Wednesday, October 31, 2012

7 Social Benefits of Home Ownership and 6 Social Benefits of Renting

End of Mortgage Interest Deduction Favor Renting Over Homeownership?  Good idea?

Does homeownership result in a more stable family, neighborhood, city, or nation?  Is owning a home a benefit for owners financially, socially, psychologically, or otherwise?  If it is a benefit, to what extent should it be the governments's business to incentivize ownership over renting?   Answers to these three questions would already require a huge, potentially book length subject, to consider.  We will leave it to a later post to contemplate whether the current incentive is an incentive at all, or whether there might be better ways to achieve the goal, should the goal turn out to be a worthy one.

What are the social benefits of homeownership?

Benefits generally cited include:
    ✓    Neighborhood stability
    ✓    Less crime in the neighborhood
    ✓    Pride in ownership results in better maintenance of personal and public property
    ✓    More civic involvement
    ✓    Student of owners do better in school and have fewer behavior problems
    ✓    Forced savings vehicle results in financial stability
    ✓    Excellent financial investment.  Wealthy population better.

The biggest argument against the benefits listed above is that while those results are clearly related to home ownership, they are not necessarily causative.  In other words, it may be that the kind of people who are more likely to own a home are also more likely to be stable, have pride, be more involved, and have kids who do better.  That argument makes sense in that younger, unmarried adults and those with low paying and more transient jobs are more likely to rent.  Those demographic characteristics would seem to also point to the opposite of the virtues noted in the list.

We will address the financial aspect in another post.

What are the social benefits of renting?

As to the societal benefits of renting:
    ✓    More flexible work force - can move more easily
    ✓    More flexible investing population
    ✓    Renters use less resources
    ✓    Time saved on chores can be used for other things
    ✓    Less stress in financially or job related stress situations
    ✓    No risk of capital

The biggest societal issue would seem to be the stability vs flexibility issue.  There is no question that a workforce that rents is much more likely to uproot and move to where the jobs are and to live closer to the job.  There is also reasonably good evidence that owners as a group are "better" citizens.  

Should the US Government incentivize homeownership through mortgage tax policy?

This leaves open the issue of whether the government should be encouraging one over the other.  Maybe we are better off with a workforce that can move to where the jobs are.  Maybe there should be studies to determine if home ownership and the obvious stability that goes with it, has a causative relationship to lower crime and better students.  How do you come down on these issues?  Should government just get out of the way?  Should we study the effects of both more?  Do you believe that owning or renting is significantly better for society?

Also read:

Tuesday, October 30, 2012

Perfect Strom to Also Hit Mortgages in January 2013

Mortgage Lenders See Tighter Credit Under New U.S. Rules - Bloomberg News Headline

Regulation of the financial sector is a big issue in the current election.  The Democrats led by President Obama have successfully past massive reforms on lending effecting everything from credit cards to mortgages.  The regulations being spun out of these bills have already effected the ability of consumers to borrow.  New regulations expected to take effect on January 1 may interrupt the fledgeling housing recover, and thus the overall recovery.  Is this round of additional restrictions necessary?  Or do the Republicans, led by Governor Romney, have it right when the complain that these regulations on mortgage lending are too much and way too soon?

The Forbes article specifically point to two new regulations:
Regulators are preparing to release the language of two rules taking effect in January to set standards for non-abusive lending and require banks to hold a slice of risky mortgages on their books. In addition, U.S. banking overseers must also complete new capital standards mandated in the international Basel III accords next year.
The housing rules, coming almost simultaneously, may overlap or conflict, creating what National Association of Realtors President Maurice “Moe” Veissi called a “perfect storm” of regulation.
“There’s this intersection of policies that are absolutely not being considered by this massive array of institutions, all involved in deciding the future of homeownership and rental opportunity,” David Stevens, president of the Mortgage Bankers Association, said in an Oct. 22 speech at the association’s annual conference in Chicago.
 One might also ask, even if these regs are good public policy, would it be smarter to hold off on their implementation until the business and housing climate improves?

For consumers considering a new home mortgage or home refinance, this might be one more reason act quickly, especially if their credit score, down payment, and income place them on the cusp of eligibility. 

Monday, October 29, 2012

Fact Check: Who Wins and Who Loses When Next President Ends Mortgage Interest Deduction

The Mortgage Interest Deduction Will End 

It is all but certain Congress will eventually eliminate the much loved and historic mortgage interest deduction

Unbiased and Complete Coverage of Pluses and Minuses of Mortgage Interest Deduction

Since it seems so likely that this sacrosanct tax deduction is going away in the next year or so, it is odd that so little of substance has been written about the pro's and con's, winners and losers, and potential consequences both obvious and subtle.  It will be the goal of this blog to cover every detail of the debate over the mortgage interest deduction with clear eyes, and with the intention to remain unbiased.  In fact, the basic contention of the series will be that the math for the most likely proposals results in surprise benefits for some who may not think they like the idea of eliminating the subsidy, and surprise losses for some who might be supporters of the new approach.

Join the Discussion About the Future of the Mortgage Interest Deduction

Here is a list of the complete series of blog posts we have created on this issue.  Hopefully you will find them informative and even handed. 

Three fourths of the homes effected by any reduction or elimination of the mortgage interest deduction are in blue states.  Check out the facts.

 Will you be effected if the mortgage interest deduction is eliminated?
Are you curious about the effect of any change in the home mortgage deduction on your taxes?

Home Values of those effected by ending the Mortgage Interest Deduction Could Drop by Hundreds of Thousands of Dollars.  Is that fair.

Capping the Schedule A Deductions Might be More Fair than Eliminating the Home Interest Deduction

Could Ending the Home Mortgage Interest Deduction Send Another Horrible Shock Wave Through the Economy?

Ending Home Mortgage Interest Deduction Could Give US Government $1.2 Trillion in Revenues over the Next Decade

What Are Options to Ending the Home Interest Deduction

What Are the Reasons or Benefits Associated with Ending the Home Mortgage Interest Tax Deduction?

What Are the Benefits to Homeowners and the Real Estate Industry of Keeping the Mortgage Interest Deduction

What are the Societal Benfits of Keeping the Home Interest Tax Deduction

Contributors to the content come from the center left and center right of the political spectrum, and experts will be sighted throughout the posts from dozens of thoughtful commentators in finance, business, academia, and from every point of view.  In order to maximize our goal of getting it all on the table, we hope that you will bring your opinions to the comment section, and that if you have credentials and would like to write a guest column, please contact us with your proposal. 

Thursday, October 25, 2012

Housing market and economic recovery- refinance expert Los Angeles

News for those looking to buy or refinance in Los Angeles
A number of recent conditions in the housing market have some experts predicting some economic upswing. The housing market was an integral part of the economic crisis, and the market has continued to be sluggish in its recovery, though some think that is changing now. This from 

Positive indicators 
According to a report from the U.S. Commerce Department, new-home construction this year is likely to contribute to economic expansion for the first time in seven years. In the first and second quarters, residential construction added 0.4% and 0.2%, respectively, to U.S. GDP

According to CoreLogic, a leading provider of housing information and analytics, nationwide home prices rose 4.6% year over year in August, representing the largest annual gain in six years. And inventory of for-sale homes is currently at a 5.9-month supply, the lowest since March 2006. Not bad given that a six-month supply is usually considered a healthy inventory level.
Year-over-year nationwide home prices and sales of new homes have risen meaningfully, while inventories have declined markedly. Supply is finally starting to come in line with demand. See more of this article at

Tuesday, October 23, 2012

Mortgage rates dropping again: refinance los angeles

Los Angeles mortgage rate expert Bill Rayman keeps this blog updated with latest mortgage rate news.

The Global Newswire brought the following mortgage news about rates, which have fallen slightly since last week: 

SEATTLE, Oct. 23, 2012 (GLOBE NEWSWIRE) -- The 30-year fixedmortgage rate on Zillow® Mortgage Marketplace is currently 3.28 percent, up two basis points from 3.26 percent at this same time last week. After peaking at 3.35 percent on Friday, the 30-year fixed mortgage rate dropped and hovered between 3.27 and 3.3 percent over the weekend, dropping to the current rate this morning.
"This past week, rates moved up slightly on optimism about the Eurozone's recovery and improving U.S. economic data," said Erin Lantz, director of Zillow Mortgage Marketplace. "Although Wednesday's Federal Open Market Committee announcement has the potential to move markets, we don't expect policy changes that would move markets out of the flat sideways pattern in the coming week."
Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgage Marketplace site, and reflect the most recent changes in the market. These are not marketing rates, or a weekly survey.
The rate for a 15-year fixed home loan is currently 2.65 percent, while the rate for a 5-1 adjustable-rate mortgage(ARM) is 2.51 percent.
Below are current rates for 30-year fixed mortgages by state. Additional states' rates are available at:

Up to date mortgage rate information comes from's Market Place, where lenders submit data which is averaged in real time.

Thursday, October 18, 2012

Today: Mortgage rates plummet again- Los Angeles refinance

Los Angeles mortgage rates expert Bill Rayman brings you the latest mortgage news updates on this blog.
In today's news, from NBC news wire reports:

"The average U.S. rate on a 30-year fixed mortgage has fallen to near its record low set earlier this month.
The rate on the most popular mortgage dipped to 3.37 percent from 3.39 last week, mortgage buyer Freddie Mac said Thursday. Two weeks ago, the rate reached 3.36 percent, its lowest level on records dating to 1971.
The average rate on the 15-year fixed mortgage, often used for refinancing, set a record low of 2.66 percent, down from last week's 2.7 percent.
Cheaper mortgages are helping fuel a modest but steady housing recovery.  
"Mortgage rates remained more or less unchanged this week as home construction builds up steam," said  Frank Nothaft, vice president and chief economist, Freddie Mac. "Construction on single-family homes jumped to an annualized rate of 11 percent in August, the strongest pace since August 2008. Over the first nine months of the year, single-family starts were 23 percent higher than the same period last year," he added."

Tuesday, October 16, 2012

Home Loan waiting period: How long?

Waiting for final approval on your conventional home purchase loan, refinancing loan, or FHA loan in Los Angeles is always difficult. The technical period of time designated for this is 30 days, but it can stretch longer than that particularly with the purchase of a home, for reasons Bill Rayman explains in this short video. 
Timing is everything in buying your home, and this hurry-up-and-wait process can be a source of real anxiety for the buyer. In this video, Bill explains what might cause your waiting period to be longer, and allays some common concerns about this. 
In California in particular, inventory of lower-priced homes has been drastically reduced due to high competition, as reported by the Los Angeles Times on Friday. This high competition can make waiting periods more stressful for buyers in this market, who may have a hard time finding an affordable home even if they qualify for a loans.

Sunday, October 14, 2012

Will impounds save you money? Los Angeles Mortgage broker explains pros and cons

In this short video, Bill Rayman, Los Angeles FHA loans, mortgage rates, and refinance options expert, discusses the benefits and drawbacks of impounds, also known as escrow accounts. 
An impound account is set up to pay your annual property taxes and insurance for you. The account collects 1/12th of the cost of your taxes and insurance each month, so you do not have to worry about paying all at once. Bill explains how it may help you to secure a lower interest rate on your loan. It can be cancelled anytime without penalty.
If you want to be in charge of your own decisions with the help of a mortgage broker who can help you understand the mortgage business and weigh your options, Bill Rayman is a trusted resource in the Los Angeles area. 
Bill will lay out your options for you in common language, and help you find the best solutions for your specific situation, so you can increase your financial security and freedom. Give us a call today and we will help you problem-solve or choose the next steps forward.

Friday, October 12, 2012

Low mortgage = high competition in Los Angeles

We consult with many clients seeking FHA loans in Los Angeles, often to purchase their first home. FHA loans are a good option for buyers who qualify for their desired mortgage, but may only have a small down payment.  Of note to first time homebuyers is this mortgage news article from the Los Angeles Times today: 
"Competition for lower-priced homes in California is so hot that the number of cheaper homes available for sale has sunk more than 40% in the last year, pushing out many would-be buyers.
Homes that sold for $313,200 or less were the most competitive type of home nationally, but nowhere did inventory in that price range drop more than in the Golden State, according to a report released Thursday by real estate website Zillow."
If you need expert advice on how to get an edge in today's most competitive California home buying market, contact Bill Rayman. Bill is an independent mortgage broker and lender. He brings years of experience in the lending market, and works directly for his clients, not for a bank. If you are a first time homebuyer interested in an FHA loan or traditional mortgage loan, contact Bill Rayman today.

Consumer debt crisis? Refinancing to consolidate

Many consumers do not know they may be able to consolidate debts through home refinance (in Los Angeles, contact Bill Rayman). Are you overwhelmed by debts from auto loans, personal loans, credit cards, or other debt? Many people today are paying high interest rates on their debts, when they could be getting a much lower interest rate by refinancing their home. If you have gotten overwhelmed with your debts or unexpected expenses, consolidating your debt and refinancing may help you get on your feet again. As a mortgage broker in Los Angeles, we can help you make the sound financial decisions that will get you back on track.

As a mortgage broker in Los Angeles, we can help you look at all your financial options. We can often help clients who thought there were no options available to them. With smart financial planning, and a strong advocate on your side, (we work for you, not the bank) you can find the way to move forward into financial freedom.