Mortgage Rates Holding Steady at Lows for the Year

Mortgage rates remained little changed for the fourth straight week, according to Freddie Mac’s weekly Primary Mortgage Market Survey (PMMS).

The average rate on 15-year fixed mortgages held steady at 3.69 percent, while the 30-year fixed rate mortgage ticked up ever so slightly, to 4.51 percent from 4.50 percent. The 5-year adjustable rate mortgage (ARM) rate hit a new record low, dropping a smidge to 3.22 percent from 3.25. The previous record for 5-year ARM rates was set in November of 2010, at 3.25 percent.

“Interest rates on 30-year fixed mortgages hovered around 4.5 percent for the fourth consecutive week following mixed reports on the strength of the economy,” said Frank Nothaft, vice president and chief economist of Freddie Mac.

“There were some signs of improvement in the housing market,” Nothaft added.  “However, much of the improvement reflected the seasonal increase in homebuying over the spring-summer period.”



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Vanishing act: Your home insurance coverage is disappearing

There’s a disturbing nationwide trend of insurance companies chipping away at coverage for homeowners, says Amy Bach, executive director of the nonprofit United Policyholders consumer group. She says she’s disturbed by what she sees as policies becoming less adequate.

“We have been working on a number of fronts to try to reverse this tide, while alerting consumers so they have a chance to protect themselves,” Bach says. “We have been going to regulators from all over the country and telling them it is getting very messy out there in the homeowners’ market. Instead of blanket protection, it is more like Swiss cheese and there really are a lot of holes.”

“In much of the country, the basic home policy is just for fire and theft,” Bach asserts. “For everything else you have to have extra coverage.”

Public claims adjuster Steven Venook in Florida points out that mold used to be covered under standard home insurance policies; now it’s listed as an exclusion.

Were you unfortunate enough to have two simultaneous disasters hit your house, one of which is not covered? Expect your whole claim to be tossed out.

“The worst is the anti-concurrent causation clause,” says Robert Hunter, director of insurance for the Consumer Federation of America. “If you have two events happen and one is insured and one is not — for example if you have flood and wind — they now say they will no longer pay for either event. Courts have upheld it.”

Just ask Hurricane Katrina victims.

Have you checked your home insurance deductible recently? It’s the amount deducted from what your insurer is going to pay on a claim. There are a lot of ways the buck is being passed to you.

Insurers are expanding use of “percentage deductibles” on home insurance policies. Instead of a specified amount, your deductible becomes a percentage of the insured value of the home. For example, if your home is insured for $200,000 and you have a 2 percent deductible for windstorm damage, you will have to pick up the first $4,000 in repairs – that’s a lot more than a flat-dollar deductible like $1,000.Bach points out that certain perils, such as wind damage, now may require a separate deductible. Here again, you’re probably looking at a percentage deductible of 2 percent or higher.

Industry insiders say insurers are questioning claims more.

“There are numerous conditions under a policy that say that you, the policyholder, must prove your claimed damages,” Venook says.

In cases of water damage, for example, home insurance companies “are going out of their way to try to determine that the consumer was somehow at fault and negligent,” Venook adds. “Insurance companies are showing up with forensic engineers on day one.”

Vernook says that Florida is a state especially hit hard by exclusions and separate deductibles, and that insurance companies are too focused on making profits and denying home insurance claims.

Home insurance companies have no choice but to seek reasonable protections against rising costs and risks, particularly in regions where violent storms are common and damage to homes can be widespread, such as the Gulf Coast states, explains Loretta Worters, spokesperson for the Insurance Information Institute.

“In 1992, Hurricane Andrew caused about $15.5 billion in insured losses,” Worters says. “It was considered the most expensive storm ever for insurers. It soon became apparent that there were more people who were building in high-risk areas, that there were more frequent and more severe storms.”

Some of the largest insurers found it hard to buy reinsurance, which is insurance for insurance companies. According to Worters, they were forced to begin switching over to percentage deductibles, so that homeowners could take on a larger share of the financial burden. “There is only so much money in the coffers,” she says.

Claims adjuster Robert F. D’Amore, vice president of New York Public Adjusters Association, also views the changes as companies protecting their interests and keeping prices within the reach of consumers.

“Underwriters are statisticians,” D’Amore says. “Their job is to compute the likelihood of what the loss will be. It is all scientific. Tornadoes are usually limited in scope, but a hurricane could take out many miles of coastline. The windstorm deductible is part of how they make their rates. It is the only way they can keep insurance affordable.”

Consumer advocates say that with the changing home insurance landscape, it’s essential that you understand your home insurance policy’s limitations.

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As Foreclosures Rise, Home Prices Plunge to Never Before Lows

The US is definitely going through one of its most challenging phases. Unemployment is at its peak and as people lose jobs, they are faltering on mortgage payments. Hence, foreclosures are becoming common. Home prices have now plunged to never before lows. Hence the market is attractive for first-time investors.

Take, for instance, Mandy Icenhower and James Shannon, her fiancée. They began searching for a home early last year. Around June 2008, they found a flat in Central Point. The couple liked the four bedroom space but ultimately did not buy it because they felt the price was too much. After a few months, they took a look at a foreclosed home in Pitt View Avenue. The house, which had once sold for $388,000 five years ago, was available to them at a price of $176,000.

Buyers like Icenhower are taking advantage of plunging prices. Even the tax credit of $8,000 being extended to first-time buyers and very low bank rates are great incentives. They have pushed sales of residential homes at Jackson County to unimaginable levels. The Southern Oregon Multiple Listing Service report has pointed out that home sales have registered a double-digit growth. Sales have nearly jumped 33.8 per cent as there have been gains in nine of the 11 areas that were tracked.

Short sales and foreclosures may be driving down prices but according to SOMLS, the average sales price of homes in Jackson County have gone up to $190,000 till the period ending July 31. As many as 495 single-family homes were sold between May and July compared to 370 sold during the same period last year.
It may be mentioned here that the deal between Icenhower and the property dealers had become slow because of a number of factors. To Icenhower the deal seemed months to mature. At times, she wanted to come out of it but is now glad that she did not. However, not every home buyer shares the same experience. Amy Warner too wanted to buy a home as prices are low. This is the ideal time to buy a house, she says. She had liked a home at Summer Place in Talent and the house was available to her within a period of two months. Now she has given the property on rent.

According to the SOMLS report, the county's median price fell by 15.1 per cent to $190,000 from $223,750.

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New Self-build Off-plan Mortgages in Turkey

NEW Self-Build Off-Plan Mortgages in Turkey
Relatively low construction costs in Turkey make it possible to own a top bracket luxury home for a fraction of the acquisition cost elsewhere.

For example, a palatial 250 m2 floor plan will have a construction cost of £65 - 100,000. Land costs vary widely, but for a desirable location the total land and build cost would typically range £110-185,000.

Provided the design and location are right, these type of villas can generate a gross rental yield of 14-18% for the April to October season, and more near an all year golf resort development. In order to achieve these rental yields,  plot design and location are the key.

For those with a penchant for the ultimate in both Interior and exterior finishing quality, the range of choice is unsurpassed. Superb artisan craftsmanship in wood and stone work is abundant to compliment exceptional design skills in the best tradition of the Sultans - imported Italian, French, or Istanbul chic.  Turkey has long been a sought after treasury of rare marbles, ceramics, and metals for foreign markets, and the available choice would not disappoint a creative Italian designer's most extravagant ambitions.

For anyone satisfied with nothing less than an exceptional life-style standard, Turkey is one of the best kept secrets, and one of the most desirable locations anywhere in the world. Those in the know, include  many from the ranks of the rich and famous, enjoying discreet privacy in select locations all along the Turkish Riviera. And why not? This coast line has been the idyllic home of innumerable civilisations since the dawn of time for very good reason, as anyone who has ever visited will attest to.

The rugged and lush green mountainous terrain, and endless small turquoise coves, make this coast line perhaps the best hide-away anywhere - which shouldn't come as surprise considering the history of piracy since ancient times. Never-the-less, the casual observer is inevitably surprised by the number of £2-10 million estates snuggled  discretely out of sight and sound, so well concealed as they are.

Understanding the attractions of this segment, the Turkish Mortgage Centre are very pleased to introduce the first off-plan self-build mortgage in Turkey. The product enables a lifestyle investor to use 20 year mortgage finance for the land purchase and construction of the ultimate dream home, over a one or two year build cycle. “Turkish mortgage legislation is very specific, so we are very pleased to have succeeded with the bundling of services and development of this product, enabling lifestyle investors to finance a £1-2 million home for a build cost of a couple hundred thousand pounds   - the sale value of a semi-detached house in the UK -  an obviously enticing investment proposition.” 

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Personal Finance V - Understand Home Mortgages

Buy a home is one important decision that many people have to make sometime in their life. If you decide to buy a home now, there are many things you have to know and many papers have to be signed before the home you brought can be registered to your name.

When home, house or real estate is used to secure a loan, the borrower signs a contract called a mortgage. It is a contract refers to the borrower as the mortgagor, and the lender is called the mortgagee. The gradual repayment over many years of a mortgage, usually 15, 20, 30 years including the accrued of interest, is called amortization and equity of a property can be estimated by finding a fair market value price and subtracting the outstanding mortgage debt.

In this article, we will discuss types of mortgages.

Understand First and Second Mortgages a) If a property may have more than one mortgage on it, then the mortgages will be ranked as first, second,...according to the order they were recorded at the registry office.
b) If the first mortgage on a property is paid off by the home borrower, the second mortgage automatically becomes the first mortgage.
c) If the home buyer defaults on the mortgage payments and the property will be foreclosed and resell, after first mortgage has been paid, the claims of the second mortgage would be settled.
d) Usually, home buyer requires to provide a down payment of at least 25% of the property's value.

Conventional Mortgage a) A conventional mortgage is a type of mortgage offered by all banks, trusts and credit unions requiring the home buyer to have a down payment of at least 25% of the property value.
b) Privately arranged conventional mortgage, the down payment can be whatever the parties involved agreed upon.

Insured Mortgages a) If the mortgage is approved, financial institution may require home buyer to have addition life insurance equal to the amount of mortgage to protect the owner as well as financial institutions in case of home buyer sudden death before paying off the mortgage.
b) If the down payment is less than 25% of the property value, financial institution may require any amount less than the requirement of 25% to be insured.

Mortgage Brokers Mortgage brokers specialize in making contact between those who have funds to invest in mortgages and those who need a mortgage. The rates for arranging a mortgage usually is 0.5% or higher of total amount borrowed is payable by the borrower at the time of closing.

Ratios to calculate home buyer qualificationThe mortgage lender will calculate 2 ratios
a) Gross debt service
It is the percentage of the buyer's annual gross income (usually not exceed 32%) needed to cover the mortgage payments, plus municipal taxes.
b) Total debt service
It is the percentage of annual income needed to cover mortgage payments, taxes, heating, and consumer debts, usually not exceed 38%.


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Greece Buys Time for Insolvent Bankers and Delusional Politicians

Last week, the Greek parliament voted by a narrow margin to pass an economically crippling austerity plan of some $40 billion in return for some $159 billon of fresh liquidity injections. Although many hailed the event as a needed first step on a long road to recovery, I believe the austerity program will make a bad situation worse. It is a flawed solution that stems from a false premise: that Greece should continue to be part of the euro zone, and continue to use the euro as its currency.

To return to national economic viability Greece must abandon its use of the euro currency, which has become a financial straight jacket. Nevertheless, Greek politicians may have agreed secretly to accept the austerity in name only, in return for a liquidity bailout that will buy time for European unity to solidify. Once political unity is restored, we should expect more massive financial transfers from northern countries, present day Germany and Britain, to the subsidized southern regions.

As its price to maintain the status quo, central bank lenders, including the IMF and ECB, are demanding that Greece sell off some $72 billion of its national assets. The likely buyers will be international companies based in the EU, U.S. and possibly even China. Such a fire sale can't restore the Greek economy, but it gives the appearance that the Greeks are paying something for their loans, and it provides cover to northern European politicians who are feeling increasing frustration from voters who have been continually asked to foot the bill for southern European profligacy.

In contrast, Greece could have decided instead to abandon the euro and devalue a new Greek currency unilaterally to pay its debts. This is the typical remedy for marginal economies that have gotten into debt quicksand. Most certainly, devaluation would reduce Greece's standard of living by slashing the purchasing power of Greek citizens. But in recompense it would boost exports and improve Greece's balance of payments. The Greeks could then begin the hard work of restoring their economy while maintaining ownership of their national assets.

However, if Greece was to abandon the euro, the shaken confidence could lead to a euro collapse, bringing to an end the idealistic dreams of a unified Europe. Politicians are desperate to avoid this no matter what it costs their increasingly subjugated peoples.

In addition, a Greek debt default would trigger massive losses on the books of EU banks, many of which had been 'persuaded' by their governments to invest in Greek debt. Also, major U.S. banks have profited hugely by selling Credit Default Swaps (CDSs) to insure these loans. Indeed, they have insured some $32.7bn of Greek debt alone. Furthermore, U.S. banks have invested directly in European sovereign debt. In other words, the financial pressure to keep Greece from defaulting is enormous.

The euro is the world's second largest reserve currency. Its dissolution would cause huge shockwaves in a currency system that already is causing some investors to hedge in precious metals. A collapse of the euro could likely send gold, silver and most food commodities skywards in price. As a result, politicians and the bankers share a common interest in saving Greece from debt default and so salvaging the euro, regardless of the effect on the Greek people.

Greece's vote to accept austerity has yet to be enacted in specific cuts and taxes, but when they do, expect public resistance that will dwarf what we have seen thus far. At that point we can expect this debate to be revisited. I believe that when the pressure becomes too intense, Greece may in fact return to the Drachma.
I have consistently argues in these columns that a sovereign debt crisis would develop into a possible currency collapse. The beginnings of this endgame can be seen today on the streets of Athens.

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Finances in 55 Seconds: Check Beneficiary Designations

When it comes to what you want done with your money after you’re gone, it’s important to consider an estate plan. Estate planning is an essential part of making sure your money goes where you want it to. Proper estate planning can limit the amount of time your estate spends in probate — and reduce the fees and taxes that are paid on what you leave behind.

Estate planning sounds daunting, but it can be broken down into smaller pieces to make it more manageable. One of the easiest estate planning activities you can do is check your beneficiaries. Indeed, this can be done in under 55 seconds:


List accounts with beneficiaries: The first thing you need to do is list the accounts likely to have beneficiaries. These accounts include your life insurance policies, annuities, retirement plans, and some bank accounts. (18 seconds)


Gather the paperwork: Next, gather the paperwork associated with the accounts. Hopefully you have the papers stored in a safe location that you can access fairly easily. You can also call your HR representative if you have a company retirement plan. (20 seconds)


Skim the beneficiaries: You should be able to quickly look through the paperwork to find the beneficiaries. It’s information that is usually found in a section with a prominent heading. Make a note of the beneficiaries. (17 seconds)

Now, of course, it is time to figure out how to change beneficiaries. A major life change, such as marriage or divorce, or the death of one of the beneficiaries, usually means that a change needs to be made. You should find out the process for making that change, and fill out the necessary paperwork. This is extremely important because who you have listed as a beneficiary trumps what is i your will in most cases. This means that if your will states that your current husband should get the assets in an account, but the beneficiary is still your ex, it’s your ex who will get the money. Make sure that you go through all of your accounts and update beneficiary information.

Realize that you might not be able to make changes on some accounts without closing the account and opening a new account. While you are about it, you should also double check the type of bank accounts you have. Some deposit accounts don’t allow for automatically passing your assets on to survivors. This means that when you die, it goes to probate to be considered as part of your estate. Find out from your bank what sort of restrictions can limit the way your account is passed to another person. You can then make the necessary arrangements to change matters, or open a different account.

You want to make sure that your money will be used according to your wishes — or at least passed on to your preferred heirs. In order to ensure that this happens, it is important that you check beneficiary information regularly to make sure that it is accurate and up to date.

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Update Your Jewelry Appraisals: Insurance Coverage

All the news over the past year (or three) about the skyrocketing price of gold and silver has probably gotten your attention. Maybe you have a few pieces of jewelry you no longer like (or perhaps an earring that has lost their bud) and are considering selling. It’s natural to try to get a little more out of your stuff, especially if you don’t use them anymore.

One thing that some people, ourselves included, tend to forget to do on a regular basis is get our jewelry appraised to ensure our insurance coverage is sufficient. As gold and silver prices rise, you may discover that your insurance coverage is no longer enough to cover your valuables.

I would recommend getting your jewelry re-appraised every four or five years, unless you’ve seen a big run-up in commodity prices. With precious metals becoming more valuable as of late, now is a good time to re-appraise your jewelry unless you’ve already done so in the last few years. The easiest way to check is to review your appraisal paperwork to see when it was done and how your piece was valued. If you it was appraised last year, then the higher commodity prices were used. If it was done ten years ago, you might want a refresher.

While you’re at it, you should be regularly updating your home inventory too.

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