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Archive for the ‘Mid Atlantic Funding’ Category

6 must-haves for mortgage approval

Even trade-up buyers, owners of multiple properties hit roadblocks

Interest rates fell to new lows in September. Low interest rates increase affordability and should make it easier for buyers to qualify. Yet stories of buyers waiting months to gain loan approval and home purchase transactions not closing on time due to lender’s strict underwriting are all too common.

Some buyers are turned down for illogical reasons. For instance, if you have investments — even if they’re performing well — an underwriter might deny the mortgage because your portfolio doesn’t fall into the underwriter’s risk assessment model.

One couple was turned down because the husband had worked at his current job for less than a year — even though he was making more money at the new job than he was before.

These buyers were well-qualified. The wife had worked several years for one employer and was able to qualify for the loan on her own. So, the transaction closed, although two months late.

Generally, it’s more difficult to qualify now than it was a year ago. Most conventional lenders require a 20-25 percent down payment. For the lowest interest rates, your credit scores need to be in the 700 range. You need to have verifiable income and cash reserves in addition to your down payment and closing costs.

You could run into underwriting problems if you’re self-employed, as W-2 income is much easier to verify. Other hurdles are lapses in employment and owning a lot of property. Some lenders won’t lend to buyers who have more than three or four residential properties.

If you’re buying a new home before selling your current home, you’ll need to have 30 percent equity in your current home. This needs to be verified by the lender’s appraiser. Also, the lender will want to see a copy of the cashed check from the tenant for the first month’s rent to verify rental income if needed to qualify.

HOUSE HUNTING TIP: As soon as you’re serious about buying a home, find the best mortgage broker or loan agent you can to assist you. Don’t make your selection based on interest rates alone. A good track record counts for a lot.

Closing the deal should be your primary goal. If you have to pay 0.25 percent more to assure your transaction closes on time and that you’re not turned down at the last minute, it’s worth it.

Be candid with your loan professional about anything in your financial picture that might impact loan qualification. A good loan agent or broker will be able to assess your financial situation and anticipate what you’ll need to do to satisfy the underwriter.

Be aware that appraisal issues can impact your loan approval. For example, if a previous owner added square footage without a building permit, the additional square footage probably won’t be included as livable square feet.

If the appraisal comes in for less than the purchase price, the lender might not lend you enough to close the deal. Include an appraisal contingency in your contract.

As of Oct. 1, the conforming jumbo mortgage limit for expensive housing markets like New York City and San Francisco dropped from $729,750 to $625,500. In some cases, conforming jumbo lenders have moved into the market to pick up some slack. You can expect to pay about 0.25 percent more for a 30-year fixed-rate conventional jumbo loan, in some cases. However, today’s lower interest rates will help boost affordability.

There are more jumbo financing options available now. Adjustable-rate mortgages that are fixed for 10 years and then revert to an adjustable have a starting rate about 0.25 percent less than a 30-year fixed jumbo. A five-year fixed starts about 0.5 percent to 0.75 percent lower, but is riskier.

THE CLOSING: Because of the risk factor, the lender may want you to have a large cash reserve. Your retirement account counts toward this.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”

Contact Dian Hymer: Email Letter to the Editor

Copyright 2011 Dian Hymer


Posted at Yahoo.com

Must do’s when adding attic insulation

Combining batts, loose-fill fiberglass can create moisture issues

Q: I’ve had loose-fill fiberglass (insulation) in my attic since 1975. I have some new insulation with brown paper covering on one side so I need to know if that is called batts? If it is called insulation batts, then can I put them on top of loose-fill fiberglass? Which side would I put the batts: at bottom or at top?

In your article you wrote about “using unfaced batts only so that you don’t create a double vapor barrier and trap moisture between the layers of batts.” What does that mean? I want to understand about it clearly before I put them in the attic. –Becky F.

A: The type of insulation you describe, with the paper facing over the insulation, is indeed what is known as batts. The paper facing is the vapor barrier.

Here’s a quick explanation of how it all works: Inside the house, you create moisture from cooking, bathing, etc. That moisture vapor in the air wants to move from a warm area to a cold area, so it’s naturally always moving toward the ceiling and exterior walls of the house.

Vapor barriers are used to prevent that moisture from getting into enclosed areas where you don’t want it, because once it gets in there, if it can’t escape it can do a lot of damage.

For that reason, batt insulation often comes with a vapor barrier on one side. The vapor barrier is always installed facing the heated side of the wall or ceiling, because that’s where the moisture is coming from.

Now let’s look at your situation, which is a little different. You have loose-fill insulation in the attic, which doesn’t have a vapor barrier. The theory is that part of the moisture vapor in the house is actually blocked by the drywall and paint on the ceiling.

Any moisture that does enter the attic will pass through the loose-fill insulation and exit the attic through the roof vents, so it won’t cause any damage.

It’s fine for you to install your batt insulation over the existing loose fill. However, you want to remove the paper vapor barrier first — simply peel it off and discard it — then lay the batts on top of the loose fill as gently as possible, so that you don’t compress the old insulation.

If you don’t remove the vapor barrier, you run the risk of trapping moisture vapor that passes through the loose fill against the vapor barrier, where it can’t escape from the attic.

Q: We have the “new insulated window,” and after 10 years we have had major condensation problems. Any thoughts? –Wilson R.

A: If the condensation is appearing between the panes of glass, then you have a broken seal in the insulated glass unit. Insulated glass works by trapping a layer of dead air between two panes of glass. If the seal is broken, moisture can get between the panes and condense, and it’s very difficult to get rid of.

The only solution is to replace the insulated glass unit. You need to call a local glass company, and the company can make a site visit and measure your window. They’ll order a new sealed glass unit — just the glass, not the entire window — that will be made to fit your particular window. Once the new glass unit arrives, on-site installation is fairly simple for most types of windows.

Q: Are brick-construction homes colder than a wooden home in the New England winter? –Glenn D.

A: If you’re talking about a true brick construction, as opposed to a brick veneer over a standard insulated, wood-framed wall, then the answer is yes. You have several problems with full-brick construction when it comes to keeping them warm:

1. Brick has an R-value of approximately 0.2 per inch (which would equal 0.8 for a standard 4-inch brick). So if you have a typical double-brick wall that’s 8 inches thick, you have an R-value that’s less than R-2. On the other hand, a 6-inch wood-frame wall has an R-value that’s more than 10 times that much.

2. Brick homes tend to have more air infiltration problems, due to the number of joints between the bricks. Even tiny gaps can add up to a lot of infiltration heat loss when multiplied over the size of the entire home.

3. Conventional brick homes don’t have wall cavities, so there’s no place to add insulation. The only way to improve the thermal performance is to add a layer of rigid foam to the face of the walls.

4. Brick has a lot of thermal mass, so it takes time for heat to penetrate it and warm it up. Therefore, it takes more time for a brick house to respond to temperature changes. When you get home from work and turn on the heat, it’s going to take a lot longer for a brick house to “feel” warm than for a conventional wood house.

Remodeling and repair questions? Email Paul at paulbianchina@inman.com . All product reviews are based on the author’s actual testing of free review samples provided by the manufacturers.

Contact Paul Bianchina: Email Letter to the Editor

Copyright 2011 Paul Bianchina


Posted at Yahoo.com

5 housing bubble lessons for buyers

Don’t underestimate impact of deferred maintenance, refinancingMany mistakes were made by homebuyers and sellers during the great housing bubble that burst in 2007. Today’s buyers and homeowners can learn from these past mistakes.

Home prices went up for so long that most people believed that this time things were different. Previously, when prices rose for several years in a row, there was usually a correction in the market. In 2005 and 2006 when prices rose precipitously and buyers clambered to buy, it was thought that prices would never come down.

Prices don’t just go up; they go up and down. This became abundantly apparent when the bubble burst and home prices subsequently dropped 30 percent between 2007 and 2011.

To make matters worse, too many buyers bought with too little cash down. They were banking on home-price appreciation to bail them out. When depreciation replaced appreciation, lenders ended up taking back properties by the millions through foreclosures.

HOUSE HUNTING TIP: Buying your home is not like buying an investment property where it may be advantageous to leverage as much as possible. Your home should also not be viewed as a piggy bank against which you can borrow for vacations, new cars and college tuition.

That strategy got a lot of homeowners into trouble if they refinanced during the bubble years and then ended up being unable to sell their homes for the amount they owed the lender.

Many homeowners refinanced to make renovations and improvements to their homes figuring if they did a good job, they would recoup the amount they spent and then some. During the recent price decline, homeowners often received little if any increase in value due to the improvements they made to the property if they bought after 2000. Home prices in many areas dropped too precipitously.

You need to keep your home well maintained if you expect it to sell well when you decide to move on. However, don’t spend a lot on improvements if you don’t intend to stay in the home and enjoy them.

It isn’t only during periods of price declines that improvements don’t pay back well. In general, in most parts of the country, they don’t pay back the amount invested, according to Realtor magazine and the National Association of Realtors’ collaborative annual surveys. Most homeowners aren’t aware of this.

This doesn’t mean that you shouldn’t remodel your home. For example, if you want a lifestyle that includes a great space for casual living and entertaining and you can afford to, go ahead and create it. Your enjoyment of the improved space should create value for you, even if you don’t recoup the total amount invested in the project. However, don’t over improve for the neighborhood.

During the bubble years, many homes were sold “as is” with respect to deferred maintenance and property defects. In many cases, buyers are still buying “as is.” The mistake that some bubble buyers made was that they didn’t have the defects or deferred maintenance repaired, but lived with the problems as they happily watched property values rise.

When the market turned down, sellers often had a hard time selling without making large price concessions to allow for the property problems. Buyers in today’s market are looking for homes they can move right into without having to do a lot of work.

THE CLOSING: There’s nothing wrong with buying “as is” as long as you know how much it will cost to correct the problems and you have the work done. You should make sure that the price you pay takes into account the amount of work the property requires.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”

Contact Dian Hymer: Email Letter to the EditorCopyright 2011 Dian Hymer


Posted at Yahoo.com

5 keys to buying a home in today’s market

Trading up at a discount still possible

Interest rates dropped to new lows at the end of the first week in October. Thirty-year fixed-rate conforming loans were available in some areas with an interest rate of less than 4 percent. However, during the same week, mortgage applications dropped 4.3 percent, according to the Mortgage Bankers Association.

In past markets, low interest rates ignited the home-sale market. Not so today.

One reason homebuyers are holding back is that current economic news is anything but comforting. The Conference Board Consumer Confidence Index plummeted to 45.2 in August. It was 100 in 1985, which was not a particularly robust housing market. The Confidence Index improved marginally in September to 45.4.

Economists who previously said we’d avoid a double-dip recession are now not so sure. Economic growth has been slowing nationally and internationally. Even if we don’t slip back into a recession, most real estate analysts predict little improvement in the home-sale market for another five years.

Last year, home prices stabilized briefly; then the market softened again. The best homes in the most desirable locations and offered at the most competitive prices sold. The rest sat.

It was thought by many analysts that we were bouncing along the bottom price-wise and would be for some time. Now there’s concern about further price declines, although most economists think the biggest price drops are behind us.

In these uncertain times, should you buy a home? Before you can answer that question, you need to find out if you can afford to buy. Many buyers can’t qualify for the mortgage they need to buy given today’s stringent qualification criteria.

Other prospective buyers are stuck in homes that no longer work for them because they can’t be sold for enough to pay off the mortgage. Many owners can’t make up the difference and come up with enough cash for a down payment on a new house.

HOUSE HUNTING TIP: Some buyers who can afford to buy today and would like to take advantage of low interest rates are holding back due to fear. There is risk involved in buying a home in today’s market; prices could move lower before they improve. There is also risk if you want and need to buy and you postpone it.

We are living in unprecedented times. Home prices have dropped more during the recent recession than they did during the Great Depression. Even though another recession might be in the near future, at some point the housing market will improve.

New-home construction has been virtually nonexistent for years. When the foreclosure inventory that has overshadowed the home-sale market diminishes and the job market improves, the housing market will pick up. In areas with a shortage of inventory, home prices are likely to move upward. This is already happening in areas with significant job growth.

For some buyers, it’s a good time to buy. Let’s say you’ve outgrown your current home and need a better school district. If you can sell or rent your small home and qualify to buy a bigger house in a better location that will last you for decades, you could buy at a discount.

The key is to buy for the long term and be certain of your job security before you make a move. You should have cash reserves for emergencies. Partners who are both employed can hedge their risk if they can qualify on one income. That way, if one party is laid off, they don’t have to sell their home.

You also need to be able to live with a turbulent market without losing sleep. Home values fluctuate over time, but they won’t go down indefinitely.

THE CLOSING: With a long-haul strategy, you can ride out the downturns and sell when the market improves.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”

Contact Dian Hymer: Email Letter to the Editor

Copyright 2011 Dian Hymer


Posted at Yahoo.com

Top reasons to sell home in winter

Aside from less competition, low borrowing costs give buyers incentive

We’re getting close to the end of the year, which begs the question of whether it’s worthwhile trying to sell your home now. Is it a waste of time? Will it sit on the market and become shopworn? Should I take my house off the market for the holidays? Will the home-sale market be better for sellers in 2012?

The first question you need to ask yourself is: Are you emotionally prepared to sell? Selling is a challenge for most sellers, although some markets are better than others. Unless you bought more than eight to 10 years ago and preserved your equity, you may not be able to sell for enough to pay off the mortgages secured against the property and the other costs of selling.

For sellers who have no additional assets, a short sale or foreclosure may be the only option. If so, first look into government programs that might help you out financially. Also, talk to your attorney and tax adviser.

Sellers who have the resources to make up the difference between the sale price and the amount they owe need to ask themselves if they are willing to pay the additional cash in order to sell and move on.

There are two reasons why you might prefer bringing cash to closing. One is that your credit will not be negatively impacted, as would be the case with a short sale or foreclosure. The second is that many buyers shy away from short sales because of the lengthy and uncertain process involved.

The next thing to consider is the condition of your home. Is it ready for the market? The most salable homes are those that are in move-in condition.

Before racing to the hardware store, ask your Realtor about how much competition there would be for your home if you put it on the market before the holidays. Some areas are shy on inventory of good homes on the market. If so, now could be a good time to sell.

HOUSE HUNTING TIP: The supply/demand ratio plays a significant role in the health of a local real estate market. No matter what is said about the housing market nationally, it’s the local picture that tells the tale in terms of the possibility of selling your home at any given time.

Most sellers don’t put their homes on the market during the last or first couple of months of the year. The inventory of homes for sale tends to dwindle during the winter months. Interest rates are low. So, if there are buyers in your local market, you may be at an advantage selling when most sellers are waiting.

Some sellers feel that if they’ve waited this long to sell, they should put the process on hold until spring and get the house ready in the meantime. Certainly, it’s not a good idea to put your house on the market until it looks great. But if you and your house are ready to sell, move ahead.

The market in general tends to slow down over the holidays. But rather than pull your house off the market and miss a likely prospect, change the showing procedure to require advance notice. And enjoy your holidays. A sale before year end could be a great holiday gift.

There is a lot of pent-up demand, on both the buyer and seller sides. Sellers have been waiting for a better time to sell. Buyers have been waiting for more quality inventory and a sense that prices have bottomed or are close to it.

THE CLOSING: Recent projections call for another five or so years of bouncing along close to the bottom of this market cycle. Many experts believe that the big price declines are behind us.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”

Contact Dian Hymer: Email Letter to the Editor

Copyright 2011 Dian Hymer


Posted at Yahoo.com

10 Worst First-Time Homebuyer Mistakes

These errors could wind up costing you more than the coveted key to your first home.

By Amy Fontinelle, Investopedia


Are you gearing up to buy your first place? If so, arm yourself with these tips to get the most out of your purchase and avoid making 10 of the most costly mistakes that could put a hold on that sold sign.


1. Going House Shopping Without Knowing What You Can Afford

As we’ve all learned from the subprime mortgage mess, what the bank says you can afford and what you know you can afford or are comfortable with paying are not necessarily the same. If you don’t already have a budget, make a list of all your monthly expenses (excluding rent), including vehicle costs, student loan payments, credit card payments, groceries, health insurance, retirement savings and so on. Don’t forget major expenses that only occur once a year, like any insurance premiums you pay annually or annual vacations. Subtract this total from your take-home pay and you’ll know how much you can spend on your new home each month.


If you end up looking at homes that are outside your price range, you’ll end up lusting after something you can’t afford, which can put you in the dangerous position of trying to stretch beyond your means financially or cause you to feel unsatisfied with what you actually can afford. You may even learn that you can’t afford the type or size of home that you desire and that you need to work on reducing your monthly expenses and/or increasing your income before you even start looking.


2. Going House Shopping Without a Mortgage Qualification

What you think you can afford and what the bank is willing to lend you may not match up, especially if you have poor credit or unstable income, so make sure to get pre-approved for a loan before placing an offer on a home. If you don’t, you’ll be wasting the seller’s time, the seller’s agent’s time, and your agent’s time if you sign a contract and then discover later that the bank won’t lend you what you need, or that it’s only willing to give you a mortgage that you find unacceptable.


Be aware that even if you have been pre-approved for a mortgage, your loan can fall through at the last minute if you do something to alter your credit score, like finance a car purchase. If you cause the deal to fall through, you may have to forfeit the several thousand dollars that you put up when you went under contract.


3. Forgetting to Include Taxes, Fees, Maintenance, Closing Costs and Insurance

Once you’re a homeowner, you’ll have additional expenses on top of your monthly payment. Unlike when you were a renter, you’ll be responsible for paying property taxes, insuring your home against disasters and making any repairs the house needs (which will occasionally include expensive items like a new roof or a new furnace).


If you’re interested in purchasing a condo, you’ll have to pay maintenance costs monthly regardless of whether anything needs fixing because you’ll be part of a homeowner’s association, which collects a couple hundred dollars a month from the owners of each unit in the building in the form of condominium fees.


So, if you know you can afford to spend $1,500 a month on your home, subtract from that $1,500 whatever property taxes are on your home divided by 12, your annual home insurance premium divided by 12 and a couple hundred dollars for maintenance. Now you know how much of a monthly mortgage payment you can really afford. Make sure to actually set aside the extra money so you’ll have it when those other expenses come up.


4. Being Too Picky

Go ahead and put everything you can think of on your home-buying wish list, but don’t be so inflexible that you end up continuing to rent for significantly longer than you really want to. First-time homebuyers often have to compromise on something because their funds are limited. You may have to live on a busy street, accept outdated decor, make some repairs to the home, or forgo that extra bedroom. Of course, you can always choose to continue renting until you can afford everything on your list – you’ll just have to decide how important it is for you to become a homeowner now rather than in a couple of years.


5. Rejecting a Great Place Because of Lack of Vision

Even if you can’t afford to replace the hideous wallpaper in the bathroom now, it might be worth it to live with the ugliness for a while in exchange for getting into a house you can afford. If the home otherwise meets your needs in terms of the big things that are difficult to change, such as location and size, don’t let physical imperfections turn you away. Besides, doing home upgrades yourself, even when you have to hire a contractor, is often cheaper than paying the increased home value to a seller who has already done the work for you.


6. Being Swept Away by Staging and/or Minor Upgrades

These inexpensive tricks are a seller’s dream for playing on your emotions and eliciting a much higher price tag. Sellers may pay $2,000 for minimal upgrades or staging that you’ll end up paying $40,000 for. If you’re on a budget, look for homes whose full potential has yet to be realized. Also, first-time homebuyers should always look for a house they can add value to, as this ensures a bump in equity to help you up the property ladder.


7. Compromising on the Important Things

Don’t get a two-bedroom home when you know you’re planning to have kids and will want three bedrooms. By the same token, don’t buy a condo just because it’s cheaper when one of the main reasons you’re over apartment life is because you hate sharing walls with neighbors. It’s true that you’ll probably have to make some compromises to be able to afford your first home, but don’t make a compromise that will be a major strain.


8. Getting Your Heart Set on a Home Before It’s Been Inspected

It’s tempting to think that you’re a homeowner the moment you go into escrow, but not so fast – before you close on the sale, you need to know what kind of shape the house is in. You don’t want to get stuck with a money pit or with the headache of performing a lot of unexpected repairs. Keeping your feelings in check until you have a full picture of the house’s physical condition and the soundness of your potential investment will help you avoid making a serious financial mistake.


9. Not Choosing to Hire an Agent or Using the Seller’s Agent

Once you’re seriously shopping for a home, don’t walk into an open house without having an agent (or at least being prepared to throw out a name of someone you’re supposedly working with). Agents are held to the ethical rule that they must act in both the seller and the buyer parties’ best interests, but you can see how that might not work in your best interest if you start dealing with a seller’s agent before contacting one of your own.


10. Not Thinking About the Future

It’s impossible to perfectly predict the future of your chosen neighborhood, but paying attention to the information that is available to you now can help you avoid unpleasant surprises down the road.


Some questions you should ask about your prospective property include:

  • What kind of development plans are in the works for your neighborhood in the future?
  • Is your street likely to become a major street or a popular rush-hour shortcut?
  • Will a highway be built in your backyard in five years?
  • What are the zoning laws in your area?
  • If there is a lot of undeveloped land? What is likely to get built there?
  • Have home values in the neighborhood been declining?


If you’re happy with the answers to these questions, then your house’s location can keep its rose-colored luster.



Buying a first home can seem stressful and overwhelming, and it isn’t without its share of potential pitfalls. If you’re aware of those issues ahead of time, you can protect yourself from costly mistakes and shop with confidence.


For many people, a home is the largest purchase they will ever make, but it need not be the most difficult.


Amy Fontinelle is a freelance writer and editor with clients located across the United States and in Canada. She has written over 300 published articles and blog posts for a variety of national and local publications and websites on topics including travel, restaurants, food and drink, fitness, budgeting, credit management, real estate, investing and historic preservation. Her articles have been featured on the homepage of Yahoo! and on Yahoo! Finance, Yahoo! HotJobs, several local news websites and Forbes.com.


You can read more of Amy’s personal finance articles at Two Pennies Earned, her own personal finance website, and at PF Advice, one of the web’s leading personal finance blogs.



Posted at Yahoo.com

10 Tips For Getting A Fair Price On A Home

Whether it’s a buyer’s market or a seller’s market, all homebuyers have one thing in common: they don’t want to get ripped off. But how do you know if you’re getting a fair deal on the home you’re prepared to place an offer on? Read on to find out how to evaluate the price of any home so you can make a sound investment decision.

1. Research Recently Sold Comparable Properties

A comparable property is one that is similar in size, condition, neighborhood and amenities. One 1,200-square-foot, recently remodeled, one-story home with an attached garage should be listed at roughly the same price as a similar 1,200-square-foot home in the same neighborhood. That said, you can also gain valuable information by looking at how the property you’re interested in compares in price to different properties. Is it considerably less expensive than larger or nicer properties? Is it more expensive than smaller or less attractive properties? Your real estate agent is the best source of accurate, up-to-date information on comparable properties (also known as “comps”). You can also look at comps that are currently in escrow, meaning that the property has a buyer but the sale is not yet complete.


2. Check Out Comparable Properties That Are Currently on the Market

In this case, you can actually visit other homes and get a true sense of how their size, condition and amenities compare to the property you’re considering buying. Then you can compare prices and see what seems fair. Reasonable sellers know that they must price their properties similarly to market comparables if they want to be competitive.


3. Look at Comparables That Were on the Market Recently but Didn’t Sell

If the house you’re considering buying is priced similarly to homes that were taken off the market because they didn’t sell, the property you’re considering may be overpriced. Also, if there are a lot of similar properties on the market, prices should be lower, especially if those properties are vacant. Check out the unsold inventory index for information about current supply and demand in the housing market. This index attempts to measure how long it will take for all the homes currently on the market to be sold given the rate at which homes are currently selling.


4. Consider Market Conditions and Appreciation Rates in the Area

Have prices been going up recently or going down? In a seller’s market, properties will probably be somewhat overpriced, and in a buyer’s market, properties are apt to be underpriced. It all depends on where the market currently sits on the real estate boom-and-bust curve. Even in a seller’s market, properties may not be overpriced if the market is on the upswing and not near its peak. Conversely, properties can be overpriced even in a buyer’s market if prices have only recently begun to decline. Of course, it can be difficult to see the peaks and valleys until they’re history. Also consider the impact of mortgage interest rates and the job market on the economy.


5. Are You Buying a For-Sale-by-Owner Property?

A for-sale-by-owner (FSBO) property should be discounted to reflect the fact that there is no 6% (on average) seller’s agent commission, something that many sellers don’t take into consideration when setting their prices. Another potential problem with FSBOs is that the seller may not have had an agent’s guidance in setting a reasonable price in the first place, or they may have been so unhappy with an agent’s suggestion that they decided to go it alone. In any of these situations, the property may be overpriced.


6. What Is the Expected Appreciation for the Area?

The future prospects for your chosen neighborhood can have an impact on price. If positive development is planned, such as a major mall being built, the extension of light rail to the neighborhood, or a large new company moving to the area, the prospects of future home appreciation look good. Even small developments like plans to add more roads or build a new school can be a good sign. On the other hand, if grocery stores and gas stations are closing down, the home price should be lower to reflect that, and you should probably reconsider moving to the area. The development of new housing can go either way – it can mean that the area is hot and is likely to be in high demand in the future, increasing your home’s value, or it can result in a surplus of housing, which will lower the value of all the homes in the area.


7. What Is Your Real Estate Agent’s Opinion?

Without even analyzing the data, with years of experience, your real estate agent is likely to have a good gut sense of whether the property is priced appropriately or not and what would be a fair offering price.


8. Does the Price Feel Fair to You?

If you’re not happy with the property, the price will never seem fair, even if you get a bargain. Even if you pay a little over market value for a home you love, in the end, you won’t really care.


9. Test the Waters

Even in a seller’s market, you can always offer below list price just to see how the seller reacts. Some sellers list properties for the lowest price they’re willing to take because they don’t want to negotiate, while others list their homes for higher than they expect to earn because they expect to negotiate downward or they want to see if someone will make an offer at the higher price. If the seller accepts your price or counteroffer, you’ll get an indication that the property probably wasn’t worth what it was listed for and you have a good chance at getting a fair deal. On the other hand, some sellers may underprice their properties in the hope of generating lots of interest and sparking a bidding war. Unlike on eBay, however, the seller doesn’t have to simply sell to the highest bidder: sellers can reject any and all offers that don’t meet their expectations. If you have your heart set on the property, be warned that some sellers may be offended by lowball offers and refuse to work with you if you chose to employ such a tactic. Also, when you offer less than the list price, you may increase your risk of being outbid by another buyer.


10. Get an Appraised Value and a Home Inspection

Once you’re under contract, the lender will have an appraisal of the property done (usually at your expense) to protect its financial interests. The lender wants to make sure that if you stop making your mortgage payments, it’ll be able to get a reasonable amount of its money back when it forecloses (FCL) on your home. If the appraisal comes in at considerably less than your offering price, you may not be getting a fair deal. In fact, the lender may not even let you purchase the home unless the seller is willing to bring the price down. A home inspection, which is completed after you’re under contract, will also give you a way to gauge your offering price. If the home needs many expensive repairs, you’ll want to ask the seller to make the repairs for you or discount the purchase price so you can make them yourself.



When you’re shopping for a home, it’s important to understand how homes are priced so you can make a sound investment and reach a fair agreement with the seller. Using these tips, you’ll be able to make a confident and well-informed offer on any home in any market.


Amy Fontinelle is a freelance writer and editor with clients located across the United States and in Canada. She has written over 300 published articles and blog posts for a variety of national and local publications and websites on topics including travel, restaurants, food and drink, fitness, budgeting, credit management, real estate, investing and historic preservation. Her articles have been featured on the homepage of Yahoo! and on Yahoo! Finance, Yahoo! HotJobs, several local news websites and Forbes.com.


You can read more of Amy’s personal finance articles at Two Pennies Earned, her own personal finance website, and at PF Advice, one of the web’s leading personal finance blogs.


Posted at Yahoo.com

9 ways to keep lid on energy bills

Air leaks can infiltrate surprising places

No one likes wasting money, especially in these tough economic times. So it certainly makes sense — dollars and cents — to make a small investment of time and supplies to close up those heat-wasting air leaks around your home. It’ll pay back big dividends in reduced energy bills and a warmer, more comfortable house this winter. So let’s look at some of the areas where those drafts may be lurking, and see how to take care of them.

1. Doors and windows: This should be an obvious one. If you can see gaps between your siding and your windows or exterior doors, close them up with a bead of clear or paintable acrylic latex caulk. Larger gaps can be filled with foam backer rod before applying the caulking.

2. Exterior penetrations: Some of these areas are going to be obvious, while some may take a little bit of searching. Some examples of exterior penetrations where air can leak into the house include exterior faucets, dryer vents, exterior electrical outlets, exterior light fixtures, holes that have been drilled for phone and TV cables, conduit penetrations, exit points for plumbing drains, and penetrations for air conditioning lines. Closing these penetrations may require a variety of different techniques, including caulk, expanding spray foam, or, in the case of electrical boxes and fixtures, specific gaskets that are designed to fit the boxes.

3. Exhaust-vent covers: Dryer vents, range hood vents, bath fan vents, and other interior ventilation equipment typically terminate outside the house in a plastic or metal cover that has one or more louvers on it. The louvers are designed to be in the closed position whenever the fan is not in use, so that outside air doesn’t leak in. Check all of these louvers to be sure they’re closing completely, with no air leaks. If they aren’t, you can adjust the spring tension to hold them closed more tightly; add foam weatherstripping tape for a more air-tight seal; or replace the entire vent cap with a new one.

4. Gaps around interior vents and recessed lights: Inside your home, heated air can be leaking out around that same ventilation equipment, where vent pipes pass through the walls or ceiling, or where vent covers meet wall and ceiling surfaces. Recessed light fixtures can also be real air-leakers. Around the vent pipes and recessed light cans, seal any gaps with caulking. For the vent covers and recessed light covers, remove the covers, then adjust the springs and/or add foam weatherstripping tape to create a tight seal between the cover and the ceiling.

5. Heat-duct penetrations: Gaps around heating-duct cans where they pass through the floor or wall allow cold air to enter from the crawl space, while gaps around ceiling-duct cans allow heated air to escape into the attic. To close those drafts, first remove the register, then use a combination of caulking and/or metallic duct sealant tape to close any gaps between the sheet metal cans and the floor, wall or ceiling surface.

6. Fireplaces and woodstoves: Lots of gaps can occur around these appliances. With a conventional fireplace, keep the damper closed except when burning a fire to prevent heated air from escaping up the chimney. Consider investing in a set of air-tight doors, which close off the air leaks and also make your fires more efficient. Look for gaps around woodstove and gas fireplace flue pipes, and air leaks around masonry chimneys. Use a metal collar if necessary around flue pipe penetrations, and seal gaps with heat-resistant sealant specially formulated for this application.

7. Attic and crawl space hatches: These can be real air losers if they’re not weatherstripped, so take care of that with some foam tape. Make sure the hatches are insulated as well.

8. Interior doors to unheated spaces: If you have any interior doors that lead to unheated spaces, including basements, garages or attics, be sure the doors are weatherstripped to prevent air leakage. If possible, replace older, hollow-core doors with solid-core or, better yet, insulated metal doors.

9. Sill plates and penetrations: This one’s not as easy to deal with, but it’s well worth the effort to try to do whatever you can with it. Air can leak both into and out of the house through gaps where the sill plate meets the foundation or the siding, and around plumbing and wiring penetrations drilled through wall plates in various areas. If you have a gap between your siding and the bottom of your exterior wall, especially in older homes where the use of sill sealers was not a common practice, consider closing up this big air gap with a bead of caulking or expanding foam. In the basement, crawl space and attic, if you can access any of the pipes and wires that pass through the wall plates, seal the penetrations with expanding foam.

Remodeling and repair questions? Email Paul at paulbianchina@inman.com . All product reviews are based on the author’s actual testing of free review samples provided by the manufacturers.

Contact Paul Bianchina: Email Letter to the Editor

Copyright 2011 Paul Bianchina

Obama signs bill raising FHA mortgage limits



* Move designed to help more buyers get FHA-backed mortgages

President Obama on Friday signed a bill that allows the Federal Housing Administration to back mortgages of up to $729,500, six weeks after the limit dropped to $625,500. The move makes it easier for more buyers to get low-interest FHA loans.

But loans backed by the government entities Fannie Mae and Freddie Mac will continue to have a $625,500 limit, making them less useful in high-priced housing markets like North Jersey.

Loans that exceed the Fannie, Freddie and FHA limits are considered “jumbo” mortgages, which typically carry higher interest rates and require 20 percent (or higher) down payments.

The FHA allows lower down payments and is more forgiving of imperfect credit. But FHA loans also carry higher fees, so more-affluent buyers tend to prefer Fannie and Freddie loans, when they qualify for them.

Keith Gumbinger, a vice president with HSH.com, a Pompton Plains company that tracks the mortgage market, said high-end buyers who can’t qualify for a Freddie or Fannie loan will have to figure out which is the better deal: a jumbo loan or an FHA loan.

Jumbo loans were recently going for about 4.7 percent, while FHA loans were around 4 percent, Gumbinger said. But the FHA loans require a 1 percent upfront fee, plus about 1 percent a year in insurance fees.

Posted at NorthJersey.com

November buying advice: Is it better to buy a new or existing home?

Find out whether it’s worth it to fork over extra for a home with up-to-the-minute features and fixtures.

By Melinda Fulmer of MSN Real Estate


Given the rock-bottom pricing on existing homes these days, why would a buyer want to fork over a lot more for a new home?

In this month’s edition of Buying Advice, we’ll look at the pros and cons of buying a new home, as well as some tips for making it more affordable. We’ll check out the latest housing statistics and answer a reader’s question about whether it’s a good idea to bundle your mortgage, tax and insurance payments.

Why buy new?
Those model homes in new-home communities sure are enticing, with up-to-the-minute flooring, fixtures and appliances, but are they worth paying a premium?

That depends on the community, its location and design, experts say.

“They can bring a lot of benefits, assuming you can find a location you like,” says John McIlwain, the Urban Land Institute’s senior fellow for housing.

However, you will likely pay much more upfront for these perks: The median price of new homes sold in the U.S. in August 2011 was $204,400, according to the Commerce Department. That’s far more than the median existing home’s $165,400 price tag, which has been pulled down by the flood of bank-owned property. (See more on these stats in the “Housing snapshot” below.)

And that new-home price is far less negotiable than that of a comparable existing home. Builders say they are reluctant to discount the price and bring down the value of future sales in a community.

However, they will often throw in upgrades, such as a free fence, appliances or upgraded flooring to buyers who press for incentives. And they will often pay for closing costs to seal the deal.

What you do get in a new home – if you buy from the right builder – is a house that will need fewer costly repairs, will cost you less for updates and will have greater energy efficiency.

“The difference (in energy savings) between a new Energy Star home and even a 10-year-old home can be dramatic — as much as 30% to 50%” says Todd Frederking, sales manager for the Houston division of First Texas Homes. “These dollars per month should be considered in choosing a home.” These homes can also bring more at resale.

You won’t have to pay thousands to swap out old single-pane windows or add insulation. You won’t have to spring for new cabinets, countertops or flooring, as you might with the purchase of a 1970s or 1980s-era home. You get a home built with materials that suit your taste, and you don’t have to clear out or otherwise inconvenience yourself to get it that way.

More buyers appear to be interested in new construction; sales climbed 5.7% in September from the previous month, according to the Commerce Department.

The downside is that appraisals in new-home communities can come in low, especially if there aren’t many other new-home communities in the area to compare it with, says Ken Chitester, spokesman for the Appraisal Institute.

“Far fewer new-home communities are being built,” Chitester says. That’s putting pressure on appraisers to make tricky adjustments. Indeed, with fewer solvent builders, new-home sales are running at levels that are a third of where they were at the peak of the housing market, McIlwain says.


New homes can also be harder to appraise if they have a lot of special features. In many cases, an independent appraisal might be required to get lender approval.

And there can be a tradeoff in size. As homebuilders have worked to bring down prices post-bubble, many have had to cut lot sizes and room dimensions. In the best case, that means efficient floor plans with less to clean. At worst, it means a bedroom that barely accommodates your furniture, a backyard as small as a postage stamp and a view straight into your next-door neighbor’s window.

With so many builders cutting corners, you’d be wise to check out a builder’s reputation first and look for any pending lawsuits against the company. McIlwain also suggests going through that newly built home with a home inspector — and possibly even a contractor — before you close and move in.

But if you are comparing two homes — one new and one existing – and both are fine options, you have to go with your gut and ask, “Where do I really feel comfortable? Will I be happier here or there?” McIlwain says.

That, he says, is how you find a home that you can live in for a decade or two, rather than a house that you might regret.


Housing snapshot
Despite record-low mortgage rates, existing-home sales declined 3% in September to 4.91 million from the 5.06 million the previous month. However, they were 11.3% higher than in September 2010, the period immediately following the expiration of the housing tax credit, according to data from the National Association of Realtors.

Lawrence Yun, NAR chief economist, looked on the bright side, noting that the housing market has been relatively stable, although at low levels. “The irony is that affordability conditions have improved to historic highs and more creditworthy borrowers are trying to purchase homes, but the share of contract failures is double the level of September 2010.”


Contract failures are sale cancellations caused by declined mortgage applications and other failures in underwriting, such as appraisal values coming in below the negotiated price.

The national median sale price declined 3.5% to $165,400 from September 2010, despite distressed homes making up a smaller share of sales – 30% versus 35% in the same period last year.

Investors continued to make up a large part of the market, with 30% of all sales being cash deals.

The biggest sale drop-off came in the West, a higher-cost area where lenders had lowered mortgage loan limits over concerns about the expiration of higher conforming-loan limits at the end of September.

Bundle your bills?
We received this question from reader “Atma” who asks: “Is there any advantage to have your mortgage, home insurance and property tax all included in one monthly payment?”

We asked Ilyce Glink, author of “Buy, Close, Move In!: How to Navigate the New World of Real Estate — Safely and Profitably — and End Up with the Home of Your Dreams.”

The best reason to pay your mortgage, real-estate property taxes and homeowners’ insurance together is that you’ll never forget to make those payments and possibly lose your home, Glink says.

Many folks have trouble coming up with enough cash to make that big tax bill once or twice a year. “It’s a big payment, and you’ve got to be pretty smart about making sure you put enough cash away so that you have enough savings at the right time,” Glink says.

Some folks don’t want to give the bank all of that money and deal with the possibility of it taking more than it needs to make the payments. The good news is that you can opt out of a tax and insurance escrow, she says, if you have enough equity in the property. We’re talking at least 30% before lenders will allow you to pay your own taxes and insurance, and some require even more.

Moreover, if you decide to place your own taxes and insurance premiums in escrow, you’ll have to pay the lender for the privilege, in the form of an upfront fee of as much as several hundred dollars.

Is it worth it? “If you’re sure you can save enough to make these payments and won’t forget to actually write the check, I’d probably try to get around having a mandatory tax and insurance escrow. I’m a big believer in maintaining as much control over your money as possible,” Glink says.

Questions?  Comments?  Do you have a question about buying real estate or a suggestion for a future topic in this column? Submit either in the comments section below or on Facebook, or emailrefdback@microsoft.com. Brief questions have the best chance of being selected.


Posted at MSN.com