By Diana Lundin
Move.com

Still sitting on the fence about buying your first home? If you want to take advantage of the federal government’s tax credit of up to $8000, you have until the end of April. But there are a lot of other good reasons for buying now.

Along with the tax credit, low interest rates and a large existing-home inventory as well as incentives from new-home builders make it a buyer’s market in many areas of the country.

Real estate experts say if you have good credit, a steady income and want to take on the responsibilities of home ownership, it’s a great time to buy your first house. But because it often takes weeks for first-time buyers to find a home, it pays to have everything lined up for the purchase that should optimally take place no later than mid-November.

You should have all documents in order, including pay stubs, bank statements and tax returns. You should get pre-approved (not pre-qualified) for a loan so that you can be ready to act when you find a house. And you shouldn’t make any credit purchases before buying the home as that can affect your closing. Lastly, make sure you have your closing costs lined up. Those often have to be paid for in cash.

To take advantage of the credit, here’s what you need to know.

1. Who is eligible to claim the $8,000 tax credit for first-time buyers?
First-time home buyers who have not owned a home in the past three years and who purchase any kind of home—new or resale—are eligible for the tax credit for 10 percent of the purchase price, up to a maximum of $8,000. To qualify for the current tax credit, a home purchase must occur on or after November 6, 2009 and they must have a binding sales contract in force on or before April 30, 2010.  Purchasers have until June 30, 2010 to close.
The full credit is available for married couples filing a joint return whose modified adjusted gross income is $225,000 or less and for other taxpayers who’s MAGI is $125,000 or less.  The credit phases out for buyers earning more than those income limits.

Persons claimed as dependents by other taxpayers or who are under age 18 do not qualify for the tax credit program.
Source: National Association of Home Builders, Internal Revenue Service

Homeowners who have lived in their current home for at least five consecutive years within the last eight and who want to purchase a different home qualify for a $6,500 tax credit.  Home purchase must occur between November 7, 2009 and April 30, 2010.  The purchaser has until June 30, 2010 to close.
Source: National Association of REALTORS®

3. What is the definition of a first-time home buyer?
The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. If you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, IRS Notice 2009-12 allows unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
Source: NAR, NAHB

4. How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000 (See No. 12 for price limits) for first-time buyers and a maximum of $6500 for existing owners.
Source: NAR, NAHB

5. The income limits for claiming the tax credit were raised when the tax credit was extended. Are the higher limits retroactive?
No. The new income limits are only applicable to purchases occurring after November 6, 2009. The income limits for sales occurring  after November 6, 2009 are $125,000 a year for individuals and $225,000 for couples $75,000 for single taxpayers and $150,000 for married couples filing jointly.
Source: NAHB, IRS

6. What is “modified adjusted gross income”?
Modified adjusted gross income or MAGI your total annual income minus adjustments to income.  Examples of adjustments to income are Alimony payments, contributions to an IRA, contributions to health savings accounts, or moving expenses for a new job.
Source: Investopedia, IRS

7. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phase out limits.
Source: NAHB

8. Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $235,000. The applicable phase out to qualify for the tax credit is $225,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phase-out range of $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is a $4,000 credit.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $138,000. The buyer’s income exceeds $125,000 by $13,000. Dividing $13,000 by the phase out range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
Source: NAHB

9. How is this home buyer tax credit different from the tax credit that Congress enacted in early 2009?
For first-time buyers the tax credit’s income limits were increased, the documentation requirements were tightened, and the program’s deadlines were extended.  Existing homeowners who buy a new principal residence also now qualify for a credit up to $6500.
Source: NAHB

10. How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?
You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.
Source: NAHB

11. What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

It is important to note that you cannot purchase a home from, among other family members, your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse or your spouse’s family members. Please consult with your tax advisor for more information. Also see IRS Form 5405.
Source: NAR, NAHB

12. I read that the tax credit is “refundable.” What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even the entire amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
Source: NAHB

13. Will the tax credit need to be repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.
Source: NAR

14. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after November 6, 2009 and on or before April 30, 2010 (or by June 30, 2010, provided a binding sales contract was in force by April, 30, 2010).

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
Source: NAHB

15. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with an MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may not claim the tax credit if they are participating in an MRB program.
Source: NAHB

16. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
No. You can claim only one.
Source: NAHB

17. I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of “nonresident alien” in IRS Publication 519.
Source: NAHB

18. Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
Source: NAHB

19. I bought a home in 2008. Do I qualify for this credit?
No, but if you purchased your first home between April 9, 2008 and November 6, 2009, you may qualify for a different tax credit. Please consult with your tax advisor for more information.
Source: NAHB

20. Is there a way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 or 2010 tax return?
Yes. You have several options.
Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the down payment.

Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Second, you may claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a down payment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community.    
Source: NAHB, National Council of State Housing Agencies

21. HUD is now allowing "monetization" of the tax credit. What does that mean?
It means that HUD allows buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for certain down payment and closing cost expenses.

Under HUD’s guidelines, non-profits and FHA-approved lenders are allowed to give home buyers short-term loans of up to $8,000. The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.

Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent down payment requirement. In addition, approved FHA lenders can purchase a home buyer’s anticipated tax credit to pay closing costs and down payment costs above the 3.5 percent down payment that is required for FHA-insured homes. 
Source: NAHB

22. If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 (or 2010) as if the purchase occurred on December 31, 2008 (or if in 2010, December 31, 2009). This means that the previous year’s income limit (MAGI) applies and the election accelerates when the credit can be claimed. A benefit of this election is that a home buyer in 2009 or 2010 will know their prior year MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their prior year tax return, but who have already submitted their tax return to the IRS, may file an amended return claiming the tax credit using Form 1040X. You should consult with a tax professional to determine how to arrange this.
Source: NAHB

23. For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, depending on in which year my credit amount is the largest?
Yes. If the applicable income phase out would reduce your home buyer tax credit amount in the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount.
Source: NAHB

By Michele Dawson

Figuring out whether you’re ready to buy a house — whether you’re a renter or are aiming to move up or size down — can be a daunting task. But there are signs that will indicate whether you’re ready to take the buying plunge.

If you are thinking about buying, you’re not alone. So are you ready to make the move?

You might be if you:

1. Are familiar with the market. If you’ve been paying attention to how much houses are listed for in the neighborhoods you’re eyeing and have a realistic view of how much a house will cost you, you’re in good shape. But if you’re dreaming about that big corner house with no clue about it’s asking price, you may want to spend some more time becoming familiar with the market and how much houses are going for.

2. Have the money for a down payment and closing costs. The down payment is a percentage of the value of the property. Freddie Mac says the percentage will be determined by the type of mortgage you select. Down payments usually range from 3 to 20 percent of the property value. Also, you may be required to have Private Mortgage Insurance (PMI or MI) if your down payment is less than 20 percent. Closing costs include points, taxes, title insurance, financing costs and items that must be prepaid or escrowed and other settlement costs. You can expect to pay between from 2 to 7 percent of the property value. Generally, buyers will receive an estimate of these costs from your lender after you apply for a mortgage.

3. Know how much you can afford. Freddie Mac says that as a general guide, your monthly mortgage payment should be less than or equal to a percentage of your income, usually about a quarter of your gross monthly income. Also, your income, debt and credit history go into determining how much you can borrow. As a general rule, your debt -credit card bills, car loans, housing expenses, alimony and child support — should not be more than about 30 to 40 percent of your gross income.

4. Know what additional expenses will come with owning a home. This includes homeowners insurance, utility bills, maintenance costs — roofing, plumbing, heating and cooling.

5. Have your credit in good shape and make sure your credit report is accurate. Potential lenders will view your credit history — how much debt you’ve accrued, how many accounts you have open, whether your payments are made on time, etc. — to determine whether they’ll give you a loan. You should get a report from each of the three credit reporting companies: Equifax, Experian, and Trans Union.

6. You haven’t made any recent major purchases, particularly a vehicle. If you do, you may have a harder time getting a loan — or it could potentially lower the amount you’ll be approved for.

By Phoebe Chongchua

Looking for a new home can be exciting and frustrating. You can help alleviate the frustration by paying close attention to five key areas of the homes you’re considering buying; it may save you money in the long run.

Don Walker is an inspector and owner of Ace Home Inspections. He says there are five areas in homes that he frequently reports problems with. They are electrical, foundation, plumbing, the attic, and landscaping.

Electrical
Walker says sometimes homeowners assume with newer homes that all will work just fine but that’s often not the case. "I [inspected] a brand new house — four years old but the electrical was all done incorrectly," says Walker.

Having a complete home inspection will help to rule out any problems and point out any areas of concern. However, even as you’re browsing homes, buyers can start to make note of the key areas that Walker mentioned, such as the foundation.

Foundation
Walker says a four-year-old home he inspected recently was already showing trouble signs which could result in a costly repair project. "It was a model home. What [the homeowners] did was plant trees for shade to make it look really nice, but they planted the wrong trees and they’re going to crack the foundation and it’s going to cut the property value down by $50,000," says Walker.

Walker says in the case of that home, the trees were causing micro-fractures in the tile in various locations of the home. "As you walk through the house, 21 feet in and 30 feet deep, there’s just too much root invasion and it’s going to ruin their tile," explains Walker.

He says some tell-tale signs with this home were the minor cracks in the foundation that were causing a lifting and separation of the foundation. Also, the windows were not opening and closing properly, "which means the foundation is moving."

However, just because you see cracks doesn’t mean there is a foundation problem. "Most people don’t understand that there are natural cracks in a house. That’s why when we do an inspection report we have to look at it and say ‘Okay, this is a typical crack and this one is an untypical crack,’" says Walker. He says some cracks may lead to other problems while others won’t.

Plumbing
Walker says another big area of concern is the plumbing. It’s an area that you can’t always spot as easily but it can create expensive repairs if plumbing issues go either undetected or are not properly fixed. "Mold forms underneath sinks when people have a leak and they fix the pipe but they don’t take care of the mold," says Walker.

He says things like caulking the sink can help prevent mold. "That’s my number one thing I always find — bad sinks," says Walker.

He says that when you look at the sink, look behind it and most of the time you will discover a little crack. "What happens is, when you wash dishes or you wash your hands in the bathroom or the kitchen, the water gets in that crack and seeps down. Once the water gets behind the cabinet it’s in a perfect position to create mold," says Walker. The dampness, humidity, and lack of light can turn that area beneath the sink into a mold-breeding ground.

Attic

"You can tell everything about the house by the attic," says Walker. He says other areas of the home can be covered up if a repair had occurred. For instance, if there was a leak and it damaged a wall, with the right contractors and repairs it can be made to look like new and, hopefully, function like new. But Walker says the attic is sort of the eyes to the soul of the home. "In the attic you can tell where all the damage has been," says Walker.

"If you’re in a 20-year-old house and you see that the insulation is brand new, you know that there was a water leak because it had to be replaced," says Walker. He adds, "You can tell if the roof is good because you can look right at the wood."

Landscaping
"There should not be moisture or plants next to your house," says Walker. He says there should be a 12 inch barrier between the landscape and the house. Walker says otherwise you run the risk of having the foundation crack and affect the home. What happens is, as the landscape that is too close to the home is watered, the foundation and soil expand. Then, when no watering occurs, the foundation dries up and shrinks and this can cause it to crack.

Remember, knowledge is power, so learning about the home before you close the deal on it will keep you from making a mistake that may cost you extra out-of-pocket money later.

By Luke Mullins of U.S. News & World Report

As the temperature drops and the snow piles up, it’s easy to forget that spring is quickly approaching. After more than three years of a painful housing swoon, real-estate experts predict that lower prices, attractive mortgage rates and a tax perk from Uncle Sam will create the most vibrant spring home-selling season in some time. "This is going to be probably the most pleasant experience for a home seller in the last four or five years," says Mike Larson of Weiss Research. "If you have been beating your head against a wall, this is going to feel a lot better." But even if the market does perk up, buyers are likely to retain the upper hand throughout 2010. So to help property owners get the best selling price they can — without burying themselves in expenses — U.S. News has created a list of 10 cheap ways to boost a home’s sales price by spring:

1. Retouch the front shell: If your property’s exterior isn’t appealing, no one will want to see your newly remodeled kitchen. Property sellers must first ensure that their home projects a cozy, inviting feeling. "The shell — the outside front — is probably the most important area for improvement, the area where you can make the biggest improvement with the smallest amount of cash," says Pat Lashinsky, president and CEO of ZipRealty. Touching up the paint on the front-entry portion of the house can be an inexpensive but effective way to make the entire property more inviting. "Really focus on that outside, external shell," Lashinsky says. "You would be amazed by the amount of people that drive by a house and say, ‘Ah, that’s not for me.’ And they can tell just by the way the upkeep and the outside looks."

2. Trim the greenery: Ensuring that the lawn, hedges and flowers are well-maintained helps make your home more alluring to prospective buyers. Property owners can hire professional landscapers or break out the lawn mower and get busy themselves. "Many people have landscaping that is overgrown and too heavy, and it is concealing a lot of the house," says Paul Zuch, the president of Capital Improvements. "Trim the trees, trim the hedges … (and) add a little color to the flower beds."

3. Paint the interior: Putting a fresh coat of paint on the home’s interior is a cost-effective way to make a home more appealing to buyers, says Ron Phipps, a broker with Phipps Realty in Warwick, R.I. When choosing the color, homeowners should be conservative. "The caution is that your favorite color may not be the favorite color of the buyer." Instead, homeowners are best off using neutral colors, Phipps says. "Go with something that is a very light yellow or a light cream with a contrasting white, so it just looks very fresh and crisp. … Having the paint in good condition is almost more important than the color."

4. Don’t forget the floors: Improving the condition of a home’s flooring is also a smart move for sellers — and you don’t need to refinish wood floors or install new carpets to make them more attractive. "If it’s a hardwood (floor), has the floor been buffed?" says David Lupberger, a home improvement expert with ServiceMagic.com. "If you have carpets, have the carpets been cleaned?"

5. Make all major repairs: Because tighter lending standards demand higher down payments, today’s homebuyers won’t have much cash left for improvements once they’ve made their purchase. So it’s imperative for sellers to make all major home repairs — fixing the leaky roof, rebuilding the front stoop — before they put the property on the market. "Repairs can’t be ignored, because nobody has any extra money," Phipps says. To determine what needs to be done, property owners can scrutinize their homes themselves or bring in a home inspector to examine the property professionally. "The home inspection piece, I think, is something that is a huge value, particularly if there is something that is a question," Phipps says.

6. Put appliances under warranty: To give buyers more confidence in a home’s appliances, Phipps recommends that sellers put them under warranty. Sellers can buy home warranties, which cover repair and replacement costs for many home appliances, from several different companies. "If I have got a 40- or 50-year-old house, it is going to be harder for me to persuade a first-time homebuyer with a limited amount of cash to buy it because they will say, ‘Well, what happens if something breaks down?’" Phipps says. "If I have a home warranty … that solves that problem."

7. Make energy-efficient home improvements: Increasing your home’s energy efficiency is another good way to make your property more attractive to buyers. Many such improvements, such as new windows or better insulation, come with federal tax benefits. In addition, a growing awareness of human impact on the environment means that homes that have these upgrades will stand out from other listings. "If you have some cruddy old windows that are leaky and just not energy efficient, you can put in new replacement windows and take advantage of the tax credit," Zuch says. "It’s not greenwashing. Those are really practical things that make your house more sellable." Many contractors will conduct a so-called energy audit free of charge to determine where efficiencies can be created, Zuch says. "If your house is more energy efficient — you use less energy, it’s better insulated — it is going to be more desirable for a potential buyer," he says.

8. New light fixtures: Replacing old or broken light fixtures with new ones can also be a low-cost way to add value, Lupberger says. Installing a new light fixture in the foyer can be a particular benefit, he says, because it can make a strong first impression on would-be buyers. Creating an inviting feeling in the interior entryway helps get home shoppers more interested in checking out the rest of the property. "I am not going to redo the house," Lupberger says. "But I can update those features so that somebody can walk in and say, ‘You know what? (The homeowners) took care of this.’"

9. New stove: While some homeowners might think the only way to jazz up a dated kitchen is a full-on remodeling job, Lashinsky recommends a much less costly alternative: buying a new stove. "If there is an updated stove in the kitchen, it is amazing how that draws people in, and people say, ‘Wow, this kitchen is going to be great,’" Lashinsky says. While upscale homeowners may have to shell out for top-of-the-line appliances to maintain their kitchen’s décor, others can budget well under $1,000 for the upgrade. "You can get a really nice stove for $700 or $800," Lashinsky says. "You can basically have the look of a new kitchen that is going to be really enticing to someone — and what you are really trying to do is differentiate your house from somebody else’s."

Property owners in neighborhoods where most homes have granite countertops can consider making this upgrade as well. But Lupberger says the project makes sense only for homeowners with extremely dated kitchens that are going to serve as a serious impediment to finding a buyer. A real-estate agent with experience in the local market can help you determine whether the upgrade is essential, he says.

10. Freshen up the bathrooms: Getting rid of mildew stains on the bathroom caulking can boost a home’s appeal as well. Such stains "scream, ‘These people haven’t taken care of this house. It’s going to be a money pit,’" Zuch says. Use a razor blade to remove the old caulk, and replace it with new, mildew-resistant caulk, Zuch says. And rather than remodeling the entire space, homeowners can reinvigorate a worn-down bathroom by replacing cracked sinks, Lupberger says.

Everybody wants to find ways to save money around the house — but who can afford to break the bank on pricey improvements just to save a few dollars, right?

Wrong. These days there are plenty of small home improvements you can make that pay for themselves (or nearly so).

We’ve asked the experts to tell us some of their favorites. Flip through these, then get busy … and watch the dollars and cents start adding up.

1. Programmable thermostat

“A programmable thermostat can save you a couple of hundred dollars a year on your heating and cooling costs,” says Celia Kuperszmid Lehrman, deputy home editor for Consumer Reports. You can program it to, say, lower the temp in the house while you sleep, and warm up the house just before you wake. “The only catch there is that you actually have to program the thing,” Kuperszmid Lehrman says. That’s why Consumer Reports liked Lux’s Smart Temp Touch Screen TX9000TS. “It was especially easy to operate, and it was only $80. You’re going to make that back in the first year.”

2. Compact fluorescent bulbs

Light bulbs are the little addition that could. “In our tests, you can save about $56 over the life of each bulb,” says Celia Kuperszmid Lehrman, deputy home editor for Consumer Reports.  Now multiply that by 40 bulbs — the number of bulbs in an average home — and that’s big savings. And the bulbs last for years. One of Consumer Reports’ top-rated bulbs is the Home Depot EcoSmart spiral CFL (about $1.50  per bulb). Consumer Reports has some info on how to choose the best bulb for your fixtures, though a subscription to the magazine is required to see most of the info.

3. Low-flow showerhead

Showerheads spew a lot of water. You can still get a great shower — and save water — with a low-flow showerhead, however. The testers at Consumer Reports really liked the American Standard FloWise showerheads, which can provide up to 40% water savings, the company says. Installed throughout the house, they can save a family as much as 8,000 gallons of water use a year, the company says. Cost: $65 to $105, depending on the finish.

4. Low-flow toilet

Toilets gulp a lot of water. Buy a low-flow toilet and watch your bill drop. Consumer Reports’ Celia Kuperszmid Lehrman says the Kohler Cimarron Comfort Height toilet (K3609) “did very well in our tests,” swallowing just 1.6 gallons per flush. And with a retail price of $369, it won’t break the bank.

5. Insulation

Heat loss through walls, floors and the roof accounts for about 45% of heat loss (or cooling loss, in summer) in a typical home, says Amanda Lowenberger, researcher for the American Council for an Energy Efficient Economy. Attics are often the easiest thing to insulate, and rolling out some Owens Corning fiberglass is often a DIY weekend project. Need more incentive? There’s a significant federal tax credit for installing insulation — 30% (up to $1,500) of the cost of materials.

6. D’Mand System water circulation systems

Why should all that water go down the drain while you’re waiting for the shower or bath to heat up? Though every family is different, about 25 to 30 gallons of water daily can be wasted this way — that’s 10,000 to 14,000 gallons annually, says Doug Bird, product manager for water circulation for Taco Inc. Taco makes the D’Mand System, which automatically recirculates colder water back to your water heater until it’s hot enough for use.  The cost: $500 to $750, depending on the system.

7. Smart switches

Outdoor lighting can be pretty — but it’s easy to leave the lights on all day. Photo-sensitive sensors, meanwhile, can get thrown off by the brightness of urban areas. With Intermatic’s “smart switches” installed in the switch plate, you tell the control where you live and what day it is — and you never set it again. The mini-computer figures out sunrise and sunset and when to turn the lights on and off. The cost: $30 and up.

8. Insulated ducts

“If you’ve got a forced-air heating system, make sure that you have your ducts insulated,” says Celia Kuperszmid Lehrman, deputy home editor for Consumer Reports.Why? Lots of hot air (and air-conditioned air in summer) is lost through uninsulated metal tubes, or through gaps in the ducts. “It costs around $500 or so (to wrap the ducts), but you can save around $400 or so a year,” she says. “It’s not exactly a fun, sexy thing, but it’s really a gift for yourself. It’s the kind of thing that pays for itself year after year after year.” Web sites such as InsulationStop.com have insulation you can install yourself.

9. An energy audit

A home energy audit is like a physical for your house — it pinpoints all the ways it’s using, and losing, energy. You can perform a simple energy audit yourself, but a pro will use more advanced techniques and tools to really help you identify your home’s weak spots — and help you fix them. Cost for an audit can be as little as, well, zilch at many utilities, says Rick Giles of Conservation Services Group, which does audits for utilities. Or it can be $350 or more for some private contractors, says Heather Rae of Maine Home Performance, so it’s really worth calling to find out what’s available — and what you get for your money. Find an approved auditor in your state — and learn what to look for in one — here. 

10. Washing machine

Old washing machines are big water hogs. But the newest front-loading ones like this Amana have changed the game: Though they cost more ($649) at the register, front-loading washers can save you about $100 a year in water and electricity costs, estimates Celia Kuperszmid Lehrman, deputy home editor for Consumer Reports. There’s also a Cash for Clunkers-type program taking shape for appliances with estimated rebates of $50 to $200, she says. “That would really shorten the payback period.”

11. Tankless water heaters

Tankless or “on-demand” water heaters like the ones made by Rinnai provide hot water only when it’s needed, and so they remove the need for a big tank of hot water waiting in the basement (and the energy use that comes with that). The tankless heaters are anywhere from 8% to 50% more efficient than old-school tanks, depending on a home’s needs, the government says. Read more about their pros and cons in Mother Earth News.  The cost: $800 and up.

12. Geothermal heat pumps

Geothermal heat pumps like those by Ingram’s Water and Air or Econar GeoSystems are a lot like regular heat pumps, but instead use the heat of the ground (instead of the air outside) to provide heating, air conditioning and sometimes hot water. Because of that, they’re really efficient. But they’re not always cheap: The California Energy Commission’s Consumer Energy Center estimates that a so-called “closed loop” system for a typical-sized home would cost about $7,500 — twice the amount of a regular heat pump, not counting drilling. But the investment can be recouped in five to 10 years. (Ingram’s “open loop” systems, which pull water out of a well, circulate it, then put it back into a stream, cost about half that. But then, not everybody has a well … or a stream.)

13. Energy-efficient windows

New, energy-efficient windows like this ThermaStar window by Pella are a great way to save money over time, and they do it in lots of ways: They stem unwanted heat and cooling loss in winter and summer, respectively; they block harmful UV rays that fade carpets and furniture; and they even can reduce the size of the heating/cooling system you need. Recently, several energy-efficient homes were built that included good windows, resulting in a 30% reduction in the size of the air-conditioning system needed, according to the Efficient Windows Collaborative. Cost for energy-efficient windows varies widely based on size, number of windows and location. Many companies do free in-home estimates.

Harvey was one of my favorite mentors and has been instrumental in my success!  I have all of his books autographed and have actually met with him on a few occasions!

By Amy Hoak of MarketWatch

On his road to homeownership, Scott Leibfried has learned one thing: Expect the unexpected.

He and his wife had an offer accepted on a home, only to find out later that foreclosure proceedings were about to begin on it. That’s after they considered another home that was aesthetically pleasing but had major issues that came to light upon closer inspection.

In the meantime, they’re trying to estimate the money they will need for closing costs and any future expenses, hoping that they won’t eat too much into their financial cushion.

“There are always going to be things that come up,” Leibfried said.

That statement could describe homeownership in general.

Allan Glass, a Los Angeles-based real-estate agent who works with the couple, says that “the biggest mistake buyers make is underestimating the costs” of buying a house and maintaining it over time.

Homeowners should have 1% of the purchase price of their home in savings for improvements and surprise expenses, he said. “That is the absolute minimum. It’s better to have 2% to 3% socked away somewhere.”

The cushion often isn’t easy for first-time homebuyers to have — especially after they’ve scrimped and saved for their down payment. And many first-time buyers are in the market now, due to affordable prices, low interest rates and a federal tax credit.

“Some people walk away from closing with a nickel and a stick of gum, and that’s probably not going to be a good idea,” says Dale Robyn Siegel, president of Circle Mortgage Group, in Harrison, N.Y. She recommends having at least six months of mortgage payments in the bank after closing on a house, “especially now, with such an iffy job market.”

A five-year budget
To get a better handle on where the house stands, buyers should attend a home inspection and ask questions, says Bill Richardson, a home inspector in New Mexico and president of the American Society of Home Inspectors. That way, they can get tips and recommendations from the inspector as he or she is working. They should keep the inspection report handy for reference.

For existing homes, an inspector will estimate the age of major components, giving the homebuyer a sense of when they will need replacing. A furnace, for example, often lasts between 12 and 15 years; a water heater from 10 to 12 years, he says.

A list of approximate life expectancies of home components — as well as cost estimates — can be found at LivingWithMyHome.com, a Web site sponsored by home-inspection company Pillar to Post. Click on the “Repair & Remodel Estimates” tab.

Once you know what you’re dealing with — and perhaps what the sellers will repair or pay for before the sale is final — look five years out and make a list of big-ticket home issues that you’ll need to address, says Kelly Rogers, director of education for the Consumer Credit Counseling Service of Orange County, based in Santa Ana, Calif. Make a time line for those expenses.

And don’t count on borrowing money needed for repairs. “The banks have really tightened up, so it’s harder and harder to get a home-equity line of credit,” Richardson said. “If you don’t budget for repairs, you will never get the repairs done when you need it.”

When small problems pop up, it’s important to address them before they become large-scale projects. Consider the tile in the bathroom: As soon as there’s deterioration or cracking, address it, Richardson said.

“If the toilet is loose to the floor … it doesn’t seem like a big deal, but it can leak and rot the floor,” he said. “What could be a $15 repair could (end up being) a $700 repair or more.”

Richardson suggests planning for a $500 to $1,000 annual general maintenance budget for most starter homes, which would cover everything from painting a room to caulking the bathtub.

“Buying a home is one of the largest investments you’re going to make,” he said. “If it’s done wisely and with lots of thought, it can be a huge asset. If it’s not well thought out, it can become a huge burden to you.”

Monthly surprises
Estimating monthly expenses can often trip up new homebuyers as well.

As renters, people are accustomed to paying rent and some utilities, such as phone, Internet service and cable.

Homeowners, however, also face other utility costs, such as water, sewer and trash collection. Then there are property taxes, homeowners insurance and perhaps homeowners association dues.

There also can be expenses unique to your location. In Los Angeles, for example, water restrictions are such that if you go over a certain cap of usage, you face a penalty, Glass said.

Remember, you also can have miscellaneous expenses such as snow removal and lawn service, if you don’t plan on doing them yourself, Siegel said.

By Marilyn Kennedy Melia of Bankrate.com

Many home sellers are losing money — precisely because they’re determined not to lose money. So why won’t your home sell?

One reason homes are languishing on the market is that owners are suffering from “sunk cost fallacy,” says Ohio State University economist John Kagel.

This fallacy describes the reluctance people have to sell for less than they paid or put into a home, even when hanging on and waiting for the right price will ultimately prove costly.

It can be hard to shake this faulty logic, even when homeowners’ income has dropped precipitously or they’re living off a limited amount of money, like a severance package, says financial planner William Suplee of Structured Asset Management in Paoli, Pa.

Here are three questions to determine whether you could benefit by losing money on a home sale:

1. Will you slash your housing costs with a move?
Owners under financial pressure who could find relief on their monthly cash flow by moving to a lower-cost home that they either buy or rent are the ones grappling with the sunk cost fallacy.

Suplee tries to help owners get a clear view of their best option by preparing spreadsheets that lay out the costs of different living arrangements.

Don’t forget all the ancillary expenses, like commuting costs, that go along with a particular housing choice, adds D. Scott Neal, a financial planner in Lexington, Ky.

Laying out the annual costs of staying in a home that cost his client $800,000 several years ago was the only way to convince her that she would soon deplete her savings if she stayed put, says Rick Kahler, a financial planner in Rapid City, S.D.

Even though she’d probably sell for about $300,000 less than she paid, the monthly outlay was unsustainable, Kahler says. The pain of loss is softened somewhat, he adds, because she can buy a home that is also valued at less than it was several years ago. And the recently passed tax credit of up to $6,500 for repeat buyers under certain income levels also applies to many people in this position.

2. Do you know what a realistic price is?
Recognizing that conditions dictate selling at a loss doesn’t mean that you’re ready to accept any offer, however.

Indeed, experts stress that the only way to proceed confidently with selling at a loss is to thoroughly research the housing market in your area.

Ask your agent to provide lots of recent prices on sales of comparable homes. In some states, agents can also provide very recent sales data by getting the prices of homes under contract, says John Huggins, president of Coldwell Banker Legacy Real Estate Group in Bowling Green, Ky. Home sellers can also ask to tour other homes for sale to get an idea of how their home compares with properties being offered at various price levels, he says.

Homeowners who owe more in mortgage than they can likely net in a sale must investigate whether they’ll have to add in their own cash to pay off the loan, or whether the mortgage lender will agree to accept a lower amount. In cases where owners have to pay out-of-pocket to sell, that outlay could alter the advantage of moving, Neal says.

3. If you hold out, could you avoid a loss?
Going against the natural inclination to avoid loss means that you’ve analyzed the cost of holding the property and are reasonably confident prices won’t spring back up.

The National Association of Realtors forecasts that home prices nationwide will end 2010 with an increase of just under 4% from the end of 2009.

Moody’s Economy.com predicts that prices will stabilize in mid-2010, but that there will be no appreciation. Economy.com’s housing economist Celia Chen says that she expects some middle and higher-end housing to be at risk for further decline this year, and that some homeowners will not see prices return to what they paid for at least several years.

Real-estate trends are local, Huggins adds. He advises looking at prices of similar homes in your area and gauging demand against inventory.

When he prepares spreadsheets for homeowners to examine the costs of holding versus moving, Suplee asks, “What rate of appreciation does the house need for a holding strategy to make sense?” Then, he asks for an honest determination of how plausible it would be to see that appreciation.

By Sari Krieger of The Wall Street Journal

For homebuyers, green is fast becoming a priority — whether it’s because they want to reduce their energy costs, minimize their carbon footprint or improve indoor air quality.

Here are 10 questions that prospective buyers or renters ought to ask to find out how green a house or apartment is.

1. How big is it?
The bigger the home, the more energy it uses. The U.S. Green Building Council considers a "neutral size" home — basically what most people need, without what might be considered luxury space — to be 900 square feet for a one-bedroom home, 1,400 square feet for two bedrooms and 1,900 square feet for three bedrooms. A 100% increase in the size of the home adds anywhere from 15% to 50% to energy use.

2. Where is it?
Can you walk to public transportation? Are there sidewalks or easy places to walk in the neighborhood, so you don’t always have to drive? How close are shopping centers and other places you would frequent? The Web site walkscore.com rates the walkability of cities, neighborhoods and individual addresses and shows the distances to stores, restaurants, schools and amusements.

3. How is it oriented?
South-facing windows can trim heating costs in the winter. Shade from trees to the south and west can reduce cooling costs in the summer.

4. Is it well-insulated, and are doors and windows sealed tightly against air leaks?
The U.S. Energy Star Web site, energystar.gov, features a calculator to help determine how much insulation you need, based on your location. To guard against air leaks, windows and exterior doors ideally should have an Energy Star rating, which indicates they meet a certain standard of efficiency in preventing the loss of heat in the winter and cooling in the summer. You may be able to feel air leaks, or you can hire an energy auditor to conduct a "door blower test" — a big fan placed in a doorway sucks air out of the home, creating easily detectable drafts rushing in from outside wherever there’s a leak.

5. Has the indoor air quality been tested?
Well-insulated, well-sealed homes not only hold in heat and cooling, but also can retain toxins such as formaldehyde, mold, asbestos and lead. A test will show whether any toxins are present in levels that exceed the safe maximums established by the Environmental Protection Agency. You might also ask whether the home was constructed or renovated with nontoxic building materials and furnishings, such as low- and zero-emission paints and sealants and materials such as strawboard for the subflooring.

6. If it’s an older home, have insulation, heating and cooling systems and appliances been upgraded?
Newer products are far more efficient than those bought several years ago. Also, has higher-efficiency lighting been installed?

7. How efficient is the water usage?
Are the kitchen and bathrooms equipped with water-efficient plumbing fixtures? If it’s a house, does it have a water-conserving irrigation system for the grounds, and landscaping that minimizes the use of water? It may also have a rainwater collection and storage system, particularly in drier areas where water is increasingly scarce and costly.

8. What’s on the roof?
A lighter-colored roof reflects more heat than a dark-colored roof, which absorbs heat, putting more strain on the cooling system. Does it have skylights that let in natural light?

9. Where did the home’s materials come from?
Recycled or salvaged building materials reduce the home’s impact on the environment. Also preferable are materials that are locally available, can be processed with less energy and water, are reusable or recyclable, are durable and are abundant in the environment.

10. Has it been certified green?
The U.S. Green Building Council, the Environmental Protection Agency and others offer ratings on homes, based on inspections by trained third-party professionals.

By Tisa Silver of Investopedia

In this economy, houses aren’t selling like they used to. If you have a house on the market, or are considering selling yours, there are some ways to improve your chances. Here are seven tips that will make it easier to sell your house and make a smooth transition from one owner to the next.

1. Maintain neutrality
This policy has worked for Switzerland, and it can also work in real estate. Customizing your home is great if you plan to stay there, but extreme colors and themed rooms can scare off potential homebuyers. If you have customized every room with extremely bright or dark colored paint, wallpaper or wall fixtures, you may want to consider toning it down a bit. Using neutral colors on the walls can help prospective buyers create their own vision for the house, and will also leave them with less work to undo if they buy the house.

2. Less is more
Even though you have not moved out yet, removing some of your furniture can help the house move off the market. If you take pictures for your listing, having less furniture can help the home appear more spacious. When potential homebuyers arrive, having less furniture can also provide clear walkways.

3. That new house smell
Honestly, the new house smell isn’t always the most pleasant, but at least it is new. In preparing to show your home, you should avoid strong smells. To avoid odors, make sure to take out the trash and clean the refrigerator regularly. It’s also good to be mindful of what you cook in the days leading up to a showing; certain foods have strong scents. If you have pets, keep an eye on the litter box. Any smell that is too strong could send potential homebuyers running out the door.

4. Pay attention to the details
It’s not a good idea to make major renovations when you are ready to sell your home; you may not recoup your investment. If you never got around to starting or completing that total kitchen or bathroom makeover, then you can make some small, inexpensive changes to spruce things up. Replacing the hardware on cabinets is a quick way to improve the appearance of older looking fixtures. Upgrading small items such as light switch and outlet covers can add a nice touch.

5. Maximize your "curb appeal"
The front of your home is the first thing prospective homebuyers will see, so keeping it presentable is a must. If there is a yard, keep the grass to a reasonable height and, if there are trees, be sure to keep the branches under control. The path to your front door should be a clear and welcoming one, not an obstacle course.

6. Don’t get too personal
Upon entering your house, everyone will know it is lived in, but they do not need to see all the evidence. Get rid of excess clutter such as newspapers, magazines and mail. Be sure to put away your laundry and shoes. It may also be a good idea to put away some other personal belongings, like pictures on the refrigerator or mantle. For you, the pictures may make a house a home or display your personal touch. For the new homeowner, it may appear too personal.

7. Take care of repairs
Waiting to make repairs until after you find a buyer can be tricky. Depending on the nature of the repairs, you may not be able to find a buyer. Depending on how fast the buyer wants to close on the house, you may not have enough time to make the repairs. Save yourself some time and potential trouble by making repairs before you list your home. The repairs will have to be made anyway, so it is better to get them out of the way sooner rather than later.

First impressions can make the difference between a sale or no sale. Keeping things simple can give you a leg up on similar houses on the market.