Strong Labor Market Decreases Foreclosures

Chart shows close correlation

money chart

A new study from Fannie Mae shows that the jobs market correlates closely to the number of homes in foreclosures, according to an articleby Susanna Kim for The Home Story.

Foreclosure starts decreased in July to the lowest level since May 2005, according to ATTOM Data Solutions, the new parent company of RealtyTrac.

Banks started on the public foreclosure process on 36,863 residential properties nationwide in July, a decrease of 5% from last month and 19% from last year.

While the drop in foreclosures can be tied to many different economic factors, the main reason is the jobs market, Fannie Mae Economist Orawin Velz said, according to the article.

From the article:

Velz says one of the most common reasons people fall behind on mortgage payments is unemployment.

“If you lose your job, it doesn’t take much to stop paying your mortgage,” she says.

The jobs market improved over the past several months, posting higher-than-expected gains each month.

Total non-farm payroll employment increased by 255,000 in July, far above what experts predicted, and by 287,000 in June, according to a report from Bureau of Labor Statistics.

This chart shows the correlation of the jobs market and foreclosures over time.

Click to Enlarge

FM

(Source: Fannie Mae)

That being said, the national delinquency rate increased 5% in July, the first rise above 4.5% since February, according to a report by Black Knight Financial Services.

Other sources, such as S&P Dow Jones Indices and Experian also reported an increase in mortgage delinquency in July.

Does this mean we will see a shift in the jobs market? If these delinquencies turn into foreclosures, it might.

Posted in Financing, Foreclosure, Homeownership, Market Conditions, Mortgage | Tagged , , , , | Leave a comment

How to Decorate with Black-and-White

How To Decorate With Black-and-White http://www.housebeautiful.com/decorating/colors/black-and-white-designer-rooms via @housebeautiful#Black/White

http://www.housebeautiful.com, August 29th, 2016

Posted in Design & Remodel | Tagged , , , , , | Leave a comment

Don’t Get Caught in the Rental Trap!

KCM Crew, August 29th, 2016

Don't Get Caught in the Rental Trap! | Keeping Current MattersThere are many benefits to homeownership. One of the top ones is being able to protect yourself from rising rents and lock in your housing cost for the life of your mortgage.

Don’t Become Trapped

Jonathan Smoke, Chief Economist at realtor.com, reported on what he calls a “Rental Affordability Crisis.” He warns that,

“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”

In the Joint Center for Housing Studies at Harvard University’s 2015 Report on Rental Housing,they reported that 49% of rental households are cost-burdened, meaning they spend more than 30% of their income on housing. These households struggle to save for a rainy day and pay other bills, such as food and healthcare.

It’s Cheaper to Buy Than Rent

In Smoke’s article, he went on to say,

“Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.” “While more than 85% of markets have burdensome rents today, it’s perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why aren’t those unhappy renters choosing to buy?”

Know Your Options

Perhaps you have already saved enough to buy your first home. HousingWire reported that analysts at Nomura believe:

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment. It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream home. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible to get a mortgage.

Posted in Financing, Home Buying, Home Selling, Homeownership, Market Conditions, Rent vs. Buy | Tagged , , , , , | Leave a comment

Trending Now: 25 Bedrooms We’d Love to Fall Asleep In

Trending Now: 25 Bedrooms We’d Love to Fall Asleep In http://www.houzz.com/ideabooks/71415173 via @Houzz#Bedrooms

http://www.houzz.com, August 29th, 2016

Posted in Design & Remodel | Tagged , , , , , | Leave a comment

8 Things to Plant Now for your fall Vegetable Garden

8 Things to Plant Now for Your Fall Vegetable Garden http://www.housebeautiful.com/lifestyle/gardening/g3665/fall-vegetable-garden/ via @housebeautiful#FallGarden #FallVegetableGarden

http://www.housebeautiful.com, August 28th, 2016

Posted in Uncategorized | Tagged , , , , , , | Leave a comment

Caution: Why Rent-to-Own is Often Too Good to be True

Aspiring homeowners with lousy credit, no nest egg savings for down payments, or just plain low incomes may have a tough time purchasing a home—particularly as buyers with deeper pockets compete for the limited number of properties for sale.

That’s why it may be so easy for them to be lured in by the promise of rent-to-own properties—a fast-growing but slightly sketchy segment of the consumer housing industry. In these sorts of programs, tenants who can’t qualify for a mortgage will make monthly payments on a home they’re renting with the promise of owning it after a set number of years—usually between five and 20 years of payments. The payments are often higher than local rents, because tenants are essentially buying the property from their landlord over time. In many cases, they’re also responsible for making repairs on the homes.

The problem is that if a deal sounds too good to be true, well, we all know by now that it probably is.

Here’s the rub: Many renters in these arrangements never become homeowners—despite years of shelling out for repairs and extra-high rents, according to a New York Times investigation into Vision Property Management. The Columbia, SC–based firm is one of the largest firms in the field.

The deals often don’t come with consumer protections and may not even be enforceable in certain states. And it’s often the cheapest homes, those designed to appeal to the worst-off buyers, that come with the most pitfalls.

“It usually doesn’t end well for anyone involved,” Kevin Koel, a real estate attorney with Capital Farm Credit, in Bryan, TX, tells realtor.com®. The rent-to-own business “is rife for people to get taken advantage of.”

In the worst-case scenarios, there are no guarantees that the landlord (who could be an individual renting out just one property or a large company) even owns the property, he warns.

Sometimes landlords will try to evict tenants early to get out of the deals. “They’ll find some way to default you so they won’t have to honor the contract,” Koel says.

And even when tenants in these arrangements make their payments on time each month, that typically doesn’t give their credit scores a corresponding boost. That’s because sellers often don’t report the payments to credit bureaus, he says.

A better plan for those interested in rent-to-own propositions would be an owner-financed deal, says Cassandra McGarvey, a real estate attorney with Houston-based Sanders Willyard. They’re very similar to rent-to-own deals except the tenant gets the deed to the property.

Plus, their credit scores can go up if they pay on time. And they can’t be evicted as easily if they fall behind on payments as the home would need to go through foreclosure proceedings.

The problem for tenants is sellers are often reluctant to transfer the deeds to these super risky buyers.

If tenants can’t score an owner-financed deal, she recommends they have a record of the rent-to-own arrangement on the deed of the property. This provides them with some measure of protection if their landlord decides to sell the home to another buyer. Many title insurance companies would be hesitant to go through with a deal with a new buyer if they were aware of a rent-to-own arrangement, she says.

They should also have a home inspection performed so they understand what condition the property is in—and how much money they can expect to spend on repairs.

“If you’re buying a house with major foundation problems, it could cost you $20,000 to $30,0000,” McGarvey says. “You want to make sure you deduct that $20,000 to $30,000 from the price of the house.”

And finally, tenants and landlords need to hash out who will be responsible for paying property taxes, homeowners association fees (if there are any), and insurance. They should also put in writing when the deed will be delivered, assuming everything goes well, and who will get the insurance check if the home is destroyed by something like a fire.

With all of these potential problems, McGarvey advises tenants to steer clear of the arrangements. “They are designed to take advantage of lower-income, less credit-worthy individuals,” she says.

Posted in Credit Score, Financing, Home Buying, Home Selling, Homeownership, Market Conditions, Rent vs. Buy | Tagged , , , , , | Leave a comment

Trending Now: Step Outside with these 20 Decks

Trending Now: Step Outside With These 20 Decks http://www.houzz.com/ideabooks/71359246 via @Houzz#Outside #Deck

http://www.houzz.com, August 28th, 2016

Posted in Design & Remodel | Tagged , , , , , | Leave a comment