Home Refinancing Questions And Answers (Part 1)

Find clear answers to common questions regarding home mortgage loan refinancing. 

Question:  Rates Are Low. Is Now A Good Time To refinance?  When interest rates are lower than your current mortgage rate, a homeowner should definitely contact multiple lending institutions for competitive home mortgage loan refinancing rates.

Assess Your Financial Needs And Goals
Carefully assess your financial situation and goals before making any final decision. Answer the following questions:

1. Is your goal to lower your monthly payments? 
2. Do you need to consolidate debt? 
3. Do you need cash for large purchases? 
4. Are you seeking to adjust  your interest deduction expense for tax purposes? 

Once you determine your reason for refinancing consider the amount of cash back your require. Using a mortgage refinance calculator determine the amount of savings per month and annually according to lowest available refinance rates. Seek lenders who offer the lowest refinance rates nationwide.

Countrywide CEO forfeits $37.5 million

Facing pressure over his payout, Angelo Mozilo says he is giving up severance pay and other perks.

Mortgage mogul Angelo Mozilo made a killing

BY FROMA HARROP | Froma Harrop is a syndicated columnist based at The Providence Journal in Rhode Island.

January 29, 2008

As banks, money markets and stock exchanges convulse over a sinking American economy, we see the folks sprawled at the bottom of the smoking rubble - debt-crushed American consumers. It is they whose reckless or trusting natures enriched so many, at least for a while, and whose troubled loans have sent markets into panic.

But let us also note the operators creeping away from the disaster they helped create with their millions intact. None made a bigger pile off the pile than Angelo Mozilo, former head of Countrywide Financial.

All the planets lined up for Mozilo.

The government could have stopped the excesses of Mozilo and other pushers of ugly mortgages. But the Bush administration was never overly burdened by a conscience. If little people were being tricked into abusive loans - which were then unloaded on unsuspecting investors - well, that's the "free market" for you. The mortgage mongers were important. They kept the housing bubble going.

The American dream propaganda machine provided the background music: Real estate was played a "must own" for all respectable families and an investment that never fails. Foes of regulation defended the exorbitant fees and delayed-explosive interest rates as socially desirable. Without them, they argued, low-income people - read "minorities" - could not enjoy the blessings of homeownership.

Mozilo understood the rhetoric perfectly. In a Countrywide brochure titled "Working Together to Achieve the Dream," he pledged "our unflagging dedication to helping lower the barriers to homeownership." The pictures were a parade of American diversity, alongside references to black churches and Countrywide's extensive Spanish-language resources.

Despite Countrywide's slogan, "the best loan possible," the sales force was trained to sweet-talk customers into high-cost mortgages. The company software was rigged to steer borrowers with good credit into subprime mortgages, a trick played with considerable success in black and Hispanic neighborhoods. Salespeople were discouraged from offering Federal Housing Administration loans, which are generally the best deal for low-income borrowers.

The name of the game for mortgage makers was to pocket big fees upfront. Countrywide and others loaded borrowers with a plethora of fees - for flood certifications, appraisals, preparing the papers - even for e-mailing documents.

Shabby lending practices were a given. Many of the mortgages required no down payment or proof of income. None of this mattered, because Step Two was to pass the risky loans on to the next sucker.

So the mortgage brokers sold the mortgages to investment banks. The investment banks then packaged the loans into securities (and collected their own fees), which they palmed off on investors. (To make their loans more appealing to investors, Countrywide insisted on big prepayment penalties, making it hard to refinance and trapping borrowers into the high interest rates.)

The party couldn't last. When housing turned bad last year, Countrywide stock lost more than half of its value. But that didn't affect the estimated $414 million Mozilo had already made selling his Countrywide shares from 2004 to 2007.

You say the borrowers should have been more careful, but suppose, for example, you were an ordinary Latino working guy and saw Countrywide listed on the Congressional Hispanic Caucus Institute's "Hogar" (means "hearth") Web site as a "trusted friend." (Countrywide had paid $50,000 for that mention.) Wouldn't you have assumed its mortgages were fair?

Did we forget to add that Mozilo was named the National Housing Conference's "man of the year" in 2004? Or that the venerable American Banker newspaper gave him its 2006 "lifetime achievement award"?

If Countrywide gets sold to Bank of America as planned, Mozilo says he'll give up $37.5million in severance and consulting pay - not much compared with the wreckage he leaves behind. That's how things work in the Age of Bush.

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What's in the Tentative Stimulus Deal?

by Heidi Glenn

NPR.org, January 29, 2008 · House leaders and the Bush administration last week reached a deal on how to deliver an economic stimulus package to help jump-start the sluggish U.S. economy. The $150 billion agreement includes tax rebates for individuals, tax cuts for businesses and help for American homeowners. The stimulus plan now moves to the Senate, where it appears it will undergo some changes.

The head of the Senate Finance Committee on Monday challenged the agreement worked out by House leaders and the president with a $156 billion counteroffer. The move dashed hopes Bush had for moving his stimulus proposal quickly through Congress and to his desk.

Here, read about what happens next and when you might see a rebate check in your mailbox.

What kind of tax rebates would individuals get under the House bill?

House leaders and the White House have agreed to tax rebates worth more than $100 billion for individuals and families. The tax rebates would be:

• Up to $600 per person
• Up to $1,200 per couple
• An additional $300 per child

The rebates would go to 117 million families.

Who would be eligible for a rebate?

Under the agreement worked out by House leaders and President Bush, taxpayers earning less than $75,000 and couples earning less than $150,000 in adjusted gross income for the year would receive a rebate check. To be eligible for the income tax rebate, taxpayers would have to have earned at least $3,000 in 2007.

The agreement expands the scope of President Bush's original stimulus plan, which would have limited tax rebates only to those who pay income tax. The new agreement would provide $28 billion to 35 million families who wouldn't have been eligible under President Bush's original proposal, according to House Democrats.

When could I expect a check in the mail?

It's unclear when a final deal will be reached. Treasury Secretary Henry Paulson says the IRS could begin issuing rebate checks — either electronically or as paper checks — within 60 days of when the economic stimulus package is enacted. The lion's share of the rebates would then be delivered within a 10-week period, according to Paulson. But Paulson warns that the agency will need to focus for two weeks in April on the demands of the regular tax-filing season. If the bill is enacted in mid-February, as many lawmakers hope, then the process would be wrapped up by mid-summer.

What kind of tax cuts would businesses get?

The House package includes tens of billions in tax cuts for corporations.

It would allow all businesses to immediately write off 50 percent of the purchase cost of new plants and other equipment. In addition, small businesses would be permitted to write off other equipment purchases.

Does the deal address the mortgage crisis?

Yes. The House package would temporarily increase the size of mortgage loans — known as the conforming loan limit — that Fannie Mae and Freddie Mac can purchase: from the current $417,000 to a maximum of $729,750. It would also permanently raise the cap on Federal Housing Administration mortgage loans from $367,000 up to $729,750.

Why raise the conforming loan limits?

Supporters say raising the loan limits will deliver lower interest rates to a large number of homebuyers.

Right now, mortgages for more than $417, 000 carry higher interest rates than mortgages below that amount. That's because Fannie Mae and Freddie Mac are not allowed to back loans above that cutoff.

Higher loan limits will make many more homeowners eligible for lower rates, which could translate to savings of hundreds of dollars each month for those in high-cost areas of the country.

But some critics warn that higher loans limits will merely result in more — and bigger — bad loans being bought up by government agencies. And that means that when these loans go bad, taxpayers will be left holding the bag.

What's in the Senate version?

The proposal from Senate Finance Committee Chairman Max Baucus (D-MT) includes tax rebates and business tax cuts. It would also offer 13 weeks of additional unemployment insurance, a proposal that House Democrats dropped during negotiations with President Bush.

Under Baucus' plan, the tax rebates would be:

• Up to $500 per person
• Up to $1,000 per couple
• An additional $300 per child

Unlike the House bill, Americans receiving Social Security benefits would receive rebate checks. However, Baucus would not include upper-income limits as the House bill would, so wealthy taxpayers would also receive rebates.

Baucus' proposal also includes business tax cuts similar to those offered by the House, but he would also allow companies to write off losses going back five years.

What happens next?

The deal struck last week among Democratic and Republican House leaders and the White House was a major political breakthrough. However, now that the Senate has laid down its initial counteroffer, a conference between the House and Senate will be required to negotiate what is likely to be a delicate compromise.

During talks with President Bush and House Republicans, House Democrats had dropped demands to expand unemployment and food stamp benefits in exchange for extending the rebates to those who earn too little to pay income taxes. Conservative Republicans, meanwhile, may object to rebates going to those without income tax liability.

And House Democrats already have expressed displeasure with Baucus' plan to give wealthy taxpayers rebate checks.

The Associated Press and NPR contributed to this report.

Fed Makes Second Deep Cut to Interest Rates

NPR.org, January 30, 2008 · The Federal Reserve has voted to cut a key interest rate another half-percentage point to 3 percent on Wednesday, barely a week after the previous cut, signaling the central bank's desire to stabilize the faltering economy.

The move to pare the federal funds rate was announced at the end of a two-day meeting of the Fed's policy-setting Federal Open Market Committee. The cut had been widely anticipated on Wall Street, where analysts expected at least a quarter-percentage point cut but had hoped for more.

The move to cut the the federal funds rate by 50 basis points came on a unanimous decision.

The Fed's announcement comes close on the heels of last week's surprise three-quarter point cut in the same benchmark rate — its biggest single decrease in more than two decades.

In explaining its aggressive move last week, the Fed said the outlook for economic growth had weakened and downside risks had risen. Policy-makers also said businesses and households were beginning to feel the pinch of tighter credit.

In a statement, the Federal Reserve said that taken together, the two moves "should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain."

The economy's weaker-than-expected performance in the fourth quarter — an anemic 0.6 percent growth rate — along with housing and labor concerns, also played a role in the Fed's decision.

By Craig Torres

Jan. 30 (Bloomberg) -- The Federal Reserve lowered its benchmark interest rate by half a point to 3 percent, the second cut in nine days, and indicated its willingness to do so again to prevent a U.S. recession.

``Downside risks to growth remain,'' the Federal Open Market Committee said in a statement after meeting today in Washington. In a reference to the volatility of the past five months, the Fed added that ``financial markets remain under considerable stress and credit has tightened further for some businesses and households.''

The dollar tumbled and two-year Treasury notes rose after the decision as traders anticipated another reduction at the Fed's March meeting, if not before. The cumulative reduction in rates since Jan. 22 is the fastest easing of monetary policy since 1990. The Standard & Poor's 500 Index closed 0.5 percent lower and is down 7.7 percent this year.

``They're going full-bore trying to keep the economy from recession,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. ``Conditions in the market place are the driving force right now.''

Hours before the decision was announced, the Commerce Department reported that gross domestic product grew at an annual pace of 0.6 percent in the fourth quarter.

``The Fed has gotten religion and is going do what they need to do,'' said Mark Vitner, senior economist at Wachovia Corp. in Charlotte, North Carolina.

Readiness to Respond

Fed officials said they will continue to assess financial markets and the economy ``and will act in a timely manner as needed.''

``Recent information indicates a deepening of the housing contraction as well as some softening in labor markets,'' the central bank's statement also noted.

Chairman Ben S. Bernanke and the Fed's Board of Governors also voted to cut the discount rate, the cost of direct loans from the central bank, to 3.5 percent from 4 percent.

Dallas Fed President Richard Fisher dissented from today's decision, preferring no change.

Policy makers presented revised three-year economic forecasts at this week's gathering. The Fed will release the projections along with minutes of the meeting on Feb. 20.

Today's Commerce Department figures showed the Fed's preferred inflation gauge rose at a 2.7 percent annualized rate last quarter. Fed officials in October forecast the personal consumption expenditures price index minus food and energy would rise 1.6 percent to 1.9 percent in 2010, offering a measure of their longer-term inflation objective.

Inflation

``The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully,'' the Fed said in today's statement.

Wall Street firms including Morgan Stanley, Merrill Lynch & Co., Goldman Sachs Group Inc. and Citigroup Inc. are forecasting the first recession since 2001 this year. Still, executives at firms such as Dow Chemical Co. said they don't detect a downturn yet, while risks remain.

This year ``will be slower than 2007,'' Andrew Liveris, the chairman and chief executive officer of Dow Chemical, said yesterday. ``It is an inconvenience, not a catastrophe.''

United Parcel Service Inc., Caterpillar Inc. and General Electric Co. are relying on gains overseas to counter slower growth at home.

Evolution Since August

Fed policy makers have struggled since August to contain the economic damage sparked by the worst housing recession in a quarter-century. The world's largest banks and securities firms have recorded more than $133 billion in asset writedowns and credit losses since the beginning of 2007, which analysts blamed on weak and fragmented supervision and poor credit analysis.

``The Fed's move lowers the cost of financing for Wall Street which is struggling to raise capital after being hit with writedowns not seen since the Great Depression,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.

Foreclosure rates rose 75 percent in 2007 as a record amount of adjustable-rate loans to borrowers with weak or limited credit histories reset to higher rates, RealtyTrac Inc. data show. Home prices in 20 U.S. metropolitan areas fell 7.7 percent in November from a year earlier, the 11th consecutive decline, the S&P/Case-Shiller home-price index showed yesterday.

``We are in a historic housing bust right now, comparable to that of the Great Depression,'' said Robert Shiller, chief economist of MacroMarkets LLC in Madison, New Jersey, who co- founded the house-price index. ``The unraveling of that has unpredictable consequences.''

Delay in 2007

Fed officials waited until September to cut the benchmark lending rate, even though premiums on corporate bonds and lower- rated securities began to climb in late June.

By December, Fed policy makers had cut the benchmark lending rate 1 percentage point, yet still described the policy rate as ``somewhat restrictive'' as they deliberated whether to cut again that month, minutes show.

The government's December payroll report, which showed a loss of 13,000 private sector jobs, the first decline since July 2003, began to reshape Fed officials' views about risks.

Bernanke used a Jan. 10 speech to update the public. ``The baseline outlook for real activity in 2008 has worsened and the downside risks to growth have become more pronounced,'' he said, breaking with the Fed's statement a month earlier which only expressed ``uncertainty'' about the outlook. He pledged ``substantive additional action as needed.''

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net

Last Updated: January 30, 2008 17:15 EST

Press Release

Release Date: January 30, 2008

For immediate release

 

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent.

Financial markets remain under considerable stress, and credit has tightened further for some businesses and households.  Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

Today’s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity.  However, downside risks to growth remain.  The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.  Voting against was Richard W. Fisher, who preferred no change in the target for the federal funds rate at this meeting.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 3-1/2 percent.  In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco.

 

2008 Monetary Policy Releases

Home Selling Articles and Advice

If you are thinking of selling your home, chances are you're caught up in a mass of emotions. You may be looking forward to moving up to a new home or facing the uncertainty of a major move across country. You may be reluctant to leave your memories behind or eager to start new and exciting adventures.   Remember, we are here to help you with any of your needs.  Check us out at www.askaboutrealestate.net.

When Your Selling Price is too High, Beware!

So you’ve decided to sell your home and have a fairly good idea of what you think it is worth. Being a sensible home seller, you schedule appointments with three local listing agents who’ve been hanging stuff on your front doorknob for years. Each Real Estate Professional comes prepared with a "Competitive Market Analysis" on fancy paper and they each recommend a specific sales price.

Amazingly, a couple of the Real Estate Professionals have come up with prices that are lower than you expected. Although they back up their recommendations with recent sales data of similar homes, you remain convinced your house is worth more. When you interview the third agent’s figures, they are much more in line with your own anticipated value, or maybe even higher. Suddenly, you are a happy and excited home seller, already counting the money.

Which Real Estate Professional do you choose?

If you’re like many people, you pick Real Estate Professional number three. This is an agent who seems willing to listen to your input and work with you. This is an agent that cares about putting the most money in your pocket. This is an agent that is willing to start out at your price and if you need to drop the price later, you can do that easily, right? After all, everyone else does it!

The truth is that you may have just met an agent engaging in a questionable sales practice called "buying a listing." He "bought" the listing by suggesting you might be able to get a higher sales price than the other agents recommended. Most likely, he is quite doubtful that your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price.

Why do agents "buy" listings? There are basically two reasons. A well-meaning and hard working agent can feel pressure from a homeowner who has an inflated perception of his home’s value. On the other hand, there are some agents who engage in this sales practice routinely.

Home Selling Articles and Advice

If you are thinking of selling your home, chances are you're caught up in a mass of emotions. You may be looking forward to moving up to a new home or facing the uncertainty of a major move across country. You may be reluctant to leave your memories behind or eager to start new and exciting adventures.   Remember, we are here to help you with any of your needs.  Check us out at www.askaboutrealestate.net.

Home Selling Articles and Advice

If you are thinking of selling your home, chances are you're caught up in a mass of emotions. You may be looking forward to moving up to a new home or facing the uncertainty of a major move across country. You may be reluctant to leave your memories behind or eager to start new and exciting adventures.   Remember, we are here to help you with any of your needs.  Check us out at www.askaboutrealestate.net.

Fixing Up the House Interior

Plumbing and Fixtures

All your sink fixtures should look shiny and new. If this cannot be accomplished by cleaning, buy new ones where needed. If you don’t buy something fancy, this can be accomplished inexpensively and they are fairly easy to install. Make sure all the hot and cold water knobs are easy to turn and that the faucets do not leak. If they do, replace the washers. It is not difficult at all.

Check to make sure you have good water pressure and that there are no stains on any of the porcelain. If you have a difficult stain to remove, one trick is to hire a cleaning crew to go through and clean your home on a one-time basis. They seem to be wonderful at making stains go away.

Ceilings, Walls and Painting

Check all the ceilings for water stains. Sometimes old leaks leave stains, even after you have repaired the leak. Of course, if you do have a leak, you will have to get it repaired, whether it is a plumbing problem or the roof leaks.

You should do the same for walls, looking for not only stains, but also areas where dirt has accumulated and you just may not have noticed. Plus, you may have an outdated color scheme.

Painting can be your best investment when selling your home. It is not a very expensive operation and often you can do it yourself. Do not choose colors based on your own preferences, but based on what would appeal to the widest possible number of buyers. You should almost always choose an off-white color because white helps your rooms appear bright and spacious.

Carpet and Flooring

Unless your carpet appears old and worn, or it is definitely an outdated style or color, you probably should do nothing more than hire a good carpet cleaner. If you do choose to replace it, do so with something inexpensive in a fairly neutral color.

Repair or replace broken floor tiles, but do not spend a lot of money on anything. Remember, you are not fixing up the place for yourself. You want to move. Your goal is simply to have as few negative impressions upon those who may want to purchase your property.

Windows and Doors

Check all of your windows to make sure they open and close easily. If not, a spray of WD40 often helps. Make sure there are no cracked or broken windowpanes. If there are, replace them before you begin showing your home.

Do the same things with the doors – make sure they open and close properly, without creaking. If they do, a shot of WD40 on the hinges usually makes the creak go away. Be sure the doorknobs turn easily, and that they are cleaned and polished to look sharp. As buyers go from room to room, someone opens each door and you want to do everything necessary to create a positive impression.

Odor Control

For those who smoke, you might want to minimize smoking indoors while trying to sell your home. You could also purchase an ozone spray that helps to remove odors without creating a masking odor.

Pets of all kinds create odors that you may have become used to, but are immediately noticeable to those with more finely tuned olfactory senses. For those with cats, be sure to empty kitty litter boxes daily. There are also products that you can sprinkle in a layer below the kitty litter that helps to control odor. For those with dogs, keep the dog outdoors as much as possible. You might also try sprinkling carpet freshener on the carpet on a periodic basis.

Costs of Repairs

Do not do anything expensive, such as remodeling. If possible, use savings to pay for any repairs and improvements – do not go charging up credit cards or obtaining new loans. Remember that part of selling a house is also preparing to buy your next home. You do not want to do anything that will affect your credit scores or hurt your ability to qualify for your next mortgage.

Home Selling Articles and Advice

If you are thinking of selling your home, chances are you're caught up in a mass of emotions. You may be looking forward to moving up to a new home or facing the uncertainty of a major move across country. You may be reluctant to leave your memories behind or eager to start new and exciting adventures.   Remember, we are here to help you with any of your needs.  Check us out at www.askaboutrealestate.net.

Removing Clutter, Though You May Not Think of it as Clutter

This is the hardest thing for most people to do because they are emotionally attached to everything in the house. After years of living in the same home, clutter collects in such a way that may not be evident to the homeowner. However, it does affect the way buyers see the home, even if you do not realize it. Clutter collects on shelves, counter tops, drawers, closets, garages, attics, and basements.

Take a step back and pretend you are a buyer. Let a friend help point out areas of clutter, as long as you can accept their views without getting defensive. Let your agent help you, too.

Home Selling Articles and Advice

If you are thinking of selling your home, chances are you're caught up in a mass of emotions. You may be looking forward to moving up to a new home or facing the uncertainty of a major move across country. You may be reluctant to leave your memories behind or eager to start new and exciting adventures.   Remember, we are here to help you with any of your needs.  Check us out at www.askaboutrealestate.net.

Emotion vs. Reason

When conversing with real estate agents, you will often find that when they talk to you about buying real estate, they will refer to your purchase as a "home." Yet if you are selling property, they will often refer to it as a "house." There is a reason for this. Buying real estate is often an emotional decision, but when selling real estate you need to remove emotion from the equation.

You need to think of your house as a marketable commodity. Property. Real estate. Your goal is to get others to see it as their potential home, not yours. If you do not consciously make this decision, you can inadvertently create a situation where it takes longer to sell your property.

The first step in getting your home ready to sell is to "de-personalize" it.

De-personalize the House

The reason you want to "de-personalize" your home is because you want buyers to view it as their potential home. When a potential homebuyer sees your family photos hanging on the wall, it puts your own brand on the home and momentarily shatters their illusions about owning the house. Therefore, put away family photos, sports trophies, collectible items, knick-knacks, and souvenirs. Put them in a box. Rent a storage area for a few months and put the box in the storage unit.

Do not just put the box in the attic, basement, garage or a closet. Part of preparing a house for sale is to remove "clutter," and that is the next step in preparing your house for sale.

AgStar’s Fund for Rural America Awards Grant to GFW High School

MANKATO, Minn. –  The AgStar Fund for Rural America is pleased to announce its recent grant award of $10,000 to the GFW High School. Through this grant the high school will purchase equipment for the Natural Resources, Plant Science and Exploring Ag Classes.

The GFW High School supports the importance of agriculture in the school by offering students educational experiences where they can do relevant coursework and apply what they have learned towards solving real world issues. “Ag education for our youth is vital and AgStar is proud to award this grant to ensure that students in the area are able to experience this innovative and hands-on learning environment,” said Jody Bloemke, AgStar Fund Administrator.

The AgStar Fund donated over $480,000 last year to organizations working to improve the future of rural America. Applications considered for funding and support must align with the Fund’s mission to “enhance the quality of life and future opportunities for rural residents and their communities” and focus in one of the four key areas of support: Education, Technology, Environment and Quality of Life.

About AgStar: AgStar Financial Services, ACA, headquartered in Mankato, Minn., operates in 69 counties in Minnesota and northwest Wisconsin serving rural communities and agribusinesses throughout the U.S. as part of the Farm Credit System. The company primarily serves the cash grain (corn and soybean production), swine and dairy industries. AgStar has also developed successful programs in loans, leases, crop insurance, tax services, accounting and rural home mortgages. Visit www.agstar.com for more information on the AgStar Fund.

Contact:
Jody Bloemke
507-345-56

NAR Pleased with Housing Components Included in Economic Stimulus Package

Jan. 28, 2008-The following is a statement by National Association of Realtors® President Richard F. Gaylord:

“NAR is pleased that the House of Representatives, along with President Bush, presented a bipartisan economic stimulus package today that includes important housing provisions. NAR has been actively advocating for many months FHA reform and increasing the conforming loan limits for Fannie Mae and Freddie Mac.

“The stimulus package announced today is a positive step toward strengthening the housing market and our economy. The increase in loan limits should provide liquidity to the mortgage market in all parts of the country allowing qualified home buyers who may have been on the sidelines to enter the market.

“In high-cost states, many home buyers with good credit could save $3,000 to $5,000 per year by not being forced into the current jumbo mortgage market. Currently, only families in lower cost areas are able to qualify for these types of affordable loans. Such a move would stimulate home sales and help stem the rise in foreclosures, reducing the number of foreclosures by as much as 210,000.

“There is still work to do and we urge the Senate to work with the House and the President to achieve quick enactment of a comprehensive stimulus package.”

Real Estate Terms (the W's)

what-if analysis
An affordability analysis that is based on a what-if scenario. A what-if analysis is useful if you do not have complete data or if you want to explore the effect of various changes to your income, liabilities, or available funds or to the qualifying ratios or down payment expenses that are used in the analysis.

what-if scenario
A change in the amounts that is used as the basis of an affordability analysis. A what-if scenario can include changes to monthly income, debts, or down payment funds or to the qualifying ratios or down payment expenses that are used in the analysis. You can use a what-if scenario to explore different ways to improve your ability to afford a house.

wraparound mortgage
A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee.

Real Estate Terms (the V's)

VA mortgage
A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.

vested
Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn.

Department of Veterans Affairs (VA)
An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.

Real Estate Terms (the U's)

underwriting
The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.

unsecured loan
A loan that is not backed by collateral.

Criteria for Selecting A Real Estate Agent!

Consumers would be wise to select an agent:

1. who is professional in appearance, attitude, demeanor and capability.

2. whose company has a strong local reputation for service, ethical performance and available resources.

3. who is willing to prepare, present and commit to a written comprehensive marketing plan.

4. who is willing to commit to a schedule of communication, follow up activities and attending to details.

5. who has experience and knowledge of the local marketplace.

6. who is skilled and accomplished in formulating and implementing effective negotiating strategies.

7. who has a reputation for caring, committed and trustworthy service.

These are the traits that you should look for in a Real Estate Agent. 

These are the traits we look for in the Real Estate Agents who are members of www.askaboutrealestate.net

Clinton seeks to smooth relations with Obama

Fri Jan 25, 2008 2:34pm EST

WASHINGTON (Reuters) - Former President Bill Clinton said he might have gone too far in attacking Barack Obama, Hillary Clinton said on Friday, adding that both Democratic presidential campaigns should focus on issues.

"He said several times yesterday that maybe he got a little bit carried away," Hillary Clinton said on CBS' "Early Show."

"So we're all going to, on both sides I think, you know, try to bring this debate and this campaign back to the issues that are important," said the New York senator, who would be the first woman U.S. president.

The campaigns of Clinton and Obama, the top two contenders for the Democratic nomination, have engaged in an increasingly bitter war of words, including a debate on Monday that featured sometimes personal attacks.

Obama, an Illinois senator who would be the first black president, has complained specifically about comments from Bill Clinton, including his charge that Obama's consistent opposition to the Iraq war was "a fairy tale."

Hillary Clinton, on ABC's "Good Morning America," said her husband "obviously is a passionate advocate for my cause, as are the wives of my two major opponents. But I think all of us just need to take a deep breath here because we know we'll have a united Democratic Party once this nomination is determined."

Former North Carolina Sen. John Edwards is the other major candidate vying for his party's nomination.

On NBC's "Today," she added, "It is perfectly legitimate to draw comparisons and contrasts ... It has been obviously an incredibly intense campaign."

(Reporting by Vicki Allen and Andy Sullivan)

NYC sues Countrywide officers, underwriters

Fri Jan 25, 2008

Lawmakers urge Mozilo to pay back

Sen. Charles Schumer and Rep. Barney Frank call on Angelo Mozilo to give part of his severance package to help mortgage victims

NEW YORK (CNNMoney.com) -- Two lawmakers are calling on Countrywide CEO Angelo Mozilo to give a portion of his severance package to charities that could help families affected by the mortgage crisis.

According to The Corporate Library, a corporate governance and CEO pay tracker, Mozilo will be receiving a severance package worth about $101.3 million in cash and benefits.

Early Friday, Bank of America announced that it would purchase the troubled mortgage lender for $4 billion - opening the door to speculation that Angelo Mozilo's days as Countrywide CEO are numbered.

"The sale of Countrywide closes an ugly chapter in the subprime mortgage crisis," said Sen. Charles Schumer, D-N.Y.

"Mr. Mozilo could display some goodwill by donating any severance pay he stands to receive to the nonprofit housing counselors trying to prevent foreclosures," Schumer said in a statement.

He should "donate a substantial portion of the $150 million he has collected over the last several years," added Rep. Barney Frank, D-Mass., chairman of the House's financial services committee.

Frank also called on Countrywide to freeze interest rates to prevent the eviction of tenants living in foreclosed properties. 

Countrywide boosts execs' bonuses

In filings, troubled mortgage lender discloses sweetened incentive to keep some from leaving before Bank of America deal is completed.

January 17 2008

LOS ANGELES (AP) -- Countrywide Financial Corp. has sweetened annual bonus awards for a handful of its top executives as an incentive for them to remain with the mortgage lender as it goes through the process of being acquired by Bank of America Corp., according to regulatory filings Thursday.

Countrywide (CFC, Fortune 500)'s compensation committee has approved retention awards of cash and cash-settled restricted stock units for David Sambol, president and chief operating officer; Eric Sieracki, executive managing director and chief financial officer; Ranjit Kripalani, executive managing director, Capital Markets; and, Carlos M. Garcia, executive managing director, Banking and Insurance, according to the filing with the Securities and Exchange Commission.

The bonus portion of the incentive packages range between $2.5 million for Kripalani and $1.45 million for Garcia. The executives must remain with the company through at least March 15, when the bonuses are to be paid, according to the filing.

In this latest action, Countrywide's compensation committee did not designate a retention incentive bonus for Countrywide Chairman and Chief Executive Angelo Mozilo.

Mozilo already stands to walk away from the company with $66 million in retirement pay and stock holdings, according to estimates by Hay Group. Other estimates have suggested Mozilo's payout could go even higher.

Calabasas, Calif.-based Countrywide agreed last week to be acquired by Bank of America (BAC, Fortune 500) for $4.1 billion in stock.

In recent years Countrywide rose to become the nation's largest mortgage lender but has been struggling since last year amid rising mortgage defaults, particularly subprime loans to borrowers with questionable credit histories.

In the filing, Countrywide also disclosed that should shareholders not approve the takeover by Bank of America, the two companies have agreed to restructure their agreement and resubmit it to Countrywide shareholders.

The agreement also includes a provision that calls under specific circumstances for Countrywide to pay Bank of America $160 million should the proposed acquisition fall through.

Countrywide shares slid 46 cents, or 7.7 percent, to $5.48 Thursday

Betting against the BoA - Countrywide deal

With no obvious barriers to the merger, why is there such a spread between Countrywide's stock price and the value the deal puts on it?

Countrywide Home Loan Delinquencies Rise

By ALEX VEIGA – Jan 2008

LOS ANGELES (AP) — Countrywide Financial Corp.'s shares tumbled for the second day Wednesday after the nation's largest mortgage lender said the delinquency and foreclosure rate of home loans in its portfolio surged in December.

The news drove shares down more than 15 percent in early afternoon trading.

The company said some 6.96 percent of the loans in its servicing portfolio were delinquent last month, up from 5.02 percent in December 2006.

About 1.04 percent of the mortgage loans were pending foreclosure, up from 0.65 percent.

Meanwhile, loan fundings during December rose 1 percent from the previous month, ahead of internal forecasts.

The company said it funded $24 billion in loans during the month, giving it a total of $69 billion for the fourth quarter.

Countrywide also reported that its banking operations had assets of $113 billion at the end of December, up from $83 billion at the end of November.

Management pointed to the slight increase in loan fundings and rising bank deposits as evidence the company was heading in the right direction.

"Our fourth quarter ended with a number of positive operational trends," Countrywide's president and chief operating officer David Sambol said in a statement. "Management is pleased with the progress we have made in positioning the company to navigate the current challenging environment."

But its shares fell 83 cents, or 15.2 percent, to $4.64 on afternoon trading Wednesday after sinking as low as $4.43 earlier in the session. The drop followed a loss of $2.17, or 28.4 percent, on Tuesday.

Calabasas, Calif.-based Countrywide previously reported a $1.2 billion loss for the third quarter of last year, but management has forecast a profitable fourth quarter and 2008.

Analysts polled by Thomson Financial are estimating Countrywide will post a fourth-quarter profit of 12 cents per share on revenue of $1.9 billion.

The company is due to report its fourth-quarter financial results on Jan. 29.

The company said Wednesday that mortgage applications waiting to be processed as of Dec. 31 were worth about $35 billion, down from $57.2 billion in the year-ago period.

In all, the lender originated 116,577 home loans in December, down from 212,566 in the same period of the previous year.

The company continued to shift away from risky subprime loans, with fundings totaling $6 million, down from $3.73 billion in December 2006. Subprime borrowers often have shaky credit repayment histories.

Home equity loan originations also declined last month to $1.26 billion, down 61.3 percent from $3.27 billion in the year-ago period.

Countrywide's slate of adjustable rate mortgages fell by 75 percent, to $3.68 billion from $15.22 billion a year earlier.

As of Dec. 31, the lender's mortgage loan servicing portfolio included about 9 million loans valued at $1.47 trillion, up about 14 percent from December of 2006. The company services loans originated by other lenders.

• Countrywide Financial: http://my.countrywide.com/

Press Release

Release Date: January 25, 2008

For immediate release

The Federal Reserve Board on Friday approved the application by State Bank of India, Mumbai, India, to establish a branch in Jackson Heights, New York.

Attached is the Board's Order relating to this action.

 

Attachment (41 KB PDF)

2008 Orders on Banking Applications

IRC 1031 Tax Deferred Exchange

Save Money using a “1031 Tax Deferred Exchange”

Often investors do not realize taxation of a personal residence is far different than taxation on income or investment property.  The Taxpayer Relief Act of 1997 changed Internal Revenue Code treatment of the sale of a person residence to allow a single taxpayer a $250,000 exclusion from capital gain.  Married couples receive a $500,000 exclusion.  The taxpayer must have resided in the property two of the last five years.  This exemption may be used once every two years.

If an investor sell appreciated property they pay tax.  However, property that qualifies for preferential tax treatment under Internal Revenue Code Section 1031 (IRC 1031) is treated quite differently. 

IRC 1031 states “No gain or loss shall be recognized if property held for productive use in a trade or business or for investment is exchanged solely for property of like-kind.”

Therefore, an investor using IRC Section 1031 can exchange raw land for a rental home, an apartment complex for a shopping center or rental houses for an office building.  The use of the property is a key factor in determining the tax treatment.

Every dollar saved in taxes will allow an investor to purchase 4-5 times as much real estate . . . .

To learn more about IRC 1031 exchanges contact your commercial or investment real estate agent, your accountant or a professional qualified Intermediary that specializes in IRC 1031 Exchanges.

The savings are only available if you make the correct moves in the process.  Make the call and save the taxes!

 51 Tips for Preparing Your Home FOR SALE (Part 4 of 4)

Here are the remaining TIPS for Preparing Your Home FOR SALE (Part 4 of 4)

Other tips

1.      Neatness makes a room look bigger.  Avoid clutter.

2.      If possible, leave your furniture and rugs in the house for showing it.

3.      Avoid having dirty dishes in the sink or on counters.

4.      Keep all toys in the children’s rooms.  Bikes, wagons and skateboards should be made as inconspicuous as possible.

5.      Keep radio, stereo, TV off or turned down low.

6.      Take your family away if you are holding an “open house.”

7.      Children should be as quiet as possible.

8.      Refer direct inquires you receive about seeing your house to your Realtor to take advantage of their professional skills in selling your home.

9.      Don’t mention furniture or furnishings you wish to dispose of unless asked. 

10.  Take pets outdoors or kennel when your house is being shown.

11.  Let the real estate expert show your house, and please do not tag along.  Answer questions candidly when asked, but do not offer answers to unasked questions.  “Less is more.”

Again, these tips were compiled through seller/buyer surveys and general industry feedback over many years looking at what preparations for selling had the greatest positive impact to the seller’s asking price.  Not everyone has the time to do all this items; however, any areas that need additional attention by the buyers may reduce the seller’s total purchase price and offer.  Most certainly, asking prices are directly reflective of the condition of these items at time of placing the home on the market.

When faced with a buyer's market the seller has to prepare their home above and beyond their competition so they are noticed by the current buyers, and any future buyers the REALTORS who show their property want to bring by to preview the home. 

"You never get a second chance to make that first impression; therefore,

make yours a lasting first IMPRESSION!"

Good Luck with your Real Estate Sale!

More rate cuts to come?
CNNMoney.com
Tuesday January 22
By Paul R. La Monica, CNNMoney.com editor at large

Press Release

Release Date: January 22, 2008

For immediate release

The Federal Open Market Committee has decided to lower its target for the federal funds rate 75 basis points to 3-1/2 percent.

The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth.  While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households.  Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

Appreciable downside risks to growth remain.  The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Eric S. Rosengren; and Kevin M. Warsh.  Voting against was William Poole, who did not believe that current conditions justified policy action before the regularly scheduled meeting next week. Absent and not voting was Frederic S. Mishkin.

In a related action, the Board of Governors approved a 75-basis-point decrease in the discount rate to 4 percent.  In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Chicago and Minneapolis.

Stocks tumble before surprise Fed rate cuts

The Business Journal of Milwaukee

The stock market tumbled in early trading Tuesday before rebounding in the wake of the Federal Reserve's surprise announcement that it cut a key interest rate by three-quarters of a percent.

The Federal Reserve reduced the federal funds rate to 3.5 percent due to a weakening of the economic outlook and increasing downside risks to growth, the Fed said Tuesday morning. International markets plunged overnight over fears of a U.S. recession.

The Federal Reserve's Open Market Committee voted 8-1 to cut the rate because financial market conditions have continued to deteriorate and credit has increasingly tightened for some businesses and homes, according to a release. The federal funds rate, the rate banks charge to other banks for overnight loans, affects the rates charged to credit card customers and some consumer loans.

Voting against the rate cut was William Poole, head of the St. Louis Federal Reserve, who did not believe the current conditions justified an action before next week's regularly scheduled meeting, according to a release.

The Federal Reserve's board of governors also approved a 0.75 percent decrease to 4.0 percent in the discount rate, the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank.

Wisconsin stocks in general opened well below Monday's closing price, but many have since rebounded, with some posting gains in midday trading.

What the Fed Cut Means For Your Mortgage
Tuesday January 22,  According to CNBC

On days like this, I think it’s important to go back to the ol’ mortgage primer and figure out exactly what all this news means to you, to your mortgage, to your home equity line and to your home’s financial future. I’ve said it before, and I’ll say it again: the 30-year fixed is not tied to short-term treasuries.

Face it, you're getting older, so now is the time to make preparations for health changes and retirement.

By Liz Pulliam Weston

If you're turning the corner into your sixth decade, you've probably heard the jokes about getting older. The ones that start, "you know you're 50 when …":

• You look like the morning after and you haven't been anywhere.

• You throw a party and the neighbors don't call the cops. In fact, they don't even realize you had a party.

All the aches, pains and startling glimpses of that stranger in the mirror drive home the point: You're not going to live forever, and it's time to get serious about your future, financial and otherwise.

The good news, for most 50-somethings, is that they're in their peak earning years. Many (but not all) are done with child-rearing, which leaves more money in the kitty for other goals, like retirement. Most are homeowners, and the recent boom years have added nicely to the typical 50-something's net worth.

Source: Federal Reserve Survey of Consumer Finances, 2004

But dangers abound. Inadequate savings or high debt levels can cripple retirement plans, as can illness, disability or layoffs (see "The hidden threats to your nest egg"). Poor planning, insufficient insurance protection and boomerang kids (adult children who return to live at home) pose additional risks. And by making some crucial decisions now, about timing your retirement or where you might live, you'll be better able to map out your plans.

If you want to get yourself in the best financial shape possible at this milestone, take the following steps:

Reconsider your career

Most baby boomers say they want to work at least part time in retirement. Work can have social, emotional and, especially, economic benefits: The longer you're employed, the less you need to save for retirement.

But what if you hate your job or your industry is downsizing rapidly? (Think airlines, newspapers and U.S. auto manufacturing.) You can wait to get fired, or you can figure out what you'd really like to do when you grow up, and to see if you can get there from here. A session with a career counselor could help; so could that venerable career changer's guide, Richard Nelson Bolles' "What Color is Your Parachute?"

Beware the temptation to pitch it all and go back to school for years on borrowed money, however. You're unlikely to recoup the investment, and you could end up saddled with student loans in your 80s. If you need additional training, night school is usually the better bet. If you're dying to start your own business, do it as a sideline first to see if you can make your idea fly.

Put retirement on the front burner

Sure, you've got other obligations. You may still have kids to raise and educate (two out of five 50-something households include minor children), and your folks may need financial help as well.

But saving for your retirement still needs to be your top priority. You're also close enough to the finish line now -- the median retirement age these days is 62 -- that you should begin to make definite plans about where you'll live, what you'll do and how much money you'll spend. If you don't have a specific age or date in mind, try several different scenarios using MSN Money's Retirement Planner. MSN Money's Retirement Expense Calculator can help you nail down the changes you can expect in your spending.

If you're thinking about retiring before age 65, when Medicare coverage kicks in, consider your health insurance options:

• Does your company offer retiree medical coverage? Many don't, and many of those that do are phasing out coverage.
• Could you be covered under a spouse's workplace plan?
• Would you be eligible for COBRA and/or HIPPAA continuation coverage?

Under the 1986 Consolidated Omnibus Budget Reconciliation Act (COBRA), you can continue your employer's health insurance coverage for up to 18 months after you retire, as long as your employer offers health insurance and employs more than 20 people. You'll pay for the privilege: You must take over the whole premium (the portion you've been paying plus what your employer pays) and an additional 2% administrative charge.

After the 18 months is up, the 1996 Health Insurance Portability and Accountability Act (HIPAA) guarantees your ability to buy private individual coverage without facing exclusions for pre-existing conditions, but again, this could be expensive. Ask your HR department for details.

If you can't get COBRA coverage, you may need to buy an individual policy. These can be pricey, even if you opt for a high deductible, and may not be an option if you're in poor health or have a serious pre-existing condition.

Other factors to consider: Will you sell your home and move, or tap the equity with a reverse mortgage? How will you spend your time and how much will it cost? (Golf and travel can be expensive pastimes.) Do you have long-term care coverage or will you need to set aside money to cover future care? Fidelity Investments estimates the typical couple at age 65 will need about $200,000 to cover long-term care costs.

You also may want to use more detailed planning software, like the kind contained in Microsoft Money or Intuit's Quicken, to help you fine-tune your plan and include variables like inheritances, different retirement ages (if you're part of a couple) and downsizing to a smaller house. Consider scheduling a visit with a fee-only financial planner to get a second opinion. You can get referrals from the National Association of Personal Financial Advisors or the Garrett Planning Network.

Accelerate debt repayment

If you're behind on retirement savings, every extra dollar should go there. If you're in good shape, though, you might want to consider getting your debt, including your mortgage, paid off by the time you retire. That will allow you to live on less (or, conversely, spend more doing fun stuff, like travel).

That credit card debt should be the first to go. Once you've paid off higher-rate, nondeductible debt, you can start adding a few bucks to every mortgage payment.

Get your kids off the dole

If they're out of school and not disabled, they should be economically independent. If they're still relying on you for sustenance, you're putting their financial future at risk as well as your own.

Some of the saddest letters I get are from elderly parents whose adult children are still hitting them up for cash. If you need motivation and ideas, read "Should parents bail out their adult kids?"

Review your life insurance needs

If you've got minor children or other financial dependents, make sure they're adequately covered if you die prematurely.

If the kids are out of college, the mortgage is paid off and your spouse doesn't need your income to survive, you may no longer need insurance. The exception: if you've got a large estate (over $2 million or so) and want coverage to help pay future estate taxes. If that's the case, hire an objective professional, like a fee-only financial planner, to evaluate your options.

Review your other insurance

Your earning power is still one of your greatest assets, and you'll want to protect it with disability insurance if you possibly can. See if your employer offers long-term disability coverage; if not, check out individual policies

Also, make sure you have adequate liability insurance. Raise the liability limits on your homeowners' and auto insurance policies to the maximum, and consider adding a personal liability policy (also called an umbrella policy). As a rule of thumb, you should have liability coverage that's equal to one to two times your net worth.

Long-term care insurance is the final piece of the puzzle. There's no consensus about the best time to buy -- insurance agents will insist you should have gotten it in your 40s, while Consumer Reports says most people should wait until they're 65. You should at least begin learning about the options in your 50s, however, and start investigating companies that offer it. You'll want an insurance company with extremely sound ratings, of course; check Weiss Ratings before signing up. You don't want to shovel tens of thousands of dollars into a company that won't be around when you need it.

Schedule all those checkups

Now that you're 50, you should be having physicals every year (Guys, that means you, too). Women need mammograms every one or two years and should ask about bone-density screening. Men need prostate exams and both sexes need to start screening (if they haven't already) for colorectal cancers, which may include sigmoidoscopy or colonoscopy.

This isn't optional anymore, folks. Your risk for cancer and other serious conditions is rising as you age; you don't want to hear that you waited too long and it's too late for treatment.

Join the AARP

Actually, you probably won't need to pay your first year's dues -- because some wag will probably buy you your premiere membership as a gag gift. Laugh along, then start taking advantage of your AARP discounts on insurance, travel, entertainment, shopping and more.

 Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.

The Lender Appraisal in Real Estate

Many sellers think that the price of their home is determined solely by what they are willing to accept and what the buyer is willing to pay. However, there is one more variable that can affect the sale of a home assuming that a bank loan is involved -- the lender's appraisal.

To protect the interest of their investors, the buyer's mortgage lender hires a licensed appraiser to give an independent, objective opinion of what the property is worth. The appraiser compares the house with similar homes in the neighborhood that have recently sold. Square footage, amenities and the condition of the home are taken into account. Renovations and home improvements made by the seller usually add value to the home, while defects such as needed repairs or code violations decrease the property's value. The seller's real estate agent can provide the appraiser with up-to-date information about neighboring homes that have sold to support the seller's asking price.

Locating A Buyer in Real Estate

Listing your home with a Professional Real Estate Agent gives you the advantage of having a team of experts apply themselves to the task of finding you a buyer as quickly as possible. In the process, the agents try to arrange showing appointments that are convenient to both parties, but it does not always work out that way.

Last-minute appointments are sometimes necessary because buyers who are relocating from other areas are often on tight schedules. This can be annoying to sellers unless they understand the nature of the Real Estate Agent's job. When selling homes, we sometimes have to rely on our intuition. Many sales have been consummated as the result of last-minute appointments.

The prospective buyer who is on a very short house hunting trip may need a house now! In this kind of situation, the Real Estate Agent can make things can happen fast! So when the phone rings at the last-minute, keep in mind that the appointment represents an opportunity for the sale.

Real Estate Terms (the T's)

tenancy by the entirety
A type of joint tenancy of property that provides right of survivorship and is available only to a husband and wife. Contrast with tenancy in common.

tenancy in common
A type of joint tenancy in a property without right of survivorship. Contrast with tenancy by the entirety and with joint tenacy.

tenant-stockholder
The obligee for a cooperative share loan, who is both a stockholder in a cooperative corporation and a tenant of the unit under a proprietary lease or occupancy agreement.

third-party origination
A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market. See mortgage broker.

title
A legal document evidencing a person's right to or ownership of a property.

title company
A company that specializes in examining and insuring titles to real estate.

title insurance
Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.

title search
A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.

total expense ratio
Total obligations as a percentage of gross monthly income. The total expense ratio includes monthly housing expenses plus other monthly debts.

trade equity
Equity that results from a property purchaser giving his or her existing property (or an asset other than real estate) as trade as all or part of the down payment for the property that is being purchased.

transfer of ownership
Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device. In cases in which an inter vivos revocable trust is the borrower, lenders also consider any transfer of a beneficial interest in the trust to be a transfer of ownership.

transfer tax
State or local tax payable when title passes from one owner to another.

Treasury index
An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury's daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market. See adjustable-rate mortgage (ARM).

Truth-in-Lending
A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.

two-step mortgage
An adjustable-rate mortgage (ARM) that has one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.

two- to four-family property
A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.

trustee
A fiduciary who holds or controls property for the benefit of another.

Real Estate Terms (the S's)

sale-leaseback
A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.

second mortgage
A mortgage that has a lien position subordinate to the first mortgage.

secondary mortgage market
The buying and selling of existing mortgages.

secured loan
A loan that is backed by collateral.

security
The property that will be pledged as collateral for a loan.

seller take-back
An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage. See owner financing.

servicer
An organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

servicing
The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.

settlement
See closing.

settlement sheet
See HUD-1 statement.

special deposit account
An account that is established for rehabilitation mortgages to hold the funds needed for the rehabilitation work so they can be disbursed from time to time as particular portions of the work are completed.

standard payment calculation
The method used to determine the monthly payment required to repay the remaining balance of a mortgage in substantially equal installments over the remaining term of the mortgage at the current interest rate.

step-rate mortgage
A mortgage that allows for the interest rate to increase according to a specified schedule (i.e., seven years), resulting in increased payments as well. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan.

subdivision
A housing development that is created by dividing a tract of land into individual lots for sale or lease.

subordinate financing
Any mortgage or other lien that has a priority that is lower than that of the first mortgage.

subsidized second mortgage
An alternative financing option known as the Community Seconds® mortgage for low- and moderate-income households. An investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit corporation. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate). Part of the debt may be forgiven incrementally for each year the buyer remains in the home.

survey
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

sweat equity
Contribution to the construction or rehabilitation of a property in the form of labor or services rather than cash.

Real Estate Terms (the R's)

radon
A radioactive gas found in some homes that in sufficient concentrations can cause health problems.

rate-improvement mortgage
A fixed-rate mortgage that includes a provision that gives the borrower a one-time option to reduce the interest rate (without refinancing) during the early years of the mortgage term.

rate lock
A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time. See lock-in.

real estate agent
A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

Real Estate Settlement Procedures Act (RESPA)
A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

real property
Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

Realtor®
A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors®.

recission
The cancellation or annulment of a transaction or contract by the operation of a law or by mutual consent. Borrowers usually have the option to cancel a refinance transaction within three business days after it has closed.

recorder
The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk."

recording
The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

refinance transaction
The process of paying off one loan with the proceeds from a new loan using the same property as security.

rehabilitation mortgage
A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property.

remaining balance
The amount of principal that has not yet been repaid. See principal balance.

remaining term
The original amortization term minus the number of payments that have been applied.

rent loss insurance
Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.

rent with option to buy
See lease-purchase mortgage loan.

repayment plan
An arrangement made to repay delinquent installments or advances. Lenders' formal repayment plans are called "relief provisions."

replacement reserve fund
A fund set aside for replacement of common property in a condominium, PUD, or cooperative project -- particularly that which has a short life expectancy, such as carpeting, furniture, etc.

revolving liability
A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.

right of first refusal
A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

right of ingress or egress
The right to enter or leave designated premises.

right of survivorship
In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

Rural Housing Service (RHS)
An agency within the Department of Agriculture, which operates principally under the Consolidated Farm and Rural Development Act of 1921 and Title V of the Housing Act of 1949. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. Funds are borrowed from the U.S. Treasury.

Real Estate Terms ( the Q's)

qualifying ratios
Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.

quitclaim deed
A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

Price and Condition in Real Estate

Pricing a house is one of the most important parts of the marketing process. You want to get as much for the property as you can, but if you set the price too high, you can turn away qualified buyers. Your Real Estate Agent can tell you the selling price of homes comparable to yours. Pricing strategy depends on market conditions, and it is different in a buyers' market than it is in a sellers' market.

If your home is overpriced, the marketplace will reflect that to you. When a property fails to sell in a reasonable period of time, you and your Real Estate Agent should have a frank discussion to determine whether too high a price tag is the reason. Your Real Estate Agent will also be getting feedback from other agents who have shown your home.

Remember that price is only one factor. Consider ways you can make the property more attractive to show by handling needed repairs, improving curb appeal or making cosmetic improvements. Improve the condition of your home and you will improve its chances of selling. Likewise, if you don't improve the condition of your home, you will have to lower the price to attract buyers who will make the improvements themselves. 

You are far better off improving the home yourself.

Improving To Sell in Real Estate

Many homeowners wait until they are ready to put their home on the market before painting, planting flowers, and making other improvements to their homes. After completing these improvements, they may be so delighted with the results that they wish they had done the work on their home sooner in order to enjoy the changes.

Whether you have recently purchased a home or have been settled in your home for several years, you should consider evaluating the condition of your house as if you planned to sell it soon. Maximize your home's "curb appeal" now, so that you will reap the benefits every time you pull into your driveway. Plant those flowers and bulbs and you will have your fresh flowers on your own dining room table. Add new window treatments to freshen the appearance of the main rooms. If your house needs an upgraded kitchen, go ahead with the renovation. You will enhance your whole neighborhood and experience the pleasure of living in a more beautiful and fully functional home

Showtime in Real Estate

Does your home have more than its share of dust bunnies? Do you have a "noticeable" kitty litter box and closets whose contents tumble toward your feet when opened? If you are planning to sell your home, please don't be offended by your Real Estate Agent's suggestions about what you should do to prepare your home for the market.

One of the major challenges that sellers face is keeping their home in top showing condition while it is on the market. Many sellers have difficulty incorporating this necessity into their already busy lives. In such situations we strongly recommend that you get professional help.

If you already have a cleaning person, you may want to increase the cleaning frequency. Remember that not all buyers want to use their imagination to visualize a well-kept home. They usually react emotionally to exactly what they see, rather than to the possibilities that your home represents. If your home looks like it will require a lot of work, buyers may elect to keep looking.

For most sellers, the goal is to get the home sold as quickly as possible, and for the best price. Hiring a professional cleaner can pay high dividends and make your home stand out for the right reason!

Comparables in Real Estate

To take much of the guesswork out of your consideration about whether a particular property is a good investment, you can check on the actual selling price of similar homes in the neighborhood.

Some sales information, such as the selling price, the financing terms, and the transaction dates, is public information. Your Real Estate Agent will have record of all recent sales. You can find out how properties have been appreciating, based on actual sales, rather than from the neighbors (they could be wrong!). Driving by comparable homes can give you an idea about how they compare with the property you are considering. Your Real Estate Agent may have seen these homes and can give you additional information to help you make a decision.

Market Value in Real Estate

The first step you take when putting your home on the market is establishing the price. A professional market analysis can help you determine what the property is worth. Contact a Real Estate Agent who is familiar with your area to get prices on the homes that are for sale and to see how long they have been on the market.

Your Real Estate Agent will be able to provide you with information about the actual sale prices of homes that are similar to yours. He or she can also tell you about the features that influence the value of each property, such as the number of rooms, the overall condition, and the extra amenities -- home office, finished basement, luxury bathroom, hardwood flooring.

You can establish a market value for your home by putting all of this information together. If you price your home at the established market value, it should sell within a reasonable time.  If you overprice it, in this market, it may only sit with no active buyers.

The Listing Agent in Real Estate

Only approximately 2% of all listings nationwide are sold by the listing agent themselves.  They and you depend on all the Real Estate Agents in your market to show and help sell your property.                                                                             
                                                                                                                                                               Real Estate Agents who are affiliated with a cooperating broker may sell any of the listings.  Your  Real Estate Agent will try to make your home as easy as possible for other Real Estate Agents to preview or show to buyers.

When you select a Real Estate Agent to market your property, you are hiring them not only for their list of prospective buyers, but for their ability to tap the lists of other people in the business. They should constantly lobby the competition, asking if they have seen their listings, getting feedback and urging them to add their listings to the short lists that they show when they have a prospective buyer.

Such A Deal in Real Estate

Most sellers know that buyers are attracted to homes that are spotlessly clean, well-maintained and tastefully decorated. Sometimes the seller can't make the extra effort to prepare the home for showing. Some real estate listings are being sold to settle estates or by someone who has been transferred unexpectedly and didn't have time to complete the necessary cosmetic repairs. Homes that need work are often exceptional values.

When a Real Estate Agent shows you a house that needs help, try to imagine how it would look with new carpet, a fresh coat of paint and your furniture settled inside. Because the condition and overall appeal of a house have such an impact on the selling price, "fixer-uppers" are often priced lower than comparable homes. If the home is structurally sound and has updated systems, a small investment of "elbow grease" and paint could make it look fabulous.

A Home With a History (Real Estate Tip)

A colorful history can add significantly to the value of a home. Researching the provenance of a property you are interested in buying can be both interesting and ultimately profitable. The market value of a home will be greater if it was designed by a notable architect, built by a company with a reputation for the finest construction, or lived in by a celebrity who hosted famous guests.

Ask your Real Estate Agent if there is any historical data of significance associated with the home, or if previous owners were VIPs. Note the names associated with the deed and title to the home, and look them up with the help of the local historical society. Consult the microfiche in newspaper archives for references to colorful details of the home's past. The county assessor's office may have records of the date the home was built, and building permits may reveal the name of the architect. When inspecting the home, search closets and attics carefully for hidden historical "treasures".

Buying an older home at a bargain price, then re-selling when it is renovated and restored can be an enjoyable and lucrative adventure.

Get Rich Quick with Real Estate

You see them on cable TV, sitting around a swimming pool, sharing stories about how they got rich quick by buying valuable real estate for give-away prices. They took a course on how to invest in real estate and became millionaires overnight--with nothing down and no credit hassles from mortgage lenders. The course worked for them, and they say it will work for you, too.

If all this sounds too good to be true--it is! These "get-rich-quick" courses and schemes are being investigated by consumer fraud agencies around the country. This does not mean that you can't become a millionaire by investing in real estate.

But investing in real estate requires one important thing from you--an investment of cash. You can't build an empire overnight, but you can do very well over the long term by selecting property in a good location that is priced well, and which can provide a reasonable cash flow.

Selling Your Real Estate For Top Dollar

When you get serious about selling your home, the chances of your selling it quickly for top dollar will improve considerably if you list it with a real estate sales professional. If you doubt this, consider the fact that eight out of ten homes sold today--more in some markets--are listed with a professional Real Estate Agent.

Listing your home places it on the local Multiple Listing Service that is subscribed to by a majority of real estate sales professionals. Through the MLS listing, your home is assured of getting the widest possible exposure to the market place.

Some buyers shop the home market on their own, but most save time and money by using the services of a real estate sales professional. Ask yourself which homes the Real Estate Agent is going to show the prospective buyers--homes listed on the MLS or those that are not?

If you still want to try to sell your own home, be aware that you will face stiff competition when it comes to attracting qualified buyers!

Want a step up on the competition - ask your Real Estate Agent to advertise your home on www.askaboutrealestate.net.

Real Estate Open House

If your home has been on the market for a few weeks, your Real Estate Agent may suggest an "open house." Your agent puts up signs, gives you some pointers about how to prepare your home for showing and shows up early on Sunday morning. You may be tempted to stay around, but the best advice is to leave while your home is being shown!

When sellers are present at an open house, they can hamper the sales professional's ability to cultivate interested buyers, and can even squelch a sale. What would your response be, for instance, if someone strolls into your kitchen and says, "What awful wallpaper!" If prospective buyers know that you as the owner are present, they might feel reluctant to express their objections and concerns openly and directly to your agent.

If your objective is to get your home SOLD, the best thing to do is to get out of the way and let the sales professional do the job.

No Smoking in Real Estate

One of the issues that may come up during the sale of a home is pervasive odors, particularly cigarette smoke. If your home is on the market, it may sell more quickly if you temporarily make it a smoke-free zone. Many non-smokers are highly sensitive to the lingering presence of smoke.

The sense of smell is the most powerful of all the five senses. Be sure to keep your home aired out while it is on the market. If the weather is good, you can smoke outside or while taking a walk or a drive. Avoid heavily-scented room fresheners which combined with the smoke can be worse than the smoke alone. It helps to wash the walls and have drapes and upholstered furniture professionally cleaned. This is really a serious issue for many buyers, so don't limit your market by turning away non-smokers.

Kitchen Clutter in your Real Estate Sale

The kitchen is usually very important to prospective buyers. Your kitchen may not be new and state-of-the-art, but it should look its best.

Your kitchen should be spotlessly clean and well organized while your home is on the market. The counter tops should be clean and free of clutter, and the floor should shine. Appliances should be clean and in good working order. You may want to add a few decorator touches or replace cabinets, flooring, and even appliances for a small investment. Dollars spent on kitchen improvements usually pay major dividends when you sell your home. If you are planning to sell your home and need some advice in this area, an agent will be happy to discuss your options with you.

Sunshine Sells Real Estate

When your home is being shown, you want prospective buyers to feel good as soon as they step into the living room. It pays to give special attention to maximizing the amount of light in your home because dark homes are depressing to many people. When prospective buyers give Real Estate Agents feedback on the homes that we show, they often cite a light, airy feeling as a major attraction.

Begin your preparation for showing your home by cleaning the windows and curtains thoroughly. Open the drapes and blinds to let the sunshine in. Even on a bright day it helps to turn on some lights in the main rooms of the house. If you are using shades or heavy drapes to eliminate a less-than-perfect view, you may want to consider replacing them with translucent curtains in a light color.

Sunshine definitely helps to sell homes!

Affordable Real Estate

Are you still writing those checks to your landlord every month to keep a roof over your head, but not accumulating any home equity? If you are still renting because you think you still need a fortune to get into your own home, you should investigate today's real estate market.

Interest rates are still relatively low, which means that mortgage loans are affordable, with payments potentially in the range of your current monthly rent. Qualifying for a loan was never easier, especially since lenders have increased in large numbers and are competing for your business. Even if you couldn't qualify to buy a home just a few years ago, you may be able to qualify today. There are a number of government programs and mortgage packages which require small down payments, in the three to five percent range--and that is not even talking about the tax advantages! Think about it the next time you write a rent check.

Less Than Market Value in Real Estate

Real estate ads are sprinkled with terminology that often puzzles consumers who don't have applied knowledge of housing industry lingo. Internet homebuyers find that information about properties is often presented in abbreviated form or unfamiliar language. Shedding a little light on some basic real estate terms may help you locate a home that is available at a very affordable price.

'MLS' refers to the Multiple Listing Service, which is the national database of listed homes for sale. Some real estate web sites allow homebuyers to preview local listings that appear on the MLS. If you see a real estate ad for a "FSBO", it means that the property is for sale by the owner, who is declining the services of a Realtor. A home listed "As-is" is being sold in its existing condition. A "bargain sale" home is priced at less than its market value, and a "fixer-upper" is priced low because it needs refurbishing.

Your Tax Free Profits in Real Estate

Significant tax reform legislation was signed into law with the Taxpayer Relief Act of 1997. This legislation replaced both the one-time $125,000 tax-free exclusion for homeowners aged 55 and older, and the "rollover" deferment of capital gains tax requiring the purchase of a replacement home of higher or equal cost within two years of the sale of your principal residence.

With this change, a married couple filing their taxes jointly pays capital gains taxes only on that portion of home sales profits that exceeds $500,000. Single taxpayers, heads of households, and married persons filing separately may exclude up to $250,000. The exclusion is available for all sales of homes that occurred on or after May 6, 1997. Homeowners can use this tax-free provision every two years.

You are allowed to keep these tax-free profits only if you have owned and used the home as your principal residence for two out of the five years prior to the sale of the property. Although the regulations do not require continuous occupancy, the IRS specifies that your principal residence must be the home you use for the majority of time during the year. Consult your tax advisor about your personal circumstance.

Your Principal Residence (Real Estate Sell)

The Federal Tax Code allows married taxpayers to exclude from capital gains taxes up to $500,000 in profits from selling a home (singles can exclude $250,000). In order to qualify for this exemption, you must prove that that the home has been your principal residence for at least two out of the last five years. The establishment of the home as a principal residence depends on the facts of each homeowner's circumstance. Here are two cases to consider.

Homeowner A has lived at 25 Pine Drive for 12 years. Although he stays at his vacation cottage in another town for up to three months out of each year (sometimes more), 25 Pine Drive is his principal residence, where he lives most of the time. When he sells the home, Homeowner A (filing as a single individual) can keep up to $250,000 in tax-free profit.

Homeowner B buys 108 Maple Street, intending to live there. He rents it out while waiting to sell his current home, where he has lived for six years. His principal residence sells at the end of two years. Homeowner B moves into his new house, lives there for three months, and then decides to travel. After a six-month trip, he regrets buying 108 Maple Street and sells it. Even though he has owned the house on Maple Street for over two years, it won't qualify as "owner-occupied", because he only lived in it for a few months. Thus Homeowner B is not eligible to claim the tax exemption when he sells the house on Maple Street.

Consult your tax advisor for advice about your particular circumstance.

Tax Rewards for Real Estate Homeowners

The Federal Tax Code has significantly improved the American taxpayer's ability to profit by selling a principal residence. Prior to 1997, homeowners could take advantage of a tax benefit termed the "rollover", which granted exemption from capital gains taxes on the net profit from the sale of a home. Homeowners who used profits to purchase a bigger and better home did not have to pay tax. And homeowners over the age of 55 were given a once-in-a-lifetime exclusion from taxes on profits of up to $125,000 on the sale of their principal residence.

Compare those tax breaks with our current, streamlined and potentially more profitable arrangement that replaced both the rollover and the one-time exemption. If you are a married home-seller filing jointly, you may enjoy up to $500,000 in tax-free home sale profits, provided you have occupied the property as your principal residence during two of the last five years. Taxpayers who file singly get a $250,000 capital gains exclusion. Homeowners are eligible to exclude capital gains on the sale of a principal residence as often as once every two years.

The law allows capital gain exclusions whether you "buy up" to a more expensive home or "buy down" to a less expensive one. The tax-free dollars can be used in any way you want. Consult your tax advisor for detailed advice about your particular circumstance.

Not at ARMs Length in Real Estate

A sale of a house is just a sale, right? Not necessarily. If you are selling your house to your children or transferring title outside the open market, then the transaction may be characterized as "not at arm's length". Since such a transfer may have tax consequences, you should discuss it with a tax attorney or accountant before taking action.

The transfer of title to a son or daughter may cause the parents to lose favorable property tax treatment, require the payment of state gift taxes, or have other unexpected consequences. From a capital gains point of view, it may be more prudent for children to inherit property than to receive it as a gift. The disposition of any real estate should be considered within the entire framework of your tax and estate planning.

For answers to all your real estate questions, consult experienced professionals who are familiar with this area.

Advice From Real Estate Agents

When buying a home, it is essential to cooperate as closely as possible with your Real Estate Agent. This can be challenging, especially if your agent asks you to do some things that you don't particularly want to do to in order to get you moved into your new home as quickly as possible.

When Real Estate Agents advise you regarding ways to make the transaction work, they are acting as part coach and part business consultant. If you find the house you love and want to "sleep on" the decision for a few days, the agent knows that you run the risk of losing the house. If you are inclined to complicate your offer with clauses that might make the contract unattractive to the sellers, the agent may ask you to consider some modifications. Should you call the week before the closing with an attack of "buyer's remorse", your agent knows the cure. Following your Real Estate Agent's suggestions will increase your chances for a successful move!

Less Than The Real Estate Market Value and Other Terms

Real estate ads are sprinkled with terminology that often puzzles consumers who don't have applied knowledge of housing industry lingo. Internet homebuyers find that information about properties is often presented in abbreviated form or unfamiliar language. Shedding a little light on some basic real estate terms may help you locate a home that is available at a very affordable price.

'MLS' refers to the Multiple Listing Service, which is the national database of listed homes for sale. Some real estate web sites allow homebuyers to preview local listings that appear on the MLS. If you see a real estate ad for a "FSBO", it means that the property is for sale by the owner, who is declining the services of a Realtor. A home listed "As-is" is being sold in its existing condition. A "bargain sale" home is priced at less than its market value, and a "fixer-upper" is priced low because it needs refurbishing.

Real Estate House Bargains

Houses that are spotlessly clean and tastefully decorated tend to sell quickly, and for top dollar. There can be substantial savings for home-buyers who are willing to purchase a property that needs cosmetic improvements.

When you look at a house that needs work, try to imagine it with fresh paint, refinished floors and new carpet. Consider the attractive features of the home. Would it get more sunlight if the draperies were opened and the windows cleaned? Does the back yard have potential?

Try to distinguish between the cosmetic condition of the house and the state of its structure and major systems. Some fixer-uppers need a lot of professional attention from electricians, plumbers and other expensive professionals, while others are true bargains that can be transformed with a little elbow grease, a paint brush, and your imagination.

Diamonds in the Rough in Real Estate

There are a lot of "diamonds in the rough" for sale. A property with incredible potential may be in a great location, have large sunny rooms and a big yard, but it may also have dated wall paper, worn carpeting, and uninspired bathrooms. If you can look beyond the surface, you may see a house that could be transformed by a little "elbow grease", paint, and new carpets.

A house that is structurally sound with all the systems in good condition may be only a few cosmetic repairs away from being fantastic! A home that does not show well is usually priced accordingly. If the price doesn't reflect the condition of the house, the seller may be more willing to negotiate than a seller who has made a considerable investment in preparing a home for the market.

Bring your imagination with you on your next house hunting trip! You may be pleasantly surprised to find a diamond in the rough.

The Real Estate Inspection Report

Are you looking for a home and becoming tired of house-hunting? If so, you may be tempted to buy a bargain-priced home "as is" and forego the home inspection. But without the inspection report, do you know what the "as it" refers to? Wouldn't it be better to know what condition the home is in before you buy it?

The inspection contingency allows the buyer to enlist the services of a licensed home inspector within three to seven days after the purchase agreement is signed. The inspector will go over the property from top to bottom, evaluating the condition of all the basic systems and structures of the home in order to identify conditions that may be considered material defects and thus may affect the market value or the safety of the home.

The inspector's report is the only documented proof of the actual condition of the property that is being sold. It is a valuable tool that helps you negotiate the sales contract and gives you information about future maintenance projects. The cost of an inspection is well worth the peace of mind it provides.

Tips for First Time Real Estate Investors

When starting out as a real estate investor, you can choose either the conservative approach of holding a property until it increases in value or the riskier approach of "flipping" - reselling very soon after making some improvements that add value. If you plan on taking the safer approach, keep the following factors in mind when searching for the right investment property.

Look for a house or apartment unit that is close to where you live, so inspecting the property and overseeing maintenance will be easier. Choose an area where there is clear potential for future development, and you will benefit from the inevitable increase in property values. If you have the choice of either buying a newly built or recently remodeled home or a less expensive house in the same neighborhood that needs a cosmetic makeover, buy the bargain property and upgrade it for a better long-term return on your investment.

Patience in Real Estate is Required

Sellers often have to deal with a buyer's anxiety. For example, you may have reached an agreement with your buyers and signed the paperwork for the sale of your home. After all of the documents were signed, however, the buyers began to behave strangely, getting somewhat agitated and making additional demands.

It is important to remember that people experience a high level of stress when they are buying a house. Your buyers may be suffering from "Buyers Remorse"-- that intense feeling that they have paid too much and that the house is going to fall down as soon as they assume ownership. They may start questioning the fine points of the structural integrity of your home or ask you to include your new washer and dryer and power mower in the transaction.

Don't take it personally if your buyers begin going through the "home-buying jitters". Be patient, and allow the Real Estate Agent to do whatever "hand holding" is necessary to get the buyers happily settled in your home.

What Can Go Wrong in a Real Estate Transaction?

Real estate transactions are very complex, and difficulties can arise. One common form of interference can come in the innocent guise of helpful advice from family and friends.

When you buy your first home, you want the best advice you can get. You want to show the house to friends and relatives before you commit. They will probably tell you about all of the things that went wrong during their own transactions so you can avoid the same mistakes. These people all have good intentions, but too much advice can put you into a state of high anxiety.

If you are buying your home with the help of a professional Real Estate Agent, your agent will know how to make sure that any minor upsets do not turn into major problems. A Real Estate Agent's expertise is based on formal training and experience in many real estate transactions. Their reputation is on the line with each sale, so they are highly motivated to make your purchase or sale go as smoothly as possible. When you are dealing with a professional Real Estate Agent, you can worry about what might go wrong if you wish, but you don't have to!

The Blues of Real Estate Buyers

Here is an illustration of what you might go through as a homebuyer when the Real Estate Agent calls to say that your offer has just been accepted.

Although you are ecstatic when your agent congratulates you, your initial euphoria may be short-lived if you begin to have second thoughts about the purchase. You may look at the amount of cash required for the down payment and closing costs, and feel that you won't be able to enjoy a restaurant meal or a shopping spree for months! The mortgage added to the interest payments over thirty years seems like an outrageously high sum. Finally, you stare at the inspector's report and convince yourself that the roof will blow off and every major system will fail the day after you move in. You're in a frenzy. You ask yourself, "What am I doing?"

If you begin having doubts about your home purchase, the wisest approach is simply to relax! These feelings are so common that they have been given a name--"Buyer's Remorse." "Buyer's Remorse" is almost always a temporary malady, so please call your real estate agent if you are having an extreme attack. Your Real Estate Agent  has experience in helping clients through the home-buying jitters.

First Time Loans in Real Estate

Most first-time buyers can qualify for a mortgage loan, but they may need help from parents to make the down payment or closing costs on their home. There are loan programs that minimize the down payment and closing costs for first-time buyers. These programs usually require that 3 to 5 percent of the purchase price come from the buyers' funds, not from a loan or gift. Most lenders ask for the last three months' bank records. The borrower will be asked to reveal the origin of any large deposits. If the money comes from the homebuyer's parents, the lender may not consider those funds when qualifying the buyers.

Parents who are planning to help their children finance a home should transfer any funds several months before the house-hunting process begins. If it is a loan rather than a gift, a formal re-payment agreement should be drawn up between parents and children to eliminate potential misunderstandings or future complications with either estate.

Real Estate: Closing Your House

If you are selling your house, you may have to jump through a few hoops between the time you and the buyer reach an agreement and the time the money and deed change hands. The structural inspector usually finds a few things that need to be repaired or replaced, and the termite inspection may reveal the presence of unwanted pests. Most buyers will also have a list of items that they want the seller to fix.

The ideal is to have your home as perfect condition as possible in time for the walk-through inspection prior to closing. If you have agreed to complete repairs on your home, it is a good idea to get an early start on the work so there will be plenty of time to correct any "surprises" that may be found. Call several companies to get competitive bids for the work that needs to be done or ask your Real Estate Agent for recommendations.

Presenting the buyers with a clean, well-maintained home will make the process a lot easier for them, especially if they get a case of last-minute jitters.

Buyers Remorse in Real Estate

If you are like most buyers who sign a purchase agreement on a new home, you will almost certainly feel a wave of overwhelming anxiety. You may begin to question your judgement -- did I pay too much? Is it the right home? Can I really afford the mortgage payments? How can I get out of it? This response--referred to as "Buyer's Remorse"--is completely normal!

Call your friends who have owned a home for a few years if you experience an attack of buyer's remorse. Are they bothered by rapidly escalating home prices? Probably not, because that means the value of their home is increasing. Did they feel anxious when they first signed the agreement? They may tell you that they felt just as anxious as you are feeling, but now are really glad that they went through with the purchase. Have they made improvements to the property that heightened their enjoyment of the home? They will probably say they much prefer the creative freedom of being a homeowner compared with having to ask the landlord's permission to put in a garden or paint the living room.

When you experience a buyer's panic attack, be strong -- you have a great deal to gain!

For Sale to SOLD in Real Estate

It takes a lot more than a "For Sale" sign in the front yard, a Multiple Listing entry, and an occasional ad in the classifieds to get a listing sold. When Real Estate Agents sell a house, we sometimes have to "sell" it again and again before the contract is actually signed by the buyers and sellers.

Many events must occur before the closing. The house must be "sold" to the buyers' relatives, the home inspector, the appraiser, and other experts. The buyers must secure a mortgage. At some point during the process, the buyers may go through a serious case of "buyers' remorse" and consider backing out of the transaction. Since the transaction could potentially fall through at any step in the process, you will find the services of a professional real estate agent invaluable. Agents continue to present the house in the best light possible and use thier professional skills to solve any problems that may arise.

Real Estate Tip - Overpriced Real Estate and Home

In the real estate world, a large group of people are looking to buy homes at any given time. These are the seller's best prospects. This ready group of buyers is wasted, however, if your house is overpriced.

People who have been shopping around and are accustomed to comparing properties will probably refuse to look at your home with an unrealistic price tag. You and your Real Estate Agent may know that you would sell for $10,000 less, but the buyers do not know this. As a result, your overpriced property receives little attention or in worse cases no attention at all.

Don't be fooled into thinking that your house is worth more than someone is willing to pay for it, or that it's just a matter of waiting for the "right" buyer to show up.

Surveys show that the longer a house is on the market before being sold, the greater the drop in price from the listing price when it does sell. The buying public eventually sets an accurate price.

An overpriced house just sits on the market, waiting for a price adjustment before it will attract a buyer.

With the abundance of homes on the market compared to the number of active buyers, an overpriced home helps sell the homes that are priced correctly. 

Garner the attention of your home for the right reason - "Price your home at the correct price."

First Time Real Estate Buyers

People who are selling their homes should know something about the market group from which their buyers are likely to appear. Many homes are perfect for a first-time buyer. First-time buyers are making a major purchase they have never attempted before, and may be unusually subject to the inevitable stress and anxiety that goes with buying a home.

First-time home buyers are usually younger (between 25 and 34 years of age) and have distinct buying patterns. First-timers are often looking for homes that are smaller, and perhaps older, than repeat buyers. The median home size for first-time buyers is about 1450 square feet. Approximately four in ten first-timers will buy homes built before 1960, compared to two in ten repeat buyers.

First-time buyers are in the process of developing a clearly defined sense of what they want in a house. They may not have enough money to buy their ultimate dream home at first, but seventy-four percent say they like their new home better than their previous residence.

Do Not Panic During a Real Estate Transaction

Many homebuyers have experienced the alternating waves of excitement and regret that can occur when the Real Estate Agent presents your offer to the sellers and they accept it. At first you will probably feel ecstatic--unless you wake up the next morning, covered with a rash and asking yourself, "What on earth have I just done?"

Occasionally agents get a morning-after call from buyers who will do anything to get out of the commitment they just made. If you are purchasing a home and find yourself in this condition, there are two important things to remember. First, your rash accompanies a very common condition called "Buyers' Remorse". Almost everyone who buys a house experiences this feeling, with varying degrees of intensity, sometime between making the inital offer and finalizing the sale.

Second, you should know that the anguish of buyer's remorse is almost always temporary. If you experience a sudden panic attack over your home purchase, call your Real Estate Agent immediately. Postpone making any radical decision about backing out of the contract until you have considered things carefully and rationally with your agent.

Dream Versus Reality in Real Estate

When you decide to buy a home, you may feel resistance to fulfilling the many practical requirements that are necessary to turn your dream into a reality. An important part of a professional Real Estate Agent's job is to help you overcome such resistance.

You will need to handle a multitude of details when purchasing a property. There are numerous deadlines that require a timely response. Home purchases come with a lot of paperwork, such as the financial statement and purchase agreement. Negotiations with the seller are a standard part of the process. All of these practical "realities" can seem overwhelming.

You may experience a startling range of emotions at each step of the way, from mild anxiety to full-blown "buyer's remorse". It helps to remember that everyone who has purchased a home has probably experienced similar feelings. Just take a deep breath and trust your Real Estate Agent, who is trained to help you deal with the pressures of the home-buying process.

The Real Estate Blues of Buyers

Here is an illustration of what you might go through as a homebuyer when the Real Estate Agent calls to say that your offer has just been accepted.

Although you are ecstatic when your agent congratulates you, your initial euphoria may be short-lived if you begin to have second thoughts about the purchase. You may look at the amount of cash required for the down payment and closing costs, and feel that you won't be able to enjoy a restaurant meal or a shopping spree for months! The mortgage added to the interest payments over thirty years seems like an outrageously high sum. Finally, you stare at the inspector's report and convince yourself that the roof will blow off and every major system will fail the day after you move in. You're in a frenzy. You ask yourself, "What am I doing?"

If you begin having doubts about your home purchase, the wisest approach is simply to relax! These feelings are so common that they have been given a name--"Buyer's Remorse." "Buyer's Remorse" is almost always a temporary malady, so please call your Real Estate Agent if you are having an extreme attack. Your agent has experience in helping clients through the home-buying jitters.

Best Interests of the Buyer in a Real Estate Transaction

Who represents the homebuyer in the transaction? The most common scenario is for homebuyers to purchase a home with the help of the seller's listing agent. In this case, known as "dual agent representation," the Real Estate Agent assists both the sellers and the buyers. However, it is also possible for the buyers to ask another realtor to represent their interests exclusively, acting as the "buyer's agent," a service which is available at no additional cost to the homebuyer.

Any licensed Real Estate Agent can act as your buyer's agent, helping you to locate and look at properties in your price range. However, if that Real Estate Agent works for the same brokerage that is listing a particular property, dual agency or designated agent rules will then apply. The buyer's agent will advise the buyer if issues arise such as termite damage or significant material defects appearing on the home inspection report. If the home appraisal comes in at less than the asking price, the agent will represent the buyer's interest, working with the seller and the lender to negotiate a satisfactory resolution.

Buyer Agency in a Real Estate Transaction

In the history of the real estate industry, there has been a single approach to working with a Real Estate Agent. If you wanted to purchase a home, an agent showed you properties on behalf of the sellers of those homes. As a buyer, you were not represented by anyone other than yourself. Negotiation over price and terms were entirely your responsibility.

Now there is another way to handle buying property. With buyer agency, your real estate sales associate acts on your behalf in all negotiations. That Real Estate Agent is committed to being your advocate in finding and purchasing your next home, and at no cost to you.

In many cities across the United States, buyer agency is used in the majority of home purchases. With buyer agency, all fiduciary duties are owed to the buyer, not to the seller. The buyer has the freedom to discuss personal finances, negotiating strategies and the value of properties with their buyer agent. The buyer can ask for the opinion of the buyer agent regarding the condition of the property, the effect of improvements, the seller's motivation for selling and a variety of other information thar the seller's agent cannot provide.

Building With Help From Your Real Estate Broker

Did you know that, for no additional cost, you can be represented by a real estate broker in conjunction with purchasing a home from a builder?

Homebuilders are accustomed to working with real estate brokers and often their commission is already covered in their marketing and promotion costs. A broker can provide objectivity and guidance in designing your home and help you select amenities that will lead to a more advantageous resale. He or she can help coordinate the sale of your present home and the closing of the new one. Many brokers offer guaranteed home sale programs so that when your new home is finished, the real estate company will buy your previous home at a pre-agreed price to prevent you from owning two homes at one time; and can usually arrange the occupancy agreeable to all parties. Take advantage of using your real estate broker in conjunction with building your new home at no additional cost.

Listing and Selling Price in Real Estate

When calculating what you can afford in a house, don't just look at the list price. The amount you pay for a house is important when you consider your ability to re-sell the house. Today's mortgage options are increasing the possibilities for home buyers, so you should also take a close look at what it will cost you to live in the house.

Your monthly housing cost is the second figure to consider, and that cost is largely determined by current interest rates. Today's real estate market is very price-driven. Homes which are in the best condition and have the most attractive price tags are the ones that sell.

Diverse financing options and competition among lenders are giving many buyers the opportunity to buy a more expensive house or condo than they thought they could afford--and sooner. There are many creative ways to get into a home with a relatively small amount of money, but make sure those you are there for the long haul and not a short stay. 

Ask your Real Estate Agent to help you look at today's numbers--you may be pleasantly surprised.  There are many opportunities in the current real estate market.  Know your facts and make an informed decision.

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Real Estate Tip - Sellers Beware

Here is a scenario for sellers to avoid. You contact a Real Estate Agent to list your home and the agent suggests that you might get more for your house than comparable homes on the market. The agent assures you that it only takes finding one person who is willing to pay your price!

Some agents approach a listing appointment as if they are bidding for your home. The unfortunate result is that you start out with an unrealistic opinion of your home's value. There is often a strong temptation to work with a person who says what you want to hear. An experienced, reputable Real Estate Agent will back up their opinion of your home's value with hard data. The agent should give you information about the listing price of homes that are currently on the market, and recent selling prices of similar properties in your immediate area.

Even the most heroic marketing efforts won't work on a property that is obviously overpriced, (except in the most exaggerated of seller's markets.) Even if you find a buyer who is willing to pay more than your home is worth, the sale could fall apart when the appraisal comes in lower than the agreed-upon price.

Listen to everything, but be careful!  Look for the truth that can be proven.  Over-priced homes hurt one group of people the most - sellers. 

Selling Tools in Real Estate

After a month of trying to sell your home "By Owner" you may decide to list it with a Real Estate Agent. If you are in this position, you may begin to notice that your agent doesn't market the home the same way you did. You ran classified ads every weekend, but your agent has only advertised twice all month. Even so, there is a lot more interest and activity than you were able to generate on your own.

When your home is being marketed professionally, your Real Estate Agent has many powerful selling tools that make it worth hiring someone who is experienced and competent. Some advantages to hiring an agent are the national and worldwide referral networks, the Multiple Listing Service, and the Internet. Real Estate Agents advertise extensively in almost every media available including TV, which may bring in a call from the people who will buy your home. Real Estate Agents work cooperatively with other brokers and share information about listings. Communication is the key to a real estate property success. Agents use all of these tools to market their listings aggressively to get sales action!

Ask your Professional Real Estate Agent  to add one more great advertising tool - advertise your property on www.askaboutrealestate.net.

Hard Sale in Real Estate

Many real estate listings come from individuals who thought they had sold their homes. Sellers who try to sell their own home learn the hard way that selling a home is not easy. Keeping it sold and getting to the closing table is even more difficult. What are the pitfalls involved in selling your own home?

Face-to-face negotiations can be difficult, even when the buyer really wants the house. Then there is the paperwork. Standard contract forms rarely cover all of the local requirements regarding disclosure laws. Such contracts may provide loopholes which could allow a buyer with cold feet to back out at the last minute.

When you have finally come to an agreement, how can you be sure that your buyers will engage competent professionals to handle their loan and complete the closing? What if structural problems are discovered or property boundary problems are revealed? The experience and expertise of a professional Real Estate Agent is your greatest asset in concluding a successful transaction.

Full Disclosure in Real Estate

If you are about to list a home that you have lived there for many years, you know that it is not perfect. For example, there might be a leak in the basement that is noticeable only after a heavy rain. Your garage door might stick, and the dishwasher may be prone to work stoppages.

Every home has a few quirks. When it is time to sell your home, you have a choice of either making the necessary repairs or letting the buyers know about the problems. Material defects must be fully disclosed. Some buyers will order a structural inspection in order to learn exactly what they will be getting. Even if the buyers don't ask for an expert to look at the house, it is the seller's responsibility to disclose any known defects in the property. The seller's agent will provide the disclosure form, wherein the seller may itemize any problems. Sellers may avoid any real estate lawsuits over undisclosed defects by making repairs before the sale or agreeing to a price adjustment during the transaction if defects are discovered.

The best rule of thumb is to disclose what you know and place everything right out in the open so there are no surprises after the close.  No one want an uncomfortable telephone call after the close, so do your homework so that does not happen - "disclose, disclose, disclose."

Real Estate Tip - Child Proof Before Showing

As you prepare your home for the market, keep in mind that some of the people who will look at your home may bring along small children. Families with children may be looking for a larger home with more bedrooms and a bigger yard.

Prospective buyers will be accompanied by a Real Estate Agent while touring your home, but that doesn't guarantee that the children will be supervised the entire time they are in your home. Every Real Estate Agent has a story of a little person grabbing a Steuben apple from a low shelf, or of a toddler running full speed to the edge of a high deck.

Preparing your home to show involves common sense, such as removing sharp or breakable objects from low shelves and making sure that electric appliances don't have dangling cords that little hands can reach. If there is a possibility of falling from a porch or deck, place a visible note advising parents to supervise small children. Some sellers keep a few toys around to entertain young house hunters while their parents are looking at the home.

A Full Service Real Estate Professional

Home sellers may be lured by the promises of agents that offer to list and sell your home for a discount commission. But consider the advantages of using a full service broker who will represent your best interests in the transaction without cutting corners.

A full service Real Estate Broker will be informed about the current trends in your local market. He or she will share valuable information about the selling price of comparable properties, to help you determine a realistic price for your home. If your home needs repair prior to listing, a reputable local contractor will be recommended. Buyers will be pre-qualified and personally escorted through your home. After showing your house, your broker will give you feedback from buyers and agents, negotiate the price and terms of the purchase contract when an offer comes in, schedule the home inspection and coordinate the closing.

You may not receive adequate professional or personal attention if the agent feels they owe you less because you are paying them less. It is to your advantage to engage the full services of a Real Estate Broker who will give 100 percent to guide you through the complex process of selling your home.

You get what you pay for, go with  "A Full Service Real Estate Professional."

Real Estate Agent Representation

Which party in a real estate transaction is represented by the Real Estate Agent--the buyer or the seller? Until recently that question was never asked because the answer was always the same. Traditionally all the marketing professionals involved in real estate transactions were legally and ethically obligated to conduct business on behalf of the seller. They may have aided the buyer in certain situations, but their client was the seller. Today that is not necessarily the case.

In a time of increasing specialization, buyers can be represented by a Real Estate Agent who functions solely as a buyer's broker. In this case, the sales professional helps the buyer locate a home, negotiate the price, and is responsible to the buyer only, for an agreed-upon fee or a percentage commission.

In any real estate transaction you have the right to know which party the Real Estate Agent is representing.  Ask and make sure you are represented.

Buying Real Estate from Out Of State

People who are moving to another state are usually concerned about how they will be able to monitor the purchase or sale of a home across state lines. Your local Real Estate Agent can assist you in the process of buying or selling property out-of-state.

The National Association of Realtors is a nation-wide network of real estate sales professionals, similar to the local Association of Realtors. Almost every real estate professional is who is a member of the local association is also a member of the national organization. This professional affiliation among real estate agents all across the country works to your advantage when you buy or sell out-of-state property.

Your local Real Estate Agent can contact an agency in the area where you want to buy or sell. When the relationship with the out-of-state real estate agent is established, your agent can coordinate arrangements by selecting houses for your consideration and helping you to strike a deal when you have made a selection. Having a local sales professional to help you work out any problems that may arise is a real plus.

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Real Estate Terms (the P's)

partial payment
A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan.

payment change date
The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment adjustable-rate mortgage (GPARM). Generally, the payment change date occurs in the month immediately after the adjustment date.

periodic payment cap
For an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease during any one adjustment period. See cap.

periodic rate cap
For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be. See cap.

personal property
Any property that is not real property.

PITI
See principal, interest, taxes, and insurance (PITI).

PITI reserves
A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.

planned unit development
See PUD.

point
A one-time charge by the lender for originating a loan. A point is 1 percent of the amount of the mortgage.

power of attorney
A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

prearranged refinancing agreement
A formal or informal arrangement between a lender and a borrower wherein the lender agrees to offer special terms (such as a reduction in the costs) for a future refinancing of a mortgage being originated as an inducement for the borrower to enter into the original mortgage transaction.

preforeclosure sale
A procedure in which the investor allows a mortgagor to avoid foreclosure by selling the property for less than the amount that is owed to the investor.

prepayment
Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.

prepayment penalty
A fee that may be charged to a borrower who pays off a loan before it is due.

pre-qualification
The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.

prime rate
The interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.

principal
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.

principal balance
The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. See remaining balance.

principal, interest, taxes, and insurance (PITI)
The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance.

private mortgage insurance (MI)
Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.

promissory note
A written promise to repay a specified amount over a specified period of time.

public auction
A meeting in an announced public location to sell property to repay a mortgage that is in default.

PUD - Planned Unit Development
A project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.

purchase and sale agreement
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

purchase money transaction
The acquisition of property through the payment of money or its equivalent.

Real Estate Terms (the O's)

original principal balance
The total amount of principal owed on a mortgage before any payments are made.

origination fee
A fee paid to a lender for processing a loan application. The origination fee is stated in the form of points. One point is 1 percent of the mortgage amount.

owner financing
A property purchase transaction in which the property seller provides all or part of the financing.

Get Rich Quick with Real Estate

You see them on cable TV, sitting around a swimming pool, sharing stories about how they got rich quick by buying valuable real estate for give-away prices. They took a course on how to invest in real estate and became millionaires overnight--with nothing down and no credit hassles from mortgage lenders. The course worked for them, and they say it will work for you, too.

If all this sounds too good to be true--it is! These "get-rich-quick" courses and schemes are being investigated by consumer fraud agencies around the country. This does not mean that you can't become a millionaire by investing in real estate. But investing in real estate requires one important thing from you--an investment of cash.

You can't build an empire overnight, but you can do very well over the long term by selecting property in a good location that is priced well, and which can provide a reasonable cash flow.

Strategic Pricing in Real Estate

When you decide to sell your home, your next decision is key to the sale--"How much should I ask?" If you ask too little for your home, you could potentially lose money. Asking too much for your home could cause it to sit on the market for a long time.

Your Real Estate Agent wants to sell your home as soon as possible, for the best price. The agent will use a Competitive Market Analysis to determine the price for your home. The sales professional may advise you to reduce the asking price if buyers fail to surface after a certain period of time on the market.

If you are serious about selling your home, you should take your Real Estate Agent's advice. In case the first price reduction doesn't generate a buyer, another reduction may be necessary. The monetary value of a house is only what someone is willing to pay for it, but if the market analysis is done correctly, you will get the maximum amount--and a timely sale.

Different Real Estate Markets

If you are going to sell your present home, the market conditions will play a crucial role in determining the asking price. Market conditions change constantly, so it is important that you get solid advice from a real estate professional who is familiar with your specific area.

A good Real Estate Agent will know how quickly houses in your area are selling, and will be aware of other factors that may influence the sale. For example, nearby commercial development, which may create congestion and noise, may also mean a greater demand for housing from people who will be working in the new office buildings. A bus route that cuts commuting time could make your home more valuable, while major highways close by can be an issue for many buyers. The economic conditions have a strong impact on the real estate market. Real estate professionals can help you consider all of the issues and assist you in setting a fair price for your home.

Competitive Pricing in Real Estate

You have seen it all over the years--interest rates rise and fall, sales prices escalate and decline. No matter what phase the market is in, it is always important to price your home in your area competitively. How can you price your home with confidence?

The first step is to contact a professional Real Estate Agent for a comparative market analysis. The agent will look at recent sales of comparable homes in your area and give you information about other properties that are currently on the market. By comparing the size, location and condition of your home to the competition, your agent can help you determine how much to ask for your home. Even in an active market, an inflated price may frighten prospective buyers away. A house that is over-priced can take additional months or more to sell, and the final sale price may even be lower than if the sellers had started out more realistically.

The price is based on market conditions, comparable sales, and your agents years of experience in the marketplace.

Your Real Estate Investment

While it is impossible to predict what a particular house will be worth at any point in the future, single family homes have a track record of being excellent investments. If you want to take the plunge, what should you look for in an investment property?

Location is the prime factor. A great location will make a property easier to rent or sell later on for top dollar. You should also consider the cash flow situation. It is often difficult to break even or show a profit from your rental income for the first few years of owning a property. Assuming the property will appreciate as you own it, you should consider the potential amount of equity you will build up each year. If you are planning to become a landlord, it is a good idea to consult a Real Estate Agent and an accountant to help make sure that your decision to purchase investment real estate is an informed one.

Investment Real Estate

Individuals who invest in real estate are seeing many opportunities right now. The potential for income, appreciation and possible tax savings makes investment property especially attractive.

It is important for you to get professional advice before you decide to buy investment property. You may want to start with a personal financial advisor who can help you set your investment goals. Your Real Estate Agent can help you select a competitively-priced property that meets these goals, and can answer questions about why a particular property would be a solid investment.

• What features would make it easy to rent?                                                                      
• What kind of maintenance expenses are you likely to incur?                                         
• What will your cash flow be, and how will the tax savings affect your bottom line?

While agents cannot predict how much a particular property will appreciate, they can give you the history of price trends in the market area.

The Right Time to Buy Real Estate

Are you waiting for "just the right time" to get into the real estate market? The signs indicate that there is no time like the present. Interest rates are still comparatively low and buyers are shopping for new and second homes in great numbers.

Vacation homes are very popular for investment purposes and personal enjoyment. You can use your vacation home as a getaway property now, and by the time you retire you will have paid a significant amount on the loan. If you live in a vacation home for 14 days a year or less, you can take depreciation on it.

Another important benefit is that tax deductions in the form of interest and property taxes help to offset the cost of paying for a second home. If the debt does not exceed $1 million, mortgage interest payments on principal residences and second or vacation homes are fully deductible for tax purposes.

Don't waste valuable time while interest rates creep upwards -- all you need is the right Real Estate Agent to guide you!

The Key to Good Tenant Relations in Real Estate

It is important to attract and keep great tenants when you own investment property. A good way to begin a positive tenant/landlord relationship is with clear communication about what you expect from your tenants and what they can expect from you.

The written lease agreement spells out the legal obligations of each party. The landlord must ensure that the property is habitable and complies with local codes, and the tenant must pay the rent in a timely manner and not damage the property. Make sure that the terms of the agreement are stated clearly in straightforward language.

Let the tenants know of your commitment to keep the property in good repair and of your desire to know about maintenance problems before they become serious. When it's time for the tenants to move, offer to provide a reference letter if they need one. This is a nice way to say "thank you" to them for having maintained the property during the terms of their lease.

Good communication can help you to maintain the quality of your investment.

Selling Real Estate Rental Properties

Marketing a rental property presents some special challenges. Owners will probably want to offer the house for sale while tenants are still living there so that the property continues to bring in income. However, most Real Estate Agents prefer that their listings either be occupied by the owner or empty. Tenant-occupied homes are often the most difficult to sell since the tenants may not share the same pride of ownership. They may not be eager for the property to sell, and as a result, the house is not shown to its best advantage.

When you put a tenant-occupied house on the market, it is important that you enlist the tenants in the effort to get your house sold. Talk to the tenants first to see if they have a desire and ability to buy the house. If they are not interested in buying, work out with them the ground rules for access to the house. In most cases, the new owners will want the tenants to move, and it will be important to work out alternate living arrangements with them. In each situation, work hard to create a spirit of cooperation with the tenants.