In Sour Home Market, Buying Often Beats Renting. I love a good article that really looks into the facts under-girding the “home ownership myth.” A simple way to do the buy vs. rent comparison is to look at something called the rent ratio: the purchase price of a house divided by the annual cost of renting a similar one. The number 20 provides a useful rule of thumb. When you do the math, you discover that a ratio above 20 means you should at least consider renting, especially if you may move again in the next five years or so. When the ratio is well below 20, the case for buying becomes a lot stronger. Here’s a great buying vs. renting calculation tool included in the piece.

10 Things Home Inspectors Won’t Say. I love some of these ’10 Things’ lists from SmartMoney…hey they rip on lawyers too sometimes. It’s amazing for someone who has/does handle a pretty high volume of residential real estate legal work the HUGE variety of thoroughness and quality that I observe in written home inspections. Not that the number of pages is a perfect indicator but I’ve seen home inspections range from 3 to 50 pages. The points I would highlight from the list are the downside of an inspector being too loyal to a real estate agent and lack of malpractice insurance. Like attorney selection, this isn’t an area to trust an agent on and simply you cannot use an inspector who does not have errors/omissions coverage…if there’s a problem that’s your potential recovery pot of $$.

When Not to Pay Down a Mortgage. This piece does a great job crunching the numbers to settle this question, particularly in a low mortgage interest rate environment. First, you don’t even think about making extra mortgage payments unless you’ve paid down all high interest rate debt, have a decent emergency fund set aside, and you’re maximizing things like employer match contributions to a retirement account. Then you sort of balance the potential return of investment on an alternative investment versus paying down the debt of your mortgage interest. But the article does point out that your real interest rate on your mortgage isn’t what’s on the Note but also to knock off the mortgage interest tax deduction to see your real interest rate. And there’s also the empowering concept of being 100% debt free too.

And, surprise surprise, another government attempt to deal with the housing crisis…here and here. Anyone else cynical about another use of taxpayer funds to “help” homeowners in financial difficulty? I ask the question in no way meaning that I lack empathy for people in tough financial situations but rather as someone who has followed the general ineffectiveness of government attempts to assist mortgage-holders over the last 1-2 years. The new efforts target three areas:  **Giving the unemployed a 3 month pass on mortgage payments; **FHA refinance incentives for underwater mortgages; and, **giving lenders incentives to write-down loan balances.

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Home Buyer (11/6/09 version) Tax Credit:  10 Things to Know. I sometimes call myself a real estate lawyer but have been admittedly slow in getting up to speed on the revised tax credit…I do get to celebrate a few holidays, no? For my money the big change is the $6,500 credit to home buyers who have previously used the same home as principal residence for at least 5 of the last 8 years. Also note that military members on extended duty outside the U.S. have until 4/30/11 (a year beyond the rest of us) to take advantage of the credit. For the most part, the “first time” homebuyer part of the credit remains the same expiring 4/30/10 (or 6/30/10 for properties under contract by 4/30/10).

Here and Here are 2 somewhat complimentary stories on the success/not of the Making Home Affordable program…one a more national and the other more Illinois focused. On the upside, mortgage loans ARE now being modified (the lack of modification efforts used to be a favorite rant of mine). But, at least in Illinois only 7% of the modifications are permanent. So, does the program simply serve to lengthen the housing crisis by giving false hope to homeowners who in the end won’t be able to afford their homes in the end regardless??

Don’t Buy a House–Yet. I think the op-ed makes a compelling argument…namely, real estate prices likely haven’t hit bottom and the market’s recovery will be agonizingly slow so what’s the rush? Foreclosure rates remain near their high and banks haven’t even fully released all of their inventory onto the market and the unemployment rate is going to remain around 10% through the end of this year…those are facts.

Town house or condo. The difference isn’t always so obvious. Usually the townhomes are multi-story with the small front/backyard that you actually own whereas a condo is a self-contained unit on a single floor and the rest of the building is commonly owned. But it’s not always so stark…legally look at the declaration, a condo must use “condominium” is the legal title of the association and of course the Illinois Condominium Property Act governs condos but only section 18.5 governs town homes.

And lastly…

Debtor’s Dilemma:  Pay the Mortgage or Walk Away. A fairly lengthy piece from the Journal focusing on people who CAN afford to pay their mortgage loans but are choosing not to based on the property’s plummeting value. Hard for me to empathize too much with these people…I think this debate is centered in futile, American vanity. Namely the focus on your home’s value…if you’re like what 75% of people who aren’t planning on relocating, you needn’t/shouldn’t care if your home value has dropped. Banks aren’t offering lines-of-credit anymore anyways. Sit back, take that mortgage interest deduction, and enjoy the view.

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Here’s some coverage on the loan modifications here and here.

And finally, why are the percentages so low?

Take a read of this entitled, Lucrative Fees May Deter Efforts to Alter Loans.  A very interesting discussion about the many fees that mortgage servicers accrue as loans get behind and why it’s not always in their financial best interests to modify your loan.

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