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Planning Home Improvement Projects

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Many homeowners are planning a major home improvement project for this coming spring. At least they want a significant facelift to enhance their home's value and properly reflect their lifestyle preferences.

A lot of homes can definitely use a facelift, especially properties in distress, but some projects may not be worth the sweat and dollars when considering the return on investment.

Based on results from the 2013 Remodeling Cost vs. Value Report, the National Association of Realtors revealed exterior projects will typically yield the highest return on investment.

"Projects such as siding, window and door replacements can recoup more than 70 percent of their cost at resale," said NAR president Gary Thomas.

After experiencing a downturn, spending on home improvement may finally register an increase, with the market appearing to be "poised for a solid rebound," according to a recent report from the Harvard Joint Center for Housing Studies.

The Joint Center estimates spending on home improvement rose 9 percent in 2012 after falling in previous years. The study found that as the housing market improves, the homes that burdened the economy are now being renovated.

Thus, there is strong potential for a boom in home improvement activity this spring.

Q: Why are mortgage rates rising?

A: Moderately good economic news continues to press mortgage rates higher, as investors both here and around the world move their money from safe haven investments in bonds and into riskier assets such as equities, it was reported by HSH.com, a mortgage information site.

"Major stock market indexes across the globe put in some of their best January gains in years, all coming at the expense of bonds, whose yields rise as investor demand wanes.

"Even with its massive balance sheet expansion, the Federal Reserve's program to keep interest and mortgage rates low constitutes only a portion of the market, so there are limits to the Fed's ability to maintain rates at rock bottom levels," HSH.com noted.

Q: Is the housing market improving in all areas of the country?

A: Yes, all areas are showing varying levels of improvement.

That was not the case a year ago.

As more markets across the country improved in recent months, all 50 states were able to receive representation in February's Improving Markets Index released by the National Association of Home Builders.

Last year during this time, just 36 states were represented. For this month, the IMI grew to include 259 markets, up from 242 in January. In February 20 metros were added to the list, while three dropped out.

Q: Are rents still rising?

A: Yes, but at a slower rate of increase as previously reported. National rents rose 4.1 percent in January, down from the 4.7 percent increase seen earlier in the year in July, data from Trulia revealed.

"Rent gains are slowing down because of more supply, not less demand," said Jed Kolko, Trulia's chief economist. The study also categorized metro areas based on healthy housing market fundamentals and found San Francisco, Seattle, Denver, San Jose and Salt Lake City are all "booming."

Q: Is the mortgage industry satisfied with the "qualified mortgage rule"?

A: Many mortgage brokers are unhappy with the qualified mortgage rule that was issued last month, National Mortgage News reported.

"Brokers claim the Consumer Financial Protection Bureau is counting all the compensation the 'brokerage entity' receives from the wholesaler/creditor toward the 3 percent points and fees cap.

"A brokerage firm has overhead and other expenses, which should be excluded from the cap, according to the brokers. Like a bank, a mortgage brokerage firm should count only the compensation it pays to its loan officers."

Q: How many homeowners are underwater with their mortgage?

A: About 11 million borrowers are underwater on their mortgages, owing more than their homes are worth, according to CoreLogic. However, home equity lines of credit are suddenly on the rise again, it was noted in the firm's report.

"During the housing boom of the last decade, Americans withdrew over $1 trillion in home equity. They did it through cash-out refinances, home equity loans and home equity lines of credit. The latter allowed them to use their homes like an ATM," the report stated.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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