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Upscale Remodeling Projects that Pay

January 15th, 2010 7:43 AM

Upscale Remodeling Projects that Pay

By Katie Adams, Yahoo Financially Fit Guide

Today's home buyer is in the driver's seat when it comes to demanding the best value in the current real estate market. If sellers want to maximize the worth of their properties by updating their home with a remodeling project, what will produce their highest return for each dollar spent?

Remodeling Magazine evaluated the top remodeling projects to see which ones rank as the best investment. Here is a list of the top projects that will return a high ROI (Return on investment) when you sell your house.

Siding Replacement (fiber-cement or foam-backed vinyl).

Siding may not be as exciting as a new kitchen or bathroom, but for high ROI it can't be beat. Fiber-cement siding nets an astonishing 87% ROI. A foam-backed vinyl product rates almost as high with an 80% rating.

Window Replacement (vinyl or wood).

Windows are an aesthetic feature and represent one of the easiest ways to lower home heating and cooling bills. Vinyl windows net an 80% ROI compared to 77% for wood windows.

Bathroom Remodel. The sky is the limit when undertaking a major bathroom remodel especially when tearing out walls, repairing joists and structural elements, and replacing a toilet and shower. Depending on the size and amenities you could expect to pay up to $50,000 or more. However, you can expect to recoup nearly 71% of the cost.

Major Kitchen Remodel. While a major kitchen renovation is usually the most time-consuming and expensive home improvement job (averaging more than $110,000), it's also one of the most profitable. Regardless of the size of your financial outlay, you can expect to get a nearly 71% ROI.

Deck Addition (composite product). With families spending more time at home, it makes sense to add a deck (composite, not wood). Expect to recoup 63% of your total job cost to boost your home's value by nearly $24,000 if you paid the average job cost of $37,000.

Don't forget federal tax credits for energy efficiency

As you begin to undertake any new remodeling project in 2010, be aware that selecting certain energy efficient products with the Energy Star label will earn you a 30% tax credit for the cost of the product up to $1,500. In some instances the cost of installation can be included in your tax credit amount.

This tax credit expires December 31, 2010 and must be used for an existing home that is your principal residence. New construction and rentals do not qualify. The key to your tax credit is the Manufacturer's Certificate which indicates the product's tax credit status. The residential energy tax credit is claimed on IRS Form 5695 for 2010 tax returns.Check with your tax professional for details.

The official Energy Star approved list of products include:

Window, Doors and Skylights (Includes storm windows and doors.)
Heating, Air Conditioning and Ventilation Systems (Includes all types of HVAC systems.)
Roofs (Includes both metal and asphalt roofs.)
Insulation (Attics, crawl spaces and walls.)
Biomass Stoves (Use alternative fuels such as agricultural products, wood pellets, waste products and more for energy efficiency.)
Water Heaters (Includes gas, oil and propane products.)

Learn more here: www.EnergyStar.gov

Link: Remodeling that Pays

Posted by Customer Service on January 15th, 2010 7:43 AMPost a Comment (0)

Banks Pursue Mortgage Payoffs Long After Homeowners Default

January 28th, 2010 4:39 PM

Banks Pursue Mortgage Payoffs Long After Homeowners Default

By Kathleen M. Howley

Bloomberg, Jan. 28 -- When John King stopped making payments on his home in Coral Gables, Florida, two years ago, he assumed the foreclosure ended his mortgage contract, he said. Last month, a Miami-Dade County court gave collectors permission to pursue him for $44,000 stemming from the default.

King is among a rising number of borrowers who are learning that they can be on the hook for years after losing their homes in foreclosure. Banks are exercising their rights to pursue unpaid mortgage balances.

To get their money, they can seize wages, tap bank accounts and put liens on other assets held by debtors. Judgments such as the one levied against King usually tack on court fees, fines and interest.

The Federal Deposit Insurance Corporation (FDIC) tracks the amount banks collect after defaulted loans were written off. These mortgage recoveries rose 48 percent to a record $1.01 billion in the first nine months of last year compared with the year-earlier period.

The federal government spent $230 billion in the year ended in September to support homeowners facing foreclosure, according to the Congressional Budget Office in Washington. Those efforts didn't help people who had already walked away from their houses.

In states such as Florida, courts give mortgage holders as long as five years to seek a deficiency judgment and up to 20 years to collect. Deficiency judgments are not allowed in Missouri according to Kathy Swift, Integrity First Consulting.

The likeliest candidates for deficiency judgments are so-called rational defaults, according to Larry Tolchinsky, a real estate attorney in Hallandale Beach, Florida. In those cases, people who are current on their mortgages decide to walk away from a property because its value has sunk far below their loan balance.

"Walking away from a property comes with a cost, especially for people who otherwise have good credit," Tolchinsky said. "The bank is going to pull your credit report, and if you're current on your other bills they are going to come after you."

Short sales also may lead to deficiency judgments years after former homeowners have moved on, according to Ben Hillard, real estate attorney with Hillard & Rodgers, Largo, FL. "Banks are being very careful to preserve their rights, either outright in the short sale agreement or by using vague language that leaves that door open," Hillard said. About 90 percent of people who do a short sale think they are "off the hook."

That was the case when two of his clients, Brigitte and John Howard, sold their home in New Port Richey, Florida, almost two years ago without using a lawyer.

"We got a call out of the blue saying we owed $20,000," said Brigitte Howard, 45. "It was a shock. There was no mention in the short-sale contract that the bank might come after us for the difference."

Link: Defaults

Posted by Customer Service on January 28th, 2010 4:39 PMPost a Comment (0)

FHA Policy Changes Address Risk

January 22nd, 2010 8:11 AM

FHA Policy Changes Address Risk

WASHINGTON, Reuters - The U.S. Federal Housing Administration (FHA) said on Tuesday it will raise the minimum down payment required to secure an FHA-backed mortgage for less creditworthy borrowers as part of a series of steps to shore up the agency's finances.

The FHA said borrowers with credit rating scores below 580 would be required to make a down payment of at least 10 percent, while the rate for higher-ranked borrowers would stay at the current 3.5 percent. The target for implementation of this rule is early summer.

The agency also said it would increase the up-front mortgage insurance premium (UFMIP) to 2.25 percent from 1.75 percent on April 5th. These policy changes were deemed prudent by the agency to ensure its financial health and carry on the mission of supporting home ownership.

"Striking the right balance between managing the FHA's risk, continuing to provide access to underserved communities, and supporting the nation's economic recovery is critically important," FHA Commissioner David Stevens said in a statement.

The FHA said in November that its capital reserves had dwindled to just 0.53 percent of the value of the thousands of home mortgages it insures, well below the 2.0 percent required by law and down sharply from 3.0 percent in 2008.

To help rebuild reserves, the agency said it would seek congressional approval to allow it to raise annual mortgage insurance premiums - which are paid out by the borrower over the life of the loan - above the present maximum of 0.55 percent.

If approved, this would allow it to shift some of the increase in the UFMIP premium to the annual premium. This would help reduce the amount of cash a borrower would need at closing.

"This shift will allow for the agency's capital reserves to increase with less impact to the consumer, because the annual premium is paid over the life of the loan instead of at the time of closing," continued Stevens.

The agency will release the new proposed annual insurance premium this week.

The FHA also said it was cutting the amount of aid sellers could provide buyers to 3 percent of the purchase price from 6 percent; a move it said could help lessen incentives to inflate appraised home values. The target to implement this rule is early summer.

These changes will be in addition to tighter oversight of FHA lenders. The agency saw a fall in volume during the height of the financial boom in 2007 as Wall Street investment banks offered lenders a lucrative market for their loans. Agency volume has soared since mid-2007 as lending standards tightened and easy access to capital dried up.

Applications for FHA-guaranteed mortgages exceeded an annual rate of 3 million in October; nearly triple the level in 2007. In 2006, when subprime and other Wall Street programs were at full speed, the annual rate for applications was less than 600,000.

Link: FHA Rules

Posted by Customer Service on January 22nd, 2010 8:11 AMPost a Comment (0)

Some Areas Hot; Others Take a Breather

January 8th, 2010 11:53 AM

Some Areas Hot; Others Take a Breather

By Stephanie Armour, USA Today via HouseLogic.com

Home sales have cooled during the winter holiday season but are expected to warm up this spring. Homebuyers will face another deadline to claim a federal tax credit.

The National Association of Realtors® (NAR) said Tuesday that its index of pending home sales fell 16% in November from October, breaking a nine-month string of gains. NAR economist Lawrence Yun said that the median house price also fell in October because "many first-time buyers had entered the market. They tended to buy more inexpensive houses, so they dragged down the median price."

A couple of factors contributed to the sales drop. People were rushing to take advantage of the first-time homebuyer tax credit which expired at the end of November. Buyers had to get their mortgage applications in by mid-October to ensure that they would be able to have enough time to close by the tax credit cut-off date.

Sales got a big lift in October then declined as the deadline approached. When the credit was extended into 2010-and expanded to repeat buyers-buyers took a breather.

Another reason is the season. The beginning of December to early January is the slowest slot on the calendar because people are spending their time doing other things: shopping for the holidays, and joining gyms in January to fulfill New Year's resolutions.

Buyers must have a contract in place to buy a home by April 30 and close on the home by June 30 to qualify for a tax credit. It's worth up to $8,000 for first-time buyers and $6,500 for repeat buyers.

Economists say last year's tax credit pulled sales from early this year, and they predict this year's credit is likely to borrow sales that would have happened late in 2010. However, the national chill in home sales isn't being felt across the country.

In Phoenix, broker Tanya Marchiol of Team Investments says there is no sign that sales are slowing down. "We are busier than you can even imagine. We have a lot of people moving here for climate reasons and the technology industry," she says.

Distressed sales, including foreclosures, are also drawing buyers' interest. "The investor market is really taking off," she says. "They can get a home for 40 cents on the dollar and sell it for 80 cents on the dollar."

It's not just investors in Phoenix who are busy. Real estate investor Wayne Rogers is developing a 500-home subdivision near Crestview, Fla. He is tapping into the first-time home buyer market by building two- and three-bedroom homes priced under $250,000. Those, he says, continue to sell.

In Jersey City, sales remain brisk at a former brick pencil factory that was converted into loft-like residences selling in the $200,000s and $300,000s. There has been no slowdown, says Kristin Hurd, sales manager at The Residences at Dixon Mills.

"We've had a nice pace, and we're outperforming the market," she says, adding that incentives such as a year of free maintenance help draw in first-time buyers.

Link: Some Areas Hot

Posted by Customer Service on January 8th, 2010 11:53 AMPost a Comment (0)

Top Savvy Home Buying Tips for 2010

January 6th, 2010 4:10 PM

Top Savvy Home Buying Tips for 2010

"Homebuyers looking to purchase a home in 2010 are facing a market that has changed dramatically over the past two years," states Holden Lewis, BankRate.com, in their annual 100 Smart Money Tips online guide.

"Rules for scoring a low-interest mortgage have become stricter, and homebuyers must be savvy and well prepared to land any home loan." But, there are many incentives available to help a buyer including the Extended $8,000 First-Time Homebuyer and $6,500 Repeat Homebuyer Tax Credits, historically low interest rates and competitive home values. Lewis has a few proven tips to make a borrower's homebuying odyssey more successful in 2010.

TIP 1: Get your loan early in the year.

"The Federal Reserve plans to stop buying mortgage-backed securities by the end of March. Most mortgage experts believe that rates will rise when mortgages go off Fed support as private investors require higher rates to compensate for the risk," says Lewis. April 30, 2010 is the deadline for the stimulus Tax Credits which leave you 17 weeks to find your dream home and make an offer. With a signed contract you'll be able to extend the closing to June 30, 2010.

TIP 2: Know your credit.

As the mortgage world goes back to basics, good deals require high credit scores. Until recently, a credit score of 720 or higher would command a low rate, but the bar has been raised so that the best deals go to borrowers with credit scores of 740 or higher. Start off right by ordering a free credit report at www.AnnualCreditReport.com.

TIP 3: Look at different loan scenarios.

Instead of focusing solely on the interest rate, consider different combinations of discount points and loan type. A Paramount Mortgage Banker can show what a borrower's monthly payment and rate would be paying zero discount points and compare them to other scenarios where borrowers pay discount points in exchange for a lower rate.

TIP 4: Consider an adjustable-rate mortgage.

In late 2009, one in 20 borrowers nationwide was obtaining adjustable-rate mortgages. As mortgage rates rise in 2010, the proportion of ARM borrowers is expected to grow. Ask yourself how long will you realistically live in the house. If less than five or seven years, consider a 5/1 or 7/1 ARM (Adjustable Rate Mortgage). ARMs carry an introductory rate typically lower than a 30-year fixed. A fixed-rate mortgage is probably the safest option for homebuying. But for people who plan to sell their homes within a few years, a hybrid ARM is worth considering.

TIP 5: Small down payment? No down payment?

Go with an FHA (Federal Housing Administration) guaranteed loan with only a 3.5 percent down payment or VA (Department of Veterans Affairs Guaranteed Home Loan Program) loan or RHS (U.S. Department of Agriculture Rural Housing Service) loan with no down payment. Proof of military service is required for the VA guaranteed loan program along with other conditions. RHS guaranteed loans have income restrictions as well as property location. A Paramount Mortgage Banker can give you all the details about these loan programs.

More 2010 homebuying tips are available at BankRate.com

Link: 2010 HOMEBUYING TIPS

Posted by Customer Service on January 6th, 2010 4:10 PMPost a Comment (0)