The article, "Buying a Home Won't Get Much Cheaper," cites jobs growth, low mortgage rates and the falling number of distressed sales as key factors to an improved real estate market outlook.

While buyers are anxious to get into the market, inventory levels in many cities are well below normal making it feel more like a seller's market than a buyer's market. Buyers are advised to continue looking if they are ready to purchase, but it may take longer than anticipated to find their dream home. Price gains are expected to be modest in most markets, according to the experts, but along with modest price gains there are likely to be modest gains in interest rates. 

Thinking of buying? Don't think on it too long!

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.
2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.
3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.
4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.
5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.
6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.
7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.
2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.
3. How much does the association keep in reserve? Plus, find out how that money is being invested.
4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs.To determine if the assessment is reasonable, compare the rate to others in the area.
5. What does and doesn’t the assessment cover? Does the assessment include common-area maintenance, recreational facilities, trash collection, and snow removal?
6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.
7. How much turnover occurs in the building? This will tell you if residents are generally happy with the building. According to research by the NATIONAL ASSOCIATION OF REALTORS®, owners of condos in two-to-four unit buildings stay for a median of five years, and owners of condos in a building with five or more units stay for a median of four years.
8. Is the condo building in litigation? This is never a good sign. If the builders or home owners are involved in a lawsuit, reserves can be depleted quickly.
9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer’s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren’t in good repair, they become your problem once you buy.
10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you’re buying, may require separate assessments.

It's possible that you are responsible if information about potential water intrusion was disclosed to you before you closed the sale and you accepted the property in its "as is" condition regarding this.

For example, if there are trees overhanging the roof gutters, and the sellers and your home inspector told you the gutters need to be kept free of debris, you probably won't get very far asking the sellers to repair roof leaks if it turns out they were caused by your lack of maintenance. When gutters get clogged, water can back up and run into the house.

The first thing you should do if you discover a defect after closing that you think is either a new condition or something you're sure has happened in the past is to look through the inspection reports and disclosures, if there were any, to see if you were made aware of this before you bought.

Plenty of paperwork is generated during today's home-sale transactions, but many buyers and sellers are prone to recycle most of it as soon as the sale closes. It's a good idea to reduce the amount of paper, but not the critical information you'll need for tax purposes, such as your settlement statement and documentation of the property's condition.

Ideally, the purchase contract and addenda, any disclosures and all inspection reports should be burned to a CD for your records before recycling the paper copies.

What should you do if you clean the gutters but the roof still leaks during the next rain? Did you have the roof inspected before you bought? Was maintenance recommended? Did you have the work done? If so, call the roofer. If the seller hired a roofer to maintain the roof, make sure you have documentation that identifies the work that was done, and contact that roofer.

Dealing with defects discovered after closing is not always black and white.

For example, let's say the sellers told you that they occasionally found a small amount of water in the basement after a heavy rain.

In fact, the basement floods when it rains so that it can't be used for storage, and the flooding is rusting the bottom of the furnace and the hot water heater. A fix for a problem like this could be expensive if it requires a new drainage system.

HOUSE HUNTING TIP: Your purchase contract should detail how disputes will be dealt with if they can't be solved by the parties involved or with the help of their real estate agents.

Some contracts call for disputes to be mediated before they are either resolved through arbitration or in court. In any event, you should contact a knowledgeable real estate attorney for answers to any questions regarding who's responsible for defects disclosed after closing.

Be sure to hire the best inspectors you can find in your area. Disclosure requirements vary from state to state. Also, many buyers buy bank-owned or estate-sale properties where there typically aren't thorough disclosures because the owners didn't occupy the property and may be exempt from providing disclosures.

A good home inspector would see signs of flooding in the basement, such as bubbling paint on the foundation walls, rust on the bottom of the furnace, and water stains, unless they have been intentionally covered up by the seller. If the home inspector recommends hiring a drainage specialist to look at the property, be sure to follow through with this.

THE CLOSING: It's best to resolve property defect issues before closing, if possible.

Courtesy of the California Association of Realtors, Dian Hymer is a nationally syndicated real estate columnist and author.

Some buyers are turned down for illogical reasons. For instance, if you have investments -- even if they're performing well -- an underwriter might deny the mortgage because your portfolio doesn't fall into the underwriter's risk assessment model.

One couple was turned down because the husband had worked at his current job for less than a year -- even though he was making more money at the new job than he was before.

These buyers were well-qualified. The wife had worked several years for one employer and was able to qualify for the loan on her own. So, the transaction closed, although two months late.

Generally, it's more difficult to qualify now than it was a year ago. Most conventional lenders require a 20-25 percent down payment. For the lowest interest rates, your credit scores need to be in the 700 range. You need to have verifiable income and cash reserves in addition to your down payment and closing costs.

You could run into underwriting problems if you're self-employed, as W-2 income is much easier to verify. Other hurdles are lapses in employment and owning a lot of property. Some lenders won't lend to buyers who have more than three or four residential properties.

If you're buying a new home before selling your current home, you'll need to have 30 percent equity in your current home. This needs to be verified by the lender's appraiser. Also, the lender will want to see a copy of the cashed check from the tenant for the first month's rent to verify rental income if needed to qualify.

HOUSE HUNTING TIP: As soon as you're serious about buying a home, find the best mortgage broker or loan agent you can to assist you. Don't make your selection based on interest rates alone. A good track record counts for a lot.

Closing the deal should be your primary goal. If you have to pay 0.25 percent more to assure your transaction closes on time and that you're not turned down at the last minute, it's worth it.

Be candid with your loan professional about anything in your financial picture that might impact loan qualification. A good loan agent or broker will be able to assess your financial situation and anticipate what you'll need to do to satisfy the underwriter.

Be aware that appraisal issues can impact your loan approval. For example, if a previous owner added square footage without a building permit, the additional square footage probably won't be included as livable square feet.

If the appraisal comes in for less than the purchase price, the lender might not lend you enough to close the deal. Include an appraisal contingency in your contract.

There are more jumbo financing options available now. Adjustable-rate mortgages that are fixed for 10 years and then revert to an adjustable have a starting rate about 0.25 percent less than a 30-year fixed jumbo. A five-year fixed starts about 0.5 percent to 0.75 percent lower, but is riskier.

THE CLOSING: Because of the risk factor, the lender may want you to have a large cash reserve. Your retirement account counts toward this.

Dian Hymer is a real estate broker with more than 30 years' experience and is a nationally syndicated real estate columnist and author.

Don’t rouse the IRS or pay more taxes than necessary — know the score on each home tax deduction and credit.

Sin #1: Deducting the wrong year for property taxes

You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind — that is, you’re not billed for 2011 property taxes until 2012. But that’s irrelevant to the feds.

Enter on your federal forms whatever amount you actually paid in 2011, no matter what the date is on your tax bill. Dave Hampton, CPA, tax manager at the Cincinnati accounting firm of Burke & Schindler, has seen home owners confuse payments for different years and claim the incorrect amount.

Sin #2: Confusing escrow amount for actual taxes paid

If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed, says Bob Meighan, CPA and vice president at TurboTax in San Diego. The regular amount you pay into your escrow account each month to cover property taxes is probably a little more or a little less than your property tax bill. Your lender will adjust the amount every year or so to realign the two.

For example, your tax bill might be $1,200, but your lender may have collected $1,100 or $1,300 in escrow over the year. Deduct only $1,200. Your lender will send you an official statement listing the actual taxes paid. Use that. Don’t just add up 12 months of escrow property tax payments.

Sin #3: Deducting points paid to refinance

Deduct points you paid your lender to secure your mortgage in full for the year you bought your home. However, when you refinance, says Meighan, you must deduct points over the life of your new loan. If you paid $2,000 in points to refinance into a 15-year mortgage, your tax deduction is $133 per year.

Sin #4: Failing to deduct private mortgage insurance

Lenders require home buyers with a down payment of less than 20% to purchase private mortgage insurance (PMI). Avoid the common mistake of forgetting to deduct your PMI payments. However, note the deduction begins to phase out once your adjusted gross income reaches $100,000 and disappears entirely when your AGI surpasses $109,000. Also, unless Congress acts to extend the PMI deduction again, 2011 is the last tax year for which you can take this deduction.

Sin #5: Misjudging the home office tax deduction

This deduction may not be as good as it seems. It's complicated, often doesn’t amount to much of a deduction, has to be recaptured if you turn a profit when you sell your home, and can pique the IRS’s interest in your return. Hampton’s advice: Claim it only if it’s worth those drawbacks. If so, here's what to  know about what you can write off.

Sin #6: Missing the first-time home buyer tax credit

While the original home buyer tax credit deadline passed in April 2010 (and isn’t available in 2012), military families and some government workers on assignment outside the U.S. were given an extension until April 30, 2011, to get a home under contract and take advantage of up to $8,000 in tax credits for first-time buyers and $6,500 in credits for repeat buyers.

It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.

Sin #7: Failing to track home-related expenses

If the IRS comes a-knockin’, don’t be scrambling to compile your records. Many people forget to track home office and home maintenance and repair expenses, says Meighan. File away documents as you go. For example, save each manufacturer's certification statement for energy tax credits, insurance company statements for PMI, and lender or government statements to confirm property taxes paid.

Sin #8: Forgetting to keep track of capital gains

If you sold your main home last year, don’t forget to pay capital gains taxes on any profit. However, you can exclude $250,000 (or $500,000 if you’re a married couple) of any profits from taxes. So if you bought a home for $100,000 and sold it for $400,000, your capital gains are $300,000. If you’re single, you owe taxes on $50,000 of gains. However, there are minimum time limits for holding property to take advantage of the exclusions, and other details. Consult IRS Publication 523.  

Sin #9: Filing incorrectly for energy tax credits

If you made any eligible improvement, fill out Form 5695. Part I, which covers the 30%/$1,500 credit for such items as insulation and windows, is fairly straightforward. But Part II, which covers the 30%/no-limit items such as geothermal heat pumps, can be incredibly complex and involves crosschecking with half a dozen other IRS forms. Read the instructions carefully.

Sin #10: Claiming too much for the mortgage interest tax deduction

You can deduct mortgage interest only up to $1 million of mortgage debt, says Meighan. If you have $1.2 million in mortgage debt, for example, deduct only the mortgage interest attributable to the first $1 million.

By: G. M. Filisko - Published: January 5, 2012

This article provides general information about tax laws and consequences, but shouldn't be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

Selling your home.
There might come a time when you need to sell your home. You might get offered an out-of-state job opportunity, determine it makes financial sense to downsize, or need to look for a larger home if your family is expanding. If you are ready to buy another home, your current home's value can narrow down your options for your new purchase, and I can show you the financing options that will be available to you. Knowing your home's market worth would certainly help you make an informed decision, and put you in a position to more quickly respond.

Refinancing your home.
There are a number of reasons to refinance. For instance, you might be able to finally tap into current low rates, or you might desire better terms. You can find out if you will qualify for a traditional refinancing program or if you may be eligible for the HARP II refinance program, which allows homeowners who owe more than their home is worth to restructure their loans into more stable products with a lower rate. Until you know your home's value, you won't know how advantageous or disadvantageous a refinance would be from a financial perspective. I'd be happy to connect you with an experienced financing professional to help you explore whether refinancing makes financial sense for your unique situation.
 
Making home improvements.
While you might have mulled over how home improvements, such as a bathroom makeover, new countertops, or perhaps an addition, could improve your enjoyment of your home and mused at what additional value they might bring, you really don't know until you're aware of your home's value. Check what other homes in your areas have sold for, and pay particularly close attention to any sold properties that had upgrades similar to or the same as yours in relation to those that don't. Once you get an idea of what your home might sell for, you can see if the upgrades you are considering are worth the expense, or if you might want to go with a more cost-effective option.
 
Reassessing your taxes.
Your county assessor's office reviews property values on a periodic basis, and makes adjustments based on a property's market value. In a down market this can mean much lower property taxes. Being aware of your home's value can put you in a position to anticipate changes and do some tax and financial planning accordingly. That said, many assessor offices only shift their regular assessments by a maximum amount or percentage of the previous year's value. However, many states offer an appeal mechanism that can help you push for a lower reassessment to ensure an even more advantageous (and fair) property tax break. But the key is to know your home's actual value and be able to document it.*
 
So, how do you determine your home's value? Your first instinct might be to go to a popular website or download an app for online services that provide estimated real estate values. While these services might offer some instant gratification, they do not take in all the factors and trends that will give you the most accurate estimate of your home's worth.
 
Especially if you are considering a move, the best option is seek assistance from a real estate agent that has expertise in your marketplace. An experience professional who is familiar with the properties in your area will have not only the tools and information but also the context and expertise to get a more accurate read on your home's true market value. An experienced agent can bring insight into your local market and help you see opportunities that you may not have considered before. Having your home value assessed also gives you the opportunity to establish a relationship with an agent that you can work with when it's time to buy or sell.

*As a real estate sales professional, I am not qualified to give tax advise. The information contained in this article is for informational purposes only and may not reflect current tax year rules and regulations. Consult your tax advisor or the IRS for current tax year rules, restrictions and regulations.

FHA will increase its annual mortgage insurance premium (monthly mortgage insurance) (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount.  Upfront premiums (UFMIP) will also increase by 0.75 percent. 

These premium changes will impact new loans insured by FHA beginning in April of 2012. The FHA said the changes will boost the Mutual Mortgage Insurance Fund by $1 billion, helping to repair the health of its emergency fund.

FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month. 

You can read the entire press release at: http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2012/HUDNo.12-037

Annual Mortgage Insurance Premiums

Annual Mortgage Insurance Premiums – High Balance

Annual Mortgage Insurance Premiums – Streamline Refinances³

Up-Front Mortgage Insurance

Notes:

1. 1.       Effective dates are based on FHA Case Number assignment date
2. 2.       Mortgages with terms ≤15 years and LTV ≤78% remain exempt from the Annual MIP (ML 11-35)
3. 3.       Streamline Refinances endorsed on or before May 31, 2009 are eligible.  Endorsement date is on the Case Query screen in FHA Connection.

Improvements to flipped properties can vary dramatically, from a simple primping (paint, carpet, general updating and some landscaping work), to complete renovation.

On the surface, flipped properties look “new.” Fresh paint, refurbished flooring, new or resurfaced cabinets, and updated baths and kitchens with the latest contemporary finishes can have a great deal of sex appeal. All the more reason for the buyer to find out if there are any dark secrets lurking beneath the surface.

Before I continue, please know there are many quality renovations/flips that are completed by skilled business people who employ knowledgeable and experienced tradesmen. I have a great deal of respect for the men and women in this business who take pride in their work. Many of these homes went from being the “dog” of the neighborhood to becoming the prettiest home on the block and a boost to the neighborhood!

On the other extreme, however, I’ve attended many home inspections where the inspector has discovered botched repairs to  plumbing, electrical, roofing, flooring and more that could cost an unsuspecting buyer thousands of dollars to correct —often much more than it would have cost to do it properly, with permits, the first time.

Check out this example:

Despite having expressed my verbal reservations after noticing multiple defects that I considered warning signs about the quality of the repair/renovation work in a flipped home, my clients submitted an offer which was accepted. As the inspector was performing his inspection, I did my own visual inspection and I discovered a long crack in the freshly plastered and painted wall at the seam behind the door.

When the inspector crawled under the house, he discovered that two sides of the foundation wall were missing! In its place, heavy cardboard had been installed around the foundation area and then the exterior of the home (including the cardboard) had a new coat of stucco applied! Estimated cost to repair the foundation issues: $30,000. Yes, there were other issues with this “remodeled” home as well, but I think that’s enough to make my point.

When previewing a flipped home, here are some things to do and questions to ask:

• Pay attention to details! Sloppy finish work should put you on alert.
• What is the quality of the materials used in the renovation? Are they likely to withstand usual wear and tear for a reasonable period of time?
• Assuming you go under contract on the property, hire an experienced and well-qualified home general home inspector and have your inspection as soon as possible.
• Ask for a detailed accounting of the work completed by the seller and request invoices and warranties that may apply.
• Consider additional inspections for any “suspect” areas of the home pointed out by the home inspector (or any you may have reservations about yourself) such as roof, plumbing, electrical, HVAC, foundation, property lines, etc.
• Take time to talk to the neighbors. They can be a good source of information about the condition of the home prior to the renovation and may share observations that might be helpful.
• Ask the seller about their previous experience with home renovations. How many have homes they successfully flipped? Who did they use for the repairs?
• Does your Realtor have reservations about the property? Ask them why.
• How was the property acquired? Did the current owner receive information and disclosures when they purchased the property? If so, request all documentation. You have a right to see it.
• If the property was acquired at auction, ask your Realtor to explain the possible risks associated with the chain of title for a foreclosure. Homes bought at auction are generally without warranty or any guarantee of clear title.

In closing, there’s nothing wrong with purchasing a home simply because it has been flipped. However, just because it looks great doesn’t mean there should be any less due diligence. In fact, since signs of problems may have been recently concealed in the renovation, perhaps special care should be taken to assure that the beauty of your new home is not just skin-deep.

This information came to me from a local lender-partner and I thought it worthy of sharing:

The following are timelines of how long it will take before you are eligible to buy a house, depending on what you are purchasing and the type of financing you use.

Federal Housing Administration Financing (FHA)

·       Short Sale is 3 years (a Short Sale with no late payments has no waiting period for eligibility)

·       Deed-in-Lieu of Foreclosure is 3 years

·       Foreclosure is 3 years

·       Bankruptcy is 2 years

Conventional Conforming Financing (FNMA/FHLMC)

·       Short Sale is 2 years*

·       Deed-in-Lieu of Foreclosure is 4 years*

·       Foreclosure is 7 years

·       Bankruptcy is 4 years

Veterans Administration (VA)

·       Short Sale is 2 years

·       Deed-in-Lieu of Foreclosure is 2 years

·       Foreclosure is 2 years

·       Bankruptcy is 2 years

Conventional Non-Conforming (Jumbo Loans)

·       Short sale is 7 years

·       Deed-in-Lieu of Foreclosure is 7 years

·       Foreclosure is 7 years

·       Bankruptcy is 7 years

* Certain guidelines apply.  Information is based on today's lending standards.