Square footage of a home is sometimes a matter of debate — a homeowner measures it one way, a real estate agent another way, and an appraiser a third way. The local tax assessor has his own method, too.
Who is right?
Until 2003, they all were. That’s when the NATIONAL ASSOCIATION OF REALTORS
Many home sellers prepare their home for listing with cosmetic changes such as paint and reflooring, but “green” thinking can give an additional boost to value and grab a federal subsidy.
Homeowners who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in their home can receive a tax credit of up to $500 from the IRS.
In addition, 30% of the purchase cost for qualified solar cells and for solar water heating (used exclusively for purposes other than heating swimming pools and hot tubs) can be refunded, too — up to $2,000 per household .
There are more energy-saving credits available, too.
The U.S. Department of Energy lists all of the credits available to homeowners and those credits come right off of your tax bill come April 15.
A home on the market that features energy-saving upgrades carries a unique appeal to buyers and proves that not all home improvements are not equal — especially in the eyes of the IRS.
If you’re currently paying Private Mortgage Insurance (PMI) and have been for several years, it may be time to petition your lender to have the PMI payment removed.
PMI protects lenders from homeowners that stop making payments on homes with small amounts of equity. It’s an insurance policy that is “cashed in” if the homeowners defaults.
However, federal law allows homeowners to petition the end of PMI if their loan-to-value (LTV) drops below 78%.
An example of 78% LTV is a home that is worth $100,000 on which $78,000 is owed to mortgage lenders.
If you are paying PMI and think you are eligible to have it removed, contact your mortgage lender and ask them about their procedure to remove PMI.
The lender may require that you have your home appraised (at your expense) and that may cost anywhere from $200 to $400 — but if your petition is successful, the cost of an appraisal is still less expensive than the ongoing monthly cost of PMI.
If you’re in the process of buying a home and are working without a rate lock, take notice: over the past two weeks, mortgage rates have spiked to their highest levels since November 2006.
Your actual mortgage payment will be higher than you originally anticipated.
Depending on your preferred mortgage product, rates have increased by as much as one-half of one percent.
Mortgage experts expect the surge to continue over the next 30 days, at a minimum.
If your mortgage pre-approval is dated prior to May 9, call your lender and ask him to re-run it using today’s rates and market conditions. If you don’t have a pre-approval yet, today would be a good day to get one.
Your home is listed for sale and you’ve “neutralized” the place. But, after the fresh coats of paint and new carpeting, what will distinguish your house from the others listed for sale?
To prospective buyers, there is usually one specific thing that catches their eye in every home they tour. It's simply human nature.
Without that “one thing”, your home may be disadvantaged.
Simple steps can catch attention in a positive way.
- A large vase full of flowers is welcoming
- Baking cookies or bread creates a homey environment
- Classical music playing softly conveys a dignified image
Whatever it might be, having that one thing is good. Nothing too personal, nothing too showy! Think Martha Stewart and you’re probably on the right track.
If you don’t give people that one thing to remember your home by, they may find something on their own (and it may be less than flattering).
Brick exteriors are low maintenance and have a distinct look. They do require some upkeep over the years, however.
Every few decades (depending on environmental and building conditions), the brick’s mortar should be repaired of cracks and loose joints.
This process is called “tuck pointing” and it’s an expensive job to be handled by professionals.
Some homes’ bricks are paint-covered. Not so long ago, a brick facade was considered to be old-fashioned so homeowners covered their bricks with white, red, or other colored paint.
With brick back in vogue, removing paint is a big business that requires a delicate touch.
To remove paint from brick, professionals will use walnut shells or another similarly soft blasting agent; sandblasting is too powerful and will make the brick more prone to erosion.
Corncob is another popular blasting agent for paint removal.
If you live in a neighborhood with a lot of brick homes, ask a neighbor for a recommendation or look in the Yellow Pages for a qualified mason. You can also reach out to me anytime — I’d be happy to make a referral to a mason I trust.
The Federal National Mortgage Association (FNMA) — more commonly known as “Fannie Mae” — offers non-biased home buying advice on their Web site.
If you prefer your home buying advice with a side of blandness, Fannie Mae’s Becoming a Homeowner section is sure to satisfy.
Originally founded in 1938, Fannie Mae’s role in the home buying process is to help make mortgage money available to those who need it. The government-sponsored agency is not a direct lender to consumers, though, which is why its advice can be considered impartial, or non-salesy.
Wikipedia has a more complete explanation of Fannie Mae, if you are interested.
The Fannie Mae Web site includes articles, calculators and worksheets that can help you learn about homes and set a realistic home owner’s budget for yourself. The site also explains different types of properties and what to look for when shopping for homes.
One caveat: although the advice offered is still sound, the FNMA Web site as not been updated in two years. Mortgage markets evolve fairly quickly so the information provided may be incomplete, at best. It’s still a good place to get started, however.
When buyers and sellers look for common negotiating grounds, it’s common for the buyer to request home improvements to be made prior to the sale.
The request may be phrased in any number of ways:
- “The hardwood floors are warped and we think the seller should pay for it.”
- “There is a leak in the plumbing that needs to be fixed to prior to moving in.”
- “The roofing reached the end of its life. It needs to be replaced.”
The seller may agree to meet the buyer’s demands, but making repairs to a home fixture, such as a roof, isn’t convenient while a person still occupies a home.
And this is how the “repair credit” gets introduced into the contract. A repair credit is a dollar amount granted from the seller to the buyer to be used to cover the costs of the requested repair(s).
For a seller, repair credits offer a way to “pay for” the handyman work without actually going out of pocket; all of the funds for the buyer are taken directly from the home sale’s proceeds instead of from a bank account.
Unfortunately, when granting the repair credit, many sellers go about it in the complete wrong way, putting their buyer’s ability to acquire home financing for the purchase at risk.
That’s because — as a rule — lenders do not allow concessions for home repairs to be line-item credited on the final settlement statement.
This is for two reasons:
- The lender has no way of knowing that the repair will actually be made by the buyer
- The lender has no way of knowing whether or not the repair is actually needed
Put the two together and it raises the red flag we call “Fraud Alert”.
The correct way to offer a repair credit is to reduce the home’s sale price by the amount of the credit and make that the new purchase price. In the end, the seller goes home with the same amount of money.
When you’re buying a home, you’re buying a neighborhood, too.
Evaluate a neighborhood by spending some quality time there. Walk around for a while seeing what is going on.
If you see dumpsters in front yards or parked on the street, it’s a sign that people are upgrading and investing in their houses and the neighborhood.
Fresh paint jobs, manicured lawns and friendly people that you greet are also positive signals.
Do your own personal research, if possible. Neighborhoods are not always “as advertised”. During the last major real estate boom, the character of many areas changed dramatically.
Spending some time in the nearest coffee shop or at the grocery store will also reveal something about who your new neighbors are likely to be. It’s best to find out for yourself and make up your own mind.
Each month, the Commerce Department releases a statistic titled “Housing Starts” that measures residential construction activity.
This morning, the Commerce Department released April’s Housing Starts data (PDF) and the headline data reflected a 2.5% increase in new construction.
Markets had anticipated a 0.8% decrease. This coincided with a decrease in available homes, as shown on the graph at right.
Housing Starts details the number on residential units on which construction started in the reported month.
Housing Starts can provide terrific guidance on the future direction of our economy for several reasons:
- Home construction creates jobs in the construction industry
- Home builders spend dollars on raw materials, fixtures and appliances when building a home
- Home buyers spend money on furniture, electronics and services (i.e. movers) after buying a home
So, as more homes are built, more jobs are created, and more money is pumped back into the economy.
A hot Housing Starts number can predict strong economic growth 6-9 months out on the horizon and that is one reason why economists watch it intently.
Another reason Housing Starts matters is because the Federal Reserve is inflation-wary.
It has stated many times that growth is strong but that housing is dragging down overall growth to a more comfortable level. The housing sector, it believes, will create a gradual economic slowdown.
Today’s data may prove otherwise.
In response, expect mortgage rates to rise today on inflation concerns.