For parents with college-age children, this NBC Today Show clip is worth watching. It discusses the “hows” and the “whys” of buying off-campus housing for your kids.

Real estate analyst Barbara Corcoran makes a few terrific points about:

• Why June is the best time to look for off-campus housing
• Why you should hire a professional property manager
• Why parents should co-sign the mortgage with the child

Investing in collegiate housing is not for everyone, but everyone that does should purchase an accompanying insurance policy for injuries that may occur on-site.

If you’d like a referral to a strong real estate agent in your child’s college town, call or email me anytime — I’ll be happy to help you.

On the first Friday of every month, the Bureau of Labor Statistics releases its Non-Farm Payrolls report.

More commonly called the “jobs report”, today’s 2-page analysis of May 2008 shows that the economy shed jobs and that unemployment surged.

This is terrific news for home affordability.

That may sound counter-intuitive, so let’s dig deeper into the jobs report and what it really tells us about the U.S. economy.

Over the last year, rising food and energy costs have chipped away at household budgets, leaving Americans with two basic choices:

1. Spend less on discretionary items like vacations and dining out
2. Demand more pay at work so they can vacation and dine out

If Americans choose to spend less, the economy eventually slows down because two-thirds of it is tied to Consumer Spending. This is anti-inflationary.

But, if Americans demand pay raises instead, businesses eventually pass those higher wage costs back to consumers in the form of higher prices.

This is called a “wage-price spiral” and it’s very inflationary.

So, because today’s jobs report showed unemployment surging by a half-percent to 5.5%, Americans really have no choice but to follow the “Spend Less” path — they’re not in a position to demand more pay at work.

Today’s jobs data is good for home affordability because it relieves inflationary pressures in the economy and when inflation is falling, mortgage rates tend to do the same.

Better mortgage rates mean less expensive housing payments.

Source
Employment Situation Summary
BLS.gov, June 6, 2008

Mortgage rates are a big deal when you’re buying a home.

With even the slighest uptick in rates, 30 years of mortgage payments can get substantially more expensive and one of the most substantial threats to mortgage rates is an economic event called inflation.

Inflation’s influence on mortgage rates is so large that markets can get jarred on just the mention of it and that’s exactly what happened Wednesday when Fed Chairman Ben Bernanke uttered “inflation” 55 times in a 5-page speech at Harvard.

The speech started at 2:45 P.M. ET and by 2:53 P.M., the damage was done.

Market players interpreted Bernanke’s remarks to mean that inflation may be worse that previously expected and mortgage rates moved up by 0.125 percent, or $8 per $100,000 borrowed.

This equates to $2,880 in extra payments over 30 years.

If you’re actively shopping for a home loan and rapid rate movements make you nervous, consider locking in your mortgage rate today; rates have been especially jumpy all year and don’t look to smooth out anytime soon.

When a home buyer is gifted cash for a downpayment, there is a right way and a wrong way to receive the funds.

The right way includes:

• Completing an acceptable gift letter
• Documenting the withdrawal of funds with receipts
• Documenting the deposit of funds with receipts

The wrong way is to ignore the rules that mortgage lenders clearly spell out for you.

Mortgage lenders watch gifts closely because they want to make sure that the “gift” is not really a loan-in-disguise. If it’s a loan, the total dollar amount must be counted against the home’s total loan-to-value and higher loan-to-values typically increase lender risk.

If it’s a gift, a signed and dated gift letter should accompany the home loan application. An example:

I am the [relationship to recipient] of [name of recipient] and this letter serves as evidence that I am gifting [name of recipient] [amount of gift] to be used for the purchase of the home at [complete address of property].

This is a gift — not a loan — and there is no expectation of repayment.

Signed,
[Signature of donor]

For additional evidence that the gift is legitimate, the recipient should make sure that deposited funds are not commingled at the bank. If the gift is for $12,000, for example, then the recipient’s bank deposit receipt should indicate that a $12,000 deposit was made.

There may be legal and tax liabilities when gifting funds between family members so if you’re unsure about how donating or receiving a gift may impact you, call or email me. If I can’t answer your question, I can certainly refer you to somebody that can.

Interior designers have 16 million colors in their palettes with which to work, but room planning often boils down to three other numbers — 60, 30, and 10.

As in, the 60-30-10 Rule.

As featured on HGTV.com, the 60-30-10 Rule says that decorating a room should be based on percentages:

• 60% should be a dominant color
• 30% should be a secondary color
• 10% should be an accent color

A quick look through design magazines will show that this is not just a theory — it’s a planning tip that is used over and over again by the world’s most famous designers.

The HGTV piece also explains why do-it-yourselfers should add black elements to every room and how to visually divide colors from dark-to-light.

Interior decoration requires flair and intuition, at times. But, because there are practical methods behind designing, that intuition can be honed with education.

The HGTV Web site is a terrific place to start.

Source
COLORSwatch
Mark McCauley
HGTV.com

Mortgage approvals don’t last forever.

A conforming mortgage approval from Fannie Mae or Freddie Mac has a shelf-life of 120 days.

After 120 days, the approval expires and a mortgage applicant must re-submit his application for consideration.

In addition, a mortgage approval can “expire” within the 120-day period for other reasons:

• Change of job status or income
• Newly-acquired monthly debt (i.e. car payment, student loan)
• Change in asset levels

If your current mortgage approval (or pre-approval) is dated prior to February 3, 2008, it is now expired and your new approval may be subject to Fannie Mae’s new, more strict, underwriting guidelines.