After having a long discussion with an agent with whom I work, I thought it would be helpful this Friday to offer a couple of tips for home owners considering or in the process of applying for a home loan modification.

1. Be as accurate as possible on your financial worksheet, but make sure your expenditures don’t greatly exceed your revenue.  The numbers must be pretty close.  My friend said she spent $200 p/month on groceries and was questioned by the lender.  She explained that she has a garden and clips a lot of coupons to keep that expense down.
2. Hand write your distress or application letter.  The lender isn’t interested in seeing a fancy, error free typed request.  They are there to help real people and a handwritten letter honestly written will appeal more to that person you’ll never meet than the cold, typed letter.
3. If you can get in the HAMP program (or Making Home Affordable) by the government, you’ll be well on your way to being approved for the loan modification.  For more information, click here.
4. Do not fail to be in touch with the lender at least ONCE a week - call to check the status, etc.  Make sure when you do contact them, document who you talked with, along with the date and time.

Good luck getting that loan modification.  You’re going to need it.

My husband and I refinanced our mortgage several years ago in the heyday of real estate.  We bought our current home in 2003, then watched - amazed - as the value went up by $40,000 in just two years.  We thought, “Let’s refinance for the value and pay off our car and credit card!”

Bad move.  Our home is now worth only about $10,000 more than our original purchase price - only because we also added a sun room.  So in essence, we are about $50,000 underwater because we jumped right in the middle of the feeding frenzy of property values increasing like white lightning.  Hindsight… yea yea…

So is refinancing a good idea?  For us - even though we could decrease our interest rate from a 6.5 to a 4.5 percent rate - we can’t do it because the house won’t appraise for the refinance.  For others, it may still be a good option according to cashmoneylife.  Some of the reasons to refinance:

• Your credit score has improved.
• Mortgage interest rates increasing.
• Have trouble making your payments each month.
• Need to consolidate other debts.
• Making more money.

Again, proceed with caution if you decide to refinance, but the good news is if you bought your house before 2007, you are probably in good shape not getting in upside down.  Good luck!

At the risk of the headline being too long, picking your lender may be just as important as selecting your house!  I learned early on that if I’m working with buyers who are looking for a new home, they get pre-approved or pre-qualified FIRST before we ever go look at a house.

What’s at risk?  What if the buyer falls in love with a house, but finds out it’s $30,000 more than the lender says they can afford?  What if their credit score is worse than they thought - maybe there’s a hidden judgment from a forgotten car your buyer once co-signed on a loan for their nephew.  If these happen, they will be unable to buy a house right away.  If these happen, you want to find a lender who can tell you how to FIX IT.

Mickey Koch of Shorewest Realtors in Milwaukee offers some tips on finding a good lender,

1. Tell the lender what you want to spend every month on your mortgage, taxes, and insurance. Don’t forget about private mortgage insurance if you don’t have 20% down. A great lender will coach you on what price range to be looking in so you don’t leave your “comfort zone” for how much you want to pay each month.
2. Ask them up front what their costs are and have them put them in writing. READ THAT DOCUMENT! And understand it.
3. Set up a face to face meeting with your lender and bring all of the required documentation ASAP. Don’t put this off.

Great advice, all of it!

There’s one lender on Facebook who I haven’t blocked.  He does talk about mortgages about once every two weeks to once a month like this,

Hey Facebookers….rates are starting to move north, don’t miss your chance to lock in a low rate on a refinance or purchase. Contact me with details!

But he also talks about other things like his car breaking down or family picture day.  It’s the real him who happens to work with lending.  On my own Facebook site, I don’t talk about real estate a lot.  Yes, I do discuss it like anyone else would talk about their own jobs, but I don’t hammer people over the head with it.  I want to be sincere.  I want my Facebook friends to be my real friends, not just viewed as clients or customers.  I fear that I’m too casual, though. I need to listen more to the real social networking experts. Whether you’re a lender, a real estate agent, or just someone who offers a product or service, Sarah Dopp’s advice is good.

1) make sure that EVERY SINGLE THING you put out to the world supports that lovable, human image that you have of yourself.

2) make sure whatever you say is put into words that you would actually say out loud to another human being in person.

If it doesn’t pass those tests, don’t write it.

I’ll cheer to that!  Be careful with how you market yourself on social networks.  People are watching, listening.  And then they may not.

For most folks, the idea of reading a credit report isn’t all that appealing and it’s made even less desirable through the steps you have to complete just to get your hands on it.

I signed up for a free credit report a few years ago and after jumping through several hoops, finally had the massive document ready to print.  I was deeply disappointed then to see that while all my credit pluses (and one or two minuses) were there, no score was to be found anywhere.  That’s where they get you… you get your report FREE but have to PAY for the score.  Ay yi yi…

The Federal Trade Commission offers some great advice on how you can obtain your credit report and credit score here, but here are the details that get to the heart of it:

To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The form is on the back of this brochure; or you can print it from ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

You are entitled to get a free report each year.  Beware of sites that try to charge you for them if you don’t cancel after a certain amount of time.  And remember, no one else can get it unless you give them permission (which many employers do, as well as anyone you want a loan from, e.g., credit card companies, car loans, etc.).

About 20 years ago, buyers were told to consider their future income when they purchased a house.  For example, if they qualified for a $100,000 loan (a lot of money back then), but wanted to keep the purchase price around $85,000, they were encouraged to go ahead and spent the full $100,000 based on anticipated raises.

Yes, my first Realtor told me that.

However today I advise buyers of the exact opposite.  So how can really tell how much home you can afford?  My advise is you could anticipate what your monthly mortgage payment would be on the house you think you’d eventually like to buy.  Pay your regular rent, but pay yourself the different in a savings account of what that future house payment will be.

You will be able to save ahead for down payment and closing costs this way, while getting a solid reality check on whether you can afford that mortgage payment.

Another rule of thumb… make sure your house payment doesn’t exceed 25 percent of your income.  Okay, perhaps up to 32 percent might be okay but anything above that could be dangerous to your financial health.

Approach your ability to pay with plenty of skepticism, save ahead in case of emergencies, and don’t forget to plan for other expenses that go along with home ownership.  If you’ve already done this, consider buying now so you can take advantage of the $8000 tax credit being offered by the feds.  You must have a home under contract by April 30th and close by June 30th to qualify.

Home maintenance is so much more than changing your furnace filters every month, mowing the lawn, and closing your crawl space vents in the winter and opening them in the summer.  You also need to keep your refrigerator coils clean, clean around the dryer vents, get your chimney inspected, and much more.  CNN Money provides a great article with year-round maintenance tips, including:

Inspect your roof. Grab some binoculars and look for loose shingles, mold, mildew, or cracked chimney mortar. Catch problems early and you may avoid spending $2,000 to $12,000 (and up) for a roof replacement.

Check your attic for holes or thin spots in the insulation, and make sure the caulking around doors and windows doesn’t leak. Keep in mind that your attic should be only 5° to 10° warmer than the outside air; any hotter and you could develop ice dams on your roof, which can cause water leak.

There are dozens of great ideas in this article and if you have tens of thousands of dollars (or hundreds of thousands) invested in your home mortgage, pay attention and do what needs to be done to preserve your asset!

Photo by Collin Anderson via Flickr Creative Commons.

When it comes to preparing your taxes, you want to be careful. It’s not just about avoiding a tax audit. In fact, you might need to overcome some assumptions when you are ready to file. And, whether you file yourself, or have a tax professional take care of it, there are a few things to keep in mind. Roni Deutch, “The Tax Lady” offers some insight into items that you might overlook when preparing your taxes. As you get your 2009 tax return together, and as you plan for taxes in 2010, consider The Tax Lady, and keep these 5 things in mind:

1. Changes to your family: Childbirth, college, having your parents move in, marriage and divorce can all affect the tax breaks you are eligible for.

2. Home changes: When you move, there are deductions associated with your situation. And don’t forget the homebuyer tax credit.

3. Job changes: All things related to the job search can affect your tax return, especially with rules for unemployment benefits.

4. Major purchases: If you made a large purchase, let your tax preparer know. It may be nothing, but it may also impact your situation.

5. Bankruptcy: Your taxes are filed differently, depending on the kind of the bankruptcy you have. Be sure to have someone knowledgeable help you this.

The E*Trade baby strikes again, this time reminding us all that the lottery isn’t, in fact, a retirement plan.

Happy Friday!

2010 is going to be an interesting year for taxes. There are a number of tax breaks available that haven’t been available before. Here are two home-related tax moves for you to consider in 2010:

1. Buy a Home

The first time home buyer tax credit has been expanded and extended so that you can get the $8,000 first time tax credit until the end of April. Additionally, if you already own, you can get up to $6,500 when you buy. If you are planning to buy in the next couple of years, this might be the year to do.

2. Green Home Improvements

If you are thinking of making your home more energy efficient, 2010 is your year. There are tax credits available for putting in solar home heating systems, replacing your windows, adding insulation, and more.

Plan out the year ahead so that you can do your best to reduce your tax liability. Figure out what you want, and then decide how you can make it work within your budget.