Open House by Jim Woodard

The improving economy is changing the mindset of home buyers. Instead of moving from one community to another because of recession-related factors, today's families are more likely to be motivated by the desire to live in a bigger and better home with more amenities.

The shifting trend was revealed in a recent survey conducted by Relocation.com. A similar survey last March indicated that the recession was driving the move of most families who relocated from one community to another.

"The change between the March and recent surveys indicate that consumer attitudes are shifting," the survey report noted. "With more people taking advantage of favorable real estate deals and falling rents, even as the recession continues to pinch most Americans, they suggest a boost in consumer confidence.

"While finances still factor into the moving decisions, the survey indicates that fewer people were feeling the need to move due to job losses, foreclosures or downsizing to cut costs. The people who looked to improve their living situation were a mix of those buying a home or renting. They wanted to take advantage of lower rents and home prices to move smart."

The key reason to move, as indicated by survey respondents, was the desire to live in a bigger and better home (26 percent). Next in line was to find a better neighborhood or community, followed by the desire to live closer to family and friends and the need to find a home in an area with a lower cost of living.

Other reasons for moving were a change in marital status, the need for better or special schools, job loss or retirement. While finances are still important factors, fewer people are feeling the need to move because of job losses, foreclosures or downsizing to cut cost, according to the survey report.

Q: Are pending home sales still rising?

A: Yes, substantially. Contract activity for pending home sales has risen for six straight months, a sustained pattern not seen since 2001, according to a report from the National Association of Realtors. An NAR index indicated that contracts signed in July increased 3.2 percent over the preceding month, 12 percent higher than in July 2008.

The index is at the highest level since June 2007. Pending home sales are transactions that are under contract but not yet closed.

Q: What is a shared appreciation mortgage?

A: Sometimes old becomes new in the home mortgage field.

That could be the case with the shared appreciation mortgage (SAM) — an old concept that is showing signs of renewed interest. This is a mortgage where the lender agrees to an interest rate lower than the prevailing market rate in exchange for a share in the appreciated value of the home.

The share of the appreciation in value is known as the "contingent interest." It's determined and due at a sale closing or at the termination of the mortgage. In the past, these mortgages were particularly popular when prevailing rates were very high. Now, of course, mortgage rates are at historic lows.

The primary appeal of SAMs today is from home buyers who just marginally qualify to finance the purchase of a home. This is most common with young first-time home buyers. The lower interest rate and mortgage payments help buyers afford and qualify for financing. In a typical case, the lender might reduce the mortgage interest rate by a full percentage point when claiming 20 percent of the appreciated value of the property.

A SAM should not be confused with an equity-sharing agreement. With a SAM, the borrower continues to owe the entire current balance of the loan, even if the property's appraised value should decrease.

Q: What is the new FHA-HAMP program all about?

A: The new FHA-Making Home Affordable Loan Modification Program (FHA-HAMP) was recently implemented by the Department of Urban Development and Federal Housing Administration. The program will be a big help for struggling homeowners, significantly reducing their monthly mortgage payments and keeping the home they worked so hard to purchase.

"This is a tool the federal government is providing to help homeowners avoid foreclosure by making mortgage payments more affordable," said HUD Secretary Shaun Donovan. "These changes expand the Obama administration's Making Home Affordable Modification Program to include FHA borrowers."

The action was strongly supported by the National Association of Realtors. "Until foreclosures have been significantly reduced and housing inventory reaches a more normal level, there can be no true housing recovery," said NAR President Charles McMillan. "The FHA-HAMP program will go a long way in achieving these important goals by helping FHA servicers bring mortgages current. They will buy down loans by up to 30 percent of the unpaid principal balance and defer these amounts until the first mortgage is paid off. The actions taken over the past several months are beginning to help stabilize the housing market."

As a further step in strengthening the market, real estate industry leaders are now pushing legislators to extend and expand the first-time home buyer tax credit to include all home buyers.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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