Brandon’s response:

You’re right. There’s not much additional risk for the banks. But there’s a loss of revenue for the company that owns and services the mortgage loan. They get paid off sooner, so they make a lot less money in interest fees. Then they’re just left with cash that probably can’t be invested as well at present (mortgage debt is a good investment, if the borrower is still making payments).

That is why they drag their feet when it comes to underwater refinance and mortgage modifications. From the bank’s / investor’s point of view, anything that reduces revenues is anathema. They are money-making machines, and nothing else.

Did you know the FHA has modified it’s lending program to accommodate more upside down borrowers? They are giving lenders monetary incentives (among other things) to refinance people who are underwater, as long as they are current on their payments. Here’s a fact sheet on these recent changes. You should look into that, and also the Making Home Affordable refi program. They are both designed for people in your situation — current on payments, upside down, wanting to refinance, etc.

You are in the same boat with a lot of homeowners right now. The housing bust reduced property values all across the country. In some places (California, Arizona, Florida, etc.), home values sank considerably. This has put a lot of homeowners into a situation where they owe more on their mortgages than their homes are currently worth. This is referred to as being upside down or underwater on the mortgage loan.

Generally speaking, there are two ways to restructure and/or reduce your mortgage debt. These are mortgage modifications and refinancing. The trouble is that traditional refinance loans don’t work for people who are upside down, because you need a certain amount of equity to be approved for the refi loan. So the “standard” refinancing strategy is not an option.

Part 1 - New FHA Refinance Program

The standard refinancing process might not work for you. But certain government-led programs might be an option. For example, the FHA recently announced a new program that permits lenders to offer refinancing loans to underwater homeowners. It was announced in May of 2010, and it’s supposed to begin sometime in the fall of 2010.

Here’s a fact sheet on the FHA refinancing program. It’s a good place to start.

Part 2 - Making Home Affordable Refinance Program

If your mortgage loan is owned by Fannie Mae or Freddie Mac (and there’s a good chance it is), you might be able to refinance into a lower payment through the Making Home Affordable Program. This program is designed for homeowners who are current on their mortgage payments, but unable to refinance because of decreased property value.

You can learn more about it on the official website.

Just keep in mind that these options may not reduce the principal amount you owe. [Correction: The FHA refinancing program mentioned in Part 1 could reduce your principal loan balance by at least ten percent. This is according to the fact sheet I linked to earlier.] They might help you lower your payments by securing a lower interest rate, but they probably won’t reduce the current debt you owe. You would need a mortgage modification to do that. Lenders will only reduce the principal amount owed in rare cases.

Here are some related articles you might want to read:

• How to Refinance an Upside Down Mortgage (check out the comments)
• Government Mortgage Assistance Programs

I hope this response has helped you out in some way, or at least point you toward some useful information. Good luck.

In this article, you will learn my super-secret formula for FSBO marketing success. I have used this marketing strategy twice when selling a home by myself, and both times were a success. Okay, so it’s not really “super secret.” But it’s definitely a surefire recipe for success. So I’m happy to share it with you today.

Are you ready to learn the proven formula for FSBO marketing? Do you have a pen and paper? Are you ready to absorb this highly complex strategy for success? Okay. Here’s the best way to market your FSBO home effectively:

List your home on the MLS and Realtor.com.

Were you expecting something more complicated? If so, I’m sorry to disappoint. This is the FSBO marketing strategy I’ve used on two occasions. It was easy, and it achieved the desired result both times. It helped me bring in a steady stream of potential buyers, which is the first step to making a quick sale.

Make no mistake about it — a quick sale is your ultimate goal. A quick sale for the best possible price. That is what you want to achieve when you sell your home. It’s your FSBO marketing mantra. So say it with me: I want to sell my house quickly, and for the best possible price! Got it? Good. Let’s move on.

You can use these FSBO packages to get on the MLS and Realtor.com:
Sell your home on ForSaleByOwner.com and pay 0% Real Estate commissions

If you want to market your FSBO home effectively, you need to put it in front of the largest possible audience. And you need to do this quickly, and with little effort. That’s why I’m stressing the importance of these two marketing channels. If you list your home on the MLS, all of the real estate agents in your area will see it almost instantly. If you list your home on Realtor.com, local home buyers will be able to find it immediately. Put these two things together and you have a powerful FSBO marketing strategy.

A yard sign is a must, as well. And you might want to create a marketing flyer that buyers can pick up as they walk in the door. The flyer doesn’t have to be anything fancy. A simple Word document will do the trick. You just want to point out some of the things that make the home special. Upgraded lighting? New floors? Surround sound? Put it on your flyer. Don’t just assume people will see these things — tell them.

How to Market Your FSBO Property

Let’s recap some of the key points we’ve discussed. As an FSBO seller, your goal is to sell your house quickly and for the best possible price. In order to achieve this, you need to market the home to all of the potential buyers in your area. You can do this by listing the home on Realtor.com and the MLS. This will put it in front of most home buyers and agents in your area. This is the first step to FSBO marketing success.

You should also get a yard sign and create a marketing flyer that points out the key features of your house. This is the best way to market your FSBO home to buyers — in my experience anyway.

Here are some related articles you need to review:

• 21 Tips for Selling Your House Quickly
• Staging a House to Sell Fast
• The FSBO Matrix
• How to Price Your Home to Sell

I hope you found this article helpful. Good luck with your marketing campaign.

This article answers the question: How do I market my FSBO home to potential buyers? If you have additional questions about this topic, try using the search box at the top of this page. You can also post a question of your own through our Q&A tool (see the upper-right section of the site).

How to Compare Policies Online

There are dozens of websites that let you compare home insurance offers from multiple providers. This is a great way to get the ball rolling, because it saves you time and effort. It also allows you to compare insurance policies in a side-by-side fashion. You can do this the “old-fashioned” way if you want, by making half a dozen phone calls. But why waste the time? You can use the Internet to do the same thing, and in a fraction of the time.

Here’s a good place to get started: Shop and Compare multiple Home Insurance quotes for free.

Before we go any further, we need to cover some of the basic terminology used by the insurance industry. You’ll be better able to compare home insurance policies once we do. Here are some insurance terms and concepts you need to understand:

• Deductible — The deductible is what you have to pay when you make a claim, before your insurance provider will cover the remainder. Let’s say that you have a deductible of $750, and property damage valued at $7,000. You would have to pay $750 of the total damage amount, before your insurance “kicks in.” After you paid the deductible, your provider would cover the remaining $6,250.
• Premium — This is the amount you pay each year for your insurance policy, minus any deductibles. You can consider this the cost of your coverage. The average premium for a homeowners policy in the U.S. is about $850 per year.
• Replacement cost — You definitely need to understand this term in order to compare home insurance offers. Replacement cost is when the lost or damaged item is replaced at the full and current cost. Let’s say you have a television set that’s ten years old. With this coverage, your insurance provider would replace the TV with a current model, even if the modern version costs more than your ten-year-old set.
• Cash value — This is the alternative to replacement cost coverage, which we covered above. With cash value, your belongings are only covered up to the amount you paid for them at the time of purchase. Keep this distinction in mind as you compare homeowners insurance policies.

These are some of the key points you need to consider when you compare home insurance coverage. You want to know (A) how much your premium and deductibles will be, (B) what your total coverage is, and (C) whether you have replacement or cash-value protection.

These are not the only components of homeowners insurance. But they are some of the most important factors when shopping for quotes. If you understand the items defined above, you’ll be able to compare insurance quotes effectively. You’ll make smarter choices in the end, too.

Saving Money on Homeowners Insurance

You can save money on your monthly homeowners premium by increasing the deductible amount. This strategy is widely recommended by money-saving experts. You might also qualify for certain discounts offered by the insurance company, such as a discount for having a home security system. If you get your homeowners policy from your current provider, you could qualify for a multi-policy discount. ways to save money on your home insurance. , your homeowners insurance policy by increasing the deductible.

This article explains how to compare home insurance policies. If you have additional questions about this subject, you can use the Q&A tool at the top of this page. You might want to visit our main insurance page as well. Good luck.

The answer to your second question would be yes and yes. It does matter who you use, because you might get a better deal from one lender over another. But at the end of the day, the interest rate and closing costs matter the most.

Now let’s address the first part of your question.

Best Lender for Refinance Loans?

Here’s what it all boils down to. No lender is the best for home refinancing loans, because it depends more on the borrower’s qualifications than anything. If you have excellent credit and a sufficient amount of home equity, you could get good refinancing terms from any number of lenders.

On the flip side, if you have bad credit and/or a lack of equity, then most lenders will turn you down. So it all depends on your financial picture. The best lender for refinancing is simply the one that gives you the lowest interest rate and closing costs.

Here’s what I would do, if I was planning to refinance my home loan soon:

1. First, I would find out how much equity I had in the home. This one item alone can be a deal breaker, or a deal maker. So I would start there. If you don’t have much equity (or if you’re upside down on the loan), you’ll have trouble refinancing the loan.
2. Next, I would check my credit score to see where I stood. The lender will check this shortly after you submit your refinance application. You don’t want them to know more about your credit than you do. So find out where you stand.
3. I have an existing relationship with a local bank in my area, so I would ask them about their refinance options. Sometimes, the best lender for home refinancing is the one you’re already working with. You might get a lower rate or reduced closing costs this way.
4. Lastly, I would try to get refi offers from at least two other lenders. This would allow me to compare the rates and terms offered by several different lenders.
5. You might want to try this option as well:

This article answers the question, Who is the best lender for mortgage refinancing these days? If you have additional questions about the refi process (or anything else related to mortgage loans), you two ways to research it. You can use the search tool at the top of this page, or you can type your question in the box provided above.

We need to clear up some misinformation first. Then we can talk about the eligibility requirements for this mortgage program. The current down-payment requirement for FHA loans is at least 3.5%. In order to qualify for this down payment, you will need a FICO credit score of 580 or higher. If your score is below 580, you’ll have to put at least 10% down for an FHA-insured mortgage.

With that item cleared up, we can move on to the eligibility criteria for FHA home loans.

Who is Eligible for FHA Loans?

The Federal Housing Administration (FHA) is part of the Department of Housing and Urban Development, or HUD. This department is part of the federal government. The FHA insures home loans made by approved lenders. So if you want to apply for one of these loans, you must first locate an FHA-approved lender in your area. You can do that on this page.

Let’s start with the basic eligibility requirements for these loans. You will need a valid social security number, and you must be a lawful resident of the United States. You need to be old enough to sign a mortgage loan, in accordance with your state’s laws. This is just to get your foot in the door. If you want to actually get approved for an FHA home loan, you’ll have to meet additional eligibility criteria.

When you apply for the loan, the lenders will review your income, assets, debts and credit history. So let’s talk about each of these requirements in turn:

The FHA loan program does not have any exact income requirements. But they do prefer a certain debt-to-income ratio. In short, you need to have enough income to cover your monthly mortgage payments — as well as any other debts you currently have.

In most cases, the 29/41 rule applies. This means that your monthly mortgage costs should not exceed 29% of your gross monthly income. Your total combined debts (including your mortgage) should not exceed 41% of your monthly income. Again, this eligibility requirement is not set in stone. But it is used in most FHA loan situations.

Credit scores are another eligibility requirement for FHA loans, but they’re equally hard to pin down. Generally speaking, the credit score requirement for FHA mortgage is more “relaxed” than with a conventional mortgage. That goes for the rest of the qualification process, as well. The reason for this is the government backing. The federal government insures lenders against any losses they might incur. So the qualification requirements are less stringent than they would be on a conventional mortgage.

We talked about two important FICO score “cutoff” points earlier. If you want to qualify for the 3.5% down payment on your FHA loan, you’ll need a score of 580 or higher. Anything below that, and you’ll have to put more money down — at least 10%. As for the absolute minimum score needed to get approved, you’ll have to talk to your lender about that.

Those are the main eligibility requirements for the FHA mortgage program. If you want to find out if you’re qualified for one of these loans, you can start here:

I hope this answers your question. Good luck.

You’re right. They are rising in popularity right now, and you’ll soon learn why. There are actually several differences between FHA and conventional mortgages. Let’s start with some basic definitions, which will also outline one of the biggest differences between these financing methods:

• An FHA loan is insured by the Federal Housing Administration. This organization is part of the federal government, and it falls under the Department of Housing and Urban Development (HUD). You can apply for these mortgage loans through any mortgage lender that has been FHA approved.
• A conventional mortgage, on the other hand, is not insured by the government. There is no government backing at all.

That’s the primary difference between these two types of loans. Let’s talk about some more differences.

Other Differences Between FHA and Conventional

With an FHA loan, you can usually make a much smaller down payment than you’d have to make for a conventional mortgage loan. If your credit score is 580 or above, you could put as little as 3.5% down when using an FHA home loan. A conventional loan will require a larger down payment — somewhere between 5% and 20%.

This makes the FHA program popular among home buyers who don’t enough money saved up. In fact, a 2010 survey by the Home Buying Institute found that this was the #1 reason people use FHA mortgages.

The qualification process is another key difference between FHA and conventional mortgage loans. In most cases, it’s easier to qualify for an FHA loan. This appeals to people with credit scores below a certain range, or other financial problems.

Remember that the federal government insures these loans against losses resulting from default. This gives the lender a level of protection they wouldn’t have otherwise. So they are more willing to work with borrowers they wouldn’t normally deal with.

Learn more:

• FHA loan guidelines and requirements
• How to apply for an FHA home loan

There are also certain loan limits on FHA loans that may not apply to conventional mortgages. These are limits on the size of the loan you can obtain through this program. They are assigned by county. You can find the limits for your area by doing a search through the HUD website. Here’s the page you need.

This article covers the key differences between conventional and FHA mortgage loans. If you have additional questions about this topic, you can use the search tool at the top of this page. We have plenty of mortgage-related articles on the website, so you’re bound to find something useful.

If you’re not familiar with how refinancing works, you might want to start with this helpful article. It explains how the process works, and when it makes sense to do it.

It depends on your goals. Why do you want to refinance? Do you simply want to lower your payments and save money? If so, you’ll need to save more than what you pay in closing costs. That’s when refinancing would make sense.

This brings us to the concept of the break-even point, or BEP. This is when the amount of money you save (through the lower rate) surpasses the money you spend (in closing costs). When you clear this point, you are saving money over the life of the new loan. This is when it’s worth it to refinance the mortgage loan.

Another common reason to refinance is to switch from an ARM loan into a fixed-rate mortgage. So as long as you can accomplish this goal, the refinance loan is worth the effort. Sometimes you can accomplish two goals at once. For example, you might be able to refinance out of an ARM loan while lowering your payments at the same time.

So the first thing you need to do is determine your goals. Are you simply trying to lower your payments and save money? If so, you need to get a low enough rate on the new loan (and keep the loan long enough) to clear the break-even point. Are you trying to switch from an adjustable rate to a fixed-rate mortgage? If so, you need to do this without increasing your payments. This is when it’s worth it to refinance the loan.

Staging a House to Sell - A Case Study

In this lesson on staging a house to sell, I’ll tell you exactly what my wife and I did to stage our home. We sold our home during a relative downturn in the housing market. This all happened in July 2010, when housing inventories were high and demand was low. It was a buyers’ market where we lived, as was the case elsewhere across the country. But despite these challenges, we got an offer in just over a week. In fat, we received a total of four offers. Two of them were for the full asking price. Here’s how home staging played a role…

Curb Appeal and Backyard “Wow” Factor

We have a lot of landscaping in our yard. Plant beds, flagstone path, bushes and shrubs, etc. So we brought in a landscaping crew to do a clean sweep, from front to back. They de-weeded the entire yard, added fresh mulch where needed, trimmed trees, shaped bushes. You name it. They did in eight hours what would’ve taken me a couple of weeks.

Here are some pictures of the end result.

I also spent a lot of time getting my grass in good shape, and keeping it manicured. You can see this in the photo above. Healthy, green grass is a bonus in a hot climate like Texas (where I lived at the time). Potential buyers realized they would inherit a nice lawn. And when you’re staging a house to sell fast, every little bit helps!

We put a lot of effort into the backyard, because we knew it was one of the biggest selling points for the home. This helped us set the home apart from others in the neighborhood. That’s the whole point of curb appeal and home staging — to set your home apart from the competition. We stained the wood fence, hung colorful flowers in baskets, added some plants where needed, and even bought some new patio furniture. We took the furniture with us when we moved, but it added a lot to our staging efforts.

Staging the Inside of the House

Inside the house, we painted all of the walls with a neutral (but attractive) color scheme. We had some bold “accent walls” in several areas. Such colors are taste specific. We toned it all down to appeal to the majority of buyers. This is a key concept when staging a house to sell fast. You have to make the home appeal to the largest possible audience. And that means avoiding things that are too taste specific.

We also upgraded the light fixtures in all three bathrooms. Prior to this, we had those builder-grade “Hollywood lights” in the bathrooms — basically an aluminum rectangle with bulbs sticking out. We replaced these with some brushed-nickel light fixtures with frosted glass shades. Remember, the key to staging a house to sell is to make it different from other homes in the area. We knew that potential buyers would be used to seeing the cheap lights. So we invested in some upgrades. Just a little more of the wow factor.

We also de-cluttered the house from top to bottom. We made a dozen trips to the Goodwill, gave stuff away to friends, and sold some of our excess furniture on Craigslist. The house seemed a lot bigger when it was all said and done. It’s a lot easier to stage a home if you do a bit of purging first. Trust me.

Here are some pictures of the interior, after all of the painting, de-cluttering and upgrading.

In the family room, we just de-cluttered and rearranged the furniture to suit the space. We also neutralized the color scheme (the room used to have a red accent wall).

In the master bedroom, we created a “reading nook” just by adding a chair and lamp. We had these items elsewhere in the house, so it didn’t cost us anything.

The front room when you walk in the house could serve several purposes. It could be a dining room, an office or a den. We set it up as an office. The key is to let each room serve a singular purpose. Multi-functional rooms and empty spaces only confuse buyers. Staging a house to sell means removing all of the guesswork. Don’t make people guess what a room if for –show them the possibilities.

The combined out-of-pocket cost for staging and preparation was a little over $2,000. That might seem like a lot of money to spend on home preparation, but the results were worth it. At a time when most homes sit on the market for weeks or months, we were able to get an offer in eight days. We actually had buyers competing to buy the place. This rarely happens in a buyer’s market, and it’s the direct result of our home staging and pricing strategies.

Related articles:

• How to Price Your Home to Sell
• 21 Tips for Selling Your House Quickly

Staging a house to sell can be a lot of work. But it can help you sell the home faster, and for a higher price. This is what ever seller wants. I hope this case study has helped you realize the value of proper staging.

First of all, I’d like to give you some kudos for being a smart home buyer. You’ve started the research and planning process well in advance of your purchase. That’s what I always tell people to do. So you’re off to a great start. Now, on to the question at hand.

Just to be clear, you are asking this: How much mortgage can I afford to borrow with my income? This is one of the most common questions among home buyers. But it’s not one that I can answer. Even if I knew your income, there’s still one important variable that’s missing — and that’s your monthly expenses.

How Much House Can I Afford?

To figure out how much mortgage you can afford, you must first create a housing budget for yourself. Start by comparing your monthly income (after taxes) to your monthly expenses. By “expenses,” I’m talking about everything you spend money on each month: Your car payment and insurance. Your grocery bills. Your credit card debt. The money you put toward savings. Entertainment and qualify-of-life items. Everything. You need to subtract these monthly expenses from your net income. If you’re currently paying rent, you can leave that off your list of expenses. You won’t be paying rent anymore, after buying a home.

I’m not advising you to use all of your extra income to cover your mortgage costs. That wouldn’t give you much breathing room. But the number you come up with after your calculations does give you a good starting point. You know that your mortgage payment must be equal to or less than this amount. If your monthly payments exceed the difference between your income and expenses, you’re going to have trouble keeping up with the payments. This is a recipe for home foreclosure. And you don’t want to go down that road.

Related article: How much house can I afford to buy?

This article answers the question: How much mortgage can I afford to borrow with my income? If you would like to learn more about the mortgage or home-buying process, use the menu at the top of this page. You can also use the search box to enter your question or keyword. Good luck.