Pros' guide to deck refinishing

By Bill and Kevin Burnett
Inman News®

Q: It's time to refinish my sun-pounded deck, and I was wondering whether you'd recommend sanding it down again. I did so about three years ago, and although I love the freshly finished look, I'm not sure how many times I should sand the wood.

So I'm hoping that I can just seal it well and be done with it. The last time, I used a Cabot product called Pacific Coast Redwood-Clear. I liked it, but it's worn down now.

A: Pick a nice couple of days -- not too hot or too cold -- and get the refinishing part out of the way.

You did well to get three years out of the Cabot product. We usually suggest a product we've had good luck with: Superdeck by DuckBack. But since the Cabot product works for you and you like the look, stick with it.

We understand the concern about continuing to sand the deck. But the little bit of wood fiber removed with a sander won't affect the structural integrity of the decking. A 1 1/2-inch deck board can take a dozen or more sandings with no problem.

That being said, sanding is a lot of work. You can get the same clean, fresh surface with a good pressure washing. A pressure washer removes the deteriorated finish and some of the decayed wood fiber leaving a like-new surface after the wood dries. This machine attaches to a garden hose and sends out a pressurized stream of water that makes short work of old finishes, surface dirt, mold and mildew.

To look its best and prolong its life, a deck should be cleaned and treated with a preservative every one to two years depending on exposure to weather and use. A maintenance program consisting of cleaning the deck, removing any mildew and applying a new coat of preservative is the ticket.

We recommend using a pressure washer that can produce a stream of water of at least 1,500 pounds per square inch (psi). A word of caution here. Nozzles are adjustable from a stream the size of a pencil to a broad fan. For deck cleaning use the fan setting and be sure to keep the wand moving so you don't blast softer wood away from the surface and leave a rippled effect on the deck.

If your deck is really showing its age, consider using a chemical deck cleaner. Cleaners are available where pressure washers are rented or sold. We've had good luck with a product called Restore-X.

Pressure washers can be multitaskers, useful for washing the car or blasting moss off a shady sidewalk. So purchasing as opposed to renting might make some sense. If you have good neighbors, consider making a communal purchase and sharing.

Once cleaning is complete, thoroughly rinse the deck with clear water if you used a chemical cleaner, and allow the deck to dry for several days. Lightly hand sand the decking to provide some tooth for the preservative to penetrate. Apply the Cabot product you like according to package instructions. If a second coat is allowed, do a quick sanding between coats.

It's a fair amount of work, but we're confident you'll get another three years out of this job.

Home prices at new lows for downturn

A national home-price index that captures about 75 percent of U.S. properties in all nine Census divisions showed home prices falling 2 percent during the first quarter to a new post-crisis low.

The S&P/Case-Shiller National Composite is down 35.1 percent from its second-quarter 2006 peak, Standard & Poor's reported today. Two other S&P Case-Shiller indexes, the 10- and 20-city composites, are also at new lows for the housing downturn, although both were little changed from February to March.

Seven of 20 metros covered by the 20-city composite saw price declines from February to March, compared with 16 in last month's report. Five -- Atlanta, Chicago, Las Vegas, New York and Portland -- are at new lows for the downturn.

"While there has been improvement in some regions, housing prices have not turned," said David Blitzer, chairman of the Index Committee at S&P Indices, in a statement.

Blitzer noted some improvement from last month's report, when nine metros hit new lows. The annual rate of change deteriorated in just three of 20 metros in March: Atlanta, Chicago and Detroit. Seven cities posted annual gains: Charlotte, Dallas, Denver, Detroit, Miami, Minneapolis and Phoenix.

"This is what we need for a sustained recovery: monthly increases coupled with improving annual rates of change," Blitzer said. "Once we see this on a broader level we will be able to say the market has turned around."

S&P/Case Shiller indices March 2012

Metro	March 2012 index level	Change February-March (percent)	Change from year ago (percent)
Atlanta	82.53	-0.9%	-17.7%
Boston	145.92	-0.2%	-1.0%
Charlotte	109.40	1.2%	0.4%
Chicago	102.77	-2.5%	-7.1%
Cleveland	94.65	0.4%	-2.4%
Dallas	114.49	1.6%	1.5%
Denver	123.66	1.5%	2.6%
Detroit	66.66	-4.4%	2.3%
Las Vegas	89.87	0.0%	-7.5%
Los Angeles	159.73	0.1%	-4.8%
Miami	140.76	0.9%	2.5%
Minneapolis	109.21	-0.9%	3.3%
New York	157.87	-0.9%	-2.8%
Phoenix	106.38	2.2%	6.1%
Portland	129.01	-0.5%	-2.8%
San Diego	149.68	0.4%	-2.7%
San Francisco	125.94	1.0%	-3.0%
Seattle	131.23	1.7%	-1.3%
Tampa	125.49	1.3%	-1.0%
Washington, D.C.	176.48	1.0%	-0.6%
Composite-10	146.61	-0.1%	-2.8%
Composite-20	134.10	0.0%	-2.6%
National	123.33	-2.0%*	-1.9%

*Change from fourth-quarter 2011 to first-quarter 2012. Index has a base value of 100 in January 2000. Source: S&P Indices and Fiserv.

In March 2012, Phoenix posted the largest annual rate of change, 6.1 percent, while home prices in Atlanta fell the most over the year, down 17.7 percent.

The indexes emphasize non-seasonally adjusted figures, although seasonally adjusted figures are also provided for reference.

"Since we are entering a seasonal buying period, it becomes very important to look at both monthly and annual rates of change in home prices in order to understand the broader trend going forward," Blitzer said.

The indices have a base value of 100 in January 2000. So the national composite's current index value of 123 translates to a 23 percent appreciation rate since January 2000 for a typical home.

Atlanta, Cleveland, Detroit and Las Vegas were the four metros in the 20-city composite where average home prices were below their January 2000 levels.

Loan approvals come with conditions attached

At the beginning of the year, a rumor was circulating that mortgage lenders were going to ease up on their stringent qualifying requirements, making it easier for buyers to buy and helping the housing market improve.

So far, that rumor has not been confirmed. If anything, the approval process has become more laborious. The home-sale market improved recently, resulting in significant lender backlog in underwriting and funding loans.

Many buyers haven't been able to remove their financing contingencies on time. A request for an extension of time from the sellers is common. Disgruntled sellers often don't understand why qualified buyers can't remove their financing contingency on time.

A delay can occur because the buyers and sellers negotiate on inspection-related defects. It can take a few days to a week for the parties to agree. The negotiations can result in a lower purchase price or a cash credit to be applied to the buyers' closing costs in consideration for the buyers taking care of the defects after closing.

In this case, an addendum to the purchase contract reflecting the credit or price reduction goes to the buyers' lender for underwriting approval. Often, the buyers' loan is already in underwriting at this point.

Any change to the contract that needs underwriting approval can move the buyers' loan package back to the end of the underwriting queue. This can delay final loan approval.

Setbacks at the approval stage can result in a delay in closing if there isn't enough time built into the contract between the deadline for the financing contingency and the closing date.

Most lenders issue loan approval with conditions attached. These will need to be satisfied and approved by underwriting before the lender will issue the loan documents that the buyers need to close the sale.

HOUSE HUNTING TIP: Make sure that you have no doubt about your ability to satisfy the lender's conditions before removing the financing contingency.

Last year buyers that were in contract to buy a home in Berkeley, Calif., were told by their lender that they could remove their loan contingency, which they did. A week or so later, the lender told the buyers that they didn't have a loan.

Fortunately, the sellers in this situation were accommodating. They agreed to an extension of closing date. The loan was reworked, approved and the deal closed. If it hadn't, the buyers' deposit would have been at risk because they had, based on the lender's say-so, removed all contingencies from the contract.

Frustration on the part of everyone involved typifies the homebuying experience in today's picked-up market if the purchase requires a new mortgage. Will lending conditions improve soon? Although a few lenders are lightening up a little, most lenders aren't confident enough that the current homebuying activity is sustainable. So, they're unlikely to ease up on underwriting requirements or hire additional employees to make the approval process move more smoothly.

The loans that are the easiest to process are the conforming loans from Fannie Mae, Freddie Mac or FHA. The conforming loan market has guidelines so there is more consistency in underwriting and loans are approved more routinely. These loans are available only in amounts up to $417,000, or $625,500 in high-priced areas.

Jumbo loans are available for homebuyers who need to borrow more. These loans require buyers to jump through qualification hoops. Two appraisals are sometimes required. There are more layers of underwriting, investor approval is often required and there is less consistency in terms on underwriting guidelines.

THE CLOSING: It's always best to work with an experienced loan professional. It can make a world of difference with jumbo loans if you work with someone who knows how to package your financial documentation in order to receive approval.

How long will you be underwater?

By Jack Guttentag
Inman News®

About 16 million homeowners owe more on their mortgage than their homes are worth, which means they are "underwater." So long as that condition continues, they have no equity that can be used to help finance the purchase of another house.

On the contrary, they can't sell the house without digging into their pockets to pay the difference between what they owe and what they can realize from the sale net of expenses.

But time heals most wounds, and negative equity is no exception. The principal component of the monthly mortgage payment reduces the loan balance by the same amount.

Refinancing into a mortgage carrying a lower interest rate reduces the interest portion of the monthly mortgage payment, thereby increasing the principal component and the rate at which the balance is paid down.

Although underwater borrowers generally can't qualify for a refinance, those fortunate enough to have their mortgages held by Fannie Mae or Freddie Mac comprise an important exception. The government's Home Affordable Refinance Program (HARP) permits negative equity, though borrowers must be in good standing to be eligible.

The other component of negative equity, depressed home prices, also appears to have turned the corner. Prices have begun to rise again in some areas in which the houses listed on the market have fallen short of demand from purchasers. It is plausible that within the year home prices in most areas will again be on the rise.

It is now time for underwater borrowers to start planning to get their heads above water. To help in that process, Chuck Freedenberg and I have designed two calculators designated 2d and 2e on my website. The first shows the borrower's equity in the property month by month for any combination of the various factors that affect changes in equity. These include the interest rate, property appreciation rate, and extra payments. Some examples are shown in the table.

Changes in Negative Equity with Initial Loan Balance of $200,000, Property Value of $150,000 and Monthly Payment of $1,300

Factors Affecting Change in Equity			Month When Equity Reaches:
Interest Rate	Appreciation Rate	Extra Payments	0	10%	20%
6%	0	0	122	148	170
6%	1%	0	98	123	147
6%	1%	$50	89	112	134
6%	2%	$50	74	95	116
6%	2%	$100	68	88	108
4.5%	0	0	79	99	117
4.5%	1%	0	67	86	104
4.5%	1%	$50	63	80	97
4.5%	2%	$50	55	71	87
4.5%	2%	$100	52	67	83

The table shows, for different combinations of interest rate, appreciation rate and extra payments, when the borrower will no longer be underwater, which is the month when equity hits zero. The table also shows how long it will take before equity hits 10 percent, at which point the borrower who is otherwise qualified will be able to refinance, and 20 percent where a refinance won't require mortgage insurance.

Borrowers may want to raise their targets to cover the expenses of whatever action they plan. If the goal is to sell the house, for example, they will need positive equity of 5-7 percent to cover sales costs. This is easy to find with the calculator.

The second calculator is designed for underwater borrowers who want to know how much extra they have to pay each month to reach a target equity level within a specified period. For example, the borrower paying 4.5 percent in the example above wants 10 percent equity in five years and believes his house will appreciate at a rate of 1 percent a year. The calculator tells him he must pay an additional $315.50 every month for 60 months to reach his objective. If his house does not appreciate, he has to pay $418.05.

While the calculator tells you what you must do to reach your objective, it doesn't tell you how to develop the commitment and determination to see it through. I am working on that.

Refis surge as mortgage rates probe lows

Homeowners are once again rushing to refinance their mortgages as rates continue to hold at or near record lows, but demand for purchase loans is weaker than it was at this time last year.

Worries that the European debt crisis will trigger another global recession makes bonds and other conservative investments -- including the guaranteed mortgage-backed securities that fund most home loans -- look like safe havens to investors. Increased demand for those investments has pushed yields down.

Rates on 30-year fixed-rate mortgages averaged 3.78 percent with an average 0.8 point for the week ending May 24, down from 3.79 percent last week and 4.6 percent a year ago, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey. That's a new low in Freddie Mac records dating to 1971.

For 15-year fixed-rate mortgages -- a popular option for refinancing -- rates averaged 3.04 percent with an average 0.7 point, unchanged from last week but down from 3.78 percent a year ago. Rates on 15-year loans have never been lower in records dating to 1991.

Rates on five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 2.83 percent with an average 0.6 point, unchanged from last week but down from 3.41 percent a year ago. Rates on five-year ARMs hit an all-time low in records dating to 2005 of 2.78 percent during the week ending April 19.

For one-year Treasury-indexed ARMs, rates averaged 2.75 percent with an average 0.4 point, down from 2.78 percent last week and 3.11 percent a year ago. Rates on one-year ARMs hit an all-time low in records dating to 1984 of 2.72 percent during the week ending March 1.

Low rates have unleashed another wave of refinancings, but tight lending standards have helped keep a lid on demand for purchase mortgages.

The Mortgage Bankers Association today upped its forecast for 2012 mortgage refinancings by almost $200 billion. The MBA now expects lenders will refinance $870 billion in mortgages this year, about the same level as 2011, a banner year for refinancings. The trade group now expects purchase mortgages to total $409 billion, down from a previous estimate of $415 billion.

"Deterioration of the debt situation in Spain and Greece and a new regime in France that is a weaker proponent of European austerity, along with slower economic growth globally, have driven the U.S. 10-year Treasury yield down," said Mike Fratantoni, MBA's vice president of research, in a statement. The MBA is projecting "lower U.S. mortgage rates for the rest of the year and raising our refinance forecast as a result."

The MBA's Weekly Mortgage Applications Survey showed demand for purchase loans fell a seasonally adjusted 3 percent during the week ending May 18 compared to the week before. Demand for purchase loans was down 4.2 percent from the same time last year.

Requests for refinancings picked up for the third week in a row, with refi applications at their highest level since February.

As European leaders prepare for a possible Greek exit from the euro, China's industrial sector -- which depends on exports to Europe and other markets -- is in its longest slowdown since the 2007-2008 financial crisis, Reuters reports. Germany and France are also seeing greater-than-expected contraction in manufacturing, and an index gauging U.S. manufacturing slipped in May, the news service said.

Britain is already in its second recession since the financial crisis, and this week the International Monetary Fund suggested that the Bank of England move beyond "quantitative easing" and start buying private-sector assets, Reuters said.

European markets "are poised to implode before the next Greek election on June 17," Boulder, Colo.-based mortgage broker and syndicated columnist Lou Barnes said in his most recent column.

If Greek voters reject austerity measures imposed as a condition of financial assistance, the country would be forced to withdraw from the euro.

"Reversing the euro to local currencies would be briefly chaotic, and slow the global economy, but it is the one way to rationalize the economies involved," Barnes said.

Know when to replace your kitchen faucet

By Bill and Kevin Burnett
Inman News®

We get a fair amount of questions that don't require a detailed answer, but deserve a response. So it's time once again to empty the question bag:

Q: I have a Moen kitchen faucet that is leaking. It is a rotating, single-handle, one-hole installation, with no plate. The leak seems to come from a rusted base under the sink and drips down the flexible tubing. Is it easy to fix?

A: Yes, but the fix is to replace the faucet. The rust is the key. The faucet's innards are shot. It's possible that some parts need replacing, but for about $100-$200 (installed yourself) you can have a new one. We say live large and go new instead of trying to repair the old one.

Q: Thanks for the tip on fixing a leaky faucet. My question is: I have a two-handle faucet that turns on and off backward. How do you fix this problem?

A: If "backward" means the valve opens when turned to the right and closes when turned to the left, there's nothing you can do to reverse the operation. This is opposite of "normal," but it's the way the faucet was designed.

It's common for some old fixtures -- especially wall-mounted laundry tub faucets -- to work this way. If "backward" means hot water comes out when the cold valve is opened (and vice versa), simply reverse the supply lines to the faucet.

Q: I understand everything you had to say about hanging pictures from plaster walls. But my house, which was built in 1963, uses an expanded metal screen instead of wood lath. I normally see this material used as part of a guard on industrial machinery. Do I just use a screw or nail and hope I get past the metal?

A: The metal lath may look like an industrialized machine protective cage, but it's much lighter. Don't try the hit-or-miss method. Blind nailing or screwing -- especially with heavy pictures or wall hangings -- is a bad idea.

Get out the drill, insert the appropriate-size twist bit, and drill a hole for a molly bolt. The twist bit goes right through the metal, and a molly bolt expands in the wall when tightened, providing a secure anchor. Once the bolt is set, back it out a bit, and there's your hanger.

Home sales, inventory both tick up in April

By Inman News
Inman News®

The pace of existing-home sales picked up in April, and while the number of homes on the market grew even faster, an "acute shortage of inventory" in some markets is driving up prices and creating multiple-bid situations, the National Association of REALTORS® said today.

Sales of existing single-family homes, townhomes, condominiums and co-ops were up 3.4 percent from March to April, NAR said, to a seasonally adjusted annual rate of 4.62 million. That's a 10 percent increase from the 4.2 million homes-per-year pace seen at the same time a year ago.

Distressed properties -- foreclosures and short sales sold at discounts -- accounted for a smaller percentage of sales in April (28 percent) then they did a year ago (37 percent).

That helped boost the median existing-home price for all housing types in April by 10.1 percent from a year ago, to $177,400. Median home prices were also up 3.1 percent in March, marking the first time since the summer of 2010 that median prices have posted annual gains for two months in a row.

The inventory of existing homes on the market also shot up 9.5 percent to 2.54 million. At the pace homes were selling in April, that represented 6.6 months of supply -- up from 6.2 months in March. A six-month supply of inventory is generally considered an even balance of demand between buyers and sellers.

At this time last year, the inventory of homes on the market was equal to a 9.1-month supply. In July 2007, there were a record 4.04 million existing homes for sale.

NAR Chief Economist Lawrence Yun said the diminishing share of foreclosed property sales is helping home values. He said NAR expects stronger price increases in markets where homes are in short supply, including Washington, D.C.; Miami; Naples, Fla.; North Dakota; Phoenix; Orange County, Calif.; and Seattle.

First-time buyers accounted for 35 percent of April sales, up from 33 percent in March but down slightly from 36 percent a year ago. NAR estimated 29 percent of April sales were all cash, down from 32 percent in March and 31 percent a year ago. Investors purchased one out of five homes in April, little changed from March or the same time last year.

Single-family home sales rose 3 percent to a seasonally adjusted annual rate of 4.09 million in April, up 9.9 percent from a year ago. The median existing single-family home price was $178,000, up 10.4 percent from April 2011.

Existing condominium and co-op sales increased 6 percent to a seasonally adjusted annual rate of 530,000 in April, up 10.4 percent from a year ago. The median existing condo price was $172,900 in April, up 8.1 percent from a year ago.

Regionally, existing-home sales in the Northeast rose 5.1 percent to an annual level of 620,000 in April, up 19.2 percent from a year ago. The median price in the Northeast was $256,600, up 8.8 percent from April 2011.

Existing-home sales in the Midwest increased 1 percent in April to a pace of 1.03 million, up 14.4 percent from April 2011. The median price in the Midwest was $141,400, up 7.4 percent from a year ago.

In the South, existing-home sales rose 3.5 percent to an annual level of 1.79 million in April, up 6.5 percent from a year ago. The median price in the South was $153,400, up 8 percent from April 2011.

Existing-home sales in the West increased 4.4 percent to an annual pace of 1.18 million in April, up 7.3 percent from a year ago. The median price in the West was $221,700, up 15.9 percent from a year ago.