Interest rates have been kept artificially low for several years by the Federal Reserve in an effort to strengthen the economy. Policy is shifting to allow them to seek their own natural level and that will surely result in higher mortgage rates. Rates on 30 year fixed mortgages are up over 1% from January, 2013.
Foreclosure activity is down, new home starts are up and prices have been increasing in most markets for two years. Most experts agree that the cost of housing is going up.
If the price were to go up by 2% and the mortgage rate by 1% while a buyer is “sitting on the fence” making a decision, the payment would go up by almost $175.00 each and every month for the term of the mortgage. Even if a person can afford to make the higher payments, what could they have done with that extra $175.00 a month? Buy furniture? Car payment? Principal reduction? Retirement contribution? Save for a rainy day?
Click here to determine what the cost of waiting to buy will be using your price home.
Most would-be buyers and sellers believe the real estate “deal” is negotiated at the signing of the contract. By that point, the counteroffers have been made and the back and forth has happened, so it’s easy to assume that the deal will go on auto-pilot until closing.
The reality, though, is that in many cases, the deal-making and negotiations only start at the contract signing. Even in more competitive real estate markets, negotiations still happen once in escrow.
For example, if you’re a buyer, the property inspection or sellers’ disclosures — maybe the HVAC system has some issues — may prompt you to seek a credit. But where do you go from there?
Here are three tips for negotiating repairs after a home inspection.
1. Ask for a credit for the work to be done
The sellers are on their way out. If the property is moving toward closing, they’re likely packing and dreaming of their new home. The last thing they want to do is repair work on their old home. As a result, they may not approach the work with the same conscientiousness that you, as the new owner, would. They may not even treat the work as a high priority. If you take a cash-back credit at close of escrow, you can use that money to complete the project yourself. Chances are you may do a better job than the seller, too. Finally, if you get the credit, there will be less back and forth to confirm the work has been done.
2. Think ‘big picture’
If you know you want to renovate a bathroom within a few years, then you likely won’t care that a little bit of its floor is damaged, that there’s a leaky faucet or that the caulking needs to be redone. These things will get fixed during your future renovation. However, the repairs are still up for negotiation. Asking the seller for a credit to fix these issues will help offset some of your closing costs.
3. Keep your cards close to your chest
A good listing agent will walk the property inspection with you, your agent and the inspector. Revealing your comfort level with the home or your intentions, in the presence of the listing agent, could come back to haunt you in further discussions or negotiations.
For example, if you mention you’re planning a gut renovation of the kitchen, the sellers will certainly hear about it. And they’re going to be less likely to offer you a credit back to repair some of the kitchen cabinets. Also, if the listing agent hears you tell the inspector that you love the home so much you don’t mind replacing the HVAC system, the agent will surely let the sellers know about that.
Eyes wide open
A word of caution: You should never complete the original contract assuming that you can negotiate more as a result of the property inspections. If it’s a competitive market and the property inspection comes back flawless, there’s nothing to negotiate. If you attempt to negotiate anyway — to recoup what you lost in the initial contract negotiations — you risk alienating the sellers and possibly giving them an incentive to move on to the next buyer.
You need to go into escrow with your eyes wide open. A real estate transaction is never a done deal until all the money has been wired in and the deed transferred. Prior to signing the real estate contract, your main concern is that you may be competing with other buyers. Once you’re in escrow and doing inspections, however, it’s just you and the sellers. Stay on your toes. Otherwise, you may risk losing out on further viable negotiation opportunities, which could lead to buyer’s remorse.
Hermann Wolz of La Conner, Wash. doesn't have to imagine. He's one of 25,000 people who now use Nomorobo, the free service that spots robocalls, blocks them and automatically hangs up.
"It's easy to install and it works real well," Wolz said. "I noticed a change right away."
Nomorobo launched about three months ago by Aaron Foss, a Long Island software developer. The cloud-based technology works for people who have Internet-based VoIP phone service. Last year, Foss won the Federal Trade Commission's Robocall Challenge, which came with a $25,000 cash prize.
He promised his call-screening service would work, but there was no way to be sure until it went public.
are now blocking 48,000 robocalls per week and getting tons of positive
feedback," Foss said. "The demand has been absolutely amazing."
How does it work?
Nomorobo uses a service called "simultaneous ring" that is provided by most VoIP phone companies. This feature allows customers to have numerous phone lines ring at the same time.
If your phone company offers simultaneous ring and you sign up for Nomorobo, all of your calls will also go to Nomorobo's computers. The company uses caller ID and call frequency information to screen them.
When Nomorobo decides a call is a robocall, it hangs up after the first ring. That's how you know a call was blocked.
"The phone rings once and then it just magically stops," said Eric Giers, a business owner in Milford, Conn. "And then you just smile and say, 'I got ya.'"
Giers has four business phone lines. Before Nomorobo, they were constantly ringing with robocalls. Not anymore.
"It's incredibly peaceful here," he told me. "It's like a gift from heaven."
You don't need to have caller ID on your phone for this to work and Foss promises the information he collects is anonymous to protect subscribers' privacy.
There are currently 1.2 million phone numbers in the company's database of blacklisted phone numbers. These known robocallers come from complaints filed with state and federal regulators.
The system isn't perfect. Robocalls do slip through. Foss encourages subscribers to report those numbers so they can be added to the list. It's crowd-sourcing to stop illegal telemarketing.
Nomorobo expanding ... sort of
"We are excited about providing our customers with another alternative
to block telemarketers and robocalls," said Patti Loyack, vice
president of broadband voice for Comcast cable.
Lindsay, general manager of Home Phones at Time Warner Cable, said,
"The last thing we want is for someone to have their enjoyment of our
service affected by these nuisance calls."
Nomorobo still does not work with any traditional landline phone service because they don't offer the simultaneous ring feature it requires.
The landline companies say they support Foss, but are limited by their older technology.
"It would be like trying to provide digital service on an analog TV. It just can't be supported," said Kevin Rupy, director of policy development at the United States Telecom Association (USTelecom).
He said traditional phone companies have to be very careful about how they address the robocall issue, because they are governed by regulations that do not apply to cable companies and other VoIP phone services. For example, the FCC requires them to complete all calls and specifically prohibits them from blocking any calls.
"We're not kicking the can down the road, we're not punting on this issue, but we have to be very cautious about how we implement any type of service like this," Rupy said. "It's an extremely complex technological and legal issue."
The industry is making a massive and expensive switch to Internet-based voice technology which would support a Nomorobo-type service. Rupy points out that many phone companies that offer VoIP service (such as AT&T U-verse and Verizon FiOS) are already compatible with Nomorobo.
He said phone companies are working to create standards that would solve the robocall problem for all types of telecommunication networks. "There is hope" for people with landline phones, he said, but a solution is probably one to two years away.
Sen. Claire McCaskill, D-Mo., chairwoman of the Senate Subcommittee on Consumer Protection, doesn't want to wait that long.
"It's time for the telecom industry to do its part to help combat illegal robocalls," McCaskill said in a statement. "Nomorobo and other technologies offer consumers greater options to combat this problem, and it's disappointing that these solutions have not been embraced by our phone companies."
McCaskill said it's become clear that Congress must act to "provide regulators with a robust set of tools to fight these fraudsters." She plans to introduce legislation to do that in the coming weeks.Note: Nomorobo does not work for wireless phones, but there are a number of robocall blocking apps are available for Android devices, such as PrivacyStar, mrnumber and Blacklist Plus.
Higher mortgage rates and home prices are conspiring against potential homeowners. To see where consumers may be priced out if rates hit 5 percent -- or 6 percent -- real estate information website Zillow Inc. screened 100 major metropolitan markets, using the average percentage of monthly income going to mortgage payments from 1985 to 1999 as a base figure for affordability.
Here we highlight 10 places where 5 percent mortgages, which Zillow expects we'll see by year end, would push that percentage of monthly income (based on income and wage growth data from the Census Bureau and the Bureau of Labor Statistics) furthest above the average. We include Zillow's median home values as of September 2013 and its forecast of values a year from then, which go into affordability calculations, as well as analysis of each market by Zillow chief economist Stan Humphries. We order cities by their distance above the average. We then do the same for 10 cities where a 6 percent rate would hurt the most (there's some overlap). Californians, we feel for you.
For six years, Ingrid Boak, who travels a lot for work as a racehorse trainer, ignored mail from her homeowner association.
Boak, of Lexington, Kentucky, says the letters were requests for $48
in annual fees for upkeep of the tidy neighborhood of one-story brick
homes. Because she didn't use the clubhouse or pool, or participate in
social activities sponsored by the association, she didn't think she
needed to pay. Last September, while she was away, a neighbor called to
tell her about a handwritten sign tacked to her front door. It said her
house had been sold.
Masterson Station Neighborhood Association had foreclosed on her $120,000 home because she had $288 in unpaid dues, according to the association's lawyer, Nathan Billings. Boak was sent nearly 30 notices before her property was foreclosed on, he said; the dues were mandatory association fees.Boak says she does not remember seeing a foreclosure notice, and no one served her papers in person. She likens the experience to her father's in East Germany, where the communist state took away property rights. "Now I'm 75, and the same thing is happening to me, in America," she says. With her once-good credit damaged, she is unable to buy another house, and now rents her old one from the new owner for $900 a month.
Fewer potholes, fewer rights
Homeowner associations first took off in the 1970s as local
governments looked for a way to offload costly services, such as snow
removal and road repair. Municipalities have encouraged their growth
since through tax incentives and zoning laws.
Today some 63
million Americans live in homeowner associations, up from 2.1 million
in 1970. Four out of five buyers of new homes, including condominiums,
end up in such communities.
Supporters point out that they provide services and amenities that preserve the community's character and property values. Some 70 percent of residents say they have a positive experience living in them, according to the Community Associations Institute.
"I live in a community association that
provides a wonderful home for me and my family, a wonderful neighborhood
and community pool, and that's the way many Americans feel," says
Robert Nordlund, a resident of Calabasas, California, and founder of
Association Reserves, which helps associations with budget and
But people who buy houses in an
association often don't bother to read the agreements that spell out
what covenants owners are obliged to observe. They may unknowingly
forfeit the right to fly a flag in the front yard, let a shrub grow any
old size, or allow their kids to shoot hoops in the driveway. Homeowner
associations typically have the right to place liens against wayward
residents. Either through a court or state-regulated process, they can
then foreclose on houses worth hundreds of thousands of dollars even for
a few hundred dollars of unpaid debt, much like a municipality can for
unpaid property taxes or a bank for a few missed mortgage payments.
Failure of funding
Foreclosures on delinquent properties by homeowner associations were almost unheard of before the financial crisis of 2008. Now lawyers and real estate researchers say they are becoming more common as association funding bases shrink because of previously foreclosed homes' standing empty.
About 70 percent of association-governed communities are
underfunded, up 12.5 percent from 10 years ago, according to
Association Reserves. The average association has financial reserve
accounts—the amount required to maintain infrastructure and common
areas—that are only funded at 52 percent, down from 60 percent a decade
ago, its research shows.
Tyler Berding, an attorney whose
firm is consulting with a San Francisco condo homeowner association,
suggests the problem is one of governance. "It's very much akin to the
public pension crisis," he said. "Homeowners' associations are simply
not putting enough money away to make the repairs and replacements they
will have to make over time." The condo in question is having to levy a
$70,000 special assessment against each resident to restore the
Dog DNA testing
Another reason for underfunding is the inexperience of administrators,
often volunteers from the community itself who possess some of the same
powers as banks and governments but operate with little of the
oversight. Even though these board members oversee what are often
multimillion-dollar operations, they require no licensing or training to
do their jobs.
Without that discipline, many are now
responding to the homeowner association funding crisis by aggressively
going after residents for unpaid bills and penalizing them for
infractions that would have been overlooked in the past.
Brian Hanrahan of Columbia, Md., had a truck that was running fine. But
his condominium association board, believing otherwise, towed it away,
using a rule that allowed the removal of inoperable vehicles. The
association slapped him with a $200 bill for the towing, which Hanrahan
decided to fight in court.
The ensuing litigation cost the
association about $175,000. In court documents it said about $70,000 of
that was Hanrahan's responsibility because of what it spent "enforcing
the governing documents."
Hanrahan won the case and
subsequent appeals in a Maryland court. According to his lawyer, Larry
Holzman, the case was settled for an undisclosed sum. Holzman has since
been hired by the association and declined to comment on its behalf.
Another association, the Villa Medici Condominiums in Jacksonville, Fla., decided to cancel its dog-waste removal service to save money and force errant residents to comply with community rules. In November the board instituted mandatory, $35 DNA testing for all dogs by a company called PooPrints, as a way to identify members who do not pick up after their pets. Delinquent owners face a fine of $100 a day, which can eventually rise to $1,000 for repeat offenders.
"People are furious," said Gunilla Craven, a resident and former board member.
The association did not respond to requests for comment.
Residents can fight something like a foreclosure notice by hiring
lawyers, but not everyone wants to take on expensive litigation the way
Hanrahan did. Boak, who lost about $30,000 on the value of her house
because of the foreclosure, said she didn't want to lose any more on a
Over the past decade, a citizen movement has grown
to curb the power of homeowner associations, which remain largely
unregulated. Nevada is just one state that has appointed an ombudsman to
field complaints from homeowners; California and others have passed
statutes limiting the assessment increases boards can make without
Boak's local Urban County Council
member, Shevawn Akers, is pressing Kentucky state government to draft
legislation that would prohibit a homeowner association from
foreclosingor at least from doing so before it proved that the homeowner
had received written notice. State politicians have yet to take up her
"This is just beyond overboard," Akers said.
Boak isn't the only one who paid a price for ignoring her mail. For
four years, Colorado's Woodmen Hills Filing Number 11 Design Review
Council sent Christopher Wright notices for late payments that
eventually reached $900, said the homeowner association's attorney,
Jerry Orten. But Wright, who told southern Colorado NBC affiliate KOAA
that he thought the notices were fines for keeping his kids' bikes
outside, never responded.
After nearly a decade of disaster that reached levels of despair not seen since the Great Depression., 2013 was more than a turnaround year. Within its short life, it changed housing from a liability to an asset so favorable that it had to power to take the rest of the nation’s economy along for its ride upward, in the eyes of the Bernankes and Obamas.
In some ways, it changed the housing economy for years to come. Like a human life, it’s true place in history won’t be known until it is gone and some time has passed, but it will be hard to argue with the hard numbers of what was achieved in 2013.
Was 2013 a good year for you? What are you hoping 2014 will bring? Here’s wishing that 2014 brings you even better returns than the year past.
BURGLARS USE SOCIAL MEDIA
Q. I read that burglars use social media to target victims. How do they do it?
A. Criminals only need a rough idea of where you live — and access to Google Street View — to start casing your home. Using check-in apps and posting vacation photos broadcasts to the world that you're not at home right then. Be sure to check your privacy settings — and wait until you're safely home to share vacation stories.
NEW WAYS THIEVES STEAL YOUR IDENTITY
Q. I keep hearing about new identity-theft scams. What are they?
A. Identity thieves are using public hotspots to set up fake Wi-Fi networks. So, you might think you're logging onto public Wi-Fi, but end up signing onto a hacker's network instead. If you're in a café or restaurant, ask and make sure you're joining a legitimate network. Medical identity theft is another fast-growing threat. It happens when a thief uses your name and information to receive medical services.
APPS TO BEAT TRAVEL BOREDOM
Q. I travel for business, which means I have a lot of airport downtime. Do you know any apps that will help pass the time?
A. Word Search is a digital version of those classic word-search books. It's fun, addictive and gives your brain a good workout. Trivia hounds will love QuizUp. Or pass the time by enjoying a free and uncut movie on the Crackle app.
CAPTURING THE BEST HOME VIDEOS
Q. I want to take home videos with my digital camera. Any tricks or tips?
A. Avoid over-using the digital zoom feature on your camera — your crisp images will become blocky and fuzzy. Be sure to use multiple angles. Start with a wide shot to establish location, then slowly zoom in on interesting faces and details. Invest in a cheap tripod — it's an easy solution to camera handshake.
THE GOOD AND BAD OF ONLINE BANKING
Q. I still use my checkbook to pay bills. But my wife wants to switch over to online banking. What do you think?
A. Online banking is convenient, simple and often free. You can monitor accounts and pay bills from pretty much anywhere in the world. The downside is even bank-level encryption can't protect you against a major security breach. And, of course, no matter how easy online banking is, there are times when you will want to talk to a real person.
Today’s buyers are more sophisticated than in the past due to the abundance of information available to the public on the Internet. There are seemingly inexhaustible sites with homes for sale, valuation estimates and virtual tours. There are extensive mapping sites with satellite images, traffic conditions, entertainment, shopping and other points of interest.
There are actually three legitimate types of property showings. A knowledgeable buyer can view a home for sale online and make a reasonable determination of whether the home will fit their needs. Occasionally, buyers will drive by a home to get a feel for the home and also the neighborhood which might cause them to eliminate any further examination or consideration.
The third type, the physical showing, certainly gives the buyer the opportunity for the closest scrutiny but is generally reserved for properties that have passed the inspections of at least one other type of showing.
Sellers should be aware of the different types of showings and that a sales agent’s job is to help the buyer find the right home. The listing agent’s job is to market the home so that the right buyer finds it either through their own efforts or that of the buyer’s agent.
An initial investment now will generate immediate returns through energy costs and because they last longer, you won’t need to replace them for years.
The life of LED bulbs is projected to be from 35,000 to 50,000 hours compared to an incandescent bulb at 750 to 2,000 hours. For normal home use, a LED bulb could last more than 20 years.
80-90% of the energy used by fluorescent and incandescent bulbs is wasted by the heat generated. In contrast, cool LED bulbs converts 80% of the electrical energy to light energy.
• The color of LED lights is bright white, more like daylight, instead of the warm yellow of incandescent or the greenish tint of fluorescent bulbs.
• LEDs light up instantly instead of building to their intensity like some of the fluorescent bulbs.
• LEDs are more durable because they don’t have filaments or thin-glass bulbs like incandescent and fluorescent bulbs.
Shop around to find the best price on LEDs. If the LED only lasted
20,000 hours, you might have to purchase 20 incandescent bulbs during
that same period of time. Using the chart below, you can see that the
LED uses about 10% of the wattage without compromising on the
Getting a mortgage can mean keeping track of a lot of moving parts. Savvy shoppers know to ask lenders about interest rates, closing costs and how much they can borrow.
But even seasoned buyers may not know to dig a little deeper. Here’s a look at five key things homebuyers often forget to ask mortgage lenders:
What’s the Annual Percentage Rate? Interest rates get advertising attention, but you need to pay equally close attention to the annual percentage rate (APR). The interest rate, or note rate, is stated on the mortgage note and is used to calculate your monthly payments. But it may not reflect the overall cost of borrowing.
Let's say Lender X offers you a 30-year fixed rate mortgage at 4.5% interest. Lender Y offers the same mortgage for 4.25%. This would seem to be a no-brainer. But we're missing some key information, namely all the other costs associated with the loan, from closing costs and origination fees to mortgage insurance and more. Lender Y may have the lower rate, but this loan could cost you more in the long run if their costs and fees are higher.
That's why you need to look at the APR, which factors in those costs beyond just your interest rate. It's also why lenders are now required to disclose APR. Otherwise, they could hide fees and charges behind an incredibly low — yet ultimately misleading — interest rate.
Do I Have to Escrow Taxes and Insurance? Homeowners paid on average about $800 per year for homeowners insurance in 2008, the most recent year for which data is available, according to the Census Bureau. The average property tax bill that year was $1,200. A lender may require you to escrow funds to cover those bills. Instead of writing a $1,200 check at year’s end to pay those taxes, a lender will have you split that total into 12 equal payments.
Your mortgage payment would include that month’s portion of your property tax and homeowners insurance bills. The money sits in an escrow account until your lender pays the bills on your behalf. Some homeowners would prefer to pay those bills all at once rather than part with a portion each month. Whether you have to escrow funds can depend on where you live, your loan-to-value ratio and other factors.
Is There a Prepayment Penalty? These have gone out of vogue in the mortgage industry. But you really don’t want to be the exception. Ask lenders if there’s any financial penalty for paying off the mortgage early. A clause like this could potentially impact your ability to refinance or even sell the home. The good news is government-backed loans like FHA and VA loans don’t allow prepayment penalties as a rule. Fannie Mae doesn’t purchase mortgages with prepayment penalties, and Freddie Mac will follow suit beginning next month.
Is There Anything I Shouldn’t Do Before My Loan Closes? Don’t confuse loan preapproval with loan approval. Lenders will double-check financial information, employment status, credit scores and other important metrics before giving your loan a green light. Don’t change jobs if you can help it. Don’t move lots of money around, or suddenly make big deposits. Save your furniture-buying spree for after your loan closes. Any changes to your credit or your overall financial stability can spell major trouble for your credit file. If you absolutely have to make a major change, be sure to update your loan officer as soon as possible.
Who Will Service My Loan? It’s kind of jarring for some first-time homebuyers, but you may not send your mortgage payment to the lender that originated your loan. Many lenders sell their loans and the right to service them. Companies are legally required to notify you regarding these kinds of changes. The mortgage servicer will receive your monthly payment and manage your escrow account for taxes and insurance. This is also the entity you’ll turn to if you run into problems paying your mortgage on time. This isn’t uncommon or a harbinger of trouble. Loans and servicing rights get sold all the time. But it’s important to know who will be responsible for processing your payments and ensuring your bills get paid on time.