February Buying Advice: See what homebuyers put on their ‘must-have’ lists — and which features they realized they didn’t need.

By Melinda Fulmer of MSN Real Estate

Just as most of us have a list of traits that are non-negotiable in a spouse, every house hunter has a list of things he or she wants in a house. Of course, these features and amenities won’t necessarily ensure a match that stands the test of time.

We asked our readers to tell us what they love most about their current home and what, in hindsight, was clearly just a passing fancy. In this month’s Buying Advice, we’ll look at the real-estate love letters they wrote and compare them with what buyers are
shopping for today.

We’ll also check in with the latest home-sales data that hint at a bottoming market
and answer a question that many first-time homebuyers have: “Where do I start?”

Finding the perfect house

It doesn’t take a mansion to satisfy most of our readers over the long haul. Indeed, for many of those responding to last month’s query, it was the small conveniences — a laundry area near the bedrooms or a spacious closet — that helped ensure long-term love.

However, the one thing that seemed to bring the most satisfaction was a bright open
space, no matter the square footage:

“Of all the houses that I have built/purchased/leased, the one issue that stands paramount is openness — large windows and an open-concept interior home plan,” said reader Alan Sadler via email. “There is nothing more depressing than walls, walls and more walls.”

Jane Curkendall agreed, putting at the top of her list for her next home an “open floor plan” where the kitchen and family room are together, “lots and lots of light” and “lots and lots of windows.” Maybe that’s because she wound up spending so much time in her current home’s sunroom addition. “This is where our office is, and where we hang
out,” she said in her email.

Large windows with a nice view can make up for a home’s shortcomings, readers said.

“Our home is flooded with warm light for most of the day,” said reader Ralph Banks from New York, via email. “We also still enjoy the water views out of some of the windows of our home after living here for 27 years.”

Carrie Douglas, a buyer, said she is looking for “pleasant outdoor vistas visible from the windows” in her next home, as long as it also includes an up-to-date kitchen and plenty of storage space.

Also high on our readers’ lists were comfort-adding features such as central air
conditioning and heat.

“Of all the improvements we have made to our house throughout the nine years in it,
this has been by FAR the best investment,” said Carmen Munoz, a reader from the New York area. “Our home is always at comfortable temperatures and there is so much less maintenance involved with this system than with our old … gas boiler/window A/C.”

Also high on our readers’ lists of must-haves were generous kitchen cabinet storage,
large closets, good-sized bedrooms and a level backyard that’s easily accessible for entertaining.

One thing Munoz said was a mistake in retrospect was the mother-in-law suite she was determined to have when she bought her home. “It has created strife within our family because people think it is OK to come stay there for extended periods of time,” she said. This rarely used space has raised her heating and cooling bill, she said.

Housing-market snapshot: Sales continue to rise; prices continue to dip. But is there light at the end of the tunnel?

Existing-home sales continued to rise in December, swelling 3.6% to 4.61 million, from a downwardly revised 4.39 million in December 2010, according to the National Association of Realtors. The median existing-home price dipped 2.5% from the previous year to $164,500.

While that may not sound that encouraging, economists see a glimmer of hope in the numbers. December marked the third straight month of sales increases and a 5% uptick from November.

“The pattern of home sales in recent months demonstrates a market in recovery,” said Lawrence Yun, the NAR’s chief economist. “Record low mortgage interest rates, job
growth and bargain home prices are giving more consumers the confidence they need to enter the market.”

The total housing inventory at the end of December dropped 9.2% from November to 2.38 million homes for sale — a 6.2-month supply at the current pace — down from a 7.2-month supply in November.

Economists such as Mark Fleming from CoreLogic are now saying that 2012 should be the year the housing market starts to turn the corner as the prices for nondistressed homes begin to stabilize.

Housing sales could see a further boost this year, analysts say, as homeownership begins to look better than renting. A recent report from Capital Economics shows that the median monthly mortgage payment of about $700 is close to even with the median monthly rent, making the move to homeownership much more attractive — especially in the face of rising rental rates.

However, at least one market watcher says talk of a recovery is still premature. Lance
Roberts, CEO of StreetTalk Advisors, said he doesn’t believe the market correction is over, given the high levels of debt that some consumers are still struggling with; the high number of owners who have negative equity in their homes and therefore have little ability to move; and the combination of unemployment and underemployment that is making it impossible for many to save for a down payment or qualify for a loan.

“The bottom line is that until we see a substantial REAL recovery in employment … there will be no recovery in housing,” Roberts said in his X-Factor Report.

By Polyana da Costa of Bankrate.com

Getting a mortgage loan has become challenging in recent years. Don’t expect that to change anytime soon.

Lending standards will remain tight in 2012, but that doesn’t mean you won’t be able to snag a mortgage with an attractive rate. Savvy borrowers who understand the rules and
prepare will improve their chances of success.

These tips will help you stay on top of your game as you try to secure a mortgage in 2012.

Study your credit

Good credit is the key to snagging a mortgage in this tight lending environment. Get copies of your credit scores and credit history from the three main credit-reporting bureaus. Study the reports carefully to make sure there are no errors or issues to resolve before applying.

Most lenders require a minimum credit score of 680 to comply with Fannie Mae and Freddie Mac’s guidelines. Federal Housing Administration loans — which are guaranteed by the FHA — allow for lower scores, but most lenders want to stay away from scores lower than 620.

Prepare before you start

Every lender requests certain basic documents when you apply for a mortgage. Don’t wait for them to ask.

Have these documents ready when you walk into the lender’s office: your last two pay stubs, W-2s, income-tax returns and bank statements.

Save these documents and any additional ones the lender requests in an electronic format, so you can easily resend them if anything gets lost.

Know how much you can afford

Don’t rely on your lender to tell you how much mortgage you qualify for and then borrow the maximum amount. Plan your budget, and leave room for unexpected expenses. That’s especially the case when you are buying a house.

Bankrate’s calculators can help you determine how much house you can afford and estimate your monthly mortgage payments.

Shop around

Shopping around for a mortgage should go beyond comparing interest rates. Rates are important, but would-be borrowers must consider points, closing costs and different types of loans. Get estimates from three banks and three mortgage brokers before you
decide which combination works for you.

Time is of the essence

Once you submit your mortgage application to the lender, the clock starts ticking. Make sure you quickly send in any documents requested during the approval process.

For buyers, a delay in closing the loan could kill the purchase and cost them their deposits. When refinancing, a delay could mean losing the interest rate the borrower
originally locked in. Ask for an expected closing date, and follow up with the lender periodically until the loan closes. Keep in mind, some lenders close more quickly than others.

Mortgage approved?
Your credit must stay put until closing

After the lender pulls your credit and says you’ve been approved, don’t assume you’ve won the battle. Most lenders will pull your credit again before the loan closes.

It’s wise to avoid any moves that may affect your credit. Don’t apply for new credit cards or credit lines. Pay your bills on time. Don’t close any accounts. Don’t finance a new car. Stay put until closing.

Consider refinancing with no closing costs

You don’t always have to spend money to save money when refinancing. Many lenders offer mortgages with no closing costs. No, it’s not a free ride. Lenders usually make up for those costs by charging the borrower a slightly higher interest rate. Sometimes the slight increase translates into a few extra dollars in the monthly payment, and the borrower can save thousands in closing costs.

Consider a shorter-term loan

Because interest rates have been at or near rock bottom, short-term loans have  become more affordable for many borrowers.

Those who have a 30-year mortgage with an interest rate of 6% or higher may be able to refinance into a 20-year or 15-year loan while keeping their monthly mortgage payments close to what they pay now. Consider this option even when the short-term loan means slightly higher monthly payments. This is your chance to pay off your
mortgage more quickly.

Receive a gift? Be ready to explain it

Did your parents or in-laws give you a few thousand dollars as a gift to help out with the down payment? If so, congratulations — but make sure you can document and explain
where you got the money.

FHA loans allow borrowers to receive their down payment as a gift from a relative. For
conventional loans, borrowers may receive gifts, but at least a 5% percent down payment must come from their own funds.

Borrowers receiving a gift are required to present a gift letter signed by the donor, and they will need a paper trail of the money transfer. Be ready to present statements to
show where the money came from when it was deposited into your account.

Unless the money is being used for the down payment, avoid receiving large cash deposits in your bank account until your mortgage closes. Any large deposits other than your paycheck will have to be explained to comply with federal regulations.

Be persistent

If one lender rejects your mortgage application, that doesn’t mean all lenders will. Most lenders follow Fannie Mae and Freddie Mac guidelines. In addition, they have their own
internal underwriting guidelines, and some are stricter than others.

Ask why your mortgage was denied. Depending on the reason, you may be able to take some quick steps to improve your credit, or you might just need to try a different lender.

Appraisal isn’t enough? Try again

If the home appraisal your lender received isn’t enough to back the mortgage loan and you think the appraiser is mistaken, try another lender.

You can’t order a second appraisal or pick which appraiser the lender hires, but you can dispute the first appraisal or apply with a different lender.

In a perfect world, the appraised value of a home shouldn’t vary drastically from one appraiser to another. But you may find that it does. If you believe the first appraiser is
wrong, try a different lender and hope that lender’s appraiser does a better job.

Seek help

If you are behind on your mortgage or are struggling to keep up with your mortgage payments, seek counseling.

The Department of Housing and Urban Development has counseling agencies throughout the country. Homeowners can receive free foreclosure-prevention counseling from HUD-approved counselors. To find a housing counseling agency near you call 800-569-4287 or visit the HUD website.

Rates will likely stay below 5% for at least the first half of the year, industry experts say.

By Amy Hoak of MarketWatch

Mortgage rates should remain low in 2012, especially in the first half of the year, according to the predictions of several industry watchers.

“We may spend the entire year below 5%,” said Greg McBride, senior financial
analyst for Bankrate.com, referring to the average interest rate for a 30-year
fixed-rate mortgage.

Rates may even fall to new lows early this year, particularly if the European debt
crisis hits a crescendo, McBride added.

Already, rates are sitting at record lows. The 30-year fixed-rate mortgage averaged
3.91% for the week ending Jan. 5, according to Freddie Mac’s weekly survey of
conforming mortgage rates. That ties the record for the lowest rates that have been in the history of the survey. In contrast, the highest average was 18.63% set in 1981, according to Freddie Mac.

In general, the financial troubles in Europe, combined with the Federal Reserve’s pledge to keep short-term rates on hold at least through 2013, will keep mortgage rates from rising significantly, McBride said.

Europe’s woes have caused a “flight to quality” among investors, sending their money in
the direction of U.S. bonds, which has the effect of lowering mortgage rates. The Fed’s short-term rate policy also reduces long-term rates, since long-term rates “reflect expectations of where short-term rates will be in the future,” he said.

Lately, consumers have been conditioned to expect low rates. Last year, the 30-year fixed-rate conforming mortgage had its lowest annual average on record at 4.66%, according to Bankrate.

According to Freddie Mac, the 30-year mortgage averaged 4.5% in 2011; the lowest weekly rates on record were posted toward the end of the year.

But whereas rates fell in the second half of 2011, they are expected to rise at least somewhat during the second half of 2012, said Frank Nothaft, chief economist of Freddie Mac.

“Operation Twist is scheduled to remain in effect until June,” Nothaft said. The intent of
Operation Twist, or the Federal Reserve’s Maturity Extension Program, is to push — and keep — long-term interest rates low, which means rates should stay low for the first half of the year, he said. The Fed plan, announced in September, involves buying long-term securities and selling $400 billion in short-term debt.

But the Fed hasn’t made a commitment on whether it will extend the program beyond the June cutoff, Nothaft said.

Economic outlook

An improving economy could also cause rates to rise.

Rates on a conforming 30-year fixed-rate mortgage are expected to average 4.2% in the first quarter of 2012, and should average 4.8% by the fourth quarter, according to Freddie Mac’s forecast.

Meanwhile, HSH Associates, a publisher of consumer loan information, predicts conforming, 30-year fixed-rate mortgages will remain between 3.85% and 4.85% throughout 2012.

“Things appear to be improving domestically. The economy, employment, the housing market are showing signs of warming,” said Keith Gumbinger, vice president at HSH.

While the troubles of 2011 will certainly carry over into the new year, at least some
upward emphasis on mortgage rates is expected “as things start to look a little more rosy,” he said.

But those who aren’t as optimistic about the growth of the economy have different rate forecasts. For example, Fannie Mae’s chief economist, Doug Duncan, expects rates will stay relatively flat all year, with the 30-year fixed-rate mortgage rising to 4.1% or 4.2% at the most by the fourth quarter.

The low-rate environment means that even people who have been improving their credit quality for the past five years may have a shot at scoring some of the lowest mortgage rates in history — and they may add sales to the housing market in the process, Duncan said.

Some mortgage market watchers also think that lenders may be more willing to work with borrowers with good but not great credit in the year ahead, as the housing market and economy show some signs of improvement and lenders look to grow their business.

“I don’t see credit becoming appreciably easier. But I think what you will see is more lenders willing to dip their toes into the waters of 700 and 720 credit-score consumers,” McBride said. “You may end up, as a consumer, seeing more lenders at the table for
those that have good credit scores and not just those who have great credit scores.”

But despite continued favorable mortgage rates, don’t expect great strides in the housing market just yet. The economy is still weak and unemployment is still high — two strong headwinds pushing against housing demand, even though affordability is so high, Nothaft said.

“Consumer confidence is still relatively low. And what a low reading for consumer confidence means is that consumers are nervous about their economic well-being,” he said. “If you’re feeling ill at ease, you will be reluctant to buy something that costs $200,000 to $300,000 and commit to monthly payments for 30 years.”

Winter’s doldrums got you down? Grab a screwdriver and a hammer and fight back with easy home repairs that’ll raise spirits and get your house ready for spring.

Accomplishments — even little ones — go a long way toward a sunny outlook. Fortunately, there are plenty of easy, quick home repair chores you can do when you’re mired in the thick of winter. For max efficiency, make a to-do list ahead of time and shop for all the tools and supplies in one trip. On your work days, put the basics in a caddy and carry it from room to room, checking off completed tasks as you speed through them.

What to look (and listen) for

In each room, look around and take stock of what needs fixing or improving.
Focus on small, quick-hit changes, not major redos. Here are some likely
suspects:

1. Sagging towel rack or wobbly toilet tissue holder. Unscrew the
fixture and look for the culprit. It’s probably a wimpy, push-in type plastic
drywall anchor. Pull that out (or just poke it through the wall) and replace it
with something more substantial. Toggle bolts are strongest, and threaded types
such as E-Z Ancor are easy to install.

2. Squeaky door hinges. Eliminate squeaks by squirting a puff of powdered graphite ($2.50 for a 3-gram tube) alongside the pin where the hinge turns. If the door sticks, plane off a bit of the wood, then touch up the paint so the surgery isn’t noticeable.

3. Creaky floor boards. They’ll shush if you fasten them down better. Anti-squeak repair kits, such as Squeeeeek No More ($23), feature specially designed screws that are easy to conceal. A low-cost alternative: Dust a little talcum powder into the seam where floorboards meet — the talcum acts as a lubricant to quiet boards that rub against each other.

4. Rusty shutoff valves. Check under sinks and behind toilets for the shutoff valves on your water supply lines. These little-used valves may slowly rust in place over time, and might not work when you need them most. Keep them operating by putting a little machine oil or WD-40 on the handle shafts. Twist the handles back and forth to work the oil into the threads. If they won’t budge, give the oil a couple of hours to penetrate, and try again.

5. Blistered paint on shower ceilings. This area gets a lot of heat and moisture that stresses paint finishes. Scrape off old paint and recoat, using a high-quality exterior-grade paint. Also, be sure everyone uses the bathroom vent when showering to help get rid of excess moisture.

6. Loose handles or hinges on furniture, cabinets, and doors. You can probably fix these with a few quick turns of a screwdriver. But if a screw just spins in place, try making the hole fit the screw better by stuffing in a toothpick coated with glue, or switching to a larger screw.

Safety items
You know those routine safety checks you keep meaning to do but never have the
time? Now’s the time.

7. Carbon monoxide and smoke detectors. If you don’t like waking up to the annoying chirp of smoke detector batteries as they wear down, do what many fire departments recommend and simply replace all of them at the same time once a year.

8. Ground-fault circuit interrupter (GFCI) outlets. You’re supposed to test them once a month, but who does? Now’s a great time. You’ll find them around potentially wet areas — building codes specify GFCI outlets in bathrooms, kitchens, and for outdoor
receptacles. Make sure the device trips and resets correctly. If you find a faulty outlet, replace it or get an electrician to do it for $75 to $100.

Another good project is to replace your GFCIs with the latest generation of protected
outlets that test themselves, such as Levitron’s SmartlockPro Self-Test GFCI ($28). You won’t have to manually test ever again!

9. Exhaust filter for the kitchen stove. By washing it to remove grease, you’ll
increase the efficiency of your exhaust vent; plus, if a kitchen stovetop fire breaks out, this will help keep the flames from spreading.

10. Clothes dryer vent.  Pull the dryer out from the wall, disconnect the vent pipe, and vacuum lint out of the pipe and the place where it connects to the machine. Also, wipe lint off your exterior dryer vent so the flap opens and closes easily. (You’ll need to go outside for that, but it’s quick.) Remember that vents clogged with old dryer lint are a leading cause of house fires.

11. Drain hoses. Inspect your clothes washer, the dishwashers, and the icemaker. If you see any cracks or drips, replace the hose so you don’t come home to a flood one day.

12. Electrical cords. Replace any that are brittle, cracked, or have damaged plugs. If you’re using extension cords, see if you can eliminate them — for example, by replacing that too-short lamp cord with one that’s longer. If you don’t feel up to rewiring the lamp yourself, drop it off at a repair shop as you head out to shop for your repair materials. It might not be ready by the end of the day. But, hey, one half-done repair that you can’t check off is no big deal, right?

By Tara-Nicholle Nelson

Freud was famously (and incorrectly) quoted as having said “sometimes
a cigar is just a cigar.” But with real estate, the exact opposite is true.
Buying, selling, even staying in or moving from your home is rarely just about
picking a place to hang your hat. Rather, real estate decisions are whole-life
decisions, because they impact and are impacted by nearly every other area of
your life.

Most people are highly aware of the fact that their real estate decisions are related to their family matters and their money matters, but many don’t give nearly as much thought to the interconnectedness of whether, how and where you buy your home with your career: past, present and future.

Here are five ways your career and real estate decisions are linked, and some new ways to think about these topics together, to make decisions that better serve both these areas of your life.

Link #1: Location, location, location. At the top of the market, many areas saw an outflow of professionals from urban areas to the rows of McMansions that lined the gated cul-de-sacs and subdivisions of the suburbs. But as the prices of closer-in homes have declined, home values have melted down in many of these suburban areas and gas prices skyrocketed, many buyers have begun to prioritize urban areas to be closer to their jobs, some even ditching their cars and taking public transportation or walking to work.

Buying a home near work has obvious efficiencies and conveniences, including giving you back the hours you might otherwise have devoted to your commute. However, if your job is located far away from other companies, buying a home to be very nearby can cause issues – especially if your employer ever hits hard times or closes that location.

Link #2: Job choices and income can limit or enlarge your home options. As you’ve probably heard by now, mortgage guidelines have gotten very tight lately, with lenders forcing borrowers to stay well within their means, shrinking the amount of documented current monthly income that can be consumed by the new mortgage, property tax and home/mortgage insurance payments. Lenders also view your job history as relevant; large gaps of unemployed time and even major career moves from one industry to another can trigger a lender to require that you be in a stable work situation for at least
two years before they agree to finance your home purchase.

While it might seem obvious that your income would have a direct effect of limiting how much you can afford to spend on a home, what is somewhat less obvious is that the way you make it can also have an impact. Borrowers who work on commission, earn cash tips and even are self-employed or small business owners may find themselves subjected to stricter guidelines than those who earn a salary, because of the greater burden of documentation lenders may impose. For example, if you’re self-employed, your “income” will likely be determined by your Adjusted Gross Income on your last two years’ federal tax returns, which many entrepreneurs work hard to bring down by making aggressive deductions.

Link #3: Home and mortgage obligations can limit your career decisions. While most home buyers are very aware of the extent to which their past job decisions and income impact their real estate moves, there are many ways our real estate commitments can impact our future career decisions. Smart agents advise their clients not to make any major job moves or go from, say, a salaried position to starting that business you’ve always wanted to in the weeks and months just prior to buying your home. But even after you’ve committed to make a mortgage payment in a market like today’s, where selling can take many months or longer, these obligations can actually limit your
ability to work fewer hours, move to a lower-paying job in a field you want to break into, or quit your day job and become an entrepreneur without much more intensive planning and saving than you would have had to do otherwise.

Buying a home on today’s market is a long term commitment; most insiders recommend you not buy unless you are okay staying put at least 5 to 7 years (longer if you’re buying in a locale that has been hard hit by the foreclosure crisis; shorter if your market was relatively immune to the recession). At the same time, the length of time Americans work for one employer is getting shorter and shorter. Gone are the days when your 30-year mortgage matched right up with the 30 years you could expect to stay on a
single job. Over the past few years, I’ve heard more than a few reports of unemployed homeowners who felt stuck in their homes, unable to accept job offers across the country because they were deeply underwater or other market forces made it impossible for them to sell their homes.

The upshot? It’s important to feel comfortable making a long-term geographic commitment to an area before you buy; if you expect you may need to move in the near-term for work, it might be best to rent unless you are able to negotiate for your compensation package to include relocation assistance from your employer.

Link #4: Health of your local job market impacts your home’s value. Many news stories have reported how the Silicon Valley real estate market has thrived of late, despite the home value doldrums still being experienced across the rest of the nation. In San Francisco and the South Bay Area, the tech boom means the local job market is booming and employees are being made millionaires by cashing in their stock options when tech companies go public. One of the first purchases many of these new millionaires make is a home.

On the other end of the spectrum, we’ve seen entire regional real estate markets fall into incurable recessions when the only major employer or two in town moves away or shuts down. Then, not only are you stuck with a home and no job prospects nearby, it becomes very difficult for you to find anyone else to buy it. When an area has a high unemployment rate or no new jobs are being created, not only does it increase the rate of foreclosures and make it difficult to find buyers, it also makes locals who do have jobs very nervous about their job security and hesitant to make the long-term financial and geographic commitment to buying a home.

My advice is to prioritize homes located near bustling job centers and areas with multiple industries that are thriving (and projected to continue doing so), areas in which the job market is not dependent on a single employer or even a single industry.

Link #5: Your home’s infrastructure can impact your ability to work there. Things like local internet speeds and networks available, lighting, room configuration – even the age of your home’s electrical system can have a major impact on how comfortably or effectively you are able to work at home – or whether you can work at home at all. And if you are looking to create an area in your home exclusively devoted to working or running a business, that may impact your ability to take extra tax deductions for a home
office (a topic you should discuss with your tax professional).

This also highlights the holistic view you should take on how your choice of home impacts the entirety of your life. If you are able to work at home, your choice of home location vis-à-vis work location might be different than if you are not, which might impact what sort of work you do and which employers you prioritize, if you’re looking for a job.

It’s like Freud didn’t say, but could have – in real estate, nothing is just a cigar.