Consider a Vacation Home for Fun Times, Investment Returns

Glorious summer days at the lake…the grandkids frolicking at the shore…or a warm fireplace as you wait for the perfect powder at your ski retreat. A vacation home builds memories and it can be a great investment.

In most vacation hot spots, second-home prices are at five-year lows. Some in California and Florida can be had for 47 percent below their 2006 price. Bargains are likely to be available within a couple of hundred miles from where you live.

* There’s more to a vacation place than fun and up-front bargains. In the future, the home will be an appreciating asset. Economists say prices are already rising and will continue to rise for at least the next five years.

* The home is a better deal if it’s rentable. The rental potential puts money in your pocket, but it also increases resale value.

* The typical vacation property rents out about 17 weeks a year, according to HomeAway.com. Ask a property management company how much comparable properties rent for by the week. While the rent won’t pay all your expenses, it will help with the mortgage, utilities, taxes and maintenance.

* You will meet and become friends with an entirely new group of people when you own a vacation home. Lifelong friends are made with neighbors and in the community.
* You’ll have tax benefits. Rent it out for less than two weeks, and you won’t have to report the income to the IRS.
* If you rent the home for two weeks or more, you can deduct operating costs, such as maintenance, cleaning, mortgage interest and property tax. You allocate the write-off between personal and rental use.
* As with any rental property, distance is important. Less than 200 miles from your primary home is best.

Finance
* When the property is classified as a second home, you’ll get about the same interest rate and terms as on a home loan, according to HSH Associates.
* If you need the rental property income to qualify for a mortgage, it will be classified as an investment property. The down payment will be higher and the interest rate will be about 1 percent more.

Condo Ownership Sensible in SF, San Jose and Oakland

The San Jose Mercury reported that data shows that buying condos, versus renting, makes financial sense in San Francisco, San Jose, and Oakland in this current market.

A study done by Trulia of the nation’s fifty largest cities focusing on rent-versus-buy price analysis revealed that these Bay Area cities, especially San Jose, ownership is less expensive.
They calculated a rent-to-buy ratio of cost, and any city with a rent-to-buy ratio of 15 or below means that it is less expensive to buy. San Jose’s ratio is 12-1.
Oakland and San Francisco, where renting is cheaper, can make more financial sense to buy depending on the situation. Oakland has a ratio of 16, and San Francisco 19.
To read more about the math behind the study, read the San Jose Mercury article here, or you can take a look at Trulia’s entire report of the fifty biggest cities in the country here.

Four Ways to Spice Up an Open House

Open houses are a great way to meet potential clients, and showcasing the home in an attention-getting way can cement potential sellers’ confidence in the Realtor.

 

1. Take advantage of branding opportunities.

Water bottles on hot days with a custom label can be a great source of advertising. A picture of the house with contact information on the bottle is not only fun, but a way to keep both the home and the Realtor in the mind of the visitor after the open house.

2. Go beyond the basics with food.

You may have heard the age-old technique of baking cookies in the home to infuse it with the scent of homemade treats. However, food at an open house can be another way to stand out. It can encourage people to stay longer and strike up a conversation. Think outside the box – ice cream, chocolate fountains with strawberries, or lattes from an espresso machine.

3. Don’t forget the music.
Having music softly playing enhances the atmosphere and detracts from an empty feeling in the home and makes it more inviting. Soft jazz or other non-lyrical music can be played from an iPod and dock system. Have it centrally located so the music is heard throughout the home.

4. Consider the early evening
A recent Realtor Magazine article suggested holding open houses not only on Sundays, but during twilight hours. This way, people can visit the home directly after work, expanding the potential buyer pool.

Speed- Cleaning Your Kitchen

Speed-Cleaning Your Kitchen

by Hon Akao on March 1, 2011

There are many shortcuts and extra efficient methods of keeping your kitchen spotless without spending too much time cleaning every day. This Real Simple magazine article recommends setting up three kitchen to-do lists: daily, weekly, and seasonally.

Daily chores include wiping down the sink, stovetop, counters, and sweep or vacuum the floor. They tally this up as taking 3 minutes and 30 seconds total.
Weekly, Real Simple recommends wiping down backsplashes, appliances, cabinets, garbage can, switchplates and phones. Also, one should mop weekly (about four minutes, the most time consuming of these quick tasks), and wash the dish rack. The weekly tasks add up to about 20 minutes.
Seasonal tasks include deep cleaning and scrubbing of the refrigerator, sink, and other appliances four times per year.

While cleaning isn’t everyone’s idea of fun, using these quick guidelines will decrease your cleaning time to minutes a day – the time it takes to brew your coffee.For motivation, Marla Cilley, author of Sink Reflections, recommended in the article to clean your sink first.

“A sparkling sink becomes your kitchen’s benchmark for hygiene and tidiness, inspiring you to load the dishwasher immediately and keep counters, refrigerator doors, and the stove top spick-and-span, too.”

Save More Money With Your Home

This article about being financially fit has great advice for small, inexpensive ways to save more money over time with your home.

Several tips that stand out are:

1. Be fire ready – Check that your fire extinguishers are functioning and easily available, and check your smoke detectors as well.

2. Prevent shocks – Outlets near water, such as in the bathroom or kitchen, should have a ground fault circuit to prevent shocks and electrocution. An inexpensive tool can alleviate this worry.

The major takeaway from this is that by making small investments in your home, you save yourself more in the long-run and protect the value of your property.

Full article here.

This Week's Market Insights

There are six economic reports worth watching this week that are likely to affect mortgage rates in addition to the minutes from the last FOMC meeting and two speaking appearances from Fed Chairman Bernanke.

This is a far cry from last week’s schedule, making it very likely that we will see plenty of movement in mortgage pricing this week.

There is no relevant economic data scheduled for today, so look for the stock markets to be the biggest influence on bond trading and mortgage rates. The week’s first release is one of the highly important ones when the Commerce Department posts January’s Retail Sales data. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched quite closely.

If Tuesday’s report reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall since it would be a sign that the economy is not as strong as many had thought. However, a stronger reading than the 0.5% increase that is expected could lead to higher mortgage rates.
Wednesday brings us three economic releases in addition to the FOMC minutes. January’s Housing Starts will be posted early Wednesday morning, giving us an indication of housing sector strength and mortgage credit demand. It usually does not affect rates unless the results vary greatly from forecasts. Current forecasts are calling for an increase in starts of new housing.
The Labor Department will post their Producer Price Index (PPI) for January early Wednesday morning also. It measures inflationary pressures at the producer level of the economy and is considered to be one the two key measures of inflation we see each month. The core data is more important to market participants because it excludes more volatile food and energy prices. It is expected to show an increase of 0.7% in the overall reading and a 0.2% rise in the core data. Good news for bonds would be a decline in both readings, particularly the core data as it would ease concerns about inflation that make long-term securities less attractive to investors.
January’s Industrial Production data will be released mid-morning Wednesday. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities and can have a moderate impact on the financial markets. Analysts are expecting to see a 0.6% increase in production from December to January. A smaller than expected rise in output would be good news and should push bond prices higher, lowering mortgage rates Wednesday. That is assuming that the PPI doesn’t give us any negative surprises.
The minutes from last FOMC meeting will be released Wednesday afternoon. Traders will be looking for any indication of the Fed’s next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading.
These minutes may indicate if there is a consensus amongst Fed members or if there is disagreement about their actions or inactions. This release may lead to afternoon volatility Wednesday, or it may be a non-factor. However, the minutes do carry the potential to influence mortgage rates so they should be watched.
The sister report to Wednesday’s PPI will be posted early Thursday morning when the Labor Department releases January’s Consumer Price Index (CPI). The difference between the two is that the CPI measures inflationary pressures at the more important consumer level of the economy. With exception to maybe the Employment report, the CPI is the single most important report that we see each month. Its results can have a huge impact on the financial markets, especially on long-term securities such as mortgage-related bonds. It is expected to show a 0.3% increase in the overall index and a 0.1% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall.
Also Thursday morning will be the release of the Leading Economic Indicators (LEI) for January. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.5% increase, meaning that economic activity may rise in the near future.
A smaller than expected rise would be good news for the bond market and mortgage rates, but the CPI draws much more attention than the LEI. Therefore, for this report to influence mortgage pricing, it will have to show a sizable variance from forecasts and the CPI will have to match estimates.
Fed Chairman Bernanke will speak before the Senate Banking Committee Thursday morning and overseas Friday morning. Neither engagement is expected to bring any new theories or give an indication of the Fed’s next move to boost or limit economic activity. The markets always watch his words, but I would be surprised if either of these lead to changes in mortgage rates.
Overall, the most important day of the week will likely be Thursday with the CPI being released, but Tuesday and Wednesday will also be active days for mortgage rates due to the importance of the Retail Sales data and the number of events scheduled Wednesday. There is nothing of concern scheduled for today or Friday, so we can label them the best candidates for the calmest day.
In other words, be prepared for an active week in the markets and mortgage rates, particularly the middle part of the week.

Ways to Accumulate Your Down Payment

Do you want to take advantage of the market and buy a home?  Here are a few tips  that may help you come up with your down payment or reduce closing costs

n   Have your parents give you the money as a gift.

Documentation will be required to prove that the money is actually a gift and not a loan. Any taxpayer is permitted to give up to $10,000 per year to another person without having to pay a gift tax. Technically, your mother could give you $10,000 and give $10,000 to your spouse. Your father could do the same. With 20% down the whole downpayment may be in the form of a gift. Less than 20% down, the buyer should be prepared to put down 5% of their own funds.

n   Borrow against your 401K or insurance policy.

You can also cash out your 401K but you will be subjected to withdrawal penalties and payment of taxes. If you borrow against it, the loan payment will be counted as a debt.

n   Sell or borrow against an asset.

Selling an asset such as a car can help increase the amount of money you have available. Borrowing against an asset is also acceptable as long as you qualify with the additional debt. (Payment may not be counted as a debt when down payment is 20% or more.)

n   Obtain a low point or zero point loan.

This will reduce the amount of your closing costs substantially. In some instances, the lender can also pay all or a part of your non-recurring closing costs.

n  Ask the seller to pay for all or a part of you non-recurring closing costs.

(On loans to $240,000 seller may also pay recurring costs.)

Your real estate agent can assist you with this when you make an offer on a home.

n   Ask the seller to carry back financing.

If the seller does not need all of the equity in their property, they may be willing to carry some of the financing which will reduce the amount of your down payment.

n    Check into city and/or county down-payment assistance programs.

n  Close escrow late in the month to reduce the amount of prepaid interest on the loan.

Mortgage Process Too Confusing for Some in Recent Survey

An article in yesterday’s Wall Street Journal revealed the results of a survey that determined the mortgage process was considered to be the one of the most confusing parts of buying a home.

While 54% of respondents said finding the right home was the most difficult part of the process, one-third of those surveyed by MortgageMatch.com felt that understanding the mortgage process was the most confusing.

According to the article, “nearly 23% of those surveyed said that the mortgage process was challenging because documentation requirements from lenders kept changing, compared with 7% of borrowers who said it was hard to qualify because their credit score wasn’t strong enough.”
While the requirements have changed, it is important that our customers are educated fully along every step of the sometimes-confusing mortgage process labyrinth. Your comfort and understanding is a priority, and if you have any questions, speak with a loan officer today.
Take a look at the full WSJ article here. Do your concerns match up with the survey results?

This Week’s Market Commentary - 2/2/2011

Yesterday’s bond market is in negative territory following early stock gains and stronger than expected results from an important economic report.
The Dow is currently up 89 points while the Nasdaq has 37 points. The bond market is currently down 19/32, which will likely push the morning’s mortgage rates higher by approximately .250 of a discount point.
The Institute of Supply Management (ISM) released their manufacturing index for January late this morning. They announced a reading of 60.8 that exceeded forecasts of 57.5 and that December’s reading was revised higher by 1.5 points.
This indicates that more surveyed manufacturers felt business improved during the month than did last month- a sign of a strengthening manufacturing sector and economic growth. That means this data is negative for bonds and mortgage rates because economic growth makes long-term securities such as mortgage related bonds less attractive to investors.
Today has no government reports scheduled for release or data that is considered likely to impact mortgage rates. However, there are a couple of private sector employment-related reports due to be posted. They normally would not be of much concern, but one of them showed an unexpected spike in new hires recently that caused selling in bonds and an increase in mortgage rates.
I still am not too concerned about their results, but the potential does exist that a significant variance in the numbers could lead to changes in mortgage pricing.
Thursday has a weekly (unemployment figures), monthly (December’s Factory Orders) and a quarterly report (4th quarter Employee Productivity and Costs) all scheduled for release. None of them individually is considered to be highly important, but combined they can move mortgage rates enough to notice if they all show similar results.

New Home, New Space… New Furniture?

A brand new home offers a clean slate for décor, a tabula rasa that you can fill with new furnishings, artwork, paint colors, and more. However, this can quickly become overwhelming. There are many ways to go about furnishing and decorating your new home: filling it with your old furniture, starting fresh, or a mix of the two that fits your new space perfectly.

If you are on a budget, it is especially important that you prioritize in decorating.

It can be tempting to buy all of the pieces you love and fill that blank space quickly, but patience is important. Think about what pieces or furnishings you need and will use most – a couch, beds, and other things you need to live in your new home. That beautiful antique armoire can wait if it would send you in to debt.

Focusing on less expensive new accent pieces is a way to change the look of a room without changing much.  “Accents draw the eye – that’s where an edit is important,” said Bay Area interior designer Cynthia Spence. “If you have too many, it looks like clutter. It says something about the person that lives there. It’s what personalizes the space.” NewHomeGuide.com recommends that you make the most out of what you already have until you can afford to design your dream home. “Get the most mileage out of items that are still usable until you can afford to replace them,” states the website. They recommend repainting or re-staining wooden pieces or putting slipcovers on upholstered furniture.

Buying new big ticket items like beds and couches is something you might want to wait to do. “The most important thing I think is to try to avoid spending money on something you know you want to change in a big way down the road,” said Spence. She recommends buying accents in a favorite color, and painting the walls in a way that becomes a part of the décor.

“Avoid apartment beige; use saturated pigments for your wall colors, such as chocolate brown or taupe slate gray. Don’t be afraid of black for accent colors,” said Spence. “Paint is definitely your friend.”

How to Conserve Water at Home

Not only will reducing your water usage at home shrink your utility bills, conservation of water helps to prevent environmental pollution in lakes, rivers, and other nearby bodies of water. Conserving water will prolong the life of septic systems by not over-saturating the soil.

Four Easy Ways to Conserve Water

1. Check your toilet for leaks

Put a drop of food coloring in the toilet tank water and do not flush the toilet. If the color appears in the bowl within 30 minutes, this means you have a leak that needs to be fixed. Almost all replacement parts are cheap and simple to install.

2. Don’t leave the hose running while washing your car
Instead, use a bucket of soapy water and use the hose only for rinsing. The average DIY car wash can use up to 150 gallons of water if the hose is running!

3. Take shorter showers
Pay attention to how long your showers are, as just a four minute long shower can use up to 40 gallons of water. Shorter showers make a big difference in water usage.

4. Use your dishwasher and washing machine for full loads only
For water conservation optimization, only use these appliances with full loads of dishes and clothes. Many manufacturers of dishwashers recommend against pre-rinsing, saving a lot of water. With clothes washers, try to avoid using the permanent press setting, as it adds 5 gallons of water. Consider Energy Star appliances, which use less water and may qualify you for a federal tax credit.
photo credit: flutterfly2002

Quick Fixes For a Great Looking Kitchen

Quick Fixes For a Great Looking Kitchen

by admin on January 17, 2011

A modern look is very popular right now.

Cabinetry
Damaged or dirty cabinet doors are a big turn-off for buyers. But that’s easy to fix. Most cabinetry can be re-painted after cleaning it and applying a coat of primer. Just check that the materials can take paint or whether you need to give any special preparation to the doors first. Alternatively, you can just replace the doors. There are companies that provide doors to fit existing kitchen cabinets.

Hardware
Another way to fix up cabinets is to replace the hardware, perhaps changing out-of-date fixtures for sleek, modern ones. This is a very cheap and easy way to update your kitchen.

Sinks and faucets
Try trading your faucets for more modern designs and replacing a damaged or very dirty sink.

Appliances
People love modern stainless steel appliances. It could be a good investment to upgrade your appliances to the most modern designs to give your kitchen the ‘wow’ factor.

Backsplash
An easy way to update your kitchen is to replace the backsplash. Subway ormosaic tiles or a sheet of stainless steel are very popular right now, and this quick change can really lift the feel of the room.

Make sure the flooring matches the rest of the kitchen.

Flooring
Dirty, tired linoleum floors will turn off buyers. Try updating with tough laminate flooring or some tiles that tie into the rest of the kitchen.

Paint
Change the decor easily by repainting in fresh, modern, neutral colors. A coat of paint can be a very cheap way to refresh the look of your kitchen.

Clutter
Just by simply removing the clutter that accumulates on your countertops, you can freshen up your kitchen. Throw out things you don’t need; put away others you only use occasionally.
photo credit: Mirage floors

Simple Steps to Shrink Your Energy Bill

There are plenty of simple ways to reduce your energy bill without a lot of effort.

Cutting back on your energy usage will not only save you money on monthly bills, but will help the environment as well.

Three simple things you can do today:

1. Turn off the lights when you leave the room

This just takes a second of your time and really adds up. Turn the lights out when you leave for work so they are not wasting energy and adding to your bill.

2. Unplug electronics when not in use
This includes chargers and coffeemakers, which can suck up a lot of energy.

3. Buy energy efficient light bulbs
They last longer and use less energy, saving you money just by using a different type of light bulb.

Other Ways To Save Energy

Solar panels are an investment initially, but save you a lot over the long term. Installing these is also a great way to help the environment by using solar power.

One can get federal tax credits for energy efficiency, and that means double the savings – on taxes and on bills. Buying EnergyStar appliances, other energy efficient products and efficiency upgrades to your home can earn you a federal tax credit of 30% of cost, up to $1,500.

What methods do you use to cut back on energy consumption and save money?