Sunday, October 30, 2011

Advantages of rooftop solar power

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Solar panels for your home - advantages and benefits
While big solar farms tend to grab the headlines, the rooftop revolution is quietly making its mark. Solar panels in residential settings do so much more than generate free electricity.

Here are some more benefits and advantages in adding a solar power system to your house.

Carbon emissions reduction
Conventional coal fired electricity generation systems generate emissions of around 2 pounds of greenhouse gases per kilowatt hour; a solar panel, zero. While it vary depending on local conditions, an entry level system consisting of 1.5kW worth of solar panels (6-8 modules) can avoid around 3.2 tonnes of greenhouse gas emissions year (compared to brown coal fired power generation).

Reduction in water consumption
Electricity generation can be a very thirsty business. A coal fired power plant uses around 1.5 gallons of water to generate a kilowatt hour of electricity (source). A solar panel - none. 

Insulating benefits
Solar panels can also act as rooftop insulators. Researchers determined the savings in cooling through a solar panel's roof shading qualities amounts to a 5% discount on the cost of the modules over their lifetime.

Increases house value
A study of the real estate market in California found houses with rooftop solar power system achieved better sale prices than homes without a solar array.

Can be a better investment than money in the bank
This will greatly depend on financial incentives in your area, but where feed in tariff incentives exist that pay a premium rate for the electricity produced by a system, investing in solar panels can provide a better return than sticking the equivalent amount of cash in the bank. This can also apply in areas where there are no feed in tariffs, but where electricity costs are rapidly increasing.

Encourages further energy efficiency
Something I've noticed with some households that go solar is a sudden awareness of and interest in electricity consumption, which in turn leads to other energy efficiency and electricity saving measures being implemented.

Durable and reliable
Most solar panels should have a useful life of over 25 years - with no moving parts, there's very little to go wrong in the panel itself. Solar inverters, the box between the panels and your switchboard that converts the DC current to AC have a life of around 10 years.

Minimal maintenance
Time = money. Aside from *perhaps* needing to wipe down the panels very occasionally, if ever (solar panel glass has self cleaning qualities), and keeping the inverter dusted, that's about all the maintenance involved.

Increased energy security through distributed generation
It's never wise to put all your eggs in one basket, but that's exactly what we tend to do with energy. We rely too heavily on massive power plants that are subject to failure, human error and also targets for sabotage.

In September 2011, 1.4 million customers of San Diego Gas & Electric were left without power for 12 hours due to an "inadvertent operator error" - the actions of a single employee. 

Home rooftop solar power systems help provide a more secure electricity supply through distributed generation - all that's needed is for mains grids infrastructure to catch up with the technology.

Minimal line loss
The further from the point of electricity generation to the point of consumption, the more energy is lost, usually as heat. It's estimated between 7 - 10% of all electricity generation in the United States is wasted through line loss; which means millions of tons of coal are burned each year for nothing. Rooftop solar power systems only have to transmit over a very short distance, not miles - and no coal is burned in the process.

Reducing the need for peak load stations
In Australia, ten percent of capital expenditure in electricity infrastructure goes towards providing capacity to respond to peaks in electricity demand that occur for just 20 hours a year.

The massive uptake of home solar power systems in the Australian state of New South Wales has delayed the need for baseload fossil fuel based electricity generation capacity in the state being added for around 3 years - and the same will occur wherever there are a high number of home solar power systems installed.

Creates jobs
A census carried out in August 2010 by the Solar Foundation found the U.S. solar industry was employing 93,000 people, with that number expected to have increased 25% by August 2011 (latest census figures expected soon.). A 2011 report prepared for Solar Energy Industries Association found 75 cents from every dollar spent on a solar installation in the US makes its way back into the US economy through wages and associated services.

Optimizes land usage
One of the prickly issues involved with large solar farms (or any electricity generation plant) is the large amount of land they require. Our cities and towns provide a sea of rooftops that could be harvesting energy from the sun.

Encourages wider adoption
Solar farms stuck out in the middle of nowhere are seen by relatively few people. A solar farm on your rooftop will likely be seen by many - it helps keep the technology in front of people and stirs up curiosity that results in research. It's been shown that a single household installing a solar power system can act as a catalyst for other households nearby to do the same. Be the solar pioneer in your street! :)

There's so much more to home solar power than just the free electricity aspect. Aside from slashing your electricity bill, as you can see from the above, the other benefits to you, the wider community and the environment are substantial.

Five secrets to shopping for appliances

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by Daniel DiClerico, provided by ComsumerReport.org
Sunday, October 30, 2011

Fall is a great time to find a bargain on home appliances, large and small. Holiday sales are heating up, especially on ranges, cooktops and microwaves. Plus retailers have to clear out inventories to make room for the latest vacuums, coffeemakers and more. But with Black Friday looming, the make-or-break stakes mean you could be subject to pushy sales tactics or less-than-full disclosure about the particulars of your purchase. With that, here are five things appliance stores might not tell you.

Extended warranties typically don't pay. If you're buying a major appliance, chances are you'll be pitched an extended warranty, which might sound tempting given the size of the investment. But Consumer Reports surveys have found time and again that most appliances don't break during the extended-warranty period. And even when breakdowns do occur, the median cost of the repair, $150, isn't much more than the median price of the warranty, $142.

Price is always negotiable. If you've never haggled over the sticker price of an appliance, you're missing out on big possible savings. When we last surveyed major-appliance shoppers, 35 percent said they tried to negotiate the price and, of them, 72 percent succeeded in saving a median of $97. You don't have to play hardball. Simply finding a manager and asking nicely if there's anything he or she can do for you might be enough to land a lower price.

Energy Star doesn't guarantee energy savings. While the federal labeling program is a good starting point, you can't just choose an Energy Star model and assume you're getting maximum efficiency. Consumer Reports energy tests routinely reveal a wide range of energy costs among qualifying models, especially with refrigerators, which have different Energy Star specifications depending on the type of fridge. In fact, you can buy an Energy Star-qualified side-by-side model that uses more energy than a top-freezer that doesn't carry the label. Check our Ratings of refrigerators (as well as Energy Star-covered dehumidifiers, dishwashers, freezers, and washing machines) which compare models by efficiency as well as performance.

Free haul-away can cost the planet. Many retailers will come pick up your old appliance for free. But only Appliance Smart Factory Outlet, Best Buy, the Home Depot and Sears participate in the EPA's Responsible Appliance Disposal (RAD) Program, which ensures the recovery of ozone-depleting substances (ODS) from old household appliances. With other retailers, free haul-away could mean a one-way trip to the landfill. Many utility companies are also RAD partners, so they might also take your old appliances off your hands, and perhaps even pay you a $50 or so rebate in the process.

Small appliances are often cheaper online and on TV. That's what we found when we asked readers about their experience buying vacuum cleaners, gas grills and coffeemakers. Amazon.com and the QVC shopping channel had some of the best prices, and Amazon stands alone in terms of selection. Only Costco and Sam's Club offered the same low prices, though selection and service were lacking in both warehouse clubs.

Friday, October 28, 2011

Renters Spending 5% More Than Home Owners

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Rising rents are forcing renters to outspend home owners on housing costs, according to a new study. 
Since 2005, home owners’ housing expenses have climbed from 31.9 percent of their household budget to 33.2 percent. On the other hand, in that same time period, renters’ expenses have jumped from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing and Mortgage Trends.
In the last 26 years, home owners have increased the amount they spend on household expenses by 12 percent while renters have increased it by 22 percent, according to the study.
Earlier this month, Capital Economics economists noted that for the first time in 30 years the median monthly mortgage payment is about the same -- or less -- than the median rental payment. 
Yet, with the bleak job market, home ownership rates continue to fall in many parts of the country, particularly among younger generations. CoreLogic found in its report that the home ownership rate for the 25-to-34 age group dropped from 51.6 percent in 1980 to 42 percent in 2010. For the 35-to-44 age group, home ownership rates fell from 71.2 percent to 62.3 percent over that period.

Short Sale Myths

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Myth #1 – The Bank Would Rather Foreclose Than Bother With A Short Sale
This is one of the most common misconceptions. The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks, investors, and even the federal government have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. Overwhelmingly, banks receive more on their investment through a short sale than a foreclosure.
The qualifications for a short sale include:

Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
Monthly Income Shortfall – "You have more month than money." A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

Myth #2 – You Must Be Behind On Your Mortgage To Negotiate A Short Sale
While this may have previously been the case, today lenders are looking for verifiable hardship, monthly cash flow shortfall, or pending shortfall and insolvency.
If you meet these three requirements and believe that you soon may be unable to afford your mortgage, act immediately. Any delay could limit your options. Do not wait until the countdown clock to foreclosure has started and you have even less time left.

Myth #3 – There Is Not Enough Time To Negotiate A Short Sale Before My Foreclosure
This is a myth that probably hurts homeowners the most. Many do not realize that foreclosure is a process, and that there is time to make decisions that may result in better outcomes.
The foreclosing party—in most cases a lender—can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate contract. For real estate professionals who understand foreclosures and short sales, there is time available until the foreclosure process is complete.

Myth #4 – Listing My Home As A Short Sale Is An Embarrassment
It is understandable to have reservations about letting the world know that you owe more on your home than it is worth. However, according to recent estimates, more than one out of eight homeowners in the U.S. is in the same situation. You are to be congratulated for admitting you need help, taking action, and finding a professional who can work with you toward a solution.
With recent estimates showing 40-60% of U.S. sales will be short sales or foreclosures, you are not alone.

Myth #5 – Short Sales Are Impossible And Never Get Approved
This is a complete falsehood. Are short sales more difficult to execute? Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not.
For example, agents with the Certified Distressed Property Expert® (CDPE) Designation receive thousands of short sale approvals on a monthly basis. These professionals have undergone extensive training in methods to help homeowners in distress and process short sales. While there are no guarantees in any transaction, more and more short sales are being approved regularly. This is far from an impossible process.

Myth #6 – Banks Are Waiting On A Bailout And Not Accepting Short Sales
You may have heard this, but the reality is that banks (and the U.S. government) are trying to do anything they can, within reason, to avoid foreclosing on properties. It is preposterous to believe they would deny a short sale in hopes that some future legislation would pass and pay them for losses.
Today, more banks are aggressively pursuing short sales and working with agents who understand how to process them. Freddie Mac recently hosted a national training Webinar for real estate agents where they expressly stated the organizational goal of "eliminating distressed assets through modification or short sale."

Myth #7 – Buyers Are Not Interested In Short Sale Properties
This is a myth that potential sellers hear all the time. Thankfully, this is just not true. In fact, many agents are getting calls from buyers who say they only want to look at foreclosure and short sales.
For buyers, short sales and foreclosures have become synonymous with "good deals." More specifically, international buyers are targeting these properties. Listing with an experienced agent who is educated in the short sale process will provide you with a great chance of quickly seeing a contract on your property.

via CDPE

Short Summary on Short Sales

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Phoenix Valley Wide Weekly Market Update 10/28/11

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Monday, October 24, 2011

Massive West Valley development to launch

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Two Phoenix-area developers, John F. Long Properties and the Alter Group, are planning a massive mixed-use commercial development in the West Valley that will span Phoenix, Avondale and Glendale.

The project is made up of three separate parcels totaling 1,500 acres and likely will take decades to complete, the developers said.

Long Properties has owned much of the land involved in the project for years but did not create specific development plans for it until recently.

Over the course of its development, the project is expected to create 3 million square feet of employment space, generate at least 10,000 West Valley jobs and rake in $500 million in construction costs, they said.

Most important, the project will make it easier for employers to relocate or expand to the West Valley, because its developers have designed a number of shovel-ready projects that could be built relatively quickly, Alter Group and Long Properties representatives said.

"If that phone rings, we can be ready for them," said Jim Miller, property manager for Phoenix-based Long Properties.

Construction is set to begin before the end of the year on a 60,000-square-foot medical office building at one of the three sites, said Kurt Rosene, senior vice president of national development at Skokie, Ill.-based Alter Group's Scottsdale office.

An 80,000-square-foot medical office building and a retail center already exist nearby on the site.

The developers said they have a client lined up to occupy the planned building but would not disclose the company's name, saying they would announce it at a groundbreaking ceremony later this year.

That project will be part of Algodon Medical and Office Park, northeast of Thomas Road and Loop 101 in west Phoenix, one of three distinct office and light-industrial parks involved in the West Valley development partnership.

Miller said Algodon ultimately would be part of a larger, mixed-use development called Algodon Center that will span 1,000 acres in Phoenix and Avondale, bisecting Loop 101 and stretching north from Thomas Road to Campbell Avenue, just south of Camelback Road.

A second, smaller park called Aldea Centre will be developed on 150 acres at the southwestern corner of 99th Avenue and Bethany Home Road in Phoenix, Miller said.

The massive project's third component will be a 300-acre commercial park next to the Glendale Airport called Copperwing Business Park, southeast of Glendale and 115th avenues, in Glendale.

Long Properties, the master-plan developer for the three commercial parks, owns all 1,500 acres and has obtained mixed-use commercial zoning on all the land from the three municipalities in which it is located, Miller said.

Long Properties owns the land outright and has invested $7.5 million in infrastructure development such as power and sewer hookups, he added.

The Alter Group will market the properties and develop individual structures as they are needed, Rosene said.

Rosene and Miller said their expectations for the project's total development cycle were conservative and realistic.

"If we were the only developer in the Valley doing office, it still would take 20 years," Miller said.

Rosene said the project's greatest benefits to the West Valley would be realized not overnight but over a long period of years.

The project's existence should make it easier for quality employers to choose the West Valley when scoping out locations for a new office building, manufacturing plant, retail center or other commercial facility, he said.

"We're not just trying to get in and out in a few years, build some buildings and make some money," Rosene said.

by J. Craig Anderson - Oct. 21, 2011 03:57 PM
The Arizona Republic

Realtors decry potential loss of mortgage deduction

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Eliminating the mortgage-interest deduction is a looming option for cutting the nation's budget deficit. Realtors are taking to the road to fight against that and other issues they believe will hurt the already ailing housing market.

Thursday morning, the National Association of Realtors homeownership bus, painted red, white and blue, rolled into Phoenix and parked in front of the wine bar and restaurant Postino on Phoenix's Central Avenue. Local and regional NAR leaders, as well as several agents, were there to protest the potential loss of the tax deduction as well as lower loan limits on government-backed mortgages.

"The mortgage deduction is a hot button for not only Realtors but homeowners," said Holly Mabery, of the Keller Williams Heartland Group, at the event.

According to NAR data, the average mortgage deduction for Arizona homeowners was about $14,000 last year. That's only a few thousand dollars more than the standard tax deduction. The deduction essentially drops the taxable income of homeowners because they can deduct the interest they pay on their mortgage in a year.

Susan Ramsey of Re/Max Integrity of Glendale said the tax deduction gives hundreds of thousands of Arizona homeowners an extra $2,000 to $5,000 from their tax refund.

Ramsey, president of the Phoenix Association of Realtors, said that's money that goes back into the economy, and metro Phoenix's economy needs it.

Much of the debate over the mortgage deduction is because it benefits the wealthy more than middle-class homeowners. The pricier the home and higher the mortgage, the bigger the deduction is for the tax filer.

According to the Internal Revenue Service, about 75 percent of U.S. homeowners who claimed the tax deduction in 2009 earned at least $100,000. Fewer than 25 percent of homeowners earning about $50,000 benefited from the mortgage-interest deduction.

A lot of figures on how much the mortgage deduction costs the U.S. government have been bandied about in this debate, ranging from $800 million to $130 billion a year.

And no one disputes that wealthier taxpayers save much more with the deduction than the middle class, which has been hard hit by the recent economic downturn.

One concern in metro Phoenix involves people who continue to pay on a mortgage larger than their house is worth. If they lose the tax deduction, will that be the final incentive to walk away from their home and loan?

Realtors are also concerned about the psychological impact of losing the deduction.

Christopher Paris, an agent with HomeSmart Elite in north central Phoenix and the incoming Phoenix Realtors president, said too many potential buyers are hesitant to purchase now because of the economy, and the loss of the tax deduction will make things worse for the housing market.

Realtors are also fighting for conforming mortgage limits to climb back to 125 percent of an area's local median price. Congress recently lowered the loan limit to 115 percent.

The Realtors' bus was in Tucson on Friday night and is making its way to Anaheim, Calif., for the group's annual meeting.

by Catherine Reagor, columnist - Oct. 21, 2011 04:28 PM
The Arizona Republic

Friday, October 21, 2011

Long Term Benefits of Buying vs Renting

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Tuesday, October 18, 2011

What’s in your credit report?

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Although each credit reporting agency formats and reports this information differently, all credit reports contain basically the same categories of information. Your social security number, date of birth and employment information are used to identify you. These factors are not used in credit scoring. Updates to this information come from information you supply to lenders.

Identifying Information.
Your name, address, Social Security number, date of birth and employment information are used to identify you. These factors are not used in credit scoring. Updates to this information come from information you supply to lenders.

Trade Lines.
These are your credit accounts. Lenders report on each account you have established with them. They report the type of account (bankcard, auto loan, mortgage, etc), the date you opened the account, your credit limit or loan amount, the account balance and your payment history.

Credit Inquiries.
When you apply for a loan, you authorize your lender to ask for a copy of your credit report. This is how inquiries appear on your credit report. The inquiries section contains a list of everyone who accessed your credit report within the last two years. The report you see lists both "voluntary" inquiries, spurred by your own requests for credit, and "involuntary" inquires, such as when lenders order your report so as to make you a pre-approved credit offer in the mail.

Public Record and Collection Items.
Credit reporting agencies also collect public record information from state and county courts, and information on overdue debt from collection agencies. Public record information includes bankruptcies, foreclosures, suits, wage attachments, liens and judgments.

via myfico

Wednesday, October 12, 2011

Top 6 reasons mortgage applications are rejected

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By Tara-Nicholle Nelson
Inman News™

Half of refinance applications are abandoned or rejected, as are 30 percent of purchase mortgage applications, according to the Mortgage Bankers Association. All told, the Federal Financial Institutions Examination Council (FFIEC) says that well over 2 million mortgage applications were rejected last year.

Want to avoid falling into that number? It's tough -- especially in light of the fact that mortgage lenders have become increasingly restrictive in terms of their lending guidelines since the housing market crash.

Here, as a cautionary tale and primer on what to expect, are the top six reasons mortgage lenders reject applications.

1. Income issues. Most failed applications falling into this category have income too low for the mortgage amount they are seeking; often, a spouse's credit issues can create this problem, too, as the income the spouse plans to actually chip in toward the mortgage cannot be considered by a lender.

But increasingly, the recent vagaries of the job market are also causing this issue, as people who have changed their line of work or have changed from salaried employee to freelancer over the last couple of years can also have their home loan applications rejected based on income.

2. Muddled money matters. If the mortgage for which you're applying plus your monthly payments on credit card, car and student loan debts will comprise more than 45 percent of your total income, you could have problems qualifying for a home loan. You might also run into problems if you rely too heavily on bonuses, overtime, cash wages or rental income -- all of these can be difficult or impossible to get a mortgage bank to consider, and if they do, they might not take all of it into account.

3. Credit issues. Today, the mortgage-qualifying FICO score cutoff falls somewhere between 620 and 660, depending on which lender and which loan type you seek. More than one-third of Americans, by some numbers, have credit scores too low to qualify for a home loan. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible.

4. Property didn't appraise. Since the whole industry had its hand (among other things) smacked for allowing home values to skyrocket in a very short time, appraisal guidelines have tightened up -- some would say, even more than overall mortgage guidelines. So, it is increasingly common to have the property appraise for a price lower than the sale price negotiated between the buyer and seller.

This is especially common in the refinance realm, as well over a quarter of U.S. homes are now upside-down, meaning the mortgage balance owed is greater than the value of the home. (If you're trying to refinance an upside-down mortgage, consider the FHA Short Refi program -- contact your lender or get referrals to any mortgage broker who makes FHA details to apply.)

5. Condition problems. With all the distressed properties on the market, and with most nondistressed sellers barely breaking even, more home-sale transactions than ever are falling apart due to condition problems with the property. Many lenders will not extend financing on homes where the appraiser points out problems like cracked or broken windows, missing kitchen appliances, electrical problems, or wood rot.

And in the world of condos and other units that belong to a homeowners association, if more than 25 percent of units are rented (rather than owner-occupied) or more than 15 percent are delinquent on their HOA dues, new applications for refinance or purchase mortgages on units in the development are likely to be rejected.

6. Technical difficulties with application. The days when lenders just took your word for it are long, long gone. Applications with incomplete or unverifiable information are doomed.

If any of these mortgage loan application glitches arise in your homebuying or refinancing process, it's critical that you connect with your mortgage professional, be it your banker or mortgage broker, to determine what course of action to take.

In some cases, it might be as simple as buying a stove you find at Craigslist and installing it before escrow closes; but with income issues your mortgage pro will need to help you determine whether it makes sense to pay some bills down, get a co-signer, or even wait six months so your income documentation will qualify.

Friday, October 7, 2011

Tips To Present a Stronger Mortgage Application

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by DEAN HARTMAN on OCTOBER 6, 2011 

As underwriting guidelines for lenders become more stringent, we need to re-examine what a good mortgage application looks like. As home buyers begin their search for a home, there are a few items they should be aware of that they can do to help get their loans approved (with the best possible terms), and, at the same time, lessen some of the stress that goes along with the mortgage process.

1. Income documents
Most lenders want to see a full month of paystubs and two years’ complete Federal Tax Returns. Assembling them ahead of time and holding on to every paystub you get is a good idea even before you find a home and/or submit your mortgage application because it will save you time later. Moreover, looking at those documents and being prepared to explain any deductions that show up is crucial. Child support, alimony, garnishments, and Unreimbursed Employee Expenses are often crippling factors that, if explained and dealt with upfront, can make your loan approval smoother.

2. Asset documents
Most lenders will scour your bank accounts for the two months prior to going to contract. They are looking for large deposits because large deposits can signal a new loan that wouldn’t show up on your credit report yet. What’s a “large deposit”? Typically, any deposit that would represent more than your income can support. If you make $5000 a month, after taxes you likely net $3800 (or $1900 a bi-weekly pay period). Therefore, deposits in excess of that will need to be explained and documented. Sold a motorcycle? Have a paid receipt and motor vehicle documents in place. Received a gift? You will need a Gift Affidavit, proof of the donor’s ability and transfer of the funds. Any and all questions should be discussed with your loan officer.

3. Credit Score Optimization
Do your best to curtail your use of credit as it relates to your available credit lines. Target a cap of 30% of usage of available lines to get the best scores. Do NOT cancel credit cards. That will lower your amount of available credit, thereby raising your percentage of usage. That will damage your score. Do NOT shop for a car, explore life insurance, apply for a new credit card or increase the limits on your current cards because the running of your credit by people in other industries will also lower your credit score. Most importantly, don’t do anything that will require having your credit run without first discussing it with a mortgage professional who knows the impact it could have.

4. Appraisal Concerns
It’s unlikely you will make an offer to purchase without checking out comparable home sales. It’s also likely you received that type of data from the real estate agent you are working with. Make sure your agent prepares the same information for the appraiser. Data about similar sales, similar homes currently on the market and maybe even cost estimates for any repairs or improvements anticipated can preempt future problems with appraised values and conditions.

Overall, it is recommended that you hold onto copies of everything financial, think before allowing your credit to be run and work with an agent and loan officer who can use their experience to put your loan application in its best possible light…as soon as you start thinking about buying a home.

Did You Actually Save Money By Waiting to Buy?

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by THE KCM CREW on OCTOBER 7, 2011 


2.6% percentage the monthly cost of owning the average priced home has decreased since January.

5.9% percentage rents have increased this year.

Thursday, October 6, 2011

New Discounts for Mortgage Borrowers

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By ANNAMARIA ANDRIOTIS, SmartMoney

Lenders are cutting closing costs and offering other discounts to go along with low rates. What's the catch?

As mortgage rates continue to fall, lenders are rolling out splashy discounts and promotions to inspire reluctant home buyers. But critics say the newest offers still stop short of the best deal for borrowers: Lower rates.

From large banks to credit unions, a growing number of lenders are waiving fees, lowering rates and finding new ways to cut loan prices for would-be home buyers and refinancers. Capital One is waiving some closing fees for refinancers, which can save $3,300 on average. Citi and Bank of America are discounting fees by as much as 0.75 percentage point. And online lender Quicken Loans is telling customers who get a mortgage through December that if mortgage rates fall in the future, they'll be able to get the lower rates with most refinancing costs covered.

While some of the deals are available to refinancers, they are mostly aimed at home buyers. In this market, new purchase mortgages can be more profitable for banks. But they currently account for just about 20% of all mortgage applications, according to the Mortgage Bankers Association. "We are still amazed that record low interest rates and significantly lower home prices have not resulted in strong loan demand," says Tim Zimmerman, president and CEO at Standard Bank in Pittsburgh, which is lowering closing costs by up to $500 for home purchases and refinances.

That's a small discount, relatively. Closing costs typically run up to 2% of the loan amount -- $500 would fully cover closing costs for a $25,000 loan. Zimmerman says that on refinances closing costs tend to be lower, and that this discount along with low mortgage rates creates an opportunity for borrowers.

But other offers are more generous. In a rare deal for refinancers, Capital One is eliminating on average $3,300 closing costs -- including the appraisal and title-related charges -- for homeowners who refinance into a 30-year mortgage in some locations, including New York, Texas and the Washington D.C. metro area. Some credit unions are also slashing closing fee costs. In August, for example, the largest credit union, the Navy Federal Credit Union (designated for Department of Defense employees and their families) began offering $2,500 off of closing costs for borrowers.

Other lenders are discounting costs that borrowers may pay when they sign up for a mortgage. Borrowers have the option to pay what are called "discount points" -- a prepayment of interest -- in exchange for a lower interest rate. One point equals 1% of the loan amount. Citi is offering home buyers 0.75% of the loan amount that can be used to offset discount points. On a $375,000 mortgage, the credit would be $2,812.50 -- plus the lower interest rate over the life of the loan. Earlier this year, Bank of America began offering 0.25 percentage point off discount points in 12 states; next month, the bank will extend the offer in nine more states, including South Carolina, Texas and Washington D.C.

But if you're seeing incentives, says Keith Gumbinger, vice president at mortgage-data firm HSH Associates, there might be a catch. To qualify for the Bank of America discount, for example, consumers must have at least $50,000 socked away with the bank or its investment firm.

Other incentives may be designed to distract from a rate that's not as low as it could be. The average rate consumers get on a 30-year fixed-rate mortgage is 4.25% -- about 0.75 percentage point higher than the lowest advertised, according to LendingTree.com. That's almost the widest spread since the firm began tracking the data in February 2010. On a $275,000 30-year fixed rate mortgage, the difference adds up to about $120 more per month, or more than $42,000 over the life of the loan.

For their part, banks say they're looking to attract new customers, or drum up more business with old ones, and that rock-bottom rates, though difficult to get, are accessible for borrowers with the highest credit scores, large down payments and low debt levels. But they also acknowledge that these promotions are good without being too good: A Bank of America spokesman says the institution is looking to price competitively but not low enough to spark an overflow of applications that would prevent it from being able to process the mortgages in a timely manner, the spokesman says.

Still, a low interest rate is still the key to finding the cheapest mortgage. Experts direct borrowers to consider lenders who are most eager for business, including online outfits, which can offer a lower rate because they have lower overhead, and smaller institutions like community banks and credit unions that might have more wiggle room on rates. With rates expected to stay low for a while, qualified borrowers can afford to haggle to get a low rate, which will help them save more than most incentives on the table now.

Wednesday, October 5, 2011

Short Sale vs. Foreclosure: A Short Sale Always Wins

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by CHRISTOPHER REALE, The KCM Blog on OCTOBER 4, 2011.

“Why should a seller go through the short sale process rather than letting their house be foreclosed upon?” 

While we cannot speak to every client circumstance, we can say one thing with complete conviction.  In almost all instances in which a potential seller is contemplating whether they should short sell their house or let it go through the foreclosure process, a short sale is the better option. The following are examples to consider:

Example A - Short Sale
Mr. Smith owns a home in which he has a mortgage balance of $220,000 and a current market value of $150,000. Mr. Smith has elected to short sell his property. His Realtor successfully obtains a buyer who puts forth an offer price of $120,000 (80% current market value according to Realty Trac Foreclosure Report 5/26/2011). After reviewing the buyers offer and the financial hardship information from Mr. Smith, Mr Smith’s bank agrees to accept the short payoff of $120,000 which would leave a deficiency balance of $100,000.

The transaction closes and is final.  Mr. Smith then pulls his credit report 30 days after the transaction takes place. On the report he notices that the mortgage trade line states “Mortgage debt was settled for less than full” and the balance on the mortgage is $0.  Mr. Smith is now on the road to financial recovery.

Example B - Foreclosure
For the ease of illustration we will use the same value and mortgage debt amounts as in Example A. However, Mr. Smith has elected to forgo the short sale process and let the bank foreclose on the property.  The bank holding his mortgage facilitates the proper legal procedures to foreclose on the property, all of which are costly.  Mr. Smith is notified and his property foreclosed upon of which is taken back by the bank to sell as an REO.

Six months later, the bank finally sells Mr. Smith’s home only they sell it for $90,000 (60% of current market value according to Realty Trac Foreclosure report dated 5/26/2011). Remember, as a short sale, the home would have sold for $120,000 keeping the deficiency to $100,000. In addition to the deficiency now being $130,000, the bank has elected to add on legal costs of $15,000 and asset preservation costs of another $5000 for a total deficiency liability of $150,000. Mr. Smith pulls his credit report 30 days after being notified that the bank has sold his property and of his liability.

On the report he notices that the mortgage trade line states “Foreclosure” and the balance is $150,000. Because of Mr Smith’s choice to choose foreclosure vs. short sale his road to financial recovery has taken a major detour. He not only has a foreclosure on his credit report but now has a much larger deficiency balance in which the bank, in most cases, will report on his credit report as a balance owed.

The Best Option is Clear
While the financial and credit advantages are clear when choosing a short sale over a foreclosure, other advantages are sometimes overlooked. The most important of all of them is maintaining the seller’s dignity and peace of mind. We have heard too many stories of families having to leave their homes because of a Sheriff’s order or some other type of legal action. The short sale process alleviates this negative social impact. The process puts the control back in the seller’s hands so that they can get back on the road to financial recovery and start providing for their families. In the battle of the two evils, a short sale always wins!!!

Monday, October 3, 2011

5 Home Improvement Projects that Will Get You Top Dollar For Your Home

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It’s a highly competitive market for home sellers right now. More homes to compete with means that the impression your homes makes - from the curb, and on the inside - matter now more than ever. You can increase your chances of selling faster - and at today’s top dollar - by investing in a select few home improvement projects that have been shown to make a big impact on buyers.

Bad news alert: it might cost you a little time, effort and cash.  The good news, though, is that the best projects for quickly increasing your home’s resale value tend to be cosmetic and fairly simple and inexpensive to do. Here are five projects with big-time return on investment for home sellers-to-be, in terms of their power to attract buyers, and to attract dollars from those buyers.

Painting:  Adding a fresh coat of paint to ceilings and walls is a tried and true way to increase your home’s appeal to buyers. Go for white or neutral tones that help lighten your rooms. (Now is not the time to show off your fascination with fuschia and lime green.) Buyers will have an easier time envisioning how they will infuse their own personalities into your home if they’re looking at a relatively blank slate. 

Painting lightens and brightens rooms, instantly removes scuffs and dings and gives every room a fresh, polished feel. 

Fresh exterior paint - even if your time or cash budget limits your efforts to accents like eaves, shutters, doors and trims - is also a quick, inexpensive way to polish the look of your home from the curb.

Landscaping:  Everything you’ve heard about curb appeal is true. First impressions matter - especially if your house is one of eight or nine a buyer has seen in one day. Buyers will be more excited to look at the inside your home if the outside looks clean, charming and inviting. Mow the lawn, trim the hedges, pull the weeds and plant some flowers, bushes or shrubs for the biggest impact - and be diligent about keeping your landscaping very well-manicured throughout the time your home is on the market. 

Be sure to keep it low-key, relatively low maintenance and neutral, though. This is not the time to indulge your personal fantasies of living in an exotic paradise, unless that matches the existing look and feel of your home, nor is it the time to install a time-intensive English garden that buyers will love, but not want to take on. Think clean, simple and elegant for the biggest boost in value.

Cleaning and de-cluttering:  Start by removing all your family photos from the walls and all sorts of tchochkes and clutter from the tops of tables, desks, dressers and counters. Buyers want to be able to envision their lives in the house, not yours. Personal items - and the visual clutter they create - have been shown time and time again to block buyers’ ability to create this vision. 

Also, remember that buyers are coming to see the house and evaluate its space, not to bear witness to all the fabulous furniture that means so much to you (no matter how amazing your personal taste). Remove furniture that takes up too much space and fills up rooms. Get rid of clutter such as clothes, boxes, piles of mail and other items. 

And then clean - and keep cleaning obsessively, the entire time your place is on the market. Kitchens, bathrooms and bedrooms should look unlived in when they are shown.  And don't forget to clean less obvious places like windows, walls, doors and  and floors, to dust off shelves and furniture, and to polish appliances. 

Plumbing repairs and water stain/damage repair: Paying a plumber to make a few stops throughout your home can be well worth the investment. Leaky faucet in the master bathroom? Get it fixed. Does the space under your kitchen sink look like a science experiment? Leaks and water stains definitely provoke disgust and exasperation on the part of the buyers you want and need to impress.  And they can be pretty cost effective to fix - ask your agent for a referral, if you need one.

Staging:  Staging your home can make a dramatic difference in the price for which your home sells. Good staging is equal parts:
(a) removing your personal belongings and replacing it with more  artwork, decor and cleaner-looking furniture,
(b) and tweaking the home’s paint, wall coverings and even landscaping to show the place in its very best light.

When done well, staging can convert your home from just another listing on a buyer’s list to the setting for a fresh, new start to the fresh, new life of their dreams. Professional stagers, in particular, have special skills and materials they use, from convincing you to get rid of a bunch of things you value (but read: junk to a buyer), to  items like mirrors, plants, art work, lamps, pillows and even furniture that tells a visual story of the life buyers can fantasize about living in your home.

Talk to your agent about staging - some agents have the skill to do this on their own, while others might have a professional stager they frequently work with.

In some cases, you might want to take on even larger projects. Before you go that route, talk with a local real estate agent; they are well-positioned to know what sort of updates and features will make the most impact on local buyers. Not all major, non-cosmetic upgrades to your home will create a significant difference in the price it commands, so take advantage of your agent’s expertise as you make decisions about whichproperty preparation investments to make (and which to forego). 

Saturday, October 1, 2011

Median Sold Price in Ahwatukee, Chandler and Gilbert - September 2011

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