Families that have steered cleared of the housing market may want to reconsider their decision to rent instead of own.

A new report from the federal government indicates that U.S. homes are the most affordable they have been in 10 years. The Obama administration's Housing Scorecard found that a combination of record low interest rates and low housing prices are marking this time period as the one to buy, the U.S. Department of Housing and Urban Development and the U.S. Department of the Treasury said.

HUD Assistant Secretary Raphael Bostic said that "the housing market is performing better than the predictions made over a year ago. We're absolutely not claiming victory, but due to the Obama Administration's efforts, improved home affordability is continuing to provide opportunities for prospective, qualified, homebuyers, while promising neighborhood stabilization efforts are helping hard hit neighborhoods start to recover."

Last week, the Mortgage Bankers Association's weekly survey found that interest for 30- and 15-year fixed-rate home loans reached an all-time low. The rate for a 30-year mortgage fell to 4.59 percent and for 15-year mortgages, it dropped to 4.05 percent.

By: RealEstate.com, August 5, 2010

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DEAR BARRY: We are buying a foreclosed home from a bank and are concerned about three issues: There is a plumbing leak in the upstairs bathroom, with water dripping from the garage ceiling; the previous owner agreed to leave the window treatments but took them, as well as the kitchen range, when she moved; and there are numerous holes in the drywall in several rooms. What can we do about these problems? Do we have recourse against the previous owner? --Cyndi

DEAR CYNDI: When you buy a bank-owned property, it is usually an as-is sale. Banks are interested in cutting their losses by getting these foreclosed properties off of their books. But there are exceptions, depending on the kinds of defects involved.

In some cases, buyers or their agents are able to negotiate for repairs, but these instances are rare. In the case of an active plumbing leak, you've got a fair chance, but don't delay on this because prolonged leakage can cause further problems, such as mold. Holes in the drywall are cosmetic defects, unlikely to be considered by the bank.

The former owner was apparently not very responsible or ethical, considering the physical damage to the property and failure to leave fixtures as promised. But all of that is history and not worth pursuing. Wall damage is easily patched, and you'll probably enjoy new fixtures in place of the old ones that were taken.

Your decision now is whether to buy a home that needs some repairs, or to cancel the sale. If the purchase price is good, and the cost of repairs is not too high, this may still be a good deal. To gain some perspective on this, get some quotes for physical repairs and replacement of fixtures. And above all, be sure to hire an experienced home inspector for a more complete list of defects.

DEAR BARRY: When I bought my house, the home inspector found no problems with the roof. But last winter the roof started leaking in several places. So I went into the attic and found buckets under several of the leaks. Two of the buckets were filled and overflowing. Shouldn't my home inspector have said something about this? --Cheryl

DEAR CHERYL: If your home inspector went into the attic, something should have been said about the buckets. There is only one reason to install buckets in an attic, and this should be obvious to every professional home inspector. When pails, wash tubs, old coffee cans or buckets are seen in an attic, past or current leakage is evident, and an extra careful evaluation of the roof is in order.

If the roofing material looks new, the buckets are probably left over from previous leaks. If the roofing does not appear new, further evaluation by a licensed roofing contractor is in order.

If your home inspector inspected the attic and said nothing about the buckets, he was professionally negligent. If he didn't inspect the attic, he was either professionally negligent or inconveniently corpulent. Either way, he wasn't doing his job.

BY: BARRY STONE, AUGUST 17, 2010

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You're not just buying a house -- you're also buying a neighborhood. Sometimes, though, one resident's "neighborhood glories" are another resident's "neighborhood warts."

Take, for example, close proximity to clubs and nightlife.

For some homebuyers, that would be a turnoff. But a few years ago, Austin, Texas, broker Kimbrough Gray had clients who insisted on being "stumbling distance" from a particular bar.

"They said, 'We don't want to drive after we've gone to our favorite club,' " Gray said. "I'd show them houses, and they'd say, 'If we were drunk, could we find our way home to this house?' "

His clients ended up being happy with their eventual choice. But how is a stranger to a community expected to know the difference between "too close" and "too far"? Or how to know, like Gray's clients, which neighborhood features are truly critical to their personal needs?

Five things to consider when picking a neighborhood:

1. The time of day when you first lay eyes on a prospective house can affect your impression of the neighborhood, so visit at various hours.

"A neighborhood can be totally different at night," said Gray, who has blogged about factors affecting neighborhood choice at Escapesomewhere.com, the website of his brokerage, Vox Real Estate. "If you go somewhere at 1:30 p.m., it may seem OK, but if you go back at night, it (could seem) a bit more sketchy."

The same can be said for neighborhood traffic congestion, which can change dramatically at rush hour -- or traffic on a Saturday can be a different story than on a Tuesday, he said.

2. Neighborhood choice can be a pocketbook issue, and not just because of house prices and property taxes. Commuting costs -- of both time and money -- are critical.

"I'm a Realtor, but we also do a lot of investing, so we move around a lot," Gray said. "I always calculate (in a buying decision) how much I'm going to spend on gas when I'm commuting.

"I've had clients say, 'This house is $10 cheaper on the mortgage (than another house),' but I've had to tell them, 'Yes, but this one is going to cost you $80 more in gas.' "

3. Ask questions of people who already live there.

The locals usually freely offer their opinions of neighborhood safety, noise, school performance, commuting times, etc., he said.

"When I'm dealing with a condo association, I usually stand outside the building and wait to chat with somebody who's just walking around," Gray said. "But I've had clients who will go around and knock on doors."

4. The Internet can be a boon for researching the nitty-gritty.

NeighborhoodScout.com, for example, is a subscription service that offers in-depth looks at such considerations as crime statistics (for 17,000 law-enforcement jurisdictions), school-performance data, and quarterly price-appreciation records of area homes.

It's customizable: The site can do such things as take the characteristics of a neighborhood that's familiar to you and approximate similar neighborhoods in other cities. For retirees, it can narrow down neighborhoods that have, say, a large population of educated seniors.

And coming soon, the site says, is a "build your neighborhood" feature in which users enter home-price range, crime-level comfort, preferred school scores, etc., to come up with suggested areas.

The service costs $29.99 a month, or $14.99 a month for a six-month subscription.

5. Some neighborhood characteristics can be hard to cram into numerical categories or scores. NabeWise.com has taken 65 "quality of life" characteristics and set them up as criteria for neighborhood-hunters.

For example, you can actually search for "trendy" neighborhoods -- or "clean" ones. Perhaps you want to live around liberals or around conservatives. Maybe you want to be near a farmers market or public transit or nightlife. The user just needs to fill out a checklist.

The site also features photo tours of neighborhoods and reviews from locals. Currently, it covers only New York City, San Francisco, Boston, Seattle and Chicago; Los Angeles is in the works, the company says.

By Mary Umberger, Wednesday, August 18, 2010.

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In a recent column, we considered how an expensive waterfront property could be viewed in the eyes of the purchaser. While many consumers would consider the $12 million mansion the ultimate in comfortable living, it's possible the place will not serve as the owner's shelter, but rather solely as an investment.

Savvy investors buy assets because they foresee significant potential. Often, the "upside" is considerable, be it an undervalued stock, unpopular bond or unknown baseball player waiting for an opportunity to help a new franchise.

While you cannot purchase a baseball player with an individual retirement account, you can buy stocks, bonds and real estate. In fact, you can even finance a real estate IRA if you have a sizable downpayment and can document monthly income from tenants.

The challenge with real estate IRAs has been lack of funds to make a meaningful purchase. Historically, real estate IRAs have been purchased with cash, and the trust then held the property free and clear. One way to crack a huge financial nut was to get several investors to buy shares in one property.



See related article, "Realize retirement with real estate IRA."



Now, some banks are discovering the real estate IRA niche and granting a "non-recourse loan" to the trustee for specific properties. Non-recourse means if the loan goes into default and the lender needs to foreclose, the property would be the only asset the lender could claim. It's similar to a non-judicial foreclosure, where the property becomes the lender's only focus.

Seattle-based Pacific Crest Savings Bank is one local lender offering loan programs specifically designed for non-recourse financing requirements for purchases and refinances of rental properties. Representatives from the bank say they continue to get requests for customers seeking financing to purchase investment properties, allowing for diversification without tying up other retirement funds.

According to Larry Enselman, a non-recourse loan specialist at Pacific Crest, the bank provides mortgages for single-family homes, multifamily dwellings, commercial properties -- even an RV park. Raw-land loans are problematic because there is no income from monthly rents.

Non-recourse loans typically are available for both purchasing and refinancing properties -- including "cash-back" refinances that are structured to pull money out of one property for investment in another. Fixed-rate loans are the most common, yet three- and five-year adjustable-rate mortgages also are available.

The IRA-leveraged loan is made to the IRA or plan, not to an individual. Rules preclude an owner from using his or her personal credit to influence the loan. Since the loan is "non-recourse," the lender can seek relief only from the secured property in the event of default and foreclosure.

The owner's other assets cannot be claimed -- similar to a "non-judicial" foreclosure.

The only advantage generally associated with judicial foreclosure is that it may be possible to obtain a deficiency judgment against the owner if the proceeds from the sale of the property are insufficient to satisfy the debt. A judicial foreclosure is usually more costly and time consuming because it requires court proceedings.

The typical customer of an IRA-leveraged loan usually has significant other assets. However, the lender is not making the loan to an individual; it is making it to the IRA. It's a different twist, with different possibilities and guidelines.

By Tom Kelly, Wednesday, August 18, 2010.
Where the loan absolutely makes sense is with a small, traditional investment property like a duplex, triplex or fourplex in a good location. Unlike a vacation destination, income is not dependent upon seasons.

Rents would flow to a self-directed program administrator who would then make the monthly mortgage payment to the IRA-leveraged loan lender. The administrator also would make payments on taxes and insurance.

As mentioned previously, you cannot use IRA money to buy your own residence or any other property in which you live. It has to be an investment property. But when you retire, you can direct your IRA to turn it over to you as a distribution at the current market value.

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