Real Estate, The Economy, and News: Property

Showing posts with label Property. Show all posts

Friday, July 29, 2016

Government Restrictions Eased on Secondary Housing Units

Throughout California, but especially in the Los Angeles area, housing opportunities are getting very limited. There simply isn't enough space to provide housing to the thousands of current residents and the hundreds of new people looking to find somewhere to live. Los Angeles has plenty of draws: the nice weather, the variety of shops and restaurants, and a wide array of employment opportunities. However, as more people look to come to California, the market shifts accordingly. Currently, even for those who can afford to buy a house or rent an apartment in the rising housing market, there is little room for being picky based on location; you just take what you can get. Fortunately, as Liam Dillon and Andrew Khouri describe in their L.A. Times article, California lawmakers are working on a way to address the major housing issue.

New construction of homes or apartment buildings could provide housing opportunities. Unfortunately, all available vacant land has also been growing scarce. Until recently, getting the required approvals and permits for construction was such an arduous process that it made it nearly unfeasible for most people to even try. Now, due to the push from Governor Jerry Brown and LA mayor Eric Garcetti, legislators are relaxing regulations, making it easier for homeowners to build "granny flats" in their backyards, thus converting empty space into housing.

Just a few years ago, any homeowner that wanted to convert a garage into an extra room or add an extra freestanding structure in their backyard had to face the seemingly endless trials of the governmental bureaucracy. In the end, many who tried to add on to their property, whether for guests, for family, or as a rental to bring in some extra income, inevitably failed or at least had to go through months of stressful negotiating with the city of Los Angeles. Now that the restrictions are being relaxed, at least to some extent, homeowners may help California as a whole to keep up with growing demand. Statistics show that Los Angeles needs to add at least 100,000 new units each year in order to keep up with the market, and retired individuals may benefit the most from this opportunity.

Some, like 78-year-old Rochelle Ventura, tried previously to submit plans to the city for backyard additions, but the strict regulations led to their ultimate rejection. Since 2005, so few units have been approved that only 347 have been completed in the Los Angeles area. Some of the regulations seem unnecessary to most, especially if the secondary unit will be used by family members. One of the new bills is overturning a restriction that required secondary units to have uncovered access to a public street. Since that is no longer a necessity, under the new rules, more property owners may find it economical again to take a crack at expanding into the territory of secondary units. Hopefully, the new legislation will help to solve problems for those trying to find housing as well as those trying to gain a little bit of extra income by providing the sought after housing.

***************************************************************************************************
Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

***************************************************************************************************

Friday, November 6, 2015

San Francisco's Anti-Airbnb Proposition Narrowly Fails

Short-term home or apartment rentals, usually through online platforms like Airbnb and VRBO, have been steeped with controversy in recent months. Some cities have even tried to ban such rentals while others have embraced them wholeheartedly. Most recently, San Francisco put forth a proposition to limit the ability of landlords to use such websites for renting their property. Tracey Lien, in her L.A. Times article, discusses how Airbnb affects both landlords and tenants, and how this new Proposition F may affect the city.

The controversy behind services like Airbnb is mainly one of a fight between a capitalist economic theory and one in which people deserve fair treatment. On the one side, tenants in San Francisco fear that the increasing prevalence of Airbnb will eventually lead the owners of their rented homes and apartments to evict them in favor of the larger sums paid by short-term renters. It is these tenants who would vote for the proposition since it limits landlords' use of Airbnb and their ability to turn normal rentals into short-term ones quickly. The proposition aims to prevent or at least slow down the conversion of apartment buildings into pseudo-hotels.

Some see it differently. While services like Airbnb could convince landlords to evict tenants in favor of the faster income, the free market could take care of any issues that arise from it. Eventually, if enough landlords raised prices enough to match the rising demand by tourists, ten the average worker would not be able to afford to live in the city. If workers are forced to move out, then business and regular city work will grind to a halt, When the economy halts in such a way, tourists will not want to visit, which will force landlords to lower their prices back to normal rates in order to get tenants. While this situation could probably work itself out, Proposition F aims to avoid it altogether.

Even for some landlords, Airbnb has uncomfortable implications. One Balboa Park resident, who had only ever rented his units out on a long-term basis voted against Proposition F. He worried that his tenants might use Airbnb to rent out his unit for short-term stays, a concept that he wasn't completely comfortable with. However,different from many tenants, he said that he would have voted yes on the proposition if he was in their shoes for that same reason: the ability to rent out the apartment in which one is living while out of town for short periods of time.

Unfortunately for those passionate about the topic, voter turnout for the proposition was extremely low. In-person votes were in the low hundreds, and mail-in votes reached about 9,000. In the end, Airbnb beat the bill, but even while celebrating, the San Francisco-based company expects further assaults in the near future. They believe that the proposition failed mainly due to its highly specific and extreme stance regarding the short-term rentals. Even so, the vote was close, with about 45% of voters supporting the proposition. Airbnb fears, rightfully, that behind the scenes, lawmakers in places like Los Angeles and San Diego may be getting ready to start the fight all over again.

***************************************************************************************************

Tuesday, May 19, 2015

California Employment Rates Rising, Mainly Due to Temporary Jobs

4/24/15 - While California's Inland Empire suffered many of the harsh consequences that came with the housing market crash, its economy has been coming back over the past few years. The Inland Empire currently contains one of the fastest-growing job markets in the state, aided mainly by growth in the logistics sector, which involves transportation and storage of goods. While jobs have indeed been added, and unemployment rates thereby lowered, Chris Kirkham's L.A. Times article points out that this growth may not actually be the significant shift it appears to be.

As the ports have gained more use in previous years, Riverside and San Bernardino counties have joined the supply chain of international trade. Strategic locations in these counties have become “inland ports” for goods traveling throughout California and to the rest of the country. The Inland Empire, on the other hand, has plenty of affordable land, which has made it the place for warehouses, in which goods are stored until they get shipped out.

Inventory, transportation, and warehouse jobs accounted for 1 in 5 new positions created in the Inland Empire last year. Job growth is great, but these are not of the ideal type to help the average worker and the economy. Positions in this industry usually pay minimum wage, do not include health benefits, and provide no guarantee as to the number of hours an employee might expect to work in any given week. So, while employees are provided with some source of income, they lack job security and can never be fully prepared to adjust to the ever-changing demand for workers.

Temporary jobs like those in this sector have increased by 35% over the span of 5 years, growing faster than almost any other industry. While such jobs are difficult to keep, Kirkham shows that some who work quickly and efficiently are able to climb the corporate ladder and move from positions of warehouse laborer to inventory manager or sales representative. In the aftermath of the Great Recession, companies care more about precision and speed in order to cut inventory costs. This has caused warehouses to be more like short stops between the factory and the customer, rather than long-term storage spaces for goods.

The logistics industry is a necessary part of international and domestic trade. Goods need to be transported, sorted, and kept track of. The industry needs support, but so do the workers. Kirkham concludes the article with the following claim: the workforce is struggling. What changes might be made to keep the industry thriving while also helping laborers to gain some semblance of structure and continuity, rather than uncertainty and worry?

***************************************************************************************************

Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

***************************************************************************************************

Each Year, Thousands Mistakenly Declared Dead

1/23/15 - How would you feel if the Social Security Administration and the world's top credit reporting companies proclaim you dead? Well, about 1,000 people per month are mistakenly declared dead by such organizations, leading to a great amount of stress and wasted time in order to reverse such decisions. In his L.A. Times article, David Lazarus describes the tale of George Sledge, a 58-year-old man who has been forced to file a lawsuit in an attempt to force the credit reporting companies to bring him back to life.

While many of the mistakenly listed individuals on Social Security Administration's “Death Master File” are there due to typographical mistakes and other such human errors, a sizable number could be avoided by simple fact-checking on the part of the credit reporting companies. Besides the amount of time you might spend convincing and arguing that you're is still alive, there are much worse consequences.

One such consequence is in regards to your credit score. When anyone is marked as dead, their credit score is automatically set to zero. While this helps to prevent identity theft, it also makes it impossible for a someone like Sledge to get a loan or sign up for a credit card, or even, in some cases, get a job. Furthermore, credit reporting companies have databases full of information that they sell or share with other companies. When someone has been declared dead in one database, it is almost as if they have been simultaneously declared dead in all other databases.

So, even if a person like Sledge were able to get a single company to take him off of the “Death Master File,” all of the other companies would still have him marked as dead. To go through the same rigorous process with every possible company would be straining, if not completely impossible. So, what could an individual in Sledge's position do?

Lazarus suggests that everyone should keep a close eye on their credit information. There are ways to report incorrect information, and if such information is found, you should take care of it sooner rather than later. Most of all, though, Lazarus states that these errors would happen much less often if companies would do their due diligence. A simple phone call might be enough to prevent a living person from being mistakenly marked as deceased, and that could make all the difference.

***************************************************************************************************

Home Equity Used For Long-Term Investments

12/12/14 - A decade ago, before the Great Recession hit in full effect, it was common for people to take out a line of credit on the equity of their homes. This “quick cash” was spent non-productively, used to buy groceries or spent on vacations, rather than being used as an investment. Over time, people began to cease such “wasteful” ventures and have slowly been learning to use Home Equity Lines of Credit (HELOCs) in a smarter manner. In his article in the Los Angeles Times, Kenneth Harney describes how a recent increase in the use of such lines of credit is a good thing for the economy.

Although such HELOCs were once a way for people to pull money out of their homes for regular expenses, people have generally learned not to jeopardize the equity of their homes unless investing in something safe. For example, most of those who took money through a HELOC used it to make improvements on their homes, or to pay off higher-interest debts, such as those on credit cards. Both of these provide long-term benefits for the home-owner. Thus, it is shown that tapping into home equity is not always a bad thing. For those who make smart investments using the line of credit, home equity can be used and quickly earned back.

Until recently, most home-owners were wary of HELOCs, remembering the negative consequences that had arisen from the use of such funds for day-to-day expenses. Now, though, equity lines are up 21%, which, according to Harney's sources, could mean that people are starting to become more confident in the economy's stability. With less fear of economic collapse and an improvement in equity and interest rates, more home-owners consider a line of equity to be a “safe investment.”

Besides a stabilizing economy, HELOCs have become safer because of a crackdown by lenders. Lenders have become more careful as to who they lend to, making sure that credit scores and financial reserves are up to par. As Harney concludes, now is the time to look into home equity lines of credit. Such money, if used right, could have a dramatic economic impact, both personally and nationally.

***************************************************************************************************

Credit Unions Providing Home Loans

11/21/14 - While home loans were once the responsibility of major financial institutions like banks, the post-recession mortgage loans have slowly but surely been making their way into the realm of the credit unions. Such credit unions have been amassing members, and currently own over 8% of all mortgages, three times as much as were owned before the Great Recession. Lew Sichelman's L.A. Times article goes into how these credit union loans can actually be preferable to those provided by “standard” institutions.

Credit unions, which are member-controlled, provide an alternative to common loan institutions that commonly increase the cost of a loan through miscellaneous fees. Anyone can join a credit union, and their non-profit standing keeps people interested in their loans, especially with our currently troubled housing market. During the recession, while many lenders pulled back and restricted the loans they were willing to grant, credit unions stayed open, making their loans available to those whom they deemed a worthwhile risk.

These lenders are different; they are run by the people. Every member has a say in how the union should be run, and this is a big part of why credit unions have been increasing in success. While mortgage loans were once a minimal area of focus for credit unions, new interest has led to mortgage loans encompassing over 40% of all loans provided by such institutions. The interest rates on credit union loans may be the same as those from other lenders, but a more personal touch of a credit union appears to be one of the factors drawing in new customers. Borrowers, of late, tend to have more faith in them, rather than in the banks and other lenders that once held the vast majority of mortgages and other such loans.

Although they are still relatively new to most, credit unions are gaining ground as they accomplish various goals. The common mortgage loan from a credit union is the normal, 30-year fixed rate, but many of these institutions have been applying innovative new techniques to make these loans more manageable. From ways of scheduling your mortgage so that you finish at a specific time, to loans that reset their interest rates to market level every five years, credit unions have developed ways to make their loans as consumer-friendly as possible. All in all, a standard banking institution may be great, but credit unions might be an option for many potential borrowers to seriously consider.

***************************************************************************************************

FHA Set To Re-institute Quick-Flip Restrictions

11/14/14 - The Federal Housing Administration, a federal agency involved in providing mortgage loans to real estate investors, is set to reinforce restrictions that were lowered in 2010 in an effort to help the weak housing market. These restrictions set a minimum of 90 days for investors who wish to buy a home and “flip” it, by fixing it up and reselling it. The 90 day period between buying and selling is meant to prevent the selling of poorly-fixed houses for “hyper-inflated” prices. On the other hand, forcing flippers to hold onto a house for 90 days raises their costs, which they then have to incorporate into their selling price. An article by Kenneth Harney of the L.A. Times investigates the positive and negative aspects of the FHA's restrictive 90-day flipping period.

By waiving the 90-day flip period in 2010, the FHA enabled investors to buy, fix, and sell houses quickly and at lower cost, thus allowing first-time home-buyers to more easily find homes in a lower price range. These quick-flips benefited both investors and buyers, lowering prices across the board. Because of the decreased restriction, over 100,000 homes were revitalized and sold, thus improving the housing market.

This improvement is the reason for the FHA's reinstitution of the 90-day flip period. The waiver program has done what it was meant to do: it stimulated home sales, thus stabilizing the market and allowing newcomers the chance to become home-owners. The program has worked relatively well so far, but such a program always has its possible dangers.

In the past, before the 90-day period existed, investors would commonly resell seemingly well-maintained houses, which were nothing more than run-down homes with a fresh coat of paint. This would lead to buyers defaulting on their mortgages, and the FHA would be forced to cover the losses. By forcing investors to take at least 90 days in fixing the houses for resale, the sellers are encouraged to actually do a decent job on the construction.

Whether the restrictive 90-day period is a good or bad thing is a matter of opinion. Yes, forcing flippers to hold onto a property for longer than they need to would raise sale prices, but allowing quick-flippers to sell dilapidated properties at synthetically-high price would also hurt the housing market. The main point addressed in Harney's article is this: whether you like it or not, the FHA has made its decision. The waiver program will stop at the end of December, and the 90-day resale period will come back into practice at the beginning of 2015.

***************************************************************************************************

Low Supply + High Demand = Price Increase

10/31/14 - Southern California rental costs are on the rise, and there's nothing we can do about it. According to a recent study cited in Tim Logan's L.A. Times article, rent prices throughout the Southland are poised to rise over 8% in the next two years. This is due partially to a surge in job growth as well as a shift from home ownership to rental.

While Southern California has long had issues in providing enough rental housing, the recent rise in demand is far surpassing the rate of new construction. The study shows that vacancies remain roughly the same, since the higher rent prices, combined with roughly unchanged income, make for a situation in which renters can't afford the cost of renting.

This trend, predicts the study, will lead to the mass exit of industrial jobs from Southern California. Without affordable housing, businesses can't afford to remain open or open new factories in the Southland. Logan's source even compares California's current stance to that of Detroit in its heyday: a strong housing market, which could fail as soon as industrial jobs move elsewhere.

As Logan discusses in the article, this future failure could be prevented with the right policy initiatives. From lowering restrictive and costly requirements on new construction to speeding up the approval of building permits, Logan presents evidence that shows how policy-makers could make housing more affordable and, at the same time, keep jobs close at hand.

***************************************************************************************************

Buying vs. Renting: Pros and Cons

9/19/14 - Prior to the Great Recession, the question of buying versus renting was never really an issue at all. If you could get a mortgage, then buying was the best way to go. Even after the housing market crash, there was still plenty of interest in buying rather than renting. If people had some money to do it, then buying was generally their course of action. However, with real estate prices, especially in Southern California, on the rise, and very few “bargain homes” available, potential buyers are being much more careful in deciding whether they really want to enter the market. In a Los Angeles Times article, Tim Logan discusses the potential positive and negative aspects of either buying or renting.

The decision is a hard one for many. Yes, the housing prices have gone up dramatically, but the interest rates on mortgages are lower than they have been in years. Renting makes it easier to pick up and leave, but owning a home has a huge payoff in the long term. According to Logan, a survey of renters showed that most do plan to buy, but are unsure as to how soon. Furthermore, some statistics presented by Logan show that, over the span of seven years, buying can cost you over 20% more money than renting.

The prices of homes are not the only thing deterring potential buyers. It's all about location, location, location. In some areas in Southern California (Lancaster, San Bernardino, etc.), foreclosures make the monthly mortgage payments lower than average rent payments. In other areas (San Marino, Newport Beach, etc.), the return of seven-figure price tags make rent much more affordable than mortgage. Besides the costs of homes and apartments in certain areas, differences in construction choices can limit a home-hunter's options. For example, some areas are busy building new apartment buildings, while others are designing condos and houses. If there are very few houses available in your area, then buying might not be an option. According to Logan's sources, new construction has been mostly for rental properties, likely due to developers' fears of another housing crash.

Apparently, members of the younger generation are statistically more likely to want to rent, not yet willing to “tie themselves down” to something like home ownership. However, even “prime” first-time buyers (married, early 30s, income of at least $95,000) have lately become hesitant toward buying property. Logan's sources claim that this hesitation is due to the housing crash. These first-time buyers witnessed the colossal blow that the recession made on their parents' financial situation, and are leery as to how good of an investment home ownership really is.

As Logan states, this hesitation can be a good thing, preventing buyers from jumping into the realm of home-ownership without the necessary means to make their monthly payments. By making sure that they know what they are getting into, this new, more realistic, outlook of buyers will hopefully prevent another crash in the near future.

***************************************************************************************************

Banks Held Responsible for Housing Market Crash

9/12/14 - Three of the country's largest banks have been facing all kinds of financial and legal repercussions in the aftermath of the housing crash that contributed greatly to the Great Recession. Bank of America, who, in 2008, bought out a couple of failing firms: Countrywide Financial Corp. and Merrill Lynch & Co., are now suffering the consequences of “the worst deal in banking history.” An article by Jim Puzzanghera and Walter Hamilton, of the L.A. Times, described the various legal problems and penalties that Bank of America, JPMorgan Chase & Co., and Citigroup Inc. have had to face over the past year.

Even between BofA's record-breaking $16.65 billion settlement, JPMorgan Chase & Co.'s $13 billion settlement, and Citigroup Inc.'s $7 billion settlement, these three penalties only make up a fraction of the total amount gathered from such financial institutions. According to Puzzanghera and Hamilton, approximately $125 billion in settlements related to the financial crash have been paid by the six largest banking institutions alone. While some of BofA's penalties are due to the pre-recession actions of Merrill Lynch and Countrywide, every bank has problems of its own.

Out of the many billions of dollars paid in penalties and settlements by these banking institutions, over 50% of this money goes to several federal agencies, including the Securities and Exchange Commission, as well as a few states that were most affected by the banks' practices. California by itself has been designated $300 million from the settlements to help reimburse two of its largest pension funds: the Public Employees' Retirement System and the Teachers' Retirement System. The rest goes toward “ consumer relief,” which involves write-downs of mortgage principal or reductions in interest rates on the mortgage. According to Puzzanghera and Hamilton, rates could be reduced to as low as 2%.

While many people and federal institutions blame Bank of America for many of the practices that contributed to the housing crash and the Great Recession, others feel that it is unfair to punish BofA shareholders for the actions taken by executives and employees at Merrill Lynch and Countrywide. While criminal suits against Angelo Mozilo, the former Countrywide chief executive, have been dropped since his involvement didn't quite “rise to the level of a crime,” many prosecutors are continuing to pursue civil cases against him in the hopes of finding some way of holding him responsible for his actions and the actions of his employees.

Now that these proceeding are, for the most part, done with, investors can hopefully breathe easier in the coming future. According to experts, these penalties will only affect the current quarter, and that by the third quarter, profits should be back up to their usual levels. While it is great that these financial institutions are being held responsible for their decisions, I personally am skeptical as to how these penalties are going to have a long-lasting effect on pulling us out of the Great Recession. I guess we will just have to wait and see.

***************************************************************************************************

Downtown Properties Undergoing Revitalization

8/29/14 - Over the last several years, many of downtown Los Angeles' old buildings have been revitalized by investors looking to breathe some life back into the surrounding community, to produce better job opportunities as well as new shops, apartments, and restaurants. One of the largest of such projects to be undertaken involves the former May Co. department store on Broadway, more well known as the “Broadway Trade Center.” A recent article by Roger Vincent of the L.A. Times discusses the implications that this renovation may have on continued development of the downtown area.

Seemingly following the same approach used on New York's Chelsea Market, these investors are looking to bring the old, run-down building back to its former glory. The renovation of such a large building could provide space for new apartments, office buildings, shops, and markets, all of which could be put to good use in the populous downtown area.

With over 1 million square feet of space to fill, Waterbridge Capital and real estate developer Jack Jangana, who acquired the six-story building for about $130 million, are looking for tenants in the realm of technology. While they may also want to devote the first few floors to retail uses, such as restaurants and stores, the rental of upstairs space to a major technology company could draw in “creative” jobs historically present mainly in the Santa Monica and Hollywood areas.

Such introduction of creative and technology-based companies could lead to the addition of new, well-paying jobs to an area currently being filled with new homes and restaurants. According to Vincent, even the addition of technology companies to the Broadway Trade Center may not be enough to fill its enormous potential. Such other possibilities include a grocery store, roof garden, or post office, among a plethora of other ways to fill retail space in the massive building. While it may take as long as 24 months for planned renovations to be completed, this project by New York investors holds great potential to benefit downtown Los Angeles and the surrounding community.

***************************************************************************************************

High End Home Sales: On The Rise

8/15/14 - Recent housing statistics show that, while the housing market as a whole has been at a bit of an impasse, home sales on the upper end of the spectrum appear to be steadily increasing. In the aftermath of the Great Recession, lenders have become more cautious, preferring to fund mortgages for borrowers with cash on hand and access to credit, as compared to the average American home-buyer. This split between buyers has led to a split in housing sales, thus resulting in this recent trend of increased million-dollar home sales, especially in California. In an L.A. Times article, writer Tim Logan discusses this phenomenon and what it means for attempted rebuilding of California's housing market.

Logan looks into how first-time buyers, what with much stricter loan regulations and a not-so-stable jobs market, are having trouble taking their first step into the realm of home ownership. On the other hand, wealthy investors, with available cash, are more able to benefit from current low interest rates. While average California housing prices are getting toward the high six-figures, it appears that from the San Francisco Bay Area to Southern California, seven-figure home sales have become more common than ever.

Even for older home buyers, of the “Baby Boomer” generation, purchases of homes with seven-figure price tags have become all the more prevalent. For these buyers, looking to downsize, the cash that they gain from selling a large house goes into the purchase of a high-end condominium, such as those produced by City Ventures, which go for around $1.5 million on average. However, while these buyers pay all cash for such properties, Logan presents statistics showing that 70% of recent million-dollar home sales in California were accompanied by a mortgage, illustrating the way in which buyers are taking advantage of historically-low interest rates.

Logan shows throughout this article how beneficial the current housing market is – at least, for wealthy, high-end buyers. Even for the average buyer, although they have more difficulty getting loans, these low interest rates can help them to purchase homes on the upper end of the housing spectrum, since low interest rates mean more affordable monthly payments over the course of a mortgage. Thus, while this article shows that lower interest rates have been helping those with cash on hand, individuals looking for a fancier home or an investment property, perhaps lenders will soon enough loosen their grip, allowing for the average home-buyer to also benefit from these lower interest rates.

***************************************************************************************************

Sale Price vs. Mortgage Rate: Which Would You Prefer?

7/31/14 - Which is worth more: a lower price on a home, or lower monthly mortgage payments? An article by Kenneth Harney of L.A. Times takes a shot at answering this question. What with slowing sales, price erosion, and rising of mortgage rates, realtors and home sellers are looking for better and newer ways to stimulate the housing market.

A relatively new topic for home resale, it appears that a strategy called “interest rate buy-down” has become more prevalent in the housing market of recent years. This method, as described in detail by Harney, involves the seller making a cash payment to the buyer's lender in order to lower the buyer's interest rate and thus reduce the size of monthly mortgage payments. In this way, both sides win.

Since the buy-down lowers the monthly payments, the buyer is able to afford a higher sale price on their dream home. Since the buyer pays more than they would have previously paid, the seller has the capital necessary to pay off the lender. The more a seller buys off, the lower the monthly payments are and the higher the sale price a buyer can afford. An extra positive for the seller: the money they pay for the interest rate buy-down is a deductible expense under IRS rules!

While buy-downs may be the way of the future for some, other buyers prefer a lower sales price than lower mortgage rates. Furthermore, according to Harney, a buy-down of half a percent of the mortgage price could cost the seller two percent or more, thus lowering net income and making the scenario less than ideal.

Basically, although an interest rate buy-down isn't the best choice for all sellers and buyers, it certainly should be available for those who want it. While a mortgage buy-down may mean a higher sale price, the lower interest rates and monthly payments can definitely make the trade-off worthwhile. That being said, if interest rate buy-downs sound interesting to you, look into it and talk to your local loan officer to find out more!

***************************************************************************************************