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Making Home Affordable: The Modification Option
January 4, 2011
The Making Home Affordable program offers at-risk homeowners a chance to modify mortgages to avoid foreclosure on their homes. This is just one of the possible solutions that are available to home owners who are in distress or are facing that possibility.
Qualifying for a loan modification
Making Home Affordable’s modification option is known as the Home Affordable Modification Program, or HAMP. It’s designed for homeowners who are likely to lose their homes because they can’t keep up with mortgage payments. Even if you aren’t behind on payments yet, you can qualify for help if you can demonstrate that you will fall behind soon.
To qualify for HAMP, the home must be your primary residence and you must owe $729,750 or less on a first mortgage that was originated on or before Jan. 1, 2009. Your monthly payment on your first mortgage must be greater than 31% of your monthly gross income. Second mortgages and home equity lines of credit don’t count. You must also demonstrate financial hardship such as a jump in mortgage payments or a drop in income.
A loan modification makes sense if you can’t afford your current mortgage payment but could manage to stay current if that monthly payment is lowered. Second homes, which include vacation homes and rentals, don’t qualify for the program. Homes of up to four units are eligible, with higher loan limits, as long as you occupy one of the units. HAMP is scheduled to expire at the end of 2012.
How to get started
HAMP begins with a trial phase. Contact your lender to initiate the process, or call 1-888-995-HOPE to get free assistance from a housing counselor approved by the U.S. Department of Housing and Urban Development. The lender will calculate a lower monthly payment, which you must make on time for at least three months. After successfully completing the trial phase, your lender should make the loan modification permanent.
While lenders may accept some undocumented information up front to begin the process, eventually you’ll need to file detailed paperwork to earn a permanent modification. It’s better to get your documentation in order in advance. HAMP administrators say the leading reason trial modifications fail to be made permanent is missing paperwork.
Start by gathering information on your income (pay stubs), expenses (mortgage statements, tax and insurance bills, debt balances), and assets (bank and non-retirement savings statements). You’ll need that information to fill out the Request for Modification and Affidavit. Also complete IRS form 4506T-EZ, which allows your lender to review your income tax returns. File a Hardship Affidavit as well. If possible, send all of the documents at once by certified mail to your lender to lessen the likelihood of lost paperwork and delays, says Nicole Hall, editor of LendingTree.com.
Lowering your monthly payments
A lender can modify a mortgage in several ways: lower your interest rate, reduce your principal, or extend the term of the loan. The basic goal is to use one or more of these approaches to get your monthly mortgage payment, including real estate taxes and homeowners insurance premiums, down to a more affordable 31% or less of gross (pre-tax) income. Lenders are allowed to cut your interest rate to as low as 2%, if necessary. The average HAMP modification has reduced monthly payments by $640.
To get a ballpark figure of how much a modification might lower you monthly payment, run the numbers for yourself. If, for example, your current mortgage payment is $2,000 and your monthly gross income is $4,000, then you’re paying 50% of your pre-tax income toward the home loan. A typical modification to bring that figure down to 31% would reduce the payment to $1,240, a savings of $760 a month.
Alternatives to foreclosure
Even if you’re facing foreclosure, HAMP is worth a shot. The foreclosure process is suspended while you’re in the trial phase of the modification. Foreclosure can be avoided altogether if you can demonstrate the ability to keep up with the new, lower payment and graduate to a permanent modification. Keep in mind that the foreclosure process can resume if you miss payments during the trial phase or fail to get approved for a permanent modification.
Some owners won’t be able to stay in their homes, even with a mortgage modification. To avoid foreclosure, look into the federal Home Affordable Foreclosure Alternatives program. HAFA offers lenders financial incentives to opt for a short sale or deed-in-lieu rather than a foreclosure. Although the program doesn’t officially go into effect until April 5, 2010, some lenders may initiate it early.
In a short sale, a borrower sells a home for less than the outstanding mortgage, and the lender takes the proceeds and considers the debt paid off. In a deed-in-lieu, the homeowner turns over the home to the lender, and the mortgage is closed. Although neither option is ideal, either can make sense if a loan modification isn’t attainable or sufficient.
To learn more about this option and to see what other options might be available to you, give me a call. RE/MAX Professional Associates recognizes the need for this type of information and already has a team ready to help you.
Tax Tips for Homeowners Looking Ahead to 2010 Returns
January 3, 2011
In addition to the standard tax deductions for home owners, here are some additional ones that you might want to check your records to see if you qualify.
The tax areas that are most beneficial for home owners are; mortgage interest, points paid to refinance your mortgage, PMI, capital gains up to $250k for qualifying home owners, home improvements that have increased the value of your home at your future sale (and reduce the amount of capital gains), real estate and property taxes, home offices, *some* relocation moving expenses, home improvements for medical reasons and vacation homes.
Check out these additional tax tips for homeowners looking ahead to 2010 returns.
Claim remaining energy tax credits
It’s time to get cracking if you didn’t exhaust your full allotment of residential energy tax credits during 2009. Although tax credits for big projects like residential wind turbines and solar energy systems have no upper limit and are good through 2016, energy tax credits capped at $1,500 expire at the end of 2010. Eligible capped projects include new windows and doors, insulation, roofing, water heaters, HVAC, and biomass stoves.
Here’s how it works with capped federal credits: You can earn energy tax credits worth 30% of the cost of qualifying improvements, but the total tax credits can’t exceed $1,500 combined for 2009 and 2010. So if you only took, say, $700 worth of capped energy credits on your 2009 tax return, you’re still due for another $800 in credits in 2010. Some projects include the cost of installation–a furnace, for example–while others, such as insulation, are limited to the cost of materials.
Max out tax benefits of a vacation home
Use a vacation home wisely, and it’ll provide a break from taxes as well as the hustle and bustle of everyday life. The rules on tax deductions for vacation homes can get a bit tricky, but understanding and adhering to them can yield many happy tax returns.
If your vacation home is truly a vacation home meant for your personal enjoyment, as opposed to a rental-only income property, you can usually deduct mortgage interest and real estate taxes, just as you would on your main home. You can even rent out the home for up to 14 days during the year without getting taxed on the rental income. Not bad.
Now, let’s say you want to rent out your vacation home for more than 14 days in 2010, but also use it yourself from time to time. To maximize the tax benefits, you need to keep tabs on how many days you use your vacation home. By restricting your annual personal use to fewer than 15 days (or 10% of total rental days, whichever is greater), you can treat your vacation home as a rental-only income property for tax purposes.
Why is that a big deal? In addition to mortgage interest and real estate taxes, rental-only income properties are eligible for a slew of other tax deductions for everything from utilities and condo fees to housecleaning and repairs. Deductions are limited once personal use exceeds 14 days (or 10% of total rental days), so get out your calendar now to strategically plot your vacations.
Take advantage of tax breaks for the military
In salute to members of the armed forces serving overseas who want to purchase a home, the IRS is extending a lucrative tax perk for military personnel. If you spent at least 90 days abroad performing qualified duty between Jan. 1, 2009, and April 30, 2010, you have an extra year to earn a homebuyer tax credit. In addition to uniformed service members, workers in the Foreign Service and in the intelligence community are eligible.
Thanks to this extension of the homebuyer tax credit, qualifying military personnel have until April 30, 2011, to sign a contract on a new home. The deal must close before July 1, 2011. Just like non-military buyers, first-time homebuyers can earn a tax credit worth up to $8,000, and longtime homeowners can earn a credit of up to $6,500. The same income restrictions and $800,000 cap on home prices apply.
Military personnel can also get a break if official duty calls and they’re forced to move for an extended period. Normally, the homebuyer tax credit needs to be repaid if you sell your home within three years, but this requirement is waived for uniformed service members, Foreign Service workers, and intelligence community personnel. The new extended duty posting doesn’t need to be overseas, but it must be at least 50 miles from your principal residence.
Challenge your real estate assessment
You can’t do much about the rate at which your home is taxed, but you can try to do something about how your home is valued for taxation purposes in 2010. The process varies depending where you live, but in general local governments conduct a periodic real estate assessment to determine how much your home is worth. That real estate assessment figure is used to calculate your property tax bill.
You can usually appeal your real estate assessment if you think it’s too high. Contact your local assessor’s office to find out the procedure, and be prepared to do some research. There’s often no charge to request a review of your assessment.
Look for errors. You probably received an assessment letter in the mail, and many local governments provide the information online as well. Make sure the number of bedrooms and bathrooms is accurate, and the lot size is correct. Also check the assessed value of comparable homes in your area. If they’re being assessed for less than your home, you might have a case for relief.
Even if your assessment is accurate and comparable homes are being taxed at the same rate, there might be another route to tax savings. Ask your assessor’s office about available property tax exemptions. Local governments often give breaks to seniors, veterans, and the disabled, among others.
This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.
The Value of Home Maintenance
January 2, 2011
Regular home maintenance is key to preserving the value of your house and property. Looking forward to the spring market in 2011 – this play an important role if you thinking about listing your home. In general, it’s important to maintaining your investment and your quality of life.
“It’s the little things that tend to trip up people,” says Frank Lesh, former president of the American Society of Home Inspectors and owner of Home Sweet Home Inspection Co. in Chicago. “Some cracked caulk around the windows, or maybe a furnace filter that hasn’t been changed in awhile. It may not seem like much, but behind that caulk, water could get into your sheathing, causing mold and rot. Before you know it, you’re looking at a $5,000 repair that could have been prevented by a $4 tube of caulk and a half hour of your time.”
Maintenance affects property value
Outright damage to your house is just one of the consequences of neglected maintenance. Without regular upkeep, overall property values are affected.
“If a house is in worn condition and shows a lack of preventative maintenance, the property could easily lose 10% of its appraised value,” says Mack Strickland, a professional appraiser and real estate agent in Chester, Va. “That could translate into a $15,000 or $20,000 adjustment.”
In addition, a house with chipped, fading paint, sagging gutters, and worn carpeting faces an uphill battle when it comes time to sell. Not only is it at a disadvantage in comparison with other similar homes that might be for sale in the neighborhood, but a shaggy appearance is bound to turn off prospective buyers and depress the selling price.
“It’s simple marketing principles,” says Strickland. “First impressions mean a lot to price support.”
Prolonging economic age
To a professional appraiser, diligent maintenance doesn’t translate into higher property valuations the way that improvements, upgrades, and appreciation all increase a home’s worth. But good maintenance does affect an appraiser’s estimate of a property’s economic age—the number of years that a house is expected to survive.
Economic age is a key factor in helping appraisers determine depreciation—the rate at which a house is losing value. A well-maintained house with a long, healthy economic age depreciates at a much slower rate than a poorly maintained house, helping to preserve value.
Estimating the value of maintenance
Although professional appraisers don’t assign a positive value to home maintenance, there are indications that maintenance is not just about preventing little problems from becoming larger. A study by researchers at the University of Connecticut and Syracuse University suggests that maintenance actually increases the value of a house by about 1% each year, meaning that getting off the couch and heading outside with a caulking gun is more than simply a chore—it actually makes money.
“It’s like going to the gym,” says Dr. John P. Harding, Professor of Finance & Real Estate at UConn’s School of Business and an author of the study. “You have to put in the effort to see the results. In that respect, people and houses are somewhat similar—the older (they are), the more work is needed.”
Harding notes that the 1% gain in valuation usually is offset by the ongoing cost of maintenance. “Simply put,” he says, “maintenance costs money, so it’s probably best to say that the net effect of regular maintenance is to slow the rate of depreciation.”
How much does maintenance cost?
How much money is required for annual maintenance varies. Some years, routine tasks, such as cleaning gutters and changing furnace filters, are all that’s needed, and your total expenditures may be a few hundred dollars. Other years may include major replacements, such as a new roof, at a cost of $10,000 or more.
Over time, annual maintenance costs average more than $3,300, according to data from the U.S. Census. Various lending institutions, such as Directors Credit Union and LendingTree.com, agree, placing maintenance costs at 1% to 3% of initial house price. That means owners of a $200,000 house should plan to budget $2,000 to $6,000 per year for ongoing upkeep and replacements.
Proactive maintenance strategies
Knowing these average costs can help homeowners be prepared, says Melanie McLane, a professional appraiser and real estate agent in Williamsport, Pa. “It’s called reserve for replacements,” says McLane. “Commercial real estate investors use it to make sure they have enough cash on hand for replacing systems and materials.”
McLane suggests a similar strategy for homeowners, setting aside a cash reserve that’s used strictly for home repair and maintenance. That way, routine upkeep is a snap and any significant replacements won’t blindside the family budget. McLane’s other strategies include:
Play offense, not defense. Proactive maintenance is key to preventing small problems from becoming big issues. Take the initiative with regular inspections. Create and faithfully follow a maintenance schedule. If you’re unsure of what needs to be done, a $200 to $300 visit from a professional inspector can be invaluable in pointing out quick fixes and potential problems.
Plan a room-per-year redo. “Pick a different room every year and go through it, fixing and improving as you go,” says McLane. “That helps keep maintenance fun and interesting.”
Keep track. “Having a notebook of all your maintenance and upgrades, along with receipts, is a powerful tool when it comes to sell your home,” advises McLane. “It gets rid of any doubts for the buyer, and it says you are a meticulous, caring homeowner.” A maintenance record also proves repairs and replacements for systems, such as wiring and plumbing, which might not be readily apparent.
You can also track your projects at houselogic.com. Houselogic.com is a free site sponsored by the National Association of Realtors and is easy to use and fun. Directly corresponds with your Facebook and provides step-by-step instructions for your home projects including shopping lists and diagrams.
If you want a check-in on what your home is currently worth today, just let me know. I would be happy to provide you with a free market analysis and help you get started on increasing the value of your home.
Homeowners Insurance: Time for an Annual Check-Up
December 30, 2010
Okay…so this isn’t a very exciting topic but it’s necessary! An annual check-up on your homeowners insurance can result in a healthier policy and a healthier pocketbook.
What type of coverage do I have?
The most effective type of coverage is known as “replacement cost,” which covers, up to your policy limits, what it would take today to rebuild your house and restore your belongings, says Jerry Oshinsky, a partner at Jenner & Block in Los Angeles who has represented homeowners in litigation against insurers.
“Extended” replacement cost coverage provides protection to your policy limit, say $500,000, and then perhaps another 20% of the cost after that. Percentages vary, but in this example you could recoup up to $600,000 on a $500,000 policy, assuming your losses reach that high. Extended coverage can compensate for any unanticipated expenses like spikes in construction costs between policy renewals. Now harder to find due to the industry shift toward extended replacement coverage, “full” or “guaranteed” replacement coverage covers an entire claim regardless of policy limits.
A less attractive alternative is “actual cash value” coverage that usually takes into account depreciation, the decrease in value due to age and wear. With this type of policy, the $2,000 flat-screen TV you bought two years ago will be worth hundreds of dollars less today in the eyes of your claims adjuster. Kevin Foley, an independent insurance broker in Milltown, N.J., favors replacement cost coverage unless you can save at least 25% on the premium for going with actual cash value coverage instead.
Even if you have replacement cost protection for your dwelling and personal property, don’t assume everything is covered. Structures other than your home on your property—such as a detached garage or swimming pool—require separate coverage. So too do luxury items like jewelry, watches, and furs if you want full replacement cost because reimbursement for those items is typically capped.
How much coverage do I really need?
OK, now that you’re clear on what type of policy you have, you need to figure out how much policy you truly require in dollar terms. Let’s say you purchased your home five years ago and insured it for $200,000. Today, it’s worth $225,000. Simply increasing your coverage to $225,000 may nonetheless leave you underinsured. Here’s why.
The key to determining how much dwelling coverage you need isn’t the value of your home but the money you’d have to pay to rebuild it from scratch, says Carlos Aguirre, an agent for Liberty Mutual Insurance in Arlington, Texas. Call your local contractors’ or homebuilders’ association and inquire about the average per-square-foot construction cost in your area. If it’s $150 and your home is 2,000 square feet, then you should be insured for $300,000.
There’s no rule of thumb for how much your homeowners insurance should cost. Insurers use numerous factors—age, education level, creditworthiness—to determine pricing, so the same policy could run you more than your neighbor. In recent years the average annual premium was $804. Oshinsky advises against scrimping on insurance because big increases in coverage probably cost less than you’d think. He recently purchased a liability policy that cost $250 for the first $1 million in coverage. Adding another $1 million increased his premiums only $12.50 more.
How can I lower my premiums?
The higher your deductible, the amount you pay out of pocket before coverage kicks in, the lower your premium. Landing on the appropriate deductible level requires remembering that insurance should cover major calamities, not minor incidents, says Foley, the independent insurance broker. Most homeowners should be able to absorb modest losses like a broken window pane or a hole in the drywall without filing claims. If you can, then you’re wasting money with a $250 deductible.
Foley’s rule: If you’re a first-time homeowner and don’t have a lot of savings, moving up to a $500 deductible will probably stretch your budget. However, if you live in a ritzy home and drive an expensive car, then you should be able to afford a $1,000 deductible. In Milltown, N.J., for example, the premium for a $200,000 home with a $500 deductible would be $736, according to Foley; moving up to a $1,000 deductible drops the annual premium to $672. That’s $64 in savings.
Every major insurer offers discounts to various groups, such as university employees or firefighters. Figure about 5%. Ask which affiliations would entitle you to a discount and how much. If an AARP membership would result in a $50 savings, pay the $16 dues and pocket the $36 difference. Many insurers also offer discounts ranging from 1% to 10% or more for installing protective devices like alarms and deadbolt locks, for going claim-free for an extended period, or for insuring both your car and your home with the same carrier.
12 Top Remodeling Trends for 2011
December 28, 2010
New year, new list of remodeling projects to start around the house. At least that’s what remodelers and contractors are hoping.
So, what remodeling projects are on top of everyone’s list?
The National Association of the Remodeling Industry (NARI) conducted an exclusive poll of their top builders and developers for us and found that while most people are not starting major renovation projects due to the economy, now is the time to take care of the smaller jobs around your home.
Call it the over-arching remodeling trend for 2011: Tackling small projects while you wait to do the really big remodeling project that’s on your list.
1. Save Money: Remodel Your Bathroom. Old tile getting a little grungy? It looks like 2011 is the year for a bathroom update. Dennis D. Gehman, president of Gehman Custom Remodeling says, “Bathrooms are the hottest project, we think it’s due to the economy. Baths cost less than a kitchen or addition and most houses have more than one bath, so there are more available to be remodeled.”
2. Must-Do Remodeling Projects. Rather than going through major renovations, next year people will continue to only complete the projects that need to be done, like repairs to siding or roof leaks. Mitch Speck of Specktacular Home Remodeling says he is seeing a trend of people doing “‘have-to’ projects instead of ‘want-to’ projects.”
3. Warming Up The House. Warmer tiles and colors are coming back. People tend to be moving away from minimalist, white designs in favor of cozier, earth tones. The trend, however, is not rustic. Instead, it’ss a mash-up of earthiness and modern design. Judy Mozen, president of Handcrafted Homes, Inc., says she is seeing people favor rooms that are more contemporary and calming, but are “still not totally contemporary.”
4. Getting Decked Out. George Christiansen of Pequot Remodeling Corporation says his clients are building outdoor spaces for themselves. “It appears that people want to sit outside again and are staying at home more frequently. Many pools are also being built in the neighborhood.”
5. Hiring A Great Contractor. Darius Baker of D & J Kitchens and Baths, Inc. says that “consumer diligence” is on the rise. “Folks are finally getting the message that it is important to look closer at the companies they are considering for their project. They are asking the questions we have been telling them to ask for years.”
6. Paying in Cash. Rather than taking out loans for renovation projects, homeowners are using cash for projects. Steve Klitsch of Creative Concepts Remodeling, Inc. says homeowners are giving themselves a budget and picking and choosing what projects they can do with the money. One way to save money is by updating features, like cabinets, but not remodel an entire room.
7. Opening Up Rooms: “Open floor plans are in, so we’re removing interior walls and opening up the spaces in older houses to modernize them,” says Gehman. Open floor plans help families be more flexible with the square footage they already have.
8. Bronze Age. Along the with warmer tones in homes are warmer tones in metallic features. Kathy Adams of J&C Adams Co., Inc. says “oil rubbed bronze, aged bronze, or distressed hardware” will be big in the coming year.
9. Going Green. Bamboo floors, grass thatched roofs, and bark siding may sound like something from “Jungle Book,” but they are just a few of the newest green home products. In addition, people are getting energy efficiency upgrades. Adams says upgrades on glass will be continue to be big, and adds that “people are even asking for tri-pane (windows)!”
10. Industrial Flair. Exposed beams will continue to be popular, but so will “stainless steel cable and architectural products,” says Michell Milestone, director of sales and marketing at JG Development, Inc. With so many people working from home, home will take on more of an industrial or commercial look to enforce business credability.
11. Creating Relaxation Space: With home values still falling in many areas and a new prediction of three more lousy years of real estate, homeowners are more stressed than ever. So it’s no surprise that when they are developing new spaces, tranquility comes to mind. Mozen says people are asking for “zen-like” bathrooms. “The bathrooms don’t have to be big-but they have to be relaxing and soothing. They seem to prefer showers with the works-steam, seats, body sprays, etc.”
12. Planning ahead: “We are seeing many clients thinking about their retirement years,” says Jillian Renner of Golden Rule Remodeling & Architecture, Inc. Her clients-even those far from retirement-are putting in easy-opening cabinetry, hand-held showers, and more accessible kitchens and baths. Renner adds, “Even though the clients don’t need those things right now, they are planning for when they might find them needed.”
Are you planning a remodeling project this year? How much are you planning to spend?
Snow is pretty.
December 23, 2010
No blog post today…just this picture of a home in Utah because I think it’s a great picture 🙂
The house is open on Wednesday evening…and I will be there smiling!
December 21, 2010
RE/MAX Professional Associates in Spencer is having an open house on Wednesday evening from 4pm to 6pm and we would like to see your faces! Please stop in and enjoy some great food and meet the group at our office on 294 Main Street.
We are also accepting canned food donations for the food pantry during the open house. Which brings me to my next moment…
I am a very fortunate person to have so many great people in my life. Such as my childhood best friend who now lives in Virginia and is still one of my very dearest and closest friends today.
We met in first grade and have been attached at the hip since – if not physically than most certainly emotionally. She is my confidant, cheerleader, advice counselor, partner in crime on occasion, companion and all around “put me in my place when I need it” person.
She was recently up here visiting and wanted to come to the open house to meet the great group of people I work with but it wasn’t in her schedule. Instead, she is making a generous donation to canned food drive…and in true form…she doesn’t even have to carry the stuff in. 🙂
Thank you Jacqui!
Would someone please turn the lights on?
December 21, 2010
I love Christmas lights! Especially when people get very creative or go way over the top! I have noticed that this year there seems to less lights – economy? Time? I am not sure but I went in search of “more lights” and using my good friend Google – I found them!
Here are some links to local light displays (besides Bright Nights at Forest Park):
Quincy: http://www.christmaslightexplosion.com/
Oxford: http://christmasonpinestreet.com
Tewksbury: http://www.christmaslightpeople.com/
Stoneham: http://www.holidaylandscapes.com/
Rockland: http://www.HoliDaves.com
Bridgewater: http://www.bridgewaterfestivaloflights.com/
Carver (over 7 million lights per the website): http://www.edaville.com/
Millis: http://www.milliswonderland.com/
And some with pictures from other states (it’s nice to see what others are doing too!):
http://www.ChristmasDisplays.net
http://www.ChristmasLightFinder.com
I’m sure there are more – I want to see HUGE lights! If anyone knows of something in Worcester County – please let me know.
4 secrets to homebuyer budgeting
December 18, 2010
Renting and thinking about buying? Start with a solid budget plan that includes strong credit and savings.
Living from one paycheck to the next may be the norm for many people. But homebuyers need a better strategy.
“If buying a home is your goal, then it needs to be your priority,” says Tim Kirchner, vice president of MetLife Bank in Irving, Texas. “Most people need to sacrifice a little and stick to a budget in order to save for a home.”
A good budget plan begins one or two years before a buyer makes an offer. Here are four tips for renters who plan to become homeowners.
1. Build strong credit
When it comes to securing a loan at the best mortgage rate, credit is king.
“The most important focus for all potential buyers should be improving their credit score,” says Jean Badciong, chief operating officer of Inlanta Mortgage in Waukesha, Wis. “A low score can prevent someone from buying a home or at least from qualifying for an affordable mortgage rate.”Greg Holmes is national director of sales and marketing for Credit Plus, a company in Salisbury, Md., that provides credit reports to mortgage lenders. He says potential buyers should request their free credit report at AnnualCreditReport.com.”Some people who think they have good credit don’t, while people who think their credit is bad may be surprised that it is actually OK,” Holmes says. “Everyone should check their report for accuracy and fix any mistakes. It can take months to correct errors.”
To improve their credit scores, buyers should pay off past-due bills, pay every bill on time and reduce their balances on every account to less than 30% of the credit limit, Holmes says. Also, it is best to have three to five credit accounts, such as a car loan, student loan or credit card, for one year or longer.
Holmes says he does not recommend switching credit cards frequently to get the best rate, though.
“Lenders do not want to see a lot of credit inquiries or too many new accounts because this could indicate someone who is about to take on a lot of extra debt,” Holmes says.
Kirchner says people often do not realize the consequences of paying bills late or missing a payment, which can affect your credit report for a long time.
Some young people assume they can improve their credit scores as an authorized user on a parent’s card. But Badciong says this will have no impact on their score.
2. Save cash
Christine Howard, a senior loan officer with Inlanta Mortgage, says future homebuyers should make “virtual” mortgage payments today to build up savings and learn to budget for actual mortgage payments down the road.
“Renters can estimate a mortgage payment and set aside the difference between that payment and their rent each month,” Howard says. “If they are paying $800 in rent and estimate their mortgage will be $1,100, they can put $300 per month in a special savings account.
“Not only does this help them save for a down payment, but it demonstrates to a lender their ability to afford that higher housing payment.”
Kirchner says he recommends that future buyers create a simple budget and set a savings goal.
“If they find they can save $300 a month, then they will have $3,600 at the end of the year,” Kirchner says. “Lenders want to see that pattern of savings, and buyers will need at least 3.5% for a down payment on a (Federal Housing Administration) loan or at least 10% for a conventional loan.”
Kirchner recommends setting up an automatic transfer of funds into a savings account through your employer or your bank.
3. Reduce debt
While buyers increase their savings, they should also reduce their debt.
“Paying off debt tops saving in terms of priorities because of the interest payments on the debt, which exceeds the amount of interest they can earn on their savings,” Kirchner says. “Lenders want to see that you are managing your debt and keeping your credit-card balances low.”
Howard says debt-to-income ratios are an important element in a loan approval. This ratio compares minimum monthly debt payments to gross monthly income.
“If your debt-to-income ratio is over 50%, you need to pay off your debt before even thinking of buying a home,” Howard says. “Some companies will relax their standards for borrowers with a strong credit score or substantial cash reserves, but in general, FHA will only go up to 43% and conventional lenders will only go to 41% for the overall debt-to-income ratio.”
4. Get educated
Although it might be premature to visit a lender two years before a home purchase, it can be valuable for consumers to know if they qualify for a mortgage, Kirchner says. He also recommends visiting open houses.”A lot of people have no idea what $100,000 or $200,000 will buy,” he says, “so the more they look at places and neighborhoods, the better understanding they will have of the value in a home.”
Talk with your realtor – they can point in the right direction and will stay with you through the whole process!
7 fast fixes for scratched, burned and squeaky floors
December 17, 2010
In the home — as in life — it’s often the little things that matter. And it’s amazing how many small structural things can go wrong around your house.
Whether it’s the front-door lock that won’t let you into your own home or the cracked window that won’t keep the cold out, small household problems can have a big effect. For most of these, there’s no need to call for repairs; the solution lies in tapping your ingenuity and using a few common household materials in innovative ways.
Even when it seems that the roof is falling in or the floor is opening up beneath you, there are often simple ways to solve larger problems on your own. Here are some quick fixes for your floor troubles.
Blemish ban
That wood table was heavier than you thought, and dragging it across the room has left a nice long abrasion in your pretty wood floor.
The quick fix
The fix depends on the type of floor, says Rusty Swindoll, assistant technical director with the National Wood Flooring Association.
“If the floor is finished with wax, fine surface scratches can be concealed with a liberal amount of wood-floor paste wax, rubbed in with the grain using a fine-grain steel-wool pad,” he says. “Remove the excess wax and buff the surface lightly with a cloth.”
But, he says, “If the floor is finished with a surface finish (either water- or oil-based), use the meat from a pecan or walnut that has been crushed, rubbing it over the surface scratches to camouflage the scratch.”
Healing the floor
The last thing you need in a busy kitchen is another tripping hazard, which is exactly what that blister in your resilient flooring has become.
The quick fix
Puncture the blister with a sharp object, such as a small nail, and use a glue syringe to shoot flooring adhesive under the surface of the blister. Cover the blister with several heavy bricks or other weights and leave for 24 hours or until the epoxy is fully cured.
Sharing squares
You just learned the hard way that dragging a heavy metal garbage pail can ruin a vinyl kitchen tile.
The quick fix
Ideally, you thought ahead when the floor was installed and put aside a few extra tiles. If not, you can scavenge a replacement tile from underneath the refrigerator or stove. This will be harder if the tiles are light-colored because the floor will be more faded than the replacement tile.
Remove the old tile by heating it with an iron set on low until you can pry it up with a putty knife. Remove the warm adhesive, apply new adhesive, and lay down the replacement tile. Weight it down with bricks or other heavy objects until the adhesive cures.
Sound off
Every home seems to have that one area of wood floor that squeaks, and yours is driving you to distraction.
The quick fix
Squeaks almost always occur in the subfloor, not the wood floor itself, says Ed Korczak, executive director of the National Wood Flooring Association.
“The best solution is to secure the subfloor from below by driving screws into the subfloor of the area that is squeaking,” he says. “Be sure the screws are short enough so that they don’t break the surface of the face of the wood floor.”
Scarring
Your resilient flooring isn’t resilient to small scratches and scuffs.
The quick fix
Rub the scratch with the edge of a quarter. If the blemish is still apparent, rub a tiny amount of paste wax on the surface and buff it with a clean soft cloth.
Square shooter
So now you know: Dropping a cast-iron pan really will crack a ceramic tile.
The quick fix
Remove the grout around the tile carefully using a grout saw — this is not a mechanical saw but a simple abrasive tool that you run along grout lines. Then chip out the tile with a small cold chisel.
Once you’ve removed all the tile pieces, try to remove as much of the adhesive as possible. Lay down a bed of new adhesive and press the new tile in place. Grout around the tile and let it sit for 24 hours before walking on it.
Slow burn
Uncle Bill finally went home, taking his stinking stogie with him, but he left behind a nice burn mark in your carpet.
The quick fix
First, discreetly clip away damaged fibers with a sharp pair of scissors; then, lightly scrub with a scouring pad to remove the darkened tips of the carpet fibers. Vacuum to remove the singed particles.
For deeper or more serious burns, you’ll need to patch the carpet. Unless you have a remnant from when the carpet was installed, this will mean finding an area of carpet that is rarely seen, such as in a closet or underneath a piece of furniture, and removing a patch.
Use a utility knife and jar lid to cut a neat circle around the burn mark, and cut an identical circle out of the donor carpet section. Use double-edged tape or carpet adhesive to set the patch firmly in place.
I found most of this content in an article in Popular Mechanics online and then adapted it for blog form. I really enjoyed the article and wanted to share it because floors take such a beating in our homes and if they don’t look good then the whole rooms suffers.
Real Estate and *stuff * 