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Fireplace Safety Basics
March 4th, 2011 1:17 PM

Practice Good Hearth Health: Fireplace Safety Basics

By Charles Furlough Print Article Print Article

RISMEDIA, March 2, 2011—In the winter, there’s nothing as idyllic as sitting by a gently crackling fireplace with a cup of cider or hot cocoa, feeling the warmth from your toes to your soul. The essence of comfort and luxury, a fireplace is the focal point of a home. But, in order to ensure many more years of fireside moments—and to keep something beautiful from becoming potentially dangerous—some regular maintenance is required, as well as a keen eye toward safety.

When most people think of fireplaces, they recall traditional ones, found in older and classic homes. In a traditional fireplace, the fire is encased in a metal firebox lined with special firebrick. Smoke moves up a flue, which is typically a tile or metal liner inside a masonry chimney. A flue damper keeps air from escaping when the fireplace isn’t being used; and the smoke shelf, behind the damper, stops outside air from coming in and pushing harmful smoke into the living area.

Besides traditional fireplaces, though, there are plenty of other types. A heat-circulating fireplace produces some radiant heat, but mainly warms the air that circulates around the firebox; some have a fan that increases the air flow. A gas fireplace is mostly decorative and takes gas logs. By contrast, direct-vent fireplaces are like a wood-burning heat circulator—cool air enters at the bottom, is warmed, and rises out the vent at the top; the CO is expelled out the rear, so there is no need for a chimney. Finally, if you have a modern home or apartment, there’s a good chance you’ll have a modern wood stove—they’re desirable because they’re more efficient that a heat-circulating fireplace.

No matter what type of fireplace you have, maintenance is key to safety. First, before the winter, it’s essential to call in a professional to clean the chimney. Creosote can build up in the chimney and start fires. Typically, as soon as the creosote in the chimney is 1/8-inch thick, that’s an automatic sign to call in a professional who will also check the firebox and masonry and fill in potentially dangerous cracks.

Another important safety note: Chimneys must be lined with metal, or the appropriate tile. Older homes (especially those built before 1950) are typically not. If you have just moved to your home, this is something that a certified home inspector should have found during an inspection; but, if you’re not sure, call in a reputable, professional home inspector to assess the safety of the chimney. The inspector will give input on required repairs you need to have done.

Beyond professional maintenance, it’s essential for the homeowner to take safety precautions too. Here are some of the most important:

-Never burn pine or soft wood; it generally causes extremely fast creosote buildup.

-If you have a wood stove, make sure ashes don’t build up too much. One or two inches of ash is optimal; more than that, and you should remove some.

-Never burn pressure-treated or painted wood; it can cause noxious fumes.

-Never burn any kind of trash—paper, Christmas trees, anything at all—in a wood-burning fireplace. Only use logs made for wood-burning fireplaces.

-Never burn charcoal in a wood-burning fireplace.

-Even though it’s tempting to have as big a fire as possible, never overload a fireplace or wood stove; it can cause restricted air flow and dangerously high levels of combustion.

-Use logs specifically designated for your type of fireplace. If the label on the log’s packaging doesn’t detail this clear enough (which it should), ask a representative at the store you’re buying it from.

-If you have a direct-vent fireplace, make sure that it’s underwritten by Underwriters’ Laboratories (the “UL” symbol will be prominently listed on the packaging) or by the American Gas Association (AGA).

-Play it safe. If anything looks or smells out of the ordinary while you’re operating your fireplace, call a professional for servicing.


Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 4th, 2011 1:17 PMPost a Comment

Tax Benefits Come as a Welcome Relief for Homeowners at Tax Time

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RISMEDIA, March 16, 2011—With a little more than one month before income taxes are due, many of the nation’s 75 million homeowners may be appreciating the value of homeownership just a bit more as they take advantage of the tax benefits of homeownership.

“Owning a home offers myriad benefits throughout the year, but some of the financial advantages of homeownership are most apparent at tax time,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I.

“As many of today’s hard-working American families are feeling a financial squeeze, the tax benefits that can come from owning a home can be a welcome relief.”

A number of tax deductions and credits are still available for homeowners; these include deductions—with specific limits—for mortgage interest and capital gains on home sales, and credits for certain energy-efficient home improvements. Even with these benefits, homeowners pay 80-90% of all U.S. federal income taxes.

“It’s been suggested that many of today’s tax incentives for homeownership primarily benefit wealthy individuals, but that’s simply not true,” said Phipps. “As today’s public debate continues about what homeownership means for families, communities, and the nation’s economy, there’s no question that for many, owning a home is still the best way to begin building wealth.”

Ninety-one percent of homeowners who claim the mortgage interest deduction earn less than $200,000 a year, and the ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home in 2010 with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5%, could save nearly $3,500 in federal taxes when they file this year.

“REALTORS® see the very real positive impact of homeownership every day with our clients,” said Phipps. “Recent proposals to reduce or eliminate the mortgage interest deduction and remove government support of the housing finance market could have disastrous consequences for the economy, not to mention making it harder or nearly impossible for millions of families to own their own homes. We believe America must continue to invest in homeownership, for the future of our families and our nation.”

For homeowner tax season tips, visit www.HouseLogic.com. HouseLogic is a free source of information from NAR that helps homeowners maintain and enhance the value of their homes and engage in issues that affect their local communities.


Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 29th, 2011 12:45 PMLeave a Comment

March 28th, 2011 3:33 PM

How Well Are You Insured Against Flooding?

By Claudia Buck Print Article Print Article

RISMEDIA, March 23, 2011—(MCT)—The frightening images of Japan’s tsunami wiping out homes, roads and entire cities are vivid reminders that a natural disaster can strike at any time.

And whether it’s an earthquake, a wildfire or flooding, being covered against severe damage to your home or business is essential.

Across the United States, flooding is the No. 1 natural disaster, according to the Federal Emergency Management Agency.

And given the region’s swollen rivers and the promise of heavy runoff this spring from melting snow, now is a good time to assess how well you’re protected against flooding.

A basic homeowner’s or business’ insurance policy will cover damage caused by storms, such as a leaky roof, fallen tree limbs or broken pipes.

But a homeowner’s policy typically does not cover damage due to flooding, or what’s known as “rising water.”

Flooding—such as a levee break, a river overflowing its banks or water from springtime snow melt—is generally defined as a temporary inundation of normally dry land. For that type of coverage, you need a separate flood policy, which is provided by the federal government’s National Flood Insurance Program and purchased through a local insurance agent.

“The distinction is that homeowner’s insurance covers water falling from the sky; flood insurance covers water rising from the ground,” says Tully Lehman, spokesman for the nonprofit Insurance Information Network of California.

In some areas, flood insurance is required, particularly in high-risk areas. “In other areas, flood insurance is suggested but not mandatory,” says Vince Wetzel, the Sacramento-based spokesman for State Farm Insurance. “People need to evaluate the costs and (flood) risks and decide for themselves.”

Flood insurance covers most damage to your home, business and personal property caused by temporary inundation of water. It includes mudflows, but not landslides.

One limitation to flood insurance is basements. Improvements such as sheetrocked walls, finished floors and personal belongings in a basement are not covered by flood insurance; essential household equipment such as furnaces or water heaters is covered.

For residential policies, the maximum coverage is $250,000 for the structure and $100,000 in personal property. For a business or commercial property, the maximum limits are $500,000 structural and $500,000 in contents.

Flood insurance premiums vary, depending on where you live and whether your home is considered at high or low risk of flooding.

The average residential flood insurance premium is about $570 per year, according to the NFIP. But homeowners in low-risk areas can purchase coverage for as little as $129 a year; those whose homes are in heavily flood-prone areas will pay $2,700 or more in annual premiums. Commercial property rates are higher. See www.floodsmart.gov for details.

And keep in mind: If you get a policy today, it doesn’t go into effect until 30 days after it’s purchased.

Regardless of whether you purchase flood insurance, it’s a good idea to conduct a home inventory.

Here’s a test recommended by insurers: Sit and mentally visualize everything in your living room, from the TV to the bookshelves to the candle collection on your mantel. Got your list? Now walk through the room itself, seeing all the items you missed.

It’s easy to underestimate the number and value of possessions, from major appliances to decorative objects. But in the event of a disaster, you want to be able to get reimbursed for your losses.

Doing a home inventory can help with replacement costs for any type of damage, whether it’s a flood or other disaster covered by your regular homeowner’s policy.

If you don’t have an accurate inventory and your policy “only lists that 12-inch TV from your college days and doesn’t include that big flat-screen TV you bought,” you could be vastly underinsured, says Lehman.

The same goes for home-remodeling projects.

“Any time you do changes, such as kitchen and bath upgrades, you want to be sure your homeowner’s insurance policy includes that information,” says Lehman. “If you’ve gone from Formica countertops to a nice marble or granite, or from a Frigidaire to a SubZero refrigerator,” you should include those improvements, he says.

To do a home inventory, walk through your house, room by room, with a video or regular camera, photographing major objects, such as furniture, electronics, etc.

If using a video camera, talk and describe the room and its contents. If taking still photos, date and label each photograph with details. Jot down serial numbers for major appliances and electronics.

You can file everything in a binder, on a CD or on your computer, ideally with copies of sales receipts for major purchases, such as electronics, appliances, furniture, etc.

Websites, such as the California Department of Insurance (www.insurance.ca.gov) or the Insurance Information Institute (www.knowyourstuff.org), have handy inventory planners that you can print out or download. And, of course, there’s an iPhone app, too: “Home Inventory.”

Keep a copy—along with your insurance policy and insurance agent’s contact information—in a secure and waterproof place: a safe-deposit box, a home safe or in a separate location, such as with a trusted family member.

Like Hurricane Katrina, which set records in the United States six years ago for water-related insurance claims, the overwhelming losses suffered by individuals and families in Japan can serve as a wake-up call to be prepared.

“Whenever a disaster like this happens, it makes people question: If this were to happen here, what do I need to do to be covered?” says State Farm’s Wetzel. “It makes you re-evaluate.”


Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 28th, 2011 3:33 PMLeave a Comment

March 19th, 2011 8:49 AM

SUMMARY: 10 Real Estate Markets to Watch in 2011

An Inman News Special Report

Inman News™

Flickr image courtesy of <a href="http://www.flickr.com/photos/jontintinjordan/3736098889/sizes/o/in/photostream/" target=blank>jontintinjordan</a>.Flickr image courtesy of jontintinjordan.

Inman News examined housing, economic and demographic data for metropolitan areas nationwide in compiling a list of 10 housing markets that are showing signs of strength and may outperform other housing markets in 2011 in several key metrics. Inman News also asked a host of real estate search and data companies to share research and methodology to identify high-performing real estate markets across the U.S.

Real estate markets in the Midwest and Northeast dominated a list of 10 fast-rising real estate markets nationwide identified in the Inman News analysis, as many markets in the Sun Belt states are still struggling through the housing downturn.

The Midwest and Northeast U.S. accounted for eight of 10 markets on the list: Bismarck and Fargo, N.D.; Des Moines, Iowa; Bloomington-Normal, Ill.; Elmira and Buffalo-Niagara Falls, N.Y.; Portland-South Portland-Biddeford, Maine; and Burlington-South Burlington, Vt.

The other two markets on the list: Kennewick-Richland-Pasco, Wash.; and the Washington, D.C., metro area.

   

See the 10 markets
   

Nationwide, unemployment is high, home prices are flat and trending lower since the expiration of the federal homebuyer tax credits, and overall sales fell last year compared to the prior year.

Stan Humphries, chief economist for Zillow, said it's unlikely that "substantial price appreciation" will occur "in any market nationwide in the near term." Rather, the company identified some "stabilizing" markets in a chart provided for this report.


Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 19th, 2011 8:49 AMLeave a Comment

March 17th, 2011 6:01 PM

First-Time Home Buyers Prepare for Best Buyer’s Market in Recent History

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RISMEDIA, March 18, 2011—While affordable housing prices, ample inventories, and historically low interest rates signal ‘buyer’s market’ for investors or move-up buyers in many U.S. markets, inexperienced first-time buyers may not know if the time is right to make a move into real estate.

“It’s not about timing the market. It’s about time in the market,” says Steve Berkowitz, chief executive officer at Move, Inc., a leader in online real estate. “Once you know how long you expect to own a home, look at the historical value performance of properties in the neighborhood. Be confident about your own job security, down payment resources and tolerance for upkeep, as well as the lifestyle you want today and in the near term. While homeownership may not be for everyone, it is the right choice for hundreds of thousands of people. Today’s housing market, especially for first-time buyers, makes it almost impossible not to think about the possibilities.”

To help first-time buyers know if they’re ready to look for the home of their dreams as we head into this year’s home-buying season, the experts at Move have created a ‘reality checklist’ designed to help them decide if the time is right.

Get your financial house in order
Before you decide to buy a home, it’s essential to make sure your credit is in good shape and repair any damage previously done. Know your credit score: thirty-five percent (35%) of successful buyers recently reported they didn’t know their credit score when they went house shopping, according to a national survey fielded for MortgageMatch.com. Having enough money set aside for a down payment is a key component to making sure you are ready to purchase a home. Also, it’s important to not put all of your money in the down payment as other fees or unexpected expenses often arise after closing.

Don’t fall in love with a house you can’t buy
Find out how much you can afford: establishing your purchase power upfront, including how much money will be required for a down payment and closing costs, is a must for first-time buyers. Look for special loans available from FHA and government sponsored loans for first-time home buyers that reduce the amount of money required to get into a home.

Learn the lingo
Since first-time buyers are new to the market and will finance a significant portion of their purchase, it’s important to get familiar with the processes and terminology associated with home-buying. Here are a few key terms from MortgageMatch.com to add to your vocabulary:

Bait rate: Misleading mortgages with low rate promises and no contingencies generally for those with extraordinary credit. Rates are based on: credit, debt-to-income and loan-to-value ratios, the size and type of loan, property location and the day you lock your rate, etc. The loan isn’t locked until the application is accepted. By then, it may be too late to find a better rate from another lender.

Basis point: A term used in the mortgage industry which simply means 1/100th of 1%.

Closing costs: The fees required to process and close your loan. They’re a cash obligation running from 3-5% of the purchase price. Motivated sellers might pay a portion of these costs.

FHA: Federal Housing Administration, the Federal Government Agency that oversees the U.S. Housing market. FHA Loans are loans insured by the Dept. of Housing and Urban Development.

FRM and ARM: A Fixed-Rate Mortgage Loan (FRM) is a loan where your interest rate stays the same for the life of the loan. ARMs are Adjustable-Rate Mortgages with variable interest rates that fluctuate based on an agreed-upon index.

GFE: The Good Faith Estimate (GFE) is a document explaining all costs involved in getting a loan.

TIL: The Federal Truth-in-Lending Form is a document that spells out the costs and fees of the loan.

Lis pendens: An official notice that there is a pending lawsuit over real estate.

Per Diem interest: Interest you pay per day, from the day you close to the last day of the month.

Underwriting/underwriting fees: Underwriting is a process the lender performs to qualify a borrower for a loan and the fee is what you pay the lender at closing to cover evaluating the risk involved with loaning you money.

Warranty deed: A legal document guaranteeing the seller has a right to sell a property, which is very important if you are considering a distressed or discounted property.

Mortgage Knowledge
While national rates on 30-year-fixed-rates mortgages have risen slightly this year, they are still at historic lows not seen since 1980, according to Freddie Mac. “Buyers who prepare themselves financially before they start looking for a home will have a better chance of succeeding,” says Sue Stewart, senior vice president for Move, Inc. “If you want to land the best mortgage that fits your needs, start early, educate yourself on your financial situation, get your documentation together and find a lender you trust.”

Find a REALTOR® and go shopping
For those ready to buy, REALTOR.com® has the tools and tips to help you find a REALTOR® and, ultimately, the right home. Finding a licensed real estate professional in your area will make the process smoother and easier to understand. Once you find an agent, share your realistic budget and what you’re looking for in a home. Stay in constant contact with your agent and look for homes whenever you have a spare moment.

First-time home buyer resources
For more tips designed to help the first-time buyer navigate the home buying process, the experts at Move have provided an abundance of helpful information that’s just one click away:
-Reality checklist – Are you sure you’re ready to buy? Here’s how to know.
-How-to Guide: Buying Your First Home – Everything you need to know about buying a home
-Get Prequalified Now – Get prequalified for a mortgage before you begin shopping
-Realtor.com Blogs– Connect with REALTORS® to help you navigate the market
-MortgageMatch.com News – Answers questions about finances and mortgages
-Move.com Home Finance – Equips first-time buyers with tools, guides, advice, and more

If now isn’t the right time, prepare for your future purchase
If now isn’t the right time to buy a home, make a plan with a target date for when you expect to be ready. Improving your credit, paying down debt, stabilizing your work history and calculating exactly how much you can afford, are the best ways to prepare for your future home purchase. It’s also important to refrain from making any new large purchases or applying for new credit.


Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 17th, 2011 6:01 PMLeave a Comment

March 11th, 2011 1:59 PM

Selling Your House? 5 Reasons To Do It NOW!

by The KCM Crew on February 15, 2011 · 20 comments

in For Sellers,Pricing

The conventional wisdom when selling a home has always been to wait until the ‘Spring Buying Season’. Over the years, that has seemed to make sense and is now accepted as a good strategy for those who want to sell their house and receive the best possible price. This real estate market has shattered many previously held beliefs. The wisdom of waiting for a spring market is another belief that is about to fall. Here are five reasons why?

1.) Interest Rates Are On the Rise

Interest rates have spiked up rather dramatically over the last ninety days and are now over 5%. Initially, an increase in rates has a positive effect on the market as it forces buyers off the fence. However, it also eats into a buyer’s purchasing power. As rates increase, the mortgage amount a buyer qualifies for decreases. This will eventually have a negative impact on prices.

2.) Your Dream Home Will Never Be Cheaper

If your family goal is to sell your current house and take advantage of the fabulous selection of properties currently available to buy the home of your dreams, DO IT NOW! Prices will continue to soften in most markets. However, if you are buying, COST should be more important than PRICE. Cost can be dramatically impacted by rising mortgage interest rates. Do the math and decide if now is the time.

3.) Buyers Are Out Early

There is mounting evidence that buyers are coming out earlier this year. A belief that now is a good time to buy coupled with the increase in interest rates has started the buying season early.

Pete Flint, CEO of Trulia:

“We’re seeing a national resurgence of buyer and seller activity on Trulia.com. In January alone, we experienced an unprecedented level of site traffic including 11 million unique visitors – which is more than 70 percent year-over-year growth. We’ve are now experiencing 100,000 property views per minute.”

The National Association of Realtors just reported that the number of house  sales increased 12.9% over last month.

4.) Inventory Increases Every Spring

Every year there is an increase of inventory which comes to market as we approach the spring. Here is the number of listings available for sale in 2010.

  • February – 3,531,000
  • March – 3,626,000
  • April – 4,029,000

We believe there will be an increase in these numbers in 2011 as there is a pent-up selling demand created by the weak market of the last few years. You won’t have to worry about this increasing competition if you sell now.

5.) We Are in the Eye of the Foreclosure Storm

While banks are trying to rectify their foreclosure procedures, there is a large supply of discounted properties which has been delayed coming to market. This inventory will be released sometime in the next few months. Foreclosures sell on average at a 41% discount. When released they will be competing with your house for the buyers in the marketplace. If you are looking to sell in 2011, you want to sell before this inventory becomes your competition.

CNN Money quoted the leadership Of RealtyTrac on this issue:

“We’ve now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000,” said James Saccacio, CEO of RealtyTrac.

“Unfortunately,” he added, “This is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing.”

“We expect a spike in the first quarter,” said Rick Sharga, a RealtyTrac spokesman.

Bottom Line

These are five strong reasons to sell now instead of waiting until later in the year. Sit down with a local real estate professional today and decide the best options for you and your family.


Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 11th, 2011 1:59 PMLeave a Comment

Will I Get More Money If I Wait?

by The KCM Crew on March 11, 2011 · 0 comments

in For Sellers,Pricing

Sellers in any real estate market are looking to get the best possible price. If you are looking to sell in the next year, today’s price may well be the best price. Home values stabilized somewhat in 2010. Many hoped that was a sign that values had bottomed out and we would see price appreciation in 2011. Studies released this week have painted a different picture.

If we look at CoreLogics January Home Price Index (HPI), we see that prices are again beginning to decline:

National home prices, including distressed sales, declined by 5.7 percent in January 2011 compared to January 2010

Mark Fleming, chief economist with CoreLogic, said, “A number of factors continue to dampen any recovery in the housing market. Negative equity, which limits the mobility of homeowners, weak demand and the overhang of shadow inventory all continue to exert downward pressure on housing prices. We are looking out for renewed demand in the coming months as the spring buying season gets underway to hopefully reduce the downward pressure.”

They are not talking about the spring market increasing or even stabilizing prices. They hope it will “reduce” the pressure to drive prices lower.

Radar Logic’s RPX Composite Price comes to virtually the same conclusion:

Radar Logic believes the RPX Composite price will continue to exhibit year-on-year declines throughout 2011 due to a growing supply of homes for sale and in the inventories of financial institutions, and weakening demand due to the reduction of government incentives for home buyers. Moreover, banks are facing uncertainty over whether they will be forced by regulators to expand mortgage modifications, and may reduce lending and tighten standards as a result.

“No matter what you call it, a ‘double dip’ or the continuation of a long process of deterioration, the current trend in home prices is evidence that housing markets are continuing to languish,” said Quinn Eddins, Director of Research at Radar Logic. “We expect the negative trend to continue under a severe supply overhang that includes a large and growing ‘shadow inventory’ of homes in default or foreclosure.”

Bottom Line

It seems that prices have again begun to fall nationally. With the overhang of existing and shadow inventory, prices will probably continue to decline throughout most of 2011. If you’re thinking of selling, now might be the best time. Check with a local real estate professional to see how this might impact your area.


Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 11th, 2011 1:54 PMLeave a Comment

For Buyers:The Financial Opportunity of a Lifetime?

by The KCM Crew on March 2, 2011 · 0 comments

in For Buyers,Pricing

We often point out that a buyer should be more concerned about the COST of a home rather than the PRICE. Price obviously is a component of cost. However, unless you buy all-cash, you must also be concerned about the financing of the purchase. The price and the financing together determine the cost of a home. Today, we want to look at only the financing piece.

An opportunity exists today because of recent government involvement; an opportunity that may never again be available in our lifetimes. There has been much discussion about what role the federal government should have in supporting homeownership. We will leave our opinions on the debate for another time. However, we want to alert you to two advantages available to a purchaser today that may disappear in the future:

  • Historically low interest rates
  • The ability to lock in these rates for thirty years

Interest Rates

Because of the financial crisis, the government stepped in and instituted a series of programs which pushed mortgage interest rates to historic lows. If we look at 30 year mortgage interest rates before and after government intervention we see the impact these programs had (see chart below).

According to Freddie Mac, from 2006 to the start of the financial crisis (the fall of 2008), the average rate was 6.29%. Since then, the average rate has been 4.92%.

A purchaser can still get a 30 year-fixed-rate-mortgage at approximately 5%. However, interest rates this low may soon disappear. The government has questioned its role in supporting homeownership. In the administration’s REFORMING AMERICA’S HOUSING FINANCE MARKET: A REPORT TO CONGRESS, they are very strong in voicing their thoughts on this issue:

…our plan also dramatically transforms the role of government in the housing market. In the past, the government’s financial and tax policies encouraged housing purchases and real estate investment over other sectors of our economy, and ultimately left taxpayers responsible for much of the risk incurred by a poorly supervised housing finance market.

Going forward, the government’s primary role should be limited to robust oversight and consumer protection, targeted assistance for low- and moderate-income homeowners and renters, and carefully designed support for market stability and crisis response…

Under our plan, private markets … will be the primary source of mortgage credit and bear the burden for losses.

What are the probable results of this decision?

The Royal Bank of Scotland:

“The (government) currently provides 95% of housing finance in the U.S.; any reductions of their involvement in supporting mortgages mean interest rates will have to go up to induce private lending.”

AnnaMaria Andriotis, writer for SmartMoney:

“In the proposals were changes that will mean more expensive mortgages, with higher fees and, probably, higher interest rates, larger down payments and, in the near term, fewer lenders to choose from.”

The day of a 5% rate seem to be coming to an end.

Locking in a rate for thirty years

We must also realize that having the ability to lock-in a rate for 30 years may soon be a thing of the past.

There are a growing number of people who think that our mortgage industry should imitate those of other industrial countries around the world. If we do start limiting government support for the mortgage process, the 30-year-fixed-rate mortgage may disappear. Other countries, like Canada, only allow a purchaser to lock in a rate for a five year term. After that, the borrower must renegotiate a new mortgage at current rates. Could that happen here?

Mark Zandi, Chief Economist of Moody’s Economics.com addressing the administration’s recent report:

“A private system would likely mean the end of the 30-year fixed-rate mortgage as a mainstay of U.S. housing finance. A privatized U.S. market would come to resemble overseas markets, primarily offering adjustable-rate mortgages. Based on the experience overseas, the fixed-rate share in the U.S. would decline to an average of between 10% and 20% of the mortgage market compared with a historical average of closer to 75%.”

Bottom Line

The COST of a home is dramatically impacted by the mortgage component. Today, we can get a 5% mortgage and lock it in at 5% for the next thirty years!! Both of these opportunities may disappear in the future. You should take this into consideration if you’re looking to purchase a home.

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Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on March 2nd, 2011 12:09 PMLeave a Comment

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