Obama's new housing proposal extends refinancing to underwater mortgage holders.

On Wednesday, February 1, President Obama presented a series of housing proposals. The primary proposal aimed at making mortgage payments more affordable for existing homeowners–particularly those struggling with underwater mortgages. It’s still a long way from approval, but if the package passes, how will it affect you?

If you’re underwater, have good credit, and are currently paying an interest rate over the current rate, you’re in good shape. The program will extend refinancing at today’s rates to almost all homeowners, including those with negative equity.

As with any law, there are guidelines and standards. These refinance packages are available only to homeowners with a FICO score of at least 580, apply only to primary-residence, single-family homes, and the size of your loan must be within FHA conforming loan limits. Still, that covers the majority of the country’s existing home mortgages, and the government expects an average savings of $3000 per year, per refi.

The proposal also includes a plan to convert foreclosed properties into rentals to reduce downward pressure on housing prices. You can read the full text of the proposal here.

School quality is important, even if you have no children.

A home is the longest-term investment most people will ever make, and unless your home is on wheels, you’re not going anywhere. Choosing the right neighborhood is critical–and very personal. While there are a wealth of online tools for neighborhood research, here are some tips for moving beyond the numbers and finding a place that will keep you–and your family–happy for the long term.

Price is just an opener

The average selling price of homes in a neighborhood is a fairly good indication of overall desirability, but don’t put too much faith in that alone. Price is a reflection of hard facts (for example, crime rate), fact-based perception (“safety”), and complete intangibles, like what happens to be hip or trendy. Some of the factors (for example, proximity to a major employer) may not matter to you, while others that the market overlooks (like access to public transportation in a city like Los Angeles) might be critical.

While you’re researching neighborhood prices, be sure to dig into the neighborhood’s appreciation rates. The last few years hit every neighborhood hard, but with a large enough sampling, you can often tell whether your neighborhood is on its way up or down, regardless of economic variance.

Check Crime Stats

Crime rates are one of the easiest statistics to find, and one of the hardest to comprehend fully. At the outset, look for overall crime rates relative to other areas you’re considering, and check your local sex offender registry. When you’ve narrowed your choices to a few neighborhoods, check year-over-year trends to see whether crime is getting better or worse. Finally, ask residents of the area for their impressions. This can be particularly useful in densely populated areas, where crime can vary block-to-block. In many large cities, for instance, but still fall within the same zip code.

Schools

Even if you don’t plan to have children, school quality can be important. If you plan to resell your home within the relatively near future and your likely buyer might be a young family, do your homework about local public schools. If you plan on holding your home for the long haul and children are not an issue, you may be able to find a bargain in a district with historically poor-performing schools. Be sure to ask your REALTOR© about any special circumstances, such as magnet or private schools schools in the area.

Don’t Ignore Planned Communities

Most planned communities are created in large, undeveloped areas, which are generally not known for a neighborhood feel. Still, if the development is planned well, with security, nearby shopping, and other amenities, planned communities can be a very desirable “neighborhood in a box.” In Las Vegas, the Summerlin development showcased this phenomenon, turning a parcel of empty desert into one of Nevada’s most desirable living areas.

Ask Around

Are you looking for the funky feel of Austin in the heart of New York City? Chances are, you’re not the first. If you have a town or neighborhood you already love, ask current residents for their opinions. There’s a good chance one of them may have moved from or considered moving to the same places you’re considering. Local bulletin boards like Craigslist cover the entire country, so getting in touch is easy and free. And don’t forget to enlist the help of a REALTOR©. A good REALTOR© will have worked with a number of buyers in your situation, and will be able to refer your business to another REALTOR© if your search takes you elsewhere.

It pays to find the right inspector.

A home’s history gives it character and charm, but also takes a toll. Over time, roofs sag, mortar cracks, and furnaces lose efficiency. Beyond this normal wear and tear, older homes can harbor mold, water damage, termites, or other structural threats that can cost tens of thousands of dollars to fix.

The easiest way to handle these issues is avoiding them altogether, or building the solutions for them into your home purchase agreement. To do this, you need a seasoned inspector with your best interests at heart. Here are some tips on inspecting your future home.

New homes need inspections, too

New or old, a house isn’t a car—you can’t just trade in a lemon. Regardless of its similarities to neighboring structures, every home is different. Each home is build by different hands, at different times, on different land, and each responds differently as it settles. A home inspection before purchase your new home can alert you to long-term risks, identify immediate problems your builder must fix, and help you get the most from your new home warranty before it expires.

There’s no such thing as a perfect home. Even if there were, it wouldn’t last long. Climate, material flaws, poor workmanship, and even gravity conspire to tear every home apart. Home maintenance is a necessary cost of home ownership, but homebuyers need to make smart decisions about acceptable costs. A home inspection is the most cost-effective way to go into a purchase with your eyes open.

What they won’t cover

When you schedule an inspection, have the inspector outline special conditions he or she does not cover. Lead, radon, asbestos, and other toxic substances are generally not covered, and may require an inspector with a special certification.

Inspecting the Inspector

Finding a good home inspector can take some work, but it’s worth it. When you’re comparing inspectors, remember TEN—Transparency, Experience, and Neutrality.

Transparency

There’s nothing magic about home inspection, and good inspectors will be completely forthcoming about what they look for, how, and why. If you don’t understand something, ask. Professional inspectors will always answer your question to your satisfaction. Ask to see the home inspection, or better yet—go along on the inspection. It’s your house, after all. If the inspector hedges, walk away. Don’t be shy. Your home is worth more than their pride.

Experience

Every home inspector should provide references. Call them. Even though most inspector-provided references will be overwhelmingly positive, you may pick up helpful details, especially if you ask leading questions such as “What do you wish the inspector had spent more time on?”

Neutrality

Inspectors work for you, not the realtor, the owner, or a contractor. A well-established inspector will have worked with all sorts of real estate and construction professionals, but recommending those professionals is a conflict of interest.

Certifications

Not all states require certifications, and a certification doesn’t guarantee There are dozens of certification associations, but some of the older and larger include ASHI, the National Academy of Building Inspection Engineers, and the National Association of Home Inspectors.

The most important step in selecting a home is knowing how much you can spend. If you already use an electronic budgeting system, you’re ahead of the game. If not, track your expenses for the past several months to a year. Try to quantify the “gray areas” of cash withdrawals that disappear on small purchases. Now add up your current rent and other related expenses. If you’ve been saving money toward your down payment, note that, as well. Finally, ask yourself where you can tighten your belt with your existing discretionary purchases. This is the maximum amount you could pay per month. Now ask yourself if this is reasonable, given your current savings and possible expenses. Only you know the answer to that. When you’ve arrived at a comfortable number, write it down, and save your calculations. You’ll take this to the bank when you apply for loan preapproval. For now, you have an estimated payment you can use while shopping online.

Set your Criteria

A home is the biggest purchase you’ll probably ever make. Stay focused and don’t let emotion guide you. If you have one child and no plans for more, four bedrooms are probably a waste. Write down a list of must-haves, nice-to-haves, and can’t haves before you start visiting homes. You’ll save time, help your agent work more productively, and keep yourself from getting carried away—into the wrong house.

Important criteria include:

• Age of house
• Number of bedrooms and bathrooms
• Size of lot / yard
• School district requirements
• Type of street (Are busy streets OK, or do you want a cul de sac? Do you need to be near a bus or light rail line?)
• Type of home (Single-story? Mutli-level? Are there any dominant architectural styles in your area that you refuse to buy?)
• Central heating and cooling
• Expensive additions, such as in-ground pools

Make a list of Homes

After you’ve made this list, search online and find several representative homes. If you have time and you’re fairly local, drive by a few of them to get a feel for the neighborhoods. Write down your impressions. This will help you understand home much of a home’s description is fact versus fluff, and give your real estate agent a good idea of your likes and dislikes.

Find a Realtor®

Most home buyers select a licensed Realtor® to represent them, and they are almost always happy they did. Realtors® are real estate agents who subscribe to a strict code of ethics and are acknowledged experts in the field. A Realtor® knows your local market, and can help you through every step of the home buying process, from finding your dream home to negotiating the best possible terms, explaining everything along the way.

Bring a Camera

Your Realtor® will take you on a number of open houses, and your opinions can be lost in the blur. To keep things straight, bring a digital camera on your trips. Take a picture of the street number of each property, then photograph each room during your walk-through. Photograph a house even if you decide it’s wrong for you—there may be furnishings, construction tips, or other features you notice later that could come in handy when you find the right home.

Being underwater can be scary, but don't panic.

If you put less than 15% down on a recent purchase, there’s a good chance that you owe more than your property’s current value. It’s a tough spot to be in—and tougher if you want to sell. But despite the risks, there are legitimate reasons to consider negative-equity sales. If you’re considering selling in the red, here are three simple rules to follow to keep as much money as possible in your pocket.

Rule 1: Consider Renting

Before you sell, think about renting. Relocating to a new home while renting your current home isn’t for everyone, but it might work for you. To determine whether it might, evaluate three key factors:

Time

The more time you have, the better an option renting becomes. It takes time to rent out your home, so if you need cash in a hurry, a quick sale may be your only choice. On the other hand, if you have a few months in which to make your decision, you might be able to avoid selling at a huge loss or potentially damaging your credit with a foreclosure.

Financial Pressure

Are you under financial pressure, or do you just want something better? How close are you to making ends meet? If you’re $5000 short on your monthly mortgage payments, renting probably won’t help. However, if you’re fairly close to even, and you just need to buy some time to get back on your feet, you may be able to rent your way out of the hole. You don’t need to cover your whole mortgage, either—just enough to continue making payments while you rent a different home. If you’re able to make payments already, renting out your existing home (even at a loss) while you rent a “tester” home or apartment in your ideal neighborhood can give you another 12-24 months to build equity while you scout out the perfect location for your long-term purchase.

Needs versus Wants

Of course, renting your current home only works if you move into something less expensive. If you bought “too much house” on good credit and a dream, you can probably find something more reasonable. This may well involve moving to a less desirable neighborhood, having the kids share a room for a year, or increasing your daily commute, but saving your credit, and possibly your home, are worth a bit of belt tightening.

Rule 2: Don’t Forget Repairs

You may not have a lot of money, but you can’t ignore the basic laws of home selling. Buyers buy the house they see, not the house it can become. Most repairs and many upgrades more than pay for themselves, and if you don’t repair your home, there’s another one down the street in better shape. In Additions & Remodeling and Three Ways to Improve the Value of Your Home, we outlined low-cost, high-return improvements homeowners can make without contractors, expensive equipment, or construction expertise. Put them to use.

Rule 3: Always Ask a Realtor©

You may be tempted to sell your own property to save commission costs. Properly-executed, For Sale By Owner (FSBO) sales can save a substantial amount, and many homeowners sell their own homes every year.

It’s important to note that a large number of FSBO homes are sold by professionals who renovate and “flip” distressed homes for a living. These people have studied local market pricing and trends, and have invested significant amounts of time, expertise, and labor to bring their properties up to snuff. If you’re new to the seller’s market, we suggest you enlist the help of a licensed Realtor© In exchange for your commission, a Realtor© will price your home appropriately, promote your home to buyers you probably can’t reach, handle all the paperwork, and advise you of the financial implications of your decisions. Given their expertise, most Realtors© can sell a home for more than a layperson (particularly if you’re under time pressure), so your commission dollars will likely pay for themselves.

Representing yourself can be a lonely, expensive road.

It’s 2012.  You can find nearly anything and anyone on the Internet. Do you really still need a to put an agent in the middle of your real estate transaction? What’s to stop you from finding a home online, going straight to the source, and saving yourself a few percent on the commission?

Nothing at all.  But before you decide to buy or sell a house without an agent, take this to heart: You’ll probably lose money on the deal.  A lot of it. We’ll repeat that for emphasis. Even if you save on commission, you’ll probably lose money in the end. Why?  For the same reason you don’t represent yourself in court, or fix your own transmission.  You’re not an expert.

There’s nothing shameful about that.  No one can be an expert in everything. You should certainly educate yourself as much as possible about your market (it’s your house, after all), but you don’t spend all day, every day working in the field.  You may have researched comparable homes in your area, but you don’t know what other buyers and sellers are thinking.  You don’t know what’s hot, what’s not, and what other opportunities might be steering prices up or down.

A real estate agent is a negotiator who knows the ins and outs of your market.  She knows what buttons to push, how to remain objective, and when to move on.  She’s also done this dozens of times before, and can guide you through legal and regulatory issues that could cost you tens of thousands of dollars.  If you’re dealing with a short sale, a foreclosure, a rental unit, or any other property with special guidelines attached, this guidance is critical.

You can certainly buy or sell your own home, but doing so will cost you time, money, and frustration you could save by handing the job to a pro–letting you focus on finding the perfect home.

Fires, floods, and other disasters can strike at any time. Are you sure your insurance covers everything?

A house is not just your biggest investment–it’s your home. Homes provide safety, security, and continuity, and no one wants to think about the worst that can happen to them. But fires, floods, theft, and other dangers are real, and protecting your home is more than a legal responsibility. It’s the smartest move you can make.

Here are 7 tips for getting the most out of your homeowners insurance for the smallest premium.

Shop around. Too many homebuyers treat insurance as an afterthought and go with the first policy they find. They might get lucky, but chances are, they’re paying too much or covering too little. Insurance is critical to your long-term happiness, and it can be a substantial part of your monthly home-related expenses. The more research you do, the greater the odds that you’ll find a policy that fits your needs and your wallet.

When you’re shopping for policies, be sure to start with your existing car, boat, or other vehicle insurance provider. The insurance business is competitive, and most insurers will offer package deals, particulularly if you’re a long-standing customer. Be sure to ask about “longevity discounts” when you speak with your agent. As an added bonus, you’ll also be able to combine your bills to reduce bookkeeping.

Raising your deductible is a great way to lower your monthly payment. It reduces risk to the insurer, shows them you’re not going to pester them with frivolous claims, and can save a conscientious homeowner a lot of money in the long run. Just be sure that you can absorb the costs. An extra $2000 of expenses over the long haul may seem insignificant, but you rarely need insurance at good times. Will you be able to cover the deductible 2 days before payday, the week your daughter’s tuition is due? If not, choose the higher premium for now, and adjust your deductible when you can afford it.

All assets depreciate over time, so be aware of the difference between “Actual Cash Value” (ACV) and “Replacement Costs.” Your TV might only sell for $200 on Craigslist, but but buying a new one might cost $2000. Policies will make explicit reference to ACV and Replacement Costs, so be aware of what you’re signing, and get the coverage you need.

Your credit was good enough to get a mortgage. Congratulations, but you’re not done. Many insurers will factor your credit score into your rate, so be sure to check your scores frequently and address any blemishes.

Before you apply for insurance, ensure that your home is as safe as possible. Install fire extinguishes, deadbolts, outdoor lighting, smoke detectors, burglar alarms, and fire-retardent plants. You’ll be safer and your premiums will drop.

Florida has hurricanes. Oklahoma has tornados. California has earthquakes. Every homeowners policy has exemptions, usually based on location. If you’re building or buying a home in flood country, you’ll probably need to pick up special flood insurance. Ask your insurer what the policy doesn’t cover when you buy. Odds are, he or she will be happy to sell you additional coverage.

A licensed REALTOR© can show you a lot more than yard signs.

While it’s possible to sell or buy a home without representation, everyone generally agrees it’s a bad idea. But what about renting a home?

In Manhattan, Tokyo, London, and other densely-populated cities, finding an adequate apartment without representation is nearly impossible. In fact, many employers in those cities include broker fees in their relocation packages. But what about the rest of us? Can a REALTOR© really offer something an afternoon drive and a few hours on Craigslist can’t?

In most markets, the answer is yes, though the amount of utility you’ll get from a REALTOR© will depend on your area’s conditions. Working with a REALTOR© provides three advantages: Selection, differentiation, and negotiation.

Selection:

Simply put, a REALTOR© who specializes in rentals will have access to more properties than you. In part, this is due to exposure and familiarity. a REALTOR© is a local expert, and will have special knowledge of housing patterns and contacts. For example, in a university town, an experienced REALTOR© would understand which areas or developments tend to empty out after graduation, and might contact property managers before the units are even listed.

Additionally, some properties (particularly higher-end apartments and private homes) are only listed through REALTORS©, to give the owner more peace of mind. In these cases, hiring a professional may be your only chance to see a rental.

Differentiation:

With renting more popular than ever, it’s hard to stand out from the crowd. Showing up with a REALTOR© marks you as a serious renter and a long-term tenant. If the income, credit, and references of two candidates are equal, a landlord will often defer to the prospect with professional representation.

Negotiation:

A list price is merely that. A licensed REALTOR© knows precisely what a property is worth in your market, and will negotiate on your behalf. A rained negotiator with intimate market knowledge will always do a better job than a layperson.

Despite these advantages, many renters are put of by the potential cost of a REALTOR©. In many cases, the costs are minimal. In some states, the property owner is responsible for a REALTOR’s fees. In other cases, the REALTOR offers incredibly reasonable rates to establish a long-term relationship with the renter, who might become a buyer in the future. Be sure to ask your local REALTOR© about any fees during your initial consultation.

Even with solid research, long-distance homebuying will probably require multiple trips.

With intense variation in properties values across the country and an explosion in entails, the prospect of buying a home far from your current address are looking up. Any home purchase can be stressful, but trying to manage the selection and processing from afar can bring even the most experienced real estate pro to tears. Here are some tips to help you find your home away from home without losing your mind or your money.

1. Perform background research

What works for most may not work for you. Austin is fantastic–if you’re OK with muggy summers. Portland is amazing–unless you hate the rain. If you’re looking for a potential residence, a little research will help you narrow down your lost of dream cities. Start with some research on climate, crime, and demographics. Quiz sites like findyourspot.com are unscientific but fun, and can help you locate areas you wouldn’t have considered. Once you’ve made a short list, investigate average home prices to ensure that you’re not pricing yourself out of the market before you begin.

2. Community Message Boards / Web Sites

Now that you have a target, search for local communities online. Free message boards like Craigslist and review sites like Yelp can be great places to meet locals and get a town’s feel. Explain your situation, concerns, and “must haves” to the community, but take everything with a grain of salt. Anonymous users will often exaggerate, may have a personal axe to grind, or may be promoting their own product or agenda. Still, it’s a good place to start.

You should also look for public forums dedicated to planned communities, rental developments, or Homeowners Associations in your town. Again, these may be somewhat slanted toward complaints, but the people behind the posts will be somewhat less anonymous than other sites, and they could provide necessary input on step 3.

3. Get a referral

If your online research leads you to a good REALTOR©, it was worth the effort. A knowledgable, local REALTOR© will be able to translate your requirements and limits into a realistic list of possibilities, while explaining options you hadn’t considered. A REALTOR© will also let you know if your demands are unreasonable, and can suggest ways in which you might be able to compromise.

A REALTOR© is a professional, and should be treated as such, so come to the table with as much information as you can. Financial records, pre-approvals, addresses of homes you find interesting, and a detailed list of must-haves and deal-breakers will show the REALTOR© you’re serious about this transaction and help her get to work quickly and effectively.

4. Visit the area

You should never buy a property sight-unseen, so you’ll eventually need to visit the area. With your preliminary research complete and a broker on the case, you can probably get in and out in just a day or two if necessary. Remember to save all of your receipts, as some of your trip may be considered a business expense. Check with your accountant to be sure.

5. Find a friend

If you made any online friends during your research, your trip would be a good time to reach out in person. In addition to building a social network, making contact with a few friends can give you eyes on the ground. Most purchases will require several trips out, and having a friendly representative who can visit open houses, take pictures, and report back can be a lifesaver.

Lead levels in chipping paint are more dangerous than previously thought.

On January 4, the Center for Disease Control’s Advisory on Childhood Lead Poisoning Committee recommended lowering the standard for diagnosing lead poisoning in children. The recommendation was based on newer research linking what were previously acceptable levels of lead in the bloodstream with permanent developmental disorders and other health problems.

All this attention to lead is certainly good news for Americans and public health, but how does it affect homebuyers and sellers? According to the CDC, nearly all homes built before 1978 will contain some form of lead-based paint. If the home you’re looking to buy, rent, or sell was built after that date, you’re probably in the clear. If the home is older than that, you should take special care to understand the home’s condition and address any issues you find.

More specifically, it is the homeowner’s responsibility to determine whether a property contains hazardous lead levels. Your REALTOR© can help you locate a specialist who can test your paint, soil, and pipes, and perform a certified cleanup.

If you own a home known to contain lead, the Environmental Protection Agency (EPA) requires full disclosure to prospective buyers or renters. The EPA provides sample forms for lessors and sellers. For Spanish forms, or for more information, visit their Web site.