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Stuck in the rent vs buy dilemma? Consider the local price-to-rent ratio

Price-to-rent answers affordability questions If you’re debating whether to rent or buy, look to your local price-to-rent ratio for guidance. Verify your new rate (Oct 29th, 2018) Where buying a home’s more affordable According to a new analysis from Rentberry, Trenton, New Jersey, boasts the nation’s lowest price-to-rent ratio, making it a slam-dunk for potential home buyers. The median property price in Trenton sits at $149,700, while the average monthly rent is $1,500 per month, making Trenton’s rent-to-price ratio 8. Daniela Andreevska, content director at real estate analytics firm Mash Visor, says anything in the 15 and under range means buying a home is more affordable than renting. “For renters and homebuyers, this means that it is relatively cheaper to buy a property in a certain market rather than to rent there,” Andreevska said. “So, if you have the necessary cash for a down payment and have figured out the rest of your financing in such a market, go ahead and buy a home.” Other cities with low price-to-rent ratios include Toledo, Dayton and Akron, Ohio; Syracuse, New York; Davenport, Iowa; Hartford, Connecticut, Cedar Rapids, Iowa; and Lansing, Michigan. “In most of these locations, the median property price does not exceed $250,000, which is below the level in many other top markets at the moment,” Andreevska said. Home prices in the area average $1.4 million, while the average monthly rent is $2,780. “Some of these cities are infamous for the high real estate prices there, such as San Francisco, New York, El Paso, and Irvine,” Andreevska said. In such expensive markets, it makes sense that renting is the better option or even the only affordable one.” Show Me Today's Rates (Oct 29th, 2018) Get today’s mortgage rates Looking to buy a home in one of the nations low price-to-rent markets?

Cost of living: The purchasing power of a dollar in every state

To shed light on these differences that reflect the relative purchasing power of Americans in every state, 24/7 Wall St. calculated the value of a dollar in each using data from the Bureau of Economic Analysis. For example, with Hawaii’s relatively high housing prices, a dollar spent on rent there is worth only 61 cents. States with large shares of residents living in expensive housing within urban areas account for the vast majority of the states where a dollar is worth the least. A dollar is generally worth much more in states, particularly in the South, where a smaller share of residents live in cities. North Carolina More:Economic climate: The best (and worst) states for business 34. South Dakota More:Financial security: Best (and worst) states to grow old in 42. For example, with Hawaii’s relatively high housing prices, a dollar spent on rent there is worth only 61 cents. In states where a dollar is worth less (those with the highest cost of living), many residents have higher incomes. While residents of New Jersey state see only $0.88 in value for each dollar they spend, the annual per capita income there is also almost $20,000 higher, more than enough to offset their lower purchasing power. For this reason, in most states with high resident incomes and steep consumer prices, the people living there can generally afford to fork out more for goods and services than can their counterparts in states with cheaper prices and lower salaries.

The number of Utahns worried about housing costs is rising, particularly in Salt Lake...

The ranks of Utahns worried about affordable housing have grown dramatically since 2015 and conditions appear to be the worst for renters living in Salt Lake County, according to a new study. The nonprofit Utah Foundation reports that of 20 measures in its yearly Community Quality of Life Index, public perceptions on housing affordability have seen the largest declines in recent years. Statewide, about 12 percent of respondents to Utah Foundation surveys said their personal housing costs were not affordable this year. That number hovered between 7 percent and 8 percent in Utah, Weber and Davis counties, and at 6 percent for Utah’s rural counties. But in Salt Lake County — home to a third of the state’s population — that number was at 20 percent, or one in five residents. "That's a big difference," Utah Foundation President Peter Reichard said in an interview. "That indicates the sore spot is Salt Lake County." Housing advocates with Salt Lake City estimate a gap of at least 7,500 apartments affordable to low-income renters making $20,000 or less. And one in four renters told the Utah Foundation their housing was unaffordable, compared to 4 percent of homeowners. Foundation analysts said that contrast was probably due to a relative stability in costs in recent years for homeowners with fixed-rate mortgages, while rents have risen much faster than the cost of living, especially in Western states and those enjoying rapid economic growth, including Utah.

The striking similarities between mortgage-backed securities and the 17th century financial system

Yet, last weekend the Financial Times reported that in the first quarter of 2018 a total of $1.3 billion of bonds backed by sub-prime loans were purchased by investors. The problem was that the perennially short-of-money King Charles II didn’t have the funds required. Strutting their financial muscles, they claimed that they had already extended the king enough credit via the collateralized treasury orders (CTOs) they held. These instruments were not dissimilar from modern day mortgage backed securities (MBS) and the impetus for the lesson in financial history. Under CTOs, anticipated tax revenues were used as collateral for loan or advances. Think of mortgage backed securities, except that instead of mortgage payments by homeowners backing the loan, it was property tax payments and the like. To make a long story short, King Charles II defaulted on the collateralized treasury obligations. On January 2nd 1672 they proclaimed that the tax revenues that had been promised or assigned to the holders of these securities would instead be redirected to pay other required expenses, such as outfitting the mentioned 60 ships. The amount of debt on which England defaulted was approximately one year’s worth of government tax revenues, which at the time was slightly over £1 million. But at its core, this is yet another great example of what happens in the market for securitization.

Don’t Get a Mortgage Loan Without Doing This

“The Consumer Financial Protection Bureau found that nearly half of home buyers do not look for mortgages with more favorable interest rates. Why?” Well, for one: It’s the Wild West out there. If you’ve gotten even a third of the way through the home-buying process, you know there’s enough paperwork to fill what was supposed to be the guest bedroom in your new place. The process is overwhelming—so much so that simply getting a preapproval from one lender feels like a win. But you shouldn’t stop there! While the market dictates where interest rates hover, different banks and lenders have different offers, so call around and get at least a handful of different quotes before settling. It’s often the case, too, that bigger lenders will match or beat better offers you get—but that’s not something they usually advertise. You have to get in there and play the game. In Worth It, Steinberg uses a $100,000 mortgage example: If you pay this off over 30 years, you’ll end up paying over $71,000 on top of the mortgage amount. Whatever you do: Shop around, and know that almost everything involved in buying a house is negotiable—the mortgage included.

Juggling real estate, second job not uncommon for agents

“Starting a new career as a real estate agent can be intimidating, to say the least. She spells out a few tips for part-time agents seeking to get into real estate full time and for workers jumping into the field while holding down another job. One key starting point is to find a broker who’s used to part-time or newer agents. “Obviously it’s not easy to be available for your clients at a time that is good for them if you work limited hours. “But if you work elsewhere during this time period getting things done might become quite difficult.” Another potential problem are situations when it’s not possible to meet certain timing requirements. “You already know that evenings and weekends are prime time for agents, and finding the time for a day off or vacation is going to be difficult if you want to succeed.” She says many prospective agents “decide to ‘test the waters’ before devoting themselves full time as a new agent.” Many associates begin as part-timers and some stay that way, Ford says, noting that it fits “single parents, persons looking to supplement an existing income, or retired persons who want to stay active and involved.” For potential real estate investors, there are income streams “to sustain you” while pursuing the career full time, says Jaren Barnes, writing for BiggerPockets.com. It takes “a little bit of a hassle” to get things set up, he says. “But once they are, you’re looking at making $200-$400 per appraisal.” Barnes acknowledged that becoming an appraiser “definitely takes a time investment.” The outcome, however, can be “working less than 10 hours and making a decent income.” Assistant Property Manager. Broker price opinion professional. Barnes says that becoming a stager “is something you can do right out the gate, without any professional experience.” Moreover, it can be fun, lucrative and fairly easy to develop a schedule so the work is part time.

Pricey mortgages: Homeownership is getting tougher this spring as rates keep rising

Buzz60 LOS ANGELES — Higher mortgage rates are making the already challenging task of buying an affordable home even tougher for many Americans this spring. And in places such as Los Angeles, where the number of homes for sale is down sharply from a year ago, sellers routinely receive multiple offers. Higher mortgage rates only further limit what buyers can afford. More: Home-buying tips: How to land the right house in a tough market for buyers More: Home buyers beware: Most expensive housing markets in some states average $750,000-plus More: Drew Scott of 'Property Brothers': How I became a house flipper and entrepreneur More: Despite challenges, there are ways Millennials can prep themselves for homeownership The combination of low inventory, rising prices and higher mortgage rates is expected to weigh on the U.S. housing market this year, with several economists and housing experts forecasting U.S. home sales will be flat or only slightly higher than in 2017. "We've been talking about low inventory for several years, and yet inventory continues to turn lower," said Danielle Hale, chief economist for Realtor.com. As mortgage rates started rising, so did Zolman's anxiety about being able to afford to buy. "The rates kept going up, and the more the rates kept going up, the less house you can buy," said Zolman, 41. The supply of homes for sale fell 8.1% in February from a year earlier to 1.59 million. Home sales have been uneven so far this year. To cope with rising prices in Dallas, first-time buyers like Rob Chilton and his wife have broadened their search area, even if it lengthens their commutes to work The couple, who cut back on dining out and other luxuries the past few years to set aside money for a down payment, bought a three-bedroom, two-bath fixer-upper for $335,000 in February.

Getting a mortgage is now easier, but it could backfire

Your debt-to-income ratio, or DTI, is the percentage of monthly income you pay toward your monthly debts, including a new mortgage payment. Fannie Mae increased its maximum DTI ratio to 50 percent, up from 45 percent, in July 2017. However, you’ll pay private mortgage insurance when you put less than 20 percent down — and you might not be able to borrow as much as you need to buy a home. “We’re still about one-quarter of where we were compared to the pre-housing boom,” says Kan of mortgage credit accessibility. “Standards are looser now than they were from 2010 to 2012 when credit access was the tightest, but it’s not subprime.” The share of new, conventional conforming home-loans with a DTI ratio above 45 percent spiked after Fannie Mae raised its DTI limit, according to research from CoreLogic. Even as high DTI loans gain popularity, lenders haven’t budged on credit score standards. Borrowers’ average credit score for conventional, conforming purchase loans remained unchanged at 755 in the first quarter of 2018 compared to the same period a year ago, CoreLogic found. That’s significantly higher than homebuyers’ average credit score of 705 in 2001 — before the downturn. A high LTV ratio increases borrowing costs, and you’ll likely have to pay mortgage insurance to offset the lender’s risk. “Today, people have significantly less savings in reserve.

Southern California’s median home price hits a record $520,000 despite rising mortgage rates

Southern California home prices in April surged 7.2% from a year earlier to reach an all-time high, a sharp increase at a time when rising mortgage rates are making an already pricey housing market even more so. "It's extremely hot," Derek Oie, an Inland Empire real estate agent, said of the market. "When is it going to end?" Indeed, home sales fell 1.5% in April compared with a year earlier — possibly because the number of homes offered for sale has fallen in recent months compared to the same time in 2017, according to online brokerage Redfin. of Realtors. "We don't have the ticking time bomb we had the last time around when we had a lot of folks with loans with stated income," he said, referring to loose standards that required little evidence that buyers could afford loans during the housing bubble of the mid-2000s. In April, the median — the price point at which half the homes sold for more and half for less — increased compared with a year earlier in all six counties included in CoreLogic's report: At that rate, April's median-priced home of $520,000 would carry a $2,781 monthly mortgage payment for buyers who put 20% down. Some Southern California real estate agents say the surge in mortgage rates is causing would-be buyers to bid less for homes or put their searches on hold. Heather Presha, a real estate agent who specializes in middle-class Leimert Park, said her clients haven't mentioned the rise in rates as an obstacle. 2:50 p.m.: This article was updated with additional analysis and comment from an economist and real estate agent.

The housing market is cooling off — and uncertainty isn’t helping

The housing market has been losing momentum, with inventories rising to 2011 highs. Wage growth could help bridge the disconnect. From rising prices to the new tax law, economists say there are a number of conditions contributing to a slowdown in the US housing market. "Usually, consumers are used to seeing the housing market perform in tandem with the economy," said Jonathan Miller, an appraiser and market analyst. "But what's been especially confusing over the last year and a half or so is that they seem to be disconnected." Together with rising rates, an increasing number of Americans have been priced out of the market. That could be especially discouraging for Americans living in states with high taxes and expensive housing markets, like New York and California. "This isn't too surprising given the growing gap between what homebuyers can afford and where home prices stand today," BAML said. "What's clear in the responses is that consumers believe the housing market has favored the seller this year." "If you look at wage growth with inflation factored in and then at housing prices, there's a big disconnect."

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The Top Ways to Save a Larger Down Payment

What if you don’t have a lot of money saved, though? Automate Your Savings The easiest way to save a large sum of money is to make the saving automatic. This way you won’t have the opportunity to spend the money – it’s not in your checking account, so you will forget about it. You can put as little or as much as you want in your savings account. Before you know it, you’ll have a decent amount of money to put towards your home. Don’t forget your long-term goal of saving for a down payment, though. Cut Your Monthly Spending This step could take a little work and sacrifice. The money you save should be put right in that savings account, though, so you can make the most of your savings. Consolidate Your Debt If you have a lot of high-interest debt, consider consolidating it into one big loan. Take the money you make from your side gig and put it right in your savings account.

As 2017 Ended, Rents Rose