Common homeowners' fears and what to do about them

My house is ruining my sleep. I'm used to the sanity-busting clanging that our vintage steam heat pipes make when the furnace fires up. The mysterious scratching noise coming from the living room wall has stopped.
But I still can't get a good night's sleep because I keep thinking about what serious homeowner disasters await me. And I never find the time to answer these persistent questions.

This year, though, I am resolving to silence all my nagging worries (will the new flat-panel TV push our anemic electrical system over the edge?).

Putting your mind at ease about these four big fears can leave you with better finances and a better night's sleep.

Is my house falling apart?

Worried that something is seriously wrong with the crack in the basement? Stop fretting and get advice. Home inspectors don't work only for buyers; you can call one anytime to get an educated opinion about whatever keeps you awake.

For $250 to $350 on average, an inspector will look over your home's structure and systems. Find one in your area at ASHI.org, the Web site for the American Society of Home Inspectors, which also has a virtual home-inspection tool so you can see what a typical checkup covers.

Interview a few pros to make sure their field experience matches the type of home you own.

Do I have enough insurance?

The housing boom has lifted home values 51 percent over the past six years. For most of us that means that if our house was destroyed, insurance would pick up only a portion of the cost to rebuild.

For the underinsured, the average shortfall is 21 percent, according to one firm that tracks building prices. Even if you bought a guaranteed replacement or an extended replacement policy, you could still face too-low coverage caps. (For more on being adequately insured, read the story here.)

To see how much coverage you need, have a contractor estimate the cost of rebuilding. And don't forget to check your contents coverage, which is often inadequate.

Water is your home's biggest enemy, and your regular policy won't cover all types of damage. If you live in a floodplain, you need flood insurance (contact the National Flood Insurance Program at 888-379-9531 or floodsmart.gov). You'll pay $1,000 a year on average if you live in an area that's susceptible.

Can I afford my mortgage?

Over the next few years, about 8 million adjustable-rate mortgages will reset. If yours is among them, you need to decide whether to refinance now or later. Check the fine print on your mortgage to see how bad it can get in the first reset and over the life of the loan.

While it may seem like a no-brainer to refinance now, you may not need to rush because rates aren't expected to climb sharply this year. What's more, you could pay closing costs of 2 percent to 3 percent of the loan. Use the fixed-vs.- adjustable tool in the calculator section of Bankrate.com to help you make the call.

Am I paying too much?

Another nagging concern may be that you're spending money on your house for no good reason. If you bought after July 1998 with less than 20 percent down and had to get private mortgage insurance, your lender must automatically cancel your PMI once you've paid off 22 percent of the loan. But price appreciation may help you hit the target earlier.

This annoying fee can run $16 to $50 a month for every $100,000 of debt. However, before you pay $300 or so for an appraiser to prove that your home's greater value has pushed your equity higher, understand what it will take to waive PMI. Mortgage terms vary.

This article was written by Gerri Willis.

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Getting Prequalified

This is a great time to be in your new home for spring & summer season ahead. When you are prequalified, you are already ahead of most of other buyers. Here are some reasons to get prequalified:

• With prequalification, you have plenty of time to determine which loan program best fits your needs and which programs you quality for.
• You will know exactly how much you are qualified for. It's no fun to find the ideal home and then find out you can't afford it
• Your monthly payment will be set. This will allow you to budget your money before making this large investment.
• You will learn what the down payment and closing cost will be.
• If you are a first-time buyer, you may be able to qualify for a special program which may expand your buying power by giving you a lower rate or supplementing your down payment.
• If you feel that you can afford a higher mortgage payment but are no able to meet qualifications, co-mortgagor financing may be available to you.

Most Real Estate Agents & Lender recommend that home buyers get prequalified with a lender before selecting home to purchase. This way you will have the best information about your price range.

For any questions feel free to contact us, we have been in business for long time and work with some of the best people out in Mortgage industry. Thanks!

6 Renovation Projects that Make $ense

KNOW WHICH UPDATES WILL PAY OFF THE MOST

1. High-end siding replacement - It might not be as sexy as a new kitchen or bathroom remodel, yet a large-scale siding project - replacing at least 1,250 square feet of existing siding with new fiber­ cement siding, and including 4/4 and 5/4 trim using either fiber-cement boards or PVC lumber ­returned 103 percent of its average $10,393 cost. Siding is most popular in the East, fetching 115 percent of its cost. A more budget -conscious vinyl-siding replacement including trim returned 95.5 percent of its cost.

2. Midrange bathroom upgrade - Updating an existing 5-foot-by-7 -foot bathroom - with a porcelain-on-steel tub and 4-by-4 ceramic tile surround, new single-lever shower control, standard white toilet, solid-surface vanity counter with integral double sink, recessed medicine cabinet with light, ceramic tile floor and vinyl wallpaper - returned 102.2 percent of its $10,499 average cost. Such a project returned 112 percent in the West; 103.3 percent in the South.

3. Minor kitchen remodel - Kitchens remain the heart and soul of a home, and usually are the focal point of most homebuyers. Kitchens also suffer the most wear and tear in a home, and more quickly than other rooms fall behind changing style and color trends. A minor remodel of a 200-square-foot kitchen with 30 linear feet of cabinets and counters ­including cabinet resurfacing and new, raised panel doors and drawer faces, a new oven and cook top, mid-priced sink and faucet, and new resilient flooring - returned 98.5 percent of its $14,913 price tag. A midrange job with new cabinets, a small island and additional appliances and lighting costs an average of $43,862, returning 91 percent of that total.

4. Attic bedroom addition - Homeowners who created a third or fourth bedroom from unfinished attic space - typically a 225 square-foot room with a 5-foot -by-7 -foot bathroom and shower - paid an average of $39,188 for the project, which returned 93.5 percent of that cost at resale. Bottom line: Consider a project that creates something from nothing, such as the addition of valuable square footage.

5. Deck addition - Decks expand your living space at a fraction of typical construction costs. They let homeowners cook, entertain and enjoy the great outdoors, right outside their sliding-glass door. Adding a 16-foot-by­20-foot deck using pressure-treated lumber joists supported by 4-by-4 posts set into concrete footings returned 90 percent of an $11,294 price tag. Similar decks on average returned 99.5 percent in the West.

6. Window replacement - Greater home efficiency is nearly always a good investment, paying off in lower energy bills and greater comfort long before you sell. A typical project - replacing 10 3-foot -by-5-foot, double-hung windows with new double-glazed windows clad in vinyl or aluminum - returned 89.6 percent of its $9,684 sticker.

REMEMBER: ALWAYS MAKE IMPROVING YOUR QUALITY OF LIFE THE TOP PRIORITY OF ANY RENOVATION PROJECT

New-Home Sales End Year On High Note, Up 4.8% In December

Housing demand showed further signs of stabilization heading into 2007, as sales of new single-family homes rose 4.8 percent to a seasonally adjusted annual rate of 1.12 million units in December, according to figures released today by the U.S. Commerce Department.

“Today’s housing report squares with our most recent builder surveys, which show that traffic of prospective buyers is up and consumers are responding favorably to price adjustments and widespread sales incentives,” said David Pressly, president of the National Association of Home Builders (NAHB) and a home builder from Statesville, N.C.

On an annual basis, new home sales registered 1.061 million units in 2006.
While this represents a 17.3 percent drop from the all-time high achieved in 2005, the sharpest percentage decline since 1990, the sales level was on par with the solid sales numbers registered in 2003, which preceded the unsustainable housing boom of 2004 and 2005.
On a quarterly basis, new home sales posted a rate of 1.061 million in the final quarter of 2006, up from 1.007 million in the third quarter, the quarterly low-point for the year.

“The stabilization of home sales and housing demand that we are now seeing is the first step required to put the housing market back on track,” said NAHB Chief Economist David Seiders. “The second step is to whittle down the inventory overhang, which builders have been doing since July, and the final step will be to bring housing starts back up to sustainable levels. We anticipate that starts will bottom out in the first quarter of this year and that residential construction activity will be moving up by the second half of 2007.”

The inventory of new homes for sale hit a 10-month low of 537,000 units in December, which is equivalent to a 5.9-month supply at the current sales price – down from a recent high of 7.2 in July.

On a regional basis, new home sales were up 27.3 percent in the Northeast,
26.6 percent in the Midwest and were flat in the South. Sales fell 4.4 percent in the West. Seiders noted that unusually warm weather conditions probably boosted sales in the Northeast and Midwest regions to some degree in December, but that the stabilization pattern evident in the fourth quarter is quite convincing and consistent with other available housing indicators, including NAHB’s survey measures."