Tips to Increase Home Appeal

What sells a home? Is it the price, location, or condition? The truth is that it takes a combination of all of these factors to make a sale in today’s market. Unlike boom era transactions, the seller is now in the passenger seat. Buyers today have a great advantage. A glut of homes in many markets means that supply far outweighs demand. Buyers are able to be choosy and to negotiate sweet deals.

When your home is on the market you want to be noticed and for the right reasons. It’s a competitive advantage that could mean the difference between making the sale or not. Let’s look at five top ways to increase your home’s appeal when it’s on the market.

1. Stage for Photos: We are a visual society. Webcasts, virtual tours, and the Internet have made staging for photos and showings an integral part of any marketing plan. Pictures amplify problems. It’s a moment frozen in time, available for a viewers deepest inspections. This means you must create a perfect moment in time. Remove any clutter or excess furniture. Rearrange furniture with looks taking rank over functionality. If your furniture has seen better days, consider budgeting for furniture rental. Add detailed touches, such as cut flowers, throw pillows, and lit fireplaces.

2. Clean: While smells and grime don’t always translate in pictures, they will definitely be a buyer deterrent during showings. If your home needs a lot of scrubbing, either hire a maid service or work on one room at a time until they all shine. Buyers are especially turned off by dirty bathrooms, kitchens, and odors. Scrubs these rooms and burn candles or spray room fresheners.

3. Enhance Curb Appeal: Curb appeal is the first impression of the real estate market. Yes, buyers do judge a house by it’s “cover.” The outside must create a desire to see the inside. To accomplish this you may need to spend money to make money. Cosmetic enhancements go a long ways. Start small and work your way up. Powerwash the deck or sidewalk. Fix broken stones and plant new landscaping. Clean and mulch existing landscaping. Add new shutters, house paint, an accent color on the front door, an updated exterior light, and new patio furniture. Staging doesn’t stop at the front door. It goes from property line to property line.

4. Price Competitively: Buyers are more dollar conscious than ever. Fears of a renewed recession and a high unemployment rate have them wanting the best deal for their money. Buying in today’s market means low interest rates and high levels of affordability. Buyers aren’t willing to pay more for an image or an idea. Be sure to be realistic about what your home is worth in today’s market. Prices have changed, dramatically in some areas. If you price too high you run the risk of scaring away would be buyers. Price correctly from the beginning.

5. Hire an Agent: Perhaps this should have been number one. Many sellers may be considering doing a For Sale By Owner in an attempt to save money on closing costs in these tough times. That could be a big mistake. Buyers have the upper-hand in negotiations these days and without an experienced professional by their side, they could get taken advantage of. Agents also have access to a larger pool of potential buyers. Buyers seek them out when they want a home.

Selling today is possible. In fact, many areas are seeing increases in existing-home sales. Buyers know now is a great time to buy, you just have to convince them that they should be buying your home.

Courtesy of Carla Hill

Mortgage rates ease again to new 2011 low

Rates on fixed-rate mortgages dropped slightly this week, hitting new lows for the year, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey.

While lower rates often trigger applications for refinancing, purchase loan demand also picked up last week and was slightly stronger a year ago, a separate survey by the Mortgage Bankers Association showed.

Freddie Mac’s survey showed rates on 30-year fixed-rate mortgage averaged 4.6 percent with an average 0.7 point for the week ending May 26, down from 4.61 percent last week and 4.84 percent a year ago.

Rates on 30-year fixed-rate mortgages hit an all-time low in Freddie Mac records dating to 1971 of 4.17 percent during the week ending Nov. 11, 2010, before climbing to a 2011 high of 5.05 percent in February.

Rates on 15-year fixed rate mortgages averaged 3.78 percent with an average 0.7 point, down from 3.8 percent last week and 4.21 percent a year ago. Rates on 15-year mortgages hit an all-time low in records dating back to 1991 of 3.57 percent in November.

Costly Home Buying Mistakes

Buying a home is a big financial commitment – very likely, the biggest financial investment you’ll ever make. And if you don’t go about it the right way, you could end up making costly mistakes along the way. Here are five costly home buying mistakes:

Trying to time the market bottom
No doubt, the real estate market has been in a tailspin for several years now. As a result, everyone is in limbo — sellers are on the sidelines because many of them owe more on their homes that the home is worth, and buyers are waiting for prices to drop further. Remember, buyers: Home prices are just one factor in how much a home will cost per month. The other consideration is mortgage rates. They’re rising — and that means higher monthly payments. In fact, even if home values fall — and we’re expecting them to drop another 5-7 percent this year — higher mortgage prices could counteract that. For example, say a house was worth $300,000 in November 2010. If you bought it then, got a fixed-rate mortgage of 4.1 percent and put 20 percent down, it would cost you a little over $1,200 a month. If you waited just two months, and values dropped 1.8 percent, it would cost you $63 more per month; if you waited 14 months, when values are projected to be down about 6 percent and mortgage rates are projected to reach 5.7 percent (per Freddie Mac), your payments would be $126 more per month. Ouch

Not researching loan options
Get this: Borrowers are spending twice as much time researching a car purchase than they are home loans — 5 hours versus 10, respectively — even though homes cost an average of five times more! This disparity can cost you thousands of dollars over the long haul. That’s why it’s important to shop around for different loan options. A site like Zillow Mortgage Marketplace enables borrowers to get unlimited loan quotes from vetted lenders without sharing any personal contact information. That means you compare different mortgage rates and terms without having to field follow-up calls from lenders. It’s risk-free shopping.

Buying a house you can’t afford
In addition to getting pre-approved before you house hunt, know that as a general rule of thumb, the total cost of your mortgage payment (including any taxes and insurance) — should not exceed 30 percent of your take-home pay.

Not knowing your credit score
Find out what your FICO score is (or get a ballpark credit score here for free) and if it’s sub par – in the low 600s, for example – launch a campaign to raise it, keeping in mind that even a 20-point increase could save you thousands of dollars over the life of the loan. What’s ideal? The lowest interest rates are reserved for those with a score of 720 or above.

Falling in love too quickly
Love is blind! Don’t let your emotions get to the best of you. If you do, you may overlook costly flaws, skip an inspection, fail to factor in commute times (gas prices are up there!), property taxes, the location/neighborhood (an important consideration for resale purposes), and more. To ensure you’re getting the best house at the best price, take the time to shop around, comparing at least three homes before you make a decision. You’ll be glad you did.

5 Ways to Go Green, While Saving Green, in Your Home

While making your home energy efficient is good for the environment, it’s also good for your wallet.

According to the U.S. Department of Energy, consumers spend $241 billion annually on home energy and 1.2 billion tons of green-house emissions are released as a byproduct. The typical family spends $1,900 on home utility bills, and much of the energy isn’t used. It’s estimated that doing a few simple home improvements would cut the amount of carbon-dioxide released, as well as the amount of money spent on energy bills annually, in half. We dug up some things you can do around the house to help lower both greenhouse gases and your utilities.

Tip #1: Get rid of vampires or other phantom power suckers: This isn’t a reference to the blood-sucking villain or popular culture, but a term that’s used to refer to appliances that suck energy when not in use. Vampire energy, also known as phantom energy or standby power, accounts for 20 percent of home electricity use and 1 percent of carbon dioxide emissions.The biggest culprits are small appliances like coffee-makers, TVs, laptops, cell phone chargers, fans and hair dryers. You can cut back on standby power use by unplugging appliances after you use them or installing a power strip to easily turn several appliances off at once.
Estimated savings: It depends. Cornell University estimates that vampire power adds about $200 to residential energy bills annually.

Tip #2: Change your water heating: The U.S. Department of Energy estimates that water heating can account for 14 to 25 percent of energy use each month. The best way to save energy—and money—is to turn down your hot water heater down to 120 degrees. Most manufacturers set the temperature at 140 degrees which isn’t necessary in washing machines and most dish washers. Want further savings? Most clothing doesn’t need to be washed in hot water; warm to cold water works just as well, and cold water is always fine for rinsing. Consider investing in a front-loader machine which use less water, energy and can cut down on drying times.
Estimated savings: At a very minimum of 3 to 10 percent but a new washer could save you an additional $135 each year on your utility bills.

Tip #3: Change the light bulbs: You’re going to have to eventually change to florescent bulbs (CFLs) when the U.S. begins to phase out incandescent lighting, so might as well start the switch now. According to Energy Star, a program run by the Environmental Protection Agency, switching to CFLs saves “about $600 million in annual energy costs, and prevents 9 billion pounds of greenhouse gas emissions per year, equivalent to those from about 800,000 cars.”
Estimated savings: $57.55 over the life of a CFL bulb, according to a study done by Consumer Reports.

Tip #4: Heating and cooling: On average 43 percent of your utility bill goes toward heating or cooling. Heating and cooling systems also generate 12 percent of the nation’s sulfur dioxide and 4 percent of the nitrogen oxides—the two chief ingredients in acid rain. Whether its 10 or 110 degrees, there are several things you can do to significantly decrease heating and cooling costs.

Turn down your thermostat—especially at night. If you turn the thermostat down by 1 degree for eight hours every night, you’ll use about 1 percent less energy.
Clean or replace filters on furnaces once a month or as needed.
During the heating season, keep the draperies and shades on your south-facing windows open during the day to allow the sunlight to enter your home and closed at night to reduce the chill.
During the cooling season, close blinds and windows during the day to reduce solar gain through windows.
Invest in energy-efficient products when you buy new heating and cooling equipment.
Estimated savings: 20 to 50 percent

Tip #5: Save water: According to the EPA, leaks account for 10,000 gallons of water wasted in the home each year on average. Fixing leaks can greatly reduce your water bill. Purchase low-flow faucet and shower heads, and if you are looking for a new toilet, invest in a low-flow toilet. Many of these will not perform any differently, but you’ll see significant reductions in your water usage. Lawn and garden watering makes up 40 percent of water use in the summer. Cut down on water costs by investing in a rain barrel to collect water from your roof. In times of drought this water can be used to wash your car or dog and water your garden or lawn. This not only reduces demand on municipal water—saving up to about 1,300 gallons of water during the peak summer months—but also reduces storm runoff.
Estimated savings: 25 to 60 percent off your annual water bill.

Common (and Costly) Mistakes Borrowers Make

Getting a mortgage can be daunting, especially when there’s a lot of your hard-earned money at stake. It’s critical to spend a few hours researching how a mortgage works (or at least as much time as you’d spend researching a vacation or a car purchase) before you begin the process. Unfortunately, nearly half of prospective home buyers don’t understand essential mortgage information, according to a recent mortgage survey conducted by Zillow Mortgage Marketplace. This lack of basic knowledge is likely leading borrowers to make costly mistakes. Here are some of the most common mortgage misunderstandings, and how to
avoid them.

Buying Mortgage Discount Points – Nearly half ( 45 percent) of those surveyed in the Zillow poll believe they should always buy discount points when obtaining a mortgage. However, because mortgage discount points have an upfront cost that can be recouped through a lower interest rate over the life of the loan, the decision should depend on how long you intend to own the home. In some cases, you may not plan to remain in the house for long enough to break-even after buying points. A discount points calculator can help you do the math.

Not Monitoring Rates – Mortgage rates can change multiple times throughout the day, similar to how stock prices fluctuate. But more than half (55 percent) of the people polled thought rates were set one time each day. To get the optimum rate, it’s important to monitor rates and talk to different lenders. When you compare various rates make sure you are comparing the exact same loan.

Contacting Just One Lender – Many buyers believe lenders are required by law to charge the same fees for credit reports and appraisals. One-third (34 percent) of survey respondents do not understand that lender fees are negotiable and can vary by lender. Borrowers can save money by reaching out to several lenders and comparing rates and fees. This may appear time-consuming but sites like Zillow Mortgage Marketplace enable borrowers to put in a loan request — without sharing any personal contact information — and compare rates and fees personalized to their financial situation from hundreds of vetted lenders nationwide. Bonus feature: the site offers lender ratings and reviews to help borrowers choose the lender not only with the lowest rates and fees, but with the best service level to other borrowers.

Not Considering Various Loan Options – Many people may automatically avoid certain loan products, like Adjustable-Rate Mortgages (ARMs) because they don’t understand how they work. For example, when asked if interest rates on 5/1 ARMs always reset to a higher rate after five years, the majority of those polled (57 percent) said yes. In actuality, after five years, the rate could increase or decrease, meaning that there’s a possibility for a borrower’s monthly payments to go down. Whether an ARM makes sense for you depends on your personal situation such as your appetite for risk and how long you plan to live in the home. As you consider different loan products, ask your lender to go through the worst-case scenarios to avoid any surprises during the life of the loan.

Not Knowing Basic Terms – As you begin to think about securing home financing, you may hear terms like FHA loans and pre-qualification get bandied around. According to Zillow research, many people don’t know what those terms mean. Forty-two percent of prospective home buyers thought only first-time buyers could qualify for FHA loans, and 37 percent believed if they pre-qualify for a loan it means they’ve secured financing. Familiarize yourself with basic mortgage terms before reaching out to a lender. Most importantly, don’t be afraid to ask your lender, or even your real estate agent, lots of questions about the loan throughout the process.

5 Key Concepts of Home Insurance

by Brandon Cornett

Homes are Getting Smaller, More Energy Efficient

What do home buyers want today and in the future? The answer: smaller, more energy-efficient homes.

The average size of a new single-family home in 2010 was 2,377 sq. ft., down from 2,438 sq. ft. in 2009 and down from the peak of 2,520 sq. ft. in 2007 and 2008, according to U.S. Census Bureau data presented yesterday at the International Builders’ Show in Orlando by Rose Quint, assistant vice president of survey research for NAHB.

And the trend will only continue, Quint said, with the 2015 new home size currently projected at 2,150 sq. ft. with fewer bathrooms and smaller garages.

It’s hard to say whether home sizes will decline to 1970 levels of 1,500 square feet. But Quint says she believes smaller sizes are here to stay based on demographics. The U.S. population was 310 million as of April 2010. That’s expected to rise to 322 million in 2015 and up to 422 million by 2050. The population is also getting older and more diverse. In 2010, 25% were over the age of 55, which is expected to grow to 31% by 3050.

This rising segment of older home owners who won’t want to care for a huge space, Quint said, and then you have Generation Y buyers who are very energy conscious. “People are coming to realize, ‘Let’s buy what we need,’” said Quint.

The Census Bureau data matches NAHB’s findings that builders expect to build smaller homes with more green features in the next five years. Low-energy windows, water-efficient features, engineered-wood beams, joints, or trusses, and Energy-Star ratings for whole home are expected to be more prevalent.

Builders also expect an increase in living room size as well as more planning for universal design features with homes more easily adaptable for future improvements.

Jill Waage, executive editor with Better Homes and Gardens, also presented her magazine’s 2011 consumer preferences survey, which was taken the first week of December. According to Waage, the top three improvement priorities home owners want were a laundry room, additional storage, and a home office.

“The connection to outdoor living space is also really important,” Waage says.

Other trends included in the Better Homes and Gardens study: built-ins, media space for flat screen TVs and gaming systems, and areas wired for technology. Buyers also want combined kitchen, family room, and living room open space. Universal design features, she said, will be incorporated in much more subtle ways.

Foreclosure ‘Dual Track’ Snaring Home Owners

By Leslie Berkman, The Press-Enterprise, Riverside, Calif.

Jan. 31—Four years into the nation’s foreclosure crisis, consumer advocates say hundreds, if not thousands, of borrowers are losing their homes in foreclosure while negotiating to lower their mortgage payments—or even while they are making payments on more affordable terms that they believe will become permanent.

Such unexpected foreclosures are frequently chalked up to mistakes that can occur when the arm of a bank that modifies mortgages operates independently of another arm of the same bank that pushes mortgages through the foreclosure process.

“It is an absolute nightmare,” said Ginna Green, communications manager for the Oakland office of the Center for Responsible Lending.

Consumer advocates want to do away with this so-called “dual track,” but they are meeting resistance from the mortgage industry. Such a step would add to the foreclosure backlog that is weighing down the national economy, industry opponents say.

Testifying before Congress late last year, Bank of America President Barbara Desoer said “parallel foreclosure and modification processes are required by many investors and reflect an industrywide servicing practice.”

She acknowledged that the dual track process is a source of confusion for customers that should be addressed. But she did not give any specific suggestions.

Most of the confusion arises because home owners in the midst of modification negotiations continue to receive notices as their homes move ever closer to a foreclosure sale on the courthouse steps, said Bank of America spokesman Rick Simon.

Under bank policy, Simon said, Bank of America, the nation’s largest mortgage servicer, stops short of actually letting a house go to a foreclosure trustee sale as long as modification efforts are still under way.

In rare instances, he said, a mistake is made and the foreclosure sale occurs. In those cases, he said, the bank has had the sale rescinded.

Reversing course

However, consumer attorneys contend that the mistakes are not always so easily undone. The scope of the problem is difficult to measure, they say, because often it is the home owner who discovers what has happened, and many give up trying to salvage their homes.

The National Consumer Law Center, a legal resource for consumer attorneys, found that almost all of 96 consumer lawyers it surveyed in 34 states, including California, reported having clients who had lost their homes to foreclosure while they were awaiting a loan modification.

Recent attention that was drawn to other questionable practices of banks that service delinquent mortgages also increased public awareness about the shortcomings of the dual track, said Paul Leonard, California director of the Center for Responsible Lending.

Eliminating simultaneous foreclosure and modification tracks is opposed by Fannie Mae, Freddie Mac, and other investors in mortgages who are suffering from the foreclosure crisis and want to minimize their losses.

Kurt Eggert, a professor of law at Chapman University and former member of the Federal Reserve Board consumer advisory council who testified in December before the U.S. Senate Banking Committee, said the dual track enables mortgage investors and servicers to put pressure on delinquent home owners.

“Some servicers and (mortgage) owners like Fannie and Freddie think they need a dual track to hold borrowers’ feet to the fire to force them to pay or modify the loan or get out,” Eggert said.

Amy Bonitatibus, a spokeswoman for Fannie Mae, said the company’s position is that “a borrower should never be foreclosed on until all the options are exhausted including forbearance, modification, short sales, and deeds in lieu,” in which borrowers who can’t afford their mortgage give their homes to the bank in exchange for having their obligations canceled.

But she said after a home owner misses three months of payments on a mortgage, Fannie Mae wants its bank servicers to move ahead with the foreclosure process. Then, if efforts to salvage the mortgage fail, the house can be sold at a trustee sale as quickly as possible, with the proceeds going to cover as much of the delinquent mortgage as possible.

The foreclosure process starts with the recording of a notice of default, usually after three months of missed payments, which may be followed 90 days later by a notice of trustee sale. The trustee sale is an auction where the home is sold to the highest bidder.

If nobody bids on the property, the lender repossesses it and sells it on the open market. The borrower who loses ownership of the home will receive a notice to vacate. If the borrower refuses to move, he can be evicted.

Getting homes out of the hands of those who cannot afford them and into the hands of new owners able to make mortgage payments is financially beneficial not only for Fannie Mae and taxpayers—the U.S government owns a controlling interest in Fannie Mae—but for the nation’s economic recovery, she said.

But consumer advocates contend that too often the dual track system breaks down and prevents mortgage fixes that would be less costly and more compassionate than foreclosure.

‘Doing right thing’

“The problem is that sometimes borrowers think they are doing the right thing in working with a servicer to modify the loan, they have done everything the servicer tells them, and boom, they get the rug pulled out from under their feet,” Eggert said.

Julio Martinez, 64, has filed a lawsuit for breach of contract against JP Morgan Chase. Martinez said Chase approved him for a temporary trial modification provided under the federal government’s Home Affordability Mortgage Program, or HAMP, and continued to accept his mortgage payments under that program even after the bank foreclosed on his San Bernardino home.

Martinez said he fell behind on the mortgage on his three-bedroom house when the ailing economy forced him to close his auto repair shop, and in July 2009 a notice of default was recorded on the property, beginning the foreclosure process.

In November 2009, Chase offered Martinez a trial modification that required him to make three consecutive monthly payments of $1,064 each, he said. He was able to make the trial payments with income from his new job at a wrecking yard and Social Security, he said.

Awaited application

Chase told him that he would get a formal application to participate in HAMP, but the promised documents never arrived in the mail, Martinez said.

Three days after he made his first trial modification payment, a Chase representative informed him that because of a bank error his house had been sold in foreclosure. He said Chase instructed him nonetheless to continue making his scheduled trial modification payments.

The bank said, “We made a mistake selling the house, but we will give the house back to you,” he recalled.

Not long afterward, he said, a neighbor called him at work to ask whether he was having his locks changed.

Subsequently, he learned that investors who bought his house at the foreclosure sale wanted him to move. But he said Chase told him to stay put.

Martinez contends that on further advice from a Chase representative, he made the last of three trial mortgage modification payments. From then on, he said, the Chase representative he had been dealing with did not return his calls.

Dennis Moore, a Riverside attorney representing Martinez, said a judge sided with the investors in a court action to evict Martinez but allowed Martinez to stay on as a renter until the eviction case is heard on appeal.

Moore said he has filed a separate lawsuit on his client’s behalf to reverse the foreclosure.

Chase spokesman Gary Kishner said it was against the bank’s policy to comment on Martinez’s lawsuit because it is pending litigation.

Another case

Another of Moore’s clients, Alan Carriaga, 43, said Wachovia sent him a letter in April 2009, saying that a mortgage modification proposal had been prepared for him pending verification of his income, which Carriaga contends he already had provided.

Carriaga became distraught when a month later he received notice that his Grand Terrace home would be sold in foreclosure. He said a Wachovia representative told him not to worry and that the company would fix the problem right away.

But Carriaga’s home was sold in foreclosure, and now he is a tenant of Wachovia’s successor, Wells Fargo, paying rent of $1,825 a month while he pursues a lawsuit in hope of getting the house back.

A musical instrument technician with his own business, Carriaga said he fell behind on his mortgage payments when his adjustable rate mortgage soared about the same time that he was laid up by a car accident and coping with deaths in his family. He said now he is on his feet, his business is doing better and he could afford to make a reasonable modified mortgage payment.

Moore complains that because Wachovia promised Carriaga a mortgage modification and Carriaga believed what he heard, his client missed other opportunities to save his house, such as filing bankruptcy, taking a second job or borrowing money from friends and family.

Wells Fargo denies that it gave Carriaga any indication that he would soon receive a mortgage modification and says he was informed of the scheduled foreclosure “well in advance,” said Wells Fargo spokeswoman Amy Savicky-Injaian.

Free guidance

Melinda Opperman, vice president for community outreach at Springboard, a Riverside-based nonprofit organization that provides free foreclosure counseling, said any time a homeowner receives a notice of foreclosure while negotiating a mortgage modification, he should take action.

Opperman said the home owner should quickly seek help from a government-approved agency such as Springboard, which she said has stopped unwarranted foreclosures by calling a bank’s advocacy department or going directly to the office of a bank president.

It is important to act before the house is sold at a foreclosure auction, perhaps to a third party. “We get right at it,” she said. “You can’t unring a bell that has already been rung.”

Kevin Stein, associate director of the California Reinvestment Coalition, a consumer advocacy group, said a survey last year of foreclosure counselors in the state revealed that 60 percent had seen clients notified of foreclosure while in mortgage modification negotiations.

“The potential for mistakes is great, and the consequences of the mistakes are huge,” Stein said. He said he was skeptical whether the servicers know the full extent of the mistakes that are made “when the right hand doesn’t know what the left is doing.”

Also, Stein said once a foreclosed home is sold to a third party, it is questionable whether a judge would require the buyer to return it.

“We think (the dual track) is a significant problem that warrants legislation, said Stein.

Stein said this year that the coalition plans to reintroduce legislation that would legally mandate mortgage servicers in California to halt all foreclosure actions while deciding whether a home owner is eligible for a mortgage modification. A similar proposal failed to pass the California state legislature last summer.

Opponents, who included a broad array of industry trade associations such as the California Bankers Association and California Building Industry Association, complained that, among other things, the legislation would “create a series of procedural traps” for loan servicers “that will lead to ever increasing litigation.”

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