Archive for June, 2010

Hump Wednesday Funnies

Frank and Ernest cartoon about real estate


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Is Now a Good Time to Refinance?

house and piggy bank refinance your mortgage

Recently, the mortgage rates have been the lowest since the mid-1950s.  Does this mean that it’s a good time to refinance your home loan?

That depends mainly on what rate you have now—and whether you’re planning to move anytime soon. Experts advise weighing your options carefully.
Mortgage rates fell this week to their lowest point on records that mortgage company Freddie Mac has kept since 1971. The average for a 30-year fixed-rate loan sank to 4.69 percent. The previous record of 4.71 percent was set in December. Rates for 15-year and five-year mortgages also hit lows.

The last time long-term rates were lower was in the mid-1950s, when they averaged around 4.6 percent. Those loans typically lasted 20 or 25 years, unlike today’s standard 30-year fixed mortgage.

Here are some answers to common questions about refinancing mortgages:

Q: How much does refinancing cost?
A: It can cost several thousand dollars. Typically, there’s a fee that goes to the mortgage broker or lender, plus fees for title insurance, a new appraisal, document processing and other charges.
But brokers or lenders have ways to make upfront charges invisible to borrowers. They can, for example, create the appearance of a “no fee” mortgage by adding the costs to the total loan amount or by charging a slightly higher interest rate.

Q: So will refinancing my mortgage save me money?
A: That depends on how soon you want to sell. Let’s say you have a $200,000 loan. If you’re able to cut your rate from 5.5 percent to 4.69 percent, your monthly principal and interest payment will drop by about $100—from about $1,135 to about $1,035.
But if your lender charges fees of $4,000, it would take more than three years to break even. The deal would make sense only if you planned to stay longer than three years .

Q: What kinds of loans are available?
A: Since the subprime lending bust, most lenders have eliminated the riskiest loans. These included loans that let borrowers make only interest payments for the first few years. Other risky loans required no down payments or proof of income. The Federal Housing Administration lets buyers get loans with down payments of at least 3.5 percent. That’s how most first-time buyers are able to get mortgages these days.

Q: What’s the difference between a loan modification and a refinanced loan?
A: Loan modifications are for borrowers who are behind on their mortgage or on the verge of falling behind. They involve a reduction in the interest rate or a temporary break on payments. By contrast, a refinanced loan is an entirely new mortgage, often made with a different lender.

Find out which option is best for your situation.


Source:  Associated Press (HouseLogic.com)


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A Morning Cup of Inspiration (June 25, 2010)

morning cup of inspiration


When one door of happiness closes, another opens, but often we look so long at the closed door that we do not see the one that has been opened for us.

– Helen Keller

Helen Keller

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New Policy: Fannie Mae will Penalize Borrowers who Walk Away

fannie mae

Seven-Year Lockout Policy for Strategic Defaulter

Fannie Mae  announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe.

Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.

Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances. These policy changes were announced in April, in Fannie Mae’s Selling Guide Announcement SEL-2010-05.

Source: Fannie Mae


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Hump Wednesday Funnies

Pickles real estate cartoon

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What to look for in a Home Warranty

home warranty house under umbrella

Home warranties are on the rise.  According Carla L. Davis from RealtyTimes.com, below are some of the most common questions regarding home warranties:

What is a home warranty?

A home warranty is a residential service contract giving the homeowner repair and replacement coverage for major operating systems and appliances in a home. These repairs must be due to wear and tear, and not negligence or damage.

How can you benefit from a home warranty?

Repairs to homes are inevitable. And while homeowners cross their fingers in hopes that these repairs are relatively inexpensive, what if an entire system needs replaced, and you are left staring at a bill with a few too many zeros? A home warranty can offer you some level of protection.

Your home warranty plan also provides you with a selected network of professionals from which to choose. Many homeowners prefer having a list to choose from instead of taking a guess at which repair company will be reliable.

According to the Service Contract Industry Council (SCIC), a home warranty, also called a home service contract, offers many benefits to buyers and sellers, including:

  • Repair or replacement coverage of most major appliances and home systems including heating, plumbing, and electrical;
  • Toll-free access to technical support and prequalified repair professionals;
  • Comfort for new owners and protection for sellers while their property is on the market;
  • Optional coverage for structural components such as roofs; recreational equipment such as swimming pools; etc.
  • Ability to transfer the contract from homeowner to buyer.

What are the average costs of a home warranty?

MSN Money says you will be looking to spend somewhere from $250 to $600. And then expect to spend from $25 to $75 for each service visit.

What isn’t covered?

According to The Home Warranty Review, you should make sure you get any repairs approved by your warranty company prior to calling a repair company. This will help to ensure you are reimbursed. Keep in mind that pre-existing conditions, improperly installed or mismatched equipment, and poorly maintained systems are not usually covered.

Warranties also do not cover “acts of God.” This means the pet damage, the graffiti, and the lightning strike are your own responsibility.

Keep in mind, as well, that items “outside the perimeter” of your home may also be off limits. The Review writes, “Some people are surprised to learn that the plumbing leak in the yard is not covered.”

How have home warranty changed in our current economy?

According to the SCIC director, Timonty Meenan, there was a “significant increase in home warranty contract renewals in 2009. Existing homeowners fueled the increase over the previous year, while sales by real estate professionals to home sellers and buyers held nearly steady.”

Florida broker/owner Ed Smith of RE/MAX Coastal Properties has seen a jump in home warranties sales over the past five years, noting, “buyers and sellers have come to understand the benefits of home warranties and there are plenty of customer testimonials demonstrating their value. It’s both a good marketing tool for selling and good protection policy for buyers and sellers.”

How do I choose a company?

MSN Money reporter, Liz Pulliam Westom, gives you three helpful tips.

  • Find out which government agency, if any, regulates home warranty companies in your state and check its complaint records.
  • If regulation is loose or nonexistent, pick a company that has a long track history in your state and solid financials. (If the company is public, you can ask for an annual report to see if its home warranty operations are making a profit.)
  • If someone else — the home seller or a real estate agent — is paying for the policy, insist that the warranty premium be paid in full for the term of the agreement before the sale closes. Check to be sure the amount is listed on the final escrow statement.

A final tip for anyone considering a home warranty, is to read carefully. A warranty is a contractual agreement, and like all contracts, you should know what you are signing. Warranties can vary in price and coverage depending on the company you choose, so be sure to shop around before signing on the dotted line.

Source: Carla Davis, M.A., works on the Realty Times staff as Managing Editor for our online publication. She also is Producer for the real estate news channel, seen daily on RealtyTimes.com and on video newsletters nationwide.



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Remodel your Bathroom the Green Way

bathroom remodeling

If you want to make sure your bathroom remodeling project is as green as possible, here’s how to save energy, conserve resources, and protect your budget.

It’s all about the water

Thinking about greening your bathroom means considering how you use water in terms of consumption and energy. According to the American Water Works Association, your humble toilets are the thirstiest water users in the house, accounting for 27% of consumption. This fact inspired conservation schemes like placing something hefty in the toilet tank to reduce flushing capacity, and those low-flow toilets that too often didn’t flush what needed flushing.

A more successful approach is the dual-flush toilet. It has two flush buttons, one for light work, one for heavy. Long a mainstay in Europe, dual-flush toilets are available in the U.S. for $250–$400, a price in line with top-quality conventional toilets. A dual flush toilet can save 17,000 gallons of water a year—about $50 off your water bill. If you wish to keep your old toilet (a very green decision), you can retrofit it with a dual flush mechanism costing only $70.

The shower is another squanderer of water. Showers use 16% to 20% of a home’s water, most of it heated. The flow rate of a typical showerhead is 2.5 gallons per minute. Switching it out with a low-flow head of 1.5 to 2 gallons per minute still offers adequate cleansing power with a substantial savings in water usage. (If you cherish a really forceful blast of hot water, consider a full-flow showerhead with a lever that lets you shut it off while you lather.)

In addition to conserving water, you’ll want to take a close look at the way your water is heated. Second only to the kitchen, the bathroom is your home’s most intensive energy user, with most of that energy going towards those nice hot showers and baths. Curbing wasted energy can be as simple as adding an insulating blanket to your tank-type heater (reducing energy use by 4% to 9%) and insulating all accessible hot water pipes. In addition, most water heaters are set to 140 degrees; you can turn down the water heater temperature setting to a still-toasty 120 degrees and save up to $60 per year on energy costs.

If your old water heater is nearing the end of its 15-year life cycle and you’re considering investing in a new water heater, you can achieve some handsome energy savings. One smart option is a condensing storage water heater. Using technology similar to that of high-efficiency furnaces, the condensing heater puts nearly every possible BTU into the water instead of sending it up the flue. Currently, a 50-gallon gas unit costs $1,700 (versus $380 for a standard tank-type heater), a price that is expected to drop as demand takes hold. Installation costs are around $400, slightly higher than that of standard units. Those higher costs are offset by a $300 tax credit and an EPA estimated annual fuel savings of more than $100.

A tankless water heater heats water only as it is needed, avoiding the heat loss that occurs with a conventional tank. A unit costs about $2,000 installed, and your annual energy savings will be $70 a year. Be aware that these units take some getting used to; expect a shot of cold water before the hot kicks in.

Move that air

A bathroom remodel is an excellent time to consider installing a new exhaust ventilator fan to remove odors, moisture, and mold spores. Many bathroom fans only vent to the space between ceiling joists, creating an environment for mold and dampness that can damage walls and ceilings. Make sure your new fan vents completely to the outside of your house.
Unfortunately, even properly installed fans that push the moist outdoors can carry away a lot of heated air as well. A clever solution to this problem is a heat-exchange ventilator that uses outgoing air to warm the cold incoming air. Such units cost about $250 uninstalled, twice the price of a standard fan. Whatever fan you have, avoid an on-off switch; it’s too easy to forget to turn it off. Replace it with a timer switch or, better yet, buy a new fan unit with a motion- or humidity-sensing switch.

Selecting green materials

A green bathroom remodel need not stint on style. Classic ceramic tile comes in limitless colors and patterns, and is a green choice due to its low maintenance, durability, and low toxicological impact. Some tiles have high recycled content; recycled glass tiles are a lovely way to do the right ecological thing. Not buying something new can be good green idea too. Consider refinishing your old tub or sink. Use the pros for the best results. Expect to pay $500 for a tub, $300 for a sink. You’ll save as much on installation costs.

LED illumination now produces pleasing light quality in fixtures that sip only 2 to 15 watts, emit little heat, and have a life span of 15–20 years. They cost about three times as much as conventional fixtures but use so little electricity that the payback can be as short as a year.
Paint and vinyl coverings often come loaded with VOCs (volatile organic compounds) that threaten indoor air quality. Look for building materials with Green Seal certification. Green Seal is a non-profit, independent organization that certifies products claiming to be environmentally friendly. Low-VOC options in paints and adhesives can be found at your local home center.

Waste not

Much of our landfill (estimates range from 22% to 40%) comes from construction debris. Any steps that reduce landfill potentially reduce the chance of ground water pollution, the odor and unsightliness of a local landfill, and in some cases the high cost of shipping waste elsewhere. Much of the debris that comes from a remodeling tear-out is not salvageable, but old toilets, sinks, light fixtures, medicine cabinets, and vanities can be donated to an organization like Habitat for Humanity’s ReStore. In fact, it may be just what someone is seeking for their own green remodeling.

Source: Dave Toht (HomeLogic.com)Dave has written or edited more than 60 books on home repair and remodeling, including titles for The Home Depot, Lowe’s, Better Homes & Gardens, Sunset, and Reader’s Digest. A former contractor with decades of hands-on experience. Dave was editor of Remodeling Ideas Magazine and continues to contribute to numerous how-to publications. He is currently putting the finishing touches on a green addition to his Olympia, Wash., home.

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