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The cost of a finished, ready to build lot, can cost a developer about 25 percent of the finished home price. There are a number of these ready-to-go lots on the market at about half what they actually cost to prepare. Investor groups are snapping them up, figuring that the time will come soon when they will be in demand.
"The country needs 1.2 million new units for the next 10 years just because of population growth," says Scott Clark, president of American Development Partners, which has bought thousands of vacant lots all over the West. "[U.S. builders] built about 500,000 units in 2009 and 600,000 units in 2008, so there eventually will be pent-up demand. We want to get as many of those finished lots as we can because as demand begins to rise, the need for housing will become painfully obvious. The delta (ratio of change to value of underlying asset) in this investment will be significant."
The giant mortgage buyer’s weekly survey, conducted Monday through Wednesday, pegs the average rate nationally at 4.97%, with 0.7% of the loan balance on average paid in upfront charges, or points. Last week, 30-year rates averaged 5.01%. That continues a trend so far this year in which the average has come in either just above or just below 5%.
The survey asks 125 lenders across the country the rates they are offering to borrowers with good credit and a 20% down payment, or at least 20% equity for those refinancing their home loans.
The approaching end of Federal Reserve purchases of Freddie Mac and Fannie Mae mortgage bonds is expected to result in rate increases later this year. The Mortgage Bankers Association estimates the typical interest rate might rise by half a percentage point. If the average 30-year fixed rate rose a half-point to 5.5%, that would still be unusually low by historical standards.
Nonetheless, such an increase would make any home purchase somewhat more expensive and could put an end to a continuing mini-boom in refinancings, which have accounted for about two-thirds of home-loan applications this year.
CURRENT TRENDS
* Water efficiency. Toilets can waste a lot of water. Today, you can choose from a variety of high-efficiency, water-conserving toilets without sacrificing flushing power. One style is dual-flush, which allows you to select the amount of water you use, based on the type of waste that needs to be flushed.
* Smart toilets. New technologies are changing the way you use the loo and can even prevent that age-old gender disagreement over leaving the seat up. Fancy models lift the seat when you approach and automatically flush and close when you leave. Other luxury features include a heated seat, front and rear washing and an air dryer.
* Hidden toilets. Homeowners are doing some creative things to keep the toilet separate from the rest of the room. Whether it's a stylish partition or custom-designed furniture that houses the commode, you won't even know the toilet is there.
BIGGEST MISTAKE
Like with all remodels, keep the toilet upgrade proportionate to your home's market value, advises appraisal expert Leslie Sellers.
You don't want to spend thousands of dollars on a fancy toilet and bidet in a starter home.
EXPERT TIPS
* On a Budget: Unless your toilet is falling apart, you don't need to replace it. Oftentimes, all you need to do to update the commode is thoroughly scrub it down and replace old tank parts.
* Mid-Range: A two-piece toilet, in which the tank bolts on top of the bowl, is standard. But if you can afford it, a high-efficiency, one-piece toilet with an integral tank and bowl may be worth the investment. It offers a seamless, modern look and is easier to clean.
* High-End: Wall-mounted toilets add a unique look to a bathroom and are super easy to clean. Keep in mind that this style will cost more to install and maintain because it requires a thicker wall to mount the toilet and house the tank. Focus on highly efficient, water-saving models.
SOURCE: FRONTDOOR.COM
Whether you go with a freestanding tub, standalone shower or tub-and-shower combination, you have many options as far as style, color and tile to customize your bathing experience.
* Tub wraps. Rather than rip out the bathtub, many homeowners are opting to "wrap" their existing tub with a custom-fitted "liner" for an instant and affordable upgrade. Companies like Bath Fitters will take measurements and install the liner over your tub.
* Less bubbles. Jetted whirlpool and Jacuzzi tubs were all the rage in past years, but some homeowners find them noisy or costly to maintain. Now the trend is soaking tubs or air tubs with small openings for bubbles, which offer less problems in the long term.
You don't need to completely overhaul your tub if it's in decent condition. There are some affordable options, so do your research, suggests Appraisal Institute president Leslie Sellers.
"Some homeowners will rip out the tub and put in a new tub just because they want to change it," Sellers explains. "But that's a mistake and they'll pay for it later on."
* On a Budget: Unless you're a DIY expert, it's probably best that you avoid ripping out the tub. If you don't know what you're doing, you could end up spending more on repairs. You may also want to avoid painting the tub with acrylic paint, because that usually doesn't work well. Instead, look into the wraparound tub liners that fit over your older tub to give it an instant makeover.
* Mid-Range: When replacing an outdated shower, a new fiberglass tub-and-shower unit and new ceramic tile will add the most value.
* High-End: In the master bathroom, you should have a tub (whirlpool or soaking, depending on your preference) and separate shower. If you desire, your shower can function as a steam room or tanning area. Other high-end features include a dry sauna, dual showerheads, built-in aromatherapy and even a fireplace.
If your floors have seen better days and need to be updated, you've got a lot of options.
* Style underfoot. Vinyl, ceramic tile and laminate are common choices, but natural stone, hardwood and concrete offer a unique look and additional value.
When choosing wood, make sure it's sealed well and water-repellent.
Concrete is becoming more popular due to its durability and design flexibility. It can be colored or custom designed for your bathroom.
A few homeowners are even putting moisture-resistant carpet in the bathroom, though it requires more maintenance to ensure mold and mildew don't build up. Whatever style you choose, make sure the surface is not dangerously slippery when wet.
* Heated floors. Nothing beats the feeling of walking onto warm tile after a shower. This added comfort can benefit you now and later when you sell.
Appraisal expert Leslie Sellers says too often homeowners want to rip out the existing bathroom and start over again without really giving serious thought to a new design.
"One of the biggest mistakes people make is poor planning," Sellers says. "Homeowners need to come up with a master plan and complete the project in stages."
* On a Budget: Vinyl flooring is a popular choice because it's affordable, durable and easy to install. Plus, today's vinyl sheets and tiles feature many stylish designs and patterns.
* Mid-Range: Ceramic tile is the standard and instantly adds an upscale look to a bathroom. For heated floors, an affordable alternative to getting a professionally installed system is to do it yourself with heated floor mats.
* High-End: Concrete and natural stone offer a different look from the traditional ceramic or porcelain tile. Honed marble, limestone and slate are less slippery. A radiant floor-heating system is essential.
Add value to your home and grab buyers' attention when it's time to sell by giving an outdated vanity and countertops a makeover.
* Natural stone counters. Not only are these materials durable, but they also give bathrooms a luxurious look and feel. Granite, marble, limestone and soapstone are popular choices.
* Separate vanities. In addition to dual sinks, more homeowners want separate vanities, especially in the master bath. It allows each person to have his or her own space and storage.
* Vanities that look like furniture. Vanities now look like furniture you'd find in the living room, giving your bathroom a warm, cozy feel. Medium and dark woods are popular. Dark glazes, like black, sable and eggplant, are also in demand. Add an area rug -- or even use carpet as flooring -- and you've got the perfect retreat.
* Smart use of space. Clutter is an eyesore in a small space like the bathroom. Homeowners want storage to hide their toiletries, medicine and personal items. Many medicine and vanity cabinets come with flexible shelving, small drawers, dividers and even hidden outlets for your electric shaver or hair dryer. Vertical storage, such as a tower, can be both stylish and functional.
"Don't overdo it," advises Leslie Sellers, president of the Appraisal Institute. If you put in marble counters and an expensive vanity, don't assume you'll get your entire investment back when you sell.
"The cost of tearing out and preparing the area before doing any construction is more than the cost of putting things in," Sellers explains. "You may not get all your money back, but you do increase the marketability of your home."
The key is to manage your expectations, Sellers adds.
* On a Budget: If your countertops are in good shape and not terribly outdated, all they may need is a good scrub-down. Otherwise, look into solid-surface counters, which look like natural stone at a fraction of the cost. Restain wood cabinets and replace outdated handles.
* Mid-Range: Upgrade to granite counters if you don't already have them. Update a tired vanity with a modern glaze that matches your style. If you have one vanity and sink, consider adding a second.
* High-End: If you're feeling adventurous, marble and quartz are great alternatives to granite. Make high-end vanities work for you. Choose from all kinds of luxury features, including towel warming drawers, anti-fog mirrors and built-in lighting.
Whether you're going for a modern or traditional look, learn about the different styles and materials available.
* Two is better than one. Dual sinks continue to be in demand, especially in master bathrooms.
* Undermount sinks. Vessel sinks have long been popular, but now the trend is shifting to undermount and farmhouse sinks that blend with counters for a seamless look.
* Deep and freestanding sinks. More homeowners are choosing the convenience of larger basins and the clean, modern look of freestanding or pedestal sinks.
* Brushed metal faucets and fixtures. These beautiful finishes are stylish and easy to clean. Popular choices include pewter, nickel, silver, weathered copper, bronze and gold. Match your towel bars, hooks and light fixtures for added value.
One of the biggest mistakes homeowners make is doing a bathroom remodel that is not proportionate with the home, says appraisal expert Leslie Sellers. Make sure the project is in line with your home's market value and neighborhood standards.
"If you're putting in granite counters, a fancy faucet and a Jacuzzi tub in a starter home, you'll have a nice bathroom but you won't recoup much of your investment," Sellers says.
* On a Budget: If you can't afford to replace your entire sink, thoroughly clean your current one and replace the outdated faucet. There are many affordable options that fit your sink.
* Mid-Range: For large bathrooms, a farmhouse sink instantly updates a tired look. For smaller baths, a pedestal sink adds space. Choose a brushed-metal faucet and matching fixtures to go with the sink. If your master bath has one sink and you have extra counter space, consider adding a second sink.
* High-End: Dual sinks and high-end fixtures such as towel warmers are a must for a luxury home. For tech fans, smart faucets turn on when you approach, recognize your face and control water temperature.
The agency is changing what is known as the “anti-flipping rule” to speed up sales of renovated homes in communities with too many bank-owned and foreclosed homes, says FHA Commissioner David H. Stevens.
Waiving the 90-day rule will encourage private investors to buy vacant properties, fix them up, and quickly sell them to buyers who will be eligible to buy them using FHA financing.
FHA's change is going to be absolutely terrific for first-time home buyers hoping to take advantage of the tax credit.
Source: Washington Post (01/30/2010)
1. Large kitchens, with an island 2. Granite countertops 3. Energy-efficient appliances, high-efficiency insulation and high window efficiency 4. Home office/study 5. Main-floor master suite 6. Outdoor living room 7. Master suite soaker tubs 8. Stone and brick exteriors 9. Community landscaping, with walking paths and playgrounds 10. Two-car garages
Source: National Association of Realtors 2009 Profile of Home Buyers and Sellers
· Is it really a deal? It may not be worth replacing appliances that are fewer than seven years old, but older models can represent a real deal. Joe McGuire, president of the Association of Home Appliance Manufacturers, says a 20-year-old refrigerator uses three times as much power as a new Energy Star-approved model.
· Buy now before it ends. There is only about $300 million available and some states got more money than others. It is expected to run out fast.
Source: The Associated Press, Vinnee Tong (12/30/2009)
Freddie Mac recently stated the average rate on a 30-year loan was 4.71% with an average 0.7 point, the lowest rate since the agency began its weekly tracking of long-term interest rates in 1971. A point is equal to 1% of the loan amount, payable as a lump sum at closing. While the decline wasn’t overly dramatic, the dip is likely to get people wondering whether it’s time to sign on the dotted line.
The 5 following questions may help you decide if now is the time to go ahead and purchase a home or refinance your current home.
Q: Why are rates so low? A: Since early January, the Federal Reserve has been purchasing mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae in an effort to stabilize the housing market by making homes more affordable for consumers. The Federal Reserve Bank of New York, which is managing the program, plans on purchasing $1.25 trillion of securities.
Q: Are rates expected stay this low? A: It’s hard to tell, but don’t count on it because the lending landscape is likely to change next year. In September 2009, the Fed said it would gradually wind down the purchase program, ending it by March 30, 2010. That has some in the mortgage lending industry worried.
In a recently published mortgage survey, more than 60% of Bankrate.com’s panel of experts predicted that rates will move higher over the next 30 to 45 days. How much higher is anyone’s guess. Last year at this time, the average 30-year, fixed-rate mortgage was 5.53%.
Q: Why do different mortgage surveys come up with different average interest rates? A: It depends on which lenders are in their sample, when the survey was taken and whether the rates quoted are the posted rate, the application rate or the commitment rate. Also, some surveys take into account the points paid to secure the rate.
But regardless of the survey, the general consensus is that rates are ultra-low right now and may be the lowest the market will see.
Q: What else does a consumer need to know? A: The lowest rates are offered to the most credit-worthy customers who can make sizable down payments. Shop not just for the interest rate and the points involved but also for the fees involved, which can vary widely from one lender to another.
If you’re refinancing, remember the bigger the loan, the greater the payoff for finding a lower interest rate. Savvy customers put in their paperwork with a lender and set a “strike” interest rate at which to lock in the loan, a good move considering rate volatility.
Several refinancing calculators are available online that let borrowers plug in all the required numbers and determine the monthly savings and how long it will take to recoup the expense of a refinancing.
Q: So is now the best time to buy a home? A: It depends on personal situations. Homebuyers certainly have a lot of factors working in their favor right now—low interest rates, plenty of marked-down homes for sale and an extended and expanded federal tax credit that will expire in the spring.
On the flip side, there’s growing sentiment among analysts that housing prices, which are showing ever-so-minor improvement, may fall further. The reason? Lenders are expected to get better at determining which borrowers will qualify for loan modifications. That means lenders also will get faster at moving homes through the foreclosure process.
Mark Zandi, chief economist at Moody’s Economy.com, recently predicted that housing prices nationally will hit bottom in 2010’s third quarter. That means anyone buying a house now could see the value of their investment initially depreciate.
Source: 2009, Chicago Tribune.
Under what has been dubbed “Cash for Caulking,” home owners would get a 50 percent rebate on items like energy-efficient air conditioners, heating systems, washing machines and dryers, refrigerators, replacement windows, and insulation up to $12,000, meaning a household could spend $24,000 and get $12,000 back. There will likely be no income restrictions.
Steve Nadel, director at the American Council for an Energy-Efficient Economy, who is helping to craft the legislation, says they are contemplating having contractors or retailers pay part of the cost upfront to ease the need for home owners to come up with lots of cash.
Source: CNNMoney.com (12/08/2009)
When a home-owning parent of an adult child co-signs for a mortgage and both names appear on the note, the IRS says that under some circumstances, the first-time home buyer can qualify for the whole amount.
The IRS says the parent doesn’t qualify for any portion of the credit, but if the child hasn’t owned a home during the three years preceding the current purchase and can qualify based on income, he or she can be allocated the entire $8,000 credit.
When unmarried individuals co-purchase a home and only one of them is eligible for the credit, then the full $8,000 can be allocated to the eligible buyer.
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