Borrowers with minor imperfections on their credit applications — like a brief loss of employment or a temporary dip in their credit score — are starting to have better luck at snagging a loan with smaller lenders, Bloomberg reports. At least 15 smaller firms this year are offering slightly riskier mortgages, which in some cases come with higher interest rates and larger down payment requirements and aren’t backed by the government.
“Some lenders became afraid of their own shadows,” RPM Mortgage Inc. Chief Executive Officer Rob Hirt told Bloomberg. The bank started a program this summer for borrowers who have higher debt burdens or who had sold a home for less than the outstanding mortgage. “The market is beginning to realize that if you make smart and sound loans to people who don’t fit in the narrow box, it doesn’t make them a worse risk.”
On the other hand, larger banks, like Bank of America and JPMorgan Chase & Co., have generally tightened their credit standards over the last few years. The average score on mortgages that government-controlled Fannie Mae and Freddie Mac bought now stands at about 740 – well above the 660 level that is considered subprime. Some of the big banks are reluctant to ease their credit standards, concerned that Fannie, Freddie, and the FHA will force them to buy back bad loans with underwriting errors; the banks do not want to take on the risks of loans that the government programs won’t insure, Bloomberg reports. The lending giants from 2006 through 2012 faced more than $200 billion in losses from home loans, according to Moody’s Analytics data.
But where big banks are stepping back, small banks are stepping in. For example, Shellpoint Partners LLC’s New Penn unit began this summer to offer mortgages for home buyers with debt-to-income ratios up to 55 percent and interest-only loans when borrowers have “high disposable income” or “high income potential due to their line of work.” Lone Star Funds’ Caliber Home Loans Inc. also debuted this summer new programs that offer flexibility for foreign nationals and on purchases of condos without approval for government programs. TD Bank’s Right Step program allows borrowers to put 3 percent down and not have to pay mortgage insurance if they have credit scores of 660 or above. Banc of California is providing loans to borrowers who have a foreclosure or late payments on their records, as long as they can make a down payment of at least 20 percent and show other strong assets in their finances.
“To us, it’s common sense,” says Jeff Seabold, chief lending officer at Banc of California. “There’s quite a few people who are boxed out that shouldn’t be.”
Posted By: Coach Henion
College towns have long been known as havens for investors looking to cash in on rentals or turn a profit on a home flip. RealtyTrac recently ranked the best college towns for flippers in 2014.
RealtyTrac analyzed public four-year universities that had enrollment of 20,000 or more as of 2012 and also were located in counties that had unemployment rates below the national average of 6.2 percent. The top 10 college towns for flipping were ranked based on the average gross return on investment (ROI) percentage for single-family home flips there during the first eight months of 2014. (Note: Some college towns did not have sufficient sales or flipping data to be included in the rankings).
Here are the college towns that topped RealtyTrac's 2014 list:
- University of Minnesota (Minneapolis)
Average gross flip profit: $105,292
- University of Washington (Seattle)
Average gross flip profit: $168,247
- University of Nebraska (Lincoln, Neb.)
Average gross flip profit: $53,763
- San Francisco State (San Francisco)
Average gross flip profit: $402,790
- Thomas Edison State College (Trenton, N.J.)
Average gross flip profit: $40,497
- University of Florida (Gainesville, Fla.)
Average gross flip profit: $41,235
- University of Colorado (Denver)
Average gross flip profit: $103,658
- University of Cincinnati
Average gross flip profit: $45,929
- University of Akron (Akron, Ohio)
Average gross flip profit: $35,909
- North Carolina State (Raleigh, N.C.)
Average gross flip profit: $61,028
Posted By: Coach Henion
You might want to take a closer look at your listing's curb appeal: Upgrading a home's landscape from average to excellent can raise its overall value by 10 percent to 12 percent, according to research from Virginia Tech.
Researcher Alex X. Niemiera with the Department of Horticulture at Virginia Tech found that a $150,000 home with no landscaping could fetch an additional $8,300 to $19,000 by adding a landscape with color and large plants.
The value of landscaping differed greatly from state to state. For example, the change in value from a home with no landscape to well-landscaped ranged from 5.5 percent in Louisiana to 11.4 percent in South Carolina. Michigan homes saw the biggest difference in landscaping appeal, with a home's value being increased by 12.7 percent.
"The most preferred landscape included a sophisticated design with large deciduous, evergreen, and annual color plants and colored hardscape," according to Niemiera. Adding different plant sizes to a front yard, for example, can boost curb appeal, as well as mixing fruit trees and flowers for added color.
The following landscape elements were found to be most important to survey respondents:
- Design sophistication
- Plant size
- Diversity of plant material type
"Survey results showed that relatively large landscape expenditures significantly increase perceived home value and will result in a higher selling price than homes with a minimal landscape," Niemiera writes in the paper. "Design sophistication and plant size were the landscape factors that most affected value. The resulting increase in 'curb appeal' of the property may also help differentiate a home in a subdivision where house styles are similar and thereby attract potential buyers into a home. This advantage is especially important in a competitive housing market."
Posted By: Coach Henion
New Jersey once again topped the nation with the priciest median real estate tax bill at $7,331, according to the newly released 2013 American Community Survey. On the other hand, Alabama has the lowest in the nation at $532.
Depending on where you live can greatly influence how much – or how little – you pay in real estate taxes. The highest property tax states are mostly centered in the Northeast, while the lowest are often in the South, according to the survey.
“When comparing residential tax bills across states it is important to consider government financing,” researchers note at the National Association of Home Builders’ Eye on Housing blog. “Property taxes may represent 40.3 percent of state and local tax receipts, but some states rely less heavily on property taxes as a source of revenue than others.” For example, in New Hampshire the median real estate bill is the third highest in the nation at $5,017, but residents there do not pay an individual income tax at the state level. However, in West Virginia, which has one of the lowest median real estate taxes at $605, residents face the highest marginal rate for individual state income tax at 6.5 percent, according to NAHB.
The following are the states where home owners can expect to pay some of the highest median real estate taxes:
- New Jersey: $7,331
- Connecticut: $5,280
- New Hampshire: $5,017
- New York: $4,559
- Massachusetts: $3,955
- Illinois: $3,939
- Rhode Island: $3,872
- Vermont: $3,727
- Wisconsin: $3,202
- Maryland: $3,075
On the other hand, home owners will likely find the cheapest median real estate taxes in:
- Alabama: $532
- West Virginia: $605
- Arkansas: $674
Posted By: Coach Henion