Ceiling Fan Provides Relief in 2 Ways

One of the basic things we all understand about heat is that it rises. As air molecules warm up, they expand and become lighter, and that causes them to head up toward the ceiling of a room, which isn't necessarily where you want them.

This natural rising can create layers within a room, with cooler air down near the floor, and warmer air trapped up near the ceiling. That's especially true if you have ceiling-mounted heat registers, where your heat is entering the room at a higher level to start with. And of course, the higher the ceilings, the more that heat can rise, and the warmer the temperatures will get up near the peak.

The same is going to be the case with cooler air. When summer finally gets here and we switch back to air conditioning, cooler air is going to want to fall and settle near the floor of a room, to the detriment of those spaces on the upper levels. And here again, if you have air conditioning ducts in the floor, the effect is going to be that much more pronounced.

Stirring things up

One possibility for getting that hot air down from the ceiling and back into the room when it can do some good is to install a ceiling fan. Ceiling fans utilize large, angled, rotating blades to push air down or pull air up, which creates currents that can stir things up and move stagnant air off the ceiling. They also help draw cool air up off the floor during the summer, as well as creating cooling breezes.

Sizing things up

When considering a ceiling fan, the first order of business is deciding on the size. Fans are sized by the overall diameter of the blades, such as 36-inch, and will have anywhere from three to five blades. For the most part, the more blades and the larger the diameter, the more air movement you'll have, although some large-diameter, industrial-style fans move quite a bit of air with only three blades.

As a general rule of thumb, a fan with a diameter of 36 to 44 inches will handle a room up to about 225 square feet, and a fan with a 52 or 54 inch diameter will handle about 400 square feet. For rooms that have more square feet than that, simply use more fans.

Ideally, the fans should be installed with the blades about 7 to 10 inches from the ceiling. Any closer than that and you won't get a good air movement to stir up the stagnant air along the ceiling. Also, the blades should be at least 18 inches away from the wall.

Most ceiling fans have the option of multiple speeds, so this is also a consideration when choosing a size. Larger blades have the capability of moving more air at a slower speed, so if you have relatively low ceilings, that can be a real advantage when you don't want the fan to be blowing loose papers around!

So which way is up?

If you look at the fan blades from the end, you'll see that they're angled in relation to the floor, rather than being exactly parallel. It's that angle that allows them to move air as they turn, like a horizontal airplane propeller. Most fans have a reversing switch, which allows the motor to run either clockwise or counterclockwise. In one direction, the angle of the blades will pull air up from the floor toward the ceiling; in the other direction, the blades will push the air down from the ceiling toward the floor.

If you have a very high ceiling, such as a room with a two story vault, you'd like to get the warm air that's trapped up there pushed down, so the lower floors can take advantage of it. Typically, that means that the fan rotation should be such that the blades are pushing the air down. However, in homes with lower ceilings, that downward push of air, even though it's pushing the heat down, may also create an unpleasant breeze that actually makes you feel cold.

In that case, reverse the motor so the blades are pulling the air up. That will create a convection current of air against the ceiling, and push the warm air that's up there outward and down the exterior walls, which again stirs things up.

The bottom line is that getting things where you want it from a heat distribution standpoint may take a bit of trial and error, with a combination of both blade rotation and blade speed.

For cooling, things are usually a bit more straightforward. Most people prefer to have the fan rotation set so the blades are pushing the air down, which stirs up the air and creates a nice cooling breeze. Set the speed at whatever level you're comfortable with, and you should find that you can save money by cutting back on how often you run your air conditioning

Market at a Glance January 2013

Market @ A Glance
California	Reporting Period	Current Period	Last Period	Year Ago	Change from Last Period	Change from Year Ago
Existing Home Sales (SAAR)  *	January-13	491,720	523,090	511,760	-6.0%	-3.9%
Median Home Price  *	January-13	$337,040	$366,930	$271,490	-8.1%	24.1%
Unsold Inventory Index (months)  *	January-13	3.5	2.6	5.8	34.6%	-39.7%
Median Time on Market (days)  *	January-13	36.6	38.1	59.6	-3.9%	-38.6%
Traditional Housing Affordability Index (HAI)  *	2012 Q3	49%	51%	51%	-2.0%	-2.0%
30-year fixed-rate mortgage (FRM)  **	January-13	3.41%	3.35%	3.92%	0.06%	-0.51%
SOURCES * CALIFORNIA ASSOCIATION OF REALTORS®, ** Federal Home Loan Mortgage Corp.

Is There a Window of Opportunity for Sellers Right Now?

One of the most interesting revelations of the latest National Association of Realtors (NAR) Existing Home Sales Report is the shortage of housing inventory being reported throughout much of the country. At the same time, buyer demand is dramatically up over last year.  Here are some key points:

• Total housing inventory at the end of January fell 4.9 percent to 1.74 million existing homes available for sale, which represents a 4.2-month supply at the current sales pace.
• This represents the lowest housing supply since April 2005 when it was also 4.2 months.
• Listed inventory is 25.3 percent below a year ago when there was a 6.2-month supply.
• Raw unsold inventory is at the lowest level since December 1999 when there were 1.71 million homes on the market.

What Does This Mean if You Are Selling a Home?

The price of anything is determined by supply and demand. According to NAR’s report, inventory is at its lowest level since the real estate boom eight years ago. At the same time, demand is up. Lawrence Yun, NAR chief economist, reveals:

“Buyer traffic is continuing to pick up, while seller traffic is holding steady. In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We’ve transitioned into a seller’s market in much of the country.”

Does that mean you should sell your house now? Or should you wait to see if prices increase? Nobody knows for sure. However, some feel that there may be a pent-up inventory about to come to the market because, as prices increase, it will free up some sellers who have been locked in a negative equity situation (where the house is worth less than the remaining mortgage).

The Zillow Negative Equity Forecast predicts: 

“The negative equity rate among all homeowners with a mortgage will fall to at least 25.5 percent by the fourth quarter of 2013, freeing more than 999,000 additional homeowners nationwide.”

If these homes come to market, the supply/demand ratio will begin to balance out and lessen the opportunity a seller now has.

Calculated Risk, a well respected blog which analyzes the economy:

“With the low level of inventory, both in absolute numbers and as a month-of-supply, and the recent price increases in some areas, it would seem likely more inventory would come on the market.”

Lawrence Yun agrees:

“We expect a seasonal rise of inventory this spring.”

Yet, Yun is quick to add:

“It may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth.”

Probably the most interesting comment on this comes from Calculated Risk:

“I need to think about this…This will be an interesting issue all year.”

FHA: More Expensive Than Expected

The 3.5% down payment on FHA loans could be more expensive for buyers than expected. Beginning April 1, 2013, the mortgage insurance premium will go up by .1% to 1.35% which may not even be noticeable to most would-be homeowners.

The staggering increase will occur on 6/3/2013 when FHA’s policy on the duration of the required mortgage insurance will be increased for the life of the mortgage. It basically doubles the amount of total MIP if the loan is paid to term.

Below is an example with a purchase price of $175,000 with 3.5% down payment at 4% mortgage rate on 30 year term.



(Regarding the current MIP duration: When the unpaid balance reaches 78% LTV of original purchase, the MIP can be released. In any event though, the minimum time must be five years.)

Currently, the MIP is required for approximately 9 years 9 months with normal amortization. The new program would require the MIP for the life of the loan. In this example, the initial monthly MIP is $196.88 which decreases based on amortization.

There are buyers that qualify on income and credit who may not have the necessary additional down payment required for 80% and 90% conventional loans. The 3.5% FHA program has provided a great vehicle to get into a home with a minimum amount of cash.

For homeowners that expect to stay in their home for ten years or less, the new changes might not have much financial impact. Homeowners who expect to be in their home long term can refinance with a conventional loan without mortgage insurance once the equity has increased due to amortization and appreciation.

For buyers to avoid these increases, they will need to act now to get the FHA commitment issued prior to these change dates.

Tips on Buying and Renting a Home for Extra Income

Tips on buying and renting a home for extra income, being a landlord
Although the housing market is showing signs of recovery, demand for rental housing is expected to remain strong. Follow these tips from rental experts on becoming a landlord or investor in rental property.

Making sense of the story
Understand what it means to be a landlord. If tenants are paying the rent, rentals can be a strong source of income; however, if they’re not, landlords must be prepared to cover costs.
Buy in an area with a history of strong rental demand: Neighborhoods near universities are a good option. For homes in residential areas, proximity to schools can be a good draw for families.
Consider using a management firm: Landlords should determine whether they want to select the tenant and handle property issues or hire a company to do it. Property management firms can charge a percentage of the rent, sometimes 10 percent or more.
Do the math: Although prevailing rental prices will go a long way toward determining what can be charged, getting the best return on an investment starts with making sure the rent is enough, ideally, to cover expenses and costs.
Screen tenants thoroughly: Once the rental starts drawing inquiries, it pays off to screen prospective tenants by asking for previous landlord references and running a credit and criminal records check.
Get familiar with landlord laws: Two good resources for rental rules are the U.S. Dept. of Housing and Urban Development’s website (www.hud.gov), and The Landlord Protection Agency (www.thelpa.com), which includes state-specific rental guidelines and standardized forms for rental agreements.

Don't Wait Too Long To Buy

Thinking of Buying Your Dream Home? DO IT NOW!

A recent survey showed that 3 out of 4 future home buyers (who are not first time buyers) plan to move up to some form of a ‘better’ home. The breakdown:

• Move to a significantly bigger home (49%)
• Move to a nicer home (17.5%)
• Move to a nicer part of town (8.6%)

If you or your family falls into any one of these categories, you should strongly consider making the move sooner than later. The ‘cost’ of your new dream house will be determined by two factors: the price of the house and the mortgage interest rate. Both are projected to increase this year.

Prices Set to Increase

In the recent Home Price Expectation Survey, 105 leading housing analysts called for a 3.1%increase in home values by the end of 2013.

Mortgage Interest Rates Projected to Increase

According to the Mortgage Bankers Association, after reaching record lows in 2012, the 30 year mortgage rates are expected to creep up slowly in 2013 to 4.4%.

Now is a great time to buy the home you always dreamt of owning. However, the longer you wait, the more it will cost.

House Prices: When Will 2006 Values Return?

There is a lot of optimism regarding house prices. The most recent Home Price Expectation Survey projects a 3% -3.5% increase in values for each of the next 5 years. We concur that most parts of the country will see varying levels of appreciation over that time. However, we must realize that we will not see 2006 values any time soon.

Barclays’ U.S. residential credit strategy team recently predicted that 2006 values would return in 2021. From an article in DSNews:

“While the floor appears to have materialized, they stress that home prices are likely to recover slowly over the next 4 to 5 years.

“We expect on average a 3-4 percent annual increase in home prices [nationally] in coming years,” they said in an updated market outlook.

At that rate, Barclays’ analysts explained, home prices will be slightly below their 2006 peaks even in 2020, finally returning to pre-crisis peak levels in June 2021.

In an article for CNNMoney, the analytics firm Fiserv projected that 2006 prices would not return until 2023:

“Fiserv forecasts prices will bounce back an average of 3.7% a year for the next five years — a rate that would still leave prices 20% below the peak. At that forecasted growth rate, the national average high of $238,000 would not be hit again until 2023.”

If you are waiting for 2006 values to return before selling your house, realize it will take years.

You Need More Than Just The Down Payment to Buy a House

When it comes time to buy your first home you need to know that a down payment is just part of the real costs in buying a home. The down payment is a big part of the purchase, but there are other costs that must be paid by someone, and that someone is usually the buyer.

If you are paying cash for a home many costs are eliminated, but how many people today pay cash? From my background as a NYSE stockbroker, let me tell you that paying cash is generally not the smartest thing to do. Cash is king and cash can do a lot of things, but cash real estate deals, in many cases, cost more than having a mortgage.

So back to the cost of buying a home. When you have a new mortgage you will have costs such as appraisal of the property, title Insurance, homeowners insurance and other fees that can add up quite quickly.

On the purchase of a $400,000 home you should plan for an additional 2-3 percent for the various closing costs and such items as taxes and insurance.

Another item that you may have to plan for if you are buying a condo is the homeowners association fee. More specifically, some associations require that new owners make a payment of 2-3 months of association dues to keep the cash reserve for the association. Then, when you sell your condo you are reimbursed this amount at the time of closing the sale.

Prepaid items are an expense at closing that includes real estate taxes and homeowners insurance. A full year of homeowners insurance will be paid at the closing and part of this year's real estate taxes will be escrowed so that when the county sends out tax statements next year, the lender will hopefully have sufficient cash to pay this year's taxes. Keep in mind that not all lenders require you to escrow funds, this means that the lender will collect one-twelfth of the taxes and insurance each month. Most lenders now allow you to pay the taxes and insurance direct, but most lenders add a onetime fee, as they really want to pay these fees direct.

One way for you, the buyer, to finance these costs into the loan is to have the seller pay them. This sounds a little odd, but what you do is raise the price to offset the dollar amount of the closing costs. This can be done with the help of your mortgage professional and your Realtor. Keep in mind that the home must still appraise for a value equal to or more than the purchase price.

The bottom line is that you as a buyer need to know well in advance of making an offer to purchase a home that the down payment is just part of the final equation. Make an appointment with a mortgage professional today to become educated in what can and cannot be done. Know your options before you sign on the dotted line and end up regretting the fact that time and knowledge is an important factor when making what may be the biggest investment of your life.

WHERE PEOPLE ARE MOVING TO AND FROM

Short Sales – 10 Common Myths Busted

It’s likely you’ve heard the term “short sale” thrown around quite a bit. What exactly is a short sale?

A short sale is when a bank agrees to accept less than the total amount owed on a mortgage to avoid having to foreclose on the property. This is not a new practice; banks have been doing short sales for years. Only recently, due to the current state of the housing market and economy, has this process become a part of the public consciousness.

To be eligible for a short sale you first have to qualify!

To qualify for a short sale:

• Your house must be worth less than you owe on it.
• You must be able to prove that you are the victim of a true financial hardship, such as a decrease in wages, job loss, or medical condition that has altered your ability to make the same income as when the loan was originated. Divorce, estate situations, etc… also qualify. There are some exceptions to hardship now, but for the most part the bank or investor will need to verify some type of hardship.

Now that you have a basic understanding of what a short sale is, there are some huge misconceptions when it comes to a short sale vs. a foreclosure. We take the most common myths surrounding both short sales and foreclosures and give a brief explanation. LET’S BUST SOME MYTHS!!

1.) If you let your home go to foreclosure you are done with the situation and you can walk away with a clean slate. The reality is that this couldn’t be any farther from the truth in most situations. You could end up with an IRS tax liability and still owing the bank money. Let me explain. Please keep in mind that if your property does go into foreclosure you may be liable for the difference of what is owed on the property versus what is sells for at auction, in the form of a deficiency balance! Please note this is state specific and in most states you will be liable for the shortfall, but in some states the bank may not always be able to pursue the debt. Check your state law as it varies widely from state to state.

Here is an example of how a deficiency balance works:

If you owe $200,000 on the property and it sells at auction for $150,000, you could be liable for the $50,000 difference if your state law allows it.

Not only could you be liable for the difference to the bank, but in some situations you could also be liable to the IRS! Although there are exemptions (mostly for principle residences) under the Mortgage Debt Forgiveness Act, there are times when you could be taxed on both a short sale and a foreclosure, even in a principle residence situation. Since the tax code on this is a little complicated and I am not a CPA, I advise always talking to a CPA when in this situation as you are weighing your options. Banks and the IRS can go as far as attaching your wages. Not to mention if you let your home go to foreclosure you will have that on your credit, as well.

Guess What? A short sale can alleviate your liability to the bank, in most situations. There are also exceptions to this, but in most cases banks are releasing homeowners from the deficiency balance on a short sale.

2.) There are no options to avoid foreclosure. Now more than ever, there are options to avoid foreclosure. Besides a short sale, loan modifications along with deed in lieu are also examples of the many options. In most cases (but not all) a short sale is the best option. Either way, there are more options today than there have ever been to avoid foreclosure.

3.) Banks do not want to participate in a short sale, or, it is too hard to qualify for a short sale. Banks would rather perform a short sale than a foreclosure any day. A foreclosure takes a long time and creates a huge expense for the banks; a short sale saves both time and money. In working with some of the biggest lenders and servicers in the country they have told me that on average they net 17-25% more on a short sale than on a foreclosure. A testament to this is the financial incentives now being offered by banks, and how much the entire process has recently changed to try and streamline the process for all parties. Banks more than ever welcome short sales. Qualifying for a short sale is easier than you think, you need to have a true financial hardship, or a change in your finances and your house has to be worth less than what you owe on it. Not only do consumers, but banks also now have government incentives to participate in short sales.

4.) Short sales are not that common. At this present time, short sales range from 10-50 % of sales in various markets and it is predicted that in 2013 we will have more short sales than any other year, to date.  One of the biggest reasons is that MHA(Making Home Affordable expires December 2013). Many of the Government incentives like HAFA, will expire the end of this year. Due to economic changes in the last few years, this is something that is affecting millions of Americans. Short sales are in every market, and are not just limited to any particular income class. This has affected everyone from all facets of life. A short sale should be looked at as a helpful tool, not a negative stigma.That is why the government is offering programs that actually pay consumers to participate in short sales. It is not just affecting one community; it is affecting communities and consumers across the nation.

5.) The short sale process is too difficult and they often get denied. Though the short sale process is time consuming; it is not as difficult as the media would have you believe. The problem is that most short sales are denied because of a misunderstanding of the process. It is true that if the short sale process is not followed correctly there is a good chance of getting denied. An experienced agent knows how to avoid this. Short sales require a lot of experience, and a special skill set. If you are looking to go the option of a short sale make sure your agent is skilled and experienced in this area.

6.) Short sales will cost me money out of pocket. A short sale should not cost you any out of pocket money. In fact, you could get between $3000-up to $30,000 to participate in a short sale. In many ways, a short sale may put you in a better financial position than prior to the short sale. Almost every short sale program now has some type of financial incentive for the home owner, as long as it is a principle residence, and we are even seeing relocation money being paid on some investment/second homes. As a seller of a property you should never have to pay for any short sale cost upfront to any professional service. Realtors charge a commission that is paid for by the bank. In most communities there are also non-profits and HUD counselors who can help you with foreclosure prevention options for free. The only potential cost you could incur is if the bank would not release you from a deficiency balance in the short sale, which is happening less and less now.

7.) If I am behind on my payments, I can perform a short sale any time. The farther you get behind on your payments, the harder it is to get a short sale approved. The closer a property gets to a foreclosure the harder it is to convince the bank to perform a short sale. As they get closer to a foreclosure sale more money is spent, thus deterring them from doing a short sale. If you think you need to perform a short sale, time is of the essence; the sooner you start the process, the better. Waiting too long can trigger the ramifications of a foreclosure, losing the ability to do a short sale as a viable option.

8.) I have already been sent a foreclosure notice so I can’t perform a short sale. For the most part just because you received a foreclosure notice or notice of default it does not mean that you do not have time to perform a short sale. The timeline and specifics do vary from state to state, but having done short sales all over the country, I have seen banks postpone a foreclosure to work a short sale option as close as 30 days prior to the scheduled foreclosure auction, but the longer you wait the less chance you have. If you have received a legal foreclosure notice, please reach out to a professional right away. The longer you wait, and the closer you get to foreclosure, the fewer options you have. If you have received a notice to foreclose this means the bank is filing paperwork and starting the process to take legal action to repossess the house. You still have time at this point to prevent foreclosure, but do not hesitate! The closer you get to the foreclosure date the harder it becomes to negotiate with the bank for whichever option you choose.

9.) I was denied for a loan modification, so I know I will get denied for a short sale. Short sales and loan modifications are handled by two separate departments at the bank. These processes are totally different in approval and denial. If you got denied for a modification you can still apply for a short sale; in some cases you can get a short sale approved faster than a loan modification, as some loan modifications are denied because they cannot reduce the loan low enough based on the consumers income.

10.) If I go through a short sale I cannot buy another house for a long time. The time to buy another house depends on your entire credit picture and can vary from 2-3 years. Fannie and Freddie just came out November first and said a homeowner may be eligible two years after a short sale to repurchase. There are even a few FHA programs that allow for a purchase sooner than that, but the guidelines are fairly strict. Some regional and local banks will finance 16-18 months after a short sale, but the interest rate will more than likely be higher than one of the national chains, and this is based on their specific under writing guidelines.

These are just a few of the common myths surrounding short sales and foreclosure. With the options available today, no homeowner should ever have to go through foreclosure, and hopefully this information can help a few more homeowners think twice before walking away from their home not realizing the possible long term ramifications a foreclosure can have.

Now Is The Time To Buy a Home

Many potential buyers are waiting until they can be 100% sure the real estate market has fully recovered before making the move to purchase a home. Here are five reasons why waiting might not make sense any longer:

1.) Prices Are on the Rise

The latest Case Shiller Home Price Index revealed that home prices have appreciated 5.5% over the last year. This is occurring across the nation as increases were reported in 19 of 20 metros. The Home Price Expectation Survey, which polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts, calls for continued appreciation over the next five years.

2.) Mortgage Interest Rates Are Expected to Increase

The Mortgage Bankers Association has predicted that, after reaching record lows in 2012, mortgage rates will creep up slowly in 2013 to 4.4%. Rates have already increased by 2/10 of a point (3.32 to 3.53) in the last two months.

3.) Rents Are Continuing to Skyrocket

Recently, Zillow  reported that rents in the U.S. increased by 4.2% over the last year. Increases were 5% or more in many major metropolitan areas including Chicago, Boston, San Francisco, Detroit, Baltimore, Denver, San Jose and Charlotte.

4.) New Mortgage Regulations Will Be Announced Later This Year

Six regulators, including the Department of Housing and Urban Development, the Office of the Comptroller of the Currency and theSecurities and Exchange Commission, are currently drafting the newQualified Residential Mortgage (QRM) rule. They will decide on two major requirements for buyers looking to qualify for a mortgage: minimum down payment and minimum FICO score. Many experts believe the new rules will be more stringent than current requirements.

 5.) Timelines Will Be Shorter

The dramatic increase in transactions caused many challenges to the process of buying or selling a home in 2012. We waited for inspections, dealt with last minute appraisals and prayed that the bank didn’t ask for ‘just one more piece of paper’ before issuing a commitment on the mortgage. There are fewer transactions this time of year. That means that timetables on each component of the home buying process will be friendlier for those involved in transactions over the next 90 days.

These are five good reasons why you should consider buying a home today instead of waiting.

AGENTS: Looking for insights on how to explain to your clients (especially Generation X & Y and Move-Up buyers) that now is the time to buy?

Happy Ground Hog Day!!!

Sales in December were up 0.8 percent from a revised 518,460 in November and up 0.9 percent from a revised 517,730 in December 2011.  The statewide sales figure represents what would be the total number of homes sold during 2012 if sales maintained the December pace throughout the year.
The statewide median price of an existing, single-family detached home climbed 5 percent from November’s $349,300 median price to $366,930 in December.
December’s price was up 27 percent from a revised $288,950 recorded in December 2011, marking the tenth consecutive month of annual price increases and the sixth consecutive month of double-digit annual gains.
The substantial increase in price was due in large part to a significant increase of higher-priced properties, while inventory constraints continued to constrict sales of lower-priced homes.  Price increases are not expected to continue at a high pace into 2013.
California’s housing inventory was further constrained in December, with the Unsold Inventory Index for existing, single-family detached homes dropping to 2.6 months, down from 3.1 months in November and a revised 4.3 months in December 2011.  The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate.  A six- to seven-month supply is considered normal.
The median number of days it took to sell a single-family home edged up to 38.1 days in December 2012 from 37.5 days in November but was down from 58.7 days for the same period a year ago.