Daily Archives: November 12, 2014

When Homebuying Is A Waste of Money | North Salem Real Estate

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For many Americans, home buying is simply a waste of money.

You could spend years paying thousands of dollars of interest on a mortgage, never reap the full tax benefits and never see enough appreciation to make it worthwhile.

Home ownership is one of the great myths of the American dream. But there’s nothing wrong in having a home. Buying it may not make the most financial sense.

A recent study by Morningstar's MORN +0.39% HelloWallet, the Chicago-based financial research firm, showed that where you’re considering of buying makes the difference in your decision. (Disclosure: I freelance for Morningstar.com)

Much of the decision in homebuying should be dictated by the “rent-to-price” ratio. This comparison shows you when it makes sense to rent instead of buy.

In some cities, for example, renting may be the only option because home prices are stratospheric: Think San Francisco, New York and Boston. Other cities, though, may offer a plethora of bargains such as Memphis, St. Louis and Cleveland, Dayton and Toledo Ohio.

“While there is no question that homes have become the most valuable asset for U.S. households, our research finds that homeownership is often not the best strategy for building wealth,” said Matt Fellowes, founder and CEO of HelloWallet and a former scholar at the Brookings Institution.

He added: “Workers need to take a hard look at other investment choices before deciding to buy a home. Employer-sponsored retirement or health savings programs, 529 college savings plans, or even IRAs may be more effective vehicles for families to build wealth and get ahead.”
When It’s Best to Rent

You may not reap the full benefits of tax write-offs for taxes and mortgage interest. That’s a signal that renting is wise. Median income homeowners realize no federal tax benefit in 75 percent of major cities.
You have to look at the local price cycle. Many homebuyers purchase at the top of the market and won’t reap appreciation from the past. More than half of current homeowners, or more than 40 million households, purchased their homes during time periods when average homebuyers would have been better off renting and investing.
Don’t overstate the benefits of buying. Many popular, free, online “buy-or-rent” calculators inflate the benefits of home buying. The study shows that calculators provide inaccurate guidance to more than 90 percent of renters considering whether to buy a home by overestimating tax benefits and underestimating the returns an individual can earn by investing.
Do the math. Prospective home buyers should calculate their “rent-to-price” ratio, or the ratio of the annual rental costs of a home compared with its purchase price, to determine whether to by a home or rent and invest.
What’s Your Bottom Line? If the rent-to-price ratio is 5% or less, people may be better off renting and investing any savings. If the rent-to-price ratio is greater than that, they may be better off buying a house.
If you have a yen to own a home, just keep in mind that ownership also entails property tax and maintenance. In growing areas, taxes are likely to rise to build schools, fire stations, libraries, etc.

 

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http://www.forbes.com/sites/johnwasik/2014/11/12/when-homebuying-is-a-waste-of-money-five-smart-moves/?partner=yahootix

Mortgage volume stalls with rates | Cross River Real Estate

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Mortgage rates-and applications-barely moved last week.

Total application volume fell 0.9 percent from the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association.

Applications to refinance, which saw a brief surge on lower rates in October and then a precipitous drop when rates rose again this month, fell 2 percent from the previous week. Mortgage applications to purchase a home rose 1 percent from the previous week but are still 11 percent below year-ago levels.

A bright spot in the mortgage market today appears to be for veterans. Loans guaranteed by the Department of Veterans Affairs rose to 11 percent of total applications. Usually loans backed by the government mortgage insurer, the FHA, are more popular, but its share came in at 9.6 percent last week. Higher fees and insurance premiums have kept many borrowers away from even this low down-payment loan option.

VA loans require no down payment in most cases, and do not require mortgage insurance. This may be why they’ve gained popularity as home prices continue to rise.

“Apropos of Veteran’s Day, the VA share of the market reached a new high,” said Michael Fratantoni, chief economist for the Mortgage Bankers Association. “VA’s share has exceeded FHA’s share of loan applications for the last three weeks.”

 

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http://finance.yahoo.com/news/mortgage-volume-stalls-rates-130008561.html

Prepare Your Home for Winter | Waccabuc Real Estate

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By the time fall rolls around, most of us are ready to say ‘goodbye’ to the summer heat, and hello to a few months of cool weather. However, autumn is more than just a time to enjoy the changing color of the leaves and the dropping of the mercury in the thermometer; it’s a time to prepare your home for the coming ravages of winter. After all, if you don’t take care of potential problems now, before they actually happen, you could find yourself stuck with some major repair work right in the middle of the Holiday Season. Here’s a quick list of things you need to do to prepare your home for the coldest months of the year.

1. Prune back your hedges, shrubs, and branches.

When it comes to being covered in snow, the plants with less surface area are less likely to get damaged. Trimming back your outdoor plants will help keep them safe, and will give them a nice fresh start to grow from once spring arrives.

2. Check around your doors and windows.

With the cold fast approaching, now’s the time to locate any areas of your home through which heat could escape. Make sure that the caulking around you windows is solid and free from cracks, and check around your doors to make sure that they shut securely without leaving gaps.

3. Give the heater a test run.

Replace your furnace filter, open your vents, and kick the heater into high gear, because you’ll want to make sure that your heater works before you get trapped inside during a blizzard. If you notice any problems, call a repairman and get it sorted out quickly.

4. Clean and cover the AC outdoor condensing unit.

This is good idea especially if your area drops into low temperatures or has heavy snowfall. Use a high pressure hose to clean any debris out of the condensing unit, and then cover it up for the winter. If left open, the harsh winter weather could damage your system, leaving you without a cooling system once things begin to heat up again.

5. Clean out your gutters.

If you have any trees near your house, then chances are that once all the leaves have fallen, you’ll have rain gutters that are absolutely full of debris. Clean these out before the weather starts to get any worse, otherwise you could have to deal with water buildup and ice damage.

6. Check the roof.

If you have any missing or damaged shingles, you should hurry to get them replaced before winter arrives. Also check to see if you have any significant air leaks coming up through the roof, and have them repaired if you do.

7. Blow out your sprinkler system.

In many areas, simply turning off your sprinklers isn’t enough to protect them. Have your sprinkler lines completely emptied of any residual water by using an air compressor (or hiring someone to use an air compressor) to blast it free. Water left in the pipes could freeze, causing massive damage to your home irrigation system.

8. Fix any cracks in your driveway and other paved surfaces.

Small cracks can become big eyesores if you allow water to get into them and freeze. So, before that happens, take a close look at any of your paved surfaces and fill any cracks with either poured concrete or special concrete crack sealer.

 

 

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http://www.motherearthnews.com/green-homes/