5 Steps to Get Ahead of the 2012 Housing Market

More of the same: that’s the gist of economists’ predictions for the 2012 housing market. But if you’re thinking of buying or selling, these five tips will propel you a step ahead so you are positioned for homeownership success.

1. Don’t count on the Federal Housing Authority.  In 2011, the FHA kept up with high demand for its federally guaranteed, lost-cost mortgages. But now, default rates are rising for FHA loans and regulators might crimp down on its lending volume.

What you can do:

• Stay apprised of local FHA lending trends so you are aware of what buyers are up against. If it seems that FHA lending is fading in your area, consider researching additional lenders, such as credit unions, so you can make informed recommendations to your buyer.
• Also inquire about current FHA fees and lending requirements. If fees continue to rise, buyers will be even more cash-strapped at closing – a factor that will likely come up in your negotiation process.

2. Property tax rates are going up, offsetting a drop in property tax bills due to lower assessed property values.

What  you can do:
Make sure your property tax records are correct, including the all-important assessment. Collect & maintain evidence to support a correct assessment. 

• Document cost of improvements so you are always ready to make the case for your values to an appraiser or assessor
• Make sure all improvements are properly documented on the assessment. 
• Look up what neighbors pay so you can see if a request for an adjustment would hold up.

3. As widely reported, homeownership expenses are rising, especially homeowners’ insurance. 

What you can do:

• Review the guide at the Insurance Information Institute, which offers in-depth information to help you confirm that your home and possessions are properly insured.
• Make common-sense safety upgrades and maintenance to keep premiums reasonable. Thingss such as repairing wobbly porch railings and upgrading electrical service. (Document the expense and process of the improvements.)  These same improvements are likely to mark your home well during a buyer’s inspection, so you may as well do them now.
• Talk with your agent about property protection features that might minimize insurance policy fees and make your house more marketable. For example, permanently installed roll-down exterior window covers that stormproof your windows might pay for themselves in just a few years, while simultaneously making your house more attractive to buyers.

4. Mortgage rates are likely to stay low. At the end of the year, mortgage rates were a shade above 4%, according to the Mortgage Bankers Association. Unless the global economy suddenly perks up, analysts agree, rates will continue to be low.

What you can do:

• Understand that when rates are low, other factors, such as added bank fees, still can bump up closing costs

5. Buyers will likely struggle to piece together down payments, because they spent what they had during the 2011 holiday season.  The savings rate eroded to support a 15% eruption in year-end spending, according to credit score monitoring company ComScore.

What you can do:

•  If you are planning to both sell your house and buy a new one, don’t count on equity alone for your down payment.  Examine your credit report and assess your post-holiday debt.  Use the ForSaleByOwner.com Credit Cleanup Countdown to get in shape for your own mortgage application…and approval.