You don't see a lot of housing construction these days. But a project in Milton, known as Cameron's Run, is an exception.
The development calls for 50 units of mixed housing, including market rate, senior retirement and affordable-- the affordable as part of the Champlain Housing Trust.
Development partner Don Turner estimates that in Milton, the real estate market for mid-priced homes is down around 5 percent and prospective homebuyers look carefully at the cost.
"Everything seems to be priced relative," Turner said. "If the price is good-- the people are interested. If it's just over that, forget it. They're not going to buy it."
The developers say land trust home sales here have actually picked up over the past year, although this housing development was already under construction when the recession hit. Still, the builders think Vermont's housing market overall may be very close to hitting bottom.
But the recession still leaves most housing construction in limbo. Erhard Mahnke of the Affordable Housing Coalition says even after the Vermont legislature overrode the governor's budget veto, spending on the state's main affordable housing program, the Housing and Conservation Board, was cut substantially.
"This year, they got about half of the flexible state funding that they got last year," Mahnke said. "There's been some backfilling with federal recovery dollars and other federal monies. But basically, you're looking at probably half of the production that we were able to do annually over the past few years."
It means that affordable housing production in Vermont will drop from an average of 300 to 500 units a year to about half that. Housing construction loans through the USDA's Rural Development office have slowed to a trickle.
"I think maybe I made one loan in the past two years, and two in the past four years, I believe," said Steve Campbell of USDA Rural Development.
Meanwhile, Don Turner says Cameron's Run is on track.
"Everything that we had planned is coming to fruition, so we're happy about that," Turner said. "And probably not as fast as we wanted, but it's taking time. But we're willing to be patient and work through this."
Tuesday, June 30, 2009
Construction Loan: Remodel your Home Without Any Burden
Everyone wants their house to be comfortable enough to accommodate every member of the house. If you want to incorporate some changes in your house and start some construction for the purpose, you will require a good amount of money. In case you do not have the necessary amount, you can borrow a construction loan and work according to your needs.
Construction loan is usually called a story loan. This is so because the lender of the loan wants to know the actual ‘story’ behind the loan meaning that where you want to utilize the money, why you need the changes, how you plan to accomplish it, etc.
Being a temporary secured loan, it would require the borrower to pledge this house as collateral to borrow the money. Moreover construction loan is an interest only loan which requires the borrower to pay only the interest during the time of construction of the house.
While borrowing a Construction Loan, the borrower should be very particular about the rate of interest. He can receive the loan rate in two forms, locked interest rate or variable interest rate. Through the variable rate of interest, the borrower can take up the loan and the rate may rise during the course of construction of the house.
When the borrower takes up the locked interest rate option he should be careful about the other expenses that are locked in the loan amount. These hidden expenses can amount to great sums of money and can cause the borrower heavily. If the borrower is being offered low rate of interest for locking, he should get it in writing from the lender so that the lender is not able to back out from his commitment of the rate.
Construction loan is usually called a story loan. This is so because the lender of the loan wants to know the actual ‘story’ behind the loan meaning that where you want to utilize the money, why you need the changes, how you plan to accomplish it, etc.
Being a temporary secured loan, it would require the borrower to pledge this house as collateral to borrow the money. Moreover construction loan is an interest only loan which requires the borrower to pay only the interest during the time of construction of the house.
While borrowing a Construction Loan, the borrower should be very particular about the rate of interest. He can receive the loan rate in two forms, locked interest rate or variable interest rate. Through the variable rate of interest, the borrower can take up the loan and the rate may rise during the course of construction of the house.
When the borrower takes up the locked interest rate option he should be careful about the other expenses that are locked in the loan amount. These hidden expenses can amount to great sums of money and can cause the borrower heavily. If the borrower is being offered low rate of interest for locking, he should get it in writing from the lender so that the lender is not able to back out from his commitment of the rate.
Construction Loans.
The mortgage market meltdown that began in the third quarter of 2007 severely affected the construction lenders. First major institution to announce that it is dropping out of the market was late Washington Mutual, followed by IndyMac Bank, Citi Bank and Chase, who were then followed by smaller banks and lending institutions.
Though most every bank is still in the mortgage business none of them have ventured back into the construction loan field. The reason is the fact that construction loans, whether made for ground up construction or remodeling loans are based on the future value of a property and banks are finding it difficult to judge present value in declining markets, let alone future values.
There are a number of lenders who still make construction loans but they are only a few and far in between and their guidelines are much tighter than before.
Gone are the days when stated income construction loans were routinely made for up to 100% of the future value. Under current guidelines a barrower will be lucky to find a lender willing to make a construction loan at 75% loan to future value given that the borrower can fully document income and has impeccable credit.
For those interested in remodeling their homes FHA offers a construction loan program called 203k which some lenders offer.
The FHA 203k is a remodeling loan only and offered for single family residences. The loan may be used to remodel an existing home and add a second unit to it so long as the second unit shares at least one wall with the original structure. FHA never offered any stated income programs so the borrower has to fully document income and the loan limits are subject to limitations.
Though most every bank is still in the mortgage business none of them have ventured back into the construction loan field. The reason is the fact that construction loans, whether made for ground up construction or remodeling loans are based on the future value of a property and banks are finding it difficult to judge present value in declining markets, let alone future values.
There are a number of lenders who still make construction loans but they are only a few and far in between and their guidelines are much tighter than before.
Gone are the days when stated income construction loans were routinely made for up to 100% of the future value. Under current guidelines a barrower will be lucky to find a lender willing to make a construction loan at 75% loan to future value given that the borrower can fully document income and has impeccable credit.
For those interested in remodeling their homes FHA offers a construction loan program called 203k which some lenders offer.
The FHA 203k is a remodeling loan only and offered for single family residences. The loan may be used to remodel an existing home and add a second unit to it so long as the second unit shares at least one wall with the original structure. FHA never offered any stated income programs so the borrower has to fully document income and the loan limits are subject to limitations.
Thursday, June 18, 2009
The last data on real estate market in Veneto
The real estate market is one of the most important sectors in the economy of a country. Unfortunately in the last months it has been one of the most affected sectors by the economic crisis; let's see now how is the situation in Veneto, a region always considered among the most flourishing and productive.
In March already, the Ance (National associations of building workers) annual report on 2008 and forecast of 2009, has registered a reduction of investments at about -4,5% and also in 2009 the investments will have a strong decrease. This pronounced slowdown in the region, however, it is also explained because for more than a decade the construction sector in Veneto has increased more than the rest of Italy. The crisis is now clearly visible, numbers and reports confirm it. The elements that move the balance in negative, in addition to the economic downturn started already last years and that involves all economic sectors, are the strict credit policy and the numerous delays or even the stop of payments by the local authorities.
In every province in Veneto, from Padua to Belluno, there is a significant infrastructure deficit, particularly with regard to the medium and small works that could already be set in motion, also because we must consider that the need of residential buildings remains high, mainly due to the significant population growth in recent years.
One of the most difficult areas is that of non-residential public buildings that in 2008 shows a 10% decline over the previous year. In strong decrease there is also the private non-residential sector (-6,7%) and the new housing (-4,7%). The only sector that in 2008 still shows a positive sign is that of investments for the extraordinary maintenance and recovery of existing housing (+1,3%). As for real estate selling in all provinces, the date are not favourable; in the first six months of last year the number of resulting sales decreased by 18,6% in comparison with the first half of 2007. The decrease is most marked in non-headplace of province municipalities (19,2%) compared with a decrease of 16,% in the headplaces of province of Veneto.
The latest report Nomisma records after 10 years of uninterrupted growth, the first negative signs on residential property prices. However, this does not mean that investors are turning their back to real estate market. Prices of apartment in Padua have fallen of -1,2%, in Venice of -4,2%, in Mestre -3,9% compared with the second half of 2007, these data indicate therefore that prices in general are not decreasing so much in relation to the rest of Europe.
The crisis has also affected the banking sector, which has immediately enacted more restrictive policies, between January and September 2008. In Veneto there was a decrease of 17,8% of funding to non-residential sector. Loans granted to households have registered in this region a decline by 3,6%, but only in the third quarter the reduction was of 20,2%. To overcome the economic and financial crisis, all observers, domestic and international, reaffirm the anti-cyclical role that the infrastructural investments can play, for their power to sustain income and employment.
The key factors to revitalize the sector have been identified in technological innovation, especially issues related to energy issue, development of infrastructure, this is essential both because it gives job opportunities to the construction companies and because each infrastructure forms the basis for a further socio-economic development of the area, and in the policies for the house promoted by the Veneto region to face the housing problem for large sectors of the population.
In March already, the Ance (National associations of building workers) annual report on 2008 and forecast of 2009, has registered a reduction of investments at about -4,5% and also in 2009 the investments will have a strong decrease. This pronounced slowdown in the region, however, it is also explained because for more than a decade the construction sector in Veneto has increased more than the rest of Italy. The crisis is now clearly visible, numbers and reports confirm it. The elements that move the balance in negative, in addition to the economic downturn started already last years and that involves all economic sectors, are the strict credit policy and the numerous delays or even the stop of payments by the local authorities.
In every province in Veneto, from Padua to Belluno, there is a significant infrastructure deficit, particularly with regard to the medium and small works that could already be set in motion, also because we must consider that the need of residential buildings remains high, mainly due to the significant population growth in recent years.
One of the most difficult areas is that of non-residential public buildings that in 2008 shows a 10% decline over the previous year. In strong decrease there is also the private non-residential sector (-6,7%) and the new housing (-4,7%). The only sector that in 2008 still shows a positive sign is that of investments for the extraordinary maintenance and recovery of existing housing (+1,3%). As for real estate selling in all provinces, the date are not favourable; in the first six months of last year the number of resulting sales decreased by 18,6% in comparison with the first half of 2007. The decrease is most marked in non-headplace of province municipalities (19,2%) compared with a decrease of 16,% in the headplaces of province of Veneto.
The latest report Nomisma records after 10 years of uninterrupted growth, the first negative signs on residential property prices. However, this does not mean that investors are turning their back to real estate market. Prices of apartment in Padua have fallen of -1,2%, in Venice of -4,2%, in Mestre -3,9% compared with the second half of 2007, these data indicate therefore that prices in general are not decreasing so much in relation to the rest of Europe.
The crisis has also affected the banking sector, which has immediately enacted more restrictive policies, between January and September 2008. In Veneto there was a decrease of 17,8% of funding to non-residential sector. Loans granted to households have registered in this region a decline by 3,6%, but only in the third quarter the reduction was of 20,2%. To overcome the economic and financial crisis, all observers, domestic and international, reaffirm the anti-cyclical role that the infrastructural investments can play, for their power to sustain income and employment.
The key factors to revitalize the sector have been identified in technological innovation, especially issues related to energy issue, development of infrastructure, this is essential both because it gives job opportunities to the construction companies and because each infrastructure forms the basis for a further socio-economic development of the area, and in the policies for the house promoted by the Veneto region to face the housing problem for large sectors of the population.
The Story behind the Construction Home Loan
Construction loans are generally known as story loans. This is because the lender will wish to know the story behind the whole planning process before the loan is granted. Although these loans are not standardized in the manner of mortgage loans they will require interest-only payments while the construction is going on and can be turned into a mortgage loan upon the completion of the building and the issuing of the certificate of occupancy. This is convenient to the borrower as it can be done with the same application and closing.
Typically, construction loans have variable rates combined with some form of short term interest rate. The loan can be divided into stages in keeping with the different phases of construction according to which the funds will be disbursed. If the borrower is the owner of the land, it will be ideal as it can be offered as equity on the loan taken for construction purposes. This can easily change the amount that the lender is willing to risk.
Once you are able to estimate the date if completion of the construction then it will be a good idea to apply for a rate lock agreement with due thought given to construction delays.
Typically, construction loans have variable rates combined with some form of short term interest rate. The loan can be divided into stages in keeping with the different phases of construction according to which the funds will be disbursed. If the borrower is the owner of the land, it will be ideal as it can be offered as equity on the loan taken for construction purposes. This can easily change the amount that the lender is willing to risk.
Once you are able to estimate the date if completion of the construction then it will be a good idea to apply for a rate lock agreement with due thought given to construction delays.
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