Property Tax Appeal and Protest Services

What’s Ahead For Mortgage Rates This Week – June 10th, 2019

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What’s Ahead For Mortgage Rates This Week – June 10th, 2019Last week’s economic releases included readings on construction spending, public and private sector jobs and national unemployment. Weekly reports on mortgage rates and first-time unemployment claims were also released.

Construction Spending Little Changed in April

Census Bureau readings for April showed a minor dip in construction spending as compared to revised figures for March. $1,295.5 billion was spent on a seasonally-adjusted annual basis and missed the expected reading of $1,314.7 billion.

March construction spending was revised to $1,299.2 billion. Falling mortgage rates were good news for home buyers, but concerns over global economic disputes and higher materials prices concerned home builders.

Mortgage Rates Fall as Initial Jobless Claims Hold Steady

Freddie Mac reported lower average mortgage rates across the board. 30-year fixed mortgage rates dropped 17 basis points to 3.82 percent; the average rate for 15-year fixed rate mortgages fell 18 basis points to 3.28 percent and the average rate for 5/1 adjustable rate mortgages fell eight basis points to 3.22 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Initial jobless claims were unchanged with 218,000 first-time claims filed.  Monthly labor reports issued for May showed sharply lower jobs growth for public and private sector jobs.

Public and Private Sector Jobs Growth Dips in May

In a potential warning of slowing economic growth, public and private sector job creation fell far short of expected readings in May. The Labor Department’s Non-Farm Payrolls report showed 75,000 new jobs in May as compared to expectations of 180,000 new jobs and April’s reading of 224,000 public and private sector jobs created.

ADP’s report for private sector jobs growth was equally dismal for May; 27,000 jobs were created as compared to April’s revised reading of 271,000 private sector jobs created. Mark Zandi, who developed ADP jobs reporting, said “The economy is weakening; growth is slowing and slowing sharply.” The national unemployment rate was unchanged at 3.60 percent, which matched expectations. Analysts said that signs of slower economic growth could lead the Federal Reserve to implement monetary easing. 

What‘s Ahead

This week’s scheduled economic news includes readings on inflation, retail sales and consumer sentiment. Weekly reports on mortgage rates and new jobless claims will also be released.

Renovations That Improve Resale Value And Those That Don’t

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Renovations That Improve Resale Value And Those That Don'tThose who want to renovate a home usually do this to make it more spacious, improve its condition, and to add amenities. However, it is also important to consider if the renovation has the potential to add value to a home.

Unless the plan is to live in the same place for life, there is a strong likelihood that, at some point, the home will go on the market for sale. It is nice if it sells for a high price and there is some profit for the seller in the transaction.

It is not the amount spent on renovations that is the key consideration. In fact, spending a lot of money making certain renovations may not improve the sales price, when the home sells. This guide helps decide between renovations that add value and ones that do not add value.

Renovations That Add Value

Renovations that add value are those things that almost everybody wants, which include:

  • Upgraded Kitchen: Having a professional-style cooking area and all the appliances with matching stainless steel-finishes creates an attractive upgraded kitchen. Many appreciate having an island area in the center for use as a working area when cooking large meals that doubles as an eating area for breakfast.
  • Luxurious Master Bedroom and Bathroom: Homes with a large master bedroom with big windows and a king-sized bed usually sell for a top price. If the master bathroom has a large renovated bathroom with a big tub, then this is a plus.
  • Extra Bedroom: Having another bedroom puts a home in a higher-valued category.
  • Lots of Closet Space: Many think that adding an extra bedroom is sufficient; however, adding extra closet space is also a great idea, especially when adding walk-in closets with his/hers vanity areas that are accessible from the master bedroom.
  • Green Systems: Solar energy systems that reduce the monthly utility bill are desirable. Energy-efficient windows are also attractive.
  • Smart Home Systems: These systems offer computer control of the home for energy efficiency, security, and convenience for the occupants.

Renovations That Do Not Add Value

  • Carpeting: Carpet colors are a matter of personal taste. If the carpet is not brand-new or thoroughly cleaned, it will lower the interest in the home. It is better to have nicely-finished wood or tile flooring with rugs strategically placed to create different usage areas. Offer to sell the rugs for their value with the home or to take them away.
  • Excessive Front Yard Decorations: There are a few homes that have so many garden gnomes in the front yard that adding another one is nearly impossible. Avoid this because not everybody appreciates this style.
  • Swimming Pools: For many, this is potentially negative. The cost of building a new, in-ground, swimming pool is not usually an amount recouped in the selling price. Some like pools; however, many others do not like the idea of continual maintenance and monthly expenses. Families with young children may see pools as very dangerous.
  • Bright-Orange Exterior Paint: It is not surprising to learn that most people do not like houses painted this color and other garish colors. Even if the paint is new, they do not usually sell for a higher price.

Summary

In general, in order to add value with renovations, do the things that most people appreciate. Complete the project for a budget to add to the purchase price of the home that will not exceed the average market value of a home of a similar type.

Homeowners who follow this general rule, get to enjoy the renovations and get their money back, perhaps with some profit, when the home sells.

If you are in the market for a new home, be sure to contact your trusted real estate professional.

How To Turn A “Dumb” Home Into A Smart Home

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How To Turn A Dumb Home Into A Smart HomeHaving a “smart home” is a trend that is popular. What does it actually mean? Smart home technology improves energy-efficiency, increases security, and creates more convenience for the home’s occupants.

Innovative smart home technology improves with the deployment of the Internet of Things (IoT), 5G wireless broadband, and the use of artificial intelligence (AI) programming. Many things that an owner and/or occupant of a home needs or wants may be done for them by smart home technology.

Energy-Efficiency

Green energy systems include installing energy-efficient windows and perhaps solar panels along with battery storage. Moreover, by managing micro-zones within a home, money is saved by not wasting it on heating or cooling when not needed.

Management of temperature control is possible with smart home technology that allows the heating and air-conditioning system to direct hot or cold air to the rooms that need it, only when occupied. These systems turn off the zone when the room is not in use.

Advanced systems learn the occupant’s typical home-use patterns and anticipate them. For example, if a person comes home around the same time each day, the house prepares the rooms for that person in advance of their arrival.

Advanced systems link vehicles with the home. For example, the climate control system may receive the GS location of the vehicle over the IoT. Then, the AI software of the house can determine the distance the car is from the home and the direction it is traveling. The AI guesses if the person is driving home and adjusts the home accordingly.

Increased Security

This is one of the best reasons to install smart home technology. Increased security may help to reduce risks of burglary, home invasion, and damage caused by unavoidable disasters.

Home security may use biometrics, such as facial recognition, fingerprints, iris scans, and others, to authorize entry for specific people and prevent unauthorized intruders.

Video surveillance of the property, inside and out, keeps a record of what is happening. Innovation in AI detects camera images that are not appropriate, such as someone trying to break into the home and alert the homeowners as well as law enforcement.

Alarms trigger for many things such as a break-in of a door or window or someone coming to the front porch to steal a delivered package.

Sensors, which are much more sophisticated than a basic smoke alarm, may warn of smoke, fire, natural gas leaks, carbon monoxide levels in a garage, and even plumbing problems. With nanny cams, monitoring of babies and children is helpful for their safety.

Convenience

Smart Home technology can respond to the occupants’ use automatically or be manually chosen. For example, the coffee maker can turn on automatically in the morning to have the perfect brew ready for those who wake up. The dog door can be unlocked from bed for the dog to go outside in the morning.

A real-time inventory, using the barcodes of foodstuffs, automates the re-ordering of regularly used items when depleted.

The car can be started remotely and warmed up or cool before the driver and passengers enter it. During wintertime, entry steps can be heated to melt ice and snow just in time for people’s arrival. A hot tub can be turned on remotely so that it is fully heated up and ready for use when the owner’s come home.

Summary

There are so many innovations in smart technology already available and more on the way. Homeowners who invest in this smart technology may not only get to enjoy their home more, they may save on energy bills, and might also get a higher resale value for the “smart” home when selling it. It’s worth considering.

If you are in the market for a new property, be sure to tell your trusted real estate agent if a “smart home” is on your priority list!

The Benefits Of Adding An In-Law Apartment To A Home

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The Benefits Of Adding An In-Law Apartment To A HomeOne renovation that may add value to a home is an in-law apartment. Even if a homeowner does not have any relatives, an in-law apartment makes wonderful guest accommodations. It is possible to rent it when unoccupied to earn some money.

Homeowners who rent out part of a home need to check with their insurance agent to upgrade insurance to accommodate commercial use of a part of the home.

Additionally, a person staying in an in-law apartment, who is not a member of the owner’s household, may need to get renter’s insurance to cover any personal property kept in the in-law apartment.

Renovation Plans

An in-law apartment may be in a basement or attic. Creating one is possible as a home addition, a garage makeover, or as a tiny house in the backyard.

Check the building regulations for the area where the home is. It is wise to get the proper building permits needed for the construction. Work done without permits usually does not add value when reselling because it creates a liability.

Some people make an in-law without having to do major renovations if partitioning the house is possible. It may be possible to separate an area to create an in-law apartment if the house has an extra bedroom with a connected bathroom.

If no existing part of the home is suitable for remodeling, then adding an addition is an option. A better choice for a backyard that usually increases the resale value is building an in-law cottage rather than investing in installing a swimming pool. Some people may prefer having in-law accommodations when compared to the cost of maintaining a swimming pool.

Multiple Uses For An In-Law Apartment

Almost everyone has a use for an in-law apartment. This is why they are attractive to potential home buyers. Children can stay with parents as they become adults. Elderly parents can live with their children. Couples without children can use the room as a home office. Single people can rent out the space to help pay the bills.

Use of the space may change over time, so be sure to think creatively about the space. The value-added for having this space is the privacy it allows. Living together is normally easier when the parties also have some privacy.

Having a private bathroom, a separate entrance, and a kitchenette in the in-law apartment covers all the needs. This allows the space to be self-contained.

Summary

Consider adding an in-law apartment for the convenience, potential improvements in the resale value of the home, and to reduce the expense of supporting family members who live elsewhere and pay rent for an apartment to others.

If an in-law space is on your wish list for your next home purchase, be sure to advise your trusted real estate professional.

Can I Qualify For A Mortgage Without W-2 Income?

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Can I Qualify For A Mortgage Without W-2 IncomeIt’s more common these days to have non-traditional income that doesn’t fall into the W-2 category. Many people work in what is referred to as the “gig economy,” where income might come from a variety of freelance sources.

Other times, people don’t have W-2 income because they are retired or have an independent source of wealth that generates interest income. Still other times, an individual may own their own business and take draws instead of a paycheck. In all these cases, it might seem impossible to qualify for a mortgage, since there’s no W-2 income. 

Lenders Are Understanding

Thankfully, many lenders understand when a prospective lender doesn’t have W-2 income. Since it’s becoming more common, lenders have come up with alternative ways to qualify borrowers who want to buy a home. While more paperwork is usually involved, it is still possible to get a mortgage, assuming you work with certain lenders. Your real estate agent can help you in this regard; sourcing lenders that work with non-traditional borrowers.

Rely On Your Tax Returns

Even without W-2 income, you can prove income by relying on your tax returns. If you can show at least two years of qualifying income levels on your tax returns, your lender will have an easier time of finding underwriters for your loan. 

Maintain Your Bank Deposits

Some states offer a Bank Statement Loan Program that looks – not at your W-2s – but at your bank deposits for the last 12 to 24 months. These programs are ideal for people who own their own business and take draws rather than paychecks. 

Try For An Assumable Mortgage

Sometimes you may be able to find a property that has an assumable loan. In these instances, all you need to do to qualify for the mortgage is to have sufficient money for a down payment, have a decent credit history and be able to prove your income one way or another. Assumable loans can be harder to find, but your real estate agent can help you with that part of your home buying process.

Bear in mind that each of these options require a strong credit history in order to qualify. Credit scores and histories are always the cornerstones of acquiring a mortgage, whatever your income source may be.

Two important partnerships in your quest for a new home are with a trusted real estate agent and a home mortgage provider. Be sure to rely on these professionals to answer all of your real estate and financing questions.

What’s Ahead For Mortgage Rates This Week – June 3rd, 2019

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What’s Ahead For Mortgage Rates This Week – June 3rd, 2019Last week’s economic news included readings from Case-Shiller on home prices and pending home sales. Readings on consumer confidence and weekly reports on mortgage rates and new jobless claims were also released.

Case-Shiller: Home Price Growth Slows in March

While home prices continue to rise throughout the U.S., they are growing at a slower pace. Case-Shiller reported that Home prices dropped 0.20 percent in March to a growth rate of 3.70 percent on a seasonally-adjusted annual basis. Case-Shiller said that March home price growth was the lowest rate reported in 10 years.

Top cities for home price growth in March were Last Vegas, Nevada with a seasonally-adjusted year-over-year home price growth rate of 8.20 percent; Home prices rose 6.10 percent in Phoenix, Arizona and increased by 5.30 percent in Tampa, Florida. These three metro areas suffered steep declines in home prices during the recession.

Home prices are no longer growing at double-digit rates, and the West Coast is no longer experiencing rapid growth of home prices previously reported in Seattle, Washington, San Francisco and Los Angles California metro areas. Analysts said that while home-buyers continue to seek homes in temperate climates, they are no longer looking in high-cost coastal metro areas. New York City was the only metro area reporting a month-to- month negative growth rate in home prices, but it is already one of the highest cost housing markets in the nation.

Pending Home Sales Fall for 16th Consecutive Month

According to the National Association of Realtors®, the annual rate of pending home sales fell for the 16th consecutive month in April. The Midwest region was the only region to report growth in pending home sales with a reading of +1.30 percent growth. Northeastern regional pending sales fell by -1.80 percent. Pending home sales dropped -2.50 percent in the South and fell by -1.80 percent in the West. Real estate pros and mortgage lenders track pending home sales as an indicator of future home sales closed and mortgage loan volume.

Mortgage Rates Fall as New Jobless Claims Rise

 Mortgage rates fell across the board last week in response to uncertainty in global markets. Rates for 30-year fixed rate mortgages fell seven basis points to 3.99 percent; rates for 15-year fixed rate mortgages averaged 3.46 percent and fell five basis points. Rates for 5/1 adjustable rate mortgages fell an average of eight basis points to 3.60 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Weekly jobless claims rose to 215,000 initial claims and matched expectations. Analysts did not find last week’s increase of 3000 new claims filed an indicator of weakening economic conditions.  Unemployment remains near an all-time low set in 1968.

Consumer confidence as reported by the University of Michigan’s consumer sentiment index was revised to reflect a dip in consumer confidence after tariffs on Chinese imports were imposed. Consumer confidence dropped to an index reading of 100.0 as compared to May’s initial reading of 102.4.

What‘s Ahead

This week’s scheduled economic reports include readings on construction spending and labor sector reports on private and public sector job growth and the national unemployment. Weekly reports on mortgage rates and new unemployment claims will also be released.

The Benefits Of Developing A Multi-Use Property

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The Benefits Of Developing A Multi-Use PropertyRenovations that create a multi-use property or the development of a new multi-use project can be a very attractive investment especially in urban areas that are undergoing redevelopment. The concept of multi-use is to make the most of the site that is revitalized or developed.

Multi-Use Projects

Typical multi-use projects have a mixture of retail space, restaurants, offices, and/or living spaces. They may include parking areas. Large multi-use projects can also become destination locations that are core improvements, which create a momentum for the gentrification of an entire area. Waterfronts, boardwalks, and walking promenades are successful as multi-use projects in many cities.

The advantages for investors in these projects include the ability to design the use of the space to maximize the return on investment (ROI). Depending on the area for the project’s construction, there may also be tax advantages.

Tax Advantages

Under the new tax laws, Opportunity Zones all across America have been created to stimulate redevelopment in areas that are distressed. The federal tax advantages include either delaying capital gain taxes or avoiding them altogether if investors hold the investments for more than ten years.

It is also possible to sell a project in an Opportunity Zone for a profit and then reinvest the proceeds under a tax exchange transaction into another investment in an Opportunity Zone and avoid paying the capital gains. Check with a competent real estate and tax attorney to learn how to set up an Opportunity Zone Fund to maximize the tax advantages.

Additionally, the financial basis used for calculating any profits on the second transaction is raised, thereby locking in the tax savings on the profits from the first transaction. This is a very effective strategy for build-to-suit developers who organize a multi-use development project in an Opportunity Zone with the intent to sell it.

State, County, And Municipal Support

Depending on the location, there may be state, county, and/or municipal support in terms of tax abatements and contribution of the land and funds for the development of a multi-use project.

Lack Of Basic Services

Another key consideration is that many Opportunity Zones lack sufficient basic services. Some neighborhoods do not even have a grocery store. A multi-use development, in a distressed neighborhood, which offers services and stores for these basic needs, is likely to experience an immediate consumer demand for the offerings.

Loans And Investment Funds For Multi-Use Projects

Lenders are more attracted to multi-use projects because of the possibility of higher average rents per square foot that will cover the monthly mortgage payments. Multi-use projects can be successfully funded by crowd-sourcing techniques as well.

Opportunities For Real Estate Agents And Brokers

REALTORS® have commission-earnings potential in the sale/acquisition of the properties for a multi-use development, leasing out the properties when developed, and selling a project upon construction completion or after being leased out.

Conclusion

The advantages of multi-use approaches as a development project are significant. There is plenty of support available in many parts of the country for these projects. REALTORS® benefit from many opportunities for commissions on each project as the development begins, the project is leased out, and then potentially sold.

Be sure to partner with a trusted real estate professional if you are interested in purchasing and developing a multi-use property.

Loan Servicing Companies

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Loan Servicing CompaniesWhat happens when you suddenly get a notice to pay your mortgage to a company you may have never heard of? How do you determine if this is a legitimate request or a scam?

A borrower may get a written notice or an email that their mortgage sold to another entity or that a new loan servicing company will now be collecting the mortgage payments. The borrower needs to exercise extreme caution before just sending in a payment to the new company. It is prudent to double check to see if the communication is legitimate because many people get scammed by this type of notice.

Borrowers must receive a letter in the mail from the original lender notifying them of the change before getting any communication from a new company. If there was not a letter from the original lender, it is probably a scam.

How To Verify A Legitimate Request With The Original Lender

It is important to be 100% certain that communications are with the lender. DO NOT respond to any notice received by email by clicking on any link in the email, even if the email looks legitimate.

Fraudsters on the Internet use a technique called “phishing” to trick people into thinking they are getting a request from a legitimate company when the email comes from a criminal. These emails are very convincing. They look exactly like the real company; however, they are fake.

Borrowers who want to communicate with their lender online, should type in their lender’s website address and make contact through the company’s official website. 

Better yet, call the customer service number listed on the company’s official website and talk directly to a customer service person to verify that the request is legitimate. They will ask you for identification information and then be able to tell you your loan status.

What Is Loan Servicing? Can A Lender Sell My Loan?

Companies may choose to have the collection of the loan payment done by a third-party vendor. Usually, in any loan, there is a provision that allows the lender to sell it to another party or to change loan servicing companies. These legal rights are normally in the part of the loan document called the “Mortgage Servicing Disclosure.”

This legal right is usually held only by the lender and the borrower has no option but to comply with a legitimate request. Since almost all lenders sell off their loans to other companies or investors, so that they can get more money to loan out, the chance of a new mortgage loan selling is extremely high.

Troubles With Loan Servicing

Many make a smooth transition from one loan servicing provider to a new one by simply following the instructions. Others have troubles. Besides actual fraud by fake companies, there may be problems with real companies if the information in the records is not accurate. The date of a loan transfer may cause an overpayment or a late payment.

Any time there is confusion with regard to a mortgage loan servicing transfer, it is best to be proactive and stay in touch with the original lender for guidance in connecting with the new loan servicer.

Conclusion

Lenders sell their loans all the time. Loan servicing companies change frequently as well. These can be a simple legitimate transfer of the business process from one company to another. However, this is an area that is ripe for scammers to trick people and for bad companies to take advantage of their customers through loan servicing fraud techniques. Be aware of this problem and take care to avoid any negative consequences of loan servicing fraud.

Remember that two of your best partnerships in real estate will be with your licensed real estate agent and your trusted home mortgage professional. Be sure to rely on them if you have questions or concerns about your property.

Case-Shiller: Home Price Growth Slows in March

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Case-Shiller Home Price Growth Slows in MarchCase-Shiller Indices reported slower home price growth in March with a 3.70 percent gain year-over-year as compared to 3.90 percent home price growth for the year-over-year period in 2018. This was the slowest pace of home price growth in seven years.

The 20-City Home Price Index showed Las Vegas, Nevada as having the top year-over-year home price growth rate of 8.20 percent; Phoenix, Arizona had year-over-year home price growth of 6.10 percent. Tampa, Florida had the third highest growth rate for home prices at 5.30 percent. Analysts said that all three cities continue their recoveries from deep home price declines during the recession.

Did Home Prices Grow Too Fast?

David M. Blitzer, managing director and chairman of the S&P Dow Jones Index Committee, said that given strong economic signs in other sectors, housing should be doing better. He said that too-high home price gains may have caused slowing growth in home prices as fewer prospective buyers can afford skyrocketing home prices in many metro areas.

The 20-City Home Price Index showed New York City was the only metro area posting a negative growth rate in March; this was attributed to the region’s already high home prices. Fluctuating mortgage rates likely sidelined some prospective home buyers, especially first-time and moderate income buyers.

The U.S. Department of Housing and Urban Development reported that home affordability reached a ten-year low in the end of 2018. Coupled with short supplies of affordable homes and builders focusing on high end housing development, shortages of affordable homes are expected to continue, particularly in high demand metro areas.

Slower home price growth indicates that the rapid rise in home prices in recent years aren’t sustainable as fewer prospective buyers can afford to buy homes or cannot qualify for purchase money mortgages. When home prices rise faster than inflation and wages, home buyers encounter more challenges in their searches for affordable homes.

 

What’s Ahead For Mortgage Rates This Week – May 28th, 2019

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What’s Ahead For Mortgage Rates This Week – May 28th, 2019Last week’s economic news included readings on sales of new and pre-owned homes; weekly readings on mortgage rates and first-time jobless claims were also released.

Sales of New and Pre-Owned Homes Lower in April

Sales of brand-new homes fell nearly seven percent in April according to Commerce Department reports. Analysts noted that March sales of new homes were revised upward, which contributed to the difference between March and April readings. 673,000 new homes were sold in April on a seasonally adjusted annual basis. Analysts expected a reading of 670,000 sale of new homes; this reading was based on the initial March reading which was later revised upward to 723,000 sales.

Factors impacting new home sales include affordability, strict mortgage qualification requirements and new homes being built for higher-end markets. The average sale price for new homes was eight percent higher year-over-year at $342,20.

Year-to-date sales of new homes were 6.70 percent higher in April than for the same period in 2018. Inventories of homes for sale was reported at 5.9 months. Real estate pros typically consider a six-month supply of available homes as an indicator of average market conditions.

Sales of previously-owned homes were lower in April. 5.19 million existing homes were sold on a seasonally adjusted annual basis; this reading fell short of expectations of 5.35 million sales and the sales rate of 5.21 million sales of pre-owned homes reported in March. Sales were lower for pre-owned homes for the second consecutive month in April.

Sales of pre-owned homes were 0.40 percent lower month-to-month and were 4.40 percent lower year-over-year. First-time and moderate income home buyers are attracted to lower asking prices for previously-owned homes; declining sales suggest that prices of pre-owned homes have risen beyond affordability for buyers with moderate incomes and less-than perfect credit ratings.

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported lower average mortgage rates for fixed-rate mortgages last week. The average rate for a 30-year fixed rate mortgage was one basis point lower at 4.06 percent. Rates for 15-year fixed rate mortgages averaged two basis points lower at 3.51 percent. 

Rates for 5/1 adjustable rate mortgages were two basis points higher and averaged 3.68 percent. Discount points averaged 0.50 percent for 30-year fixed rate mortgages and 0.40 percent for 15-year fixed rate mortgages and 5/1 adjustable rate mortgages.

Initial jobless claims fell to 211,000 new claims filed as compared to the prior week’s reading of 0f 212,000 claims filed. Analysts expected a higher reading of 217,000 new jobless claims filed.

What‘s Ahead

This week’s scheduled economic reporting includes readings from Case-Shiller on home prices; pending home sales will also be released along with weekly readings on mortgage rates and new jobless claims.

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Questions?

If you have a question about how any of this works, just give me a call at 214-212-6910.

You can also email me at: Rob@RobWheelock.com.

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