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John Riggins
Displaying blog entries 121-130 of 260
Low inventory is a relative term depending on how you're comparing it. Would the comparison be to total number of homes on the market last year, homes in a certain price range or homes in a certain area? In some situations, it's a combination of all of those things.
In any given market, inventories will fluctuate based on area and price range. The National Association of REALTORS® considers a balanced market to be six months' supply of homes. If it takes longer than six months to sell, it is thought to be a buyer's market and less than six months, a seller's market. Most buyers and sellers probably feel inventory equilibrium is more like three month's supply of homes.
Inventory has a direct impact on price. During the housing bubble, demand decreased, supply ballooned to four million houses and prices dropped dramatically. Increased inventories due to foreclosures, bank' revised lending practices and builder's lack of new housing starts each contributed to the dramatically lower prices.
As the market has recovered, economic conditions have improved, banks have loosened their requirements, interest rates have remained low, foreclosures have slowed and gradually, the inventory has been reduced to approximately two million houses. When demand is constant but inventory is reduced, price tends to increase because the same number of people are trying to buy a smaller than normal number of homes.
Based on the low mortgage rates that have been inching up each week in 2013 and an improving consumer confidence level, most markets are experiencing some increase in demand. With inventory decreasing, buyers in the marketplace can see that prices are increasing.
Just as signs of spring can be seen to be just around the corner, it should be recognized what direction prices will be moving. Hindsight is 20/20 but we can't purchase or sell in the past. We need to make decisions today on what we think will happen in the future.
If you're curious to know what inventory conditions are for your specific market, send me an email with the price range and area and I'll send you a report. John@JohnRiggins.com
We're constantly bombarded by lenders to refinance our mortgage under a variety of programs. The volume of offers can almost make you numb to the rational consideration.
There are common rules of thumbs that homeowners and agents use such as not refinancing more often than every two years or there must be at least 2% savings from your previous mortgage rate may not always be accurate.
The reality is that if you can refinance for a lower rate and you'll be in the home long enough to recapture the cost of refinancing, it should be considered. The costs of previous refinancing that haven't been recaptured by monthly savings may need to be added to the costs of the new refinance.
Take a look at the chart that shows the average rates according to Freddie Mac for 2012. They are lower today than they were in January of 2012 and for the ten years before that.
Refinancing may save you a substantial amount of money, especially if you're going to be in your home for a long time. It is definitely worth investigating. To get a quick idea of what your savings could be, use this refinancing calculator.
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.
Example: Purchase Price $175,000 with 3.5% down payment at 4% mortgage rate on 30 year term
Current
After 6/3/13
MIP duration
78% of original loan
Life of mortgage
Cumulative premium
$20,838.24
$42,447.93
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.
The last thing you want to do while you're on a trip is to worry about someone burglarizing your home. Use this checklist to add some peace of mind to your travel plans.
These easy-to-handle suggestions may protect your belongings while you’re gone while adding a level of serenity to your trip.
Retirees Not Near Bases to Lose TRICARE Prime Oct. 1
Tom Philpott | January 10, 2013
The military's managed-care option -- TRICARE Prime -- will be ended Oct. 1 for retirees, their family members and for military survivors who reside more than 40 miles from a military treatment facility or from a base closure site, TRICARE Management Activity announced Wednesday.
Most of these 171,400 beneficiaries will need to shift health coverage from Prime to TRICARE Standard, the military's fee-for-service health insurance option. For beneficiaries who use more than preventive health care during the year, the shift will mean higher out-of-pocket costs.
[Let your elected officials know how you feel about this change in TRICARE benefits.]
Defense officials expect the move to save the health care system up to $55 million a year.
The rollback in number of Prime service areas will not impact active duty members or their families living far a military base for tours as recruiters or in other remote assignments. Their health insurance through the separate TRICARE Prime Remote program will not change.
But grown children of members or of retirees who elected coverage under TRICARE Young Adult insurance will, like retirees, lose access to managed care providers under Prime if they reside more than 40 miles from a base.
TRICARE had considered ending Prime in remote service areas of the West Region on April 1, to coincide with changeover for that region's TRICARE support contactor. On that date, the TriWest Healthcare Alliance will give way to UnitedHealthCare Services of Minnetonka, Minn.
"The primary concern was the beneficiaries. We didn't feel like we had enough time to notify them and help them through the transition," explained S. Dian Lawhon, director of beneficiary education and support at TRICARE Management Activity headquarters in Falls Church, Va.
Congressional committee staffs also had complained about a staggered start across regions to a major benefit change. So the Prime service area rollback will occur in the North, South and West regions simultaneously next fall. This will cause another set of challenges in remote areas of the West Region that an April 1 start there would have avoided.
TriWest needed years to build its current network of providers far from military bases across the region. UnitedHealth will now be paid additional monies under a contract change order to build its own remote networks of providers. Those networks will only operate until October.
How successful UnitedHealth can be in luring providers, or even beneficiaries, to new networks that will be dissolved quickly is anyone's guess but the scheme has skeptics.
"They are just kicking the can for six months at significant expense to the government," said one TRICARE contracting official with knowledge of the move. "When they have a [defense budget] sequester looming, proceeding down that path really doesn't make a lot of sense."
TRICARE's far more critical challenge, however, is to educate impacted beneficiaries that their Prime coverage will end and most of them will need to shift to TRICARE Standard. An aggressive information campaign is planned with the first of three letters of explanation and warning to be sent to affected beneficiaries and families within 30 days, Lawhon said.
Under Prime, beneficiaries get their care from a designated network of providers for a fixed annual enrollment fee, which for fiscal 2013 is set at $269.28 for individual coverage or $538.56 for family. Retirees and family members also are charged a co-pay of $12 per doctor visit.
Under TRICARE Standard, beneficiaries choose their own physicians and pay no annual enrollment fee. When in need of care, retirees must pay 25 percent of allowable charges themselves. They also pay an annual deductible of $150 for individual or $300 per family. Total out-of-pocket costs, however, cannot exceed a $3000 per family catastrophic cap.
Some beneficiaries who see local Prime coverage end will be able to enroll in a remaining Prime network near base. To do so they would have to reside less than 100 miles from that exiting network and would have to waive the driving-distance standard that TRICARE imposes for patient safety. That standard when enforced required that an assigned network provider be within a 30-minute drive of the beneficiary's home.
If displaced Prime beneficiaries meet the two requirements, then an existing network will make room for them regardless of number of beneficiaries enrolled, Lawhon said. But joining a new network also will mean new doctors. So most displaced Prime beneficiaries are expected to choose to use TRICARE Standard instead to get care locally and, in many cases from the same physicians who treated them under TRICARE Prime.
"People who use Standard are very, very pleased with it," Lawhon said. As a group they report higher scores on customer satisfaction surveys than do Prime user, she said.
The push to end Prime in areas away from bases began in 2007 with design a third generation of TRICARE support contracts. It took years to settle on winning contractors for the three regions, however, due to various bid protests and award reversals. Health Net Federal Services has run North Region under the new contract since April 2011. Humana Military Healthcare Services has had the South Region under the new contract since April 2012. Along with TriWest, these contractors have continued to run remote Prime networks under temporary order while waiting final word from TRICARE on imposing Prime area restrictions written into original contracts.
The driver behind new restrictions on Prime is cost. Managed care is more cost efficient for the private sector but more expensive for the military to offer than traditional fee-for-service insurance. This is true in part because Congress won't allow Prime fees to keep pace with health inflation. So more beneficiaries using Standard means less cost to TRICARE.
Of beneficiaries impacted by the Prime area rollback, more than half, almost 98,000, reside in South Region. Roughly 36,000 are West Region beneficiaries and more than 37,000 are in the North Region.
Let your elected officials know how you feel about this change in TRICARE benefits.
Have you ever picked a color from the myriad of paint samples available, put it on the wall and decided that it was all wrong? It shouldn't have to be that difficult but trying to pick the perfect color from those little swatches is just not that easy.
Painters and decorators suggest you buy a small amount of the colors you're considering. Your paint store should be able to mix them in any brand and any color. Once it's on the wall, it will be easy to determine if it needs to be lighter or darker or if it's completely wrong.
Take them home and paint a 2' x 2' area on the wall. If you're concerned about testing the colors on your wall, you can paint some sample boards that can be easily moved around to see how they'll look with the furniture, floors and other items in the room.
Instead of guessing what it's going to look like, you'll actually see how it looks during different times of the day, in natural and artificial light.
While $30 to $40 a gallon for paint may seem like a lot of money, the cost in time and labor to put it on the wall is even more. It's worth taking the time to test the color on the wall before you buy all the paint needed
Buyers who have delayed purchasing a home due to concerns about what might happen to the tax laws affecting home ownership should feel comfortable about getting back in the market. The recent legislation passed by Congress and signed by the President continues to value homes as a favored investment.
For a summary of specific real estate provisions in the "Fiscal Cliff" bill, click here.
Whether the delayed purchase is for a home to live in as your principal residence or to use as rental property, taking action sooner is better than later.
Reasons to buy now:
Contact me about any specific questions you have or information you need.
Most people have lots of things to save for but not always enough discretionary income after the family essentials have been met.
A relatively small investment in a rental home can control a good home that will easily rent, generate positive cash flows and pay for itself. The borrowed funds create leverage that earn a return on the total value of the home and not just the amount of cash you have invested.
The strategy is simple. Find a slightly below average priced home that will rent well. It will appeal to a larger group of people while it's rented and when it's ready to be sold.
Rent the home and maintain its condition over the years. As the loan amortizes and the value increases, the equity will grow. When your student is ready to start college, you'll actually have several options.
You can sell the property; pay the tax on the gain at the reduced capital gains rate and fund the education. Another option would be to refinance and take the proceeds to pay for the tuition. This would allow you to continue to own the asset but would free your equity and under current tax laws is a non-taxable event.
Regardless of whether you're trying to plan for your children's education or your own retirement, rental property offers many solid investment opportunities. Contact me if you want more information.
FHA has announced a major change to its loan program which allows borrowers to cancel the mortgage insurance premium (MIP) when their unpaid balance reaches 78% of the original purchase price. While no specific date has been set for the change, sometime in 2013, new FHA loans will require the mortgage insurance for the life of the loan.
At existing rates, the monthly MIP on a $168,875 mortgage is $178.99 per month. Under the current rule with normal amortization, the MIP would no longer be required in 9 years and 9 months. However, under the new rule, it would last for the entire 30 year term.
They also announced that the annual MIP will also be increased from 1.25% to 1.35% at some point in the near future. HUD, the parent agency for FHA, is making the changes to restore the capital reserves of the program that are needed to fund failed loans.
People that can close a FHA loan before the change takes place will fall under the old rules for canceling MIP and the lower rates. Since no date was announced, it is not known exactly when the changes will take effect.
While this information will probably not make the evening news, it will have a big impact on borrowers planning to use an FHA loan. Please pass it on to anyone you know who might be considering purchasing or refinancing with a FHA loan.
