Permanent vacation

By Elizabeth Gehrman

Vacationers, beware: It’s that time of year when you’re most susceptible. You spend a week at a rustic camp in Maine or a few days in a cozy Cape Cod cottage, and – intoxicated by the sound of kids splashing at the dock, the heady scent of saltwater, the luscious taste of lobster rolls and soft-serve ice cream from the corner clam shack – the next thing you know you’re putting a down payment on the place next door. But what do you need to consider when purchasing a vacation home, and where are the top bargains right now?

Know When and Where to Buy

If you’re lucky enough to be able to purchase a second home, the generally depressed real estate market and historically low interest rates beckon. According to the National Association of Realtors’ Investment and Vacation Home Buyers Survey, released in March, the peak of vacation home buying occurred in 2006, with about 1.5 million properties sold nationwide. By 2008, the number of vacation homes transferred was less than half that. And when demand decreases, prices typically follow. The market does appear to be on the upswing: Last year, the number of vacation homes sold nationwide increased by almost 8 percent, to 553,000 from 513,000 in 2008, and the median sale price rose from $150,000 in 2008 to $169,000 in 2009. But that’s still down almost 17 percent from a high median sale price of $204,100 in 2004, and some very desirableNew Englandlocations have excellent news for buyers right now.

In Maine, for example, statewide prices for all homes have declined almost 16 percent, from a median of $194,000 in 2007 to $164,000 in 2009. InNew Hampshire, the drop was about 22 percent, withBelknapCounty– which encompasses Lakes Region cities and towns likeLaconia, Gilford, andBelmont– declining by 27 percent.

In Newport,Rhode Island, according to realtor Paul Leys of Gustave White Sotheby’s International Realty, a modest wharf-area condo might now go for as low as the upper $300,000s. “That wouldn’t be waterfront,” he says, “but it might be water view.”

And on Cape Cod, prices are down about 20 percent since 2005 – slightly more than the state as a whole, but that number depends in part on where you’re looking to buy. Mid-Cape seems to be the best bargain. “We are selling condos for prices that have not existed since 2000,” says Joyce Bearse, a realtor with Kinlin Grover inYarmouthPort.That’s because the condo market has taken a bigger hit than the single-family market and inventory is high across the board. “Right now, there are 224 listings in Dennis andYarmouthfor under $300,000. If I had done that search six years ago, it would have been two or three.” Bearse points out that prices may dip even lower now that the federal tax credit has expired, reducing demand, and as homes in foreclosure continue to come on to the market. “Even people at the high end can now afford a property they never could afford before,” she adds. “Now, instead of $1.5 million, that same property might be $1.2.” Even prices inProvincetown, with its easy access by fast ferry toBostonand its cosmopolitan feel, may surprise you. Century 21 Shoreland broker Rick Tourgee, for example, says he has a 1,300-square-foot two-bedroom-plus-den listed in a condo development called Seashore Park for $329,000.

“We don’t know when the bottom is until it starts going back up,” says Tom Kelly, the Seattle-based author of How a Second Home Can Be Your Best Investment, “but this appears to be close to the bottom.”

Analyze Your Needs

According to the National Association of Realtors survey, almost a third of buyers begin their vacation-home hunt by searching Internet sites like findashorehome.com, lakehouse.com, escapehomes.com, and homeawayrealestate.com. While 20 percent of buyers find their primary home through a friend, relative, or neighbor, or by driving by and seeing a sign in the yard, 28 percent of those looking for a vacation home get their most productive leads this way, suggesting that the idea of buying first enters people’s minds while they’re actually on vacation.

As you weigh the notion of taking on a second home, be sure you’d rather spend time in the same location every year than visit different destinations. “If you buy,” says Tony Giacalone of Tony’s Realty in East Boston, who owns a second home inPalm Springs,California, “you’re not just going on vacation. It gives you a chance to build up community someplace else. It gives you a new set of neighbors and a new set of activities, and gives your kids a whole new group of summer friends.” If you decide that’s for you, consider these points:

> Get to know your desired location before you buy. “If you’ve never been toMainebut you want to buy a place here,” says Tom Ferent of Mr. Lakefront Keller Williams Realty in South Casco,Maine, “well, we’ve got a big state. I always say come spend some time, because it’s a big investment.”

> Determine how you plan to use the property and how long you’ll hold on to it. “Families with kids buy a ski home and think they will come up every weekend to ski,” says Peter Tucker of Tucker Real Estate inStowe,Vermont. “But when the kids become teenagers, they may have different interests. Hockey is a good example. If you’ve got to be on the rink at 6 a.m. on Saturdays, it’s tough to come up for the weekend.”

> Decide whether you’ll want your vacation home to eventually become your full-time retirement home. It could help determine the features you look for, such as a first-floor master bedroom.

> Finally, consider whether you might want or need to rent out your place to help with costs. If so, study the rental market, going rates, and issues such as advertising options and cleaning services available in the area.

Compromise to Save Money

The best way to save money on a vacation property inNew Englandis by giving up one or two items on your wish list, starting, perhaps, with location. The mid-Cape, for example, has better deals than the lower, or outer,Cape, in part because it contains a broader range of properties. Bearse says a heated 900-square-foot two-bedroom ranch within a mile of the beach might go for less than $300,000. “And you can buy those small places, 450 or 500 square feet, for under $200,000,” she says. “Or if it’s half of a duplex, you could get 500 or 600 square feet for maybe $150,000. Just a place to hang your hat.” It won’t be a sprawling family compound, but with the right layout, 450 square feet can comfortably sleep four or five people.

In the Berkshires, Lenox, Stockbridge, Great Barrington, and Egremont are more expensive than, say, Lee or Becket. “Becket’s still an easy commute” fromBoston, says Beth VanNess, broker/owner of Gile Real Estate in Becket, “and it’s close to Tanglewood and all the other cultural amenities of the Berkshires.”

InNew Hampshire, Whitefield, for example, is less expensive than towns likeLincoln, whereLoonMountainis located, andLaconia. Whitefield is farther north but still just a short drive to the slopes, and it offers beautiful views, cute shops, decent restaurants, and fewer crowds. Even a small distance from your first choice can make a price difference. A recent Craigslist search on “Winnipesaukee cottage,” for example, yielded a 450-square-foot place with stunning water views about 2½ miles from hot spotWeirsBeachfor just $169,900. True, if you paid $80,000 or $100,000 more, you could probably just fall out of bed and onto Weirs – but what’s a short bike ride when you’re on vacation?

Scrutinize the Property

Once you’ve pinpointed a community you can afford, it’s time to fine-tune that wish list. Yes, you’ll likely have to compromise, but Ferent recommends looking for these criteria in a vacation home:

> A knockout view. “As you get older, you’re not as active on the water,” Ferent points out. “If an older person can get in anAdirondackchair and look at the sunset over the mountains, that’s really important.”

> A level lot. This kind of property – or, for lakeside homes, a sandy beach with gradual entry – appeals to a broader market than one with a steep slope.

> Proximity to the water. This can be a two-edged sword. In Maine, for example, all new construction has to be 100 feet back from the water – but, as Ferent points out, “you can’t watch the kids from the deck if you’re 100 feet back,” which might make an older home more appealing. Then again, in certain areas – near the open ocean and on river-fed (as opposed to spring-fed) lakes – being closer to the water may present flood hazards, so you need to inquire about special insurance before making your move.

> Privacy. Ferent contends that for a single-family home, about 100 feet of water frontage is needed for real privacy. “It really kills the atmosphere when you’re sitting on your deck and your next-door neighbor flushes his toilet,” he says. “If it’s 50 feet and the neighbors are on top of you, you’re going to have to really like people.” For some buyers, of course, living closer to neighbors is part of the fun; if you’re one of them, you might want to consider a cottage community or condo rather than a stand-alone house.

Ferent recommends that all the buyers involved – usually a committed couple, but sometimes two or three friends or relatives – take separate notes as they visit properties, ranking each of, say, five attributes on a 10-point scale. “I say, ‘Don’t share, but each of you come up with your top three,’ ” he says. “Often the husband and wife don’t agree on what they like,” but will have enough pluses in common to come to a decision.

Consider the Finances Carefully

By now everyone knows it’s tougher to get a mortgage than it was a few years ago, and for vacation homes it’s even worse. “You can buy a primary house for as little as 3 percent down,” says David Brennan, senior vice president for residential and consumer lending at Cape Cod Five Cents Savings Bank inOrleans. “But for an owner-occupied vacation home – that is, one you’re not planning to rent out – you’d need at least 15 percent down.” And you’ll need at least 20 percent down if you think you’ll get any income from rentals or if you need a jumbo loan, which in Barnstable County, for example, is $462,500 or greater and on Nantucket and the Vineyard, $729,750.

“What I’m hearing, at least here inCape Cod, is that more people are paying cash simply because there are no investment opportunities,” Brennan says. “Money market funds are paying nothing; the stock market’s up and down. I’m hearing from realtors that people are saying, ‘I might as well take the money out of my portfolio and pay cash or put down a very large down payment.’ ”

If you don’t have a sizable amount to put down, you might find a seller who is willing to carry part of your mortgage for a fixed period, allowing you to ask a smaller amount from the bank. “There are a lot of older people who’ve held these properties for a long time and are looking for consistent income in their retirement,” says Kelly. “You can make a lower down payment, and their qualifying standards won’t be as stringent as the bank’s.”

When figuring out how much you can afford, remember that your carrying cost, or the amount you’ll pay monthly, includes not only your mortgage, taxes, and insurance, but also maintenance, which can include unexpected surprises during the seasons you’re not watching over the place, and any extra insurance you may need because of the location – that flood insurance, for example, or additional homeowner’s insurance because your place is in a remote location far from a fire station or hydrant.

Go With Your Gut

While some realtors recommend taking your time to buy – after all, this is a discretionary purchase – just as many say you should grab the place you want when you see it. “I can’t tell you how many people say, ‘That first house was perfect for our needs, but we felt like we shouldn’t make an offer because we hadn’t done our due diligence,’ ” says Ferent. “And then they regret not making an offer because someone else buys it.”

To avoid longing for the one that got away, Ferent recommends being ready to take the leap once you do know what it is you’re looking for. “If it’s in your gut that you like the place and it’s in your price range, take it,” he says. “If you don’t, and someone else does, you’ll feel awful, and then on the rebound you might buy too quick. I’ll tell you how you know: If I call you in a week and tell you it’s sold, will you be sick?”

Once, the notion of owning two homes was solely for the wealthy. But now more middle-class baby boomers entering retirement are “trading down” from a big family house to two small abodes in separate states, according to real estate specialists.

“These aren’t rich people. … Yet they have traditional pensions that give them enough income to support homes in two parts of the country,” says Margie Casey, a veteran real estate broker and author of “Relocate at Retirement or Not?”

In a typical scenario, a retiring couple will first sell their large family house. Then they’ll buy a smaller home nearby for use as their primary residence. Finally, they’ll purchase a small, secondary residence in another state, most often in a resort setting.

Wherever they choose to live, most boomers want low maintenance, with exterior upkeep provided through a condo or homeowners’ association.

“People want the total freedom of ‘lock and leave’ homes,” Casey says.

Of course, many boomers lack the wherewithal to pursue a two-home retirement strategy, often due to financial setbacks in recent years. But Casey says those with enough money are willing to spend it in order to enhance their retirement lifestyle.

Here are a few tips for those considering a two-home retirement dream:

•First check out the financial implications of your plan.

Casey, who reviews retirement communities, says anyone considering two-home ownership should first discuss the financial implications with a professional adviser.

“A planner can help you calculate what you can afford and give you a second opinion on your plan,” she says.

On paper, it should be no more expensive to own two small units than a single large one. But in reality, dual homeownership can be more expensive after you take into account homeowner’s association fees and transportation costs.

Local taxes are also a big factor, especially in today’s tough times, where cash-strapped municipalities are frequently raising them.

“Once you investigate the taxes, you may decide to live one state away from your grandchildren, assuming that lowers your cost of living,” Casey says.

•Think through the choice of a condo as one of your two homes.

Michael R. Crowley, a real estate broker and past president of the National Association of Exclusive Buyer Agents, says homebuyers considering the purchase of a condo should exercise caution.

As an example, he tells of a married couple he advised on the purchase of retirement property in Hawaii. The couple chose a condominium development that seemed attractive. Before they concluded a purchase there, however, they rented a unit as a trial run.

“After a brief time renting, they realized they hated condo living. It felt way too crowded to them. They were glad they’d tried it out before actually buying,” Crowley recalls.

As he notes, there are other options for small-scale living that provide many of the worry-free features as a condo-apartment.

For instance, in many “planned unit developments,” you can buy a one-level detached unit that comes with exterior maintenance, including a lawn service, Crowley notes.

•Consider transportation before deciding where to relocate.

Many a retiree has selected an idyllic retirement setting without taking into account airport access, which is a major mistake, Casey says.

Relying on an out-of-the-way airport makes it harder to travel to distant locations for vacation or to see your offspring. It can also add to your transportation bills.

“Try to live near an airport that’s a hub for one of the major carriers. That can save you a ton on air travel costs,” Casey says.

Another transportation factor to consider is proximity to major interstate roadways.

“Most retired people want to live within a two-hour drive of their grandchildren,” Casey says.

•Avoid high expectations for visits with your offspring.

“Living near the grandkids is the No. 1 thing for a lot of retirees,” Casey says.

Still, she cautions those choosing a retirement habitat to be realistic about their expectations on how often they’ll see family, no matter how close they live.

“Your kids have busy lives. Sure, you can hope to see them often. But don’t focus your whole retirement lifestyle on seeing family. First and foremost, choose the lifestyle that works for you,” Casey says.

•Remember the benefits of two-home living.

One reason retirees like owning two abodes is that they can take advantage of two distinct climates, avoiding harsh winters and interminable summers

By living in two places, Casey says, many retirees have “the best of both worlds.” They can choose a primary setting near family and a secondary one that satisfies their desire for intellectual stimulation, perhaps in a college town where they can enjoy classes, lectures and cultural events.

For instance, Casey cites low-cost courses available to seniors on many campuses through the Osher Lifelong Learning Institutes, www.osherfoundation.org Buying a home near a college town offering such classes can enrich retirement.

Obviously, not all retirees are suited to living in two homes. Some prefer a sedentary life with little travel involved. But many others thrive on a dual-town lifestyle, Casey says.

“Living in two places can be exciting. The change of going back and forth is stimulating. And that’s good for a lot of people,” she says

By DEREK KRAVITZ and ALEX VEIGA - AP Real Estate Writers

WASHINGTON — Five years after the U.S. housing bust sent sales and prices plunging, the spring home-buying season is pointing to a long-awaited recovery.

Reduced prices, record-low mortgage rates, higher rents and an improving job market appear to be emboldening many would-be buyers. Open houses are drawing crowds. A wave of foreclosures is leading investors to grab bargain-priced homes.

In this photo taken Friday, April 13, 2012, in Chicago, John and Megan Henshel pack belongings in the condo they were renting to move to a home they just purchased. M. SPENCER GREEN / AP PHOTO

And many people seem to have concluded that prices won’t drop much further. In some areas, prices have begun to tick up.

Interviews with more than two dozen potential buyers, sellers, brokers, Realtors and economists suggest that confidence is up and that sales will move slowly but steadily higher.

“The biggest challenge that we’ve had over the past four years is fear – fear that the economy is collapsing, that property values are collapsing, that the world is coming to an end,” says Mark Prather, a broker at ERA Buy America Real Estate in La Palma, Calif. “The fear factor is all but gone.”

Prather says the number of prospective buyers who contacted his company last month was about 35 percent more than a year ago.

The spring buying season got an early lift-off from an uncommonly warm January and February – a winter that was the best for sales of previously occupied homes in five years. Permits to build houses and apartments rose in February to their highest level since 2008.

“People feel much more confident,” said Steve Brown, co-owner of real estate company Irongate Inc. of Dayton, Ohio, who says sales jumped more than 16 percent for the first two months of 2012 over the same period last year. “There’s no question there’s a good feeling in the marketplace.”

Some analysts detected a slight uptick in prices for February and March. CoreLogic, a real estate data firm, says prices for homes not at risk of foreclosure – about two thirds of the market – rose 0.7 percent in February. It was the first increase in four years. Price gains occurred both in some hard-hit areas, such as Phoenix, and some still-thriving areas like New York and Washington.

In Miami, the average sales price has surged 14 percent in the past year, according to Trulia, a real estate data firm. In Phoenix, the average is up 13 percent, in Pittsburgh 9 percent.

Earnings reports Friday from two big banks suggested that more people are taking out mortgages. JPMorgan Chase issued 6 percent more mortgages from January through March than it did a year ago and got 33 percent more applications. Wells Fargo issued 54 percent more mortgages and received 84 percent more applications.

Still, few think the housing industry is nearing a return to full health. For that to happen, a robust job market would be needed. More hiring would give more people the money and job security to buy. That would help boost sales and prices.

Such areas as Atlanta, suburban Las Vegas and central California show few signs of recovery. And in some others – from Seattle to Cleveland – home prices have continued to slip. The average has dropped 9 percent in Seattle over the past 12 months and 7 percent in Cleveland.

But in many parts of the country, including thriving areas of Boston, Dallas and Seattle, confidence is rising along with prices. Among the reasons:

- Hiring has strengthened. Each month from January through March generated a solid average of 212,000 jobs. Unemployment has sunk from 9.1 percent in August to 8.2 percent. More job security tends to embolden more people to invest in a home. In Dayton, for example, the University of Dayton is hiring for a new engineering research center, General Electric is hiring hundreds of contractors and the nearby Wright-Patterson Air Force Base are expanding.

By BRIAN IANIERI Press of Atlantic City Staff Writer

Beach-home seekers and unseasonably warm weather helped boost regional home sales in March from a year ago, even as sales declined nationally, according to Realtor sales figures and local real estate agents.

Existing single-family home and condo sales in Cape May County jumped 39 percent from a year ago to 269 homes in March, data tracked by the local Multiple Listing Service show.

In Atlantic County, shore towns such as Brigantine and Margate posted large volume increases as home resales throughout the county grew 9 percent to 214 in March.

“These are not investors. These are end-users, people buying for themselves to meet a vacation need or a retirement plan,” said Ada Krebs, senior sales associate at Weichert Realtors Brigantine Realty.

In March, the 57 homes sold in Cumberland County were up from 39 in the same month a year ago.

Realtors agreed that the region’s warm weather was a factor because its puts people in the mood to house hunt.

Nationwide, the pace of buying slowed 2.6 percent in March to a seasonally adjusted annual rate of 4.5 million homes, the National Association of Realtors said Thursday.

An increase in January and February purchases nationwide had raised optimism that home sales would continue their upward momentum, but that did not happen throughout the country in March.

Even with the first-quarter gains, the sales pace remains far below the 6 million per year that economists equate with healthy housing markets.

U.S. home prices, however, were up. The median price nationally of a house sold in March was $163,800, 2.5 percent higher than a year ago.

“I believe prices have largely already bottomed out in the Atlantic City region,” said Joel Naroff, president of Holland, Pa.-based Naroff Economic Advisors and the owner of a home in Margate. “Sales are beginning to pick up and that is a signal prices have reached a level where buyers now think there are real bargains out there.”

In Ocean City, most of the sales were condos — 72 in March, compared with 47 in the same month last year, MLS listings show.

“It hasn’t been this busy in a long time,” said Doug Grisbaum, co-broker of record at Berger Realty in Ocean City.

“I think the problem we had in the past, all they were looking for was an investment in Ocean City. Now people want to be here, to vacation here. They are not so much investors as users,” Grisbaum said.

At McCann Realtors, which has locations in Sea Isle City and Ocean City, sales associate Eric C. Axelson said the spring market locally has been strong among properties priced realistically.

Bidding wars have even arisen for some of those homes, he said.

“One property had seven bidders on it,” he said. “There’s inventory and the smart buyers are realizing this and they’re aggressive right now, which is good. We have a lot of inventory out there to work through. People are realizing the market has softened and getting their price points down to realistic levels.”

“The guy who has owned this property for 20 years can sell in a heartbeat. The guy who bought in 2007 at the height of the market and is trying to get it back, obviously the numbers don’t work,” Axelson said. “The biggest hurdle is people understanding the market has softened from the peak, but the peak was unrealistic and unsustainable.”

This piece originally appeared on NJ Spotlight.

A massive white sphere resembling a golf ball sits atop the newly built Revel casino, arousing the curiosity of anyone who sees it. When asked, company officials were coy, saying only that it would be used to represent their brand and that it would not roll off the top of the building. But people may have to wait for Revel’s grand opening Memorial Day weekend to see just what the ball will do.

The Atlantic City Boardwalk. Credit: Chris Connelly on Flickr

They aren’t the only ones watching Revel. Investors are anxiously waiting to see how the casino, will fare—because most say as goes Revel, so goes Atlantic City. The gambling mecca is trying to reinvent itself as a seaside resort, and developer Revel Entertainment Group LLC’s $2.4-billion project, Atlantic City’s first new casino in nine years, is widely viewed as the barometer of whether that concept will work.

Aside from 150,000 square feet of casino space, Revel has 1,800 hotel rooms, three theaters, including a 5,500-seat concert hall, 14 restaurants, six pools and two acres of landscaped outdoor decks. Investors want to see whether Revel attracts a new breed of tourist to Atlantic City or whether it simply siphons off business from the existing casinos. With gambling now available throughout the Northeast, Atlantic City needs to attract people other than gamblers if it is going to survive.

The roadmap for the city’s makeover is the Casino Reinvestment Development Authority’s master plan, unveiled Feb. 1, a year to the day Gov. Chris Christie signed landmark legislation designed to revitalize the city.

With help from Chicago-based Jones Lang LaSalle, the urban planning firm Jerde Partnership, the engineering firm Birdsall Services Group, and the law firm Hill Wallack, the state-run CRDA put together a 300-page plan that spelled out redevelopment options for the so-called Tourism District—a 1,700-acre area encompassing the casinos, the boardwalk, shopping and dining districts, and Bader Field. Christie is giving the resort five years to gain its feet before reconsidering whether to expand casino gambling to the Meadowlands and other parts of New Jersey.

The plan contained short- , medium-  and long-term goals. Among the short-term: To have light and sound attractions along the two-and-a-half mile Boardwalk. The designers envision up to 10 “Innovation Pavilions” sponsored by private companies that would have entertainment and educational components. Interactive wind sculptures will run along the beach.

If the planners have their way, even the casino parking garages will be revamped to include some open space—for cafes and stores. The sky bridges leading to the casinos will offer more sky, and the bandshell will be expanded and art and music festivals will be held year round.

Atlantic and Pacific Avenues, which run parallel to the Boardwalk, will be given a make-over; the blighted facades addressed by a variety of means, some legal, some by asking the owners to get involved in the reclamation. Street furniture will be installed, as well as hexagonal pavers. Fountains will be added, along with other “water features.”

Pacific, one street over from the Boardwalk, will be more pedestrian-friendly, while Atlantic Avenue, the next street, will be turned into a Main Street of sorts for tourists. Atlantic will also have a “small business incubator” to support local business.

Lighthouse Park will be expanded to encompass the South Inlet. A Gardner’s Basin development will have a wildlife research facility and marine technology center, as well as a working “Fisherman’s Village.” And Bader Field, the 143-acre site of the former municipal airport, will be turned into a mixed-use commercial and residential area.

Screenshot from the master plan.

The plan received unanimous support from the CRDA’s 15-member board, including Atlantic City Mayor Lorenzo Langford, who in the past has been critical of the state’s takeover of Atlantic City’s tourism district.

Some questioned the master plan process. Typically, a draft of the plan is put out to stakeholders and the public, who can then make comments. Those comments are considered in the final draft. In Atlantic City, the plan was adopted first and then put out for comment. Copies weren’t even available until after it was adopted.

Critics also question how some of the proposals will be implemented. The city has had five or six master plans since gambling was legalized in 1976, and much of what was suggested was never done. They fear this plan will be more of the same if money isn’t put behind some of the goals, such as improving the casino parking lots and cleaning up blighted facades.

“I would liked to have seen immediate plans to throw money behind demolition and removal of blight, and maybe some incentive programs, to actually get people in here to start building,” said Damon Tyner, an attorney in Atlantic City who recently ran unsuccessfully as a Democrat for state assembly.

While New Jersey already offers tax incentives to developers on $50 million projects that create at least 200 jobs, Sen. Jim Whelan (D-Atlantic) has sponsored a bill that would extend those incentives to non-gaming projects within Atlantic City’s tourism zone. The bill would give developers of such projects a $20-million credit against their state income taxes over 10 years if the project costs at least $20 million and creates at least 100 jobs.

“You’ve got to get [investors] in there immediately. Unfortunately, all the buzz I’m hearing from folks on Wall Street is that they’re just not really interested,” Tyner said. “It’s always disappointing, living here and understanding the potential, and then seeing that the folks that write the checks are just not coming.”

It doesn’t help that not one non-gaming project, since the city adopted gaming—from residential projects to the shopping outlet district in the center of town known as the Walk—has been profitable without hefty government subsidies, sources said.

One of the primary issues, for non-gaming projects like real estate, is the city’s high property taxes. With its proximity to the ocean and its great restaurants and entertainment, Atlantic City would be an ideal place for tri-state area residents to have a second home, but high property taxes make it cost prohibitive, said Tom Scannapieco, president of Scannapieco Development Corp., based in New Hope, PA.

Scannapieco, whose company built the Sheraton Atlantic City Convention Center Hotel, as well as the Bella Condomiums next to Revel and townhouses on the Northeast Inlet, said the current economic climate has investors skittish everywhere. But casino revenues falling 6 percent to 8 percent a year give the impression that Atlantic City is a city on the decline. That’s unfortunate, because it has a ton of potential, he says. But property taxes are the No. 1 hurdle.

“I will tell you flat out that nothing will be done in the city non-casino wise. No development will go forward in the city unless they are able to put in a very significant tax abatement program like they have in Philadelphia,” he said.

Philadelphia has a tax abatement program that gives hefty tax holidays over a 10-year period. Scannapieco said he currently has a condo project in Center City, Philadelphia, where the property taxes on a $7 million condo would be about $1,800 a year for the first 10 years. A similar condo in Atlantic City would have an annual tax bill of $140,000, he said.

“Atlantic City is not a market that can command that kind of tax payment today, for a second home, and because of that, it has been passed over as an opportunity for second home development.”

Proponents of the plan say this time may be different because there’s finally a consensus to turn Atlantic City around. The plan has the backing of the governor’s office, the city, and there is now an agency whose clear mission it is to implement the goals in the plan, said Cory Morowitz, a gaming industry analyst. That said, economics will ultimately dictate whether the plan succeeds, he said.

“Investor money is drawn in by the market opportunity. So if Revel is successful, and the gaming industry stabilizes in Atlantic City, and if the general economic conditions get better, then investor money will flow,” Morowitz said.

Consensus, tax incentives, and leadership are all good tools to help facilitate investment, but investors are driven mostly – or entirely—by returns on investment.

“I don’t think things like tax incentives are a major driver of investment decisions,” Morowitz said. “Ultimately, it’s going to depend on a few things: The market has to evolve beyond gaming, which it is, and the economy has to get better. And the leadership has to be consistent and maintain the course it’s on.”

Tom Ballance, senior vice president of administration for the Borgata Hotel, contests the notion that the master plan is good on paper but difficult to implement. The plan spells out short-term goals like boardwalk and façade improvements, which are easy to do and don’t require a lot of capital, and yet they increase the appeal of the city, thereby attracting the tourists and investors needed to achieve the longer-term goals.

“As with any urban redevelopment, you need to get momentum,” said Ballance. “Those early projects are designed to build that momentum.”

Ballance is also a trustee on the Atlantic City Alliance, an agency whose goal it is to build that momentum by marketing the city. The ACA has a budget of $30 million a year, money the casino industry used to pay to the ailing horse-racing industry so that it could offer more lucrative purses. For the next five years, that money will remain in Atlantic City.

If you make Atlantic City attractive, people will definitely come, said Jack Plackter, a real estate lawyer with Fox Rothschild in Atlantic City. Borgata has shown that, and Revel, when it opens, will show that, he said.

“Atlantic City is only 48 blocks long. You can fix this place one block at a time,” Plackter said. “The issue is can it be done quickly enough. We don’t have a huge window. We don’t have 20 years.”

Sea Isle City Real Estate for Sale

The clock has been reset on property values across the board, particularly at the Jersey Shore (especially in the Wildwoods). Homes and condominiums at the shore are widely available today at prices similar to what you would have paid in the early 2000’s. There are a number of factors that contribute to this situation. The primary factor is the influence of “distressed sales” on the market place.

A distressed sale is generally considered to be a sale offering of a property whose owner is unable to continue to pay the mortgage and other related expenses pertaining to the property commonly known as a pre-foreclosure. In addition it may also be a property offered for sale by the bank or entity that owns the mortgage in most cases post foreclosure.

There are many factors that contribute to the creation of a short sale situation. The primary factor is that the property no longer brings a price in the present day market place that will equal or exceed what is owed to the lender. In order to sell the property “short” the lender must agree to allow the property to sell for less than is owed to them. Therefore the sale is contingent on the lender and or third party’s approval (in some cases there may be a second mortgage and or additional creditors.

In general the properties that are currently offered as short sales in the beach communities of Cape May County are newer condominiums and townhouses, many in locations that offer direct ocean, beach and or bay views!

Considering that current real estate market conditions offer up to 50% discounts from previous high values in the area; together with mortgage interest rates lower than we have seen in decades, add to these sellers who are motivated to sell and must reduce debt obligations the result is the “perfect storm buyers market”!

Knowing the current market helps potential buyers to maneuver the terrain of the different shore towns. Over the past 12 months we have been bouncing off the muddy bottom. I coined it that because there are many circumstances that define the very different price points. Pricing should be stable for the next six to nine months as the distressed inventory is evaporating.

This is the reason you want to speak with an experienced full time agent that is working in the marketplace that will tell you like it is. The market had been steadily drifting for a seven year period and this is now the turning point. Don’t take my word let’s make some offers and see that the sellers are content to sell their properties at a reduced price but have seem to hit a barrier.

This folks is the best news you can hear, prices have stabilized and will now be steady for the foreseeable future.  Its time to get off the sidelines before the buyers market will be over. At least you can say you bought a shore home near the bottom, approximately 25% below the manic market top.

With signs of improvement in the housing sector already emerging, participants expect to see housing starts nearly double by 2014 and project home prices will begin to rise in 2013.

The average home price, which has declined somewhere between 1.8 percent and 4.1 percent over each of the past three years, according to FHFA data, is expected to stabilize in 2012, followed by a 2 percent increase in 2013, and a 3.5 percent increase in 2014.

Single-family housing starts are expected to rise from 428,600 starts in 2011 to 500,000 in 2012, and jump to 800,000 in 2014.

The unemployment rate is expected to continue falling, with the rate dropping to 8 percent by the end of 2012, 7.5 percent by the end of 2013, and 6.9 percent by the end of 2014.

GDP is expected to grow by 2.5 percent in 2012 and grow to 3.2 percent in 2014.

But, with the improving economy is inflation and higher interest rates. These rising rates will increase costs for investors, and those surveyed do not expect substantial increases in real estate capitalization rates for institutional-quality investments (NCREIF cap rates), which are expected to remain steady at 6 percent in 2012 and 2013 and then rise slightly to 6.2 percent in 2014.

By property type, National Council of Real Estate Investment Fiduciaries (NCREIF) total returns in 2012 are expected to be strongest for apartments (12.1 percent), followed by industrial  (11.5 percent), office (10.8 percent), and retail (10 percent).

By 2014, returns are expected to be strongest for office (10 percent) and industrial (10 percent), followed by apartments (8.8 percent) and retail (8.5 percent).

ULI CEO Patrick L. Phillips advised that while the ULI Forecast suggests that economic growth will be steady rather than sporadic, it must be viewed within the context of numerous risk factors such as the continuing impact of Europe’s debt crisis; the impact of the upcoming presidential election in the U.S. and major elections overseas; and the complexities of tighter financial regulations in the U.S. and abroad.

“While geopolitical and global economic events could change the forecast going forward, what we see in this survey is confidence that the U.S. real estate economy has weathered the brunt of the recent financial storm and is poised for significant improvement over the next three years.,” said Phillips.

Non-housing sector growth, according to the ULI Forecast, which was conducted from February 23 to March 12, 2012

-For the apartment sector, year-end vacancy rates are expected to decline further in 2012 to 5 percent, and then rise slightly to 5.1 percent in 2013 and to 5.3 percent in 2014.

-Apartments are expected to show strong rental rate growth, rising 5 percent in 2012, then slowing down to 4 percent in 2013, and 3.8 percent in 2014.

-Issuance of commercial mortgage-backed securities (CMBS) is expected to increase from $33 billion in 2011 to $40 billion in 2012, $58 billion in 2013, and $75 billion in 2014.

-Ten-year treasury rates are projected to rise to 2.4 percent by the end of 2012, 3.1 percent for 2013, and 3.8 percent for 2014.

-Future equity REIT returns are expected to rise to 10 percent in 2012, then drop to 9 percent in 2013, and 8 percent in 2014.

-Returns for institutional-quality direct real estate investments are expected to trend lower, with returns of 11 percent in 2012, 9.5 percent in 2013, and 8.5 percent in 2014.

-Hotel occupancy rates are projected to increase to 57 percent by 2012, 58.2 percent by 2013, and 59.2 percent by 2014.

-For the industrial/warehouse sector, vacancy rates are expected to decline steadily over the next three years to 12.8 percent by the end of 2012, 12.1 percent in 2013, and 11.5 percent by the end of 2014.

Sales of investment and vacation homes* jumped in 2011, with the combined market share rising to the highest level since 2005, according to the National Association of Realtors®.

NAR’s 2012 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2011, shows investment-home sales surged an extraordinary 64.5 percent to 1.23 million last year from 749,000 in 2010. Vacation-home sales rose 7.0 percent to 502,000 in 2011 from 469,000 in 2010. Owner-occupied purchases fell 15.5 percent to 2.78 million.

Vacation-home sales accounted for 11 percent of all transactions last year, up from 10 percent in 2010, while the portion of investment sales jumped to 27 percent in 2011 from 17 percent in 2010.

NAR Chief Economist Lawrence Yun said investors with cash took advantage of market conditions in 2011. “During the past year investors have been swooping into the market to take advantage of bargain home prices,” he said. “Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property.”

Yun said the shift in investment buyer patterns in 2011 shows the market, for the large part, is able to absorb foreclosures hitting the market. “Small-time investors are helping the market heal since REO (bank real estate owned) inventory is not lingering for an extended period. Any government program to sell REO inventory in bulk to large institutional companies should be limited to small geographic areas. Even where alternatives are needed, it’s best to rely on the expertise of local businesses, nonprofit organizations and government,” he said.

All-cash purchases have become fairly common in the investment- and vacation-home market during recent years: 49 percent of investment buyers paid cash in 2011, as did 42 percent of vacation-home buyers. Half of all investment home purchases in 2011 were distressed homes, as were 39 percent of vacation homes.

“Clearly we’re looking at investors with financial resources who see real estate as a good investment and who aren’t hesitant to use cash,” Yun said. Of buyers who financed their purchase with a mortgage, large downpayments were typical. The median downpayment for both investment- and vacation-home buyers in 2011 was 27 percent.

“Given the tight credit in recent years, many would-be normal home buyers for owner occupancy declined,” Yun said.

The median investment-home price was $100,000 in 2011, up 6.4 percent from $94,000 in 2010, while the median vacation-home price was $121,300, down 19.1 percent from $150,000 in 2010.

Investment-home buyers in 2011 had a median age of 50, earned $86,100 and bought a home that was relatively close to their primary residence – a median distance of 25 miles, although 30 percent were more than 100 miles away.

“The share of investment buyers who flipped property remained low in 2011, and many of those homes likely were renovated before reselling,” Yun said. Five percent of homes purchased by investment buyers last year have already been resold, up from 2 percent in 2010. The typical investment buyer plans to hold the property for a median of 5 years, down from 10 years for buyers in 2010.

The typical vacation-home buyer was 50 years old, had a median household income of $88,600 and purchased a property that was a median distance of 305 miles from the primary residence; 35 percent of vacation homes were within 100 miles and 37 percent were more than 500 miles. Buyers plan to own their recreational property for a median of 10 years.

Lifestyle factors have consistently been the primary motivation for vacation-home buyers, while the desire for rental income drives investment purchases. Vacation homes purchased last year were more likely to be in suburban or rural areas; investment homes were concentrated in suburban locations.

Eighty-two percent of vacation-home buyers said the primary reason for buying was to use the property themselves for vacations, or as a family retreat. Thirty percent plan to use the property as a primary residence in the future, and only 22 percent plan to rent to others.

Half of investment buyers said they purchased primarily to generate rental income, and 34 percent wanted to diversify their investments or saw a good investment opportunity.

Sixteen percent of vacation buyers and 14 percent of investment buyers purchased the property for a family member, friend or relative to use. In many cases the home is intended for a son or daughter to use while attending school.

Forty-two percent of vacation homes purchased last year were in the South, 30 percent in the West, 15 percent in the Northeast and 12 percent in the Midwest; 1 percent were located outside of the U.S.

Forty-four percent of investment properties were in the South, 23 percent in the West, 17 percent in the Midwest and 15 percent in the Northeast.

Eight out of 10 second-home buyers said it was a good time to buy. Nearly half of investment buyers said they were likely to purchase another property within two years, as did one-third of vacation-home buyers.

Currently, 42.1 million people in the U.S. are ages 50-59 – a group that has dominated second-home sales since the middle part of the past decade and established records. An additional 43.5 million people are 40-49 years old, while another 40.2 million are 30-39.

“Given that the number of people who are in their 40s is somewhat larger than the 50-somethings, the long-term demographic demand for purchasing vacation homes is favorable because these younger households are likely to enter the market as their desire for these kinds of properties grows, and individual circumstances allow,” Yun said.

NAR’s analysis of U.S. Census Bureau data shows there are 8.0 million vacation homes and 42.8 million investment units in the U.S., compared with 75.3 million owner-occupied homes.

For more information about Jersey Shore vacation homes contact Ian Lazarus, The Landis Co., Realtors, 609-457-0258 mobile, ian.lazarus@mygo2realtor.com .

Inquirer Staff Writer

Atlantic City’s newest casino project towers over one of the city’s most blighted neighborhoods. A new master plan developed by the Revel Entertainment Group provides a vision for improving the South Inlet and Northeast Inlet sections of the city.

ATLANTIC CITY – This town isn’t Las Vegas, but the $2.4 billion Revel Casino wants to take visitors there with A-list entertainment, posh rooms, and celebrity-chef restaurants in a luxurious setting where the champagne and water in 10 swimming pools are always flowing.

The 20-acre resort – draped in silvery-blue reflective glass – literally curls to and fro like the ocean it embraces. Many see Revel as the lifeline for this down-on-its-luck gambling mecca in need of a revival.

As the 12th casino – the first built from the ground up since the game-changing Borgata opened in 2003 – Revel plans to move Atlantic City from primarily a day trip to overnight market that caters to leisure and group guests, conventioneers, and, of course, gamblers.

“It will be good for Atlantic City,” said local resident Lucas Pineda, 40, a restaurant cook, as he walked past Revel last week on his way to work.

A heavy morning fog lifted to reveal the facade – covered in enough glass to fill 18 football fields. At 47 stories, it’s now the city’s tallest building and New Jersey’s second tallest.

“It’s a big casino,” Pineda said, looking up. “It will bring them back.”

Revel has an ambitious and unconventional business plan. It becomes the first fully smoke-free and first nonunion palace here since gambling was legalized in 1976, according to the state Division of Gaming Enforcement. It will be the first Atlantic City casino to impose employee “term limits,” in which workers, ranging from bellhops to dealers, will have to reapply for jobs every four to six years.

Few are watching more closely than Gov. Christie, who last year created a state-run tourism district to jump-start the city’s turnaround, eased casino regulations to entice developers, and earmarked $261 million in state tax credits toward Revel’s completion. To Christie, much of Atlantic City’s future – and to a large extent, its survival – will depend on how Revel performs.

But the casino, which launches an eight-week “soft opening” starting April 2 to phase in most of its 1,898 rooms, half of its 14 restaurants, a spa, and the first of the pools, as well as test the 2,500 slot machines and 150 table games, could be Atlantic City’s biggest gamble yet.

Gaming analysts say Revel’s lavish price tag and bevy of offerings on 20 acres of prime beachfront aren’t a guarantee for success – not with competitors in Pennsylvania, Delaware, Maryland, and New York, and more casinos on the way.

Revenue from Atlantic City’s still dominant gaming industry has declined 42 of the last 43 months, and its workforce has shrunk by about 10,000 from its peak six years ago.

“I would not say that Revel is doomed to fail, but it clearly has some challenges,” said John Kempf, of RBC Capital Markets. “There is something to be said for addressing the nongaming amenities, although this may take some time to develop.”

Revel’s nonunion status, reliance on part-time workers (25 percent of its 5,500-member staff will be part-time with no health benefits), and term limits have put the casino directly at odds with the 13,500-member Unite Here Local 54, which represents most of the city’s casino and hospitality workers.

“This is a complete commoditization of the workforce and is directly against what the original [New Jersey] Casino Control Act stood for – which was decent jobs, benefits, a future,” union president Robert McDevitt said. “Revel has completely turned that upside down.”

“If this is successful, the industry will have no choice but to follow,” he said. “The reality will be [the other casinos] can’t have a 50-year-old cocktail waitress.”

At 6.3 million square feet, Revel is among the largest U.S. casinos by square footage. The largest in North America – Foxwoods in Connecticut – measures 6.7 million square feet.

Revel cost more than double its closest Atlantic City rival – the Borgata, built for $1.1 billion. But when Revel opens for the preview, missing will be a casino standard – the buffet, which even the upscale Borgata offered. Instead, Revel borrows heavily from the Las Vegas playbook, housing such amenities as theaters, nightclubs, cabanas, retail shops, and restaurants with celebrity chefs Jose Garces, Michel Richard, and Marc Forgione.

“Each aspect of the resort is designed for a particular guest experience,” said Revel chief executive officer Kevin DeSanctis. “If you are a foodie, or groupie [music lover], or someone who enjoys nightlife, Revel will offer an experience so that every guest connects with something . . . every time they’re here.”

The 130,000-square-foot gaming floor represents just 5 percent of the complex – comparable to the Venetian and Cosmopolitan in Las Vegas, but smaller by more than 30,000 square feet than a few other Atlantic City casinos – and smaller even than Revel’s available meeting space.

Entertainment will play a huge role, with inaugural acts including top draws Maroon 5 and Beyoncé in the 5,050-seat Ovation Hall.

Unlike other Boardwalk casinos, which put the ocean to their backs (which critics say was to discourage patrons from leaving), Revel embraced the water and light. Even gamblers can see the ocean and horizon from the gaming floor.

“The ocean figured prominently into Revel’s design from the start,” said Michael Prifti, a principal at BLT Architects, Revel’s main architect. Every room and suite has an ocean or bay view.

“What we’re looking to do . . . is basically create a business model that, one, is not something that you can copy,” DeSanctis said at the East Coast Gaming Congress here last May. “Other jurisdictions cannot copy it because they don’t have the capital investment to do it. And, two, it’s much more sustainable.”

But will it be enough?

Pennsylvania’s 10 casinos – soon to be 11 with the opening Saturday of the Valley Forge Casino Resort – have cut into what had been a steady clientele for Atlantic City for three decades.

Jackie Hemphill, of Lambertville, N.J., hasn’t been back to Atlantic City in two years. It takes her 35 minutes to get to Parx in Bensalem vs. two hours to the Shore.

“Revel will have to do something truly amazing to get me down there,” said the 63-year-old retiree, as she worked a penny slot machine at the Bucks County casino last week.

Analyst Kempf said Revel’s biggest obstacles were “new competition within and outside of Atlantic City, having a small room base, and executing on its nongaming strategy.”

Revel’s 1,898 rooms will rank fifth among the city’s 12 casinos, behind the Borgata, Harrah’s Resort, Tropicana, and Trump Taj Mahal. It edges out Bally’s with 1,727 rooms.

“The room size is one of the biggest issues in my mind,” Kempf said. “It will need heavy-volume day traffic, as well as high customer spend-per-visit to offset this disadvantage. I’m not saying they won’t, but it will be challenging.”

Longtime Margate resident and Philadelphia native Phil Greenspun shared similar concerns.

“We might be oversaturated” as far as casinos, said the 72-year-old retiree as he strolled the Boardwalk in neighboring Ventnor recently. “The possibility exists.”

Andrew Zarnett of Deutsche Bank AG predicts significant cannibalization once Revel opens. The smaller venues that are already on the bubble, such as Resorts and the Atlantic Club (formerly the Atlantic City Hilton), could face extinction, he said.

“Revel will hurt the higher-end properties, such as the Borgata, because in order for it to succeed, it needs to target those higher-end customers, and it needs to grow the market,” he said. “Some of the smaller, nonprofitable, older casinos will close, and the larger casinos will consolidate the rest . . . of the market.”

But Mustapha Moutaouakil, 43, a professional poker player from Mystic, Conn., and a regular at Foxwoods, isn’t so sure Revel will steal business from market-leading Borgata – at least not right away.

“I’ll check it out. If they have good poker games, I might go there,” he said, as he played in a recent tournament at the Borgata.

At times, Revel’s reaching completion seemed like a long shot. It began construction in late 2006, but a plane crash in the summer of 2008 killed six executives who were on their way to select glass for the facade.

The recession hit later that year, and lending froze. For two years, Revel sat dormant – a shell at New Jersey Avenue and the Boardwalk.

Work on the interiors, including the restaurants, didn’t resume until a year ago after DeSanctis secured the remaining $1.15 billion in financing to complete it.

Five and a half years after it broke ground, Revel Entertainment Group L.L.C. will go before the New Jersey Casino Control Commission on Monday for its casino license. Revel arrives as Pennsylvania and New Jersey duke it out for the second-largest U.S. gambling market title after Nevada. New Jersey’s 11 casinos grossed $3.3 billion last year to Pennsylvania’s $3.1 billion.

DeSanctis, who was recruited from Penn National Gaming Inc. in 2006 to oversee Revel, and guided it through tragedy and difficult odds, can’t help but be optimistic.

Atlantic City’s resurrection is “going to take time,” he said. “It took us a long time to get in this situation. It’s going to take us time to get out.

“I think we’ll be part of the positives that are going on.”

With interest rates sitting just above 5 percent, now is a great time to crunch the numbers and see whether refinancing your mortgage can save you money. As a general rule, homeowners will probably come out ahead when they can shave about 2 percentage points off of their interest rate, says Marc Savitt, president of the National Association of Mortgage Brokers.

If you have an adjustable-rate mortgage (ARM) or an interest-only loan, you might also benefit from refinancing, even if you don’t save money on the monthly payments. That’s because you can lock in a 30-year fixed-rate mortgage at today’s historically low rates and never have to worry again about your payments increasing.

Think you’re a good candidate for refinancing? Despite reports of banks hoarding money, lenders are still making loans. But it has become harder to qualify for one. Here’s a road map to help you navigate the new and ever changing mortgage terrain.

The new criteria

Credit scores matter

“If you want access to the lowest interest rates, you need a credit score of 720 or higher,” says Keith Gumbinger, vice president at mortgage-information publisher HSH Associates. If you have a score of 620 or below, you might not qualify for a loan at all, he adds. Credit scores range from a low of 300 to a high of 850.

Equity is king

You’ll need at least a 10 percent equity stake in your property to refinance. And in some cases, you won’t be able to get a loan without a 20 percent stake if private mortgage insurance is hard to get in your region. That might be a problem if you live in an in area where property values are quickly falling. You might discover that your house is valued at less than you owe on your current mortgage, making refinancing difficult. The one exception is for people with mortgages that are owned and held by Fannie Mae or Freddie Mac. A new program will allow homeowners to refinance up to 105 percent of the home’s value.

Underwriting standards are tough

All homeowners will need to document their assets and income. “Right now you have to prove you are the borrower you say you are, sometimes repeatedly,” Gumbinger says. Lenders want to make sure that homeowners can realistically afford any debt obligations, and they’re reluctant to underwrite a mortgage if the homeowner’s overall debt load is more than 43 percent of the family’s income. At the height of the housing boom, acceptable debt ratios reached as high as 55 percent, Gumbinger says.

The jobless need not apply

Refinancing isn’t an option for the millions of Americans who need to lower their monthly payments the most those who have lost their jobs. Banks won’t make new loans to such people until they can show pay stubs from a new job for at least 30 days, says Savitt, of the National Association of Mortgage Brokers. A jobless homeowner’s only option might be one of the new government programs for distressed folks, but they are usually available only to those who are at least 90 days delinquent on their payments. And while it might be tempting to stop mailing in your check, know that your credit score will take a serious hit if you stop paying your mortgage.

The refi shopping experience

Expect higher fees

In the past, you might have been able to refinance without paying any points and fees, but today that’s often not the case. Now that Wall Street is no longer securitizing smaller mortgages, the vast majority of conforming loans (those valued at $417,000 or less in most areas and $625,500 in high-cost areas) are sold to government-sponsored entities Fannie Mae and Freddie Mac. About a year and a half ago, they started charging borrowers additional fees. The first one you’ll encounter is called an Adverse Market Delivery Charge, and it could add as much as a quarter of a percentage point to the loan.

Fannie Mae and Freddie Mac also charge a fee called the Loan Level Pricing Adjustment, which takes into consideration your credit score and loan-to-value ratio, or how much home equity you have. Someone with poor credit and very little equity could end up paying an additional 300 basis points in fees, says Gumbinger, of HSH Associates. So if you were borrowing $100,000 and had to pay 3.25 percentage points in fees, you’d owe the bank an additional $3,250 in closing costs. If you wrapped the fees into the mortgage itself, you’d end up paying a 6.25 percent rate over the life of the loan.

Small lenders might offer the best deals

Interest rates used to be fairly similar from one lender to another, but now they can vary by as much as a percentage point. And some of the most competitive interest rates are found at the smaller community banks and credit unions, which might be better funded than some of the larger players that got caught in the subprime debacle, according to Gumbinger.

Make sure you don’t limit your shopping to a single bank or mortgage broker. Some of the larger lenders, including Chase, no longer allow brokers to sell their products. So if you want to see all of the rates in your area, you’ll need to pick up the phone and do some calling around yourself.

If you want a few local mortgage sources that I have personally worked with contact me for a list of me vendors list of mortgage, title insurance, attorney’s, home inspectors, etc.

Ian Lazarus

The Lazarus Team

The Landis Co., Realtors

ian@mygo2realtor.com

609-457-0258 mobile

www.SJbeachhomes.com