Posted in Real Estate

Is It Possible To Have A Hurricane-Proof Home?

Is It Possible To Have A Hurricane-Proof HomeThe recent total devastation of the Bahamas by hurricane Dorian reinforced the need for hurricane-proof homes in areas that are subject to this risk. Building codes have not kept up with the increasing severity of the weather.

Wind Damage

As an example, Florida communities, such as the Miami-Dade County area, have building codes that are designated by risk zones.

The risk zones in Miami-Dade County are:

  • Risk Category I – Buildings must be able to withstand 165 mph winds.
  • Risk Category II – Buildings must be able to withstand 175 mph winds.
  • Risk Category III – Buildings must be able to withstand 185 mph winds.

These building codes were last updated in 2010. Broward County in Florida has these same risk categories; however, the wind speeds are 10 mph lower for each category. Other parts of Florida have building codes that are even lower than these standards. Dorian reached a 183 mph wind speed. It stayed over the Bahamas for over fifty hours with these winds.

Water Damage

Water damage from hurricanes is more severe than wind damage. The storm surge for Dorian reached over 23-feet high in some places.

Hurricane Proofing

To withstand hurricane-force winds, the structure must be able to handle 180+ mph winds over an extended period. Damage done by the wind includes all the projectiles and debris being blown about. Some homes in the Bahamas had vehicles blown through walls.

The main consideration for wind damage is to use wind-resistant, shatter-proof glass for windows that are also protected by steel shutters, which can be closed when a hurricane is coming. These shutters close to protect other openings such as doors as well. Walls should be thick, reinforced concrete, especially the lower floors that need to resist both the wind and the water.

Water is going to come into the lower two floors of a home on the beach, so beach homes need to be at least three stories high. This may be challenging in some areas because of the building-height restrictions that are in place to prevent blocking other neighbors’ views of the ocean.

The idea is to make to bottom floors able to withstand water entering the home as if it is a swimming pool. When a hurricane is coming, you can move all the items from the lower floors to the upper floor.

In Holland, where many of the coastal cities are at sea level, their solution is to have homes that float. These homes near Amsterdam are like houseboats that are moored down very strongly so that they can rise with the storm surge but not float away.

Summary

There is not a 100% certain way to make a home completely hurricane-proof; however, there are examples of well-built homes that are the only ones left standing when the entire neighborhood is devastated by a hurricane.

When considering a home on the coast, it is better to build a new home to very high standards regardless of the building codes. In all coastal areas, building codes need to be updated to make the hurricane standards more robust because hurricanes are becoming stronger and more frequent.

If you are have concerns about buying or selling a home in a high risk storm area, be sure to consult with your trusted real estate professional.

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Posted in Market Outlook

Fed Policymakers Cut Key Rate Range by .25 Percent

Fed Policymakers Cut Key Rate Range by.25 PercentThe Federal Reserve’s Federal Open Market Committee reduced its key short-term interest rate range one-quarter percent to 1.75 to 2.00 percent during it’s September meeting. While FOMC members had mixed opinions on reducing the benchmark rate range for short term loans, the post-meeting statement suggested that reducing the federal funds rate was a hedge against inflation. The federal funds rate impacts short-term consumer loan rates for autos and adjustable rate mortgages, but does not impact fixed mortgage rates. FOMC monetary policy decisions are governed by the Federal Reserve’s dual mandate of maintaining price stability and an inflation rate of 2.00 percent.

FOMC Members Facing Conflicted Opinions On Rate Cuts

Policymakers consider a variety of influences and news when cutting or raising the federal funds rate range. In addition to its dual mandate, FOMC members consider domestic and global impacts on the economy. Uncertainty over effects of international trade disputes and Great Britain’s looming exit from the European Union balanced strengths in the U.S. economy.

According to the post-meeting statement, seven FOMC members voted in favor of the rate cut to 1.75 to 2.00 percent; one member voted for a rate cut to 1.50 to 1.75 percent and two members voted against changing the target federal funds rate range.

Fed Chair: U.S. Economy Expected To Stay Strong

Fed Chair Jerome Powell said in a post-meeting press conference that while U.S. economy expanded for its 11th consecutive year, global economic outlook was less certain particularly in Europe and China. The U.S. economy expanded 2.50 percent in the first half of 2019; factors driving growth included rising consumer confidence, wages and strong job markets. Business investment and exports were lower due to uncertainties over trade. Job growth slowed, but this was expected based on 2018’s fast pace of job growth. Work force participation grew; the Fed expects the national unemployment rate to remain below four percent for the next few years.

Chair Powell said that maintaining strong economic conditions was particularly important for low to middle income consumers left behind during the Great Recession. While current inflation stands at 1.40 percent, the Fed projects that it will grow to 1.90 percent in 2020 and achieve the target goal of 2.00 percent in 2021. Chair Powell said that inflation pressures are muted and at the lower end of historical ranges.

Chair Powell echoed the FOMC statement in saying that the Fed would continue to monitor economic developments abroad and would adjust monetary policy according to economic developments prompted by trade disputes and emerging economic developments.

 

Posted in Market Outlook

NAHB: Home Builders Remain Confident

NAHB Home Builders Remain ConfidentThe National Association of Home Builders Housing Market Index shows steady builder confidence in housing market conditions. September’s index reading of 68 was one point higher than August’s reading. Any reading over 50 indicates that most home builders surveyed view housing market conditions as favorable. August’s original index reading was adjusted upward by one point.

Component readings for the Housing Market Index were mixed. Builder confidence in current market conditions rose two points to index reading of 75; this was the highest reading year-over-year. Builder confidence in home sales over the next six months fell by one point to 70. The gauge of buyer traffic in single-family housing developments held steady at 50. Readings for buyer traffic seldom exceed 50; September’s reading suggested higher builder confidence than the numerical reading suggested.

Average New Home Size Decreases, Builders Confident In Housing Markets

In recent months, builders have focused on producing larger homes, which has limited the number of affordable homes available to middle-income and first-time home buyers. High demand for homes caused by slim inventories of homes for sale and factors including competition with cash buyers sidelined would-be buyers. Home builders scaled down the size of new homes by 4.30 percent during the second quarter of 2019. This trend is expected to encourage potential home buyers into the market as lower home prices and mortgage rates combine to encourage more buyers into the housing market.

Lower Home Prices And Mortgage Rates Increase Affordability

Analysts and real estate pros have long said that the only way to ease demand for homes is by building more homes within all price ranges. Builders did not immediately respond to calls for more homes, but if current builder confidence and a new focus on building affordable homes continues, high demand for homes and short supplies of available homes may ease toward evenly balanced market conditions, but the unknown factor is mortgage rates. If they rise, affordability will be challenged and buyer interest in new homes could slow.

New home prices typically fall as peak buying season ends. Current trends toward building smaller homes, low mortgage rates and lower home prices combined to provide more choices and affordable options for home buyers. If general economic conditions remain strong, more home shoppers could become homeowners.

 

Posted in Mortgage

Is Now a Good Time to Cash Out Your Home Equity?

Is Now a Good Time to Cash Out Your Home EquityFor many Americans, their home is their primary investment. The equity stored in your residence can be a source of available cash for home repairs, upgrades, or for financing the purchase of investment properties. However, few homeowners really understand the process that results in home equity. 

What Is Home Equity?

Your monthly mortgage payment goes towards two different amounts. The first is the interest that you pay for the loan. The other is your principal payment or the amount that counts against the initial amount that you borrowed for the purchase. Depending on the details of your loan contract, each payment is generally split between these two types of charges.

Over time the amount that you’ve paid towards the loan’s principal grows your equity position. With each payment, your equity grows as well. Once enough equity is accrued, many lenders allow homeowners to access those funds via an equity line of credit, home equity loan or a cash-out refinance. 

You’ll have to pay interest on any monies you withdraw from the second mortgage or higher loan amount upon your refinance. With home equity lines, however, these loans only charge interest on the money that you actually use. You can secure a home equity line of credit for a certain amount and not be liable for a penny in interest until your first withdrawal.

How Can You Calculate Potential Equity?

There are 4 main factors to consider when calculating your home’s equity.

  • Home value.
  • Monthly mortgage payments.
  • Down payment.
  • Any liens or additional mortgages on the property.

Imagine your home is currently valued at $300,000. With cash down payment of 20%, your home’s starting equity is equal to your initial $60,000 payment. Each payment slowly increases your equity until you have full financial ownership of your home.

Talk to your lender to understand how interest in applied to each payment. For fixed rate loans, you can easily figure out how much of your mortgage payments are immediately applied to the loan’s principal. An easy way to see this equity build up on a monthly basis is to reference an amortization schedule. Your lender should be able to provide this for you at no charge.

For property owners with liens and additional mortgages, add the value of those items to what’s still due on your primary mortgage loan before completing the calculations.

Home equity is a flexible financial tool that you can use to improve your property, expand your business, or treat yourself to something special. Plan carefully to get the most out of your home equity line of credit.

If you are interested in a buying a new home or listing your current property, be sure to contact your trusted real estate professional.

Posted in Financial Reports

What’s Ahead For Mortgage Rates This Week – September 16th, 2019

What’s Ahead For Mortgage Rates This Week – September 16th, 2019Last week’s economic news included readings on inflation, core inflation and consumer sentiment. Weekly reports on mortgage rates and first-time jobless claims were also released.

Lower Gas Prices Dampen August Inflation Rate

Consumer prices fell in August; analysts attributed the decline to lower gasoline prices. August’s reading matched expectations, but was 0.20 percent lower than July’s reading. The Core Consumer Price Index, which excludes volatile food and fuel sectors, rose by 0.30 percent and matched July’s reading.

Analysts expected an August core inflation reading of 0.20 percent. Rising housing and healthcare costs indicated that overall inflation would rise in coming months. Core inflation rose to its highest level in 13 months and was 2.40 percent higher year-over-year.

Mortgage Rates, Rise; New Jobless Claims Fall

Freddie Mac reported higher mortgage rates last week. Rates for 30-year fixed rate mortgages averaged 3.56 percent and were two basis points higher than in the prior week. Rates for 15-year fixed rate mortgages averaged 3.09 percent and were nine basis points higher on average.

Rates for 5/1 adjustable rate rose six  basis points to an average rate of 3.36 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.

New jobless claims fell last week with 204,000 first-time claims filed. Analysts expected 213,000 new claims filed based on the prior week’s reading of 219,000 initial claims.

The University of Michigan reported a jump in consumer sentiment in September;  August readings fell due to consumer concerns over the impact of tariffs on imported goods. September’s consumer sentiment index reading rose to 92.00 as compared to August’s index reading of 89.80.

Analysts predicted a September index reading of 91.40. Analysts said that while confidence in general economic conditions rose, consumers continued to be worried about the effects of tariffs.

What’s Ahead

This week’s scheduled economic news includes the National Association of Home Builders Housing Market Index, Commerce Department readings on housing starts and building permits issued and a statement by the Fed’s Federal Open Market Committee statement.

Fed Chair Jerome Powell will also give a press conference. Sales of pre-owned homes will be reported along with weekly readings on mortgage rates and new jobless claims.

Posted in Mortgage

Simple Tips To Pay Off A Home Mortgage Loan Faster

Simple Tips To Pay Off A Home Mortgage Loan FasterIt is a major life decision to buy a home and yet many do not consider how much they will pay on the interest over the life of the loan. All they usually think about is if they can afford to pay the monthly mortgage payments.

It is helpful to learn how different loan structures impact the amount of money wasted on the interest paid for a home loan. Here is a comparison of different loan lengths and payment options to show some helpful ways to reduce the total interest paid.

Standard 30-Year Fixed Mortgage

For a buyer who has a good credit history, purchasing a median-priced home with a significant down payment usually helps get the best mortgage financing. A standard 30-year mortgage on a home requires 360 monthly payments to pay off the loan.

The total cost of the loan includes paying back the principal amount borrowed and all the interest. Over 30 years, the total interest paid can be as much as one-third or more of the principal amount borrowed, depending on the loan interest rate.

Standard 15-Year Fixed Mortgage

Comparing a standard 30-year fixed mortgage with a standard 15-year mortgage shows a surprising result. The differences are that the length of the loan term is less and the monthly mortgage payments are higher. A standard 15-year mortgage on a home requires 180 monthly payments to pay off the loan.

The shorter loan period may reduce the total interest paid to less than one-half of a 30-year mortgage, depending on the loan interest rate. The savings can be in the tens of thousands of dollars.

Payment Techniques That Save Money

A simple way to save money is to pay an extra monthly payment each year and ask the lender to apply the extra payment to reduce the principal amount owed. On a 30-year mortgage, the loan pay-off date is more than two and one-half years sooner, reducing the total interest paid by about 10% percent.

A smaller savings amount is possible without even needing to pay more, just by paying more frequently. Instead of paying a mortgage once per month, make arrangements with the lender to pay half the monthly mortgage payment twice per month. The amount the lender receives monthly, in the two payments, totals the same amount that the lender would receive in one payment.

This technique works because there is a daily calculation of mortgage interest. By making payments more frequently, there are fewer days of use for some of the loaned funds. This tiny change in periodic repayments can be a nice way to save a few thousand extra dollars over the life of a loan.

In addition, since there are 26 two-week periods in one year, you’re getting an extra payment in over the longer months in the year. So you’re paying the equivalent of 13 monthly payments instead of 12. You might not feel it as much since you’re likely making more money in the longer months as well.

If you’d like to do this strategy and the lender won’t accept bi-weekly payments, then just divide the principal and interest portion of your mortgage payment by 12 and add that amount to each regular monthly payment. You’ll save a ton of interest over the life of the loan!

Summary

Think about interest paid as money that could have a better purpose. Choosing a shorter loan period for a home mortgage and increasing the mortgage payment frequency are important things to consider for the savings that they can produce.

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.

Posted in Mortgage

6 Ways to Fight Foreclosure

6 Ways to Fight ForeclosureSometimes, things don’t go as planned. Despite the best intentions, there are times when it’s impossible for homeowners to fulfill their mortgage obligations. When your misfortune turns into a foreclosure notice, these tips will help you control the situation and realize the best outcome.

Work With Your Lender

Open the lines of communication with your lender to stall the foreclosure process.

  • Call your lender and explain your predicament. Give them specific details about the nature and estimated length of your circumstances. Many lenders are willing to temporarily modify payment terms to temporarily accommodate certain hardships.
  • Apply for a loan modification. If your credit rating has improved or market values have shifted in your area, it’s possible to negotiate friendlier terms that lower your monthly payments.
  • A forbearance allows you to pause or drastically reduce your mortgage payments for a short period. However, you’ll have to pay everything owed in a lump sum or via larger monthly installments.

It is in your lender’s best interest to keep you in your home. Contact them early to avoid unnecessary issues.

Take Legal Action

Keep the law on your side to ensure you have the best chance at keeping your home.

  • If you believe your foreclosure is unlawful or in error, you will have the chance to present your case in court. Respond in writing to the official foreclosure complaint as soon you receive it. This eliminates quick default judgments.
  • Talk to a lawyer about your case. Even if you can’t afford to retain one for the trial, invest in a short sit-down session with a knowledgeable legal representative to get the facts straight and ensure you’re ready to present your defense.
  • Personal bankruptcy is a final strategy for saving your home. Most chapter 7 and 13 filings allow you to keep your primary residence while reorganizing your debt.

Foreclosure is less of a threat when you understand the laws and procedures that govern the process. Educate yourself on your legal options.

A temporary setback doesn’t have to ruin your entire life. With these tips, you won’t have to lose your dream to foreclosure.

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 for assistance.

Posted in Mortgage

What Is A Reverse Mortgage?

What Is A Reverse MortgageA reverse mortgage is a way to use the equity value that built up in a home to improve the quality of life for those who have appropriate circumstances when they reach the retirement age of 62 or older. With a reverse mortgage, a person continues to live in their own home and retains the title to it but does not have to make any monthly reverse mortgage payments.

A reverse mortgage may be helpful; however, not everyone qualifies for one. The benefits come with disadvantages as well. Here is a list of the advantages and the disadvantages for reverse mortgages.

Be sure to discuss this option with a qualified professional when thinking about a reverse mortgage before making any commitment.

Reverse Mortgage Advantages

  • Reverse mortgage funds may be used to pay off an existing home loan balance. The funds may be taken out in a lump sum or paid in monthly installments for a certain period.
  • The reverse mortgage creates a lien on the home but does not require any monthly loan principal or interest payments. This continues as long as the person lives in the home and takes care of it (paying the property taxes, home insurance, HOA fees, etc.)
  • Usually, a reverse mortgage has no effect on social security payments or Medicare benefits. It does not usually cause any tax consequences because it is a loan structure, not income.
  • If repayment of the loan happens at some point, any equity remaining is still available to the homeowner for any purpose, such as giving something to heirs.
  • It is a non-recourse obligation. There is no personal liability to repay the reverse mortgage loan if the equity value in the home is not sufficient to pay it off.

Reverse Mortgage Considerations

  • Since a reverse mortgage has no payments, the loan balance increases and the interest accumulates over time.
  • A reverse mortgage reduces the equity in the home that would otherwise be available to heirs. If the remaining equity exceeds the loan, the home can be sold off to repay the loan and the balance can then go to the heirs.
  • Medicaid eligibility or disability payments (SSI) may be affected.
  • A reverse mortgage loan becomes immediately due if certain things happen, such as the death of the homeowner, the homeowner vacates the house for six months or more for a non-medial reason and 12 months or more for a medical reason. It becomes due if the home is no longer the principal residence of the reverse mortgage borrower.
  • The loan is immediately due if the homeowner does not pay the property taxes, home insurance premiums, HOA fees, and other things necessary to maintain the home.

Summary

A reverse mortgage is a special financial tool that needs to be used only when appropriate. Typical rates for these loans may be higher than standard home equity lines of credit and other traditional home-refinancing options. Consider all the details very carefully before and as always, consult with your trusted home finance professional to get the best advice for your unique situation.

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.

Posted in Real Estate

Boom Or Bubble? – Home Prices Hit Record Highs Across America

Boom Or Bubble? - Home Prices Hit Record Highs Across AmericaThe rapidly rising home prices currently found in many parts of the United States make it seem like the Great Recession of 2008 never happened. It took approximately eight years for home prices to recover the values that were equivalent to those they had before the recession.

After reaching this point of recovery, since around 2016, real estate prices have been going up very quickly in many cities.

The Best Recovered Housing Markets

Here are the fully-recovered housing markets analyzed by ATTOM data service for the second quarter of 2019 that have exceeded the peak valuations from before the recession.

This list of winners shows the percentage that they are now above their pre-2008 peaks:

  • Greeley, Colorado (87% up)
  • Shreveport, Louisiana (81% up)
  • Denver, Colorado (80% up)
  • Austin, Texas (77% up)
  • Fort Collins, Colorado (76% up)
  • Dallas-Fort Worth, Texas (72% up)
  • Nashville, Tennessee (71% up)
  • San Antonio, Texas (58% up)
  • Houston, Texas (54% up)
  • San Jose, California (54% up)

It took quite a while for homes to have this much appreciation in value, which in most cases meant that the homes, first, had to increase significantly to overcome the lowered values from pre-recession peaks.

Homeowners Waiting Longer To Sell

Homeowners, who were wise and able, waited for this to occur. This accounts for the median of eight years that homeowners waited before selling now. Before the Great Recession, the median holding period for selling a home was only four years after purchase.

Homeowners who were able to hang on to their homes after the Great Recession hit, and then ride it out until now, are, in general, being rewarded for waiting to sell.

The Hottest Markets For American Cities

Most American cities are hot real estate markets. The appreciation rate for annual increases is up 89% of all the metro market areas.

Cities showing the greatest annual appreciation rates are:

  • Atlantic City, New Jersey (16% increase)
  • Boise City, Idaho (14% increase)
  • Chattanooga, Tennessee (13% increase)
  • Mobile, Alabama (11% increase)
  • Madison, Wisconsin (11% increase)
  • Milwaukee, Wisconsin (9% increase)
  • Boston, Massachusetts (9% increase)
  • Salt Lake City, Utah (9 % increase)
  • Columbus, Ohio (8 % increase)
  • Birmingham, Alabama (6% increase)

Summary

Whether this a continuing boom or an early indication of another real estate bubble that might eventually burst is anyone’s guess. It is a decent time to sell if selling a home is in the plans. It is a more challenging time for home buyers. However, the one thing the Great Recession taught us all is that housing prices do not always go up.

If you are in the market for a new home or interested in listing your current property, please consult with your trusted real estate professional.

Posted in Financial Reports

What’s Ahead For Mortgage Rates This Week – September 9th, 2019

What’s Ahead For Mortgage Rates This Week – September 9th, 2019Last week’s economic reports included readings on construction spending, public and private-sector jobs and the national unemployment rate. Weekly reports on mortgage rates and first-time jobless claims were also released.

Construction Spending Rises in August

Construction spending rose 0.10 percent higher than in July according to the Commerce Department. Analysts expected construction spending to increase by 0.60 percent based on June’s reading of -0.70 percent. Construction spending was -2.70 percent lower year-over-year based on revisions to data going back to 2008.

Construction spending was impacted by multiple factors including costs of labor and building materials and inclement weather in some areas of the United States. As peak home buying season winds down to fall and winter, builders are expected to reduce spending. Builder concerns over the impact of tariffs on imported building materials continued to affect builders’ budgets.

Mortgage Rates Fall, Weekly Jobless Claims Rise

Freddie Mac reported lower mortgage rates last week; the average rate for 30-year fixed rate mortgages was nine basis points lower at 3.49 percent. Rates for 15-year mortgages were six basis points lower and averaged  3.00 percent.

Rates for 5/1 adjustable rate mortgages averaged 3.30 percent and were one basis point lower. Discount points averaged 0.50 percent for 30-year fixed rate mortgages, 0.60 percent for 15-year fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

First-time jobless claims rose by 1000 claims to 217,000 new claims filed. Analysts expected 214,000 initial jobless claims based on the prior week’s reading of 216,000 first-time claims filed. No signs of layoffs were indicated in relation to the higher reading for new jobless claims.

The monthly reading for new jobless claims showed 216,250 new claims filed and was higher by 1500 new claims filed. The monthly reading is considered more stable than week-to-week readings for initial jobless claims.

Public and Private-Sector Jobs Reports Mixed, Unemployment Rate Holds Steady

ADP reported 195,000 private-sector jobs added in August. The Commerce Department reported 130,000 public and private sector jobs added; analysts expected 170,000 jobs added in August. The national unemployment rate was unchanged at 3.70 percent.

What’s Ahead

This week’s scheduled economic news includes readings on inflation, retail sales and consumer sentiment. Weekly readings on mortgage rates and initial jobless claims will also be released.