Congratulations to Palm Beach Public School, which ranked 172 out of the state's 1,795 elementary schools in 2011! For the third year in a row, the school also earned an 'A' rating. Ranking in the top ten percent is an excellent achievement and is one that makes living in Palm Beach (or in the neighborhoods in West Palm Beach that can send their children to Palm Beach Public School) even more attractive.
In addition to the excellent teachers and administration, the students also benefit from a tutoring program that began in the late 1990s. The program pairs students with 30 tutors on the island that teach math and reading skills once or twice per week. Many of the tutors are professionals or retired teachers.
The Palm Beach Country Club also funds an after-school program that focuses on different subjects. This year's subject is visual arts, which encompasses drawing, computer art, chess and the fine art of clowning. It is wonderful to see that the community has taken such an interest in the children's education and that their education, in addition to being top-nothc, is inclusive of the arts and culture.
Wednesday, March 28, 2012
Interest Rates Rise
According to Freddie Mac, the average rate for a 30-year fixed mortgage rose to 4.08 percent two weeks ago, up from 3.92 percent. This marks the first time in five months that that interest rate has been above 4 percent. The average 15-year fixed mortgage rate rose to 3.30 percent, up from 3.16 percent.
Interest rates tend to track the yield on the 10-year Treasury note. Because the economic outlook has been more buoyant in recent weeks, investors have shifted funds out of the less-risky T-bills and into the riskier stock market, leading to higher yields on the T-bill.
Interest rates tend to track the yield on the 10-year Treasury note. Because the economic outlook has been more buoyant in recent weeks, investors have shifted funds out of the less-risky T-bills and into the riskier stock market, leading to higher yields on the T-bill.
70 Percent of Renters Believe Owning Makes More Sense
According to Fannie Mae's newest quarterly National Housing Survey, 70 percent of renters believe owning makes more sense than renting. In fact, across all education levels, American think that owning is the smarter move. Almost 66 percent of current renters say they plan to buy a home. Interestingly, the top reasons for buying, including neighborhood safety and good schools, are not financial reasons.
How Can You Figure Out Your Design Perspective?
I have the greatest design resource for my readers! Go to www.houzz.com to discover hundreds of thousands of home photos- both interior and exterior- that you can then sort into your personal folder so that you can keep track of what you like. The genius behind this idea is that it allows you to see so many different designs that you can truly flush out your personal design philosophy. You might find yourself consistently attracted to photos that feature a certain something that you didn't even know you liked. After I spent a few hours on the site, I realized that I really like master bedrooms that either feature indoor/outdoor space or that have floor-to-ceiling windows that bring nature inside. I didn't even know that was one of my design priorities. I also discovered a drawer specifically designed to hold sunglasses. Genius!
The Dangers and Costs of Thirdhand Smoke
I have written about this in my blog before, but I want to keep reminding my readers that it is so very important for them not to smoke in their homes. We all know that secondhand smoke is dangerous, but thirdhand smoke is as well. What is thirdhand smoke? It is the carcinogenic chemicals that remain in the walls, flooring, railings and dust in a home for a long time after the smokers have gone. The deadly chemicals can be ingested by new occupants, especially by children and pets.
Before you buy a home, you need to figure out whether the owners smoke in the home. Owners are not required to disclose that information, so let your senses figure out whether they smoke inside. Does the home smell of smoke? That smell means you are breathing in carcinogens. Are the walls or ceiling yellowing? Painting, tearing out old carpets and cleaning the home from top-to-bottom will help clear out the carcinogens, but your best bet is to let the home air out for as long as possible.
As for my readers who are smoking in their homes, stop! Potential buyers are going to offer you less for your home if it comes loaded with carcinogens by deducting the cost of remediation from their offer. Simply put, your smoking is decreasing the value of your home and is very bad for the health of subsequent owners.
http://www.utsandiego.com/news/2010/dec/16/smokers-move-out-tobacco-related-carcinogens-remai/
Before you buy a home, you need to figure out whether the owners smoke in the home. Owners are not required to disclose that information, so let your senses figure out whether they smoke inside. Does the home smell of smoke? That smell means you are breathing in carcinogens. Are the walls or ceiling yellowing? Painting, tearing out old carpets and cleaning the home from top-to-bottom will help clear out the carcinogens, but your best bet is to let the home air out for as long as possible.
As for my readers who are smoking in their homes, stop! Potential buyers are going to offer you less for your home if it comes loaded with carcinogens by deducting the cost of remediation from their offer. Simply put, your smoking is decreasing the value of your home and is very bad for the health of subsequent owners.
http://www.utsandiego.com/news/2010/dec/16/smokers-move-out-tobacco-related-carcinogens-remai/
Before Buying a House, Should You Test for Meth?
Below is a link to a story about a couple who bought a home that had previously been a meth lab. Unfortunately, the presence of the chemicals sickened them and they had to move out. And the bill to clean up the house? $61,000. There are no laws in Pennsylvania (or in Florida) that require disclosing whether a home has been found by the government to have been a drug lab.
Before you buy a house, you should consider having it tested for methamphetamines. You should also check to see if the home is registered on the U.S. Drug Enforcement Administration's National Clandestine Laboratory Registry, http://www.justice.gov/dea/seizures/index.html
http://www.cnn.com/2010/US/11/29/couple.buys.meth.house/index.html?hpt=C1
Before you buy a house, you should consider having it tested for methamphetamines. You should also check to see if the home is registered on the U.S. Drug Enforcement Administration's National Clandestine Laboratory Registry, http://www.justice.gov/dea/seizures/index.html
http://www.cnn.com/2010/US/11/29/couple.buys.meth.house/index.html?hpt=C1
Monday, March 26, 2012
Sold Homes in El Cid
According to the MLS, five properties sold in El Cid between October 26, 2011 and March 26, 2012.
348 N. Bromeliad- This townhouse in Magnolia Court has 3 bedrooms, 3.5 bathrooms, and 2,028 sf. It sold for $300,000 ($147.93/psf) on 2/2/12.
310 Cordova Rd.- This 3,486 sf home has 3 bedrooms and 3 bathrooms in the main house and a 2-bedroom guest house. It sold for $710,000 ($203.76/psf) on 12/27/11.
2501 S Flagler Dr.- This 1,672 sf home has 2 bedrooms and two bathrooms. It sold for $1,100,000 ($657.89/psf) on 12/30/11.
194 Pershing Way- This 2,028 sf home has 3 bedrooms and 4 bathrooms. It sold for $495,000 ($244.08/psf) on 1/6/12.
205 Belmonte Rd.- This 1904 sf home has 2 bedrooms and 2 bathrooms. It sold for $645,000 ($338.76/psf) on 3/13/12.
348 N. Bromeliad- This townhouse in Magnolia Court has 3 bedrooms, 3.5 bathrooms, and 2,028 sf. It sold for $300,000 ($147.93/psf) on 2/2/12.
310 Cordova Rd.- This 3,486 sf home has 3 bedrooms and 3 bathrooms in the main house and a 2-bedroom guest house. It sold for $710,000 ($203.76/psf) on 12/27/11.
2501 S Flagler Dr.- This 1,672 sf home has 2 bedrooms and two bathrooms. It sold for $1,100,000 ($657.89/psf) on 12/30/11.
194 Pershing Way- This 2,028 sf home has 3 bedrooms and 4 bathrooms. It sold for $495,000 ($244.08/psf) on 1/6/12.
205 Belmonte Rd.- This 1904 sf home has 2 bedrooms and 2 bathrooms. It sold for $645,000 ($338.76/psf) on 3/13/12.
Friday, March 23, 2012
Mortgage Insurance Premium to Increase
Effective April 1, 2012 (and no, it ins't a joke!), the Federal Housing Authority (FHA) is increasing the up-front mortgage insurance premium (MIP) by 75 basis points (.75 percent) (BPS) and annual mortgage insurance premiums will increase 10 basis points (.10 percent). This is the fourth time in two years that the FHA has raised the MIP. The MIP is a fee added to loans to protect lenders from losses on loans that default. Translation? If you pay a MIP, you are subsidizing the losses of people who default on their loans. The FHA generally requires MIP for borrowers making a downpayment of less than 20 percent. For 15-year loans, no MIP will be charged if the downpayment is 10 percent or greater.
Now:
30-year mortgage with LTV> 95 percent will have a MIP of 115 BPS per year;
30-year mortgage with LTV<= 95 percent will have a MIP of 110 BPS per year (and the annual premiums will be cancelled when the loan reaches 78 percent and the mortgagor has paid the annual premiums for at least five years);
15-year mortgages with LTV> 90 percent will have a MIP of 50 BPS per year (and the annual premiums be be cancelled when the loan reaches 78 percent LTV);
15-year mortgages with LTV<= 90 percent will not have a MIP;
Loans > $625,000 will have an additional 65 BPS (.65 percent) added to their annual MIP.
To put that into dollar terms, the new MIP will add $1,500 to a $200,000 loan, plus an annual increase of $200 in annual mortgage insurance premiums.
To calculate the monthly MIP on your FHA loan, multiply your initial loan amount by the MIP and divide by 12.
Want to avoid this? Get your loan application in before April 1 because existing loans will not be effected by this increase.
Now:
30-year mortgage with LTV> 95 percent will have a MIP of 115 BPS per year;
30-year mortgage with LTV<= 95 percent will have a MIP of 110 BPS per year (and the annual premiums will be cancelled when the loan reaches 78 percent and the mortgagor has paid the annual premiums for at least five years);
15-year mortgages with LTV> 90 percent will have a MIP of 50 BPS per year (and the annual premiums be be cancelled when the loan reaches 78 percent LTV);
15-year mortgages with LTV<= 90 percent will not have a MIP;
Loans > $625,000 will have an additional 65 BPS (.65 percent) added to their annual MIP.
To put that into dollar terms, the new MIP will add $1,500 to a $200,000 loan, plus an annual increase of $200 in annual mortgage insurance premiums.
To calculate the monthly MIP on your FHA loan, multiply your initial loan amount by the MIP and divide by 12.
Want to avoid this? Get your loan application in before April 1 because existing loans will not be effected by this increase.
Wednesday, March 21, 2012
30-Year Fixed Mortgage Rate
Last week the average 30-year fixed mortgage rate has risen to 3.92 percent, up from 3.88 percent the week before. The average 15-year fixed rate rose to 3.16 percent, up from 3.13 percent.
Shadow Inventory
According to Florida Realtors,
• As of January 2012, shadow inventory remained at 1.6 million units, or 6-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or REO.
• Of the 1.6 million properties currently in the shadow inventory, 800,000 units are seriously delinquent (3.1-months’ supply), 410,000 are in some stage of foreclosure (1.6-months’ supply) and 400,000 are already in REO (1.6-months’ supply).
• Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.
• The shadow inventory is approximately four times higher than its low point (380,000 properties) at the peak of the housing bubble in mid-2006.
• Despite 3 million distressed sales since January 2009, the period when home prices were declining at their fastest rate, the shadow inventory in January 2012 is at the same level as January 2009.
• The shadow inventory is approximately half of the size of all visible inventory listings. For every two homes available for sale, there is one home in the “shadows.”
• The segment of borrowers 60-plus days delinquent in the past but “cured” – now current on their payments – is increasing. This figure was 7.2 percent in January 2012, up from 5.7 percent a year ago.
• The total percent of borrowers over 60-plus days delinquent (irrespective of delinquency status today) increased to 15.5 percent in January 2012, up from 14.3 percent a year ago.
• The highest concentration of shadow inventory is for loans with loan balances between $100,000 and $125,000. While the overall supply of homes in the shadow inventory is declining versus a year ago, the declines are being driven by higher balance loans. For loans with balances of $75,000 or less, however, the shadow is still growing and up 3 percent from a year ago.
• As of January 2012, shadow inventory remained at 1.6 million units, or 6-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or REO.
• Of the 1.6 million properties currently in the shadow inventory, 800,000 units are seriously delinquent (3.1-months’ supply), 410,000 are in some stage of foreclosure (1.6-months’ supply) and 400,000 are already in REO (1.6-months’ supply).
• Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.
• The shadow inventory is approximately four times higher than its low point (380,000 properties) at the peak of the housing bubble in mid-2006.
• Despite 3 million distressed sales since January 2009, the period when home prices were declining at their fastest rate, the shadow inventory in January 2012 is at the same level as January 2009.
• The shadow inventory is approximately half of the size of all visible inventory listings. For every two homes available for sale, there is one home in the “shadows.”
• The segment of borrowers 60-plus days delinquent in the past but “cured” – now current on their payments – is increasing. This figure was 7.2 percent in January 2012, up from 5.7 percent a year ago.
• The total percent of borrowers over 60-plus days delinquent (irrespective of delinquency status today) increased to 15.5 percent in January 2012, up from 14.3 percent a year ago.
• The highest concentration of shadow inventory is for loans with loan balances between $100,000 and $125,000. While the overall supply of homes in the shadow inventory is declining versus a year ago, the declines are being driven by higher balance loans. For loans with balances of $75,000 or less, however, the shadow is still growing and up 3 percent from a year ago.
Tuesday, March 6, 2012
30-Year Fixed Interest Rate
The average rate for a 30-year fixed mortgage is 3.90 percent and the 15-year fixed rate is 3.17 percent.
Explaining Negative Equity, Short Sales and Foreclosures
Negative equity exists when the value of an asset used to secure a loan (like a house) is less than the outstanding balance of that loan. Near-negative equity means that the borrower has less than 5 percent equity. Negative equity becomes a problem when the borrower would like to refinance because the banks will often refuse to refinance a loan that is underwater (another term for negative equity).
If a homeowner wants to sell their property and they owe more than they will be able to sell the house for, they have options. The first option is for the homeowner to pay they difference to the bank between what they owe on the property and the price for which it sells. This option, though painful, has many advantages. The first advantage is that the homeowner won't take a huge hit to their credit score, as they would with a short sale or a foreclosure. The second advantage is that they can move on with their life, as opposed to always living under the threat of having to one day pay back the difference (the deficiency, see below). Thirdly, they won't have to wait either three (for a short sale) or seven (for a foreclosure) years before they can get another mortgage. Finally, they won't owe income tax on that deficiency (see the short sale explanation below).
A short sale is when a bank agrees with the borrower to accept less than the full amount owed on a debt. The unpaid balance balance is called the deficiency. What many people don't understand is that having a short sale does not necessarily release them from the obligation to pay back the deficiency. In order to have that happen, the bank must agree to forgive the deficiency. The borrower's credit score will also take a serious hit, though exactly how much depends on the lender and the credit bureau. It will be significant but not nearly as high as it would be with a foreclosure. And the seller will have to wait at least three years before being able to finance another home.
A foreclosure happens when a borrower falls behind on their mortgage payments and the lender then seizes the home in order to sell it and recover as much of the debt as possible. If the sale price does not cover the outstanding balance of the loan then the lender can file for a deficiency judgement, which means that the borrower will still owe that difference. With a deed in lieu of foreclosure, the borrower gives the lender the title to the property and the debt is forgiven. Otherwise, the lender must sue the borrower in state court for defaulting on the loan. States in which foreclosures must go through the courts have much slower foreclosure processes than states that do not require it. A foreclosure will result in a serious penalty on the borrower's credit score and the borrower will have to wait seven years before being able to obtain another mortgage.
For either a short sale or a foreclosure, the amount of debt that is forgiven in the deficiency judgement counts as income and the bank will issue the borrower a 1099. The borrower will then owe income tax on that debt.
If a homeowner wants to sell their property and they owe more than they will be able to sell the house for, they have options. The first option is for the homeowner to pay they difference to the bank between what they owe on the property and the price for which it sells. This option, though painful, has many advantages. The first advantage is that the homeowner won't take a huge hit to their credit score, as they would with a short sale or a foreclosure. The second advantage is that they can move on with their life, as opposed to always living under the threat of having to one day pay back the difference (the deficiency, see below). Thirdly, they won't have to wait either three (for a short sale) or seven (for a foreclosure) years before they can get another mortgage. Finally, they won't owe income tax on that deficiency (see the short sale explanation below).
A short sale is when a bank agrees with the borrower to accept less than the full amount owed on a debt. The unpaid balance balance is called the deficiency. What many people don't understand is that having a short sale does not necessarily release them from the obligation to pay back the deficiency. In order to have that happen, the bank must agree to forgive the deficiency. The borrower's credit score will also take a serious hit, though exactly how much depends on the lender and the credit bureau. It will be significant but not nearly as high as it would be with a foreclosure. And the seller will have to wait at least three years before being able to finance another home.
A foreclosure happens when a borrower falls behind on their mortgage payments and the lender then seizes the home in order to sell it and recover as much of the debt as possible. If the sale price does not cover the outstanding balance of the loan then the lender can file for a deficiency judgement, which means that the borrower will still owe that difference. With a deed in lieu of foreclosure, the borrower gives the lender the title to the property and the debt is forgiven. Otherwise, the lender must sue the borrower in state court for defaulting on the loan. States in which foreclosures must go through the courts have much slower foreclosure processes than states that do not require it. A foreclosure will result in a serious penalty on the borrower's credit score and the borrower will have to wait seven years before being able to obtain another mortgage.
For either a short sale or a foreclosure, the amount of debt that is forgiven in the deficiency judgement counts as income and the bank will issue the borrower a 1099. The borrower will then owe income tax on that debt.
Looking to Refinance But Have Negative Equity?
Homeowners who want to refinance but have been unable to do so because they owe more on their home than their home is worth will be relieved to find that they might now be able to do so. For those whose mortgages are owned or guaranteed by Fannie Mae and Freddie Mac, have less than 20 percent equity and are current on payments, the Home Affordable Refinance Program (HARP) might be able to help.
Demand for this program doubled from January to February of this year. For the week ending February 24, 20 percent of the refinance applications submitted were for HARP loans, up from 10 percent in January. Moody's Analytics forecasts that 1.6 million loans will be refinanced under the HARP program by the end of 2013, with average monthly savings of $250. In fact, borrowers under this program might get better rates than borrowers with more equity and better credit scores who refinance because HARP caps some of the fees banks can charge.
Demand for this program doubled from January to February of this year. For the week ending February 24, 20 percent of the refinance applications submitted were for HARP loans, up from 10 percent in January. Moody's Analytics forecasts that 1.6 million loans will be refinanced under the HARP program by the end of 2013, with average monthly savings of $250. In fact, borrowers under this program might get better rates than borrowers with more equity and better credit scores who refinance because HARP caps some of the fees banks can charge.
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