Mortgages and Loans

Top Six Down Payment Mistakes

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:28:00 +0000

Top Six Down Payment Mistakes
About to make a down payment on a home? Here's how to avoid the six most common down payment errors.

Deciding how much of a down payment to make on a home is one of the most crucial steps in the mortgage process. The amount you pay up-front is a major factor in determining how much your monthly payments will be, which makes it a decision that could affect you for years to come. Here are six of the most common down payment mistakes home buyers make and advice on how to avoid making them yourself.

Mistake #1: Making too small a down payment

While lenders do offer mortgages with down payments of less than 20 percent of a home's sale price, these loans require you to pay private mortgage insurance (PMI) -- an additional fee tacked on to your monthly payment to help protect the lender in case you should default on your loan.

In addition, low- and no-down-payment loans frequently carry higher interest rates and so can end up costing you considerably more over the life of your loan. Conversely, a down payment greater than 20 percent may earn you a more favorable interest rate if you have a less-than-stellar credit rating.

Mistake #2: Making too large a down payment

While common sense dictates that the more you pay up front, the better off you'll be, that's not always the case. One mistake first-time homebuyers sometimes make is using such a large portion of their savings for their down payment that they end up not having enough left over to cover closing costs and other expenditures for their new home.

Mistake #3: Not making a down payment at all

Some lenders offer mortgages that require no down payment but these loans can be risky. Paying no money down puts you in the position of having no equity in the home (i.e. you don't own any part of it). Should the value of your home fall, there is the risk that you could end up owing more to the lender than your house is worth. This situation could also make it difficult to refinance your mortgage in the future.

A no-down-payment mortgage may be an effective strategy in certain situations. However, you need to be economically responsible and financially sound to be able to handle the inherent risks involved.

No-down-payment loans often come with a higher interest rate than loans with a conventional down payment. As a result, your monthly payments will be higher, leaving you with less money available for bills and emergencies.

Since you'll be paying less than 20 percent of the home's purchase price, you will also have to pay PMI or be required to take out a second loan (known as a "piggyback loan"). Each of these options increases the monthly cost of owning the home.

Mistake #4: Paying with unseasoned funds
In most cases, a down payment is a pretty substantial chunk of money, and not everyone has the ready cash to cover it. A gift from a friend or family member can help, but don't think that just because you've come up with the full amount that you're necessarily in the clear.

All funds -- whether they're gifts from relatives, loans against an investment portfolio or your own savings -- that have been in your account for longer than two months are referred to as "seasoned," meaning that they're considered your money. If your bank statements indicate a large cash deposit that's less than two months old, your lender will need to know where those funds came from and whether they're gifts or loans. Gift-givers may be required to provide a letter to the lender indicating that they are in a financial position to offer the gift. Also, generally speaking, the larger your overall down payment amount, the less concerned the lender will be about where the money is coming from.

The lender wants assurances that the money you're putting towards your down payment is actually "yours," since it's assumed that if you're investing a significant portion of your own money into the down payment, you're less likely to default on your loan.

Mistake #5: Neglecting to bring a cashier's check to closing

Along with figuring out how much of a down payment you should make, you also need to ask your closing agent exactly how much you will be required to pay at closing. It's not enough to simply bring your personal checkbook to closing. You will a cashier's check to pay the amount of your down payment and your closing costs. Find out ahead of time exactly what the final total will be and obtain a cashier's check for that amount.

Mistake #6: Incorrectly assessing your debt comfort level

No one knows better than you how much debt you can handle. Trust your instincts; if you'd rather pay as much as you can at the start and have the benefit of lower monthly payments, don't let anyone dissuade you from that. The worst thing you can do is lock yourself into a mortgage that ends up costing you more per month than you can comfortably afford to spend.

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Real Estate Listing Photos: Where to Draw the Line

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:28:00 +0000

Real Estate Listing Photos: Where to Draw the Line
A good listing photo can go a long way in helping you sell your home. Just don't make it too good to be true.

The Internet is rapidly becoming the preferred tool for homebuyers searching for the perfect house. In a recent survey conducted by the National Association of REALTORS®, over 80 percent of home buyers polled said they'd hunted for a home online, and 25 percent said they found the home they eventually purchased via the Web.

Since the Internet is primarily a visual medium, listing photos have become more important than ever. A poorly lit photo or an unflattering angle can sometimes mean the difference between a click-through and a scroll-past. So, in an effort to make their homes look as visually appealing as possible, some sellers and real estate agents have taken to digitally altering their listing photos.

Ethical considerations

There is some debate in the real estate industry as to how just how much retouching of listing photos is too much, or even if the process is ethical at all. Currently, there are no hard-and-fast rules governing the manipulation of real estate photos. However, there's a general acceptance of some alteration so long as the physical attributes of the house and property are not distorted.

It could even be argued that a little photo retouching has become accepted as part of the marketing process. But while we may consider it OK for a model in a magazine ad to be air brushed to remove certain imperfections, we expect the products the model is promoting to be portrayed accurately.

Minor touch-ups

Photo editing can be extremely helpful if the seller's photography skills are limited or if the photos were taken at a time of day or year that isn't particularly flattering. With a few clicks, you can adjust the lighting, change the contrast, eliminate shadows and crop the frame (this is especially handy if you've accidentally shot too much of the sky or the ceiling). These sorts of adjustments don't misrepresent what the house actually looks like.

More advanced photo manipulations involve changing the sky from overcast to sunny, tinting brown grass a more appealing shade of green or removing power lines or distant treetops from the background. In most cases, this is considered acceptable; the house itself remains untouched and will look pretty much the same in real life as it does on-screen.

Intentional misrepresentation

Photo retouching could negatively impact a sale if a potential buyer feels that they've been intentionally misled. A heavily altered photo may make the buyer wonder if there's anything else that's been misrepresented about the home.

It's never advisable to alter a photo in a way that would give an incorrect impression of the house that is for sale. Changing the exterior color, adding or removing elements such as TV antennas or shrubbery, or altering the position of neighbors' houses to make them appear further away, could come off as direct misrepresentation to potential buyers. Also, if a photo is edited to, say, delete a dead tree from the yard, a potential buyer may expect the tree to be removed before agreeing to the sale.

Professional help

The best way to make your house look great in photographs is to hire a professional photographer to take your real estate snapshots for you. Most real estate agents will offer to either take photos of your house themselves or arrange to have a photographer who specializes in home listing photos do it for you. A real pro will take many shots from multiple angles, both inside and out, to ensure you get images that make your home look its best.

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What You Need to Know About Local Moves

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:28:00 +0000

What You Need to Know About Local Moves
The rules for local moves are different than for interstate moves, so make sure you understand them.
Moving across town can be nearly as challenging as moving across country, and you're hiring movers without the protections of federal agencies that regulate interstate moves. Plus, different rules apply - rules that can vary state by state. Here are some things you should know when you're making a local move.

The major difference between a local move and an interstate move is that local movers generally charge by the hour and number of people needed to move your goods 100 miles or less.

This is not cut and dry. Depending on where you live, the moving company and how far you're moving, you might still be charged by weight and mileage. You might not have a choice about how you are charged, depending on local laws. (Only 30 of the 50 states regulate intrastate moves, according to the American Moving and Storage Association.) Some companies also offer a flat-rate fee for a local move.

If you are paying by the hour for a local move, consider what you can do to help the movers do their job more quickly. Being ready when the movers arrive is a good place to start. Have the appliances unplugged, the ceiling fans disconnected and removed (if you are taking them), the boxes packed and ready to go.

Stacking packed boxes a few feet high can make it quick and easy for the movers to load them onto dollies and onto the truck. Labeling each box with the room it belongs in also can keep things rolling, especially if you clearly identify those rooms at your new home.

You also could have the movers unload all or most of the boxes in one room, then unpack or move them the rest of the way yourself.

With any local move, it's your choice whether to pack yourself or have the movers pack all or some of your belongings. Some people have the movers pack breakables and large, fragile items like mirrors, glass table tops and framed artwork with glass. Just make sure you understand how you'll be charged for any packing the movers do for your local move. With a local move, carriers are often subject to less liability for damages than with interstate moves.

For both local and interstate moves, experts and the American Moving and Storage Association strongly advise you to steer away from companies that won't do an in-home estimate. Phone estimates are not binding.

Also, experts advise checking out moving companies with your local Better Business Bureau. Remember that if you're using a national company, you'll need to check out the local agent that will actually be handling the move.

Another resource is the www.protectyourmove.gov Web site maintained by the Federal Motor Carrier Safety Administration. You can find state-specific lists of moving associations and regulatory agencies at the site. You also can check the American Moving and Storage Association Web site to see whether the mover is a member. The association says it removes the names of members with a repeated pattern of consumer abuse.

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The Art of Buying Foreclosures

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:28:00 +0000

The Art of Buying Foreclosures
Investing in foreclosures could pay off big if you do your homework.
The dream of every homeowner and real estate investor is to find a great home at an even better price. Easier said than done, you might say, especially if you don't have Donald Trump-like financial resources. But foreclosures can offer a certain degree of opportunity for the non-Trumps among us.

When homeowners can't keep up their payments or sell a house on their own, the bank forecloses on the property and resells it to cover its costs. If the home loan was insured by the Federal Housing Administration, or FHA, then the U.S. Department of Housing and Urban Development (HUD) takes over the property and resells it.

Either way, the previous homeowner's loss could be your gain.

HUD foreclosures are first offered to buyers who intend to live in the home. But after a set period, the homes are offered to investors. You might be able to find local listings of HUD foreclosures. Or, HUD contracts with a number of management companies to compile listings in each state. Go to www.hud.gov/homes/index.cfm and click on your state to see what's available.

You can look for foreclosures by ZIP code, so you can concentrate on neighborhoods with which you're familiar. Also, be sure to do your research: Make sure you know what comparable houses in the neighborhood sell for so you can set a realistic purchase price. If you are planning on reselling or "flipping" the property, that same information can help you set a sales price. Be aware that it could be difficult to resell at a profit in a neighborhood with multiple foreclosures.

When buying foreclosures, you're not always able to have the property inspected before putting in a bid. You could end up needing expensive repairs to shore up the foundation, fix the heating and air-conditioning system or replace the roof.

The home's previous owners can present another challenge to buying foreclosures. If the home is still occupied, it could be difficult to evict owners or renters. And, if you are planning on reselling the home, the longer you have to pay the mortgage, the less profit you'll make at resale.

Some investors buy properties before the foreclosure proceedings are final rather than waiting for an auction. That involves negotiating directly with the owners and dealing with complicated legal issues. Buying from the lender, or at a HUD auction, in generally considered a safer way for inexperienced investors to buy foreclosures.

If you're planning to flip the foreclosure, make sure you can make payments on the loan for several months, just in case you can't sell it right away.

You also might want to purchase a foreclosure as a rental property. As long as the money coming in is greater than what you owe in mortgage costs, taxes and maintenance, rentals can be a good investment. Again, you'll need to know the neighborhood and comparable rents before taking the plunge.

Buying foreclosures can be lucrative, but smart investors get plenty of advice from tax advisers, real estate attorneys and mortgage lenders before they make a move. In time, you might even give Trump a run for his money.

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Painless Moving

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:28:00 +0000

Painless Moving
Don't let moving be a headache plan ahead to make your move painless.
Moving is a pain. Between packing the boxes, taking care of all the details, saying your good-byes, there's not much that makes moving fun. But, by getting a head start and tackling the problem head-on, painless moving can be a possibility for your next relocation.

1. Declutter

Still have clothes that fit three sizes ago hanging in your closet? Or, is there a drawer in your house that is so full of junk that it frightens you to even contemplate opening it? Why move stuff you don't want or need? Go through your house and throw away or donate whatever you can. Not only can this help make your move painless, but it also saves you money. Less to move means less you have to pay the movers, or if you are moving yourself, less boxes to buy. And, less to move also means less of your valuable time wasted.

2. Cancel services

Don't make the mistake of paying for the electric bill of your old residence after you've left. An easy way to make moving painless is to make a checklist of all the services that you need to cancel or transfer. Also, be sure to get confirmation numbers. If someone at the electric company forgets to turn off your account, it's your word against theirs and guess who would lose that battle.

3. Set up new services

While you are canceling your old services, go ahead and set up all the services at your new residence. Keep in mind that you'll probably have to be there for some services to be set up - cable, Internet, etc. Schedule these when you'll actually be moved into your new home and able to take some time off work.

4. Pack

Unless you are lucky enough to hire movers who are going to pack for you, this is a task that you'll want to get a head start on to ensure a painless moving day. Start packing with the rooms in your house that you use the least - guest room, formal living room, formal dining room, etc. Get a room packed as much as possible before moving to the next room. For rooms that you'll use right up to the end, go ahead and pack as much as you can. Be sure to label very well. Clearly note if the contents are fragile as well as where the box should go in the new house.

5. Prepare children

If you have young children, it might be difficult for a move to be painless for them. They may not understand why you are boxing up all of their toys. Keep a dialogue going to ease any apprehensions they may have. If possible, show them pictures of the new home. Try to get them excited. Let them pick out the color of their new room. Also, reassure your kids that all of their toys and furniture will meet them in the new house.

6. Lock up pets on moving day

The last thing that you want when you move is to lose a beloved pet in the process. Be sure to lock up any pets so that they can't get loose while loading the moving truck. If you've hired movers, keep the pets in an empty room that is clearly labeled "Do not enter: pets inside."

7. Pack a bag

Keep an overnight bag with you that holds a few essentials to keep you going for a couple of days. Move out and move in dates don't necessarily sync up - you'll be glad you have a couple of days of clothes and even an air mattress if you get stuck in your new house waiting for the movers to bring your furniture.

8. Keep valuables with you

Pack one box with your valuables - jewelry, wills, important papers, passports, birth certificates, sentimental items, coin collections, etc. If something happens to your belongings in transit, you'll feel better having these with you.

9. Put boxes in appropriate rooms
A trick to keeping your move painless once you arrive at your new home is to put boxes where they go. Don't just unload as fast as you can, piling boxes into the family room or garage. Instead, take them straight to their final destination. That makes unpacking so much easier.

10. Set up beds first

Also, while you are unloading, set up the beds as soon as you can, complete with sheets, pillows, etc. You'll be very glad that night when you're completely exhausted and can crash in a ready-made bed.

11. Keep a close record of damage and follow up

If you have hired professional movers, document any damage to your belongings. This part continues as you unpack your boxes. Most moving companies give you a timeframe in which to file damage reports. Make sure all boxes are unpacked to give you enough time to evaluate any damage and report it.

12. Focus on finishing one room first

One last trick to painless moving is set up one room completely as soon as you can. Make one room box free, pictures on the wall, furniture placed just right. That way, in the weeks ahead of unpacking, you have one room where you can relax with a cup of coffee and just get away from all the cardboard boxes and chaos.

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Customizing Your Move with Professional Movers

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:28:00 +0000

Customizing Your Move with Professional Movers
Have the movers do it all, or tackle some of the chores yourself to save some cash.
Amid all the excitement of buying a new home lays a decidedly less glamorous chore: moving there. It's kind of like getting ready for a stroll down the red carpet at a Hollywood premiere and having to drive yourself there in a 15-year-old sedan.

You can make it easier on yourself by hiring professional movers. But you'll still have some details to work out, including what level of moving services you want. To some extent, that will be determined by how much you want to pay.

When you hire professional movers, the base price usually includes just loading, transportation and unloading. You'll have to pay extra to have the movers pack your possessions. The charge for the full packing and unpacking service generally is based on the weight of the load, according to the industry's professional organization, the American Moving and Storage Association, and includes the cost of all but specialty cartons for things like mirrors and marble tabletops.

You can get custom packing services from professional movers if you pack some of the items yourself and unpack yourself, according to the industry group. In that case, the charge is based on the number of boxes or cartons used.

Even if you pack yourself, you'll have to pay for boxes if you aren't able to scrounge enough from the office and the grocery store. Consider at least buying wardrobe boxes - mini-closets with a metal bar where you can hang clothes on hangers - and dishpacks for breakable kitchen items like plates and glasses.

You'll also need to decide whether to buy additional protection in the event your goods are damaged by the professional movers. Under the basic protection included in the cost of your move, the movers are liable for only 60 cents per pound if something is damaged. In other words, you could end up with only $60 for your broken, 100-pound couch. Full replacement-value coverage costs more, but could be a good investment.

One advantage to hiring professional movers is they can store your goods if you need to move out of one house without moving immediately into another. The charge for storage is based on the weight of the load and how long your goods are in storage.

Another option to consider is something called self-service moving. You pack all your goods, load and unload the truck, but a professional driver transports it. The price is based on the number of miles traveled and how much space your load takes up on the truck. (Long-distance full-service moves are based on weight.) As you might guess, the price is less than for a full-service move.

You can hire professional movers for long-distance or local moves, but remember that pricing is different for short-haul local moves. In that case, you might be charged by the hour rather than by weight.

Either way, hiring professional movers can at least make you feel like you're arriving at the fancy Hollywood premier in a limo instead of an old sedan.

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Will a Home Warranty Help Your House Sell?

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:28:00 +0000

Will a Home Warranty Help Your House Sell?
Give yourself a marketplace edge by offering buyers peace of mind.
Which home would you rather buy? One that offers you no protection if the furnace, air conditioner, dishwasher, plumbing or garage door opener go kaput, or one with a home warranty that gets the problem fixed for less than $100?

Most buyers would select door No. 2, so it's easy to see why many sellers are making a home warranty part of the deal. It's almost standard in some markets, according to industry experts.

Offering buyers guaranteed, low-cost repairs is especially valuable in a slow housing market. In some cases the warranty will give you an edge over other properties; in other cases home warranties are expected, and not offering one might cause buyers to reject your home outright.

"It's one more benefit that the seller can offer," said Kathy Aymard, manager of the Annapolis, Md., office of Prudential Carruthers REALTORS®, which is affiliated with RealEstate.com. Home warranty coverage costs a few hundred dollars, but what you're offering buyers is peace of mind for their first year in the home.

"Most buyers don't have a whole lot of extra cash when they get in the house" after coming up with a down payment and paying for a move, Aymard said. Under a home warranty, repairs are covered, with the new owner paying a small deductible - generally $30 to $75, depending on the policy.

A good listing agent should suggest offering a warranty, Aymard said. Her office considers it so important that its listing services include providing a warranty.

She cautioned that home warranties won't cover pre-existing conditions. In other words, a seller who knows he has a plumbing leak and buys a warranty with the intention of having it fixed under the policy, she said. Likewise, a problem caught during the pre-sale inspection should be repaired before closing.

Indeed, the offer of a home warranty does not mean that a buyer should forego a home inspection. Although the buyer bears the cost of the inspection, it's critical to have a qualified home-inspection specialist give the home a thorough once over before you sign on the dotted line at closing.

Keep in mind that purchasing a home warranty for the buyer doesn't get you off the hook for making repairs before putting your home on the market. You'll still need to patch and clean and paint and do whatever you can to get your home in showcase condition.

However, sellers can purchase a home warranty while the home is on the market to protect themselves against unexpected repair costs, then transfer the warranty to the buyer. Several companies offer home warranties. Ask your real estate professional for recommendations if he or she doesn't suggest the warranty as part of their services.

"I don't know that a warranty by itself sells a house, but a warranty is a benefit" to the buyer, Aymard said, noting, "If the seller's not offering it, the buyer ought to get it anyway."

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Pros and Cons of Open Houses

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Pros and Cons of Open Houses
Internet tours are great, but an old-fashioned open house can still get your house noticed.
Open houses once were the preferred way to get as many possible buyers' eyes as possible on your home. You'd frantically clean, mow and trim ahead of the big event, then leave the house for the day as your real estate agent stayed behind to show people through the home in hopes of bagging a sale.

But the open house is losing favor among many real estate professionals, who argue it's a time-wasting exercise that rarely results in an offer on the house.

Virtual whole-house tours on the Internet now serve the same purpose as an open house by giving potential buyers a first look at the property, they argue - and no one has to sit in the house all day waiting for viewers who might or might not be serious buyers.

Even some sellers have jumped on the anti-open house bandwagon, saying most of the people coming through are just nosy neighbors curious about the home's interior.

Other real estate professionals say they still see benefits to open houses.

"I always think it's worth having an open house, especially now with the market softer than it was," said Coral May, vice president for business development at Prudential Carruthers REALTORS®, a RealEstate.com-affiliated brokerage in the Washington-Baltimore metropolitan area.

"Open houses create activity," added May, whose office is in Fairfax, Va. "Builders are still building models, furnishing them and selling them, so people do go to open houses. Some of the old standbys still apply."

Kathy Aymard, manager of Prudential Carruthers' Annapolis, Md., office, says the effectiveness of an open house depends in part on location. It's difficult to get people to an open house in a rural area, but one on a popular street might have a lot of visitors, she said.

Open houses are more successful when they are well marketed, Aymard added. Targeted e-mail "blasts" to other agents working in the area and invitations to neighbors can generate traffic, she said. Neighbors sometimes know someone interested in buying in the neighborhood. "It's also a nice way to say 'This home is on the market' and letting other agents know about it."

Aymard acknowledged that open houses were more important selling tools before the Internet and other technology-based marketing. It remains a way to get people in the house, though.

"Most houses don't get a contract because of an open house, but it can be a nice way of introducing the home to the market and getting some chatter," she said.

Not all open houses are for buyers. Agents also host open houses for other real estate professionals, providing some incentive like a catered lunch. "It's very effective. They're not expected to bring buyers, so you have time to sit down and talk about the house," Aymard said.

Showing the home to other agents increases its exposure exponentially, because each agent now knows about the house and can show it later to their own clients.

Added Aymard: "The most important thing for sellers to do is to have a really strong, good listing agent and trust they know how to sell the house."

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Pre-Construction Condos: How the Process Works

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Pre-Construction Condos: How the Process Works
When you buy a home that's not built yet, there can be setbacks before you move in. Here are steps to buying a pre-construction condo
Pre-construction condos are units that have been proposed by a developer, but have not yet been built. When you purchase a pre-construction unit, you are putting money down before construction begins.

Buying a pre-construction condominium can be a great opportunity, but you should proceed with caution. Because you are buying into something that does not yet exist, there is greater potential for unforeseen problems and setbacks before you move into your home. By understanding the risks and planning carefully, you can avoid complications and come out a winner.

Advantages
The main advantage to buying into a condominium development before construction starts is that you often get a lower price than if you buy when construction is complete. The reason for this is that developers typically need pre-construction sales of 50 percent to 90 percent of the units in a development before they can borrow funds to begin construction.

Pre-construction condos can also get you in on the ground floor of an investment that will appreciate. The market value of pre-construction units generally increases during the one to three years it takes to build a development, so your unit may be worth more than you've paid for it before you set foot in the place. In addition, you can often choose from a variety of finishes and flooring options, allowing you to customize your home.

How the process works
There are several steps to buying a pre-construction condo. They can vary from developer to developer, but the basic components are:

1. Reservation agreement
You give a deposit (usually between $5,000 and $10,000) to reserve the unit and set the price (although the builder can reserve the right to change the price in the contract). The deposit is held in escrow and you can cancel the agreement at any time with a full refund.

2. Condominium documents

When a development is approved for construction, the developer submits condominium documents (including budgets, association rules, unit descriptions, materials and other important information) for approval by the state. Once the documents are approved, they are sent to you for review. Read them carefully to make sure that you will be comfortable living by the association rules.

3. Right of rescission
Once you receive the condominium documents, you have a 15-day period to decide whether you would like to proceed into a binding contract. If you don't, you can exercise your right of rescission and withdraw with a full refund.

4. Hard contract

If you don't withdraw, you'll provide the balance of the required down payment, usually 15 to 20 percent of the purchase price, and sign a binding contract agreeing to purchase the condominium. You generally have seven days after that to cancel. This is your last chance to walk away with no penalty.

5. Closing

When construction is nearly finished, the developer will issue you a Certificate of Occupancy. A closing date is set when you will hand over the balance of the purchase price and sign the final documents. If all goes according to plan, your closing will coincide with your move-in date, and you will be ready to enjoy your new home.

This article was originally published at http://www.lendingtree.com/smartborrower/New-homes/Buying-a-condo-pre-construction.aspx

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Pre-Construction Condos: How the Process Works

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Pre-Construction Condos: How the Process Works
When you buy a home that's not built yet, there can be setbacks before you move in. Here are steps to buying a pre-construction condo
Pre-construction condos are units that have been proposed by a developer, but have not yet been built. When you purchase a pre-construction unit, you are putting money down before construction begins.

Buying a pre-construction condominium can be a great opportunity, but you should proceed with caution. Because you are buying into something that does not yet exist, there is greater potential for unforeseen problems and setbacks before you move into your home. By understanding the risks and planning carefully, you can avoid complications and come out a winner.

Advantages
The main advantage to buying into a condominium development before construction starts is that you often get a lower price than if you buy when construction is complete. The reason for this is that developers typically need pre-construction sales of 50 percent to 90 percent of the units in a development before they can borrow funds to begin construction.

Pre-construction condos can also get you in on the ground floor of an investment that will appreciate. The market value of pre-construction units generally increases during the one to three years it takes to build a development, so your unit may be worth more than you've paid for it before you set foot in the place. In addition, you can often choose from a variety of finishes and flooring options, allowing you to customize your home.

How the process works
There are several steps to buying a pre-construction condo. They can vary from developer to developer, but the basic components are:

1. Reservation agreement
You give a deposit (usually between $5,000 and $10,000) to reserve the unit and set the price (although the builder can reserve the right to change the price in the contract). The deposit is held in escrow and you can cancel the agreement at any time with a full refund.

2. Condominium documents

When a development is approved for construction, the developer submits condominium documents (including budgets, association rules, unit descriptions, materials and other important information) for approval by the state. Once the documents are approved, they are sent to you for review. Read them carefully to make sure that you will be comfortable living by the association rules.

3. Right of rescission
Once you receive the condominium documents, you have a 15-day period to decide whether you would like to proceed into a binding contract. If you don't, you can exercise your right of rescission and withdraw with a full refund.

4. Hard contract

If you don't withdraw, you'll provide the balance of the required down payment, usually 15 to 20 percent of the purchase price, and sign a binding contract agreeing to purchase the condominium. You generally have seven days after that to cancel. This is your last chance to walk away with no penalty.

5. Closing

When construction is nearly finished, the developer will issue you a Certificate of Occupancy. A closing date is set when you will hand over the balance of the purchase price and sign the final documents. If all goes according to plan, your closing will coincide with your move-in date, and you will be ready to enjoy your new home.

This article was originally published at http://www.lendingtree.com/smartborrower/New-homes/Buying-a-condo-pre-construction.aspx

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What to Ask When Buying a Condo Pre-Construction

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

What to Ask When Buying a Condo Pre-Construction
Buying a condo that hasn't been built yet poses its own set of risks. Learn what details you should find out about before you sign that contract.
While most people would never sign away tens of thousands of dollars on a car sight-unseen, they do exactly that with real estate all the time. Many homes and condominiums are purchased before the builders ever sink a shovel into the ground. Visiting a model home may give you an idea of what the finished product will be like but it's not the same as touring the real thing.

Buying a pre-construction condo is also different from buying a pre-construction home. In most cases, a homebuyer will have some degree of say in the design and layout of their planned home. A condo buyer rarely has this luxury. Beyond flooring and surfaces, the design of the unit is generally left to the discretion of the developer. Concerns that seem intangible at the time of purchase -- proximity to neighbors and waste disposal, for example -- can become unavoidably real after you move in. But it's hard to think about all the potential problems when you're basically purchasing a spot of empty space.

Purchasing real estate of any kind is a big decision. Here are some questions to ask when buying a condo that hasn't been built yet.

What's being done to enhance the soundproofing?

While you've no way of finding out how noisy your neighbors are going to be until after you've actually moved in, you can ask what steps the developer has taken to improve the building's soundproofing. Depending on where your unit is located, you may have people living above, below and on either side of you. Sound transmission -- be it airborne sounds coming through the walls, or impact noise from high-heeled shoes coming the ceiling -- is a common complaint about condo life.

Most modern condos are well soundproofed, but there are still certain things that are well worth asking about. You can request to see a floor plan of your neighbors' units to determine which common walls you share and which of their walls connect with which rooms in your unit. Also, if possible, try to find out if your upstairs neighbors have opted for wall-to-wall carpeting -- an option that's less conducive to sound transmission than bare hardwood flooring.

How close will my unit be to common areas?

Many areas of a condo are shared by all of the tenants. Find out ahead of time if your unit will be situated on, or near, the front vestibule, meeting/party room, gym, elevator or stairwell. People tend to be less careful of noise in shared areas than they are inside of their own unit, and a raucous celebration in an adjoining party room or people tromping up and down nearby stairs could keep you up at night. If your unit will be situated near a noisy part of the complex, ask if it may be possible to get a price discount.

Where will my unit be in relation to sanitation and laundry facilities?

Being near the laundry, sanitation room or pool can pose noise- and smell-related hazards. You could end up living in a condo that constantly smells of bleach, chlorine or cleaning supplies. If your unit backs onto the parking lot or alleyway behind your complex, make sure you ask where the dumpsters will be placed. A balcony becomes significantly less charming if it offers a scenic -- not to mention fragrant -- view of a building's trash, especially in mid-summer.

What is the building's expected occupancy?

Be sure to ask how many people you'll be sharing the services and amenities of your condo with. Do some math: Will a laundry room built for five washers and dryers be big enough if a quarter of the tenants opt to do their laundry on a Sunday afternoon? If the gym has only three treadmills, how long might you have to wait after work to get onto one?

Also, ask about what the expected ratio will be of owners to renters. Owners are more likely to take better care of their units than renters. As a result, it can sometimes be more difficult to secure financing for a unit in a condo with more renters than owners, or you may be charged a higher interest rate on a mortgage. A good owner-to-buyer ratio is 3:2 or better.

What are the rules and regulations?

Unlike private home ownership, condo ownership is subject to certain rules and regulations pertaining to the use of both common areas and individual units. Condos can place restrictions on just about everything from the number and type of pets you can have (if any) to what kind of renovations you're allowed to undertake on your unit. Some even place restrictions on how many guests you can have at one time. Get a list of all of these rules and see if any of them are unreasonable or potential deal-breakers.

By asking the right questions, you can get a better understanding of what a condo is going to be like after it's built. And, hopefully, knowing what to expect will help you avoid having any unpleasant surprises.

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Finding a REALTOR® to List Your Home

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Finding a REALTOR® to List Your Home
Asking the right questions can help you choose the right REALTOR® to sell your home.
Finding a REALTOR® to look out for your best interests can make the difference between getting a good offer and a great offer. The questions below can set you on the right path for finding your REALTOR®.

1. Are you a disclosed dual agent?
This term means the REALTOR® is allowed to act on behalf of both the person selling the home and the buyer. This can be a conflict of interest in that the price and deal may be good for one party but not the other. Hire a REALTOR® who will represent only you. That way, you may avoid some lowball offers.

2. Can you provide me with references?
Ask for at least three references from satisfied customers who have sold homes in a similar price range in your area. And don't just get the list -- be sure to call all the names for a chat.

3. What are your professional qualifications?
Look for someone who works as a full-time REALTOR® and is a licensed real estate agent. REALTORS® are real estate professionals who belong to the National Association of REALTORS®. They subscribe to a strict code of ethics and are committed to ongoing education in the real estate industry.

4. Are repeat or referral clients a large part of your business?
A list of satisfied customers is a sign of success.

5. What's the average length of time the homes you've listed have been on the market?
If it takes too long to sell, a house may be overpriced. A reasonable time frame is 90 to 120 days. Beware of agents who might deliberately give high listing prices just to sign new clients.

6. What's the average difference between the asking and the selling price of the homes you list?
If the prices are close, the agent did a good job of setting the listing price.

7. How many properties have you listed over the past six months?
Look for a REALTOR® who typically lists one or two homes a month.

8. How many of these homes have sold?
It's a good idea to choose a REALTOR® that sells all or most of the homes he or she lists.

9. In what areas of my city do you normally work?
If you are interested in a particular area, look for someone who knows it well. Such REALTORs® will have expertise in finding just what you want -- they will also have good contacts with other REALTORs® and will be familiar with prices in your region.

10. How much will this cost?
Most REALTORs® are paid by commission, often 4 to 6 percent of the selling price and, in most parts of the country, they are paid by the seller. However, there may be other fees and administrative costs, so ask.

11. How will you arrive at a listing price?
The REALTOR® will recommend a listing price based on an up-to-date market analysis of your area. This will focus on recently sold homes that are similar in size, style and features to yours. The accuracy of the listing price is important because you can discourage those potential buyers who have higher or lower budgets from seeing it. It's also a good idea to specify in the listing agreement that offers will only be accepted from buyers who have been pre-approved for a loan.

12. Are you my only contact?
A team effort may help sell your home because REALTORs® often have more than one client. A REALTOR® with many listings may hire people to handle some of the administrative work, for instance. Nevertheless, your REALTOR® should be the only one to show your home, negotiate the sale and handle the transaction. If your REALTOR® is planning to be away in the near future, make sure you meet and are happy with the REALTOR® who will be filling in during that time.

13. How often will I hear from you?
A daily telephone call, fax or e-mail is not unreasonable. Some offices have software that automatically notifies you whenever someone tours your home. Your REALTOR® should let you know about every tour of your home and give you feedback from potential buyers or their agents.

14. What are your sales tactics?
There are many strategies for attracting buyers both from your area and from far away. Your REALTOR® should write up a listing of your home, perhaps with a picture, to put on the local and national Multiple Listing Service. The Internet has become very important in marketing real estate. As well, he or she will hold an open house for REALTORs®, a few public open houses on weekends, plus by-appointment tours of your home for prospective buyers. A detailed property fact sheet with specific information about your home and any improvements should also be available.

15. What will the listing agreement cover?
Most contracts name the beginning and end dates, and these should be negotiable. Giving a REALTOR® three to six months to sell your home is reasonable. REALTORs® cannot guarantee they will sell your house within a given period of time because the real estate market is often affected by factors outside his or her control.

16. What can I do to boost my selling price?
Your REALTOR® should offer advice on what you can do to make your home more attractive to potential buyers. For example, this could mean painting your bright red foyer a more subdued neutral shade, making some minor repairs or clearing out your clutter. Fresh flowers in the living room are also a nice touch, as is the smell of fresh baking in the kitchen.

Remember, the quicker you get your asking price, the sooner you can move on to your new life in your new home.

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What You Need to Know About Private Mortgage Insurance

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

What You Need to Know About Private Mortgage Insurance
PMI lets you buy a house with less than 20 percent down -- in exchange for higher payments.
Private mortgage insurance is just what the name implies: insurance that covers the lender in case the home buyer defaults. If you put less than 20 percent down on most mortgages, chances are your lender will require you to have private mortgage insurance, commonly known as PMI.

Unless you have a government-insured loan, such as an FHA or VA loan, you don't have much choice in the matter. And the benefit of private mortgage insurance is it allows you to buy the home you want even if you don't have a large down payment. The lender will obtain private mortgage insurance for you.

Paying private mortgage insurance
There are a couple of ways to handle your private mortgage insurance payment.

One popular payment method is to include private mortgage insurance as part of your monthly mortgage payment. PMI generally costs about one-half of 1 percent of the cost of your house, or $75 a month for an $180,000 mortgage.

Another way of paying for private mortgage insurance is to finance it when you get the mortgage. That would generally increase your interest rate, possibly by one-half of 1 percent. Mortgage interest is likely tax-deductible while private mortgage insurance may not be. (Consult a tax advisor about your situation.)

You can cancel PMI
You don't have to pay PMI forever. You can ask to have it canceled after you have built up 20 percent equity in your home. This means if your home is worth $200,000, you have at least $40,000 in equity in your home. And you don't have to pay down your mortgage to build equity, either. If you have made significant home improvements or your property has appreciated significantly in value, you may be able to cancel private mortgage insurance even earlier. The lender may require you to pay for an appraiser to establish your home's value in today's market.

If you signed your mortgage on or after July 29, 1999, a federal law requires lenders to automatically - with a few exceptions - cancel your private mortgage insurance once you have paid 22 percent of the principal based on the original loan amount.

Lenders do have some leeway to refuse to cancel your PMI if you are not current on your payments, if there are liens against the property or if you have an exceptional amount of debt based on your income.

Some people avoid private mortgage insurance by getting a small home equity loan to "piggyback" on the mortgage. The piggyback loan pays for the rest of the down payment so the buyer is able to put 20 percent down. These loans carry a higher interest rate than the mortgage, but the interest may be tax-deductible. A financial advisor can help you figure out how to determine if private mortgage insurance is the best way for you to buy a home.

This article was originally published at http://www.lendingtree.com/smartborrower/Private-mortgage-insurance/What-you-need-to-know-about-private-mortgage-insurance-.aspx

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Top 10 Home Buying Mistakes

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Top 10 Home Buying Mistakes
Buying a house is the largest investment most people ever make; yet all too often it's a decision made in haste without adequate preparation
Use our list of common house-buying mistakes to avoid costly regrets.

1. Doing it alone. Buying a house is a complex transaction. Even if you don't use an agent, you'll need a complete, dependable team: lender, lawyer, inspector, insurer, as well as referrals and advice from friends and family. Enlist the help of these individuals early in the buying process.

2. Buying at first sight. You may be in love with the place, but does it fit your family's needs and budget? Make a list of your needs and wants and make sure the house fits your requirements. Check out the neighborhood and the community before you buy by visiting at different times of the day and week to learn about noise and traffic patterns. Even if you don't have kids, check out the local schools to make sure your resale value will be good.

3. Not getting pre-qualified and pre-approved. Being pre-qualified gives you a general idea of how much you can afford to borrow. Being pre-approved means a lender has verified your information and credit rating and agreed to provide you with a specific amount of money. You are in a better position to go house hunting knowing exactly how much you can afford and that you have financing.

4. Overbuying. You may qualify to borrow more, but can you afford to? Analyze your monthly costs: debt, food, transportation, entertainment, and savings. As a general rule, your total monthly debts, including your mortgage, should not exceed 36 percent of your income before taxes. Be sure to budget enough to cover closing costs (often two to five percent of the home's purchase price), plus moving, redecorating and maintenance. Allow for increases in ongoing expenses such as utilities and taxes.

5. Misplacing your trust. No matter how much you like the agent, sellers, inspector, or the guy down the block who vouches for them, remember this is a business transaction. Your decision is binding. Do your own research and know your support team's roles and responsibilities.

6. Relying on oral agreements. Get it right and get it in writing. Written agreements almost always trump oral ones when it comes to contracts. If the offer says the lawnmower is negotiable, but the agent says it's included, get it in writing.

7. Skipping the fine print. You need to understand what you're signing before you pick up a pen. Ask for documents in advance, make time to read them and ask questions. Get copies of your mortgage papers a few days ahead of closing.

8. Forgetting or betting on resale. Avoid buying a home that costs 50 percent more than neighboring homes and think before buying the most expensive home on the block. Your neighbors' lower home values will weaken yours. Remember, markets change. If you buy intending to flip your investment and the market falls and you have to sell, your selling price may not be enough to even cover your mortgage.

9. Making an unconditional offer. Protect yourself with at least two of these contingencies in your offer:
Mortgage financing -- You're pre-approved, but is the house? Before a bank will lend you money, it will want a formal appraisal of the property to confirm that there is sufficient equity in it to warrant the loan. If the house appraises lower than the sales price, the loan may be declined.
Inspection -- never buy an existing or new home without a thorough home inspection. Walk through the home with the inspector to learn more about the house and any concerns he or she may have.
Insurance -- confirm you can get adequate coverage. In some areas, it's difficult to get hazard insurance.

10. Having buyer's remorse. No place is perfect. There will always be surprises. Don't let a few initial blips spoil the whole ride. And don't miss a great house waiting for the perfect one!

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Move or Remodel: How to Get the Home of Your Dreams

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Move or Remodel: How to Get the Home of Your Dreams
Whether to move or remodel is a question of cost and convenience.
If you and your family have outgrown or tired of your current home, you're probably ready either to sell your home and trade up or to jump into a major home remodeling project. But the question is which option makes the most financial sense for you - moving or remodeling?

Calculate the costs of moving

The chief advantage of moving is that you'll be able to see your fully finished new home, rather than only drawings, before you make a commitment. Yet moving can be disruptive and it's not without a myriad of costs.

In addition to the purchase price of your new home, transaction costs involved with moving could include real estate agent commissions, mortgage origination fees and home inspections. In addition, your monthly mortgage payments, homeowner's insurance and property taxes could be more expensive after you move.

If you sell your current home first, you may also need to obtain temporary housing until you've purchased your new home. Depending on where you live and how long before you can move into your new home, temporary housing could get expensive. Or, if you buy your new home first, you may have to make two mortgage payments each month until your current home is sold. You might also need to hire contractors to make necessary repairs to ready your current home for sale or your new home for occupancy.

Other costs include hiring a moving company or renting a moving van, and making deposits to set up new accounts with local utility companies.

Consider inconvenience of remodeling

The chief advantage of remodeling, on the other hand, is the opportunity to design your own home and choose the features and amenities you want as your home is being transformed. Yet remodeling can be costly and disruptive in its own way.

In addition to the costs of the remodeling project and the potential cost overruns, you'll also need to pay for architect or design services, building permits, and new fixtures, appliances or furnishings for your remodeled home. You may also be facing a second home loan payment each month and potentially higher property taxes.

If you move out of your home during construction, you may need to pay for temporary housing. Or, if you decide to remain at home, you'll probably incur some additional living expenses such as takeout meals or professional cleaning services.

Personal preferences are important too

Whether to move or remodel depends not only on the costs, but also on how much inconvenience you're willing to tolerate and how you feel about the two options.

If you're enthusiastic about finding, buying and moving into a new home, moving may be the right choice for you. But if you're emotionally attached to your home, you may prefer to remain in place and remodel. Either way, you'll be that much closer to the home of your dreams.

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How to Find the Genealogy of Your House

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

How to Find the Genealogy of Your House
You'll spend a lot of time at the library and the county courthouse.
Ever wondered who lived in your house a few decades ago, or what the house looked like when it was built? You can research the genealogy of your home just like you can research your own family tree, using many of the same public records.

The determined researcher can have a lot of fun playing house detective, says Sally Light, author of "House Histories: A Guide to Tracing the Genealogy of Your Home."

"There often are some fascinating stories. Others are ordinary, typical stories," she says. Her best advice for someone beginning house genealogy research? "Don't believe everything everyone says about your house."

Libraries, county offices and historical societies and museums will be among your best resources.

Light suggests starting with a title search. You'll need a legal description of your property. It's on your deed, and on file at the county clerk's or county tax assessor's office. You might also need some kind of parcel identification number; check your annual property tax notice.

The title search tells you who owned the house and when it changed hands. County records also detail the sales price of each transaction. Light cautions that title information might not detail a home being passed from family member to family member.

The Jefferson County Historical Commission in Birmingham, AL. -- one of many local historical groups offering tips on researching the genealogy of a home - says that county appraisal files will often date a structure, identify previous occupants and even contain photographs of the home.

Old city directories can provide additional occupant information, the Birmingham group says. You also could check to see where a previous occupant lived before and after he or she lived in your home. Check your local library for city directories, also known as reverse directories.

The Jefferson County Historical Commission recommends supplementing what you learn from public documents with interviews with neighbors and others familiar with the oral history of your home.

Light says local fire departments often will have detailed property information going back decades, or even centuries. You could learn, for examples, the materials used to build your house, when additions were built on and the home's contents.

The Smithsonian Institution has published an easy-to-follow guide to researching your home's genealogy. Check it out on the Web at http://americanhistory.si.edu/house/pdfs/webhouseguide.pdf.

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Why Zero Down Payment Loans Can Be Risky

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Why Zero Down Payment Loans Can Be Risky
A down payment can help to reduce the risks of homeownership.
Mortgages that don't require a down payment help many people purchase a home they otherwise wouldn't be able to afford. That's very good news. But no-down payment mortgages have additional risks that borrowers should understand before they obtain such financing.

What is a down payment?

A down payment is simply a percentage of the home's purchase price. For example, a 10-percent downpayment on a $250,000 home would be $25,000. A down payment also can be expressed as a "loan-to-value ratio" or LTV. A 10-percent down payment would be equivalent to a "90-percent LTV."

The buyer's down payment becomes the new homeowner's initial "equity" in the home. (Equity is the value of the home minus what's owed on the mortgage.) For example, if you borrowed $180,000 to buy a $200,000 home, you would have $20,000 of equity. If you borrowed $200,000 to buy that same home, you would start out with zero equity in the home.

Zero money down can increase your loan costs

No-down payment mortgages are riskier for the lender since the borrower doesn't have any ownership stake in the home and could become "upside-down" if the value of the property dipped below the purchase price. That's why high-LTV loans typically are more costly than loans that require a larger down payment.

A down payment that's less than 20 percent of the home's purchase price triggers the need for either a second loan, called a "piggyback," or mortgage insurance, which protects the lender if the borrower defaults. Either option adds to the borrower's costs of owning the home.

Why having no equity can be risky
Homeowners who don't have equity can't borrow against their home to remodel, add on or make repairs to the home or for such personal reasons as a family emergency, medical expenses or college tuition. Refinancing may be difficult as well.

Lack of equity can be a bigger problem if the homeowner needs to sell the home because if the value of the home has dipped, the sale price might not be enough to pay off the mortgage. If the value of the home stayed the same, a seller with no equity would have to pay the transaction costs out of his or her pocket. That's why soft housing markets make no-down payment loans more risky for lenders and borrowers.

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Remodeling Can Pay Off

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Remodeling Can Pay Off
Smart home improvements can make your home more valuable.
A major home remodeling project can be a great investment. In fact, some types of projects in certain regions of the country can recapture more than 100 percent of the cost by making your home more valuable.

A recent report in Remodeling magazine revealed the national and regional average costs and percentage returns of popular home remodeling projects. The averages, which are given for upscale and mid-priced projects, are good relative indicators of which home improvements may be good choices for homeowners who want to recoup their costs. These figures shouldn't be taken as a guarantee of a specific return on an individual project, however.

Top payoffs vary among U.S. regions

Four mid-priced remodeling projects returned more than 100 percent of the cost, on average, in the Pacific region. Those projects were a minor kitchen remodel, bathroom remodel, wood window replacement and addition of a second story. Remodeling was a very good investment in the Pacific region, where every upscale and mid-priced project on the list recouped a higher return on average than the national average for the same project.

The top mid-priced remodeling project in the New England region was the replacement of vinyl siding, which returned more than 94 percent of the cost through a higher home valuation. The same project topped the list in the Mid-Atlantic region as well with an average return of 92 percent of the cost.

Three mid-priced projects recaptured slightly more than 90 percent of the cost in the South Atlantic region. Those projects were an attic bedroom remodel, basement remodel and the addition of a second story.

Vinyl siding replacement also topped the list of returns on mid-priced remodeling projects in the East North Central region and the East South Central region, with a return of 81% for the former and 105% for the later.

Home offices offer least return on average

A remodeled home office might be a great boost for a home-based business, but this project offered the least attractive average return of any remodeling project on a national basis. The average cost of a mid-priced home office remodel was $20,057 and the average return on that cost was $12,707, or only 63 percent. The home office was the lowest-ranked project on this scale nationally in 2005.

Lifestyle should trump investment potential

Regardless of the return on investment, a home remodeling project should be a personal choice that is unique to you and your home. While the likely increase in the value of your home as a result of improvements is worth consideration, remodeling should suit your needs as well as your lifestyle.

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Should It Stay or Can It Go? What You Can Take With You When You Move

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Should It Stay or Can It Go? What You Can Take With You When You Move
You've just sold your home and are preparing to move. But which items and appliances are you allowed to take with you?
Personal property disputes are a common problem in real estate transactions. Some buyers who've fallen in love with a home's decorative accents have moved in to find the chandelier, mirrors and even the doorknobs have been stripped from the house by the previous owners. Conversely, some sellers have discovered that items they assumed they could legally take with them are considered to have been sold with the house. How can you tell what's yours and what's not?

Real property

State laws differ on specifically what is and isn't yours to take, but there are some general rules. "Real property" usually includes any improvements to the land or physical structure that cannot be easily moved. It includes such things as wiring, plumbing, roofing, masonry, staircases and in-ground pools. Basically, if it would require a contractor to remove it, it stays.

Chattels

"Chattels" are pieces of personal property purchased by the homeowner that can be easily moved. Chattels are not considered to be a part of the house. If an item can be unplugged or easily unscrewed from the wall or ceiling, it's usually considered a chattel. Home appliances, potted plants, hanging mirrors, artwork and security systems are some examples of common chattels.

Fixtures

"Fixtures" are chattels that are physically attached to the house or property. These items are more permanently affixed than chattels but less so than real property. They are generally considered to be a part of the house unless it's specifically indicated otherwise in the purchase agreement. Doorknobs, chandeliers, garden sheds, shutters and curtain rods are some of the items that qualify as fixtures.

Out of sight, out of mind

When selling your home, a good way to avoid problems down the road is to simply remove or replace any items that could be subject to dispute before you hold an open house. If a potential buyer never sees your antique chandelier, they'll never miss it. Placing "does not convey" note cards on items is also acceptable, however, there's a chance you may receive an offer conditional upon them being left behind -- or a request that you lower your price in order to compensate for taking them. Most residential sales contracts contain a checklist where the "staying or going" status of fixtures can be clearly indicated. If yours does not, consider drawing one up yourself.

Removing things like doorknobs or chandeliers after a buyer has viewed or even purchased the house may not necessarily be illegal, but it is unethical. If you remove them before the deal has closed, it could endanger the sale by forcing those buying to wonder: "If they took that, what else did they take?" If you remove fixtures from the house that are included in the purchase agreement after the deal has closed, it may qualify as breach of contract.

Don't get burned

When a sale agreement is signed, the buyer's agent should check the house and make a careful list of all its fixtures. Sellers should check this list very carefully to make sure they are in agreement with the buyer as to who owns what. In some cases, buyers have included things on this list that didn't actually exist in the house to begin with, like a refrigerator with a built-in icemaker or a workshop tool bench. Since the purchase agreement is a legally binding contract, the seller will then be liable to supply these "missing" items.

Chattels and fixtures are often negotiable, depending on individual seller's wants and needs and can be factored into the selling price of the house at later stages. The bottom line, though, is to always be prepared. A written agreement is the best way to determine who is entitled to what.

What typically stays (unless otherwise specified in writing)
Wall-to-wall carpeting
Permanent light fixtures
Landscaping (patio stones, masonry, in-ground pools)
Window coverings (shutters, blinds, curtain rods)
Skylights
Fireplaces and mantelpieces
Garden sheds (with concrete foundations)
In-ground plants and trees
Mirrors permanently affixed to walls

What typically goes (unless otherwise specified in writing)
Carpets and area rugs
Household appliances (refrigerators, stoves, microwaves, dishwashers, washer/dryers, etc.)
Non-permanent light fixtures
Potted plants
Curtains
Hanging mirrors
Paintings and wall hangings

For more information and advice, we recommend that you consult an attorney or real estate professional.

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Housing Co-ops

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Housing Co-ops
Cooperative housing can provide an affordable alternative, plus the chance to build up equity.
Formal housing cooperatives, or co-ops, have become a vital component of urban housing in the U.S., particularly since the 1960s. Today, more than 1.5 million American families live in co-ops ranging from low-income apartment buildings to luxury town homes to entire housing communities. When you buy into a housing co-op, you buy much more than four walls and a roof -- you buy into a way of living and a ready-made neighborhood.

In fact, you don't actually buy the four walls and roof of a co-op home. What distinguishes buying a co-op from purchasing other forms of real estate is that you are buying shares or membership in a cooperative housing corporation. It is the corporation that owns or rents the real estate. Unlike standard rental housing, however, your monthly share loan payments help you accumulate equity in your co-op share. And, generally speaking, buying a co-op share is more affordable than buying real estate, which makes it an attractive choice for those with limited resources.

Getting a share loan
Share loans are available through banks and credit unions in much the same manner as standard mortgages. They are also known as co-op mortgages, co-op apartment loans, or end-unit financing, depending on where you live. In order to qualify for a share loan, lenders typically expect you to make a down payment of five to 10 percent of the purchase price. Like a mortgage, the loan is then amortized over a period of years, and each month you pay back the loan with interest.

Are there other fees?
Closing fees are lower for share loans than they are for mortgages. The sale is treated as the transfer of personal property (the stock certificate or cooperative ownership contract) rather than the transfer of land, so land transfer taxes do not apply. You should expect to pay additional monthly fees, however, for maintenance, similar to the way condominiums charge monthly fees. The fees vary according to the co-op, and may also include insurance premiums, utilities and real estate taxes. The good news is that even though you aren't paying the real estate taxes directly, you can usually still deduct your share of the tax payments and mortgage interest on your personal income tax return. (Consult a tax advisor about your situation.)

There are three types of housing co-ops, each with slightly different characteristics:
Market-rate housing cooperatives: Buying into this type of housing co-op is the most similar to buying a condominium or single-family home. The share price is determined by fair market value. Accordingly, this type of co-op has the potential to allow you to build up the most equity.
Limited-equity housing cooperatives: In a limited-equity housing co-op, there are restrictions on the amount sellers can get for their shares when they leave the co-op. The co-op housing corporation places these limits in order to ensure the housing remains more affordable. Members benefit by receiving below-market interest rates on loans, breaks on real estate taxes and other cost-saving measures. The co-op bylaws may also set a maximum income limit for new members as a method of ensuring the housing is accessible to families in need.
Leasing (or zero-equity) cooperatives: In the case of a leasing co-op, the co-op housing corporation doesn't actually own any real estate, but rather, leases it from an outside investor. As a result, it doesn't build up any equity. In some case, if the property eventually comes up for sale, however, the corporation may buy the property from the investor and convert the co-op into one of the other two types of cooperatives.

This article was originally published at http://www.lendingtree.com/smartborrower/Finding-the-right-home/Housing-co-ops.aspx

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Universal Design for Your Home

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Universal Design for Your Home
You don't have to be over 50 to benefit from universal design changes.
Have you ever noticed how much easier it is to open a door with a lever rather than a knob? Have you ever wished you didn't have to bend over so much to reach items on the bottom cupboards or to unload the dishwasher? Do you have enough light to read food labels and recipes?

These are all issues that universal design seeks to solve. The basic idea is to make homes more accessible to all people, regardless of ability or disability. But secondarily, universal design works to provide that accessibility without being obvious or, quite frankly, ugly.

You've probably heard of universal design if you have been reading about how baby boomers are influencing new home design as they age. And it's big business, involving everyone from builders to designers to manufacturers.

Builders of housing for people 50 and older say most universal design features aren't even noticeable to the average buyer. Or, if they do notice, they think about the design feature's convenience, not how down the road they might need the wider doors or hallways to accommodate a wheelchair or walker.

One reason many universal design features seem to blend into a home could be that the push is coming as people adopt a more casual lifestyle. In a new home, that often means open floor plans that make it easier to get around. You might be less likely to notice that, for example, hallways are 36 inches to 42 inches and doorways are 32 inches to 36 inches wide - other than being pleasantly surprised that it's easier to move your furniture in.

With universal design, you'll find light switches and electrical outlets higher on the wall, and thermostats lower. There won't be steps going into the house, and the master bedroom will be on the ground floor.

Interested? Here are some other universal design features to look for as you shop for a home, according to the Center for Universal Design at North Carolina State University:

--Rocker light switches.

--Task lighting throughout the home.

--Loop handle pulls, not knobs, on cabinets.

--Levers, not knobs, on doors.

--Pull-out shelving and corner-cabinet Lazy Susans.

--Windows that can be opened or closed easily with one hand.

--Dishwashers placed on pedestals.

You also can search for homes with taller toilets, sometimes called handicapped toilets. They are 16.5 inches to 18 inches tall, compared with 14 inches to 16 inches for standard toilets. The taller seats are easier on knees, legs and backs, but don't look out of place in the average bathroom.

Builders also are putting in curbless showers and showers with built-in seats. Plumbers can install scald protection systems that keep water from getting too hot if someone falls and hits the hot water control.

To learn more about universal design, go to Center for Universal Design's Web site: www.design.ncsu.edu/cud/. The AARP also has a number of articles about universal design available on its Web site at www.aarp.org/families/home_design/universaldesign/.

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Housing Co-ops

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 08:27:00 +0000

Housing Co-ops
Cooperative housing can provide an affordable alternative, plus the chance to build up equity.
Formal housing cooperatives, or co-ops, have become a vital component of urban housing in the U.S., particularly since the 1960s. Today, more than 1.5 million American families live in co-ops ranging from low-income apartment buildings to luxury town homes to entire housing communities. When you buy into a housing co-op, you buy much more than four walls and a roof -- you buy into a way of living and a ready-made neighborhood.

In fact, you don't actually buy the four walls and roof of a co-op home. What distinguishes buying a co-op from purchasing other forms of real estate is that you are buying shares or membership in a cooperative housing corporation. It is the corporation that owns or rents the real estate. Unlike standard rental housing, however, your monthly share loan payments help you accumulate equity in your co-op share. And, generally speaking, buying a co-op share is more affordable than buying real estate, which makes it an attractive choice for those with limited resources.

Getting a share loan
Share loans are available through banks and credit unions in much the same manner as standard mortgages. They are also known as co-op mortgages, co-op apartment loans, or end-unit financing, depending on where you live. In order to qualify for a share loan, lenders typically expect you to make a down payment of five to 10 percent of the purchase price. Like a mortgage, the loan is then amortized over a period of years, and each month you pay back the loan with interest.

Are there other fees?
Closing fees are lower for share loans than they are for mortgages. The sale is treated as the transfer of personal property (the stock certificate or cooperative ownership contract) rather than the transfer of land, so land transfer taxes do not apply. You should expect to pay additional monthly fees, however, for maintenance, similar to the way condominiums charge monthly fees. The fees vary according to the co-op, and may also include insurance premiums, utilities and real estate taxes. The good news is that even though you aren't paying the real estate taxes directly, you can usually still deduct your share of the tax payments and mortgage interest on your personal income tax return. (Consult a tax advisor about your situation.)

There are three types of housing co-ops, each with slightly different characteristics:
Market-rate housing cooperatives: Buying into this type of housing co-op is the most similar to buying a condominium or single-family home. The share price is determined by fair market value. Accordingly, this type of co-op has the potential to allow you to build up the most equity.
Limited-equity housing cooperatives: In a limited-equity housing co-op, there are restrictions on the amount sellers can get for their shares when they leave the co-op. The co-op housing corporation places these limits in order to ensure the housing remains more affordable. Members benefit by receiving below-market interest rates on loans, breaks on real estate taxes and other cost-saving measures. The co-op bylaws may also set a maximum income limit for new members as a method of ensuring the housing is accessible to families in need.
Leasing (or zero-equity) cooperatives: In the case of a leasing co-op, the co-op housing corporation doesn't actually own any real estate, but rather, leases it from an outside investor. As a result, it doesn't build up any equity. In some case, if the property eventually comes up for sale, however, the corporation may buy the property from the investor and convert the co-op into one of the other two types of cooperatives.

This article was originally published at http://www.lendingtree.com/smartborrower/Finding-the-right-home/Housing-co-ops.aspx

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Trouble Selling Your Home? Try Sweetening the Deal

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 02:25:00 +0000

Trouble Selling Your Home? Try Sweetening the Deal
If you're having trouble landing a buyer for your home, maybe you need better bait.
A soft real estate market is a lot like the breakfast cereal aisle at the supermarket. Suppose you have two virtually identical boxes of corn flakes. They both offer the same nutritional value, similar taste and can be had for the same price, but, if you had to choose, chances are your hand would gravitate towards the box that that has the Secret Decoder Ring inside.

Crafty home sellers know incentives are the prize at the bottom of the box. By offering buyers something a little different, they can improve their chances of selling their homes quickly and for the price they want.

Here are just a few of the ways home sellers can sweeten the deal with extras.

Cover the buyer's closing costs

Many buyers, preoccupied with saving enough cash for their down payment, overlook their closing costs which, at between 3 and 6 percent of the sale price, can amount to several thousand dollars extra. Offering to pay them on behalf of potential buyers may be just the push they need to close the deal.

Help the buyer get a better mortgage rate

Another potential deal sweetener is to offer to purchase discount points on the seller's mortgage. Discount points are purchased up front in order to secure a lower interest rate on a mortgage -- the more that are purchased, the lower the rate. In most cases, one point is equivalent to one percent of the loan amount and will reduce the interest rate by .25 percent.

Discount points may make your home more attractive to buyers in that their monthly payments over the life of the mortgage will be lower. Plus, it enables you to advertise your home with the offer of "below market financing," which may draw in more potential buyers.

Throw in some freebies

If you're planning to purchase new furniture, appliances, curtains or light fixtures for your new place and the ones at your current home are in good condition, try including them as value-adds in your purchase agreement. This works particularly well with first-time homebuyers who may not have much furniture of their own. Plus, leaving some things behind may even reduce the overall cost of your move.

If you don't want to part with any of your possessions or fixtures, another low-cost incentive is to include a home warranty. Offered through insurance companies for around $400 (depending on the extent of coverage), home warranties are contracts that cover the cost of replacing or repairing major appliances that break during the first year after the sale of the home. Plumbing, electrical and heating systems may also be included under the home warranty.

Other attractive incentives that may lure buyers in are gift certificates, golf club memberships, airline tickets and even cars. These types of incentives do cost money, but they can go a long way in helping to get your home listing noticed. You may also consider offering them to your real estate agent as an added incentive to finding a buyer.

Overcome objections or problems

A less glamorous but often equally effective tactic to help close a sale is to offer to rectify any concerns a potential buyer may have with your property. Something as simple as offering to repaint the front steps, re-sod the lawn or adjust the move-in date might push a potential buyer off the fence. You can either offer to make the improvements yourself or to include a renovation allowance in your purchase agreement.

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Evaluating Investment Property

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 02:25:00 +0000

Evaluating Investment Property
It's important to know how to evaluate real estate investment property before you sign on the dotted line.
Investment property is hot right now. Many entrepreneurs are trying their hand at making money through buying property. But the key to successful real estate investing is knowing if your purchase will work - and will turn a profit. No need to buy a crystal ball for that. Instead, know how to evaluate investment property in order for it to be a successful money making venture for you.

Finding investment property

You won't find investment property just by driving down the street, hoping a neon sign will point out the perfect property. You have to put some effort into the search.

Start with your most convenient tool, the Internet. Using real estate websites, such as www.RealEstate.com, you can search for investment properties from your couch. However, don't limit yourself to just the Internet. Some investment properties, especially in older or more rural areas, may be listed in more traditional sources such as newspapers.

You can also find investment property by getting in your car. Take a Sunday drive through areas that could be a good place to buy investment property. Hunt out for sale by owner signs. Keep a watch out for abandoned properties. The owners just may be open to an offer.

Also, don't shy away from using a real estate agent. You don't need to go-it-alone as a real estate investor. A real estate agent can provide very useful services. S/he can search for the properties for you, but more importantly, your agent can run comps. Once you find an investment property, your agent can pull up comparable properties and their recent sales. This serves as a guide to whether or not this investment property is a good price and if it has profit potential.

Evaluating investment property

Okay, so you found a piece of investment property. Next question, is it a good buy? While no one can predict the future, especially in real estate, there are a few ways to evaluate the property to determine if it will pay off.

First, take a quantitative look at the investment property. What are your expectations of the property as an investment? How do you expect it to perform? You need to define your expectations and check to be sure they're not unrealistic.

Next, look at the property with a qualitative eye. Is this realistic? Do you have the time and commitment necessary for this a project or endeavor? Is this something that you can actually do?

Finally, consider the rate of return. Any investment property is going to require money. You know that you have to actually purchase the property, but keep in mind that the money outflow doesn't stop there. Renovations cost a lot, as well as any upkeep and maintenance. Add up the money that you'll have to put into the investment property and compare that to the expected profits. That gives you the rate of return.

Take time in evaluating the property and be realistic. Know your limitations as far as the time you have to invest, your ability to renovate and manage the property, and your cash flow. You'll need all three of these areas to work in your favor to make an investment property profitable.

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Building vs. Buying a Home

noreply@blogger.com (Unknown) — Mon, 30 Jun 2008 02:25:00 +0000

Building vs. Buying a Home
Building a new construction home or buying a resale home which is right for you?
If you're on the market for a home, you may be asking yourself whether it makes more sense to build a new home or buy a resale home. If you are looking to buy a home, it's a big decision. The answer depends on what is important to you.

Advantages of an existing neighborhood

Established neighborhoods with lived-in homes have much to offer. If the neighborhood has been around long enough, trees may canopy the streets and the landscaping may be lush and mature. It is hard to beat the charm of an established neighborhood that is already lined with well-loved family homes. It's a place you can easily imagine walking the dog or strolling with the family.

Another advantage of a resale home is that you can move in relatively quickly. With a new construction home, you often have to wait for construction to be completed. It could be six months or more, depending on delays from the weather or supply shortages. A resale home is ready at closing, often just 30 to 45 days after making an offer. That beats having to stay in a cramped apartment waiting for your home to be built.

There is also convenience involved with buying an existing home. You won't have to put up with construction traffic through your neighborhood as other homes are completed and you already know what surrounds your home.

Also, a resale home can usually be purchased at a better value per square footage than new construction. You often get more house for the money with a resale home.

Advantages of a new construction home
Like the idea of being the first to live in a house, picking out its features for yourself? Then new construction may appeal to you. Although new neighborhoods may lack certain charms of an older neighborhood, in many ways new neighborhoods may be more desirable.

The location of a new neighborhood is one of its best features. New neighborhoods tend to go up on the outskirts of town, where the new growth occurs in a community. That often means new schools for all of these new residents. It can also mean new shopping centers to accommodate that growth, too. You'll often find big box stores convenient to new construction neighborhoods.

New neighborhoods also tend to have great amenities. Today, everyone wants workout facilities, playgrounds, open spaces, swimming pools, etc. in a neighborhood. A resale home may not be able to offer much of that, but new construction homes often feature these amenities. Many new neighborhoods often have social functions centered around its pool, open spaces, etc.

Love a nice lawn but hate spending your Saturdays taking care of it? Well, a trend in new construction communities is to have lawn maintenance provided with your homeowner's dues. No more getting up early on Saturday morning to beat the heat to mow.

New construction homes also offer a chance to be friendly to the environment. New construction must be built to abide by the latest regulations, but that also means that they are usually more energy efficient than a resale home. That could equal savings to you each month on your utility bills.

Weigh the pros and cons of buying a resale home vs. building a new construction home. Know your tastes and what is important to you when making this decision. Then, go out and buy the home that is right for you.

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