In Today’s Market it is more important than ever to ensure that your home is in tip-top condition.  What that typically means is making some improvements or remodeling.

The website RemodelorMove.com has some excellent calculators if you are trying to decide if it is better to remodel your present house or move.  Since prices on existing homes are so low right now the bias lends itself towards moving; however, to ensure you get top dollar for your home you might need to make some improvements to your present house before you are able to sell.

I found this great information about returns on remodeling projects today:

1. Master Suite - Turning your master bedroom into a master suite is a popular remodel and one of the best ways to add value to your home. Bedrooms aren’t just for sleeping anymore. A master suite can include sitting areas, direct access to walk-in closets, and of course, the master bath. Master suites can increase your home value as much as $67,000 and recoup as much as 65% of their costs on average.
2. Family Room Addition - Family rooms are a desirable addition to modern homes. They can increase the value of your home as much as $50,000 on average and recoup approximately 65% of their costs.
3. Basement Remodel – People who have basements are tapping into that storage area and turning it into living space including bedrooms, family rooms, play rooms, and even bathrooms. A basement remodel can add as much as $46,000 to the value of your home on average for a mid-range remodel and recoup 75% of its cost.
4. Kitchen – Technology changes so quickly that anything more than a few years old looks dated. Since your kitchen is likely the one room in your house to contain the most gadgets, remodeling this room can add significant value and utility to your house. Kitchen remodels can recoup as much as 72% of their costs.
5. Attic – A great way to turn this wasted space into livable space is by adding a small bedroom or converting this space into usable storage. Attics can add over $40,000 worth of value to a home and recoup over 80% of their cost.
6. Sun Room – A popular trend today is having a room that doubles as an indoor-outdoor area, also known as a sun room. Some sun rooms have entire walls that can be rolled up, opening the room to the outside completely, while others are more simple additions, acting like screened in porches or decks. A sun room will recoup approximately 50% of its cost.
7. Garage – Families with multiple automobiles require two or more garages. Some people with boats and RV’s also like to keep their vehicles safe indoors. As such, adding a garage for these purposes will add value to your home. A two car garage can add as much as $36,000 to the value of your home and recoup 62% of its cost.
8. Bathroom – most agents will tell you the master bathroom is the third most important room to potential buyers, behind only the kitchen and master bedroom.  Turning your bathroom into a master bath suite with jetted tub, standing shower and dual sinks can increase the value of your home.  Also, adding an additional bathroom to a home that has only one can also add resale value.  A bathroom addition will add over $20,000 of value to your home and recoup 60% of its cost.
9. Home Office – With scores of people telecommuting or opting to work from home rather than at the corporate location, a home office is quickly becoming one of America’s favorite additions. This addition will recoup almost 50% of its cost and increase the value of your home nearly $13,000.
10. Roof Replacement - Many potential buyers will cross your home off their list if they think roof repairs will need to be made in the near future. At the same time, replacing your roof can add value to your home and make it more energy efficient. A new roof will increase the value of your home nearly $13,000 and recoup almost 67% of its cost.

lendingtree.com, Lendingtree.com, Mar 2010

Remember if you are looking to purchase a USDA Home Loan is the best loan available.  If you are looking to get approved to purchase your next house, or get cash for your remodeling project the best place to start is Lakewood Lending Group.

Related posts from Indiana's USDA Home Loan Expert:

1. Minimum Property Requirements for a USDA Home Loan
2. Using a USDA Loan to Purchase a Home After a Foreclosure
3. REO Properties and USDA Loans

How much can you afford?

Deciding how much house you can afford is a personal decision.  Many factors come into play.  How much can I borrow?  How much can I put toward my down payment?  What size monthly payment can I afford?

There are no black and white answers to these questions.  Its a matter of give and take.  If you plan on a 30 year mortgage, you can probably make a lower down payment (or perhaps no down payment at all [as long as your using a USDA Loan]) and still manage the monthly payments.  If, on the other hand, you plan on a 15 year mortgage, you’ll probably want to make a larger down payment to keep your monthly payments in line with what you can afford.

How large a down payment can I make?

Many buyers look at their cash on hand as their only source for their down payment.  This simply is not the case.  One way to fund or partially fund a down payment is by using a gift.   Parents, grandparents and other family members are often eager to help by making a cash gift toward the purchase of your home.

If you are selling a home, the equity you’ve built up can be applied to your down payment.

Of course a USDA Home Loan still offers 100% financing, and if the home appraises for enough you can include all closing costs, or possibly get the closing costs covered from a seller closing cost concession.

What size monthly payment can I afford?

When determining what size monthly payment you can afford, you’ll want to consider what other monthly expenses you have.   Tangible expenses such as car payments, day care and utility bills, all play a role in how large a monthly payment you can afford.

There are also the intangible expenses or lifestyle expenses that you’ll want to consider.  Things such as dining out, travel and when you buy your next car can effect how much you can afford.  Are you willing to curtail or delay some of these expenses in order to afford a larger monthly payment?

This is a very important fact: what payment are you comfortable with, not what payment you can get qualified that may be much larger than what you are comfortable making.

How much can I borrow?

This is a question you’ll want to get answered before you begin your home search.   This is something that I’m here to help you with.  My mortgage calculators will help you see how your down payment, monthly payment and the amount you borrow are all interrelated.

I can answer any questions you may have about the mortgage process.  But the best I can help is by getting you pre-qualified for a mortgage loan.  To get started, simply complete the Quick Rate Request.  I look forward to helping you buy your dream home.

Related posts from Indiana's USDA Home Loan Expert:

1. The Benefits of a USDA Guaranteed Loan to Purchase
2. Using a USDA Loan to Purchase a Home After a Foreclosure
3. The Tax Man Cometh: As A Homeowner You Can Give A Lot Less

I’m here to help you accomplish your dreams of homeownership. Productivity guru Jason Womack shares his recommendation for building up “Team You.”

Now more than ever you need a competent professional.  Let’s talk so we can discuss your mortgage needs.

Related posts from Indiana's USDA Home Loan Expert:

1. How Much Can I Afford
2. Using a USDA Loan to Purchase a Home After a Foreclosure
3. The Benefits of a USDA Guaranteed Loan to Purchase

Deductible Homeowners Expenses

One of the advantages of owning your own home is that the home mortgage interest and real estate taxes paid can be deducted from your federal income tax*. To do so, youll need to comply with current tax laws and complete the appropriate federal tax forms and itemized deduction schedules.

Home Mortgage Interest

For your home mortgage interest to be deductible, it must be for a first or second mortgage, a home improvement loan or a home equity loan. Additionally:

• The mortgage loan must be secured by your main home or a second home
• Only interest paid for that tax year can be deducted

The amount you can deduct can be limited if your mortgage balance is more than $1 million ($500,000 if married filing separately) or the mortgage was taken out for reasons other than to buy, build or improve your home.

Points

Points (aka loan origination fees, maximum loan charges, loan discount, or discount points) are generally treated as pre-paid interest and, as such, the full amount cannot be deducted in the year paid.  Rather, the deduction must be taken over the term of the loan.  When you refinance, you may write off the remained of the points in the year of the refinance.

Real Estate Taxes

State or local real estate taxes can be deducted from your income if they are paid in the tax year. To qualify, the tax must be levied on the propertys assessed value, the taxing authority must charge a uniform rate for properties in its jurisdiction, and the tax must not be for your special privilege but for the benefit of the general welfare.

Restrictions on Itemized Deductions

The amount of itemized deductions you can take are restricted by your adjustable gross income. In 2009, the limits were $166,800 for single persons, persons filing as head of household or qualified widow(er), or married persons filing jointly; and $83,400 for married persons filing a separate return.

Non-deductible items

Many of the expenses related to owning your own home cannot be deducted from your income tax. These non-deductible items can include:

• Most settlement costs, including (but not limited to) appraisal fees, notary fees, VA funding fees, USDA Guarantee Fee, and mortgage preparation costs
• Insurance
• Local assessments that generally add value to your home, such as sidewalks, sewers, etc.
• Utilities
• Domestic help
• Depreciation

Check with the IRS

*The information contained in this article is for informational purposes only and may not reflect current tax year rules and regulations. Youll need to consult with your tax attorney, CPA, or the IRS for current tax year rules, restrictions and regulations.

Related posts from Indiana's USDA Home Loan Expert:

1. Using a USDA Loan to Purchase a Home After a Foreclosure
2. Home Buying Process for a First Time Homebuyer
3. Uncle Sam Subsidizes a Portion of Your Monthly Payment

Any home that will utilize a USDA Home Loan must meet minimum property requirements (MPR), these are the same requirements utilized by FHA.  The MPR is referred to as the 3s’s, Safety, Security, and Soundness.  The requirements differentiate between minor and major.  A minor item is not something that would keep the house from meeting the requirements.  Some examples of minor items:  a hole in a window screen, cracked glass, worn floors, or a minor plumbing leak.  Some major items:  foundation damage, worn out roof (3 or more layers of shingles), faulty mechanical system.

When you are looking at a homes keep these items in mind, so you’ll know if the property will meet USDA minimum property requirements.

This list is for reference only and does not guarantee compliance with FHA Minimum Property Requirements.  Minimum Property Requirements are to insure the health and safety of the occupants and/or the marketability of the property.

The basic requirement is that the property be free of all known hazards and adverse conditions that:

• may affect the health and safety of the occupants
• may affect the structural soundness of the house
• may impair the use and enjoyment of the house

FHA Existing Property Condition Screening Checklist

Site Hazards And Nuisances
Presence of the following may indicate unacceptable property condition:

• Sinkholes
• Active or planned gas-drilling within 300 feet
• Within 75 feet of operating oil/gas well with no visible mitigation measures
• Abandoned oil or gas well within 10 feet
• Slush pits
• Excessive noise or hazard from heavy traffic area
• Dwelling or improvements within 10 feet of easement for high-pressure gas or petroleum line
• Dwelling or improvements within fall distance for overhead towers (high-voltage, radio/TV, cell phone etc)
• Excessive smoke, fumes, offensive noises, or odors
• Stationary storage tanks with more than 1000 gallons of flammable or explosive material

Wood Destroying Insects
Presence of the following will require a termite inspection and treatment if infestation is present:

• Structure is ground level and wood is touching ground
• House or other structure show obvious evidence of infestation
• Local jurisdiction requires inspection
• Inspection is customary to the area

Soil Contamination
Presence of the following may indicate unacceptable property condition:

• Surface evidence of underground storage tank
• Proximity to dumps, landfills, industrial sites that could contain hazardous materials
• Presence of pools of liquid, pits, ponds, lagoons, stained soils or pavement

Grading And Drainage
Presence of the following may indicate unacceptable property condition:

• Grading does not provide drainage away from structure
• Standing water near structure

Individual Water And Sewage Systems
Presence of the following may indicate unacceptable property condition:

• Private sewage system shows evidence of system failure
• Property lacks connection to public water (you’ll need to get a water test to ensure water quality meets public health requirements)
• Separation between well and septic drain field less than 100 ft (75 feet may be acceptable if local authorities allow.)
• Separation between well and property line is less than 10 feet (If local authority requires greater distance that requirement must be met.)

Private Road Access
Presence of the following may indicate unacceptable property condition:

• Property inaccessible by foot or vehicle
• Property accessible only by private road without permanent recorded easement

Floor Support Systems
Presence of the following may indicate unacceptable property condition:

• Significant cracks
• Evidence of water damage
• Evidence of spongy/weak/rotted flooring

Framing/Walls/Ceiling
Presence of the following may indicate unacceptable property condition:

• Significant cracks
• Visible holes in exposed areas that could affect structure
• Damaged plaster, sheetrock, or ceiling materials in homes constructed before 1978
• Significant water damage

Attic
Presence of the following may indicate unacceptable property condition:

• Inadequate access
• Evidence of holes
• Support structure damaged
• Significant water damage visible from interior
• No ventilation by vent fan or window

Basement
Presence of the following may indicate unacceptable property condition:

• Blocked or inadequate access
• Evidence of significant water damage
• Significant cracks or erosion in exposed areas that affect structural soundness

Crawl Space
Presence of the following may indicate unacceptable property condition:

• Blocked or inadequate access
• Space inadequate for maintenance (recommended 18 inches)
• Support beams not intact
• Excessive dampness or ponding of water

Slab
Presence of the following may indicate unacceptable property condition:

• Significant cracks that could affect structural soundness

Roof
Presence of the following will require a roof inspection and possible repair:

• Missing tiles, shingles, flashing etc
• Holes
• Signs of leakage

Furnace/Heating System
Presence of the following may indicate unacceptable property condition:

• Unit does not turn on
• Heat is not emitted
• Unusual noise
• Smoke or irregular smell
• Significant holes or deterioration in unit

Central Air Conditioning
Presence of the following may indicate unacceptable property condition:

• Unit does not turn on
• Cool air is not emitted
• Unusual noise
• Smoke or irregular smell
• Significant holes or deterioration in unit

Electrical System
Presence of the following may indicate unacceptable property condition:

• Electrical switches don’t work
• Outlets don’t work
• Presence of smoke or sparks from outlet
• Exposed frayed or unconnected wiring

Plumbing System
Presence of the following may indicate unacceptable property condition:

• Significant drop or limitation in water pressure
• No hot water
• Toilets don’t function or have been removed
• Toilet leaks
• Sinks/bathtub/shower leaks (very minor leaks may be acceptable)
• Sinks/bathtub/shower does not work or have been removed
• Swimming pools not operational, in bad repair or not maintained

Paint
Presence of the following may indicate unacceptable property condition:

• Chipped peeled or peeling paint on interior or exterior of home and/or structures and improvements if home built before 1978
• Chipped or peeling paint on exterior surfaces if finish is unprotected (ie, bare woods) if home built after 1978

Other
Presence of the following may indicate unacceptable property condition:

• Missing or inoperable exterior doors
• Broken or missing stairs
• Absence of built-in appliances
• Absence of free-standing stove

Related posts from Indiana's USDA Home Loan Expert:

1. Using a USDA Loan to Purchase a Home After a Foreclosure
2. REO Properties and USDA Loans
3. The Benefits of a USDA Guaranteed Loan to Purchase

Flickr photo by Nick Bastina

Did you know you can use the power of a USDA Home loan to purchase a Real Estate Owned (REO) property.  Yes, all the deals you’ve been hearing about on homes and a bank presently owns.  Sometimes a foreclosure will need a little work, but recently foreclosures have been coming on the market needing less, and less work.  With a USDA home loan you can purchase a home at under market value, and with 100% financing, and if the house appraises for enough you can even roll in the closing costs.  A lot of lenders are so eager to move these homes that they will offer a closing costs concession, a percentage of the purchase price to use towards your closing costs.

You can use USDA Home Loan financing to purchase a foreclosed, bank owned (REO) as long as the house will be the house you intend on living in (primary residence).

With any home, but especially REO’s you must ensure that the property meets FHA minimum property requirements (MPR). The 3 S:
1.  Safety
2.  Security
3. Soundness

Related posts from Indiana's USDA Home Loan Expert:

1. Minimum Property Requirements for a USDA Home Loan
2. Using a USDA Loan to Purchase a Home After a Foreclosure
3. The Benefits of a USDA Guaranteed Loan to Purchase

A lot of homeowners think that after a foreclosure they will never be able to purchase a home again.  A foreclosure does hurt your credit in the short term, but it will not keep you from purchasing a home in the future.

The actual foreclosure event will stay on your credit report for seven (7) years.

So, your house was foreclosed on you’ve moved out now what.

You’ll need to start re-building your credit.  One thing you’ll need to make sure is keep track of all paper work from the previous mortgage company.  Be sure and get a free copy of your credit report from annualcreditreport.com  Check your credit report for errors, if there are errors send supporting documentation to the 3 credit bureaus asking that the error be corrected.  By law they have 30 days to investigate or they have to remove the item; however, if it is later found that it is accurate, it will be replaced on your credit.  The Federal Reserve Board has a flyer to help you entitled, “5 Tips for Improving Your Credit Score.”

Document the circumstances surrounding your foreclosure.  What happened that caused the foreclosure to start, loss of job, medical problems, death of spouse, significant other, etc.  The underwriter will want to know that the problem is not likely to recur and that you are in a much better ability to pay a mortgage in the future.

You will need 3 years from the date of your foreclosure until you are able to purchase a house using a usda loan, which allow for 100% mortgage financing.  In addition to the 3 year time frame you will also in most cases need at least a 620 credit score.

One thing that will help speed the process if you work with your lender prior to the foreclosure through:

• Forbearance. This is an agreement that lets borrowers make a reduced payment, or none, for a specific period. You might have to make larger payments once the crisis has passed. To qualify, you might need to show that you’re expecting a bonus, a tax refund or other income that will let you catch up.
• Reinstatement. You agree to pay the full amount of your missed payments by a specific date. Reinstatement is sometimes combined with forbearance.
• Modification. Your lender agrees to change the terms of the loan to make payments more affordable. Your lender may agree to add missed payments to your loan balance or extend the term of your loan, reducing the size of your payments.

If you are beyond that point or there is just no way you can afford the current mortgage then it is time to move on:

• Work with your lender and ask if they will accept a deed in lieu of foreclosure.  This is where you sign the house over to the lender then they do not have to go through the foreclosure process.  You will have to move out immediately.  The bright spot for you is that you can begin the rebuilding of your credit sooner than if you waited on a foreclosure.
• Sell your home. More than likely you owe more than your home is worth.  So, you will need to sell as a “short sale”.  You’ll want to contact a short sell investor or a Certified Distressed Home Seller Real Estate Agent.  While you may try selling yourself, this will not get you the exposure your home needs to sell quickly.

Related posts from Indiana's USDA Home Loan Expert:

1. The Benefits of a USDA Guaranteed Loan to Purchase
2. Minimum Property Requirements for a USDA Home Loan
3. REO Properties and USDA Loans

When the time comes to buy your first home you will most likely have conflicting feelings about the home buying process. Looking for the perfect place to call home is an important and exciting time in your life. Before you can get the keys to your first home you have to go through several steps, some of which can be confusing or downright intimidating. One of the most important steps is securing money to purchase your home. The loan process can be complicated therefore learning as much as possible beforehand will reduce the chances of making a costly mistake. Here we look at the loan process for first time home buyers.

Determine how much home you can afford – This is not an official step in the loan process, but an important step nevertheless. Avoid putting yourself in a position where you are house poor by buying a home that you can afford. Lenders consider many factors when determining how much credit they are willing to extend, however no one knows your financial situation better than you- determine a number you are comfortable with and stick to it, even if the lender approves your loan for a higher amount.

Compare loan terms – Finding the right lender and loan is just as important as finding the perfect home. Buying a home is a huge investment and one that should be taken very seriously. Take the time to compare lenders and loan terms to find the best loan. Begin with a checklist of potential lenders including their name, address and contact information. For each lender you will want the following information; type of mortgage, minimum down payment, interest rates and points, prepayment penalties, closing costs and length of time to process loan.

Loan application – You can fill out a loan application in person, over the phone and sometimes on the Internet. The loan officer will ask you about your employment, income, savings and debt. The loan officer will also request proof in the form of pay stubs, W-2’s and tax returns. Your credit will be checked to determine creditworthiness. When filing out the loan application make sure all requested information is provided to ensure the application is processed without delay. Incorrect or incomplete applications could result in being turned down for a loan.

Processing the loan – Once you have completed the loan application it will then pass from the loan officer to the processor. Their job is to make sure all the paperwork is in order and all requested information and documentation is complete. The processor basically reviews all the information that you went over with the loan officer, verifying information and comparing numbers to determine whether you qualify for the loan.

Underwriting – Next your loan application will be reviewed by the underwriter. The underwriter checks the work of the processor. They will go over all the information on the loan application once again to ensure everything that is needed is present. A second look at the numbers by the underwriter will confirm whether or not your loan will be approved. If you have met all the conditions of the loan and provided all the necessary documentation your loan will be approved.

Closing and settlement – When the loan has been approved it will then go to closing. This is when the lender contacts the title company to begin the paperwork needed for settlement. At this stage funds are made available for the purchase of the home and settlement is scheduled. Settlement is the final step in the loan process. Everyone is present the buyer, seller, real estate agents and settlement attorneys. During settlement both the buyer and seller go over a settlement sheet to ensure the numbers are correct and as agreed. If all steps of the loan process have been followed, there should be no last minute issues or problems. This is the last step in the loan process.

Related posts from Indiana's USDA Home Loan Expert:

1. Using a USDA Loan to Purchase a Home After a Foreclosure
2. The Benefits of a USDA Guaranteed Loan to Purchase
3. REO Properties and USDA Loans

Time is running out on the Extended tax credit.  A house must be under contact by April 30, 100 days from tomorrow, to qualify for the tax credit. The implementation of some of the new regulations is adding to time to get mortgage approval.  As the clock clicks down you must ensure you are working with a competent mortgage professional.

Remember the Government is literally handing out money asking you to please take this money of up to $6,500 for a move-up buyer and up to $8,000 for first time homebuyers.  Remember that this credit is on top of the credit you will realize from being a homeowner of interest and taxes paid.  To top it all off present home values are still low, rates are at a historical low.  Your ability to own a home and the affordability will likely never be better than it is right now.

Are you Ready?

• Creditworthiness (What credit is acceptable, what credit is needed to qualify for various loan programs)
• Qualifying Income
• Mortgage Loan Options
• Down Payment (With a USDA Loan it will be zero)

These are just some of the questions that are answered during an initial consultation with me.

Listen as an I.R.S. agent gives tips on the homebuyer tax credit.

Related posts from Indiana's USDA Home Loan Expert:

1. What’s a Credit Score Got to Do With It?
2. Home Buying Process for a First Time Homebuyer
3. The Benefits of a USDA Guaranteed Loan to Purchase

“A penny saved is a penny earned”… or so the old proverb goes. Of course, the value of a penny has changed somewhat from the time when your grandfather offered his wisdom on the value of keeping what you earn. Today, you could save thousands of dollars by simply making the right mortgage decision. If you haven’t taken advantage of the historically low interest rates you are leaving huge savings in the pockets of a banker.

Your mortgage is one of your most significant financial decisions. Making the right decision regarding your mortgage can have a huge impact!

It is my primary role as a mortgage broker to find you the right product for your personal situation. A mortgage broker is a financial professional and – like your investment advisor – I want to understand your personal situation and payment preferences. I have access to many lending institutions, so you can do some valuable comparison shopping for the right combination of features, rates and mortgage options.

All these choices offer you substantial opportunities to save money over the life of your mortgage.

If you are like most homeowners, you are focused -for good reason – on finding the best possible rate for your mortgage. A mortgage broker can offer you the best range of rate options and terms. If a mortgage broker can get you a half per-cent (1/2%) off the posted rate, that could mean a savings of more than $17,000 in interest per $150,000 borrowed over a 30 year term. If, however, you believe that most mortgage rates are basically the same from one institution to the next, then consider the fact that even an eighth of a point difference in the rate can offer significant savings over the duration of your mortgage.

But it’s also important to look beyond the rate. There are other ways to find savings in your mortgage. I am up-to-date on market trends and new opportunities… as well as some of the tried-and-true ways to save money in a mortgage.

Do you get an annual bonus in your job? You may want to use that bonus to pay down the principal of your mortgage. If you pursue this strategy consistently over the life of your mortgage, you could save thousands of dollars in interest by paying your mortgage off sooner.  However, sometimes, it makes more sense to save this money is a safe side account, that you could utilize to pay down your mortgage, or as an emergency cushion.

Are you paid bi-weekly or bi-monthly? Consider a change from the usual monthly mortgage payment. Set up your mortgage payment schedule to coincide with your pay period. Again, you can shave years off your mortgage, and enjoy thousands of dollars in savings.  You can accomplish the same thing through just making one extra payment per year as well.

Consider the old penny proverb again. How much is your time worth? Time savings is one of the key, unexpected benefits that clients say they have enjoyed when they choose to work with a me. Above all, I’m an expert in customer service, and that means that I look after every detail of your mortgage research and negotiations on your behalf.

Related posts from Indiana's USDA Home Loan Expert:

1. The Benefits of a USDA Guaranteed Loan to Purchase
2. The Good Faith Guarantee – What You Need to Know as a Borrower and a Realtor
3. Using a USDA Loan to Purchase a Home After a Foreclosure