(BPT) – For nearly 74 million homeowners, a new fall tradition has emerged: home improvement.
According to a recent Metrostudy Residential Remodeling Index<a , several factors point to a rise in home improvement projects this season.
Energy-Efficiency – With colder weather on the horizon, homeowners shudder at the thought of higher heating costs. They upgrade windows, layer in more insulation, service or replace old furnaces and, in some cases, do all of the above.
Weather – Home improvement projects can be challenging, particularly for DIY-ers. Lower temperatures and humidity create a much more comfortable environment for completing projects.
The Holiday “Wow” – Everyone wants their home to sparkle when they welcome family and friends during the holidays. Completing a home improvement project during the fall sets up a big reveal when the holidays roll around.
Falling Prices – Fall is an excellent time to save money by finding great deals on home improvement supplies and service. Year-end sales begin and discounts can be steep. Also, contractors are busiest during the warmer months – their business cools as the weather does.
Judy Gratton Your Real Estate Edge
Reprinted with permission from RISMedia. ©2015. All rights reserved.
Home buyers were granted a bit more time to lock in today’s incredibly low mortgage rates before the era of low interest rates ends with the Fed’s decision to postpone raising its short-term target rate. However the move by the Fed just substantially increased the odds of the important symbolic move occurring in December. And like we’ve seen this week and in prior periods when the Fed was widely expected to tighten monetary policy, mortgage rates may move up before they officially act.
“Those planning to get into the housing market in 2016 may want consider a home purchase before the end of the 2015,” says Jonathan Smoke, chief economist for realtor.com. “When rates go up, not only will monthly mortgage payments increase, that increase will also lessen some buyers’ ability to get approved for a home loan – due to an increased debt to income ratio.”
Forecasts for mortgage rates vary, but indicate a potential increase of 50 basis points over the 12 months following an official move to increase the Federal Funds target rate. And with that move being more certain than this close call, mortgage rates may move ahead of the target increase.
Smoke’s analysis of loan-level data from Optimal Blue, an enterprise lending services platform, for the first half of this year demonstrates how a 50 basis point rate increase could impact potential buyers.
A 50 basis point increase in the effective mortgage rate could result in:
• A 6 percent increase in monthly payments on new mortgages. In May, the average loan with a 30-year fixed mortgage was $231,000, which had a monthly principal and interest payment of $1,107 at the average interest rate of 4.03 percent. When rates reach 4.53 percent, that same loan amount would result in a monthly payment of $1,175, an increase of 6 percent.
• As much as 7 percent rejection of mortgage applications. The increase in the monthly debt burden as a result of higher rates will stress the upper limits of loan- and debt-to-income ratios for new loan applicants. “Based on analysis of loan-level ratios for a large sample of loans approved in the first half of this year, as much as 7 percent of mortgage applicants would have failed to get approval as a result of higher debt-to-income ratios caused by higher rates,” says Smoke.
• Average debt-to-income ratio to increase by 4 percent. The average debt-to-income ratio for mortgages in the first half of 2015 was 35.5 percent. With an increase of mortgage rates by 50 basis points and keeping all other factors equal, the average debt-to-income ratio increases by 4 percent to 37.0 percent.
• Popularity of loan types will likely shift with rate increases. In the first half of this year, conventional mortgages were most popular, capturing 50 percent of the market, followed by 31 percent FHA, and 12 percent VA. Under the modeled higher rate scenario, conventional and jumbo mortgages were most likely to hit an upper limit on debt-to-income ratios, and VA and FHA loans were least likely to hit an upper limit.
The potential impact to borrowers also varies dramatically by geography. “High cost markets and markets where first-time buyers have been just barely able to qualify this year are most at risk of seeing more failed mortgage applications as a result of higher debt burdens triggered by higher rates,” added Smoke.
Most impacted markets (those with 10 percent or more by percentage of potential failed applications):
1. Honolulu – 14 percent
2. Stockton, Calif. – 12 percent
3. Fresno, Calif. – 12 percent
4. El Paso, Texas – 11 percent
5. Fort Pierce, Fla. – 11 percent
6. San Diego – 11 percent
7. Visalia, Calif. – 11 percent
8. Chattanooga, Tenn. – 10 percent
9. Los Angeles – 10 percent
10. Miami – 10 percent
11. Modesto, Calif. – 10 percent
12. Reno, Nev. – 10 percent
13. Sacramento – 10 percent
14. San Francisco – 10 percent
For more information, visit http://www.realtor.com.
Judy Gratton Your Real Estate
HUD Makes Millions Available to Fight Housing Discrimination
The U.S. Department of Housing and Urban Development (HUD) recently announced that it is making $39.2 million available to fight housing discrimination under HUD’s 2015 Fair Housing Initiatives Program (FHIP) Notice of Funding Availability (NOFA). This year’s funding notice also creates six new types of grants that support fair housing capacity building, education and outreach activities, and testing in rental and sales transactions.
Each year, HUD makes funding available to support organizations interested in the enforcement of fair housing laws and policies as well as educating the public, housing providers, and local governments about their rights and responsibilities under the Fair Housing Act.
“The funding is part of the Department’s ongoing commitment to giving our fair housing partners the vital financial resources they need to create sustainable, inclusive communities of opportunity,” says HUD’s Assistant Secretary for Fair Housing and Equal Opportunity Gustavo Velasquez. “Organizations dedicated to this work are an essential component of our efforts to put an end to unlawful housing discrimination and these grants make their work possible.”
The categories of grants being made available are:
- Private Enforcement Initiative grants (PEI) – $29,275,000 available. HUD awards these to help local non-profit fair housing organizations carry out testing and enforcement activities to prevent or eliminate discriminatory housing practices.
- Education and Outreach Initiative grants (EOI) – $3,500,000 available. HUD awards these to groups that educate the public and housing providers about their rights and responsibilities under federal law or state and local fair housing laws that are equivalent to the Fair Housing Act.
- Fair Housing Organizations Initiative (FHOI) – $6,425,000 available. HUD awards these to help build the capacity and effectiveness of non-profit fair housing organizations, particularly organizations that focus on the rights and needs of underserved groups, such as rural and immigrant populations.
The new categories of grants being made available today include:
- Special Emphasis Component – Up to $350,000 per grant – These grants will strengthen the enforcement activities and capacity building efforts of organizations and help them pursue cases that investigate systemic patterns of discrimination.
- National/Regional Testing Component – Up to $500,000 per grant – These grants will enable organizations to develop and support a national/regional testing program to identify discrimination in rental and sales transactions.
- National Programs Component – Sex Discrimination – $500,000 per grant – Organizations will use this grant to conduct education and outreach projects that counter sex discrimination in housing, including domestic violence, sexual harassment, gender stereotyping or discrimination based on gender identity.
- National Programs Component – Sex/Familial Status Discrimination – $500,000 per grant – This grant will enable organizations to conduct education and outreach projects that focus on one or more forms of sex or familial status discrimination.
- National Programs Component – National Origin Discrimination – $500,000 per grant – Organizations will use this grant to address one or more forms of national origin discrimination in rental, sales, or lending.
- National Programs Component – Disability Discrimination – $500,000 per grant – This grant will enable organizations, using the results of recent discrimination studies, to conduct education and outreach activities that address discrimination based on disability, particularly discrimination experienced by individuals with mobility impairments, hearing impairments, and cognitive or mental disabilities.
For more information, visit www.hud.gov.
Judy Gratton Your Real Estate Edge
The 7 Most Common Tax Scams and How to Avoid Them
Filing season means three things: taxes, refunds and scams. Taxpayers should know that they are legally responsible for what is on their tax returns, even if it is prepared by someone else. Illegal scams can lead to significant penalties and interest for taxpayers, as well as possible criminal prosecution.
To avoid jeopardizing your standing with the IRS, steer clear of these seven schemes.
- Phone Scams: Aggressive and threatening phone calls by criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent months as scam artists threaten police arrest, deportation, license revocation and other things.
- Phishing: Taxpayers need to be on guard against fake emails or websites looking to steal personal information. The IRS will not send you an email about a bill or refund out of the blue. Don’t click on one claiming to be from the IRS that takes you by surprise. Taxpayers should be wary of clicking on strange emails and websites. They may be scams to steal your personal information.
- Identity Theft: Taxpayers need to watch out for identity theft, especially around tax time. The IRS is making progress on this front, but taxpayers still need to be extremely careful and do everything they can to avoid becoming a victim.
- Return Preparer Fraud: Taxpayers need to be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. But there are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers.
- Inflated Refund Claims: Taxpayers need to be on the lookout for anyone promising inflated refunds. Taxpayers should be wary of anyone who asks them to sign a blank return, promise a big refund before looking at their records, or charge fees based on a percentage of the refund. Scam artists use flyers, advertisements, phony store fronts and word of mouth via community groups and churches in seeking victims.
- Fake Charities: Taxpayers should be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities. Note charities with names that are similar to familiar or nationally-known organizations.
- Abusive Tax Shelters: Taxpayers should avoid using abusive tax structures to avoid paying taxes. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered.
Judy Gratton Your Real Estate Edge
I’m interested in seeing how many people go out in February to see the movie premier of ‘Fifty Shades of Gray,’ versus heading into their own homes to refinish interiors in countless shades of gray.
That’s because Philadelphia’s Paint Quality Institute (PQI) for the second year in a row, is predicting gray to be the most popular hue for home interiors. This is the first time any color has headlined our forecast in back-to-back years, but gray, a near-perfect neutral color, has really caught on, according to a recent post on their website, paintquality.com.
Institute experts say gray is very easy on the eyes, it’s understated and sophisticated, and most tints and shades of gray are ‘chameleon’ colors that change appearance when the light changes, so they provide enormous visual interest.
Another reason for its popularity: Gray is a very versatile color that coordinates beautifully with a wide range of hues. As a result, it can be used in many different color schemes and with almost any style of décor.
PQI experts say that pairing gray with one or more neutral colors—white, off-white, beige, taupe, soft blue, or black—can produce a tranquil color scheme capable of making an indoor space more relaxing. That’s why you may often see these combinations in areas of refuge and comfort, such as bedrooms and family rooms.
But gray can also serve as an ideal foil for more adventurous color, ranging from saturated hues like purple, fuchsia, rust, and navy to softer tints like dusty pink and pale lavender. Color schemes employing these combinations can be used in virtually any room in the home.
Where paint color is concerned, you can simply ask a counterperson about the color formula to find out whether the gray contains warm or cool elements, and let that guide your selection of companion colors. Warm or cool, gray is a great color for any interior.
And the institute assures homeowners and decorators that it’s a color that will stand the test of time.
Judy Gratton Your Real Estate Edge