Boomers buy 1-story homes, but not the old cracker boxes
By NANCY MUELLER
For The Tennessean

There's a new housing product showing up in some neighborhoods: single-story homes designed to fulfill the needs of baby boomers.

These homes bear no resemblance to the low-profile, one-story ranches that many of the boomers grew up in during the '50s and '60s.

These new homes for empty-nesters are stylish and plush, with an emphasis on European-influenced architectural flourishes and open floor plans.

Fixtures, cabinets and flooring materials are high quality. This new version of one-level living also nearly always includes a second-story bonus room, so that most of these homes are technically 1½ stories tall.

Tennessee Valley Homes is one of the builders of this product. It has built one- and 1½-story homes in several Williamson County neighborhoods, including King's Chapel, Avalon, Tollgate Village, Glenellen and the Woodlands at Copperstone, said sales agent Rachel Work.

"We sold three one-stories in Copperstone this summer," she said while showing the builder's two-story Copperstone model home on Amethyst Lane. "We sell out of one-stories very quickly."

Next door is one of the company's unsold single-story homes. Although it may have been designed with downsizing in mind, at 3,885 square feet, it isn't all that small. And there's certainly nothing low-scale about the $679,900 asking price, either.

The kitchen has Viking Signature appliances, custom cabinetry and granite countertops. The master and secondary baths also have granite countertops. The upstairs bonus room, the only room on the second level, features a custom wet bar and a powder room.

Large footprint is costly

These homes are more expensive to build because they require, proportionally, more foundation, which can make the price per square foot higher.

Work said, however, that boomer buyers do not necessarily want to lose too much square footage when they downsize. They just want all of their bedrooms on one floor.

And they care about the exterior appearance of their new homes, eschewing anything that appears too squatty.

"I talked to one lady who wanted all of the bedrooms on one floor, but she wanted it to look like a two-story," Work said.

In Glenellen, under development in southeast Brentwood, Tennessee Valley Homes has built eight homes. Five have sold, and three of those feature all first-floor bedrooms. They were all snapped up by baby boomers with no children living at home, Work said.

"The other two were looking for one-story and ended up with two-story houses that have two bedrooms on the main level," she said. "They were baby boomers, too."

Demand is growing

Upscale homes for empty- nest baby boomers will constitute 8 to 10 percent of the national housing market over the next 18 years, market forecaster Edsel Charles said.

Charles' MarketGraphics Research Group, which is based in Franklin but makes market forecasts for clients in 20 states, has isolated the desires of empty-nesters moving from homes of at least 5,000 square feet and seeking a new home with a yard, as opposed to a townhouse or condo.

In the Nashville area alone, that translates into a probable need for 800 to 1,100 new, upscale empty nests per year, starting in 2008, Charles says.

PRIVATE MORTGAGE INSURANCE

What Is PMI?

PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.

Benefits of PMI

PMI plays an important role in the mortgage industry by protecting a lender against loss if a borrower defaults on a loan and by enabling borrowers with less cash to have greater access to homeownership. With this type of insurance, it is possible for you to buy a home with as little as a 3 percent to 5 percent down payment. This means that you can buy a home sooner without waiting years to accumulate a large down payment.

New PMI Requirements

A new federal law, The Homeowner's Protection Act (HPA) of 1998, requires lenders or servicers to provide certain disclosures concerning PMI for loans secured by the consumer's primary residence obtained on or after July 29, 1999. The HPA also contains disclosure provisions for mortgage loans that closed before July 29, 1999. In addition, the HPA includes provisions for borrower-requested cancellation and automatic termination of PMI.

Why a Change in PMI Requirements?

In the past, most lenders honored consumers' requests to drop PMI coverage if their loan balance was paid down to 80 percent of the property value and they had a good payment history. However, consumers were responsible for requesting cancellation and many consumers were not aware of this possibility. Consumers had to keep track of their loan balance to know if they had enough equity and they had to request that the lender discontinue requiring PMI coverage. In many cases, people failed to make this request even after they became eligible, and they paid unnecessary premiums ranging from $250 to $1,200 per year for several years. With the new law, both consumers and lenders share responsibility for how long PMI coverage is required.

The Homeowner's Protection Act (HPA) of 1998

What Loans Are Covered?

Generally, the HPA applies to residential mortgage transactions obtained on or after July 29, 1999, but it also has requirements for loans obtained before that date. This new law does not cover VA and FHA government-guaranteed loans. In addition, the new law has different requirements for loans classified as "high-risk." Although the HPA does not provide the standards for what constitutes a "high risk" loan, it permits Fannie Mae and Freddie Mac to issue guidance for mortgages that conform to secondary market loan limits. Fannie Mae and Freddie Mac are corporations chartered by Congress to create a continuous flow of funds to mortgage lenders in support of homeownership. As of January 1, 2000, mortgages in amounts of $252,700 or less are considered conforming loans. For non-conforming mortgages, the lender may designate mortgage loans as "high risk."

What Is a Residential Mortgage Transaction?

There are four requirements for a transaction to be considered a residential mortgage transaction: (1) a mortgage or deed of trust must be created or retained; (2) the property securing the loan must be a single-family dwelling; (3) the single-family dwelling must be the primary residence of the borrower; and (4) the purpose of the transaction must be to finance the acquisition, initial construction, or refinancing of that dwelling.
How Do You Cancel or Terminate PMI?

Cancellation

Under HPA, you have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less. You also need a good payment history, meaning that you have not been 30 days late with your mortgage payment within a year of your request, or 60 days late within two years. Your lender may require evidence that the value of the property has not declined below its original value and that the property does not have a second mortgage, such as a home equity loan.

Automatic Termination

Under HPA, mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once you pay down your mortgage to 78 percent of the value if you are current on your loan. If the loan is delinquent on the date of automatic termination, the lender must terminate the coverage as soon thereafter as the loan becomes current. Lenders must terminate the coverage within 30 days of cancellation or the automatic termination date, and are not permitted to require PMI premiums after this date. Any unearned premiums must be returned to you within 45 days of the cancellation or termination date.

For high risk loans, mortgage lenders or servicers are required to automatically cancel PMI coverage once the mortgage is paid down to 77 percent of the original value of the property, provided you are current on your loan.

Final Termination

Under HPA, if PMI has not been canceled or otherwise terminated, coverage must be removed when the loan reaches the midpoint of the amortization period. On a 30-year loan with 360 monthly payments, for example, the chronological midpoint would occur after 180 payments. This provision also requires that the borrower must be current on the payments required by the terms of the mortgage. Final termination must occur within 30 days of this date.

What Disclosures Does the HPA Require?

For Loans Obtained on or after July 29, 1999

The HPA establishes three different times when a lender or servicer must notify a consumer of his or her rights. Those times are at loan closing, annually, and upon cancellation or termination of PMI.

The content of these disclosures varies depending on whether: (1) PMI is "borrower-paid PMI" or "lender-paid PMI," (2) the loan is classified as a "fixed rate mortgage" or "adjustable rate mortgage," or (3) the loan is designated as "high risk" or not.

At loan closing, lenders are required to disclose all of the following to borrowers:

The right to request cancellation of PMI and the date on which this request may be made.

The requirement that PMI be automatically terminated and the date on which this will occur.

Any exemptions to the right to cancellation or automatic termination.
A written initial amortization schedule (fixed-rate loans only).
Annually, your mortgage loan servicer must send borrowers a written statement that discloses:

The right to cancel or terminate PMI.

An address and telephone number to contact the loan servicer to determine when PMI may be canceled.

When the PMI coverage is canceled or terminated, a notification must be sent to the consumer stating that:

PMI has been terminated, and the borrower no longer has PMI coverage.
No further PMI premiums are due.
The obligation for providing notice of cancellation or termination is with the servicer of the mortgage.

An annual statement must be sent to consumers whose mortgages were obtained before July 29, 1999. This statement should explain that under certain circumstances PMI may be canceled (such as with consent of the mortgagee). It should also provide an address and telephone number to contact the loan servicer to determine whether PMI may be canceled.
The HPA's cancellation and automatic termination rules do not apply to loans made before July 29, 1999.

Although parts of the new law apply only to loans obtained on or after July 29, 1999, many lenders report that they plan to follow the HPA's requirements for both new and existing loans. Making a call to your mortgage loan servicer will help you understand exactly how the law applies to you and your mortgage.

What If Your Home Value Has Increased?

When making mortgage payments, most of the payments during the first few years are finance charges. Therefore, it can take 10 to 15 years to pay down a loan to reach 80 percent of the loan value. If the home prices in your area are rising quickly, your property value may increase so that you can reach the 80 percent mark a lot faster. Your property value could also increase due to home improvements that you make to your home.

If you think your home value has increased, you may be able to cancel PMI on your mortgage. Although the new law does not require a mortgage servicer to consider the current property value, you should contact them to see if they are willing to do so. Also, be sure to ask what documentation may be required to demonstrate the higher property value.

Life Expectancy of Home Components

One way to prepare for the costs of owning a home beyond the mortgage payment, insurance and taxes, is to know the expected life expectancy of your home's components.

Such knowledge doesn't supersede the use of a home inspector when buying a home, new or old, but it can help you develop a savings plan so you are prepared for the inevitable. Sooner or later you'll have to repair or replace many of your home's parts -- inside and out.

Knowledge of components' life expectancies is what homeowner associations use, in part, to build a reserve fund designed to spread, over time, the cost of the inevitable.

When the roof goes, the appliances conk out, or the paint begins to fade, it's a lot easier to come up with the cash if you've already got some socked away for just this kind of rainy day.

Last year, the National Association of Home Builders, along with the Bank of America developed the "NAHB/BoA Home Equity Study of Life Expectancy of Home Components" to help you take the guess work out of preparing for the worst.

The report suggests you use the timelines as a general guideline. Local weather conditions, use habits, regular maintenance -- or the lack of it -- can all affect the life expectancy of many components.

Personal tastes for contemporary upgrades, remodeling needs and other factors may also dictate replacing parts before their useful life time is up.

In any event based on a comprehensive telephone survey of manufacturers, trade associations and researchers NAHB developed information about the longevity of housing components.

From the foundation to the rooftop, here's a quick look at how long, on a national average, some of the most common home components are expected to last.

Foundations. Poured concrete block footings and slab foundations should last a lifetime, 80 to 100 years or more provided they were quality built. The foundation termite proofing, 12 years, provided the chemical barriers remain intact.

Properly installed waterproofing with bituminous coating should last 10 years.

Flooring. Natural wood flooring has a life expectancy of 100 years or more with proper care. Marble, slate, and granite, likewise, but again, only with proper maintenance. Vinyl floors wear out in 50 years, linoleum about 25 years, and carpet between 8 and 10 years, tops.
Electrical system. In the electrical system, copper plated wiring, copper clad aluminum, and bare copper wiring are expected to last a lifetime, whereas electrical accessories and lighting controls are expected to fail not much longer than 10 years.

Outside materials. Outside materials typically last a lifetime. Brick, vinyl, engineered wood, stone (both natural and manufactured), and fiber cement typically last as long the house exists. Exterior wood shutters get 20 years, well maintained gutters, 50 if they are copper, 20 years if they are aluminum. Copper downspouts last longest, 100 years or more, while aluminum ones give out after 30 years.

Doors. Exterior fiberglass, steel and wood doors will last as long as the house exists, while vinyl and screen doors have a life expectancy of 20 and 40 years, respectively. Closet doors are expected to last a lifetime, and French doors have an average life of 30 to 50 years.

Windows. Wooden windows last longer than aluminum ones -- 30 years compared to only 15 or 20.

Heating, ventilation, and air conditioning systems require a religious regimen of maintenance. Still, most components give up within 25 years. Furnaces break down in 15 to 20 years, heat pumps 16 years, and air conditioning units 10 to 15 years. Tankless water heaters can go for 20 years or more, but electric or gas water heaters only 10 years. Thermostats have a 35-year lifespan but are often replaced for more efficient models.

Appliances. Appliances' life expectancies depend largely on how much they are used, but they are typically replaced long before they are done. One must keep up with the Joneses. Among major appliances, gas ranges live15 years, dryers and refrigerators die at 13, compactors, dishwashers and microwave ovens might last until they are 9 years.

Roofing. The life of a roof is largely dependant upon local weather conditions, proper building and design, material quality, and adequate maintenance. Slate, copper, and clay/concrete roofs have the longest life expectancy, 50 years or more. Wood shake roofs, go for 30 years, fiber cement shingles last 25 years, asphalt shingles give up at 20.

Keep that Heating Bill Lower

Seven Tips to Slash Soaring Home Heating Bills

(ARA) - Consumers will likely pay record prices to heat their homes this winter, up an average of 10.5 percent from last winter, says NEADA, a group of state energy aid officials. Now is the time to give your home a “check-up.” Here are seven tips from the Comfort Institute to make your home an energy sipper instead of a gas guzzler.

Ask your HVAC contractor to test your duct system for air leaks. Many assume that windows and doors are the major cause of a home's energy wasting air leaks. But according to recent research by the Department of Energy (DOE), gaps, joints and disconnections in the typical home's duct system are much more significant. The DOE states that the typical duct system loses 25 to 40 percent of the energy put out by the central furnace or heat pump. Authorities recommend sealing ducts with a brushed on fiber-reinforced elastomeric sealant. Duct tape usually dries out and fails. It turns out duct tape is great for many things, but sealing ducts isn't one of them.

Ask your contractor to perform an Infiltrometer “blower door” test. The blower door is a computerized instrument originally invented by the Department of Energy. It pinpoints where your home's worst air leaks are, such as duct leaks, and also measures how leaky the overall house is.

Most homes have the equivalent of an open window in combined air leaks. Many heating contractors offer an Infiltrometer test as part of a “Home & Duct Performance Checkup” that also checks insulation levels and overall duct performance.

Have your heating system cleaned and tuned. A pre-season tune up is a great investment. It reduces the chances of breakdowns on cold winter nights, improves safety and more than pays for itself through more energy efficient operation. For a free report: “How to Identify a Good Heating and Cooling Contractor,” go to http://www.comfortinstitute.org/.
Replace your furnace or heat pump air filter (or clean it if it is an electronic unit). Most systems need this done every month to ensure safe and efficient operation. Keep forgetting to do it? Ask your contractor for an extended surface area central air filter that only needs to be replaced once a year. It also does a far better job of keeping your equipment and the air in your home clean.

Close your fireplace damper. Did you remember to close it last time you used the fireplace? Shut it now or waste precious warm air all winter long.

Install a programmable set-back thermostat. Turning down the thermostat eight degrees for eight hours a day will save 8 percent on home heating costs. An easy way to take advantage of these savings is to lower the thermostat temperature while away from home or sleeping. Ask your heating contractor about new models which are much easier to program.

Consider replacing your old furnace or heat pump. Just like a car, heating and cooling equipment doesn't last forever. Is your system more than 12 years old? Planning to stay in your home more than a few years?

Many authorities recommend replacing it before it fails permanently. New units can pay for themselves over time as they are up to twice as energy efficient. However, government and utility research has found that over 90 percent of newly installed high efficiency systems have energy wasting mistakes. Today's new equipment is drastically compromised if it is hooked up to bad ducts.

Do some homework before talking to contractors. For more information, visit http://www.energystar.gov/ and http://www.comfortinstitute.org/. Print out the free Comfort Institute report “Tips and Secrets to Buying A New Heating and Cooling System.”

Courtesy of ARAcontent