posted on May 11, 2006 12:31:01 PM newNeed to keep house payments low? Try a 50-year mortgage
By Noelle Knox and Mindy Fetterman, USA TODAY Wed May 10, 6:54 AM ET
Those struggling to afford a home may be wondering how long their mortgage payments can be stretched out.
The new answer: a half-century.
A handful of lenders have begun offering 50-year adjustable-rate loans to buyers who need to keep payments low in the face of record home prices and rising rates.
Most big banks already offer 40-year mortgages, which account for about 5% of all home loans, according to LoanPerformance, a real estate data firm. So far, only a few small lenders have rolled out the five-decades-long mortgages.
"One of the biggest things in California is the high costs of homes," says Alex Diaz Jr. of Statewide Bancorp in Rancho Cucamonga, Calif. "And with rates going up, there's demand from customers (for) longer loans."
Statewide, which introduced its 50-year loan in March, has received about 220 applications, Diaz says.
For cash-squeezed buyers, the longer-term loans are another option. In California, only 14% of people could afford a median-priced home in December, when the median was $548,430, if they had to put down 20%, the California Association of Realtors found.
The 50-year mortgage also signals that the cooling real estate market is heating up competition among lenders.
"Mortgage lenders are getting craftier to get the attention of consumers," says Anthony Hsieh, CEO of LendingTree. But, he says, "The consumer needs to slow down and understand the product."
Two issues to keep in mind: A borrower with a 50-year mortgage builds equity very slowly. And because rates on the loans are adjustable, borrower's monthly payments could rise.
Still, the 50-year isn't considered as risky as an interest-only loan or a mortgage that lets borrowers pay even less than the interest.
With those loans, a borrower might not build any equity and could end up owing more than a home is worth - called negative amortization.
That's why Anthony Sanchez applied for the 50-year loan to refinance his California home. "I looked at a lot of different options," says Sanchez, 30. "I didn't want to be tempted with negative amortization."
Mortgage experts caution that the 50-year mortgage is best-suited for those who plan to stay in their home for about five years, while the loan's interest rate remains fixed.
"If you're going to be there more than five years, you're gambling," says Marc Savitt of the consumer protection committee for the National Association of Mortgage Brokers. "You don't know what interest rates are going to be. I wouldn't do it."
posted on May 11, 2006 12:37:36 PM newAnalysis finds boom in Hispanics' home buying
By Haya El Nasser, USA TODAY
Home buyers with names such as Rodriguez, Garcia and Hernandez bumped Brown, Miller and Davis down the list of most common buyers' names in 2005, reflecting Hispanics' rapid advance into the middle class.
A DataQuick Information Systems analysis of deeds and county assessment data shows a dramatic rise in the number of Hispanic and Asian home buyers since 2000.
Smith and Johnson remain the two most popular, but Rodriguez has replaced Brown in third. Four Hispanic names are in the top 10, compared with two in 2000.
Hispanic surnames made up 14.6% of all home buyers' names, up from 10.3% five years earlier. "The Latino population is really integrating into the middle class — and rapidly," says John Karevoll, analyst at DataQuick, a San Diego real estate information company that scoured public records in 37 states that accounted for 91% of the USA's real estate activity.
Asians also are bigger players. Nguyen, a common Vietnamese name, moved from 23rd to 14th.
In California, almost 28% of home buyers are Hispanic, and the five most common surnames are Hispanic. Only one was in the top five in 2000.
The changes are dramatic elsewhere, too. No Hispanic names appeared in the top five in Illinois in 2000. Now, Garcia is third and Rodriguez fifth. Nevada went from zero to three and New Jersey from one to three. "It's startling how rapid the changes are," says Dowell Myers, a housing demographer at the University of Southern California. "People assume that Latinos are poor and that they're not a factor in homeownership. They're really integrating economically."
The rate of homeownership among the nation's 42.7 million Hispanics hit a record 50% in the last quarter of 2005, according to the department of Housing and Urban Development.
Two major factors contributing to the spike: low interest rates and flexible lending rules. Twenty-five years ago, lenders would not consider a spouse's income when evaluating a home loan, Karevoll says. Now, various relatives can qualify by pooling their earnings.
"It's not just dual but triple and quadruple income," he says. "Husband, wife and husband's brother and then wife's brother."
Tracking race and ethnicity through surnames is not an exact science. "Lee," for example, can be Chinese or Anglo.
Hispanics are expected to make up 40% of first-time home buyers over the next 20 years, the Harvard Joint Center for Housing Studies says. A study by the Toms Rivera Policy Institute at the University of Southern California projects that 2.2 million Hispanic households will buy homes between now and 2010.
"When we start showing up on the top list of names, that's fabulous," says Frances Martinez Myers, chairman of the National Association of Hispanic Real Estate Professionals. "It speaks to the growing economic clout of the Hispanic community. They are willing to assimilate ... to be part of the country and to pay their way. "
posted on May 12, 2006 10:03:18 PM new
It's very interesting to me to read non-fiction books about the lives of middle-class people before about 1930, and back into the 1800s. Very few of them owned their own homes, unless they lived on farms and built their homes with their own hands. Most people rented their homes and moved fairly frequently. Home ownership for the masses is a relatively new phenomenon.
posted on May 12, 2006 10:33:55 PM new
Indians were home owners, they carried their's around with them. UGH! me wantem 50 year morgage on teepee. 2 hides a month for 50 years.
**************
Some minds are like concrete,
thoroughly mixed up and permanently set.
posted on May 13, 2006 07:35:56 AM new
Inuits can build their igloos in 25 minutes.
Talk about hispanic home buying-I am outside Houston,my builder is building its third subdivision with 1000 homes and using hispanic salesforce to sell to hispanic buyers.
Most of them are first time homebuyers,I wonder if they understand what is involved in home ownership,the sales force do not tell them much of rising property tax(it has been rising every year),association fee,misc expenses which they do not have as renters such as water and sewage,lawn mowing,weedwacking,fertiliser,cinch bugs,fungus ,insurance etc.
As these wonderful and affordable houses are situated outside city limits,they will have to drive farther to work,so they need second car,better car and more driving so more gas and higher insurance and more repair down the road.
Bigger house also comes with higher utility bills in both summer and winter.
Water heater,air conditioner,dishwasher,oven,refrigerator are now their responsibility,so are one time $$ outlay for backyard sodding,garage door opener,lawnmower,weedwacker,garden tools,sprinkler,ladder .
This is my 4th year in a new subdivision and I have seen a fair number of for sale sign by folks who cant afford to maintain their home.
But for those Hispanic/Asian homebuyers who move in with their parents,aunts/uncles and siblings and share the expenses , they dont seem to have any problem sharing their living quarter with each other and pool their resources together,in fact they enjoy more amenities say one drives an SUV,one buys a plasma tv set and one gets a fancy outdoor grille and free babysitting and inhouse movies ,every day is a like a medieval feast .
/ lets all stop whining !! /
We see a lot of that around here. Builders are putting up new homes in improverished areas now and selling to low-income first time buyers who are getting special mortgages. These buyers have no idea about property taxes, utilities, maintenance, insurance, water and sewer bills and a host of other things that come with home ownership. All they are seeing is that their mortgage is less than their rent was. The result is more and more neglect and homes going on the auction block. It's happening in the suburbs as well.
posted on May 13, 2006 06:07:23 PM newMost of them are first time homebuyers,I wonder if they understand what is involved in home ownership,the sales force do not tell them much of rising property tax(it has been rising every year),association fee,misc expenses which they do not have as renters such as water and sewage,lawn mowing,weedwacking,fertiliser,cinch bugs,fungus ,insurance etc. As these wonderful and affordable houses are situated outside city limits,they will have to drive farther to work,so they need second car,better car and more driving so more gas and higher insurance and more repair down the road.
Is there some reason that you believe that first time home buying latinos are less aware of the costs of home ownership than first time causasian home owners?
~~~ • ~~~ • ~~~ • ~~~ • ~~~
People put their hand on the bible, and swear to uphold the constitution. They do not put their hand on the constitution, and swear to uphold the bible.
posted on May 14, 2006 07:04:21 AM new
Yes,I was in those model homes asking questions and talking to the hispanic buyers and hearing what they have to say to each other.
They see a nicely decorated home with special features which would cost them more if they want the same and they wont know until they sit down with the salesman.
Selling a house is becoming like selling a car,the base price may seem affordable,but wait till they give you the pitch on all the accessories and all the miscellaneous expenses at closing.
It is not just Hispanic,but Asian and African as well,one does not truly grasp the cost and work involved in homeownership until they move in,and something as basic as how to remove weeds and look for lawn disease or best way to water the lawn and what time to water the lawn ?
For example,one of my African neighbors who is single male and always out of town said to me one day he is not strong enough to pull all the weeds out of his front lawn.Yours truly went up to the attic just to pour some bleach down the furnace ended up poking a hole in the ceiling,wham,a $150 dollars fix!
While our tax is going up every year,it is nothing compared to Houston ,and how many of us really pay attention to the footnote in the contract that we must realise someday we could be annexed by Houston as we are using up more and more of that city resources.It has happened to other area.
Not sure if 'annex' is the right term??
Knowledge that Americans who are born here gained from growing up in a house and watching how their parents take care of the house etc make homeownership like a breeze compared to some of us who are still fumbling around in the dark!!
Oh,by the way,I finally found out the ugly bald spots spreading on my lawn is not caused by fungus,it is cinchbugs!!
posted on May 14, 2006 08:42:22 AM new
I was wondering about the bleach also because I've lived in homes with oil, gas or electric furnaces and it would never occur to me to put bleach in any of them. I would worry about something going KABOOM!
Most filters are disposable but maybe a mild bleach solution would clean a removable mesh type one that's meant to be permanent (removed and cleaned and then replaced).
posted on May 14, 2006 09:33:10 AM new
When I was on our city council, we had a lot of Hispanics buying small old homes in the central city area. Putting old refrigerators in the front yard, letting grass die, playing loud music at all hours of the night. (Not all of them, mind you, but just enough to drag down the property values of the long-time residents in their neighborhoods.) I figured that they hadn't grown up in a family that owned their own home, as someone in this thread has pointed out, and they really didn't know any better.
There were some jewels among them who had pristine lawns, rose bushes, the whole nine yards.
So our city developed a brochure for realtors to give first-time homeowners telling them what our neighborhood norms were--and it helped. The brochure included that they must shovel the snow off their sidewalks, not park in the street after a snowstorm when the snowplows would be coming by, watering their lawns, keeping appliances and junk off the front yard, noise ordinances, all that.
posted on May 14, 2006 09:37:41 AM new
A refrigerator in the yard would sure make it easier to get a fresh beer when you're out there listening to music. Can't believe I never thought of that. Some "hispanic" I am...regular disgrace to mi cultura....
note to self: get fridge for yard
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posted on May 14, 2006 10:15:41 AM new
My furnace has a standing pipe where I pour some bleach down to clean up the sludge,thats what I am told.
They also told me my water heater has calcium deposits and it cannot be drained off as they are too big.As both furnace and heater are up in the attic,I am afraid what will happen if the water heater conks out someday??
The problem with selling houses to buyers who can barely afford the mortgage is that after these houses are foreclosed ,they usually sell for less to buyers who are in the same boat or worse than the previous owners and then the price of houses in the neigborhood just trend lower and lower.
posted on May 14, 2006 12:08:16 PM new
water heater in the attic? Are you SURE?? What a stupid place to put a WH. I'd move it if I's you.
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posted on May 14, 2006 03:10:19 PM new
The problem as it was explained to me by some service man is that our water here is hard and the calcium deposit cannot be drained as the rocks are too big,so connecting to a drain pipe is not going to work if it cannot pass thru.
(I found out about all these when I kept hearing popping noise which I thought it was dripping noise).
Prof,
All the new houses built in our area have the water heater and the furnace in the attic,they seem to think it is safer than the garage.
/ lets all stop whining !! /
posted on May 14, 2006 10:46:39 PM new
hwahwa, I think desquirrel was referring to when the water heater conks out more like burst its seem leakes all over the place to put a water sensor near it (on vinyl I do not recommend) so you have notice it is getting wet up there. The pan he referrs to the heater sits inside it and you connect pipe to it in case it starts leaking that way it runs out of house and not down through your ceiling. My central unit is in attic and sits in a huge fiberglass tub pan that will catch water if it happens to get clogged and that will run outside on my front porch in obvious spot so I see it and if that happens he said get someone out there immediately.... otherwise it is piped out drain wise to side or house that has a continous drip down near ground which I put a moveable 3 foot vented with holes along underside --pipe so it waters my yard in different areas not just one spot, heck I even painted it green so no one sees it LOL.
I just replaced my water heater for same reason as yours too much calcium buildup water not getting as hot as it use to... New one was great it even cut out the excess heating cost caused by that calcium buildup making the gas run longer and more often. Cut my cost a lot.
It is better to replace now instead of waiting for it to bust and damage everything below. lardy lardy a mess waiting to happen.
**************
Some minds are like concrete,
thoroughly mixed up and permanently set.
[ edited by irked on May 14, 2006 10:56 PM ]
