The Cost of Ownership: Home Repair and Replacement Costs

The costs to maintain, repair, and replace home systems is one of the hardest budget calculations a homeowner must predict. The size, age, and condition of your home at the time of purchase will all impact how much money you need to spend to keep your place in shape. Generally, though, home experts suggest that you set aside between one and three percent of the home's cost each year for home repair and maintenance costs. (If your home cost $250,000, you'd need to allocate anywhere from $2,500 to $7,500 each year for home repair and replacement costs.)

The chart below shows estimates to repair or remodel different portions of your house and is based on data* from Freddie Mac, the lending organization. Bear in mind that these costs are estimates and prices can vary widely from region to region and based on the quality or finishes of materials you choose for repair and replacement projects.

Outdoor projects:
Regrade lawn	$500 to $1,500
New gutters/downspouts	$2.50-$3.50 per linear foot
Install French drain/sump pump	$2,000-$3,500
Replace asphalt/fiber shingles atop existing shingles	$1-$1.20 per square foot
Remove and replace shingles	$1.30-$1.75 per square foot
Install storm windows	$60-$100/apiece
Replace existing windows	$250-$500/apiece
Additions
Single-car garage addition	$6,000-$9,000
Double-car garage addition	$8,000-$12,000
Building an addition	$70-$120 per square foot
Half-bath addition	$3,500 to $5,000
Full bath addition	$7,000 to $12,000
Indoor projects
Porch enclosure	$5,500 to $15,000
Drywall ceiling over plaster	$1.50-$2 per square foot
Convert basement to rental unit	$30,000 to $50,000
Bathroom remodel	$7,000 to $12,000
Increasing electrical capacity to 200 amps	$700 to $1,200
Running separate electrical lines	$150 to $300
Install connectors on outlets	$15 to $20/per connection $2,000 to $3,000 (entire house)
Build masonry fireplace	$3,300 to $4,800
Install prefab fireplace	$1,800 to $2,300
Reline chimney (terra cotta)	$2,000
Sand/finish wood floors	$1.50-$3.30 per square foot
Install ceramic tile	$11-$22 per square foot
Install vinyl tile floor	$2.64-$5.34 per square foot
Install wall-to-wall carpet	$3.38-$6.61 per square foot
Replace hot water boiler	$2,500-$3,500
Install attic ventilation	$250-$450
Insulate attic/basement	$0.75-$1.20 per square foot
Kitchen remodel	$8,000 and up
Appliance replacements and additions:
Replace warm air furnace	$1,500-$3,800
Replace electric heat pump	$2,200-$3,600
Replace central A/C	$2,600-$3500
Install humidifier	$300-$550
New water heater	$300-$650
New well or septic system	$3,000-$5,000
Install sump pump	$400-$500

*Data provided here are intended as estimates only. If you are considering remodeling or replacing home systems, be sure to solicit bids from qualified contractors or source prices in your own market.

from: Home repair costs

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HUD Offers REO Homes for $100 Down in Select States

10/24/2011BY: CARRIE BAY

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HUD has approved a program aimed at putting foreclosed homes back into the hands of owner-occupant buyers.

In select states, from now into October of next year, buyers need a down payment of only $100 to purchase a HUD-owned REO home.

The buyer must be an owner-occupant, utilizing financing insured by the Federal Housing Administration (FHA). Standard FHA underwriting guidelines apply, and the sale must be for the full amount of the current list price.

The $100 down payment incentive program has been approved for two of HUD’s four national regions – the regions managed by the Denver Homeownership Center and the Atlanta Homeownership Center. HUD homes in the states listed, as well as the Caribbean are currently eligible for the program.

Denver Homeownership Center’s Jurisdiction:
Arkansas, Colorado, Iowa, Kansas, Louisiana, Missouri, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin, Wyoming, Utah

Atlanta Homeownership Center’s Jurisdiction:
Alabama, Florida, Georgia, Kentucky, Illinois, Indiana, Mississippi, North Carolina, South Carolina, Tennessee, Caribbean

HUD’s $100 down payment incentive program can also be applied to an FHA 203k loan, which can be used to fund repairs and renovations on the home. The 203k program allows buyers to finance both the mortgage and additional money for rehabilitation needs with a single government-insured loan.

Matt Martin, CEO of Matt Martin Real Estate Management(MMREM), says this is one of the most exciting features of the new incentive program and should drive a lot of exposure to FHA’s 203k offering.

MMREM is under contract with HUD to assist with disposition sales of its repossessed homes. MMREM handles properties throughout 16 states, or about a third of HUD’s REO portfolio.

With an FHA 203k loan, “buyers can find a property that needs some TLC, fix it up however they want to, and finance the whole thing for $100,” Martin explained.

“MMREM is excited to work with this recent initiative, in a way that it supports putting HUD homes back into the hands of homeowners,” Martin said.

In addition to $100 down instead of FHA’s typical 3.5 percent down payment, HUD says it will also cover up to 3 percent of the closing costs in most cases.

US announces help for underwater homeowners

By msnbc.com staff and wires

A leading housing regulator on Monday announced changes to a government refinancing program that could help up to one million homeowners of the estimated 11 million whose homes are worth less than their mortgage.

The Federal Housing Finance Agency, which oversees mortgage finance sources Fannie Mae and Freddie Mac, said it was easing the terms of the two-year-old Home Affordable Refinance Program, which helps borrowers who have been making mortgage payments on time but have not been able to refinance as home values have dropped.

To help underwater borrowers, or those whose loans are worth more than their homes, FHFA said it will scrap a cap that prohibits any homeowners whose mortgage exceeds 125 percent of the property's value from participating in HARP, which is targeted at loans backed by Fannie Mae and Freddie Mac.

"Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets," FHFA's acting director, Edward DeMarco, said in a statement.

After meeting with DeMarco earlier this month, one lawmaker said the expanded program could help as many as 600,000 to one million borrowers. But that is only a fraction of the estimated 11 million homeowners who are underwater.

President Barack Obama is expected to promote the initiative during a speech Monday in Las Vegas. Obama will also use the trip to raise money for his re-election campaign.

But even the White House is uncertain about how many homeowners it could help. White House economist Gene Sperling said Monday it was too early to project how many struggling borrowers would "benefit from the changes announced today or could be announced in the future."

The New York Times reported Monday that the initiative was part of a program the president would be rolling out to address the nation's economic woes in the face of congressional Republicans' reluctance to pass his jobs plan.

It is the latest White House effort to deal with a key factor stalling the economy -- a crippled housing market -- and adding to political liabilities for Obama, whose re-election bid is already imperiled by stubbornly high U.S. unemployment.

It remained unclear whether the Obama administration's revised approach, which falls short of an overarching plan that some experts have said is needed, will provide enough of a boost to the battered housing market to spur the stagnant U.S. economic recovery.

Earlier federal programs to curb housing foreclosures have failed to yield the benefits initially promised.

To encourage banks to participate in the program, FHFA is revamping it to protect lenders from having to buy back HARP loans if underwriting problems are later found. Banks will only have to verify that borrowers have made at least six of their last mortgage payments and the new rules eliminate the need for appraisals in most cases.

FHFA said government-controlled Fannie Mae and Freddie Mac will waive certain fees for borrowers that refinance into loans with a shorter term, such as 15 years, aiming to spur homeowners to pay down the amount they owe at a faster rate.

HARP, one of the Obama administration's anti-foreclosure efforts, was unveiled in March 2009 and was expected to help as many as 5 million borrowers. So far, however, only about 894,000 borrowers have refinanced their loans through the program.

FHFA said it will extend the effort until Dec. 31, 2013. The program is limited to loans that Fannie Mae and Freddie Mac guaranteed before June 2009.

Tips to Make Small Spaces Look Bigger

Visual tricks are a very important tool of interior design. Colors, light, furniture and decorative pieces can be arranged the right way to make a statement, or to make a space look smaller…or bigger. You no longer have to sacrifice comfort because you live in a small, enclosed place. With a few visual tricks and some key elements, any room can appear bigger than it really is.

Here are some simple tips to follow for any small room of the house:

Color:
– Light hues will open up the space, and painting the walls white will definitely maximize that effect.
– Go monochromatic. If all white doesn’t work for your lifestyle, try painting the walls, trim and detailing in different shades of one color. Pick from off-white, beige, any pastel or neutral color.
– Match the color of the furniture with the color of the walls. Stay away from contrasting colors, especially in big pieces such as the sofa.

Decoration:
– Medium-size furniture pieces work better than a big, prominent one. Avoid having many small pieces scattered all over the room, and arrange furniture at an angle to add visual interest to the place.
– Track or recessed lighting works best for small spaces. Use a torchiere lamp to bounce light off the ceiling, and get rid of heavy drapery. Let the natural light come in as much as possible.
– Mirrors are also a great way to make a room feel and look bigger. A big wall mirror right in front of a window will reflect light and color; so will a collection of smaller ones, distributed along one wall.

Organization:
– Any small space--even a tiny closet--will look bigger if it’s clutter-free. Get rid of little furniture dispersed all over, and move around pieces that block the view and walkway space.
– Designers recommend getting pieces of furniture with open arms and legs, as well as small glass-top tables, so the light can filter through.
– Make the most out of the space with multifunctional furniture. Invest in good quality pieces such as drop-leaf or removable-leaf tables and ottomans for storage and sitting purposes, among others.

By following these recommendations you can maximize the space in any room (or create the illusion of space) with the right decorative touch.

Source: At Home Rewards, Adaptive Marketing

Putting Your Best Foot Forward: High Hopes for High Appraisals

For many homeowners looking to sell their home, a high appraisal could make a huge difference in the amount of money the property actually sells for. Although there is much scrutiny about what you should or should not do to prepare for a home appraisal, many appraisers agree that keeping the home as updated and cared for as possible will take it the extra mile throughout the selling process. Here are a few tips to keep in mind when preparing for your home's appraisal:

Make your home look dapper: There is no need to panic about a couple dirty dishes, so don't sweat the small stuff. However, things like overgrown landscaping, a bug or pest problem or lackluster carpeting could affect your home's final appraisal. Try to plan ahead and update what you can before the appraiser arrives at your home.

Keep a detailed list of renovations: If you've updated any aspect of your home in the last few years, keep a running list of what was done and how much it cost. You will not only be highlighting the beneficial features of your home, but also pinpointing its worth. This will only help you in the end.

Focus your funds: Save your hard-earned cash unless you're completely positive it will yield a return. The best areas to focus on are the home's plumbing system, carpeting, lighting and paint. Prioritizing will help, but homeowners who have been attentive throughout their stay should not have a problem.

Location is always crucial: Have there been any updates to the surrounding area or neighborhood? Has your area been deemed a historic district? Is there a new shopping plaza or large chain retailer? Be sure to mention this to your appraiser - it could help toward the final tally.

Hide the pets, crank the heat. Make sure the appraiser is as comfortable as possible. Lock up intrusive pets. If it's hot out, turn up the air conditioning. If it's cold, crank the heat. You don't want the appraiser to question whether or not your system works.

Before scheduling an appraisal, make sure to finish any projects that may remain on your to-do list. They very well could affect your final appraisal.

Source: wsj.com

5 Ways to Know If A Home Is "The One"

By Tara-Nicholle Nelson

With so many homes on the market, many buyers house hunt for months, even years before hitting property pay-dirt.  Even for the savvy buyers who have narrowed their house hunt to an affordable price range, the condition issues so common in distressed homes can make choosing a home difficult.

And on the flip side, some subdivisions have scads of similar homes, all of which are in good shape, all listed at a similar price, making it nearly impossible to choose just one.

Here are five indicators that a particular home you’re viewing might be “The One” – the property on which you’ll want to place an offer:

1.       You feel possessive about it, instantly. I once showed a less-than-fabulous home to a buyer who stepped in the front door, opened her eyes wide, and uttered in a much-quieter-than-normal voice, “I would cry.” We got a good laugh out of this later, after she found and bought a home that made her feel virtually the opposite.

Not only did the winning home bring a smile to her face, it also made her instantly possessive. She didn’t just want it - she wanted it immediately. She could barely even wait to write the offer paperwork! When another agent showed up to bring a buyer through the place while we were still there, she lingered leisurely (in hopes they would just leave) and secretly looked at them with daggers in her eyes (out of competitiveness, because in her heart, the home had already become hers).

If you walk through a place and leave wondering how quickly you can get your offer in, how much you’d offer to beat someone else out, or what you can do to lock it down quickly, it might be “The One.”

2.       You start rationalizing its flaws away.  Train tracks 10 feet from the bedroom window? Next door neighbor that runs a pigeon-sitting service? Okay – I exaggerate. But if you find yourself viewing a home with traits that you would normally deem undesirable or as deal-killers, yet you like the place so much that you instinctively compile a mental list of reasons those traits just don’t matter, you might have found “The One.”

Now, smart buyers should be aware of a syndrome I like to call “Pottery Barn Psychosis,” whereby the aesthetics of a wonderfully staged home with amazing curb appeal can hypnotize a buyer, rendering them blind to the negative property features, which would be glaring or grave concerns if the place weren’t so stinking cute. It’s fine to make a conscious decision that the pros of a place outweigh its cons, and even to consciously re-rank your priorities in light of a particular property’s advantages. But buyers should take steps to avoid falling victim to Pottery Barn Psychosis (and the Buyer’s Remorse that often follows suit) by writing down your absolute musts and deal-breakers before you ever step foot in a single property – and by revisiting this document before you write an offer and again before you remove your contingencies.

3.  The bathroom and kitchen don’t disgust you. We humans are born with only two fears in life: the fear of falling and the fear of loud noises. By about eight months old, we start to acquire new fears, and most of us never stop.  Among the first fear most people learn: the fear of other people’s kitchens and bathrooms.

I exaggerate (again!), but it is true that generally speaking, other people’s kitchens and bathrooms hold definite gross-out potential.  There’s just something about what goes on in those rooms that seems exceptionally intimate and even unsanitary.  So, if you happen to find yourself falling in love with a home’s river rock shower floor or drooling over the pot-filler over the stove and the built-in cookbook stand on the countertop, that’s a sign that you’re falling head over heels with a home that might just be “The One.”

4.  You involuntarily envision your own family, furniture, decor, daily activities or remodeling choices in/to the home.  They say that the best staging helps prospective buyers envision their own idealized lives taking place in the staged home.  But whether or not a property is staged, if you find your mind’s eye Photoshopping a given property to insert your own kids and sofa into the living room, your dining table and favorite wall hangings into place in the dining room, and your daily meditation in the breakfast nook – or even start mentally removing walls entirely – it’s entirely possible that the home you’re in could be “The One” for you.

5.  You lose interest in seeing other homes.  I once took some buyers out for their first house hunt in my territory after they’d spent two years looking for homes in a neighboring area, without ever making a single offer.  I’d planned to show them seven homes, but when they got to the fourth property, they declared that they’d found their home, and they neither wanted nor needed to see any more.  I insisted that they finish the list, if for no other reason than to confirm their choice and to avoid feeling later that they hadn’t seen enough nearby homes to compare theirs to.  They humored me and saw the last three places on the list, then promptly bought house #4 and still live there, blissfully happy, to this day.

When you find “The One,” continuing the house hunt you may have obsessed over for months, even years, starts to seem silly, like a waste of the energy you could be using to move into your new home.

Researching the Perfect Neighborhood

There’s an episode of the hit TV series How I Met Your Mother where the characters of Marshall and Lily decide to buy a home in a neighborhood they are unfamiliar with, only to learn later that it sits downwind from a sewer plant. The message is obvious: A buyer must do his or her due diligence on prospective neighborhoods to make the best real estate decisions.

For starters, investigate the local school district, as good schools boost your property value. Research the closest parks and community centers and consider how busy streets impact the neighborhood.

According to Florida-based REALTOR® Caprice Atwell, profiling the perfect neighborhood also involves meeting prospective neighbors. Walk through the area and say hello to people and ask them for their impressions of the neighborhood. While you’re at it, look around. Are there lots of kids on the block? Do people walk or jog through the neighborhood at night? A neighborhood can speak volumes by itself.

Don’t forget to map out stores and restaurants in the area. You may be used to a five-minute drive to the local grocery store, only to find out that your new home is 25 minutes away from the nearest place to buy milk. Of course, find out if your potential new home is part of a neighborhood association bearing regular fees, or if your community has lawn or construction restrictions, says Atwell.

A good agent can furnish you with a wealth of local information, and will take you on a tour of the closest commerce centers, restaurants and shops.

With a little groundwork you can help ensure that your dream house is surrounded by a dream neighborhood.

The Federal Government Takes Action on Radon Gas to Prevent Lung Cancer Deaths in 2011

October 17-24 is Federal Radon Action Week according to The Surgeon General. Health agencies throughout the United States have joined forces to promote awareness of the leading cause of lung cancer for non-smokers. The American Lung Association, Centers for Disease Control and the National Cancer Institute all agree that radon is a national health problem and encourage radon testing during the October awareness drive. Radon is a naturally-occurring, invisible and odorless radioactive gas. One in 15 American homes contains high levels of radon. Millions of Americans are unknowingly exposed to this dangerous gas. In fact, a recent study by Harvard University ranks radon as America’s #1 in-home hazard. By taking simple steps to test your home for radon and fix if necessary, this health hazard can be avoided. Radon gas is not isolated to certain geographical areas or home types. Radon problems have been detected in homes in every county of the U.S. It caused more American fatalities last year than carbon monoxide, fires and handguns combined. If a home hasn't been tested for radon in the past two years, EPA and the Surgeon General urge you to take action. Contact your state radon office for information on locating qualified test kits or qualified radon testers. The federal commitment made by EPA, the General Services Administration and the departments of Agriculture, Defense, Energy, Health and Human Services, Housing and Urban Development, Interior, and Veterans Affairs will focus efforts on radon reduction and mitigation in homes, especially those of low-income families, many of whom do not have the resources to make the simple fixes necessary to protect their homes and loved ones. Learn more about the Federal Radon Action Plan at www.RadonPlan.org. For more information about the Federal Radon Action Week, visit www.RadonWeek.org.

Myth-busting the Home Buying Process

Whether you are a first-time buyer or a seasoned veteran who has been out of the game for awhile, buyers should always be aware of and note certain home buying myths that abound. It's easy to get caught up in the excitement of buying new property, but by being educated and realistic, buyers can avoid a few common-yet-untrue beliefs as they venture toward closing a deal. The Myth of "The Perfect Home" Along with all that excitement comes the dreams of your ideal home. If the vision you've set for yourself is too close to perfection, you may not find what you're looking for. Every house is bound to have something wrong with it. If a home is nearly perfect, don't nitpick over smaller needs and priorities. Lock it down before it gets snagged. The Myth of "The Speaking House" It's human nature to get a certain "feel" to a house when first walking through it. As they always say, first impressions go a long way and the same rings true with real estate. Buyers, however, should try to fight initial gut feelings. More than likely the home was staged for buyers to feel an emotional tie to the décor. Look past the paint and décor to figure out if a home is right for you. The Myth of "The Old Furnace" An old furnace can sometimes be difficult to maintain or replace, but don't let it be a deal breaker for an otherwise suitable home. The same goes for other issues such as a roof in need of repair, old wiring, etc. If everything else is in order without needed repairs, the home in question can still be a great choice for your investment. The Myth of "The House to Grow In" First-time buyers always get the advice that they should buy up so that they can grow into a house - for instance, should a couple be planning for children. Look at your current needs, not what you'd like to have down the road. If you end up needing more space for a larger family down the line, you can always sell and move up later. The Myth of "The Negotiation Winner" Don't feel like you have to win the negotiation. The winner is not the person to have the last word, but rather, everyone when the deal is truly a fair one. Don't sweat the small stuff, and remember that it is a business transaction - leave those emotions and egos at the door. The Myth of "The Best Deal" Don't fall into the frame of mind that thinks foreclosures are always the best deals. Though they can sometimes save in large amounts, oftentimes there's a lot of work and repair to be done. Foreclosed homes are occasionally not left in the best condition. Sometimes the easiest transaction is buying from a seller and negotiating until an agreement can be reached. When buying a home, it's important to separate hearsay from your actual needs, wants and beliefs. Try to view every property with a clear mind and minimal expectations. Avoid these real estate myths to reach your own conclusion based on your needs, and most importantly, never say never. Source: FrontDoor.com

Why Choosing the Perfect Neighborhood is Just as Important as the House Itself

By Keith Loria

It’s easy to fall in love with a house, but buyers need to think about more than just the home itself before deciding to live there. While the home may have the perfect number of rooms, a large play area for the kids and that master bathroom you have always dreamed about, you also need to consider the neighborhood in which the home is located.

That’s why before buying any home, a buyer should explore the surrounding neighborhood and area to make sure it has everything they want and need.

For buyers with children or those thinking of starting a family, the first thing you will want to look at is the local school system. You’ll also want to research the closest parks and community centers and consider how busy the streets in the neighborhood get. Even if you are single, living in a top school district will raise your property value.

Another consideration is your daily commute to work. You’ll want to understand the traffic patterns to and from your job and figure out if you’re going to be sitting in traffic for several hours a day. Researching the local mass transit system is also important, as you may want a neighborhood that gives you the option to not have to drive to work.

Profiling the perfect neighborhood also involves scoping out the neighbors themselves. Are there a lot of kids on the block? Are there neighborhood events? Do you see a lot of fences and “Keep Out” signs? It’s never a bad idea to take a walk through the neighborhood and say hello to some of the people you see and ask about the neighborhood before putting in an offer.

Don’t forget to map out stores and restaurants in the area as well. You may be used to a five-minute drive to the local grocery store, only to find out that the home you are interested in is 25 minutes away from the nearest place to buy milk. And if you like to walk to stores and shops, make sure to tell your agent that you want a place where this is possible.

You also want to find out if your potential new home is part of a neighborhood association and if your community has lawn or construction restrictions and if there’s a yearly fee involved. The last thing you want is to find out that you can’t put those holiday decorations up because of a strict town ordinance.

Also consider warning signs that the neighborhood could be in trouble. If you see abandoned buildings, vandalism or a lot of “For Sale” signs, it could be a sign that the community is heading in the wrong direction.

A perfect home isn’t always in the perfect neighborhood and you’ll want to make sure that both meet your expectations.

Avoid Common Mistakes as an Investor

Given the current economy and housing market, now is as good a time as ever to purchase real estate with the intent of renting. For investors looking to hold on to a property for the long haul, there is great money to be made with the right plan in place. However, nothing is ever a sure-shot. If you plan on picking up a piece of rental housing, be sure to avoid the following mistakes to ensure long-term success:

Don't assume a cheap deal is a good one. It's true that there are definitely inexpensive properties out on the market, but don't be too hasty when deciding to buy one. If the neighborhood or area is deserted and vacant, it won't be that appealing to future renters and you could run the risk of having your rental go uninhabited. Do some homework about the town, city or neighborhood before you sign the dotted line.
Don't overlook various costs. Sure, the price is attractive, but have you factored in closing costs? How about maintenance or repair costs? Do the math before buying so you can be sure to not bite off more than you can chew.

Every day your property is empty, you lose money. Avoid any type of extended vacancy in your property. If the property is empty, you aren't making any money. Between tenants, be sure to clean and repair quickly so that a new one can move in.

Understand that being a landlord is hard work. Don't assume that you will get to sit back and watch the rent checks flood in. Not only will there be maintenance work to do throughout the year, but you should also have concerns about finding the right tenants to rent the place. If your renters stop paying, it could take weeks or months to properly evict them. Some landlords may even run into issues relating to theft. Properly screen all possible candidates whenever possible.

Don't assume that owning a rental is the same as owning a home. There are many laws that vary by state that all landlords must abide by. Renters will always make various demands and requests and will definitely take up some of your time. Hiring a property manager is also an option, but with it comes yet another added expense. Make sure you are mentally and financially prepared to take on the task of becoming a landlord.

By being prepared and learning about what it truly takes to become a landlord, you can avoid making one of these common investor mistakes.

Source: www.wsj.com

Colorado Springs Market Analysis for September

• September home sales in Colorado Springs increased 11.4% from the same time last year.  672 listings sold.
• The Average price was down 5.2% ($218,526).
• The Median price was down 4.0% ($187,250).
• The Inventory of Unsold homes was 4,183 which was a dropped of 24.5%. That's just over a 6 month supply. Real Estate Experts consider that to be a sign of a Normal Market. Since this has been constant in the past few months, date is indicating supply and demand are roughly in balance.
• The Selling Price to List Price Ratio was 95.86%.
• Disclosed Distress Properties equaled 14.4% (97) of the homes sold in September. This particular figure is likely under-reported because of agents not wishing to disclose when a home is subject to short sale approval. This figure has steadily declined since January from a high of 27.2%, and is currently at its lowest point since September of 2007.
• These figures are also indicating buyers are taking advantage of low interest rates, which in come cases are now below 4%.

For more details, see the Colorado Springs Homes Sales Trend Data

4 Credit Myths- Busted

When it comes to credit, sometimes the largest challenge is the most difficult to surmount: we simply don’t know what we don’t know, so our assumptions and inaccurate beliefs run wild and free through our mental real estate. Most of the time, there’s no harm; following finance fundamentals like paying every bill on time, every time, keep us out of credit danger zones.

But when it’s approaching the time to buy, refi or even rent a home, relatively small credit score differences can stop you from getting your dream home, and can cost (or save) you thousands of dollars in interest over the life of your loan.

If you’re at a time in your life where it makes sense to invest some time and effort into optimizing your credit score, here are five common credit myths we’d like to help you bust without further ado:

Myth #1:  Having lots of cash, a great income, or tons of equity, makes your FICO score less relevant.
Fact:  No matter how much cash you have, if you want a mortgage, you must meet the lender’s FICO score guidelines.  Of course, if you’re flush with cash, it should be relatively easy to make your monthly payments on time.  But if you have come into cash relatively recently or you’re coming off a rough financial patch, lenders don’t not look at your credit score on the theory that your other assets diminish your credit riskiness. Most lenders want nothing more than to avoid having to foreclose on a home, even if the homeowner has other assets.

And the best predictor of whether you’ll default on a loan in the future is how you’ve handled your credit in the past, so your credit score will drive whether you qualify for a home loan and what interest rate you’re charged, no matter how much you make.  

Two exceptions: if you buy a home with all cash, or take a hard money loan, which usually requires a much larger-than-average down payment and interest rate, you might be able to bypass credit score scrutiny, but you’ll pay for it.

Myth #2:  Having no debt or no late payments means you have great credit.  

Fact:  Financial responsibility and good credit are two different things. Your FICO score is meant to be a measure of your responsibility when it comes to managing debt, as proven by the fact that you have credit accounts, use them regularly and don’t abuse them.

Having no credit accounts or debts doesn’t give you good credit - it gives you no credit.  And on the other end of the credit usage spectrum, being maxed out on various credit accounts all the time, submitting lots of credit applications and other credit moves that indicate you may abuse your credit can actually depress your score.  Best practice is to have several credit accounts (student and car loans count!) that you actively and responsibly use on a monthly basis.

Tip: FICO gives a top score to accounts with balances that are 30 percent of the credit limit, so if you can keep your credit card or loan account balances at or around that mark, even better.

Myth #3:  Checking your own credit score in advance prevents surprises when you apply for a mortgage.

Fact:  Your mortgage originator (broker or banker) must pull their own version of your report from their own provider, and it might have a very different score, rating scale or even different line items than the free or paid report you pulled online.  This is why it’s imperative to start working with a mortgage professional as early as possible - a year in advance is not overkill - so you can detect any errors or issues and get their recommended fix in the works with plenty of lead time.

Myth #4:  If you’ve had a foreclosure or short sale, your credit report will be damaged for 7 years.
    
Fact: Derogatory credit items, like late mortgage payments, foreclosures and short sales, appear on your credit report for 7 years, but your credit score can be rehabilitated enough to buy a home or obtain other credit in less time, depending on your circumstances. Your post-short sale or foreclosure waiting period depends on a number of things, including what type of loan you’ll be seeking to buy your next home with, how much cash you’ll have to put down and whether there were any extenuating circumstances involved in losing your home in the first place; some loans allow for an immediate purchase, others require a waiting period of 2, 4 5 or even 7 years after the loss of a home.

Of course, your FICO score is also a key criteria in a post-home loss “buy,” but interestingly enough, the length of time it takes to get your FICO score back up depends on how high it was beforehand.  Earlier this year, the New York Times reported that it would take a consumer with a 680 FICO score three years after a foreclosure to bring their score back to that level, while it might take someone with a 780 FICO score (near-perfect) seven years for full score recovery.

And keep in mind that as your foreclosure or short sale ages, its impact on your score will decrease, too.

Local homebuilding soars in September

RICH LADEN

THE GAZETTE

Home construction jumped last month in the Pikes Peak region, giving the local homebuilding industry a boost as it claws back from a downturn that began four years ago.

Single-family building permits in Colorado Springs and El Paso County, which measure the pace of home construction, totaled 124 in September, a 53.1 percent increase over the same month last year, according to a report released Monday by the Pikes Peak Regional Building Department. It was the third year-over-year gain in permits during the last four months.

Through the first nine months of 2011, single-family permits totaled 1,058, a 4.7 percent decline over the same period last year.

While September’s numbers showed a sizeable year-over-year percentage increase, they also need to be kept in perspective.

In September 2006, before the local and national recessions hit, building permits totaled 219. In September 2005, single-family building permits were more than three times higher than in September 2011.

Still, the latest monthly figure was encouraging, said John Cassiani, an executive with the Banning Lewis Ranch Management Co. and incoming board president of the Housing and Building Association of Colorado Springs.

“I’m just hoping that this means the Colorado Springs area is becoming a little more stable in terms of housing starts,” Cassiani said. “It’s still tough out there, but there’s some positive news.”

Homebuilders in the Banning Lewis Ranch continue to construct and sell houses, despite the bankruptcy of the ranch’s owner last year, Cassiani said. Home sales in Banning Lewis probably will total 75 to 80 this year, better than what he expected, Cassiani said.

Another recent positive development: Local builders Classic Cos. and Vantage Homes announced last month they were taking over Promontory Pointe in northern El Paso County, pumping life into a housing development that had languished because of its previous owners’ financial troubles.

Likewise, Wal-Mart and Agilent Technologies are moving ahead with construction of data centers in the Springs, which will add jobs in the area, Cassiani said.

“Consumer confidence is still tough out there, the job market is still tough,” he said.

But mortgage rates remain at 60-year lows, which might be driving a decision for some buyers to take the plunge — assuming they can qualify for a loan, Cassiani said.

“There might be a feeling that it’s not going to get much lower in terms of rates or (home) prices,” he said. “If you feel secure about your job at all, it’s a fantastic time to buy a house.”

El Paso County foreclosure filings, meanwhile, totaled 300 in September, according to the El Paso County Public Trustee’s Office. That’s the third-highest monthly total this year, yet it’s still down 20.4 percent from September 2010.

The overall pace of foreclosure activity in the Pikes Peak region also has slowed noticeably in 2011. Through the first three quarters of the year, foreclosure filings — the start of the legal process that can lead to the loss of a home or other property — totaled 2,615, down 26.9 percent from the same period last year.

The area is now on pace to finish 2011 with about 3,800 foreclosure filings, which would be the fewest since 2007, Public Trustee Tom Mowle said in his monthly report.

Still, this year’s foreclosure filings will be significantly higher than 10 to 15 years ago; for most of the 1990s, annual foreclosure filings never topped 1,000 in El Paso County.

Read more: http://www.gazette.com/articles/year-126075-last-september.html#ixzz1Zr3XyKGt