Early next year my husband Gerry and I will reach two milestones in our finances: Our mortgage’s outstanding balance will drop below $100,000 and, more significantly, more of our monthly payment will go toward principal than interest. With the passing of both of these milestones, Gerry and I will be that much closer to paying off our 20-year fixed-rate mortgage, a process we’re hastening by making additional principal payments of $195 a month. (Why the odd figure? I’ll get to that later; the short story is that it is part of $395 a month in spare cash we debated over where to invest. )

Some people believe paying off a mortgage is a stupid move, and would advise us to forgo the mortgage prepayments and invest that $395 a month elsewhere. This school of thought holds that the wisest financial move you can make is to get mortgages with the lowest monthly payments possible — refinancing as rates decline — and never pay off the loans, a strategy that improves your cash-flow and lets you benefit from potential home-price appreciation. (more…)

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Of all the confusing and expensive things about buying a house or refinancing a mortgage — and there are plenty — title insurance just might take the prize. “A lot of customers don’t understand title insurance,” said Samuel Ingram, president and CEO of myclosingspace.com, a Wall company that offers title insurance and other house-closing services. “It’s the largest component of your closing costs, and yet people don’t know anything about it.”

They should start learning about it, because title insurance, which protects homeowners’ property ownership rights, is drawing scrutiny from state regulators and other critics. They charge that: title insurance prices — and profits — have unfairly soared, because they’re based on house prices, which skyrocketed from 2000 to 2005. “The real estate boom has been very profitable for title insurers,” said J. Robert Hunter, director of insurance for the Consumer Federation of America. (more…)

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Trump-Style Negotiation by George Ross (John Wiley and Sons, $24.95). This book offers insights into Donald J. Trump’s big-thinking negotiation style, which leaves the contract details to his trusted adviser, George Ross. Only serious real-estate buyers, sellers, real-estate agents and investors will study this well-written book that reveals negotiation tactics not found elsewhere, illustrated with many actual examples from Trump acquisitions.

The Automatic Millionaire Homeowner by David Bach (Broadway Books, $19.95). If you could read only one real-estate book, whether you are a renter considering a home purchase, a current homeowner, a seasoned realty investor or a real-estate agent, this is the book for you because it shows how homeownership can lead to wealth. The book’s two themes are a) renters can become millionaires by investing in their first house or condo and b) that residence can become the foundation for a better home or more investment property in future years. (more…)

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The cost of affordable rental housing has risen 28 percent in the past seven years, far outpacing the wages of those who need it most, according to a new report released Tuesday. “Out of Reach,” the annual report of the National Low Income Housing Coalition (NLIHC), found that housing affordability is most difficult for minimum-wage earners but is also tough for those who earned the median hourly wage ($14.57) last year. In 2006, what the NLIHC calls the “national housing wage” rose to $16.31 for a two-bedroom rental, from $15.78 last year.

The report found that a minimum-wage earner making $10,712 a year cannot afford a one-bedroom home based on fair market rents anywhere in the country. To do that, he or she would need to earn at least $28,475, NLIHC calculated. And two-bedroom homes are out of reach even for families with two minimum-wage earners making $21,424 annually. For that, they’d need to make $33,925. (more…)

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For two enterprising couples, gingerbread became a relocation inspiration on a grand scale that extended well beyond holiday connections; sweet and spicy gingerbread baking emerged as the signature touch in Lynne and Peter Van Wyck’s transplanted venture on the banks of Ontario’s well-named Grand River, elaborate gingerbread wood-carved trim was part of the attraction for the relocation of Bermudians Alan Barker and Libby Rego to Wolfville, Nova Scotia.

Gingerbread played a different role in this Nova Scotian attraction. ‘Gingerbread’ is also the name given to the intricately-carved decorative wood trim which traditionally adorned roof edges and porches of Victorian houses. Barker and Libby Rego were drawn to a property that was defined by its ornate woodwork. Originally the 1893 carriage house for a neighbouring historic inn, it was converted into a family home in the 1980’s. The owner then transformed the building into the gingerbread wonder which became the Gingerbread House Inn. “The [Inn] does not look that big from the front and people are taken by surprise,” said Barker. “This is not a typical bed and breakfast where you peel off and go down a hall, one room here, one room there, and you fight for the remote. Our 4 suites with hot tubs in the rooms are the only ones in Nova Scotia and they have private entrances. The other 3 rooms have Jacuzzis.” (more…)

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We have purchased several single family homes, and our lender has always insisted that we obtain a hazard insurance policy before settlement. We are about to purchase our first condominium unit, and our real estate agent has advised that we do not need any insurance, since the entire association is covered under what they call a master policy. Is our agent correct?

This is your space; this is where you live; you own it. You pay real estate tax on your unit and can obtain a mortgage loan using your unit as security. In order to determine what is your space, you have to read your Declaration. Additionally, the units will be shown on the condominium Plat and Plans. Limited Common Elements is a common element and is reserved exclusively for use by one or more, but less than all, of the unit owners in the condominium. Limited Common Elements may include balconies, roof decks, storage areas and parking spaces. The Declaration will define Limited Common Elements and the Plats should show where in the complex they are located. (more…)

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Subprime mortgages are loans made to borrowers who are considered to be higher credit risks because of past payment problems. Since these loans are so profitable, the market has grown at a 39% annual rate from $120 billion in 2001 to $625 billion in 2005. But if a borrower can’t pay back the loan, the costs of this rapid growth become apparent. Up until 2005, if a borrower could not pay back the mortgage, the borrower could sell the house and use the proceeds to pay the mortgage company.

In October, borrowers were 60 days or more behind in payments on 3.9% of the subprime home loans packaged into mortgage securities this year — nearly twice the delinquency rate on new subprime loans recorded in 2005. And UBS expects 2006 to be “one of the worst ever for subprime loans” with 80,000 subprime borrowers behind on their payments. The way this happened with subprime mortgages is similar to what is going on now in lending to private equity buyouts. In subprime mortgages, the initial success during the real estate boom caused lenders to relax their standards and loosen their requirements for documentation. In 2003 and 2004, defaults were unusually low and investors who bought the mortgages did well and wanted more. (more…)

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