Prudential Pacific Properties

10 ways to make your home worth more and get the most bang for your buck.

Here are 10 ways to make your home worth more and get the most bang for your buck.

Home Value and Pricing Tools

It's by far the most important and most often-asked question for home sellers: How should I price my home? We'll show you how to calculate your home's market value and avoid pricing mistakes to get an offer you can't refuse. Follow this link

Home Refinancing Program a Huge Maze

The federal government's Home Affordable Refinance program is designed to help homeowners refinance their mortgages -- even if they owe slightly more than the current value of their homes.

For some borrowers, the program could be a boon. But many layers of rules may resemble one of those maddeningly complex contests that offer prizes to people who complete a maze of special offers.

The program is complicated because the federal government has a top-level set of rules; Fannie Mae and Freddie Mac have their own separate sets of rules and lenders, loan servicers and mortgage insurers generally have their own rules as well.

Borrowers may well wonder where to begin. Here's our guide to help you navigate through this labyrinth of rules:

The federal government's Home Affordable Refinance program is intended to help creditworthy homeowners whose homes have decreased in value refinance their mortgages to obtain lower interest rates or payments, lock in a fixed interest rate or eliminate onerous loan terms to improve their long-term stability as homeowners.

• The program applies only to loans that are owned or guaranteed by Fannie Mae or Freddie Mac, the two secondary-market mortgage corporations that currently are operated under federal government conservator ships.

• The borrower must be an owner-occupant of a detached house, condominium, duplex, triplex or four-unit residential property.

• The borrower must not have made a loan payment more than 30 days late in the last 12 months or missed a payment if the loan was originated fewer than 12 months ago.

• The new first mortgage cannot exceed 105 percent of the current market value of the property.

• The borrower may be allowed to finance closing costs or obtain small amounts of cash.

• The interest rate on the new mortgage will be a market rate.

• The borrower must have sufficient income to afford the new mortgage payments.

• The borrower's existing loan balances will not be reduced.

• Nearly a dozen lenders have signed formal agreements to participate in this program. A list of these lenders has been posted on the Making Home Affordable Web site.

• This program will end June 10, 2010.

Fannie Mae's Home Affordable Refinance program is intended to help borrowers refinance to reduce their monthly principal-and-interest payment or switch from a risky loan product such as a short-term, adjustable-rate mortgage, or ARM, or from an interest-only mortgage to a fixed-rate mortgage.

• To qualify, the borrower must have an existing mortgage that is owned or guaranteed by Fannie Mae. To find out whether Fannie Mae owns or guarantees your loan call (800) 732-6643.

• Borrowers can apply through any lender that has been approved by Fannie Mae. However, some borrowers may find that they need to refinance through their original lender or loan service.

• The new loan may be a fixed-rate mortgage or an ARM with an initial fixed-rate period of at least five years. The payback period may be as long as 40 years.

• So-called "jumbo-conforming" or high-balance loans that meet loan-limit requirements may be eligible.

• Vacation/second-home and investment properties may be eligible.

• The borrower may be able to finance closing costs or take out cash of up to 2 percent of the mortgage amount or $2,000, whichever is less.

• The borrower must have sufficient income to afford the new loan payments. A verbal verification of employment is required.

• No minimum credit score is required. However, borrowers whose credit is impaired may be offered a higher interest rate.

• An appraisal may be required.

Freddie Mac's Home Affordable Refinance program, known as the Relief Refinance Mortgage, may be used to reduce the borrower's interest rate, shorten the loan repayment period or replace an adjustable-rate mortgage, interest-only mortgage or balloon/reset mortgage with a fixed-rate loan.

• To qualify, the borrower must have an existing mortgage that is owned or guaranteed by Freddie Mac. To find out whether Freddie Mac owns or guarantees your loan, call (800) 373-3343.

• Borrowers should contact their original lender or loan servicer to apply for this program.

• The new mortgage can be a 15, 20 or 30-year, fixed-rate loan or an adjustable-rate mortgage with an initial term of five, seven or 10 years.

• The property may be a vacation/second home or an investment property, with some restrictions.

• The existing loan, new loan or both may be a so-called "super-conforming" loan limit within the applicable loan limit for the area.

• The borrower may be able to finance transaction costs of up to $2,500.

• Borrowers whose monthly payment increases 20 percent or more must provide income and employment documentation and have an acceptable credit score and debt-to-income ratio to demonstrate they can afford the new higher payment.

Distributed by Scripps Howard News Service. Reach Marcie Geffner at editors@bankrate.com

First-Time Home Buyer Tax Credit

A tax credit of up to $8,000 is available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.

Twitter Your House and Friend a Realtor on Facebook

Online social networks offer new ways to find agents, buyers and sellers

By Geoff Williams, FrontDoor.com | Published: 3/20/2009

When Kari Sullivan was looking for a real estate agent, she did what a lot of homeowners appear to be doing: She found one through a social networking site.

She considered using Twitter, the popular social networking and microblogging service that's getting a lot of press these days, but Sullivan, 32 and extremely Internet savvy (she co-owns a business called Blogthings.com with her husband), decided to actively look for an agent on LiveJournal.com, where she had been a member, mostly to trade vegetarian recipes. At the LiveJournal online community for Austin, Texas, she asked the members if there was a real estate agent among them.

And soon, one came a-calling. Er, emailing.

Twitter. Facebook. LinkedIn. At this point, these names are burned and branded into the consciousness of many Americans -- even those who don't use these social networking hubs. But while another article on the topic may seem redundant, if you think about it, these Web sites feel like made-to-order tools for the real estate market. After all, buying and selling a home has always been about who you know, or who your Realtor knows, and whether you're connected enough to find people who aren't necessarily daunted by the thought of piling all of their belongings in a moving van. And what connects people more these days than a social online network?

In an era where you can easily find a friend of a friend of a friend, or link up with a perfect stranger online to bond over the varying ways to make vegetarian lasagna -- well, Realtors, homeowners and buyers are starting to see the value in a Web site that allows you to network -- and network quickly.

An Instant Real Estate Community

It's not just about finding a Realtor or even asking around to locate a buyer. These social networking sites are being used for just about every purpose imaginable in real estate. Wander through the search engine of Twitter by typing in "real estate," and you'll suddenly see a cross-section of home buying and selling conversations across the country.

In a recent 24-hour stretch, for instance, some of the snatches of dialogue that appeared on Twitter included:

• Someone with the handle, Legreen93, put out there to the 981 people "following" her: "If anyone is looking to get a house in Vegas, there's a really great house in my neighborhood going for a song. Just DM me. (Not a Realtor.)"
• JAS13 wrote "looking for a good Realtor to represent me in short sales."
• Sometimes people, like Kori_Brown, just want to share their news. "Buying a house today!!" And JackThomas wrote at the same time, "Just talked with a Realtor about buying a house. ... Things are rolling and we will be home owners this summer! Hallelujah!"
• Many savvy Realtors are using Twitter as an effective marketing tool. KLDubya wrote her 18 followers, "If you are in Chicago and looking for a condo, I am a Realtor with Sudler Sotheby's. Available $115,000 in Chatham 2br/1 ba." And MichelleBuckman, a Realtor in Washington, D.C., informed her 126 followers, "I have a new listing -- a great fixer upper in Chevy Chase, DC. Some minor repairs are being made. It will be on the market mid-April."
• A woman in Reno, Nevada, with just a few followers, shared with another Twitter friend, "We may be buying a house, but right now, it looks like probably not. I have to call my credit advisors & see if I can apply." Less than an hour later, she informed her friend, "Good news, my credit advisors said I CAN apply, and that my credit score is 200 points up from where it started."
• Another woman named Ruthns13 twittered to her followers: "Selling my house anyone want to buy email me." (Considering she has five people following her, good luck with that.)

And on and on, it goes. The Real Estate Web List Network has their own Twitter group, and online social networking and real estate are intertwining so quickly that, not too surprisingly, Web sites have been set up to help Realtors sell homes using the Internet, like MyTechopinion.com, which has the tagline "technology for real estate." And, of course, there are numerous real estate groups on Facebook, mostly set up by Realtors -- either for real estate specialists to converge and discuss ways to do their jobs better -- but also to identify and help first time home buyers.

Price Reductions

When you sell, you want to net the most out of the sale. If no buyers are making an offer, an aggressive remedy is to reduce your asking price.

You should consider the following:

1. Time Theory of Value:the higher the price, the longer it will take to sell a property. If you are ready to sell, reduce the price.
2. Pyramid of Value:the lower the price the more people will be willing to purchase a property. If want more buyers to consider your property, reduce the price.
3. Reluctance to reduce a price is very costly. Some costs are obvious like double house payments or double utilities. Others are personal and affect the harmony of the household:
   1. Separation of the family when one spouse moves to the new location and one stays behind with the kids
   2. Stress of keeping the home in show-able condition
   3. Uncertainty of not knowing when or where you will move
   4. Inconvenience of leaving during showings

   Calculate these costs in real dollar terms in deciding to reduce.

4. Consider your plans. Is the home you are buying larger or appreciating? The increase in value in your next home could diminish any gain in equity that comes from standing firm on your list price.
5. A market is dynamic and should regularly be re-evaluated. Look at what has come on the market and sold since you listed. No amount of seller angst or need to maximize equity will change the price that a buyer is willing to pay. Remember that it is the buyer who ultimately sets the selling price.

Negotiation Tips

 Successful negotiations have common threads. Remember these tips to get the most out of your negotiation:

1. Don't get insulted with a low offer or a low counter. It is natural that the buyers want to pay as little as possible.
2. The members of each party should feel like winners in the end.
3. Counter offersneed to show movement by each party. This demonstrates a willingness to deal.
4. Make sure you understand the buyers' priorities. Counters then can focus on the higher priorities. Those that carry less weight can be used to compromise.
5. Quantify problems. Repairs or concessions should have a dollar value on them and not be left open ended.
6. Isolate major issues by getting agreement on all other points. This allows the negotiation to be just one item away. Then all energies can focus on the one final obstacle.
7. Contingencies are major stumbling blocks. If you ask for a contingency, then don't expect major concessions anywhere else. If you must sell a home before you can buy, don't slash the list price.
8. Buyers show seriousness in your home with earnest money. Work to make the buyer happy.
9. Avoid the tendency to 'nickel and dime' the buyers. If the buyers feel that you are trying to squeeze every penny out of them, they will be less likely to compromise on major items. Negotiation good will can be used up on petty items.
10. Make sure what you want is put in writing. Count on nothing that is negotiated verbally.
11. Depend on your sales professional for negotiation counsel.

5 Tips to Help You Sell Your Home Fast

There is no question that in many parts of the country, houses are currently on the market longer. As a seller, this slow-down means there is more competition for a limited pool of potential buyers. Consider the following five tips to place your home on the fast track to sale:

 

Price It Right

The first 30 days are the most critical. If your home is priced too high, interested buyers may never even tour your listing. The longer the property is on the market, the fewer the prospects.

 

Deciding the value of a home isn’t an exact science. Yet, there is data to help you determine a fair asking price that is right on target. You may want to hire a real estate appraiser for an objective, unbiased estimate. Then consult with a real estate professional who can help you determine true market value based on a comparable market analysis, which will include recent home sale transactions as well as homes currently on the market. From your analysis, you may want to price your home conservatively to give it a competitive edge.

 

Make Your Home Irresistible

Unless they are looking for a fixer-upper, most homesellers are more likely to make a bid on a home that they can enjoy immediately. Therefore, you need to create an environment the buyer can’t resist. In other words, do everything you can to make the home so attractive, charming, cozy, inviting, comfortable and exciting that a buyer will want to buy that lifestyle for himself.

 

Evaluate the home from a buyer’s point of view.

An experienced real estate professional will be able to offer an objective view and will also know what buyers are asking for. Get your home in tip-top shape by making repairs and cosmetic improvements, and removing clutter. This may mean investing in a few upgrades to modernize your home’s look such as installing newer carpet and light fixtures and painting the walls a neutral shade.

 

Create Traffic

If you want buyers to see your home, you must first find the buyers. Work with your real estate professional to design a marketing plan that is flexible and capitalizes on your property’s most desirable features. Your strategy should include ways to reach buyers online and offline – such as word of mouth, the Internet, yard signs, direct mail, open houses and so on.

 

Go with a Professional

Selling a home is more than just putting a sign in your yard and having a listing on the Internet. And in a competitive market, you don’t really want to take the chance of making novice mistakes that can slow the selling of your home. By hiring a real estate professional, you get the benefit of an experienced marketer and negotiator who is familiar with real estate issues in your community. A real estate professional can offer worthy advice on pricing and staging your home based on their vast experience.

 

Plus, there’s the added value of the peer-to-peer networking among real estate professionals, which can bring buyers and sellers together – sometimes even before the property goes on the market.

 

Offer Incentives

Offering incentives can be just the impetus a potential buyer needs to select your property over others. You may want to consider offering a carpet or paint allowance. Or, pay for a professional home inspection or a home warranty – and, depending on your market and budget, offer to pay some of the closing costs.

 

Don’t be discouraged if there are competing homes for sale in your neighborhood. With just a few smart moves, you can turn a buyers’ market in your favor.

Create an Action Plan for an Easy Move

The key to an easy move is careful planning. There are many action items that need to be taken prior to the move all the way up to the actual day the first box is loaded on the moving truck. Take time to write down and organize the decisions and activities that will need to be accomplished prior to the move such as securing a mover and changing your address. Ideally, you should try to break up the tasks over a two-month period. By doing so, you won’t overload your schedule, plus it can save you time and money.  To get you started, consider using the checklist below as a guide.

 

Eight Weeks Prior

Get estimates from at least three professional movers. If you are going to do it yourself, get estimates on rental trucks.

Decide which furniture and household goods you’ll be taking, which needs to be disposed and which needs to be replaced.

If you will be moving to a new city, contact the Chamber of Commerce of that town for a new residence packet. Your sales professional may also have information.

 

 

Six Weeks Prior

Inventory your possessions besides furniture – kitchenware, decorative items, electronics, apparel and so on.

Complete a change of address form with the post office. This can be easily done online at www.MoversGuide.comfor a minimal cost of $1. Make sure you notify organizations, credit cards companies, and publications to which you subscribe of your new address, too.

Obtain copies of all medical, dental, legal, accounting and veterinarian records.

If children are changing schools, arrange for transfer of educational records.

Itemize moving-related costs with the mover including packing, loading, special charges and insurance.

 

Four Weeks Prior

Make arrangements for packing your belongings. If you will be using professionals, schedule with the company for packing to take place a day or two before the move. If you will handle packing on your own, purchase adequate boxes, packing materials and tape.

Arrange for short-term or long-term storage if needed.

Make travel arrangements for pets including necessary medical records, immunizations, medication and so on.

 

Three Weeks Prior

Begin packing items you won’t need immediately or that will go into storage.

Contact utilities on both ends of the move to order termination or turn-on for occupancy date.

Confirm travel arrangements for family and pets.

 

Two Weeks Prior

Terminate newspaper and other delivery services.

If necessary, arrange and confirm new bank accounts and local services in your new neighborhood.

 

One Week Prior

Gather important papers, records, and valuables for protected shipment to new home or safe deposit box.

Obtain any prescription medications needed for the next few weeks.

 

Day Before or Actual Moving Day

Defrost refrigerator/freezer and give away all perishable food.

Keep a box marked “Last Box Packed/First Box Unpacked” for tools, flashlights, first aid kit and so on. On moving day, this should be the last box placed on the truck.

Pack items to carry with you such as valuables, financial records, personal papers and so on.

 

Give the movers a telephone number and address to reach you.

To be sure, a detailed action plan can get your move well down the road before you ever depart to your new destination.

Who Owns My Mortgage?

When trying to contact your lender to work out a payment plan or some other deal, knowing who owns your mortgage can be very helpful. Unfortunately finding out is not as easy as it sounds. You should be able to call the phone number on your last mortgage statement or the number in your payment coupon book and connect directly with your lender. More often than not, this merely puts you in touch with the servicer – the business that collects and processes your payments. In some cases, the servicer is prohibited from divulging the true identity of your lender. In other cases, the person you're dealing with has no idea who your lender is.

Mortgages are often sliced and diced and repackaged into mortgage backed securities (MBS's) that are sold and traded on Wall Street. Many investors subscribe to an automated system called MERS (Mortgage Electronic Registration System) that keeps track of who owns the mortgage and note as it changes hands among investors, as well as who services it for that investor. MERS can provide another level of anonymity to the process. On many mortgages, the Mortgagee (the party that was granted the mortgage) is listed only as MOM (MERS as Original Mortgagee). No, that doesn't mean you can call your mom to find out who owns your mortgage note. It means you have to try to look it up in the MERS registry. Customers trying to look up the investor on the MERS registry will not find it. MERS makes the name and contact information of the servicer available, but not the name and contact of the investor. That information is for the servicer or investor to disclose, not MERS.

To add to the confusion, the mortgage meltdown sank many banks and other lending institutions which were taken over by other banks or regulators.

So, what should you do if you're trying to track down your lender? Take the following approach:

1. Call the phone number on your most recent mortgage statement or your payment coupon book. This will put you in touch with the servicer who may also be the lender who owns your mortgage or at least be able to tell you the name of your lender. (Remember, the person may not know or may not be permitted to tell you.)

2. If you have an FHA loan, contact FHA's National Servicing Center to determine who owns your mortgage:

(800) CALL- FHA / (800) 225- 5342

Email hsg-lossmit@hud.gov

Department of Housing and Urban Development National Servicing Center 301 NW 6th Street, Suite 200 Oklahoma City, OK 73102

3. You can try to contact Fannie Mae. If they own the note, they may provide the identity of the investor: 1-800-7FANNIE (1-800-732-6643).

4. If the mortgage is listed as MOM or has a MIN (Mortgage Identification Number) assigned to it, you can search the MERS database by mortgage identification number (MIN), your name and social security number, or the property's address. Dial the toll-free MERS Servicer Identification System at 888-679-6377 (an automated touch-tone system) or search online.

5. If you know the name of the bank or other lending institution that owns your mortgage but have no contact information for them, check out Hope Now .

One of the most important steps to saving your home from foreclosure is to get in touch with your lender immediately. Better yet, hire a qualified attorney with experience in foreclosures and loan modifications to contact your lender on your behalf, so you have legal representation on your side. I can guarantee that your lender has an attorney reviewing the paperwork. You should have one to watch your back, too.

April 27, 2009 -- Realty Times Feature Article by Ralph Roberts

Make the Most of Today's Low Mortgage Rates

Deal of the Day by Kelli B. Grant

Between holiday shopping and decorating the house this weekend, carve out some time to review your mortgage or rethink your home-buying plans -- it just might be the perfect time to make a major move.

Mortgage rates are already hovering around 5.5%, the lowest levels since 2005, and, recent reports suggest they could fall by another percentage point in upcoming weeks. According to a Wall Street Journal report Wednesday, Treasury Secretary Henry Paulson is considering a plan that would have lending giants Fannie Mae (FNM: 0.84*, -0.03, -3.45%) and Freddie Mac (FRE: 0.84*, -0.04, -4.54%) encouraging banks to issue 30-year fixed mortgages at rates as low as 4.5%. No official announcement has been made. The Treasury and Freddie Mac did not return calls for comment. And a spokeswoman for Fannie Mae declined to comment.

Should the plan materialize, rates would be among the lowest seen in 50 years, says Keith Gumbinger, vice president of HSH Associates, which tracks rates on mortgages and consumer loans. But it’s far too early to count on such a move. “It’s all rumor at this point,” he says. “They’re ‘discussing the potential.’ There’s no plan, no details.”

Even without the rumored plan in place, mortgage rates still remain well below those of the past year. Rates began to drop last week after the Federal Reserve announced it would purchase $600 billion in mortgage-related debt held by Freddie, Fannie, Ginnie Mae and the Federal Home Loan Banks. Rates have bounced around since, but have yet to creep above 6%. On Thursday, the average 30-year, fixed-rate mortgage was 5.58%, down from 5.76% last week and 6.33% two weeks ago, reports mortgage tracker Bankrate.com.

Consumers have been quick to take advantage. Mortgage applications jumped 112% last week, while refinancing requests were up an astonishing 203%, according to the Mortgage Bankers Association, an industry group.

While the latest news has some consumers wondering, “How low can they go?” they shouldn’t stay in limbo too long. Here's what potential borrowers should consider:

Prepare to pounce on great rates

Analysts agree: Current rates are very attractive, and they aren't going to rise anytime soon thanks to government efforts like last week’s bailout. “I don’t think the window of opportunity is going to slam shut on anyone,” says Gumbinger. That said, rates fluctuate daily based on any number of market factors. Whether you’re considering buying or refinancing, pull together your financial paperwork such as federal tax returns, investment records and proof of income so that you can jump on good rates immediately.

Polish your credit score

The almighty credit score is king these days and, given some of the early details leaked about the Treasury's plan, it will continue to be. Most likely the more favorable mortgage rates will be reserved solely for those with the very best credit scores -- at least a 760 on the 300- to 850-point scale, says Christian de Ritis, director of credit analytics for Moody’s Economy.com, an economic forecaster. That’s all the more reason to build up your credit and avoid mistakes that could trash your score, like late payments and big balances. Help for those with less-than-stellar scores has yet to materialize, although Federal Reserve Chairman Ben Bernanke urged the government Thursday to take steps to stem foreclosures by buying delinquent mortgages and offering bigger incentives for banks to refinance loans.

Refinance based on rates, not rumors

Early indications are that the Treasury’s low-rate plan would only apply to new mortgages, says Gumbinger. So if you’re looking to refinance, there’s no sense in hesitating. Bear in mind, however, that lending standards are still tight. You’ll need a great credit score and at least 10% equity in your home to qualify in most markets.

House hunters should stay the course

Don’t wait to buy a home based on a government plan that may not materialize, says de Ritis. Even if the plan does go through, those low 4.5% mortgages will only be extended to borrowers who fit the plan criteria, and won't be offered to borrowers across the board. If you were already thinking about buying, there’s no reason to put off your search.

Opportunities for First-Time Homebuyers in Today's Market

Historically low interest rates make right now a good time to buy

By Bo Menkiti, FrontDoor.com | Published: 9/01/2008

The Real Estate Bubble has Burst...Mortgage Meltdown...Home Sales Thud to Five-Year Low! These are the dramatic headlines that dominate the national conversations about the housing market, but what does all of this mean for the first-time homebuyer?

The reality is that housing sales have slowed across the country, but the interest rates remain historically low -- 6.35 percent doesn't look bad compared to the 10 percent we saw in the early '90s and 17 percent in the '80s. The combination of these two factors can easily translate into great opportunities for first time homebuyers to maximize their purchase power by taking advantage of the changing market conditions.

The shifting market provides buyers with broader housing inventory to choose from as well as the opportunity to do more due diligence before making a final purchase decision. There is also increased opportunity to negotiate with both motivated sellers and new construction developers. With low interest rates buyers are able to leverage significant borrowing power to find a home that meets their needs while maintaining or in some cases reducing monthly housing costs and positioning themselves well for future wealth building.

There are some key factors to consider when deciding if it's the right time to make the commitment to home ownership:

Compare current monthly spending on rent with the costs of owning. This is a valuable exercise that can make the decision-making process a more logical one. When making the rent vs. buy calculations make sure to take into account the principle reduction you will experience in a fix rate amortizing loan as well as the immediate and long term tax benefits of home ownership. Engaging an experienced lender in your market can also be a significant asset in this phase. The lenders expertise will assist first-time homebuyers in uncovering potential resources and assets that facilitate the home buying process.

Look at local market trends rather than national trends. Median home sales in your area could range from $141,510 in Memphis, Tenn. to $825,100 in San Francisco, Calif. and the supply and demand ratio will vary just as drastically. When tracking the market, you'll need to look at the local sales trends and average pricing to determine what is happening, and what you can afford. Although a significant amount of information is available through the Internet, this is the stage where a Realtor in your area can provide great insight about the market conditions. It is important to identify an agent that is experienced with the areas where you are focusing the search.

Research the Community Based Lending Programs and First-Time Homebuyer Programs available in your market. Some programs offer 100 percent financing, below market interest rates or down payment/closing cost assistance. Many of the programs only require attendance at a home buying seminar, so six hours on a Saturday could save you thousands on mortgage expenses. These programs are often locally based and another area where a local real estate agent and lender can be of assistance.

Decide how long you plan to stay in the home and look at appreciation in your market. The key in all of this is to have a long term perspective. The days of homes values doubling or tripling in a few years are gone, but those who buy well located quality property with a three to seven year time horizon (depending on the market) are bound to continue to realize the significant benefits of home ownership.

Ultimately the decision on whether to stop renting and make the move to home ownership should be made based on personal finances and local market conditions. Engaging a talented team of real estate professionals will allow first-time home buyers to navigate the home buying process and be better positioned to take advantage of the market shifts that can create long-term benefits to buyers.

A Checklist For Moving / Relocating to a New City or State

Think of moving or relocating and "stress" is a common outcome. Reduce the cold sweat borne from a move by planning ahead. Grab a legal pad, ditch what you don't need, get your documents in order and simplify the process.

A Checklist For Moving & Relocation

MOVING! The very thought of it can send chills down our spine and can cause us to break out into a cold sweat. Experts say that any kind of "change" creates "stress". Moving, (and especially if we are relocating to a new city or state),represents a huge change and naturally brings a great amount of stress along with it. This can be a double whammy, because stress can lead to a lack of energy and motivation. Many of us tend to procrastinate during stressful periods of our lives.This is one time, though, when we must rise above that. When preparing for a move we need to put the pedal to the metal and get a lot of things done. This checklist contains many suggestions that may seem like "no-brainers". However, the very act of printing out these simple suggestions and reminders can become a significant security blanket as the dreaded time approaches. Moving and relocating calls for being proactive,grabbing the bull by the horns and actually completing certain chores well in advance of their deadlines. Hopefully this little paper will help you to accomplish that. In this particular article we are leaving out the "big things" such as finding the best moving company, researching your new neighborhood's transportation, parking, employment, etc. Those are for other articles on another day. Today we are concentrating on the basics of planning and preparation.

Get rid of what you don't need.

Many of us are "pack rats". One thing that we can accomplish immediately is going through all of our "stuff" and getting rid of what we don't need anymore. Moving unwanted clothing and bric-a-bracs from one place of residence to another is a great waste of time and effort. It is surprising how much more in control we feel once we start narrowing down our "inventory" to what we actually need to keep. Getting rid of the unwanted item scan be done by having a garage sale long before moving time and then donating the leftovers to the Salvation Army or other charitable groups.

Get all important papers and documents together and secure them.

Since moving is hectic, to say the least, we need to be aware of the exact location of all of our important items. Things that we absolutely must not lose or misplace should certainly be hand carried, not put in a box for the movers: 

Address Books, Birth Certificates, Bank Statements, Checks,Credit Cards and Statements, Home Movies, Irreplaceable Memorabilia, Insurance Policies, Marriage Records, Medical and Dental Records, Military Records, Passports, Photos and Photo Albums, Resumes, School Records, Stock Certificates, Tax Returns, Telephone Numbers, Valuables, Vehicle Documents,Wills.

Prepare well in advance for living at your new location.

There are many things that we can do at our new location well in advance of our move that will help smooth out the bumps and grinds of our relocation process when the actual event occurs:Open up new bank accounts. Open up a new Safe Deposit Box. Contact the new area utility companies and arrange for your new services. These can include Cable TV, gas, electric, oil,telephone, water and Internet access. Arrange for new medical providers. If you are moving to a new state, contact the DMV and get forms necessary to re-register your vehicles. Contact your insurance companies and find out if your car insurance,homeowner's insurance, etc. can be transferred. If not, find an Insurance Broker in your new area and discuss your needs and requirements for new policies. Go to the post office and get moving kit. Prepare change of address forms for all of your correspondents; credit card companies, other credit accounts,banks, insurance companies, current utility companies for final statements, magazines and other subscriptions, family, friends,and any other persons or businesses that you correspond with on a regular basis.

As the time approaches, get a nice new legal pad.

As moving day approaches and when the moving process actually begins, you don't want to be hunting for phone numbers in wallets, purses, or address books. Have a nice new legal pad ready with all important phone numbers written clearly and legibly for both your old and new contacts: Banks, Doctors,Emergency contacts, Family members, Friends, Landlords or Real Estate Brokers, Movers, Pharmacies Schools, Storage Facilities,Utilities. With proper planning and preparation the moving process, though never fun, can at least be sane. With proper planning and preparation the utilities at your present address can be disconnected the day after you move and the utilities at your new address can be connected the day prior to your arrival.With proper planning and preparation you will not be frantically searching for a new doctor or pharmacy, if that unfortunate need arises.

With proper planning and preparation you will have all of your important documents at the tip of your fingers at all times. With proper planning and preparation your mail will start arriving the day after you move in to your new abode and your life will endure a minimum of chaos and clutter.

Good luck with your move and good luck in your new home or apartment.

Top 10 Real Estate Market Myths Debunked

With mortgage meltdowns, plummeting home prices and soaring foreclosure rates constantly in the news, it's no wonder people are wary of the housing market these days. But contrary to popular belief, things are not as dismal as they seem, according to Lawrence Yun, chief economist of the National Association of Realtors. Yun debunks 10 commonly held beliefs about the current housing market, and FrontDoor.com offers you 10 related tips.

1. Peak-to-trough home price declines to date have been about 20 percent. Wrong. Measurements of home price declines can be skewed depending on which homes in which markets are being measured. For instance, the Case-Shiller Index, which indicates that home prices are down 20 percent, is heavily skewed towards homes with subprime loans and other distressed home sales. These troubled homes have experienced a steeper decline than home prices in general, says Yun, adding that both government data based on loans backed by Fannie Mae and Freddie Mac and data from the National Association of Realtors suggest much more modest price declines. TIP: If you're selling your home, the best thing to do is price your home right.
   Read More >>
2. The much smaller number of new homes now under construction indicates the dismal outlook for the housing market. Wrong. The inventory of homes on the market is very high, so the last thing we need now is more new homes being built. Home builders have cut back sharply on production, which will help lower inventories and stabilize prices. The builders have done exactly what market forces are dictating under current conditions, Yun says. TIP: With many new homes completed but not sold, you can find great opportunities.
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3. Even when the housing market recovers, home price growth will be only 4 to 6 percent per year -- much less than historical average returns for the stock market. Most buyers put less than 20 percent of their own money into a home purchase; this borrowing power can translate to a greater rate of return. This is how Yun explains it: Home price appreciation historically has been about 1 to 2 percentage points higher than consumer price inflation, which translates into about 4 to 6 percent per year. But this growth rate cannot be viewed as a rate of return like the stock market. The reason is that most people do not buy a home for all cash, instead making a cash down payment and borrowing the rest. The leverage this borrowing creates can magnify returns -- and losses. If price growth returns to historic norm, the price growth of 4 percent can easily turn into 20 to 30 percent rate of return if the home buyer makes a down payment of 10 or 20 percent. TIP: Get the fundamentals right when investing in real estate.
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4. Impending baby boomer retirements and moves to small homes will cause a glut of homes on the market. Wrong. The first edge of the baby boomers has reached 60 years of age and the massive bulk of that generation will soon go into retirement, but far from trading down, many of these older homeowners are keeping their homes or moving to ones of comparable size. And even if more boomers do sell their larger homes in the years ahead, Yun points out, the rapidly growing U.S. population should absorb the inventory of existing homes on the market. TIP: Active seniors can find a retirement community that caters to their needs and interests.
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5. The federal government takeover of secondary mortgage companies Fannie Mae and Freddie Mac is a bailout that will cost taxpayers bundles. Too soon to tell, says Yun. It's conceivable that taxpayers may have to cover some losses. It's also possible that the government takeover will result in no loss of taxpayer dollars. Even if taxpayer funds are used, the bailout would be preferable to the global economic problems that would have occurred if Fannie and Freddie had gone belly up. TIP: Uncle Sam is "bailing out" homeowners facing foreclosure. Find out more about the Hope for Homeowners plan.
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6. The Federal Reserve controls mortgage rates. Wrong. Yun explains: The Fed's activities influence mortgage rates but don't directly control them. What the Fed sets is a very short-term interest rate called the Federal Funds Rate. Mortgage rates are determined by global savings as well as credit spreads and inflationary pressures. Over the past two years, the Fed has raised the Fed Funds Rate to 5.5 percent, and then cut it deeply to around 2 percent. All the while, the 30-year mortgage rate has averaged in the 6 to 6.5 percent range. TIP: Today's rates don't look bad compared to the 10 percent we saw in the early '90s and 17 percent in the '80s.
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7. It's the wrong time to buy. Wrong. All real estate is local. For those who are financially and mentally ready to buy, there has never been a better time to be a buyer in many markets. An abundant selection of homes and historically low interest rates give buyers an edge over sellers. The recently passed $7,500 federal tax credit for first-time home buyers creates an added incentive. For someone with a long-time horizon, Yun says, there is very little worry about home values since homes have historically provided a solid foundation for wealth accumulation. TIP: Compare the pros and cons of renting vs. buying to see what makes sense for you.
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8. It's the right time for everyone to buy.No. All real estate is local, and everyone is unique. Someone who is not emotionally or financially ready should not be forced or induced to join the rank of homeowners, even when a market presents good buying opportunities. Potential homeowners clearly need to understand that the decision to move up to ownership requires sacrifices, like saving up for down payment and elevating their credit scores. Homeowners who lose their home to foreclosure serve no one's interest, Yun adds. TIP: Take a good hard look at your financial status and create a homeowner's budget to see if you're ready to buy a home.
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9. It's a terrible time to sell. Wrong. In markets where home sales are picking up strongly, a seller can easily get an offer if the property is priced correctly. Also, Yun says, for those looking to trade-up, selling low on an existing home is more than offset by buying the new move-up home at a lower price. When the market recovers, home price appreciation on the traded-up home will bring bigger bang for the buck. TIP: Homebuyers want bargains in this market. If you price your home much lower than your competition, you might end up with a bidding war.
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10. With the advent of the Internet, more and more homes are being sold by owners (FSBOs), and real estate practitioners are becoming obsolete.Nope. According to Yun, the share of home sellers who choose to go it alone when selling their home has actually decreased from about 20 percent in the late 1980s to about 12 percent today. Even after these sellers successfully complete a transaction, only 4 in 10 say they would sell their next home without the assistance of a real estate professional. TIP: You don't have to sign a listing contract to talk to a Realtor. Ask family and friends for referrals and interview a few. You might even get some free advice.

Thanks Trulia, you're the best!

Whether you're actively on the house hunt or just enjoy looking, now you can get driving directions on Trulia's property pages from Google Maps. Find a home then select "Driving Directions" underneath the map.
Enter your city to try it now! »

Open The Doors And Buyers Shall Come—But Prepare First!

by Phoebe Chongchua

If your home is on the market, chances are your agent will at some point hold an open house. Open Houses can be a great way to drive buyer traffic to your home. But most often the desire to physically come and see your home starts with a picture on the Internet.

“I have developed a proprietary way to build layers into a room to give that depth when you’re putting the photo on the website,” says Christine Rae owner of Certified Staging Professionals (CSP) and co-author of Home Staging For Dummies. For more information visit: csptraining.com

She says, “Curb appeal starts on the Internet so it’s very important to make the pictures of your home attractive. You have two drive-bys.” And if the Internet picture doesn’t sell your home, you might not ever get the buyers to actually do a physical drive by and come inside your home.

Once you entice buyers with an eye-catching picture, then you have to keep up the good work.

“Everywhere the eye rests, the sale begins. So that means everything counts: floors, walls, ceilings, windows, the stuff outside, inside, cleanliness, attention to detail,” says Rae.

“To me the biggest mistake people make is thinking that good enough is good enough and it isn’t -- not anymore. Sellers say to me, ‘I can’t be bothered to do all of this stuff.’ I say, ‘You know what? The buyer can’t be bothered either.’ So if the seller can’t be bothered to do all of these things, why should buyers trade their old houses for your old house? There are lots of other options out there. It’s a very competitive marketplace,” says Rae.

“The buyer is expecting something fantastic and if you’ve got anything less than a fantastic-looking property, you’re less likely to get the offer that you’re looking for,” explains Rae.

Rae shares a few tricks of the trade to help you before you hold an open house.

Target your buyers.

Rae says target the buyers you think are most likely to buy your home. That means paying attention to economic trends in your market. Also, when advertising, feature the items that are likely to attract the targeted buyers.

“One of the biggest demographics that you have in the U.S. is the Hispanic demographic; 40 percent of the homebuyers are going to be Hispanic. You have a cultural difference in the way that culture lives, buys, and lives in homes,” says Rae. If you think that demographic might be interested in your home, consider learning more about how to make your home more appealing to them from an agent who routinely works with the Hispanic market.

“There’s also a big demographic growing for single women buying homes. They bought 20 percent of the homes last year and that’s a growing trend. You’ve got to target what’s appealing to them such as building in a security system is a very crucial element to selling that home to them,” says Rae.

Energy efficiency can help sell your home.

“Anytime you can bring light into a house, that is going to make people feel good,” says Rae.

That’s why agents typically open curtains and blinds and turn on all the lights before a showing. It’s a simple thing to change all the light bulbs to energy-efficient light bulbs. “By 2010, North American energy costs are going to rise 50 percent. Who would not want a more energy-efficient home? If you’re focusing on energy-efficiency, that’s going to help the buyer buy your house,” says Rae.

Rae says the energy-efficient light bulbs in a daylight finish are great for helping show off your home. “Daylight bulbs, when they are placed in retail stores, increase retail sales by 40 percent. That reduces energy costs and increases sales; so doesn’t that make sense that it’s going to have a dynamic effect when you put it into a domestic home?” says Rae.

Good sound system? Then play music.

“CSP has developed a music-for-open house CD. It’s kind of easy listening. You have to target the buyer. It can’t be elevator music and it can’t be funeral music or rock—generally an easy-listening good sound track lifts spirits. People are always apprehensive when they are looking at houses. They feel like they are prying into somebody else’s house. So, make your house not feel like that,” says Rae.

Remember, that buyers need to feel comfortable when viewing your home. Don’t cook anything the night before that might permeate through the entire house and leave a pungent odor. Put away personal items. Get the dog out of the house and roll out the welcome mat!

“A buyer doesn’t want to feel like a guest in your home so you have to remove anything that would cause any trepidation,” says Rae.

Invite your neighbors over for a preview.

Sometimes your neighbors can be the best sales people. Invite them in to see your home. You never know who your neighbors know. They might have the perfect buyer for your home.

Once the clutter is out, what to do with the stuff you don’t want.

There’s a new service called StagersList.com that is attracting shoppers and real estate professionals. The site is a virtual consignment shop that provides resources for Realtors, stagers, and homeowners. Various items that are no longer wanted are placed for sale on the site. Many use the site to purchase items that can be helpful for staging while others use it to unload items no longer wanted. Visitors bid on the items at stagerslist.com

So, open the doors and invite buyers into your home, not as guests but as potential homeowners and watch the offers roll in.

Real Estate Outlook: Real Estate Market Defying Odds

by Kenneth R. Harney

The panic and fear that have been shaking Wall Street aren't translating into negative numbers for real estate -- in fact, it's been the reverse.

While the Dow Jones index peeled off a record fourteen hundred points in a matter of days, the latest pending home sales index was moving in the opposite direction -- up strongly to its highest level in more than a year.

Pending sales jumped by 7.4 percent in the latest month, according to the National Association of Realtors.

Financial industry analysts had forecast a one and a half point DECLINE in the index for the month, but pent-up demand for housing, plus rock bottom bargain prices in many markets, convinced buyers that this is a good time to get off the sidelines and get into the game.

The pending home sales index measures new contracts for home purchases that haven't yet gone to closing, but should do so in the near future. It's a widely accepted predictor of sales activity two to three months down the road.

Mortgage rates and new loan applications also defied the negative spiral in the stock market: Applications for home purchases to be financed with conventional mortgages jumped by three percent last week, and new FHA applications were up by nearly 10 percent, according to the Mortgage Bankers Association's national survey.

Interest rates on 30 year fixed rate loans dropped to 5.9 percent and 15 year rates hit 5.7 percent.

Why the sharp divergence in performance between home real estate and Wall Street?

One key reason is that real estate -- which helped trigger the financial crisis through lending abuses and fraud -- has been undergoing its own correction on pricing and underwriting practices for the past two and a half years.

It's already taken its lumps, and has now reached a point where prices in former boom markets are so affordable that smart buyers are swooping in.

Also - although we keep hearing about the global credit squeeze and banks' unwillingness to lend money, that's definitely NOT the case in the mortgage market. There's plenty of money available - as long as you have a solid credit history and some downpayment cash.

Fannie Mae, Freddie Mac and the FHA now account for well over 90 percent of home financing volume, and all three are backed by the federal government.

They've got a direct and virtually unlimited pipeline into the capital markets.

And with mortgage rates under 6 percent, no wonder consumers are shopping for -- and buying -- houses at great prices.

Published: October 14, 2008

Choosing the Right Community for You

If you are buying a home, one of the first things your real estate professional will do before taking you on home tours is interview you to determine the type of house you want such as a 2,000-square-foot four-bedroom, split-level with a formal dining room and two-car garage.  But just as important is the type of community you want to live in. Knowing what your requirements are will help narrow your home search and save time.

To expedite the house-hunting process, start by making a list of the dream home factors that are most important to you and your family’s lifestyle. Consider style, location, proximity to work and schools, yard size, children in the community, and of course, price.

Price and location generally are the key factors you’ll use to identify the communities that best suit you. If you are moving within the same city, you may want to start your community search by getting in your car and exploring. There are also resources on the Internet that let you compare communities.

You’ll want to ask yourself critical questions, such as: Do you dream of something quaint and charming that can only be found in an older area? Or, do you prefer everything new? Are you willing to sacrifice size and space for architectural detailing? What about drive and commute time to the office and schools? Will you forgo the number of bedrooms and a big yard for proximity to a lake or other recreational areas?

Whether you have children or not, buying a home in a community with good schools is important. It not only adds value to your property, but also is an attractive feature when and if you decide to sell. There are plenty of resources available to get information about schools within the communities you are considering. Various Internet sites offer school reports and profiles. They provide statistical data such as graduation rates, college-bound percentages, and standardized test scores. You can also learn about special programs the schools offer. In addition to these reports, many schools have their own Web sites you can peruse. And of course you can always talk to people in the area or take a tour of the school.

Additional factors you’ll want to consider during your community search are crime, recreational activities, proximity to shopping and restaurants, and other specific family needs.

Once you’ve narrowed your search to two or three communities that fit your price range and lifestyle, make comparisons of price and sales activity. Your real estate professional can help you determine which communities are most sales-worthy at present, and which are more likely to continue to be.

There are many factors involved in selecting the right community for you and your family. Discuss your options with your real estate professional. This will provide the information he or she needs to help you find property listings to tour. Remember, a targeted approach to house hunting is less time consuming, less expensive and more efficient.

Getting Your Home Ready for the Market

As a seller, your No. 1 goal is to sell your home as quickly as possible at or near the listing price. In today’s market, where there is much more competition for buyers, it is important to put your best foot, or in this case, home forward because first impressions are vital.

Many of today’s prospective homebuyers have busy lifestyles and are looking for properties that don’t require a lot of work. Therefore a home in move-in condition is much more attractive. Before placing your home on the market, you may want to invest in making needed repairs.

To get started, inspect both the inside and outside of the home. Take inventory of practical and aesthetic repairs. You may want to apply a fresh coat of paint on the walls, doors, and shutters. Clean the carpet and buff and polish wooden floors. Tighten and polish hardware. Repair cracks in sidewalks and driveways, and clean any stains on them. Replace missing or warped roofing. Clean or re-grout kitchen and bathrooms. Repair dripping faucets and drains or plumbing fixtures that aren’t operating.

Fix sticking doors and replace old locks and doorknobs. Replace old bulbs and broken electrical sockets. Replace cracked windows and torn screens. Repair broken fencing and reseal the deck. Clean up stains on the tiles and countertops.

Some experts also recommend hiring a certified home inspector to thoroughly and impartially evaluate the property. (For a list of inspectors in your area, visit the American Society of Home Inspectors website, www.ashi.com, or ask your real estate professional for recommendations.) A standard report will review the condition of the home’s heating system, central air conditioning, plumbing and electrical systems, the roof, attic, walls, ceilings, floors, windows and doors, the foundation, basement and visible structure.

If there are recommendations for improvement, consult with your real estate professional in prioritizing the list of repairs.

Depending on your goals and budget, you may want to repair only items that could cause significant deterioration to the home, such as a leak. In addition, your local market conditions may dictate how extensive your repairs need to be. Let your budget and your real estate professional guide you.

However, be careful about major repairs. Sellers rarely recoup money on major remodeling projects, and you may want to save funds for your new home.

A home in good condition demonstrates pride of ownership. Taking the time to make small repairs to your home can go a long way in making sure that your home is presented to potential buyers in its best possible light. They also just might make the sale.

Are you a property pro or a real estate rookie?

With today's real estate market, it's important to stay sharp and play it smart. Take this quiz and bone up on everything from mortgages to staging. We'll tell you how your knowledge stacks up and give you tips on how to increase your expertise.

Building a Home? Protect Yourself from Soaring Prices for Materials

By Joanne Cleaver

RISMEDIA, August 8, 2008-(MCT)-The materials used to construct a house aren’t rare-wood, steel, concrete, shingles, copper. Like all commodities, their prices fluctuate.Especially lately. The Association of General Contractors of America reported in June that prices for steel products rose 8.1%, asphalt, 6.7%, and diesel fuel, used to transport those materials, was up 5.7% over the past 12 months.

Construction materials and components were up 13.2% for the six months that ended in June, according to the Bureau of Labor Statistics.

Fluctuating materials’ prices don’t matter if your house is already built. But if you’re considering building or remodeling, or if you’re in the middle of a project, the last thing you want is a stream of price increases from your contractor. Tactics for minimizing mid-project surprises include setting limits on price increases in the contract, considering alternative materials and collaborating with the lender even after you land a construction loan.

Often, buyers are so caught up in the choices of a lot, floor plan and finishes that they pay little or no attention to the contract until they’re emotionally invested in the house, says Roy Wagner, a partner with the law firm von Briesen & Roper and chair of the Wisconsin construction section of the state Bar Association.

“They find a lot, they look at the design, they go through many months of what they’re buying, without looking at the contractor’s proposed business terms,” he says. “Then the contractor pulls out the contract and says, ‘Sign here.’ By then the consumer has lost their leverage, they’re so invested in the process.”

Head this off by asking for a “template contract” at the start, along with the contractor’s references. Review the contract to see the clauses that address price escalation or surcharges on materials. And get a lawyer to advise you on this, the biggest purchase you’re likely to ever make.

Labor costs aren’t usually included in legal language that lets a contractor raise prices midstream. The Association of General Contractors estimates that hourly earnings for construction workers rose about 3.7% in the 12 months that ended in May-not quite in the league with materials.

Negotiate a fixed-price agreement in the contract, Wagner adds. That puts the responsibility on the contractor to hold down materials costs, which he can do by buying materials at good prices and storing them at the job site.

“There’s a natural tension for the homeowner to wonder if (the contractor will) cheapen the project in ways they don’t see because his profit is being eroded,” Wagner says. Add the requirement that you are allowed to review receipts and the actual cost for materials purchased for the project each time the builder applies to withdraw money from the construction account. Keep track of materials prices so you have a point of reference, and ask for data that proves that the materials the contractor paid for are for your project.

Performance and payment bonds are two additional tools, typically used in government and commercial contracts, that can reduce the risk to homeowners when there are material price increases with a fixed-price contract.

Performance bonds essentially provide project completion protection to cover the cost of finishing the project if the builder abandons it rather than finish-sometimes a scenario prompted by spiraling materials costs.

Payment bonds ensure that material suppliers get paid, especially when project costs increase beyond the contractor’s budget.

Wagner says that these bonds can also indicate the financial health of your contractor; to get them, the contractor has to have enough business assets to qualify, or must make a personal guarantee to the bonding company. If the contractor doesn’t qualify, it may indicate that the company doesn’t have enough assets for your project.

The bonds aren’t cheap, though, and typically the homeowner covers the cost.

There are some materials you have to have: shingles, piping and plywood. But others may be more optional than you think.

Bielinski Homes, based in Waukesha, Wis., offers a guaranteed price contract to reassure buyers that they won’t get hit with sticker shock, says chief operating officer Paul Bielinski. “‘I don’t really know what it will cost’ is a scary thing,” he says.

Some house layouts are easier on materials than others. Bielinski has tweaked some designs to eliminate walls, offering a more open layout. It is also starting to offer laminate floors instead of hardwood floors-one example of how costs can be held down by changes in finish materials.

Paying for all this has gotten more complicated, too.

Lenders say construction loans have been hit by the same kinds of credit complications as other types of mortgages.

“If their scores are not optimal, customers are feeling that in the wallet a little bit,” says Doug Gray, a mortgage loan officer with Kenosha, Wis.-based Southport Bank.

Bridge loans, which are used when an owner is building a house while living in the old one, “are significantly more challenging than they used to be,” he adds.

Instead of commissioning a new house and crossing their fingers that the old one will sell quickly, many homeowners are first selling, and then breaking ground.

When it’s finally time to build, expect to review your construction contract with your lender.

“Yes, we do look at the escalation and cost clauses,” says Jeff Cumminford, a vice president and field manager for mortgage lending for Racine, Wis.-based Johnson Bank.

If the cushion in the construction account is consumed by extra costs, “the only solution is to ask the customer to come up with more cash or refinance the construction loan when the project is done, or you make a separate second mortgage or lien of credit to cover the extra cost,” he explains.

Of course, getting the loan to begin with assumes that the market value of the finished house is in line with its new neighborhood.

“Cost is not always equal to value,” says Leslie Sellers, vice president of the Appraisal Institute, based in Chicago.

“You wouldn’t want to build something that’s too customized, or a home that’s twice the size of others in the neighborhood,” he says. “With the market as it is, you won’t get any of that value back.”

Keeping Track

You can track material prices by watching the Producer Price Index (PPI), compiled by the Bureau of Labor Statistics. It shows the change in the cost of producing finished goods, excluding food and energy.

5 Big Mistakes Consumers Make When Moving

By Fayette Wester

RISMEDIA, August 11, 2008-Moving may seem like an overwhelming experience for some home buyers, so we’ve compiled a list of “don’ts” to help consumers gear up for a smooth move.

1. Getting a quote over the phone or Internet: A big mistake that consumers make, when planning their moves, is obtaining a quote over the phone or the Internet. Any quote obtained in this manner is a non-binding quote. The only way to obtain a guaranteed or binding quote is to have a visual survey of your household goods by a reputable mover. If you choose to accept a quote over the phone or Internet you are setting yourself up for a nasty scenario when the mover shows up at your new home and demands more money.

2. Waiting too long to line up a mover: Allowing time for a visual survey, receiving a written and binding quote, and reserving a truck for your move takes a lead time of 4-6 weeks. Although moves can be arranged in a shorter period of time, many consumers find that their choices are limited by availability, especially in the busy summer months. In our current real estate market many homes are taking longer to sell, but once sold are closing very quickly. The time to obtain estimates for your move is before your home sells so that you are prepared when it does.

3. Misrepresenting what you are moving: It is very important to show the surveyor or estimator everything you are planning to move. If you forget to show items in a basement, garage, attic, or off-site storage unit and then add those items at time of pick-up, your estimate will no longer be binding. In the same vein, if you commit to packing your own items but don’t have time to finish, the van line will pack your items and charge you for the service. If you are uncertain of whether you will be taking something, or are not sure if you will have time to pack everything, ask the surveyor to put the items or service in the estimate. If you decide not to take something, or do not require the packing, the cost will be adjusted downward.

4. Paying a deposit up front: Reputable movers do not ask for payment up front to reserve trucks or dates. This is a classic red flag in moving. A reputable mover will expect payment upon delivery.

5. Finding a mover based upon price rather than reputation and service: If a mover gives you a price that is significantly lower than other movers it is likely that you are being low-balled. If a surveyor has underestimated your weight in order to give you a lower price you may find, on moving day, that the moving truck does not have enough room for your shipment. This is called an overflow. An overflow means that your items will not all travel together, will not all arrive at the same time, and will generally just cause you a big hassle. Another way to lower cost is to compromise service. Look for a competitive bid from a professional mover who is certified and reputable. Although price is an important factor, don’t base your decision on price alone.

The Move Advocate was designed to help you and your clients navigate your way to a smoother move. Call 800-617-1918 to discuss your moving needs with a professional moving coach, and to obtain multiple binding quotes at no cost and with no obligation.

For more information, visit www.moveadvocate.com.

7 Guidelines for Attracting Great Residents

Rental Strategies by Rob Massey

RISMEDIA, August 12, 2008-In the rental business, all of us have heard the nightmare stories about bad tenants destroying properties and causing prolonged evictions. Realistically, anyone can prevent most bad occupancies by following a few simple guidelines:

- Location-There is no question that the more desirable a neighborhood, the lower the risks of having a bad resident apply. It is also worth noting that the higher the rent, the lower the risk.
- Condition-A very vital but controllable influence for attracting desirable residents is its condition. The formula is simple. Make it look like everything was just completely redone. Exterior property condition is very important as well.
- Pricing-Don’t be afraid to price a property slightly below what the market dictates. For every 2½ weeks a vacancy sits on the market, the annual rent could have been lowered by 5%.
- Internet Marketing-Renters today turn to the Web in search of a new rental home. Internet listing services provide an excellent value for promoting rental properties. They also come in handy for making rental rate comparisons.
- Signage-A prospect calling from a yard sign should be treated as a serious lead. They have seen the exterior of the property and know its precise location.
- Response Time-Rapid response time can make all the difference. Use cell phones or text messaging to allow prospects to quickly reach someone who can show the property or answer any questions.
- Screening-Despite all of the above, screening is still vital. Be sure to adhere to a written tenant selection plan that is in compliance with all Federal, State and Local Fair Housing Laws and the Federal Fair Credit Reporting Act.

Great residents in rental property do not have to be elusive, so long as simple but effective steps are taken to ensure that they are found.

Rob Massey, Jr., CPM, is founder of RentalHouses.com and a consultant for Rentals.com.

5 Reasons for Seniors to Rent Their Vacation Properties

RISMEDIA, August 14, 2008-It seemed like a great idea twenty years ago-you’d buy that condo in Florida, vacation there as often as possible, then someday sell your primary residence and spend your Golden Years basking in the sun. Now, “someday” is here and-lo and behold-you’ve changed your mind. You now have grandkids you don’t want to leave, all your friends are nearby, and frankly, the idea of nonstop sunshine with no autumn leaves or snowfalls has lost its luster. You’d hate to sell your vacation getaway, but keeping up two homes has gotten too pricey for comfort. Is there a solution?”Absolutely yes,” says Christine Karpinski, director of Owner Community for HomeAway.com (HomeAway.com) and author of “How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment” (Kinney Pollack Press, 2007, ISBN: 0-9748249-9-2, $26.00). “Renting out your vacation home allows you to have your cake and eat it, too. And the good news is, it’s easy to do it yourself-not to mention surprisingly lucrative.”

Many seniors find themselves in this position, she adds. A good percentage of second homeowners fall into the “retirement age” demographic, and quite a few of them have-at one time or another-kicked around the idea of selling their primary residence and moving into that beachfront condo or mountain chalet full-time. Yet, changing lifestyle trends, combined with a rising cost of living, have led many of them to reconsider the fate of their vacation villa.

If you’re a second homeowner, Karpinski offers five reasons why you might consider renting out your vacation home:

1. Circumstances have changed since you made your retirement plans. Maybe grandchildren have arrived on the scene and you can’t bear the thought of moving hundreds of miles away from them. Or your parents are in poor health and need you nearby. Or your spouse has passed away and retiring in the Great Smoky Mountains was his idea, not yours. Regardless of specifics, your life bears no resemblance to what you thought it would look like back when you made your retirement plans.

“Life rarely turns out to look like we thought it was going to look,” notes Karpinski. “That’s okay. Some of the happiest, most successful people I’ve met during my years working in this field never dreamed they would rent out their vacation home, and yet once they tried it they love doing it. It pays to be flexible and keep your options open.”

2. You’ve suddenly realized there’s no place like home. Maybe there are no dramatic life circumstances keeping you from moving to your “dream destination.” Maybe you’ve simply changed your mind. You’ve decided you like being near your friends, you don’t want to leave your church or synagogue, and your Tuesday lunch with “the girls” or Thursday Bridge night with “the guys” is a tradition you just don’t want to give up. Or perhaps you’d like to stay in your hometown most of the year (you kind of like the change of seasons) and spend the bitterest winter months in your beachfront condo. Renting your second home out during the time you are not staying there makes it financially feasible to keep both homes.

“Traditionally, many retirees would sell the home they lived in for forty years, downsize to a smaller house or apartment, and split their time between that home and their vacation place in, say, Florida,” explains Karpinski. “But there are drawbacks to doing that: you lose your neighbors, you’re no longer close to your familiar grocery store, and so forth. And you don’t get to pass the ‘homestead’ down to your kids. Rent out your vacation home and you can have the best of both worlds. You can afford both places. It’s the perfect balanced solution.”

3. You’ve decided to “retire” from retirement. It is not unusual for people to test-drive retirement and find that it’s just not for them. Work can provide many rich rewards-structure, social interaction, mental stimulation, a sense of purpose, and so forth-that people keenly miss when they retire. And when they discover that quitting “the rat race” isn’t quite what they thought it would be, more and more people are opting to return to the workplace. And (let’s be honest), sometimes people simply can’t afford to retire.

“When people decide to postpone retirement, they may also postpone moving to their retirement home,” says Karpinski. “Even if they do retire and then rejoin the workforce either full-time or part-time, they may not want to live in the city they associate with retirement. It’s a psychological thing. And so, in these cases, it’s better to keep the vacation home a vacation home. Renting it out allows them to do that.”

4. Your fixed income hasn’t kept up with your lifestyle. Admit it. Even when you’re happy to give up the daily grind of your job, losing the paycheck that comes with it can be pretty painful. Factor in inflation, rising taxes, and unexpected “new” expenses, and you may find that what seemed like a manageable cost of living five years ago doesn’t seem that way anymore. Your second home, even if it’s paid for, may start looking like a liability due to property taxes, homeowner’s association dues, and maintenance costs. Not if you rent it out, says Karpinski. Then it becomes a (sizeable) source of new income.

“If you have a mortgage on your second home, renting it out only seventeen weeks will cover your mortgage payments for an entire year,” she says. “If it’s paid for free and clear, only five off-week rentals will cover costs like bills for your phone, power, cable, and association dues. All the rest is profit! When you consider that in some markets you can earn as much as $30K-40K in rental revenue per year from your vacation home, you’re looking at a nice ‘raise’ for yourself.”

5. You’re currently renting your vacation home through a property management company, but you’d like to make more money. Ditching the middleman may be the way to go. Property managers simply charge a hefty fee for their services. In fact, as Karpinski’s books point out, you have to rent ten more weeks with a management company to end up with the same amount of money you’d make renting by owner. And with the growing popularity of vacation home rental websites like HomeAway.com, finding renters is surprisingly easy.

“Here’s another good reason for seniors to rent by owner: they typically have time to handle the details,” says Karpinski. “Not that there’s a huge amount of work involved, but it is easier to respond to renter inquiries, do bookkeeping, orchestrate routine maintenance details, and so forth when you aren’t tied down to small children and/or a demanding career. Plus, vacation rental homeowners often meet interesting people and form friendships with them, and retirees tend to have more time to nurture these relationships.”

And here’s a surprise: people who try renting by owner often end up liking it so much that they pour their earnings into another vacation home. In fact, a recent survey by the National Association of Realtors® found that some 55% of vacation home buyers said they were likely to purchase another property within two years.

“Who knows-becoming a vacation rental property owner may become your encore career,” says Karpinski. “Buying and renting out vacation homes is addictive. I’ve done this for years and I can’t imagine ever not doing it. It’s more than a way to make money. It’s a richly rewarding way of life-at any age.”

Christine Karpinski is the author of “How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment” (Kinney Pollack Press, 2007, ISBN: 0-9748249-9-2, $26.00) and Profit from Your Vacation Home Dream: The Complete Guide to a Savvy Financial and Emotional Investment (Kaplan, 2005, ISBN: 1-4195069-1-9, $19.95).

Mortgages: Doing it Over

Save money this time around by comparing lenders, researching fees

By Karin Beuerlein, FrontDoor.com | Published: 11/01/2007

Buying a home the second time around is a breeze, right? You learned from every single mistake you made buying your first home, and you're practically a pro. Or not.

The truth is, unless you're a real estate or mortgage professional, or you buy a house or two every month, you probably aren't completely on top of the game just because you've played it before. You know a good faith estimate from a hole in the ground, but you'd benefit from a refresher course so you can turn that experience into real savings of time and money.

Shopping for a mortgage is probably the part you remember most clearly from last time and not because of all the fun you had doing it. Shopping for a lender may be the most exhausting part of buying a new home. So, in the interest of saving time and energy, you may be tempted to go with your old lender and just take whatever terms they offer.

Don't do it. The market changes constantly. Getting the best deal available can save you thousands of dollars in the short term and many tens of thousands over the long haul. So buck up, and let's get started.

Get pre-qualified or preapproved
Not everybody does this as the very first step of the home-buying process, but it's a wise move. You show sellers you're serious, and you put yourself in prime position to move quickly should a bidding war ensue. To sum up:

• Pre-qualification takes a few minutes over the phone. You probably already know your price range, but a pre-qualification letter lets sellers know you're serious. Call a lender, answer some brief financial questions, and you're good to go.
• Preapproval requires an appointment with a lender and documentation of all your financial statements. If you're buying within the next few months, get this step out of the way first and show a seller proof you qualify to buy her home. (However, don't show the seller anything that indicates you can afford far more than you're offering.)
• Getting pre-qualified or preapproved does not lock you in with a lender. You don't owe a lender anything until you've signed the closing papers (although don't pay upfront costs like appraisal fees until you've settled on one lender because they aren't refundable).

Shop around
The process of applying for a mortgage loan does ding your credit score slightly, but when a lender checks your credit that opens a two-week window during which subsequent credit checks have no adverse effects on your score.

So spend that two weeks comparing as many lenders as possible. Negotiate for the best possible terms; don't be afraid to tell one lender what another is offering to see if he's willing to beat the deal

Don't Raid the Couch Cushions and the Cookie Jar

By Karin Beuerlein, FrontDoor.com | Published: 11/01/2007

When you're deciding how large a down payment you can afford, remember to leave yourself some padding. The home-buying process, moving and the first months of home ownership are fraught with unexpected expenses.

Examples:

• Appraisal fee. You often have to pay this fee out of pocket as part of the loan approval process. Depending on your location, the fee can run anywhere from $200 to $1,000.
• Professional home inspection. Costs range from $300 to $800 for typical homes, but they can go higher depending on the age and type of structure. More specific inspections, such as those for structural engineering, mold and termites are additional costs.
• Extra closing costs. Although the good faith estimate from your lender should be reasonably accurate, you won't know the actual amount you have to bring to closing until a day or two beforehand. Don't play it too close. You don't want to hold up closing because you're $100 short.
• Homeowner's association fees. If you're buying in a subdivision, you may pay an annual or even monthly fee for upkeep of common areas.
• Repairs, upgrades, renovations. Depending on the condition of the home you buy, remember to budget for the work it will take to make it move-in ready.
• Moving van rental fees and boxes.
• Termination fees for current services. Carefully check your Internet and cell phone contracts.
• Appliances. Whether you'll have appliances included depends on the deal you strike with the seller. Be aware that brand-new houses usually do not include refrigerators, washers or dryers. If the other kitchen appliances are stainless steel, you'll need to spend some serious dough to buy a matching fridge or else live with the "eclectic" look.
• Household items. As a renter, it's easy to forget that the move to a bigger space means you'll need more mundane stuff like trash cans, lamps and shower rods. New houses, again, usually don't include hardware like drawer pulls, bathroom mirrors or towel bars; you may think you can live without them for a while, but trust us, you'll crack after a week and pull out the credit card.
• Lawn-care equipment. Buying a yard? Your new neighbors will prefer that you mow, rake and edge it.
• Warm milk. Just for the first week of wigging out in the middle of the night, wondering if they still have debtors' prison. (They don't.)

Young Professionals Embrace Buyer's Market

By John R.D. Celock, FrontDoor.com

While some people are running away from real estate in today's market, 20- and 30-somethings are diving in. What are they looking for? A bargain place, in a trendy neighborhood, with long-term investment value.

The housing downturn hasn't scared off young professionals, who are buying in urban areas, looking down the road at marriage and families, and planning for potential future payoffs. This generation is also showing more flexibility than previous ones, exploring partnerships with their peers and possibly renting out their places as needed.

Even Manhattan's skyrocketing real estate prices haven't slowed young professionals down. Jason Haber, a sales agent with Prudential Douglas Elliman, says these buyers are quick to act and demanding turnkey units.

"I find single people can see something and 10 minutes later are putting in an offer," Haber said.

Right Place, Right Time

Real estate is all about timing, and Jason Schwab, a 26-year-old freelance film editor from Los Angeles, believes he struck while the iron was hot when he purchased in July 2006. Schwab said sellers were highly motivated and willing to negotiate, getting him a lower price.

Schwab negotiated his unit down to the mid $500,000 range from a $600,000 listing price, and even got the sellers to throw in the refrigerator at no cost, a rarity in Southern California. While negotiations started off slow, they heated up quickly in the second round and Schwab sealed the deal within a week.

Investing in Growing Neighborhoods

During his house hunt, Schwab kept the long-term investment potential of his purchase in mind, targeting his search in up-and-coming areas, like Studio City.

"This neighborhood in particular is only going up in value," Schwab said. "They got rid of the gangs and now it's young Hollywood people."

If history is any guide, up-and-coming neighborhoods in metro areas should have good long-term value. Steven Fulop, a 30-year-old Wall Street trader, strayed from his friends in 2001 and didn't look for a Manhattan rental, rather venturing across the Hudson River to the up-and-coming Jersey City, N.J., waterfront.

Fulop sold his condo four years later with a good return on his investment and bought a larger one across the street. His neighborhood has become one of the trendiest in the Tri-City area, as historic brownstones are renovated and new high rises spring up seemingly daily, pushing prices higher.

"My decision was based on affordability and investment potential," said Fulop.

Buying with Friends

Young professionals are also embracing tenancies-in-common, also known as co-ownership, a trend that's been growing nationwide in the last three years.

"I think that it's a function of the cost of housing," said Andy Sirkin, a San Francisco attorney who has worked in co-ownership law for 20 years. "It is becoming very expensive to own in urban areas."

The biggest issue has been the development of co-ownership agreements, Sirkin says, which spell out every issue related to the co-ownership and occupancy. Many co-owners who don't have agreements end up in court and lose money in the end, he said.

But young people seem to be willing to take risks. Whitney Cristall, a 24-year-old county legislative aide, bought a house with a longtime friend in Buffalo, NY, and chose not to have an agreement, opting instead to work out issues as they arise.

"We think it makes the most sense in our friendship," Cristall said. "I suppose there is a chance we could hate each other down the road."

Bucking the Trend

Still, there are those who are choosing to ride out the turbulent real estate market, like Garrett Baird, a 30-year-old software sales consultant who gave up home ownership for the simplicity of a renter's life.

Baird had gotten an adjustable rate mortgage on his three-bedroom townhouse in Morristown, N.J., for $385,000 in 2004, not really knowing what he was getting into.

"I was completely ignorant about the subject," Baird said. "I was convinced by the enticement of the minimum payments. It's a way people get hoodwinked."

As his payments grew, Baird quickly looked for an exit strategy. He was transferred closer to Philadelphia, and Baird sold his townhouse for $465,000. He now rents a one-bedroom apartment in Philadelphia's Old City.

Owning a Home: the Monthly Tally

By Karin Beuerlein, FrontDoor.com

It's hard enough reconciling yourself to the reality of paying the monthly principal and interest on a new home mortgage. When you realize all the expenses that will be added to that price tag, it can be a real shocker.

Bottom line: prepare yourself. Home ownership costs are bearable -- people pay them every day -- as long as you know what's coming. You may even want to scale back the size of the home you're looking for in order to bring the whole package in line with your budget.

Here's a list of potential monthly fees and expenses you'll encounter:

• Insurance. They won't let you complete the home-buying deal without it, so shop wisely. Homeowner's insurance, also referred to sometimes as "hazard insurance" on mortgage documents, provides basic protection against fire and theft. It does not generally cover flood damage; flood insurance is an entirely separate entity that you will be required to purchase if you live in a flood-prone area. HINT: Consider bundling your homeowner's insurance with your auto insurance to get a bargain price.

• Property taxes. You can't avoid these either, but consider them a good thing: pay them, and the fire department will come when you call. Depending on where you live, you may be responsible for both city and county property taxes; call your county property assessor's office to be sure. Local tax rates vary, but your home is typically taxed on its assessed value, an amount equal to a fraction of its appraised value, which is the number you're probably familiar with from the loan-securing process. Taxes can add hundreds of dollars to your monthly payment, and the figures on your good faith estimate may not be accurate, so find out the final number before you sign the dotted line.

• Private mortgage insurance (PMI). If your down payment is less than 20 percent of the mortgage value, you may have to foot the bill for PMI, which protects the lender against your defaulting on the loan. This can tack on as much as a couple hundred dollars per month, depending on the size of your loan.

• Homeowner's association fees. If you're buying into a subdivision or a condominium community, you may have to pay for the monthly upkeep of common areas and other shared expenses. Some HOA fees are paid yearly and are quite inexpensive; on the other hand, some Manhattan co-op fees run to four figures per month. Some states allow associations to foreclose on homes with unpaid fees, so don't treat them as optional. Find out if your state imposes limits on HOA power, including how much fees can increase per year.

• Utilities. If you're moving from an apartment to a home for the first time, know that the increase in square footage (not to mention water for a newly sodded yard) can pack a real punch in the form of a huge utility bill. Plan to implement some energy conservation measures, like light-blocking blinds and compact fluorescent light bulbs, to offset the tab.

• Maintenance. This won't show up in your mortgage payment, but it's no less real an expense. Be sure you have some monthly budget set aside for repairs and upkeep, whether for small do-it-yourself things like replacing floodlight bulbs or the inevitably serious issues that crop up from time to time (sure, the fridge looks fine today, but all appliances have life spans).

Remember, forewarned is forearmed!

What Real Estate agents can't tell you

Fair-housing laws prevent agents from talking about neighborhood demographics, and they often don't want to discuss other details, such as crime stats. Luckily, the Web picks up where agents leave off.

Low-Income Home Buying Programs Explained

What are low-income home buying programs, and how do they help home buyers?

I get this question a lot, especially from first-time home buyers. So here's an overview of low-income home buying programs, how they work, and where you can learn more.

Generally speaking, a low-income home buying program is any program that's designed to help home buyers who may not otherwise qualify for a mortgage loan.

Normally, when you talk about such programs, you're talking about a loan that gets some form of government backing. In other words, the government backs or guarantees a loan on behalf of the home buyer who is applying for the loan. This is the essence of how most low-income home buying programs work.

When the government backs a loan for a slightly unqualified borrower, mortgage lenders will be more inclined to loan money to that borrower. The lender is comfortable doing this, because in the event that the borrower defaults on the loan, the government has agreed to back it, so the lender would still be paid.

Fannie Mae
Fannie Mae is a shortened version of Federal National Mortgage Association (FNMA). Congress created this organization in 1938. According to their website, Fannie Mae "provides financial products and services that make it possible for low-, moderate-, and middle-income families to buy homes of their own."

Learn more at www.FannieMae.com

Freddie Mac
Freddie Mac is a shortened version of Federal Home Loan Mortgage Corporation. Congress chartered this organization in 1970. Freddie Mac supports the secondary mortgage market by purchasing residential mortgage loans and reselling them to investors (mostly on Wall Street). This increases the availability and affordability of home loans for low- and middle-income Americans.

Learn more at www.FreddieMac.com

As a home buyer, you wouldn't normally deal directly with an organization like Freddie Mac or Fannie Mae, but they do have a role in the low-income home buying process.

Federal Housing Authority
The Federal Housing Authority (FHA) also supports low-income home buying in the U.S. This organization was created as part of The National Housing Act of 1934. The FHA insures mortgages, which helps low-income home buyers qualify for mortgage loans they might not otherwise qualify for.

Learn more at www.FHA.gov

Rural Housing Authority
The Rural Housing Authority (RHA) can assist low-income home buyers in certain situations. The RHA is part of the United States Department of Agriculture (USDA). Unlike the organizations listed above, the RHA actually makes direct loans to home buyers. They also guarantee loans for home buyers in rural areas.

Learn more at www.rurdev.usda.gov/rhs

Veteran's Administration Home Loans
The Veteran's Administration (VA) helps home buyers by guaranteeing loans made by mortgage lenders. The VA does not actually make direct loans. The VA home loan program is reserved for U.S. military veterans and their spouses. To apply to this program, one must first obtain a Certificate of Eligibility from the VA. The home buyer would then present this certificate to their mortgage lender.

Learn more at www.homeloans.va.gov

State-Sponsored Programs
In addition to the federal programs listed above, there are many programs unique to certain states. For instance, the Michigan State Housing Development Authority "makes low interest mortgage loans available through [their] network of experienced lenders." Most other states have similar programs, in one form or another.

State programs are too numerous to list on this page. To learn more about them, searching online for home buying programs in your state.

About the Author: Brandon Cornett is the publisher of Home Buying Institute, the Internet's largest library of first time home buyer advice. To learn more about buying a home, visit http://www.homebuyinginstitute.com

New landlord tools for squeezing renters

Property owners are taking advantage of the rising tide of cheap, online personal data to reject more applicants, raise rents based on credit scores and pepper renters with fees — not all of which may be legal. Find out about your rights and how you can fight back. Want to know more?

Creative Ways to Announce Your Move

Are you moving?

After you've settled into your new home, emerge from your moving cocoon and share the good news with friends and family. If you have the energy, celebrate with a housewarming party! Find inspiration in these websites.

• www.partycat.com -- simple, chic, and cheap
• www.celebrate-moving.com -- tons of choices from a wide range of companies
• www.einvite.com -- bulk pricing and no-frills options for businesses
• www.storkavenue.com -- not just for birth announcements
• www.vistaprint.com -- budget-friendly, customizable announcements
• www.evite.com -- fabulous and free; check the "special announcements" section under ecards

How to rent out your house

When a rental property lands in your lap, should you hold or fold? Outsource the management or do it yourself? Are you ready for the tenants, toilets and trash? Find out more here...

How can you buy the house you're renting?

Rent-to-own arrangements can help people make the transition from tenant to homeowner, but how to go about it? In a sagging market, a lease-option offers the most flexibility. Click here to read the article...

How to Be a Real Estate Statistic - The Good Kind

2007 was a year of record-breaking real estate statistics in the United States. Unfortunately, most of those stats were bad. Just ask the hundreds of thousands of homeowners who faced foreclosure last year!

On the up side, there is a lot you can do to prevent this kind of real estate misery, and to avoid becoming a negative real estate statistic. Education goes a long way in this regard, and that's why I continue to publish articles like this.

So with that said, here are five ways to be a good real estate statistic in 2008, instead of a negative one:

1. Understand and Guard Your Credit

Good credit has always been important for home buyers who are shopping for a mortgage loan. But it will be even more important this year, and for the foreseeable future. Last year's subprime mortgage crisis has led to tougher regulation of the lending industry. As a result, most lenders (those that are regulated anyway) will be paying closer attention to the credit scores of borrowers.

So your first step is to understand the importance of credit in the real estate world. Your next step should be ordering a copy of your credit report so you'll know where you stand, compared to the average consumer in this country. You should also check your credit reports for errors and work to get them corrected if need be.

You are entitled to one free credit report per year, from all three of the credit-reporting companies. There are several websites you can use (including my own) to request all three reports at once, which is certainly the convenient way to do things.

Also, if your credit score is low -- lower than average, this is -- you should work on improving it. You can do this by paying down your debt, paying all of you bills on time, and being financially responsible in general.

2. Don't Buy Over Your Head

Many of the negative real estate statistics from 2007 were people who bought more home than they could rightfully afford. Of course, some of the lenders were to blame as well, mainly for offering ARM loans with low teaser rates during the introductory period, and glossing over the potential rise in monthly payments that would ensue.

Here's the bottom line. If you can't afford a home, you just can't afford a home. Instead of pursuing dangerously "creative" financing methods to purchase that new home, focus on improving your financial situation first. Reduce your debt. Save up some cash. Try to increase your income, if at all possible. You might even relocate to an area where the housing costs are more within your reach. Heck, that's the main reason I moved from San Diego to Austin!

Avoid buying beyond your financial means. It never ends well, and you will likely end up as a bad real estate statistic instead of a good one!

3. Choose Your Mortgage Type Carefully

In the previous point, I talked about the perils of the adjustable rate mortgage (ARM) loan, for people who don't truly understand the ARM.

Don't get me wrong ... an adjustable-rate mortgage can be a good idea, mainly if you have plans to sell or refinance the home within a few years. In that case, you could save yourself some money by paying lower interest rates in the short term.

Here's the key to success when choosing a type of mortgage loan. First of all, you have to understand the pros and cons of the different mortgage types. Secondly, you have to be realistic about your future plans. If you'll be staying in the home for many years, you might be better off with a fixed-rate mortgage that can weather the financial storms of the future without being affected by them.

Research the different types of mortgage loans, and then match your loan to your home-buying situation and future plans.

4. Don't Trust Lenders ... Or the Government

Here's a real "shocker." Mortgage lenders are in the business of lending money to people, and making a profit while doing so. Surprised by this? I told you it was a revelation! Mortgage lenders will do everything they can to get somebody to borrow from them, as long as they don't get burned in the short term.

So you really can't trust a lender to tell you what you can and cannot afford to pay each month. The only thing a lender can tell you with certainty is whether or not you're qualified for the mortgage ... not whether or not you can realistically afford it. And if they sell the loan to the secondary market after granting it to you, then they don't really have to worry about your financial woes down the road.

But what about the government? Surely they are looking out for home buyers, right? Well, not always. You see, there are these people called lobbyists, and many of them represent the lending industry. They make big contributions to certain political campaigns (like Schwarzenegger and Bush, to name only two) in order to influence regulations -- or the lack of regulations -- on the lending industry as a whole.

So don't expect the government to come riding to your rescue if you get in over your head with a mortgage loan. You must be a smart consumer, an educated consumer, and a self-reliant consumer.

5. Be Proactive in Times of Trouble

Even if you adhere to the other four guidelines on this list, but you still find yourself in trouble, you should be proactive about finding a solution. In other words, don't procrastinate.

Here's an example of what I mean.

Let's say you buy a new home and take on a mortgage loan to pay for it. Everything is fine for the first two or three years, but then you run into some unexpected hospital bills and other expenses. So you get behind on your mortgage payments. But you fully expect to be back on track in a few months.

Here's where it pays to be proactive. If you contact your mortgage lender and explain that your financial problems are only temporary, they probably have ways to help you out.

Generally speaking, mortgage lenders want to avoid foreclosure as much as the homeowner does. After all, they are in the business of loaning money, not managing and selling properties. That's why most lenders will work with homeowners to come up with a solution to temporary setbacks. Some lenders have tools at their disposal to help in such cases, such as repayment plans and lump-sum reinstatements. But you won't know about them unless you're proactive about it.

About the Author: Brandon Cornett publishes several home buying and real estate websites. His latest offers information on Tucson real estate and other popular cities across the U.S. Learn more about being a smart home buyer by visiting http://www.armingyourfarming.com/realestate

How Not to Ruin Your Life

Real Estate Realities

by Ben Stein

Herewith a few little notes on home sales, financing, facts, and fantasies.

First, if you read the newspapers and magazines and watch the news shows on TV about finance, you'll see that there's a housing catastrophe out there.

Let's look at the facts, as someone used to say. Yes, real estate has corrected powerfully from its peak in the spring of 2005. Yes, there are a very large number of homes for sale compared with the usual metrics. And, yes, there are many homes in foreclosure by normal standards.

But on a national basis, residential home prices are still up roughly 60 per cent from their levels of 2000. In my home area of Southern California, they're up close to 100 percent above spring 2000 levels. Prices are still falling, but the appreciation even after the recent correction, has been dramatic. By my rough measurement, the gains since 1990 here in Southern California have been by at least a factor of three. That is, homes that were selling for roughly $400,000 in 1990 would be selling for about $1,200,000.

In addition, the owners got the benefits of imputed rent, tax deductions, and no tax at all on the imputed rent, which is really a benefit. (That is, if you owned a bond and got interest checks for it, those would be taxable in most cases. But you if you get free rent, the equivalent of the bond coupon, you are not taxed on it at all.)

Patience Truly is a Virtue

If you look at the long run, gains have varied widely across the nation. Except for the upper Midwest, and especially around Detroit, the increases have been impressive. Residential real estate can not be counted out as a smart investment or maybe even as the smartest one you'll make.

Patience remains the watch word when buying real estate. Even if you buy at the peak, if you wait long enough, you will generally make out well. (Detroit and other cities undergoing serious economic dislocation may require especially extreme patience.) If you expect to turn it over quickly and consistently for a profit, you are taking a risk. On the other hand, the present real estate situation presents a rare and enviable long-term opportunity.

On a selfish and personal basis I can tell you that when I have bought any real estate at all and held it a long time, I have been happy. When I count the holding period in months or a few years, I am often desperate. That is the nature of real estate cycles. Or, to put it another way, if you are patient enough, you will always get by handsomely. If you are in a hurry, you are courting disaster.

Next, kindly correspondents often e-mail me and ask if they should take money out of their savings and pay off their mortgages so that they own their homes free and clear. The answer varies. On the one hand, in today's low interest rate world, the interest rate on the mortgage is almost surely higher than the interest on your savings, so that you will in effect earn higher interest by paying off your indebtedness than by keeping it in a savings account or money market or a CD.

Liquidity and Sound Nights of Sleep

But the issue of liquidity is far more important than the interest rate differential. Unless you have a super high tolerance for risk, you will not want to deprive yourself of liquidity for any reason. If, by great luck, you have so much liquidity in your personal financial system that you can pay off the mortgage and not be stretched thin on liquidity, go for it. If, on the other hand, you are like most people and are not as flush as Warren Buffett, you would do better to just make your full monthly payment of principal and interest, and maintain some reserves of liquidity.

Or, I can put it another way. If you were to lose your job or have a divorce or a health issue, and suddenly needed cash, you would have been glad you conserved cash instead of paying down your mortgage. There is no case that I know of where a household lost its mind from worry because they had a million dollars in cash and still had a mortgage to pay off.

But if that household were broke but had no mortgage, I can guarantee they would face some major sleepless hours. Yes, they probably could refinance, but it is far from instantaneous, unless you have a line of credit, which is a good thing to keep for very rainy days any way (and that's for rainy days only!). It's a nice fantasy and a lovely reality to have no mortgage. But it's far better to have the reality of cash on hand for a dark day. No one ever went to the mental health ward for feeling too liquid.

How to Buy a Home With a Low Down Payment

It's no surprise that so many Americans are looking for ways to buy a home with a low down payment.

After all, with so many other costs associated with a home purchase -- like closing costs, furniture, moving expenses, etc. -- coming up with a large down payment isn't always an option. So the idea of buying a home with a low down payment can be very appealing to many buyers, especially first time home buyers.

Many people mistakenly believe that a down payment of at least 20 percent is required in all mortgage scenarios. This is the way things were for a long time. But these days, there are more flexible loan programs and terms available to home buyers. In fact, some mortgage lenders will extend loans to qualified buyers with a down payment as low as 5 percent of the purchase price.

Generally, a mortgage loan with a down payment of less than 20 percent is referred to as a low down payment mortgage loan.

But like all things in life (and in home buying), there are special conditions to buying a home with a low down payment. For instance, many mortgage lenders who grant loans with such a low down payment usually require that the loan be insured in some way. This insurance is aptly called mortgage insurance.

Mortgage Insurance for a Low Down Payment
Mortgage insurance is just what it sounds like -- insurance on a home mortgage loan. This type of insurance protects the lender financially in the event that a homeowner defaults (ceases to make payments) on the mortgage.

Mortgage lenders usually require mortgage insurance on loans with a down payment of 20 percent or less. In other words, some form of mortgage insurance is almost always required for a low down payment mortgage. The home buyer is usually required to pay the cost of this mortgage insurance.

Two Types of Mortgage Insurance - Government and Private
Let's recap what we have covered so far. We know that it's possible to buy a home with a low down payment, and that a 20 percent down payment is not always necessary. We also said that most lenders who offer mortgages with a low down payment (below 20 percent) will also require some form of mortgage insurance. Thus, buying a home with a low down payment almost always requires mortgage insurance.

With that straight, let's talk about the two types of mortgage insurance -- governmental and private.

Government Mortgage Insurance
Government-backed mortgages are usually insured by one of three federal organizations. These mortgages are either insured by (A) the Federal Housing Administration, or FHA; (B) the Department of Veterans Affairs, or VA; or (C) the Department of Agriculture's Rural Housing Service, or RHS.

Each of these agencies has its own criteria for the types of loans they will ensure. For example, the VA Home Loan program only applies to military veterans or their spouses, and RHS loans are usually reserved for people in rural areas.

The FHA requires a minimum down payment of 3 percent. They also limit the loan amount that they're willing to ensure based on geographic area.

So this is governmental path to buying a home with a low down payment. When you obtain a mortgage loan backed by one of the federal organizations listed above, you can make a down payment less than the traditional 20 percent.

Private Mortgage Insurance
In addition to the three governmental options above, there are also private companies willing to insure mortgage loans. This too can be a path to home buying with a lower down payment. Private mortgage insurance is aptly referred to as PMI. Private mortgage insurance is available to a much wider audience than the governmental options listed above. For instance, there are no restrictions regarding military service or rural residence.

Private mortgage insurance, or PMI, is available on a wide variety of low down payment home loans and there is no pre-determined limit on the loan amount (as there usually is with the government-backed mortgage loans).

Conclusion
These days, it is certainly possible to buy a home with a low down payment. In this context, "low" refers to a down payment of less than 20 percent. These types of home loans require some form of mortgage insurance, either government insurance or private mortgage insurance (PMI). Here are some resources to help you learn more about home buying with low money down.

About the Author: Brandon Cornett publishes a network of websites related to home buying and mortgages. For more tips on buying a home please visit the Home Buying Institute at http://www.homebuyinginstitute.com

Tips for Getting the Best Mortgage Rate

As a home buyer, it only makes sense to try and obtain the lowest interest rate when applying for a mortgage. After all, that rate is a primary component of the mortgage payment, so it has a direct bearing on the amount of money you'll pay each month.

But how do you get a low rate when applying for a home loan? This is the question many home buyers want to know. So in this article, I'll explain three important concepts you should keep in mind when seeking the best rates from mortgage lenders.

Concept #1 - Your Credit Score Plays a Role

The first thing to realize is that the interest rate you are offered will be partly determined by your credit score and financial history. In other words, the best mortgage terms are usually reserved for those home buyers with the best credit scores.

What does this mean to you when buying a home and applying for a loan? It means that your credit score will often dictate the type of interest rates you are offered. So if you have a bad credit history, and your score illustrates this to the lender, then there's little chance you'll be getting the best interest rate. If this is the case, you should focus on improving your credit score before you go shopping for a mortgage online.

Concept #2 - The Mortgage Type Makes a Difference

The type of home loan you select also plays a role in determining the interest rate you receive. So it's important for home buyers to understand this concept as well. For example, an adjustable rate mortgage (ARM) loan will generally come with a lower interest rate than a fixed-rate loan -- but that is only for the first few years. Of course, the rate on an ARM loan will also adjust at some predetermined point in the future, and typically this adjustment means a higher interest rate! That's another thing to keep in mind when mortgage shopping.

Concept #3 - You Must Compare Lenders on Key Factors

There is one last thing I want to touch on, and that is the need to shop around in order to get the most favorable rates from a lender. Shopping for a loan is just like shopping for anything else -- you have to compare multiple lenders in order to find one that offers the best rates and terms on the loan.

Many buyers don't realize that ten different lenders may offer you ten slightly different mortgages. The interest rate will vary, the terms will vary, the closings costs will vary ... you get the idea. And these make a big difference in the amount of money you pay over the long haul. That is why it's so important to compare lenders and to carefully review the information they present to you, ideally with a financial advisor of some kind (or at least someone who is mortgage-savvy).

About the Author: Brandon Cornett publishes a home loan website with hundreds of helpful tips and articles. Learn more about this subject by visiting http://www.homebuyinginstitute.com

Credit and Home Buying - Like Peas and Carrots

In the classic film Forrest Gump, Tom Hank's character said that "Jenny and me was like peas and carrots," referring to how inseparable they were when growing up in Greenbow, Alabama.

Borrowing that analogy from Forrest, home buying and credit scores are like peas and carrots too. The two concepts are inseparable, so anyone planning to buy a home in the near future must understand the importance of credit.

The Credit and Mortgage Connection

For most people, purchasing a home means taking out a mortgage loan to pay for it. Unless, of course, you've just inherited a fortune from Uncle Ernie, won the lottery, or invested in Apple Computers stock back in the 1980's. If you fall into one of those categories, count yourself lucky.

But for the rest of us "average folks," buying a new home is only possible through the use of a mortgage loan. And this is where credit comes into the picture.

To obtain a home loan, you must have a credit history behind you (and ideally a good one). Lenders will review your financial background to "weigh" you in terms of risk:

• If you have a history of being financially responsible, then you'll have a higher credit score and will be more likely to get a good interest rate on your home loan. You are a low-risk borrower for the lender.
• On the other hand, if you have a history of missing bill payments, carrying too much debt, or similar examples of bad financial management, you will have a lower credit score. In this scenario, it will be harder to obtain a loan for home buying purposes, and even if you do you'll pay a higher interest rate on the loan.

The two points outlined above have always been true. But good credit is even more important for home buyers today, due to tighter regulations on the lending industry. So let's talk about the things you can do to maintain a higher score:

Credit Score Needed to Buy a Home

What kind of score do you need for home buying in today's economy? Well, this will partly depend on the lender you choose. But suffice to say that a better score will certainly make your home buying process a lot easier. Not only will you have an easier time qualifying for a loan, but you'll also qualify for a better interest rate on that loan. This translates into money saved each month!

The average credit score in the United States currently falls between 650 and 700, depending on whom you ask. Higher is always better. According to experts, a score of 720 or above is ideal for home buying purposes because it will ensure that (A) you get qualified for a mortgage loan in the first place and (B) you get a good interest rate on the loan.

Carrots and Peas ... Like Never Before

Good credit is more important for home buyers today than it was in the past. That's because in the past, there were plenty of subprime lenders willing to offer home loans to borrowers with bad credit scores. Of course, they would charge them astronomically high interest rates on the loans, which is partly what led to the mortgage crisis of 2007 - 2008.

As a direct result of that crisis, there are very few subprime lenders around anymore. That particular business model is simply not viable anymore. So while there were plenty of subprime (bad credit) mortgages in the past, they simply aren't around anymore.

About the Author: Brandon Cornett publishes a weekly blog column under the alias "Captain Credit." To learn more about home buying, credit repair and similar topics, please visit the Captain at http://www.homebuyinginstitute.com/credit.php

How To Fix Errors On Your Credit Report

Errors within your credit reports can negatively affect your credit score, making it lower than it really should be.

In turn, this makes it harder to qualify for a home loan, a car loan, or obtain any form of financial lending for that matter. And if you do qualify for financing, you will almost certainly pay a higher interest rate because of that score. So errors on those reports must be identified and correcting, no matter how long it takes you.

Before we go any further, I want to point out an important distinction. In this article, I am not offering tips on how to improve a credit score (one that is low because of bad financial habits on the part of the consumer). Instead, I'm focusing on plain old mistakes on your reports, such as a line of credit that should not be there, or a documented bankruptcy that never happened, etc.

In other words, I'm telling you how to fix things that aren't your fault. So with that clear, let's press on!

The "How" of Correcting Errors

The first thing you need to understand is that you have three different reports, and they contain exclusive / proprietary data as opposed to "shared" data. This means that you could actually see different information on all three of them.

It also means that you could encounter a mistake on one particular report (the one from TransUnion, for example), while the data provided by Equifax and Experian appeared to be correct. So if you ever have to dispute a mistake on your information, you must contact the company that produced the erroneous report, as the information provided is specific to that company.

All three of the companies mentioned above have a "Disputes" section of their website. That's where you need to go in order to get the ball rolling. Filling out a dispute form is a way of saying, "Hey, this information is incorrect, and you need to fix it because it's affecting my financial status!"

So, you found an error on one or more of your credit reports and you have diligently submitted a dispute / correction form through the appropriate website above. That's all there is to it, right?

Unfortunately, no...

You Are Not a Preferred Customer

Here's something else you should take away from this article. When you first begin contacting a credit-reporting company about a mistake within your information, you will quickly realize that you are not their customer. You will realize this because they will probably treat you in a fashion that suggests the same.

The mortgage company who pays to obtain your credit information is their customer. The car dealer who pays for this information is also their customer too. But you are not their customer. You are a number ... a piece of data to them. And when you start demanding their review of a potential mistake, you become a nuisance as well.

Is this right and fair? Of course not. Personally, I don't think a private company should even be able to collect such information. And if they do collect such information, they should be proactive about safeguarding the data and ensuring the correctness of it. But this is not the case.

I just want you to understand the reality of the situation before you become involved with it. When you go into the process understanding the dynamic, you'll be better prepared for what you must do next, which is to stay on top of them until things are sorted out!

Weak Legislation to the Rescue

As you have probably guessed, the three credit-reporting agencies are regulated by Congress. However, "regulation" in this context just means there are some rules on paper -- it doesn't mean those rules are actually enforced. Specifically, the Fair Credit Reporting Act dictates certain obligations these companies have, with regard to maintaining credit information on consumers. (and correcting that information when it is clearly in error).

The law was created back in 1970, and it has been more recently amended (2003) to try and force the credit-reporting companies to be more responsive. Still, many consumer advocates argue that the act does not go far enough to protect consumers, that it is lazily enforced, and that the core problems that prompted the creation of the act are still very much around today.

The credit-reporting companies are not governmental organizations, as many consumers believe. They are companies driven by profit. In other words, it's in their interest to make as money as possible (as with any other company), but it's not necessarily in their interest to look after consumers.

As a last resort -- if you're previous efforts to correct reporting errors have proven unsuccessful -- you can sue the company who has produced the erroneous information. If you can prove that certain information is false, and that the report has thus caused you financial harm, you could be entitled to damages (monies) paid by the company.

About the Author: Brandon Cornett is the publisher of Home Buying Institute, an educational website that offers hundreds of helpful articles for home buyers. Learn how to improve your credit score by visiting the author's website at http://www.homebuyinginstitute.com

101 Tips for a Smoother Home-Buying Process

I created this list for two reasons. First, I want to give you a good understanding of the home buying process from start to finish. Secondly, I want to help you identify those areas where your knowledge-level is lacking, so you can conduct further research on your own.

Preliminary Considerations

1. Learn the home buying process in advance. You'll make much better decisions with a better understanding of the process.

2. Learn the lingo while you're at it (especially all the mortgage terms). You'll have a smoother home buying experience if you "speak the language."

3. Obtain your credit report. To get copies from all three credit bureaus at once, visit www.AnnualCreditReport.com.

4. Review your credit report. Make sure there are no errors. Check everything from the administrative information to the credit history.

5. Fix errors quickly. If you find an error on your credit report, go to the company's website where the report came from (TransUnion, Equifax or Experian) to contest it. Don't delay.

6. Run the numbers. Use an online mortgage calculator to get an idea how various mortgage amounts translate into monthly payments.

7. Check your debt-to-income ratio. Mortgage lenders prefer your overall debt to be no more than 20% of your net monthly income. If your debt is more, pay it down as quickly as possible.

8. Start saving your cash. Mortgage lenders like to see that you have some cash reserves on hand, and you'll need them for any unexpected fees or costs that might arise.

9. Get pre-qualified. Pre-qualification is an informal review of your finances by a mortgage lender to see what amount you might qualify for.

10. Avoid new lines of credit. Don't sign up for new credit cards or make any large credit purchases while you're "under review" by a mortgage lender.

11. Add HomeBuyingInstitute.com to your Internet favorites or bookmarks. Few websites contain as much helpful home buying information for first-time buyers.

Finding a Real Estate Agent

12. Ask friends or family. People who know you well are in the best position to recommend an agent who is right for you.

13. Talk to multiple agents. Don't think you have to sign on with the first agent you meet.

14. Ask how they search. Make sure your agents is going to use every means possible to find the right home for you. That means using the MLS in addition to their preferred listings.

15. Ask how they network. An experienced agent will often be part of a vast network of real estate professionals. This can sometimes help you find a home before it's even listed.

16. Ask about mortgage connections. It will save you time and headache if your agent can point you toward a good mortgage company.

17. Read paperwork carefully. At some point, your chosen agent will ask you to sign an agency agreement. It's usually a boilerplate document, but be sure to read it carefully all the same.

18. Consider the "vibe" factor. You might be working with this person anywhere from 2 to 12 months, so it certainly helps if you like them on a personal level.

19. Exchange cell phone numbers. You should have your agents cell number in your wallet, and vice versa. You don't want to miss an opportunity simply because you couldn't be reached.

House Hunting

20. Create a "need vs. want" list. Make a spreadsheet or checklist of the things you need in a home, versus the things you want. Print a copy for each house you visit and check items off.

21. Practice self-reliance. Don't over-rely on your agent when it comes to finding a home. Get out there and do some hunting yourself. It's a necessity, but it's also exciting!

22. Use multiple channels. The more channels you use to search for a home, the better. Read the newspaper, cruise the neighborhoods, and surf the web.

23. Use the Internet to your full advantage. Bookmark the real estate listing sites you find most helpful. Visit them once a day and write down new homes that meet your criteria.

24. Create a Google Alert. Visit Google's home page, click on "More" and find the Google Alerts. Enter real estate phrases for your area, and you'll get daily updates with news and info.

25. Feel free to snoop (sort of). When house hunting, it's okay to peek into dark corners, basements, storage sheds and the like. Respect the owner's privacy, but see the whole house.

26. Ask plenty of questions. Don't be shy about asking the sellers questions, if they're home.

27. Validate the asking price. It's called an "asking price" for a reason. Compare it to recent sales in the area. Your agent should be expert at this.

28. Consider shopping, dining and the like. Is the home near the places you frequent, or will it be a long drive?

29. Consider the commute. If you're a daily commuter, distance is a big consideration.

30. Visit during rush hour. Is the home hard to access or exit during rush hour? Is there a lot of traffic noise?

31. Check out the zoning. Are you surrounded by residential areas, or is there a soon-to-be-used commercial zone right across the street?

32. Research the neighborhood, not just the house. Neighborhoods impact property value as well as your own happiness.

33. Research taxes. Sometimes, two neighborhoods right across the street from one another will have different tax situations. Don't make assumptions.

34. Research future development. Will that nice meadow down the street be a highway extension or shopping mall in two years?

35. Bring a "disinterested witness." A level-headed friend or family member will help you judge the pros and cons of each home.

36. Avoid "The One" syndrome. Don't pull up to a home and say, "This is the one!" It might be, but you need to be cool-headed and open-minded during your first visit.

37. Bring a digital camera. It's a great way to record the details of each home for later review.

38. Bring a notepad. Jot down some notes about each home, and label each page by address.

39. Ask about ghosts, poltergeists or other forms of haunting. Just kidding.

40. Think five years ahead. Will the home still suit your needs if your family grows?

41. Play home inspector, casually. The full inspection will come later, but you should at least give the "big ticket" items (roof, heating system, etc.) a glance when visiting.

42. Keep an eye out for mold, standing water and other symptoms of disrepair.

43. Research schools. This is important whether or not you have school-aged children. Schools affect property values.

Making an Offer

44. Base your offer on evidence, not emotion. Remember, the lender will appraise the home later on. If it appraises for less than you've agreed to pay, you'll have problems.

45. Use your agent's experience. It might be your first offer, but your agent has probably seen dozens.

46. Discuss contingencies. Will your offer be contingent upon something, like the sale of your current home?

47. Prepare for all possible responses. What will you do if the seller makes a counteroffer or rejects your offer outright? Conduct "rehearsals" for each scenario.

48. Move quickly (but cautiously) in seller's market. Delays can cause a home to slip through your fingers.

49. Plan the closing date. This will normally be agreed upon during the offer process.

Choosing a Mortgage

50. Study the different types of mortgages, especially the pros and cons of each.

51. Consider your staying time. How long you plan to stay in a home will often determine which type of home loan is best for you.

52. Learn about new mortgage packages. A variety of "creative financing" loans have emerged in recent years. Learn about them.

53. Shop for the best interest rate. Mortgage lenders will offer different rates based on how comfortable they are lending to you. So shop around.

54. Read up on RESPA. The Real Estate Settlement Procedures Act protects you from unethical lenders. Familiarize yourself with it.

55. Consider paying points. A point is one percent of the loan amount. Paying points can lower your interest rate. Look into whether or not it's a good idea for your situation.

56. Don't go it alone. Ask your agent for advice. Talk to friends and family who've been through the home buying / mortgage process before.

57. Factor in PMI. If your down payment is less than 20% of the loan amount, you'll probably have to pay private mortgage insurance (PMI).

58. Visit the mortgage section of HomeBuyingInstitute.com. You can learn about everything mentioned above, in much greater detail.

59. Watch out for unethical lenders. Talk to your agent or real estate attorney is something seems strange or too good to be true.

The Mortgage Application

60. Be honest. Don't let anyone talk you into falsifying information on your mortgage application. You'll be the only one held accountable.

61. Ask questions. And ask them again, until you're comfortable that you understand each part of the application.

62. Read the fine print. Often, the most important parts of an application are in the fine print. Don't let these details go unnoticed.

63. Don't sign blank areas. If a section of the mortgage application is blank, either 'X' it out or leave it unsigned.

64. Keep a copy for yourself. This applies to all documents during the home buying process. Start a folder with copies of everything.

65. Get a truth-in-lending statement. After you apply for the loan, the lender is required to give you an estimate of the total costs associated with the loan.

66. Plan for more than truth-in-lending statement. Unfortunately, it's common for the actual costs of a loan to be more than the lender's estimate. So plan for more.

The Home Inspection

67. Get a home inspection! At around $500, it's a small price to pay for peace of mind.

68. Hire a certified inspector. Anyone can claim to be an inspector. So make sure yours is certified by a professional organization.

69. Tag along if possible. You'll learn a lot about the inner workings of the home.

70. Categorize discrepancies, based on whether or not you want the seller to fix them.

71. Be realistic with repair requests. In a seller's market, you may not get all the repairs you want. So be realistic with what you're asking.

72. Get a termite inspection. Make the offer contingent upon a termite-free inspection.

The Home Appraisal

73. Understand the appraisal process. It's for the lender's protection, but it will also tell you if you're overpaying for the home.

74. Have a plan for under-appraisal. You can pay the difference, the seller can lower the price, or you can walk.

Pre-Closing / Pre-Settlement

75. Read up on closing procedures. Start with a refresher on RESPA.

76. Talk to friends and family who've been through a closing process. Learn from them.

77. Stay in touch with your lender, your agent, and the escrow company. Make sure they have all the paperwork they need to avoid delays.

78. Keep saving your money. Real estate closings often come with unexpected costs.

79. Be on the lookout for your HUD-1 statement. You should get one several days before closing. It will list the total amount due at closing.

80. Transfer utilities. Now might be a good time to start putting the utilities into your name.

81. Get hazard insurance. Most lenders require it, but it's mainly for your own protection.

82. Conduct your final walk-through. Make sure all requested repairs have been made.

83. Get a certified check for the amount due on the HUD-1 statement.

84. Confirm the time and location of the closing.

The Closing / Settlement Process

85. Bring your ID. The escrow company will probably want to verify it.

86. Don't forget the check!

87. Bring some blank checks, just in case unexpected costs or fees arise.

88. Don't feel rushed. Escrow companies do it for a living, but it's probably you're first time.

89. Read thoroughly. People make mistakes, so read each document carefully (especially the bottom-line amounts).

90. Ask questions. You're not being a pest for asking a lot of questions. You're simply looking out for your finances.

91. Don't make assumptions. For example, just because you agreed to buy mortgage points for a lower interest rate, don't assume it has been processed that way. Check the paperwork.

After Closing

92. Follow-up on your utility transfer.

93. Complete a change of address form for the postal service.

94. Notify friends and family of your new address. Postcards and emails work well.

95. Get a safe deposit box for your important documents, like your homeowner's insurance policy.

96. Set up auto-pay for your mortgage payments. It will be one less hassle to worry about each month, and it will also help you avoid missing payments.

97. Go meet the neighbors. If your neighbors don't come and introduce themselves, go say hello. Remember, these are the people who will keep an eye on your home when you're away.

98. Ease into your mortgage payment. Before filling the house with new furniture or electronics, give yourself a few months to adjust to the new mortgage payment.

99. Do the happy dance (whatever your version might be). Just remember to stretch first.

100. Break out the champagne, or your preferred non-alcoholic beverage.

101. Exhale.

About the Author: Brandon Cornett is the editor of HomeBuyingInstitute.com. You can learn more about the home buying process by visiting www.HomeBuyingInstitute.com

Adjustable Rate Mortgages - A Guide to ARM Loans

by Brandon Cornett

Many home buyers choose the adjustable rate mortgage (ARM) in order to save money during the first few years of homeownership. But later, these same homeowners run into trouble when the adjustable rate mortgage adjusts (hence the name) to higher interest rates.

In many cases, such adjustments can greatly increase the size of the overall mortgage payment, which catches a lot of homeowners off guard. In this guide, we will examine the adjustable rate mortgage in more detail. After reading this guide, you will better understand the ARM loan and will be able to make wise decisions about such loans.

What Is an ARM?
As the name implies, an adjustable-rate mortgage differs from a fixed rate mortgage in the way it adjusts to a new interest rate at some future point in time. Fixed rate mortgage loans carry the same interest rate through the entire life of the loan. So the interest rate you would pay in Year 1 would be the same rate as years 5, 10, 15 ... all the way through the end of the loan's term. On the other hand, with an adjustable rate mortgage, the interest rate will change periodically. This can cause payments to go up or down, depending on the prevailing rate at the time of adjustment (and other factors).

In other words, an adjustable rate mortgage is a loan with an interest rate that changes at some point in the future. Most of the time, ARM loans start off with a lower monthly payment than a fixed rate mortgage. But keep the following points in mind:

• Unlike a fixed rate mortgage, the payments on an adjustable rate mortgage can change. This can increase the size of your mortgage, sometimes significantly.
• You cannot predict what the interest rates will do three or five years from now, when your ARM loan adjusts.
• It's possible that you could eventually owe more money than you borrowed.
• If you want to pay off your ARM early to avoid payment increases, many lenders will charge a penalty fee for it.

Shopping for an Adjustable Rate Mortgage
When shopping for a mortgage, it's important to compare the rates and terms offered by different lenders. It's like anything else in life -- only by shopping around can you find the best deal. These days, comparing one adjustable rate mortgage to another can be confusing. That's because you have to understand the concepts of index, margin, caps, payment options, etc. It is beyond the scope of this article to show comparison examples, data charts, etc. But you can get plenty of those from the Federal Reserve's tutorial on ARM loans, available through the link below:
http://www.federalreserve.gov/pubs/arms/arms_english.htm

Primary Advantage of an ARM Loan
The biggest advantage of an adjustable rate mortgage is the lower initial interest rate. Most lenders charge lower initial rates for an ARM loan than they charge for fixed rate mortgages. And since the interest rate is a key ingredient of the mortgage payment, this would in turn lower the mortgage amount you have to pay each month. For many first-time home buyers, this can be a big selling point for the adjustable rate mortgage. But there is also a key disadvantage to these loans.

Primary Disadvantage of an ARM Loan
As we have discussed, the characteristic that makes an adjustable rate mortgage unique is that the interest rate adjusts periodically. When and how often the loan adjusts is something you will know in advance, because the lender is required by law to tell you those things. But the amount it adjusts will remain an unknown variable, because nobody can predict what interest rates will do in the future. This is the primary disadvantage of an adjustable rate mortgage, the uncertainty of interest rate changes / increases.

Key Ingredients of the Adjustable Rate Mortgage
To get an even better understanding of how the ARM loan works, you should understand the key ingredients of such a loan.

* Initial Rate - We have already discussed how an adjustable rate mortgage loan starts off with a relatively low interest rate in the beginning. This is known as the initial rate, and it will stay in place for a limited period of time -- usually 1 to 5 years. But here's the thing to remember. On most adjustable rate mortgages, the initial interest rate (and by extension the initial payment amount) can vary greatly from the rates and payments you would face later in the loan's term.

* Adjustment Period - This is just what it sounds like, the period during which your adjustable rate mortgage adjusts to a new interest rate (and payment amount). Usually, the interest rate on an ARM loan will change every month, quarter, year, 3 years, or 5 years, with the latter options being the most common. A loan with an adjustment period of 1 year is called a 1-year ARM, which means the interest rate and payment can change once per year (after the initial period).

* Loan Descriptions - The law requires that mortgage lenders must give you written information on each type of ARM loan you are interested in. The information they provide must explain the term / conditions for each adjustable rate mortgage, as well as details about the index and margin (which determine the interest rate), how your rate will be determined, how often the rate will change, caps (or limits) on rate changes, plus an example of how high your monthly mortgage payment might go based on adjustments.

* Interest Rate Caps - Interest-rate caps are an important concept in the world of adjustable rate mortgage loans. A cap is just what it sounds like ... a limit on the amount your interest rate can increase. Interest rate caps come in two versions: 1. Periodic adjustment caps limit how much the interest rate can go up or down from one adjustment to the next (after the first adjustment). 2. Lifetime caps limit the interest-rate increase over the life of the loan. Lifetime caps are required by law, so you'll find them on nearly all adjustable rate mortgage loans.

* Payment Caps - Many ARM loans also cap (or limit) the amount your monthly payment can increase at the time of each adjustment. So if your adjustable rate mortgage loan had a payment cap of 8%, your monthly payment would not increase more than 8% over your previous payment amount. Be Careful Choosing an ARM Loan

Avoiding Payment Shock
In your financial planning, the biggest thing you want to avoid is payment shock. Payment shock is what happens when your mortgage payment rises steeply during a rate adjustment. For example, let's say you took out an adjustable rate mortgage for a $200,000 loan. During the first year of an ARM, you'll usually enjoy a very low interest rate. That's the primary benefit. So let's say you start out with a 4% interest rate that later goes up to a 7% interest rate (after the second year). During the first two years, the mortgage payments would be somewhere in the neighborhood of $950 per month. But after the adjustment at year two, those payments would go up to more than $1,300. That's a big difference.

Percentage points may not seem like much by themselves. But when you plug them into a mortgage calculator, you can see how significant they really are. So if you are considering an adjustable rate mortgage, just be wise about it and think long-term. If you plan to stay in the home and hold the loan for many years, make sure you have a plan for when the rate adjusts. Or make sure you can handle a significantly larger mortgage payment.

Conclusion
Here's what we want you to take away from this lesson. Adjustable rate mortgages offer benefits up front (during the initial period) in the form of lower interest rates. But they are full of uncertainty later on, and this can lead to unpleasant financial surprises. If you understand this concept, and you plan to sell the home a few years down the road, an ARM loan might be a good option for you.

But if you're not comfortable with the uncertainty of rate and payment adjustments, or if you plan to stay in the home (and hold the mortgage) for many years, an ARM loan might be a bad idea.

About the Author: Brandon Cornett publishes a network of websites related to home buying and mortgages. His latest website offers tips on mortgage refinancing and related topics. Learn more at http://www.mortgage-refinance-advice.com

What are all the fees including in my monthly mortgage payment?

If you are searching for a new home then chances are you have used our convenient mortgage calculator. These convenient tools are a great way to begin your home search but it is important to remember these are only rough estimates. Depending upon your credit, the final selling price of the home, interest rate, duration of the loan and other factors your actual monthly mortgage payments may be higher or lower than the estimated payments.

Use the following checklist to create a budget that takes all the components of a monthly mortgage payment into account:

1. The actual amount borrowed to purchase the house consists of two parts: mortgage principle and interest. .

2. Property Taxes. Property taxes are an ongoing cost of owning a home. Never assume your property taxes will remain the same as the former owner. Instead, check with the real estate agent about how the new selling price will impact the expected property taxes owed when you purchase the home. Real estate prices have increased substantially in recent years resulting in higher property taxes. Additionally, because of inflation, property taxes typically increase each and every year.

3. Homeowners Insurance. Home owners insurance is also individualized depending upon your credit score, location and prior claims related to the property. Before making a final offer on a home, it's a good idea to call at least three insurance agents to obtain homeowners insurance quotes; especially if the property is located in a high risk area such as beach front or is a difficult to insure property.

4. Escrow: In most cases property taxes and homeowners insurance are typically escrowed as part of your monthly mortgage payment however, in some cases you can opt-out and pay the fees directly. Either way, be sure to plan ahead.

5. PMI or Private Mortgage Insurance. PMI is required in most situations where less than 20 percent down payment was made when purchasing the property. PMI will typically run .05 percent to .01 percent of the amount.

6. HOA or Homeowners Association fees are shared expenses required to maintain the community or other shared property. Typical costs range from under $100 per month to several thousand dollars annually depending upon amenities.

If I refi can I avoid PMI?

If you have been in your home for several years and are still paying PMI or private mortgage insurance, then refinancing might be one way to eliminate PMI and save money on your monthly mortgage payment.

Many people with adjustable rate mortgages or higher than average interest rates benefit from refinancing their home loans into fixed rate mortgages while rates are low. Depending upon your specific situation, an additional benefit might be the opportunity to eliminate PMI resulting in an even lower monthly mortgage payment.

If you have sufficient equity of at least 80 percent in your home, then check with a mortgage broker about the possibility of eliminating PMI and reducing your monthly mortgage rate.

Real Estate Outlook: Worst is Over

May 22, 2008 -- Realty Times Feature Article by Kenneth R. Harney

Don't break out the champagne glasses quite yet, but there are more economic signs this week that the worst is over for the three year real estate correction cycle.

One of the country's most prestigious groups of market forecasters, the National Association of Business Economists, says housing and consumer credit conditions will stabilize and begin improving as the year moves on. Equally important, said Ellen Hughes-Cromwick, chief economist at Ford Motor and president of the association: The entire U.S. economy will "slowly return to health" this year.

The housing market offered some immediate hints of that recovery with new home starts up by 8.2 percent last month and building permits up by 5 percent. Even in hard-hit southern California, home sales in April were up 22 percent compared to March, according to DataQuick Information Systems.

The mortgage sector continued to cooperate: Rates fell again for the third straight week. Thirty year fixed rate conventional mortgages averaged 5.8 percent, down from 5.8 percent the week before, according to the Mortgage Bankers Association of America. Fifteen year rates also dropped, averaging 5.5 percent.

Any time we're quoting mortgage rates in the fives, that's GOT to be positive news for home buyers with reasonably good credit.

Why the continuing decline in rates? One reason is that inflation is not a major worry for capital markets investors at the moment -- even if gas and food prices are over the top for most of us. The latest Consumer Price Index report -- that's the federal government's measure of inflation -- came in at just zero point two percent (0.2%) for April, which is very low. Year over year, inflation is still only around 2.3 percent.

Despite these positive signs, the fact is that consumers are still worried about the overall direction of the U.S. economy. The University of Michigan's bellwether Consumer Sentiment Index registered a 3.1 percent decline last month, continuing a steady downward trend.

That's not helpful for home sales for sure -- and that negative mindset will certainly keep some buyers on the sidelines in the months ahead.

Which is a shame if you look at conditions in most markets objectively. Most of the current numbers add up to an excellent buying opportunity.

Prices are more affordable they've been in several years. There's a bumper crop of houses to choose from. And mortgage money is cheap and getting cheaper.

Maybe the message is just taking a little time to get out there.

Closing Costs and Prepaids

Buyer fees are paid to various service providers in the transaction. Some are collected at the time of mortgage application, such as the application fee or the credit report. Most are collected at closing. Buyer funds are allocated to the down payment, closing costs, and prepaid items. Sometimes your closing costs and prepaids are paid by the seller when negotiated in the contract.

Closing costs are fees for services necessary to the transaction. Fees which cover the appraisal, survey, tax certificates, escrow fees, loan application, underwriter, courier, title insurance, and attorney are examples of closing costs.

Prepaids are fees paid by either you or on your behalf are collected for payment of a bill due in the future. Many prepaid items are put into an escrow account where they accumulate until the actual bill is due. Examples of prepaid items are taxes, insurance, private mortgage insurance, prepaid interest, etc.

Lenders are required to disclose charges involved in the financing of the home. The Truth in Lending Act requires the lender to disclose credit terms clearly, conspicuously, meaningfully, and in writing. The lender discloses terms by providing a Good Faith Estimate.

The Good Faith Estimate is only an estimate. The actual charges will be affected by information not known by the lender at the time of the mortgage application. These charges will be affected by the date of closing, the specific vendors providing services, the municipality where the property resides, and the underwriter providing funds to you.

At closing, you will sign a HUD-1 Settlement Statement which lists the disbursement of all funds associated with the purchase. To learn more about closing costs, prepaids, and the HUD-1, go to http://www.hud.gov/offices/hsg/sfh/res/sfhrestc.cfm.

The HUD-1 Settlement Statement

When you close on the home you're buying, you will sign the HUD-1 Settlement Statement. This two-page form lists the closing costs for all of the items paid by you and the seller. Each page has a seller's column and a buyer's column. The first page is a summary of the transaction. It takes items charged to you and subtracts items which are credits. The result will be the cash you should bring to closing in the form of a cashier's check. The last line of page two (Item 1400) lists the total settlement charges for you and the seller. The seller's summary takes the items that the seller should be receiving and subtracts the charges. The difference is the amount of money that the seller will net at closing. To learn more about the HUD-1, go to http://www.hud.gov/offices/hsg/sfh/res/sc3sectd.cfm.

The Right Offer Price

As a buyer, your goals are very different from the sellers during negotiations. You want to pay as little as possible while sellers want to sell for the highest possible price. Buyer advantage comes with market knowledge.

You may have seen enough to decide your offer price. However, it's wise to ask your sales professional to provide you with sold property data. By examining recent sales of similar properties you can reduce the risk of overbuying.

Know how the market has behaved recently to focus your offer price. You can assess the likelihood the seller will take less by looking at the number of competing properties and days on market. If comparable homes are selling quickly, your selection might not last long. This would prompt an offer price closer to list.

Understand your market. In a buyers market with plenty of inventory, a lower offer will have a better chance. In a sellers market, where inventory is scarce, a low offer price makes you vulnerable to a competing offer. In general, a seller will take less in a buyer's market and budge little in a seller's market.

If you are competing with another buyer(s) for the same house, consider making an offer greater than list price. Your sales professional can advise you how to view the market and hone in on a prudent offer price. Consider how long you have searched, how motivated you are, and if you have a back-up property.

Always remember that time is of the essence. Long negotiations increase the likelihood that another buyer could make an offer on the same property or that the sellers might change their minds.

Negotiate to Your Advantage

A reasonable initial offer is the best way to start real estate negotiations. However, other elements can also favorably influence the negotiation.

1. Focus on needs, not position. Once a party assumes a position, negotiation can become stalemated. An example of a position could be a closing date. Shifting to a needs focus would examine why that date was important and what other dates could work to meet those needs.
2. Avoid becoming emotional. Emotions get in the way of clear and logical decisions. Anger and irritation have no bearing on the transaction.
3. Allow the sellers to save face. Provide a way for the sellers to back away from a position. By offering alternatives, you give the sellers an out with grace.
4. Understand the seller's priorities. Communication is very important. Tell your sales professional the motivations behind your requests. When shared with the other sales professional, it's more likely to elicit an acceptable counter. Your sales professional can be a powerful advocate on your behalf when armed with knowledge of what you want and why.

Realty Viewpoint: Six Signs It's Time For Home Buyers To Buy

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