| Should I refinance my rental property? and Will FHA be the next big bailout? |
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Should I drop $40,000 to refinance my rental house now so I can save about $400-500 a month in mortgage costs? We currently owe $220,000 and the home just appraised for $200,000. We would need to put $40,000 in to be able to go from a 6% mortgage to a 4.5% rate. We have about $250,000 in savings and retirement plans and about $30,000 of that is in cash or fairly liquid accounts. This rental house is our only debt right now, so we can afford the difference between the rent we receive and our monthly mortgage payments, and still manage to save and pay off a few extra hundred dollars on principal. However, in the next year we may be starting a family and we will have to live on one income and that extra $400-500 a month may come in handy. [Read the full article] Surveys released by the Kansas City and Chicago Federal Reserves Tuesday find that despite a struggling U.S. housing market, agricultural land in their districts is booming. And the run-up in prices may have yet to peak, they said."District farmland values surged to a record high in the third quarter," the Kansas City survey said. "Cropland values rose more than 25 percent over the past year, and ranchland values increased 14 percent."In particular, Nebraska experienced exceptionally strong gains in the Kansas City District due to bumper crops -- especially productive seasons for certain crops -- reporting a roughly 40% rise in farmland prices from one year ago.The surveys indicate that good credit conditions, successful harvests, and elevated levels of farming income helped to contribute to this large surge in an already strong agricultural property market. [Read the full article] Don't expect the market to move much beyond first gear, though. The median expectation among more than 100 economists and real estate pros surveyed by MacroMarkets is that home values will inch ahead by a mere 0.25%, compared to their 2011 median forecast decline of 2.8%. They also foresee annualized gains through 2015 of just 1.1%, as the real estate market slowly works its way through a mountain of foreclosures.Those foreclosures will continue to weigh on the market. According to Core- Logic, there are 5.4 million homes that are for sale or part of the market's "shadow inventory" -- which includes bank-owned properties, homes in the foreclosure pipeline that haven't hit the market yet, or properties where owners are seriously behind on payments.To put that in perspective, Freddie Mac forecasts that only 4.8 million homes will be purchased in all of 2012. A market with six months of inventory is considered healthy. [Read the full article] 
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