Considering a New Home Loan?

Those considering purchasing a new home need to be prepared for the changes that are happening almost on a daily basis in the mortgage marketplace.  Fannie Mae & Freddie Mac are changing guidelines on a fast and furious pace to keep up with the real estate market declines in most of the country.  The loan you were trying to get approved for last month (or last week) may no longer be available when you go to submit your laon application.

Most stated income loan programs are disapearing at a rapid pace, or have had significant changes made to them.  A stated income loan is one requiring you to state your income but not document it.  These loans have all but become extinct in the home equity divisions of almost all companies.  Home equity loans, and lines of credit are becoming more difficult to obtain in connection with a first mortgage to avoid PMI or mortgage insurance.  Many lenders are not allowing these programs any longer due to the fact that they are not protected in the event of a foreclosure without the presence of mortgage insurance.  So don't be surprised if you apply for one of these loans and there have been significant changes.

Credit Scores from 620-679 will now cost you more in the form of points, and or rate on your mortgage.  Many lenders and Mortgage insurance companies will no longer finance over 80% loan to value in the event your credit score is below 620.

Anyone in the process of buying a home needs to be in touch with their loan officer on a weekly basis.  Make sure the program you need to finance your home has not been eliminated or had major changes made to it that might create a problem for you when you go to finalize your real estate transaction.

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More Interest Rate Cuts Coming?

The Federal Reserve is hinting that more interest rate cuts might be needed to offset the deterioration in the credit markets leading to deeper problems for the housing sector and overall economy.

The central bank lowered its key federal funds rate - an overnight bank lending rate that affects how much consumers pay for credit cards, home equity lines, auto loans and other forms of credit - by a quarter of a percentage point on Dec. 11 to 4.25 percent.

That marked the Fed's third consecutive rate cut since September as the central bank attempts to deal with the subprime mortgage meltdown, which has caused cash-strapped consumers to default on their loans and banks to report billions of dollars in losses tied to bets on bad mortgages.

Traders are now betting that a rate cut at the Fed's next meeting, a two-day session that concludes on Jan. 30, is certain.  The question is simply how big of a cut it will be.

What do you think?  Will the Fed cut rates again on January 30th?  If so, how much?  .25?  .50?  Tell us what you think and why?  We'd love to hear from you.  Use the comment link below.  Your email address will not be published here for your protection.

Choosing the Right Contractor

Making major improvements to your home is one of the biggest decisions you can make.  So who actually does the job is an important decision.  How do you find the best contractor?  Money reporter Stacy Johnson has some tips.

If you have a question or comment about the video, please post your comment below.  Don't worry, your email address will never be displayed on our site for your privacy and protection.

Some Home Improvements Are Worth Skipping

Homeowners aren't recouping as many improvement costs as they could in recent years, according to a recent study by Remodeling magazine.  In fact, real-estate agents advise clients not to overdo it, regardless of what the local market conditions are like.

To keep costs down and spend remodeling dollars wisely, consider the following tips:

1. Ask for advice.

Before making any remodeling plans, clear your home of clutter and rent a storage unit, if necessary, to hold extra stuff while the home is on the market.  Then, get some advice from a local real-estate agent on how the home stacks up against the competition.

Cleaning the carpets, painting the walls and removing wallpaper are common fixes. It is wise to budget for these tasks before putting money aside for more expensive projects.

2. Dig deeper.

It also could pay to look below the surface by getting a home inspection before even listing the property for sale.  That way, problems that could hold up a sale are addressed in advance.

Some estimate that for every dollar of perceived defect, buyers want a $2 to $3 discount.  If that's true, it might pay to spend $2,500 to replace an old furnace before a buyer demands $5000 off for them to have to replace it.

Also, replacing something as necessary as a furnace helps create a favorable perception of how well a seller took care of the home.  If there is a problem with an essential element of the house, a buyer might think, "If that was neglected, what else was?"

3. Look outside.

Pay attention to exterior details like the condition of siding and windows.

According to Remodeling magazine's 2007 Cost Vs. Value Report, a wooden-window replacement recovers on average 81.2% of its cost at resale, and siding replacement recovers on average 83.2% of its cost.  The payoff for those projects is much better than for an upgrade that a buyer might not need.  A home-office remodeling, for example, recovers only 57% of its cost on average.  The estimates are national averages for midrange homes, not upscale ones.

4. Spend time in the bathroom.

Freshening up the bathroom doesn't have to be expensive, but it could be important.

It's most important for the bathroom to be clean, but sellers should also consider replacing the fixtures, tub, sink and toilet — if they need it.  Replace cracked tiles and curled linoleum.

The replacements don't have to be expensive.  A toilet can cost less than $250, and it is recommended that you consider taller, handicap replacement toilets to appeal to an aging population.

5. Keep it small in the kitchen.

The other room that often sells a house is the kitchen, but it might be best to keep renovations modest.  Remodeling magazine's report found that homeowners could recover 83% of the cost of a minor kitchen remodel at resale, compared with 78.1% of a major kitchen remodel.

Use caution when thinking about replacing refrigerators, stoves or dishwashers.  Buyers considering remodeling the kitchen will likely have their own preferences.

Along those same lines, sellers should replace a countertop if it is crumbling but not if its only fault is that it is outdated.  Even then, seriously consider material costs: There is no need to update to granite unless the competition has granite countertops as well.

Opportunities Abound to Profit in 2008

Tumbling home values.  Soaring energy prices.  A topsy-turvy stock market and a gazillion other financial worries, not the least of which is whether we'll spend the coming year mired in recession.

Considering all the black clouds hanging over the economy, you probably think there's no way you can really expect to prosper in 2008.  It will be all you can do just to hang in there, right?  WRONG!

We firmly believe there will be plenty of opportunities to make money this year - yes, even in real estate - as well as ways to insulate your finances from the most serious economic challenges ahead.

The real estate slump isn't going away soon, so whether you're buying, selling or staying put, deal with it.

For sellers:

Forget what the ugly house next door sold for last year or even what comparable homes are listed for today.  Instead, use the going price of houses that have recently sold as a guide - then price your home even lower so it looks like a great deal.

Best case: Your aggressive pricing attracts more than one bid, pitting buyers against one another and ultimately lifting the final sale price.

For buyers:

If ever there was a time to drive a hard bargain, this is it.  Don't be distracted by small stuff like whether the current owners will leave behind their appliances and window treatments.

Focus instead on what's really important: getting the lowest price.  Do a little homework and find out what comparable houses have sold for lately.  Then start the bidding at 10% to 15% below that recent sale price.

Note: This strategy works best if there are several homes on the market in your area around the same price.

There are many other tips throughout this weblog for buyers and sellers.  We encourage you to spend a few minutes and look through them.  It could be worth a minor fortune if you pick up a tip here or there that could add dollars to your home buying or home selling strategy.