Indy Home Marketing - January 2009 Newsletter

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January 2009 Newsletter

Volume 3, Number 1

			5 QUESTIONS TO ASK BEFORE RENOVATING YOUR HOME Ready, set, wait… Before making any big changes to your home, ask yourself these big questions... Q: How long do you plan to be living in your house after the renovations? The longer you plan to stay, the
	more creative you can be. But if you are planning on selling the house in the next five years, keep potential buyers in mind with your choices. In the latter case, for instance, go with neutral colors in the kitchen and bathroom. For the same reason, con- sider maple cabinets. Maple is the best wood to choose for cabinets. Some people dislike oak and some dislike cherry, but a majority of people can live with maple. Continued

	STEPS TO WEATHER THE ECONOMY Protecting Your Home and Finances in Tough Times With the nation possibly facing the worst financial crisis since the Great Depression, and as many as 6 million homeowners at risk of foreclosure, we all need to review our finances
	and make sure we are well positioned for the future. Home values, the stock market and the economy will eventually recover, so the main goal is to make sure we protect our finances as well as pos- sible in the meantime. Continued


		RECIPE OF THE MONTH Italian Baked Chicken and Pastina January's cold weather makes "comfort foods" like this great baked chicken and pasta recipe something the whole family

will enjoy and ask for seconds. The 4 serving meal can be pre-
pared in about 40 minutes. Recipe courtesy: The Food Network

INGREDIENTS:

•	1/4 teaspoon kosher salt	•	2 tablespoons olive oil
•	1/4 cup bread crumbs	•	1 clove garlic, minced
•	1/4 cup grated Parmesan	•	1 cup shredded mozzarella
•	1/4 cup chopped fresh flat-leaf parsley
•	1/2 cup cubed chicken breast (1-inch cubes)
•	1 (14.5-ounce) can diced tomatoes with juice
•	1 cup pastina pasta (or any small pasta)
•	1/2 cup diced onion (about 1/2 a small onion)
•	1/4 teaspoon freshly ground black pepper
•	1 tablespoon butter, plus more for buttering the baking dish

DIRECTIONS:

Start by preheating the oven to 400 degrees F. Then, bring a
medium pot of salted water to a boil over high heat. Add the
pasta and cook until just tender, stirring occasionally, about
5 minutes. Drain pasta into a large mixing bowl.

Meanwhile, put the olive oil in a medium saute pan over
medium heat. Add the chicken and cook for 3 minutes. Add
the onions and garlic, stirring to combine, and cook until the
onions are soft and the chicken is cooked through, about 5
minutes more. Put the chicken mixture into the bowl with
the cooked pasta. Add the canned tomatoes, mozzarella
cheese, parsley, salt, and pepper. Stir to combine. Place
the mixture in a buttered 8 by 8 by 2-inch baking dish. In
a small bowl mix together the bread crumbs and the Par-
mesan cheese. Sprinkle over the top of the pasta mixture.
Dot the top with small bits of butter. Bake until the top is
golden brown, about 30 minutes.

'08 HOME SALE PRICES REMAIN RELATIVELY
STABLE DESPITE CONTINUED SALES SLUMP

Recently released statistics by the Metropolitan Indianapolis
Board of Realtors^® (MIBOR) for the 12-month period ending in
November compared to the same period in 2007, continue to
mirror double digit declines in home sales. However, average
sale prices, as well as the median sale price, have remained
reasonably stable, with only 4 and 5 percent drops respective-
ly. In comparison, 12-month national statistics have shown
property devaluations of 30% or more in some states, such
Arizona, California, and Florida.

Indiana's relatively "good" figures coupled with a drop of 9.3
percent in the inventory of unsold homes have led some area
economists to predict Indianapolis real estate is on the verge
of a slow recovery. Further, long-term affordability of homes
in the metropolitan area will certainly help Indianapolis real
estate reverse its declines earlier than other cities in the
country.

5 QUESTIONS TO ASK BEFORE RENOVATING (Continued)

Q: Are you just doing cosmetic fixes, or ready for an all-out over-
haul? It’s okay to make small changes one at a time, but think
long-term about the next step. For example, if you’re buying a
new kitchen sink, buy one with enough holes on the deck for the
faucet, sprayer, and soap dispenser so you’ll be able to afford to
add on later. (Cutting more holes into stainless steel or porcelain
is a tough job.) And if you know you’re going to buy new cabinets
later, don’t replace the countertop with an expensive granite one
now. The chances of reusing a granite countertop are slim to none.
Either it breaks when you try to remove it, or won't match the
footprint of new cabinets.

Q: Are you prepared for long-term chaos? Be realistic about how
long these changes might take. Renovations can go on for months,
so you need to be prepared to make do without that bathroom,
kitchen, or bedroom. When checking references, one of the most
important questions to ask is if the contractor finished the work
on time. You'd be surprised how quickly a week can turn into a
month. And if you're bunking up with the in-laws during reno-
vation, that month, as you know, could very well seem like
a year.

Q: Are your renovations keeping with the style of the home?
Any big changes you make to a home inside should reflect what
future buyers of your home will expect from the outside. If you
live in a Victorian house, don’t make it too contemporary. Also,
don’t change the woodwork or the floors. People who see a his-
torical exterior will expect a historical interior, so stay true to
the details. The same goes for a contemporary or modern home,
where future buyers may not expect old-fashioned details like
antique crown molding.

Q: Are your DIY choices reasonable? You may consider yourself
handy, but many do-it-yourself jobs demand your time more
than anything else. If you have a full-time job, are you capable
of taking on a second one? Some jobs that are not technically
difficult can take longer than you think. For that reason, if you
start any job yourself, take a tiny taste of the job before com-
mitting to the whole thing. It can takes only minutes to remove
something and days or weeks to replace it... and before you
know it, you can be in over your head. So take it slow. For
example, while refinishing cabinets with a new stain isn’t
rocket science, sanding down each one can take forever. Don’t
sand them all down at once. Instead, do one door from the
first step to the last... sanding, staining, gluing, adding hard-
ware... and see how you feel. Because, well, you just may
feel like hiring someone else to complete the rest of them.

A final tip: If you do plan to follow through with a large-scale
renovation, do the smallest room in the house from start to
finish... the insulating, rewiring, painting, refinishing, tiling,
so you gain a sense of accomplishment. Then, when you want
to pull your hair out wondering, why you're remodeling... you
can lock yourself in your beautifully renovated room with a
bottle of wine and remind yourself why.

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Protecting Your Home & Finances... (Continued)

The appropriate action is related to your liquidity. If you have suf-
ficient cash and liquid assets to cover one year's worth of living
expenses, you're in pretty good shape for the near term. Liquid
assets include things that are often overlooked, such as IRAs,
401Ks, cash surrender or withdrawal value for life insurance and/
or annuity funds that are immediately accessible, so you may be
in better shape than you think. There may be penalties associated
with some of those withdrawals, so tap them only as a last resort.

While regularly reviewing your financial status is a good idea for
everyone, there may be no need to modify a thoughtful and bal-
anced long-term financial plan if you have sufficient liquidity.
Homeowners with minimal liquid reserves need to take action
soon to strengthen their ability to access cash if they need it in
increasingly uncertain times. Uncertain economic times can be a
threat to even the safest jobs, and jobs take longer to find during
a recession. For homeowners with less than a year's liquid re-
serves, a top priority should be to protect their limited liquid
assets, look for ways to expand liquid assets, and look for
ways to improve your ability to get additional cash in the
future if you need it.

There are four important steps smart homeowners should take
to protect their financial security:

1. Review your home financing structure and take
action if necessary.

If you have a 30-year fixed-rate loan at current mortgage interest
rates or less, no action may be necessary if you have enough cash
and liquid assets to cover one year's worth of living expenses. If
not, refinancing your mortgage to reduce payments or prevent
future payment increases may be a good idea if you have equity
in your home.

If you have sufficient equity and your credit score is sufficient, you
may be able to take out cash in the process, which is a particularly
good idea if you have little savings and/or you can significantly
lower your mortgage interest rate through refinancing. If liquidity
is a challenge and you're eligible for a home equity line of credit,
apply now so it will be in place in case of a crisis. Things are
trickier for homeowners with mortgages that are "underwater"
(the mortgage balance exceeds the home's current market value).
Most lenders won't forgive the difference unless you're behind
on payments and are out of money, and even then they are far
more inclined to a restructuring that would temporarily reduce
payments to an affordable amount while maintaining the
mortgage balance.

A new "Hope for Homeowners" FHA program may enable some
homeowners to get part of the mortgage debt forgiven and re-
finance with a 30-year fixed-rate mortgage. Yet other alternatives
may emerge out of the current Wall Street rescue effort over the
next few months. In most cases, a foreclosure should be avoided
if possible.

In some cases, it may actually be in the homeowner's best interest.
For example, some financially-pressed homeowners whose mort-
gage balance far exceeds their home's value have recognized that
it will probably take many years for the home's market value to
catch up with their mortgage balance. In the meantime, they are
also trapped in their present home and unable to sell and take
advantage of better job opportunities in other areas. By the time
home values do catch up, many could have restored the damage
done to their credit rating by a foreclosure, and they would have
advanced in their career as well.

2. Review the allocation of your other investments.

Experts recommend diversification in good times and bad. If you
don't have enough liquid assets to cover at least one year's worth
of living expenses, rebalance your investments to minimize the risk
of further erosion of their value. Sell individual stocks and mutual
funds and buy conservative investments like AAA bonds and fed-
erally insured savings accounts and federal, state and local bonds.
They will hold their values in declining stock markets.

While conservative investments will also trail other investments
in appreciation when the market recovers, it's better for home-
owners with liquidity to be safe and miss out on some opportunity
for investment growth until the market recovers. Conversely,
homeowners who are in good shape financially probably need
not restructure a well-balanced investment portfolio.

When recovery begins, appreciation of securities will outstrip
growth of more conservative investments. Timing such market
changes is notoriously difficult, and homeowners with balanced
investment portfolios are usually better advised to stay in the
market and benefit from all of that recovery.

3. Make sure your investments, insurance policies,
IRAs, and/or annuities are adequately insured.

Bank deposits are covered by the Federal Deposit Insurance Corp-
oration (FDIC), which guarantees bank account balances of up to
$100,000 in a single bank ($200,000 for joint accounts). If you
have accounts in more than one bank, each account is covered
by those limits. FDIC protects IRAs kept in bank accounts up
to $250,000.

Make sure that any other investments through stockbrokers or
other financial service firms are insured by the Securities Investor
Protection Corporation (SIPC). SIPC protects the assets in your
investment account from losses due to a financial services firm's
bankruptcy, but it does not protect you from losses due to stock
market declines. SIPC covers up $500,000 per customer,
including up to $100,000 for money market funds.

With the failure of giant insurer AIG, many homeowners are con-
cerned about the status of their life insurance and/or annuities.
Life insurance policies are insured by each state's guaranty as-
sociation. Typical coverage is $100,000 in cash surrender or
withdrawal value for life insurance and $100,000 in withdrawal
and cash values for annuities.

4. Build liquidity by reducing unnecessary personal
expenses

If you need to improve your liquidity, reduce unnecessary personal
expenses and stop making any extra payments on your mortgage.
To build your savings, cut back on expensive vacations and non-
essential activities like hobbies and expensive restaurants. Look
for other ways to save money as well (never a bad idea even if
your finances are strong).

Article provided by the American Homeowners Foundation.

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