Mtg rate update, Shared Housing (renting out rooms)

By
Real Estate Mortgage Broker

Hey there - hope your weekend will be a great one - I'll be at the Latino Home Buyer Fair at the Oregon Zoo on Sunday from 10-4; hope to see you there!

 I've run into a lot of folks that are having a hard time making their mtg pmt (duh!) - some have extra room in their homes.  The subject of Shared Housing is not new.  I was talking with my kids a few days ago that just a few generations ago it was quite common to have a multi- generational household.  Here in America we seem to be making a comeback to this rich way of life (I say rich cause my mother in law lived with us for 8 years - it was wonderful having her, except the dental bills were terrible - my 21 year old daughter is still addicted to Kit Kat Bars!).  Joking aside after she left we rented the space out to a really cool gentlemen and he's been with us for 5 or so years now - he's now part of our kooky family.  He's taught the kids so much and without us he would be very lonely. 

I bet you know someone in your database that would have questions on this - I've included a few resources below that speak to this - from a local agency in the Portland area to the tax implications.  Be the Go To Person for your clients and next time you converse with them bring this up as it may allow them to stay in their home, bring in some extra income and maybe even offer companionship and help with the yard work!  (our additional "member of the family" chopped down the blackberry bushes last week - how cool is that!?) 

Cheers!

 Mary Taylor

 From Think Big, Work Small

  

No let up in selling in the equity markets early this morning, but a recovery at 10:00 is underway. Stock markets in Europe tried to improve but met with more selling as the markets moved into the afternoon session. Trading in US stock index futures also tried to gain ground but they too fell to the selling. Markets are now contending with huge margin calls forcing some selling to be able to meet some of the calls. US treasuries are now the lowest yields in over a year on increasing belief Europe's economy will suffer as the EU battles to head off debt defaults and political arguing that some think may permanently derail the European Union, whether or not that occurs it is the fact there is dissention growing between the heavy weights and light weights in the Union. Germany did approve the bailout package in its parliament but is also rattling the cage that it won't continue to do it.  

 

At 9:30 the DJIA opened -105, the 10 yr note +26/32 at 3.12% -10 bp and mortgage prices being dragged along, up 9/32 (.28 bp).   

 The euro currency gained some ground yesterday against the dollar, was stronger overnight, backed off some into the 9:30 open of US stock markets but by 10:00 it is ganing again. The decline of the euro was the fueling factor for the initial selling in US equities but appears to be being surpassed by increasing belief Europe will drag the US recovery down. Then we turn to our US Senate, it passed the financial reform bill yesterday and now it moves to the House for reconciliation; another procedure that will likely hang more amendments on it and make it even more a mess that eventually we will find as time goes on. I am not taking the banks'  side; banks need to be slapped down as once again the banking sector has shown it isn't capable of managing itself for the good of the country. Banks are too large, way too greedy, and are not manageable, every bank CEO Congress called to testify said they didn't know what was going on in their banks. This reform bill hasn't come close to stepping down hard enough, but the bill will hinder economic growth and eventually be a another hurdle for consumers. 

No economic data today; hardly matters these days though. The entire focus now is on what impact Europe will have on US economic growth. After months of looking and expecting a correction in the equity markets, now that it is here there is panic. Margin calls are fueling the selling and now the market is so oversold that we expect some buying will begin to happen; maybe not enough to reverse the trend but enough to slow it and bring back some rational thinking; yes the EU is the trigger but for months markets were expecting a pullback but there had to be something to set it off. Now that the key indexes are over 10% off their recent highs, look for some stability top return; not a strong rally but not the deep daily declines we have seen this week and last. All that said, market volatility is going to remain for a few weeks as a possible base is built. 

 

Freddie Mac:  Long- and Short-Term Mortgage Rates Fall Again This Week  

May 20, 2010
McLean, VA - Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.84 percent for the week ending May 20, 2010, down from last week when it averaged 4.93 percent. Last year at this time, the 30-year FRM averaged 4.82 percent. Once again, the 30-year FRM has not been lower since the week ending December 10, 2009, when it averaged 4.81 percent.

The 15-year FRM this week averaged 4.24 percent, down from last week when it averaged 4.30 percent. A year ago at this time, the 15-year FRM averaged 4.50 percent. The 15-year FRM has not been lower since Freddie Mac started tracking the 15-year FRM in August of 1991.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.91 percent this week down from last week when it averaged 3.95 percent. A year ago, the 5-year ARM averaged 4.79 percent. This breaks last week's record and, again, the 5-year ARM has not been lower since Freddie Mac started tracking the 5-year ARM in January of 2005.

The 1-year Treasury-indexed ARM averaged 4.00 percent this week down from last week when it averaged 4.02 percent. At this time last year, the 1-year ARM averaged 4.82 percent. The 1-year ARM has not been lower since the week ending October 28, 2004 when it averaged 3.96 percent.

"Mortgage rates eased back once again this week to the lowest level of the year," said Frank Nothaft, Freddie Mac vice president and chief economist. "Low mortgage rates, coupled with the homebuyer tax credit, helped strengthen the housing market in the first four months of the year. New construction on one-family homes rose for the fourth consecutive month in April to an annualized rate of nearly 0.6 million units and represented the strongest pace since August 2008. Three of the four Census regions showed increases, led by a 14.8 percent jump in the South.

"Moreover, homebuilder confidence rose for the second straight month in May to the highest level since August 2007, according the National Association of Home Builders/Wells Fargo Housing Market Index.

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Renting Out Rooms

Shared Housing (Ecumenical Ministries of Oregon)
Need housing?
Want to share rent expenses with others?
Need help with chores or personal care?

Shared Housing may be the program for you.
Shared Housing is a matching and referral service bringing together those who need affordable housing with people who have homes and want help with rent, household chores or personal care. This exchange is beneficial to both the person seeking housing and the one offering it.Many elderly, disabled and low-to-moderate income homeowners and renters have found that rent and/or services provided through homesharing have been an important factor in enabling them to remain in their homes. Home seekers have found affordable housing at low rent or in exchange for work.

 

Contact Shared Housing
Barbara Stone, Program Manager
Phone: (503) 225-9924 Fax: (503) 226-2569
E-mail: housing@emoregon.org
Location: First Baptist Church, 909 SW 11th Ave., Portland, OR 97205

Housing Services
The following is a description of Shared Housing's services, and how to access them.

How to Apply
1. Home seekers must to apply in person. Please call to make an appointment to come in. Office hours are 10 a.m. to 4 p.m., Monday through Thursday.
2. Home providers may apply at the office, but as a rule Shared Housing will hold a phone interview and mail paperwork for home providers.
3. Both Home seekers and Home providers will be asked to provide the names and phone numbers of three personal references (local references preferable). We will also request permission to perform a criminal background check and (from home seekers) housing references for the past year.
4. Home seekers are required to bring a piece of photo identification.

The Matching Process
1. Initial matching takes place as soon as we have completed our intake process. Once in our database, clients are matched continuously with each new participant.
2. Once applicants are matched, the parties are provided with general, non-identifying information about each other including first names and telephone numbers. Home seekers will receive their initial matches at the time of the initial interview. Clients are asked to follow up by a phone contact with those matches that interest them.

Phone Contact, Meeting and Homeshare Agreement
The phone interview gives both parties a chance to talk about needs and wants, as well as to exchange information about lifestyle. Any concerns should be raised during the first or second interview. We recommend that participants prepare a list of questions before the phone contact or meeting. We provide a Steps for Selecting a Homesharer sheet to program participants that contains more information about interviewing. If the phone contact is promising, the parties usually arrange a meeting and, if that goes well, they begin the process of negotiating a homeshareing agreement. Shared Housing strongly urges the parties to sign a written agreement before anyone moves in. Shared Housing provides all program participants with a blank homeshare agreement that they can use as a basis for a written document. The terms of the homeshare are to be determined by the parties themselves, Shared Housing is not involved in this process.

References
Shared Housing collects three references from each applicant. It is the responsibility of each program participant to check the references of anyone they are seriously considering for homesharing. Potential homesharers can be asked directly for references, or participants can call us and we will share reference information. We do not have the staff to check references, so please, no matter how urgent your situation may be, we urge participants to take the time to check references.

Criminal Background Check - Drug and Alcohol Use
All Shared Housing applicants must agree to a criminal background check. Individuals convicted of crimes of violence or serious property offenses at any time in the past, or those convicted of any felony within the past two years will, under most circumstances, not be eligible for the Shared Housing Program. Anyone applying for the Shared Housing Program is asked to certify that they do not abuse alcohol nor do they engage in the use of illicit drugs.

Fees
All program participants are asked to pay a fee of $10 to $30, depending on income.

After Placement
Shared Housing will attempt to support program participants after they have found a homeshare, however it must be understood that Shared Housing does not represent either party in a match, that we make no guarantees regarding the suitability of the housing or the homeshare relationship and that Shared Housing is not liable for any costs or claims that might arise out of the homeshareing relationship. We are happy to provide mediation services to Shared Housing program participants providing both parties are willing to support the mediation effort.

Meanwhile ...
Until placement, participants are asked to contact us regularly (at least every two weeks) to check for new matches and to let us know that they are still interested in finding a homesharer through Shared Housing.

Non-Discrimination
Shared Housing and Ecumenical Ministries of Oregon do not discriminate on the basis of race, religion, national origin, sexual orientation, gender, gender status or mental or physical disabilities.

No participant in the Shared Housing program is required or expected to accept any match referred by Shared Housing but program participants should understand that Shared Housing refers matches without regard to any of the above listed factors.

All Shared Housing program participants are expected to treat individuals referred by Shared Housing with respect and dignity

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Today TaxMama hears from Bloomers in the TaxQuips Forum. She is renting out the rooms in her 5-bedroom house. Bloomers asks.  "What are the laws for renting out rooms?  If the amount I am making in rent every month, on average, does not amount to the total cost of the mortgage and house expenses, is there a special tax procedure?"  http://taxmama.com/forum/taxquips/rental-income-1/

 

Dear Bloomers,

These days, your arrangement is increasingly common - and very smart.

IRS has a publication that explains how to deal with rental income.  IRS Publication 527 http://www.irs.gov/publications/p527/index.html .

Chapter 4 of this publication talks about how to handle it when you rent out only part of the property.   I would still recommend that you get some help from a tax professional to set things up for you.

Another thing you might consider doing is to treat each room as an apartment, to track rents collected, rents in arrears, direct costs for the room, etc. Quicken Rental Property software may be ideal for you.  It's a little cheaper at Amazon than from Intuit.

Remember to be very careful about who you rent to.

1) They will be living IN YOUR HOME. They can either be a joy - or make your life a living hell!

2) It takes just as long to evict a roommate as a regular tenant. You may be stuck with someone who is not paying rent, is bringing in unsavory guests, and is destroying your property for two or three months after eviction proceedings start.  it could even get dangerous. Screen VERY carefully.

3) Even if it's your best friend or relative - especially if it is! Make the arrangement an arm's length deal, with a contract and all.  Always treat the tenant relationship professionally and you will get to keep your relationship intact AND get paid.

[Also, remember to set up house rules - and enforce them consistently!]

Rita Lewis, EA from CT adds a tip about getting the right permits.  You can start by checking with your town.  Try their web site for an overview of zoning laws.  In her town, a home owner can have up to four unrelated renters in his home, but more than that is not allowed under current zoning.  In a neighboring town that does allow boarding houses, they have to meet specific zoning regulations re parking spaces, emergency exits, etc.

And, oh yes, make sure your homeowners insurance knows you are taking in tenants. Get the appropriate coverage!

And remember, you can find answers to all kinds of questions about renting out your home and other tax issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed TaxQuips, you'd be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link - it's free!]

 

 

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Topic:
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mtg rate update
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Rainmaker
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mary taylor

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