Curious and eager to learn more I read the entire article. Renting out a room in your home or renting out your lawn as a camp site to a weary traveler is all the rage. Travelers can save money by renting from a home owner instead of paying for high cost  hotels or motels. That’s not such a strange notion. I spent every night in someone else’s home while touring Ireland last fall. They called it a bed and breakfast. It was a civilized way to meet and talk with the locals. I liked that the money stayed in the pockets of the homeowner.

My friend and associate, Katy, told me that her daughter moved from Penn Valley to San Francisco. She didn’t have to buy her daughter a car because she rented from a company called Zipcar. The auto-sharing companies focus is on cities and college campuses. It’s 650,000 plus members pay an annual fee (under a $100.00)in addition to an hourly rate.

They track their fleet of cars through technology. Each member has a card that allows access to the garages where they are kept and to the vehicles themselves. The savings for renting compared to owning is enormous.

Do you remember when the guys use to rent their tuxedos for prom night but the girls paid hundreds of dollars for their prom dresses? Not anymore. Companies all over the country are renting designer dresses for a fraction of their cost.

Daniel Gross, economics editor at Yahoo Finance says that “Americans are getting use to the idea of renting the good life, from cars to couture to homes”. Mr Gross explains that
Our recent economic downturn and foreclosure crisis has created 3million new rental households.

For many renting makes sense. A one year lease is far more manageable than a 20% down payment, insurance, maintenance and taxes. A tenant also has much more freedom. A tenant has the ability to take advantage of opportunities as they arise without having the burden of selling.

Mr Gross believes that Americans are getting over the idea of owning the American dream, they’re becoming ok with renting it.

Each year, owners rent their home for a big premium during the Masters and make tax-free income. Homeowners benefit from a little known provision in the tax code that does not require taxpayers to recognize the income derived from renting their home for less than 15 days per year. See Rental of property also used as home on IRS.gov.

Large sporting events like golf and tennis tournaments, championship games and other high attendance events increase the demand for a temporary rental of a private residence. Obviously, there are challenges with personal belongings and damage but getting a premium rental rate with a substantial deposit and not having to recognize the income could be worth it.

You’ll certainly want to discuss this with your tax professional prior to making this decision. You’ll probably also want to get some help from an experienced real estate professional.

The Home Affordable Refinance Program (HARP) makes it possible for home owners who have no equity to refinance at today’s low rates. To qualify the existing loan must be owned by Fannie Mae or Freddie Mac. The loan had to have been originated on or before May 31, 2009.

Ryan Rivera, of Goldmine Financial said that his phone is ringing off the hook. He said that  that everyone wants to know if they qualify. He said that the new HARP 2 program has unlimited loan to value guidelines and doesn’t require an appraisal. He explained that each lender offers different interest rates but the average rate is in the range of 4.5%.

Ryan Rivera provided the basic guidelines; – loan must be owned by Fannie Mae or Freddie Mac -Current on monthly mortgage payments -loan origination on or before May 31, 2009 -Unlimited loan to value -No appraisal -Maximum of 4 properties financed -Owner occupied, 2nd home and non owner occupied -Fixed rate term only -1 year tax returns -Minimum FICO 620

Ryan said that these aren’t the only requirements and other factors come in to play.  He suggests  that you contact your lender for more details.

Time is ticking to get a fresh start.

According to recent data by CoreLogic©, a leading provider of information, analytics and business services, almost 1 in 4 homes with a mortgage is  underwater.  This number has continued to grow quarter over quarter as real estate values remain stagnant.

Many underwater homeowners allow their home to go into foreclosure or choose a short sale, where the home is sold for less than the principal balance, to eliminate the mortgage debt.  However, any amount of money that is written off as debt forgiveness can have taxable consequences.

Tony Graupensperger, Tax Attorney and CPA, says that “If the bank writes down $100,000 in debt on a loan and you are in the 28% tax bracket,  you could owe as much as $28,000. to Uncle Sam. That income is offset by itemized deductions and exemptions like all other income.”   And you lose your house and credit too.  Ouch!”

The good news is that the 2007 Mortgage Debt Relief Act  allowed up to $2 million in debt forgiveness for your principal residence.  Over the past five years, hundreds of thousands of families have taken advantage of this to sell their home and get a fresh start.  However, time is running out.  The 2007 Act expires at the end of 2012 and it is unclear whether or not it will be extended.

“If your house is underwater you would be wise to consider selling your home this year,” says Sue Thompson,  Agent and owner of HomeTown Realtors.  “With 1 in 4 homes underwater, there is no sign that the market will turn around soon.  All of these negative equity homes need to be removed from the market to see values increase.  And this could take years.”

Thompson, who has helped hundreds of homeowners, says that short sales are getting a lot easier from years past but still can be very complicated.  “Some homeowners have multiple liens, past HOA dues and taxes, that can complicate the process.  Each additional element can lengthen the sales process.”  Timing is becoming even more critical with the looming expiration of the Mortgage debt relief act.

The good news is that there is a way out of your debt crisis.  If your house is worth less than what you owe on it, now is the time to do a short sale–don’t wait for a foreclosure.  FHA guidelines allow you to purchase another home within 3-years of a short sale and a whopping 7-years after a foreclosure.

The buyer and seller agree to a pre determined purchase price and monthly rental amount. A portion of the rent is usually applied towards the purchase price. Again, it’s negotiable.  The term of the lease is typically between one and three years at which time the buyer applies for financing and buys the property.  Buyers are often required to pay all of the maintenance expenses  including taxes and insurance.

The option money is non refundable and doesn’t generally get applied to the purchase price. The option money is consideration or payment for the privilege of delaying a purchase and the guarantee that no one else will be able to step in and buy it.

The buyer is usually precluded from assigning the contract to another party without consent from the seller. The buyer is obligated to buy the property at the end of the rental term unlike a lease option. If the buyer defaults, sellers do not refund any of the rent or option money and may even sue for specific performance.

Due diligence is essential. Complete all of the ordinary inspections one would normally do as a purchaser including, well, septic, survey, home and pest. Open an escrow and review a title report. I would even suggest talking to a lender about what you can expect from financing.

My advice is to consult with a real estate attorney before entering into a lease purchase agreement.

I have lawns and pastures that are irrigated during the hot summer months. The irrigation pump was put on a timer. It keeps the electric meter from running any longer than necessary.

I had a guy from the Auburn home show come over and do some caulking, weather stripping and add extra insulation in the attic  and sub area. He changed out all of my light bulbs to the $15.00 apiece low out put life time kind. The outside lights have motion detectors.

A new heating and air system was installed and the air ducts sealed.   I  even changed out my water heater to a tankless system. I have a newer more efficient 5 star refrigerator and I heat my home exclusively with wood, which I love.

Try as I might my electric bill has continued to increase over the years.  It now averages $500.00 per month. That’s $6000. per year! Who knows what it’s going to cost 10 years from now.

I admit that I do have a hot tub and endless pool for exercising that I refuse to give up. I just have to figure out a better way to pay for them.

I have been researching solar systems for the last 10 years. The cost after credits was running over $50,000.00. It would take 10 years to pay that back. The closest I came to pulling the trigger was the Counties mPower program. The county had funds they would loan to property owners at 6% interest with a pay back  over 5-20 years. There was just one little hitch. If  one had a mortgage the lender had to subordinate to the loan. At the time my lender wouldn’t have anything to do with subordinating.

I learned about a new program from one of the solar contractors that previously gave me a $50,000. plus bid. It involved leasing instead of purchasing. The company, DC Solar gave me three options; monthly lease with little or no money down, pre-pay option or out right purchase.

I chose the pre pay option. For an up front payment of $25,000.00, I am guaranteed  a reduction of 97% of my current usage over the next 20 years!  That means that my pg&e bill will go from $500.00 per month to approximately $15.00 per month plus taxes and other miscellaneous fees tacked on by pg&e.

Under the lease program DC Solar has to make any repairs and will monitor the systems out put.

In addition to the approximate $485.  per month (23% annual return) savings and less than a 5 year pay back,  we will be removing 366,426 pounds of CO2 gasses from the environment which is equivalent to planting  4,815 trees and taking 37 cars off the road!

I was able to take a one time distribution from my self directed IRA to pay for it. Sad to say that I didn’t have to pay a penalty because I am over 591/2.

50 million American home owners have a mortgage on their homes. 10 million of those home owners are upside down or as some like to say, under water. 6.4 million of those home owners are delinquent!

Does this mean a new wave of foreclosures? Probably not. The lenders have determined that short sales cost them and the community far less than a foreclosure.

If the homeowner stays in their home through the short sale process and keeps the lights on and the grass mowed and manages the listing, sale and subsequent closing, the lender doesn’t have to pay the legal fees to foreclose and they don’t have to take on the management expense of re-keying, winterizing and making repairs caused by vandals.

The community is spared as well. Short sales reduce the number of run down vacant homes that create blight and lower the values of the surrounding homes.

A foreclosure costs the lender between $50-75,000.00 to complete and they sell on average for 15% less than short sales. They don’t make financial sense unless of course the lender or borrower has mortgage insurance.

Banks are beginning to prefer short sales. The larger banks are experimenting with what they call cooperative short sales. They are sending out packages offering short sale incentives to select borrowers. This is a heads up to those delinquent home owners to open ALL of the mail from your lender. They may be offering you a financial incentive. The incentives start at $5000.00. Don’t miss out just because you are not opening your mail.

As a homeowner you must realize that the social stigma of a short sale has all but evaporated. There are no deficiency judgments and in most case no tax consequences. Sellers aren’t being asked for cash contributions at closing and the process is taking 90 days on average.

If you short sale now you will be in a position to buy a new home in 2 years. Not so with a foreclosure. It will be 5-7 years before you will be able to buy a home again.

With the lenders beginning to prefer short sales your next correspondence that you receive from your lender may not be a dunning letter but an offer worth considering.

I would recommend that you start with the bank. That’s right, the bank. I believe that the financing structure is the foundation for a successful home building project.

First, a lender will help you to determine what you can afford. S/he will be able to break down the total project cost including the land, utilities, grading, construction, permit fees and loan costs.  S/he will even factor in a percentage  for unexpected costs known  as overruns.

Second, the lender will manage the payments to the contractor. The lender will actually inspect the construction site at different stages and release payments to the contractors once the construction requirements are met. The lender makes sure that the contractor and sub contractors submit lien releases after the payments are made. The lender wants to protect the asset or collateral that it’s lending on.

Some homeowners have unwittingly paid their contractors the entire contract amount up front only to never see their contractors again.  Others have asked their contractors to add amenities, upgrade and make changes during the construction process ultimately running out of money before construction has been completed. This can all be avoided by having the construction lender manage the payments known as draws to the contractors.

Third, lenders know if construction estimate costs are in line. S/he may suggest more bids. Construction lenders won’t lend if the contractor has a bad performance or financial record. This expertise and knowledge is priceless.

Land  and lot prices are phenomenally priced. We are seeing land priced at one fifth of what they were at the peak of the market. Lot prices in a local and popular development were above $250,000.00 in 2005. Those same lots are re-selling for as low as $50,000.00.

Interest rates are incredible. A $250,000.00 loan at 3.9% amortized over 30 years is $1179.00 per month. Compare that with rent. If you qualify you are definitely ahead of the game owning. Remember that Uncle Sam will give you an interest deduction which is really like helping you with your house payment.

Construction costs have bottomed out and the contractors that are still in the business are the best in the industry.

Research is critical and will help to ensure a smooth building process.

Research the land that you are interested in building on.  Research easements for ingress and egress. Easements are described on the title report. Check with the local government agencies for building requirements such as minimum square footage and set- backs and building envelopes. The HOA or home owners association guidelines may differ from that of the building department. HOA requirements will take priority. The HOA guidelines may restrict building styles and materials. For example some HOA’ s require tile roofs while others may not. Certain requirements can have a huge impact on your cost per square foot.

Research the availability and cost to bring in and connect to utilities such as power, sewer, gas, cable and water.  Check into permit costs. It’s very important that you understand that permit costs can be as much as $40,000.00.

Research the available financing. Know what you qualify for. Construction financing can include the cost to acquire the property, build the home as well as  permanent financing known as “take out”. Your construction lender will discuss various options and explain the process.

Research builders. Most builders will assist you with your research. They will also help you design the home that you want to build. It’s less expensive to modify an existing set of plans Thant to design from scratch. Either way expect to pay for the plans.

These premium changes will impact new loans insured by FHA beginning in April and June of 2012.  Details will soon be published in a Mortgagee Letter to FHA-approved lenders.

The following is the announcement from FHA.: The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent.  This change is effective for case numbers assigned on or afterApril 1, 2012.  FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500.  This change is effective for case numbers assigned on or afterJune 1, 2012.

The UFMIP will be increased from 1 percent to 1.75 percent of the base loan amount.  This increase applies regardless of the amortization term or LTV ratio.  FHA will continue to permit financing of this charge into the mortgage.  This change is effective for case numbers assigned on or afterApril 1, 2012.

FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.  These marginal increases are affordable for nearly all homebuyers who would qualify for a new mortgage loan.  Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the pricing changes.

Taken together, these premium changes will enable FHA to increase revenues at a time that is critical to the ongoing stability of its Mutual Mortgage Insurance (MMI) Fund, contributing more than $1 billion to the Fund, based on current volume projections through Fiscal Year 2013.Freddie, FHA financing is still available and down payment requirement is still a minimum of 3% and the seller can give you a credit for recurring and non recurring closing costs at the close of escrow. Those costs include loan fees, title and escrow fees and insurance.