Tuesday, July 29, 2008

Maintaining Your Home to Retain Value

You've got the kitchen of your dreams and a master bedroom suite that would look right at home in a 5-star hotel. And your gorgeous new exterior paint job is the envy of the neighborhood. Your place looks so great that real estate agents are dropping off their cards telling you how much they could sell your place for, if you felt like putting it on the market.
Sell it now! Good grief no! Not after all the remodeling work. But... who knows? In five or six years when the kids are off to college and you and your mate get tired of mowing that big lawn and knocking around in a house built for five but inhabited by two, a downtown condo may look pretty inviting. Face it. At some point in the future, whether it's next year or in 20 years, you're going to want to sell your house. And with all the improvements you've made over the years, you should get a nice return on the sale, assuming you don't let your house fall apart.
Remodeling can be frustrating but it's also fun -- filled with anticipation and visible rewards at the end of the project. Maintenance is dull and routine, but you have to do it if you want to retain the value you've added to your home. For example: Hardwood floors need to be refinished every 5-10 years depending on wear and tear. If they get too worn down you can do permanent damage to the wood. Exteriors need to be repainted every 5-10 years too, depending on such factors as the weather where you live, or you can damage the exterior wood. Your roof and gutters need annual inspections. A clogged or damaged gutter and drain spout can flood your basement and cause serious damage.
And the list goes on. Like taxes and dental checkups, regular home maintenance isn't fun. But you must do it if you want to take care of what is likely your biggest single asset -- your home.
Annual checklist home maintenance checklist:
Kitchen: Check for leaks under and around the sink. Plumbing leaks can damage cabinetry and floors. Check and repair grout and caulking on tile countertops and around the sink. Also check wear and tear on wood floors, which periodically need to be refinished.
Bathrooms: Check for plumbing leaks and check grout on tiles. If the grout gets worn away water will start getting into the walls behind the bathroom, causing damage.
Basement: Check for cracks in the foundation and leaks. Buildings settle over time and even after decades of having a dry basement leaks may suddenly occur.
Attic: Check for signs of water leakage from the roof. Also look for any sign of termites or rodents. Squirrels or rats that nest in your attic can chew electrical wiring, which can lead to fires.
Smoke alarms: Batteries need to be changed annually.
Heating system: If yours has a filter, change it annually.
Air conditioning system: Change all filters monthly or as recommended by the filter manufacturer.
Roof: Note if any shingles have fallen off or if gutters or downspouts appear clogged or damaged. You can always hire a reliable roofing company to get on the roof and take a look. Reputable roofing companies won't try to sell you a new one unless you really need it. You can simply pay them for an inspection.
House exterior: If your house is wood, check that the paint hasn't worn away so much that the primer paint is showing. If the primer also wears down, you can do damage to the wood. Brick houses should be inspected for damaged bricks or masonry. Check stucco houses and repair any cracks large enough to slide a nickel into.
Asphalt and concrete driveways: Repair any cracks or buckling.

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Wednesday, June 18, 2008

Short Sale to buy or not to buy?

Buyers pursue short sales to get a good deal. So when you see a price listed for a home that you think is too low for the neighborhood, before you jump on that price like hot fudge on a sundae, ask your agent to call the listing agent to find out if the home is a short sale.
Because you might want to think twice about making an offer on a pre-foreclosure, short sale home. It's not as simple as you may believe, and very few can close in 30 days or less.
What is a Short Sale?
A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.
Be aware that the seller need not be in default -- to have stopped making mortgage payments -- before a lender will consider a short sale. A lender may consider a short sale if the seller is current but the value has fallen. The seller may have over-encumbered, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it.

Check the Public Records
Do your research before making an offer to purchase. Your agent can find out who is in title, whether a foreclosure notice has been filed and how much is owed to the lender(s). This is important because it will help you to determine how much to offer.
If there are two loans, you could have a problem. The first mortgage lender's position is protected by the second lender, unless the second lender does not want to foreclose. If a seller owes $160,000 on the first and $40,000 on the second, offering $160,000 leaves nothing for the second. The first will need to give something to the second to gain its cooperation.

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Tuesday, May 27, 2008

Gas Prices... ready to buy a bike???

NEW YORK (CNNMoney.com) -- Retail gas prices hit record highs for the 20th day in a row, motorist group AAA's Web site showed Tuesday.
The nationwide average for a gallon of regular unleaded rose to $3.937, up slightly from $3.936 the previous day.
The climb in gas prices, which have steadily risen over the past three weeks, comes amid the start of the summer driving season, which unofficially kicked off over the Memorial Day weekend.
The AAA survey shows gas prices are up about 9% from a month ago and nearly 23% higher from year-ago levels. The average price for gas has passed the $4 a gallon mark in 11 states, as well as in Washington, D.C.
The most expensive state for buying gas is Alaska, where a gallon of regular unleaded costs an average of $4.201. The second most expensive state is Connecticut, where a gallon of gas costs $4.196, according to AAA.
The least expensive state for purchasing gas is Wyoming, where a gallon costs $3.751 a gallon on average. The second least expensive state for gas is Missouri, where a gallon runs $3.753 a gallon.
In the face of surging prices, consumers are cutting back on the number of miles they clock on the road. Americans drove 11 billion miles less in March this year than the same month a year ago, the Department of Transportation said Monday.
The Federal Highway Administration's "Traffic Volume Trends" report, produced monthly since 1942, showed that estimated vehicle miles traveled on all U.S. public roads in March fell 4.3% - the sharpest drop for any month in the report's history.
Gas prices have increased by a quarter over the past year, while the price of crude oil has more than doubled.
The July futures contract for crude is trading around $132 a barrel on Tuesday morning, after hitting a record high price above $135 a barrel last week. Crude prices have been pushed to hit record highs on supply concerns, a weak dollar and increasing global demand for diesel fuel.

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Friday, April 25, 2008

5 easy ways to sell your home faster

You don’t have to take on a full-fledged renovation to get prospective buyers interested in your house—in fact, that may even turn some people away in a challenging market. After all, every penny that you’ve sunk into an obvious upgrade is money that the seller is mentally adding up as a factor in the price—and may represent an aesthetic choice the buyer would not have made. (Cancel that appointment at the Sub-Zero showroom, STAT.) There are simple ways, however, to make your home seem infinitely more appealing with very little investment—and very little effort.

1. If you do only two things before showing your house, clean, and clean some more. “People want to come into a space and visualize themselves living there,” says Manhattan-based Corcoran Group sales broker Jeanine Schlifer. “If there are spills on the table, toys on the floor, and dog mess everywhere, people can’t focus on the space.” It’s worth it to hire a professional to come in for a deep-clean, as they may find dirt in places you can easily overlook, like scuffs on walls and smudged light switch plates. Nadia Geller of the new TLC show Date My House says that buyers pay most attention to the entryway—the first-impression spot for most visitors—as well as the kitchen and the master bedroom; those rooms in particular should be immaculate. The same goes for any architectural details (such as a fireplace) that might be called out on a spec sheet, Geller adds.
2. Accentuate the positive, camouflage the negative. If you have large windows or a great view, hang long, simple curtains to accentuate them. (Hanging curtains from just above and outside the window frame will also make ceilings feel higher and windows more impressive.) If you have spacious rooms, remove any too-bulky furniture or unnecessary pieces that would make the space feel cramped. Geller suggests looking at furniture catalogs to get ideas for pleasing furniture proportions, arrangements, and an idea of how many pieces to keep in a room. If your closets are tiny, pull out some of the clothes and store them elsewhere. “You don’t want it to look like you couldn’t fit one more thing on the rack if your life depended on it,” Schlifer says. A kitchen counter top cluttered with appliances can similarly make a buyer feel there will be no place to store their things; packing some of that away in cabinets will create the illusion of more space.
3. Appeal to the widest possible audience. If you have a hot-pink accent wall, paint over it with a more neutral shade that matches the other walls. Pack away that collection of Star Wars figurines. Stash kids’ toys or dog toys in another room. “Remember that you’re selling your home, not your personality,” Schlifer says. And a prospective buyer who hates dogs could get hung up on your giant training crate and pile of rawhide bones. (Be sure to also take pets to a friend’s house or a kennel and vacuum well before any showings—a sneezing, fur-allergic buyer is not a happy one.) Thin out your collection of trophies, knickknacks, and personal photos on bookshelves, and replace them with more books—even books from a secondhand store or thrift shop, says Geller; they’ll have a more universal appeal.
4. Create a welcoming environment. “You want buyers to make an emotional connection to your home,” Schlifer says, and you can go a long way toward achieving that by making the space feel warm, bright, and fresh. Replace dim light bulbs with new ones and make sure there is a pleasant, but not overpowering, smell in the house. (Try baking cookies or setting out a scented-oil diffuser.) Place fresh guest soaps in the bathroom, hang a new shower curtain and neatly fold matching bath towels. Purchase fresh flowers—a bunch of all one variety makes the cleanest statement—and put them out in a simple vase. Open the windows before people come in to let some fresh air blow through. The ultimate goal is to make people feel so good in your house or apartment, they won’t want to leave—ever.
5. Develop a quick-clean plan for last-minute showings. You never know when a realtor may have an interested client, so it’s important to have a speedy cleaning plan for spontaneous appointments. Invest in a nice-looking storage trunk for stashing day-to-day clutter in a hurry and make a habit of kicking up your regular cleaning routine a notch so there’s less to do before a visit.

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Wednesday, April 16, 2008

Fair Housing Laws and Presidential Executive Orders

The Fair Housing Laws:
Fair Housing ActTitle VIII of the Civil Rights Act of 1968 (Fair Housing Act), as amended, prohibits discrimination in the sale, rental, and financing of dwellings, and in other housing-related transactions, based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents of legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap (disability). More on the Fair Housing Act
Title VI of the Civil Rights Act of 1964Title VI prohibits discrimination on the basis of race, color, or national origin in programs and activities receiving federal financial assistance.
Section 504 of the Rehabilitation Act of 1973Section 504 prohibits discrimination based on disability in any program or activity receiving federal financial assistance.
Section 109 of Title I of the Housing and Community Development Act of 1974Section 109 prohibits discrimination on the basis of race, color, national origin, sex or religion in programs and activities receiving financial assistance from HUD's Community Development and Block Grant Program.
Title II of the Americans with Disabilities Act of 1990Title II prohibits discrimination based on disability in programs, services, and activities provided or made available by public entities. HUD enforces Title II when it relates to state and local public housing, housing assistance and housing referrals.
Architectural Barriers Act of 1968 The Architectural Barriers Act requires that buildings and facilities designed, constructed, altered, or leased with certain federal funds after September 1969 must be accessible to and useable by handicapped persons.
Age Discrimination Act of 1975The Age Discrimination Act prohibits discrimination on the basis of age in programs or activities receiving federal financial assistance. Title IX of the Education Amendments Act of 1972Title IX prohibits discrimination on the basis of sex in education programs or activities that receive federal financial assistance.Fair Housing-Related Presidential Executive Orders:
Executive Order 11063Executive Order 11063 prohibits discrimination in the sale, leasing, rental, or other disposition of properties and facilities owned or operated by the federal government or provided with federal funds.
Executive Order 11246Executive Order 11246, as amended, bars discrimination in federal employment because of race, color, religion, sex, or national origin.
Executive Order 12892Executive Order 12892, as amended, requires federal agencies to affirmatively further fair housing in their programs and activities, and provides that the Secretary of HUD will be responsible for coordinating the effort. The Order also establishes the President's Fair Housing Council, which will be chaired by the Secretary of HUD.
Executive Order 12898Executive Order 12898 requires that each federal agency conduct its program, policies, and activities that substantially affect human health or the environment in a manner that does not exclude persons based on race, color, or national origin.
Executive Order 13166Executive Order 13166 eliminates, to the extent possible, limited English proficiency as a barrier to full and meaningful participation by beneficiaries in all federally-assisted and federally conducted programs and activities.
Executive Order 13217Executive Order 13217 requires federal agencies to evaluate their policies and programs to determine if any can be revised or modified to improve the availability of community-based living arrangements for persons with disabilities.

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Monday, April 14, 2008

Higher loan limits could help you

Three government-backed mortgage programs are now allowed to make larger loans.
In theory, the changes should make it easier for thousands of consumers to obtain the money they need to buy or refinance a home, and at lower rates and better terms than they could previously obtain.
But with lenders charging more for mortgages that exceed the old limits, the new loan limits may not be as helpful as we had hoped.

The economic stimulus plan Congress approved in February raised the limits for:
Mortgages guaranteed by the Federal Housing Administration, to as much as $729,750 in high-cost cities such as San Francisco and Los Angeles. (Check here for the complete, county-by-county list of the new FHA loan limits.)
Loans bought by Freddie Mac and Fannie Mae, the government-chartered companies that provide the financing for 70% of all mortgages.
In areas with average housing costs, the old limit of $417,000 remains in place. But in 224 counties with higher than average home prices, the maximum allowable loan has been raised to as much as $729,750. (Check here for the new Freddie Mac and Fannie Mae loan limits).
Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corp.) buy loans from banks and mortgage companies, bundle thousands of them together and resell the debt to investors.
Investors are more willing to buy the debt packaged and sold by Freddie Mac and Fannie Mae because they only buy loans that meet their standards for creditworthiness.
Borrowers who meet, or conform, to Freddie Mac and Fannie Mae's requirements benefit, too, by paying lower interest rates than they would for nonconforming loans.
But federal law previously didn't allow them to buy loans for more than $417,000.
That one requirement forced many buyers in cities where housing costs are especially high, such as Los Angeles, San Francisco and New York, to obtain more costly jumbo loans that couldn't be sold to Fannie Mae or Freddie Mac.
The current mortgage crisis was triggered by a rash of defaults and foreclosures on nonconforming loans, primarily subprime mortgages given to borrowers with bad credit who couldn't meet Freddie Mac or Fannie Mae's standards.
Though jumbo loans haven't been a big problem, investors are reluctant to buy any mortgage debt not backed by Freddie Mac and Fannie Mae.
As a result, the average jumbo loan has cost well above 7% since last summer, or a point to a point-and-a-half more than the average for conforming loans.
The stimulus bill allows Freddie Mac and Fannie Mae to buy more expensive loans through the end of the year. Abandoning the one-size-fits-all approach, each city has its own limit based on the local median home price.
Initial reports suggest the new limits aren't helping as many homeowners as expected, primarily because lenders are charging one-half to three-quarters of a point more for the larger conforming loans.
"It's a tease," Debi Zentner, a mortgage broker with Diversified Capital Funding in Pleasanton, Calif., told the San Jose Mercury News. "It's not going to be the panacea we had expected."
We're hoping that will change as lenders become more comfortable with bigger, conforming loans.
FHA loans were created 70 years ago to help first-time buyers, especially low- to moderate-income families and minorities, get the home financing they need.
Because the federal government guarantees repayment, the lender knows it will not lose money on the deal. That allows the bank or mortgage company to offer competitive rates on a loan that's easier to qualify for than a conventional home loan.
Learn more about how FHA loans can help first-time buyers.
The previous strict limits on the size of FHA loans prevented them from keeping up with soaring home prices.
Under the stimulus bill, the FHA can insure loans of up to 125% of an area's median home price, to a maximum of $729,750, until the end of the year.
That's far more than the previous limit of $362,790 in high-cost cities and $200,160 in what the FHA considers standard areas.
In California, for example, the new limits range from $271,050 in lower-cost areas such as Lassen and Trinity counties to the full $729,750 in the entire San Francisco area, where the median home price is $846,000.
Buyers in high-price East Coast cities, such as New York and Washington, D.C., also will enjoy the new, highest limit of $729,750. In all, 75 areas out of about 3,200 will qualify for the maximum cap.
Even cities that don't qualify for the highest limit will benefit from the change. In Boston, for example, the new rules increased the FHA loan limit from $362,790 to $523,750.
But once again, borrowers are being forced to pay higher interest rates for the bigger loans. Initial reports say lenders are charging about three- to four-tenths of a point more than traditional FHA-insured mortgages.
By Erin Brereton
Interest.com Contributing Editor

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Thursday, April 10, 2008

Yes, you can buy real estate with your IRA

All your IRA money is in mutual funds and you'd like to diversify. One way is to buy raw land, a house or a building -- even your retirement home.

There it is, the retirement home of your dreams. The trouble is that you're at least a dozen or more years from retirement and most of your money is tied up in your IRA. Too bad, because by the time you're ready to sell your current home, that oceanfront beauty could be way out of reach.If only you could access some of that IRA money without paying a penalty. If only you could rent the space and sock away the income, tax-deferred. Until you retire and enjoy it yourself.
Start investing with $100. Explore ournew ETF center. Maybe it's commercial space or raw land. Or how about this scenario: Your landlord has just raised the rent on your office and a little building down the block has come up for sale. What a dandy idea it would be to grab it and have a building of your own. Once again, your IRA is richer than you are. If only it could be your landlord. Or maybe: Mabel and Norman always get such good deals on raw land, but this one is the best yet. An acre of waterfront property in Nicaragua, with two sweet little cottages for $45,000. If only that IRA could be tapped without all those penalties. All your IRA money doesn't have to be in paper. Most investors believe they cannot use IRA money to buy real estate. Developed or undeveloped. They are wrong.

You can invest IRA money in a wide range of investments, including stocks, bonds, mutual funds, money market funds, saving certificates, U.S. Treasury securities, promissory notes secured by mortgages or deeds of trust, limited partnerships and real estate. That includes houses, condos, office buildings -- even if located in another country.

You cannot use IRA money to buy your own residence, or any other property in which you live. It has to be investment property. But when you retire, you can direct your IRA to turn it over to you as a distribution, at the current market value. Let's take a look at one example.

Out of the woods in MaineJack Wrigley found himself in a potentially disastrous position and was able to free himself using the real estate IRA. Jack took early retirement from his corporation at age 55 and rolled his company pension plan money into an IRA worth nearly $250,000. The money was invested in stocks and bonds. He then set out to find his dream retirement home in Maine. Within a few months, he found it. It was a bargain price, too, because the owner was required to sell within eight weeks. The contract Jack signed required a $25,000 down payment, to be forfeited if the closing didn't take place as scheduled. The balance of the purchase price was $150,000. The problem hit. The investment condo in Boston that Jack was going to sell to raise the $150,000 fell victim to a soft market. No buyers. Jack was in danger not only of losing the retirement home of his dreams, but his $25,000 down payment as well. The real estate IRA to the rescue. The solution was the real estate IRA. Jack quickly opened a new self-directed IRA, rolled over the entire amount of his old IRA into it, then directed his trustee to make the purchase with the IRA becoming owner. The closing took place, but that was only the beginning of Jack's IRA advantage. Since the closing, the IRA has made wonderful capital improvements in the Maine property and rented it out for a nice income, all tax-deferred. (It could even have been tax-free if the Roth IRA had been in existence at the time.) Jack eventually sold his Boston condo and pocketed that profit. Now he is looking forward to his retirement, at which time the IRA will turn the property over to him as a distribution of the then market value. How come no one knows?Given the real estate boom of the 1980s, and its current resurgence, it's curious that so little is understood about the real estate IRA. Perhaps it's simply a lack of advertising. IRA accounts invested in stocks, bonds and other financial paper are very lucrative for banks, mutual funds, insurance companies and brokerage houses. These institutions will gladly act as your trustee (the middlemen in all IRAs) and sell you their wares. But they won't act as your trustee if you want to buy real estate with IRA money. Why? They're not in the real estate business. So you're pretty much on your own investing in a real estate IRA. You have to find your own property, trustee and perhaps a management company, to collect rents and maintain the property.House power' to the people.

As a practical matter, you'll find very few professionals who can guide you through the entire process. Housepower has created a manual and audiotapes (priced around $130), but there is no one-stop shopping service you can use. Still, the do-it-yourself process is simple. Contact an independent trustee for a self-directed IRA. You must find an institution that will open a self-directed IRA and follow your "self-directed" instructions to the letter. It's not as hard as you may think. Try Mid-Ohio Securities in Elyria, Ohio, or Sterling Trust in Waco, Texas. Sign broker-to-broker papers that will transfer designated portions of your existing IRA to your self-directed IRA. Find and buy the property using a real estate attorney to create the usual documents. Remember, you most likely will have to explain IRA ownership to him. The trustee will take title at your direction.The rules governing real estate IRAs are strict:
The house or property must remain in the trust until distribution at retirement.
It must be treated like any other investment.
You cannot manage the property. But your trustee can hire a third party -- a real estate broker, or local manager -- to collect rents and maintain or improve the property.
All rental profits must be returned to the trustee.

You cannot mortgage your IRA. The biggest drawback of the real estate IRA is that it may lack the funds to make a substantial purchase. At present, it is controversial as to whether your IRA can take a mortgage, or if this would violate several IRS provisions and render all of your IRA assets taxable. Our advice right now: Don't use IRA money as a down payment and take a mortgage for the balance due. You'll have trouble finding a lender who would go along with such an arrangement, anyway. As the self-directed IRA becomes more popular, however, we hopefully will see clarification of the borrowing rules, and perhaps more lenders willing to make loans. Meanwhile, a special technique allows you to participate in real estate ownership through your IRA, even if there is not enough in capital to pay for the entire parcel. That technique consists of buying fractional shares of property through the use of a general or limited partnership.

You can pool real estate IRAs for expensive properties. In this way, folks can get together and even buy all kinds of properties. Tenants in office buildings have pooled their IRAs to buy out their landlords. In fact, a husband and wife can consolidate their IRAs to have more cash for a purchase, or leave them separate and form a partnership.Remember, you can always get out of your investment. Just direct your trustee to sell your property or interest, and have the funds reinvested elsewhere.

Use the Roth and pay no tax at all later. Or if you are over 59 , you may withdraw any portion of the proceeds of sale after they are deposited in the IRA. The receipts from the sale must be returned to your IRA account if you are to escape taxation and possible penalties.The Roth IRA is an ideal vehicle for those who are eligible. If the value of the real estate is expected to appreciate, it would be best to opt for a self-directed Roth IRA and pay the taxes over the next four years. In that way, so long as the real estate is not distributed for five years, it will incur no tax when the deed is transferred to you personally. Assuming you and your spouse eventually live in it before selling, $500,000 of profit is completely tax-exempt.

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