Thursday, March 16, 2017

How the Fed's Latest Move Is Expected to Hurt Home Buyers

The Federal Reserve just announced some bad news for aspiring homeowners counting their pennies: It’s going to continue to nudge up a key interest rate this year. Yes, after a stop-and-start approach to raising  rates over the past couple of years, it looks like we’re settling in for an upward ride—making new buyers’ monthly mortgage payments a bit more expensive and worsening the existing housing crunch.
The Fed announced on Wednesday that short-term interest rates would go up 0.25% and signaled that two similar increases are on the horizon for later this year.
Mortgage rates aren’t the same as short-term interest rates, which the Fed determines, but they tend to keep a parallel relationship and even anticipate the Fed’s actions. So the Fed’s actions can still have a big impact on the housing market.
“If you think it’s been hard so far to find a home that fits your budget and your needs, it’s going to get worse,” says Chief Economist Jonathan Smoke of®.
That’s because homeowners who already have lower mortgage rates locked in are less likely to trade up or down into new homes that require them to get more expensive loans. So they’ll stay put.
“It’s bad for the market, because that means there will be even fewer homes for sale,” Smoke says.
Interest rates were 4.39% on the average 30-year fixed-rate mortgage as of Tuesday, according to Mortgage News Daily. That’s up from near historic lows of 3.44% last summer.
And that means buyers will be shelling out about 3% more each month on their loans for a $250,000 home that they plunked 20% down on. That’s because in anticipation of the Fed hike, mortgage rates have already ticked up just more than a quarter of a percentage point over the past few weeks. In dollars and cents, borrowers would fork over an additional $29 a month, or $348 a year.
“The small changes we’re seeing shouldn’t price too many people out” of homeownership, Smoke says. “But if you keep adding it on, it will price people out.”
The housing crunch will continue to pressure home builders to, well, build more abodes. But new homes are typically more expensive than older residences as land, local regulation, labor, and materials costs are high and rising in most parts of the country.
“Right now, rents and housing costs are increasing faster than other components [of the economy] because of the stubborn housing shortages in much of the U.S.,” Lawrence Yun, chief economist of the National Association of Realtors®, said in a statement. “More home construction is needed now.”
But buyers shouldn’t panic. Those hoping to save a few bucks can opt for adjustable-rate mortgages, which generally cost a bit less upfront than 30-year fixed-rate loans, he says. They can refinance those loans later if rates fall. Or they can purchase smaller residences in less expensive neighborhoods.
And even with the bump, “rates are still incredibly low,” says Smoke. Over the past 46 years, they’ve been at an average 8.25%. That’s almost twice what it is today.
Mortgage rates have been climbing since the presidential election. In December the Fed announced that it would be raising short-term interest rates a quarter of a percentage point, just the second increase since the housing bust.
This time around, the Fed is raising rates to “prevent inflation from getting out of control,” says Smoke. He adds that a rate hike is a good sign that wages and employment across the country are also up.

“They want to make sure the economy doesn’t overheat.”

Tuesday, February 28, 2017

Is Land a Good Investment? A Reality Check on the Profits and Risks

Buying a home may be the American dream, but buying land—empty, yet full of possibilities—holds an almost mythical appeal. It’s also cheap: On average, land will cost you a mere $3,020 per acre. Unlike avocados or iPhones, land is a finite resource, which you’d think would shore up its value. So let’s talk turkey: Is land truly a good investment?
The answer depends, for starters, on what you hope to do with it. The possibilities, of course, are close to endless: You could build a cute little cabin or your dream mansion. Or maybe you’re thinking big with your investment, like a future condo complex or shopping mall that will reel in beaucoup bucks.
But while land may seem as solid as an investment gets, it’s not something you want to venture into without careful consideration of the costs and red tape you’ll encounter. Here are some of the questions to ponder to help you decide whether you want to forge ahead.

How can the land be used?

Investors must consider not only the value of the land itself—in terms of its location and price—but also its intended purpose, says Eric Malmberg, a broker with Re/Max Advantage Plus in Minneapolis–St. Paul, who specializes in land sales. As such, your first step should be to check with the city or county to see if the land is zoned as residential (homes), commercial (shopping malls), industrial (manufacturing), or agricultural (farming). Similar to zoning laws, land can have specific designations—say, a historical site or preserve—that limit what you can build on it.
Whatever a land’s label, you should take it seriously, because if you build a house on a commercial lot, a shop on agricultural land, or some other mismatched arrangement, you’re breaking the law. And that’s rarely a winning strategy for investments (just look at where Bernie Madoff ended up).

Can land be rezoned?

What if the land you’re eyeing is not zoned the way you were hoping? Many an investor has plowed ahead anyway, intending to maximize an investment through rezoning, a phenomenon known among investors as “future-use payday.” For instance, maybe land that’s classified as agriculture currently has a restriction that will be lifted and reallocated for condos once the local population density reaches a certain level, handing a windfall to any landowner savvy enough to see it coming.
But buyer beware, cautions Andy Prasky, who specializes in new construction and land development with Re/Max Advantage Plus in Minneapolis–St. Paul.
“Investors with rezoning dreams are usually at the mercy of the city staff,” says Prasky. “They will likely find the process to be full of costly surprises, such as land surveys, engineering reports, wetland delineations, watershed compliance, feasibility reports, and more.”
In short, waiting for rezoning to happen is high-risk, high-reward. If you aren’t an experienced real estate investor or a high roller, you should probably look to other options (read on).

Can I make money off the land immediately?

Keep in mind that land comes with carrying costs: You’ll have to pay taxes on it, for instance. As such, to keep your land from being a constant drain on your finances, you’ll want to find a way for it to generate income immediately. This can be done by planting crops or trees on it, leasing it out for cattle, or offering up hunting rights.
“The key to holding raw land is to keep the taxes and expenses under control,” Prasky says, adding that agricultural land has the lowest taxes. In Minnesota where Prasky lives, for instance, farmland sells for between $8,000 and $16,000 an acre. Rent it out to a farmer, and the crop yields will generally reap a return on investment of about 3.75% per year. In short, farmland is akin to a blue chip stock: It won’t make you rich, but it does offer a slow but steady return.

What do developers think?

But if your dreams are to build something on your land, one professional you may want to call for advice is a developer. As a rookie investor, you may be valuing attributes that a homeowner would look for, like natural beauty, views, and proximity to amenities. And while these factors are important, a developer will eye additional details such as the number of buildable acres (which may not be all of it), expected expenses for site improvement, and ease of getting permits and approvals.
Also keep in mind that building will cost you, a lot. According to data from the National Association of Home Builders, the median cost of building a home is $289,415—that’s more than it costs to buy an existing median-price home, at $223,000. And that’s not where your building expenses end. You’ll also have to pay for surveys, permits, and health department approvals. What’s more, the site must be cleared, graded, and excavated—all of which can take a year or more to complete.
Bottom line: Land, as an investment, may be more trouble than it’s worth. So if you’re looking for fast and easy returns, stocks or regular real estate may be better bets. Still, if land ownership holds some appeal, just make sure to do your homework … and maybe grow a few soybeans to make ends meet.

On the other hand, “Land” can represent the ideal investment for all of those that are undecided about the type of dream home they want to have. Please remember that as we go through the different stages in our life our views and goals change and land can be a very safe way to guarantee your spot in a specific location and then take your time to play with the design of that ideal dream home where you will spend the rest of your days.

To point out a well know State for its land sales activity, Florida has a proven track record of consistent growth with a value proposition. The southwest part of the state has particularly absorbed the greatest growth within the State.

“Florida passed New York to become the nation’s third most populous state, according to U.S. Census Bureau state population estimates released today. Florida’s population grew by 293,000 over this period, reaching 19.9 million. The population of New York increased by 51,000 to 19.7 million”.
At last count, Florida is growing by 986 people per day.

According to the US Census Bureau, as of July 1st, 2016, Florida’s population was 20,612,000, and New York’s population was 19,745,000. Therefore Florida has surpassed New York by 867,000 people.

Tuesday, February 7, 2017

How to Get a Mortgage After Foreclosure (Yes, It's Possible)

If you’ve been through a foreclosure, you’ve crawled through one of the worst real estate ordeals there is. But that experience doesn’t mean homeownership has to remain forever out of reach afterward.
In fact, it’s much easier to qualify for a mortgage after a major credit event than you may think. It all depends on the circumstances of your foreclosure—and how you’ve managed your credit since.
So if you want to get back out there, here’s how to get a mortgage after foreclosure.

How long after foreclosure can I apply for a loan?

When it comes to the necessary waiting period between going through a foreclosure and applying for a new loan, every mortgage program is a bit different. But there are some general rules.
“For a conventional mortgage, a borrower who experienced foreclosure is required to wait seven years,” says Ray Rodriguez, regional sales manager at TD Bank.
On the other hand, the Federal Housing Administration and the U.S. Department of Agriculture require a three-year waiting period while the U.S. Department of Veterans Affairs requires a two-year wait.

How to speed up the process

You can reduce the waiting period for landing a new mortgage by showing that the foreclosure was the result of a significant financial hardship from which you have recovered.
So what’s considered significant? “I live to shop” definitely doesn’t count; legitimate reasons include a layoff, business failure, divorce, or major health problems.
Be prepared to provide documentation of the hardship you claim, such as proof of paid medical bills.
“You’ll need to provide an explanation letter, which should be short and focus on recovery from the event, rather than excuses for it,” says Casey Fleming, author of “The Loan Guide: How to Get the Best Possible Mortgage.”
Her sample sentence: “After my business failed, I landed a W-2 job with an excellent company doing the same thing I did before, but with a guaranteed salary and full benefits package.”
Just keep in mind that “there is no one-size-fits-all when it comes to lenders dealing with this situation,” says Rodriguez. Every lender has different requirements aside from basic guidelines set down by the FHA, VA, USDA, Fannie Mae, and Freddie Mac.
The FHA, for instance, is particular about what constitutes a significant financial hardship, says Fleming. A serious illness or the death of a wage earner may be acceptable, whereas divorce may not be. (You might have been able to work through a divorce, but not through illness or a death.)

How to rebuild your credit

For a potential borrower, a major component of landing a new mortgage is demonstrating that you have bounced back from the financial hardship that caused you to default in the past. Job one of proving that is rebuilding your credit and keeping it sparkling clean.
To boost your credit score—lenders typically like to see a score of at least 580—pay bills on time and maintain low balances on credit cards.
“Consumers should also frequently check their credit reports to ensure there are no inaccuracies that could negatively affect their chances of qualifying for a loan,” say Rodriguez.

Keep a paperwork file

Be prepared to document everything finance-related in your postforeclosure life, advises Rodriguez. That includes pay stubs, bank and brokerage statements, and tax returns. Lenders will ask for this paperwork to verify everything you put on your mortgage application as a precaution to avoid another potential foreclosure.
And save your pennies! Unless you’re using VA financing, you will probably need a larger down payment to secure a mortgage than you may have put down last time.
“Figure 10% minimum,” says Fleming. There may be exceptions, but they are rare.

What about nonprime lenders?

You can land a new loan immediately after completion of the foreclosure in most cases. But beware: It’s expensive, the fees and interest rate are higher, and usually the terms aren’t great, Fleming says. For instance, rather than a 30-year fixed loan, you may be offered only an adjustable-rate mortgage with a high margin.

How a mortgage adviser can help

Meet with an experienced mortgage adviser soon after your foreclosure so that you can begin to work on any other long-term issues that need to be addressed and fixed.
“The three legs of the qualifying stool are income, credit, and assets,” says Fleming. If one or two are weak, you’ll pay more for a loan or may not qualify. The best corrective action for a prospective home buyer depends on what leg is weakest.
Once you’ve worked on getting your credit score over a particular threshold, you may need to conserve cash if your liquid reserves are too low, or pay down your credit cards if your debt-to-income ratio is too high.
Bottom line: Your past does not predict your future when it comes to financing—in fact, a bad experience can often scare people straight.
“Many folks have rough times in their financial life, and then are excellent credit risks afterward,” says Fleming. “If you can demonstrate a willingness and ability to make payments in the future, you can get a loan to buy a home.”

Wednesday, February 1, 2017

7 Home Maintenance Tasks You Should Tackle in February

By Lisa Gordon –

Spring might be around the corner, but February can still bring plenty of harsh winter weather. Some of the harshest of the season, in fact. So that makes this month the perfect time to knock out some more of those indoor tasks to get your home ready for warmer times.
“I’ve been doing indoor tasks for three months now! Dear God, please let me out!” you’re no doubt drying. Have patience, young grasshopper—we’re almost there. But first you have to prepare your home for spring by thinking “fresh.” A fresh house can help combat the cabin fever that can overwhelm you in the last month of winter.
So how do you get fresh? We’re glad you asked!
We’ve created a handy checklist of home maintenance tasks to give your home a lift in February. And if you’re struggling to muster up the energy to tackle these chores, we’ve provided tips for how to do them faster and easier—or with the help of a pro.
Check these to-do items off your list, then sit back and relax for the last few weeks of winter.

1. Spiff up the paint

Task: Freshen indoor paint on walls, cabinets, doors, and trim.
Shortcuts: Sometimes a once-over with a Magic Eraser sponge will remove marks and smudges, reducing the need for a paint job. If that won’t cut it—and you need to paint indoors in February—stir a tablespoon of clear vanilla extract into the paint can to make the smell less noxious. And if you have trouble removing painter’s tape from furniture or walls, heat it briefly with a hair dryer.
Call in the pros: A painter will charge $200 to $400 for a 12-foot-square room. Since spring is the busy season for painters, you may get a discount if you hire one at the end of winter. That means now!

2. Give the laundry room a redo

Task: Clean and reorganize your laundry room so it’s roomier and more efficient. Scrape dried-on laundry detergent from ridges in your washer, replace damaged sorting bins, throw away laundry products you never use, and store the rest in out-of-reach places to protect young ones.
Shortcuts: Take advantage of every square inch of laundry room space. If you don’t have room for a drying rack, extend a curtain rod over your machines to hang delicate clothes, and insert a “slim cart” between your washer and dryer to hold cleaning supplies. Also, try storing bins, buckets, and laundry bags on wall hooks to free up space.
Call in the pros: A professional home organizer costs $30 to $80 an hour. While the organizer is rearranging your closets, ask her to work her magic on the laundry area, too.

3. Clean out dryer vents

Task: Clean the duct that connects the back of your dryer to outside vents. If you don’t, lint and other debris could decrease your dryer’s efficiency, increase energy bills, and even cause fires. Also, make sure birds and other animals haven’t made a home in your warm and toasty vent.
Shortcuts: Twice a year, use a leaf blower to remove lint and debris from ducts. Also, cover the outside vents with a fine mesh screen so birds and bugs don’t nest in ducts.
Call in the pros: On average, a professional will charge $92 to $162 to clean dryer vents and remove clogs. If clogged vents are a persistent problem, the pro may recommend moving your dryer to an external wall where the distance between dryer and the outside vent is minimized.

4. Clean refrigerator coils

Task: To keep your refrigerator in tiptop shape and save energy, clean the refrigerator condenser coils located in the back or on the bottom of the appliance.
Shortcuts: Use a vacuum to clean coils (just make sure to pop on the upholstery attachment first). While you’re at it, vacuum the floor under and behind the fridge, too. Then, shove a duster or refrigerator coil brush (about $5 and designed for this exact purpose) between the coils, and clean the rest of the dust, hair, and dirt still clinging to the coils.
Call in the pros: The average cost to repair a refrigerator is $200 to $400. If the appliance is near the end of its life, typically 14 to 17 years, replace it.

5. Clean and maintain your sump pump

Task: Clean out your sump pump pit and make sure the sump pump is working in February to prepare for the increase in groundwater that spring rains will cause.
Shortcuts: Test the pump by adding water to the pit, and confirm the pump ejects it as it is designed to, says home maintenance expert Charlie Frattini, who’s appeared on FYI network’s “Hero House.” Just be sure to replace the pit cover after confirming the pump works, he notes. Also, make sure nothing obstructs the sump pump pipe, which drains water to the outside of your home.
Call in the pros: Labor to replace an existing sump pump costs anywhere from $40 to $150.

6. Give your mattress some love

Task: Vacuum box springs and the mattress top and bottom. Rotate or flip the mattress.
Shortcuts: If you have a one-sided mattress—one side is padded; the other isn’t—don’t bother flipping; just rotate it to provide even aging. If you have a two-sided mattress, flip every two months to prevent sags.
Call in the pros: A cleaning service will provide this type of deep cleaning for $25 to $35 an hour.

7. Look for leaks

Task: Inspect your roof for missing shingles and damaged vent boots, and check your foundations for cracks that can cause big problems when spring rains pour on your home.
Shortcut: Wait until it rains, then climb into your attic to look for leaks.
“It’s easier to spot water leaks during a storm,” says John Bodrozic, co-founder of HomeZada, a digital home maintenance platform. “These leaks can go unnoticed for months, causing damage to insulation and creating an opportunity for mold to grow.”
Call in the pros: Roofing and foundation waterproofing companies can inspect and cure water problems. A roofing company will inspect your roof for free if it replaces shingles and repairs other roof damage. Costs typically range from $100 to $350 to replace 10 square feet of asphalt shingles. Waterproofing companies can spray a sealant on foundation cracks for $250 to $1,000.

Friday, January 27, 2017

How to Fix a Leaky Faucet Before It Drives You Insane

  | Jan 27, 2017 –
Drip … drip … drip … If you’ve ever heard this sound, you’ve probably pondered how to fix a leaky faucet—and not just because that repetitive noise is an insidious form of torture. The Environmental Protection Agency reports that a single seemingly innocuous leak can end up wasting 500 gallons of water a year, and raising your water bill by nearly 10%.
So, for the sake of your savings account and your sanity, here’s a crash course on the steps and tools you’ll need to make this important home repair yourself.

How much does it cost to fix a leaky faucet?

If you go straight to the pros and hire a handyman or plumber, a leaky faucet repair can end up costing $150 to $250.
“I would charge at least $145, depending on the extent of the leak,” says Marc Ricco of R&L Heating and Plumbing, in Norristown, PA. This option is good for people who lack a decent set of tools, or are all thumbs when it comes to repairs. Because after all, as Ricco points out, “It’s important that plumbing work is done up to code, both for resale assurances and so that a quick fix doesn’t end up causing larger issues down the road.”
That said, if you’re reasonably apt at DIY tasks it’s entirely possible to fix a leaky faucet yourself. It shouldn’t take long—less than a half-hour—and since your labor is obviously free, replacement parts are your only expense. While the price will depend on the model of your faucet, most name brands offer faucet repair kits that can be found at most home improvement stores for $10 to $20.

Tools you’ll need

  • Kitchen towel
  • Small flathead screwdriver
  • Needle-nose pliers
  • Hex wrench
  • Lock-jaw pliers
  • Replacement kit (varies, depending on the make and model of the faucet)

Steps to fix a leaky faucet

Generally, leaks result from wear and tear and can be solved by simply replacing a few parts, although exactly which parts will depend on where your leak originates. Faucets can leak from three places: the handle, the base, or the waterline. For your classic dripping faucet, the problem is the water valve. Replace that, and your leak should be fixed. Here are the steps.
Step No. 1: Turn off both the hot and cold water supply under the sink, then turn on the faucet to release any residual water. Close the drain, and place a kitchen towel over it to prevent any parts from falling in and getting lost.
Step No. 2: Most single-handle faucets have plug buttons on the front or back of the faucet. Use a small flathead screwdriver to remove it; doing so will allow you to see the lock screw. As you remove parts, keep them in order, so that you’ll be able to put the faucet back together the same way later.
Step No. 3: Use the hex wrench to loosen the lock screw until it’s loose enough to allow you to lift off the handle.

Step No. 4: Once you remove the handle, you should be able to unscrew the bonnet of the faucet with your hands.

Step No. 5: Use the pliers to remove the mounting nut.

Step No. 6: Take out the valve cartridge. (Note: Not all faucets have valve cartridges. If yours doesn’t, it will likely have either a ball mechanism or a group of washers and springs that you should remove at this time. If you aren’t sure what type of replacement parts you need, just bring the old one to the hardware store to make finding a match easier.)

Step No. 7: Insert the new valve cartridge in place. On the bottom of the valve, there are two pegs that need to be aligned with two depressions in the valve body. In the event that your faucet uses washers and springs or a ball mechanism, you should replace those in the same formation as the originals, as well.
Step No. 8: Reassemble the faucet in reverse order.

Step No. 9: Turn the water back on, and test the faucet for leaks.

How to fix a leaky faucet with two handles

The process for fixing this type of leak is very similar, except for turning off the water supply and accessing the lock screw. Since the leak is likely coming from either the hot or cold line, you’ll want to turn off the water lines one at a time to determine the source of the leak. If the faucet is still dripping after you turn off the first water line, you’ll know that the leak is coming from the other valve.
After you’ve found the source of the leak, turn off both water lines and follow the same steps listed above to replace the defective valve. Double-handle faucets may not have the plug button referenced above in
Step No. 2;  instead they may have a cap across the top of each handle. You’ll need to use a coin or thin blade to pop off the cap before continuing to remove the lock screw.

Tuesday, November 15, 2016

A Lack of Listings Remains 'Huge' Challenge in the Market

The housing crisis is finally in the rearview mirror as the real estate market moves down the road to a complete recovery. Home values are up, home sales are up, and distressed sales (foreclosures & short sales) are at their lowest mark in over 8 years. This has been, and will continue to be, a great year for real estate.
However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory. According to the National Association of Realtors (NAR), buyer traffic and demand continues to be the strongest it has been in years. The supply of homes for sale has not kept up with this demand and has driven prices up in many areas as buyers compete for their dream home.
Traditionally, the winter months create a natural slowdown in the market. Jonathan Smoke, Chief Economist at, points to low interest rates as one of the many reasons why buyers are still out in force looking for a home of their own.
“Overall, the fundamental trends we have been seeing all year remain solidly in place as we enter the traditionally slower sales season, and pent-up demand remains substantial as buyers seek to get a home under contract while rates remain so low.”
NAR’s Chief Economist, Lawrence Yun, points out that the inventory shortage we are currently experiencing isn’t a new challenge by any means:
"Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in. Unfortunately, there won't be much relief from new home construction, which continues to be grossly inadequate in relation to demand."

Bottom Line

Healthy labor markets and job growth have created more and more buyers who are not just ready and willing to buy but are also able to. If you are debating whether or not to put your home on the market this year, now is the time to take advantage of the demand in the market.