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US pending home sales rise modestly in September

By WTOP Staff

JOSH BOAK
AP Economics Writer

WASHINGTON (AP) — The number of Americans signing contracts to buy homes ticked up only slightly in September, as it remained difficult to qualify for mortgage financing.

The National Association of Realtors said Monday that its seasonally adjusted pending home sales index rose 0.3 percent over the past month to 105. The index remains half a percentage point below its 2013 average, although 1 percent higher than a year ago.

Tight credit and price increases through the middle of 2013 have limited buying activity. About 15 percent of the real estate agents surveyed for the index said they couldn’t close a deal because the buyer was unable to obtain a mortgage.

“We continue to see steady, albeit modest, improvement in this sector,” said Jennifer Lee, senior economist at BMO Capital Markets.

Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale. The number of contract signings increased in the Northeast, South and West last month, while declining in the Midwest.

Federal regulators approved plans last week to expand the availability of credit. Five agencies — including the Federal Reserve and the Securities and Exchange Commission — backed changes to the rules on how much risk banks can accept when they package and sell mortgage securities in a multitrillion-dollar market.

The modified rules should enable buyers to put less money down on a home. Regulators ended the requirement that borrowers make a 20-percent down payment if the lending bank didn’t hold at least 5 percent of the mortgage securities tied on its books.

Additionally, average mortgage rates have fallen for the past five weeks. The average rate for a 30-year fixed mortgage tumbled last week to 3.92 percent, a 52-week low, according to the government-supported mortgage firm Freddie Mac.

Affordability remains a fundamental problem. Steady job gains this year have pushed the unemployment rate down to 5.9 percent, yet average hourly wages are barely rising faster than inflation. Without higher incomes, the share of Americans with the cash flow and savings to buy a home has fallen, pushing more of them into rental properties.

Ahead of next week’s congressional election, the affordability woes even have something of a political tinge, according to new analysis by the real estate data firm Trulia.

In heavily Democratic communities, the median price for a home costs $227 per square foot. That’s nearly double the price of $119 per square foot in areas that vote Republican. This has encouraged Democrats to loosen lending standards, while Republicans have largely opposed such measures for encouraging consumers to become highly leveraged.

When the Securities and Exchange Commission voted 3-2 last week to adopt new mortgages rules, the two Republican commissioners, Daniel Gallagher and Michael Piwowar, opposed adoption.

Because Democratic housing markets “are less affordable, have lower homeownership, and have greater income inequality, political leaders in Democratic-leaning and Republican-leaning metros may push for different policies,” wrote Jed Kolko, chief economist at Trulia.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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