Lake Hartwell's Premier Real Estate Resource

The Effect of the Tax Rebate on the Property Ladder, You, Me, and Even Retirees in Florida

Most have heard Congress recently passed legislation allowing qualified first time home buyers to receive a tax rebate of up to $8000.  Google it and research the benefits if you haven't done so.  Unlike the 2008 version, this rebate doesn't have to be repaid!  It is an excellent attempt to propel the real estate business, and I believe it will have a great impact if the lenders will use their bail out money to join in the common cause.  Even though the tax rebate only applies to first time buyers, sellers of all types of properties should see benefits as a result of the property ladder . . .

What I've been terming "The Property Ladder" works like this: 

• Once a first time home buyer is preapproved for a loan, they choose a Realtor and buy a starter home listed for sale - the first wrung of the ladder.
• The seller of the starter home is then able to buy a bigger house perfect for their growing family - the next wrung up the ladder. 
• This allows the Seller of the bigger house to finally move to the house of their long-term dreams - the next wrung up the ladder. 
• The seller of the dream house is now a happy retiree able to buy a condo in Florida, a lake home in Hartwell, and a couple of rental investment homes in Athens, because the rental income pays their annual tax bills on all of the properties.

When the banks began pulling back on funding and tightening regulations, more first time home buyer candidates had to remain renters.  Thus all of the houses on the market took longer to sale: from starter homes to family homes to dream homes, and so on, and so on. 

Obviously, moving the starter homes is an opportunity for everyone hoping to sell; Family homes, Florida vacation homes, Hartwell Lake homes, townhomes, mansions, and even double wides.

Because qualified applicants can file for the rebate with their 2008 tax return, or lower their withholding over the course of 2009 by the amount of their rebate, the tax rebate should help first time home buyers with the expenses of first time home ownership.  I should also add that most foreclosures can be purchased at large bargains, but often need work.  This requires cash many starter home purchasers don't have after going through the process of putting a downpayment on a house.  This rebate allows them a means to pay for those repairs and begin filling some of the empty shells left after foreclosures.

Oh - and parents of college students - I think this is a great opportunity to experience the benefits of the rebate while helping your college student grow their credit:  Gift them the funds and assist them with Buying the house they currently rent (I even know of a lender who can offer 100% financing!).  Have their roommates continue to pay rent, and your college student will have an income stream while also receiving a tax rebate that will assist in their education expenses for the year - and gain equity throughout their college career.   BTW: A good property management company (All Hart Realty, for instance!), can manage it for him or her, collect rents from their roommates, pay the mortgage, make repairs, and simply cut a check to your son or daughter every month for you.

Encourage everyone you know who can benefit from the tax rebate to buy!  Contact me anytime, and I'll work with you to help determine your elligibility.

Understanding Points, Rates and Fees

There are several additional costs associated with your mortgage

Not only do you have to understand what type of mortgage you should choose, you have to understand the costs associated with your mortgage. All of these costs will be paid upon closing your mortgage.

Purchase Points

Purchase points, also known as "buy-down" or "discount points", are an up front fee paid to the lender at closing to buy-down or lower your interest rate over the life of the loan. Each point is equal to one percent of your total loan amount. If you have a $100,000 loan, one point would equal $1,000. The more points you buy, the lower your interest rate, but the more money you'll need at closing.

How do you decide whether you should buy points and if so, how many? Well, the decision should be based on how long you plan on living in your home and what you can afford to pay each month toward your mortgage. If you plan on living in your home for more than five years, it's probadly a good idea to purchase points. The longer you live in your home, the more you can save on interest over the life of your loan.

Interest Rate

When you get a mortgage, you are charged with an interest rate. This is the rate which the lender charges you for using their money to buy a home. It determines how much your monthly payments will be. Generally speaking, the higher the interest rate, the higher your monthly payment.

Mortgage interest rates change constantly, daily, even hourly. If you speak to a lender and are quoted a specific interest rate, that's not to say you'll necessarily get that rate when you close on your loan. Not unless you formally lock-in that rate with the lender. Locking in an interest rate will guarantee you get your loan with a particular interest rate. Lenders will allow you to lock in for 15, 45 or 60 days. But the longer you lock in, the more expensive it will be, since it's more of a risk to lenders.

Fees

There are always fees associated with getting a mortgage, these fees cover the cost of processing and underwriting the loan. These fees can include charges for ensuring the title to the home is free and clear, paying for a land survey, or for paying for a home appraisal which gives you the estimated value of the property (lenders require an appraisal to close on your mortgage).

Deciding which mortgage to get may depend on what each lender does because different lenders may charge different amounts. Some may charge lesser closing fees to lure you in, but may charge you a higher interest rate, which means you may pay more in the long run. But everyone has different needs. You may or may not be able to afford to pay more at closing and are willing to pay more over the long term.

Before it comes time to close, do your homework, make sure there are no hidden fees, and ask your lender lots of questions so that you understand all the costs involved with your mortgae

How low can you possibly go on a real-estate bid?

In the current housing market, it is not necessarily an insult to make a lowball offer. Here is some advice to aid your negotiations.

Homebuyers are looking for a steal, home sellers are looking for an out and home builders and banks are selling homes at cut-rate prices. Combined, these conditions have triggered a wave of lowball offers to buy homes in distressed U.S. housing markets.

Conventional wisdom is that the lowball offers don't work. Homebuyers are warned not to "insult" sellers, who are counseled not to counter offers from "disrespectful" buyers. Real-estate salepeople are stuck in the middle, often unwilling to engage in prolonged negotiations that might not earn commissions.

But conventional wisdom doesn't always hold true. With a severe slowdown in sales, some experts now offer new advice.

What is a lowball offer?

The term "lowball" doesn't have a formal definition in real estate, though some salepeople suggest that any offer that's less than some large percentage of either the fair market value or asking price of the property is a lowball offer.

Karen Monsour, a real-estate agent with Exit Realty Properties in Coral Springs, Fla., says any offer that's 25% less than the asking price falls into the lowball category. By this definition, an offer of $220,000 to buy a house priced at $300,000 would fit the bill, as would an offer of $1.5 million to purchase a house priced at $2.1 million. If an offer is that low, the seller's "aren't going to be happy, and most of the time, they aren't going to take it," Monsour says.

Others say the term "lowball" is more subjective. Miriam Bernstien, an associate broker with Remax Prime Properties in Scarsdale, N.Y., suggests that just about any offer could be labeled as "lowball" if it provokes the seller to outrage or anger.

"The best definition I've ever heard is that "lowball" is an offer that's so low that the sellers can't contain themselves. They get angry," she says. "You can't come up with a percentage becasuse not every property that comes on the market is (priced) high. It's very specfic to each house."

Broker's negotiating skills benefit buyers, sellers

Monsour says she encourages buyers to offer at least 85% of the asking price because anything lower than that is "an insult to the seller."

Yet her disdain of lowball offers doesn't preclude a little pre-negotiation negotiation between herself and the seller's representative in lieu of a formal written offer. The agents orally agree on a price that's close enough to open a formal negotiation, with the proviso that that price may be adjusted as the terms of the deal, which Monsour calls "bargaing tools", are discussed. This approach can move a lowball offer into a price range that's acceptable to the buyer and the seller. The stategy works in part because Monsour, like most real-estate agents in Flordia, acts as a transaction broker who has no fiduciary duty to either the buyer or the seller, but instead aims to bring the transaction to fruition.

Bernstein takes a different tack, but one that also can turn a lowball offer into an acceptable deal. Rather than discourage lowball offers, she believes buyers "should be able to put in whatever offer they want and provoke a discussion." After that, it's up to the broker to present the low offer in a manner that's friendly and nonconfrontational. Today's tough markets mean brokers need to be adept at "schmoozing" and negotiating with their colleagues, she says.

Insititutions may be more open to lowball offers

If the seller is a financial institution, rather than a private homeowner, the risk of insult may be lessened, according to Ian Maker, an REO specialist with Re/Max Gols in Rancho Cordova, Calif., (REO, real-estateowned, refers to homes that have gone through forclosure and are owned and sold by lenders.)

"My job is to get offers on their desk. I present them with the facts, and it's their choice to decide what they want to take," he says.

Home builders and investors also may be less emotional than homeowner sellers--but not always. Some builders "put their heart and soul" into each home they build and "become emotional" about lowball offers, Bernstein says. Other builders "can afford to wait until they get" the price they want, she adds.

Buyer may offer more if seller responds

The new thinking for sellers is similar. While a lowball offer may be unwelcome, it could be an opportunity to open a dialoogue with a buyer who "ultimately may give (the sellers) what they want," Bernstein says. A seller who has "a bad reaction" to a low offer, "may lose a good buyer who could make a deal," she says. 

The outcome could depend on the real-estate saleperson's willingness to negotiate, a task that not all agents greet with enthusiasm. A lot of brokers "dismiss the offer has to low" when they should say "Yes, it's low, but let's discuss it and let's see how much more money this person has to give you," Bernstein says. Some buyers will come in with a low offer, but then "come up huge amounts if they really want to buy the house," she adds.

Some sellers respond to a lowball offer with a counteroffer that cuts only a nominal amout off the asking price. Others refuse to counter at all or counter at a higher price just to make a point to the buyer. Bernstein suggest an alternative approach that aims to create good will: Thank the buyer for the offer and indiciate that a counteroffer may be forthcoming if the buyer will "come up with a little more" at the outset.

Lowball offers: 'You just never know'

The bottom line on the lowball offer is that each real estate deal, like each house is unique. That means buyers and sellers need to know the strengths and weaknesses of their own and each other's negotiating positions. If a sellers home is in prime condition, has only just come on the market and is attractively priced, a lowball offer may be rightly dismissed from a position of strength. But if the same home is still on the market with no takers six months later, a motivated seller may be more inclined to give a lowball offer a second look.

Make offers a good tip for buyers and sellers: "Don't let (the deal) die on your end." If the seller wants to sell the property, evey offer deserves a counteroffer, and if the buyer wants to purchase the property, every counteroffer merits consideration. The objective is to keep the lines of communication open until a deal is agreed upon.   

How Important is Shopping Locally to our Economy?

I have spent the past decade bringing new growth and National tenants to some of my favorite small towns: Hartwell, Royston, Athens, Monroe, etc.  It is a pleasure for me to see a commercial deal I have put together be successful.  There is nothing I enjoy more than going to some of my favorite stores and knowing I was helpful getting them started.

Though I sincerely enjoy bringing growth to small towns and feel it is important for a community's long-term growth, I always worry a little about the strain National chains put on competing, long-established, smaller businesses.  Until 2007, this proved not to be a huge concern.  However, 2007 brought on a change.

Now, I fear for every small business in my favorite small towns.  My fear has a name, and that name is Big Business.  Don't get me wrong, I love the convienence of WalMart.  Where else can you go to buy tires, a meat & 2 veggies prepared, groceries, new Spongebob lunchpails for the kids, and an ottoman - all at 2:00 in the morning?  And for a great price . . . right?

What we often fail to realize is the actual price we pay is not as inexpensive as we think.  That is because - every bit of money which we spend at WalMart goes to some large conglomerate in Arkansas, rather than knocking around in our home town and strengthening our economy.  

For instance: if I buy my tires at WalMart instead of going to Modern Tire - I might save a little money.  However, that is less money in Larry's pocket, so he cannot eat every morning at Mary's Diner.  That means less money in Mary's pocket, so she cannot go buy new clothes at Bailes Cobb.  Thus, Earl doesn't feel comfortable buying that new car, so Ed Murdock closes the Ford Dealership, putting all employees of the Ford Dealership out of work.  One of the employees of the Ford Dealership turns out to be my neighbor.  Now his house is in danger of foreclosure, so he sells it at a really low price, thus bringing my real estate value down.  All because I said, "Times are tough, so I need to go to Walmart and save some money rather than going to the tire company which has serviced my needs for decades."

Doesn't make much sense when you look at it that way - does it?

Here's another problem: When the large, convienent, discount, conglomerates are the only ones left standing, do you think they will leave their prices the same?   It is not going to happen . . . Think of it this way: if you owned a business selling - let's say - umbrellas.  Somehow, you end up being the only store in 35 miles who sells umbrellas, during hurricane season.  If you raise your prices by 20%, people are still going to buy from you because you are the only person with umbrellas in the pouring rain.  Would you leave your prices the same knowing that?   I certainly wouldn't!  That's the beauty and the beast of Capitalism. 

Shopping locally is the only way to slow the on-coming train of economic disaster.  Small business owners in Hartwell have grown our economy by 4.5 times over the course of their working lives. They have helped us till our soil, defend our ideals, teach our children, and raise a new generation to build upon our successes. And yet, many now struggle to get by.  Hartwell is more than a lake, it is a tight-knit community.  Our small business owners have worked hard to take care of us, and now we must be here for them, as well as for the health of our local economy.

Please join me - let's keep all remaining small businesses in Hartwell (or whever you live) open.  WalMart is still good for buying items in bulk in the wee hours of the night, but it is not the only retailer in town.  Let's work together to keep it that way.  Strengthen our Local Economy.  It is Important . . . Shop Locally!

Hit or Be Hit

I pride myself on giving informed advice and recommendations to my clients and customers, but recently, I had a client give brilliant advice to me in regards to the current real estate investment strategy.  That advice was "Hit or Be Hit".  Basically, a football expression meaning it hurts less to take it to your foe than it does to have them bring it on you.

In this instance, the economy is our foe.  Do you want to sit idle, squeeze your eyes shut, and hope the woes don't hit you head on?  Or, do you want to take charge and knock hard times back before they can tackle you?   I say - Let's take it to em'!

There are so many opportunities to take advantage of right now to protect your long-term investment savings.   The stock market is volatile and scary, but real estate is the only thing we cannot make more of.  There are wonderful deals out there, and - as I've been saying for months - the rental market is strong.  Take money out of your investment IRAs, or take money you would have been putting towards stock market investments, and choose to buy rental properties instead.  Let the rentals pay for the property for the next couple of years, and be patient.  In the end, you should have valueable properties to sell and make great returns.

I have over a decade of experience in commercial and residential leasing and property management.  We cannot keep residential rentals in stock, and have made excellent progress with commercial rentals as well.   I have many rented properties for sell now, and have great deals on HUD and foreclosure properties for purchase.  Call Julie Haley today at (706) 201-7363; or email me at JulieHaley@charter.net.  Let's start making your money work for you, and Hit Back!

What the Corps of Engineers is doing wrong on Lake Hartwell

Nothing!  Betcha' thought I was going to jump on the train with those who like to rant on the CoE . . . didn't you?  Well, sorry to disappoint.  The Corps of Engineers are the favorite demon of those who live around Georgia's revered recreational lake, but they are not doing anything wrong.  The lake is low because it simply has not rained.   

The CoE is not purposefully lowering the lake in a hidden agenda to get us all riled up, build a superramp, or even to prepare for the flood of the masses of snow melt coming next Spring.  As a matter of fact, they are not purposefully lowering the lake at all.

We may see them at night releasing water from the dam.  The Lake Hartwell Dam forms the Savannah River.  Lake Russell is the beginning of the Savannah River.  The Savannah flows down to the ocean, on the way passing by many Georgia counties lying South / South East of Hartwell. 

A certain amount of water needs to flow through the Savannah River at all times to carry the water out to the ocean - with a certain swiftness to dissipate and wash away pollutants without allowing them the opportunity to muck up the lovely shores of Georgia along the way.

Thus, it doesn't matter if it has been raining non-stop in Savannah; if it hasn't been raining in between here and Savannah, we still have to release enough water to assure the river doesn't become a dry river bed mired in commercial polution thick enough to kill all of the wildlife in various areas along the way.

Considering the potential outcome, I'm o.k. with sharing, even if it means having a little less lake to play in.  We still have a lovely lake.  So, lets try giving the CoE a break.  I recommend this outlet for our frustration over the lake levels: Hope and pray for rain with all of your might!  Shoot - if you feel the need, don't hesitate to pull out the rain dances or wash all of your cars by hand (that's always certain to bring rain!). 

In the meantime, please try to conserve on the amount of water used.  A lady recently complained her flowers wouldn't be pretty if she didn't use the lake to irrigate her beds.  I sympathize, because I enjoy pretty flowers as well, but not at the price of loosing an entire river of wildlife and polluting another part of our state.  Now - more than anytime in our recent history - we have to learn to share and think of others.  All it takes is for every family to make one small contribution per day for conservation to make a large difference. 

My recommendations to her: when you are warming the shower in the mornings, collect the water in watering pails, and hand water the flowers (or wash those cars I mentioned earlier).  Small sacrifice to make, a little extra time, but our docks all stay in the water that much longer and her flowers continue to bloom.  The desire to blame someone comes from a feeling of helplessness.  But, we don't have to be completely helpless; waiting for someone else to help us.  We can take positive action NOW to help our lake, ourselves, and our fellow Georgians.  If enough of us do, we have worked together to make a difference.  Wow!  Wouldn't that be satisfying!!??  Conservation - Try It; You'll Like It!

Getting Into Real Estate Investing

The recent collapse of U.S. home sales ripped a magnnificent bloom off the rose of real-estate investing - yet buying rental properties remains one of the best ways for middle-income Americans to build wealth.

While the rich have a phalanx of investment advisors to help enrich them further every day, middle-class Americans struggle just to set aside enough money in their 401(k)s to secure their retirement. Real estate offers people of modest means an opportunity to build wealth in an investment they understand as homeowners and renters themselves.

Studies show residential real-estate investing returns an average 10 percent a year equal to the historic return for stocks. While it requires active management of the asset on the investors part vs. more passive stock investing, it can be a rewarding part-time evdeavor for those with a long-term horizon.

Leveraged investing

The beauty of real-estate investing is the ability to leverage other peoples money namely, a mortgage lender and renters to make money yourself.

Take, for example, a $200,000 home bought with 10 percent down and $8,000 in closing costs. If that property appreciates just 4 percent a year over 20 years, its owner turned a $28,000 investment into a $238,000 gain.

That scenario assumes the rental income covers annual mortgage, insurance, property-tax and maintenance costs, which it may not fully in the early years. But it also doesn't factor in the likely surplus annual income in future years when rising rents more than cover fixed-mortgage costs.

Tangible assets

Unlike stocks, whose value is a matter of perception and psychology, real-estate is a tangible asset and not just a paper stock certificate (which shareholders don't even get in hand anymore.)

The steadily rising cost of constructing new homes protects and ultimately enhances the value of existing properties. That underlying strength is even greater in metro areas with a limited supply of developable land within easy commuting distance to the center city, or well-located properties in desirable coastal and resort communties.

Direct control

Unlike the crapshoot inherent in the stock market, real-estate investors have direct control over their investments. They set the rents, chose tenants and decide what improvements to make and when.

Rather than staking their fortunes with corpporate executives who can fail to grow their companies for any number of competive reasons, real-estate investors manage their own assets based on local market conditions.

Limited risks

Real estate values can and do fall as homeowners discovered in Texas in the 1980s, southern California in the early 1990s and various regional markets throughout the U.S. more recently.

Still, long-term investors seeking to build wealth for their retirement years face little downside risk with real estate. America's rising population, shrinking household sizes and unfortunately high divorce rate are expected to fuel increasing demand for places to live for decades to come.

Diversification

Real-estate values generally don't rise and fall in tandem with stocks and sometimes are countercycical, moving in the opposite direction. It is what's called in the investment world a non-correlated asset.

Diversifying investment holdings into rental properties provides a solid counterbalance to stack-laden 401(k) and IRA accounts. A modestly priced three-bedroom rental home won't ever produce the explosive returns of a sensational stock like Google, but itowner can sleep easier knowing his or her future isn't wholly dependent on the whims of the stock market.

Immediate returns

Self-anointed real estate gurus trumpet the fortunes to be made in buying and flipping distressed and foreclosed properties, a fast-buck strategy that's especially difficult to pull off in weak housing markets where properties languish for sale for months on end.

Still, smart shoppers can reap immediate paper gains on many properties. At any given time and especially in today's markets with mounting supplies of unsold homes individual home sellers forced to sell quickly due to job relocations, divorce or unemployment may accept below market prices to facilitate a sale.

Improvment potential

Just as with the purchase of a first home, it's wise when shopping for rental properties to buy the least expensive home in the nicest possible neighborhood.

The benefit of the owner is threefold: The better the neighborhood, the less likely the number of rental properties available within it. Improvements made to modest homes in nicer areas will yeild higher rents. And an owner could simply maintain the property during the rental period and improve it just prior to sale to bring it up to the neighborhood standard and command a much higher asking price.

The benefit of inflation

As Americans have seen in the last year, rising mortgage rates hurt home sales and property values. Yet rising rates can have a postitive impact on owners of investment properties.

The fewer number of people buying homes, the greater the number of renters, which heightens demand for rental properties. Since real-estate investments tends to slow as mortgage rates rise, that also means a tighter supply of rental homes in the near term.

Interest rates hikes are the Federal Reserve Bank means to curtail inflation by making borrowing money more expensive. Inflation benefits real-estate investors who can raise rents accordingly. So while long-term appreciation suffers from mortgage-rate spikes, the immediate rental income picture improves.

Tax-deferred gains

Real-estate investing provides the same type of tax-deffered advantage of 401(k)s and IRAs. Owners aren't taxed on the appreciation in a homes value until the time of sale, and even then, they can forestall paying taxes by rolling their gain into another property.

Add to that another major tax advantage: The ability under new tax law for owners of rental properties to move into the home for a total of two years in any five year period and pay no tax on up to $500,000 in capital gains. That opportunity argues for buying rental properties you can comfortably inhabit yourself for a spell.

Of course, real-estate investing is not without its downsides, which should all be heavily weighed:

Illiquid investment

Unlike stock, which could be sold with the push of a computer keystroke, selling a home can take months and entails considerable costs. If you're not prepared to tie up your money for years to come, best that you don't.

The difficulty in quickly selling a property, however, can work in investors favor by discouraging them from running scared in a market downturn and dumping properties. The relaative liquidity of stock investing is actually one od it's greatest drawbacks, since countless investors sell in a panic, often at a loss, when an individual stock or the overall market drops.

Cash-flow constraits

The ideal situation is to buy properties whose income covers monthly carrying costs i.e. mortgage and insurance payments, property taxes and maintenance costs. The run up in the U.S. home values in recent years has made that scenario difficult to attain in many regional markets.

New investors today may find temselves in a negative cash-flow situation, meaning the rent doesn't cover their costs. Investors must be prepared financially to cover any such shortfall or risk losing the property if yhey can't foot the bill, a crushing problem now facing many recent investors saddled with properties they expected to flip for a fast profit.

Sporadic income and unforeseen costs

However good the cash flow numbers may look going in, rental-property owners risk being squeezed on several unforeseeable fronts.

The first is tenants who fail to pay their rent in a timely manner or not at all, leaving it to the owner to cover their mortgage payments out-of-pocket until they collect the back rent or evict a deadbeat. Next is a tenant turnover, which can leave a property unrented for several months a year, during which time the owner must also cover the tenant. Lastly, there are major repairs that must be done--such as a new roof, furnance, or septic system that can cost well into the thousands of dollars that must be ponied up on the spot.

Landlording

Finally, there is the angst of trying to do right by tenants who don't reciprocate in kind. Some may destroy the home you're improving for them without any intentions of raising rent.And all catch on fast to when you're playing them.

Tenant selection is a skill rental-property owners need to master since it has an immeasurable influence on success. If you're suspicious by nature and have a short fuse, this is no business for you. If you can learn to recognize great tenants who'll carry your mortgage for years and care for your property as if it were their own, you may be wise to never raise their rent and reap tremendous long-term benefits.

Avoiding Home Decorating Disasters

So you've shopped til you've dropped, poured over every issue of House Beautiful you can find and are finally ready to tackle a home decorating project to update an otherwise out of date space.

Well before you push "go," it is a good idea to know the most common interior design don'ts. Avoiding these will improve your design, save time and money, and help make your experience more enjoyable.

Davis Remignanti, lead design consultant for online retailer Furniture.com, says many decorating pitfalls are easy to avoid, including:

The Big Bang. Don't expect to go from blank canvas to finished interior in one felll swoop. Interesting interiors are creadted in layers, over time. Don't try to get it all at once.

Wing and a Prayer. Don't start without a plan. Survey your resources - your current furnishings, your work schedule, your budget. Then make a list of needs, wants, and things you'd love "down the road." Reconcile accordingly.

Ebenezer Scrooge. There are times when it's better to splurge than to economize. Shop carefully for the right balance of price and quality. A "bargain" sofa loses its charm when it seams split and arms start to wobble.

My Way or the Highway. Be open-minded about new ideas - sometimes a fresh approach is best. Try re-arranging your furniture to jump start a design update. Furniture.com offers a free online Room Planner to help lay out your room.

Making Do. That "perfectly good" hand-me-down dining room probadly isn't winning any points for good design. Just because someone offers you something, you don't have to accept. Second-hand can be wonderful and inspiring, as long as it fits with your "look." 

More is better. Mix, as well as match, your furnishings adds variety and increase your design options. Use accent pieces to introduce new colors, textures and shapes to prevent your room from becoming monotonous.

Doubting Thomas. Don't trust your own judgement? Do research, clip photos from magazines, watch design shows, and ask your friends. Start small, build your confidence and learn from mistakes. The best designers did the same.

Leslie Segrete, decorator, designer and carpenter on TLC's 'While You Were Out" and 'Trading Spaces' has also seen her share of decorating don'ts. "Good design is process of designing space that meets the needs of the family who lives in that room. But too much stuff is the killer of design dreams so every decorating should project begin with a good clean-up and all out effort to eliminate as much clutter as possible", she said. Segrete also suggests:

Borrowed is better. The best way to keep cost down when freshing up a room or completely redecorating is to borrow decorative items from others rooms in the house. Snoop around that finishing touch might just be hiding in the attic.

Check the bones. If your search of secondhand furniture stores turns up some bargains, the most important thing to check before purchase is the frame. If it has a nice shape and "good bones," new fabric or fresh finish can take that trash to treasure.

It you are overwhelmed by the design process, Segrete says dividing rooms into areas of usefulness, like a place for relaxing and an area for entertaining is an easy way to get started.  

A Buying Guide For First timers

Step 1: Spiff up your credit

Good Credit can lower your mortgage interest rates, potentially saving you hundreds of dollars a month. Order a credit report (usually free online). You can dispute any mistakes, but the most important thing is to build up good credit from here out.

Lenders want clients who can pay their bills on time and and who don't owe too much to anybody else. Automated bill-paying services help. Stop applying for credit cards just for a free t-shirt or shuffling your debt around. Consider closing some of your accounts, but that's tricky. Maxine Sweet, Vice President of public education at Experian, says lenders don't want you to owe near your limit, which can happen if you consolidate to one card. Your score can dip temporarily when you make any big changes even for the better so work on your credit long before you seek a mortgage, she says.

Step 2: Start saving for a down payment and closing costs

Home buyers traditionally had to put up a 20% downpayment. Now it's more like 5-10%. Some don't put anything down. There's nothing typcal today, says Pat Vredevoodg Combs, president-elect of the National Association of Realtors.

You'll always get a better deal if you make a downpayment. Until you paid 20% of your home, your lender will probadly want you to buy insurance on your mortgage. The buyer also has to come up with closing costs, about 1-2% of the price.

Step 3: Calculate how much house you can afford

Housing eats up more of everyones paycheck these days, but as a rule of thumb buyers spend 25-30% of their pre-tax pay on housing. That translates roughly to a mortgage of 3 to 4 times your salary. Consider your entire budget: How is your credit card bill, student loan or kids tuition? How much will your new palace cost to maintain? Will you get a big break on your taxes from the mortgage interest rate deduction?

Step 4: Shop for a mortgage

New loan offerings make it easier to buy a home, but harder to pick which mortgage is right for you. The standaard 30-year fixed rate mortgage allows predictable payments. If you're planning on moving quickly, consider an adjustable rate mortgage, which has low interest and payments for the first few years. Buyers have really low starting payments with thise who want to buy more house than they can afford. Compare terms and rates from several sources. A pre-approved mortgage will let you pounce on the right house. Your lender usually calculates your monthly expenses including principle, interest, taxes and insurances. You'll pay a monthly bill into an escrow account instead of getting clobbered by annual taxes.

Step 5: Shop for a home

Make a list of the features you want or don't want. A realtor can be a great help, so much so that some start planning here months or years before they're ready to buy. The buyer pays the sale commission, which typically runs 5-7%, split between the seller's agent, and the buyer's agent. So especially first time buyers get the service basically for free. Some also shop from people who are selling their own homes, figuring the lack of a commission means a lower price.

Some agents specialize in buyers. To put customers at ease about potential conflicts of interest, some go as far as not working at firms that take any listings. Kathleen Chiras, a spokesperson for the National Association of Exclusive Buyer Agents, says the potential for a double commission gives agents a reason to sell homes that are not neccessarily the best house for that person.

Step 6: Make an offer

How much did similar homes sell for nearby? How long has this house been on the market? (Weary sellers may be more flexible.) Your realtor can evaluate market conditions and help you make a reasonable offer.

Step 7: Sign a contract

You sign and pay a deposit that is held a neutral third party. In some states, you'll want a real estate lawyer to go over the deal. Typically buyers can back out if the home inspector finds big trouble or if they can't find financing or, or in a new twist, Combs says, homeowners insurance.

Step 7: Take a close look at your house

Make sure your contract is contingent on a home inspection for a detailed, objective evaluation of your home's infrastructure. Afterwards, negotiate with the seller over the needed repairs. Be sure the title of the house is free of any liens. Your bank will appraise your house, too. 

Step 8: Show for homeowners insurance

Shop around, but your own car or life insurer will probadly give you a good package deal. As always, a higher deductible saves you money. 

Step 9: Sign papers

You'll meet at a lawyer's office or title company, sign a big stack of paers and receive the keys to your new home.

How Does Escrow Work?

If you've ever made an informal bet with a friend, you may have asked a third person to hold the money until the wager was resolved. When you take out a mortgage to buy a home, you're doing something simiar by opening an esrow account.

How it works

When you put money in escrow it is held by a neutral thrid party (called an escrow agent) who works for both the lender and the borrower. The agent's role is to carry out the instructions agreed upon by both sides. The money is released when all the terms of the agreement are met. Escrow can be involved in anything from multimillion-dollar building projects to purchases made on online sites.

When it's used

When your mortgage closes, your lender will usually require you to open an escrow account to cover property taxes and homeowner's insurance. You'll make an initial deposit, followed by payments to the account every month. (Usually these are added to you regular mortgage payment.) The escrow agent will then release these funds as your taxes and insurance premiums come due.

Its purpose

The idea is to protect the lender by ensuring that you pay your taxes and insurance on time. If you default on your property tax, for example, your municipality can put a lien on the house, which would make it difficult to sell. Or if your house burns down and you've negected to pay the insurance, the lender would be left with no collateral.

How you benefit

Escrow can benefit borrowers by helping them spread insurance and tax expenses evenly over 12 payments. For example, assume your yearly property taxes or two payments of $1,000 each, and your insurance is $400 annually. If you pay these directly, it would mean three large payments a year; your escrow costs, however, would be a manageable $200 a month.

Escrow payments

Your escrow account will have a built-in cushion--if you miss a payment, the lender must still be able to pay your account on time. However, federal law prohibits lenders requiring more than two months. And because your tax and insurance cost will change slightly from year to year, the lender will review and adjust your escrow payments annually.

When escrow may be waived

In most states, the money you place in escrow accounts earn no interest for you. For that reason, many borrowers prefer to pay their taxes and insurance directly. Lenders may agree to this if your down payment is more than 20 percent, although some may raise your interest rate slightly to compensate. Once you agree to putting funds into an escrow account, however, it is difficult to cancel it, so make sure you fully understand the arrangment before your mortgage closes.