By TERESA BURNEY

At a time when homebuilders are struggling to compete with the bargain-basement prices of distressed properties and more families are turning to rentals as credit stays tight, Beazer Homes USA seems to have adopted the motto, “If you can’t beat ‘em, join ‘em.”

A year ago, Beazer started buying distressed “preowned” homes in its Phoenix and Las Vegas markets, renovating them, and then renting them out to people who might one day be buyers. On Thursday, the Atlanta-based company announced it is putting its 200-single-family-home portfolio into a new real estate investment trust called Beazer Pre-Owned Rental Homes Inc., or BPRH. The trust was formed as a partnership between Beazer and an investor group led and arranged by affiliates of Kohlberg Kravis Roberts and Co.

The plan is to grow BPRH fast into a leader in the single-family rental home market, the news release said.

“We believe our investment in BPRH allows us to unlock the value in our rental homes business and grow it more rapidly than we otherwise could within Beazer,” Beazer CEO Allan P. Merrill said in the news release. “BPRH’s ability to focus specifically on the rental homes market and attract external capital to scale the business represents a compelling — and differentiated — value for our shareholders.”

In addition to the houses Beazer had collected, which are worth about $20 million, the new trust received cash investments and funding commitments from outside investors of $65 million.

In return for its contribution, Beazer will receive a noncontrolling interest in the trust: stock awards equal to 6 percent of the stock issued during its private phase until it has raised $150 million in equity. It will receive the first 2 percent of the shares when the trust finishes its initial round of equity financing and the rest when various benchmarks are reached. After BPRH raises $150 million in private equity capital, Beazer will get another 1 percent of stock issuances before a public stock offering.

Merrill was appointed non-executive chairman of BPRH’s board of directors. Patrick R. Whelan, a residential real estate veteran with more than 20 years of experience in a number of leadership positions, will be the company’s president and chief executive officer.

Teresa Burney is a senior editor for Builder magazine.

© 2012 Hanley Wood. All rights reserved.

WASHINGTON–The average rate on the 30-year fixed mortgage dropped near its all-time low this week, making home-buying and refinancing a bargain for those who can qualify.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan fell to 3.88% from 3.98%. That’s just above the rate of 3.87% reached in February, the lowest since long-term mortgages began in the 1950s.

The 15-year mortgage, a popular option for refinancing, plunged to a fresh low of 3.11% from 3.21% last week. The previous record of 3.13% was hit last month.

Mortgage rates are lower because they tend to track the yield on the 10-year Treasury note. Last week’s disappointing report on March job growth led more investors to sell stocks and buy Treasurys, which are considered safer investments. As demand for Treasurys increases, the yield falls.

Employers added just 120,000 jobs last month — half the monthly pace from the previous three months. Many economists downplayed the weak March figures, noting that a warmer winter may have led to some earlier hiring in previous months.

The mild winter has helped lift expectations for the housing market after four years of sluggish sales.

January and February made up the best winter for re-sales in five years, when the housing crisis began. And builders in February requested the most permits to construct homes in more than three years.

Cheap mortgage rates are also brightening the outlook. They have been below 4% for all but one week since early December.

Applications for new mortgages have fallen over the past month, according to the Mortgage Bankers Association, But there has been a sharp rise in the average loan size, suggesting a bigger appetite for home loans. The average size of mortgage applications has increased by $20,000 since December, to about $235,000 last month.

Home prices continue to fall. Prices tend to lag sales and millions of foreclosures and short sales — when a lender accepts less than what is owed on a mortgage — remain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.

To calculate the average rates, Freddie Mac surveys lenders across the country on just Monday through Wednesday of each week.

The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fees for the 30-year and 15-year fixed loans were unchanged at 0.7.

For the five-year adjustable loan, the average rate fell to 2.85% from 2.86%, and the average fee fell to 0.7 from 0.8.

The average on the one-year adjustable loan rose to 2.80% from 2.78%, and the average fee was unchanged at 0.6.

According to The National Association of Realtors existing home sales are predicted to jump 7 to 10 percent in 2012. If this happens, which we’re all hoping it will, that level of home sales will be the highest in 5 years.

Lawrence Yun, NAR chief economist, said “we’re seeing the continuation of an uneven but higher sales pattern” so far in 2012. “The spring home buying season looks bright because of an elevated level of contract offers so far this year.”

The recently released national Pending Home Sales Index declined 0.5 percent to 96.5 in February down from 97.0 in January, but is still 9.2 percent above the February 2011 level of 88.4. This information reflects contracts in the market, but not closings.

It’s worth noting that the Pending Home Sales Index (PHSI) is different when broken down by geographic areas of the US.

• The Northeast slipped 0.6 percent to 77.7 in February compared to January 2012, but is 18.4 percent higher than a year ago.
• The Midwest rose to 93.8 which is an increase of 6.5 percent compared to January 2012. That is a 19.0 percent increase year over year.
• The South fell to 3.0 percent to 105.8 in February compared to January, but is still 7.8 percent above a year ago.
• In February the West declined 2.6 percent to 99.3. This is 1.8 percent below February 2011.

All in all it is nice to see an increase in these numbers. It shows that people are out in the market looking at homes and more importantly, they’re so serious about purchasing them that they go under contract. It looks like more and more people are taking Barbara Corcoran’s advice and seizing this opportunity to buy a home at historically low mortgage rates.

If you’re planning on buying a home in the near future and adding onto these numbers, we’d love to be your partner on this adventure. Comment on this post or reach out to us through Facebook or Twitter and let us know how we can be of assistance to you.

My name is Joe Sesso and I’m known as the Homes.com “tech-guru.” I’ve been deeply involved in technology and social media for many years, dating back to my days at Realtor.com as their National Speaker. Today I continue to enjoy talking about the latest in technology and social media as the Homes.com National Speaker. Prior to this, however, I was a successful real estate investor, specializing in foreclosures and bank-owned properties. I also published an award-winning book entitled, The Foreclosure Revolution, in 2008. In the book, I spoke about a “real estate revolution” that was taking place with foreclosures. I remember pitching the idea to a few publishers, and they told me at the time that “foreclousures were the story of yesterday, and that the market for them was winding down.” Boy were they wrong.

Over the next several weeks, I’ll be discussing the current state of the foreclosure market, as well as sharing my input on how you can be a very successful real estate investor by purchasing foreclosed properties. I’ll be posting a new part to the series every week on the Homes.com blog. I’m really looking forward to sharing my thoughts and ideas with the Homes.com readers. I’ll also make myself accessible to any questions you may have regarding my posts. I look foward to writing about this exciting series, and I’ll see you next week with my next post.

Brought to you by our friend Shashank Shekhar:

Simply verifying online for today’s posted rate, might not lead to your anticipated final result due to the numerous aspects that may cause each person’s rate and closing cost scenario to change.

Since mortgage rates can change several times a day, the following questions may help determine whether or not your Loan Officer truly knows what to look for so that they are able to provide you with the best rate once you’re in a position of locking in your loan:

Who determines mortgage rates, and what exactly are they tied to?

Mortgage interest rates are driven by the pricing of Mortgage Backed Securities or Mortgage Bonds. The advertising often implies mortgage rates are based off the 10-year Treasury Note, which is incorrect.

While the 10-year Treasury Note have been known to trend in the same direction as Mortgage Bonds, it is not unusual to see them move in entirely opposite directions.

How often do mortgage rates alter?

Mortgage rates may change throughout the day, on the other hand they only change on days when the Bond markets are exchanging securities since mortgage rates are based on Mortgage Bond prices.

Think of a Mortgage Bond’s sales price similar to that of a Stock that trades up and down during the course of a day.

For example – let’s presume the FNMA 30-Year 4. 50% coupon is selling for $100. 50. The price is 50 basis points lower from the previous day’s closing price of $101. 00.

In simple terms, the borrower could have to pay for an additional. 50% of their loan amount to possess the same rate today that they could have locked in the earlier day.

What can cause mortgage rates to change?

Mortgage Bonds are largely affected by various market forces that influence the changing desire for bonds within the market. A few of the key economic factors that have the greatest impact are unemployment percentages, inflationary fears, economic strength and the overall movement of money in and out of the markets.

Like stocks, most fluctuation is caused by buyer and investor emotions.

What do you use to keep track of mortgage rates?

There are various great subscription based services available to monitor Mortgage Bond pricing.

The important thing is to make certain the loan officer is aware they should be monitoring Mortgage Bond pricing, for example the Fannie Mae 30-Year 4. 50% coupon… and not the 10-Year Treasury Note or the news media.

Once the Fed changes rates, why do mortgage rates move in the opposite direction?

It is a common misconception that after the Federal Reserve utilizes a rate cut it is immediately correlated to a reduction in mortgage rates.

The Federal Reserve policy influences short term rates known as the Fed Funds Rate (“FFR”). Lowering the FFR helps to stimulate the economy and increasing the FFR helps to slow the economy down. Effectively, cutting interest rates (FFR specifically) can cause the stock market to rally, driving money out of bonds and creating potential for inflation.

Mortgage Bond holders have to obtain a higher rate of return on their money if inflation is growing, thus driving up mortgage rates. With the Federal Reserve Board meeting every six weeks, this is a crucial question to ask. If your Loan Officer doesn’t have a firm understanding of this relationship, they may leave your rate unprotected charging you thousands of dollars above the life of your mortgage.

Do different programs have different interest rates?

Traditional, FHA and VA loans can all carry different rates on a 30-Year fixed mortgage. FHA and VA loans are covered by the Federal Government in the event of defaults. Conventional mortgages are insured by private mortgage insurance companies, if insurance is needed.

Typically, FHA and VA loans carry a cheaper rate because the investor views the government backing as less of a risk. While rates are usually different for each program, it might be more essential to evaluate the monthly and general cost during the life of the loan to find out which program best suits your needs.

Why is an Adjustable Rate Mortgage (ARM) rate lower than a fixed rate mortgage?

An Adjustable Rate Mortgage (ARM) is usually fixed for a particular period of time. The period is typically 3 years, 5 years or 7 years. The shorter time period the rate is fixed, the lower the interest rate tends to be initially.

This is due to the customer getting the future risk of increasing interest rates. The only instance where this wouldn’t be true is when there’s an inverted yield curve where short-term rates are greater than long-term rates.

Why are rates greater for different property residence types?

Mortgage interest rates are based on risk-based pricing. Risk-based pricing permits adjustments to par pricing for risk factors such as; FICO scores, Loan-to-Value percentages, property type (SFR, Condo, 2-4 Units), occupancy (Primary, Vacation or Investment) and mortgage type (Interest Only, Adjustable Rate etc).

This allows the investors who lend their money for mortgages to receive additional compensation for taking additional risk.

Understand this – If the borrower encounters a financial difficulty, are they more likely to make the payment on home they live in or the one they rent? The answer in almost all the cases would be – the home they live in. That’s why the rates on Primary Residence is lower than other types of occupancy.

Written by: Shashank Shekhar (NMLS ID 8176) is widely regarded as “San Francisco Bay Area’s #1 Mortgage Expert.” Shashank is the author of widely acclaimed books – “First Time Home Buying 101” and “Real Estate Unleashed” and highly rated mortgage blog http://www.LendingExpertBlog.com. He has been featured on Yahoo! News, Pen TV, KCBS Radio, SF Examiner and San Francisco Chronicle. He was recently ranked among top 25 most connected and “Top 40 Under 40″ most influential mortgage professionals in the country by National Mortgage Professional Magazine. He is currently the CEO of Arcus Lending – a mortgage lender based in San Jose, CA serving the entire state of California.

Shashank can be contacted via phone at 408.615.0655 begin_of_the_skype_highlighting 408.615.0655 end_of_the_skype_highlighting or via email at Shashank@ArcusLending.com.

Brought to you by our friend Amy McCarthy at Parenthood.com

Finding the perfect home isn’t easy. When you have a family, especially young children, the equation gets much more difficult. These tips can help you ensure that your dream home is safe and family-friendly.

Buying a home can be a daunting process. From financial approval to curb appeal, there are hundreds of important decisions to make. When you have children and pets to consider, those decisions multiply. As a parent, there are a number of factors that you have to take into account to ensure that your child is safe and happy.

When you’re searching for a home, there are 4 major categories that you have to consider when purchasing for a family with children, particularly young children or infants. Safety, schools, space, and amenities can “make or break” the perfect home.

1. Safety

- If you have infants or toddlers, make sure that dangerous areas (like the kitchen, stairs, or pool) can be outfitted with safety gates. If the home has low windows, make sure that locks are in good working order.

- Ensure that all proper safety mechanisms are in place, like scald-proof faucets, carbon monoxide detectors, and temperature regulators on hot water heaters.

- If the home has a pool, check that it is in proper working order. In some cases, it may be a good idea to find a home with a pool farther away from the home to keep little ones from wandering in.

- If you are buying an older home, make sure that stairs are sturdy and secure, and that paints are lead-free.

- Consider how close the home is to a hospital or emergency care center. A few precious minutes can really make a difference in the case of an emergency.

2. Schools & Education Opportunities

- Finding the right schools for your family is extremely important. GreatSchools.org can help you evaluate the schools in your area using criteria like student-teacher ratio and test scores. Also be sure to check if the school has activities that your child could need, like special education or gifted programs. Extra-curricular activities are important, too. Find out if the school offers activities your child is interested in, like drama or band.

- Choosing a home close to your child’s school and your office can save you invaluable time. If your child can walk a few blocks or take a quick bus ride to school, it can make hectic mornings much easier. As a bonus, you’ll be closer to home in the case of an emergency.

- Find out if there is a YWCA/YMCA or other facility close to the home that offers after-school programs, tutoring, or other enrichment. Being able to drop the kids off at the tutor and drive 2 minutes home to prepare dinner is a great time saver.

3. Space

- Making sure that the home has enough bedrooms for your home is a no-brainer, but if you are planning on growing your family, it can be important to consider a larger home. If a guest room or office is important to you, that extra bedroom can really make a difference.

- Don’t just consider bedrooms – make sure that the home has enough room for your children to play, do homework, and store all their “kid stuff” like athletic equipment and bicycles. One of the most common complaints from homeowners with families is a lack of storage, so a home with lots of cabinets and closets could help sway your opinion from one home to another.

- If you have a tween, garage space is an important factor to consider. Some neighborhoods have rules about parking in the street, so make sure that the home has enough driveway/garage space for your family’s vehicles.

- Family-friendly spaces mean more family time. If the kitchen and living room are in an open area, you can prepare dinner while you help the kids with homework or supervise them playing in the living area. It is nice, though, to have a distraction-free dining room where you can eat together as a family or do homework.

4. Amenities & Location

- Look for neighborhoods with parks or playgrounds. Being able to walk to the park to take the kids to play is a great benefit to a home.

- Check out what family activities are in the area. Many neighborhoods have their own Girl and Boy Scout troops, church youth groups, and even playgroups and dance lessons. Being close to your child’s extra-curricular activities can decrease after-school stress and increase the amount of time you have together as a family. If you’re looking for day camps or summer camps, check out Parenthood.com’s Kids Camps guide to find those types of activities close to your home.

- Though it may not seem like an “amenity,” moving into a neighborhood with lots of children is really great for families. Kids who have children to play with in their neighborhoods spend less time inside playing video games and more time playing with their friends. It’s especially nice if your neighborhood has a flag football or softball league on the weekends.

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.