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ON THE MARKET
Newsletter Archive
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Welcome to ON THE MARKET – March 16, 2007
A free newsletter from Hal & Jean Ward, Associate Broker and Sales Associate, Coldwell Banker Preferred Properties. www.centralutahhomes.com
Click here to subscribe.
WHAT’S NEW?
Zero-Down Mortgages are getting harder to find
Countrywide Financial Corp. has instructed its brokers to no longer offer zero-down mortgages as an option for borrowers, the Wall Street Journal reports.
That's because such loans are among the biggest reasons for a recent and sharp increase in the level of delinquencies at U.S. home lenders.
Countrywide joins such other companies as General Electric Co.'s WMC Mortgage and Washington Mutual Inc. in requiring that loan applicants have at least a 5-percent stake in their homes.
Previously, "if you breathe and have a Social Security number . . . you were going to get a house," notes Mark Cady of Market Street Mortgage in Houston. Now, lenders are demanding that applicants have higher credit scores and contribute a bigger down payment, among other requirements.
While the flow of money available to the subprime borrower community is likely to slow considerably as a result of this trend, observers note that lenders who are not subject to federal regulation will continue to offer higher-risk products such as 100-percent financing and interest-only loans.
Sources: Wall Street Journal, Houston Chronicle
MORTGAGE COMPANIES AROUND THE COUNTRY ARE CALLING US IN RICHFIELD...
...still trying to get some idea as to why the Richfield area market is so “up” in price.
Our last newsletter addressed some of the reasons, and this article is a follow up to our March 9 newsletter.
As we try to put the issue into perspective, it is important to remember that everything is ‘relative’. In this case, the Richfield market is up, relative to what? Relative to what it has been. Commercial building permits are up (as posted in a recent issue of The Richfield Reaper) They are up, relative to what? To what Richfield has heretofore seen.
Anyone not familiar with what the Richfield market has been, or not familiar with commercial permitting in the past year or so, may find themselves thinking ‘Richfield is booming’. That, again, is ‘relative’ to what? To what Utah Valley is experiencing? To what Cedar City is experiencing? To what the nation is experiencing? No, it is relative to what has occurred prior in the Richfield market.
There is common agreement that Richfield’s future looks bright, the local economy feels healthy, and the real estate market is reflecting this positive outlook.
Is it still a seller’s market? As of March, 2007, YES.
SHOULD I REMODEL OR REPLACE?
With home prices up, some Richfield homeowners have asked us about remodeling as an alternative to replacing their out-grown home. Is it a sensible idea? It could be…if you understand and plan for the often ‘hidden costs’.
Plan your home-improvement project responsibly. Consult a contractor who will help you estimate how much it will cost and put money aside accordingly. But whether the contractor tells you the price is going to exceed his original estimate or you find yourself buying more than you expected, hidden costs can leave you spending much more than you originally anticipated.
When you hire a contractor, that person gives you an estimate of how much it will cost to have a particular job done. But, "sometimes when a contractor begins doing a job, he finds out that there's more work involved than he thought," says Eugene Baldwin, a home-improvement specialist with home-contracting company Amerideck in Clinton, Md.
For example, a roofing contractor might start replacing shingles only to learn that some of the wood beneath the tile is completely decayed and needs to be replaced, as well. Or a contractor may drill into a wall only to find something behind it that he wasn't anticipating. "If you get into a job and you need another type of equipment and have to go out and rent it, it will cost the customer more, too," says Baldwin.
Some hidden costs might not be so hidden if you understand the contract. "The contract should include a description of the project and a list of what's excluded from the price," says Paul Winans, chairman of the board for the
the National Association of the Remodeling Industry. "It's almost more important to know what's excluded than what's included," he says. Certain tools and building materials might be excluded, as well as the cost of the products you want to have installed in your home. If there's a repair job in which a contractor is not sure of the extent of the damage, he might find that he needs to repair or replace a larger portion of the home than he originally thought.
Costly upgrades
Sometimes homeowners are directly responsible for unexpected costs. For example, halfway through the task of having your bathroom renovated, you might decide you want to upgrade your tile or choice of shower fixtures. Unless you choose your brands or products before the estimate is completed and stick with them, be aware that your choices will affect the total cost of the project.
Another factor that can cause the price to fluctuate is the cost of building supplies. If the job is one that will take a long period of time, or if you received your estimate several months before the actual work began, there's a chance that the price of supplies used to complete the project will increase. If this happens, your bill may rise accordingly. If your contractor includes the cost of supplies in his estimate, ask him before you sign the contract whether those costs are subject to change. The best way to prepare for hidden costs is to ask the contractor upfront which costs he expects to rise.
To prepare mentally, you can ask the contractor's references whether the final costs of their projects exceeded the estimates, and by how much. Those references can also tell you what the hidden costs were. If a contractor has a history of estimating too low, you can either find another contractor, or you can anticipate and prepare for a higher final price.
Also, make it clear at the beginning of the project that you want the contractor to let you know the minute he knows the project will cost more than expected so you have time to get your finances ready.
Do-it-yourself.
Do-it-yourselfers aren't immune to hidden costs. They, too, can find themselves paying more for a project than they originally anticipated. One hidden cost that many homeowners don't think about is permit fees. Depending on the type of work you're doing on your home, you may be required to apply for a work permit.
For example, a building permit is generally required from local building-inspection authorities for work that changes or adds to the structure of your property. Other permits you may need, depending on the project, are for electrical, mechanical and plumbing work. Often, you must pay an application fee in addition to the cost of the permit. Permit costs are generally based on the estimated construction cost of the project.
Another place a DIYer might underestimate a project is when coming up with all of the supplies and tools needed. Unless the job is one that you've done before, chances are pretty likely that there is a piece of equipment you'll forget to list or there is a tool that might make the job easier. If you're doing a task for the first time, always give your budget some breathing room for supplies you didn't think about.
Unfortunately, another hidden cost could arise from breaking something and having to fix it.
"If you're renovating your bathroom and you mess it up, you may have water all over the place and you have to pay for them to rip up the wall," says Demian Faunt, senior editor at DoItyourself.com.For that reason, it's important that you be very knowledgeable about a project before attempting to do it yourself. "Look up how to do the smaller projects that not only are in your budget but your expertise level so you don't have to call and have a contractor come in" to clean up after you, Faunt says.
A home-improvement project can be one of the most rewarding investments you can make. But when coming up with your budget, make sure you include room for the unexpected costs that are likely to arise. That way, you can spend more time enjoying your improvements and less time worrying about how you're going pay for them.
Tamara E. Holmes, from Bankrate.com.
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