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Sure, you get a tax deduction for the interest you pay on your mortgage, but that doesn't mean you aren't heartsick about all that interest. That's why paying off a mortgage early -- and cutting out as much interest as possible -- will always appeal to some homeowners.

There are various options, some better than others, experts say.

Consider, for instance, biweekly payment plans through your lender. If you make half your mortgage payment every other week, that's 26 half-payments -- or 13 full payments rather than 12, eliminating mortgage debt more quickly. But don't sign on the dotted line if the lender charges you a fee to participate, says Bankrate.com's Greg McBride.

"You can achieve the very same objective on your own," he says.

Here's how: either make an extra payment once a year or add 1/12th of that amount to each monthly payment. "Neither of those cost a dime, and you retain the flexibility to change course if money is tight," McBride says.

Ethan Ewing, president of Bills.com, makes the same recommendation. "Check your monthly statement from the lender and make sure it's being applied to principal," he adds.

You can see your total interest and principal due, and how those would change if you made extra payments, at Bankrate.com's mortgage calculator.

More complex pay-off-early plans suggest you replace your mortgage with a home equity line of credit and use that line as your savings and checking account, depositing your paychecks and withdrawing money for your bills. The idea is that your deposits lower your mortgage balance as long as the money sits there, unspent. You end up with a lower average monthly mortgage balance than you otherwise would, saving you on interest payments.

"It's good if you're cash-flow positive. If you're cash-flow negative, you're going to be in trouble," says Ewing. Spend more than you earn, and you're eating up your home equity. "We've got a negative savings rate in this country, so there are certainly a lot of people who would be cash-flow negative."

Also consider the cost to refinance and the possibility nowadays that your line of credit could get scaled back or frozen by your lender, McBride says. Remember too that lines of credit have variable rates. You can often fix the amount you borrow upfront -- the amount of your mortgage, in this case -- but any later borrowing could end up with a higher rate.

Following along? OK, here's a related concept that requires a home equity line of credit in addition to, rather than instead of, your mortgage: 

Again, you deposit your paychecks and pay your bills through the line of credit. The difference? Every few months, you put, say, several thousand dollars from the line of credit toward your mortgage. In other words, reduce principal by borrowing against your line of credit, paying interest on what you borrowed for the several months it takes for your discretionary income to catch up.

Rich Leffler, a Towson-based consultant for Money Merge Account, a $3,500 program that comes with software telling you when to make the extra payments and how much the payments should be, says you'll come out ahead because your deposits lower the balance on your line of credit as long as they sit there.

"Eight to 14 years is when you could expect a typical 30-year mortgage to be paid off with this program," says Leffler, who's also a mortgage consultant. Depending on the loan, "You could save $80,000 on the mortgage by paying it off sooner and end up spending maybe $5,000 in interest over the life of the line of credit."

A variety of financial commentators are skeptical. McBride doubts the net benefit for most homeowners would be nearly that dramatic, particularly if they're starting off with a $3,500 payment for the program. With isolated exceptions, he doesn't see how it would work to your advantage unless the interest rate on your line of credit is lower than the rate on your first mortgage -- and remains lower.

McBride and Leffler agree on one point: Find out the costs and savings for you, personally, before you take the plunge. 

Another thing to consider before paying down a mortgage more quickly: so-called "opportunity costs." If you're putting additional money into your mortgage, you're not doing something else with that cash. Paying down higher-interest credit card debt, for instance. Or saving for retirement. Or making investments that have nothing to do with the housing market.

"If you put $100 extra into your house, basically -- into your mortgage -- you have to consider that an additional investment into real estate," Ewing says. "My wife and I, .... we'd rather save that money and put it into other investments."

Tried any pay-off-early ideas? Have any recommendations? Chime in.

Posted by Jamie Smith Hopkins at 4:00 AM | Permalink | Comments (13)
                    

"Baltimore’s Flawed Renaissance: The Failure of Plan-Control-Subsidize Redevelopment" makes a case that "the city’s lack of progress on so many fronts is a direct by-product of its failure to understand and treat the real source of its problems: hostility to private property rights and a resulting flight of capital that largely drained the city of its economic lifeblood."

The report, written by Loyola College economics professor Stephen J.K. Walters and Loyola graduate Louis Miserendino, was produced as part of the Institute for Justice’s series on eminent domain abuse. (The institute is a libertarian public interest law firm.) The authors write:

Often, areas that were well-functioning (if unappealing to planners’ eyes) became emptied-out slums only after they were designated as part of a renewal area or were unlucky enough to sit in the path of a planner transit artery thought necessary to revitalize downtown.

Eminent domain has always been controversial, though it has seemed to have more supporters in the city than, say, a suburban community where a state or local agency was eying privately owned land. What do you think its effect has been on Baltimore?

Posted by Jamie Smith Hopkins at 11:58 AM | Permalink | Comments (1)
                    

In a new study, the Washington think tank projected wealth -- or, rather, lack of wealth -- among people who will be ages 45 to 54 next year:

The first scenario assumes that real house prices fall no further than their level as of March 2008. The second scenario assumes that real house prices fall an additional 10 percent as a 2009 average. The third scenario assumes that real house prices fall an additional 20 percent for a 2009 average. The projections show that the vast majority of families in these age cohorts will have little or no wealth by 2009 in any of these scenarios and that the cohorts just approaching retirement will have very little to support themselves in retirement other than their Social Security. The projections also show that a large number of families in these age cohorts will have little or no equity in their homes in 2009.

In fact, the renters within each wealth quintile in 2004 will have more wealth in 2009 under all three scenarios, than will the homeowners from the same quintile. These projections underscore the dramatic impact of policies that promoted homeownership during the housing bubble.

Well -- you know what comes next. Poll time:

Posted by Jamie Smith Hopkins at 8:10 AM | Permalink | Comments (1)
                    

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People getting a median-priced home in the Baltimore area and making a 20 percent down payment on a 30-year fixed-rate loan will pay $1,188 extra a year than if they'd borrowed in April, Zillow says. (It based its calculations off rates offered through its Mortgage Marketplace to borrowers who had "good or better" credit scores.) The change in the annual percentage rate? From 5.75 percent in April to 6.44 percent in June, Zillow says.

It's a useful reminder that dropping prices won't always mean a better bottom line.

Posted by Jamie Smith Hopkins at 3:51 PM | Permalink | Comments (4)
                    

1. Ask your Realtor

2. Investigate the companies

3. Make the moving company look at your home

4. Get three estimates

5. Demand a contract that covers everything

6. Ask about the claims process

7. Do the movers conduct drug tests and background checks?

8. Be cautious of Internet movers

9. Look at the actual trucks used

10. Pay little up front

More details can be found HERE.

Would you add anything to that list? What about suggestions for moving yourself successfully?

Posted by Jamie Smith Hopkins at 9:14 AM | Permalink | Comments (0)
                    

The February increase was greeted with cautious hope from some economists, who say declining home prices will attract bargain-hunters, increasing sales. The May numbers, released today, brought this comment from Wachovia: "It is still too early to call a bottom in the home sales market, but clearly the vast majority of the declines in sales are behind us." (The continuing problem, Wachovia says, is "excess inventory" -- too many would-be sellers competing for too few buyers.)

Compared with May 2007, sales are down about 16 percent, the NAR says. Both the average and median price of a U.S. home dropped more than 6 percent in May compared with a year earlier.

May numbers for the Baltimore metro area, released earlier by Metropolitan Regional Information Systems, show fairly flat prices -- up a bit on average, down a bit on median -- but a larger, 30 percent drop in year-over-year sales.

Posted by Jamie Smith Hopkins at 12:12 PM | Permalink | Comments (0)
                    

Instead of using powers granted by Congress to buy jumbo loans for the first time, Freddie Mac and Fannie Mae are purchasing their own mortgage-backed securities, helping reduce losses, company filings show. ...

The National Association of Realtors estimated last year that Fannie Mae and Freddie Mac would buy $150 billion of jumbo loans in 2008. UBS AG analysts now say the amount may be $74 billion; the companies' own projections indicate that they may not even reach that figure.

So-called jumbo mortgages are above the $417,000 limit previously set for Fannie and Freddie. The feds temporarily raised the limit for a number of markets. It's $560,000 in the Baltimore metro area.

Posted by Jamie Smith Hopkins at 9:20 PM | Permalink | Comments (0)
                    

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Associated Press photo

The more you hear about foreclosures piling up, the more you may be tempted to buy one. There's a lot to consider if you do -- but first things first: how to find them.

A foreclosure becomes a foreclosure when the home goes to auction. Frequently, the buyer is the lender -- that's what happens when there's no one else willing to bid at least as much as the lender wants. If you think there's a deal to be had, you can be that bidder.

You'll find ads for impending auctions in the newspapers. Or you can see listings online. Alex Cooper Auctioneers, for instance, keeps a tally of scheduled foreclosure auctions -- typically on courthouse steps. Express Real Estate Auction Services has foreclosure auctions listed as well, as does Tidewater Auctions. Harvey West Auctioneers doesn't separate its foreclosure listings from its regular auctions, but you can see the full list HERE.

Then there are companies you can pay for pre-foreclosure and foreclosure information, such as ForeclosureS.com and RealtyTrac. (Paul R. Cooper, a vice president with Alex Cooper, pooh-poohs the idea of paying. If you're willing to do your own homework, "all the information's free," he said.)

Remember: You have to come prepared to make an immediate deposit if you're going to bid at an auction. Alex Cooper expects cash, a cashier's check or a certified check.

If auctions worry you, there's another option: Buy from the bank afterward.

Some lenders keep a list of their post-auction properties -- known as "Real Estate Owned," or REO -- on their websites. Countrywide, last I checked, had more than 250 in Maryland. Others with lists include Chase Mortgage, Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development (which oversees FHA-insured loans).

Or ask a real estate agent. Realtors often market foreclosed properties for lenders, so they'll be listed for sale. (Agents can, if they choose, note on Metropolitan Regional Information Systems' multiple listing service whether a property is a foreclosure.) You can look for agents who take a lot of foreclosure listings or those who work with a lot of buyers interested in foreclosures.

A note of caution before you rush off to buy: While a foreclosed home could be a great value, seasoned real estate investors say there's no guarantee. The asking price or starting bid could be more than the house is really worth, particularly if the previous owner started with a small down payment. Or the house might need more repair work than you can afford.

That's where research and due diligence come in. You might, for instance, start by looking up the property's assessment record -- click on "property sales" to see recent sales prices elsewhere on the same street -- and by checking out the loan history.

Posted by Jamie Smith Hopkins at 4:00 AM | Permalink | Comments (1)
                    

In an opinion article published in The Washington Post (and picked up elsewhere), the Harvard professor and president of the National Bureau of Economic Research writes:

Such a program might be structured this way: The federal government would offer all homeowners with mortgages the opportunity to replace one-fifth of their existing mortgage (up to some dollar limit) with a government loan. This loan would carry a substantially lower interest rate than the individual's mortgage (reflecting the government's cost of funds). It would be a full-recourse loan that would have to be repaid regardless of what happens to the borrower's mortgage or home. By law, it would take priority over all non-mortgage debt.

... Because this program would, in effect, swap government bonds for individual IOUs, it would not involve any increase in government spending or in the deficit. Because the loans would appeal primarily to those who now have positive equity in their homes, it would not reward people who made high-risk purchases and now have high negative equity.

Most plans to help homeowners -- those facing foreclosure or hurt by the slump in other ways -- have proved controversial. So -- weigh in:

Posted by Jamie Smith Hopkins at 4:57 PM | Permalink | Comments (1)
                    

To try to fend off higher rates and other consequences, analysts say, consumers cannot afford to continue lax financial practices. Looking like a bad risk can keep people from obtaining affordable loans on homes or cars and end up with painfully high credit card interest rates.

As Harney notes:

Where is this all headed? Quite possibly to court again.

Posted by Jamie Smith Hopkins at 8:24 AM | Permalink | Comments (0)
                    

Here's his answer:

I would like to say that a turnaround is imminent but there is nothing in the data or in conversations with industry contacts that would suggest a turnaround. I have heard that in the most sought-after zip codes there have been signs of price stabilization and sales have improved. In addition, there has been some activity this spring. However, it is still too early to say if that activity will be sustained -- we experienced a similar pickup in activity in 2007.

There is still a significant imbalance in terms of supply and demand in the market, and it will take some time to work through these imbalances. Inventory levels of homes for sale remain very high, delinquencies and foreclosures continue to rise, and prices are declining in many areas. To underscore the inventory situation, in the Baltimore-Towson metropolitan area it would take 13 months at the current sales pace to sell a single family home. This figure is up dramatically from 2 months during the years before the housing boom. The question for 2008 is how much further will prices need to adjust in order to clear the excess inventory on the market.

Posted by Jamie Smith Hopkins at 6:05 AM | Permalink | Comments (0)
                    

People charged in "Operation Malicious Mortgage" include lawyers, real estate agents, developers, mortgage professionals and appraisers, the Associated Press reports. It's a depressing reminder to everyone, especially those looking for help to avoid foreclosure, that someone's years of real estate experience are no guarantee that he or she isn't trying to take advantage of you.

A dozen have been charged in two Maryland cases, which the FBI describes as only loosely related to the Operation Malicious Mortgage sting. They're based in the Washington suburbs. But victims include Baltimore-area residents. Read more about the Metropolitan Money Store case HERE and the more recent arrests HERE.

The FBI describes its cases across the country as lending fraud, foreclosure rescue scams and mortgage-related bankruptcy schemes:

Lending fraud frequently involves multiple loan transactions in which industry professionals construct mortgage transactions based on gross fraudulent misrepresentations about the borrower’s financial status, such as overstating the borrower’s income or assets, using false or fictitious employment records or inflating property values. Foreclosure rescue scams involve criminals who target legitimate homeowners in dire financial circumstances and fraudulently collect fees for foreclosure prevention services or obtain ownership interests in residential properties. Both of these fraudulent mortgage schemes may be furthered by filing bankruptcy petitions that automatically stay foreclosure.

Posted by Jamie Smith Hopkins at 9:31 AM | Permalink | Comments (0)
                    

How are things in your neck of the woods? Weigh in on our own poll:

Have you taken any creative -- or desperate -- measures to better afford housing? Are you finding better deals now on rent or mortgages? Comment away.

EDIT at 8:30 p.m.: And the winner at the moment is ... very affordable, with 35 percent of the (admittedly limited) vote. Always nice to hear good news! Still, "somewhat high" and "very difficult to cover" together add up to 41 percent. Here's hoping you voters find something that works with your budget.

EDIT on Friday at 8:30 p.m.: There's a number of extra votes now, 24 hours later, which changes things. Top category: "Somewhat high for my budget," with 39 percent of the vote. Together, the "too high" categories add up to 55 percent. "Very affordable" has about a quarter of the vote. Feel free to keep voting -- the polls never close here.

Posted by Jamie Smith Hopkins at 9:40 AM | Permalink | Comments (0)
                    

Last week, an attorney working with O'Neal said the Phoenix Suns center wants to buy the mortgages of people whose homes are in foreclosure, then give the homeowner a new mortgage with better terms. Homeowners would stay in their homes with more affordable payments, and O'Neal would turn a small profit.

The problem is, O'Neal does not yet have a concrete plan. He wasn't planning an announcement, and word leaked out when he made an impromptu visit to Orlando City Hall last week.

On a less star-studded note, The Wall Street Journal reports that some employers are helping workers with no-interest loans and the like:

Productivity tends to wane when workers are suffering from financial or other pressures, says Laura Wallace, manager of work/life programs at SAS Institute Inc., a business-intelligence software company. Providing help "just makes really good business sense," she says. "If you're worried about losing your home, your creativity is going to go out the window."

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Walter Molony, a spokesman for the trade group, told me today that a typo in the seasonal adjustment factor -- what statisticians use to try to account for variations in behavior from season to season -- caused the error.

"It's really unprecedented, but nevertheless, pretty embarrassing," he said. (He said both the NAR and New Jersey agents noticed the problem independently. You can find the corrected numbers on NAR's site, though I saw no press release about it.)

There's increasing skepticism about housing numbers -- and concern about tampering -- as the market continues to slump. I mentioned this to Molony, who said the NAR barely touched on state sales in its first-quarter press release and didn't point to New Jersey at all. Instead, it focused on metro-area prices.

"The state sales number we thought was kind of a yawn because everybody knows they're down; they're down almost everywhere," he said. "It was just a data table that we made available."

Maryland's sales figure wasn't affected, he added. The NAR reported the drop here was nearly 40 percent.

Thanks to a keen-eyed Wonk reader for noticing the New Jersey brouhaha.

Posted by Jamie Smith Hopkins at 10:17 AM | Permalink | Comments (1)
                    

Photo by the Associated Press

If you're thinking of buying, it's useful to know what's in your price range. Once you have a clear idea which neighborhoods have homes you can afford -- or which homes you can afford in the neighborhoods you like -- then you can start seriously looking.

Have no idea what areas are in your price range? Here, let me help.

I've included all ZIP codes that had at least 10 sales in those six months and 10 sales in the last six months of 2006. That's my usual attempt to toss out apples-to-oranges comparisons. Even so, be wary of reading too much into big price swings -- a few mansions selling in just one of the years can really skew things.

Remember, you can click on the magnifying glass to make the information larger.

A few factoids:

Number of ZIP codes with average prices ...

... under $100,000: 4

... in the $100,000s: 9

... in the $200,000s: 27

... in the $300,000s: 31

... in the $400,000: 15

... in the $500,000s: 14

... in the $600,000s: 4

... at $700,000 and above: 5

Number of ZIP codes that saw ...

... a gain in price: 42

... a loss in price: 58

... no change: 9

Number of ZIP codes that saw ...

... a gain in sales: 8

... a loss in sales: 97

... no change: 4

You can get more information about homes for sale in your price range by researching online listings or talking to an agent. Or, once you know what areas you're interested in, you can look at Metropolitan Regional Information Systems' statistics by ZIP code. There you can see the number of homes sold -- and listed -- in various price ranges.

Posted by Jamie Smith Hopkins at 4:00 AM | Permalink | Comments (3)
                    

"I don't think numbers like an $880 billion equity loss are all that meaningful for most individual homeowners," said Jay Brinkmann, vice president for research and economics at the Mortgage Bankers Association and an expert on real estate cycles. "When you look at home price data over the last five years, you find that large parts of the country never got caught up" in the boom and bust cycle.

The losses are highly concentrated. "The Fed's [equity decline] numbers for the country as a whole are really being dragged down disproportionately by the big drops in prices in California, Florida and a handful of other states," said Brinkmann. "Most markets haven't been hit anywhere near as hard."

That doesn't mean you can pop the champagne corks if you live in Maryland, one of the states that did get caught up in the boom. Prices are falling here by most measures now, including this one. But it's good to remember that the harder-hit states are large, which means they will have an outsized effect on national figures. That's particularly true on foreclosures.

As you can see from yesterday's poll, some Wonk readers haven't been affected at all by the housing market -- or they're seeing upsides. (Of course, I don't know whether they're homeowners or renters.) 

Posted by Jamie Smith Hopkins at 7:01 AM | Permalink | Comments (1)
                    

Read his story for what some of the victims have to say, including Nadine Bostic of Elkridge:

"They hurt a lot of people," said Bostic, who is a plaintiff in a class-action civil suit against some of the federal defendants. "I never thought I'd ever say I wanted someone to be in jail, but I do. They need to be put underneath the jail. Not on top, not inside - underneath."

Posted by Jamie Smith Hopkins at 10:12 AM | Permalink | Comments (1)
                    

Posted by Jamie Smith Hopkins at 8:12 AM | Permalink | Comments (0)
                    

First American CoreLogic has also released its latest mortgage risk map:

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