Co-Signing a Mortgage? Beware

Jim Weiker, writer for The Columbus Dispatch, warns against the danger of co-signing a mortgage. The co-signer assumes all the risks of the loan but receives none of the benefits. The lender is just as responsible, and this can amount to taking on a second mortgage. A co-signer is responsible for making a payment if the other person defaults. Ask yourself if you can afford that—as many as 3/5 co-signers end up paying the loan as reported by the Federal Trade Commission.

Even worse, some theorize that co-signers are pursued when lenders face delinquent funds. A lender could sue you, especially if you have better credit than the other signee. Thus, it could limit the co-signer’s ability to borrow money him/herself.

Finally, co-signing for a friend or family member could put a strain on your relationship. Would you judge they way someone spent that money that you co-signed for? If you want to financially help someone you care about, consider giving money towards the down payment (up to $13,000/year without paying a gift tax, or $26,000 filing jointly).

So before you co-sign a mortgage, think twice before you agree. Read the full article here.

Put Zero Down on Your New Home

While the main sources of home-loan money, Fannie Mae and Freddie Mac, require a down payment before they fund a loan, they are not the only sources available. The Navy Federal Credit Union is a federally chartered credit union that offers a zero-down payment program for borrowers.

The Navy Federal Credit Union is the nation's largest credit union and consists of 4 million members. It offers a zero down payment option for qualified buyers, and does not require mortgage insurane. Loans are usually around $200,000, although the maximum is $1 million. This often benefits first-time homebuyers, who are credit worthy but lack the cash for a down payment. Delinquencies are well under 1 percent, suggesting that down payments are just a part of the home-loan financing process. The importance of smart underwriting and good servicing is not to be overlooked.

2014 Remodeling

Hanley Wood published a survey in 2013 that revealed remodeling sales grew 10 percent from 2012, and that nearly half of remodelers surveyed expect another 10 percent increase this year.

Modern kitchens were hot in 2013, and continue to play a major role in the American household. Remodeling Magazine states that the kitchen is expected to be remodeled in 2014 more than any other room. 61 percent of respondents expect to complete kitchen remodels this year. Aesthetically, kitchens are moving away from warm, rustic feelings and instead are embracing white or grey cabinetry, simple countertops, and minimalist deigns that often involve hidden or blended-in appliances.

In second place, 58% of remodelers surveyed expect to remodel bathrooms in 2014. Not surprising, homebuyers place high importance on updated kitchens and bathrooms when looking for a new house. Resort-style bathrooms are expected to replace vintage-style bathrooms (think claw-foot tubs). These new, luxury bathrooms include features such as heated floors and towel racks, walk-in showers with many shower heads, and jetted bathtubs. Glass tiles are projected to be a popular feature. In keeping with the latest kitchen trends, neutral and cool colors will dominate.

Contrarily, other rooms will likely feature vibrant colors, that will serve as focal points for rooms rather than accents. Pantone, the international authority on color, cites examples such as "Lemon Zest" and "Rouge Red." Below is one color pallet Patrone expects to see in the interior of houses this year:

Predictions of the 2014 Housing Market

An article published by Realtor.com discusses five trends that experts predict to see this year:

1) Stable Inventory. 2013 was noted for its historically low inventory. In previous months, inventory gradually increased, although average age of inventory is still lower (down 11% in 2013), illustrating the fact that homes are selling faster than they were in 2012.

2) Positive Equity. Increased home prices helped 25 million homeowners regain positive equity status during the second quarter of 2013. Median list price for homes in October rose 7.57 percent above that of October 2012. Home prices are expected to continue increasing in 2014, which is good news for the 7.1 million homes still in negative equity (as of the second quarter of 2013).

3) Fewer Foreclosures. Foreclosure inventory has dropped to multi-year lows, indicating that foreclosures will have a minimal impact on the 2014 housing market. In fact, September 2013 marked the 36th consecutive month with a year-over-year decrease in foreclosure activity. 

4) Increased Mortgage Rates. Even though mortgage rates have already increased 100 basis points in 2013, they are nonetheless expected to rise. Janet Yellen, the chairman-designate of the Federal Reserve, pledges to continue the policies of Ben Bernanke, including keeping mortgage rates low by buying blocks of mortgage-backed securities.

5) Less-Afforable Homes. Increased home prices have outpaced increased income, resulting in the lowest Home Affordability Index in five years (as published by the National Association of Realtors).

While some of these patterns are favorable and others are not, it is important to remember that they are only speculative. The real estate market changes every day, alongside changes in the general economy. Keep up with my blog in order to stay informed of real estate market trends!

Behind the Scenes of Today's Rental Market

Harvard University's Joint Center for Housing Studies released a report in mid-December that included a number of shocking facts and statistics. Overall, demand for rental homes is increasing, leading to higher rental rates.

The Numbers:

• The proportion of American households that rent increased from 31 percent in 2004 to 35 percent in 2012.
• From 2007 to 2011, approximately 3 million homes switched from owner to rental occupancy.
• Between 2000 and 2012, median rent prices nationally increased by 6 percent. 
• Also between 2000 and 2012, the median income of renters dropped by 13 percent. Note the inverse relationship between rent prices and median income of renters. 

These trends drain renters' financial resources, forcing them to cut spending on essentials such as food, transportation, and retirement savings. For example, monthly spending on transportation decreases from $158 with affordable housing to $55 with housing cost burdens.

Buyers and Sellers Remain Cautious

According to a survey by Redfin, an online real estate brokerage, only 28% of people feel now is a good time to buy a home. This is actually an increase from 24% in the third quarter. This is the first time since the fourth quarter of 2012 that homebuyer confidence has increased. Why isn't buyer confidence even higher? Buyers are frustrated with low inventory, increasing home prices, and increasing mortgage rates. Seller confidence is dwindling, as well. While 63% of survey respondents said "now is a good time to sell a home" in the third quarter, that percentage has dropped to 46%.

In November, Fannie Mae's National Housing Survey discovered that two-thirds of respondents think the economy is on the wrong track. Consumers are also concerned that they will get less money for their home than they would have during the summer.

Discouraged by today's housing market? Working with a professional, experienced real estate agent will help you achieve your goals in the least amount of time with the least amount of hassle. Contact me to see how I can help!

McAlester Publishes 2nd ed. "A Field Guide to American Houses"

A Field Guide to American Houses was published in 1984 by wife and husband Virginia and Lee McAlester. The reference book described different styles of American homes, for example Craftsmans. Nearly 30 years later, Virginia has published the book's second addition, which is 350 pages longer than the original. New sections are included, while previous sections are expanded upon. Some new categories include ranches, split-levels, and millennium mansions. In an interview with The Columbus Dispatch, author Virginia McAlester tells readers they can expect an ebook edition. She also shared her belief that "green construction will dominate American home design and construction for the next generation" by making living both more comfortable and affordable.

The hardcover second edition of A Field Guide to American Houses can be purchased on Amazon.com for $31.63 (prime).



The original Field Guide to American Houses:          The second ed. Field Guide to American Houses:                                        
          
         

Author Virginia Savage McAlester

       

2014 Decorating Trends

High Point Market is a large home furnishings trade show held semiannually in North Carolina.  Often, attendants leave with a good idea of what is up-and-coming in home décor and interior design. Here’s a sneak peak of 2014’s hottest trends, based on the fall 2013 market:

Style. Many of the styles emblematic of the 1960s are increasingly incorporated into American households. Prints, statement patterns, and geometrical designs are back—this time on a bigger and bolder scale. Cut-velvet fabrics, modular furnishings, and Lucite also echo the 1960s era.

Color. Nancy Woodhouse, senior designer for Gabberts Design Studio, states that gray is the new beige. Modern grays are warmer than traditional shades, and serve as neutralizing colors. While shades of gray have been making a comeback in recent years, there is no reason to believe this pattern will stop. “Gray is here to stay,” claims Woodhouse. Other colors that are “in” include purple (specifically lavender and lilac), deep blue, chrome yellow, Chinese red (which is a bright, orange-red), and mauve. Kathy Basil, manager/buyer for Hirshfield’s Design Resource, is quick to point out that today’s mauve is different from that of the 1980s. “It’s not as one-dimensional. That mauve was depressing. This is a little more elegant, a little more blue.” Finally, painted furnishing finishes reflect increasing opportunities for homeowners to customize their furniture pieces.

Metal. Gold is back, dominating modern fixtures and furniture hardware. While bronze is still popular, gold has overtaken nickel and pewter. It is common in both shiny and brushed finishes.

Interested in home décor? The next High Point Market will be held from April 5th-10th, 2014. Also, keep on eye on this blog, which will provide periodic updates as the new year unfolds!

For Sale: Michael Jordan's Chicago Mansion

Basketball legend Michael Jordan is still trying to sell his 56,000 square-foot home, located in the Chicago suburb of Highland Park, IL. Previously offered for $29 million.  The estate went to auction on December 16th, but failed to attract a winning bid. This is after the home was originally meant to go to auction on November 22nd. Michael Jordan pulled his house off the auction block at the last second that day, refusing to sell the house for less than $13 million.

Jordan built the home in 1994. It sits on a seven acre lot, which features a regulation-size basketball court, tennis court, and putting green. The garage can fit 14 cars. The house itself, nicknamed "Legend Point," consists of nine bedrooms, 15 full bathrooms, and four half baths. The home's "gentlemen's retreat" is complete with a billiard parlor, wet bar, library, and the Chicago Playboy Mansion's original doors. 

Michael Jordan raised his three children in this home, during his 17-year long marriage to Jaunita Venoy. Throughout much of this time, Jordan played for the NBA's Bulls. Now that his children are grown,  he is separated from Venoy (as of 2006), and he no longer has significant business interests in Chicago, Jordan has no need for such a large Chicago home. He is now remarried to Yvette Prieto, who is expecting their first child. 

What's next? The house is now for sale at $16 million.

For a sneak peak of the home's interior, play the video, below: