Maintaining Your Home to Retain Value

You've got the kitchen of your dreams and a master bedroom suite that would look right at home in a 5-star hotel. And your gorgeous new exterior paint job is the envy of the neighborhood. Your place looks so great that real estate agents are dropping off their cards telling you how much they could sell your place for, if you felt like putting it on the market.
Sell it now! Good grief no! Not after all the remodeling work. But... who knows? In five or six years when the kids are off to college and you and your mate get tired of mowing that big lawn and knocking around in a house built for five but inhabited by two, a downtown condo may look pretty inviting. Face it. At some point in the future, whether it's next year or in 20 years, you're going to want to sell your house. And with all the improvements you've made over the years, you should get a nice return on the sale, assuming you don't let your house fall apart.
Remodeling can be frustrating but it's also fun -- filled with anticipation and visible rewards at the end of the project. Maintenance is dull and routine, but you have to do it if you want to retain the value you've added to your home. For example: Hardwood floors need to be refinished every 5-10 years depending on wear and tear. If they get too worn down you can do permanent damage to the wood. Exteriors need to be repainted every 5-10 years too, depending on such factors as the weather where you live, or you can damage the exterior wood. Your roof and gutters need annual inspections. A clogged or damaged gutter and drain spout can flood your basement and cause serious damage.
And the list goes on. Like taxes and dental checkups, regular home maintenance isn't fun. But you must do it if you want to take care of what is likely your biggest single asset -- your home.

Annual checklist home maintenance checklist:

• Kitchen: Check for leaks under and around the sink. Plumbing leaks can damage cabinetry and floors. Check and repair grout and caulking on tile countertops and around the sink. Also check wear and tear on wood floors, which periodically need to be refinished.
• Bathrooms: Check for plumbing leaks and check grout on tiles. If the grout gets worn away water will start getting into the walls behind the bathroom, causing damage.
• Basement: Check for cracks in the foundation and leaks. Buildings settle over time and even after decades of having a dry basement leaks may suddenly occur.
• Attic: Check for signs of water leakage from the roof. Also look for any sign of termites or rodents. Squirrels or rats that nest in your attic can chew electrical wiring, which can lead to fires.
• Smoke alarms: Batteries need to be changed annually.
• Heating system: If yours has a filter, change it annually.
• Air conditioning system: Change all filters monthly or as recommended by the filter manufacturer.
• Roof: Note if any shingles have fallen off or if gutters or downspouts appear clogged or damaged. You can always hire a reliable roofing company to get on the roof and take a look. Reputable roofing companies won't try to sell you a new one unless you really need it. You can simply pay them for an inspection.
• House exterior: If your house is wood, check that the paint hasn't worn away so much that the primer paint is showing. If the primer also wears down, you can do damage to the wood. Brick houses should be inspected for damaged bricks or masonry. Check stucco houses and repair any cracks large enough to slide a nickel into.
• Asphalt and concrete driveways: Repair any cracks or buckling.

Mortgage Points

Mortgage Points: When It's Smart to Pay More Upfront

Pay more now for a chance to save much more later? That's the idea behind paying "points" on a mortgage loan. But it doesn't necessarily make sense for every homeowner.

Mortgage points provide an opportunity for borrowers to lower their monthly mortgage payments by paying a lump sum at a loan's closing in exchange for a lower mortgage interest rate over the course of a loan.

Mortgage points are a smart option for borrowers who plan to stay in the same mortgage and not refinance for a relatively long period of time. But points are not recommended for borrowers who are likely to relocate or refinance in the not-so-distant future.

Borrowers pay points in order to lower their mortgage interest rates by a certain amount. The cost of one point is equal to one percent of the mortgage amount. In the case of a 30-year fixed-rate mortgage, paying one point will typically lower your interest rate by somewhere around one eighth of a percent, according to Tim Dwyer, chief executive officer of Entitle Direct, a title insurance company.

So if borrower A paid one point on a $200,000 mortgage with what would have been a 4 percent interest rate, she would lower her interest rate to 3.875 percent (4 percent -- 1/8th percent) for the cost of $2,000.

A good way of looking at points is to view them as an investment that "yields a return for the longer you stay in your house," mortgage expert Jack Guttentag writes.

If Borrower A stays in the same mortgage for only a few years before selling her home or refinancing, she may end up not saving enough in monthly payments to justify paying the $2,000 upfront. But if she stays in the mortgage for a longer period of time, she eventually breaks even on her investment and enjoys saving money every month from there on out.

"If the points are reasonable, I want to pay that upfront and enjoy the interest rate savings over 10 years because I know I'm not going to refinance," Dwyer says. But if "you're a young couple" and "you know you're going to have more babies, you know you're going to be moving out," then you should avoid paying points.

Banks may offer 10 or more point combinations on any given loan, Guttentag writes, and borrowers often don't end up selecting the option that aligns most with their interests, simply out of ignorance. You can use a point calculator to find out how long it would take to break even using different point combinations.

In a perfect world, borrowers would pay points only if it benefited them in the long run. But, in fact, many borrowers pay points out of necessity. Why?

Lenders will only allow borrowers' monthly mortgage payments to equal up to a certain percentage of their monthly income. Often they will only approve loans for borrowers whose monthly mortgage payments would not exceed 28 percent of a borrower's monthly income.

Paying points allows a borrower who otherwise wouldn't qualify for a loan because of income limitations to lower his or her monthly payment to the extent that the bank is willing to make the loan.

Some banks offer "negative points," a rebate paid by lenders toward a borrower's closing costs. "Negative points" lower closing costs for a mortgage, but raise its monthly interest rate. They can be a good option for borrowers who are hard-pressed to cover closing costs with zero points or who intend on moving or refinancing in a few years.

By Teke Wiggin

April Existing-Home Sales Up, Prices Rise Again
WASHINGTON (May 22, 2012) – Existing-home sales rose in April and remain above a year ago, while home prices continued to rise, according to the National Association of RealtorsÒ.  The improvements in sales and prices were broad based across all regions.
Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.4 percent to a seasonally adjusted annual rate of 4.62 million in April from a downwardly revised 4.47 million in March, and are 10.0 percent higher than the 4.20 million-unit level in April 2011.
Lawrence Yun, NAR chief economist, said the housing recovery is underway.  “It is no longer just the investors who are taking advantage of high affordability conditions.  A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices,” he said.  “The general downtrend in both listed and shadow inventory has shifted from a buyers’ market to one that is much more balanced, but in some areas it has become a seller’s market.”
Total housing inventory at the end of April rose 9.5 percent to 2.54 million existing homes available for sale, a seasonal increase which represents a 6.6-month supply2 at the current sales pace, up from a 6.2-month supply in March.  Listed inventory is 20.6 percent below a year ago when there was a 9.1-month supply; the record for unsold inventory was 4.04 million in July 2007.
“A diminishing share of foreclosed property sales is helping home values.  Moreover, an acute shortage of inventory in certain markets is leading to multiple biddings and escalating price conditions,” Yun said. He notes some areas with tight supply include the Washington, D.C., area; Miami; Naples, Fla.; North Dakota; Phoenix; Orange County, Calif.; and Seattle.  “We expect stronger price increases in most of these areas.”
The national median existing-home price3 for all housing types jumped 10.1 percent to $177,400 in April from a year ago; the March price showed an upwardly revised 3.1 percent annual improvement.  “This is the first time we’ve had back-to-back price increases from a year earlier since June and July of 2010 when the gains were less than one percent,” Yun said.  “For the year we’re looking for a modest overall price gain of 1.0 to 2.0 percent, with stronger improvement in 2013.”
Distressed homes4 – foreclosures and short sales sold at deep discounts – accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales), down from 29 percent in March and 37 percent in April 2011.  Foreclosures sold for an average discount of 21 percent below market value in April, while short sales were discounted 14 percent.
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said home buyers should look into financing in the early stages of their search process.  “With the tight lending environment it’s a good idea to consult with a Realtor® about mortgages and program options in your area, and tips for boosting your credit score well in advance of making an offer on a home,” he said.  “It helps to go into the process knowing what it takes to succeed.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to 3.91 percent in April from 3.95 percent in March; the rate was 4.84 percent in April 2011.  Last week the 30-year fixed rate dropped to a record weekly low of 3.79 percent; recordkeeping began in 1971.
First-time buyers rose to 35 percent of purchasers in April from 33 percent in March; they were 36 percent in April 2011.
All-cash sales fell to 29 percent of transactions in April from 32 percent in March; they were 31 percent in April 2011.  Investors, who account for the bulk of cash sales, purchased 20 percent of homes in April, compared with 21 percent in March and 20 percent in April 2011. 
Single-family home sales rose 3.0 percent to a seasonally adjusted annual rate of 4.09 million in April from 3.97 million in March, and are 9.9 percent higher than the 3.72 million-unit pace a year ago.  The median existing single-family home price was $178,000 in April, up 10.4 percent from April 2011.
Existing condominium and co-op sales increased 6.0 percent to a seasonally adjusted annual rate of 530,000 in April from 500,000 in March, and are 10.4 percent above the 480,000-unit level in April 2011.  The median existing condo price was $172,900 in April, which is 8.1 percent above a year ago.
Regionally, existing-home sales in the Northeast rose 5.1 percent to an annual level of 620,000 in April and are 19.2 percent higher than a year ago.  The median price in the Northeast was $256,600, up 8.8 percent from April 2011.
Existing-home sales in the Midwest increased 1.0 percent in April to a pace of 1.03 million and are 14.4 percent above April 2011.  The median price in the Midwest was $141,400, up 7.4 percent from a year ago.
In the South, existing-home sales rose 3.5 percent to an annual level of 1.79 million in April and are 6.5 percent higher than a year ago.  The median price in the South was $153,400, up 8.0 percent from April 2011.
Existing-home sales in the West increased 4.4 percent to an annual pace of 1.18 million in April and are 7.3 percent above April 2011.  The median price in the West was $221,700, a surge of 15.9 percent from a year ago.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.