AN UPDATE ON "WHAT KIND OF FURNACE TO BUY"

 

 

Actually I don't think I addressed this issue in a previous posting.  Here is a summary of what that posting might have looked like - IF YOU LIVE IN ANY OF THE 29 NORTHERN STATES, AS OF MAY 2013 THE DEPT. OF ENERGY (FEDERAL GOVT.) WILL DICTATE TO YOU THE TYPE OF FURNACE YOU MAY PUT IN YOUR HOME!!!

 

Here is the follow up - after being sued by the American Public Gas Association the feds have backed off  this ruling. The APGA maintained in their suit that such a ruling would force low income homeowners to swap their gas furnaces for electric and kerosene space heaters. I would like to know how they arrived at that conclusion. 

 

It's worthy to note that the ruling does not apply to boilers or hot water heating systems;  just gas forced air furnaces.  Also, it looks like these rules will be remanded to a commenting process so look for them to return in some form or another in the future.

 

Here are some interesting points!  The DOE claims that these new rules, if they go into effect, will cut our country's residential energy use by 20% between 2013 and 2045.  If this is true this would be quite significant and certainly something to consider.  It also claims that a high efficiency furnace can save the average home owner about $100.00 a year in energy costs - again, something significant. 

 

Those who are supposed to be "in the know" claim that the higher cost of installing a high efficiency furnace will force some to abandon their gas furnace for other options - don't know if that's a reasonable statement or not. 

 

No matter what, the bottom line here seems to be that the DOE at some point in time is going to finalize some rules on furnace replacement so if you  think you may not want to pay the extra $ to have a high efficiency furnace installed you may want to give some thought to replacing your furnace now or at best start putting a little $ away for when the time comes and your furnace takes a nose dive -GIVE IT SOME THOUGHT! 

 

 

 



ARE YOU LOOKING FOR SOME REASONS TO LOOK FORWARD TO 2013??

 

 

1.  Most people are quite optimistic about home values going up - they are not going to shoot up but I believe there will be positive movement.

 

2.  There should be more new households formed this year.

 

3.  Home buyers seem to have a greater sense of urgency - see # 6 below.

 

4.  Home ownership still remains a goal for members of the "Millennial" generation.

 

5.  Foreclosures look like they may fall to pre-housing-bust levels.



 

6.  Interest rates should remain relatively low during this year -informed home buyers are aware that rates will begin to rise soon.  Many of them want to beat the clock and are earnestly looking for a new place to call home.

 

7.  Loan demand for purchases seems to be on the upswing. 

 

8.  More homeowners seem to think this year will be a good time to sell.

 

9.  The number (and location) of improving housing markets is on the rise.

 

10.  New job opportunities are expected to provide a must-needed boost to the commercial sector. 

12.  As the economy improves and values rise equity will return and fewer home owners will be underwater.

13.  Real estate is contributing to the overall economic recovery.

 

SENIORS - BE CAREFUL WITH REVERSE MORTGAGES!!!!!!!!!!!

 

 

Defaults on reversE mortgages aer reaching record highs and in some cases these types of loans are being blamed for turning seniors out of their homes!!  You have all probably seen the TV ads hosted by an actor, former senator, etc. promoting reverse mortgages.  They sure make them look like (as my kids would say) a "sweet deal".  Maybe, maybe not. 

 

If you are 62 years or older you can apply to borrow money against the equity in your home by executing a reverse mortgage.  These loans don't have to be repaid until you either move or you die.  Typically these types of mortgages are seen as a way to fund one's retirement by pulling the equity out of your home - equity you have worked hard to build up. 

 

Reverse mortgages make sense for some people - BUT NOT ALL PEOPLE!!  So be careful when you are considering this type of financing.  Think it through and ask for the advice of others that you trust.  AnD remember, you still have to pay taxes, insurance, and maintenance.

 

It seems that some lenders are advertising these types of loans as "free money"!!!  NOT TRUE!!  Just as with any type of loan you take out THERE ARE RISKS!!!  So again, always seek others advice.  One person you may want to talk to would be your attorney. 

 

According to a report in the New York Times several widows across the country have come forward saying they are facing foreclosure and eviction following their spouse's death because they were not included on the reverse mortgage deed - remember I said above to check with your attorney!!  These widows say they have no claims to live in the home unless they purchase it outright following their spouse's death.

 

The CFPB is working on a new set of rules for improving the disclosures on a reverse mortgages and the hidden risks as well as more supervision of lenders who issue these loans.  Meanwhile, be careful if you are considering a revers mortgage and again, SEEK COMPETENT ADVICE.

SEEMS LIKE EVERYONE IS IN DEBT THESE DAYS-EVEN THE FHA

 

The FHA was created about 78 years ago (during the great depression) to promote stability in the housing market and allow middle class families to attain the dream of "home ownership".  Have they done a good job?? - yes they have!! 

 

However, as predicted by a number of economists, this depression-era for homeowners seems to be going broke and may have to dip into the US treasury to keep it afloat.  Does that sound familiar?  And "wow" an audit seems to indicate that the shortfall will be in the 16 billion range.  This problem seems to be the result of the rolling housing debacle of the last decade.  Think of it - it only took about 10 years to undo 78 years of great service by FHA. 

 

I think it's fair to say though that without the FHA the current housing crisis might have been lots worse -but not without stress.  In times of crises when private financial institutions have fled the marketplace and have consistently failed to step up to the plate the FHA has remained steadfast. 

 

It will be interesting to see what steps the FHA takes to meet their current challenges.  Will they raise premiums; will they tap into the US treasury - who knows!!  It will be interesting to watch.

 

We will try to keep you up to date.



 

 

THE NEW EMERGENCY FORECLOSURE ASSISTANCE FUND

 

 

The recent landmark joint federal-state settlement involving the nation's five largest mortgage services will provide additional resources for foreclosure prevention services in Iowa through the Iowa Mortgage Help initiative. 

 

There is a new tool now available to eligible (and I emphasize eligible) homeowners through the new Emergency Foreclosure Assistance Fund.  This fund may assist homeowners in filling gaps to make their mortgage payment with up to $2,000 in assistance.  The program could possibly help about 500 Iowa homeowners avoid default and foreclosure.

 

Iowa homeowners who are behind, or feel they may soon be behind, on their mortgage are encouraged to seek assistance by calling eh toll-free Iowa Mortgage Help hot line at 877-622-4866.

 

This initiative is a partnership between the Iowa Attorney General's Office and the Iowa Finance Authority that offers free, confidential help from local, trained counselors. 

 

IF YOU KNOW OF ANYONE WHO MIGHT BENEFIT FROM THIS PROGRAM PLEASE LET THEM KNOW!!!!!!!!!!!!

PRICE YOUR HOME TO SELL

Home Gain.com, a real estate services website revealed that 76% of homeowners believe their home is worth more than the list price recommended by their real estate agent - what the heck, my home is worth more just because I live in it!!

Home buyers usually have a better grasp of current home values where they are looking to buy than sellers who live there do.  Buyers look at a lot of new listings - they make offers, know what sells quickly and for how much - AND they know what doesn't sell and why. 

Soooo- your home is worth what a buyer is willing to pay for it given current market conditions.  Unfortunately, this may not be the same as your opinion of what your home will sell for, or what you hope it is worth.  Relying on emotion rather than logic when selecting a list price for your house can lead to disappointing results. 

Your home will be most marketable when it is new on the market.  Buyers wait for new listings, and usually it's the new listings that receive the most showings and have the busiest open houses.  So don't forget that when your house is newly listed it's the best opportunity for your agent to show your house off - but don't forget it's the list price that will entice the buyer to look.

When establishing a list price for your house it helps to understand how real estate professionals and appraisers establish an expected selling price or price range for your home. Both research the recent listing inventory of homes similar to yours that have sold in the past 12 months and then they make plus and minus adjustments for the differences.  So, let's say that the house next to yours which sold 3 months ago for $150,000.00, is an exact duplicate except that yours has a fireplace. They would add the value of the fireplace (say $2,500.00) to the $150,000.00 and arrive at a probable value for your home of $152,000.00.  It can be a little more complicated than that but it gives you some idea of the process.

It's sometimes difficult for sellers to step back and take an attitude of detached interest in their home.  But, it's essential to do so if you want to sell successfully in any market. Don't rely on rumors circulating in the neighborhood about how high a home sold.  Prices tend to get inflated when passed from one person to another.  Select your price based on facts.  Beware of the agent who is willing to take your listing at any price!!  They are not working in your best interest.

FALL IS COMING!! DON'T LIGHT THAT FIRE UNTIL YOU HAVE YOUR CHIMNEY CHECKED!!!!!!

So you are chopping and stacking wood for that pleasant evening fire this winter.  When is the last time you had your chimney cleaned.  Here is some information on chimneys that may be of interest to you . 

As wood burns not all of it is consumed, and what isn't consumed goes up your chimney in the form of creosote and soot.  Creosote is a thick, oily (oil burns when it reached a certain temp) material that results from the distillation of wood smoke which solidifies as it cools. Soot on the other hand is basically particles of partially burnt material that builds up in chimneys.  If enough soot and creosote build up they can clog your chimney.  That's not good, but what is worse is if the temperature in the chimney gets hot enough the build up of creosote in the chimney can ignite.  I have seen chimney fires destroy entire homes.  Since the fire usually starts in the attic area it can go unnoticed until it is too late. 

What's the solution?  Either clean the chimney yourself or hire a qualified chimney sweep.  Notice I said "qualified".  Make sure they are licensed, bonded and insured.  I had a neighbor once have an unqualified sweep clean his chimney and he ended up with a house full of black soot.

So you want to do it yourself!!!  You can probably get the supplies you need at any fireplace shop or hardware store. Go on line and google "how to clean a chimney" and follow the directions.  However, don't be surprised if you end up with a house full or black soot. 

How often should you clean your chimney?  Depends!!  If you are in the habit of damping your fire down and depriving it of oxygen (bad idea) so it will burn longer the result will be more smoke and more partially burnt solids.  These solids can build up rapidly and the chimney will get much dirtier more quickly.  So you clean more often.  Make a visual inspection to determine what's appropriate for your situation. 

ENJOY YOUR FIRES THIS WINTER!!!

STRATEGIC DEFAULTERS

Have you ever heard of the term "strategic defaulters"??  They are considered underwater homeowners (for whatever reason) who walk away from their mortgages even though they still have the means to pay.  The Office of the Inspector General (OIG) at the Federal Housing Finance Agency is trying to find them so they can collect on what they still owe.

It is estimated that 20% of all foreclosures are from "strategic defaulters".  The OIG estimates that "strategic defaulters" owe more than $1 billion to Fannie and Freddie and they are ready to collect it.  They are looking!!!  They are working with Fannie and Freddie to develop a way to identify these culprits.

Here is a recent warning from the OIG in regard to "strategic defaulters" - Walking away from a mortgage that you can afford to pay constitutes mortgage fraud and those responsible will be referred for criminal prosecution.  Says Heather Wolfe, OIG assistant inspector general "We are going to lock people up". 

AND THEN WE WONDER WHY OUR COUNTRY IS IN SUCH BAD FINANCIAL CONDITION!

5 REASONS IT'S SMARTER TO BUY THAN TO RENT- 1. Real estate keeps pace with or exceeds the rate of inflation. Even in areas hit harf by foresclosures, virtually all of them have shown substantial increases in real estate values when viewed in the long term. 2. The lowest interest rates since the 50's. Consider buying now - here is why; With the government running huge deficits, it will have to sell treasury bills to cover the debt. Investors are feeling skittish about purchasing these securities. 3. Increasing interest rate add up quite fast. An interest increase of just 1 percent results in about a 25 percent increase in interest costs over the life of a 30 year fixed-rate loan. 4. The market may be close to bottomed out. Take a look at your local market in your specific price range. Look at the number of months of inventory now vs. six months ago and one year ago. If the number of months is declining that lets you know that your market may already have reached bottom. 5. Build your wealth - NOT YOUR LANDLOARDS. When you purchase you lock in a payment at today's rate. Assuming that inflation is average - 2.54 percent per year - 10 years form now your monthly payment will be the equivalent of 75 cents on the dollar.

HAVING YOUR HOUSE APPRAISED - READ THIS!!!!!!!!!!! Flawed appraisals seem to be killing deals in some areas. The inappropriate use of distressed and foreclosed properties as comparables in determining home values may be driving prices down in some cases. This practice prepetuates the cycle of declining home values in some markets. If you are having your home appraised you may want to check out the comps the appraiser uses to determine value. If necessary, argue your poing.

THINKING OF BUYING A HOME SOON? HERE ARE SOME FACTORS YOU SHOULD CONSIDER- 1. Although the market seems to be stabilizing some and home prices were down about 2.5% last year the recovery is still expected to take quite some time. You should factor his into your decision to buy. 2. With regard to potential price declines, even though most of todays sellers have some difficulty selling at current market value it's unlikely they will be willing to compensate you for a potential event that may not happen. What you really need to know is that you are not paying too much. 3. The more information you have about the market, in the area you are looking, the better. The market is different in different locations of the country. The big question is, is the market you are looking in healty. If it is consider yourself in a near normal market and act accordingly. 4. Take a look at the local economy. Are jobs being created or lost? Are public services being cut? The answers to questions like this will tell you a lot about your market. 5. If there are an oversupply of homes in your market you may have a compettive edge. 6. The inernet is a great source of information. However, it does not replace of seeing a home that interests you nor does it replace the value of a good real estate agent. 7. The best way to avoid overpaying is to look at enough homes that have the features you are looking for. You can actually become as good (or better in some cases) as the agent you are working with. They need to be up to snuff in all price ranges - which can be a daunting job. You only need to be up to snuff in the price range you are looking in. 8. Create files for flyers and information on homes you look at so you can catorgize them. Or better yet get hooked up with an agnet that can help you achieve that. Some agents can set you up with your own web site to help you manage your search. GOOD LUCK IN YOUR SEARCH FOR A NEW HOME!!!!!!!!!!!!!!

TOP REASONS TO OWN A HOME
1.SAVINGS-Long term home ownership is still a way to get big savings!!
2.TAX BREAKS-Interest deductions,rebates and tax credits are still available. They can add up fast.
3.EQUITY-Why build up a landlords equity? Invest in a home and build up equity for yourself and your family. And don't forget about appreciation. If you buy a home for $200,000.00, and hold it for 15 years you will have built up equity equal to about $24,000.00 by paying down your mortgage,plus if it appreciated $25,000.00 you would have realized almost $50,000.00. What would you have if you were renting???
4.BUDGETING-If you are renting you will never know how much your rent is going to go up - and it will go up. If you own, you will know exactly what your monthly expenses will be and you will be able to budget.
5.SECURITY-You own it!!! It's yours to do with what you like.

FSBO FOUNDER USES AGENT TO SELL MANHATTAN DIGS
For Sale By Owner .Com founder Colby Sambrotto recently abandoned his efforts to sell his 2 $million apartment himself and turned it over to a real estate broker. The Broker promptly sold the unit for $150,000.00 more than he had been asking. The For Sale By Owner.Com web site boasted that homeowners did not need real estate professionals to sell their properties. Hum! Kind of makes you wonder does it not?

HAVE YOU HEARD?
Foreclosures were reported to be down 7% in July. Here's what they did not tell you- the decline was largely due to problems in getting notices into the hands of consumers rather than an improving housing market. It looks like more distressed homeowners have been able to stave off foreclosure.

DO YOU OWN RENTAL PROPERTY?
Rental property owners continue to enjoy the benefits of a struggling real estate market. If you are able you can buy investment properties that will give you a return on your money 5 to 10 times what you will realize putting your money in a bank. Food for thought.

AND FOR US SENIORS-
AARP has found that 32% of seniors believe their home values have deteriorated so badly that they will be forced to put off retirement. They found that seniors had planned to sell their large homes and downsize and use the profit to finance their retirement. The question is how long will this last.

THE BRIGHT SIDE-
Despite all the negative news we get these days there is a bright side. That is, we are probably half way or better through this economic crises. We are Americans and we are tough -always have been- so we can handle this even though it is rather unpleasant.

MORE ON THE MORTGAGE INTEREST DEDUCTION

Recent speculation over eliminating or reducing the mortgage interest deduction has caused widespread rumors and myths about the vital tax benefit for homeowners. The MID is not only crucial to the stability of the American housing market and the overall economy, but any changes to it could lower the homeownership rate in the U.S.

“As the leading advocate for homeownership, Realtors® believe the MID makes a real difference to homeowners, especially hard-working middle-class families,” said Bob Neuwoehner of American Realty. “This fundamental tax benefit reduces the carrying costs of owning a home, making homeownership more attainable for families. It also helps those without thousands of dollars in savings who cannot buy their home outright begin to build their financial future through homeownership.”

As Congress has looked for ways to address the deficit, some have suggested placing additional limits on the MID. We question the connection public policy makers are trying to make between the debt and the MID.

“It’s ridiculous to say that the MID is suddenly part of the deficit problem – the MID has been part of the federal tax code for nearly 100 years,” said Mr. Neuwoehner “Reducing or eliminating it is a de facto tax increase on homeowners, who already pay 80 to 90 percent of U.S. federal income tax. That share could rise to 95 percent if the MID is eliminated.”

According to the 2011 National Housing Pulse Survey, Americans are adamantly against eliminating the MID. Two-thirds of respondents opposed eliminating the MID, and 73 percent of Americans said eliminating the MID would have a negative impact on the housing market and the overall economy.

We also dispute the misconception that only the wealthy benefit from the MID, when in reality it primarily benefits middle- and lower income families. Almost two-thirds of those who claim the MID are middle-income earners; 65 percent of families who take the MID earn less than $100,000 a year, and 91 percent earn less than $200,000 a year.

“Is focusing solely on tax rates a better goal than protecting the wealth of the middle class?” “Changes to the MID could further damage the housing market’s recovery as well as the overall economy and job market. It is imperative that the MID remain intact and that Americans continue to receive this important benefit.”

HOUSING ISSUES CURRENTLY BEING DEBATED IN CONGRESS

HERE ARE SOME HOUSING ISSUES CURRENTLY BEING DEBATED IN CONGRESS THAT SHOULD BE OF INTEREST TO YOU.....

Mortgage interest decuction (MID)-This is one way some politicians are trying to address the deficit problem - they want to eliminate the MID. How about that!! Take your real estate taxes and multiply it by your tax rate and that's about how much it will cost you. You say you don't agree with that? Better contact your representatives soon!!!

Penalties for down payments less than 20%. A loan that is 80% or less of the value of the property being purchased (usually the purchase price of the property) is called a Qualified Residential Mortgage or (QRM). In a nut shell buyers who can't come up with 20% down would be required to pay .8 to 1.85% more interest. There was a time when that was probably appropriate. But given the situation now, and with the underwriting requiements that are in place now it does not make much sense to me. How about you???

FHA loan limits The FHA has been a big part of the backbone of home ownership for years. They help people who may not have that 20% down and who may not have high credit scores become homeowners. Some politicians want to shrink FHA and limit the number of buyers it supports. Bad idea in my book.

Give some thought to these issues. When you do remember that housing is a huge part of our national economy. SHARE YOUR THOUGHTS, WHATEVER THEY ARE, WITH YOUR LIGISLATORS AND REPRESENTATIVES

HAVE YOU HEARD ABOUT THE NEW REAL ESTATE TAX TO SUPPORT HEALTH CARE REFORM?

Lots of people are talking about the new 3.8% tax which will support Mr. Obama's new health care plan. LOTS OF PEOPLE ARE CONFUSED ON THIS ISSUE SO HERE IS THE SCOOP-PLEASE SEE DISCLAIMER BELOW.

Beginning Jan 1, 2013, a new 3.8% tax will be levied on "unearned income" of "high income taxpayers". These levies are being referred to as "medicare taxes". Unearned income is any income you would earn from investing your capital. W2 and 1099 income for instance is not classified as unearned income. For example, if you purchase a real estate investment any income form that investment is considered unearned income. So, who is a "high income" tax payer? If your filing status is "single" and your AGI (adjusted gross income) is $200,000.00 of more, or if you are married and your filing status is "joint" and your AGI is $250,000.00 or more you are probably subject to the tax. The portion of your unearned income that will be subject to the tax is the amount of income you derive from the unearned sources reduced by the expenses associated with earning that income. That would be "net" investment income. So, if your gross rents from operating a real estate investment were $100,000.00 and associated expenses of operating that investment were $40,000.00 you would realize net rents of $60,000.00 and that would be the amount you would include in your AGI. Note that the tax does not apply to annual appreciation of an investment. The tax one might pay here is calculated using a formula ( the government seems to do everything by or based on a formula). The tax imposed will be determined by the LESSER OF 1) net investment income or 2) the excess of AGI over the $200,000.00/$250,000.00 AGI thresholds. Thus if net investment income is the smaller amount then the 3.8% is applied only to that number. If the excess over the threshold number is the smaller amount the 3.8% would be applied to that number. HERE IS THE QUESTION EVERYONE HAS BEEN WAITING FOR!!!! Will this tax apply to the any gain on the sale of my personal residence? Any gain on the sale of a personal residence will be protected from this tax the same as it is from income tax - that is, if your filing status is "single" and your gain is less than $250,000.00 or your filing status is "joint" and your gain is less than $500,000.00 you are protected from this tax. If you realize a gain more than those numbers then you would be subject to the tax as described in the formula above. There are other provisions in this new tax law that we will not discuss here- vacation homes etc. DISCLAIMER*********I am not an accountant but I feel this information is accurate. If you have any questions feel free to call me. HOWEVER, if you feel you may be subject to this tax I would suggest you call your accountant for advice.

HERE ARE SOME NATIONAL STATISTICS

Existing home sales dropped 9.6% in February. The market is 2.8% below the pace set in Feb. 2010. Some economists think this is normal given the type of recovery we are experiencing. Home sales seem to be constrained by the dual problem of unnecessarily tight credit and unacceptable appraisals which do not support prices negotiated between buyers & sellers. The national median existing-home price for all housing types was $156,100.00 in February. This was 5.2% below the February 2010 value. Get this though- sales of newly built single family homes declined 16.9% in February. This is a record low and is certainly a reflection of consumer uncertainty regarding the overall economy. So, is this bad news? Well, it's not good news but it's better news than you would have heard on the subject a few months ago. For those of you who are in a position to buy-now seems to be the time to buy. NEXT WEEK MORE ABOUT THE SUPPOSED TAX ON THE SALE OF REAL ESTATE TO SUPPORT THE PRESIDENTS HEALTH CARE BILL.

THE LOCAL MARKET

The Dubuque Board of Realtors has reported that home sales for the first quarter are up very slightly from last year. They also report that home prices have seen a modest increase during that same period. What the report does not reference however is the number of properties that are currently on the market. We have been very fortunate here in Dubuque that the local market has not eroded as the markets in many other areas have. One of the big problems, as I see it, is financing. As a result of predatory lending practices across the country some buyers are having a tough time qualifying for financing. Let me make it clear that to our knowledge there were no predatory lending practices in our local market. We are blessed with numerous first class lenders. They, however, are feeling he brunt of some of the lending practices that took place in other parts of the country. All in all we are in pretty good shape for the shape we are in. As soon as our economy and world economies settle down and smooth out we should experience improved market conditions.

Welcome to the American Realty of Dubuque blog!

American Realty of Dubuque will be unveiling a new website in the coming weeks and keeping this blog updated with Dubuqueland information and home buying and selling tips. Please post a question or comment and I will respond promptly.