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By Jean Patteson
RISMEDIA, July 12, 2010–(MCT)–The explosion of remodeling shows on TV and makeover spreads in magazines has whetted America’s appetite for glamorous rooms brimming with the latest furnishings, appliances and color schemes.
Kitchen remodels are among the most popular, according to a report in the just-published August issue of Consumer Reports and online at consumerreports.org. And the economic slowdown means there are outstanding deals on everything from cooktops to countertops. It also means kitchen designers and building contractors are eager for work and willing to negotiate.
But bargain prices and good looks aren’t everything, said Celia Kupersmzid Lehrman, Consumer Reports’ deputy home editor.
“When remodeling a kitchen, functionality is every bit as important as style. Fortunately there are many products that look good and work well,” she said.
The design of your kitchen is every bit as important as what goes into it, said Jim Spence of Spence & Vaughn Fine Kitchen and Bath in Maitland, Fla.
The most functional design is based on the “work triangle” — the relationship between the prep area, the cooking area and the sink, he said. Ideally, the distance between them should never be less than four feet or more than nine feet. Of the three areas, the most-used is the sink.
When planning a remodel, determining your budget is one of the first steps. The National Kitchen & Bath Association calculates the average kitchen remodel costs between 10 percent and 20 percent of the home’s value. But obviously, the extent of the makeover determines its cost. In its latest issue, Consumer Reports takes top-performing products and creates three design schemes: a do-it-yourself makeover for $5,000; a plan that costs $15,000 (the average spent on a kitchen remodel); and a full-scale renovation for $50,000.
Determining your priorities is another key step, said Phil Johnson, a partner at Spence & Vaughn and a certified kitchen designer.
“Do you love to cook? If so, now might be the time to consider professional-style appliances,” he said. “Do you have a large family? Consider how best to accommodate them in your new space. Think about the things you love in your old kitchen — and the things you dislike.”
In addition, Johnson recommends the following steps for a successful remodel:
—Do your homework. Watch TV remodeling programs, clip appealing pictures and articles from magazines, attend remodeling seminars, visit home shows and parades of homes. Consult with a kitchen designer who is a member of the NKBA, who has the training and experience to avoid many of the things that can go wrong with a remodeling project.
—Visit a showroom. Examine the options in cabinets, countertops, appliances, flooring, plumbing and lighting. Decide what you want — and can afford.
—Schedule a home visit. The designer/installer need to measure the kitchen and adjacent rooms, and make a note of existing walls, doors and windows, electrical supplies, ceiling height, attic access, type of wall construction, plumbing details, etc.
—Finalize the project. The design is refined, construction plans are completed, appliances and supplies are ordered — and the initial deposit is paid.
—Survive the dust, noise and workers. With proper supervision, the disruption can be kept to a minimum. Make sure materials are ordered and on the way before beginning the tear-out. Clear a space in the garage for workers’ tools and supplies and items removed from the old kitchen. And communicate regularly with the designer/installer.
The August issue of Consumer Reports identifies these four rules for a successful kitchen remodel:
Don’t rush. There are many kitchen products that combine value, performance and good looks. Take time to meet with professionals, browse the Internet and visit showrooms and home centers. Haste can be costly. Changing your mind after the project is started typically adds about $1,500 to the cost of a kitchen project.
Size matters. In addition to being expensive, oversized kitchens can be exhausting to work in and keep tidy. A more compact kitchen often functions better. The National Kitchen & Bath Association website, nkba.org, provides guidelines for optimal space between appliances, cabinets and islands.
Beware of budget busters. Leave a 10 percent to 15 percent cushion for surprises, such as unexpected structural repairs. Avoid settling for a cheap option, thinking someday you will replace it with something you really want. Chances are that will never happen.
Get it in writing. When using a professional for a remodel, the written contract should list each phase of the project; every product, including the model number; and copies of each contractor’s license, and workers compensation and liability insurance to confirm they are current. Call references and, if possible, visit them.
reprinted with permission (c) 2010, The Orlando Sentinel (Fla.).
Distributed by McClatchy-Tribune Information Services.
Congress passed an extension of the closing deadline for the Homebuyer Tax Credit, the Homebuyer Assistance and Improvement Act (H.R. 5623). The extension applies only to transactions that have signed contracts in place as of April 30, 2010, that have not yet closed. The legislation is designed to create a seamless extension; the new closing deadline for eligible transactions is now September 30, 2010. There will be no gap between June 30 and the date the President signs the bill into law. Extending the tax credit closing deadline will help provide additional stability to real estate markets across the nation.
Great news for those that were not able to make the cut off of June 30th due to the backlog this created.
“We have seen home buyer interest in FHA loans go from practically zero three years ago to upwards of 87 percent today,” said Christopher Gardner, founder and president of FHA Pros, LLC. “Despite this rapid rise in popularity, many buyers still do not fully understand the benefits of these loans, and we believe it’s time to change that.”
1. FHA Loans Are Not Only For Lower-Income Borrowers. FHA loans are available to everyone. In fact, even Bill Gates can get one. There is no maximum income restriction associated with FHA loans. Borrowers do need to substantiate income and assets by submitting proper documentation. This requirement ensures that borrowers are well-vetted and truly able to afford their future homes.
2. FHA Loans Are Not Only For First-Time Buyers. Many people believe FHA loans are available only to first-time homebuyers. This is not the case. Whether borrowers are making their first home purchase or their fifth, they can look to FHA loans as a home financing option.
3. FHA Loans Are Not Just Small Loans; In Fact, Loan Amounts Can Be As High As Almost $800,000. The government recently raised the maximum loan amount from its original cap of $362,790 to $793,750 as a way to help stabilize the housing market. The amount a buyer can borrow varies from county to county. Later this summer, condo buyers interested in FHA loans can visit www.checkfhaapproval.com to instantly identify FHA-approved condo associations and review maximum loan amounts for a given location.
4. FHA Loans Are Not Affiliated With The Section 8 Housing Program. While both programs are administered by the U.S. Department of Housing and Urban Development (HUD), FHA loans have nothing to do with low-income subsidized housing. FHA loans are simply mortgages insured by FHA. This insurance provided by the federal government allows lenders to lend more freely by assuring them that they will be repaid in the event of default. Most traditional lenders, including Wells Fargo & Co., JP Morgan Chase and Citigroup are able to provide FHA loans to their customers.
5. FHA Loans Are Often More Affordable Than Conventional Loans. While FHA loans typically offer the same interest rates as other loans, borrowers benefit from a much lower down payment of as low as 3.5 percent.
6. FHA-Approved Condo Developments Are More Desirable To Buyers. With 87 percent of home buyers indicating that they plan to use FHA loans, condo associations that are not FHA approved are missing out on a significant pool of prospective buyers. Under rules in place since February 2010, an entire condominium development must now apply to HUD and be granted FHA approval before a buyer can purchase a unit in an association with an FHA loan or before an existing unit owner can refinance into an FHA loan.
Due to the general unwillingness of today’s lenders to extend credit with respect to conventional loans, many borrowers find that FHA is their best bet. Lenders don’t mind lending when the federal government (FHA) assures them of repayment.
Homeowners associations (HOAs) should note that although FHA-insured mortgages might be easier to obtain, they are not “risky” loans, due in large part to the strict “full documentation” requirements placed on borrowers.
Individual buyers or sellers can initiate the approval process or current owners can encourage their HOA to apply. More information about the FHA- approval process is available at www.getfhaapproval.com.
7. FHA Loans Are Assumable. In addition to lower down-payment and credit-qualifying requirements as compared to conventional loans, FHA loans are assumable. This means that when a seller with an FHA loan sells his or her property, the loan and its financing terms (interest rate) can be transferred to the new buyer. This unique feature will certainly make a property more valuable in times of rising interest rates.
(reprinted with permission)
First time home buyers have a lot to consider this summer when making the decision to rent or buy a home: interest rates are at all-time lows and prices are at or near their lowest in years.
Still, deciding whether to buy a home or rent an apartment can be a complicated decision. How do you know what’s right for you? Potential buyers should ask themselves several key questions before making this important decision.
1. What will monthly costs be, and can I afford the payments?
Keeping mortgage payments under 30 percent of your monthly income is a good rule of thumb. If you can’t keep mortgage payments below that, you may be better off renting for awhile.
2. What other debt do I have?
Total rent or mortgage payments plus credit obligations should not exceed 35 to 40 percent of monthly income. Talk to your lender and they will help you get ready to buy a home.
3. What is my credit score? Can I qualify for a good interest rate?
A high credit score indicates strong creditworthiness, and that qualifies you for better interest rates on a mortgage. Maxing out on your credit lines and paying bills late will lower your credit score. The impact of a credit score on interest rates can be significant. For instance, a borrower with a score of 760 could pay nearly two percentage points less in interest on a mortgage than someone with a score of 620. Lower interest rates also mean lower monthly payments. If your credit score is low, you may want to delay buying a home until you can improve your score. Work with your lender, they can tell you what to do to improve your credit score. Don’t have a lender? Ask your Realtor, they can refer you one or more lenders that they work with.
4. How much will taxes, monthly maintenance, or other fees cost?
Owning a home means you’ll have to pay real estate taxes and other costs like insurance and maintenance. On the other hand, owning a home brings big tax savings at the end of the year.
5. How many years will I stay here? Generally, the longer you plan to live someplace, the more it makes sense to buy. You’ll build equity in your home and have the satisfaction of knowing it is yours and you can paint or redecorate any way you want. There have also been studies that show children do better in school if the parents are homeowners.
If you need any help with this decision, your Realtor or Lender can provide you with a Rent vs Buy analysis form.
If you remember I was writing about a wonderful energy efficient loan program where you could purchase solar, heating and air conditioning units and other energy efficient items for your home and pay for them in your property tax bill. This is the MPower Loans in Placer County, CA. It’s a great program as the energy efficient loan is amortized out the life of the item you are purchasing. Say a heating and air conditioning unit will be amortized out over 20 years. So you have 20 years to pay if off and you are billed with your property taxes. Great idea right?
Well, there is a problem. Since the property taxes take precedence over any voluntary loans, aka your existing lender, you have to get your existing lender to approve the MPower loan to be in first position, instead of your existing lender. So, what do you think the chances of that happening are? Slim and none. The banks are not allowing MPower loans to be first so everything is on hold until there is some kind of solution to this issue.
It is a shame because it is a great program. MPower has written letters to several Congressmen and the Vice President of the United States to see if they can get some kind of an approval from these existing lenders that are insured with Fannie Mae. I will keep you posted as to any new developments.
It is very active in Placer and Sacramento county for any homes priced under $300,000. There are multiple bids as investors and first time home buyers are trying to purchase the same properties. The listing inventory is down to 1.5 month supply. That means it is a Sellers market. The listing inventory needs to be at 6 months for it to be an equal market between Sellers and Buyers. The price of homes has increased 4% over the last month so home prices are starting to tic up.
If you are a buyer and thinking of purchasing a home right now and it is priced under $300,000 you need to make an agressive offer. Especially if you are asking the Seller to pay up to 3 percent for your closing costs. You have to have an offer that is going to compete with an all cash offer that can close is 10 days or sometimes even less.
On the positive side, interest rates are GREAT! You can get a loan under 5% right now depending on your credit score of course. Of course you need to prove your income, just like it used to be before the No income, no asset loans. But hey, right now it is like the perfect storm. Reasonable prices on the homes and great interest rates! What more could you want?
Yes, that’s right, no monthly payments. You can get an energy efficient loan for Solar, heating and air conditioning systems, attic and wall insulation, windows and several other energy efficient improvements.
The criteria for this loan is pretty straight forward. You must be the property owner, current on your mortgage, current on your property taxes and not had a Bankruptcy within 5 years. There is no credit check required. No monthly payments as the payments are due when you pay your property taxes. You can get 10, 15, 20, and even 30 year loan payments depending on the life of the improvement. This loan does not need to be paid off if you sell your property as it goes with the property.
Locally only Placer County is doing this type of loan, but the other counties are looking into possibly starting it too. The web site for more information is www.Mpowerplacer.org
This is a great program if you plan on staying in your current home and want to remodel or if you are thinking of selling an older property but don’t have the cash to upgrade the property with energy efficient improvements.