Home Inspections: For New Homes Too!

There are a lot of different things that need to be inspected upon the purchase of a new home.  A common misconception by many home buyers is that simply because their home is newly constructed an inspection is unnecessary.  Nothing could be farther from the truth.  New homes require an inspection just as much as any older home, and they have a special set of considerations that need to be examined.  Home inspectors are part of the buying and selling process for the protection of the buyer and it is the buyer who is responsible for arranging their own inspection.  If sellers (or in this case, builders) are hesitant to have their home inspected or try to convince you to skip the inspection then you could have a serious concern on your hands.  What are they trying to hide?  Never buy a home (new or used) without having a full inspection performed.

Home inspectors are trained to find things that could be huge issues to the home buyer.  Typically they are concerned with the vital systems that are essential to the proper operation of the home.  Systems like plumbing pipes and fixtures, the electrical system, septic system (if there is one) are all checked for wear & tear, quality and proper installation.  The foundation needs to be examined for cracks and stress fractures.  This kind of imperfection in the home's structure can be quite dangerous and expensive to repair.  However if left unattended to it can cause huge problems later on in the home's life.

Mold is another issue altogether and most home inspectors are not properly educated in the identification of and dealing with the various kinds of mold that can be found in homes.  In fact, the best method of finding out about mold in the home is to hire a professional mold specialist.  These professionals are trained in the identification of various forms of mold and can better inform you on what kinds of mold are harmful to your health as well as the correct ways to remove the mold so it does not take hold in your home again.

Always be sure to have any home you are considering purchasing inspected.  It is the only way to ensure that your investment is a wise one and that your family is safe and protected.

How Not to Lose Your Home to Foreclosure

The most obvious way not to lose your home to foreclosure is by always making your payment on time.  That's a given, but sometimes, things happen.  As a growing number of borrowers fall behind on their mortgage payments.  If you fall into this ever-growing category of homeowners, the smartest move you can make is to contact your lender.

These days, there's more incentive for companies to work with borrowers to avoid foreclosure: Regulators and lawmakers, prompted by troubles in the mortgage market, are encouraging companies to assist troubled borrowers.

Major lenders in the subprime mortgage market have agreed to a set of principles calling for servicers to try to modify loans before the interest-rate reset if borrowers will be unable to afford the new payments, among other actions.

Lenders also have a financial incentive to keep you in your home: They can lose tens of thousands of dollars for each loan that goes into foreclosure.

Contacting your lender before your situation seriously deteriorates will improve the chances that you keep your home. Consider this: Half of borrowers whose homes go into foreclosure never talk to their servicer.  How crazy is that?

Call your loan servicer:  By doing so, you can try to arrange workout options that will keep you in your home. A lender may be able to modify the loan to make it more affordable in the long term.

The very LAST THING you should do is just not contact anyone and continue to get further and further behind on your mortgage payments.

We welcome your comments or reaction to this advice.  If you have any experience in this category, or advice for any other readers at this site, please leave your comment below.

Fed Move Eases Panic

The Federal Reserve's recent move to encourage bank lending has helped ease some of the panic in financial markets, but the underlying problems that led to the seizing up of credit are still there - and obviously won't disappear overnight.

The credit crisis escalated last week, forcing the Fed to cut its little used discount rate - the rate it charges member banks for temporary loans - a rare move for the central bank.

The Fed's decision to cut the discount rate was designed to get banks lending again and reassure the market - and so far that appears to be working.  But for borrowers, the real move to watch is the one when the Fed takes on its more closely watched fed funds rate, a key short-term rate that influences rates on a variety of consumer loans.

Some analysts said it looks more likely now the Fed will cut this rate to keep the credit crunch from becoming a drag on economic growth when it next meets on Sept. 18, or even earlier if there's further turmoil in the credit markets.  The fed funds rate now stands at 5.25 percent.

We'd love to hear your comment.  Did the move by the Federal Reserve do ANYTHING to boost your confidence in a sagging economy?  Leave your comment below.

Selling Your Home?  Offer Concessions Instead of Lowering the Price

Lowering the asking price on your home isn't the solution to making it stand out in today's crowded housing market.  According to the National Association of Realtors, there is nearly a nine-month supply of homes for sale on the market.

How will you make your home stand out among all those other ‘For Sale' signs?

One way experts say to stand out instead of slashing the asking price is to propose lowering the rate on a potential buyer's mortgage by providing seller financing incentives.

Consider this example showing the difference in cost and savings for lowering a home's price vs. offering seller concessions.  In the case of lowering price, a motivated seller might reduce their $250,000 asking price by 5% or $12,500.  For less money, the seller could pay up to three discount points on the buyer's mortgage, lowering the buyer's interest rate and monthly mortgage payment.  A discount point is considered 1/100 of the buyer's loan amount - about $2,500 per point in this example.

The math is simple. Seller concessions cost the seller $7,500 in this example (vs. $12,500 to lower the price of the home 5%) and the deal is actually more enticing for the buyer.  At today's 30-year fixed rate, three points off a mortgage rate can potentially save a buyer more than $30,000 in mortgage payments over the life of the loan!  And, points paid through seller concessions may even be tax deductible.

By offering a concession to lower the interest rate, the seller makes their home more affordable, without dropping their price.  This gets them to the closing table sooner.  The buyer actually may save more in reduced interest over the life of the loan than they would have via a lower home price, depending on the rate and terms of their mortgage.

Other examples of seller concessions that buyers can offer include paying some or all of the buyer's closing costs, and providing an allowance for the buyer to landscape or make improvements to the home.

Seller concessions can be an inexpensive and innovative way to move a house in a slow market.  Both the buyer and seller may benefit from such seller concessions.

Taking Advantage of a Buyer's Market

Potential home buyers have been waiting with bated breath for a change in the real estate market.  For many years the nationwide market trend has been a seller's market.  In most markets, that has changed to some extent.  With the construction boom this country has experienced over the past few years there is now an abundance of home inventory in many locations across the U.S.  This has created that "buyer's market" people have been waiting for.  In a buyer's market there are many homes and fewer buyers which makes owners have to be more competitive to attract those buyers.

The question is: "how can you best take advantage of a buyer's market?"

The first step is to get your financials in order so your mortgage approval can be done swiftly.  With the money question answered you can move on to searching for the perfect home.

One thing you may notice about a buyer's market is that homes may tend to be listed for a longer period of time.  This can work in your favor as sellers become more and more anxious the longer a home is on the market.  This is not to say you can simply low ball them and steal a home but you may find they are more open to negotiation than they would be if the buyer's market was not a factor.

In a buyer's market you are in a naturally advantageous position and it can be easy to lose sight of the final goal.  The main idea here is to find a great home that will suit you and your family for years to come or to form a piece of a well-planned investment portfolio.  The idea is not to find the cheapest home or the most desperate sellers.  Try to think in terms of what will fulfill the dynamic and changing needs of your life now and in the future.  A well-planned home purchase can be the most gratifying purchase you'll ever make.  It's all the sweeter if you just happen to get a great deal in the process.