10 Things to Know About Real Estate in 2010

Posted by Refinance House Bad Credit | Posted on 23-05-2010

Category : Real Property Management

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Is 2010 the year to buy a house? It certainly looks that way: After a steep run-up in prices during the first half of the decade, home values have plummeted back to 2003 levels.

Fixed mortgage rates are sitting near record lows. And the foreclosure epidemic–while painful for many home owners–has created some wonderful opportunities for bargain hunters. If that’s not enough, Uncle Sam is handing out thousands of dollars in tax credits to nearly all first-time buyers and the bulk of existing home owners who close a purchase by June.

But while the 2010 outlook appears inviting, there’s one key catch. “You need to have a stable job,” says Mark Zandi, the chief economist of Moody’s Economy.com. The economy is showing signs of life, but the unemployment rate is already at 10 percent and expected to go higher. And while those mortgage rates are attractive, buying a house makes sense only if you can bank on your income stream. So before you consider purchasing a home, take a hard look at your job, your company, and your industry.

That said, here are 10 things to know about real estate in 2010:

1. Prices to bottom: After more than three years of falling, real estate values have shown signs of stabilization in recent months. At the national level, home prices slid nearly 9 percent between the third quarter of 2008 and the same period this year, according to the S&P/Case-Shiller home price report. That’s a notable improvement from the second quarter’s nearly 15 percent annual drop and the first quarter’s 19 percent decline. This improvement will give way to a bottom in home prices–finally!–in 2010, but not before additional declines, Zandi says. Zandi projects home prices will hit bottom in the third quarter of 2010 after logging a peak-to-trough decline of roughly 37 percent, based on the S&P/Case-Shiller national home price index. “That means we’ve got another roughly 10 percent [decline] to go,” Zandi says.

2. Mortgage delinquencies up: Amid falling home prices and a nasty labor market, roughly 1 in every 7 mortgages was either past due or in foreclosure by the end of the third quarter–the highest delinquency rate in the 37-year history of the Mortgage Bankers Association’s National Delinquency Survey. Two factors are expected to drive delinquencies even higher next year. First, nearly 1 in 4 homeowners currently owes more on their mortgage than the property is worth, which increases their odds of default. And secondly, the national unemployment rate–which already stands at 10 percent–will peak at about 10.5 percent in the first quarter of 2010, says Patrick Newport, an economist at IHS Global Insight. Additional job losses mean more borrowers won’t be able to pay their mortgage bills. “The [delinquency] rate is going to stay up there for quite a while because the job market is going to be really weak for a while,” Newport says.

3. Foreclosures move upstream: The number of foreclosure sales will increase to about 1.9 million in 2010, according to Moody’s Economy.com. And while we’ve already seen a growing number of more expensive homes heading into foreclosure, Heather Fernandez, vice president of marketing at the real estate search engine Trulia, expects the trend to pick up steam next year. (Trulia is a U.S. News partner.) “We are poised in 2010 to see a surge of foreclosures from prime borrowers. Hundreds of billions of dollars in option [adjustable rate] mortgages are set to be recast” next year, Fernandez says. Option adjustable rate mortgages allow borrowers to make lower monthly payments for an initial period, after which the payments adjust–or “recast”–higher. For some borrowers, the new payments can be more than twice their initial payments. Combined with other factors, like the loss of a job, a recasting option adjustable rate mortgage can make borrowers more likely to default. “These are [properties] at higher price points [and] potentially in more desirable neighborhoods,” Fernandez says.

4. Mortgage rates to rise: Anyone who purchased a home in 2009 was presented with some extremely attractive mortgage rates. Rates on 30-year, fixed mortgages fell to an average of 4.88 percent in November, down sharply from 6.09 a year earlier. A key factor behind the plunge was a Federal Reserve program, first announced in November of 2008, that purchased debt and mortgage-backed securities from Fannie Mae and Freddie Mac. But the program is slated to expire at the end of the first quarter, and if private investors don’t step up, fixed mortgage rates could jump. (The Fed, of course, could always decide to extend the program.) The unwinding of this Fed program, the improving economy, and mounting concern over government deficits could push rates on 30-year, fixed mortgages to roughly 5.5 percent by mid-2010 and close to 6 percent by the end of the year, says Mike Larson of Weiss Research. “Almost all signs to me point higher,” Larson says.

5. Buyer’s market remains: With prices still falling, mortgage rates remaining historically attractive, and additional homes hitting the market in the form of foreclosures, the dynamics of the real estate market will continue to favor buyers over sellers in 2010. That means those looking to buy a home next year should not feel pressured to act impulsively. “You don’t need to have a sense of urgency, but understand that as time progresses the balance of power as we get into 2010 is going to slowly but surely shift away from [buyers],” Larson says. “It is not going to be a strong seller’s market, but it will be more evenly distributed as the year goes on.” Data from the real estate firm Zillow show that home buyers are already losing the leverage they once enjoyed. While home buyers landed a median discount of 4.6 percent off listing prices in January, the size of the gap fell to 2.7 percent by October. Expect this gap to close further as 2010 marches on.

6. Modification plan could be modified: While the Obama administration has put nearly 700,000 borrowers into temporarily restructured mortgages, it had found permanent fixes for just 31,382 struggling homeowners through November. What’s more, critics have identified two key shortcomings of the government’s $75 billion antiforeclosure plan. First, the program isn’t much help for borrowers struggling to stay in their homes as the result of a job loss. And the rickety labor market is a key factor behind rising delinquencies. At the same time, the plan does not sufficiently address the issue of negative equity–owing more on your home loan than the property is worth–which also works to increase foreclosures. “The current modification program does not address negative equity and is therefore destined to fail,” Laurie Goodman, a senior managing director at Amherst Securities Group, told a congressional committee in written testimony on December 8. “It must be amended to explicitly address this problem.” Zandi says the government may move next year to overhaul the modification program in two ways: improving troubled borrowers’ negative equity positions by writing down some of the mortgage principal, and helping to turn troubled homeowners into renters.

7. FHA lending standards may increase: While banks have jacked up lending standards in the face of mounting delinquencies, mortgages backed by the Federal Housing Administration–which come with a minimum down payment of just 3.5 percent–have remained accessible to a wide swath of borrowers. The FHA guarantees nearly 30 percent of new-home purchase mortgages today, up sharply from just 3 percent in 2006. But the rapid growth has occurred alongside an increase in mortgage delinquencies. As a result, the FHA’s reserves have dipped below congressionally mandated levels. The development has put pressure on the Obama administration to beef up its requirements for agency-backed home loans. In early December, the Department of Housing and Urban Development announced that it would make several changes to FHA mortgage requirements: raising up-front cash requirements, boosting minimum credit scores, and perhaps charging more for insurance premiums. Additional new restrictions may be in store. Taken together, the developments could work to choke off the supply of mortgage credit to borrowers who can’t get financing elsewhere.

8. Tax credit available through June: On top of lower prices and cheap mortgage rates, Uncle Sam is offering an additional incentive to get buyers into the market next year. In early November, President Obama signed a bill extending and expanding a popular tax perk for home buyers. The legislation gives qualified first-time home buyers a tax credit of up to $8,000 if they close the purchase of a primary residence by the end of June. Meanwhile, qualified current home owners are eligible for a credit of up to $6,500 when they buy their next principal residence. But while the tax perk may make a home purchase more tempting, would-be buyers should make sure they have the job security and financial wherewithal to handle the transaction before going ahead. “Don’t let [the home buyer tax credit] be the thing that drives you to act,” Larson says.

9. Markets will vary a great deal by region: The performance of the national housing market is much less important that the dynamics of your local market, and sales and pricing trends will vary a great deal from one area to the next in 2010. “There will be geographic pockets where the values will still continue to decline, and there will be geographic pockets where they increase,” said Dale Siegel, a mortgage broker and the author of The New Rules for Mortgages. That means anyone interested in buying real estate next year can’t just read the national headlines. Instead, find a good blog that covers the local housing market and consider speaking with a real estate agent with experience in the area. Check out online listings–pay close attention to pricing and inventory trends. And make sure to head out to open houses to get a firsthand feel for the market.

10. Mobile maps can help: Advances in technology have enabled would-be home buyers to increase the efficiency of their searches. For example, Zillow’s iPhone app allows home buyers to see the estimated values and listed prices of the properties they pass on the street. The app, which is free, has been downloaded more than 830,000 times. Trulia has unveiled a similar product that allows users to find nearby open houses as well. “If you are sitting in a neighborhood having brunch on a Sunday, you can very easily pull up your phone [and] walk into open houses,” says Trulia’s Fernandez.

By Luke Mullins

Confessions of an Underwater Homeowner

Posted by Refinance House Bad Credit | Posted on 22-05-2010

Category : Real Property Management

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One in four borrowers is underwater on a mortgage in the U.S. Count me among them.

My family’s modest, suburban New Jersey house is now worth about $30,000 less than our current balance. We never dreamed of walking away, but the idea of “strategically defaulting,” is something we had to at least consider. Many others have, too, as my colleague Mark Whitehouse reported in Thursday’s Journal.

We’re not home flippers or boom-era borrowers who opted for an exotic loan with no documentation. In buying our house, we believed we were making a life decision.

We started thinking about buying in 2004, when my wife and I found out that we were having a baby. We were thrilled. Shortly after that, we learned we were having multiple babies, we were equally thrilled–and terrified. We’re going to need a bigger place, we thought.

We probably could have held out a few years in our sizable apartment in Metuchen, N.J., a bedroom community about 35 miles outside of New York City. But we knew interest rates were hovering at historic lows. It was impossible, working at The Wall Street Journal, to not read those headlines every day. At the same time, people all around me were buying homes and refinancing their mortgages to capture these relatively inexpensive home loans. It was like a race, and everyone else was crossing the finish line while I was still putting on my sneakers.

When we started looking, one of the first things that struck me was how expensive even run-of-the-mill two-bedroom homes were–$450,000, $625,000 and more. A house going for less than $350,000 was rare, and what we found in that range would give pause to even the hardiest of fixer uppers. It was distressing. These weren’t impossibly large homes either, at least not to this lifelong apartment dweller. Buying in tony Metuchen was out of the question.

We weren’t oblivious to the fact that people were stretching to buy homes. We were adamant about getting a fixed-rate loan–rates really had nowhere to go but up, so why would we want an adjustable rate? (That line of thinking turned out to be an epic fail-30-year fixed rates have been at less than 5% for weeks lately.)

We were concerned about the down payment. My wife and I had just wiped clean our tens of thousands of dollars in college-loan debt. The nearly $20,000 we had saved seemed like a king’s ransom. In reality, it would be less than 10% on any home we could afford. Getting to 20% now, with our three new arrivals, was way out of reach.

By 2006, we found our home in Middlesex, N.J. The friendly, blue-collar feel of the leafy town appealed to my Jersey City, N.J., roots. The expanded Cape Cod–three bedrooms with some creativity, and going for about $339,000–wasn’t big by any measure. But it was well maintained, airy and had a nice layout. The living room was smallish, and the upstairs loft would hold the kids nicely for a couple of years. It fit our checklist of must-haves: a kitchen island, a roomy basement for laundry facilities, a backyard with grass. When the kids were older, we’d sell and upgrade. In time, I’d learn a lot of home buyers thought the same thing.

It came time to deal with the finances. Because we were plunking down only 7% or so on the down payment, we were faced with a steep insurance fee. I was naively insulted by this PMI–the idea that we were risky borrowers out of the box. So we opted for a “piggyback” loan, a second loan that would cover the rest of the down payment and allow us to avoid the PMI. We would pay about the same per month, and when our home’s value rose, we would refinance and combine the two loans into one. A lot of the people I turned to for advice were recent homebuying colleagues facing similar questions, or longtime owners who were doe-eyed by low interest rates. I don’t recall anyone saying “Dude, wait a few years.”

We negotiated a bit on the price and closed the deal in May 2006 for about $328,000 at a 6.12% rate. At the time, I didn’t know that the second loan was a de facto home-equity line of credit. I knew it would be a higher rate–a little more than 2.5 percentage points higher. But the loan amount paled in comparison to the main mortgage, so I wasn’t overly concerned.

On signing day I thought I was prepared for the blizzard of paperwork. I wasn’t. This is apparently a rite of passage not exclusive to any era. There was at least one big reveal: Our piggyback loan was actually a balloon loan. In 15 years, we’d have to pay a big chunk, in the thousands, in full. I was taken aback by this–how could I have missed this detail? I’m not a financial luddite.

The lawyer pulled me into a separate room to talk this over. We did some quick financial calculations, and projected what my life would be like in 14 years when Mr. Balloon came calling. We would have equity in the home, for sure. Even if home values stabilized, we’d be OK since we were in a suburb in the greater New York area. My wife would be working again, and we could throw the extra income at the piggyback loan.

What we didn’t foresee was home values–ours included–dropping so steep, so fast. Zillow.com now estimates our home is worth $270,000.

There’s been some debate in academic circles lately about why more financially distraught homeowners don’t just pack up their belongings and walk away. The short list of reasons: moral shame, fear of credit repercussions, and social and governmental pressure, according to Brent T. White, an associate law professor at the University of Arizona and the author of “Underwater and Not Walking Away.” These reasons don’t sway Mr. White. Homeowners should be walking away in droves, he writes.

We never considered purposefully defaulting, but then again we’re not falling down a catastrophic, high six-figure equity hole. After reading Mr. White’s paper, though, we decided to run some numbers, pulling together basic info on our loan, tax bracket and rental prices for comparable homes in our area, and plugged them into this calculator at PayorGo.com. This was by no means a scientific appraisal. I had to enter how long we expected to be in our home, and I really couldn’t answer “as long as it makes financial sense.” So I said seven years. I don’t know how realistic that is — my kids will be about 12 years old then. Apparently, if my home doesn’t rise 1.94% in value over the next seven years, we should call it quits.

We wouldn’t. Although, if I were laid off and unemployed for more than a few months we might have to.

The price drop sometimes feels like an apparition. On paper, my home is considered less valuable than what I am paying for it. In reality, it is the same home (warts and all) that I liked when I signed the papers. I can afford the mortgage and insurance payment, even with my wife at home raising the kids. That is a luxury I can’t put a price on. I wouldn’t call us comfortable like a nice pair of jeans, I would call us comfortable like the same pair of jeans after Thanksgiving dinner. (Financial consultants would scream at me for how much of my net pay the loan sucks up. I could hold the least expensive mortgage in America, and I’d still be in trouble if I was laid off. But I did refinance this year down to a 5.25% rate on the first loan; the balloon sits still at 8.75%.)

I’m not blind to the pitfalls–if I was offered a job in another city, we wouldn’t be able to sell; we can’t get a home-equity line of credit because we already tapped it. Still, my biggest challenge week to week is operating the leafblower. And if I knew in 2006 that in 2009 I’d be able to get the same home for a 20% discount AND still get a low rate, I never would have pulled the trigger.

What I do know is that this is our first home. It is where our kids–going on 5 years old– are growing up. We love our neighbors and the school system. We put in central air. I still remember the feeling of getting those keys handed to me the first time. We have sentimental equity. Home buying wasn’t a zero-sum financial game of win or lose.

The Fitzgeralds are technically underwater, but we don’t feel like we are drowning.

Brian R. Fitzgerald is an editor at WSJ.com. Email: Brian-R.Fitzgerald@wsj.com

Debtor’s Dilemma: Pay the Mortgage or Walk Away

Posted by Refinance House Bad Credit | Posted on 21-05-2010

Category : Mortgages for Bad Credit

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In down real-estate market, homeowners are deciding to abandon their loan obligations even if they can afford the payments

Should I stay or should I go? That is the question more Americans are asking as the housing market continues to drag.

In good times, it would have been unthinkable to stop paying the mortgage. But for Derek Figg, a 30-year-old software engineer, it now seems like the best option.

Mr. Figg felt trapped in a home he bought two years ago in the Phoenix suburb of Tempe for $340,000. He still owes about $318,000 but figures the home’s value has dropped to $230,000 or less. After agonizing over the pros and cons, he decided recently to stop making loan payments, even though he can afford them.

Mr. Figg plans to rent an apartment nearby, saving about $700 a month.

A growing number of people in Arizona, California, Florida and Nevada, where home prices have plunged, are considering what is known as a “strategic default,” walking away from their mortgages not out of necessity but because they believe it is in their best financial interests.

A standard mortgage-loan document reads, “I promise to pay” the amount borrowed plus interest, and some people say that promise should remain good even if it is no longer convenient.

George Brenkert, a professor of business ethics at Georgetown University, says borrowers who can pay — and weren’t deceived by the lender about the nature of the loan — have a moral responsibility to keep paying. It would be disastrous for the economy if Americans concluded they were free to walk away from such commitments, he says.

Walking away isn’t risk-free. A foreclosure stays on a consumer’s credit record for seven years and can send a credit score (based on a scale of 300 to 850) plunging by as much as 160 points, according to Fair Isaac Corp., which provides tools for analyzing credit records. A lower credit score means auto and other loans are likely to come with much higher interest rates, and credit card issuers may charge more interest or refuse to issue a card.

In addition, many states give lenders varying degrees of scope to seize bank deposits, cars or other assets of people who default on mortgages.

Even so, in neighborhoods with high concentrations of foreclosures, “it’s going to be really difficult to prevent a cascade effect” as one strategic default emboldens others to take that drastic step, says Paola Sapienza, a professor of finance at Northwestern University. A study by researchers at Northwestern and the University of Chicago found that as many as one in four defaults may be strategic.

Driving this phenomenon is the rising number of households that are deeply “under water,” owing much more than the current value of their homes. First American CoreLogic, a real-estate information company, estimates that 5.3 million U.S. households have mortgage balances at least 20% higher than their homes’ value, and 2.2 million of those households are at least 50% under water. The problem is concentrated in Arizona, California, Florida, Michigan and Nevada.

Josh Cotner, who owns an insurance agency, says his mortgage balance is about $100,000 more than the market value of his home in Gilbert, Ariz. Mr. Cotner could rent a bigger home nearby for $600 a month, far below the $1,655 he now pays on his mortgage, home insurance and property tax. He says he recently stopped making mortgage payments because his lender wouldn’t help him reduce the principal on his loan under a federal program in which he believes he is qualified to participate. Given the sometimes lengthy legal process of foreclosure, he may be able to stay in the home for at least another nine months without making any payments.

Banks warn they may get tough with strategic defaulters by pursuing legal claims on a borrower’s other assets. “We will try to reduce people’s payments if they have a hardship,” says Thomas Kelly, a spokesman for J.P. Morgan Chase & Co. “But we have a financial responsibility to get people to pay what they owe if they can afford it.”

Steven Olson, a loan officer and roof installer in Roseville, Minn., defaulted in 2007 on a plot of land in Florida he had bought as an investment. “I thought I could move on with my life,” he says. But the lender, RBC Bank, a subsidiary of Royal Bank of Canada, sued him, seeking to make him pay more than $400,000 to the bank to cover its losses on the loan. Mr. Olson has hired a Florida lawyer, Roy Oppenheim, to resist the claim. An RBC spokesman declined to comment.

States where lenders generally can pursue such legal claims include Florida and Nevada but not California and Arizona, where laws generally prohibit lenders from pursuing other assets of mortgage borrowers. A new Nevada law will protect many borrowers from these judgments if they bought a home for their own use after Sept. 30, 2009.

Another risk for defaulters is that banks could sell the rights to pursue claims to collection agencies or other firms, which could then dun the borrowers for up to 20 years after a foreclosure. Such threats appear to deter some borrowers. A recent study from the Federal Reserve Bank of Richmond found that under-water borrowers were 20% more likely to default in a state where mortgage lenders can’t pursue claims on other assets than in those where they can.

Brent White, an associate law professor at the University of Arizona who has written about this issue, says homeowners should make the decision on whether to keep paying based on their own interests, “unclouded by unnecessary guilt or shame.” He says borrowers can take a cue from lenders that “ruthlessly seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility.”

But it isn’t just a matter of the borrower’s personal interest, says John Courson, chief executive of the Mortgage Bankers Association, a trade group. Defaults hurt neighborhoods by lowering property values, he says, adding: “What about the message they will send to their family and their kids and their friends?”

In Mesa, another suburb of Phoenix, low prices are helping to draw buyers who may walk away from other homes. Christina Delapp bought a house out of foreclosure in July for $49,000 in cash. She says she will stop paying the mortgage on another home she still owns in Tempe if she can’t sell in the next few months for more than the $312,000 that she owes.

Ms. Delapp, who has been jobless for 18 months, says that the new home is part of her survival strategy. “I feel very fortunate,” she says. “Regardless of what happens to my credit, we’ve managed to put together the best safety plan that I possibly could.”

Mr. Figg says that deciding to default on his loan was “the toughest decision I ever made.” He worried that if he ever loses his job he would be marooned in a home that he couldn’t sell for enough to pay off his loan, limiting his ability to find work in other parts of the country: “I couldn’t move up. I couldn’t move down. I couldn’t move out of the city. It was a very claustrophobic situation.”

By moving to an apartment, Mr. Figg expects to lower his costs by about $700 a month. He plans to put that into his savings account and says he is willing to rent for the next five years or so.

Lenders are guilty of having “manipulated” the housing market during the boom by accepting dubious appraisals, Mr. Figg says. “When I weighed everything,” he says, “I was able to sleep at night.”

Write to James R. Hagerty at bob.hagerty@wsj.com and Nick Timiraos at nick.timiraos@wsj.com

4 Biggest Lies in Real Estate

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Posted by Refinance House Bad Credit | Posted on 20-05-2010

Category : Real Property Management

Tags: , , , , , , , , ,

A funny thing about the digital age — the more information we have access to, the more misinformation we get hit with. In the not-so-long ago days when the Internet was mainly for e-mail and facebooks were made of paper, homes were mostly advertised through newspaper ads. As long as you understood that TLC meant you needed to be handy with a hammer and an “efficiency kitchen” meant you’d better like take-out, you could avoid getting suckered.

Anyone gearing up to buy or sell a house this spring, however, has to bring a bit more skepticism to the process. Sure, the Internet has transformed the process of buying and selling a home in wonderful ways, but it has also increased the opportunities for mischief. Fall for bogus listings and lousy home price “data” and you could wind up overpaying for a home or finding yourself stuck, unable to unload the one you have. Don’t get taken by these big lies:

1. Phony Photos and Videos

Digital photos and video have been a godsend for real estate agents, homebuyers and sellers, enticing prospects to drool over images of Viking ranges, sparkling pools and lush lawns. Lately, agents have been posting interactive photos and floor plans, letting buyers view rooms and exteriors from different vantage points. Some houses have their own YouTube sites.

Problem is, it’s easy to Photoshop photos and edit video to make a house and its neighborhood seem far more attractive than they are. Some sellers post photos of kitchens and gardens you won’t find in the actual property. Videos get color-corrected so the grass, flowers and trees seem fresh and alive. A house may seem newly painted, even though the photo was taken five years ago.

Get the Truth: Go to Google Street View or Microsoft Live Search Maps for a reliable third-party look at a neighborhood or home exterior. They won’t show the inside of a house, though, so you’ll need to drive to the property and see it for yourself.

2. Valuations Lacking Value

Knowing how much a house is truly worth is vitally important whether you’re a buyer or seller. With home values down an average of 30 to 40 percent since 2005 in major metro areas, every penny counts. But you can’t always trust the numbers on home valuation sites such as Zillow, CyberHomes and Realtor.com.

When I plugged in a particular 5-bedroom/4-bath house on these sites, I received vastly different valuations and sometimes incorrect information about the number of bedrooms and bathrooms it had. I’d estimate the house is worth between $1.2 and $1.4 million. Zillow’s “Zestimate” (a calculation also used by RealEstateABC.com) was $943,000; CyberHomes suggested a range of $960,000 to $1.2 million and Realtor.com went with $788,036.

Get the Truth: It’s fine to start with online valuation sites for ballpark estimates. But to get a reliable valuation, get out of the virtual world and into the real world. If you’re selling, invite several real estate agents to walk through your home and analyze its value based on recent comparable sales. You might also hire an independent appraiser (cost: around $350 and up). If you’re buying, hire an agent who has worked the area for years, if not decades. It’s generally a waste of money for a buyer to hire an appraiser, since the lender will require its own appraisal before granting a mortgage.

3. Mortgage Rates You Can’t Get

Visit a mortgage aggregating site such as Bankrate.com and you’ll naturally want to apply for the lowest rate shown. But that rate may not really exist — at least not for every applicant.

Mortgage lenders often advertise fake low rates online without explaining that you can’t get them if your down payment or credit score is too low or you’re not willing to pay extra-high closing costs. At worst, the rate may be a “bait and switch” and wholly unavailable.

Get the Truth: Start your mortgage shopping by identifying a well-known national or regional bank, a small local lender, a well-regarded mortgage broker, a credit union (if you belong to one or can join one), and an Internet mortgage aggregator such as Priceline. Then go to AnnualCreditReport.com to pull a copy of your credit history and to pay to get your credit score. Next, find out what each lender on your list would really charge for your loan. Use the quotes to negotiate the best deal.

4. Unreal Property Descriptions

The old saw, “You can’t believe everything you read” is often true about online listings. A property advertised as having a “water view” might feature a glimpse of the ocean if you open the window, stick your head out, and look left.£ A “light, bright” apartment implies loads of sunshine, but may instead describe the wattage from overhead lighting. A condo’s listing sheet promoting “Southern exposure” might leave out a key fact: The front rooms look south, but the rest of the place faces a warehouse 10 feet away. A mention of an “in-law” or “rentable” apartment over the garage won’t say whether renting out that room is illegal, subjecting you to a future showdown with local zoning officials.

Get the Truth: To weed out unreal estate, do some fact-checking. If the beachfront condo supposedly has a water view, tell the broker to e-mail you a floor plan for the entire building. When a listing sheet says the house had a substantial renovation, check it out before you get too excited. And if you get serious about the property, you can always ask the town building department to confirm a renovation; there may be blueprints on file. If you’re counting on renting out a room above the garage, ask the building department if it’s allowed.

Bonus: Euphemism Alert

One thing that the digital revolution hasn’t changed at all — the extraordinary ability of real estate agents to put lipstick on a pig. Here’s a guide to words and catchphrases you’re likely to encounter and what they really mean:

The Listing Says…but the Listing May Mean:

“Cozy/Dollhouse”: The house is tiny, cramped and everyone over 6 feet tall will bump their head on the ceiling.

“Handyman’s Special”: You’ll need to do a gut remodel if you want to make the home livable.

“Great View”: You might have to crane your neck out the window to see the water.

“Rentable In-law Apartment”: This might be a separate room, a half-finished basement, or completely illegal.

Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and the upcoming Buy, Close, Move In!. She blogs about money and real estate on MoneyWatch and at ThinkGlink.com.

Refinance Your Bad Credit Home Loan. A good idea?

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Posted by Refinance House Bad Credit | Posted on 13-05-2010

Category : Refinance

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Before, bad credit home loan refinancing was only suitable when the interest rates fell at least 2% lower than your current mortgage. Today, you could reduce your mortgage interest rates by a small amount and it could save you plenty of money with a bad credit home loan refinance.

There are many reasons to refinance your home loan. Refinancing options include lower- cost, no-cost mortgage refinances and traditional refinancing. Listed below are several reasons why you should consider refinancing your bad credit home loan.

* Decreases your monthly payment – This is perfect for those people who plan to live in their home for a number of years. In decreasing your monthly loan payment, which pays a point or two, you could save your money monthly. However, if you are planning to move out of your current home in the near future, you may not stay long enough to regain the refinancing costs. Make sure to calculate your breakeven point to see if it will benefit your situation before deciding to refinance a bad credit home loan.

There are three methods which a bad credit home loan refinance could decrease your monthly payment. First, you could refinance to a lower payment. Second, you could adjust the term of your mortgage. Lastly, you could switch from a traditional mortgage into a mortgage program that allows you to obtain interest-only payments.

Alternatives To A Bad Credit Home Loan Refinance

* Apply for a fixed rate – If you wish to decrease your initial monthly payments and risk increasing market adjustments, adjustable rate mortgages are suitable for you. Although adjustable rate mortgages could leap monthly to levels which you could no longer afford, this benefits those people who do not plan to own the property for a number of years. A 15 to 30-year home fixed-rate loan program could offer you with more stability. Although fixed interest rates could be higher, you are aware of the specific amount you will pay monthly.

* Private mortgage insurance removal – The low down-payment housing option provides the homebuyer to obtain the home with less than 20 percent down payment. On the other hand, these kinds of homes usually require you to obtain private mortgage insurance, a deal designed for lenders when homebuyers fail to pay. You are eligible to remove the private mortgage insurance when the home value increases and your home loan balance decreases.

* Due balloon programs for an alternative to a bad credit home loan refinance – Similar to the adjustable-rate mortgage program, this kind of program allows you to decrease the interest rates and the monthly payments. However, after five to seven years, when the fixed-rate term ends and you still own the property, the whole balance of your mortgage will be paid to the lender. In this scenario, it is advisable to adjust to a fixed rate or a rate-mortgage home loan.

* Home equity cash-out – Many people overlook the possibilities of earning through their home. However, if you have equity, your home is an excellent resource of extra cash. A cash-out mortgage-refinancing program, which is tax deductible, allows you to cash out and consolidate your high interest rates, finance your child’s education and even pay for home improvements. This is a great alternative to a bad credit home loan refinance.

There are many resources online that can help you to decide if you should do a bad credit home loan refinance. You could find many information sources and websites about refinancing your bad credit home loan with a few clicks of your computer mouse. The key to your success, however, is to analyze your situation and find out which kind of refinance would benefit you the most.

Emanuele Allenti – About the Author:
Emanuele Allenti is the owner of bad credit home loans and poor credit home loans websites.

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Posted by Refinance House Bad Credit | Posted on 03-05-2010

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