News

Credit Freeze: A Misunderstood Freebie That You Actually Want

Rismedia Todays Top Story - Thu, 09/13/2018 - 16:15

(TNS)—Just one year ago, consumers woke up and discovered that hackers had one heck of a field day with their Social Security numbers and other information in a massive data breach at Equifax. Equifax’s screw-up would forever leave millions just that much more vulnerable to ID theft. Face it: It’s not like you can change the locks on the side door. Once hacked, your Social Security number is out there indefinitely.

Beginning September 21, though, a new federal law will help consumers stop intruders in their tracks. The three big credit reporting agencies—Equifax, Experian and TransUnion—will be required to offer you a credit freeze, free of charge. Such a freeze will restrict access to your credit file and help stop crooks from opening credit cards in your name.

Also starting September 21, parents across the country will be able to get a free credit freeze for children under age 16. A child’s credit file would be frozen until the child is old enough to use credit.

To be sure, the new law is but a minuscule response to the widespread outrage expressed by consumers just a year ago. Even so, it is a key step for regaining some control over our data.

Yet there’s a not-so-small challenge ahead: Many people may have absolutely no idea what a credit freeze actually is and how it works, according to new research conducted by a team at the University of Michigan School of Information in Ann Arbor. Amazingly, some consumers wrongly think that a credit freeze stops them from using their own credit cards.

So what exactly is a credit freeze?
Yixin Zou, a U-M doctoral student, says she was astonished to hear consumers disclose that they somehow associated a freeze with stopping the use of their own credit cards or limiting their own access to their existing credit cards.

“I’m quite surprised,” says Zou.

Perhaps some consumers associated a freeze with times that credit card issuers send out new cards and stop us from using old ones because the numbers of the old ones have been breached.

Perhaps others remember tips that once suggested putting your credit card in the freezer in a baggie to control spending.

Who knows?

Instead, a credit freeze stops many but not all businesses and others from reviewing your credit file.

The consumer who signs up for a voluntary credit freeze is given a PIN—a PIN that you want to keep track of—to use when you want to unfreeze that credit file in order to apply for new credit.

Under the new law, if a consumer asks for a freeze online or by phone, the credit reporting agency has to put the freeze in place no later than the next business day, according to a Federal Trade Commission blog.

If the consumer wants to lift the freeze—for example, to finance a new phone or fridge—that has to happen within an hour.

“It’s just assumed that people know what a credit freeze is,” says Florian Schaub, U-M assistant professor of Information, whose research focuses on security and privacy issues.

Schaub says too often “credit freeze” is just swept into the jargon in the industry—jargon that many consumers simply do not understand. Many times, people only fully understand a credit freeze once they’re actual victims of ID theft and told that a credit freeze is essential.

And what is a fraud alert?
Some consumers had a hard time understanding the term “fraud alert,” as well. Some thought the alerts were when a bank or credit union would text you when fraudulent activity was detected on your account.

Instead, placing a fraud alert on your credit file actually means that you’re adding a red flag, if you will, to your credit report to alert a lender to carefully verify your identity before making a loan.

Under the new law, a fraud alert will last one year, instead of 90 days. If a victim of identity theft, you’d still be able to extend a fraud alert for seven years.

We’re not talking about buying some service or signing up for some credit lock product that might have certain strings and conditions, as well as a fee. This is a free freeze.

But all that jargon—freezes, locks, alerts—can truly confuse consumers who are already overwhelmed in their financial lives.

Schaub says the credit bureaus don’t have much incentive to carefully explain things like credit freezes or fraud alerts; after all, their business model is to collect and aggregate our information to provide to lenders who want to sell us loans.

“We, as citizens, are not their customers,” Schaub says. “What makes them money is sharing our credit reports with other businesses.”

Everyone has something to lose.
Many times, particularly lower-income consumers wrongly believe that they have little reason to worry and don’t really need to protect their data after a breach, according to the U-M researchers. Those consumers thought that scammers would target people who were more affluent.

“They would say ‘I’ve got nothing to lose. Why would an identity thief go after me?'” Schaub says. He says other research has shown that people of low socioeconomic status are disproportionately affected by identity theft.

The U-M research found that most consumers took little to no action to protect themselves despite the risk of identity theft. Some consumers underestimated the likelihood of becoming a victim.

Some consumers reported that they were likely to delay taking the time to handle any security-related tasks until they’re actually harmed—even though recovering from ID theft can be far more time-consuming than prevention, researchers say.

Of course, ID thieves can see huge payouts using your stolen Social Security number for all sorts of things, including getting medical care or poaching your medical insurance, filing a fraudulent tax refund (which stops you from getting your refund cash until you take steps to clear up the matter), and filing for unemployment benefits or even Social Security benefits using your number.

Putting a credit freeze won’t stop all fraud, of course, including someone who tries to file a fraudulent tax return to collect refund cash.

The Equifax breach was significant because of the kind of data that was involved. On Sept. 7, 2017, the major credit reporting agency announced a “cybersecurity incident” where crooks gained access to Social Security numbers, birthdates, names and addresses. And in some cases, Equifax noted that some partial driver’s license numbers were stolen, too. The incident involved data for nearly 147 million people.

Without the change in the law, many consumers in several states had to pay a fee of around $10 or so for each freeze they placed on their credit files, or $30 for putting a freeze with the three agencies. Then there could be a fee of $10 or so for lifting that freeze when you wanted to take out a loan or open a credit card. Fees could be waived under certain circumstances, such as when someone has stolen your identity to open credit.

Under the new law, you can unfreeze your report at no cost, too.
Enabling consumers to get free freezes, of course, should encourage people who don’t have a lot of extra cash to consider putting a freeze on their credit.

After the Equifax breach, U.S. consumers—whether they were part of the breach or not—were allowed to sign up to freeze their credit reports at Equifax if they made a move before July 1. But the new law will go much further and offer free freezes indefinitely.

The U-M research involved in-person, comprehensive interviews with 24 consumers in the Ann Arbor area during the first few months of 2018.

Typically, while those consumers had heard about the Equifax breach, more than half of them had done nothing to further protect themselves and prevent identity theft afterwards, the research concluded.

The key to all of this, of course, is that it’s up to consumers to lock that door.

“The level of vulnerability is pretty stunning,” says Chi Chi Wu, staff attorney at the National Consumer Law Center in Boston.

Wu says being able to obtain a free credit freeze for children could be more important than some families realize—even though children wouldn’t be part of a data breach such as Equifax.

“Children are lucrative targets for ID theft because they have clean records,” Wu says. In many cases, though, children become victims of ID theft because parents or other family members steal the child’s ID to apply for utilities, such as electricity.

Wu says consumers need to realize that the data that’s out there can be used now or years from now.

“Now how do you prevent ID theft given that this information is out there?” Wu says. “Most people’s Social Security, birthdates, are just hanging out there. It can never be taken back.”

The U-M researchers concluded that it’s not enough for companies to simply report data breaches. The researchers maintain that companies should clearly inform consumers on how they’re affected, what their risks are once ID thieves can get access to that data and what immediate steps consumers can take to protect themselves.

Even if not affected by a data breach, people should consider placing a credit freeze with each of the three credit bureaus after September 21, as it substantially limits potential abuse of one’s credit report, Schaub says.

The new law—called the Economic Growth, Regulatory Relief and Consumer Protection Act—also provides that if you have guardianship, power of attorney, or conservatorship over an adult, you can get a free credit freeze for that person after providing proof of authority.

When is a credit freeze a bad idea?
Like many tools, this strategy isn’t for everyone. If you’re about to apply for a mortgage, a car loan or a student loan, don’t take out a credit freeze before you get the loan. If you do, you’re going to have to unfreeze that credit report before you can get approved for a loan. You’ll need to consider the hassle factor.

Some entities, such as insurers and employers, are exempted under the new federal law and would still have access to your credit report even under a free credit freeze. The Federal Trade Commission notes that your report could still be released to your existing creditors or to debt collectors acting on their behalf, as well. Government agencies may have access in response to a court or administrative order, a subpoena, or a search warrant.

Most consumers are being more watchful when it comes to checking their credit card and bank statements every month to make sure that the charges are accurate or looking at their credit reports, says Matt Schulz, chief industry analysts for CompareCards by LendingTree.

“Equifax may have been the tipping point where people from now on just assume their information is already out there,” Schulz says.

How do you get a free credit freeze?
If you won’t need new credit soon, then a credit freeze may be for you—but remember, the free credit freezes for all do not hit until September 21. Under the new law, the Federal Trade Commission and the credit reporting agencies must set up webpages to make it easier for consumers to take advantage of their new rights. Those links will be in operation when the law takes effect, according to the FTC blog.

If you want a free freeze, you’d need to contact each of the agencies individually. Here are some current numbers:

  • Equifax’s automated security freeze system can be reached at 800-349-9960
  • Experian can be reached at 888-397-3742.
  • TransUnion is at 888-909-8872.

You’re going to need to supply data such as your name, address, date of birth, Social Security number and other personal information.

After receiving your freeze request, each credit reporting company will send you a confirmation letter containing a unique PIN (personal identification number) or password. Keep the PIN or password in a safe place. You will need it if you choose to lift the freeze.

©2018 Detroit Free Press
Distributed by Tribune Content Agency, LLC

For the latest real estate news and trends, bookmark RISMedia.com.

The post Credit Freeze: A Misunderstood Freebie That You Actually Want appeared first on RISMedia.

Categories: Realty News

What to Buy in September

Rismedia Todays Top Story - Mon, 09/10/2018 - 16:57

(TNS)—September is a big month for bargains, with deep discounts on summer merchandise and more.

“September is all about the end of summer, so anything seasonal is going to be on clearance,” says Benjamin K. Glaser, former features editor with DealNews.com.

You’ll find the last of the one-cent and 10-cent deals on school supplies at the big office-supply chains in September. If you or the student in your life needs a laptop computer, you might find a bargain.

“Inventory will be more limited, but the discounts justify giving it a look,” Glaser says.

At the grocery store, summer produce is discounted and so is the first bounty of fall.

“You’ll see great prices on peaches and nectarines, alongside pears and apples,” says Chris Romano, chief operating officer of Veggie Noodle Co. in Austin, Texas, and former coordinator for produce and floral for Whole Foods Market. “You have two seasons at the same time.”

Here’s your guide to the best things to buy in September.

Tomatoes and Corn
If you’ve been enjoying big, juicy summer tomatoes, now is your last chance to enjoy them at lower prices.

In September, you can still find a rainbow of heirloom varieties for 20 to 50 percent less than out-of-season prices, Romano says.

Big, round “slicer” tomatoes—a cookout staple for topping burgers—will be cheaper, with some as low as 99 cents a pound. Don’t forget fresh corn—markets tend to roll out specials, such as 25 cents an ear, or four for $1.

September also ushers in the first tastes of fall. Hearty greens that are great in soups and salads, such as kale and chard, “need the cool, crisp nights” that September brings, Romano says. Look for big discounts.

Apples and Pears
Craving apple pie, apple fritters or just a sweet, crispy apple with a slice of cheese? Domestic apples are a fall crop, and as they roll into the stores in September, you’ll see prices start to drop, says Romano.

It’s also the start of the short season for another fall favorite: Bartlett pears.

“They’re very prolific and very flavorful in September and October,” says Romano. “You’ll see some nice discounts.”

Coffee
Make your calendars, caffeine fiends: Saturday, Sept. 29 is National Coffee Day. To celebrate, many coffee houses and doughnut shops, including chain stores and small independent cafes, will offer deals and discounts. Some coffee shops offer free cups of java and doughnuts on the house, as well as special buys on coffee beans.

One place you won’t find a free cup of joe: Starbucks. The giant coffee chain instead uses National Coffee Day to kick off charitable events and tout the positive impact it has on coffee-growing communities worldwide.

Airline Tickets
Most people take their big trips in summer, which makes September a good month to find deals on airline tickets. The one exception for fall travel bargains is Thanksgiving week. Flights sell quickly and at a premium for that holiday.

A few guidelines to follow:

  • If you see a good price, grab it. Airfares change frequently, and there’s always someone waiting to grab that ticket if you don’t.
  • The general rule for buying airline tickets is to book about 60 days in advance, so if you’re planning a winter getaway, September is a good time to nail it down.
  • To boost your chances of landing a deal, set fare alerts for your destination on sites such as Orbitz or Travelocity, or use a price prediction and monitoring app like Hopper. Google Flights is also a good resource for booking air travel, and it recently added new tools to help you decide the best time to book.

Bicycles, Gear and Accessories
Whether you’re an occasional bike rider or you take it seriously, September is a good month to buy a bicycle. New models debut in the fall, so retailers start to sell old inventory.

A lot of bike manufacturers have already delivered their 2019 models, says Larry Pennenski, manager of Mike’s Bikes, which sells the top bike brands at its two stores in Charleston, S.C.

Don’t expect huge discounts on bicycles.

“There’s not a whole lot of markup on them,” says Pennenski. Mike’s Bikes typically discounts older models by about 10 percent, he says.

Bike prices are all over the place, depending on what you want. A 10 percent discount on a $500 Electra Cruiser, for example, saves you a tidy $50. In September, also look for deals on cycling jerseys, helmets, storage stands, tools, and more.

Your location affects prices, too. In northern climes, the bike business slows down during cold months. That’s leverage for shoppers. Being a first-time customer at your local bike shop might give you negotiating power, too, since the store probably wants to build loyalty and retain you as a lifetime customer.

©2018 Bankrate.com
Distributed by Tribune Content Agency, LLC

For the latest real estate news and trends, bookmark RISMedia.com.

The post What to Buy in September appeared first on RISMedia.

Categories: Realty News

Consumer Confidence at High Point

Rismedia Todays Top Story - Sat, 09/08/2018 - 00:00

In August, consumer confidence rose, posting a 133.4 reading in the Consumer Confidence Index® from The Conference Board. July’s reading was 127.9.

The Expectations reading of the Index, which gauges how consumers feel about their business, employment and income prospects six months out, improved, as well, to 107.6, while the Present Situation reading, which gauges how consumers feel about conditions currently, rose to 172.2.

“Consumer confidence increased to its highest level since October 2000 following a modest improvement in July,” said Lynn Franco, director of Economic Indicators at The Conference Board, in a statement. “Consumers’ assessment of current business and labor market conditions improved further. Expectations, which had declined in June and July, bounced back in August and continue to suggest solid economic growth for the remainder of 2018. Overall, these historically high confidence levels should continue to support healthy consumer spending in the near-term.”

Source: The Conference Board

For the latest real estate news and trends, bookmark RISMedia.com.

The post Consumer Confidence at High Point appeared first on RISMedia.

Categories: Realty News

Beware Location Remorse: Over a Third Have ‘Neighborhood Regret’

Rismedia Todays Top Story - Thu, 09/06/2018 - 16:01

You can change a house—location is tougher.

According to new research by Trulia, 36 percent of Americans have “neighborhood regret,” or would have moved to another neighborhood than the one they reside in today. The feeling is heightened in metros, where 46 percent are dissatisfied with their pick, but less pronounced in rural areas (31 percent) and the suburbs (30 percent) The portal surveyed 1,000 Americans in Austin, Chicago and San Francisco who moved in the past three years.

What makes a neighborhood suitable? Forty-eight percent of those surveyed were motivated by the “vibe,” 37 percent were affected by crime rates, and another 37 percent were attracted to easier travel to work. Attributes that led to regret? Lack of public transit, noise and traffic.

Is your neighborhood a problem? For future moves, prepare through research. Look up neighborhood photos—something just 38 percent of those surveyed did—and plan a time to visit. Only 37 percent explored the neighborhood’s popular spots, and 47 percent did not go at night. Remember, as well, that your agent is an expert on the local market. Contact them for help with your move.

For more information, please visit www.trulia.com.

For the latest real estate news and trends, bookmark RISMedia.com.

The post Beware Location Remorse: Over a Third Have ‘Neighborhood Regret’ appeared first on RISMedia.

Categories: Realty News

Housing in 2020: Construction Costs Grow, Mortgage Rates Slow

Rismedia Todays Top Story - Sun, 08/26/2018 - 13:06

Where will housing be in 2020? According to the latest Metrostudy predictions, if all continues on its current track, construction costs could continue to increase, and mortgage rates could reel in.

While rates have increased in the last six months, impacting affordability, the rise is not significant according to historical trends, says Mark Bound, chief economist and senior vice president at Metrostudy, a provider of primary and secondary market information to the housing and residential construction industries. In the long term, Boud predicts mortgage interest rates will top out at 5.8 percent in 2020 and 2021, eventually being pulled down by slower economic growth—and because of tighter lending practices, the market environment will not become as dire as the last housing bubble.

As for inventory, it is significantly under-supplied, while homes are increasingly overvalued; however, the risk of a price collapse is small due to the tight market, and Boud expects the cycle of under-supply to plateau in 2020. The lack of new inventory is, in part, in response to trade increases, as many of the imposed tariffs—specifically the 20-plus percent tariff on lumber imports, and 10 and 25 percent tariffs on aluminum and steel imports, respectively—directly impact construction efforts.

These factors could lead to an increase in overall construction timelines, as well as an increase in construction costs by at least $2,000 per house, according to Boud. More homes in the upper price ranges are being built, while inventory under $400,000 is lower, in some cases. Overall, the national market is becoming top-heavy, which typically only occurs where land is more expensive, such as in California, Boud says.

Remodeling activity continues to rise in response to homeowners staying in their homes for longer, as well as the continuing trend toward purchasing existing homes, which triggers renovations. According to Boud, this is most common in coastal markets, or markets that have high appreciation rates, such as Texas.

Something to watch? Inflation. Boud says inflationary pressures are slowly building—inflation rose from 2.4 percent in March to 2.9 percent in August—but in a few years, the national debt could slow economic growth, which, in turn, could slow down rising interest rates.

Another concern? The current downward trend of the 2-10 Treasury yield spread, which could see negative figures in about a year, may be a sign that a recession is in the cards.

However, the current economy is healthy, Boud says. In the past 12 months, 2.4 million jobs have been generated, increasing demand for housing and pushing the unemployment rate down. Additionally, housing starts are fairly stable, forecasted to be 1.28 million in 2018, and increasing to 1.33 million in 2019 and 1.345 million in 2020, before plateauing.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post Housing in 2020: Construction Costs Grow, Mortgage Rates Slow appeared first on RISMedia.

Categories: Realty News

401(k) Auto-Enrollment Connected to Early Withdrawals, With Housing Implications

Rismedia Todays Top Story - Thu, 08/23/2018 - 16:41

With Social Security trust fund reserves waning—predicted to be depleted by 2034, leaving Social Security unable to maintain full scheduled benefits—and the number of retirees expecting to receive benefits increasing, more and more Americans are relying on 401(k) savings to support their retirement living. In fact, Statista estimates there are 41.2 million households who presently own a 401(k) plan in the U.S.

How does auto-enrollment fit in with these tax-advantaged savings accounts? There’s a clear benefit, as recently determined by 401(k) record-keeper Alight Solutions LLC in its 2017 Trends & Experience in Defined Contributions Plans report. Far more individuals contribute to a 401(k) with an auto-enrollment feature (85 percent) than to plans without it (63 percent).

While that should lead to higher savings rates and stronger financial health for future retirees, there is a glaring concern: Increases in auto-enrollment are leading to more early withdrawals. According to Retirement Clearinghouse LLC, over 60 percent of 401(k) participants with balances below $10,000 liquidate their accounts after leaving a company, reports the Wall Street Journal.

What’s causing this increase in withdrawals (also known as leakage)? Job changes lead to low 401(k) balances, which are largely cashed out due to company payout checks that can easily be deposited. The alternative? Having to fill out burdensome paperwork to transfer the funds into a tax-advantaged account. Others use their funds as a type of loan regardless of penalties incurred.

Although small loans or early withdrawals may not seem like much in the grand scheme of funds necessary to support retirement living, these can add up to a costly dip in long-term savings. While statistics by the University of Pennsylvania’s Wharton School show that most 401(k) borrowers pay themselves back (with interest), 10 percent default on nearly $5 billion per year.

How will this impact retirement-incentivized real estate? A survey conducted last year by The Hartford Advance 50 Team and MIT AgeLab found that 73 percent of surveyed adults over 45 strongly agreed with the statement “What I’d really like to do is stay in my current residence for as long as possible.”

That may not be achievable for a majority of retirees. Less funds to support retirement living may lead to more move-down buyers, as retirees struggle to pay off remaining mortgage debt on bigger homes while also maintaining their current costs of living. Additionally, aging in place no longer means simply staying in their current home, as improvements are necessary to ensure their safety and comfort, and these modifications can be costly.

Independent living in a safe format is merely one consideration. According to a Merrill Lynch Finances in Retirement Survey last year, the average cost to retire has increased to $738,400. The average balance in a 401(k) account is $102,900, according to Fidelity.

How much does auto-enrollment and early withdrawals impact retirement moving trends? Participating employees are more likely to reduce their potential auto-enrollment gains by as much as 42 percent, withdrawing an average of $850 more than employees who voluntarily enroll. This could lead to massive losses in retirement savings down the road.

When taking overall auto-enrollment savings into consideration, however, those who participated saved, on average, $1,200 more in eight years (in 2004 dollars) compared to employees hired only a year earlier but who were required to sign up on their own, according to the Alight report. Additionally, companies offering auto-enrollment are largely converting more employees, who would not typically contribute, into retirement savers.

Younger workers should start seeking employment with companies that offer 401(k) auto-enrollment now, and should refrain from pocketing low balances should they transfer jobs or withdrawing until they have reached retirement age. Additionally, in order to truly benefit from auto-enrollment and build up savings, Congress may have to impose added restrictions on low-balance payouts in response to job transitions, as well as make it easier for auto-enrolled contributors to transfer funds without the hassle of complex paperwork.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post 401(k) Auto-Enrollment Connected to Early Withdrawals, With Housing Implications appeared first on RISMedia.

Categories: Realty News

Challenged by a Down Payment? The Easiest Markets to Save For

Rismedia Todays Top Story - Thu, 08/23/2018 - 16:33

One of the biggest challenges for first-time homebuyers is saving.

Coming up with a down payment is a hurdle for the majority of millennials, shows study after study—but, there are areas where the average earnings are enough to save sufficiently, according to an analysis recently released by RealEstate.com. The easiest market? Chicago, where the average first-timer can save 20 percent for a starter in just over three years.

1. Chicago, Ill.
Annual Household Income for Millennials: $50,500
Annual Millennial Savings: $10,821
Median Starter Value: $177,300
Down Payment (20%): $35,460
Savings Timeline: 3 years, 3 months

2. Dallas-Fort Worth, Texas
Annual Household Income for Millennials: $50,600
Annual Millennial Savings: $10,843
Median Starter Value: $185,400
Down Payment (20%): $37,080
Savings Timeline: 3 years, 5 months

3. Detroit, Mich.
Annual Household Income for Millennials: $43,100
Annual Millennial Savings: $5,388
Median Starter Value: $96,700
Down Payment (20%): $19,340
Savings Timeline: 3 years, 7 months

4. Baltimore, Md.
Annual Household Income for Millennials: $54,300
Annual Millennial Savings: $11,636
Median Starter Value: $214,000
Down Payment (20%): $42,800
Savings Timeline: 3 years, 8 months

5. Indianapolis, Ind.
Annual Household Income for Millennials: $39,400
Annual Millennial Savings: $6,567
Median Starter Value: $122,500
Down Payment (20%): $24,500
Savings Timeline: 3 years, 9 months

6. Pittsburgh, Pa.
Annual Household Income for Millennials: $41,700
Annual Millennial Savings: $5,212
Median Starter Value: $103,600
Down Payment (20%): $20,720
Savings Timeline: 4 years

7. Cleveland, Ohio
Annual Household Income for Millennials: $42,900
Annual Millennial Savings: $5,362
Median Starter Value: $109,600
Down Payment (20%): $21,920
Savings Timeline: 4 years, 1 month

8. St. Louis, Mo.
Annual Household Income for Millennials: $43,200
Annual Millennial Savings: $5,400
Median Starter Value: $119,900
Down Payment (20%): $23,980
Savings Timeline: 4 years, 5 months

9. Austin, Texas
Annual Household Income for Millennials: $50,700
Annual Millennial Savings: $10,864
Median Starter Value: $249,700
Down Payment (20%): $49,940
Savings Timeline: 4 years, 7 months

10. Washington, D.C.
Annual Household Income for Millennials: $67,900
Annual Millennial Savings: $14,550
Median Starter Value: $343,000
Down Payment (20%): $68,600
Savings Timeline: 4 years, 9 months

The analysis factored in first-time homebuyers’ household income (median), plus the cost of a down payment on a median starter. (Twenty percent is ideal, but not a requirement.)

“Contrary to popular belief, millennials want to buy homes, but high home prices, low inventory and stagnant wage growth are some of the many factors that may be driving would-be buyers into delaying homeownership,” says Justin LaJoie, general manager of RealEstate.com. “However, in certain U.S. housing markets first-time buyers can find some relief; they just need to know where to look.”

RealEstate.com is part of Zillow Group.

For more information, please visit RealEstate.com.

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post Challenged by a Down Payment? The Easiest Markets to Save For appeared first on RISMedia.

Categories: Realty News

Disruptor Roundup: Divvy Takes on Rent-to-Own

Rismedia Todays Top Story - Tue, 08/21/2018 - 16:23

Editor’s Note: The Disruptor Roundup analyzes companies implementing unconventional models.

Divvy
This tech-powered, rent-to-own platform was launched at the end of 2017, and provides consumers with the ability to transition from renting to homeownership with a three-year program that amasses a down payment within its required monthly payments. Currently available in Atlanta, Cleveland and Memphis, Divvy is looking to expand to other markets.

Divvy purchases homes on behalf of consumers. There are, however, restrictions. Divvy cannot purchase and lease condos, non-bank approved short sales, auction properties, manufactured or mobile homes, undeveloped lots, homes in pre- or mid-construction or properties with problematic conditions that require extensive maintenance.

How does the program work? Applicants must first be preapproved and undergo a thorough underwriting process that requires photo identification, tax returns, recent bank statements and a credit check. This process typically takes between 24 hours and three business days, according to the Divvy website.

In addition to rent, Divvy also charges “equity credits,” which make up about 25 percent of the monthly payment and are used as down payment funds at the end of the leasing period. Additionally, 5 percent of the monthly payments go toward maintenance funds, to be used for any home repairs, which applicants must address themselves, as Divvy does not function as a traditional landlord.

The qualifications? Candidates must:

  1. Have been employed for the last 12 months
  2. Have an average monthly income of at least $2,300 per month
  3. Be able to comfortably afford a Divvy monthly payment (rent, equity credits, maintenance funds)
  4. Have a credit score of at least 550
  5. Have had any bankruptcies discharged at least 12 months prior to applying
  6. Have at least $1,300 saved for a down payment

The cons? First, Divvy customers may only use partnered agents, which highly limits buyers. How are these agents chosen? Divvy does not provide guidelines on its website, and was not available for comment.

Additionally, while this incentivizes homeownership for prospective buyers who have trouble building up a down payment, the leasing program is more of a forced savings program in which they risk losing out on funds if they break the lease and choose not to purchase the home. Divvy will only refund 50 percent of the total dollars of equity credit if the three-year lease is broken, and, at closing, deducts 1.5 percent of the applicant’s equity credits in order to cover its own selling costs.

Buyers might also be wary of Divvy’s static home value projection, which estimates how much the property will be worth in three years. It can be difficult to ascertain whether buyers are truly leasing to buy at fair market value three years prior to the actual time of purchase.

As Divvy does not provide mortgage services, buyers will still need to be approved for a loan at the end of the lease period, which brings up additional questions regarding the home’s value and appraisal conditions. Divvy can report on-time rental payments to the credit bureaus during the three-year lease in order to help applicants who wish to increase their credit score before purchasing, improving their chances of being able to qualify for a home loan.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post Disruptor Roundup: Divvy Takes on Rent-to-Own appeared first on RISMedia.

Categories: Realty News

Borrower Beware: Soon It Will Be Tough to Unload College Loans

Rismedia Todays Top Story - Mon, 08/13/2018 - 15:33

(TNS)—Here’s a good reason to think twice about taking out piles of student loans after watching a catchy TV ad for a for-profit college.

The U.S. Department of Education is on a path to make it far tougher to get federal college loans forgiven using the argument that the school cheated you out of a good education by misleading you about job prospects or engaging in fraud.

The new rule—now under a public comment period—would apply to students seeking loans after July 1, 2019.

Consumer watchdogs, of course, charge that bad actors are getting a pass here. It would be up to students to prove that the school knowingly made false statements. What’s most troubling is that we’re often talking about low-income students, minority students or military veterans who have taken out loans to attend for-profit schools as they seek to build a better life and get training for a good-paying job.

Education Secretary Betsy DeVos has said the proposal lays out clear rules schools must follow, while protecting students from fraud. The administration maintains that the current rules had been too broadly interpreted, leaving taxpayers on the hook and opening the door for frivolous claims.

Yet many borrowers could be burned here. We’re looking at yet another reminder of why it’s savvy to be skeptical when costly for-profit colleges aggressively recruit you and make breathless promises about grants and financing.

All graduates don’t get good jobs.
Some schools do go out of business unexpectedly; others provide misleading claims and don’t provide a degree that employers really value.

Two years ago, for example, ITT Tech shut its doors following sanctions by the U.S. Department of Education. The sudden shutdown meant that students were able to seek a discharge of federal student loans—but not private student loans—from the federal government. For-profit Corinthian College closed its campuses in 2015, leaving students unable to complete their programs.

Often consumers find the pitch surrounding some for-profit programs very appealing. They’re looking to get on the fast path to a new, more promising career. Yet many students borrow heavily—too heavily—to chase those dreams.

Robin Howarth, senior researcher for the Center for Responsible Lending, says there’s growing concern that students attending for-profit schools can end up owing a great deal of money but only have limited potential for obtaining a job with a substantial paycheck in return.

The consumer watchdog group released a report in June that indicated, for example, that students face very high tuition and fees at for-profit colleges in order to receive training for healthcare support jobs. Many students borrow most of the money, but the jobs they find don’t pay enough to cover their living expenses and all that debt.

“Students need to pay very close attention to what kind of earnings are achieved,” Howarth says.

It’s important to look beyond average salaries in the medical field and look at the kinds of jobs obtained by students who attended that program.

Many times, Howarth says, earnings for similar programs are less when the student has attended a for-profit school than if the student studied a similar program at a public or private nonprofit college.

Often, Howarth says students may be better off obtaining training at a community college at a far lower cost.

Proving fraud isn’t easy for student borrowers.
Kurt O’Keefe, a Grosse Pointe Woods attorney who has a blog called “Discharge Student Loans,” says student borrowers would still face significant challenges under the new rules, if they want to try to get loans forgiven if they claim they were defrauded by the schools.

“Failing to deliver requisite skills and knowledge is a tough one to litigate,” O’Keefe says. “The schools will say the student just failed to learn.”

In addition, he noted that many who find themselves in such circumstances are from lower-income families and cannot afford to take legal action.

“A right that costs money to exercise, legal fees for your lawyer, does not help much when you are talking about people who cannot pay their loans to begin with,” O’Keefe says.

O’Keefe says the real problem is one that he refers to as “the triangle.”

“The schools get the money whether the student gets value or not, the government (usually) lends the money and chases the borrower for repayment. The schools have no skin in the game,” he says.

Part of the draft rules would allow the Department of Education to seek reimbursement for forgiven student loans from the institutions and that is good, he says.

“It would hurt scam schools and schools with scam programs, and could be used against any institution, public or private,” O’Keefe says.

Under a current regulation, borrowers with federal student loans might be able to get debt relief when they claim they were misled about the cost and quality of the education. It’s called the “Borrower Defense to Repayment” rule.

The Education Department notes students may be eligible for borrower defense regardless of whether your school closed or you are otherwise eligible for loan forgiveness under other laws.

Consumers with questions or pending claims regarding borrower defense may call the Department of Education’s hotline at 855-279-6207 from 8 a.m. to 8 p.m. weekdays. As of January, the Department of Education has received 138,989 claims—and 23 percent had been processed. The bulk of the claims processed were associated with Corinthian and ITT.

New rules would save the government billions.
The proposed change in regulations would significantly limit the situations under which borrowers could qualify for financial relief, says Mark Kantrowitz, publisher and vice president of Research for Savingforcollege.com.

“The changes appear intended to primarily reduce costs to the federal government,” Kantrowitz says. “While the previous regulations may have been too permissive—allowing cancellation of debt based on just accusation of wrongdoing—the new regulations go too far in the opposite direction. As the lender, the federal government should have some responsibility to the borrower.”

It’s estimated that the new proposal could save the federal government nearly $13 billion over the next decade.

It’s a substantial savings, given that the Education Department had put a $14.9 billion price tag over the next decade for the program under the more-broadly defined regulations.

The new regulations would permit the U.S. Department of Education to provide partial relief instead of cancelling all of the borrower’s loans, depending on the level of harm suffered, he says.

Under the new rules, borrowers would need to prove that the college intended to defraud—a very difficult standard.

Also significant: Only borrowers already in default could apply for relief under the proposed rules. As a result, a borrower who was actively repaying the loans wouldn’t get help.

“This might lead some borrowers to intentionally default on their federal student loans,” Kantrowitz says.

Defaulting can seriously harm your credit score, and drive up borrowing costs when you want to take out a car loan, home mortgage or open up a credit card. A default will be reported to credit bureaus.

Most often, you do not want to go into default. If you default on student loans, you will be subject to collection charges and wage garnishment, and the government can seize your income tax refund, too.

©2018 Detroit Free Press
Distributed by Tribune Content Agency, LLC

For the latest real estate news and trends, bookmark RISMedia.com.

The post Borrower Beware: Soon It Will Be Tough to Unload College Loans appeared first on RISMedia.

Categories: Realty News

Is a State With No Income Tax Better or Worse?

Rismedia Todays Top Story - Tue, 08/07/2018 - 16:47

(TNS)—Is it better to live in a state with no income tax?

It’s a great question to ask, especially when considering how much of our paycheck is already set aside for Uncle Sam. Seven U.S. states forgo individual income taxes as of 2018: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Residents of New Hampshire and Tennessee are also spared from handing over an extra chunk of their paycheck, though they do pay tax on dividends and income from investments.

The main benefit of eliminating the individual income tax, proponents say, is that states with no income tax on residents become beacons for growth. They’re better at creating jobs and keeping a core of young, educated workers from moving to other states.

The American Legislative Exchange Council [conservative, generally] reports that over the past decade, the nine states without a personal income tax have consistently outperformed the nine states with the highest taxes on personal income in job creation, population growth and even tax revenues. Others, however, are skeptical about those findings.

“There is no compelling evidence that states without income taxes are outperforming states that have them or even have relatively high rates,” says Michael Mazerov, senior fellow at the Center on Budget and Policy Priorities [generally progressive].

“The research shows that the overwhelming driver of where people choose to live and where people choose to move is job opportunities and family reasons, and state and local taxes are pretty negligible for most households,” Mazerov says.

The issue is undoubtedly controversial. Public opinion usually swings with the size of one’s paycheck and the role people think governments should play in shaping society.

Before taking a side, however, consider these factors.

The New Tax Bill Reduced the Deduction for State Income Taxes
Officials in states with higher individual income tax rates—think California and New York—are less than thrilled about a provision in the new tax code that caps the state and local tax (SALT) deductions that residents can claim at $10,000.

The old tax code allowed taxpayers who opted to itemize instead of take the standard deductions—formerly $6,350 for single filers and $12,700 for couples filing jointly—to deduct all of the property taxes they paid to state and local government agencies, as well as their tally from either sales taxes or individual income taxes.

Since most people rack up more individual income taxes, that is the category they choose to deduct. The changes leave some likely owing more going forward, economists say.

It’s more business as usual for people living in a state without individual income taxes, because those residents were by default either taking the standard deduction or subtracting the amount they paid in sales and property taxes from their federal tax bills. Without making some big purchases or holding a substantial real estate portfolio, it will likely be harder to hit the new $10,000 cap.

There Are Other Ways to Get You
State governments use taxpayer dollars to fund road maintenance, law enforcement agencies and other public services. The funding for those services typically comes from three key areas: property taxes, sales taxes and income taxes, says Stephen Miller, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas.

“You might say it’s like the three legs of stool, so when you take one leg away, the funding stability is reduced,” Miller says. “If you want government services, then the payment of that has to come from somewhere else.”

States without a personal income tax might ask residents and visitors to pay more sales tax on groceries, clothes and other goods, as is the case in Nevada—or, like in New Hampshire, homeowners end up paying more on their property tax bills compared with those in neighboring states.

Tennessee, for example, has the highest sales tax in the country. The Volunteer State, which reviles income taxes so much that voters changed the Tennessee Constitution in 2014 to forbid these taxes for good, charges a 7 percent sales tax statewide. When combined with local sales taxes, the combined rate increases to an average of 9.46 percent, according to estimates from the Tax Foundation. That’s more than double the combined rate in super-touristy Hawaii.

In New Hampshire, homeowners pay some of the highest effective property taxes in the nation, according to an analysis by ATTOM Data Solutions. The Granite State also continually ranks poorly for contributing funds to higher education, and holds some of the most expensive two-year and four-year colleges in the nation when looking at average tuition and fee prices, according to the College Board.

In Washington, pump prices are routinely among the highest in the country, in part because of a sky-high gasoline tax. As of 2018, Washington charges 49.5 cents per gallon in gas taxes, the second-highest in the country, according to The Energy Information Administration.

Elsewhere, Texas and Nevada have above-average sales taxes, and Texas also has higher-than-average effective property tax rates. Florida relies on sales taxes, and its property taxes are above the national average. Wyoming and Alaska make up for the lost income tax revenue through their natural resources. Both states enjoy hefty tax revenues from coal mining and oil drilling operations.

All of those extra taxes contribute to higher-than-average living expenses in some of those states. Florida, South Dakota, Washington and New Hampshire all have higher than the median cost of living, according to data compiled by the Center for Regional Economic Competitiveness. Alaska is among the most expensive places to live, but a big part of that is because it’s so remote.

More Pressure on the Poor
While the jury’s still out on the benefits of living in a state with no income tax, experts agree that there is one clear result for those states that do levy an income tax: It helps the poor.

An income tax is a classic tool for redistributing wealth. It’s usually “progressive” in nature, meaning that it taxes higher earners at a greater rate than lower earners. Other taxes typically don’t have that characteristic.

Sales taxes, for example, are considered “regressive.” They don’t change depending on the income level of the consumer. They treat everyone the same. So do levies on food, gasoline and other key consumable items.

These taxes place an unfair burden on the poor, according to research from the Institute on Taxation and Economic Policy (ITEP) [a nonpartisan nonprofit]. The reason is the lowest earners in the state devote the lion’s share of their take-home pay to buying things that are subject to sales taxes. The wealthy, who can save a chunk of their income in their 401(k)s and other investments, have a much smaller exposure to the sales tax.

Don’t Expect an Economic Benefit
Advocates for abandoning personal income taxes are driven by the same line of thinking: Cutting the income tax will boost take-home pay for everyone. It’ll make the state more attractive than its neighbors, drawing new businesses, creating jobs and sparking an influx of talented workers.

But does this really happen? A variety of economic policy groups have pushed back over the past few years, raising questions about whether any of those claims are true.

“If taxes where everything, California would be empty and Wyoming would be bursting at the seams,” says Robert Godby, director of the Energy Economics & Public Policies Center at the University of Wyoming.

When you put the top nine states with the highest individual tax rates against the nine states that don’t go after a piece of workers’ paychecks, data shows team no-tax had a higher average population growth rate from 2006 to 2016—11.9 percent compared to 5.6 percent, according to the ITEP.

However, the ITEP points out “the more significant finding is that the no-tax states have struggled to add jobs at a rate sufficient to keep pace with their growing populations. Employment growth trailed population growth by roughly 41 percent in the no-tax states, compared to 19 percent in the states with the highest top tax rates.”

Wyoming, home to a great deal of the nation’s coal and oil and gas activity, saw one of the larger gaps between job creation and population growth, according to the 2017 report. The Cowboy State traditionally shifts more of the tax burden onto the energy industry. While that might work during boom times, bust times create funding challenges. Other governments that shift the onus away from income earners might also find themselves more susceptible to budget blows, Godby says.

“The problem is when you live in a state without an income tax, it’s really hard to implement one. It’s harder than raising an existing tax because it’s kind of like crossing the Rubicon,” he says. “For a lot of people in Wyoming, not having an income tax is something they feel special about or something that makes Wyoming special.”

©2018 Bankrate.com
Distributed by Tribune Content Agency, LLC

For the latest real estate news and trends, bookmark RISMedia.com.

The post Is a State With No Income Tax Better or Worse? appeared first on RISMedia.

Categories: Realty News

Some Not-So-Tiny Obstacles in the Growing Market for Tiny Houses

Rismedia Todays Top Story - Thu, 07/26/2018 - 16:25

(TNS)—When Tom Alsani heard about plans for a tiny-home community in St. Petersburg, Fla., he got so excited he immediately wanted to know more.

“Right now I have a house with three bedrooms, but the kids are gone and I’m trying to downsize,” says Alsani, a quality-control inspector for furniture companies. “To me, a tiny house is very, very attractive. It’s a state of mind; it’s not about how big you have it but the level of contentment and happiness.”

Few housing options have captured the public imagination like tiny houses, seen as an affordable and, yes, adorable antidote to the excesses of modern life. Their appeal is wide—to empty nesters like Alsani, soon to be retired and living on Social Security, to millennials, too burdened with student loan debt to buy a normal-size house, and to vagabonds at heart who like the idea of packing up and hitting the road at a moment’s notice.

But for all the enthusiasm, the tiny house movement isn’t moving very fast. Financing, zoning laws and entrenched attitudes have conspired to limit tiny houses to a tiny percentage of the nation’s housing stock.

“With tiny homes, because it has a new name and is not called an RV or a mobile home, people don’t know how to treat it,” says Preston Melson, a partner in a St. Petersburg company that makes tiny houses.

Today, though, “tiny house” typically means a dwelling of 400 square feet or less on wheels. While the mobility is attractive, it has impeded the widespread acceptance of tiny homes.

Legally, wheeled houses are considered recreational vehicles and are generally restricted to RV parks by county and municipal zoning laws. Many so-called “tiny homers” don’t want to live in RV parks, however, because they cater primarily to vacationers, not permanent residents.

Owners who don’t plan to move their tiny homes can build them as permanent structures on vacant land where zoning permits; thus, the challenge of tiny houses “is where to put them,” Melson says. “That’s the No. 1 enemy.”

Paying for tiny houses is getting easier. Since 2013, SunTrust’s LightStream division has offered tiny-home loans—actually, personal, non-secured loans of up to $100,000—for as long as seven years. Interest rates range from 4.04 percent to 11.04 percent, depending on the borrower’s credit history. (The minimum score is 660, and the applicant must have some assets like a 401(k) or stock.)

Though it has fewer borrowers than for car and home improvement loans, the market for tiny-home loans “punches above its weight,” says Julie Olian, LightStream’s vice president of Public Relations. “Our portfolio has grown as the market has increased. It’s a great way to get a first home and it’s one that’s flexible in terms of where it is [located].”

©2018 Tampa Bay Times (St. Petersburg, Fla.)
Distributed by Tribune Content Agency, LLC

For the latest real estate news and trends, bookmark RISMedia.com.

The post Some Not-So-Tiny Obstacles in the Growing Market for Tiny Houses appeared first on RISMedia.

Categories: Realty News

Minutes, or Money? Homeowners Save by Trading Off Travel to Work

Rismedia Todays Top Story - Wed, 07/25/2018 - 16:11

In city cores, commuting from farther out takes time, but can save thousands, according to an analysis newly released by Zillow.

In Boston, there is a 13.4 percent difference in home prices, typically, between the center of the city and locales 15 minutes out—the highest rate of savings, and totaling $57,260. In Seattle, the difference is 11.3 percent, or $54,599; in Washington, D.C., the difference is 9.4 percent, or $37,709. The analysis factored in 34 of the largest metros, in conjunction with HERE Technologies, a city intelligence and mapping platform.

In approximately one-third of the cities examined, however, the opposite is true. Compared to downtown, homes are pricier in suburbs in Texas—Dallas-Fort Worth, Houston and San Antonio, specifically—and in Baltimore, Detroit and Sacramento. San Antonio has the highest premium rate, at 14.2 percent (translating to $27,509), and Dallas has the lowest, at 0.1 percent ($308).

Convenience costs—but according to Aaron Terrazas, senior economist at Zillow, 15 minutes daily equals five months over a lifetime. With affordability eroding, is shorter travel worth it?

“There has been an urban revival in many U.S. cities over the past two decades driven by evolving preferences among young adults and a long-term shift in the American economy toward service jobs, but, this does come with a cost,” says Terrazas. “In many cities, there’s a growing tradeoff between a short commute and an affordable home. The regular commute to and from work looms large over the typical American worker’s life. Over a 30-year career, reducing your one-way commute by just 15 minutes frees up five months of one’s life for more rewarding pursuits.

“For some home shoppers, it may be worth paying more to spend less time sitting in traffic, but for others, deteriorating mortgage affordability and lifestyle needs and wants make longer commutes a reality,” Terrazas says.

Across age groups, closer commutes are important. According to a January National Association of REALTORS® (NAR) survey, both millennials and the Silent Generation would live in an apartment or townhome if it meant less travel to work.

For more information, please visit www.zillow.com.

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post Minutes, or Money? Homeowners Save by Trading Off Travel to Work appeared first on RISMedia.

Categories: Realty News

Forget a Garage—Buyers Won’t Budge on High-Rated Schools

Rismedia Todays Top Story - Tue, 07/24/2018 - 16:14

Buyers have their eyes on schools, and with the irrefutable link between the quality of schools and values, a district with high ratings trumps all—even coveted features of a home, according to a new realtor.com® survey.

To get into their desired district, 78 percent of the homebuyers surveyed had to let go of something on their wish list. When asked what they would compromise on, approximately one-fifth (19 percent) of respondents would forgo a garage, while 17 percent would go without a kitchen that has been remodeled. Another 17 percent would settle for less bedrooms.

Being within an in-demand district is “important” to 73 percent of respondents to the survey, and even more so to those with children, and those who are younger. What are the characteristics of a “good” school? Accelerated programs, arts and music and diversity are all factors, but the most important is test scores, according to the survey.

“Most buyers understand that they may not be able to find a home that covers every single item on their wish list, but our survey shows that school districts are an area where many buyers aren’t willing to compromise,” says Danielle Hale, chief economist at realtor.com. “For many buyers, ‘location, location, location,’ means ‘schools, schools, schools.'”

Generally, homes in proximity to sought-after schools move quicker than others, and are pricier.

For more information, please visit www.realtor.com.

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post Forget a Garage—Buyers Won’t Budge on High-Rated Schools appeared first on RISMedia.

Categories: Realty News

Don’t Know Your Mortgage Rate? You Could Be Costing Yourself Thousands

Rismedia Todays Top Story - Sun, 07/22/2018 - 13:02

(TNS)—Not knowing your mortgage rate can be an expensive mistake, especially in this rising interest rate market. Yet nearly three in 10 mortgage holders (29 percent) either didn’t know their mortgage rate or wouldn’t say, according to a survey by Bankrate.

This is a big problem, says Martin Choy, operations manager at Westwood Mortgage in Seattle.

“Most homeowners should know what their rate is. If they have an adjustable rate mortgage [ARM], then they should contact their lender immediately and get their current rate,” Choy says.

Rates Are Climbing, so Borrowers Should Act Now
As rates continue to rise, this could be your last chance for many years to lock in a lower rate.

“During the big boom, before this last election, we could refinance mortgages at no cost because the rates were so low, but now the rates are heading up,” Choy says.

The average rates on 30-, 15- and 10-year fixed refinances have risen from a year ago, according to Bankrate’s weekly survey of large lenders. The benchmark 30-year fixed-rate mortgage rose to 4.70 percent (as of July 11, 2018) from 4.13 percent a year earlier.

A $200,000 mortgage with a 4.70 percent interest rate costs $119 a month more in interest than the same mortgage with a 4.13 percent rate. As rates and mortgage amounts go up, the impact on your bottom line increases. Over time, this difference in rates can cost you thousands of dollars.

Good Candidates for Refinancing
When you refinance your mortgage, you pay off the remaining balance on your current loan and get a new one. You can get a new rate, new terms, or a new rate and new terms. You can get a cash-out refinance where you tap into the equity to extract cash and then get a new mortgage. You can even pay money in and take out a smaller mortgage.

Those with adjustable-rate mortgages may be good candidates for refinancing. As mortgage rates climb, so will your monthly payments. If you lock in a fixed-rate mortgage now, you may be able to save thousands of dollars later.

The same is true for people with high-rate mortgages who have since improved their credit.

“There are many variables in determining whether refinancing is a good option,” says Choy. “How much do you owe? How much is your house appraised for? Is your credit score good? If you’re in better financial shape now, both with your monthly debt ratio and credit score than when you got your mortgage, then you could qualify for better rates.”

Today, most people aren’t getting ARMs because the rates are about the same as fixed-rate mortgages, says Choy.

“It’s always better to get a fixed-rate loan than an ARM when interest rates are equal. Now is a good time to refinance an ARM before rates get even higher.”

Cash-Out Refinance Options
If you have outstanding higher-rate consumer debt and an above-market mortgage interest rate, a cash-out refinance might be a good option. That way you can consolidate all the debt into one presumably more affordable monthly payment.

Not only are mortgage rates rising; so are interest rates for credit card debt. Because credit card interest rates follow in lockstep with mortgage rates, people with credit card debt might be looking at higher monthly payments.

“With a cash-out refi, you can use that money to pay off debt and get a new mortgage with better rates. That is an option for some homeowners,” says Choy.

What Does Refinancing Cost?
Refinancing fees vary by lender and state, so be sure to shop around for specific costs. Bankrate’s mortgage rate tables are a good place to start looking at rates in your area. Calculate when you’ll break even on the new mortgage by taking into account the costs of refinancing and any prepayment penalty for paying off your mortgage early.

On average, borrowers can expect to pay between 3 and 6 percent of their balance in refinancing fees. Costs might include:

  • Application fee: This charge varies by lender and is used to cover processing your application and credit report. The cost ranges from $75-$300.
  • Loan origination fee: The lender charges this fee for preparing your loan. This may be between 0 percent and 1.5 percent of the loan principal.
  • Points: You might pay loan-discount points, which is a one-time fee for reducing the interest rate on your loan. Each point is equal to 1 percent of the amount of your mortgage. There is another point-based fee charged by lenders to earn money on the loan. This latter fee of up to 3 percent of the loan principal can sometimes be negotiated.

Other fees might include:

  • Appraisal fee
  • Title search/title insurance
  • FHA, RDS or VA fees or PMI
  • Homeowner’s insurance
  • Attorney review
  • Inspection
  • Surveys

Sometimes these fees can be rolled into your new mortgage, or the lender will pay them in exchange for a higher interest rate. Refinances that don’t require borrowers to pay these up-front fees are known as “no-cost” refinancing.

©2018 Bankrate.com
Distributed by Tribune Content Agency, LLC

For the latest real estate news and trends, bookmark RISMedia.com.

The post Don’t Know Your Mortgage Rate? You Could Be Costing Yourself Thousands appeared first on RISMedia.

Categories: Realty News

Breaking Down the Hottest Patio Trends This Summer

Rismedia Todays Top Story - Sat, 07/14/2018 - 00:00

Summer patio season is ramping up. The experts at Infratec say that outdoor design trends for 2018 are all about incorporating affordable luxury into your own backyard by turning your patio into a peaceful, lush oasis through low-maintenance water fixtures, a color refresh and vintage materials.

The company sees many homeowners gravitating toward easy-maintenance exterior garden designs that enhance physical and mental wellbeing with spa-inspired touches, like meditation benches, fountains, reflecting pools, rock waterfalls and zen gardens.

According to Infratec, low-maintenance water features can add visual interest and soothing sounds to a yard—even in drought-prone climates—because they actually require little water (and recycle the water they do use).

Kate Simmons at Decoist.com says cabana stripes can be found in this year’s collections, and this trend shows no sign of fading. She says that linen, teak and rope are a few of the materials designers are incorporating into exterior furnishings and accessories to give this year’s easy-breezy trend pizazz.

When it comes to outdoor style this year, Simmons says pink is the accent color of choice, especially if a hint of blush is introduced into your furniture vignettes.

Meanwhile, at FamilyHandyman.com, trend watchers are seeing patio furniture that mixes materials, such as metal and wood, instead of a single material, such as wicker.

If you have a covered deck or patio, the site says you can bring it up-to-date by adding a ceiling fan. If you haven’t installed a ceiling fan before, rest easy—you can do it yourself in less than a day, and you’ll be comfortable even on the hottest summer days.

FamilyHandyman.com also says that the days of small, bistro-style dining tables on the deck and patio are over, and that large-scale square and rectangular tables are hot.

As far as accessories are concerned, think bright and bold when it comes to fabrics for your patio furniture cushions in 2018. Go with yellows, reds and pinks that will pop against all that natural greenery, and your guests will be raving about your impeccable sense of style all summer long.

For the latest real estate news and trends, bookmark RISMedia.com.

The post Breaking Down the Hottest Patio Trends This Summer appeared first on RISMedia.

Categories: Realty News

Is Amazon Embarking on Home Insurance?

Rismedia Todays Top Story - Thu, 07/12/2018 - 16:21

July 16 is Prime Day, and this year’s deals feature double discounts on Alexa-enabled smart home devices, including Echo, Fire TV and Fire tablets, Amazon reports. As the marketplace giant gets more and more involved in the lives of homeowners, could consumers start to see offshoots into other home-related services?

Amazon-run home insurance could be the company’s next endeavor, according to The Information, a technology website. Although Amazon has not yet provided concrete evidence for insurance plans, it would make sense due to the company’s most recent partnerships. From plans to create a line of robots to be used as homeowners’ personal assistants, to the latest collaboration with Lennar showrooms to promote its line of smart home products, Amazon is already deeply entrenched in the lives of homeowners.

The alleged reason for this possible next phase in Amazon’s services? The company’s various tech products could help monitor for dangers such as burglaries and fires, resulting in more affordable premiums, reports The Information. Amazon has already made moves into the healthcare industry to build out its medical supply business, so an insurance division isn’t outside the realm of possibility.

If Amazon did form its own insurance division, what would it look like? In order to beat out the competition, there may have to be a sizable price difference in premiums and an added catch for consumer convenience. A traditional financial model may not be feasible for a company that needs to juggle its Prime audience base, along with several other technological innovations, to stay relevant.

However, this could be more of a partnership than a foray into its own segment of home insurance. Since regulations vary by state, it would be difficult for Amazon to establish a national presence under its own umbrella without investing an abundance of time and money to maintain a legally intricate service. Another concern? Amazon would need to have the necessary funds available to create a pool of reserves for any upfront claims payments.

In order to cut costs, Amazon may be able to sell consumer information it gathers from its smart home devices—in December alone, the installed base of Amazon Echo devices in the U.S. amounted to 31 million units, according to Statista. This way, the company would be able to barter data in order to profit from already-established insurance institutions and further negotiate consumer discounts, similar to the way insurance companies currently provide credits to homeowners who have security systems installed at their properties.

According to Statista, the global smart home market will reach an estimated value of over $53 billion in the U.S. by 2022. Will future homes be run by Amazon? It’s starting to look that way.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post Is Amazon Embarking on Home Insurance? appeared first on RISMedia.

Categories: Realty News

Buyers: Challenged by Student Debt? Consider Down Payment Programs

Rismedia Todays Top Story - Sun, 07/08/2018 - 13:02

Student loan debt is one of the biggest factors impacting millennials’ ability to purchase a home. According to the National Association of REALTORS® (NAR), 80 percent of millennials do not own a home, and, of that, 83 percent say student loan debt is impacting their ability to buy. Millennials expect to be delayed from home-buying for a median of seven years, the NAR research shows.

There are alternatives, however, that millennials may not know about. In fact, according to a 2016 ATTOM Data Solutions survey, few buyers and real estate agents know about the close to 2,500—mostly local—down payment assistance programs. Across the 513 counties surveyed in the ATTOM Data Solutions report, buyers that used these programs saved, on average, $17,766 over the life of their loan.

From offerings that benefit first-time homebuyers to options for refinancing costly student loan interest rates, it’s important that today’s homebuyer is aware of all the viable options for purchasing a home.

What’s Out There?
For consumers who are having trouble saving for a large enough down payment, there are plenty of options that offer grants or down payment assistance. The National Homebuyers Fund (NHF), for example, has multi-state Down Payment Assistance (DPA) programs that offer closing assistance or down payment grants for up to 5 percent of the loan amount.

The U.S. Department of Agriculture (USDA) also has low- and no-down payment options via its Single Family Housing Guaranteed Loan Program, which assists lenders in offering low- and moderate-income households with purchasing opportunities in rural areas, for which closing costs and other related expenses can be rolled into the loan.

Additionally, there are more localized options available on a state-by-state basis. Here are a few examples:

  • Baltimore, Md./Washington, D.C. – The Maryland Mortgage Program offers a discounted mortgage rate and up to $5,000 in down payment assistance when consumers purchase in a sustainable community.
  • Ohio Grants for Grads offers reduced-rate mortgages for first-time homebuyers who’ve earned their associate, bachelor, master or doctorate degrees within the last four years.
  • Rhode Island – The First Down Program allows first-time homebuyers to purchase a one- to four-family home or condominium with down payment assistance of $7,500, forgivable after five years of owning the home as a primary residence.

More and more companies are introducing homebuyer assistance programs to tackle the student loan debt challenge that many of today’s buyers are facing, as well; however, buyers and agents should first consult a financial expert before participating in or recommending these programs. For example, the student loan cash-out refinance that multiple lenders offer, which allows homebuyers to use their equity to pay off high-interest student loans, may not make as much financial sense with the introduction of the new tax bill. as home equity financing is no longer tax-deductible.

With other incentive programs, such as the Eagle Home Mortgage’s Student Loan Debt Mortgage Program, homeowners can pay off outstanding student loan debt (up to $13,000 for this specific program) by redirecting 3 percent of their purchase price to student debt payoff when buying a new home from the home builder. Buyers should carefully assess whether these programs are financially worthwhile.

These are just a sampling of the available down payment assistance and grant programs that can help consumers with high student loan debt achieve their homeownership dream. It’s imperative that real estate agents research these offerings in order to assist consumers who believe homeownership is still out of reach.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post Buyers: Challenged by Student Debt? Consider Down Payment Programs appeared first on RISMedia.

Categories: Realty News

Millennial Buyers Face a Tough Housing Market

Rismedia Todays Top Story - Thu, 07/05/2018 - 16:02

(TNS)—Yvonne Jimenez Smith and her husband, Brandon Smith, spoke in whispers recently as they visited a white stucco house they planned to buy on a leafy street in San Jose, Calif.

After six months of aggressive hunting, they were on their way to a small suburban home of their own after spending most of their 20s in noisy city centers.

“It was so quiet, it just seemed weird to speak out loud,” Jimenez Smith says. “We lived over a freeway entrance in San Francisco. It was always loud and we were always surrounded by people. It’s a big change.”

Like the couple from San Francisco, who are 28 and 30, other millennials are starting to follow in the footsteps of earlier generations and buy suburban houses after fueling a boom in city apartments. The share of 25- to 35-year-olds who own homes, which had been falling since 2005 as renting grew in popularity, rose slightly in 2017, according to a Stateline analysis of Census microdata from IPUMS-Current Population Survey.

Last year 32.3 percent of young people were homeowners, a slight increase from 2016 when it was 32.2 percent. That’s still well below the 45 percent in 2005 and the peak of 55 percent in 1980.

Millennials are hitting the market at a difficult time, though, with rising prices and few houses to buy as the housing industry has shifted to building more downtown rentals. Some people seeking to buy houses have been discouraged and have postponed the step, just as many have had to put off moving out of parents’ houses, forming couples and having children as they tried to build careers delayed by the recession.

Between 2011 and 2017, home prices grew 48 percent, while income for all age groups rose only 15 percent, according to National Association of REALTORS® (NAR) statistics.

“It just feels irresponsible right now,” says Jayme Fraser, a 28-year-old freelance journalist who considered buying a house in Missoula, Mont., three years ago but found prices too high. She and her husband, who is in graduate school, are now looking for a more rural home in Montana they can afford to buy while paying off student debt.

Student debt is a big obstacle to buying a home for many millennials, says Jessica Lautz, director of Demographics at NAR. The median student debt for millennials is $41,000, and they typically put off buying their first home for seven years after they wanted to buy, Lautz says.

Young people with college debt typically spend close to half of their income on loan payments, according to a 2017 study in The Journal of Consumer Affairs. This makes it almost impossible to qualify for a home mortgage with a small down payment.

“Contrary to popular opinion, millennials are not buying avocado toast instead of saving for a down payment; they’re paying their student debt,” Lautz says. “Somebody with $41,000 in student debt is going to be buying something far away with a long commute, or in a bad school district, or something too small. They’re not going to be able to stay there for long.”

Thirty-two is the median age for first-time homebuyers, according to a survey by NAR. That means many first-time buyers are squarely in the millennial generation, the oldest of whom reached their mid-30s in 2017.

The apparent increase in ownership in 2017, the first since 2005, was so tiny that it’s hard to say if the trend toward less buying and more renting is really over, says Chris Porter, chief demographer for California-based John Burns Real Estate Consulting.

Ownership is still “considerably lower than 10 years ago,” Porter says. “We may need another year or two of data to understand whether this is truly a reversal.”

Some young people who could buy houses are still on the sidelines, like Connor Coyle and his fiancée, Amy Branchini, both in their late 20s. Coyle, who works in wealth management, moved a few years ago from Manhattan to suburban Westchester County, N.Y., where he rents an apartment.

“Both of us were at the point where we wanted to get out of the city and live a more relaxed lifestyle,” Coyle says. The couple is ready to stop renting and own a house, but they just haven’t seen a house they love in their $500,000 price range.

“If we end up renting for another three years, that’s OK,” Coyle says. “What you’re getting for your money right now, to my mind, is subpar. Maybe in a few more years we can get something in the $600,000 to $700,000 range, and it will make more sense—we won’t have to put in $100,000 in renovations.”

In some expensive states, such as Hawaii, California and New York, and the District of Columbia, fewer than one in five millennials is a homeowner, according to the Stateline analysis. But in Iowa, the Dakotas and Minnesota, it’s close to half.

Today’s first-time buyers are increasingly living in ad hoc situations while they save, Lautz says, citing a survey from NAR. Twenty-one percent lived with parents, relatives or friends before buying in 2017, up from 12 percent in 1993.

Stateline’s analysis showed that the share of 25- to 35-year-olds in ad hoc situations, neither renting nor owning, has grown steadily from 21.2 percent in 2012 to 24.2 percent in 2017. Most in those situations are living with parents or other relatives.

A shortage of housing for sale is also driving prices up in some booming areas such as the San Francisco metropolitan area, where Jimenez Smith and her husband work and live. The area has added 189,000 jobs in the past three years, but only 14,000 housing units—the largest discrepancy in the nation, says Lawrence Yun, economist for NAR.

Other areas facing similar crunches are Boston, Washington, Orlando, Fla., Phoenix and Chicago, he says.

Even so, 25- to 34-year-olds are likely to insist they want to own a home in the future, according to the NAR survey.

The San Francisco couple felt the pressure to buy because their rent was rising and they were afraid that the price of a house would soon outstrip their income, even though they already could afford a $4,000 monthly mortgage and had saved about $150,000 for a down payment. Smith is a video graphics programmer for Apple, and Jimenez Smith is a policy aide for the Santa Clara County Board of Supervisors.

But in six months of shopping, they lost bidding wars again and again. Once they bid $350,000 for an empty lot with the facade and rubble of a burned-down home, figuring they could build a new home there for another $250,000. But someone else offered $480,000 for the same lot and is now trying to sell it for even more.

The couple feels lucky to have bought a modest two-bedroom house with 1,000 square feet of living space from a seller who turned out to be an acquaintance and helped them by accepting an offer matching the highest bid, not exceeding it.

“We were going through disclosures and praying it would appraise right,” Jimenez Smith says. “Fortunately, it did appraise right at $795,000.”

There were other scares. The couple had been counting on a new transit stop in the neighborhood that would have allowed Smith to commute to San Francisco, a doable but grinding hour and 40 minutes each way. The new stop was delayed, but Smith got his new job at Apple, about a half-hour away in Cupertino.

“Sometimes we worry that this is the top, that prices will go down, but our bigger worry was what if it goes up?” Jimenez Smith says. “If it went up to $900,000, we’d never be able to buy a house.”

©2018 Stateline.org
Distributed by Tribune Content Agency, LLC

For the latest real estate news and trends, bookmark RISMedia.com.

The post Millennial Buyers Face a Tough Housing Market appeared first on RISMedia.

Categories: Realty News

Blockchain Lending: Reduced Fraud or Increased Risk?

Rismedia Todays Top Story - Sat, 06/30/2018 - 00:04

Traditional lenders are transforming, adopting cutting-edge technology to stand apart from competitors and introduce an added level of security to financing. From AI-run algorithms to smart contracts, obtaining a mortgage could soon be a vastly different process than buyers experienced just 10 years ago. Industry disruptors, however, are looking to shift from the traditional model completely, threatening to take over the role typically performed by bank intermediaries, which buyers are accustomed to.

One new business claims it is the first company to apply blockchain to mortgages. Block66 is a blockchain-based marketplace for lenders, from which they can access vetted buyers looking to finance their mortgage. Co-founded in 2017 by CEO Joe Markham, CPO James Tuckett and COO Kamil Mieczakowski, the platform is set to launch in early 2019. The most significant benefit the company is advertising? Reduced risk for mortgage fraud.

“We created Block66 to offer new opportunities for borrowers and end the time-consuming and paper-driven processes in the mortgage industry,” said Joe Markham, founder and CEO of Block66, in a statement. “Our platform will make it easier for everyone to find what they need so mortgages can be approved and funded faster. By storing the history of each transaction on the blockchain, we will provide a valuable audit trail for lenders, which will help mitigate mortgage fraud.”

Additionally, Block66 states the addition of blockchain to a real estate transaction will reduce costs for buyers, as they will not have to be vetted via banks; instead, applicants’ information will be made public to any lenders using the platform. Block66’s loans, which will become asset-backed tokens, will reportedly play a role in leveling the lending playing field, allowing all types of investors (not only big banks) to participate, and giving way to increased applications for buyers who would not be considered worthwhile by larger banks.

“The idea behind mortgage tokenization is to bring in smaller lenders,” said Markham. “They are often reluctant to tie themselves to longer repayment plans but are more willing to lend capital to customers who aren’t always favored by traditional banking institutions, even though they are creditworthy.”

The risk? While bank intermediaries are often more costly—resulting from the manpower needed to not only vet candidates for creditworthiness, but to ensure financials are in order and paperwork is completely submitted—they often add another layer of security to the transaction that the new technology cannot be trusted to replicate at this time. Often, these banks become reliable vendors for real estate agents who have partnered with them, providing buyers with vetted mortgage lenders who not only get clients to the closing table, but also prioritize customer service and become community resources.

There are other challenges, as well. Smart contracts are not yet recognized by courts on a global level, an obstacle for Block66 when transacting across borders. Additionally, while applicant and property information is publicly displayed on the blockchain, the technology is still new, adding uncertainty into the equation for smaller banks who do not typically risk lending long-term loans. Applicants may still find ways to bypass this technology-based security and fraudulently represent the assets or financial history necessary to buy.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post Blockchain Lending: Reduced Fraud or Increased Risk? appeared first on RISMedia.

Categories: Realty News

Analysis: The Price of a Property Ripe for Summer

Rismedia Todays Top Story - Sun, 06/24/2018 - 13:06

With more activities, daylight, outdoor parties and vacations, summer is a precious time of year. Do you have amenities at home that make the most of the season?

According to new realtor.com® research, features that scream “summer” can earn homeowners more profit. An outdoor shower, for example, is at a 97 percent price-per-square foot (PPSF) premium—exceedingly high, because most are on properties on the water—while a barbecue grill, associated with summertime, is at 26 percent, and a pool and/or spa is at 25 percent.

“Buyers love special features that enable them to get the most out of the summer months, and are willing to pay more for a home that has them, according to our analysis,” says Javier Vivas, director of Economic Research at realtor.com.

MORE: Is ‘Green’ at a Premium? Depends Where You Purchase

However, location matters. According to the analysis, Massachusetts, Hawaii and New Jersey contain the most listings with outdoor showers, but New York, New Jersey and South Carolina have the highest premiums for them, at 256 percent, 164 percent and 140 percent, respectively. When it comes to BBQs, Arizona, California and Utah have the most listings with them, but only Arizona and California have the highest premiums (33 percent and 23 percent, respectively). Arizona and California are also contenders for the most listings with pools, but New York has the highest premium for one, at 224 percent.

When marketing a property primed for summer, the description is key, the research shows. In Michigan—where bitter winters and lake life meet—descriptions on listings mentioning “summer days” or “summer fun” command a 36 percent premium.

For more information, please visit www.realtor.com.

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

The post Analysis: The Price of a Property Ripe for Summer appeared first on RISMedia.

Categories: Realty News

Pages

Subscribe to Mohawk Valley Association of Realtors aggregator - Realty News