Housing Starts: Is the Worst Behind Us?

After boosting construction in February, March, and April, in May homebuilders saw housing starts drop to a seasonally adjusted annual rate of 1.474 million units, according to a Census Bureau report released recently.

The housing market isn't as bad today as it was in the early 1990s or early 1980s, but outlooks have worsened in the past month. Homebuilders have tried to lure buyers with price cuts, but tighter lender standards and rising mortgage rates have been too much to bear, leaving builders with a glut of unsold homes.  Fixed-rate mortgage rates have jumped nearly 60 basis points since May 1st.

The good news is that as builders scale back, inventories of new homes may slowly decrease.

The worst may be behind us.  Action Economics Chief Economist Mike Englund expects starts under construction to fall at an 8% rate in the second quarter, half the 17.7% rate of decline in the first quarter.  Housing starts are on the rise in certain regions.  In May starts jumped 16% in the Northeast and the Midwest.  In the same period, they fell 2% in the South and 20% in the West.

What do you think?  Is the worst behind us?  We'd love to hear your comment by clicking the comment link below.

Mortgage Closing Costs and Fees

Usually, closing costs are paid by the person purchasing the home, but with some mortgages (VA for example) the seller can pay closing costs. A little-known fact is that a big part of costs and fees actually go to third parties who process the mortgage, as well as local governments as taxes. The money doesn't go to the mortgage company.

Most people take closing costs and fees for granted and just pay what they are told. They don't question the mortgage or title company about the costs associated with a mortgage closing. That's too bad, because if you're a home buyer, you should!

As an informed mortgage customer, you should make your mortgage banker walk you through each cost, and explain in detail what you are paying. The bottom line is that you don't want to be surprised at the last moment. Imagine getting a call from your mortgage banker the day of your closing with a message that your closing costs are $1,200 more than you thought. And the only explanation is that the title company made a mistake. Chances are you may have to reschedule your closing to get the money together for the difference, or have your mortgage adjusted to have the amount rolled in.

To avoid a situation like this, it's a good idea to know exactly what the costs and fees are, how they are calculated, and why you (or the seller) have to pay them.

Closing costs and fees are part of a mortgage, and knowing what they are and how much they should be is a good idea. This will put you in a position to challenge a cost or fee that seems exorbitant. Even if everything is correct, you have the right to ask, and your mortgage company has the duty to explain — in detail — each and every closing cost and fee.

Have you paid closing costs before when buying a home and just paid them not knowing what you were paying for?  We'd love to hear your comments.  Click the comment link below and tell us about it.

Homeowner Insurance - Save Where You Can

There are many things you can do when it comes to saving on the cost of your homeowner's insurance.  One of the biggest factors when it comes to saving is which insurer you choose to go with.

When looking for the best deal on homeowner's insurance, you shouldn't just look at the price of the policy.  Also look at factors such as the level of after-care service the company offers, whether or not they offer any online services such as the ability to chat live with an advisor, or toll-free telephone numbers on which to speak to an advisor.

Consider whether you have other insurance polices coming due for renewal and consider going with the same company for all your insurance needs.  Many insurance companies offer discounts for multiple policies and by doing so can not only save you on homeowner insurance, but could save you on your car insurance as well, plus giving you one company to deal with when it comes to making payments.

Making safety improvements to your home can also help you to save money when it comes to your homeowner insurance.  If you install the latest and approved alarms in your home, this alone can help you to get cheaper homeowner insurance.  Sprinkler systems, fire alarms and other safety measures all add up to you getting cheaper premiums on insurance.

Buyer Beware: Skeletons in the Closet

The National Association of Exclusive Buyer Agents (NAEBA) recently conducted an online survey of their members to rate the items they found most annoying when searching for a new home with buyers.  Since these real estate companies are always looking out for the buyer's best interest they don't pull any punches.  The results of the survey are revealing, surprising, and sometimes downright weird.

Here are the top five things exclusive buyer's agents find most annoying when previewing a home:

1. Broken door locks preventing access to the house.
2. Pet deposits in the back yard or dirty cat boxes.
3. Missing light bulbs in the basement.
4. Sellers that ask you to remove shoes and then have wet carpet or dirty floors.
5. Having loose stairs on a stairway or missing banisters. 

Other reported annoyances include:

6. Low hanging dining room light fixtures in a vacant home.
7. Closet doors that fall off or are not adjusted properly.
8. Going into a vacant home and hearing animals in the walls.
9. Halloween decorations that are left out.
10. Dangerous children's toys left out.
11. Dead cars in the driveway or yard.
12. Homes on large lots without a survey or description of the lot boundaries.
13. Political signs.
14. Graffiti on a home for sale.
15. Dead birds or animals in or around the home.

It seems that many home sellers are not overly-endowed with common sense.  Closet doors falling off?  Dead animals in the front yard?  The pitter-patter of mousy feet in the walls?  Scary Halloween decorations all over the house?  These should all be no-brainers.  Sending buyers away disgusted or frightened out of their wits is probably not the best of business decisions.  Neither is killing or maiming them with dangerous children's toys left as booby traps.

Jon Boyd, President of NAEBA, points out an important lesson for home sellers.  "In all these cases the buyer's attention is diverted from evaluating the home to something mildly disgusting or frustrating.  If sellers have a dead pigeon lying on the deck it will just help buyers negotiate a better price because of less competition.  But try to leave the skeletons and coffins for the Halloween party!"

NAEBA is a nonprofit organization with over 500 members nationwide.  NAEBA offers industry standard certifications, ongoing education, client referral service, technology and information sharing.

Making Room for Parents

The emotional and financial advantages of opening your home to a parent can be great. You won't have to stress about whether they are taking proper care of themselves - you'll be able to see for yourself and help as needed. And if your mom or dad becomes frail or chronically ill, neither one of you will have to pay the $30,000 or so a year that the average assisted-living facility costs.

The preparation steps range from minor remodeling projects (such as installing handrails or brighter lighting) to major renovations (like building a separate apartment), with costs from a few hundred dollars to much more than a hundred thousand.

If done right, these changes can even help, or at least not harm, your home's value. And there's a bonus: You'll end up with a space that not only is comfortable for your mom or dad now but may also make it possible for you to continue living independently in your home as you age.

First, figure out what you'll need.  Then, decide how you'll pay for the renovation.  If the renovation costs seem shocking, bear in mind that there may be resources available to help you pay.  You may be able to use the proceeds from the sale of your parents' current home to finance a remodel.  Whatever you do, don't use the funds from your retirement stash.  Take care of your own finances first, so your kids won't be picking up the tab for you someday.

Put a premium on safety. Falls are the No. 1 cause of injury among the elderly, and most of them occur in the bathroom.  The best solution is to spend $50 to $300 to install grab bars in the bath and shower.  Check that the label says they meet the Americans with Disabilities Act guidelines for safety.

Use adhesive safety strips on the bottom of the tub or shower floor instead of plastic mats, which can slide easily, and use nylon mats with nonskid backing on the floors.

Poorly lit hallways are another danger area, so spend $250 to have an electrician install a light at each end of any hallway that runs 15 feet or more. You'll also want to get rid of throw rugs and replace plush wall-to-wall carpeting, which can become a tripping hazard, with flat and tightly woven material.

Eliminate entryway barriers.  At the very least, you'll need to get rid of steps and curbs that can be especially troublesome in winter weather.  You'll pay $1,500 each to make doorways wide enough to fit a wheelchair or walker.  Look into installing doors with swing-clear hinges, which cost about $75 and can add an extra inch or two of space.

Consider the comfort factor.  Under-the-cabinet kitchen lighting is a godsend for aging eyes.  Custom jobs can run in the hundreds, but stick-on lamps that plug into an outlet sell for as little as $50.

You can install lever door handles, which are easier for arthritis-riddled hands to use than traditional doorknobs, for about $20 to $30 each.  In the end, knowing your parent is safe under your roof can be worth the extra cost and aggravation of revamping your home.