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Home Prices Will Zigzag For Years December home prices were up 11.8 percent year-over-year, the largest gain since 2006, according to RadarLogic’s latest RPX monthly housing market report. But this isn’t a “real and sustainable” recovery according to Quinn W. Eddins, Director of Research at RadarLogic. For that, we need a rise in home prices that are driven by job growth and improving consumer confidence. In the absence of this, Eddins says rising home prices will impact demand, cause a rise in supply and then reduce the pace of rise in home prices or even reverse it. Eddins expects home prices to temporarily decline again this year, but a decline will prompt speculative demand cool housing starts and sales. “Home prices are likely [to] follow such a saw-tooth pattern for a number of years, until consumer demand increases and inventories of distressed homes return to historical norms,” writes Eddins. Though Eddins does warn that the impact of investors on this saw-tooth pattern is hard to estimate. Corporate investor transactions (purchases) increased 62 percent year-over-year in November 2012, driven by financial institutions building their portfolio of rental homes. These purchases accounted for 12 percent of all transactions in 2012, up from 8 percent the previous year. What’s more, all transactions were up just 8 percent, while non-corporate investor purchases were up just three percent. “While the overall RPX transaction count may suggest a healthy gain in sales activity, most of that gain took the form of purchases by corporate investors. When we look only at non-investor purchases, the year on year gain is much less remarkable.” Sales last year were driven by investor activity, low interest rates, and a shift in sales mix and none of this is expected to have a lasting impact on home prices.

19 Confusing Mortgage Terms Deciphered By Gerri Detweiler | Credit.com – Wed, Feb 20, 2013 6:00 AM EST If you have ever tried to get or refinance a mortgage, you may have felt like you were in a foreign language class: some of the words seem familiar but you aren’t sure you know exactly what they mean. PMI, APR, escrow, jumbo … and on and on. Here we decipher some of the most common terms you are likely to come across, plus give you the scoop on why they are important. Adjustable-Rate Mortgage (ARM): A loan with a rate that can change from time to time. Adjustable rate loans are tied to an index such as the prime rate or LIBOR and will change according to a schedule laid out in the loan documents. The Scoop: Super-low introductory “teaser” rates that got a lot of homeowners in trouble during the housing boom and bust are largely gone, but ARMs are still available. When interest rates are extremely low, however, the benefit of a slightly lower rate may not be worth the risk that the rate (and payment) can rise in the future. Annual Percentage Rate (APR): The interest rate expressed as an annual rate. When it comes to mortgages, the APR is always higher than the interest rate (or “note” rate) because it includes additional costs such as points or mortgage insurance (if applicable), and other fees associated with the loan. The Scoop: A lower APR isn’t always your best choice. If you don’t want to pay closing costs, for example, or if you plan to be in a home for a relatively short period of time, a higher APR with lower out-of-pocket costs can be the better financial choice. Appraisal: An evaluation of a property’s value on a specific date. Appraisals are prepared by licensed professionals. The Scoop: A value you see online may be far different than what an appraisal determines. Appraisers must rely on “comps” — what similar properties in terms of age, style, size, etc. sold for recently. If there are no recent comparable sales or a property is very unusual, it can make it more difficult to get an appraisal that will be acceptable to a lender if financing will be involved. That’s something to keep in mind if you are thinking about buying a “one of a kind” house. Broker: A mortgage broker typically works with multiple lenders for which it will take and process loan applications. The Scoop: A good mortgage broker will shop for the best loan for a client, depending on that client’s needs and qualifications. Don’t assume going through a broker will cost more. In the sometimes crazy world of mortgage financing, the broker should have access to competitive — or even better — rates than an applicant can get by going directly to the same lender. However, some loan officers (brokers as well as in-house lenders) have put their own financial interests before that of their clients, so choose a mortgage company with a solid reputation and track record. Closing Costs: Costs paid by the borrower and/or the seller if a home is sold rather than refinanced. May include the appraisal; points; document processing, tax service, underwriting, and/or application fees; lender or broker fees; credit report; flood certification; inspection; and/or title fees and possibly more. Typical closing costs vary by state though the national average in 2012 was $3,754, according to Bankrate.com. The Scoop: Some lenders offer no closing cost loans but they mean different things to different lenders. Sometimes they refer to no lender costs, sometimes to wrapping the closing fees into the loan, and sometimes to getting a lender credit to pay for all the closing costs. Joseph Kelly, president of ArcLoan.com, has been helping to educate borrowers on the value of these loans since 1998. He says, “A true no closing cost option provides a credit from the lender to offset all of the closing costs on a mortgage. It is the best option for borrowers who may only be in their home five to seven years, or if interest rates may drop further in the next couple of years.” Conventional: Conventional loans or financing refers to loans that meet the funding criteria of Fannie Mae or Freddie Mac. This is in contrast to government-insured loans (such as VA or FHA) or portfolio loans (loans that a lender plans to hold rather than package and sell). The Scoop: Conventional loans have been more popular in recent years, but don’t limit your search to conventional financing. An FHA or VA loan may offer a lower downpayment, for example, or may be a better choice if your credit scores aren’t really high. Credit Report: A credit report details a borrower’s payment history and information about certain public record items such as bankruptcies, judgments or tax liens. They are compiled by three major credit reporting agencies (CRAs): Equifax, Experian and TransUnion. The Scoop: Most mortgage lenders will review a “tri-merge” credit report that contains a borrower’s history from all three of the major CRAs. If more than one person is applying for the loan, each borrower’s credit reports will be reviewed. It’s a good idea to review your credit reports and credit score at least three months before you apply for a mortgage so you’ll have plenty of time to fix any mistakes you find. Escrow/ Impound Accounts: The lender collects money each month from the borrower as part of the monthly payment to cover the cost of property taxes and/or hazard insurance premiums, which are typically then paid by the lender once or twice a year. The Scoop: Your lender may or may not require an escrow/impound account. Even if one isn’t required, you may want to think about one since it can make it easier to budget for these large expenses. And although you may think of the cost of insurance and taxes as part of your monthly payment, it’s smart to shop each year to make sure you aren’t overpaying for insurance or on your property taxes. FHA: FHA loans are insured by the Department of Housing and Urban Development (HUD) and feature low down payments. In addition, certain closing costs can often be included in the loan and credit score requirements can be more flexible than some conventional loans. The Scoop: These loans require the borrower to pay a Mortgage Insurance Premium (MIP), which adds to the monthly cost of the loan. Recent changes to the FHA program will require borrowers to pay MIP for the entire life of the loan. Fixed Rate: Your interest rate is fixed at a certain rate for a specific period of time. For example, a 30-year fixed rate means your rate is fixed for 30 years. The Scoop: A fixed rate doesn’t mean your payment can’t change during that time, however. If your payment includes taxes or insurance and the amount you pay for them change, your payments will change as well. Good Faith Estimate (GFE): A good faith estimate provides an estimate of your closing costs and loan terms if your application is approved. You must receive one within three business days of applying for a mortgage. The Scoop: A GFE can be a helpful tool for understanding what a loan may cost, but it doesn’t mean that’s exactly what you will pay. You can use a GFE to shop around or to compare different loan options (lower rate with higher closing costs vs. higher rate with lower closing costs, for example). Certain fees that have been quoted can’t change, or can’t change by more than 10%, though third-party fees can differ from what’s quoted in the GFE. The CFPB publishes a sample GFE and list of which fees can and can’t change. In-House Lender: An “in-house” lender refers to where the mortgage application is processed, underwritten and closed in the same place. The Scoop: When the company you applied with has all those pieces within their same company there is more control over the process and time needed to complete the loan, says Kelly. Often these lenders are also called “direct lenders” as opposed to a broker who sends the file out to another company to underwrite the loan. Jumbo Loan: A jumbo loan is a mortgage loan above Fannie Mae and Freddie Mac’s conforming loan limits, currently $417,000 in most parts of the country, and $625,000 in some high-cost areas. The Scoop: Jumbo loans are considered more risky to lenders, so they will typically carry slightly higher interest rates. Loan-to-Value (LTV): The loan-to-value ratio compares the total amount of the loan to the value of the property. Figuring the LTV is easy: Just take the loan amount, divide it by the value and move the decimal two spaces to the right. The Scoop: LTV is important for both purchase and refinance mortgage loans. High LTV loans are more risky. Some loan products or programs will not allow loans to be made above a certain LTV (for example, 80%), rates may be higher for higher LTV loans, or a lender may require the borrower to pay for mortgage insurance to protect the lender in case the borrower defaults. Private Mortgage Insurance (PMI):  If you are making a downpayment of less than 20% on a home or try to refinance and your LTV is above 80%, you may be required to pay for PMI, which protects the lender if you don’t pay back your loan. The Scoop: You may be able to cancel private mortgage insurance after a period of time, if you pay down your balance to a certain amount or if the equity in your home increases. PITI: The cost of principal, interest, taxes and insurance, calculated on a monthly basis. The Scoop: Even if you plan to pay your taxes and insurance yourself, rather than let the lender collect and make those payments, your lender will calculate PITI and use it to compare monthly income to your monthly debt to see if the proposed payment is too high. Points (Discount Points): One “point” equals one percent of the loan amount. On a $150,000 loan, for example, each point costs the borrower $1,500. The Scoop: Discount points are used to reduce the interest rate; the more discount points you pay, the lower your interest rate. “On any given day there is a range of interest rates available with a corresponding cost (in discount points),” Kelly explains.  ”On average, paying one point will provide an interest rate 1%-4% lower.  Depending on your type of loan you may be able to pay more closing costs for a lower rate, or pay less for a slightly higher rate.  Ask your loan officer for several options and compare which benefits you more.” Servicer: Your loan may be “serviced” by a different company than the one from which you obtained your loan. The servicer collects payments, sends statements and manages disbursements such as payments for insurance or taxes loans with escrow accounts. The Scoop: You don’t get to choose your servicer, and some do a better job than others. If you have a complaint about a servicer, you can share it with the Consumer Financial Protection Bureau. VA Loans: Qualifying veterans can use these loans to purchase, refinance or improve homes. They allows borrowers to finance up to 100 percent of the VA-established reasonable value of the property. They carry a guarantee that helps protect the lender if the borrower defaults. The Scoop: You’ll pay a non-refundable funding fee of 2.15% if you borrow the maximum amount available and this is your first VA loan, or 3.3% if this is your second VA loan and you are borrowing the maximum amount. For veterans who haven’t saved a large down payment, this can still be an excellent option. Kelly adds that, “Veterans who have any military disability can get the funding fee waived.  If you are a veteran with a disability be sure to point this out to your lender to have …

12 Debt Myths That Trip Up Consumers By Rachel Louise Ensign | The Wall Street Journal – 4 hours ago Avoid debt if you can. If you can’t, borrow carefully and conservatively. So the conventional wisdom goes. But if you follow it blindly, you may miss out on key nuances of dealing with debt. For instance, consider store-brand credit cards. They often offer no-interest financing, and rewards on store-bought products. Sounds great. But did you know those attractive financing terms can come back to bite if you carry a balance after a promotional period? Then there’s mortgage debt. A big down payment may be a great way to steer clear of a huge home loan. But if you get the money for the down payment from relatives, lenders may scrutinize your financials closely. As many people look to rebuild credit or land loans, it’s crucial to know when the conventional wisdom makes sense—and when it doesn’t. With that in mind, here are some top myths that consumers fall victim to when borrowing today. Many couples think marrying each other means merging their debt loads, but that generally is not the case. While many couples opt to pay down debt together, neither spouse is usually legally obligated to pay off debt that the other incurred before marriage, says John Ulzheimer, president of consumer education at credit-monitoring service SmartCredit.com. However, be aware that a spouse could lose that protection. If you refinance a loan with your significant other and put your name on the loan’s promissory note, or add yourself as a joint account holder of a credit card, you’ll likely become responsible for those debts, even if your spouse took them on before marriage, he says. Brian StaufferKnow also that you may be responsible for debt your spouse takes on after you wed, even if your name isn’t on the account. The pitches for store-branded credit cards can sound enticing, with lures like interest-free financing and rewards. But the deals may be much less appealing if you tend to carry a balance. Some of the cards operate like payment plans where borrowers make a purchase from the retailer on the card and then have a number of months to pay it back, interest-free. But if you don’t pay off the whole balance in the allotted time, you’ll typically have to pay interest on the entire amount you initially charged retroactively—often at a higher rate than a typical credit card, says Odysseas Papadimitriou, chief executive of credit-card comparison website CardHub.com. For instance, Apple offers customers up to 18 months interest-free on purchases on a card from Barclaycard US. But if you don’t pay off that specific purchase in the interest-free period, you’ll face a variable annual percentage rate that’s currently about 23%, according to the Apple website. Other cards don’t offer deferred interest, but come with fairly high rates, says Ben Woolsey, director of marketing and consumer research at CreditCards.com. “Even somebody with excellent credit will be paying 20-plus percent,” he says. For instance, the two cards offered through Banana Republic have variable rates recently at 24% and 25%, higher than the recent average rate of 15% on all variable-rate cards. Some well-off families figure they won’t qualify for federal aid and don’t apply. But that means they may have to turn to private loans instead. In recent years, as many as 41% of families earning $100,000 or more didn’t file the Free Application for Federal Student Aid, or FAFSA, which is necessary to land federal loans, according to a Sallie Mae survey. But passing up on that chance can be a mistake. For one thing, well-off parents and students can get federal loans, as a number of them have no income limits. And private loans can come with  higher rates than federal loans, or variable rates that could very well rise in coming years. Another key drawback: Private loans generally don’t offer the flexible repayment plans, tied to a student’s income, that federal ones may. If that’s not convincing enough, consider that even private lenders recommend that you consider federal loans in the college-funding process, no matter what your income. “We encourage students to explore Stafford loans, which may have lower rates, and to compare options, such as PLUS loans and private loans, to fill any remaining unmet need,” says Patricia Nash Christel, a spokeswoman for Sallie Mae, the largest private lender. The typical scoring model from FICO, standard bearer of the credit score, will cut your score for missing mortgage payments. But don’t expect to get a lot of points added to your score for making those monthly payments on time. That’s because, in FICO’s models, missed payments say more about your riskiness than regular on-time payments do. “Negative information can be very influential, positive information helps your score more incrementally,” says Frederic Huynh, senior principal scientist at FICO. Even if people don’t buy a home entirely with cash, they’re being more careful to put down big down payments. And often that means turning to family members for money. But those kinds of gifts may set off red flags for lenders. With much tighter lending standards than before the crash, banks are looking closely at where the money for your down payment came from, says Erin Lantz, director of real-estate firm Zillow’s Mortgage Marketplace. Some lenders want to see that any gift for a down payment has been in your bank account for a significant period of time, and most want to see that its origin is documented, says Ms. Lantz. “What the lender would ask for is the whole path of that money. Where did that money come from? How did it come into your account? What has it been doing in your account? Has it been sitting there?” says Ms. Lantz. You’ll also want a letter from the person who gave you the money, stating it was a gift. And make sure you have documentation showing the money going from one account to the other, says John Prom, a mortgage banker at Real Estate Mortgage Network Inc. in New York. Lending criteria for mortgages remain tight. But standards for car loans are comparatively looser. A January Federal Reserve survey of senior bank-lending officers found 16% reporting they had eased standards for making auto loans in the preceding three months—compared with 6% for prime residential mortgages. That’s in part because auto loans come with lower delinquency rates and are therefore less risky, says Greg McBride, senior financial analyst at Bankrate.com. “For most people, the rates are the lowest they’ve ever been. Anyone with decent credit is going to get a loan at a lower rate than they’ve ever seen before,” he says. But you’ll want to shop around, as rates can vary widely, even for those with good credit, he says. While a legally binding divorce decree is an important step in separating marital debts, it does not alter your agreements with lenders, says Rod Griffin, director of public education at Experian. “People think: I went through the divorce, I have the decree, why is [the joint debt] still there?” he says. What you’ll need to do is call the lender and figure out how the joint debt—whether it’s a credit card, student loan or mortgage—can be placed in the name of only one ex-spouse. Sometimes, a lender will require you to close the joint account and transfer the debt balance into a new account held by one individual. Other times, an ex-spouse may need to refinance the mortgage or other loan independently, obtaining the new loan based on his or her own financials, he says. Credit-card companies and issuers are currently sending bevies of offers to affluent people with good credit. The rewards on some of those cards—like cash back and airline points—can look appealing. But they often come with higher interest rates than the lowest-rate cards, with or without rewards, says Mr. Woolsey of CreditCards.com. The lowest-rate rewards cards go for around 11%, while the typical higher-end rewards card, like the Visa Black Card, carries a rate around 15%, says Mr. Woolsey. Plus, the higher-end cards usually have annual fees. Meanwhile, the lowest-rate cards without rewards go for between 7.25% and 8.00% APR, says Mr. Woolsey. Of course, affluent folks can qualify for those low-interest cards—but card companies and issuers won’t usually pitch them as hard. You know one credit score. The problem is that lenders may be looking at a different credit score than you are—and there’s no easy way for you to know if it’s better or worse. Consider the widely used FICO score. There are actually 60 slightly different iterations of FICO, and lenders may pull a different score depending on what kind of credit you’re applying for, says Mr. Huynh. If you’re applying for a mortgage backed by Fannie Mae or Freddie Mac, lenders typically pull three FICO scores available directly from each of the three major credit bureaus. But if you’re applying for an auto loan or credit card, the company will likely pull a score tailor-made for that kind of credit product, says Mr. Ulzheimer. While the various FICO scores are usually in a similar range, that’s not always the case. For instance, certain scores ignore collections below $100. In some cases, a person’s FICO score that falls into this category could be 100 points above a score that doesn’t ignore such collections, says Mr. Huynh. Late payments can bring fees and interest charges—but unless you’re really late, they may not put a dent in your credit. “There will be consequences, but they won’t be on your credit report,” says Mr. Griffin of Experian. It comes down to standard practice in the credit-reporting business: companies usually don’t report a late payment to a credit agency until your payment is 30 days past due. It takes time for other kinds of late payments to hit your credit report, too. Medical debt, for instance, usually won’t show up until the bill goes to collection, says Mr. Griffin. Deducting interest is one of the big appeals of a home loan. But if your mortgage is too big, you won’t be able to deduct all of the interest you paid. The federal government has set a cap on the mortgage-interest deduction: You can generally only deduct interest on mortgages up to $1 million. So, if your mortgage is $2 million, you can typically deduct only half of the interest paid. The typical threshold is even lower on home-equity debt: $100,000. But if you’re using some of that home equity for significant home improvements, that portion usually falls under the $1 million cap for mortgage interest instead, says Jeremy Kisner, a certified financial planner and president of SureVest Capital Management in Phoenix. Covering a home purchase with cash is in vogue. With the housing market heating up, the tactic may help a buyer win a bidding war—and the idea of not living under a mortgage can be appealing. But going with cash isn’t always the best financial choice. Mortgage-interest payments can be deducted on your tax return, which can save you a bundle. Then there’s the opportunity cost of handing over that much money. Some people prefer to invest the money they would have spent on the home purchase, betting it will earn a higher return than the interest rate on the mortgage when considering the tax deduction, says Jimmy Lee, a financial adviser in Las Vegas, Nev. Ms. Ensign is a staff reporter in    The Wall Street Journal’s New York bureau. She can be reached at rachel.ensign@wsj.com.

Americans Are Tapping Into Home Equity Again Published: Friday,  8 Feb 2013 | 11:04  AM ET     By: Diana OlickCNBC Real Estate Reporter Twitter 319 LinkedIn 50 Share Nearly 11 million borrowers are underwater on their mortgages, owing more than their homes are worth, according to CoreLogic, and yet home equity lines of credit are suddenly on the rise again. – Article Continues Below – Play Video Homes as Credit Cards CNBC’s Diana Olick reports how people are using their homes for equity. During the housing boom of the last decade Americans withdrew over $1 trillion in home equity. They did it through cash-out refinances, home equity loans, and home equity lines of credit. The latter allowed them to use their homes like an ATM. They spent the money on cars, televisions, vacations and fancy home upgrades. It was seemingly endless equity, until suddenly that equity was gone. “Home prices are definitely a factor” in the recent rise home equity lines of credit, said Brad Blackwell, an executive with Wells Fargo Home Mortgage. “As they increase, people have more available equity.” (Read More: New Housing Fears: Home Prices Are Rising Too.) Blackwell also pointed to increased consumer confidence, meaning borrowers now feel better about their ability to repay these loans. Both factors fueled a 19 percent jump in originations of home equity lines of credit at the end of last year, according to Equifax. In 2008, as housing was crashing, home equity line originations dropped 55 percent. “Nationally we’ve seen a 31 percent increase in HELOC’s year-over-year,” said a spokesperson from JPMorgan Chase. Martin Poole | Stockbyte | Getty Images With home prices up 8 percent year-over-year in December, according to the latest reading from CoreLogic, homeowners are regaining home equity at a fast clip—1.4 million borrowers rose above water on their mortgages through the end of September. That number likely increased as price appreciation accelerated toward the end of the year. Does this mean a return to the reckless equity withdrawals of the housing bubble?  Likely not. “I would guess that most of the current home equity line borrowing is quite prudent. We know that it is being very conservatively underwritten with plenty of equity,” said Guy Cecala, editor of Inside Mortgage Finance. (Read More: Housing Already Shows Signs of a New Bubble.) While it is too early to say exactly what borrowers are spending this new cash on, anecdotal evidence shows borrowers are largely sinking the money back into their homes. “We are seeing more responsible uses today, like home improvements, education expenses or other major expenses that would be a more responsible use of a customer’s home equity,” Blackwell said. The average home equity line in October of 2012 was just below $90,000 compared to October 2006, when lines averaged just over $100,000, according to Equifax. Mortgages 30 yr fixed 3.64% 3.15% 30 yr fixed jumbo 4.10% 3.90% 15 yr fixed 2.89% 2.71% 15 yr fixed jumbo 3.42% 3.28% 5/1 ARM 2.77% 2.55% 5/1 jumbo ARM 2.93% 2.85% Find personalized rates: Bankrate.com Despite the recent surge, volume is still down dramatically from the height of the housing boom. Borrowers in 2012 took out a collective $7.2 billion in home equity lines through last October, compared to just over $28 billion in 2006. (Read More: Why Home Builders Won’t Drop New Home Prices,) The numbers are expected to go up in 2013, not just because home prices are rising, but because interest rates are rising. With higher rates, borrowers will not want to give up their rock-bottom fixed rates to do cash-out refinances; rather, they will turn to home equity lines instead. While these lines usually carry variable rates, banks are now offering new products with fixed rates. Wells Fargo recently promoted a line of credit where a portion of the loan is fixed for up to three years. “We clearly want to lend, and we want to lend to the types of needs that our customers have,” Blackwell added.

They bailed on mortgage, but now want to buy again Home sales are slowly climbing back, thanks to investor demand, improving consumer confidence in housing, and the surprising return of former homeowners who once walked away from their commitments. These so-called “strategic defaulters,” some of them investors and some owner-occupants, are coming back to the market, despite damaged credit, and apparently the market is welcoming them back. Read More: The Real Estate Recovery, in Your Neighborhood A new survey of past clients by YouWalkAway.com, a website that assists borrowers in the legal pitfalls of strategic default, found that nearly 80 percent expressed a desire to buy a home again within the next 12 months. It also cites data by Moody’s analytics, showing that the number of eligible home buyers who have had a previous foreclosure will be 1.5 million by the first quarter of 2014. Crashing home prices and sketchy mortgage products caused millions of Americans to default on their loans and eventually lose their homes. For some, it was a tragic fight to the end to keep their single largest investment; for others it was a conscious decision to walk away from their mortgage commitments, given the real fact that they would likely not see home equity again for many years to come. Some saw this as morally reprehensible, others as a sensible business decision. Read More: Fewer Borrowers Are Behind on Mortgages, but for How Long? While home ownership has fallen dramatically since the recent housing boom, from a high of 69.2 percent in 2004 to 65.4 percent at the end of 2012, according to the U.S. Census, the desire to own a home is still strong. About 70 percent of Americans surveyed by online real estate website Trulia.com said homeownership was still a part of the “American Dream.” Of those surveyed by Fannie Mae in January of 2013, 65 percent said that if they had to move, they would buy a home, rather than rent. Coming back to home ownership may not be as difficult as some think. Consumers who only defaulted on their mortgage during the recent recession were far better risks than those who went delinquent on multiple credit accounts, like credit cards and auto loans, according to a 2011 study by TransUnion. “There appears to be a pocket of opportunity among mortgage-only defaulters that is not the result of excess liquidity, but rather the unique circumstances of the recent recession,” said Steve Chaouki, group vice president in TransUnion’s financial services business unit in the study release. “This new market segment that the recession created is an important one for lenders to understand. They have the potential, today, to be stronger and more reliable customers.” Not surprisingly, given this potential, YouWalkAway.com is launching the “AfterForeclosure.com Pass/Fail App,” which claims to tell potential borrowers in just one minute, “if they have a shot at home ownership.” “We want people to know that it’s possible and, in a lot of cases, it’s advantageous,” says Jon Maddux, former CEO and co-founder of YouWalkAway.com. Read More: Americans Are Using Their Houses as ATMs Again It is possible, but mortgage underwriting is far more strict today than during the housing boom, and there are varying waiting periods before former homeowners who went through foreclosure can qualify for a new loan. The Federal Housing Administration, the government insurer of home loans which now backs just over 20 percent of new loan originations, requires a three-year wait. Fannie Mae and Freddie Mac, which own or guarantee the bulk of the remaining new loan originations, require up to seven years for a strategic defaulter to qualify again for a mortgage.

Remodeling the kitchen? Crunch the numbers first By Les Christie @CNNMoneyFebruary 8, 2013: 12:12 Zillow Digs allows users to select the type of room they want to redo, the styles they want and how much they want to spend. NEW YORK (CNNMoney) For many homeowners, remodeling a kitchen or bathroom can lead to many sleepless nights. Not only do worries abound about picking the right tiles or cabinets, but there are few resources to let you know if you’re paying the right amount But now homeowners can compare costs of similar remodeling jobs based on the size and type of the room, where they live and the materials they want to use with a new tool from real estate web site Zillow. Called Zillow Digs, the free web service and app allows users to select the rooms they want to redo, the styles they want  — such as modern, Mediterranean, art deco — and how much they want to spend. The site then returns a series of photos of real renovations that fit those criteria with estimates that are based on an algorithm that takes into account rates from local contractors, as well as material costs and regional labor rates. Related: Million-dollar foreclosures The results include both an average cost estimate and an estimate range, which can vary quite dramatically.  Users can input their location to better tailor estimates based on local labor and material prices. A homeowner living in Manhattan, for example, will get a much higher estimate for a kitchen renovation than someone living in Peoria, Ill. Costs are broken down by materials and labor and further subdivided by each aspect of the job. For a bath renovation, for example, the estimate will include the price of a new bathtub and how much it costs to install it. And when homeowners find something they like on Zillow Digs, they can use the site to connect with contractors, architects and designers. Related: 4 tips from a serial remodeler Last year, $125 million was spent on home renovation projects, according to Harvard’s Joint Center for Housing Studies. And, as the housing market continues to improve, spending is expected to rise by nearly 20% this year. “Through the first three quarters of 2012, investment in the residential sector was responsible for one out of every six dollars added to our GDP,” said Eric Belsky, the center’s director. “Moving forward, home improvement spending is expected to make an even larger contribution.” Homeowners are also getting more bang for their remodeling buck. For every dollar spent on an overhaul of a midrange kitchen, a home’s value rises by about 69 cents, according to Remodeling magazine’s annual Cost vs. Value Report 2013. That’s up from about 65 cents on the dollar in 2011-2012.                                                  Remodeling jobs that pay off These projects add the most home value per dollar spent, according to Remodeling magazine’s annual survey. Project Average cost Addition to home value % of cost recouped Entry door replacement (midrange) $1,137 $974 85.6% Siding replacement  (upscale) $13,083 $10,379 79.3% Deck addition (midrange) $9,327 $7,213 77.3% Garage door replacement (midrange) $1,496 $1,132 75.7% Minor kitchen remodel (midrange) $18,527 $13,977 75.4% Source: Remodeling’s 2013 Cost vs. Value Report Find homes for sale First Published: February 8, 2013: 5:41 AM ET

Best of Advice: Our Home Has Cracked Walls, What Recourse Do We Have? Real Estate News   | Feb 22, 2013   | By: Deidre Woollard Each week we feature some of the many questions that come in to the REALTOR®.com Q&A section. Today’s question comes from Richmond, VA: Q: We found foundation problems found after buying a foreclosure house, what recourse do we have? We bought a foreclosure house two years ago. And now we found that there are cracks shown on the wall. Also, there was a big crack outside of the attached garage which we did not notice before buying. Can I ask the bank for any compensation or do I have to eat it up since it was a foreclosure? A: Foreclosure or not, the repairs are your responsibility. The only recourse you might have would be against the home inspector, but it’s doubtful that a judge would hold even that person liable. It’s been at least two years since the home was inspected and a lot can happen to a house in that amount of time. – Stacey A: If you go back to your original contract addendum from the bank you will see that you have no recourse with them as to the foundation problems because you purchased the property “as is.” In fact – it was probably stated in more than one way on the addendum. Because the bank has no knowledge of the property’s history or condition – you assume all of the risk. That’s why the prices on foreclosures are so low. I’m sure you had a home inspection performed for your information on the property before you purchased it and you might want to review the report again to see if the inspector noted any foundation problems at that time. The cracks may be more recent since we have had some interesting weather and a earthquake in recent years. The discounted price is still low enough to compensate you for the issues you are facing now. Consult with a foundation contractor such as Stable Foundations in Richmond to see if the cracks are even serious enough to require attention at this time. I believe they may give you a free consultation or charge a very low inspection fee. It would be worth it for your piece of mind now – and for your information should you ever need to sell the property in the future. I buy and sell foreclosures all the time as they are a great bargain in this market – but you have to be very careful as there can be defects. Buyers need to hire an agent to help them assess the risks and perform a thorough inspection of the property before they enter an offer – one with a background in construction and building would be preferred. In the end, you can’t always leave it to the home inspector to find everything that might be a future issue with the house as they – like everything else – are always changing. I hope it turns out that the cracks are merely from settling and not anything that you need to be worried about. – Wayne Hare, REALTOR®, Investors Realty of Virginia

Best of Q&A: We Are Self Employed, Will We Be Able To Get A Mortgage? Real Estate News   | Feb 20, 2013   | By: Deidre Woollard   | 1 Response Prev | Next 5   Each week we feature some of the many questions that come in to the REALTOR®.com Q&A section. Today’s question comes from Baytown, TX: Q: Will I be able to get a mortgage being self employed? My husband and I have been self employed for three years and we both have credit scores in the 640-660 range. We have been paying down our debt and currently have a credit utilization of about 45%. Still have two credit cards to pay down. Our income is just under $30,000, is it likely that we will be able to get a mortgage? A: There are many factors involved in getting a loan. However, to answer directly your question, if you are self employed and your tax returns reflect your income needed to qualify, you should be able to get a mortgage. If you are interested, I can set you up with a mortgage professional who can answer all questions you have regarding mortgages. It certainly sounds as if you are doing all things correct. – Linda Cottar, REALTOR®, Ingrid Nel Properties A: For the self-employed that are considering purchasing a home it’s important to be aware of the changes that have occurred in the world of lending. As everyone is well aware, getting a loan is not nearly as easy as it used to be. As you’ve found out, those who are self-employed are having a more difficult time borrowing money and must provide documentation that shows their income. The IRS is being contacted for income verification by many lenders and any fraudulent income claims are being dealt with. In a nutshell, if you are self-employed and applying for a mortgage loan, be prepared and: 1) Line up all of your documents showing your income before going to apply for a loan. 2) Check your credit and do what you can to improve your credit score. 3) Pay your bills on time. 4) Most importantly, tell the truth, misrepresentation can cost you. Many lenders are hiring more loan officers. They are convinced that current low rates are going to bring many more new and refinance loans in the next 18 months or so. Mortgage rates are at their lowest, closely tied to the unsteady economy where wary investors are putting their money in safe investments like Treasury Bonds. As these yields go down interest rate goes down as well. In other words, the unsteady global economy equals good news for the home buyer acquiring a mortgage and home owners who are refinancing their home loans. Even though you are self-employed, as long as you can provide decent and accurate documentation there is no reason you shouldn’t be able to secure a home loan. – Lee Dworshak, REALTOR®, Keller Williams LA Harbor Realty