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The beginning of the New Year revolves around the 'annual' resolutions – at least according to the media. Whether people choose to follow a set plan or just play it by air, you can bet that they will be bombarded by all kinds of advice - on television, in print, and at online sites. The professional (or other) advice will cover every topic from routine to resorts to real estate.

You have to separate the great advice from the inaccurate, silly, or even foolhardy suggestions. Real estate is one area where it pays to resolve to learn more during the coming year. Even if you are not buying or selling now, chances are that you will at some point. As well, renters need to know the score. It pays to get a feel for the topic and arm yourself with knowledge.

As you delve through the mounds of real estate advice, you can find 'real' golden nuggets of information from reputable sources. Often the best pieces of advice are simple suggestions that make the most sense. Yet often, consumers overlook the simple solution because they perceive real estate as a complicated matter. Truthfully, real estate is a complex issue, but knowing the basics makes it less of a challenge.

Rounding Up the Best Real Estate Advice

"Get your home into selling shape." ~ Ilyce Glink, Real Estate Matters, Chicago Tribune

Ilyce Glink, author of Real Estate Matters, emphasizes preparing to sell your home. Part of her wise advice – get rid of items - unless you need or use them. Interior and exterior cleaning, repairs, and touch-ups are also suggestions as well as the possibility of hiring a stager.

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"Make a sensible valuation." ~ Tanya Ashreena, Financial Times

This sensible statement was written for London readers but it is relevant on a global level. Sellers have to be certain that their asking prices reflect the present market – not yesterday's value or tomorrow's prediction. The Financial Times focuses on the reality of what will happen if you ignore this piece of advice. Failure to do so will lower your chances of selling a home.

"Always get a home inspection." ~ US News

Now this bit of advice might seem boring if you've just found the perfect house – or so you think at the time. Potential buyers need to complete a 'checklist' before they decide on that dream home. The state of the foundation and the electrical system as well as water damage – all these matters (and more) have to be explored before you buy a home. Keep in mind that potential buyers can keep an eye out for types of damage and disrepair but they still need the professional help of a home inspector.

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Federal Reserve issues tips for mortgage loan shopping

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What Is The Best Real Estate Advice For First-Time Buyers?

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According to the National Association of Realtors' annual Profile of Home Buyers and Sellers survey, the current housing market is a kinder, gentler environment for first-timers. That result might surprise a few Americans who wonder about the 'when and how' of market recovery. Coupled with uncertainty about the market, first-time home buyers can no longer take advantage of the First-Time Home Buyers' Tax Credit.

Home Buyers

Yet first-time home buyers are buying in this market. Fifty percent of home sales between July 2009 and June 2010 can be attributed to first-time home buyers. Only 47% of home sales in the previous year were made to first-timers.

Why are there so many first-time home buyers - despite the obvious challenges? Apparently, they are getting help from a group referred to often as 'angel investors' – family and friends. These 'angels' are not only encouraging first-time buyers but they are providing down payments.

Family and Friends

According to this recent survey of 8,449 home buyers, 27% of first-time buyers between July 2009 and June 2010 received a gift from family or friends to help with their down payment. That percentage is up by five points over the previous year and now stands at the highest in more than 20 years.

Nine per cent of first-time buyers in this 2010 National Association of Realtors' survey received a loan from relatives or friends. According to NAR, only 6% of first-time buyers in last year's results went that route. The reason why family and friends want to help is a timeless one. It's about family and friends! In fact, a little help extended to loved ones in the housing market is not a new phenomenon. The degree of help – the number of people offering assistance and the number of buyers accepting – is the astounding statistic.

The more eye-popping revelation revolves around why first-timers need help. Is the present housing market so unfriendly to first-time buyers? Actually, without an 'angel' or two at your side, the housing market can be an intimidating place for a home buyer. A study of all types of home buyers looking for a mortgage shows that people find the process to be a difficult one. Forty percent of all buyers and 42% of first-time home buyers were surprised by the complicated challenges encountered along the way.

First-Time Home Buyers – The Challenges

• The First-Time Home Buyers Tax Credit is past its expiry date.
• Even with low mortgage rates, today's homes cost a substantial sum.
• 'No-down-payment mortgages' do not exist in the current marketplace.
• First-time home buyers need a significant down payment – even if they have good credit.
• Banks and lenders have strict standards.
• Financing is a problem if a potential buyer does not have a favorable credit score.
• Lenders have a 'one size fits all' approach – lack of consideration for individual circumstances.

Family and friends step in where lenders leave off and lack of consideration is replaced by consideration and support. Yet the reality is that despite their best intentions, many families and friends are not in a position to help first-time home buyers. This group of first-timers will be examining the housing market carefully before they enter into any transactions. If you have the means and qualifications, however, James J. Driscoll, with Auburn Sherlock Homes Real Estate in Auburn, N.Y., makes a good case for buying a home.

"..If a person's choice was between a $1,000 rent and a $650 mortgage payment, why wouldn't you buy if you're qualified and have the means to make the purchase," says James J. Driscoll, with Auburn Sherlock Homes Real Estate.

CONSUMER FINANCE: Housing-Market Bust Changes Buyer Behavior

Are You Planning To Buy A New Home?

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Within the past few days, there have been real changes to reverse mortgages. Of course, this option is a real change in itself – but it can be a step in the right direction for seniors. A reverse mortgage is available for home owners 62 and over. It releases the home equity in property as a lump sum, multiple payments, or a line of credit. Repayment is deferred until a home owner passes away or leaves to go into a seniors' home or other living arrangement.

A reverse mortgage can free up cash so that seniors can take care of extra expenses, enjoy life, and still be able to stay in their homes. It allows them to avoid the hassle and stress of selling. Reverse mortgages offer seniors a chance to have money to cover everything from renovations for safety reasons to that dream vacation. Recent government moves have made it even easier and cheaper for seniors to get a reverse mortgage.

HECM Saver

The Home Equity Conversion Mortgage (HECM) Saver, a federal government-backed product, has cut the upfront mortgage-insurance premium to 0.1% from 2% of the property's value. This premium brings the actual interest rate close to 6.75%. Generally, reverse mortgages have high closing costs and they favor people who are planning to stay in their home in the long term. With this latest decrease in the mortgage-insurance premium, reverse mortgages are now looking better and better – even to home owners with short term needs.

Upfront Information

Along with the change to the upfront mortgage-insurance premium, reverse-mortgage counselors have to be more 'upfront' with their clients. The Department of Housing and Urban Development is requiring all HUD-approved reverse-mortgage counselors to provide their clients with every available piece of related information. Clients will be receiving a 28-page consumer booklet on reverse mortgages, a tour of the new "Financial Interview Tool," and an invitation to check out the BenefitsCheckUp program.

Getting Cash out of Your Home

Pricey Prerogative

The Generation Plus Loan, available through Generation Mortgage, targets homeowners 62 and over who own homes with a value between $500,000 and $6,000,000. Unlike the Home Equity Conversion Mortgage (HECM) offered by HUD, this jumbo reverse mortgage requires no mortgage insurance but has a higher interest rate. The Generation Plus loan carries a fixed rate of 7.78% or 8.78% - depending upon the program.

The funds must be taken at closing and there is a required minimum FICO score of 700. Requesting a specific credit score might seem odd to people. Keep in mind, however, that there is no mortgage insurance requirement with this program. The lender needs to know if a home owner has the financial resources to maintain the property.

Jumbo reverses have been made available by various lenders since 2000. With the housing crisis, many jumbo reverse plans went out of favor in 2008. The chairman of Generation Mortgage explains the advantage of the Generation Plus loan.

“The NO. 1 priority of seniors is they want to stay at home as long as possible, and it’s the least expensive place for them to be," says Jeff Lewis, chairman of Generation Mortgage.“The Generation Plus simply gives more of them an opportunity to do so.”

Jumbo mortgage now available for seniors with pricey homes

Actually, reverse mortgages have fallen by 30% during the past fiscal year. With the HECM Saver and other incentives, it is believed that more seniors will take advantage of reverse mortgages in the coming year.

Are You Planning To Take Out A Reverse Mortgage?

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Today's home buyers are facing a different marketplace than home purchasers in past decades. Even if we look at home buyers during previous economic downturns, today's buyer is not living the same reality. Yet a glaring similarity exists between modern home buyers and purchasers in other decades (or even - centuries) in US history. Home buyers have a dream.

Home Buyer Education Programs

Another fairly common thread between home buyers of the past and present is the challenge of turning that dream into a reality. The path is not always as clear as the dream. In fact, more than one financial expert is convinced that many people do not understand the home buying process. A few US and Canadian organizations are addressing this issue with the introduction of Home Buyer Education Programs.

Realizing The American Dream

Beginning in October, Freedom Debt Management, a non-profit in Boca Raton, has partnered with Citi Group to begin a Home Buyer Education Program. This initiative will help South Florida first time buyers. The company hopes to help 100 families within the first year. Appropriately, the education program, consisting of two four-hour courses, is called, "Realizing The American Dream."

Existing Need

Some people may argue the value, or indeed, the need for such Home Buyer Education Programs. Yet online forums alone suggest that many first-time home buyers are not savvy about the process. Organizing these programs is not being condescending towards the first-time home buyer.

The simple truth is that if individuals never traveled a certain path, or doesn't know the way to get there, they cannot arrive at their destination – at least not in the most efficient manner. Yet some observers question how much first-time home buyers can learn in eight-hour sessions. If the program is well-organized and has valuable content, there is, however, no doubt that a home owner comes out with a better advantage.

The Program

The director of the Boca Raton program explains that their initiative enhances people's concept of saving and budgeting. In addition, the program focuses on possible credit traps, scams, and other threats to one's financial future. Class topics include mortgage affordability, understanding credit, getting a mortgage loan, shopping for a home, and keeping a home, as well as other related subjects.

"Strong financial skills can lead our residents to be able to buy homes, be prepared for financial emergencies, and be more comfortable in retirement, which leads to a stronger and healthier community. We are here to help our residents get their financial future in shape!” says Darish Still, Director of Counseling with Freedom.

Freedom Debt Management, Inc. offers homebuyer education program

Educating The Nation

Of course, Boca Raton is not the only city with a Home Buyer Education Program. The courses (or shorter but similar workshops) are in operation across the US in places such as Stockton and Norwalk. Canadian first time home buyers are also attending classes. Tarion Warranty Corporation offers online New Home Buyer Education Seminars online to help Ontario first-time home owners understand the warranty process and coverages with new homes.

Online education available for new home buyers 

Do You See Value In Home Buyer Education Programs?

"Between 70% and 80% of advisers are men, and many veterans have built careers serving a mostly male clientele."

In today's enlightened society, it is easy to forget that, once upon a time, women did not even have the right to cast a vote. Of course, the general consensus is that the modern woman has moved far beyond that point. No doubt, there is no disputing the shift in direction and change of attitude towards gender. Yet while women have advanced in every area, the system (and some in the system) have lagged behind the ladies.

Often women still face extra challenges compared to men in the same situation. That horrible truth is more likely to raise its ugly head in areas that were dominated previously by men. The area of personal finance needs some adjustment to find a balance that is fair to everyone. Keep in mind that most advisers are men and most of their clients have been men.

Women's retirement accounts have been shown to be much less than men's accounts and women have a longer life span. It is vital, therefore, that women feel comfortable with their adviser and confident about their course of action. The industry is changing and starting to understand that the system must accommodate both genders. Yet we have not reached that utopia in the world of personal finances.

Why Do Women Face Extra Challenges With Personal Finances?

1. Advisers Lose Sight Of The Client

Sometimes advisers see what is best for them - not for the client. A lady in her 60s might want to be conservative with her choices. Her 30-year old adviser may be a big risk taker. The adviser says to go with the risky option but that might not go very well for a client in retirement. The youthful adviser has years to recoup any losses but a 63-year old is in a different position. Savings can disappear quickly with the wrong investment.

On the other hand, the opposite scenario can prove true for a woman. Often she might want to take a risk but is warned against it. If the adviser thinks that there is a substantial risk, it makes sense to raise alarm bells. Yet sometimes an adviser makes the suggestion because he thinks that the risk is too great for a woman. Of course, the same individual might suggest the risky stock right off the top to a man.

2. Advisers Fail To Communicate

Generally, advisers want to sell and 'sell fast' and that approach works well with most male clients. Women investors prefer that they explain the process and show them how they can reach their goal. Obviously communication has to be central to a good adviser/client relationship. Yet often women do not feel that they are getting the whole story and advisers are just in a hurry to complete the deal.

3. Advisers Fail To See The Difference

Women have different needs than men - especially for retirement. Most likely, they earned less during their working life. The same retirement plan does not fit men and women. Yet often advisers have a 'one plan fits all' attitude.

How Retirement Planning Shortchanges Women

Do You Think Women Face Extra Challenges With Personal Finances?

Long Term

When home owners take on a mortgage, they agree to a long term commitment. Home buyers should seek out the best professional advice to help them in arranging their mortgage.

Amortization

Mortgages will amortize over a specific period of time. The usual length of a mortgage is 30 years but amortization can be as short as 15 years. On the other hand, mortgages can run longer than 30 years under certain circumstances.

Differences

Mortgages are not all the same. They differ in loan amount, terms, interest rate, and monthly payments. A mortgage must suit individual needs and finances.

Risks

Lenders assess the risk of granting a mortgage to a home owner. Before applying for a mortgage, individuals should try to be in the best possible financial condition. They should work to get their credit rating to the most favorable level. Lenders will reward a good credit rating with a low interest rate.

Market

Just like shopping for any major purchase, people should look for the best deal with their mortgage. Shop around for the lowest interest rate. If all lenders offer the same rate, they might still offer different terms and conditions.

Questions

Borrowers should ask lenders about the mortgage process. Home buyers must be as informed as possible about the steps in getting and managing a mortgage.

Pre-Approval

Pre-approval makes for an easier process down the line. Yet home buyers should not get overenthusiastic about pre-approvals. An individual might be able to get a substantial loan but that does not mean that it is a wise decision to pursue an exorbitant amount.

Down Payment

Generally, lenders require a down payment. The deposit is seen as a portion of the value of the property. If home buyers make a 30% down payment, they have a loan-value ratio of 70%.

Constant Terms

Lenders will offer constant terms to borrowers for a set time – usually ranging anywhere from six months to five years. During this period, interest rates and payments will remain constant despite market fluctuations.

Variable Rate

If a home buyer expects a drop in rates, a variable rate mortgage is a sensible choice. The interest rate will fluctuate according to the market rate.

Payments

Home buyers must be realistic about what they can afford to pay per month. Although a mortgage payment is high priority, so are food, utilities, transportation to work and school, and other basic expenses. The monthly payment should account for only 30% of the gross combined family income.

Rounding Up

Borrowers can ask lenders to round up their mortgage payment - for example, from $141.52 to $160. That $18.48 difference per month might not seem like a big deal but it can add up to thousands over amortization of the mortgage.

Skipping

Skipping a mortgage payment is not a good idea. That action adds to the interest on the outstanding balance. 'Skipping' increases interest costs on the life of the mortgage.

Mortgage Basics

What Question Would You Ask Your Lender About Mortgages?

Low mortgage rates translate to affordable monthly payments in the short term and substantial savings over the life of a loan. As well, low rates make home owners consider refinancing. The cost of the refinance does not seem so bad with savings in the picture.

Drop In Rates

During the past week, the rate on the 30-year fixed mortgage, the most widely-held type, fell from 4.38% to 4.28%. Within the past few days, 15-year fixed mortgage rates dropped from 3.87% to 3.85%. With similar decreases in adjustable rate mortgages (ARMS), it looks like the low mortgage rates might take some of the sting out of the economy in this post-Federal Home Buyers' Tax Credit period. The only catch is that lending guidelines are tighter than ever before and not everyone will qualify for a low rate.

High Credit Score

When it comes to credit and mortgages, the person with the highest credit score (usually 740 and higher) gets the lowest rate. Although a high credit score is not the only requirement to be eligible for a low mortgage rate, it can make a big difference. Borrowers must aim for the more favorable rate because it can make a noticeable impact on monthly payments.

A person with a 760-850 credit score could end up with a monthly payment in the range of $1500; an individual with a 620-639 score might have to pay over $1700 per month. High credit scores can mean huge savings. It is advisable for a borrower to have the best possible credit rating before he approaches a lender.

Debt-to-Income Ratio

As well as that high credit score, borrowers must have a certain debt-to-income ratio. Usually lenders insist that a borrower's overall debt does not exceed 45% of their income. Actually, debt-to-income ratio is given huge consideration in getting low mortgage rates. Even if a person's credit score is less than perfect, a sizeable income (or assets) can turn the tables in their favor.

Few Takers

Despite the low mortgage rates, you need not expect to see every ' home for sale' sign taken down in the next few weeks. Some people are taking advantage of the low mortgage rates but not everyone is taking the plunge. On the surface, low mortgages look like a deal that nobody could (or even should) resist but people worried about unemployment are not in a buying mood.

High Standards

In addition, lenders have those strict guidelines in place. The rules are not written to welcome the person with the low credit score. Of course, it does not follow that an individual with bad credit can never buy a home.

Credit Restoration

Credit repair is always an option and a restored rating can eventually open the doors to a new home. The repair process takes effort and commitment but credit restoration is worth the effort. With a good credit score, you won't miss out on opportunities such as the current low mortgage rates.

Are You Planning To Take Advantage Of The Low Mortgage Rates?