Snag a great deal on a short sale

Short sales - where a lender agrees to take less than it's owed on a mortgage - are rising sharply. Here's how you can profit.

(Money Magazine) -- When Brian Gavitt, a physician, and his wife Gayleen, a stay-at-home mom, started to eye homes in Sacramento last winter, they knew they were looking in the hardest-hit areas of the housing bust. So the couple, who were relocating from Lansing, figured they could land a fantastic bargain in no time at all.

The part about the bargain turned out to be true. The Gavitts bought a five-bedroom house in the upscale Natomas Park neighborhood ("Even now, you don't see FOR SALE signs up anywhere," says Gayleen.) And it was a steal at $300,000, a full $200,000 less than they would have paid just two years ago.

The amount of time it took to land the deal was another story. It was more than six months from when the Gavitts first saw their dream home to the moment they held the keys in their hands. The reason: The home they bought was a short sale.

Not along ago, few people had even heard of a short sale, which occurs when the bank agrees to discount the loan balance for a seller who owes more on his mortgage than the home is currently worth.

If you're in the market for a home today, you're almost guaranteed to be looking at some short sales. Nationwide, 14% of homeowners are currently underwater on their mortgages, calculates real estate website Zillow.com. And in many areas, it's far more: In the Gavitts' zip code, for example, over half of homeowners would owe more than their home is worth if they sold today, calculates Dee Schwindt, the Gavitts' realtor.

The good news is that short sellers are likely to still be living in the home and some may even be current on their payments. That means these aren't the run-down, distressed properties that you often find among foreclosures; in fact, there's a good chance that some of the most deluxe homes for sale in your market are underwater.

Before you get too excited about buying a short sale, know that they generally aren't, well, short. For the sale to go through, the seller's lender must approve the price and agree to take the shortfall as a loss. That extra step can cause the process to drag on three times as long as a normal home sale.

But as the Gavitts discovered, the hassles can be well worth it. Some buyers and realtors don't want to deal with short sales, leaving many choice homes with very few bidders. So if you're willing to brave the intricacies of the process, you'll be far more likely to land the home you always wanted. The key to snagging a good deal is knowing how to avoid the land mines.

Know what you're getting into. In a short sale, you are dealing with several parties: the sellers, their agent and the sellers' lender. That's why a short sale can take anywhere between two and six months to execute, compared with about 30 days for a typical sale. Though many banks are willing to take a loss on a mortgage in a short sale if it means avoiding an even bigger loss in a foreclosure, with so many owners trying to unload properties, the lender's negotiators are flooded with short-sale offers. So if you're moving or selling another property, keep in mind that you'll likely need to budget for a few months' worth of rental payments so you have somewhere to live in the interim.

Find the right pro. Lenders often make realtors who work on short sales take a hit on their commission, so some brokers may be loath to show you the listings. But don't even think about going solo. These deals take a lot of work and persistence, says Loni Parmelly, author of Success in Short Sales. Before you sign up with an agent, ask him how many short sales he's closed. If he hasn't done at least two, find someone more experienced.

Weed out candidates. In most cities, home listings will indicate in the description whether the property is a short sale. Ideally, you want to knock off ones that come with extra complexities. If possible, pass on any home that has more than one lien against it; having to negotiate loans with two lenders can greatly increase the amount of time it takes to complete the deal. Also avoid homes where the seller has other offers. That's because if another offer is pending, the seller's agent isn't likely to even submit yours for approval until the first one is rejected, meaning you'll have to wait for another negotiation to play out before you even get a chance.

Set the right price. The first step is to have your agent submit your offer to the seller. Don't just rely on the current list price to come up with your initial bid, says Bill Richardson, a district sales manager for the Keyes Co. Realtors in Boca Raton, Fla. The seller's agent may have far underpriced it in hopes of attracting buyers, but the bank likely won't accept a lowball offer. Ask your agent to determine the home's fair market value by searching comparable sales in the area, with an emphasis on other short sales and foreclosures (or get a rough estimate yourself at zillow.com). If the fair market value is lower than the list price, set your offer 10% lower than that.

At this point, you'll also want to get pre-approval for a mortgage; many banks won't even consider your offer if you don't have one, says Schwindt.

Protect yourself. Next, the seller's agent will submit your offer to the seller's lender. At this point, you'll be asked to sign a sales contract. See if the lender will agree to pick up all closing costs as part of the contract, says author Parmelly. Also ask your realtor to specify that you won't do an appraisal or inspection of the property until the offer is approved. That way you won't have to shell out hundreds of dollars until you know you realistically have a good chance of getting the home.

Finally, though most lenders will require you to make some kind of deposit along with the contract, don't put down more than $3,000 before your bid is accepted. That will give you room to put offers on other homes or even to pull out of the sale if it drags on for too long.

Be a pain in the neck. After your offer is submitted to the lender, you're likely to hear nothing for weeks, if not months. This is no time to relax. Call your agent at least once a week, and make sure the seller's agent is contacting the bank's negotiator nearly every day.

"These negotiators may have 400 files on their desk. They'll want to get rid of the squeaky wheels," says Parmelly, who worked as a loan negotiator for lenders for 16 years. To help the seller's realtor in her negotiations with the lender, it's a good idea to have your agent show her which comparable homes you used to arrive at your number.

If the clock keeps ticking and you're reaching the end of your rope, try playing hardball. After months, the lender the Gavitts negotiated with was still dragging its feet and their pre-approved loan rate was about to expire. "We said, 'We need an answer by Friday or we walk,' " Gayleen says. The bank responded by week's end.

Keep your eye on the market. When the bank finally sends its counter-offer, use it as a guideline rather than an ultimatum. Most of the time, the lender's number is based on its own research, that of a local realtor it hires and the outstanding loan balance. Usually its goal is to sell for at least 90% of the home's value, says Amy Bohutinsky, a spokes-person for Zillow.com.

The lender's offer may not be what you'd hoped for, but don't despair: You have a chance to counter. If the market has been flat since your initial bid, try for 5% to 10% less than the bank's number. If the market has been sinking rapidly, however, you may be able to prove that the home's value has shrunk further and offer even less. Once you have the lender's ear, the new offer should take less time to process.

Despite all the legwork and wait, the Gavitts are thrilled with their new home. "I'm glad people are turned off by short sales," says Brian. "It just means more choices for the rest of us."

By Joe Light, Money Magazine staff reporter

Last Updated: March 16, 2009: 7:15 AM ET

Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.

How to nab a low-rate home loan

Getting a new loan can save you a bundle, but cautious lenders will make you jump through hoops. These strategies can help.

(Money Magazine) -- On paper it seems like the perfect time to refinance. The average rate on a 30-year fixed mortgage recently hit a 20-year low when it fell below 5% in mid-March. And the Fed has said that it will spend $300 billion to buy back government-backed Treasury bonds; that will probably keep loan rates low for months to come.

But wade into the mortgage market, and you may quickly feel as if you're trying to grab a dollar in a game-show booth where the money is blowing around: Those ultralow rates are right in front of you, yet maddeningly elusive.

Lenders, grappling with deadbeat homeowners and shifting regulations, have pared back on mortgage products and upped credit requirements. Still, you have a good incentive to try: If you took out a mortgage two years ago, when rates were in the mid-sixes, you stand to drop your rate nearly two percentage points, saving almost $300 a month on a $300,000 loan. Here's how to navigate the roadblocks.

Figure out if you qualify. Nowadays, credit score and equity are king. To land the best rates, you'll probably need a credit score of at least 740, and 20% equity. "Banks are looking for reasons not to lend you money," says Mark Miskiel of Lighthouse Mortgage in Sedona, Ariz.

If you don't have 20% equity, a refi isn't out of the question - President Obama's housing package allows homeowners who owe as much as 105% to receive government-backed loans. To qualify for that program, however, your original mortgage must be held by one of the government-sponsored entities, Freddie Mac or Fannie Mae; you must prove that you can keep up with payments; and you'll get stuck with fees that tack 0.25% to 3% onto your rate.

Get rid of the HELOC. Home-equity loans and lines have become the enemy of would-be refinancers. Before you can close on a new loan, your home-equity lender must agree to "subordinate" the secondary loan (meaning that your primary lender will get repaid first in the event you run into financial trouble). That can take at least a month, says Bob Moulton of the Americana Mortgage Group in Manhasset, N.Y.

One way to speed up the process is to do a consolidation refi through your home-equity lender. If that's not possible, aim to submit the subordination paperwork as you start shopping for a primary mortgage. And know that other lenders may add up to 0.25% to your rate to cash out the secondary loan.

Know where to look. No matter how stellar your credit, you won't get a great rate without doing some serious shopping. That's because every bank is using different standards for underwriting loans, so while you may look like a risky borrower to one, another may welcome you with open arms. In general, says Keith Gumbinger of mortgage data firm HSH Associates, you're likely to get the best rates from small local banks and credit unions.

Unfortunately, if you need a jumbo loan (typically $417,000, but it can go up to $729,750 in high-cost areas), you can kiss those super-low rates goodbye. While jumbos normally run about half a percentage point higher than smaller ones, today the spread is a point and a half.

Pay a point upfront. A point, which equals 1% of your mortgage amount, typically buys you an eighth to a quarter of a percentage point drop in your rate. Today some overloaded lenders are knocking half a percentage point off for those who pay a point, hoping this extra initial cost will deter serial refinancers.

If you're planning to stay put for about five years, it may be worth it. Conversely, consider adding an eighth of a percentage point to your rate to lock it in for 45 days. Banks and lenders are putting a lot more effort into vetting applications, so it can take up to two months to close a loan, vs. about 30 days in the past; you don't want to risk rates' moving against you while you wait. The payoff for patience: a loan you can live with, for a very long time.

Not so long ago, having a pulse qualified you to take out a mortgage. These days lenders are vetting applicants with the ardor of a Senate committee grilling an AIG executive. Here's a summary of what's changed.

Carla Fried, Money Magazine

April 17, 2009: 11:52 AM ET

http://money.cnn.com/2009/04/17/real_estate/low_rate_loan.moneymag/index.htm?postversion=2009041711

Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.

Home Improvements Weak, But Future Holds Opportunity

A growing number of home builders are diversifying into remodeling hoping to find jobs to tide their businesses over until the home buying market returns, but remodeling over the short term continues to display weakness of its own as home owners pull back from major improvements to their property.

Economists at last month’s International Builders’ Show in Orlando noted that consumers have lost significant amounts of both confidence and wealth and are not in a spending mood. Even for most remodelers, who haven’t taken as much of a drubbing as home builders, the goal will be to survive another difficult year as they prepare for opportunities that will emerge on the other side of the recession.

The Leading Indicator of Remodeling Activity from the Joint Center for Housing Studies of Harvard University projects that home owner improvement spending will be declining at an annual rate of 12.1% by this year’s third quarter, moving to $109.5 billion. Home owner spending on improvements peaked at an annual rate of $141.9 billion in the second quarter of 2006.

The market has seen steady declines since the middle of 2007, although recently the rate of decline has flattened, the Harvard index shows. “While we may be nearing the bottom of the remodeling cycle, there is little to push spending back into a growth phase until the economy recovers,” said Kermit Baker, director of the Joint Center’s Remodeling Futures Program.

Expenditures on owner-occupied units were responsible for 84% of the remodeling market’s $326 billion in activity in 2007. Improvements — as opposed to more routine maintenance and repair — accounted for 70% of the total.

“Despite the gloom today, remodeling is still viable,” said William Apgar, senior scholar at the Harvard Joint Center, even in the absence of conditions favorable for upper-end discretionary jobs. Expenditures in that category grew 23% in 2005 and 7% in 2007, compared to 13% and 6%, respectively, for total remodeling activity.

While the current remodeling downturn is more severe than in previous cycles, the industry is performing notably better than home building. As of the third quarter of last year, home improvements were down an estimated 15.5% compared to a far steeper 52.6% slump for single-family construction.

A new Joint Center study, “The Remodeling Market in Transition,” notes that exterior replacements, system upgrades and disaster repairs — which vary little from year to year — are creating a floor for spending in the home improvement market.

“While upper-end discretionary projects are responsible for most of the volatility in home owner spending, even at their inflated 2007 share, these projects accounted for 30% or less of total expenditures,” the study says. “As a result, even if some discretionary projects were deferred and others were downsized, the impact on overall remodeling expenditures would be much more modest than the decline to date on the construction side.”

Apgar cited the decline in home equity, a major funding source for projects, as a significant factor behind the remodeling slowdown. From its recent $12.5 trillion peak in the final quarter of 2005, owner equity in household real estate has declined by roughly $4 trillion, or almost 32%. Even so, this “will stabilize,” he said. Home owners “still have equity of $8.5 trillion, a lot of wealth,” he said. “But people want to see where the end is before they commit.”

Another drawback for remodeling is the current slowdown in home sales; existing home sales were off nearly 30% in the third quarter of 2008 from their recent peak. “New buyers engage in a lot of remodeling activity,” Apgar said. “The patterns of recent buyers are different from longer-term owners.”

According to the Joint Center, households that relocate spend an average 20% to 25% more on improvements than otherwise similar households that do not move.

Apgar also observed that “there has been a definite decline in the past four to five years in the likely recovery of remodeling expenditures when the house is sold.” During the peak of the boom, some remodeling projects actually increased the selling price of the house by more than $1 for every $1 spent. Average cost recovery declined steadily from 87% in 2005 to just over 67% in 2008, according to Remodeling magazine and the National Association of Realtors®.

The share of cost recovered from home improvement projects typically increases when house values are rising and decreases when values are falling, says the Joint Center report.

The good news, Apgar said, is that those who do make it through another difficult year can expect to have some strong fundamentals on which to build new remodeling business.

The new Joint Center report identifies three sources of demand that are most likely to boost improvement spending once a remodeling turnaround begins to materialize:

• The increasing need to upgrade the rental housing stock. “Years of underinvestment have left the nation’s rental stock, at an average age of 36 years, in desperate need of improvement and repair,” said Baker. In 2007, almost 10% of rental housing — more than 3.6 million units — were structurally inadequate.
  
  “The poor condition of the rental inventory reflects years of neglect,” the study says. While expenditures on the owner- and renter-occupied stock moved in tandem throughout the 1970s and 1980s, their paths began to diverge in the early 1990s. “Average per unit improvement and maintenance expenditures for rental units fell by almost 40% in inflation-adjusted terms between 1990 and 2007, while expenditures on owner-occupied units increased by almost 30%.”
  
  Spending will be focused on replacements and system upgrades, as well as maintenance, the study says. However, current housing market conditions are likely to delay the process of significant reinvestment in the rental stock. For the time being, the glut of vacant for-sale units that have at least temporarily been converted to rentals is reducing rents and dampening the demand for older units, “discouraging rental property owners from making improvements in the near term.”
  
  
• Ongoing growth in the immigrant home owner market. “Foreign-born home owners, who currently account for more than 10% of home improvement spending, are heavily concentrated in their 30s and 40s, ages when families are growing and changing the use of their home,” Baker said.
  
  “Immigrants are key to the future growth of the U.S. home improvement industry,” according to the Joint Center report. “In 2007, foreign-born households spent about $23 billion on improvements on their homes. Their spending levels have grown almost 13% per year since 2000 — well in excess of the 7% among the domestic-born population.”
  
  Immigrants are concentrated in gateway cities along the California coast, in Texas and southern Florida and along the Northeast corridor, the study says. “In these high-cost housing markets, owners devote a relatively large share of their incomes to home improvements. In the 12 metropolitan markets where foreign-born home owners spent at least $500 million on home improvements in 2007, the immigrant share of expenditures was well above the national average of just over 10%. In five metro areas — Houston, Miami, San Diego, San Francisco and Washington, D.C. — immigrants contributed more than a quarter of all remodeling expenditures.”
  
  The report also notes that immigrants have dispersed to an increasingly broad array of housing markets.
  
  
• Emerging interest in sustainable remodeling projects. “If we are going to meet the nation’s energy goals, we have to continuously search for ways to improve the residential built environment,” said Mohsen Mostafavi, dean of the Harvard University Graduate School of Design, where attention to green design is a growing focus in the classrooms and studios. “Maximizing energy-efficiency in existing housing may be one of our greatest challenges, but also one of our greatest opportunities. Consumer demand for sustainable design is on the rise. Architects and planners can lead the way in devising appropriate solutions.”
  
  In 2007, home owners devoted more than $52 billion of their improvement expenditures to energy-related projects such as replacing appliances and lighting systems, upgrading their HVAC systems and increasing insulation — up from less than $33 billion in inflation-adjusted terms a decade earlier, the study says.
  
  “Motivated by broader environmental concerns, consumers have demonstrated a growing interest in products and projects that meet additional green goals: quality and durability, environmental performance, and safety and disaster mitigation,” the report says.
  
  In a survey, the Joint Center asked full-service remodelers how frequently they installed green products that met at least one of these criteria, focusing on 10 products listed by the Partnership for Advancing Technology in Housing as having the “most promise for making our existing homes more durable, stronger and more resource-efficient.” The respondents indicated that they were no more likely to install energy-efficient products than products promoting the other goals. About 40% said they regularly or occasionally installed products in each of the four categories. “Some products with energy-saving properties, such as high-performance windows, were used almost universally, while others such as tubular skylights had not yet penetrated most markets.”
  
  To gauge future trends, the survey also asked the contractors to identify products for which consumers have expressed increased interest. “Here again,” the study says, “there were no major differences between products promoting energy efficiency and those meeting other green objectives.” However, there were wide differences in interest in specific products within each category. For example, among energy-efficient products, “more than 80% of contractors noted greater consumer interest in compact fluorescent lighting, but only half saw greater interest in wireless lighting and temperature controls.”

The Joint Center also notes that when housing markets recover, foreclosed properties will provide opportunities for home improvements. Banks and new owners will renovate and repair these properties and state and local governments will make use of the Housing and Economic Recovery Act of 2008, which allocated $4 billion for the redevelopment of abandoned and foreclosed properties.

Despite today’s downturn, the Joint Center reports that, “Remodeling still rests on a solid foundation with 130 million homes — and one to two million added yearly — in continuous need of maintenance, upgrades, repairs and adjustments to meet the nation’s changing preferences and lifestyles.”

For your Sussex County, Delaware home improvement project, please visit www.yourhoneydoman.com

Your house can make you sick

You may be exposed to dangerous toxins. Get rid of them without getting ripped off.

(Money Magazine) -- You're sniffling and wheezing your way through another winter. A run of bad luck with germs? Sure, but it also may be the result of something more insidious: toxins.

Chemicals found in common home furnishings can cause asthma and flu-like symptoms, and your basement or bathroom may be harboring allergy-inducing mold. You could even be experiencing a reaction to a more dangerous substance that could cause kidney damage or cancer.

The problem of home toxins has increased in recent years, says Linda Kincaid, an industrial hygienist in San Jose. It's a nasty byproduct of the well-meaning drive to become more energy-efficient. "We used to live in houses that were not well insulated and allowed a lot of air to come in," says Kincaid. Now that homes are tightly sealed to prevent airflow from outside, chemicals can become more concentrated in your indoor space. That risk goes up in the winter, when your doors and windows generally remain shut.

Banishing toxins from your home isn't an exciting improvement, but it's a crucial one, since many states counsel home buyers to do environmental checks before closing on a home. Below you'll find five of the most dangerous and common toxins to watch for, along with the most wallet-friendly ways to nip them in the bud.

TOXIN RADON DANGER LEVEL: HIGH [4]

It's the second-leading cause of lung cancer behind smoking.

Who's at risk: Everyone. It's an odorless, colorless gas that comes from the soil and can leak into your home. It's been found in every type of house and in every state.

What to do: Radon test kits are available at most hardware stores for $10 to $20. Place one in your basement and leave it for two days. If the level of radon in your home is high, you'll need to spend about $1,200 to have a contractor who's an expert in radon removal put in a venting system, which will direct the gas away from the house. Unfortunately, your homeowners insurance probably won't cover the cost.

If you have recently installed granite countertops, you'll need to buy a second test kit for your kitchen too, since some granite that includes uranium can emit radon gas. It's not likely that your countertop will cause a high radon reading (it affects only about 5% to 10% of granite on the market), but if yours is affected, you'll have to either revamp your kitchen ventilation or replace your granite counter.

TOXIN ARSENIC DANGER LEVEL: HIGH [4]

The poison has been linked to various kinds of cancer and a range of unpleasant side effects, from nausea to blindness.

Who's at risk: Anyone who has a wooden deck, porch, fence, tree house or outdoor play furniture built before 2005. Arsenic is a preservative, and until four years ago, wood was treated with it to prevent rotting. The chemical can leach into surrounding soil (affecting plants growing in the ground nearby), and it's possible to touch arsenic-treated wood and come away with it on your hands. Young children are especially vulnerable, since they tend to put their fingers in their mouths.

What to do: No need to pony up for a new deck; just treat the wood every year with an oil-based stain so that when you touch the wood, you're touching the sealant, not the arsenic. It's best to do it in the spring, says Gary Ginsberg, Ph.D., author of "What's Toxic, What's Not," so your deck will be ready for the summer, when it's going to be used the most. You can find various weatherproofing stains for about $25 a gallon.

TOXIN LEAD DANGER LEVEL: MODERATE [3]

Lead can damage the central nervous system, kidneys and blood cells; even low levels in the blood can impair mental and physical development.

Who's at risk: Those living in homes that date back to the '70s.

What to do: Don't use home test kits for lead -- they aren't reliable. Instead, get recommendations for private labs from your state housing department. The test will cost you about $20 to $30; if it comes back positive, cover your walls with a coat of encapsulant (about $40 a gallon).

Unfortunately, the biggest problem probably isn't the paint on your walls -- it's the paint on your windowsills. "The window grinds it down to a fine powder and the breeze can blow it in," Ginsberg says. "It can contaminate the whole room." Your best bet is to replace the windows, including the woodwork and tracks. If there's a toddler in the house, consider replacing moldings and baseboards as well, since kids can chip off paint by chewing on it.

TOXIN FORMALDEHYDE DANGER LEVEL: MODERATE [3]

Formaldehyde and other volatile organic compounds (VOCs) can cause nausea, dizziness and allergy symptoms. Chronic exposure can damage your liver and central nervous system.

Who's at risk: Anyone who has recently added new floors, carpets or furniture; moved into a new home; or used common brands of paints or aerosol sprays. The adhesive used in carpeting and to hold together pressed-wood products contains formaldehyde, which releases that and other chemicals into the air. (That "new carpet" smell may be your Berber emitting chemicals.) Many paints, sealants and lacquers also release compounds.

What to do: If you've been in your home for a few years, relax. "The building has had a chance to outgas," says John Banta, an industrial hygienist and co-author of "Prescriptions for a Healthy House."

If you're refurbishing, one option is to opt for VOC-free building materials, but you'll pay a steep price: Formaldehyde-free bamboo flooring from EcoTimber, for instance, costs $5.79 to $6.49 a square foot, compared with $3.87 to $4.57 a square foot for bamboo wood flooring from Home Depot.

Can't afford to go totally VOC-free? Splurge on the bedroom; it's generally where you spend the majority of your indoor time, so you'll reap more benefit from the change. Alternatively, simply renovate and buy new furniture during warmer months, when you can leave your windows open. When you order a new carpet, ask the factory to let it air out for a couple of weeks in the warehouse before delivering it. Almost all VOC chemicals will dissipate into the air over time.

TOXIN MOLD DANGER LEVEL: LOW [2]

Mold doesn't present a severe health risk, but it may worsen asthma. If you're allergic to mold, it can also cause nasal congestion, irritated eyes or wheezing.

Who's at risk: If you've had a water problem, such as a roof or plumbing leak, and the area was wet for more than 48 hours.

What to do: Toxic black mold has gotten a lot of press in recent years, but regular mold spores "are everywhere," Ginsberg says, and the Centers for Disease Control and Prevention says they rarely cause adverse health conditions.

That said, if mold is unsightly or causing your sinuses to act up, you'll probably want to get rid of it. If it's a small area (less than three feet by three feet), remove it yourself with detergent and water. If it's a larger section, you'll want to bring in a professional to prevent spreading mold spores around your house.

Expect to pay $150 to $200 for a mold inspection and $500 and up for removal, depending on how widespread the problem is. Your homeowners insurance may cover it, but be warned: After insurers were slapped with lawsuits over black mold a few years back, they began excluding mold coverage and socking homeowners who reported water damage with higher premiums and deductibles.

Regardless, it's certainly worth spending $150 or so for a dehumidifier in your basement to draw extra water out of the air. Sometimes an ounce of prevention is the healthiest possible fix.

By Kate Ashford, Money Magazine contributing writer

Last Updated: January 6, 2009: 1:41 PM ET

The graph below reinforces my belief that a housing stimulus could turn the housing market on a dime. Thus, supporting the argument that to “Buy at the Bottom” you need to buy prior to the announcement of Obama’s Stimulus Package on or shortly after January 20th.

Anyway, the last time the gov’t intervened in the housing market by providing a tax credit and reduced mortgage rates (as the NAHB is requesting now) was in 1975. Housing starts immediately reacted to the stimulus and turned up within 2 months. Now, keep in mind that Housing Starts typically occur (on average) about two months after the home sale (contract signed). So, what this chart shows is that Home Sales literally turned on a dime the moment the Stimulus went into effect. This should be expected . . . it’s very similar to a Black Friday sale at a retail store. The first people to get in the doors and buy benefit from having the most products available. This is why people line up outside the doors of store for hours before the doors open . . . they want to have the best selection and make sure they get to buy products before they’re sold out. This phenomenon actually caused people to get trampled this year and push the doors down at Walmart . . . which is crazy and disturbing but it shows you how badly people want to be the first to capitalize on a major sale. Well, it’s the same with housing. For those who have been waiting to buy a home and can still afford to do so, they will benefit by being the first people “through the doors” and thus get the greatest selection of homes and maybe even capitalize on Builder incentives that the Builders haven’t yet removed. And make no mistake, Builders will be very quick to discontinue their incentives once they see a pickup in housing demand. I know because I am one of these builders who intends to remove or at least reduce my incentives shortly after the announcement of Obama’s stimulus package.

So, here’s the thing that smart buyers already know . . . they can get special entrance through the side door of the housing store right now, capitalize on the sale prices, have the best selection, and have a private showing of all the store merchandise. What I’m saying is that for those who have been waiting to buy a home, the best time to capitalize on Obama’s housing incentives is right now, prior to them being announced (assuming you setup settlement for late January/early February). The only reason not to do this is if you believe that Obama will not incorporate some sort of housing stimulus into his Economic Recovery Package. In my opinion based upon everything I’ve read and based upon the sound logic that fixing housing is the most important factor in fixing the economy, I think it is highly unlikely that Obama won’t enact a housing stimulus shortly after inauguration. If your buyers are worried that by buying now, they might not be eligible for any housing stimulus incentives announced on January 20th, here’s what I recommend they do: Include a contingency in the sales contract that says the buyers intend to capitalize on the housing incentives in the anticipated Economic Recovery Package and have the option to cancel this contract if: 1. A package is not passed prior to settlement or 2. If contracting prior to settlement somehow makes them ineligible for the incentives. To protect the seller, I would include a clause that says: In the event that the Buyer is not eligible for the housing incentives due to the contract being executed prior to the incentives being enacted, a new contract will be written between the Buyer and the Seller with the same price and terms of the existing contract and executed immediately after the housing incentives are enacted. Once the new contract is executed, the existing contract will be declared null and void. Anyway, you get the picture . . . the point is that there are ways to incorporate language into the contract that allows the Buyer to “Have their Cake and Eat it Too” by protecting the buyer in the event that they are not able to eligible for the housing stimulus incentives as a result of contracting prior to the incentives being implemented.

Remember, the main reason to buy now is so Buyer’s can negotiate a good deal for themselves at the point when Sellers are the most desperate. As I explained in my prior email, after the housing stimulus is announced, Seller’s won’t be willing to offer the types of deals they are now. The pressure will be off and the balance of power between Buyer and Seller will be somewhat restored.

A Wakeup Letter to Washington

Note to lawmakers: It's high time to take care of unfair costs for consumers. Let's have some change for fair play.

Take a memo.

To: Our new Congress; the President-elect
From: Nickeled-and-dimed Americans
Re: The (other) financial mess

Congratulations on winning your elections. We trust you won't spend too much time celebrating, though. We taxpayers have had to lay nearly $1 trillion on the line to keep the banking and credit system from collapsing. Cross our fingers, it just might work.

Your task now is to reform the financial industry that helped get us into this jam in the first place. Already there's a fervor in Washington to clamp down on the wholesale side of Wall Street's business, to tighten capital requirements and to get on top of derivatives and the other kooky securities investment banks trade.

All good. But please don't ignore the retail end - that is, the way lenders and brokers do business every day with us consumers. That's a mess too. You've allowed these companies, including some of the very ones we're bailing out now, to do pretty much whatever they want to drain us of our money.

Even the most responsible and savvy borrowers among us have trouble avoiding the tricky fees and rate-hike triggers on our credit cards. You've allowed our kids to get sucked into the debt culture before they've even gotten a job to pay the bills.

And then there are the financial products that are just plain poison, like mortgages that homeowners can't possibly repay and loans with interest rates to rival what guys with names like Sammy Knuckles used to charge.

As we're seeing now, irresponsible lending doesn't just hurt the people who take the bait. It can undermine the whole economy.

We aren't saying that lenders shouldn't make a profit. And we aren't saying that we borrowers aren't responsible for our own choices. We just want transparency and safeguards against faulty financial products.

Here's what you should be working on:

Curb credit-card gotchas
We understand the basic bargain behind credit cards (or think we do). For the convenience of charging, we have to pay some interest. If we pay on time, we should get a lower rate because we've proven that there's little risk we won't pay back.

But if we miss payments, we'll pay more - and even get dinged with some penalties. The card issuers call this risk-based pricing. And whenever lawmakers discuss new regulations, issuers strenuously argue that this system must never be undermined, for the good of consumers.

Ken Clayton of the American Bankers Association says that if lenders aren't allowed to charge their riskier customers a penalty, "some people will lose access to credit at reasonable prices."
Well, sure. Of course lenders ought to be able to set rules for borrowers - the only trouble here is the complexity. It seems to us that card companies aren't pricing for risk so much as teasing us with one low rate and then building multiple traps into their contracts to get us to shell out more, no matter how creditworthy we are. After all, virtually anyone can occasionally incur a late fee.

For starters, there are contracts that stipulate that the terms of the loan can change "at any time, for any reason" - which makes us wonder what all the rest of the gobbledygook is there for.
Among the reasons a card lender might choose to hike our rates: We missed a payment owed to someone else. (The lenders' jargon for this is universal default.) And when we're hit with a new rate, it's generally applied not only to new purchases but to any outstanding balances.

Penalty fees have become an important part of the card lenders' business model. According to IndexCreditCards.com, the average late fee is up to $35; the fee for going over the credit limit is about the same. (And those charges accrue interest too.)

Bills are often mailed out uncomfortably close to the due date. Sometimes the deadline isn't just a date but a specific hour. You can even be charged when paying on time: A Washington Mutual card assesses a $15 fee for paying online on the due date.

And then there's the stuff that seems intentionally perplexing. Many cards, for example, offer tantalizing 0% rates on balance transfers while charging a higher rate on regular purchases.
If a customer doesn't pay off the balance transfer immediately, all the monthly payments go to that 0% loan while the balance for the other, higher-rate charges just compounds and compounds.

Another common trick is "double cycle" billing. Here's how it works: Say a cardholder with no previous balance charges $1,200 and pays off $500 when the bill is due. You might think that interest would be assessed only on the remaining $700.

And with some cards that's true. But with double-cycle cards, a customer would owe interest in the next billing period on $1,900 - first on the original $1,200 and then on the $700 left over.
It's tough enough for full-fledged grownups with steady incomes to navigate this credit-card maze. So it worries us when we see that credit-card companies are aggressively pulling in college students. If they're over 18, they don't need a parent's consent to sign up.

A 2008 survey of new college grads for the credit bureau TransUnion found that 24% start their adult lives with more than $5,000 in credit-card debt. Many students have no means of support other than their parents, scholarships or loans.

But if kids don't or can't repay, says Robert Manning, author of Credit Card Nation, lenders "send bill collectors after parents saying, 'Do you really want to ruin Sally's life over $6,000?'"

How to fix it: We're hopeful that change is coming. "A critical mass is building for reform," says Travis Plunkett, legislative director of the Consumer Federation of America (CFA). Last year the Federal Reserve, which regulates banks, proposed new rules and asked for public comments. An unprecedented 62,000 consumers wrote in.

The Fed's proposal is a good start. If chairman Ben Bernanke actually approves the new rules, they'll ban double-cycle billing, prohibit applying rate increases to old balances and force companies to consider a payment on time if received by 5 p.m. of the due date.

The Fed would also require card companies to apply payments above the minimum proportionally. So if a cardholder who owes $2,000 for new purchases at 19% and $3,000 for transfers at 0% made a payment of $500 over the minimum, the bank would have to apply $200 to the new purchases and $300 to the cash advance. How perfectly sensible.

If the Fed doesn't act or waters down its ideas, then Congress, it's up to you. The Credit Cardholders' Bill of Rights, sponsored by Carolyn Maloney, D-N.Y., passed the House in September.

It would do much of what the Fed proposed and then some. It would bar universal default and "any time, any reason" rate hikes and require card companies to send out bills 25 days in advance of the due date.

The measure would also cut down on surprises. Card companies would have to notify customers of any rate increase 45 days before it went into effect. That would give us more time to make other plans or shop around for a better rate.

In an ideal world, we'd like Congress to go further. If a card has a credit limit, the lender should enforce it, instead of letting the transaction go through and then spanking us with a big fine.

And lawmakers should forget about those complicated deadlines and require lenders to accept a payment if it's postmarked on the due date. If that's good enough for the IRS, it should be good enough for a card company.

But most important, we've really got to protect students. Manning proposes a common-sense solution: Those between ages 18 and 21 should be allowed to have credit, but only if they have some income. Student loans and bailouts from the Bank of Mom and Dad shouldn't count.

By Marlys Harris, Money Magazine editor-at-large
November 5, 2008: 9:47 AM ET

HOME SELLER'S GUIDE

HOME SELLER'S GUIDE TO SUCCESS

http://finance.realtor.com/Finance/sellersguide/default.asp?lnksrc=REALR2LF2C0048&poe=realtor&gate=realtor

Ten Steps to Home Ownership!

HOME BUYER'S GUIDE.

http://finance.realtor.com/homefinance/guides/buyers/default.asp?lnksrc%3DREALR2LF2C0047%26gate%3Drealtor%26poe%3Drealtor&tran=vud&gate=realtor&poe=realtor