Home inspections highlights money traps

As a buyer, one of the smartest things you can do is get a home inspection. It’s arguably more important than getting an appraisal, because a proper inspection will prevent you from buying a money pit – at least not intentionally.

A good home inspection will identify both major and minor problems in the physical condition of the home. For example, the inspector can identify issues such as structural problems, (termite damage), mechanical problems (heating and air conditioning) or construction defects.

The home inspection report will identify the problem areas, explaining what needs to be either repaired or replaced, and it will give you an estimate of the expected lifetime remaining on the major systems in the home.

A home inspector will begin with a review of the home as a whole and then break it into sections, checking each area carefully looking for signs of wear and tear which is above the expected, normal wear and tear.

As a buyer, it may be very tempting to require the seller to do all of the repairs on the home before you buy it, however there are no hard and fast rules about who should pay for repairs in a home sale.

One rule of thumb suggests that anything which will require you to hire a professional, have the seller pay for the costs, either as a reduction in the sales price or before the sale takes place. It’s up to you as a buyer, but if there’s a long list of items which you need and/or want to do which can be done easily enough by yourself, don’t bother asking the seller to do the repairs. Wait until you’ve bought the home and do the repairs yourself.

Showing the sellers a huge list of things you want fixed may cause them to balk at the request and the sale could fall through, leaving you with the tedious task of continuing your home search, on top of the cost for the inspection you just paid for.

Obtaining a home inspection from a qualified home inspector is not a guarantee that nothing will go wrong. In fact, one thing that catches many first time home buyers by surprise is just how much more it does cost to be a homeowner – after all, you don’t have a landlord or “super” to call when your sink springs a leak – you are the “super!”

Source: www.longislandrealestate4buyers.com

Pipe insulation stops draft

With heating costs going through the roof, here’s an easy way to keep heat from slipping out your doors, too. Take 30 minutes and replace the weather stripping and door sweeps around your steel entry doors. Plan to do this project on a warm day since you’ll have to remove the doors. Steel doors use a compression-style strip for the hinge side and a magnetic one for the knob side and the top. But look at the door and confirm the style of weather stripping on all three sides and the type of door sweep before you head to the store. You’ll find replacement weather stripping in a variety of lengths and colors at home centers and hardware stores.

To remove the door, close it and use a hammer and a pin punch or a thin nail to tap out the door hinge pins. Turn the knob, open the door slightly and lift it off the hinges. When you rip out the old weather stripping, you might find that it’s tacked into place with small brads from the manufacturer. Leave them in place after removing the old weather stripping or you’ll damage the doorjamb. Then shear off the shanks inside the groove with an old chisel  or drive them deeper into the groove with a screwdriver. Press the new magnetic weather stripping firmly into the groove on the knob side and top of the door frame and do the same with the compression strip along the hinge side. To ensure that the strips won’t pull out, pin them with a few 1-in. brads, especially in the magnetic strips.

The sweep on the door bottom is even easier to replace. Pry or slide out the old sweep. Run a bead of caulk along the bottom edge of the door, tap the sweep into place and then staple it at the ends. While you’re at it, you might as well do a quick fine-tune of the adjustable threshold. Adjust all four screws until the door opens and closes without too much drag and any drafts have been eliminated (look for light between the sweep and the threshold with the door closed). Turn the screws clockwise to lower the threshold and counterclockwise to raise it

If you’re renting or low on funds you can re-purpose a 6ft length of pipe insulation available for $1-1.50 at any home improvement store into two door draft guards. The only disadvantage is that the pipe insulation cannot be used on windows unlike the pre- made door draft guard.

Source: longislandrealestate4buyers.com/

If you’re a homeowner, you most certainly have a homeowner insurance policy to cover your home. Not only is homeowner insurance a necessity, lending regulations require every homeowner with a mortgage to have some form of homeowner insurance coverage. It is a vital investment you need to make in order to protect your home and everything in it against accidents and hazards like fire, storm, flood, and others. Any accidents which occur in the house or on your property should also be covered, including medical reimbursements in cases of accidents and injuries.

You may have homeowner’s insurance, however, the question is, is it the right coverage? Home owners insurance differs depending on the type of coverage included in your policy. Different areas may require different types of coverage. Areas most commonly affected with natural disasters like flood, hurricane, and storms, also have special coverage against these types of natural hazards.

A good example is the homeowners insurance policy in some states where a special section called the wind policy is included. This is especially provided for homes in areas which are often experience hurricanes. This will provide home owners the necessary coverage against a very common hazard in those areas.

Upon signing your homeowners insurance policy, you need to know what is included and not included in the coverage. This will help you decide whether to provide additional homeowners insurance for other specific coverages. Some homeowners insurance policies may not cover your home against earthquake, nuclear exposure, and tsunami. If you feel you live in an area where nuclear exposure is a known hazard or if you are along the ring of fire and may want to provide additional coverage against earthquake, try to talk about this with your insurance provider and get possible coverage for these types of hazards.

Your homeowner insurance may also provide coverage for the belongings you have within your home. However, if you have expensive and valuable items within your home which the standard home insurance policy may not completely cover, you might opt to add another type of insurance — content coverage.

Make sure you have the right homeowners insurance coverage. If you are not sure about it, always seek the help and assistance of your insurance provider.

Source: longislandrealestate4buyers.com/

Buying a first home is often fraught with uncertainty and stress. The home buying process may be made easier and less stressful with these tips for first time home buyers.

1. Don’t Stretch Your Budget:

Figure out how much you are able to comfortably afford before looking for a home. A $1000 a month rent payment does not mean you are able to afford the same mortgage payment. Owning a home has increased costs over renting. Taxes, insurance and unforeseen maintenance costs will add up to higher expenses. Consider all of these factors when deciding on a home budget. A mortgage calculator will help determine these costs.

2. Find A Reputable, Seasoned Real Estate Broker:

A reputable real estate broker will help a prospective buyer find the perfect home. Good real estate agents know the local marketplace and whether the house is for sale at a good price. They will be aware of what is available and how much is a fair price for the amenities within the home. Seasoned real estate brokers will help walk the home buyer through the negotiating process to ensure the best possible purchase price.

3. Obtain Mortgage Pre-approval:

Have financing in place before stepping foot into any home. Pre-approval is different from being pre-qualified. Pre-approval means financing up to a set amount is guaranteed by the lender. Pre-approval letters from a mortgage company offer the buyer an advantage in the negotiating point of the home purchase. Potential buyers will be able to show they are serious and have funding in place. This allows them leverage over another potential buyer who does not have mortgage pre-approval.

4. Have A Home Inspection:

Home inspections are a vital part of purchasing a property. A good inspector will look for a variety of issues to help determine if there are any problems within the home. Issues found by an inspector will allow the buyer the ability to renegotiate price. Buyers may walk away from the house if severe issues are discovered and they do not feel capable of dealing with the problems, and the seller isn’t willing to fix problems found by the home inspection.

5. Remember Closing Costs:

First time home buyers need to remember closing costs. These fees typically range from two to four percent of the total loan amount. Closing costs depend on how many points the lender is charging for the loan. Buyers can sometimes negotiate closing costs with the seller paying some or all of these fees. Use a closing cost calculator to help determine your closing costs.

6. Save Some Money for Home Repairs:

Sure, putting a big down payment on your new home is a good thing. But have you thought about home repairs? It is not smart to put all of your money into your down payment, or to use the rest to make improvements. Surprises abound for first-time home buyers who may not be aware of all the ways their new home can swallow their money. Gone are the days when many homeowners could dip into their equity to replace a roof or septic system. Be proactive and keep some savings aside for unexpected home repairs, even if the inspection came up clean.

Talk to us about buying your first home. We are experienced in all these areas and can help you make the first home buying experience enjoyable, not a nightmare.

Source: longislandrealestate4buyers.com/

Home Remolding

If you’re looking to remodel or upgrade your house these days, creating lasting value is sure to be a top concern. You’ll want to add features that won’t be outdated just a few years from now — reducing your home’s marketability and making your house look like it just crawled out of a time machine. Many people have the idea that a home remodel has to involve a new kitchen or bathroom. But some simpler, less expensive projects, can also bring lasting value to your home.

Lighting: Adequate light is more than just brightness — it’s a major contributor to our sense of comfort and well-being. Good interior lighting reduces fatigue and stress by reducing strain on eyes; outdoor lighting adds curb appeal and safety. Interior and exterior lighting fixtures — recessed ceiling lights, sconces, track lights, and flood lights — contribute to the overall value of a house and property, making it more marketable when it comes time to sell.

Storage: Storage is one of the most sought-after features of prospective home buyers, and built-in storage solutions always deliver. Built-ins have a neat, fitted appearance that takes advantage of every available square inch of wall area. Because they make use of existing structural components, such as wall studs, built-ins generally cost less than free-standing furniture of comparable size, quality, and function. Fit built-in storage solutions under stairs, as window seats, and in closets.

Paint: From boring beige to rocketing red, your rooms will never go out of style. Why? Because you can easily redo them — a new paint job is one of the simplest, least-expensive of all remodeling projects. A Do-It-Yourself paint job on a 12-by-12-foot room costs only about $150 for paint and painting tools; if you’re not the do-it-yourself type and need to hire someone, expect to pay a licensed paint contractor $300-$400.

Wood Floors: Shag carpets come and go, but wood flooring has the uncanny ability to look great in any setting, whether traditional, contemporary, or country. The warm, upscale ambience of wood floors helps preserve the value of your home, and the cost isn’t prohibitive: Pre-finished wood floors in oak, maple, and bamboo run $8-$12 per square foot, installed.

Molding: Adding architectural interest with trims and moldings is a good way to bring rooms to life. Little details can have a big impact when it comes to creating homes that really stand out. You’ll pay $1-$3 per linear foot for a 5-inch-wide, paint-grade crown molding; $1.50-$6.50 for wood.

Stonescaping: Masonry materials used to create walkways, patios, and retaining walls helps define and shape outdoor spaces. Making your yard usable for sitting and strolling increases living area, which contributes to your property’s value. Materials, such as brick and stone, are virtually indestructible, readily available, and have timeless good looks. You’ll pay $17-$28 per square foot for professionally installed natural stone pavers.

Source: longislandrealestate4buyers.com

Falling housing prices

The value of their homes is a major point of pride for many owners, who use the figure to prop up their net worth and justify the money they’ve poured into their dwellings. When the price declines, as it has been doing for most homeowners for years, they tend to overlook the positive side of the drop — one that affects them more immediately.

As Budgets Are Sexy points out, lower home values means lower property taxes, which are typically added to monthly mortgage payments. Homeowners with sinking property values have lower payments and more money in their pockets than they would if the market remained steady.

There are other drawbacks to declining home values, such as less equity to borrow against and the possibility of a heavy loss if you’re forced to sell. But all things being equal, your depreciating home is making you richer.

Housing predictions strong for 2012

What’s in store for housing markets in 2012? Well, the good news is, we may finally be over the worst, according to the authors of a new Kiplinger article.

Following five long, often painful years of price declines, which saw median home prices drop by almost 40%, housing is finally showing signs of a rebound – although we still have some way to go. Things are looking better for real estate in 2012.

The Kiplinger article made a number of predictions for housing over the next 12 months. One of the most important of these is that home prices are expected to stabilize. Although Mark Zandi of Moody’s Analytics is predicting that home prices will drop by a further 3% to 5% nationwide, he also claimed that in around 12 months time things will finally stabilize, before we finally start seeing some gains in 2013.

Housing affordability is also expected to grow higher. Housing affordability is worked out according to the ratio of median home prices to median family incomes, and this is likely to remain at the current record levels we are seeing now. The article in Kiplinger notes that many homes across the US are “substantially undervalued”, and predicts we could even see a mini-bubble in places, with some areas seeing prices rise by as much as 10% to 15% in a given year.

One factor that will help keep houses affordable is low mortgage rates, which are set to continue where they left off in 2011 – at record low levels. 30-year fixed rate mortgages have been hovering under 4% for quite a few weeks now, and Kiplinger predicts this will stay around the 4% to 5% mark throughout 2012.

We may also finally start to see some more sales. While we still have huge inventories flooding many local markets, the big slow-down in new homes has led to a gradual easing of surplus inventories, something that should lead to an increase in existing-home sales.

Source: longislandrealestate4buyers.com/

Short Sale On The Rise

Short sales up, foreclosures down. That’s because in many cases a short sale may be the lesser of two evils for banks and homeowners versus a foreclosure. It’s a tarnished silver lining for people at risk of losing their houses and homeowners in neighborhoods blighted by bank-owned properties, but the robo-signing scandal that slowed the foreclosure process to a crawl appears to have increased lender interest in short sales.

Foreclosure sales are pretty devastating,” said Faith Schwartz, executive director of Hope Now, a resource for homeowners facing foreclosure. “We’d much prefer a modification, but if  homeowners don’t quality, then the next best alternative is deed-in-lieu or short sales.”

Short sales up, foreclosures down. That’s because in many cases a short sale may be the lesser of two evils for banks and homeowners versus a foreclosure. It’s a tarnished silver lining for people at risk of losing their houses and homeowners in neighborhoods blighted by bank-owned properties, but the robo-signing scandal that slowed the foreclosure process to a crawl appears to have increased lender interest in short sales.

Short sales, in which the lender agrees to let the owner sell the home for less than the amount owed on the mortgage, and foreclosures both climbed in 2010, but while short sales rose by 26,000 this year, the number of foreclosures fell by 255,000, according to Hope Now. Short sales, along with deed-in-lieu of foreclosure deals in which the lender takes the deed essentially as payment for the mortgage, still upend families, torch credit ratings and hurt neighboring property values, but they’re far less toxic than foreclosures.

Short sales are better for homeowners. They can stay in their homes, and the quicker process means they can begin rebuilding their credit sooner. Credit scoring firm Fair Isaac Co., which developed the FICO score, says foreclosures and short sales slash the same number of points from a homeowner’s credit score. Homeowners with short sales may be able to obtain a loan sooner than foreclosed homeowners, though, which can improve their credit.

In some states, mortgage lenders can pursue a delinquency judgment against homeowners for the difference between the amount due on the mortgage and the purchase price at a foreclosure auction. A delinquent homeowner engaging in a short sale has an opportunity to negotiate away the bank’s right to sue for that judgment.

The biggest plus for banks is that they stand to make more from a short sale than a foreclosure. According to foreclosure specialists RealtyTrac.com, the average price of a foreclosed home in the second quarter of 2011 was $164,217, while the average price of a short sale was $192,129. Besides yielding less, foreclosures also cost lenders more in legal and administrative resources. “The incentives against foreclosing are even larger now,” Karen Dynan, co-director of the Economic Studies program at the Brookings Institution, said via email. “Servicers are facing enormous staffing constraints because they are trying to deal with so many distressed properties, so it is probably even harder now to find the staff to do the paperwork for the foreclosure.”

Lenders are also spending more on due diligence, she said. “Servicers and lenders are being heavily scrutinized right now so they probably are more worried than ever about making a mistake in a foreclosure that could subject them to legal liability in the future.”

Neighborhoods also benefit from short sales rather than foreclosures. “Short sales typically sell at less of a discount than foreclosure sales do,” Jed Kolko, chief economist at real estate website Trulia.com, said via email. “Also, foreclosed homes often sit vacant while short sales are re-occupied more quickly. For both these reasons, short sales tend to depress neighboring property values less than foreclosures do.”

Another issue that plagues foreclosures is vandalism, either from opportunistic criminals preying on vacant homes or from disgruntled homeowners. “It’s often not a friendly process so you frequently have cases where people deliberately vandalize homes,” Dean Baker, co-director of the Center for Economic and Policy Research, said.

Some economists worry that the drop in foreclosures is less an indication of lenders’ willingness to compromise and more a function of a huge backlog of foreclosures that haven’t been processed. “Foreclosures are going to be a drag on the market for a long period of time,” Baker said. Until these distressed homes are resold and assimilated back into the market, real estate prices can’t stabilize.

Baker added, though, that lenders facing years’ worth of legal wrangling and costs to execute a foreclosure may be more willing to accept a buyer’s offer in a short sale.

The other caveat is that short sales aren’t an option for all distressed homeowners. Short sales are contingent on the ability of sometimes multiple lenders to agree on a price that a buyer is also willing to pay. For people who took out multiple mortgages or have other liens, this presents a challenge. “It’s just a little more complicated when you have more parties involved,” Schwartz said.

The number of Americans who bought previously occupied homes rose last month. But the National Association of Realtors says it overstated about 3.5 million sales during and after the Great Recession, showing the housing market remains much weaker than previously thought. The private trade group says sales rose 4 percent last month to a seasonally adjusted annual rate of 4.42 million. That’s below the roughly 6 million sales a year that economists say are consistent with a healthy housing market. But it’s ahead of 2008′s revised sales, now considered the worst in 13 years. The nearly 4.2 million homes sold last year are far fewer than the nearly 7.1 million sold at the peak of the housing boom in 2005. This year is on pace to slightly exceed last year’s total of about 4.25 million. The trade group revised down its sales from 2007 through October more than 14 percent, from 24.8 million to nearly 21.3 million. Among the reasons for the lower figures, the Realtors group says are:

1. Changes in the way the Census Bureau collects data,
2. Population shifts and some
3. Sales being counted twice.

The sharp revisions could cast doubt on future sales numbers from the Realtors’ group, a private trade organization that lobbies on behalf of its 1.2 million members. John Ryding, an economist at RDQ Economics, called the revisions “massive” and cited them as an example of how economic data can be unreliable. The Realtors’ group said it trusts its new figures, which were checked by government agencies and CoreLogic, the California-based real estate data firm that first raised questions about the numbers earlier this year. Other economists said the lower numbers won’t necessarily matter, since sales are up and fewer homes are sitting idle waiting for buyers. Sales have risen more than 12 percent over the past 12 months. The supply of unsold homes has fallen more than 18 percent. More than two years after the recession officially ended, many people can’t qualify for loans or meet higher down-payment requirements. Even those with excellent credit and stable jobs are holding off because they fear that home prices will keep falling. Sales are also being hurt by a decline in first-time buyers, who are critical to reviving the housing market. The new figures show that sales fell in three of the past four years since the housing market began to drop in 2006. Declining prices and record-low mortgage rates haven’t been enough to boost sales. The changing numbers could affect how economists view the trade group’s data. It could also affect companies that use the figures for hiring and expansion plans. Sales are measured when buyers close on homes. But many deals are collapsing before that point. 30 percent of Realtors say they’ve had at least one contract scuttled in November and October, up from 18 percent in September. Contracts have been canceled for any of several reasons:

1. Banks have declined mortgage applications
2. home inspectors have found problems
3. appraisals showed a home was worth less than the bid
4. a buyer lost a job before the closing

The median sales price rose 2.1 percent to $164,200 in November. The high rate of foreclosures has made resold homes much cheaper than new homes. The median price of a new home is roughly 30 percent higher than the price of one that’s been occupied before — twice the normal markup. Investors are taking advantage of the discounts. Their purchases made up 19 percent of all sales last month, compared with fewer than 10 percent in healthierhousing markets. Purchases among first-time buyers rose slightly last month to make up 35 percent of sales, up from 34 percent in October. In healthy markets, first-time buyers make up at least 40 percent of sales. These data indicates that the housing recovery is in  sight. Source:usnews.com

What is a short sale and who benefits from a short sale? Short sales used to be an infrequent type of real estate transaction, but with current economic conditions, more and more homeowners are opting for this type of sale. A short sale occurs when a homeowner sells their home for less than what is owed to the mortgage holder. There are pro’s and con’s for both the homeowner and the bank in a short sale.

Bank

There are several reasons why a mortgage holder, or bank, would agree to accept less than what is owed.  A bank may benefit from a short sale for one or more of the following reasons:

• More cost effective for the bank to accept less because it would cost more to foreclose
• Banks do not want to own property
• Banks are in the business of making money

In a short sale transaction, the bank or banks involved must approve any offer that is received by the homeowner. The primary bank, the one that holds the first mortgage, will review the offer received to determine whether enough money will be made in order to make it worth agreeing to the short sale versus moving forward with foreclosure procedures. This may take some time as each bank has a lot of “red tape” the offer must go through.

The New York Long Island Homeowner

There are reasons a homeowner may opt for a short sale on their home. A homeowner may benefit from a short sale for one or more of the following reasons:

• Credit score suffers less from a short sale than a foreclosure
• They remain in the home until an offer comes in that the bank accepts
• Payments may be suspended depending on the bank’s policy

To initiate a short sale, the homeowner must first contact the bank to discuss the option and learn the process the bank requires. General requirements are to provide a hardship letter outlining why the homeowner can no longer keep up with monthly mortgage payments, as well as providing earnings documentation. This should be done immediately, before the bank begins foreclosure proceedings if there have already been late payments. The bank will inform the homeowner whether or not they “may” accept a short sale, which will be dependent on any offers that are received.

The Downside

There are a few downsides to short sales. For the bank, they forgive a portion of the mortgage in exchange for receiving some of the payment in full. For the homeowner, it means possible credit history hits, as well as being a very lengthy, stressful process.

In the end, a short sale can be a beneficial alternative for distressed homeowners and banks alike. It provides the homeowner with a way to get out from under a mortgage they can no longer support, and it provides the bank with an option to costly foreclosure. It is a good idea for homeowners to consult a real estate professional as well as seek advice from a tax specialist to learn if there are tax consequences to a short sale.