Real Estate Information

A simplified guide for painless purchasing of your Los Angeles home.

Basic Steps for First-time Los Angeles Home Buyers, Part II

Part 1 of this four-part series dealt with analyzing your financial situation, getting prior loan approval, and determining your real needs anddesires in a first home. All that having been accomplished, you will now want to look for a mortgage and decide which is the most advantageous for you.

As with any major purchase, you will want to shop around for the best deal. Contact several lenders. Eileen can refer you to a number of qualified lenders. You should also familiarize yourself with mortgage types, terminology, and options. I can help you with this mission, but it would be wise to also check the internet. Keying in "First-time home buyer" or "mortgage assistance" will result in innumerable informative sites, a wealth of information for you to consider, and, most likely, a list of questions for you to ask Eileen and your potential lender.

Mortgages

For help in determining which type of mortgage is best for you, check the chart found at http://mortgages.interest.com/content/first. In an easy-to-read format, the characteristics and suitability of many types of loans (fixed rate, step, balloon, adjusted rate --ARM) are simply and clearly explained. If, for instance, you plan to live in a Los Angeles home more than 10 years and desire stability in payment amounts, then a fixed rate mortgage is for you. If, however, your finances are currently strained, but you know that in 5 to 10 years your monetary situation will improve or that you will most likely move within 10 years, then an ARM or balloon mortgage may be better for you. Being familiar with these options allows you to discuss them intelligently with your lender so you will be able to select the type which best fits your circumstances.

First-time Home Buyers

Another good source of information for first-time home buyers is the Department of Housing and Urban Development (HUD), an agency which oversees FHA loans. This type of loan is particularly useful if you have little money for a down payment, less than great credit, or large monthly bills. An FHA loan requires as little as 3.5% down (and that can be a gift from a relative or friend). In terms of your credit rating, the FHA is primarily concerned that for the past two years you have paid bills in a timely manner and have been steadily employed. With FHA you have to wait only two years after declaring bankruptcy, and your debit-to-credit ratio can be higher than for a conventional loan. You can qualify for an FHA loan if your monthly payments are no more than 43% of your income, and, as with conventional loans, you can choose from many types.

Of course, there are some negatives to consider before taking on an FHA loan. Interest rates generally run about 1/8 of a percentage point higher than conventional rates, but the real disadvantage of an FHA loan is that the borrower must pay an up-front insurance premium of 1.75% of the mortgage if the down payment is less than 20%. This cost can, however, be added to your total loan amount.

When you have done all of your homework and are ready to actually apply for a mortgage, be sure that you have all the figures and paperwork required by the lender--and send all that to the lender. You’ll most likely need the social security number of each borrower; copies of bank account statements for the past 6 months; evidence of any other assets; a recent paycheck stub showing your earnings; credit card account numbers and the amount due on each; account numbers and balances due on outstanding loans; copies of income tax filings for the past two years; and a contact who can verify your employment. It‘s quite an extensive list and will take some time to put together. Be sure to check with the lender to see if anything else will be required.

As always, to avoid stress, financial strain, and even real estate lending scams, such as bait and switch, while purchasing your Los Angeles home, be armed with accurate information and heed the sound advice of your trusted real estate agent, Eileen Walsh.

Coming next!! Part III--finding your perfect first home, making an offer, and preparing for the closing.

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A simplified guide for a painless purchase of your Los Angeles home

PART 1

Congratulations! So you’ve made the decision to stop renting and purchase a place of your own. The home buying process may initially appear complicated and a bit daunting, but by using the skills of a buyer’s real estate agent, searching the internet, and familiarizing yourself with each of the steps involved, your experience can be a smooth and rewarding one.

1. Analyzing your financial situation.

The first thing to do is to learn how much you can afford to pay for your Los Angeles home. Generally speaking, mortgage costs, or PITI (principal, interest, taxes, and insurance), should not exceed 26-28% of your gross monthly income. Many internet web sites furnish free tools for calculating these expenses for you. You can search under “calculating mortgage costs” or visit www.mortgagefit.com, www.bankrate.com, or www.bcsalliance.com, to name just a few. Remember that in addition to income, your credit rating, on-going monthly expenses, amount of the down payment, and the current interest rate must be factored into your financial analysis. Also take into consideration any HOA(homeowners’ association) dues, maintenance costs, and utilities you’ll have to pay on a monthly basis. You would be wise to investigate state and federal government programs which help qualifying first-time buyers with down payments and closing costs. Visit U.S. Department of Housing and Urban Development website for specific information which could be quite beneficial to you.

2. Getting prior loan approval.

The next step, before you ever begin actually looking a home, is to secure pre-approval for a loan. In order to do this, you will need to provide a potential lender with all necessary information about your finances. As a realtor, Eileen Walsh can help you do this.

After performing a thorough and positive analysis of your financial situation, the lender will issue you a letter of approval which states the amount for which you qualify. This letter assures sellers that you are guaranteed a sufficient loan and that the purchase can go through without their worrying about your ability to pay for the property.

3. Determining your needs and desires.

Now it's time to familiarize yourself with the Los Angeles area--in person or via the net. Think about the type of community you’d feel most comfortable in. Older and established? Brand new and shiny? Consider age, style, and size of home you’d prefer. Would a fixer-upper be a good match for you? Is proximity to good schools important? What about the distance to your workplace? Traffic patterns and noise? Ample (and reserved?) parking? Do the community amenities suit your lifestyle?

Make lists for yourself. What are your “must haves”? Where do you want laundry facilities? Is an updated kitchen essential? Do you prefer an open floor plan? Can you maintain a large yard? Prioritize your wants and needs and revise the list when necessary.

As a first-time Los Angeles home buyer, you’ll learn that you’ll have to make some compromises and that the whole process can be time-consuming, but also exciting! Rely on Eileen Walsh to advise you about the advantages and disadvantages of specific locations and house styles and to help you through the loan approval steps. Because of her access to the Multiple Listing Service (MLS) and knowledge of Los Angeles, she can search, with your wish list in hand, through thousands of listings to find the ideal Los Angeles home for you. You can also go to the MLS through this website and search for homes on your own to send to Eileen so she can set up viewing appointments for you.

Now watch this space for future "first time home buyer" postings...

Should California taxpayers pay mortgages for homeowners who are out of work or the owe more than the home is worth? Read an article from CNNMoney discussing the idea:

NEW YORK (CNNMoney.com) -- Unemployed? Owe more on your mortgage than your home is worth? Your state might one day pay your mortgage.

Giving people free money to cover their home loans is just one of the radical ways that four states -- Florida, Michigan, California and Arizona -- plan to use $1.4 billion the Obama administration is sending their way to help the unemployed and underwater avoid foreclosure.

Many consumer advocates have said the government should help cover the payments of these troubled homeowners, lest the mortgage crisis continue spinning out of control and dragging down everyone's property values. But other housing experts warn that paying off loans creates a moral hazard and could actually dissuade people from looking for work.

Innovative programs, however, are exactly what the administration was hoping for when it unveiled the Hardest Hit Fund initiative in February. Officials are looking to help the unemployed and underwater, who are now at the heart of the crisis. Despite the administration's best efforts to stabilize the market, home prices are still sliding and foreclosure filings are at record highs.

The federal government is doling out a total of $2.1 billion to 10 states, which also include Nevada, North Carolina, South Carolina, Rhode Island, Ohio and Oregon. The others have not yet submitted their plans to Treasury for approval or have not made them public.

To be sure, the proposals will only a touch a small percentage of the unemployed and underwater homeowners who need help. But it will provide assistance to some of those who presently don't qualify for traditional loan modifications.

Administration officials will spend the next few weeks reviewing the proposals, but Assistant Treasury Secretary Michael Barr told CNNMoney.com that they contained some good ideas.

The recently unveiled initiatives are not identical, but they have two common themes: Helping the unemployed by subsidizing part or all of their monthly mortgage payments for up to two years and paying down underwater homeowners' loan balances.

The states want the loan servicers and investors to match their largess, hoping to woo them by paying down as much as $50,000 of underwater homeowners' loan balances.

But until now, financial institutions have been reluctant to reduce principal.

These proposals may irk Americans who are keeping up with their mortgage payments or don't want tax dollars used to help their neighbors. But Alan White, a law professor at Valparaiso University, said all homeowners will suffer if neighboring properties fall into foreclosure.

"There are benefits for all of us for stopping foreclosures any way we can," White said.

Plus, he added, many of the people who would be helped are those capable of paying their mortgages again once they find work. By example, he pointed to a longstanding Pennsylvania program that provides loans to the unemployed, which gives them assistance while they look for new jobs.

Also, covering homeowners' mortgages is a better use of government funds than giving incentives to the servicers and relying on them to assist borrowers, said Paul Willen, senior economist at the Federal Reserve Bank of Boston. This way, he said, states have more control over who benefits from the initiatives.

"Every dollar spent will go to families who need it," he said.

But delinquent homeowners aren't the only ones who would benefit from these subsidies. In fact, the banks would come away with a huge win, said Mark Calabria, director of financial regulation studies at The Cato Institute. Not only would they have government money securely in hand, but they'd avoid the time and expense of the foreclosure process.

"This is a lot more than they would have collected otherwise," Calabria said. "The lenders should bear the losses for this. They are the one who made the loans."

Another concern is that these proposals will dissuade the unemployed from finding work or from relocating to an area with better job prospects, said Casey Mulligan, an economics professor at the University of Chicago. Such programs incent people to maintain their financial hardships.

"Why should anybody work if you are going to be in your house either way?" he said.

Because it is both a resort town and a military community, investing in Los Angeles real estate can be quite profitable and safe. Such a transaction can also be challenging, especially for first-time investors, and requires prior planning, a time commitment, realistic goals, and careful consideration of the following factors.

    1. Selecting a property. First decide on a location and the type of property you are interested in. Los Angeles real estate offers a wide variety of desirable locations sought after by renters. You might also consider proximity to good schools, public services, shopping centers, highways, etc.

Another decision will deal with the type of property you want to own--a single family residence, a multi-family unit, or a vacation rental home. Discuss with you realtor and tax advisor the pros and cons of each to decide which will be most advantageous for you.

    2. Examining your finances. In addition to a monthly mortgage payment, investment property expenses can also include taxes, property management fees, utilities, insurance for fire and floods, repair and maintenance costs, condo fees, and periods of vacancy. Be prepared to have cash on hand for a 20% to 30% down payment (or investigate other options). There are many helpful tools to assist you in calculating costs and probable financial outcomes.

Also keep in mind that long term (5 to 10 years) ownership is usually best for the average investment. The shorter the length of time you hold the property, the greater the risk.

    3. Repairing and updating. Some investment properties require initial repairs/renovation ranging from cosmetic to structural. Unless you have the time and expertise needed to make such repairs, look for skilled professional to do the work for you. Keep in mind that most renters are looking for a good location and a home that is clean and in good working order; granite counter tops and top of the line appliances are usually neither necessary nor cost effective.

    4. Acting as a landlord. Being a successful absentee owner of Los Angeles real estate will require diligence and responsibility. Carefully screen all potential tenants. Run a credit check and find out from prior landlords if they were good tenants who paid the rent on time, treated the property with care, and were considerate neighbors. The more selective you are, the more successful your lessor/lessee relations will be.

As a landlord you have both rights and responsibilities, and you need to be mindful of each. The California Residential Landlord and Tenant Act covers rental agreements, remedy provisions, application fees, security deposits, and a wealth of other information and laws relating to the rights and responsibilities of both the landlord and the tenant.

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A simplified guide for buyers of a Los Angeles home.

To a home loan shopper, there may seem to be an endless--and confusing--array of mortgage types. Of course you want to choose the option that is best suited to your current and future financial situation, but understanding the terminology, types, and monetary ramifications is not always easy. Mortgages generally fall into four categories (fixed rate, adjustable rate, step, and balloon) according to the interest rate and duration of the loan.

Basic terminology;

• Fixed rate--The interest rates do not change during the life of the loan, thus allowing you to know the amount of your payments.
• Adjustable rate (ARM)--the interest rate is tied to certain indexes plus a margin and can fluctuate up or down, thus affecting each payment,
• Step--the interest rate and monthly payment remain the same for a specified period of time. After that the interest will change to the prevailing rate and will remain there for the duration of the loan
• Balloon--a loan payment that expands after a certain amount of time. Basically it functions similarly to a fixed rate mortgage in the earlier months/years with a delayed steep increase at the end,

The following information, courtesy of Mortgages.Interest.com, outlines the type of mortgage, the loan characteristics, and the situations most appropriate for each one. If, for instance, you plan to live in your Los Angeles real estate more than 10 years and desire stability in payment amounts, then a fixed rate mortgage is for you. If, however, your finances are currently strained, but you know that in 5 to 10 years your monetary situation will improve or that you will most likely move within 10 years, then an ARM or balloon mortgage may be better for you. Being familiar with these options allows you to discuss them intelligently with your real estate agent and/or lender and then select the type which best fits your circumstances.

Fixed rate mortgage (30, 20, 15, 10 years)

• Interest rate & monthly payment remain the same for the entire term of the loan
• plan to live in property more than 10 years
• ike total payment stability

0/1 year adjustable rate mortgage

• Interest rate & monthly payment remain the same for 10 years
• Starting the 11th year, interest rate adjusted every year, so payment is subject to change every year for remainder of loan 
• plan to live in property more than 10 years 
• like initial payment stability, can accept later changes OR 
• plan to move within 10 years
• want loan to remain in force in case plans change

7/23 (2-Step) or '30 due in 7' mortgage

Interest rate & monthly payment remain the same for 7 years

• Conversion option: On the 8th year, interest rate adjusted to reflect prevailing interest rates, resulting payment will remain the same for remainder of loan
• plan to live in property more than 10 years
• can tolerate one payment adjustment OR 
• plan to move within 7 years 
• want to remain in force in case plans change

7/1 year adjustable rate mortgage

• Interest rate & monthly payment remain the same for 7 years
• Starting the 8th year, interest rate adjusted every year, so payment is subject to change every year for remainder of the loan 
• plan to live in property more than 7 years
• like initial payment stability, can accept later changes OR 
• plan to move within 7 years
• want loan to remain in force in case plans change

7 year balloon mortgage

• Interest rate & monthly payment remain the same for 7 years
• At the end of 7 years, loan is due in full. Borrower must refinance into new loan at prevailing interest rates 
• plan to live in property more than 7 years
• are willing to refinance at prevailing market rates OR
• plan to move within 7 years
• like payment stability

In addition, there are variations of the ARM, step, and balloon mortgages which differ primarily in the duration of the loan and of the planned residency.

Another good source of information for first-time Los Angeles home buyers is the Department of Housing and Urban Development (HUD), an agency which oversees FHA loans. This type of loan is particularly useful if you have little money for a down payment, less than great credit, or large monthly bills. An FHA loan requires as little as 3% down (and it can be a gift from a relative or friend). In terms of your credit rating, the FHA is primarily concerned that for the past two years you have paid bills in a timely manner and have been steadily employed. With FHA you have to wait only two years after declaring bankruptcy, and your debit-to-credit ratio can be higher than for a conventional loan. You can qualify for an FHA loan if your monthly payments are no more than 43% of your income, and, as with conventional loans, you can choose from many types.

Of course, there are some negatives to consider before taking on an FHA loan. Interest rates generally run about 1/8 of a percentage point higher than conventional rates, but the real disadvantage of an FHA loan is that the borrower must pay an up-front insurance premium of 1.75% of the mortgage if the down payment is less than 20%. This cost can, however, be added to your total loan amount.

So there you have it--an easy-to-understand guide to mortgage types. As always, you should feel free to contact me anytime with questions. I am glad to recommend a number of outstanding mortgage lenders if you are interested in talking with one.

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Los Angeles is one of three California cities to see home prices increase in February. Los Angeles home prices increased along with prices in San Francisco and San Diego. Read the LATimes article:

A trio of California cities bucked a nationwide home price decline in February while most of the other metro areas posted losses or flattened out, underscoring the resurgence of the Golden State's coastal markets, data released Tuesday showed.

The Standard & Poor's/Case-Shiller index of 20 metropolitan areas was down 0.1% from January on a seasonally adjusted basis, marking the closely watched measure's first decline since home prices began to recover last June.

But in a positive sign for housing, the index posted a 0.6% increase from February 2009, its first year-over-year increase in more than three years.

The mixed readings come as the expiration of a federal tax credit for buyers looms at the end of this week. Many analysts expect home prices to decline once the incentive runs out — but not nearly as steeply as when values entered a nearly three-year free-fall in the summer of 2006 that helped drag the U.S. into one of the most brutal recessions since the Great Depression.

"Generally, I don't see an upbeat picture, I see the trend as faltering," said David Blitzer, chairman of Standard & Poor's Index Committee. "One of the few spots that seems surprisingly strong is California."

California cities saw home prices in February gain 0.8% in San Diego, 0.4% in San Francisco and 0.2% in Los Angeles.

Mark Zandi, chief economist with Moody's Economy.com, said the strong showing in California reflected the reduction in foreclosures on the market over the last year. Foreclosures made up 44.3% of the resale market in February, down from an all-time high of 58.8% in February 2009, according to San Diego research firm MDA DataQuick.

"California is perhaps the most efficient state in respect to resolving its foreclosure issue and so a lot of properties were pushed through the process," Zandi said. "There are now fewer in the pipeline."

Although foreclosures may increase in California in coming months, leading to a period of flat prices and perhaps even some declines, the state was "much further along in getting its house in order than most parts of the country," he said.

Not reflected in the Case-Shiller numbers are regions in the state farther from the coast where overbuilding was more prevalent and the unemployment rate remains above average, said Richard Green, director of USC's Lusk Center for Real Estate.

"We are doing a little better than the rest of the country, and that is not particularly surprising because California, in general, didn't overbuild the way Arizona and Las Vegas and Florida did," Green said. "In the places we did, prices collapsed so much it's hard for them to fall much further."

In the next two months, some California shoppers have a shot at as much as $18,000 worth of tax credits if they get their timing right.

The federal tax-credit program, set to expire Friday, provides up to $8,000 for first-time purchasers and as much as $6,500 for some current homeowners. To qualify for that credit a buyer must sign a contract on a home by April 30 and close the deal by June 30.

Adding to that incentive is a statewide credit, which was approved by lawmakers last month and kicks in May 1, for as much as $10,000 for first-time buyers and those purchasing newly built homes.

The Case-Shiller index covers three months of data beginning in December, when sales began a three-month slump after what was to have been the federal tax credit's Nov. 30 expiration; Congress in November extended the credit. February's sales data capture that plunge and the traditionally slow winter months. Home sales picked up again in March, and many expect that trend to continue at least through April.

Along with the California cities, Las Vegas eked out a 0.1% gain. Fourteen cities posted declines in February over January, with the biggest losses in Portland, down 1.9%; Dallas, falling 1.4%, and Chicago, down 1%. Two cities were flat for the month.

What's your Los Angeles home worth?

HAFA or Home Affordable Foreclosure Alternatives, is a program initiated by President Obama on November 30, 2009. HAFA helps families in distress who are having difficulty selling their homes. The goal of HAFA and HAMP, the Home Affordable Modification Program, is to revitalize the real estate market.

HAFA provides incentives to families to take advantage of selling their Los Angeles home by means of a short sale (the home is sold for less than the value of the loan), or a deed-in-lieu of foreclosure (the home owner voluntarily gives the deed to the lender.

HAFA helps families quickly sell their Los Angeles homes by giving them pre-approved short sales terms before listing the property. They are fully released from future liability for the first mortgage debt, and can receive $1,500 for borrower relocation assistance. HAFA also allows investors and servicers to receive financial assistance for administrative costs, processing fees, etc. The program sounds simple, but is actually quite complex with many guidelines and rules. HAFA officially began on Monday, April 5, 2010 and will end on Monday, December 31, 2012.

Here you can watch ‘An Animated HAFA Story’, an informative video explaining HAFA…

I am a Certified Distressed Property Expert (CDPE), trained in helping families in distress avoid foreclosure. Are you or someone you know behind on mortgage payments? You do have options! A short sale may be what is needed to save your, your family and your credit. Please contact me anytime for a private consultation.

New reports show a 40% drop in foreclosures during the first quarter of 2010. Read the full story from the LATimes.com:

The California foreclosure crisis appears to be abating, new data show, as the federal government and big lenders step up efforts to keep troubled borrowers in their homes.

Mortgage default notices — the first step toward foreclosure — plunged 40.2% statewide in the first three months of the year compared with the same period in 2009, according to San Diego research firm MDA DataQuick.

Foreclosure sales dropped 1.7% from a year earlier and 16.1% from the last three months of 2009, DataQuick said Tuesday.

The numbers suggest that the housing market won't be flooded by a fresh wave of bank repossessions, which had been seen as a major threat to the market's recovery.

"It is surprisingly good news," said Gerd-Ulf Krueger, principal economist at Housingecon.com. "There is still a lot of supply lurking out there, but at this point, it looks like it is pretty much under control."

Stuart A. Gabriel, director of UCLA's Ziman Center for Real Estate, said the declining foreclosure numbers are "consistent with a broad range of indicators that are suggestive of not only a healing economy but the beginning of healing in the housing market."

Southern California home prices jumped 14% in March from the same month a year ago, to a median $285,000.

Even so, economists note that further gains statewide are jeopardized by continued high unemployment, particularly in the Inland Empire and the Central Valley.

Foreclosure activity remains concentrated in these inland areas, which suffer from above-average unemployment. DataQuick said mortgages were most likely to go into default in Merced, Stanislaus and San Joaquin counties. Conversely, defaults were least likely in the Bay Area counties of Marin, San Francisco and San Mateo.

"In coastal California, things are looking pretty decent," said Richard Green, director of the USC Lusk Center for Real Estate. "I still think if you get into the Inland Empire, Fresno, Bakersfield, Modesto, people are really struggling because the unemployment rate is so high — so that people just need help to get out from under."

California loan default notices peaked at 135,431 in the first quarter of 2009. Since then, the federal government has put increasing pressure on banks to work with homeowners behind on their payments. At the same time, experts say, banks have recognized that flooding the market with foreclosures weakens the value of the properties they have taken back and must resell.

Nestor Fabian, 44, and his wife, Ada, 41, are among those who are hoping for a break from their lender.

The couple bought a four-bedroom, three-bath home in Victorville in 2006 and said they owe Wells Fargo Bank about $305,000 on a property they believe is worth about $128,000. Ada lost her job at a Mervyn's store about two years ago and has since been jobless.

"I feel like a prisoner in my home," said Nestor Fabian, an audio technician who commutes to Pasadena. "Basically, I am asking for any peanuts they can give me."

Fabian is trying to arrange a lowered mortgage with Wells Fargo through the Obama administration's $75-billion effort to help troubled borrowers.

While the Fabians are hoping for relief, many others are still losing their homes. Paula Murray, 65, and her husband, Roger, 58, lost their Apple Valley home to a foreclosure sale in January. They are scrambling to find an apartment before they are evicted June 1.

But it isn't easy, Paula Murray noted, because both she and her husband are unemployed and the foreclosure has damaged their credit rating.

"It hurts me because the government gives all this money to these big rich guys to bail them out, bails out the banks, but the little guy can't get bailed out," Murray said.

In March, the Obama administration unveiled measures aimed at getting lenders to reduce principal balances on problem mortgages and refinance "underwater" borrowers, those who owe more on their home than it is worth. Another provision would allow many unemployed homeowners to get three to six months of reduced mortgage payments while they look for a job.

Kevin Stein, associate director at the California Reinvestment Coalition, said that although the program has added some uniformity to efforts to modify loans, it remains fundamentally flawed.

"Its main limitation is it continues to rely on voluntary participation and financial incentives for the banks to do what it is we all want them to do, which is work with families to avoid foreclosure," Stein said.

Foreclosures may also be slowing because banks are deliberately putting fewer homes on the market, experts said. It's now taking homes about 7.5 months on average to go from a default notice to a foreclosure sale. A year ago, it was 6.8 months, according to DataQuick.

"They may be a little bit reluctant to put homes on the market all at one time," said Celia Chen, a housing economist with Moody's Economy.com. "I also think the process is lengthy and there are many homes in the foreclosure process, and so the process may just be clogged up."

Across California, 81,054 borrowers received a notice of default in the first quarter of this year, down 4.2% from 84,568 in the fourth quarter of 2009. It was the fourth straight quarter in which default notices declined.

There were 42,857 foreclosure sales, a decrease of 16% from 51,060 in the fourth quarter of 2009 and 1.7% from 43,620 in the same period a year ago.

Now take a look at Los Angeles foreclosure statistics for March 2010.

The Home Buyer Tax Credit expires in ten days and many in the Los Angeles real estate community are concerned the market will completely die again. Read what will most likely be the next incentive to keep the recovery going, according to the LATimes.com:

With the April 30 deadline looming, home buyers need to get a move on if they hope to qualify for the federal tax credits of $8,000 for first-timers or $6,500 for owners wishing to move up.

But even if you don't have a binding contract in place by the end of the month, there's a good chance that plenty of incentives will be available after the federal stimuli expire.

In the new-home sector, builders are likely to dangle free options and upgrades, help with closing costs or perhaps even cash in an effort to keep the sales momentum going into the heart of the spring and summer home-buying seasons.

The goodies may not be as great in the resale market, if only because anxious sellers have probably already cut their asking prices to the bone. But sellers might be persuaded to chip in on closing costs or pay for a home inspection. And local jurisdictions or utilities may offer tax breaks of their own.

It's doubtful that builder incentives will be as prevalent in the new-home market as they were in December 2008, at the height of the housing meltdown. But giveaways are almost always available, even when the market is smoldering.

"Incentives don't disappear, even in the best of times," says Steve Melman, director of economic services for the National Assn. of Home Builders. "Even in the good times, builders will throw things in."

Just 16 months ago, according to the NAHB, nearly 3 of 4 builders were trimming their prices in an effort to dump their huge backlogs of finished but unsold product.

At the same time, two-thirds were trying to entice worried buyers off the sidelines with offers of no-cost options such as fireplaces, tricked-out kitchens and finished basements; 59% were offering to help with closing costs; and 41% were willing to absorb the points that lenders were charging buyers.

Also, even though interest rates were practically at rock bottom, 28% of the nation's builders were offering to buy down, or subsidize, their buyers' mortgage rates.

Fast-forward to June 2009, the last time the NAHB quizzed its members about the freebies they were offering, and the deals weren't as widespread. Nevertheless, 64% were still cutting prices, 55% were offering no-cost options, 45% were paying closing costs and 28% were absorbing the lender-required points. About 17% were even offering rate buy-downs.

Now that there are few empty houses sitting on builders' shelves -- new-home inventories are at their lowest level in 40 years -- some real estate figures believe that there is no reason to offer incentives. Others contend that the recession has beaten down builders so badly that it's time they started beefing up their bottom lines.

"Inventories are incredibly low," Melman says. "Builders have stopped building."

But others think incentives might make a comeback, particularly in the hardest-hit markets where there is still a heavy load of foreclosures or an oversupply of existing homes on the market -- or both. And some say builders who have benefited from the government's largesse may be willing to make some concessions.

A check around the country confirms that.

For example, Ryan Homes is offering an $8,000 "stimulus package" in communities in numerous states to be used for closing costs or customer selections.

In the Chicago area, Lennar Homes is offering closing-cost assistance, plus a free washer and dryer if buyers register online.

And in San Diego and Riverside -- where the state of California is offering a tax credit of as much as $10,000 in addition to the federal credit -- no closing costs is the come-on at most Brookfield Homes communities.

Of course, not all incentives are created equal. For example, home buyers would do well to avoid offers of a free vacation or automobile, which add nothing to the value of their properties.

Beware, too, of freebies in exchange for using the builder's mortgage company. Sometimes good deals are available from the in-house lender, but if the incentives aren't offered to all buyers regardless of whether they use the builder for a loan, it is a violation of federal law.

The best options are items for which the next owner would be willing to pay extra. A larger garage with an extra parking bay fits that bill, for example. So do top-of-the-line kitchen cabinets and countertops. And upgraded windows not only add net worth, they also help lower utility bills.

Fancy appliances, on the other hand, may look good, but they wear out. Even if the appliances are still running, the next owner isn't likely to want to pay for a souped-up range or refrigerator that has seen better days.

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Have questions about Los Angeles real estate? Ask Eileen!