Can't Afford Closing Cost? Good News, Closing Costs Are Negotiable?

Many customers don’t realize that closing costs are negotiable, mortgage experts tell The New York Times.

“There’s a lot of room for negotiation in the costs of closing and consumers should examine every charge and not hesitate to challenge them and try to bring them down,” says Barry Zigas, director of housing policy at the Consumer Federation of America.

Closing costs can really add up when buying or refinancing, running anywhere from 3 to 6 percent of the price of the property. For example, in 2010 the average closing costs for a $200,000 purchase rose nearly 37 percent to $3,741, according to Bankrate.com.

Many of the fees associated with closing are negotiable and consumers should review line-by-line estimates and challenge them.

Simply ask the lender which fees are negotiable and which are fixed to find out where there’s wiggle room. Questions such as “Who is getting paid this fee, and why am I being asked to pay it?” can start the conversation, experts say.
“It’s not a time to be polite,” says Kathleen Day, a spokeswoman for the Center for Responsible Lending. “You have to have a strong stomach and a stiff spine and not bow to pressure from the other side of the table to close the deal.”

Lenders are required within three days of receiving a loan application to provide an estimate of closing costs for buying or refinancing a home. Good-faith-estimate forms provided by lenders can be used to easily compare closing costs among lenders in shopping around for the best deal too.

Source: “Curbing Close Costs,” The New York Times (Jan. 27, 2011)

What Is Americas Attitudes About Home Ownership

According to a NATIONAL ASSOCIATION OF REALTORS® survey conducted by Harris Interactive and released in January 2011, home owners and renters agree that home ownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy.

Among the findings of NAR’s “American Attitudes About Homeownership” survey:

• The vast majority of both home owners and renters say that owning a home is a smart decision over the long term. Even in today’s challenging economy, 95% of owners and 72% of renters believe that over a period of several years, it makes more sense to own a home.
  

• Home owners are much more likely to be satisfied with the quality of their family and community life than renters. While more than half of owners (56%) are “very” or “extremely” satisfied with the overall quality of their family life, only about one-third (36%) of renters report the same levels of satisfaction. Also, 43% of home owners are “very” or “extremely” satisfied with their community life, compared with 30% of renters.
  

• An overwhelming majority of home owners are happy with their decision to own a home. A full 93% of owners surveyed would buy again.
  

• Most renters aspire to home ownership. The majority of renters (63%) say they are at least somewhat likely to purchase a home at some point in the future. Among them, young adults (18- to 24-years-old) have the strongest aspirations for home ownership.

The survey also confirmed that home owners and renters continue to have concerns about the economy:

• In today’s market, many aspiring home owners face worries about job security and credit worthiness. Among renters who are “very” or “extremely” likely to buy a home in the future, three out of five consider confidence in job security or creditworthiness to be an obstacle.
  

• Home owners and renters both believe that the mortgage interest deduction should not be targeted for change. 74% of owners and 62% of renters say it’s “extremely” or “very” important that the MID remain in place.

Should you sell in a down market?

By Steve McLinden of Bankrate.com

Q: Is now a good time to sell my house, before it loses more equity, or should I wait until house prices go up again? What's the best time of year to sell?
— Rolando

A: You didn't say where you live, so I'm going to hop on my "all real estate is local" soapbox and proffer a broad response. As I've already implied, home-selling potential always comes down to the nuances of local markets, specific ZIP codes and even specific blocks.

A great location can trump factors such as unemployment rates, low or high mortgage rates, mortgage access and other variables.

For example, a classic home on a tree-lined block near a prestigious university will always be in demand, despite the economy. The same goes for a quaint house that overlooks a lake or forest or one with a mountain view.

As for "losing more equity," odds are good at this point in the cycle that your home has lost most of the value — and equity — it's going to lose, give or take a few percentage points. But again, that value is only what someone is willing to pay for it, not market averages.

Markets in most parts of the country are closer to turning around than tailing off, with some notable exceptions. So I wouldn't let the anticipation of further losses force your hand. If you're resolved to wait for a vigorous run-up in value akin to what we saw in the middle of the previous decade, however, your wait could be long and futile.

Again, don't mistakenly base your marketing strategy on the health of the overall market. Things such as comparative sales or "comps," investment potential, mortgage-lending standards and interest rates are important in determining your potential homebuyers. But the product on hand — your specific address — should be the chief focus.

An accomplished agent can help you identify your home's relative strengths and show you how to emphasize them. But hire carefully.

As for the best time of year to sell your home, the stock response is still spring because that's when most buyers emerge. This is largely because a spring purchase allows families to plan moves that won't uproot their kids from their schools in the middle of the term.

Today, "spring" really means "late winter." If you want to sell next year, have your house on the market and ready for showings by mid- to late February. Many potential buyers are starting searches as early as possible because they also must sell their current home to make the purchase work.

There will be plenty more foreclosures and short sales emerging on the market in the spring, however.

Another option: If you are happy where you're living and aren't tanking under a top-heavy mortgage, you could simply choose to sit tight for another year or two for additional clarity. After all, a home is a shelter first and an investment second.

It's a fine line you must walk.

More Job Hiring Expected as Gloom Starts to Lift

By LUCA DI LEO

U.S. companies optimistic about the economy plan to hire more workers in coming months, a quarterly survey released Monday found, another signal that the jobs market is turning up.

The fourth-quarter poll of 84 companies by the National Association for Business Economics found 42% expected to increase jobs in the next six months. That is up from 29% in the first quarter of 2010. Only 7% of companies in the latest survey predict they will shed jobs in the coming six months, down from 23% at the start of last year.

"It looks like the opening melody of a true recovery in the labor market," said Shawn DuBravac, economist at the Consumer Electronics Association, a trade group, and chairman of the NABE committee that conducts the survey.

The U.S. economy has been growing for a year and a half but companies have been slow to ramp up hiring. That may change soon as the economy is widely expected to pick up steam. To meet higher demand, many businesses have relied mainly on existing workers to increase output. But there is a limit to how much they can boost productivity.

"The economy is potentially at a turning point in job creation," said Randall Kroszner, a professor at the University of Chicago Booth School of Business and a former Fed governor.

NABE surveyed companies in various industries including manufacturing and finance. The poll, conducted from Dec. 17 to Jan. 5, found the gap between companies planning to hire workers over the next six months and those that expect to shed jobs widened to the highest level since 1998.

To be sure, the 2007-2009 recession was so deep that a lot more jobs need to be created to make a dent in the high unemployment rate, now at 9.4%. The U.S. government's jobs report for December shows hiring remains weak.

But the recent drop in weekly jobless claims points to a stronger labor market, and the tax-cut package approved at the end of 2010 is seen as likely to help the economy this year.

More than half the companies surveyed—especially those in manufacturing, mining and agriculture–expect to see a favorable impact on sales from the tax-cut deal. Companies generally have raised their expectations for growth this year.

All of the survey's four major industry sectors—goods-producing; services; finance, insurance and real estate; and transportation, utilities, information and communications—registered stronger demand in the final three months of 2010.

Economists in the private sector and government are increasingly optimistic about the pace of the recovery.

Strong U.S. consumer spending during the holiday season has raised expectations for growth, despite a persistently poor outlook for housing.

The economy expanded by a 2.6% annual rate in the third quarter and is expected to have grown by more than 3.0% in the final three months of 2010, as well as in each quarter this year, according to a Wall Street Journal survey of economists published this month. When Federal Reserve officials meet this week, they are expected to raise their growth forecasts for 2011 slightly.

New homes in Utah: a bit smaller, not as fancy

January 24th, 2011 @ 7:55am

By Paul Nelson

SALT LAKE CITY -- A lot of people made mistakes before the market collapse. Lenders allowed people to get loans they could not afford, and many borrowers willingly went into these bad deals.

Utah Home Builders Association Executive Vice President Taz Biesinger says many customers did it in the attempt to sell the home later. But plans go awry and these homeowners were trapped with a home they couldn't pay for.

Home builders had lists of borrowers waiting for their homes to be built, and a lot of these homes had upgrades you wouldn't find in every home. Granite countertops, crown molding and fancy plumbing fixtures seemed to be on the list of necessities for many people buying a house.

"People are [now] having to say, ‘This is what we can afford to buy,' and it may not have all of those fancy upgrades in them," Biesinger says.

He says the homes being built now are just as high quality and are 100 percent more energy efficient than homes built 20 years ago. But people are more down to earth with what they're asking for.

"Maybe some of them are not putting in a fancy theater system," he says. "Or maybe they're being more realistic on some of the basic things rather than upgrading the carpet throughout the house."

Along with avoiding some of the fanciest fixtures, homeowners are looking to control their price point by limiting the size of their home. Biesinger says he's not seeing a drastic reduction in new home size, but they might not be as big as before.

"We have started trying to [make] more townhomes or condominium-type products simply because that lowers the land costs," he explains.

However, home builders and buyers were not the only parties responsible for homes being made bigger before the market collapse.

"A lot of cities, in those really high volume years, were placing requirements that you had to have a one-third [acre] lot or a half-acre lot," he says.

He says some cities are starting to loosen those requirements and some have started changing their one-time impact fees.

"Some cities are actually starting to reduce or eliminate their impact fees, altogether," he says.

Not every city is making these changes yet. Biesinger says some cities are keeping impact fees as they are now, and others are even increasing them, which he says will keep more new homes from being built.

Real Estate: Finally a Good Investment?

LONGSHOT by Dave Kansas (Author Archive)

The housing market still looks pretty bleak: There were a record one million foreclosures last year, home prices are still falling in many regions and the number of "underwater" properties is at a record high.

And things don't look much better in other areas of real estate. The number of construction jobs continues to decline, even as other parts of the economy have added jobs. And mortgage rates have moved higher as long-term Treasury yields have backed up during the past few months.

Basically, the real estate market remains a mess.

Real estate encompasses a wide range of markets – homes, apartments, hospitals, office buildings, strip malls, dormitories and other properties. But for our purposes, let's focus on residential real estate, or homes. Here are four reasons to think residential real estate might represent a bargain – with one big caveat.

Everyone hates homes.

Homes are probably the most hated asset class in the country. That's what happens when a bubble bursts. People avoid thinking about the value of their home. Sellers moan about no offers, buyers gripe about impossible lending requirements.

Hatred of an asset is often the precursor to contrarian interest, and being contrarian is at the heart of many investment strategies. To paraphrase Warren Buffett, be fearful when others are greedy and greedy when others are fearful. Mr. Buffett backed that idea when he invested in the stock market in the teeth of the financial crisis in late 2008 and early 2009.

Of course, being contrarian for its own sake isn't wise investing. Gold was hated for years ("dead money") before it recently became an attractive asset class. Still, a lot of smart ideas begin with the question: What does everyone hate?

Smart people are buying real estate.

This cohort is led by John Paulson, the hedge-fund manager who made $20 billion betting against the housing bubble. Last fall he said in a speech: "If you don't own a home buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home."

Why is Mr. Paulson so adamant? Because he believes long-term interest rates are not going to get much lower. They have, in fact, risen since he gave that speech, but they remain remarkably low by historic standards. Low rates and the expectation that home prices will rise is his argument. For his part, Mr. Buffett has predicted the housing market will bottom this year.

Real estate performs well during inflation.

There's no inflation these days, but when buying a home one should take a longer view. And the longer view shows that the economy has enjoyed a disinflationary period since the early 1980s. A number of folks think that cycle is slowly reversing itself.

If that's the case, then convention would argue for holding assets that do well in an inflationary environment. That includes Treasury Inflation Protected Securities, commodities and real estate. Remember that during the stagflation nightmare of the 1970s, real estate had a strong run.

Inflation isn't a significant issue in the U.S., but it's a growing problem elsewhere. China and India have taken steps to fight inflation, the euro zone is getting flickers of inflation and the U.K. has had oddly higher prices (above 3%) for an extended period of time. If the cycle is slowly turning, real estate makes more sense.

Demand may be coming back.

Supply isn't as out of whack as it used to be. At the end of November, home builders reported 197,000 new homes on the market, the lowest level since 1968, according to Yardeni Research. The National Association of Realtors reports that the inventory of existing homes for sale fell 4% to 3.71 million homes, which represents a 9.5-month supply at the current sales pace, down from a 10.5-month supply in October.

Those aren't pretty numbers, of course, but they are moving in the correct direction. And that may be a reason that many home builder stocks, such as KB Home ( KBH: 15.31*, -0.40, -2.54% ) , Hovnanian ( HOV: 4.87*, -0.09, -1.81% ) , Pulte ( PHA: 24.24*, +0.19, +0.79% ) and Toll Brothers ( TOL: 20.75*, -0.15, -0.71% ) , have come off their lows in the past several weeks.

It's all comes down to jobs. There are a zillion caveats to any positive home thesis, but the big one is unemployment. If the economy is not creating jobs, the chance of a rebound in housing is diminished. It's hard to buy a home without a job, and folks who aren't working don't want to take long-term risks.

The job market is still struggling and the debate is hot about when it will recover. Optimists see recovery this year. Pessimists see pain for several years ahead. How this X factor gets resolved will say a great deal about whether housing will rebound.

Read more: 4 Reasons to Buy a Home Now - SmartMoney.com http://www.smartmoney.com/personal-finance/real-estate/-1295050347411/#ixzz1BPLSFyKK

In Pictures: The Most Expensive Celebrity Real Estate For Sale - Candy Spelling - Forbes.com

In Pictures: The Most Expensive Celebrity Real Estate For Sale - Candy Spelling - Forbes.com

Buyers Try to Clear Out Bad Vibes

Foreclosed homes may have a lot of negative energy lurking, from missing appliances, dirty carpets, cracked walls, and any number of other problems from not being cared for properly from the previous home owner.

The foreclosure crisis has sparked an increase in an unusual business: More buyers are asking for ritual house cleansings before they move in to rid the home of it’s bad auras.

Witches, psychics, priests, and feng shui consultants are being asked to come in to homes to bless or exorcise the homes of their bad spirits. Sellers are joining in too, in the hopes of trying to sell their home faster.

One buyer in Salem, Mass., two weeks before closing had a witch and warlock visit his three-story home to clang bells and spray holy water to cleanse the bad aura and break up the negative energy in the home. They poured kosher salt on doorways and raised iron swords at windows to keep evil spirits away.

"It's not entities or ghosts that we're dealing with anymore," Julie Belmont, who refers to herself as an intuitive, told The Wall Street Journal. "With foreclosures, a lot of it is energy imprints from past discussions, arguments, money problems. All of that is absorbed by the house."

Real estate pro Tamara Dorris in Sacramento, Calif., is a believer in feng shui for speeding up the sale of a property. For example, she placed a jade plant, which is believed to bring financial luck, in a designated “prosperity corner” in one home.

"Within two weeks, I had two offers," she says. "Most homes have at least one or two prosperity flaws. Foreclosed homes have five or six flaws."

Source: “The Housing Slump Has Salem on a Witch Hunt Again -- Buyers Worried About Bad Vibes From Foreclosed Homes Seek a Cleansing,” The Wall Street Journal (Jan. 13, 2011)

Mortgage Rates Drop Slightly

Mortgage rates didn’t fluctuate too much this week, dropping only slightly in some cases while the conforming 30-year fixed mortgage rate held unchanged at 4.94 percent for the week, Bankrate.com reports.

Bankrate.com reports the following average rates:
• 15-year fixed mortgages fell to 4.29 percent.
• Large jumbo 30-year fixed rates dropped slightly to 5.57 percent.
• 5-year adjustable rate mortgages fell to 3.88 percent.

“The average 30-year fixed mortgage rate has been particularly docile, with the average rate fluctuating less than one-tenth of a percentage point over the past month,” according to Bankrate.com. “A heavy dose of economic data and ongoing debt issuance by the U.S. Treasury have the potential to introduce some volatility to mortgage rates over the next week.”

Mortgage rates have remained at historic lows for several years. The last time mortgage rates were above 6 percent was November 2008.

Source: “Bankrate: Mortgage Rates Mostly Lower,” Bankrate.com (Jan. 13, 2011)

Salt Lake City among best in nation for finding work

January 11th, 2011 @ 11:22pm

By ksl.com

SALT LAKE CITY -- Forbes ranks Salt Lake City No. 8 in the nation for finding jobs. As it stands, there are about three people looking for every one job posted, which is significantly better than the national average.

Spencer Eccles with the Governor's Office of Economic Development says Utah's high ranking is directly related to its young, well-educated workforce, with a strong work ethic.

Eccles also says companies are drawn to the state because Utah is known for being fiscally fit, having a strong transportation hub and is one of eight states with a triple-A bond rating.

It's encouraging news; but if you're the one looking for work, it's still too early to stand up and cheer.

Jim lost his 30-year job in banking a couple years ago. We ran into him at the Department of Workforce Services, where job seekers work the computers for leads and call on employees for research assistance.

"When I see others unemployed or underemployed ... I know a lot of people like that," Jim said.

He said he'd make more money on unemployment but works at a call center for one-third his previous pay.

"When I hear about things starting to improve, I'm hopeful," Jim said. "But it hasn't directly affected me yet."

Nearing 60, Jim is hunting for another job where he can use his skills again.

"It only takes one job," Jim said, and then he'll be back on a track.

"I've been working at it really hard," a woman named Camille told KSL News.

Camille lost her job 20 months ago. She now spends a lot of time at the unemployment center.

"It's a little bit better now than it was maybe six months ago," she said. "I think I'm getting more interviews."

"We're not going anywhere until the national economy gets out of the mud," said Mark Knold, senior economist at the Department of Workforce Services.

Right now, Knold is not sure the Forbes ranking is justified. The magazine has given Salt Lake City good rankings in recent years in the job market category. At some point, Knold says, the ranking will be deserved.

"Utah isn't going to go off and do it's own thing until the national economy gets itself righted and strengthened," he said.

The economist says Utah job growth is at 1 percent or less. That needs to climb closer to 2 percent to make a dent in the the 80,000 jobs lost in last 2 years, he says.

But Knold agrees even modest job growth lays the foundation for recovery.

"So that when those overall United States economic factors finally get back on a solid track, then we'll be in a position to benefit," he said.

Utah unemployment remains flat at about 7 percent, but Knold believes the worst of the job losses in our state are behind us.

Forbes also picked Utah as the best state in the nation for business in October of 2010.

CLICK HERE to find local jobs on ksl.com.

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Story compiled with contributions from Jed Boal and Nkoyo Iyamba.

The Most Overpriced, Underpriced Housing Markets

What are the most overvalued and undervalued housing markets in the country? The Local Market Monitor recently released a list for investors analyzing buying conditions for real estate markets in the United States.

Overall, Las Vegas was a city they flagged as the worst -- or “frankly dangerous,” as they referred to it. They said the city is not only one of the most undervalued housing markets in the country but is also considered one of the worst housing buys. Orlando, Fla., was another city the Local Market Monitor considered a bad investment city.

Las Vegas’ median home price is less than $145,000--a drop of more than half in its median home price since its housing peak days. The Local Market Monitor says Las Vegas is also nearly 30 percent less than what would be considered fair market value. Both Las Vegas and Orlando have been plagued with high inventories of homes due to overbuilding from a few years ago, and also are two of the hardest hit areas for foreclosures.

Here’s a list of the most overpriced housing markets and the percentage they are overvalued by, according to the report:

1. Nassau-Suffolk, N.Y.: 26% ($418,416 median home price)
2. Los Angeles: 24% ($368,056 median home price)
3. Portland, Ore.: 24% ($240,912 median home price)
4. Anaheim, Calif.: 23% ($449,396 median home price)
5. Edison, N.J.: 20% ($286,900 median home price)

Here is a list of the top 5 most undervalued markets:

1. Las Vegas: -27% ($144,636 median home price)
2. Akron, Ohio: -22% ($155,673 median home price)
3. Cleveland: -21% ($154,674 median home price)
4. Warren, Mich.: -21% ($111,114 median home price)
5. McAllenn, Texas: -20% ($131,871 median home price)

View a complete list of overvalued and undervalued cities.

Source: “America’s Most Overvalued - and Undervalued - Cities," CNNMoney.com (Jan. 10, 2011)

Lenders May Be Not-So-Fast to Foreclosure

After a pivotal court ruling last Friday in Massachusetts, lenders are likely to be more willing to help home owners who are struggling to make their mortgage payments.

Last Friday, the Massachusetts Supreme Judicial Court ruled that two foreclosures in the case were invalid because the banks didn’t follow proper steps to show they had the authority to foreclose on the homes.

The case likely has set a precedent for the rest of the nation’s lenders to follow: Before you foreclose on a home owner, make sure you have authority to do it.

“What banks are going to have to do is make sure they’ve dotted their I’s and crossed their T’s before going through with a foreclosure,” says Stuart Rossman, director of litigation at the National Consumer Law Center.

This could mean an even slower pace for foreclosures as banks take extra caution on their paperwork, says Roy D. Oppenheim, senior partner at Oppenheim Law in Weston, Fla.

Experts say the court ruling was a positive for home owners who are in the middle of the foreclosure process, those trying to work out modifications, refinance, or do a short sale. They say that reaching a deal with lenders may become easier.

“I am expecting the banks to do fewer foreclosures and to engage in serious conversation in pre-foreclosure with borrowers,” Oppenheim says. “We’re already seeing [some] modifications that included for the first time principal reduction.”

Source: “Foreclosure Ruling May Be Good News for Homeowners,” MarketWatch (Jan. 11, 2011)