5 reasons homeownership trumps renting

NEW YORK – Aug. 31, 2010 – The seemingly endless run of bad housing news is discouraging some potential homebuyers from considering a purchase. But the truth is that the advantages of homeownership have very little to do with investment gains, and a lot to do with personal comfort and satisfaction.

Here are five of them:

• Be your own landlord. The bank can only kick you out if you don’t pay; a landlord can be much less dependable – deciding to sell the property or choosing to live there themselves.

• Paying the principal is forced savings. Yes, it’s possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.

• Fixed-rate mortgages never rise – and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in real bargains.

• Good schools. Family-sized rentals are harder to come by in areas with excellent public schools.

• Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned – not rented.

Source: The New York Times

5 things to know about Facebook Places and your privacy

DETROIT – Aug. 30, 2010 – Facebook has brought the geo-tracking phenomenon to the masses. But there are pitfalls.

And, even if you’re not on Facebook, there are some things you need to know about the new check-in service Places to protect your privacy.

Location services like Foursquare and Gowalla – which allow users to “check in” to places, sharing their precise current location with a group of friends using GPS technology on smart phones – have grown considerably this year, but have nowhere near Facebook’s market-leading 500 million-plus active users.

For some, Facebook has been a safe way to stay in touch with friends in a mostly closed environment. The dawning of Places, though, calls some of that into question.

The unveiling of Places last week set off some hand-wringing over the increasing intrusions the social Web is making into our everyday lives.

All Facebook users are now, by default, part of the Places ecosystem. And, even if you’re not a Facebook member, someone in your home could create a listing on your behalf – whether you want him to or not.

Here’s what you need to know to be safe and informed.

1. Friends can share your location
Facebook lets your friends check you in to locations without your consent.

This means that when you’re out for a night on the town, a friend can check in and tell Facebook everyone he or she is with. Then, all your Facebook connections know where you are, even if you didn’t want to share your location with the whole World Wide Web.

To turn off this feature, head deep into your privacy settings and disable the entry called “Friends can check me in Places.”

2. Strangers can see you nearby
Even if you choose to be seen only by your friends, you could still be showing up to strangers when they check into the same location under a section called “People Here Now.” This is intended to show Facebook users who else is at the coffee shop, movie theater, restaurant, etc.

You can disable this under “Things I share” in Facebook’s privacy settings.

3. Place listings are public
It’s important to know that Facebook Place listings – the pages created when you check into a new place – are public. So, if you create a listing to check into your house when you get home from work, that page – say, “Mark W. Smith’s house” – is searchable on the Web even for those who aren’t connected with you on Facebook or even have a Facebook account.

Each page also automatically includes a handy interactive map – powered by Microsoft’s Bing – to locate the exact location. So don’t check into your house if you don’t want the entire Internet knowing exactly where you live.

If you’re curious if a listing has been created for your home or other private place, launch touch.facebook.com on a GPS-enabled smart phone. Under Places, you’ll be able to see a listing of nearby Facebook locations.

4. Opportunities for businesses
Facebook allows business owners to manage the page that pools the check-ins of its patrons. Page owners can then use that page to keep customers updated on new services, merchandise, menu items, etc.

First you have to prove to Facebook that you own the business you’re trying to manage online. To do so, click the link that says, “Is this your business?” and follow the instructions to take ownership. You’ll need to supply proof by attaching a digital copy of a business license or certificate of incorporation.

5. Integration should be coming
Facebook says it is partnering with the previous location leaders Foursquare and Gowalla so that users of those services can send their location to Facebook Places automatically. These connections have not yet been enabled, though, and it’s unclear how willing other location services will be to play nice with Facebook, which will almost undoubtedly render their services obsolete.

© 2010 Detroit Free Press

Mortgage rates hit low of 4.36%

Mortgage Rate Trend Index

Rates keep dropping but most mortgage experts polled by Bankrate.com continue to think they couldn’t drop more. Fully half (50%) predict no change over the short term; 30% foresee a decline; and the remaining 20% expect an increase.

 NEW YORK – Aug. 27, 2010 – Mortgage rates fell to the lowest level in decades for the ninth time in 10 weeks as concerns grow that the economy is weakening.

Mortgage buyer Freddie Mac said Thursday that the average rate for a 30-year fixed loan was 4.36 percent this week, down from 4.42 percent last week. That’s the lowest since Freddie Mac began tracking rates in 1971.

The average rate on a 15-year fixed loan dropped to 3.86 percent from 3.90 percent the previous week. That’s the lowest on records starting in 1991.

Rates have fallen since spring as investors shifted money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.

The low rates have fueled borrowers to refinance their home loans. Refinancing is at its highest level since May 2009 and made up 82.4 percent of all new loan activity.

However, low rates haven’t budged home sales, Those have been stymied by high unemployment, slow job growth and strict credit standards, and have dropped sharply since the expiration of homebuying tax credits in April.

To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Average rates on five-year adjustable-rate mortgages were unchanged at 3.56 percent. Rates on one-year adjustable-rate mortgages fell to an average rate of 3.52 from 3.53 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for 30-year and 1-year mortgages. They averaged 0.6 of a point for 15-year and 5-year mortgages.

Copyright © 2010 The Associated Press

Shorter-term mortgages gain favor

WASHINGTON – Aug. 18, 2010 – More homeowners are refinancing into shorter-term loans, saving a bundle by taking advantage of the lowest mortgage rates in decades.

Nearly a third of borrowers refinancing fixed 30-year loans in April through June picked loans with 15- or 20-year terms, according to mortgage finance giant Freddie Mac. It was the highest share since 2004.

The trend has been driven by near-weekly drops in rates all summer.

Average rates on fixed 15-year loans fell below 4 percent for the first time last week, dropping to 3.92 percent, according to Freddie Mac. A year ago, the average 15-year rate was 4.68 percent.

Meanwhile, the rates on fixed 30-year loans now average 4.44 percent, Freddie Mac found.

At today’s rates, a borrower with a 30-year loan at a 6.5 percent interest rate and a $200,000 principal balance could save some $70,000 in interest over the life of a shorter 20-year loan.

“It’s borrowers looking to build equity more quickly, and borrowers have generally been paying down their loans more quickly,” says Keith Gumbinger, vice president of HSH Associates, a publisher of mortgage and consumer loan information.

Peter Iche, president of Carthage Federal Savings and Loan Association in Carthage, N.Y., says he’s seen an increase in people who are approaching retirement refinancing to shorter-term loans.

“They realize that they can afford a heavier payment,” he says. “They’re getting closer to retirement where they are willing to suck it up for a few years.”

Most of the customers trying to refinance to shorter-term loans usually qualify, he says. And with rates as low as they are now, “For the group of people that can afford to do it, it’s a good time to wrap things up.”

Many can’t, however.

With rates at record lows, a higher volume of refinancings would be expected, says Mark Zandi of Moody’s Analytics.com. But high unemployment and lost home equity is preventing many borrowers from doing so, he says.

Application volume for both home-purchase mortgages and refinancings has been tepid because many potential borrowers lack high enough credit scores, sufficient income or enough equity in their homes to qualify for new loans.

Borrowers’ monthly payments rise when they refinance into a shorter-term loan, so lenders generally require borrowers to have higher monthly incomes to get a 15-year mortgage than a 30-year.

In addition, because property values in many areas have fallen sharply the past three years, about a quarter of residential properties with mortgages are worth less than the loan balances.

Copyright © 2010 USA TODAY

Facing foreclosure? New Fannie Mae website helps consumers find options

WASHINGTON – Aug. 16, 2010 – Fannie Mae launched a new website to help consumers understand their options when facing foreclosure and the possible loss of their home. Called KnowYourOptions.com, it outlines the choices available to homeowners struggling to make mortgage payments, and provides guidance on how they can contact and work with their mortgage company to find a back-up plan.

KnowYourOptions.com provides information in both English and Spanish. Features include:

• Interactive Options Finder helps homeowners identify options.
 
• Calculators help borrowers understand how many of the options would work in their situation, including calculations about refinance, repayment, forbearance, and modification.

• Videos feature real homeowners discussing how they received help; others feature housing counselors giving advice.

• Forms – including a financial checklist and contact log – to help borrowers prepare for a meeting with their mortgage company or housing counselor.

• Information on refinancing, repayment plans, forbearance, modifications and Deed-for-Lease.

• Out-of-the-box alternatives, including short sales and deeds-in-lieu for homeowners who recognize that they can no longer afford their mortgages, but want to avoid a foreclosure on their credit history

More info: www.KnowYourOptions.com.

© 2010 Florida Realtors®

Mortgage rates hit 4.44%

Mortgage Rate Trend Index

Even though rates broke another record, 40% of experts polled by Bankrate.com this week expect new declines, while 47% predict no change over the short term. Only 13% foresee an increase.

WASHINGTON – Aug. 13, 2010 – Growing pessimism over the weak economic recovery pushed mortgage rates to the lowest level in decades for the seventh time in eight weeks.

The average rate on a 30-year fixed mortgage hit 4.44 percent this week, mortgage buyer Freddie Mac said Thursday. And some brokers say homeowners looking to refinance have even managed to do so for as low as 4 percent.

Still, cheap rates have done little to boost the struggling housing market. Instead, they are highlighting investors’ fears that the rebound is stalling and the country could be slipping back into a recession.

Investors are shifting their money away from stocks and into safer Treasury bonds. That is sending Treasury yields lower. Mortgage rates track those yields.

And the Federal Reserve is pushing those yields down even further. The central bank said Tuesday it would buy Treasurys to help aid the recovery, using the proceeds from debt and mortgage-backed securities it bought from Fannie Mae and Freddie Mac.

That move alone is unlikely to push average rates down to 4 percent, said Bob Walters, chief economist at Quicken Loans. But average rates that low are still a possibility if the economic outlook worsens even further.

“The silver lining to a bad economy is that interest rates fall,” Walters said. “If you can lower your debt burden by refinancing, that’s great.”

Up to now, low rates have failed to spark a struggling housing market. Slow job growth, a 9.5 percent unemployment rate and tight credit standards have kept people from buying homes. Applications to refinance have grown but remain well short of a massive boom.

Overall home loan applications rose only 0.6 percent last week from a week earlier, the Mortgage Bankers Association said Wednesday.

For those homeowners with solid finances, the opportunity to refinance below 4 percent is persuading some to consider 15-year fixed loans. Those average rates dropped to 3.92 percent, down from 3.95 percent last week and the lowest in decades.

More homeowners are choosing that option because it allows them to save money in the long run, though it costs more in monthly payments. Freddie Mac says nearly a third of borrowers refinancing 30-year loans in the April-to-June picked loans with 15-year or 20-year terms.

Still, savvy consumers can already find 30-year fixed rates at or near 4 percent if they are willing to pay a little more upfront.

Chik Quintans, assistant sales manager with Atlas Mortgage in Seattle, said he was able to get two clients into mortgages with a 4 percent interest rate and a fee of 1 percent of the total mortgage amount on Wednesday. But rates have inched up since then.

“Every day’s different,” Quintans said. “Sometimes people have to ruminate, and then the opportunity’s gone.”

Refinancing could pick up significantly if rates fall further. An average rate below 4.375 percent could be enough of a drop so that many people who refinanced last year could shave a half of a percentage point of their mortgage rates, said Scott Buchta, chief mortgage strategist with Braver Stern Securities.

Lenders could find themselves in a bind if traffic picks up, Buchta said. Many have laid off thousands of workers over the past three years and don’t have enough staff to handle a crush of new applications.

Mortgage rates often fluctuate significantly, even within a given day. To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from about 125 banks, thrifts and credit unions around the country in a voluntary survey.

Rate quotes from parts of the country with more lending activity – such as the West and Northeast – are given more weight in creating the average.

Rates on five-year adjustable-rate mortgages averaged 3.56 percent, down from 3.63 percent a week earlier. Rates on one-year adjustable-rate mortgages fell to an average of 3.53 percent from 3.55 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for all loans except for 15-year mortgages, which averaged 0.6 of a point.
 Copyright © 2010 The Associated Press

Homes lost to foreclosure up 6% from last year

LOS ANGELES – Aug. 12, 2010 – The number of U.S. homes lost to foreclosure surged in July, another sign lenders are moving quicker to take back properties from homeowners behind in payments.

Lenders repossessed 92,858 properties last month, up 9 percent from June and an increase of 6 percent from July 2009, foreclosure listing firm RealtyTrac Inc. said Thursday.

Banks have stepped up repossessions this year to clear out the backlog of bad loans. July makes the eighth month in a row that the pace of homes lost to foreclosure has increased on an annual basis.

Meanwhile, homeowners who are falling behind on their payments are being allowed to stay in their homes longer because lenders are reluctant to add to the glut of foreclosed homes on the market.

The number of properties receiving an initial default notice – the first step in the foreclosure process – rose 1 percent last month from June, but tumbled 28 percent versus July last year, RealtyTrac said.

Initial defaults have fallen on an annual basis the past six months.

The latest data reflect a foreclosure crisis that continues to drag on as many homeowners struggle to make their monthly payments amid high unemployment, slow job growth and an uneven rebound in home prices.

Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures.

Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can’t qualify or fall back into default.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. More than 40 percent, or about 530,000 homeowners, have fallen out of the administration’s main effort to assist those facing foreclosure.

That program, known as Making Home Affordable, has provided permanent help to about 390,000 homeowners, or 30 percent of the 1.3 million who have enrolled since March 2009.

Still, RealtyTrac estimates more than 1 million American households are likely to lose their homes to foreclosure this year.

In all, 325,229 properties received a foreclosure-related warning in July, up 4 percent from June, but down 10 percent from the same month last year, RealtyTrac said. That translates to one in 397 U.S. homes.

The firm tracks notices for defaults, scheduled home auctions and home repossessions - warnings that can lead up to a home eventually being lost to foreclosure.

Among states, Nevada posted the highest foreclosure rate in July, with one in every 82 households receiving a foreclosure notice. The number of properties in Nevada receiving a foreclosure warning last month rose nearly 7 percent from June, but fell nearly 30 percent from the same month last year.

Rounding out the top 10 states with the highest foreclosure rate last month were: Arizona, Florida, California, Idaho, Michigan, Utah, Illinois, Georgia and Maryland.

Las Vegas continued to be the city with the highest foreclosure rate in the U.S., with one in every 71 homes receiving a foreclosure notice in July – more than five times the national average.
 Copyright © 2010 The Associated Press