Four Easy Home Improvements

If your house needs a makeover, but remodeling is beyond your reach, try these four simple fixes:

Touch-up exteriors. Repainting the trim and front door of your house can significantly boost its curb appeal. This kind of retouching work is easy on the budget and can be done in just a couple of hours.

Replace your floors. The widespread availability of affordable "floating floors" (flooring options that can be installed on top of existing boards or linoleum) makes updating the floors in your rec room or pantry a cinch.  You'll probably save a minimum $500 to $600 dollars by doing it yourself.

Update your hardware. Switching out old light fixtures and faucets is a simple, affordable way to modernize your home. While you're at it, equip your house with fixtures that support halogen light bulbs to save money on your electricity bill.

Transform your yard. Landscaping doesn't have to break the bank.  Replacing overgrown shrubs and bushes and adding some flowers for color is an economical way to add value to your home.

Many home repairs can be easily mastered by determined do-it-yourselfers, but there are still some things best left to the experts. If you need to re-floor your entire house, contact a flooring service, and call in the electricians whenever you're dealing with circuit boards or wiring in the walls.

Still Better to Buy a Home  

In areas where the monthly cost of owning is a big premium over the cost of renting, the long-term approach still shows that owning produces a higher lifetime standard of living than renting.

Let's say you bought a house for $150,000 with a 20% down payment and a 30-year mortgage at 6%, it would cost $8,634 a year for the mortgage and about $7,500 a year for taxes, insurance and upkeep (based on 5% of market value).  The total out-of-pocket cost would be $16,134 a year.

Long term, this would put you way ahead of a renter, even though the same house could probably be rented for about $15,000 a year, or $1,250 a month.

The benefit comes from the decline in the real cost of the mortgage.  Even modest inflation will cut the effective cost of the mortgage dramatically over 30 years.  And then the cost disappears.  The renter, meanwhile, faces a lifetime of rising rent bills.

Of course, in real life the actual numbers will differ. But as long as inflation whittles away the purchasing power of the mortgage payment, the odds will favor the homeowner over the renter.

We'd be happy to run the ACTUAL numbers for you to see for sure, but in most cases, inflation will protect us from all but the worst housing markets, if we give it enough time.

Leave us your comment on this story.  We'd love to hear from you.

Buying A House: Security Issues  

There are several security steps you need to follow when you are buying a house. Following these steps will ensure that you selected a secure home at a secure location.

The first thing to do is to meet your prospective neighbors.  Talk to these people, get to know them, ask them to describe the neighborhood and the local community to you.  The more information you have about the local community, the better decision you can make about purchasing the new house.  You will know upfront about the possible security issues in your new community and will be able to determine if there are any dangers to your home or to your family.  You will also know who your neighbors are and what kind of people they are.  This is very important if you plan to communicate with your neighbors a lot and maybe even rely on them for something.  If you have kids, you might want to know if your neighbors also have kids and whether these kids are good enough to spend time with your own children.

The second thing you should check is if there is a neighborhood watch program already started in this area.  If not, talk to your prospective neighbors and see if they are interested in starting this type of program.  If everyone agrees that this program is beneficial, this is a good sign.  If, on the other hand, everyone declines to participate in the watch program, this is a negative sign for you.  A watch program provides a higher level of security and reduces the chance of a potential break-in attempt.  Burglars consider an area with a watch program as a higher risk area and tend to attempt their robberies in other locations that don’t have a neighborhood watch program.  This information can be used when you are making a final purchase decision.

The third thing to check for is whether the community has an external security entrance system.  For example, many communities are fenced around the area and have an entrance gate.  This entrance gate may require you to enter a security code to open the gate or may even have a security guard on duty both during the day and during the night.  A security guard, of course, provides a higher level of security then an entrance code (a burglar may simply find out a code and still get inside the secure area).  If you are purchasing a house or an apartment located in a community that provides this type of additional external security, it is a big plus.

The forth thing to do is to talk the local patrolling police officer.  He or she will be happy to provide you with the local crime statistics and will be able to provide his or her opinion of how safe and secure the local community is, and your house in particular.  Since this officer has detailed information based on experience of patrolling the entire community, it is good advice to take his or her opinions and information into consideration when you are making a decision whether to purchase the house or not.  You can also check the crime statistics for the area by contacting the local police department or the local government office.

The fifth thing you should check is whether the actual house is secure.  Check if the doors and windows are strong and protected and whether the locks are good.  You will be changing your locks after you move in, but the doors and windows should be already strong and secure. Make sure the house has smoke and fire detectors installed.  Having carbon monoxide and natural gas detectors installed is also a good security measure.  An alarm system is also big plus, especially if this system already includes motion detectors.  As far as the alarm monitoring service, this is not necessary as you will need to sign up for this service yourself.  Another thing to check for is the possibility for installing a video monitoring system.  You should also check the condition of gas and water equipment and electrical wiring and find out whether any if this equipment needs replacement.

Yield Spread Premiums Can Bite You

The yield spread premium (YSP) is a mystery to most home buyers, but it would pay you to get more familiar with this little misunderstood feature of the mortgage business.

It's the basis for the fee a broker gets for selling a loan above the par rate, or the lowest interest rate a borrower qualifies for.  It's a standard industry practice, but it can also be an incentive for abuse.

The larger the yield spread, the more a broker earns, and that can tempt them to steer borrowers to higher interest loans.

A prime, fixed-rate loan at par may earn a broker a fee of one percent or less, but a hybrid adjustable rate mortgage (ARM) can pay four percent or more.

Borrowers can avoid YSP abuse by carefully going over any offer they get and comparing annual percentage rates.

APRs take into account all the one-time fees involved and provide a reasonably accurate picture of costs over the lifetime of a loan.  They may be only listed in fine print but they will be disclosed in ads and - by law - must be disclosed before the loan can be finalized.

Remember the old saying, "if a deal sounds too good to be true; it probably is."  Although the majority of mortgage brokers are responsible, valuable assets for home buyers, they have no fiduciary responsibility to do their best by clients.  Bad actors among them have no qualms about taking advantage of borrowers.

If you're thinking about buying a home and would like to talk to a reputable lender first, contact us.  We can refer you to several lenders we've worked with over time, and those who will not try to steer you in the wrong direction on your home mortgage.  We'd love to hear your comment below by clicking the comment link.

New Scheme Preys on Desperate Homeowners  

With the housing market in decline, financial predators are finding yet another way to take advantage of people who fall behind on their payments.

The schemes take various forms and often involve promises to distressed homeowners of cash upfront, free monthly rent and a chance to retain their houses in the long run. But in the process, someone else takes over the deed, borrows as much as possible against the value of the house and pockets the cash. And, almost always, the homeowners still end up losing their homes.

There are no nationwide numbers on this common fraud, known as equity stripping, but it has turned up in almost every state. Seven states have passed laws to try to stop it. Still, with foreclosure rates rising rapidly, it will be a growing problem according to consumer advocates.

Victims are becoming more plentiful as homeowners fall behind on payments and find that they cannot refinance, with mortgage rates rising.  When a property enters foreclosure, it appears on a list at the county clerk’s office. Individuals and companies in equity-stripping schemes monitor the lists closely, contacting troubled homeowners either by phone, by mail or by knocking on their doors.

Don't become the next victim of these schemes.  Remember, if you've received an offer to help with your debt and not lose your home to foreclosure, check out the company making the offer.  Make sure they are legitimate.  Those who are will be glad to furnish you with references.  Those who won't… RUN!

Have you been the victim of such schemes, or know someone who has?  We'd love to hear your comment by clicking the comment link below.