Some people fix everything the moment it breaks. To save money, repairs become a do-it-yourself project. For the rest of us, deciding what to repair and when becomes a question of priority.

Home repair expert Mark Clement, who lends his know-how to the website myfixituplife.com, suggests dividing your list into a few categories:

1. Fix it now. Do not count your pennies when anything that qualifies as an emergency or catastrophe occurs. These are easy to recognize: Your roof caves in, a window breaks, a pipe bursts in your kitchen wall, you are on fire.
2. Fix it soon. Less dramatic but still urgent: Leaks. “If you see a wet spot on your ceiling or wall, you want to get ahead of that right away,” Clement says. “If you let it go, you open yourself up to all kinds of damage, including mold.” Similarly, fix your leaky roof. It’s more urgent than new bathroom fixtures.
3. Fix it regularly. There is nothing exciting about changing the air filters on your heating and cooling system, but failing to do so every couple of months slows down your system — and worsens your air quality. Caulk around windows and doors; make sure your sprinklers aren’t “watering” your house; have your home inspected for termites. “Nonsexy items are easy quick fixes,” Clement says.
4. Fix it already. Did you start a big project last year then ran out of gas? Fix it now. No really. Don’t spend a single minute or 25 cents on a new project until the last one is completed. Otherwise, in Clement’s opinion, you may need to “fix” your marriage.
5. Fix it wisely. Have you checked off items #1 through 4? You are ready to consider discretionary repairs. These include anything from ugly aluminum windows to cracked kitchen countertops, disabled dishwashers and falling-down fences. What you fix first is up to you, but consider:
   • Structural or practical improvements, such as energy-efficient windows, pay dividends in energy saved and may qualify you for government rebates. They also add to your home’s perceived value.
   • Remodeled kitchens and/or new appliances that bring your home up to the neighborhood standard may help you fetch a competitive price. Don’t go overboard, though — too much (money) is too much and won’t pay a return.
   • Any repair that improves your home’s functionality or security is a plus.
   • If you’re looking for an inexpensive pick-me-up, try paint.

Finally, if you’re hoping to squeeze in a few more repairs by squeezing out the contractor (and doing them yourself), make sure you have the skills and support you need to get the job done. “If doing this were easy, everyone’s list would be complete,” says Clement.

Here’s what you need to know

If you bought your home within the last 2 or 4 years, it is likely that your current assessed property value – the basis for your property taxes – is higher than the current market value of your home.

In California, the County Tax Assessors office determines your property taxes off the sale price of the home. The reassessment every year is an automatic increase of 2%, rather than an actual reevaluation of fair market value based on factual market dynamics.

You also need to know that any reduction will be temporary. The law allows the assessor to raise your property taxes back up at a later date to the original tax assessment plus the 2% per year increase.

Here’s what you need to do

With property values continuing to decline, many counties have actually simplified the process of getting property taxes reduced based on the current market value of a home.

To get your property taxes reduced on the basis of a decline in the real estate market:

• Go to your county website to the Forms section and look for a form with the words “reassessment request”, “contesting your property value” or “decline in market value”. If you can’t find the form give them a call and ask them to e-mail, fax or mail the form to you. I have included a few county sites below:
  1. LA County
  2. Ventura County
  3. Orange County
  4. Riverside County
  5. San Bernardino County
• Usually the form will ask for an estimate of the current market value of your home and to list the recent comparable sales in your neighborhood supporting that estimate of value. How do you obtain this info? Here’s what you do:
  1. Call the real estate agent who sold you your home and ask that they complete the form for you or at least provide a list of comparable sales. Realtors want to keep you as a long-term client, friend or referral source, so 9 times out of 10 they will do this for you. Alternatively,
  2. Go to either www.zillow.com or www.cyberhomes.com – you’ll get an estimate of value and a list of comparable sales on which it was based.

Keep in mind that you are trying to make a case that your property value is significantly lower than when you bought it – so list legitimate sales that support that argument. Use only homes that are similar to yours, same room count and square footage (within 1 mile), that have sold, preferably in the last 6 months.

Sign it and mail it! Allow several weeks before you call and check on the status. If it’s accepted you’re golden. If it’s denied, there will be a more formal application and appeals process available to you.

So if you get a letter from a company purporting to specialize in reducing your property taxes, don’t take the bait and pay a fee. You can do the very same thing they can do….. and you can do it for FREE!

There is a ton of information whirling around the media and internet. But what exactly is a loan modification? Hopefully the information below will add clarity! It’s really important that a homeowner understands their options.

A Rate Modification option – this is offered to those homeowners that have no financial hardship but are unable to refinance because their property has lost value. This is generally offered by a lender on ARM products that have not sold the loan in the secondary market and is still servicing the loan. Typically for a small fee they will lower the interest rate on the loan to the current offered rate on the same product. Lenders that offer these type of rate modifications usually have a maximum loan-to-value of 105%. This may not be a prevalent option as there are very few lenders who keep mortgage loans in their own portfolio.

A refinance option is for those homeowners that are making timely mortgage payments but have been unable to refinance to a lower rate due to declining property values. The important thing to know is that your primary mortgage balance is less than 125% of the current market value of your home. This is part of the Obama Stimulus Plan and both Freddie Mac and Fannie Mae are onboard with this program. If your loan was sold to either of them you may be eligible and benefit from this refinance option.
For those homeowners struggling and behind in their monthly mortgage payments there is a hardship modification option called the Home Affordable Modification Program (HAMP). What makes this different? For one, you can be behind on your monthly payments. If the requirements of the HAMP loan are met, the lender may agree to modify your loan so you can avoid a foreclosure. What are the requirements? Below are a few:

• The subject property must be your owner occupied primary residence
• It can be 1 to 4 units
• You must owe a principle balance that is within conforming loan guidelines
• It must be the 1st lien mortgage and have been contracted before January 2009
• Your monthly mortgage payment is greater than 31% of your monthly household income
• And you must have a documented financial hardship

A word of caution when modifying your mortgage -

Be very careful if you choose to use a loan modification company that takes a fee upfront. They cannot guarantee a successful modification and can end up costing you another month’s mortgage payment in exchange for false hope. The best of these companies have done modifications countless times and will actually try to help you in earnest without a guarantee. The worst are scams that take your money with a cursory attempt to help you. To avoid being a scam statistic, below are 6 easy things to keep in mind:

1. Know your options – understand what your options are and who qualifies for help is vital. Websites that should be on your list are:
   • www.hud.gov
   • www.makinghomeaffordable.gov
   • www.financialstability.gov
   • www.dre.ca.gov
   • www.freddiemac.com
   • www.fanniemae.com
2. Beware and be alert – if you are struggling with your mortgage you are a prime target for scams – recognize and avoid common scams
3. Avoid fast loan modification decisions – companies that want you to sign papers immediately or who claim they can save your home if you sign the deed over to them are scam artists. No one can save your home but you and your mortgage lender
4. Again, do not sign the deed of your home to anybody unless you are working directly with the lender to forgive the debt. In other words only sign-off the deed if you are selling it back to the bank
5. Only make payments to the lender – a common scam is for a “consultant” or loan modification company to ask that you pay them and they will deal with the lender on your behalf
6. Don’t pay anybody for advice on your loan modification or for counseling services on a delinquent loan

Still a little confused? Understandable – obtaining the right loan modification can be very challenging. No matter what your situation we are here to help. Call us today at extension #7102 – the Credit Union can help alleviate any confusion!

Getting your credit score in line (see March 2009’s “How to Build a Killer Credit Score”) is key; however, debt-to-income ratio ( DTI ) is considered one of the most important qualification requirements when getting a home loan approved. Simply put, DTI is a calculation of your monthly debt obligations compared to your adjusted gross income.

When a lender reviews your application, along with your credit, they also consider your debt-to-income ratio, which is used to determine your ability to pay as well as how much the lender is willing to lend to you.

Lenders scale this ratio and will restrict the type of programs you qualify for. The higher the ratio, the more limited your options are.

There are two DTI ratios to be aware of.

Front-end ratio
Front-end ratio, also known as housing ratio, is for home-related monthly payments to monthly income. This includes mortgage principle and interest, property tax, hazard (homeowners) insurance, homeowners’ association fees and private mortgage insurance (PMI). Front-end ratio restrictions may vary according to the loan program and lender, but typically should not exceed 33% of gross monthly income.

Back-end ratio
Back-end ratio, also known as the total-obligation ratio, is the more important of the two. It takes into consideration not only your housing ratio but your total debt obligations. Total debt obligations are all items on your credit report such as credit card payments, auto loan payments, student loan payments, etc. Back-end ratio should not typically exceed 40%, but may vary depending on other factors; reserves after close, credit score, employment history, etc.

On a new loan, the new payment is also included in the DTI calculations. If the amount applied for exceeds the ratio guidelines, you may be required to pay off or pay down some of your other debts or lower your loan amount request.

It may be confusing out there, but the Credit Union can help alleviate the confusion! Give us a call to learn more and take your first step towards home ownership!

“Credit Crunch”, 2 words we hear often in the news. Interestingly enough with rates at a historical low it is becoming more and more difficult to obtain home loan financing!

What is occurring is that lenders are looking more closely at credit histories of would-be borrowers; those with high credit scores, over 740, are being approved while those with lower credit scores are being denied. Even those with average scores are now either turned down or expected to pay higher interest rates than they anticipated.

What can be done about this situation? Well, we can wait for the “credit crunch” to pass (how long will it last?), or work on our credit history to get the score up.

There are 3 major factors that impact your credit score the most, so let’s take a look at each:

Payment Record
The most important factor (35% of a score) is your payment history. Those that pay their bills on time score higher than those that don’t. Now, anyone can experience financial difficulties which results in late payments and damage to one’s credit rating. But keep in mind that the damage is never permanent.

Late payments that have the biggest impact on credit ratings are those from the most recent 12 month period. Thus it follows that if a person starts paying bills on time, and continues doing so for 12 months, they will see their credit score improve. The more time that passes, the better – late payments over 2 years are almost never counted.

But note: not all late payments are the same. Installment loans, i.e., mortgage late payments carry more weight than a revolving credit card late payment. Also being thirty days late is not as bad as being sixty days late. Furthermore, not all creditors bother reporting you if you are less than thirty days late.

Because making payments on time is so important, it’s a good idea to come up with a way of paying bills that minimizes the chances of being late. Online banking is one such way. You can also make a checklist of all bills with due dates and use it regularly.

Balances
The second-most important factor in determining your credit rating (30% of score) is how much in debt you are. A common misconception is that the total amount of your loans is what counts toward your score. Actually what counts is the total amount you owe compared to your credit limits.

For example: Erwin owes $3000 on his credit cards, and his total credit limit is $4000. So, Erwin is using 75% of his available credit. Linda also owes $3000 on her credit cards, but her total credit limit is $10,000. Linda is only using 30% of her available credit. Even though Erwin and Linda owe the same dollar amounts on their cards, Linda will likely have a better credit score because she is less in debt percentage-wise.

The best course of action is, naturally, to keep your balances low. If you owe less than 30% of your total credit limit, than you are in good shape. Go higher than that and your credit score will progressively go down.

Keeping all this in mind, let me bring up one more point – closing credit cards that you no longer need can actually hurt your credit score. There are 2 reasons for this:

1. One less card means the decrease in your total available credit, which means the percentage of your indebtedness goes up which means your credit score goes down.
2. And, the average age of your accounts is important but only on open accounts. If you close an older card the average age of your credit may go down and consequently your score will also go down.

Which segues into –

Age and Type of Accounts
The last major factor in your credit score (25% of score) is the type of accounts you have open and their age. There are 2 basic account types:

• Revolving – such as credit cards
• Installment – such as mortgages, car loans, etc.

Creditors like to see that a person is able to manage both kinds. Therefore, having a bunch of credit cards but no other loans will depress your score. However, having a student loan, or a car loan, or any other loan in addition to a couple of credit cards, gives you the kind of mix that will bump your score up.

As stated above the age of your credit is also important. So don’t close credit and suddenly open several new accounts. This will decrease the average age of your credit history and decrease your score. The more established your credit history looks, the better.

Maintaining and developing a killer credit score is more important today than ever. By focusing on building up your credit history and raising your score the more financial options you’ll have available. For those with the highest credit score, you’ll get the best mortgage options with the fewest fees and the best interest rates.

That very same week I also received a similar letter. Mine was from a local real estate agent purporting to “specialize in reducing homeowner’s property taxes”.

I’m reasonably sure that either one of the above could get the job done and get our property taxes reduced, but the thing is, ANYONE can do this – on their own – and for FREE!

Here’s what you need to know

If you bought your home within the last 2 or 3 years, it is likely that your current assessed property value – the basis for your property taxes – is higher than the current market value of your home.

In California the County Tax Assessors office determines your property taxes off the sale price of the home. The reassessment every year is an automatic increase of 2%, rather than an actual reevaluation of fair market value based on factual market dynamics.

You also need to know that any reduction will be temporary. The law allows the assessor to raise your property taxes back up at a later date to the original tax assessment plus the 2% per year increase.

Here’s what you need to do

With property values continuing to decline, many counties have actually simplified the process of getting property taxes reduced based on the current market value of a home.

To get your property taxes reduced on the basis of the decline in the real estate market:

Go to your county website to the Forms section and look for a form with the words “reassessment request”, “contesting your property value” or “decline in market value”. If you can’t find the form give them a call and ask them to e-mail, fax or mail the form to you. I have included a few county sites below:

www.lacountypropertytax.com – LA County
assessor.countyofventura.org – Ventura County
www.oc.ca.gov/assessor – Orange County
www.riversidetaxinfo.com – Riverside County
www.sbcounty.gov/assessor – San Bernardino County

Usually the form will ask for an estimate of the current market value of your home and to list the recent comparable sales in your neighborhood supporting that estimate of value. How do you obtain this info? Here’s what you do:

Call the real estate agent who sold you your home and ask that they complete the form for you or at least provide a list of comparable sales. Realtors want to keep you as a long-term client, friend or referral source, so 9 times out of 10 they will do this for you.

Alternatively, go to either www.zillow.com or www.cyberhomes.com – you’ll get both and estimate of value and a list of comparable sales on which it was based.

Keep in mind that you are trying to make a case that your property value is significantly lower than when you bought it – so list legitimate sales that support that argument. Use only homes that are similar to yours, same room count and square footage (within 1 mile), that have sold, preferably in the last 6 months.

Sign it and mail it! Allow several weeks before you call and check on the status. If it’s accepted you’re golden. If it’s denied, there will be a more formal application and appeals process available to you.

So if you get a letter like the one my sister and I received – don’t take the bait and pay a fee. You can do the very same thing they can do….. and for FREE!

Here on Earth the subject is hard to avoid and the result is a lot of worried consumers, including home buyers.

Here are five important questions on buyer’s minds, and five reassuring answers:

Is it still possible to qualify for a loan?
Absolutely. Listening to the news, you could easily get the impression that lenders are not lending any longer. But they are. Although it may have gotten a bit more difficult to qualify for a loan, it’s still not hard to do. The Credit Union is committed to providing the best possible home loan options to its members. If you have decent credit, a stable income and are not over extended on credit or loans, you should easily qualify.

How much will I need for a down payment and what will my monthly payment be?
The way to get the fastest and surest answers to these questions is to get pre-approved for a loan. A pre-approval has an added benefit of telling you the size of the loan for which you can qualify. The added sense of confidence this information can give you as you look for a home is well worth the trouble.

What if I overpay for a home?
You won’t. First, once you start looking for a home in a particular location, you’ll get a sense fairly quickly about market prices there. Second, your real estate agent will let you know what prices comparable homes have sold for recently in that area. Also the lender will order a professional appraisal before final approval of your loan, and will not approve a loan for more than the appraised value.

What if there are problems with the home I buy?
Home buyers have several protections against the possibility of discovering problems after closing. First, sellers must disclose known defects as part of the contract. They can be held liable for damages should they fail to do this. Second, you will have an opportunity to get the home inspected by a licensed home inspector who will provide you with a list of items that should be fixed before closing. Finally, you can ask for a home warranty to protect you should repairs be needed after closing.

Is the paperwork involved in buying a home complicated?
Yes. Not to worry, however. There are professionals at every step that are trained and ready to guide you through the thickets. The credit union and your real estate agent will work with you as a team with the same goal – to get you through the home buying process with confidence, minimal stress and sound advice.

Trying to time the real estate market is a difficult if not impossible proposition. The only formula I have found that truly works is to invest in homeownership for the long term.

According to the national Association of Realtors the national median price of a single-family home in 1998 was $128,400. For 2008 the estimate is that the national median will be $213,700.

What does this tell us? It’s a good reminder that while in the short term prices may rise and fall, in the long term they are most certain to end up higher.

One of the main reasons for this is the demand. Mark Twain once said, “they are always making more people, but they ain’t making any more land”. And the US Census Bureau seems to agree. According to PopClock the population of the US increases by one person every 11 seconds. By 2050 our nation’s total population should reach 400 million, compared to 304 million today.

Trying to time the market is a futile endeavor, but if you purchase for the long term you will benefit – and you will benefit in more ways than one.

One of those benefits is Uncle Sam’s favorable tax treatment. By being able to write off your mortgage interest payments on your tax returns, you save hundreds of dollars in taxes annually as compared to someone who rents. Also when you sell your home, the profit (capital gains) is tax-free in many instances.

Need I mention that you also have more stable housing costs than a renter? Plus owning a home is a form of forced savings – by making monthly payments you are able to build your equity over time. A renter builds his landlords equity.

Still many are sitting on the fence trying to recognize the right moment, the perfect opportunity to plunge in and buy a home. They try to time the market.

Is it worth the wait? In addition to financial benefits, there are other benefits. The freedom, the ability to personalize your own space – having more space! Not having to deal with a landlord or share walls with noisy neighbors! Actually knowing your neighbors as opposed to having them change every few months.

And the economy changes over time. Since 1983 we had two relatively long periods of economic expansion, and only short periods of recession in between. That represents an average up-and-down cycle of ten years.

Even if you could predict the future, with the peaks and valleys, would you want to wait 10 years to buy? You could miss out on many benefits of home ownership by waiting and still end up paying a higher price in the end.

You should only refinance if doing so benefits you financially over the long run.

Tada! Earth-shattering tidbit, right?

Well, you would be surprised just how many homeowners forgot this painfully obvious advice the last time they refinanced.

Most concentrate on getting the lowest rate possible but give no thought to the details of mortgage loans. In making the decision to refinance, it’s important to consider your whole financial picture.

There is a right way and a wrong way to do everything. Refinancing is the same.

A straight refinance to get out of an adjustable mortgage, makes sense. A straight refinance to lower your rate makes sense, too. But also consider reducing the term. Rates make little difference over the life of the loan but term makes a HUGE difference.

Homeowners normally look at the payment amount, but interest and term are much more important. Lowering your term saves you tens of thousands in interest. If you want to make a sound financial decision, stop looking only at the rate and payment.

When you are in a home you love and in a neighborhood that suits you, you may also want to consider a home equity line of credit rather than a straight refinance. You may be longing to improve your current home with an addition, redecorating , landscaping or the like. A home equity line of credit allows you to borrow against the equity in your home without touching your existing 1st lien.

A home equity loan may be just the option you need for that addition, a little remodeling, and college tuition or to consolidate debt, especially since these rates are still relatively low.

Remember, only refinance if it benefits you financially. Whether a straight refinance or an equity line of credit is the right choice for you really requires an analysis by a mortgage professional that has your best interest at heart.

That’s the right way to refinance.

What can you do to ensure that doesn’t happen to you? The best defense is an educated offense: learn what you need to know before shopping for a loan. Here are five tips that will send you safely on your way:

1. Get an A+ in Real Estate Loans 101

Do you know what a subprime or Alt-A loan is and why it is less desirable than prime?

Subprime or Alt-A loans are for borrowers with less than stellar credit histories, have minimal equity or no cash down payments and/or cannot document their income. Rates and costs on these loans are often higher, payments are often adjustable and there may be prepayment penalties that take homeowners by surprise when they decide to sell or refinance.

2. Know your credit history

It’s a really good idea to review your credit report annually, especially if you ever plan to apply for a home loan.

You can order a copy of your report from Equifax www.equifax.com , Experian www.experian.com and Transunion www.transunion.com. Clear up any issues before obtaining a loan. Ask your lender how your credit affects the price of your loan and what you would need to do to obtain a better loan.

3. Shop loan products and programs

You may be surprised to learn that lending requirements differ from lender to lender. Just because you qualify for a subprime or Alt A loan at lender A doesn’t necessarily mean that lender B will agree.

Don’t limit your shopping to brokers and banks, either. You may be surprised to find that credit unions may offer you a better product, rate and fees based on your needs and goals.

And don’t fall for the first sales pitch you hear; keep shopping because you may find something better!

4. Read the fine print

OK, I know trudging through all that tiny print may be tedious, but a home loan may be the biggest single financial transaction you’ll ever make. It’s well worth the tedium to examine the numbers and ask for an explanation of all the fees and conditions.

5. Remember your right to cancel

Most loans include the Right of Recission, meaning you can cancel the loan after signing within 3 days. If you realize you made a mistake, you have the right to get out of the loan within that time frame.

All of these tips can save you a tidy sum over the life of the loan. So make sure you get the loan you deserve by becoming an educated borrower!