Many Borrowers Unaware Higher Payments Coming

Borrowers with home equity lines of credit (HELOCs) may unexpectedly find their monthly payments rising. Mortgage rates have been on the rise, and while that doesn’t impact borrowers with fixed-rate mortgages, those with adjustable rates are seeing sudden increases. HELOC borrowers in particular, have adjustable rates on these second loans, and the payments change once a year.

Originations of HELOCs reached a peak in 2005 at $367 billion. Their popularity dwindled significantly the last few years, but as home prices have recovered, borrowers have equity again and HELOC originations are gaining ground. HELOC originations are estimated to reach $173 billion this year.

For borrowers who use the line of credit, they likely will see higher monthly payments as interest rates rise. Those increases could amount to an extra $100 more per month. However, the increase is dependent on the size of their loan.

"For those that have a high balance, clearly their payment will increase, and it will cause some prepayments" Sam Khater, an economist with CoreLogic, told CNBC. "But rates simply reflect the supply and demand for money, and that is the growth rate in the economy."

Many HELOCs from the housing boom days had a 10-year draw period, when borrowers only paid the interest on the loan and then made payments toward the principal after that. HELOCs today often require some principal payments from the onset.

Borrowers may be unaware that their costs could soon increase. Only 19 percent of 800 borrowers recently surveyed by TD Bank understood that a HELOC reset could cause their monthly payments to stretch higher. Of HELOC borrowers from 2005 to 2008 who now have their loans resetting or within the next two years, 53 percent said they were unaware about any reset impact to their monthly payments.

"If borrowers do not have a financial plan for the end of their draw period, they should contact their lender as early as possible," Mike Kinane, senior vice president for home equity at TD Bank, told CNBC. "A responsive lender will offer multiple ways for you to pay down your line of credit."

SOURCE: DAILY REAL ESTATE NEWS

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Home Owners Should Feel Twice as Rich

Thanks to rising home prices, home owners are getting richer, a new study says. The amount of homeowner equity has doubled in the last five years, according to CoreLogic’s latest Home Price Index and HPI Forecast for September 2016.

"Home equity wealth has doubled during the last five years to $13 trillion, largely because of the recovery in home prices," says Frank Nothaft, chief economist for CoreLogic. "Nationwide during the past year, the average gain in housing wealth was about $11,000 per home owner, but with wide geographic variation."

Home owners in several markets across California, Washington, Oregon, Colorado, and Utah are seeing some of the most growth, with double-digit home price gains.

Home owners nationwide likely are to see even more equity in the coming months, too.

“Home-price growth creates wealth for owners with home equity,” says Anand Nallathambi, president and CEO of CoreLogic. “A 5 percent rise in home values over the next year would create another $1 trillion in home equity wealth for home owners.”

SOURCE: DAILY REAL ESTATE NEWS

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Average Time to Close: 46 Days

The time to close on a mortgage loan is leveling off at about a month and a half. The time to close fluctuated in recent months following the implementation of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated disclosure rules.

But the average time to close on a mortgage seems to be settling at about 46 days, according to Ellie Mae’s Origination Insight Report. The report shows that the time to close on a loan has remained at 46 days for the past three months. The average time to close a refinance also averaged 46 days.

Sixty-four percent of real estate professionals indicated their contracts were settled on time in August, while 30 percent said they faced delays to settlement, and 6 percent saw their contracts terminated, according to the latest REALTOR® Confidence Index, a survey sent to more than 50,000 real estate practitioners.


The biggest issues affecting a contract delay were issues related to obtaining financing, the appraisal, and a home inspection, according to the survey. “The fraction of delays due to appraisals has increased in recent months, in part due to a shortage of appraisers and other issues reported by REALTORS® (e.g. being asked to make ‘inspections’),” the report states.  

SOURCE: DAILY REAL ESTATE NEWS

Originally Posted On WEDNESDAY, OCTOBER 19, 2016

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Home Owners Using Airbnb Face Financing Snags

Homeowners who are renting out rooms using services like Airbnb are facing difficulties refinancing their mortgages, The Wall Street Journal reports.

Bank giants like Bank of America Corp. and Wells Fargo & Co. reportedly are subjecting borrowers who rent rooms to additional scrutiny when owners try to refinance. Some borrowers are finding they aren’t eligible for certain types of loans or they will have to pay higher interest rates, according to a WSJ article.

For some home owners, they may have assumed the extra income they’re generating from renting out rooms would help them when refinancing. After all, one owner in Seattle says he earned about $30,000 last year from renting out a cottage in his backyard. He thought that extra income would help him when he applied to refinance a home equity line of credit at Bank of America. Instead, he was denied by the bank because he was operating his home as a business. Bank of America says it does not offer home equity lines of credit on investment properties.

Lenders say such room-rental services are blurring the lines between residential and commercial properties and making it much more difficult to classify a home. Lenders typically maintain tighter underwriting standards, such as requiring larger down payments and higher rates, for investment or second home properties.

Online rental services have been seeing rapid growth over the past year. Airbnb’s website had 455,223 active listings as of July, an 80 percent increase from a year prior, according to YipitData research.


SOURCE: DAILY REAL ESTATE NEWS

Originally Posted On THURSDAY, SEPTEMBER 8, 2016

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Good Schools Give 77% Boost to Home Values

Home values can get a big increase from having a highly rated school nearby. According to the new ATTOM Data Solutions 2016 Schools and Housing Report, homes in ZIP codes with at least one good elementary school have values about 77 percent higher than in ZIP codes without highly ranked schools close by.

Researchers looked at home values and price appreciation against 2015 average test scores in nearly 19,000 elementary schools across 4,435 ZIP codes. They considered a “good school” to be one that had an overall test score that was at least one-third above the state average.

The research team found that out of 1,661 ZIP codes with at least one good school, the average estimated home value was $427,402 – 77 percent more than the home value of $241,096 in 2,774 ZIP codes without any “good schools.”

“While good schools are one of the top items on most homebuyer checklists because of the quality-of-life benefit they provide, this report shows that high-performing schools also come with a financial benefit for home owners in most markets – at least over the long term,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “Meanwhile, home prices in ZIP codes without any good schools tend to be more volatile, which might work to a home owner’s financial benefit in the short term but not over the long term of at least 10 years.”

Home owners living near at least one good school have gained, on average, $74,716 in value since purchase — an average return on investment of 32 percent, the study found. On the other hand, home owners in ZIP codes without any good schools have gained, on average, $23,311 in value since their purchase, an average return on investment of 27.5 percent.

SOURCE: DAILY REAL ESTATE NEWS

Originally Posted On THURSDAY, AUGUST 11, 2016

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How Much You Need to Save to Buy A Home in the Top 10 Cities

Saving for a down payment can be a major hurdle for you, the would-be home buyers. Financial experts advise breaking down the savings into a daily amount that likely could fit into their budget.

Realtor.com®’s research team analyzed some of the largest urban areas to figure out how much you need to save per day to purchase a home. They took into account the median home listing price and the average down payment for those cities, and then calculated how much you potentially would need to save each day toward a down payment over a five-year or 10-year period.

Take a look at 10 of the cities below and how much buyers would need to save for a five-year plan in saving for an average down payment:

New York City, N.Y.

• Median home price: $413,900
• Average down payment: 17.2% ($71,191 on median-priced home)
• Daily savings goal (5 year-plan): $38.99

Los Angeles, Calif.

• Median home price: $678,000
• Average down payment: 18.3% ($124,074)
• Daily savings goal (5 years): $67.95

Chicago, Ill.

• Median home price: $264,900
• Average down payment: 13.4% ($35,496.60)
• Daily savings goal (5 years): $19.44

Dallas, Texas

• Median home price: $333,400
• Average down payment: 13.6% ($45,342.40)
• Daily savings goal (5 years): $24.83

Houston, Texas

• Median home price: $334,900
• Average down payment: 12.7% ($42,532)
• Daily savings goal (5 years): $23.29

Philadelphia, Pa.

• Median home price: $235,000
• Average down payment: 12.1% ($28,435)
• Daily savings goal (5 years): $15.57

Washington, D.C.

• Median home price: $439,900
• Average down payment: 12.6% ($55,427.40)
• Daily savings goal (5 years): $30.35

Miami, Fla.

• Median home price: $350,000
• Average down payment: 14.1% ($49,349.99)
• Daily savings goal (5 years): $27.03

Atlanta, Ga.

• Median home price: $269,900
• Average down payment: 10% ($26,990)
• Daily savings goal (5 years): $14.78

Boston, Mass.

• Median home price: $449,900
• Average down payment: 16.4% ($73,783.59)
• Daily savings goal (5 years): $40.41

SOURCE: DAILY REAL ESTATE NEWS

Originally Posted On THURSDAY, JULY 14, 2016

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Student Debt Delays Buyers By 5 Years

Nearly three-quarters of non-home owners say that repaying their student loan debt is delaying their home purchase, according to a new survey by NAR and SALT, a program provided by the American Student Assistance. 

What’s more, more than fifty percent of consumers say they expect to be delayed from buying a home by more than five years. Forty percent of consumers surveyed also said that student debt was delaying them from moving out of a family member’s house after graduating from college. 

The student loan debt burden seems to be holding back older millennials, aged 26 to 35, and those with $70,000 to $100,000 in debt the most from home ownership, the survey finds. 

While a college degree increases the likelihood of stable employment and earning enough to buy a home, consumers graduating with student debt are putting home ownership on the backburner because of the multiple years it takes to pay off their student loans at an interest rate that is often nearly double current mortgage rates, says Lawrence Yun, NAR’s chief economist.

“A majority of non-homeowners in the survey earning over $50,000 a year – which is above the median U.S. qualifying income needed to buy a single-family home – reported that student debt is hurting their ability to save for a down payment,” says Yun. “Along with rent, a car payment and other large monthly expenses that can squeeze a household’s budget, paying a few hundred dollars every month on a student loan equates to thousands of dollars over several years that could otherwise go towards saving for a home purchase.” 

The most common debt amount among the more than 3,200 student loan borrowers surveyed was between $20,000 to $30,000. Thirty-eight percent of those surveyed had $50,000 or more. 

Over three-quarters of the non-home owners surveyed say they are delaying home ownership because they can’t save for a down payment. Sixty-nine percent don’t feel financially secure enough to buy, and 63 percent say they can’t qualify for a mortgage because of high debt-to-income ratios. 

“REALTORS® work closely with our clients and consumers every day; we understand the severity of the problem,” says NAR Vice President Sherri Meadows. “This is not an abstract issue for us. This is why REALTORS® are leading the real estate industry in the discussion of student loan debt and its impact on housing by generating the most encompassing research on this topic.” 

Consumers who graduated with student loan debt six to 10 years ago had the longest delay to home ownership. Thirty-three percent say it took more than two years to move out of a family home. 


“Nearly three-quarters of older millennials, many of whom graduated at the peak or immediately after the downturn, said their ability to purchase a home is affected by student debt,” Yun says. “Add in the detrimental effects of low inventory as well as rents and home price growth outpacing wages and it’s mainly why the share of first-time buyers remains at its lowest point in nearly three decades.”


SOURCE: DAILY REAL ESTATE NEWS

Originally Posted On TUESDAY, JUNE 14, 2016
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Top Reasons Homes Fall Prey to Wildfires

One out of every four calls to fire departments nationwide has to do with brush fires or forest fires, Michele Steinberg of the National Fire Protection Association told attendees Tuesday at the Land Use, Property Rights, and Environment forum during the REALTORS® Legislative Meetings and Trade Expo in Washington, D.C.

That’s an alarming figure, especially as we head into wildfire season. While the number of these fires isn’t necessarily on the rise, Steinberg said, they’re getting bigger in size and putting more homes in peril. Steinberg offered the top risks that make homes vulnerable to fires and what can be done to make them safer.

• Flying embers and fragments of burning wood. In a large fire, embers blowing in the wind can make their way inside a home through cracks and crevices in windows, foundations, and walls. “Imagine hundreds of homes being exposed to these embers at one time, and your fire department only has 10 trucks,” Steinberg said. Home owners should have the exterior of their home checked for any of these cracks and have them sealed.
• Ground fire. Large areas of grass and vegetation fuel a fire. Homes where the grass comes right up to the structure are at an increased risk of catching fire. There should be a five-foot buffer zone between the house and any brush, plants, or grass. Encourage home owners to build out there gardens away from the house.
• Radiant heat. In the largest and most dangerous wildfires, trees that are consumed by large flames put out such scorching temperatures that the heat alone can set a nearby house on fire. Roofs in particular are vulnerable to this heat. Steinberg suggests that when it’s time to replace a roof, home owners should make sure contractors use newer fire retardant material. It’s also best that communities develop policies that large trees be more spread out and further away from residential structures.
• 
  

SOURCE: DAILY REAL ESTATE NEWS

Originally Posted On THURSDAY, MAY 12, 2016

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Foreclosures Become a Tougher Find

Thirty-six percent of U.S. housing markets – or 78 out of 216 metro areas studied -- are now below their pre-recession levels in foreclosures, according to the latest Foreclosure Market Report from RealtyTrac.

Foreclosure filings – including default notices, scheduled auctions, and bank repossessions – were down 8 percent from last year and make up 289,116 U.S. properties.

That marks a nine-year low and the lowest quarterly total since the fourth quarter of 2006, RealtyTrac reports.

“Despite a seasonal bump higher in March, foreclosure activity in most markets continues to trend lower and back toward more healthy, stable levels,” says Daren Blomquist, senior vice president at RealtyTrac. “More than one-third of the 216 local markets we analyzed were below their pre-recession foreclosure activity averages in the first quarter, and we would expect a growing number of markets to move below that milestone the rest of this year — while the number of markets with a lingering low-grade fever of foreclosure activity continues to shrink.”

Some of the metros seeing large dips in foreclosure filings below pre-recession levels in the first quarter of 2016 included Los Angeles (27 percent below pre-recession average); Dallas (down 65 percent); Houston (down 64 percent); Miami (down 19 percent); and Atlanta (down 57 percent).


However, in some markets, foreclosures remain elevated, including New York (80 percent above the pre-recession average); Chicago (up 17 percent); Philadelphia (up 97 percent); Washington, D.C. metro area (up 134 percent); and Boston (up 46 percent).


SOURCE: DAILY REAL ESTATE NEWS

Originally Posted On FRIDAY, APRIL 15, 2016
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These Aren’t Your Typical College Dorms

A resort-style pool with luxurious cabanas and a beach volleyball court complete with concierge service may not be how you normally picture a college dorm. But times have changed.

Investors across the country are giving off-campus dorms major upgrades, adding in luxury finishes to appeal to young renters who have high tastes.

For example, the Stadium Centre apartments – a 710-bed complex that is within walking distance to Florida State University’s Tallahassee campus – has gotten a fresh makeover in recent years due to $4.5 billion from investors last year alone. The complex has two resort-style pools, deckside cabanas, a beach volleyball court, professional-grade barbecues, and 24/7 staff available to cater to residents’ needs.

“Developers targeting college students are building private dorms that are more likely to resemble beach motels than libraries,” Bloomberg reports.

A recent Bloomberg analysis of 94 student housing complexes nationwide found that 80 percent of residents in off-campus student housing have access to a swimming pool; 55 percent live in places with on-site tanning salons; and 45 percent have beach volleyball courts.

One West Victory, an off-campus student housing complex in Savannah, Ga., even offers valet trash service and texting laundry machines that notify students when their laundry is finished.

Bloomberg’s analysis found some of the most popular “luxury” amenities among off-campus student housing are:

• Swimming pool

• Fitness center

• Outdoor grills

• Tanning salons

• Beach volleyball courts

• Study rooms

• Fire pits

• Sun decks

• Hot tubs

• Sauna

SOURCE: DAILY REAL ESTATE NEWS

Originally Posted On THURSDAY, MARCH 10, 2016
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