Mar 11, 2020 | Mortgage
There are many individuals who end up on a fixed income once they reach a certain age; however, their expenses aren’t always fixed. Sometimes, there is a large medical expense. In other cases, someone might need money for a new car or a home repair. In the event that someone needs cash quickly, one option is called a reverse mortgage.
Those who have equity built up in their home can draw upon this to help with unexpected expenses. This is a quick source of cash that many people overlook. At the same time, it is important to think about the pros and cons of a reverse mortgage.
The Pros Of A Reverse Mortgage
Taking out a reverse mortgage does have several benefits that everyone should know. First, there are no required monthly payments for any reverse mortgage loan. In addition, the money that people get from a reverse mortgage is not taxable. For many, this acts as a tax shield against any income that results from a reverse mortgage.
Next, nobody can ever owe more money than the value of the home when the building is sold. This prevents people from getting buried by potential interest payments. Finally, nobody will ever have to leave their home with a reverse mortgage. The owners retain the rights to the property.
The Cons Of A Reverse Mortgage
On the other hand, there are a few cons that people need to keep in mind as well. First, reverse mortgages are regulated by the federal government, which means that everyone needs to read the rules and regulations carefully. In addition, not everyone who owns a home will qualify for a reverse mortgage. They need to have enough equity built up in the home before the lender will consider it.
In order for someone to take out a reverse mortgage, a lien is going to be placed against the property. In the eyes of some, a lien must be paid off in the event the property is to be sold. Finally, in order to prevent a reverse mortgage from resulting in foreclosure, the building needs to be both maintained and insured.
Thinking about the pros and cons carefully can help someone decide if a reverse mortgage is right for them.
If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.
Mar 10, 2020 | Real Estate
According to data compiled by Realtor.com in the fourth quarter of 2019, it is still more affordable overall to rent versus buy a home — but just barely. The median monthly mortgage payment at the end of 2019 was $1,600, while the median monthly rent payment was $1,319. This is largely due to steadily-increasing rates, rising home prices, and near-record-low mortgage rates.
The Realtor.com study looked at 593 counties across the country. As compared to the fourth quarter of 2018, the average monthly cost of renting a home increased 4%, up from $1,254, while the average monthly cost of homeownership actually declined 1%, falling from $1,658. These numbers represent exactly 30% of a homeowner’s gross income and 25% for renters, based on median household income.
A Turning Tide
In a stunning 84% of the 593 counties that were part of the study, renting is less expensive than buying. The average home price in these areas is 260% higher than the national median, while rent prices average about 79% more than the national median.
Interestingly though, 26 of the 593 counties experienced the opposite for the first time ever: It became more affordable to purchase a home than to rent, even if only by a narrow margin. The largest metropolitan areas in which homeownership is more economical than renting now include Bronx County, New York; the greater Cleveland area; Columbia, South Carolina, and the surrounding areas; Indianapolis, Indiana; and Camden County, New Jersey, which includes Philadelphia, as well as cities in Maryland and Delaware. In 16% of the counties analyzed, buying a home is less expensive monthly than renting, which is up from 12% in 2018.
On the other end of the spectrum, several large counties made the switch from being more affordable to buy a home to more affordable to rent. The top five include the Wichita Falls, Texas, area; Harrisburg-Carlisle, Pennsylvania; Luzerne County, Pennsylvania; the Greensboro, North Carolina metro area; and Craven County, North Carolina.
With the costs of homeownership becoming more favorable over the past year, the gap between renting and buying a home is more narrow than it ever has been in the U.S. If you are in the market for a new home, be sure to contact your trusted real estate professional.
Mar 9, 2020 | Financial Reports
Home mortgage rates slipped to their lowest rates on record as uncertainty over the coronavirus continued to impact financial markets. Freddie Mac reported lower average mortgage rates for fixed and adjustable-rate mortgages.
Rates for 30-year fixed-rate mortgages fell by 16 basis points to 3.29 percent; the average rate for 15-year fixed-rate mortgages was also 16 basis points lower at 2.79 percent.
Mortgage rates for 5/1 adjustable-rate mortgages were two points lower on average at 3.18 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable rate mortgages. The 10-Year Treasury Yield, which tracks with mortgage rates, slipped to 0.90 percent last week; this was the first time the yield rate fell below one percent.
Homeowners rushed to take advantage of low mortgage rates through refinancing, but homebuyers could not gain the same benefits from record-low mortgage rates due to persistent shortages of available and affordable homes for sale. Analysts advised against waiting to refinance as home mortgage rates aren’t expected to fall much lower.
Construction Spending Rises, Fed Cuts Key Rate as National Unemployment Rate Falls
Analysts have long relied on home builders to ease chronically short supplies of homes for sale. Construction spending rose to 1.80 percent in January as compared to December’s rate of 0.20 percent. Analysts expected January’s construction spending to rise to 0.90 percent.
The Federal Reserve cut its target federal funds rate range by 0.50 percent to 1.00-1.25 percent.in a move to relieve the impact of the coronavirus outbreak on the economy. The Fed may cut its key rate by an additional 0.25 percent when the central bank’s Federal Open Market Committee holds its scheduled meeting on March 17-18th.
Labor-sector reports showed mixed results for job growth. The government’s Non-Farm Payrolls report showed 273,000 public and private-sector jobs added in February, this pace was unchanged from January. ADP reported 183,000 jobs added in February as compared to 209,000 jobs added in January.
First-time unemployment claims fell to216,000 claims filed from the prior week’s reading of 219,000 new claims filed. Analysts expected 217,000 new claims filed. The national unemployment rate dropped to 3.50 percent in February as compared to January’s reading of 3.60 percent.
What’s Ahead
This week’s scheduled economic news includes readings on inflation and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.
Mar 6, 2020 | Mortgage
There are many homeowners who hire contractors to make repairs or upgrades on their homes. It is critical for home improvement contractors to follow all rules and regulations set forth by the law. These regulations have been set forth under the Home Improvement Consumer Protection Act, or HICPA.
An Overview Of The Home Improvement Consumer Protection Act
The Home Improvement Consumer Protection Act was put forth to ensure that homeowners and contractors come to an appropriate agreement. Some of the rule and regulations that are included in the Home Improvement Consumer Protection Act include:
- All contractors need to obtain a registration number
- Home contractors are required to register with the Office of the Attorney General
- All home contractors need to pay the required registration fees
Finally, the Home Improvement Consumer Protection Act also specifies the various terms that need to be included in each agreement set forth by homeowners and contractors. Any contractors agreed to by contractors and homeowners need to comply with the Home Improvement Consumer Protection Act. The purpose of this act is to protect homeowners against fraudulent contractors.
What Happens If An Agreement Does Not Follow The Rules?
If an agreement does not abide by the regulations included in the Home Improvement Consumer Protection Act, then there might be liability in a civil court. Furthermore, there could even be criminal charges that result.
In the event that a homeowner enters into civil litigation against a home contractor, the first item that lawyers will look into include the regulations under the Home Improvement Consumer Protection Act. If the contractor violated any of the regulations, the HICPA may also specify penalties that might be levied against the contractor.
When Does The Home Improvement Consumer Protection Act Apply?
There are only a few exceptions where the HICPA would not apply to a home improvement job. Even though the definitions under the HICPA are very broad, this act does not apply to contractors who earn less than $5,000 of taxable income in a given year. Finally, the HICPA applies only to home improvements. It does not apply to the construction of a new home. The act also does not apply to the sale of any home appliances.
If you are in the market for a new home or interested in listing your current property, be sure to consult with your trusted real estate professional.
Mar 5, 2020 | Real Estate
Investing in real estate remains one of the best ways to accumulate wealth in America. There are six ways to get started in real estate investing. One way does not require any investment capital, just an investment of your time. Ways to get started include investing in a REIT, buying an incoming-producing property, using a buy-and-hold strategy, flipping houses, crowdfunding, and wholesale deals.
Investing In A REIT
A real estate investment trust (REIT) is an investment instrument that offers a proportional ownership interest in a real estate portfolio that follows a particular investment strategy. A private REIT has a minimum investment that could be $1,000 to $25,000. A publicly-traded REIT sells in shares, just like stocks on the stock exchange. The investment minimum is just one share and some REITs have share prices under $100.
Income-Producing Property
Buy a home and rent it out. For this strategy to work, you do have to deal with the tenant headaches, unless you can afford to outsource the landlord’s work to a property management company.
Buy-And-Hold Strategy
Buy raw land for cheap on the outskirts of a growing town and wait the time necessary for the town to overtake your land for the opportunity to subdivide and develop it for a high price.
Flipping Houses
For those who like doing contracting work, or who partner up with a contractor, there may be profit in buying some fixer-upper homes to renovate and sell for more than the acquisition price plus the renovation costs.
Crowdfunding
Crowdfunding is a way to participate as a small investor in real estate deals and also to fund your own deals.
Wholesale Deals
Wholesale deals can be accomplished with no money down. You work for other investors and secure properties at lower than market prices by controlling them with an offer that is accepted and then assigning the deal to the investors for a fee.
Summary
If you have been thinking about becoming a real estate investor, now is the time to do something about it. Even if you start with only $100 by buying shares in a REIT, at least you got started. Once you get your real estate investment strategy going, you will find it to be a very rewarding experience, if you are careful and make wise decisions.
Be sure to associate with an expert REALTOR® in your marketplace area to get sound advice and information.
