Real Estate Market: Will a New President Help?

Nearly half of all home buyers (44%) believe the housing market will improve once a new President takes office in January, 2009, according to a new survey conducted by Harris Interactive® and commissioned by Move, Inc., operator of Realtor.com®.

Forty-eight percent of women and 41 percent of men who plan to buy a home in the current market said they think the housing market will get better once the new President is in office.

According to the survey, 81% of home buyers are still nervous about the current housing market and report the existence of barriers between them and home ownership. Despite these reservations, the survey indicates underlying demand for homeownership is healthy. While nearly half (41%) of current homeowners do plan to purchase a home again, 80% of all renters plan to purchase a home someday with 47% planning to purchase a home within the next five years.

What do yo think? Do you think having a new President in office is what the real estate market needs to get back on track? Or do you think it won't really make any difference? We'd love to hear your comments. Click the comment link below and sound off on this question.

Mortgage Points: Why Pay For Them?

If you are in the market for a home or considering refinancing your current mortgage, you probably have heard your mortgage professional talking about points. They may advise you to buy points or they may advise you not to, depending on your situation. The question is, do you really understand points and when it makes sense to buy points?

A point is 1% of the loan amount. So, one point on a $100,000 mortgage costs $1,000. Points can be purchased in increments down to an eight of a point. It's not any more complicated than that. When should you buy mortgage points?

The pros of doing this are really pretty easy to understand. By pre-paying your interest, you get a lower rate and therefore a lower payment for the life of your loan. The cons of buying points are that you must stay in the home for a certain period before you "break even" on the transaction.

For example, if you have a $200,000 mortgage and you buy two points, you will pay $4,000 for those points at closing. If buying the points lowers your payment $250 a month, you'll need to stay in your house at least 16 months to break even (16 × 250 = 4000). In this example, after 16 months you'll start making money. After several years, you'll save a lot of money.

One other thing to keep in mind about buying points up front: Points may be tax deductible, so there is an added benefit if you qualify for the tax deduction. Check with your tax advisor before you deduct points on your taxes.

If you have any questions or comments about points, just click the comment link below and sound off. We'll get back to you with answers to any questions you might have. We'd love to hear from you.

Home Prices Rise Four Straight Months - Is Anyone Listening?

Amidst the gloom on Wall Street about housing someone forgot to check the stats. The National Association of Realtors® has now reported four straight months of rising housing prices, but it seems no one is listening.

According to NAR statistics, the median home price has fallen from a high of $230,200 in July 2006 to a low in February 2008 at $195,600, a drop of 15%. Since February, however, it has risen steadily every month. By May the index had risen to $208,600, up $13,000 and a full 6.6%. Another indicator, the mean home price (otherwise known as the average home price), has also shown strength and has risen from a low of $242,000 also in February of this year to $253,100, a rise of $11,100 or 4.5%. It, too, has risen every month since February of this year.

So why the crisis? Why the continual gloom and doom reports? Is this the bottom?

No one can know for sure until we all look back and can clearly define where the bottom was, but the hard data is clear. The median price has risen four straight months. The average American is out there taking advantage of bargains in their local real estate market. They are not listening to Wall Street but following their own belief that the best time to buy is when no one else is, and they are out there buying. If this keeps up, February may prove to have been the low in prices.

What do you think? Have we passed the bottom of this mess? Use our comment link below to sound off and give us your opinion. Your email address will never be published here to protect your in-box from too much mail.

Sale / Rent Back Schemes: Not Always What They Seem

As the slumping economy and ensuing credit crunch takes hold, and more and more people are struggling with their mortgage repayments, a number of companies are springing-up who offer a "sell / rentback" scheme. This type of proposal involves the homeowner having their house bought from them, for a percentage of its market value, then offered the chance to be a tenant, negating the need to have to vacate the premises.

For some, it seems like the perfect opportunity to get rid of a mortgage problem and not have to deal with the hassle of moving. However there are some critics who state that the schemes may not be all they appear to be and might actually be more trouble than they’re worth.

Some homeowners have reported receiving only half the market value of their house, with others stating the rental agreement was not upheld. There is also the risk that the company to whom the house is sold may not be able to maintain the mortgage repayments, and you, as former owner turned tenant, will ultimately face eviction anyway.

Although the general idea behind a sale and rent back is sound, the way it is handled and put in place is not, and homeowners aren’t as protected as they might think they are. As soon as they have sold their house to one of these schemes, then they have very little control over and above what is written in their contract. This forms the basis of one of the main arguments against sell and rent back companies – that the landlord can set the purchase price, rent and terms of the lease, and is very likely to be abused.

There are a lot of calls for this industry to be more highly regulated, in order to give customers the protection they deserve, and if complaints about various companies continue to rise, then the government and Office of Fair Trading will have to step in at some point and put down some ground-rules.

Do you know anyone who has sold, or may be thinking about selling, their home on one of these "Sale Rent Back" schemes? Tell us about it by clicking the comment link below. Your identity is safe, as no email addresses will ever be published here with a comment.

Credit Ignorance: What You Don't Know CAN Hurt You

Consumers remain in the dark about how the credit-scoring system works in obtaining mortgages, insurance and credit cards, costing individuals as much as $28 billion each year, according to a recent survey.

Credit scores are a vital but often overlooked part of people's financial health. The number, also known as a FICO score, determines interest rates on credit cards and is being used increasingly by insurance companies to set rates, as well as by prospective employers in hiring decisions.

Taking steps such as paying bills on time and not maxing out credit cards will improve scores. Scores also can be improved by paying off debts, rather than moving balances between accounts. Paying more than the minimum due on credit cards also improves your FICO score. Missing a single payment by more than 30 days may lower your score by 25 to 50 points.

One of the most important steps individuals can take is to obtain their reports from one of the main credit-rating companies: Equifax Inc., Experian Group Ltd. and TransUnion. An easy way to do this is through the www.annualcreditreport.com Web site the three companies run together. Consumers can obtain one free credit report each year.

According to Stephen Brobeck, executive director of the Consumer Federation of America, "People responding to the survey didn't understand that credit scores are based on payment histories and how they've used credit in the past. Many respondents said factors such as income, age, marital status, and education levels influence credit scores. They don't."

A low credit score means you'll spend more money to borrow. Raising a credit score by 30 points translates into an annual credit card finance-charge saving of $105, according to Anthony Vuoto, president of Washington Mutual Card Services. If all consumers raised their scores by that margin, he said the savings would reach $28 billion.

Have you obtained a copy of your credit report since they became free once a year? If not, you should. Getting a copy of your credit report is also a good way to detect identity theft, because there will be evidence of anyone trying to open new accounts or obtaining credit cards in your name.