The Jobless Recovery is Complete

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 It has been several years of watching millions of people chase the few jobs out there but that is changing in a hurry and permanently. Early November numbers indicate that 321,000 jobs were added to the U.S. economy. Revisions for September and October show that 44,000 more jobs than had been estimated were actually added. 2014 is turning out to be the biggest employment growth year since 1999. Unemployment Will Remain Low Within the next couple of years, the concern will shift from unemployment to labor shortages. Baby boomers continue retiring at an unprecedented rate. More than a quarter million Americans turn 65 every month. Many remained in the workforce during the recession because they saw their Wall Street invested retirement accounts shrink. Wall Street has recovered and these seniors are now feeling more confident about leaving the workforce. Only about 17% of baby boomers have retired to date, meaning a lot of jobs will become available in the near term future. The peak hiring of the millennial generation has passed meaning fewer people will be entering the workforce. As soon as next year, those born between 1981 and the early 2000s will become the majority of the workforce. They will soon be earning more money and have increased purchasing power across the entire economic spectrum, including homes. What This Means for Real Estate The shrinking workforce and millennials becoming dominate in the economy creates two significant changes in the residential real estate market. First, wages for these first time homebuyers are going up. Although the millennial generation has shown a preference for inner city apartment renting, this should change as their wages increase and they become more family orientated. In the early 2020s, many more first time buyers are expected to enter the market. However, not in the numbers that baby boomers once bought at. In addition, as baby boomer age, many will move out of the family home and into some type of senior housing. This will create an abundant market of existing houses. The second major change coming is that interest rates are going to start going up. The Federal Reserve has been artificially holding interest rates down to stimulate the economy. With unemployment down and wages heading up this artificial stimulation is about to end. Most experts now expect the Federal Reserve to raise interest rates beginning the summer of 2015. Exactly how this will affect real estate isn’t completely clear. While the raising income of millenials will absorb some of this increase in interest rates the increase will certainly lock some of the younger generation out of the marketplace. The banks have also been easing access to mortgages lately. If this continues, it’s likely to add more fuel to the real estate market. 2015 very likely will be a year of strong growth. The Real Estate Future With optimism comes a tendency for many to over react. A building and investing cycle is on the horizon. If investors and builders are overly optimistic, this could lead to another cycle of boom and bust. Real estate is always a market of supply and demand. Hopefully, we’ve learned from the past and will keep supply and demand in balance to create a stable market going forward. The real estate market also has several moving influences pushing it in several different directions. Currently there are some major forces at work. While another major event like another recession could change everything, right now the future of real estate is promising.

Thoughts on Real Estate Investing

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Whether you’re a seasoned professional or a novice investor there are fundamentals that you should always be paying attention to when investing in real estate. The fundamentals for beginners may be second nature to experienced investors but they aren’t to the beginner. The beginner needs to keep these in mind every step in the process of making his or her first purchase and sale.

Money can be made in any type of real estate market but it takes different strategies that change on a regular basis. There are two basic investment strategies. One is to buy and hold as rentals and the other buy and flip as quickly as possible. Within those two basic strategies are many other options. Today, one of the better buy and hold strategies is the lease option where you hold for a few years but have a plan to sell to the renter at a future date. For those wanting to flip houses, being able to owner finance them (even using other people’s money) is a great strategy. Both of these strategies are working well today because of the tough lending qualifications and because so many people have damaged credit scores coming out of the recession.

Real Estate Investing for Beginners

First and foremost, have an exist strategy. Never buy a house just because you can get it at a good discount. Know exactly what you are going to do with it once you own it. It’s also preferable to have a plan “B” and a plan “C”. Once you have an exit strategy, join an investment club if you haven’t already. Decide on a couple of experienced members that you trust and possibly use the exit strategy you’ve decided on. Invite them to lunch. Explain your strategy to them and ask them to punch as many holes in it as they can. Use the information you learn to improve your plan.

Expert advice for beginners is invaluable. An example of a big mistake one beginner was advised not to make involved a double lot. The beginner had found a double lot at a deep discount in a lower to middle income subdivision. He saw a huge opportunity to buy the lot and then go through the permit process to subdivide it with the intention of more than doubling his investment by selling two individual lots at retail. When he discussed his plan with an expert, the expert suggested that before making the purchase he first look into his ability to subdivide the property. When the beginner did, he learned that it could not be subdivided because of a wildlife habitat issue. The only use the property was suitable for was building a small mansion in the middle of low-end neighborhood. Obviously not a good investment strategy.

Real Estate Investing for the Experienced

If you’re at the top of your game, the best thing you can do to stay there is remain humble. Lack of humility is the biggest problem any businessperson can cause for them self. People simply don’t like doing business with someone that is arrogant. The best deals won’t be made available to you. When you do find a decent deal, negotiations won’t go in your favor when you portray yourself as always coming out on top. Stay humble and you’ll do much better.

Being humble includes offering your experience and knowledge to beginners and others less experienced than yourself. Don’t think of them as competitors and blow off their requests for help. There are plenty of deals for everyone. Occasionally, taking the time to thoroughly think through the strategic basics will also help keep you at the top of your game.

GTA resale market to be strong in 2015

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Opportunities for investors in the GTA will abound in 2015, as more homeowners in the area will list their houses for sale, creating a more balanced market, according to experts. Speaking at CMHC’s Toronto Housing Outlook Conference yesterday, senior market analyst Dana Senagama said the GTA’s sales-to-listings ratio will be 55 per cent, though some markets will deviate. For instance, the Durham region, which includes Ajax, Oshawa and Whitby, will see a sales-to-listings ratio of around 75 per cent. Senagama also highlighted more good news for investors: a strong demand for rental units. She pointed particularly to growing long-term investor activity around rental condominiums. “If you’re making the decision to invest, you need to look at the rate of return,” she said. “Thus, look at cap rate, which has between four and 4.5 per cent in the last five years.” It may be that investors are more motivated by capital gains, she added, since there is a stronger price appreciation (around 20 per cent) for new condos. “We’re seeing around a quarter of the total condo universe rented out by investors.” Looking more widely across Ontario, Ted Tsiakopoulos, regional economist at CMHC, said the province’s rental market will continue to tighten – great news if you’re an investor. “Nothing here suggests to me that prices are going to fall, that you should be rushing out to sell your real estate,” he said. Residential real estate assets in the province have been historically stable, he added. Bob Dugan, CMHC’s chief economist shared a Canada-wide outlook during the conference, forecasting slower growth in housing prices in 2015 and 2016. He added: “Price growth will drop below 2% in 2015 and 2016. Where we end up in that range depends on what happens with the economy.”

Minimizing Real Estate Investing Risk

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There are many real estate investing business models. Deciding on the one that is right for you determines the level risk you are willing to take with your investment money. Most investors decide between becoming a landlord or rehabbing and flipping middle-income houses. What few people consider is owner financing lower income houses. There’s more money to be made and lower risk with this real estate investing model.

Valuing Owner Financed Houses

Here’s where the big difference begins with owner-financed houses. The selling value of the house is NOT determined by comparables or assessed vale or an appraisal. The sales value of an owner financed home is closely associated with the dominate rents of the neighborhood. What’s important is that you find the right neighborhood to invest in. These are working class neighborhoods where people mostly live paycheck to paycheck but some manage to save a little for emergencies or towards a down payment on a house. These people might have $4,000 in the bank.

Let’s say it’s a typical family with two parents and two children and the parents are in their early 30s. They are renting a two or three bedroom apartment that is costing them $1,050 each month. They have noisy neighbors above them and below them and they have to fight for a decent parking spot when they come home from work every evening. They have the good old American dream of buying a home with a yard, a garage, and a white picket fence. However, in today’s real estate marketplace, these people can’t qualify for a traditional mortgage. Maybe they have a few blemishes on their credit score or more likely they don’t have the 20% to 25% down payment that the banks are requiring. The fact is these peopl

e don’t value the purchase cost of a home according to the appraised value nor comparable sales in the neighborhood. They value the purchase cost compared to what they are getting for their rent money. When you owner finance, you don’t need an appraisal nor do you have to show comparables. All you need is to come to an agreement on the sales price. When you can put these people in their own home for the same cost or less than they are paying in rent, most will jump at the chance.

How a Decent Deal Plays Out Financially

In most cities (especially mid-west cities and towns), there is an abundance of low cost houses that are ideal for owner financing to lower middle class and lower working class homebuyers. How a deal might work is you find a distressed seller needing to close a sale very fast. These are typically all cash sales. You need to have your financing in place before making the offer so that you can close in three days. Your financing is often a private lending source that you have built a relationship with and doesn’t require an appraisal. Today’s market is full of these private lenders.

The reason you don’t need an appraisal is because you’re going to buy the house for less than $25,000 and sell it for $45,000. You need to borrow the $25,000 but it’s secured by the $45,000 note and brings in an interest rate of between 8% and 10%. Why would a buyer pay $45,000 for a house you just bought for $25,000 and pay a high interest rate? It’s all about the cost to rent. Rent is costing the buyer $1,050 each month but buying the house with a whit picket fence is going to cost him or her about $500 per month. That’s based on a $4,000 (9%) down payment, a $41,000 mortgage at 10% and includes the cost of homeowners insurance and property taxes on a 20-year loan. Once you understand the numbers, it becomes clear this is a very lucrative way of investing in real estate. It’s a win-win-win for you as an investor, for the buyer, and for the private lender.

As the investor, you place yourself between the buyer and the lender. You pocket the $4,000 down payment for an instant payday and take 2% of the interest to leave 8% for the lender. Put 10 or 15 of these deals together and you have a passive income stream for the next 20 years without the headaches that come with being a landlord. Once you build up your own capital, you can buy and sell houses without first finding a lender. After you sell the house, you collect the monthly mortgage payment. After the loan is seasoned six months or a year, you can sell these notes on the secondary market (without discounting it) for a payday in the $20,000 range. It takes a different investing mindset but this is a huge opportunity in today’s market.

Rents Are Up, So Are Evictions

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On average, nationally rents have increased 7 percent year on year while income has only gone up 1.5 percent. Over the long haul, renting has appealed to people because it was less expensive than buying. Renting has traditionally cost about 25 percent of average income compared to ownership costing 30 percent or slightly higher (according to Zillow). Today, renting is costing the same percentage of income as buying does. For many, it would more sense to buy if they could come up with the down payment and qualify for a mortgage. Unfortunately, they can’t qualify and landlords are taking advantage.

One small financial emergency and a month’s rent is missed. That becomes grounds for the landlord to start the eviction process if the tenant doesn’t voluntarily move out. Some greedy and vicious landlords are looking for any minor violation of a lease agreement to send renters to the street so that they can bring in new renters at a higher rent. It can be as minor as a single noise complaint or a claim that the renter is hoarding unwanted materials in the rental unit.

Evictions Are a Legal Process

The eviction process varies from state to state. However, the U.S. Department of Consumer Affairs describes it this way. When a tenant doesn’t voluntarily move out of a rental unit after legally being given notice to vacate, the landlord can file an unlawful detainer lawsuit in superior court. The eviction process is a legal process that will almost always result in the tenant having it added to his or her legal/criminal record.

The tenant is given legal notice that a lawsuit has been filed. These lawsuits move through the courts very fast. The tenant often has no more than five days to file a response if he or she wants to contest the suit. A judge will typically then make a formal decision within 20 days. If the tenant hasn’t made a response and appeared for trial, the judgment will almost always favor the landlord.

The landlord cannot use “self-help” measures to remove the tenant from the rental unit. For instance, the landlord cannot change the door locks or cut off utilities. The landlord must use the court-approved process to evict the tenant. If the landlord does use unlawful methods to remove the tenant, the landlord typically becomes financially responsible for any damages or hardships the tenant incurs.

The Court Eviction Process

The court process does vary from state to state. Generally however, if the tenant presents a case that shows there is no reason for the eviction (perhaps the rent has been brought current), the court will not evict the tenant. Instead, the court might award the tenant damages for filing fees and attorney costs depending on the language contained in the lease.

When the court finds in favor of the landlord, a writ of possession is issued.  The writ of possession is an order for the sheriff to remove the tenant from the unit. Typically, the renter has about five days to voluntarily move before the sheriff physically removes the tenant from the rental unit. The court will likely award damages in favor of the landlord in the form of back rent, court filing fess, and attorney fees. In some states, the court can also order the tenant to pay a fine to the landlord for not leaving the unit when originally and legally told to do so.

All traditional court proceedings apply to evictions. A tenant being evicted can require “discovery of evidence” and/or subpoena witnesses and other legal proceedings. This includes the right to appeal a judgment that goes against the tenant. However, even on appeal, the tenant will typically be required to move before the appeal is heard.

5 Reasons You Should Give Home Automation Some Thought

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Whether you have just recently moved into a new home or if you have been considering upgrades for safety and for property value purposes, consider the option of home automation. There are a few reasons to consider home automation regardless of the size of your home, how much you travel as well as where you are located.

Safety and Protection

With a home automation system installed, you have the ability to lock down doors, windows and any other access points to your home, whether you are inside or out. Home automation systems detect break-ins and alert authorities as well as homeowners as quickly as an incident occurs, regardless of the severity of the incident itself. Getting peace of mind with a home automation system is another benefit of having one installed.

Accessibility

Many home security systems today allow for the ease of accessibility. It is now possible to view installed security cameras with the use of your television, desktop computer and in some cases, even your smartphone. Using your smartphone or another computer is a way to monitor any cameras you have set up throughout your home or even any outdoor property you are protecting at all times.

Having the ability to check on your home from just about any location is a way to ensure nothing is out of place or that you are not at risk of a potential intruder or danger. Using an automation system with security and smartphones allows you to alert authorities immediately if you spot something that is out of the ordinary while away from your home.

Features and Options

Depending on the type of home automation system you have installed, it is also possible to use a temperature gauge and monitor. Monitoring the temperature in your home is an ideal way to ensure your heating or air conditioning unit is working properly when you are unable to check on it yourself. Be sure to review all of the features and options available provided from individual home automation systems to ensure you are getting the most for your investment. Comparing features and prices is a way to find a home automation that is ideal for your property, regardless of your own needs and its location or size.

Another feature that is available with many home automation systems today includes timed lighting. Timed lighting helps to ensure you are not keeping the same lights on when you are not in the home. By having a timed automated system set up for lighting, it is much easier to leave the home or travel without looking conspicuous or becoming a target to potential thieves who have been looking into your neighborhood.

Home Warranty

Opportunities Working together with home warranty companies is another way to ensure that your home security system is always covered and can be repaired or inspected at any times. A home warranty company is capable of offering long-term warranties to ensure your household is entirely protected for years to come. Having a home warranty for your automation system is a way for you to feel protected whether you are out of state or even traveling globally.

Less Hassle

When Traveling and Out of Town Although it is still advisable to inform close family friends, and even neighbors when you are going tout of town for vacation or business, there is less need to do so with a proper home automation system installed. With features such a timed lighting and the ability to check on your home and all of its rooms at any times, leaving your home unattended has never been easier.

The more you know about what home automation systems have to offer, the easier it becomes to find a security option that is right for you and your household.Whether you require home automation for your main home, a vacation home or even your place of business, there are plenty of packages and options available for you.

Earning Wealth in Real Estate

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The real estate market is frequently at the center of national economic news. Mostly it’s about whether or not homeowner values are increasing or decreasing but there is plenty written about real estate investing. When it comes to taking the step up from personal residence investing to more diversified real estate investing, it can be a frightening proposition for many. It can also be more responsibility than many people want to take on. Before any beginner invests in real estate, he or she needs to first understand the many options available. Especially the low risk options without direct ownership responsibilities.

Low Risk, No Ownership Real Estate Investing

Earn wealth in real estate without owning anything. This is something many beginning (and experienced) investors don’t understand how to accomplish. There are multiple ways you can create wealth in real estate without the hassles of ownership. A few ways of building wealth in real estate include:

• Lease options
• Assigning contracts
• Government tax liens
• Buying deeply discounted mortgages

The goal here is controlling valuable contracts without the liabilities and hassles of ownership. No plugged toilets in the middle of the night or broken hot water tanks on Christmas Day.

Think Low Risk Wealth in Real Estate Producing wealth in real estate is much lower risk when you control the paperwork without out right owning it. A lease option can be walked away from for very little cost if the deal falls through. Assigning contracts is a form of wholesaling. You put the house under contract with the provision that you can walk away if you don’t find an end buyer. If you don’t execute the contract, you never have ownership of the property.

Tax liens pay a high interest rate if the owner redeems the home. Or you may become the owner for dimes on the dollar if the owner fails to bring the property taxes or other government lien current. Private investors buying mortgages has recently become a popular way of earning wealth in real estate. You finance someone else’s real estate purchase with the property as security for the loan. You don’t have any of the hassles of a landlord. The buyer is fully responsible for the property while you collect interest on the loan of 12% or more.

Earn Wealth in Real Estate by Investing Other People’s Money

Another great strategy to wealth in real estate is using other people’s money to control properties. In this scenario, you are more likely to become a landlord and have more hassles but for that trouble, you eventually own the real estate, creating long term wealth in real estate.

Despite the drop in home prices during the past recession, historically real estate prices have always gone up. When you factor in government subsidies, expense deductions, and cash flow, real estate is one of the fastest roads to wealth. There are many investors out there that will loan you the money to buy property. You put your credit rating at risk but their money, not yours. You’ll pay interest for the loan but over time, you take full ownership of the property.

Helping Your Parents Purchase a Home

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You often hear of cases where parents have helped their child to buy a home, but it is rarer for it to happen the other way round.

This could be the case if the children are very successful and want to help their parents buy a nicer home, or perhaps when their current house no longer meets their needs. Often the children will have moved away from home to a more expensive area, and would like their parents to live nearby. Another possibility is where parents need a retirement home, but cannot afford it on a fixed income.

Children have several options when it comes to helping parents move home. They can purchase a home outright and allow their parents to live there, or they can charge them a reasonable rent. Alternatively they can help them get a loan to buy a home on their own. These options raise various questions as to the title of the property, the taxes, and sorting out the eventual sale or inheritance of the home.

If you intend to purchase the home yourself then you’ll probably need access to considerable assets. If the financing will be in your name, the lender will view it as being a second property or investment home and this could incur higher interest rates and closing costs compared to a primary residence. Experts in these matters suggests that if a buyer has a lot of equity in their home then another alternative would be to refinance which would likely be on a lower interest rate than could be obtained with a second home or investment property.

Another option is to get a regular mortgage on the property for your parents and to make the payments yourself. On the plus side it’s possible to deduct the mortgage interest on both homes up to a total of $1 million for the combined balances on both, and to deduct the property taxes on both as well but this won’t work if you already have a second home. One of the problems with trying to obtain a mortgage for a second home is that lenders may require it to be located at least 50 miles away from your primary home which may not be so successful if the intention is to move your parents closer to you. The Family Opportunity Mortgage authorized by Fannie Mae and Freddie Mac waves this requirement but it can be harder to find a lender who offers this mortgage.

Are Home Prices About to Dip?

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The spike expected in homes prices during the traditionally busy spring and summer buying season never really developed. Prices in much of the nation remain higher than a year ago but didn’t go up as much as expected. Last year the gain from the second quarter to the third was three percent. This year it looks to be a meager one percent based on early data. That’s despite of a lower inventory of houses available for sale.

Could it be that the small gain during what should have been a busy buying season is a forewarning that prices may go negative as we enter the slow seasons of fall and winter? The western market may be a leading indicator.

Distressed Western Market Shrinks

According to Clear Capital, the West, which has some of the largest metropolitan markets in the nation, has seen a dramatic drop in the sales of distressed houses. In 2009, at the peak of distressed home sales, a full half of all sales were distressed houses. Today that number has dropped to about 12 percent.

For major investors, this means looking to the South and Midwest for better investment opportunities where distressed properties are still selling at bargain prices. Fewer buyers in the West mean less price appreciation and the possibility of prices actually declining for the first time since the bottom of the Great Recession. Regarding home values, the West has been the trendsetter. It could be an indication that as the market finally absorbs the remaining distressed properties, national homes prices could again retreat.

Other Statistics

You don’t want to only look at the statistics of one group. Although different numbers are tossed out, the trend is the same from CoreLogic. Their numbers say that national average house prices increased by 6.4 percent in August, year-on-year. But that is half of the increase that occurred in the same season from 2012 to 2013.

According to Credit Suisse analysts, “The combination of higher mortgage insurance costs, higher interest rates, and higher home prices have already brought affordability back to the long-term averages for first-time home buyers.” What this implies is that first time housing costs are approaching previous highs and will further shrink the number of buyers in the market. Of course, fewer buyers in the market reduce pressures for higher prices.

Time will tell what direction housing prices will go in the near and not too distant future. Consumer confidence is generally negative towards the housing market. There could well be a drop in average prices over the next couple of years. Or there could be modest appreciation in the range of 2 to 3 percent during 2015 and 2016. What is almost certain is there will not be a major run up in prices as many analysts had previously predicted.

The improving economy and lower unemployment numbers should be driving a higher performing real estate market. However, continuing tight mortgage markets and low consumer confidence are working in the other direction. As a result, new homebuilders will remain conservative when it comes to starting new projects. The housing market is a primary driver of the national economy. Fewer new home projects likely means fewer jobs in the construction industry, which in turn will put further downward pressure on the already slow economic recovery.

Survey Shows Current Attitudes to Smart Homes

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Lowes recently released a survey on smart homes, and discovered that more than 70% of Americans who have smartphones would like to be able to control some feature within their home, without having to move. According to the article in RisMedia, the survey looked at people’s attitudes towards home automation as well as their experiences.

It also examined the most important features for home automation, and people’s reasons for owning or wanting to own particular smart home products. Overall, the study found Americans are generally open towards the idea of smart homes, and 62% thought a smart home would be a beneficial way of being able to monitor security and home safety. The Smart Home Survey was an online poll of more than 2,000 adults aged over 18, and it found that just over half of those surveyed feel that having a smart home is somewhat important. When it comes to purchasing the equipment required for smart home automation, some 26% say the overall cost of equipment is important, while 31% feel this way about the monthly fees. Some 13% feel the ease of use is important and just 11% think this about security.

The survey found that Americans generally feel positive towards products that could make their homes easier to manage, more energy efficient and more secure. When it comes to actually purchasing smart home products, Americans more than twice as likely to prefer a solution they can fit themselves and which doesn’t have a monthly fee associated with monitoring the system, or an installation fee. Around 40% feel the benefit of owning a smart home would be to make the home more energy-efficient, and to cut down on energy bills. Out of those polled, 62% felt home monitoring and security was the most beneficial reason for choosing a smart home. Americans aged 65 or older were more than twice as likely as those aged between 18 and 64 to rank ease of use as being the most important factor when considering a smart home purchase.

Most Americans aim is to be able to control something in their home without having to get out of bed. Nearly half would like to control the temperature of the property, so it is perfect when they get home. Other wishes includes being able to control lights and door locks. Not surprisingly, these wishes are the top three things most of us forget to do before leaving home, as 18% forget to turn off the lights, while 15% don’t adjust the thermostat and a worrying 5% fail to lock the door. Over half of those surveyed admitted to forgetting to do something when they went out.

Pending Home Sales Fell Slightly in August

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Even though pending homes sales fell slightly in August, contract signings were at their second highest level over the past twelve months, according to an article in Propertywire. These figures were based on data from the National Association of Realtors. Just one region bucked the trend which was at the West, where pending home sales increased for the fourth consecutive month. With the exception of the West, all major regions saw pending home sales figures decline. The index dropped from 105.8 in July to 104.7 in August, and was 2.2% to the below figures seen in August 2013 when the index was 107.1. In spite of the decline, the index is still above 100 and has been for four consecutive months. Anything above 100 is considered to be an average level of contract activity.

Real estate experts point out that even though figures did drop slightly, the number of contract signings is holding steady. The reason the figures declined is likely to be due to less investor activity and fewer distressed sales. Fewer distressed homes are available at knockdown prices, and this factor combined with the likelihood of rising interest rates may be causing investors to hesitate over purchases. The declining numbers of investors means the market is returning towards more normal conditions, relying on first-time buyers and traditional buyers who need a mortgage to purchase a home.

The National Association of Realtors Profile of Home Buyers and Sellers shows that 81% of first-time buyers who purchased the home last year used an FHA or conventional loan. During the housing market recovery first-time buyers have accounted for less than a third of all buyers every month over the last couple of years.

It’s expected that the numbers of first-time buyers should gradually rise, in spite of increasing interest rates and tight credit conditions. This is because employment prospects for young adults are beginning to improve and their incomes are increasing. More disposable cash will help them repay student loans and should lead to higher sales growth in this area during the next two years.

Levels of pending home sales in the North East fell by 3% to an index of 86.5 in August, but this figure is still 1.6% higher than a year earlier. In the Midwest levels fell by 2.1% to an index of 102.4, 7.6% lower than in August last year. In the South pending home sales fell 1.4% giving an index of 117 which is unchanged from a year earlier. In the West, figures rose for the fourth consecutive month by 2.6% to reach 102.1, but this is still 2.6% lower than August last year.

Mortgages for the Self Employed

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There are benefits to being self-employed. Not having to answer to a boss is a big one, as is being able to set your own work hours. However, when it comes to qualifying for a mortgage, being self-employed has drawbacks. The “stated income” loan application was originally intended to help the self-employed qualify for a traditional loan. However, leading up to the height of the real estate bubble, so many people abused this method that it has been discontinued by all traditional lenders and some private lenders. Here’s How the Self Employed Qualify for a Mortgage You need to prove your income using your tax returns. There are two typical problems this causes the self-employed. First, most self-employed maximize their expenses on their income tax returns to minimize the taxes they pay. That means they show the lowest amount of income possible. Second, the process requires that the two most recent tax years be averaged to determine your stable income. Due to the slow recovery of the economy, previous year incomes were likely low and will bring your income average down compared to what you are currently earning. Stated income loans are making a small come back on the secondary private lending market but only for the most qualified borrowers. Those with a credit rating of 720 or higher. You’ll also likely need a 30% down payment and have to have six months of financial reserves available to cover all monthly obligations. Showing Income From Your Tax Return Your more likely option is showing income from your tax returns. Self employed loan applicants have to complete and submit Form 4506-T to the IRS. This form authorizes lenders to access your tax records. The lenders must receive the tax records directly from the IRS rather than a copy from you. It’s not unusual for the self-employed to report $90,000 in income but have $80,000 in expenses (or something similar). Of course, at the bottom line, this means only $10,000 of adjusted income is being shown. You’re not at all likely to be given a mortgage if that’s what your tax return is showing. However, all is not lost if you can show an unusual expense such as a one time purchase of equipment or something else that will help you earn more income going forward. You might also still qualify if you can show a one time loss that is unlikely to happen again. Other Options The bottom line is that in today’s economy, the self-employed need to decide if avoiding taxes is more important than qualifying for a larger mortgage. You also need to plan at least two years in advance so that you can qualify under the two year averaging requirement. Your best first step is speaking with a qualified loan officer who can help you understand your options based on your personal financial situation. You may also want to contact a community lender that holds their loans in their own portfolio instead of selling them to Fannie Mae or Freddie Mac. These lenders have more flexibility in how they qualify borrowers. The last option is searching the internet for private lenders. There are more out there than you are probably aware of. Individuals that have given up making a decent return from the stock markets are using retirement accounts to make personal loans. However, these private lenders charge interest rates north of 10% to compensate for the perceived increased risk.

Study: Green Neighborhoods linked to healthier babies

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Pregnant women living in “green” neighborhoods are more likely to deliver healthier babies, suggests a new study from researchers at Oregon State University and the University of British Columbia.

What makes a neighborhood green: the presence of trees, leaves, grass, and other greenery. Mothers who live in such greener spaces are more likely to deliver at full-term and have babies born at higher weights compared to mothers who live in urban areas that aren’t as green, according to the study recently published in Environmental Health Perspectives. “This was a surprise,” says lead author Petty Hystad, an environmental epidemiologist at the College of Public Health and Human Services at Oregon State. “We expected the association between greenness and birth outcomes to disappear once we accounted for other environmental exposures, such as air pollution and noise. The research really suggests that greenness affects birth outcomes in other ways, such as psychologically or socially.” Researchers controlled for factors such as neighborhood income, exposure to air pollution, noise, and neighborhood walkability. Between 1999 and 2002, researchers tracked more than 64,000 births in Vancouver, British Columbia. They found that when mothers lived in greener neighborhoods, pre-term births were 20 percent lower, and moderate pre-term births were 13 percent lower for infants. The study also found that infants from greener neighborhoods tended to be of a healthier weight: They weighed 45 grams more at birth than infants from less-green neighborhoods. Why the link to healthier pregnancies and green neighborhoods? More research needs to be done to determine if green space opens the door to more social opportunities and enhances a woman’s sense of belonging in the community, or if it has a psychological effect in reducing stress and depression, Hystad says. The study also was not clear on what type of green space is most beneficial to pregnant women, but Hystad says that adding a planter to a patio or a tree to a sidewalk wouldn’t make a large difference in birth outcomes. The study is one of several recently that shows the health benefits of green space, Hystad says. “We know a lot about the negative influences, such as living closer to major roads, but demonstrating that a design choice can have benefits is really uplifting,” says the study’s senior author Michael Brauer of the University of British Columbia. “With the high cost of health care, modifying urban design features, such as increasing green space, may turn out to be extremely cost-effective strategies to prevent disease, while at the same time also providing ecological benefits.”