| Show - - - - -- - - - - - - 1 - - "" -- I z ' z ' 4 i 1 - 1 i t t Classified Ads: : June 23 SUNDAY 237-200- 0 I 1 VtZ!!'') - IlLititli itittaito aell ak 1991 - 1 irl I ul IAD it - s I A ' --- : r 1 t i - - - I Cl ' - e i i "Tight" "Snug" or THE ASSOCIATED PRESS r kfrm"7"17P1h old The 4 72 wants years to be a doctor and is doilg very well in schooL 1 am working two jobs and my husband who recently died from cancer has left me $150000 in life insurance although 1 haven't received it yet 1 bought this home in July '89 for r6$00 for 30 years at 10 percent fixet I only paid about 5 percent down on an FHA loan We're in a good school district and 1 don't have any relatives here and only a few friends My friends tell me that 1 ahould pay off the house and take the $74500 or so remaining and keep it in the bank My house payments are $763 a month I am very confused — should I invest or pay off the house? We lost one house in Texas about five years ago because of the recession We just gave the keys back to the mortgage company when we moved here 1 am so scared about what would happen if 1 pay off this house and then can't sell it Mrs KB Worthington Ohio g 4 i &lute 1 assume that you are receiving something in Social Security death benefits Still and all a monthly mortgage payment of $763 when you've got three youngsters to raise sounds pretty steep rd be inclined to split the difference — don't pay the whole thing off but pay it down to say $40000 (using about $34000 of your insurance settlement to do so) and refinance the balance over 30 years That would drop your monthly payment for principal and interest to a more manageable $350 a month (assuming you get the same 10 percent interest rate) give you a comfortable equity in the home and still leave you with about $116000 in insurance money for investment No forget too what your friends say about "keeping the money in the bank" What you financial need is a plan that will incorporate naturally some bank CDs but will also be spread over other types of investments affording you some inflation protection safety of principal and a regular income that you can count on slower-than-norm- home-buildi- It really boils down to how hungry this mortgage lender really is If you have already contacted the lender and offered to sweeten the pot — giving back the town house with a deed in lieu of foreclosure — then they aren't going to be surprised to find that you do indeed have the $10000 required to do it I think you may find them more receptive than you think Nobody likes to take a loss and taking this town house back with a sweetener that eliminates that loss (at least for the time being) could be very attractive to them The only other alternative is for you to take a walk let them foreclose and be done with it — no profit here for the lender for you and a credit black-ey- e for at least 10 years Or of course rent it t NEW YORK — When auctions were introduced to the home real istate market a few years ago they 4eemed to be a great idea — an inoovative method for quickly mov a glut of structures ing 0 e They helped builders reduce equated with bargains but today's auctions may not be bargains at all Consider a few examples: The advertisement declares the property will be sold at absolute auction but there is an asterisk appended In small print you find that it refers to a minimum bid that might be only slightly lower than the real value In such an instance the possibility exists that the auction could benefit only the seller since any mini- itagnant inventories that were hleeding them into insolvency They provided needed cash They creat- ed competition where there had been no buyer interest at all There were benefits for buyers too especially the opportunity to get in on some genuine bargains and also for banks that held mortgages Auctions meant action and excitement and that was what seller buyer and financier needed Some important changes have eurred in the auction market since then It is no longer the direct honest admission by a seller that he needed to sell quickly and at almost any cost because he needed money property The brochure announces that 60 condominiums will be sold at auction seven of them regardless of price Technically the notice might not be misleading but it is difficult not to believe that the seller wasn't trying to give the impression of a big auction when in reality it was a badly The auction today is a sophisticat 1 TT-- pl iwi 0 riP : iiittpiii II ipi ' percent first believed But the May activity was conceny trated in construction The multifamily sector remains a concert and a problem because of the credit crunch" said economist John A Tuccillo of the National sedation of Realtors New construction of fly homes rose 31 percent to an 832000 rate following a 88 cent jump a month earlier the Commerce Department said Multifamily starts on the other hand fell 138 percent to a 150000 rate Starts of buildings with five units or more plunged 163 percent to a 118000 level the lowest since the department began keeping cords in 1963 Robert Sheehan economist for the National Apartment Associae tion said "Access to financing mains especially difficult for apart-sinc-e single-famil- single-farnsa- - - id per-sig- k 74-mon- th 93-mon- th ns it ce I 1990 Starts soared 177 percent in thel2 Northeast after falling 77 percent in April They were up 140 percent: in the West where new construct tion shot ahead 337 percent thee previous month re-Th- ment builders which should prevent any marked recovery in multifamily starts over the next By Brad Kuhn NEWS SERVICE KNIGHT-RIDDE- Balloons are back and their popularity is rising Accounting for just 2 percent of all new home loans balloon mortgages 6- -e not exactly sweeping the country But the mortgage with the little payment and a big h states bang at the end is all the rage in such as Florida and California And unlike their disreputable ancestors the new loans make sense to both bankers and consumer advocates The old balloon mortgages enticed borrowers with a few years of low payments — almost entirely interest Then the whole loan had to be paid off in one single large payment — or "balloon" high-growt- - r - 30-ye- ar I 30-ye- ar g : I :: T OU L - p rt : could not otherwise afford The hope is that such a borrower will eventually grow into the loan And when the adjustment comes the theory goes he or she will be in a better position to pay the going rate Peggy Miller a lobbyist for Consumer Federation of America said she worries that such hopes may be too optimistic in recessionary times when layoffs and wage freezes are common Nevertheless Miller said she thinks the loans can be a good deal for some borrowers The loans are popular among lenders because they offer a middle ground between conventional mortgages and those with rates adjusted annually The balloon "tends to be what the banks are pushing fixed-rat- e and loan balm mortgage part Today's right now" Meier said One reason for that is the creation of a standardized part adjustable bears little resemblance to its predecessors It doesn't have to be paid off in one lump — balloon mortgage that can be sold to investors By the loans bankers can pass along their risk and free although it can be The new loan is geared for the move-uhome buyer or corporate executive who relomore money to lend up cates frequently The secondary market is dominated by "If a consumer thinks that seven years is as long as large mortgage investors such as the Federal National they will be in a house then a balloon may be worth Mortgage Association — Fannie Mae — and the Feder- considering" said Michelle Meier a lobbyist for Con- al Home Loan Mortgage Corp — Freddie Mac Those sumers Union "If someone is moving into the home companies and others set standards for the types of that they plan to live in for the rest of their lives they loans they will buy from lenders Standardized loans are probably better off with a mortgage that does not can then be traded among investors much like stocks or bonds contain any surprises" "Balloon loans have become popular simply because The lure of the balloon is a low interest rate — typically half a percentage point below the level for a 30- - there is now an investor market for them" said Jean home loan Finance charges or Morgan vice president of marketing for Freddie Mac year fixed-rat- e Banks in general do not generate a lot of balloon "points" are also typically lower — sometimes less than loan The risk mortgages More than half of such loans purchased by''' half the points on a conventional is that the interest rate adjusts after five or seven years Fannie Mae last year came from mortgage companies? depending on the contract and most experts expect Savings and loans accounted for more than 25 percentUnlike banks which specialize in business loans most interest rates to be higher then Affordable-housinadvocates have used the lower mortgage companies thrive on residential mortgages' ' interest rate to help borrowers qualify for loans they and actively market a variety of mortgage products 1 1 March was not as steep as the Balloon Mortgages Taking Off Again For Advocates of Affordable Housing: : U pi 86 percent decline in 92 time the d Sky-hig- h mum bids would soon exceed what is probably the real value of the several months" Still analysts were encouraged by the 72 percent gain to a 979000 annual rate in applications for building permits New filings usual7' ly portend an increase in construc: tion It was the fourth consecutive monthly increase in permits and the longest string since a similar stretch from April through July 1983 following the previous recession The rise in starts also has been': accompanied by an increase in new home sales since January Inventories of unsold homes have fallen to a supply in April from: backlog in January Analysts said sales have been mortgage inr:4 spurred by single-digterest rates improved consumer confidence lower prices and fre:P' quently free options But despite the improvemente1 starts during the first five months of this year remained 28 percent" below those of the same period of sented the bottom of the current housing downturn The 82 pervent gain in April was even stronger than the 62 percent originally reported At the FA me ng back-to-bac- rather small one The announcement states that some of the houses to be auctioned are at minimum bids 50 percent below original asking prices While such a sale might be legitimate it might also be little more than a way to move previously property for more than it is really worth prices were not unusual three or four years ago Back then some markets were in a frenzy and it wasn't at all unusual to ask for and obtain prices 20 percent and 30 percent beyond comparable properties nearby The price peak didn't last long most frenzies abate abruptly People came to their senses and declined to chase prices any higher and instead made prices come down to them Therefore an auction that begins with minimum bids far below original asking prices might hold no bargains at all The market value of a property at any time is what buyers will pay for it ed marketing tool and sometimes it poses as something that it isn't or at least something that is quite different from the popular conception To many people auctions are al Release of the fig- tires coincided with Federal Re- serve Chairman Alan Greenspans before the House Ways and Means Committee in which he the US economy appears to have bottomed out but shows no of recovering from recession The Commerce Department said 'housing starts totaled a seasonally adjusted annual rate of 982000 up from a revised 981000 in April and 907000 in March But despite the sluggish pace the increase was the first since June and July 1989 and the third gain since starts plunged to 847000 units in Janu- ary January level was the lowest an 843000 rate in January 1982 in the midst of the previous recession Analysts said it repre- - Auctions Not Always Bargains By John Cunniff — Richard Peach pace" ANSWER DEAR MR CAMPEELL We own a town home here THE ASSOCIATED PRESS li About Real well-round- cal-Esta- te li - holding down nt ie - :?1 Your worry would be perfect ly understandable even without loss experithe ence that you had in Texas Yes you've got to handle that insurance money very carefully You haven't told me much about your income but in addition to the two jobs you are I Don Campbell '' te1444- ANSWER ft 4: Ai WASHINGTON — boosted construction of new homes and apartments just 01 percent in May the government said in a re- port supporting analysts' forecasts of a hosing recovery "We're not expectiAg an increase in Loosing starts at the torrid pace of past recoveries" said economist Richard Peach of the Mortgage Bankers Association David Y Seiders chief economist with the National Association of Home Builders concurred: ''We're moving along at a subpar recovery that has declined in value over the past seven years approximately $10000 Have you ever beard of a convtional mortgage company tvIring a short payoff (Le the current market value)? Would they damage our credit rating if they accepted a short payoff? Is there anything else we can do to move out of the town house besides coming up with $10000 or renting it out? We don't want to do either Incidentally the mortgage company wants a complete outline of our financial circumstances before they will consider the short payoff We can afford to pay so we doubt they will go for the short payoff Mr LK Lafayette Colo "Lis-able-" 'hich explains YOUR budget? DEAR MR CAIKPEELL am a inge parent with three children -- 2 12 and 17 Ni : --------- — By Jolm D McClain A t Trill- c31 op - : 144 0 -- -- I - : 1 :: Take a walk from your next !rent hike Come to Ivory Homes L this weekend You i rent k reseP4 - 'f: - - k 7' ill i1 get into Locations where you really want to Value you'll find hard to duplicate When you feel up to here with rent hikes come take a walk to Ivory ! P - - t ':' it : : ' ' - :: :! i 1 - 1 L 4"- -- s ' - '6 t tic4 -se t 4 ' '1 t I ':ti ' 4- 1 : ii " 0 :ri 2 - rl t i T i r : ' I - i 4: i i t4 Y i :! f ' " ' " - Ig‘ '"I I r r ! k 4 p ri '' ''i - k'y 4 4!: -- I r r !1 : iit '''' 4e - 7 ti --: 4:' i ''' - FF4' t i ''' 1 - !: 2 :4 or '1- N ! ii ‘ : -‘ --I ' 2' - iiz04 i o' 7 : 0 e s) r7401:15- ''''' c 41 :: ' : I 4 i ' - f ' lik ::::" f $ ii :I 1 1 : A- - IN ot""7 - : ksw ' ::::::: " iii- ": ":- r A " '''-- er s I v I t'::: V" 7s7: 471 - if t :! ft710 z 7 t- : 0 0 is 512:104t"t Tr1k : 1 ' 11 1 t '': iy 5! 'k it ii:a1:17' is:: - $ '1 ' I -4- f e :-- '- 5- l' FA:: " s" - - $0A1 t--: - r : '!' 1 - 4774 : :: ii7 : q 11 ' - 'S 1::' :1:4 -- i " : 1 :T:11-:- :: :1::'7---:-:- e etf-- -- e747t::":174::"-z:'--- ''''''''' r v -: -- 72- V - '":::" -- t k 11: !While rents are skyrocketing mortgage rates !are at their lowest Only the value goes up in a new Ivory Home! We'll show you new home designs you can - 70"00 : can own for about what you're paying in Plus earn valuable income tax deductions ce::ft 41'104'T3 ': i :' I l' - i obbou if ::1 I 4 a r aWs‘a&awW0110ftiwt Admixiiodi 11(- ' i 4 I p - Adero4 IIIVOED4113HOPfii Es :Suncrest 4 Westpointe 5600 W 5600 South West Velley 900 N Redwood Rd Salt Lake City 967-195- 0 595-150- 0 4 T'J7wr Southbrooke Village 3100 South 500 East South Salt Lake City 466-707- 0 4 Utalifs Number One llome Builder Cimarron 1300 West 6300 South 531-77- CI 00 Southmoore Park Buttercup Village Murray 1150 East 9880 South Sandy 10000 So 1400 East Sandy 268-090- 9 572-790- 0 572-770- 0 I 00 A i I N I "'k: 1 t 1 S -- I Os tAint Al le! owdora 4-4r- e4 Sid 4 -- ' t Remains Sluggish Housing Upturn Sum? With Lump Pay Off Mortgage 1 We're not expecting an increase in housing starts the Best Thing to Do It's Not A-- tita)s Builders at the torrid pace ofpast recoverks A r i 11 -- it d-ut- I: i pPtrte-Nr--rii h 7--34 17"114 ? 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