Homes

Renting Housing Can Be Costly

October 29, 2015 By Twila Van Leer

More Americans are renting and many of them pay up to half of their income for housing and utilities.

Enterprise Community Partners, a nonprofit agency that promotes affordable housing, looked at census data and ferreted out the data, including the fact that more families are putting half of their earnings into a rental place. Since 20007, the number of people in this category has risen to 11.25 million, an increase of 26 percent.

The problem becomes more acute when the increase in rental costs outpace the rise in hourly wages. Rentals have risen at nearly twice the rate of income, Labor Department figures show. The department reported that hourly wages rose just 2.1 percent in the past 12 months, compared with a 3.7 percent increase in rents. For some families, the difference is forcing hard decisions on how to make the income stretch far enough.

A combination of factors underlying the problem includes the slow recovery from the recession of the early 2010s. Construction of new rental units also has fed into the dilemma, as has the number of families that lost their homes during the recession, opting for renting instead. All told, the various factors create a bad situation for those who rent, including the prospect of homelessness if they can’t meet the demand.

Many have had to downsize, moving from rentals with three or more bedrooms to those with one or two. Throw in the increased costs of transportation, communications and health care and many families find themselves overwhelmed.

Studies show that more than 30 percent of renting families in California, Florida, New Jersey and New York fork over more than half of what they earn to pay for housing and utilities. In other states, excluding Alaska, South Dakota and Wyoming, the figure goes down to 20 percent.

Enterprise Community Partners say their data is consistent with that of other organizations interested in the housing market. The federal Department of Housing and Urban Development has published figures that show 12 million renters and homeowners who see half of their income go into housing costs. In 2013, the Harvard University Joint Center for Housing Studies estimated that 27 percent of renters were paying 50 percent of income for rentals and related costs. The increases reported by these agencies were “unimaginable just a decade ago,” the Harvard report stated.

The high costs of renting are affecting the upkeep of many rental units, according to the Consumer Federation of America. Those who rent cannot afford to make routine repairs, forcing the landlords to look at further increases to meet this need. The alternative is to let buildings fall into disrepair. Both the property owners and the renters are caught in the bind.

Construction can’t keep up with the increasing demand. This spring, the National Low Income Housing Coalition reported a shortage of 7.1 million apartments for low income renters. More than 320,000 units are expected to be ready for occupancy this year, according to the Commerce Department. The shortages are most acute in the Western states.

But until demand and supply reach some semblance of balance, the prospects for higher rentals that absorb greater percentages of income are likely to continue.

Set Emotion Aside During a House Sale

August 28, 2014 By Twila Van Leer

A home seller who is making decisions based on emotional feelings about their property may find the going very slow, real estate experts say. Failure to look at the sale as a financial transaction (although a very important financial transaction) may thwart efforts to consummate the sale. Cold, hard decisions should be made without sentimentality getting in the way, they say.

The experts offer these suggestions to avoid pitfalls related to emotion:

Don’t expect a potential buyer to see the value you attach to certain features of your property. They are not likely to pay a premium for something that has special value only in your mind. Don’t’ let your emotional attachments lead you into setting an unrealistic price. Remember, too, that the price you paid for your property is not likely the price that it will bring. While an older property may have escalated in value, if you bought at the market’s peak a few years ago, you may find the asking price will be adjusted downward.

If you have marked emotional feelings about the property, please let the realtor conduct showings. Make arrangements to be absent, says Renee Weinberg of Petrey Real Estate in Long Beach, N. Y. , in a Bankrate.com article.

Having the seller at hand becomes sensitive when a potential buyer finds flaws in the property, agreed Karyn Anjali Glubis of The Real Estate Expert in Tampa, Fla. When the seller takes comments personally, the sale is jeopardized. The seller must remember that the comments relate to the property, not to the person, she said. The involvement of the seller may hamper the free flow of conversation between the prospective buyers and the realtor. Better that the parties do not meet until there is a serious proposal for purchase.

Those who are selling need to be aware that the most interest will come during the first two weeks. The longer a property is on the market, the worse the offers are likely to get, the experts know. Sellers worry that they may have underpriced their property, but waiting for a better offer may keep the property on the market longer. The market tends to make reasonable adjustments over time.

Taking the whole process personally is a mistake, said Fiona Dogan, a realtor in Rye, N.Y. “Sellers need to become emotionally detached very quickly from their homes. By its nature, a real estate transaction is aggressive and confrontational since the seller wants the highest price and the buyer the lowest.” Negotiations usually will mean that the would-be buyer will point out flaws and the seller could be offended. But such nit-picking means the buyer is genuinely interested, Dogan said. To pass up the sale because of such feelings defeats the purpose in a big way.

First-Time Home Buyer? Do It Right

July 14, 2014 By Twila Van Leer

Get The Best Mortgage Loan For Your Home

Making your first investment in a home is a big deal. A combination of angst and anticipation on a steep learning curve. At the moment, the inventory of possible buys is low and lenders are being selective. Be aware and be wary. The better prepared you are the greater your chances of success.

Even if you have the burden of student debt, now at an all-time high average of $30,000 per graduate, it can be done, but it requires an astute approach. On the plus side, interest rates continue to be relatively low, so now is the time. A suggested timeline for home-buying includes:

A year in advance:

Get serious about the figures. Trulia.com has a “rent-or-buy” calculator that would help you decide if buying is in the cards or whether it would be wiser to continue renting. At the moment nationwide, buying is 38 percent cheaper than renting. Feed in your data and see how you score. Get your finances in order. Spend the year saving money and, if possible, paying down debt. An FHA loan requires at least 3.5 percent down. Conventional mortgages call for 10 percent to 20 percent. Are your jobs stable? The potential mortgage institution will want to know. Be studying the housing market to learn what appeals to you. Browse the Internet listings and save the ones that you think you’d really like to see.

Six months to go

Order free credit reports and eliminate any mistakes before they come to the attention of a potential seller. Pay your bills on time and if you have a few bucks left at the end of a pay period, apply them to debt. Don’t take on new debt. Approval for mortgage applicants requires a minimum credit score of 755. Zillow.com has an online calculator that will help you estimate what you can afford for a new home, based on income, savings and debt. Look at tax rates in the target area you propose. Don’t court disappointment by overestimating what you can afford. Try to forecast future expenses. Maintenance on a home adds, on average, 1 percent to the cost of home owning.

Three months out

You’re ready, armed with the information you need. Now determine what type of mortgage you want to pursue. Fixed mortgage rates, now at about 4.4 percent, could go up to 5 percent this year, according to industry forecasts. A 7/1 adjustable-rate loan carries interest of only 3.5 percent now. For the sake of that lower rate, however, you run the risk that you could stay in the home longer than seven years and face a sharp interest rise. That’s why 92 percent of mortgage borrowers stick to fixed-rate loans. Many banks will pre-approve a mortgage loan based on income and credit. That’s a huge advantage when the actual search for a home begins.

Time to go

Find a realtor in the area where you want to buy. Screen to be certain the person you select will serve the best interests of your home purchase. Good questions to ask: How does the realtor go about finding listings and how are potential bidding wars handled?

That’s it. Happy house hunting!

Basic Tips For Buying A New Home

May 25, 2012 By Twila Van Leer

Before You Sign Mortgage Papers, Know the Facts

First-time home buyers can find themselves bogged down hopelessly in a sea for facts, figures, statistics, competitive advertising jargon and who knows what all else. That argues for a thoughtful preliminary process that will ensure that you go into what likely will be one of the most important purchases of your life. A clear vision of what you really want in a home, what you can realistically afford and what portion of your earning power and your time you want to dedicate to home ownership should guide your ultimate decision.

Obviously, if more than one person is to be affected in the process, a thorough discussion of every detail is essential. Don’t give anyone else the opportunity for “I told you so’s.”

Start with the question: Do we really want to do this? If there is some doubt that you will remain in the location where you want to buy, home ownership may not be for you. Up-front costs tend to skew the figures mostly in the first few years. If you are not likely to pass that point, you could end up losing money if you relocate. Since no crystal ball has yet been invented to forecast every twist and turn in a society that is prone to make life changes, there is no way to assure the future. But don’t overlook the obvious.

Maintain A Good Credit Rating

Be sure before you make any moves that your credit rating is as healthy as possible. A few months before you want to start looking, get a copy of your credit data and be certain it is correct. Resolve problems before you start any discussion of money so that they don’t become part of what is already an onerous process.

Know What You Can Afford

Be realistic about what you can afford. The usual advice is that you can afford a home two and a half times your annual income. But there are plenty of variables, such as how much debt you are carrying going into the home purchasing routine and whether your income is likely to stay on track. If Mom decides post-purchase to stay home to raise children, how will that affect your bottom line? Online “calculators” are available to help you picture your personal finances relative to what your home will cost you.

Determine Your Down Payment

Find out up front how much you will have to produce for a down payment. You may well qualify for a loan requiring 20 percent down or less. Many private and public lenders offer homes with a down payment as small as 3 percent. Study your options carefully before making a decision, and remember all of the up-front money issues before you are into the actual purchase mode.

Choose A Good Neighborhood

Many factors will affect your decision on where to locate. But as a rule of thumb, areas that have good schools have several advantages. Even if you don’t have children in school who would benefit from such a location, it is a fact known to Realtors all across the country that re-selling in such a neighborhood is enhanced, since that is one of the factors many people include on their “where to live” wish lists, a feature that boosts property values.

Use A Real Estate Professional

When you get serious, involve a professional. Despite all the readily available resources online, there are details that might slip past you that a professional would recognize. Don’t look for the busiest, look for the one who will keep your interests foremost as serious negotiations begin.

Understand the difference between points and rates. When you are selecting a mortgage, you may be offered the option of paying points. That means you pay at the beginning some of the interest that you will be required to pay at closing, in exchange for a lower interest rate. If you expect to be in the home for three to five years, the points may be the better deal. A lower interest rate will save you more over the term of the mortgage.

Getting pre-approved may save you the hassle of looking at properties you can’t afford, only to be disappointed. You will be in a better position to make a valid offer if you do find the property that is just right. Pre-approval is different from pre-qualification, which is based on just a cursory review of your financial data. Pre-approval goes deeper into your income, debt and credit history.

Make a study of recent sales in your desired neighborhood before making a bid. Look at the past three months and if homes have been selling at 5 percent or so under the asking price, make a bid that is 8-to-10 percent below the listed price.

Hire a home inspector aside from the home appraiser the lender will require anyway. An engineer with experience in doing home inspections would be best, especially if he has experience in the area where you plan to buy. He likely will be aware of existing problems in the neighborhood, if any, and be able to alert you to potential problems that could rack up expensive repairs in the future.

There. Ready? Get set and go find the house of your dreams!

Secure Your Home During Foreclosure

October 27, 2011 By Twila Van Leer

Losing your home is bad enough, but walking away and leaving it empty and a target for vandalism, theft and illegal activity just adds to the problem. You are still liable for the property during the foreclosure process, experts remind those who are affected. They say that malicious or even unintentional damage to an empty home can cost mortgage lenders and homeowners considerable money. Insurance may not cover repair costs.

It may pay in the long run to prevent a property from looking vacant. Would-be vandals, thieves and illegal interlopers (who may use property for such things as illicit drug manufacturing) may think twice if the property has the appearance of being occupied. Experts offer these suggestions for minimizing the prospects of damage:

Lock up: One unlocked window could invite unwelcome invasion. An insurance company may make it grounds to deny a potential claim. Double check to see that all entrances are secure.

Winterize: Shut off the main water valve. Drain water from plumbing, using compressed air, if necessary, to remove all remnants of water. Even a small leak can cause extensive, expensive damage.

Keep up maintenance: There are property preservation companies that specialize in giving vacant sites a “lived-in” look. They perform such services as maintaining lawns and yards, keeping mail and debris picked up, shoveling snow and generally making the property appear neat and occupied. If you can’t afford such a service, ask friends or neighbors for help in maintaining and monitoring the property.

Unplug: Even when turned to “off” an appliance can still draw a little power, so make sure all plug-ins throughout the property are disconnected. This move also can minimize the potential for fire.

Monitor: Test and retest smoke and carbon monoxide detectors and security alarms. Put in fresh batteries and test again before vacating the property.

Taking the steps to secure an empty home may fend off a lot of headaches in the future.