REAL ESTATE

Investors like companies related to housing

Rising home prices have also bumped up stock prices for builders like KB Homes and Toll Brothers. This has investors eyeing the stocks of all sorts of home companies such as appliance makers, building materials, flooring, paint and pick up trucks, as well as home improvement companies. Investors expect building and remodeling trends to rise as the economy continues to improve and low mortgage rates fuel demand for both new and existing housing.

Home prices are rising, and investors think a shortage of homes on the market will make home prices rise even more. Even so, they say more buyers will be making deals or wanting to invest in their homes.

What a buyer should know about open houses

It's an open house — the first thing you know is that it will be beautiful. Or as beautiful as possible. Don't let the decoration sell you. Almost everyone stages a home. As a buyer, the main things you have to focus on are structural issues. You can ask for a disclosure sheet that lists known issues. You'll want to turn on faucets, flush toilets, check closets.

Some of the best information can come from other visitors to the open house. Neighbors know a lot about the area and the home. Why did the seller move? Was the house vandalized while empty?

While you are in the neighborhood, look around. Follow the route you will take to work. The neighborhood will be important to your happiness in the house.

Ask the agent at the open house about upgrades to the property and why the seller moved or is moving. If the listing agent is hosting the open house, feel free to question him or her. Ask if there were upgrades to the property, whether there are offers and why sellers are moving.

Home equity loans and cash out refis are back... sort of

About 1.7 million homeowners regained equity in their homes last year, and an additional 1.8 million are close to it, according to a recent study by CoreLogic. All they need is home values to go up by another 5 percent, CoreLogic says.

As home prices rise, millions of homeowners might consider turning their homes into a potential source for a loan. Cash out refinances and home equity loans, which were popular during the housing boom, are slowly returning along with the temptation to tap into equity.

"I'm starting to see some of that," says Michael Becker, a mortgage banker at WCS Funding in Baltimore. He says he has recently received a couple of inquiries from parents who are thinking of using some of their equity to pay for college expenses. Another client is considering a cash out refinance to pay off credit card debt.

Your home as an ATM: Lenders remain somewhat reluctant because these types of loans contributed to the mortgage meltdown as homeowners turned their homes into bank machines. But borrowers who have good credit scores and sufficient equity should be able to find lenders willing to do cash out refis and home equity loans.

Kitchen updates that don't break the bank

Designer Stephen Saint-Onge, author of No Place Like Home, offers these tips for renewing your kitchen:

• Focus on the feeling you want, down home, vintage, or modern.
  
  
• Workflow: If your sink, stove and fridge don't form the recommended work triangle, think about how to improve efficiency and workflow.
  
  
• Lighting: To bring more life to the room, layer your lighting. Use pendant fixtures as well as fixtures that go under cabinets and on the ceiling. LED light bulbs lower the electric bill and last longer so you won't need to change bulbs as often.
  
  
• Comfortable seating: Either at the countertop or with a long built in bench. Soften the feel with cushions and pillows.
  
  
• If you have the space, consider using a table that seats up to six people. Use padded chairs with arms. Wheels are a plus. The table offers plenty of space for reading the mail, spreading out the newspapers you're reading, or for kids to do their homework.
  
  
• Flooring: Pick a floor covering that's durable for heavy traffic and comfortable to stand on. Experts at floorbiz.com say cork flooring is environmentally friendly, thermal insulating, fire resistant, sound absorbing, extremely durable, and best of all, the most comfortable floor you'll ever walk on.

We've sold our home and will be selecting a new mortgage on a new home.

What kind do you recommend?

Certainly there are many factors to consider:

• If you can make a down payment of 20 percent, whatever mortgage you choose, you won't have the cost of mortgage insurance added to your monthly payment. Many buyers can't come up with the large down payment, but mortgage insurance is only charged by mortgage companies until equity reaches 20 percent.
  
  
• Many conventional mortgage lenders ask for 5 percent to 10 percent down.
  
  
• What is your credit score? To qualify for a conventional mortgage you need a score of 640 or higher. But if your score is lower, you can still quality for an FHA mortgage, a VA mortgage or the USDA loan which is for people in rural areas.
  
  
• How long will you stay in the house? If that might be for just a few years an adjustable rate mortgage might be a good choice. Consider it if you are in the military, your job requires you to move every few years, or if this is just a "starter house" for you.
  
  
• If you plan to live in the home for a lifetime, a 30 year fixed rate, or a 20 year fixed rate would be better. Or, if you can afford the higher payments on a 15 year fixed rate mortgage, you'll get the best interest rates of all.
  
  
• The big advantage of an FHA mortgage is its low down payment requirement, just 3.5 percent. They account for 30 percent of all mortgages today. But if you have to move in very soon beware, it takes a longer time to get one.
  
  
• Adjustable rate mortgages may have a term of three, five or seven years. Your monthly payments during this time will be significantly lower, but when the term expires, you'll pay significantly more. Or, if conditions are right, you could get a new mortgage from another lender.
  
  
• The VA loan is for service members or (this is important), for former service members. Additionally, you could get another even if you already have an existing VA mortgage in good standing.

Foreclosure aid

A small but growing number of employers help their people avoid or cope with foreclosure on their homes. The aid may be in the form of an interest free loan, a grant, aid in finding a low cost apartment or aid for security deposits. Loans are sometimes set up for payroll deductible payments to be made over time.

A survey by the Society of Human Resource Management shows that members reported a 20 percent increase in requests for pay advances in 2007. And 39 percent of HR managers saw an increase in 401k withdrawals. Some companies offer confidential or anonymous phone counseling on
financial matters.

Advisors on work/life issues at SAS Institute, Inc. say helping people through a financial crisis makes sense. When people are worried about losing their homes, productivity and creativity suffer.

The perils homeowner's insurance won't cover

If your house burns down, the insurance company will pay. Ditto if a tornado blows it away. Some homeowners have been surprised to discover that their homeowner's insurance does not cover flood damage or damage from earthquakes and landslides. Other common exclusions include damage from mold, broken pipes due to lack of routine maintenance, and sewage backups.

If you live in a high risk area for floods your mortgage company will require you to carry flood insurance. Even if the risk is fairly small, flood insurance is a good idea though it can cost $1,700 a year or more on a $150,000 building and $50,000 in coverage for contents.

Consider what problems place your home at the greatest risk and beef up coverage by adding endorsements, say experts at thisoldhouse.com.

© 2013 TLC Magazine Online, Inc.