MORTGAGE RATES » Home Mortgage Loan News

A new industry report released on Tuesday revealed that home prices fell for the first time in seven months in November 2009. According to the S&P/Case-Shiller 20-city home price index, the month-over-month price was down 5.3 percent compared with a year prior.

Losses: Data Explained

Experts had predicted that the prices would have dropped by only 5 percent, so the drop was unexpectedly high. A spokesman from Standard & Poor's (S&P) said that the drop provided a picture of contrast between month-over-month home price fluctuations as compared to year-over-year declines, which show drops in home prices. But compared to the year prior, the percent is shrinking.

State-by-State Comparisons

The markets that showed month-over-month gains in home prices included Phoenix, Ariz., which saw a 1.1 percent average increase over a 12-month period. Chicago, on the other hand, saw a 1.1 percent average decrease over the same 12-month period.

The numbers for month-over-month gains are averaged as a seasonally-adjusted rate, which means that unavoidable increases and decreases in home prices due to outside factors unrelated to what would normally affect home prices was taken into consideration.

Why Are Home Prices Important

While it may be a great thing for home prices to drop for those who are looking to buy, lower home prices can be a nightmare for sellers, as well as the entire housing market. Imagine buying a home for $200,000 then having the home value drop to $140,000.

This means that not only is the home buyer upside down (or underwater) on his mortgage, but selling at a price that's reasonable to the homeowner could be almost impossible.

With home prices showing that, year-over-year, the drop in home prices is getting better may mean that on the whole the market is improving. However, if you're a buyer looking for a home, it may be a good idea to try to get into a home before prices make a drastic leap - and the home buyer tax credits expires.

One of the great things about falling in love is being able to share your life with someone. You can make plans together, face challenges as a team, and pool your resources to create a better life. One potential problem that may arise with this new situation can be two people wanting to move in together but both are homeowners.

Figuring out what to do with a second home probably qualifies as a luxury problem, but nonetheless, doing it right can be challenging. The good news is youve got good options.

Sell, Sell, Sell

If youre moving in with someone and youve both decided that its your house that should be sold, youve got a lot to think about.

The real estate market is unpredictable, to put it mildly, and youre probably wondering if now is a good time to sell. The answer will depend on where you live. According to one forecast, only four of the top 25 metro markets will see an uptick in real estate growth this year, while the other 21 will continue to decline. Declining home sales and real estate activity is good news for buyers, but bad news for sellers. That's going to give many homeowners pause.

If you need to dump the house because its too costly to keep, however, then selling even if youre not going to see much of a profit (or any at all) in such a weak market might be your best course of action. If your only choice is between losing money and breaking even, the latter is clearly the way to go. Keeping your second home as an investment property will probably mean you need to rent it.

Rent, Rent, Rent

Owning a second home one where you dont live or vacation in is usually afforded by renting it out. How else are you going to make the mortgage payments on it?

While it makes sense in theory, of course, renting your second home and becoming a landlord comes with a whole lot of challenges and potential problems. Tenants might not be as desirable as you thought theyd be, for example, or they may lose their jobs and be forced to move out leaving you holding the monthly rental bill.

Additionally, the rental market is extremely weak these days, with no clear indications that it's going to get better any time soon.

If you want to keep your second home as an investment property, but aren't getting a lot of bites from potential renters, one idea might be to simply focus on breaking even for the next year and charging just enough rent to cover the mortgage, with no profit. If the rent doesn't quite cover the mortgage, kick in the rest. You're spending some money out of pocket but in the end you'll be hanging on to your second home. When times get better you could be making much more money when you sell.

Vacation, Vacation, Vacation

Another way to retain your second home and make money from it is to rent it to people on vacation. The vacation rental market is booming, and if you live in a place that sees a lot of tourism you could be sitting on a serious cash cow. By listing your home on such sites as Vrbo.com or HomeAway.com, youre making it available to people on a nightly basis.

A two-bedroom Los Angeles-area home that sleeps four, for example, could be rented out for $300 a night. Thats going to be very tempting for families that are traveling on a budget. While places like Los Angeles and New York City will always see a lot of tourist demand, other places wont, or will only be seasonal. In these instances it could still work out to your advantage to rent your second home as a vacation rental if there are enough "good times" to subsidize the bad - meaning, your summer income gets you through the sparse winter months.

Being a homeowner is hard right now, given the grim economy and extremely troubled real estate market. Many people have seen their homes lose significant value, and foreclosures continue to mount. Given that, it's not an opportune time to be faced with selling or renting a second home - but real estate cycles come and go, and if you hold on to your second home you could be in for the kind of payoff that makes all the stress well worth it.

A new report from the National Association of Home Builders (NAHB) reveals that the new average size of a home dropped in 2009. According to the association, the average home was 2,520 square feet in 2008 and dropped to 2,480 last year.

The last time the average size of a completed home fell by...

If you've been looking forward to taking advantage of a government-backed mortgage through the Federal Housing Administration - and have bad credit - you may have a harder time getting financed. The agency announced on Wednesday its plans to make adjustments that will help strengthen its...

New data from RealtyTrac, an online marketer of foreclosed homes, showed that almost 3 million homeowners received at least one foreclosure filing in 2009.

According to the marketer, this sets a new record for the number of people falling behind on their mortgage payments in one year.

Data from...

On Jan. 1, 2010, new rules from the Department of Housing and Urban Development (HUD) went into effect that would help simplify and clarify what mortgage lenders would charge for a loan. The new rules, which bring with them the new "Good Faith Estimate" form, are supposed to help applicants more...

While mortgage rates have managed to remain below five percent for two months, according to the Freddie Mac weekly survey for the week ending Dec. 18, 2009, the rates seem to be rising a bit. According to the survey, the rates rose that week and have climbed closer to five percent for the...

President Barack Obama has recently proposed another way for Americans to take advantage reimbursements while improving the environment - this time, his proposal is "Cash for Caulkers." The program, if followed through, is said to likely follow New York State's home energy efficient program, but...

In the recent past, buying and selling homes for a profit - also known as flipping - was the thing to do; however, now homeowners are shying away from selling and instead are using their money to nest. According to a new report from the U.S. Census Bureau, 20 percent more homeowners during the...

The idea of opening a small business could be an overwhelming one if you're not organized, which is why it's good to learn what steps should be taken before doing so, especially in relation to financing your loan. If you're thinking of opening your own small business, now's the time to get the...