A Financial Plan for Your Home

Article From HouseLogic.com
 

Do you pay each home-related expense as it comes? If so, you're missing opportunities for upgrades, or much worse, heading into a financial crisis when a slew of surprise maintenance items hit. So take a holistic look at what it costs to operate your house and set up a home financial plan.

Use our home financial plan budget worksheet, and start by writing a list of expenses, such as:

          •Mortgage
 

          •Taxes
 

          •Home insurance, including liability
 

          •Repairs and maintenance, such as new furnace, roof, painting
 

          •Voluntary upgrades, such as a swimming pool, a premium range, a new powder room
 

What will you learn from this home financial plan weekend exercise?

          •How much you have to spend
 

          •How much you need to allot in the short- and long-term for necessary maintenance and voluntary improvements
 

With this newfound grip on your home's expenses, you can create a home financial plan that'll help you there for years with maximum enjoyment and minimum anxiety.

The mortgage: Pay it--and then some

Yup, you already shell out a lot for your mortgage, but can you pay more? Even a little extra each month can add up to an earlier payoff. Let's say you have $200,000 in outstanding principal and a 20-year fixed-rate mortgage at 5%. Your monthly payment is $1,319.91. But if you can manage to pay another $100 a month, you'll save $14,887 in interest.

Run the numbers yourself for your home financial plan.

Advantages of an early payoff, says Alan D. Kahn, a financial planner in Syosset, N.Y.:

          •Less debt means more money to spend later.
 

          •It feels darn good to own your house outright as soon as possible.
 

          •Minimal tax loss. Toward the tail end of the life of a loan most of your payment goes to the principal, not the interest, so you're getting only a small tax break anyway.
 

Of course, if you're still saving for retirement, put the 100 bucks elsewhere:

          •A retirement plan
 

          •An account for the inevitable home repairs
 

          •An account for discretionary improvements, which can raise your home's value
 

Insurance: Protect your property

Your vegetable garden is pointless without a fence to keep out rabbits; likewise, your home financial plan will come to nothing without an insurance "fence":

Homeowner's insurance. Basic coverage for your home and everything in it. The average cost is $636 per year but this varies widely by state.

Liability coverage. Protects you from a lawsuit if someone gets hurt on your property, for example. Your best bet: An umbrella policy. For about $300 a year you can by a typical $1 million policy.

Various disaster insurance policies. Optional policies cover flood, earthquake, and hurricane damage. As part of your home financial plan, you have to research to see what disaster coverage, if any; you need in your area, and what your standard policy already covers. For $540 a year you can buy flood insurance, for example.

Don't under- or overbuy insurance

For your basic policy, get homeowners insurance with full replacement coverage in case your house burns to the ground.

That sounds simple, but heads up on calculation. Remember that you own a house as well as the land on which it sits. So even though you bought your home for $300,000, it may cost only $100,000 to rebuild it. Your policy limits should reflect this. This difference will vary widely by region.

Another heads up: Don't make the common and potentially disastrous mistake of thinking that because your home has fallen in value you need less insurance. If you bought a $1.2 million townhouse in Florida during the boom, it's true it now may only sell for $600,000. But the replacement cost of the townhouse hasn't changed much, so you can't improve your home financial plan by cutting insurance costs that way.

Other ways to cut your insurance budget:

          •If you make structural improvements, such as adding storm shutters, your insurer may give you a break.
 

          •If you belong to certain groups, such as AARP or veterans' organizations, your premiums may be lower.
 

Repairs and renovations: By choice or necessity

You own a home, so you'll be spending money on everything from a new faucet to-surprise!-a new roof. Freddie Mac and other authorities say as part of your home financial plan, you should be prepared to spend 1% to 3% of the market value of the home annually on maintenance. To be extra-prudent, open a savings account and make regular payments until your account reaches 1% to 3% of your home's current value.

To help you budget:

Start with the inspection report you received when you bought the house. Did the inspector indicate that you would need a new roof in five years? A new furnace in 10?

Keep a log of your major appliances' age so you can estimate when they'll need replacing. Some estimated life spans:

          •Roof: 20-25 years
 

          •Heating systems: 15-20 years
 

          •Range/ovens: 11-15 years
 

          •Water heaters: 8- 13 years
 

Then get estimates on what replacements will cost and start saving.

Consider ongoing non-emergency maintenance, too. Do you live in New England? Price a snow blower and get bids from plow services.

Resist the siren call of the home equity loan to take care of everything. That just defeats your efforts to pay off the mortgage early.

Separate out what you want from what you need. A $50,000 kitchen remodel is nice, but you'll recoup only 76% of the project cost your home's resale, according to Remodeling magazine.

If you can afford to redo, go for it. Just don't confuse your necessary repairs (new oil furnace-about $4,000) with your discretionary upgrades (Viking range-$6,000 and up).

Taxes: (Almost) no way around them

Even if your lender handles your property taxes from an escrow account, you need to budget for them in your home financial plan. They creep up almost every year, it seems. Take responsibility for tracking the changes in your area: Look over past tax bills to get a sense of how quickly they've risen in the past.

Or if your lender handles escrow and you haven't saved your bills, ask for an accounting. The median annual property tax payment is $2,198, but that hides the enormous range in medians from state to state:

          •New Jersey: $6,320
 

          •New York: $3,622
 

          •California: $2,829
 

          •Alabama: $383
 

          •Louisiana: $188
 

You can generally deduct property taxes on your federal return. A tax pro can tell you how much of a tax break you'll get, to help you fine tune your home financial plan.

You may be able to reduce your tax burden by getting a reassessment. Do your homework first: Are comparable houses taxed less than yours? Ask the local assessor what formula is used to set tax rates. You can challenge the assessed value and get yourself a rollback.

If you're in a special group, you might get some help from state or local programs. Check around to see what's available in your area. New York State, for example, has its Star Program for giving senior citizens some relief from school-related property taxes.

Homeowners Insurance: Time for an Annual Check-Up

Article From HouseLogic.com

It's time for your annual check-up. The good news is that for this one, you won't have to don one of those revealing hospital gowns-and you may walk away with a healthier pocketbook. We're talking about a homeowners insurance check-up, a task you should complete once a year, ideally around renewal time. This will ensure your policy still provides the right level of coverage for your family, and your premium isn't costing you more than it should.

Remember, homeowners insurance is essential. The coverage is designed to protect your home and its contents, as well as shield you from liability for accidents and such on your property. Block out an hour of your time, call an insurance agent, and get answers to these three important questions.

What type of coverage do I have?

The most effective type of coverage is known as "replacement cost," which covers, up to your policy limits, what it would take today to rebuild your house and restore your belongings, says Jerry Oshinsky, a partner at Jenner & Block in Los Angeles who has represented homeowners in litigation against insurers.

"Extended" replacement cost coverage provides protection to your policy limit, say $500,000, and then perhaps another 20% of the cost after that. Percentages vary, but in this example you could recoup up to $600,000 on a $500,000 policy, assuming your losses reach that high. Extended coverage can compensate for any unanticipated expenses like spikes in construction costs between policy renewals. Now harder to find due to the industry shift toward extended replacement coverage, "full" or "guaranteed" replacement coverage covers an entire claim regardless of policy limits.

A less attractive alternative is "actual cash value" coverage that usually takes into account depreciation, the decrease in value due to age and wear. With this type of policy, the $2,000 flat-screen TV you bought two years ago will be worth hundreds of dollars less today in the eyes of your claims adjuster. Kevin Foley, an independent insurance broker in Milltown, N.J., favors replacement cost coverage unless you can save at least 25% on the premium for going with actual cash value coverage instead.

Even if you have replacement cost protection for your dwelling and personal property, don't assume everything is covered. Structures other than your home on your property-such as a detached garage or swimming pool-require separate coverage. So too do luxury items like jewelry, watches, and furs if you want full replacement cost because reimbursement for those items is typically capped.

How much coverage do I really need?

OK, now that you're clear on what type of policy you have, you need to figure out how much policy you truly require in dollar terms. Let's say you purchased your home five years ago and insured it for $200,000. Today, it's worth $225,000. Simply increasing your coverage to $225,000 may nonetheless leave you underinsured. Here's why.

The key to determining how much dwelling coverage you need isn't the value of your home but the money you'd have to pay to rebuild it from scratch, says Carlos Aguirre, an agent for Liberty Mutual Insurance in Arlington, Texas. Call your local contractors' or homebuilders' association and inquire about the average per-square-foot construction cost in your area. If it's $150 and your home is 2,000 square feet, then you should be insured for $300,000.

There's no rule of thumb for how much your homeowners insurance should cost. Insurers use numerous factors-age, education level, creditworthiness-to determine pricing, so the same policy could run you more than your neighbor. In recent years the average annual premium was $804. Oshinsky advises against scrimping on insurance because big increases in coverage probably cost less than you'd think. He recently purchased a liability policy that cost $250 for the first $1 million in coverage. Adding another $1 million increased his premiums only $12.50 more.

How can I lower my premiums?

The higher your deductible, the amount you pay out of pocket before coverage kicks in, the lower your premium. Landing on the appropriate deductible level requires remembering that insurance should cover major calamities, not minor incidents, says Foley, the independent insurance broker. Most homeowners should be able to absorb modest losses like a broken window pane or a hole in the drywall without filing claims. If you can, then you're wasting money with a $250 deductible.

Foley's rule: If you're a first-time homeowner and don't have a lot of savings, moving up to a $500 deductible will probably stretch your budget. However, if you live in a ritzy home and drive an expensive car, then you should be able to afford a $1,000 deductible. In Milltown, N.J., for example, the premium for a $200,000 home with a $500 deductible would be $736, according to Foley; moving up to a $1,000 deductible drops the annual premium to $672. That's $64 in savings.

 Every major insurer offers discounts to various groups, such as university employees or firefighters. Figure about 5%. Ask which affiliations would entitle you to a discount and how much. If an AARP membership would result in a $50 savings, pay the $16 dues and pocket the $36 difference. Many insurers also offer discounts ranging from 1% to 10% or more for installing protective devices like alarms and deadbolt locks, for going claim-free for an extended period, or for insuring both your car and your home with the same carrier.

What Your Remodeling Contract Should Say

Article From HouseLogic.com
 

The contract your general contractor offers is a good starting point--for the contractor. You must edit the document so it also shields you.

Hiring a lawyer to review and make changes to a contract is a good idea, especially since each state has its own construction contract statutes. But an attorney review will cost at least $500, plus $1,000 to $1,500 in additional fees to make wholesale revisions to a flawed contract.

If you'd rather invest your money in Italian tile and other goodies, learn how to read and rejigger construction contracts.

The essential job of a construction contract is to spell out the project's "scope of work." This is the document you and your contractor will consult throughout the job, so make sure it's as detailed as possible.

Some states require the contractor to write his license number on the document and to include a clause that allows you to rescind within a certain time period after signing. Check your state laws to learn what your construction contract should contain.

 A thorough contract is filled with numbers and stipulations that will take several hours to review, so leave enough time to review it before signing. The contract should state:

          •Contractor will secure all necessary permits and approvals
 

          •Where and which walls will be moved
 

          •Payment schedule
 

          •Work hours
 

The contract needn't contain product specs on its pages: It may refer to the contractor's attached, itemized bid.

Set a payment schedule

The contract is your summary of how much and when you should pay for completed work. Payments should be linked to work milestones, such as when the foundation, rough plumbing, and electricity are completed. Here are some general guidelines:

          •First payment should be no more than 10% of the total job.
 

          •Final payment should be enough money--at least a few thousand dollars--to make sure the contractor returns to correct niggling details.
 

          •Keep back enough money to hire someone else to finish the work if things go south with your contractor.
 

Schedule start and end dates

A boilerplate contract rarely says when the job will begin and end, so make sure you add those details to the document.

Look at these dates as a timeframe, not a minute-by-minute promise: Delays happen and an eight-week job wraps up in nine. But if the project drags on for months, written start and end dates will help make--or defend--your case in court.

Address change orders

Make sure the contract states that any changes that will affect the cost of the job must be priced in writing and countersigned by both the contractor and home owner before that work commences. This line ensures that offhand discussions don't result in unforeseen additional costs
Written change orders also help you update your budget and resist the frequent urge to expand the job.

Research your arbitration options

Many remodel contracts contain a clause that stipulates that an arbitrator, rather than a judge, will resolve disputes. This clause can save you time and money because a court fight is expensive, even if you win.

Problems arise, however, when the contractor names a specific arbitrator.

"There are some big, national, well-respected arbitrators, like the American Arbitration Association, says Tampa, Fla., attorney George Meyer, chairman of the American Bar Association's Forum on the Construction Industry. "And there are other questionable arbitrators that always side with the contractor."

Before you sign the contract, research the arbitrator named. If you don't like what you find out, insist on another.

Turn down contractor's warranty

Agreeing to a warranty may limit your contractor's liability and cost you money in the end.

Warranties often are loaded with exclusions and time limits that favor the contractor, not you. Frequently, state statues provide better protection, which you forfeit if you accept less from the contractor. Unless a lawyer reviews the contract, strike the warranty clause.
 

7 Smart Strategies for Kitchen Remodeling

Article From HouseLogic.com
 

Home owners spend more money on kitchen remodeling than on any other home improvement project, according to the Home Improvement Research Institute. And with good reason. Kitchens are the hub of home life, and a source of pride.

A significant portion of kitchen remodeling costs may be recovered by the value the project brings to your home. Kitchen remodels in the $50,000 to $60,000 range recoup about 66% of the initial project cost at the home's resale, according to recent data from Remodeling Magazine's Cost vs. Value Report (http://www.remodeling.hw.net/2011/costvsvalue/national.aspx).

A minor kitchen remodel of about $20,000 does even better, returning more than 72% of your investment.

To make sure you maximize your return, follow these seven smart kitchen remodeling strategies that will help you come up with great kitchen design ideas (http://www.houselogic.com/photos/kitchens/10-tips-give-your-kitchen-low-cost-facelift/).

1. Establish priorities for a kitchen remodel
 

The National Kitchen and Bath Association (NKBA) recommends spending at least six months planning your kitchen remodeling project. That way, you won't be tempted to change your mind during construction, create change orders, and inflate construction costs. Here are planning points to cover:

          •Cooking traffic patterns: A walkway through the kitchen should be at least 36 inches wide. Work aisles should be a minimum of 42 inches wide and at least 48 inches wide for households with multiple cooks.
 

          •Child safety: Avoid sharp, square corners on countertops, and make sure microwave ovens are installed at the proper height-3 inches below the shoulder of the primary user but not more than 54 inches from the floor.
 

          •Outside access: If you want easy access to entertaining areas, such as a deck or patio, factor a new exterior door into your plans.
 

A professional designer can simplify your kitchen remodel. Pros help make style decisions, foresee potential problems, and schedule contractors. Expect fees around $50 to $150 per hour, or 5% to 15% of the total cost of the project.

2. Keep the same footprint

No matter the size and scope of your kitchen remodel, you can protect your budget by maintaining the same footprint: Keep the walls, locate new plumbing fixtures near existing plumbing pipes, and forget bump-outs.

Not only will you save on demolition and reconstruction costs, you'll cut the amount of dust and debris your project generates.

3. Get real about appliances

It's easy to get carried away during your kitchen remodeling project. A six-burner commercial-grade range and luxury-brand refrigerator may make eye-catching centerpieces, but they may not fit your cooking needs or lifestyle.

High-priced appliances are worth the investment if you're an exceptional cook. Otherwise, save thousands with trusted brands that receive high marks at consumer review websites, like www.ePinions.com and www.amazon.com, and resources such as Consumer Reports.

4. Light your way

Good kitchen lighting helps you work safely and efficiently.

          •Install task lighting, such as recessed or track lights, over sinks and food prep areas; assign at least two fixtures per task to eliminate shadows. Under-cabinet lights

-illuminate cleanup and are great for reading cookbooks. Pendant lights over counters bring the light source close to work surfaces.
 

          •Ambient lighting includes flush-mounted ceiling fixtures, wall sconces, and track lights. Pair dimmer switches with ambient lighting to control intensity and mood.
 

5. Be quality conscious

Functionality and durability should be top priorities during kitchen remodeling. Resist low-quality bargains, and choose products that combine low maintenance with long warranty periods. Solid-surface countertops, for instance, may cost a little more, but with the proper care, they'll look great for a long time.

If you're planning on moving soon, products with substantial warranties are a selling advantage.

"Individual upgrades don't necessarily give you a 100% return," says Frank Gregoire, a real estate appraiser in St. Petersburg, Fla. "But they can give you an edge when it comes time to market your home."

6. Add storage, not space

          •Install cabinets that reach the ceiling: They may cost more--and you might need a stepladder--but you'll gain valuable storage space for Christmas platters and other once-a-year items. In addition, you won't have to dust cabinet tops.
 

          •Hang it up: Mount small shelving units on unused wall areas and inside cabinet doors; hang stock pots and large skillets on a ceiling-mounted rack; and add hooks to the backs of closet doors for aprons, brooms, and mops.
 

7. Communicate early and often

Establishing a good rapport with your project manager or construction team is essential for staying on budget. To keep the sweetness in your project:

          •Drop by the project during work hours: Your presence broadcasts your commitment to quality.
 

          •Establish a communication routine: Hang a message board on site where you and the project manager can leave daily communiquéés. Give your email address and cell phone number to subs and team leaders.
 

          •Set house rules: Be clear about smoking, boom box noise levels, available bathrooms, and appropriate parking.
 

7 Ways to Have an Eco-Friendly Christmas

Article From HouseLogic.com
 

'Tis the season to consume and decorate, which can leave your bank statement and the planet a little beat up. Celebrate an eco-friendly Christmas and nip your seasonal costs in the bud:

1. Light up with LEDs. LED lights use at least 75% less energy than conventional holiday decorations, according to Energy Star. That saves the average family about $50 on energy bills during the holiday, says Avital Binshtock of the Sierra Club in San Francisco. Or douse the lights and use soy-based or beeswax candles; their emissions are cleaner than those from paraffin candles.

2. Make your own decorations. Save money and keep your kids busy by hand-crafting eco-friendly decor-strings of popcorn or pine cones-instead of buying mass-produced holiday flare.

3. Wrap with stuff you already have. Get creative with reusable shopping bags, magazines, and newspapers instead of using wrapping paper. Even gift bags that recipients can pass on make for a more eco-friendly Christmas, says Brian Clark Howard of The Daily Green.

4. Buy a real tree. Real Christmas trees, wreaths, and garlands are renewable and recyclable, Binshtock says. Real trees mean an annual cost, but that may be a wash if you tend to buy a faux tree several times a decade.

5. Say "no" to glossy paper decorations and wrapping. Shininess and color come from chemicals not easily recycled. Alternative: Decorations or wrapping papers that use soy inks or natural dyes.

6. Package it in cardboard. Plain, corrugated cardboard is good for packaging because it's easy to recycle. If plastic factors into your holiday plans, look for No. 1 and No. 2 plastics, the easiest to recycle, says Ben Champion, director of sustainability for Kansas State University.

7. Create precious moments that don't leave a trail of debris.

          •Do something experiential like taking the family to a museum.
 

          •Give a gift certificate or donation to an organization meaningful to the recipient in the receiver's name. Happy holidays to you: No sales tax.
 

          •Buy fair-trade, organic, or locally made products, which are often one-of-a-kind and may not need as much packaging and shipping, Champion says.
 

Hiring an HOA Manager: What to Consider

Article From HouseLogic.com
 

There comes a point in the lives of some homeowners associations when volunteers can no longer do it all. Finding a firm you can trust to take on all or some of the tasks involved in running an HOA is like conducting a job interview. If you do your homework, you'll know what to ask and what to look for in the candidates. Here are 10 tips for picking the right HOA management firm.

1. Know what you need. Start your search by making a list of what you'd like the management company to do. You can put anything on the list, as long as the HOA board keeps the responsibility to oversee the management company's actions. Knowing what your HOA needs will help you focus your search.

 2. Choose a person or committee to do the preliminary search. Expect to devote about 20 hours to choosing a company, says Elizabeth White, an attorney at LeClairRyan in Williamsburg, Va., who represents community associations.

3. Ask if your state requires some level of manager licensing. If so, seek out companies and candidates with the proper credentials. "We're finding a lot of management companies in states that require licensing (that) haven't gotten the license," White says. States that require licenses or registration include Alaska, Connecticut, the District of Columbia, Florida, Georgia, Nevada, and Virginia. Starting in 2011, Illinois will require licenses.

4. Consider a company certified by the Community Associations Institute. This Alexandria, Va.-based organization has a range of certifications for companies and individual managers.

5. Be sure the company performs criminal background checks on its employees, especially its managers. Do your own background checks, too. Check references and do an onsite visit. "Speak to board members of associations managed by that company," suggests David Regenbaum, CEO of Association Management Inc. in Houston. "Visit the company's office and get a sense of its business philosophy. Some are merely bookkeeping and secretarial services. Others are fully committed and involved in the community. Make sure you select the company that's appropriate to your needs."

6. Investigate the firm's bonding and insurance. Your state law and governing documents may spell out minimum standards for both, Taylor says. But a management company should also have liability insurance and workers' compensation insurance covering its employees. Ask for a copy of the company's insurance certificate, recommends Robert White, managing director of KW Property Management & Consulting in Miami. His firm carries a $2 million liability policy, plus a $10 million umbrella policy.

7. Read the fine print. It's the rare management company that works without a signed contract. "It goes without saying," Elizabeth White says, "that you should never sign the management company's form contract." Have your association lawyer suggest changes.

8. Try to negotiate for a one-year contract rather than the three-year contracts many companies seek. Why commit to a three-year contract if you can negotiate a one-year contract with the option to renew at one-year intervals for two years at the same price?

9. Scrutinize termination provisions. "As a manager, I don't mind receiving 30 days' notice of termination," Regenbaum says. "But you shouldn't allow the management company to give you 30 days' notice because it's difficult to scramble to find another manager in that time." You need 60 to 90 days to repeat the search process if things don't work out with your current management company.

10. Ask for a complete fee schedule, so you can compare competing contracts. Big costs may be buried in extra fees. For example, a company may provide for a manager to attend one meeting every six months and charge $100 per hour after that. It may also charge separately for postage and to manage a vote on and payment collection for special assessments. The lesson, according to Elizabeth White: Bids that come in significantly lower than others should be red flags.

7 Steps to a Stress-free Home Closing

Article From BuyAndSell.HouseLogic.com
 

You've already cleared several hurdles by finding the right home, negotiating the best price, and securing favorable financing. The last obstacle on your homebuying track is the closing, which can be both tedious and tense. By knowing what to expect and doing some legwork, you can put your closing behind you. These seven steps will guide you through a smooth closing.

1. Set a closing date

Your real estate agent will work with the seller's agent and title company to schedule your closing date. Be sure it meshes with the end of your lease or the sale of your existing home and a time when you'll able to play hooky from work. If you're tight on cash, schedule your closing for the end of the month because that's when you'll have to pay the least amount of interest at the closing table.

2. Gather your funds

You may be required to bring funds to the closing. If they're not easily accessible, arrange early to transfer them to a liquid account to avoid last-minute problems. If the title company requires the funds in the form of a cashier's check, also leave time to stop by the bank and pick one up.

3. Purchase title insurance

Title insurance protects the policyholder against trouble with a home's title. Your lender will insist that you purchase a policy to protect it. You should also consider purchasing what's called an owner's title policy from the same insurer, which protects you from fraudulent claims against your ownership and errors in earlier sales. In some areas, sellers traditionally pay for the buyer's title policy. FreeTitleQuote.com If your home has been sold within the past few years, ask the prior owner's insurance company for a reissue discount.

4. Line up homeowners insurance

Get quotes and compare policies to be sure coverage will be in effect by your closing date. An annual policy should run $500-$1,000, depending on your home's size, age, and amenities. If you live in an area where natural disasters occur, like earthquakes, floods, or hurricanes, you'll need separate insurance to protect your home.

5. Review your good-faith estimate and HUD-1 settlement sheet

Your lender must provide a good-faith estimate of your closing fees. Some of those fees can't change, and others can rise by 10%. Before you go to the closing, read your good-faith estimate, compare it with your HUD-1 settlement statement, and question any fees that increased.

6. Do a walk-through

Schedule an appointment to walk through the home one last time just before your closing. Make sure repairs you requested have been made, no major changes have occurred since you last viewed the property, and that the sellers left anything they agreed to leave and took all their belongings.

Also test electronics and appliances, such as the doorbell, dishwasher, washer and dryer, and oven, to ensure they're functioning properly. Do the same with the hot water heater and heating and air conditioning systems. Walk the yard to be sure no plants or shrubs have been removed.

7. Resolve issues identified in your walk-through

If your walk-through uncovers problems, in some states you can delay the closing until the seller corrects them. But that's often not feasible because your lease is probably over and you've already scheduled movers. Another option is to negotiate a discount to your sales price to cover the cost of the work needed. If the air conditioning is on the fritz and a contractor says the repair will cost $500, ask that the sales price be reduced by that amount. If you make that request at closing, however, be ready for a delay while the title company redoes the paperwork.

A third option: Have the title company hold a portion of the seller's proceeds in escrow until the dispute is resolved. Once that happens, the funds will be released to you or the seller, depending on the outcome.

How to Assess the Real Cost of a Fixer-Upper House

Article From BuyAndSell.HouseLogic.com
 

Trying to decide whether to buy a fixer-upper house? Follow these seven steps, and you'll know how much you can afford, how much to offer, and whether a fixer-upper house is right for you.

1. Decide what you can do yourself

TV remodeling shows make home improvement work look like a snap. In the real world, attempting a difficult remodeling job that you don't know how to do will take longer than you think and can lead to less-than-professional results that won't increase the value of your fixer-upper house.

          •Do you really have the skills to do it? Some tasks, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by amateurs.
 

          •Do you really have the time and desire to do it? Can you take time off work to renovate your fixer-upper house? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends?
 

2. Price the cost of repairs and remodeling before you make an offer

          •Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks he's going to do.
 

          •If you're doing the work yourself, price the supplies.
 

          •Either way, tack on 10% to 20% to cover unforeseen problems that often arise with a fixer-upper house.
 

3. Check permit costs

          •Ask local officials if the work you're going to do requires a permit and how much that permit costs. Doing work without a permit may save money, but it'll cause problems when you resell your home.
 

          •Decide if you want to get the permits yourself or have the contractor arrange for them. Getting permits can be time-consuming and frustrating. Inspectors may force you to do additional work, or change the way you want to do a project, before they give you the permit.
 

          •Factor the time and aggravation of permits into your plans.
 

4. Doublecheck pricing on structural work

If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you've uncovered and conservatively budgeted for the full extent of the problems.

Get written estimates for repairs before you commit to buying a home with structural issues.

Don't purchase a home that needs major structural work unless:

          •You're getting it at a steep discount
 

          •You're sure you've uncovered the extent of the problem
 

          •You know the problem can be fixed
 

          •You have a binding written estimate for the repairs
 

5. Check the cost of financing

Be sure you have enough money for a downpayment, closing costs, and repairs without draining your savings.

If you're planning to fund the repairs with a home equity or home improvement loan:

          •Get yourself pre-approved for both loans before you make an offer.
 

          •Make the deal contingent on getting both the purchase money loan and the renovation money loan, so you're not forced to close the sale when you have no loan to fix the house.
 

          •Consider the Federal Housing Administration's Section 203(k) program (http://www.hud.gov/offices/hsg/sfh/203k/203kmenu.cfm), which is designed to help home owners who are purchasing or refinancing a home that needs rehabilitation. The program wraps the purchase/refinance and rehabilitation costs into a single mortgage. To qualify for the loan, the total value of the property must fall within the FHA mortgage limit for your area, as with other FHA loans. A streamlined 203(k) program provides an additional amount for rehabilitation, up to $35,000, on top of an existing mortgage. It's a simpler process than obtaining the standard 203(k).
 

6. Calculate your fair purchase offer

Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs.

For example: Your target fixer-upper house has a 1960s kitchen, metallic wallpaper, shag carpet, and high levels of radon in the basement.

Your comparison house, in the same subdivision, sold last month for $200,000. That house had a newer kitchen, no wallpaper, was recently recarpeted, and has a radon mitigation system in its basement.

The cost to remodel the kitchen, remove the wallpaper, carpet the house, and put in a radon mitigation system is $40,000. Your bid for the house should be $160,000.

Ask your real estate agent if it's a good idea to share your cost estimates with the sellers, to prove your offer is fair.

 7. Include inspection contingencies in your offer

Don't rely on your friends or your contractor to eyeball your fixer-upper house. Hire pros to do common inspections like:

          •Home inspection. This is key in a fixer-upper assessment. The home inspector will uncover hidden issues in need of replacement or repair. You may know you want to replace those 1970s kitchen cabinets, but the home inspector has a meter that will detect the water leak behind them.
 

          •Radon, mold, lead-based paint
 

          •Septic and well
 

          •Pest
 

Most home inspection contingencies let you go back to the sellers and ask them to do the repairs, or give you cash at closing to pay for the repairs. The seller can also opt to simply back out of the deal, as can you, if the inspection turns up something you don't want to deal with.

If that happens, this isn't the right fixer-upper house for you. Go back to the top of this list and start again.

 Other web resources

This Old House remodeling cost estimates (http://www.oldhouseweb.com/how-to-advice/estimated-remodeling-and-repair-costs.shtml)

G.M. Filisko is an attorney and award-winning writer whose parents bought and renovated a fixer-upper when she was a teen. A regular contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

5 Reasons for a Mortgage Refinance Other Than Lowering Your Payment

Article From HouseLogic.com
 

Naturally, if you're paying 6% for your mortgage and you can refinance at 5%, you're gonna do it. Although cutting your monthly payment remains an important motive, there are at least five other reasons to consider a mortgage refinance, for long-term savings and convenience.

1. Change your mortgage term

If you decrease the term of your mortgage in a refinance by going from a 30-year to a 15-year, you'll pay a lower interest rate and shorten your total interest costs. You'll build home equity more quickly, and pay off your loan sooner, even though your monthly payments go up.

2. Move from an adjustable rate to a fixed rate

ARMs offer low introductory rates, but they also offer long periods of uncertainty that make it hard to budget. It makes sense in a mortgage refinance to go from an ARM to a fixed-rate loan during a low-interest rate environment. You'll get emotional security and your rate won't fluctuate with changing economic conditions.

3. Take out cash

With a cash-out mortgage refinance, you can turn an intangible asset-accumulated home equity-into a tangible one-cash. It makes sense for a project that will generate long-term benefits, like a home improvement or funding a child's college education. However, don't do it for frivolous reasons. Unless you're extremely disciplined, you could find yourself in even deeper debt.

4. Consolidate two mortgages

When interest rates are low, a mortgage refinance lets you consolidate your main mortgage and an outstanding home equity loan to realize a lower overall monthly payment. Plus, you'll have only one mortgage payment to make each month.

5. Recover from divorce

If your home is jointly owned with your soon-to-be ex-spouse, a mortgage refinance will turn a joint obligation into the responsibility of the person keeping the home. Nothing is more frustrating than tracking down a former spouse who doesn't keep up with his or her end of the mortgage payment.

Lay the groundwork

If one of these reasons resonates with you, contact your current lender to see if it'll offer you preferred rates or reduced closing costs on a mortgage refinance. But don't assume the current lender is best: Leave no stone unturned by searching for lenders online and calling community banks and local credit unions.

No matter which lender you choose, a mortgage refinance for the right reasons can save you lots of money-and that's the best reason of all.

Essential Heating System Maintenance

Article From HouseLogic.com
 

"If it ain't broke, don't fix it" is usually a good rule-except when it comes to your heating system. Even if it's humming along just fine, having a technician take it apart once a year to clean the lines and filters and give it a thorough inspection is absolutely essential. Regular servicing reduces the risk of breakdowns and prolongs the unit's life. Plus, it saves you money: For every year of maintenance you skip, energy bills jump 5% to 10% because of reduced efficiency. Here's the lowdown on heating system maintenance.

Who does the job?

The simplest way to get the work done is to hire your fuel company to do it. Oil companies and gas utilities usually provide this service, or you can hire the contractor who installed the equipment. Also, some plumbers handle heating systems.

What is involved?

The technician will clean soot and corrosion out of the combustion chamber where the fuel is burned, and check it for leaks or damage. He'll inspect the flue pipe for open seams, clogs, or corrosion that could cause carbon monoxide to backdraft into the house. He'll replace the filters on oil and forced-air systems. Finally, he'll test the exhaust from your cleaned machine and use the information to adjust the burner for maximum efficiency.

How much will it cost?

You'll pay between $100 and $180 for the service, depending largely on whether you have a gas system, which is easier to maintain, or oil, which requires a fair amount of soot removal. Usually the cost is covered by an annual maintenance contract that also provides 24-hour emergency service. While the technician is there, he should also service your water heater, assuming it has a separate oil or gas burner.

When is the best time to do the work?

Ideally, have your system tuned up in the fall so it's in top shape for the start of the heating season. Of course, that's when technicians are the busiest, so if you can't do it when you want, do it when you can-as long as your system is serviced once a year. And don't expect your provider to call to remind you that it's time. Even if you subscribe to an annual service plan, you still need to call to make an appointment. Call in the spring or summer to be sure of getting on the schedule in the fall.

7 Tips for a Profitable Home Closing

Article From BuyAndSell.HouseLogic.com
 

When you're ready to close on the sale of your home and move to your new home, you may be so close to the finish line that you coast, thinking there's nothing left for you to do. Not so fast. It's easy to waste a few dollars here and for mistakes to creep into your closing documents there, all adding up to a bundle of lost profit. Spot money-losing problems with these seven tips.

1. Take services out of your name

Avoid a dispute with the buyers after closing over things like fees for the cable service you forgot to discontinue. Contact every utility and service provider to end or transfer service to your new address as of the closing date.

If you're on an automatic-fill schedule for heating oil or propane, don't pay for a pre-closing refill that provides free fuel for the new owner. Contact your insurer to terminate coverage on your old home, get coverage on your new home, and ask whether you're entitled to a refund of prepaid premium.

2. Spread the word on your change of address

Provide the post office with your forwarding address two to four weeks before the closing. Also notify credit card companies, publication subscription departments, friends and family, and your financial institutions of your new address.

3. Manage the movers

Scrutinize your moving company's estimate. If you're making a long-distance move, which is often billed according to weight, note the weight of your property and watch so the movers don't use excessive padding to boost the weight. Also check with your homeowners insurer about coverage for your move. Usually movers cover only what they pack.

4. Do the settlement math

Title company employees are only human, so they can make mistakes. The day before your closing, check the math on your HUD-1 Settlement Statement.

5. Review charges on your settlement statement

Are all mortgages being paid off, and are the payoff amounts correct? If your real estate agent promised you extras-such as a discounted commission or a home warranty policy-make sure that's included. Also check whether your real estate agent or title company added fees that weren't disclosed earlier. If any party suggests leaving items off the settlement statement, consult a lawyer about whether that might expose you to legal risk.

6. Search for missing credits

Be sure the settlement company properly credited you for prepaid expenses, such as property taxes and homeowners association fees, if applicable. If you've prepaid taxes for the year, you're entitled to a credit for the time you no longer own the home. Have you been credited for heating oil or propane left in the tank?

7. Don't leave money in escrow

End your home sale closing with nothing unresolved. Make sure the title company releases money already held in escrow for you, and avoid leaving sales proceeds in a new escrow to be dickered over later.

Other web resources

 (http://www.realtor.com/home-finance/sellers-basics/closing.aspx)

Closing costs explained (http://www.homeclosing101.org/costs.cfm)

G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

How to Inspect Windows, Doors to Stop Air and Water Leaks

Article From HouseLogic.com
 

Take a look at windows, doors and skylights to stop air leaks, foil water drips, and detect the gaps and rot that let the outside in and the inside out. You can perform a quick check with a home air pressure test, or do a detailed inspection. Luckily, these inspections are easy to do. Here's how to examine the barriers that should stand between you and the elements.

Big picture inspection

A home air pressure test sucks air into the house to reveal air leaks that increase your energy bills. To inspect windows and other openings:

          •Seal the house by locking all doors, windows, skylights, and shutting all vents.
 

          •Close all dampers and vents.
 

          •Turn on all kitchen and bath exhaust fans.
 

          •Pass a burning incense stick along all openings--windows, doors, fireplaces, outlets--to pinpoint air rushing in from the outside.
 

Windows and the outside world

Air and water can seep into closed widows from gaps and rot in frames, deteriorating caulking, cracked glass, and closures that don't fully close.

To stop air leaks, pinpoint window problems.

          •Give a little shake. If they rattle, frames are not secure, so heat and air conditioning can leak out and rain can seep in. Some caulk and a few nails into surrounding framing will fix this.
 

          •Look deep. If you can see the outside from around--not through--the window, you've got gaps. Stop air leaks by caulking and weather stripping around frames.
 

          •Inspect window panes for cracks.
 

          •Check locks. Make sure double-hung windows slide smoothly up and down. If not, run a knife around the frame and sash to loosen any dried paint. Tighten cranks on casement windows and check that top locks fully grab latches.
 

Door doubts

          •Check doors for cracks that weaken their ability to stop air leaks and water seeps.
 

          •Inspect weather stripping for peels and gaps.
 

          •Make sure hinges are tight and doors fit securely in their thresholds.
 

Inspect skylights

Brown stains on walls under a skylight are telltale signs that water is invading and air is escaping. Cut a small hole in the stained drywall to check for wetness, which would indicate rot, or gaps in the skylight.

To investigate skylight leaks, carefully climb on the roof and look for the following:

          •Open seams between flashing or shingles.
 

          •Shingle debris that allows water to collect on roofs.
 

          •Failed and/or cracked cement patches put down the last time the skylight leaked.

MORE FROM HOUSELOGIC

http://www.houselogic.com/home-advice/insulation/basement-air-leaks/)

(http://www.houselogic.com/home-advice/saving-energy/do-it-yourself-energy-audit/)

OTHER WEB RESOURCES

(http://www.houselogic.com/home-advice/windows-doors/window-replacement-tax-credit/)

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
Copyright 2011. All rights reserved.

Article From Houselogic.com

By: G. M. Filisko

Published: March 11, 2010

When you're evaluating how much home you can afford, make sure you factor in the tax advantages of homeownership.

Owning your home not only allows you to build wealth through appreciation, but it can also reduce the amount of income tax you pay every year.

Here are seven tax benefits for homeowners.

1. HOMEBUYER TAX CREDITS

If you purchase your first home before April 30, 2010, you're entitled to a tax credit of up to $8,000. If you currently own a home, but sell it to purchase another home before April 30, 2010, you're eligible for a federal tax credit of up to $6,500.

2. DEDUCTIONS FOR LOAN FEES

Typically, you can deduct the "prepaid interest" you paid when you got your mortgage loan. That includes points, loan origination fees, and loan discount fees listed on your settlement statement, even if the seller paid those fees for you. Each time you refinance your home, you can deduct prepaid interest fees.

However, you must meet certain requirements to take the prepaid interest deductions when you purchase or refinance your home. Check with your accountant to be sure you're following the rules.

3. PROPERTY TAX DEDUCTIONS

In the year you purchase your home, you're entitled to deduct the real estate taxes you paid at the closing table. You can continue to deduct the property taxes you pay each year.

4. THE MORTGAGE INTEREST DEDUCTION

Every year, you can deduct the amount of interest and late charges you pay on your mortgage and home equity loans, though there are limitations. If you're required to purchase private mortgage insurance (PMI) because you made a downpayment of less than 20% on your home, you can also deduct those premiums as mortgage interest expenses.

5. HOME OFFICE EXPENSES

If you have a home office you use only for business, you may be eligible to deduct the prorated costs of your mortgage, insurance, and other expenses related to that space. The government scrutinizes home-office deductions closely. Be sure you're entitled to the deductions before claiming them.

6. THE COSTS OF SELLING YOUR HOME

In the year you sell your home, you can deduct the costs of selling it, including real estate commissions, title insurance, legal fees, advertising, administrative costs, and inspection fees. You can also deduct decorating or repair costs you incur in the 90 days before you sell your home.

7. THE GAIN ON YOUR HOME

If you lived in your home for at least two of the previous five years before you sell it, the government lets you to take up to $250,000 of profit on the sale of your home tax free. That amount is doubled for married couples. This deduction isn't available on rental or second homes.

The government also allows you to subtract from your home sale profit any amounts you spend on improvements, such as window replacement, siding, or a kitchen remodel. Those deductions are in addition to the tax credits you can receive in 2010 for making energy-saving upgrades. Money invested for routine maintenance and repairs doesn't count.

This article includes general information about tax laws and consequences, but is not intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws vary by jurisdiction.

MORE FROM HOUSELOGIC

More on the mortgage interest deduction
(http://www.houselogic.com/articles/mortgage-interest-deduction-vital-housing-market/)
Claiming your homebuyer tax credit(http://www.houselogic.com/articles/claim-your-homebuyer-tax-credits/)

Tips to use when preparing your return(http://www.houselogic.com/articles/tax-tips-homeowners-preparing-2009-returns/)

OTHER WEB RESOURCES

More information on homeownership deductions(http://www.nolo.com/legal-encyclopedia/article-29693.html)

IRS information on the mortgage interest deduction(http://www.irs.gov/pub/irs-pdf/p936.pdf)
G.M. Filisko is an attorney and award-winning writer who's enjoyed the tax advantages of homeownership for more than 20 years. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
Copyright 2010. All rights reserved.

Article From Houselogic.com

By: G. M. Filisko

Published: February 25, 2010

Here's how to clean up your credit so you get the least-expensive home loan possible.

Getting the loan that suits your situation at the best possible price and terms makes homebuying easier and more affordable. Here are seven ways to boost your credit score so you can do just that.

1. KNOW YOUR CREDIT SCORE

Credit scores range from 300 to 850, and the higher, the better. They're based on whether you've paid personal loans, car loans, credit cards, and other debt in full and on time in the past. You'll need a score of at least 620 to qualify for a home loan and 740 to get the best interest rates and terms.
You're entitled to a free copy of your credit report annually from each of the major credit-reporting bureaus, Equifax(http://www.equifax.com), Experian(http://www.experian.com), and TransUnion(http://www.transunion.com). Access all three versions of your credit report at www.annualcreditreport.com(http://www.annualcreditreport.com). Review them to ensure the information is accurate.

2. CORRECT ERRORS ON YOUR CREDIT REPORT

If you find mistakes on your credit report, write a letter to the credit-reporting agency explaining why you believe there's an error. Send documents that support your case, and ask that the error be corrected or removed. Also write to the company, or debt collector, that reported the incorrect information to dispute the information, and ask to be copied on any materials sent to credit-reporting agencies.

3. PAY EVERY BILL ON TIME

You may be surprised at the damage even a few late payments will have on your credit score. The easiest way to make a big difference in your credit score without altering your spending habits is to diligently pay all your bills on time. You'll also save money because you'll keep the money you've been spending on late fees. Credit card or mortgage companies probably won't report minor late payments, those less than 30 days overdue, but you'll still have to pay late fees.

4. USE CREDIT CAREFULLY

Another good way to boost your credit score is to pay your credit card bills in full every month. If you can't do that, pay as much over your required minimum payment as possible to begin whittling away the debt. Stop using your credit cards to keep your balances from increasing, and transfer balances from high-interest credit cards to lower-interest cards.

5. TAKE CARE WITH THE LENGTH OF YOUR CREDIT

Credit rating agencies also consider the length of your credit history. If you've had a credit card for a long time and managed it responsibly, that works in your favor. However, opening several new credit cards at once can lower the average age of your accounts, which pushes down your score. Likewise, closing credit card accounts lowers your available credit, so keep credit cards open even if you're not using them.

6. DON'T USE ALL THE CREDIT YOU'RE OFFERED

Credit scores are also based on how much credit you use compared with how much you're offered. Using $1,000 of available credit will give you a lower score than having $1,000 of available credit and using $100 of it. Occasionally opening new lines of credit can boost your available credit, which also affects your score positively.

7. BE PATIENT

It can take time for your credit score to climb once you've begun working to improve it. Keep at it because the more distance you put between your spotty payment history and your current good payment record, the less damage you'll do to your credit score.

OTHER WEB RESOURCES

How FICO scores are calculated(http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx)

Answers to frequently asked credit report questions(https://www.annualcreditreport.com/cra/helpfaq)
G.M. Filisko is an attorney and award-winning writer who keeps a close eye on her credit scores. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
Copyright 2010. All rights reserved.

Article From Houselogic.com

By: G. M. Filisko

Published: April 09, 2010

Knowing how to read your good-faith estimate can help you save money on your home loan.

When you're shopping for a mortgage loan, it's sometimes hard to understand the jargon lenders use in the good-faith estimate explaining the costs and fees you'll pay when taking out a mortgage.

When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you'll pay, as well as other loan terms. Here are five tips for using the new three-page form to your advantage.

When you apply for a mortgage, the lender has three days to give you a good-faith estimate of the fees and interest rate you'll pay, as well as other loan terms. Here are five tips for using the new three-page form to your advantage.

1. KNOW WHICH FEES CAN INCREASE AND BY HOW MUCH

In the past, lenders provided an estimate of the costs involved in getting your home loan, and if those costs rose by the time you closed on your home, tough luck. The good-faith estimate shows some fees the lender can't change, like the loan origination fee that you pay to get a certain interest rate (commonly called points) and transfer costs.

The form also lists the charges that can increase by up to 10%, like some title company fees and local government recording fees. The lender must cover any increase over that amount.

Finally, the good-faith estimate lists the fees that can change without any limit, such as daily interest charges.

2. LOOK FOR ANSWERS TO BASIC LOAN QUESTIONS

In the summary section, lenders explain your loan's terms in simple language. Can your interest rate rise? If so, a lender must spell out how much the rate can jump and what your new payment would be if it does. Can the amount you owe the lender increase, even if you make your payments on time? If it can, a lender must show you the potential increase.

3. EVALUATE THE "TRADEOFFS" ON A LOAN

In the new "tradeoff table," you can ask lenders to provide details on the tradeoffs you can make in choosing among home loans. If you'd like the same loan with lower settlement charges, how will the interest rate change? If you'd like a lower interest rate, how much will your settlement charges increase?

4. COMPARE APPLES TO APPLES WITH THE SHOPPING CHART

Included on the good-faith estimate is space for you to list all the terms and fees for four different loans, so you can make side-by-side comparisons.

5. KNOW WHAT'S MISSING FROM THE GOOD-FAITH ESTIMATE

The new form lacks some key information, such as how much you'll reimburse the sellers for property taxes they've already paid on the home. It also doesn't tell you the amount of money you'll have to bring to the closing table. Some lenders have created supplemental forms providing that information. If yours hasn't, ask for it.

MORE FROM HOUSELOGIC

More on the new good-faith estimate form(http://www.houselogic.com/articles/homebuyer-tax-credit-what-you-need-know/)

OTHER WEB RESOURCES

The new U.S. Housing and Urban Development good-faith estimate(http://www.hud.gov/content/releases/goodfaithestimate.pdf)

More on shopping for a loan(http://www.hud.gov/offices/hsg/ramh/res/Settlement-Booklet-January-6-REVISED.pdf)

G.M. Filisko is an attorney and award-winning writer who has encountered many settlement statements that bore no resemblance to the lender's good-faith estimate. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
Copyright 2010. All rights reserved.

Article From Houselogic.com

By: Terry Sheridan

Published: June 02, 2010

Know the basics of FHA loan rules and you stand a better chance of selling your house or condo.

Make your house FHA-friendly, and it will appeal to more homebuyers. Why? Because the Federal Housing Administration is insuring the mortgage loans used by about 30% of today's homebuyers.

If your house passes the FHA rules, it will appeal to buyers who plan to use an FHA-insured mortgage. If your house doesn't qualify for an FHA loan, you're cutting out 30% of potential buyers.
FHA is especially important to first-time homebuyers and those with small downpayments because it allows borrowers with good credit to make a downpayment as low as 3.5% of the purchase price.
Here's how to make your home appealing to FHA borrowers:

KNOW THE FHA LOAN LIMITS IN YOUR AREA

Start by checking to see if your home's listed price falls within FHA lending limits for your area(https://entp.hud.gov/idapp/html/hicostlook.cfm). FHA mortgage limits vary a lot. In San Francisco, FHA will insure a mortgage of up to $729,750 on a single-family home. In the White Mountains of New Hampshire, the loan limit is $271,050.

HOME INSPECTIONS

Most buyers will ask for a home inspection, whether or not they're using an FHA loan to buy the home. You must give FHA buyers a form(http://www.ncradon.org/docs/foryourprotection.pdf) explaining what home inspections can reveal, and how inspections differ from appraisals.

HOW MUCH DO YOU HAVE TO REPAIR?

If the home inspection reveals problems, FHA will not give the okay to buy the home until you repair serious defects(http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/05-48ml.pdf) like roof leaks, mold, structural damage, and pre-1978 interior or exterior paint that could contain lead.

DEALING WITH FHA APPRAISERS

Help the lender's appraiser by providing easy access to attics and crawl spaces, which usually must be photographed, says appraiser Frank Gregoire in St. Petersburg, Fla.
Your buyer can hire his own appraiser to evaluate your home. But FHA only relies on reports by its approved appraisers. If the two appraisals conflict, the FHA appraisal preempts the buyer's appraisal.

HELP WITH FHA CLOSING COSTS

Most FHA buyers need help with closing costs, says mortgage banker Susan Herman of First Equity Mortgage Bankers in Miami. So a prime way to make your house FHA-friendly is to help with those costs.
FHA currently allows sellers to pay up to 6% of the sales price to help cover closing costs, but is considering lowering that limit to 3% in the fall of 2010.

IF YOU'RE SELLING A CONDO

FHA also has to approve your condo before a buyer uses an FHA loan to purchase your unit. Be sure your condo is FHA-approved for mortgages(https://entp.hud.gov/idapp/html/condlook.cfm). The list has been updated, so if your association was approved a year ago, check again to make sure it's still on the approved list.
FHA generally won't insure loans in condo associations if more than 15% percent of the unit owners are late on association fees. Ask your property manager or board of directors for your association's delinquency rate.
Other rules cover insurances, cash reserves and how many units are owner-occupied(http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-46aml.pdf) and the types of condos that can be purchased with an FHA mortgage(http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-46bml.pdf).
FHA sometimes issues waivers for healthy condominiums that don't meet the regular rules. If your condo isn't FHA-approved, it doesn't necessarily have to meet every single rule to gain approval. Ask your REALTOR® to consult with local lenders about getting an FHA waiver for your condo if it doesn't meet all the requirements.
FHA also limits its mortgage exposure in homeowners associations. With some limited exceptions, no more than 50% of the units in an association can be FHA-insured(http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-46aml.pdf).

FHA LOANS FOR PLANNED-UNIT DEVELOPMENTS

FHA no longer requires lenders to review budgets and legal documents for planned-unit developments.

MORE FROM HOUSELOGIC

Show Your Support for FHA(http://www.houselogic.com/articles/show-your-support-for-FHA/)

OTHER WEB RESOURCES

Why Ask for an FHA Loan?(http://www.hud.gov/fha/choosefha.cfm)
Find a State Program to Help Homebuyers Afford Your Home(http://www.hud.gov/buying/localbuying.cfm)
Terry Sheridan is an award-winning freelance writer who has covered real estate for 20 years, and has owned and sold three homes.

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
Copyright 2010. All rights reserved.

Article From Houselogic.com

By: G. M. Filisko

Published: March 19, 2010

While you'd like to get the best price for your home, consider our six reasons to reduce your home price.

Home not selling? That could happen for a number of reasons you can't control, like a unique home layout or having one of the few homes in the neighborhood without a garage. There is one factor you can control: your home price.

These six signs may be telling you it's time to lower your price.

1. YOU'RE DRAWING FEW LOOKERS

You get the most interest in your home right after you put it on the market because buyers want to catch a great new home before anybody else takes it. If your real estate agent reports there have been fewer buyers calling about and asking to tour your home than there have been for other homes in your area, that may be a sign buyers think it's overpriced and are waiting for the price to fall before viewing it.

2. YOU'RE DRAWING LOTS OF LOOKERS BUT HAVE NO OFFERS

If you've had 30 sets of potential buyers come through your home and not a single one has made an offer, something is off. What are other agents telling your agent about your home? An overly high price may be discouraging buyers from making an offer.

3. YOUR HOME'S BEEN ON THE MARKET LONGER THAN SIMILAR HOMES

Ask your real estate agent about the average number of days it takes to sell a home in your market. If the answer is 30 and you're pushing 45, your price may be affecting buyer interest. When a home sits on the market, buyers can begin to wonder if there's something wrong with it, which can delay a sale even further. At least consider lowering your asking price.

4. YOU HAVE A DEADLINE

If you've got to sell soon because of a job transfer or you've already purchased another home, it may be necessary to generate buyer interest by dropping your price so your home is a little lower priced than comparable homes in your area. Remember: It's not how much money you need that determines the sale price of your home, it's how much money a buyer is willing to spend.

5. YOU CAN'T MAKE UPGRADES

Maybe you're plum out of cash and don't have the funds to put fresh paint on the walls, clean the carpets, and add curb appeal. But the feedback your agent is reporting from buyers is that your home isn't as well-appointed as similarly priced homes. When your home has been on the market longer than comparable homes in better condition, it's time to accept that buyers expect to pay less for a home that doesn't show as well as others.

6. THE COMPETITION HAS CHANGED

If weeks go by with no offers, continue to check out the competition. What have comparable homes sold for and what's still on the market? What new listings have been added since you listed your home for sale? If comparable home sales or new listings show your price is too steep, consider a price reduction.

MORE FROM HOUSELOGIC

How to ready your home for sale at little cost(http://buyandsell.houselogic.com/articles/5-tips-prepare-your-home-sale/)

How to review offers on your home(http://buyandsell.houselogic.com/articles/6-tips-choosing-best-offer-your-home/)

OTHER WEB RESOURCES

Setting the right price(http://www.nolo.com/legal-encyclopedia/faqEditorial-29056-2.html;jsessionid=B60313EBD643285161AAED862B593357.jvm1)

More on setting the right price(http://public.findlaw.com/abaflg/flg-4-4a-1.html)

G.M. Filisko is an attorney and award-winning writer who made strategic price reductions that led to the sale of a Wisconsin property. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
Copyright 2010. All rights reserved.

Article From Houselogic.com

By: G. M. Filisko

Published: March 30, 2010

After finding a buyer, all you have to do to make it to closing is to avoid these five traps.

Finding a buyer for your home is just the first step on the homeselling path. Tread carefully in the weeks ahead because if you make one of these common seller mistakes, your deal may not close.

MISTAKE #1: IGNORE CONTINGENCIES

If your contract requires you to do something before the sale, do it. If the buyers make the sale contingent on certain repairs, don't do cheap patch-jobs and expect the buyers not to notice the fixes weren't done properly.

MISTAKE #2: DON'T BOTHER TO FIX THINGS THAT BREAK

The last thing any seller needs is for the buyers to notice on the pre-closing walk-through that the home isn't in the same condition as when they made their offer. When things fall apart in a home about to be purchased, sellers must make the repairs. If the furnace fails, get a professional to fix it, and inform the buyers that the work was done. When you fail to maintain the home, the buyers may lose confidence in your integrity and the condition of the home and back out of the sale.

MISTAKE #3: GET LAX ABOUT DEADLINES

Treat deadlines as sacrosanct. If you have three days to accept or reject the home inspection, make your decision within three days. If you're selling, move out a few days early, so you can turn over the keys at closing.

MISTAKE #4: REFUSE TO NEGOTIATE ANY FURTHER

Once you've negotiated a price, it's natural to calculate how much you'll walk away with from the closing table. However, problems uncovered during inspections will have to be fixed. The appraisal may come in at a price below what the buyers offered to pay. Be prepared to negotiate with the buyers over these bottom-line-influencing issues.

MISTAKE #5: HIDE LIENS FROM BUYERS

Did you neglect to mention that Uncle Sam has placed a tax lien on your home or you owe six months of homeowners association fees? The title search is going to turn up any liens filed on your house. To sell your house, you have to pay off the lien (or get the borrower to agree to pay it off). If you can do that with the sales proceeds, great. If not, the sale isn't going to close.

MORE FROM HOUSELOGIC

How maintenance adds to home values(http://www.houselogic.com/articles/value-home-maintenance/)

Reducing closing stress(http://buyandsell.houselogic.com/articles/7-steps-stress-free-home-closing/)

OTHER WEB RESOURCES

More on calculating closing costs(http://www.hud.gov/offices/hsg/ramh/res/sc3sectb.cfm)

More on the closing process(http://www.homeclosing101.org/closing.cfm)

G.M. Filisko is an attorney and award-winning writer who wanted a successful closing on a Wisconsin property so bad that she probably made her agent rethink going into real estate. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Reprinted from HouseLogic (houselogic.com) with permission of the NATIONAL ASSOCIATION OF REALTORS (R).
Copyright 2010. All rights reserved.