Real Estate Live

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Maryann Haggerty and Elizabeth Razzi
Washington Post Real Estate editor and columnist
Friday, November 21, 2008; 1:00 PM

Welcome to Real Estate Live, an online discussion of the Washington area housing market with Post Real Estate editor Maryann Haggerty and columnist Elizabeth Razzi.

Maryann has been with The Post for 18 years and has served as real estate editor for the last five years. She's been a business and real estate editor and reporter for about 25 years. In all that time, she still hasn't figured out where you can find a lovely but inexpensive house in a charming neighborhood.

Razzi is the Local Address columnist for The Post's Sunday Real Estate section in Business. She's written about real estate and other personal finance topics for magazines and newspapers since the days of double-digit interest rates. She is also the author of two consumer-advice books, "The Fearless Home Buyer" (2006) and "The Fearless Home Seller" (2007).

Today, they'll discuss the local housing market -- from condos and investment properties to contracts and mortgages.

For more on local real estate, visit washingtonpost.com's Real Estate section.

The transcript follows.

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Maryann Haggerty: Thanks for joining us. Let's see if we can answer your questions and share your stories...

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Elizabeth Razzi: Hello, everyone! We're back chatting after only one week. We moved up the schedule, figuring everyone would be too busy eating leftovers on the Friday after Thanksgiving to chat. Let's dig in...

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Good people deserve more: I posed this same topic in another discussion site but really didn't help me out in getting some answers. My situation is that I'm top heavy on my mortgage, but able to continue making payments, keep my job, I have no other consumer debt, live frugally. When I tied to seek a loan modification, I was told that since I'm not in a foreclosure process nor have defaulted on my mortgage, I didn't qualify. I can't refinance because the numbers don't jive since I don't have enough equity built up. My point is that I've been good in terms of every aspect of keeping out of financial trouble -why isn't there anything offered that can give better options for "good" people. I think that I can sleep soundly with a lower interest rate and lower monthly payment just like everybody else.

Elizabeth Razzi: So, you deserve a lower interest rate because you've stuck to the payback terms that you agreed to a couple of years ago? And you can afford to continue paying that obligation, but you prefer not to? Why do you believe that deal should be changed?

Maryann Haggerty: I think there's a mistake in casting this in moral terms. You aren't a "good" person. (Well, of course you are, but not for this reason.) The lenders aren't modifying these loans out of charitable impulses. They are modifying them because NOT doing so would be more expensive for them.

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D.C.: Fannie Mae and Freddie Mac are the only two financial institutions that are getting a federal bailout that haven't announced any layoffs to date.

Since they both are the large employers in this area, how do you think that would affect housing if a large scale layoff was announced by both?

Elizabeth Razzi: There have been job cuts at Fannie and Freddie over the past couple of years, but no wholesale, hundreds-at-a-time layoffs. You're right, they are big employers here, but they're not big enough to derail the economy the way a big layoff at GM hurts Detroit. What could hurt the local economy would be widespread layoffs spread among all types of employers. If everyone is at risk of a layoff, everyone quits spending.

Maryann Haggerty: Part of the goal of the federal takeover is to keep the mortgage giants operating, because they fill an important role in the liquidity of the system.

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Midwest: Hi Ladies-- Pick me pick me ! I wrote in last week asking about your thoughts on the real estate web site Zillow. I know you are busy and cannot get to every question but I was hoping maybe this week you might. What do you think of Zillow/how accurate are they/how do they get their info/any other thoughts you might have. Enjoy the chats very much - Happy Thanksgiving!

Elizabeth Razzi: Oh, how cute. On any given day, Zillow can say my home's value has gone up -- or down-- by tens of thousands of dollars. I know for certain that the comparables they have listed for me, while geographically close, are in no other way comparable to my home. Their valuation function is simply not reliable enough to be of any use.

Maryann Haggerty: I think I said this last week: Zillow says the value of my home has gone up in the last couple months. I doubt that.

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Rockville, Md.: Good afternoon Maryann and Elizabeth.

I wrote in six month ago asking whether there was a chance that any of the houses that were sold out in North Potomac would be back on the market because of loan issues. I was certain that it was unlikely so I did not sell my house. Well, I guess I should have because one of the couples who bought those houses did have loan issues. I would still like to purchase that home, but would I have loan problems also if I try to keep my current home and rent it out at about $500-$1,000 loss every month? For your information, the house we are trying to purchase is around 900k. We still owe 450k on our current home. We are planning to put 20 percent down on the new home and our household income is around 220k.

Elizabeth Razzi: It will be tougher for you to get a loan while taking a loss on a rental, that's for sure. You're going to need, at a minimum, a signed contract from a renter, cash in hand from their first month's rent, and an excellent cash flow to handle both your rental losses and the payments on the new home. Do you really want to burden yourself like that?

Maryann Haggerty: Just doing the math in my head, it doesn't sound like you could support those two mortgages.

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Silver Spring, Md.: Hello. I thought you might be interested in this rather depressing story from the trenches.

My wife and I paid $212,000 for a large colonial (4 BA, 2.5 BA) in a close-in neighborhood in Silver Spring in 1990. We paid it off a few years ago and recently sold it to our son and his growing family, preparatory to our retiring to Florida in the near future.

As part of this process, we of course had to get an appraisal. We knew prices had gone down, but were stunned when the appraisal came in at $310,000. This actually works out fine for us, as transfer fees are lower, we don't need the money, and it lowers the burden on our son and his family.

But, wow. A couple years ago a much smaller rambler, 3 BRs and just 1 BA, went on the market for $390,000. They got 8 bids the first weekend and it sold for $423,000. I never saw the inside, which might have been fantastic, but I hope that family is managing the mortgage and doesn't plan to move any time soon. Even a nice house in a close-in location is no protection against the current slump.

Elizabeth Razzi: Wow. Thanks for the report. And enjoy Florida!

Maryann Haggerty: Those are price levels that begin to almost be affordable for a close-in neighborhood.

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Arlington, Va.: Hi! My husband and I are looking to buy our first home. We found one that appears to be a steal, with a price drop by almost a third. The taxes are a bit high for us. My questions: (1) would property taxes be readjusted when we purchase, based on the sale price, and (2) do we run a risk of the market taking off, the property taxes skyrocketing and we're paying more in taxes that we really like. I'm wondering if you or any of the chatters have any insight into this. Thanks.

Elizabeth Razzi: Property taxes are a wild card right now. Even if your property value goes down at the next assessment, there's a risk that the county increases the tax rate. Local governments are facing serious budget problems thanks to reductions in revenue gained from the property tax. (Be prepared to appeal the assessment promptly if you genuinely believe the home is over-valued.) Keep in mind, though, that your property taxes are deductible on your federal tax return.

Maryann Haggerty: The assessment adjustment isn't automatic. You pretty much need to wait for the county to assess, then appeal it. But Elizabeth's point is an important one: It's the tax rates, as much as the assessment, that really affect what you'll pay. And if the county budget is tight, those rates could go up.

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Forestville, Md.: I've been looking to buy a home in PG County. The community I've been looking at has homes that were built between 2004-2006. Now there are homes that have been built in 2008 and they are still building. The resales and foreclosures are listed for the same price or more as the new homes. Are people really expecting to get an contract for the same or more as the new homes? What would be a reasonable percentage to offer for the resale/foreclosed home in the community below what the new homes are selling for now? Or should I just wait a few more months as they continue to build and as I see it prices will continue to fall? Thanks.

Elizabeth Razzi: You seem to be assuming the new home prices haven't been reduced, either. Builders have been cutting prices--and throwing in extras. Normally, it would be tough for resales to compete with new construction. But in this downturn, there is a risk that your new-home development will take a very long time to get finished. You run the risk of living on a construction site for years--or that the builder will go out of business and not be around to handle normal first-year warranty work.

Maryann Haggerty: Actually, I suspect people are NOT expecting to get the same as or more than new homes. That's what they're asking. The psychology is probably that they expect that no matter what they ask, they'll get bids X percent lower than that.

Also, remember to adjust for extras--ie, are those new home prices the base prices, and the used-home prices for the fully tricked out model? (Tho, of course, most builders are throwing in the upgrades free.)

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Alexandria, Va.: Submitting early... considering a small remodel in a bathroom --replace countertop w/granite and install new sink and shower faucets. We're selling in about two years. Sink now looks ok but faucets are gold and show wear. Think it's worth making this improvement in terms of a return on the investment (about $750)?

Elizabeth Razzi: Well, if shabby faucets are the only real problem, you could just replace them with something more up-to-date for less than $750. And if resale value is the only consideration, you could do it shortly before putting the home on the market, so everything looks out-of-the-box fresh. The real question, then, is do you want to enjoy this upgrade for a couple of years? If your budget looks good, why not?

Maryann Haggerty: The gold faucets would get on my nerves.

I doubt you can actually calculate return on investment one way or the other about an investment that small (in terms of the total value of the house.)

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washingtonpost.com: Selling Luxe In a Time Of Struggle (Post, November 15, 2008)

Maryann Haggerty: Here's an article we ran last weekend on pricing and marketing techniques at an upscale new-home development.

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Laurel, Md.: Help! My fiance' and I are looking to rent a townhouse in the Fredericksburg area. We saw one we really liked and its listed with Century 21. When renting a house through a real estate company is the agent entitled to a commission if we decide to rent? Do we pay her that commission?

Elizabeth Razzi: Relax. You won't owe a commission. The owner of that home is paying the real estate company to market the rental, and very possibly to manage it from month to month. All you have to consider is whether the townhouse rent is good value for your money and whether the terms of the lease are fair and reasonable. Pay attention to the conditions stated in the lease for getting your security deposit back; whether you can sublet or break the lease early if you need to move unexpectedly. And just before you move your belongings in, take photos of the interior (especially the carpet) to document the townhouse's condition. Get the rental officer to note any obvious stains or flaws. That can help you get the full security deposit back when you eventually move out.

Maryann Haggerty: There are places where you might have to pay a real estate agent who gets you into a rental (New York City.) But that's not the custom here.

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Lexington Park, Md.: What are your thoughts on the Southern MD market? That is St. Mary's county. Thanks!

Elizabeth Razzi: It seems you folks have two big things going for you. Prices didn't really shoot up as dramatically as they did in communities closer to DC. And the Naval Air Station gives you a huge, very stable employment base. Are you seeing many foreclosures?

Maryann Haggerty: And people who work down there really do need to live down there--it's too far from anywhere else.

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Rockville, Md.: What are your thoughts on new home inspection. Do you think it's worth the money to do?

Maryann Haggerty: Yes, yes, yes. Homes are built by human beings. Even the most careful of them make mistakes.

Elizabeth Razzi: And with builders struggling under severe financial pressure now, there's a temptation to cut corners. An inspection only costs a few hundred dollars. I'd say go for it, but you're going to have a world of trouble getting a builder to make the home sale contingent on the home passing inspection. Still, it can give you a good list of things that need to be fixed during the builder's one-year warranty period.

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Arlington, Va.: You know, just a snarky comment. I found a picture of my parents standing proudly in front of their first home after they got married & I thought of that poster who months ago complained about not being able to buy a home like his parents could. I couldn't help but wonder if that guy's standards were a little high. My parents first home was teeny tiny (Knowles Ave, Kensington). 1 bathroom. 2 bedrooms, unfinished basement. I bet the poster could find plenty of homes like that, that he could afford but those kinds of homes are probably "beneath" him.

Elizabeth Razzi: Hey, given the way the economy has been treating all of us lately, we're all entitled to a little snark now and then. But you make a very valid point. Our expectations have grown tremendously. Kids used to share bedrooms, not to mention bathrooms. Central air conditioning wasn't a given. Kitchen appliances were....a range and fridge. Vinyl floors and laminate counters ruled. My only gripe is that builders used to make modest new homes for the first-time market. They haven't focused on that market nearly as much in recent years.

Maryann Haggerty: My parents are considering a move to a 2BR/2BA condo. It will be the only time they've ever lived in a place with two full baths. Mom isn't sure they really need them, though.

Personally, I consider two baths absolutely key to remaining happily married.

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Washington, D.C.: I was interested to read the Post article on the increasing number of house raffles. If I enter a house raffle (any raffle, not specifically the MD one mentioned in the article), what things should I look out for/be prepared for? Is this a "prize" some people might regret?

Maryann Haggerty: Be prepared not to win.

And if you do win, be prepared for a hefty tax bill. Odds are you'll never be able to afford to live in the house.

As that story pointed out, of the 11 raffles registered in Md. this year, only one has actually given the house to a winner. That was out in Hagerstown, and from a story we wrote about it in the spring, I know the winner was going to resell the house to pay the tax bill.

Also, there's a reason Md. and many other states require that these deals be registered with the authorities. In the past, there have been raffles where no one won and the sponsor just kept the cash.

Elizabeth Razzi: You're probably better off buying lottery tickets. I'm just deeply distrustful of individuals processing large amounts of cash without oversight.

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Pentagon City: I've been pondering buying a place for some time. With the current economic situation, are there still first time home buying benefits to be had? I would like to find a place in Alexandria, and could swing about $20K for a down payment. I know that would never be the 20% that some loans might require, but are there still any breaks out there for first time buyers? Thanks!

Maryann Haggerty: Yes, the government first-time assistance programs largely remain in place.

(In the District, for instance, there was a possibility that the city's loan assistance program, known as HPAP, might be suspended, but this week, the City Council moved to make sure it remains funded.)

Also, FHA loans continue to require just 3.5 percent down.

Elizabeth Razzi: Given the area's high cost of living, the cutoff points for housing programs can be surprisingly high. Don't assume you don't qualify. And it has always, always, always been difficult for first-time buyers to make a 20 percent down payment. That's why we've had low-down programs such as FHA or loans that use private mortgage insurance. I used PMI to get into my first home back in the 1980s. And it may not even be wise for you to put all your cash into a down payment. You still need cash in reserve to pay emergency expenses and to start your retirement nest egg.

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Baltimore: I am selling my mother's house, which my parents bought in 1953. The buyer's inspection discovered lots of substandard wiring (lamp cord!) apparently done by my father back in the 1950's. I wish I'd had a home inspection done before putting the house on the market. I'd still have to pay for the repairs, but it wouldn't be delaying the closing.

Maryann Haggerty: That's a good point.

Elizabeth Razzi: It would give you a better prediction of your bottom-line proceeds after the sale, too.

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Lexington Park, Md.: You'd be amazed at the number of people that commute down here from "civilization"...but most of us would never consider going back to D.C., Md. and NoVa. Thanks for the comment.

Maryann Haggerty: I guess family reasons could push someone into that reverse commute--ie, she works down there, but he works up here. But so much of Southern Maryland is so pretty...

Elizabeth Razzi: I'm too superstitious to say I'd never consider moving anywhere. I've seen too many people move a stone's throw away from their job...just to see the job relocate to the other side of town.

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Silver Spring, Md.: I'm like the earlier top-heavy mortgage payer. My loan conditions stink but I keep up on them. I always thought the mortgage was the number one bill to pay on time. This is probably an obsolete mentality. By stretching to pay my mortgage I am starting to defer some important maintenance and am racking up credit card debts. It certainly does cross my mind that I should skip a few payments and see if I can get better terms.

Elizabeth Razzi: It is not an obsolete mentality! You just don't hear a lot from the people who quietly pay their mortgage every month. That mounting credit card debt could be a problem, though. If you are genuinely strapped (and aren't running up the cards at Neiman Marcus, for example) your lender may be willing to work with you. The idea is that you could really be on your way toward missed payments, especially as that credit card debt balloons. It's at least worth a call or two to your lender and to the Hope Now hotline, 888-995-HOPE.

Maryann Haggerty: One thing to keep in mind, all of you who are toying with doing this: These modifications are not a walk through the park, either. You're going to be in paperwork hell.

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More notes from the field: We moved in April 2006 and finally sold in July 2008 (yes, we carried both mortgages for that time). In 2005, several comps in my neighborhood were selling for around $380K to $400K. I originally listed at $369K. We ended up taking the house off the marking in Jan 2008 due to a flood. Repaired 75% of the home and added $10K of our own in upgrades. We finally sold for $315K. I just check comps in my old neighborhood and they are listing for $250-299K.

So, you can see how the the market is plummeting. It turns out the flood in the house was the best thing that could happen to us. Although it caused us 6 months of grief dealing with insurance, vendors, the reconstruction team, we did sell our home within 2 weeks of relisting it and part of what sealed the deal was that most of the interior was brand new. The new owners love their home and we love being out from under the second mortgage.

Maryann Haggerty: Thanks for the report.

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Why not?: Elizabeth Razzi: So, you deserve a lower interest rate because you've stuck to the payback terms that you agreed to a couple of years ago? And you can afford to continue paying that obligation, but you prefer not to? Why do you believe that deal should be changed?

...Wow. I'm not the original poster, but how about a little sympathy? This is seriously vexing for those of us who are approaching "underwater" status on our own loans but faithfully pay the agreed-upon amount every month. We didn't screw up in agreeing to the loan in the first place (my husband and I could and can afford it), we're not screwing up now (we continue to pay faithfully)... and yet the bailouts are helping many people who took on loans they never could have afforded, for houses they couldn't afford, while my husband and I keep plugging away at our underwater loan in good faith. (Not counting the people whose circumstances changed drastically. They rightly deserve sympathy.)

Maryann's answer is right-on -- because the bailouts are not about who's "good," they're about cost-effectiveness for the banks. But how about a little sympathy, if nothing else, for those of us who did, and continue to do, the right thing?

Maryann Haggerty: Sorry, I pay my mortgage every month, too. I'm not underwater now, because I've lived in the same place for so long. But I've been underwater in the past. (Florida, late '80s.) I don't expect sympathy because I pay the bill I've agreed to pay, and I don't expect the loan to be recast.

If you're approaching underwater on equity, it's not fun, sure. But if you don't have to move, and you can afford the payments, you can ride it out.

Elizabeth Razzi: Hey, I've got plenty of sympathy. But it's important to keep some perspective. When you buy a home, nobody guarantees that it will always hold its value. You don't get that guarantee when you buy a stock, either. If values fall and you're upside down, that's a lousy break. But you don't actually realize that loss until you have to sell. You can ride out the down market.

Most of the people who bought homes they truly could not afford are losing them to foreclosure. They are not getting away with anything here. The foreclosure-prevention programs are being implemented just to stop the economy from getting dragged down even further.

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New York, N.Y.: My husband and I moved to N.Y. from D.C. this summer to be near family. My question is, we would really like to buy a house next summer in N.J. While prices continue to drop, which is promising and good news to us in this area, I'm wondering if now we'll be forced to make a 20 percent down payment because of the bad economy. This would definitely put off our home buying. When we moved into our rental co-op earlier this summer, we were told we had credit scores in the 800s, so I think we're pretty solid there. At the time we'd be buying, we'll have about 25k in student loans, but that's it. What's your take? Is it reasonable to think we could put 10 percent down?

Maryann Haggerty: I can't predict the future, particularly in these circumstances. But even now, you don't need a 20 percent down payment. You can still get private mortgage insurance (even though those prices have gone up, too.) And you can still get FHA.

Elizabeth Razzi: If you can afford the higher monthly mortgage payment that results from making a lower down payment, it could be the more prudent choice to keep your down payment as low as possible. Cash savings are a very handy thing to have in this troubled economy.

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Home inspections: This is a buyer's market. Do NOT agree to buy a home without it being contingent upon the home inspection. A home inspection will cost you a few hundred dollars. Some of the errors or problems that it reveals could cost you thousands or tens of thousands to fix. Why take the risk? This is not 2002 where many buyers had to forgo the home inspection to seal the deal, when there were 12 buyers for every property. Now there are 20-50 properties for every buyer and every seller should be prepared to do what needs to be done to sell. If they aren't, then you need to look elsewhere.

I remember one of those HGTV shows where they were reviewing houses to buy and they did an inspection of one house and found that it had hidden foundation problems. If they had bought that house without the inspection it would have cost at least $50K to fix. Do you want that to be you?

Maryann Haggerty: Even in 2005, I was a home inspection booster--even if people said it was impossible to buy with a contingency. I don't know why someone would consider skipping one now. HOWEVER, I do know that many people think they can save a few hundred bucks by skipping the inspection on a newly constructed house and instead relying on the builder's warranty to fix any problems. That's what the first question on inspections was about...

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Raleigh, N.C.: I'll be moving to D.C. for a new job next June. My spouse and I own a house in Raleigh (where the market is flat, but not in decline). I know that any house in D.C. will be much more expensive, but we are actively saving for the next six months and will likely have 20% ($350K?) to put down assuming we break even on our current house (shouldn't be much of a problem). Where should we start looking? I'll be near Wash Hospital & Howard U and spouse will be near Biotech row (Gaithersburg area).

Maryann Haggerty: A perpetual debate: Is it better to live half-way between workplaces, or to have one spouse with a short commute and one with a long one?

If you want half-and-half, then just about anywhere in Montgomery County.

But if you go for one short, one long (which seems to work better if someone needs to be near the kids!) you are talking two very different places that appeal to two very different kind of people. DC for city folk, Gaithersburg for new suburbs.

Elizabeth Razzi: You'll probably find more home for your money closer to Gaithersburg. Traffic is another thing you're going to have to adjust to after life in Raleigh. Wherever you move, easy access to Metro makes life easier, even if it's only a backup for when your car's in the shop.

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Arlington, Va.: My question is about the seller subsidy that is often rebated to the buyer. I understand that property records don't reflect this subsidy in appraisal values. Why is this and why isn't this considered fraud by overvaluing our housing? Also how, as an individual who is not a realtor, can I get access to the subsidy information? Thank you.

Maryann Haggerty: Appraisers do have access to that information, through the multiple listing service. That's how real estate agents have access, too. The availability of MLS info to the public via public Web sites shifts all the time. Do any of the sites include this info regularly now?

Elizabeth Razzi: I've been told by appraisers that concessions of up to about 3 percent don't affect value. And any rebates are supposed to be listed on the HUD-1 settlement statement at closing.

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Everything comes with a price: For those considering defaulting on their mortgage to try and get buyout money help, be prepared to be treated as a deadbeat. Once you default on payments, your credit rating can drop as much as 300 points. Most of you are probably in the good to excellent range (600+). You will find yourself in the credit defaulters from 300-500 and will not be able to get a new car loan, will not be able to get new credit cards. Your interest rate on your existing credit cards will go up (you thought 14-18% was bad, you'll start seeing 22-28% APRs) you will find that you no longer qualify for those deals in stores for "no money down" or "low APR loans" so you will not be able to buy a stove, dishwasher or other appliance except for cash down or a credit card that you already have.

It's a long losing battle with credit if you start down that slippery slope. Best to cut back now and try to keep your head above water before you tip over that edge. It ain't pretty.

Maryann Haggerty: This is a big consideration. Nothing ruins your credit as much as a mortgage default. (It's worse than bankruptcy in some ways.)

Elizabeth Razzi: True. It will hang over your head for years.

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Washington, D.C.: I wonder about the effectiveness of credit scores after all this plays out. Do you think we'll get to a point (in say, 2012), where people say "oh, yeah, my credit's a bit dinged up, I got caught up in the housing bubble," and that's glossed over by lenders? My point is, the big incentive for paying your mortgage on time is to maintain your credit rating, but there are going to be millions of people with dings after this, so how will banks handle them?

Maryann Haggerty: I've been wondering that, too--but these things tend to run in cycles, and at least through the first part of the cycle, expect the lenders to be even tougher.

Elizabeth Razzi: I wouldn't be too optimistic about lenders forgiving and forgetting. They have their own bad memories from the housing bubble, and they're likely to be more demanding about credit profiles for new borrowers for a very long time. Remember, there are many, many people--who aren't drawing attention to themselves--who never got in credit trouble. They're going to get the juicy credit offers in years to come.

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Alexandria, Va.: For the person in Pentagon City, as long as what you are looking to purchase is $362K or less, go to NACA and buy through them. The process is tedious, but you can get a fantastic loan with no closing costs outside of escrows with no money down (i.e. so that $20K can be used a cushion). It is literally the best mortgage product out there as long as you are within the purchase limit.

Maryann Haggerty: NACA is Neighborhood Assistance Corp. of America, one of the homebuyer education groups that works closely with lenders.

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Rochester, N.Y.: Based on your response to "good person". She should stop paying her mortgage in an attempt to lower her payment; if that doesn't work she could find another cheaper place and allow the place to go into foreclosure. Driving prices down in the her neighborhood and continuing the vicious cycle.

He/she has a point the government programs should not just be open to people behind on their payments but everyone looking to adjust their rate.

Maryann Haggerty: Posted without comment.

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Anonymous: I first want to thank you for week after week defending the virtues of living in PG County against those who try to cast PG as a crime ridden community. I grew up in Howard County and have lived in PG County for 12 years and have no regrets. I read the paper and there is crime everywhere, triple murder in Fairfax County, bus shooting in Montgomery County, always crime in D.C. So what's the point?

My question is about the market and home values in D.C. vs. PG County and other surrounding suburbs. I'm in a similar situation to the so called "good" person. (I totally agree with your response to that question. I bought high in 2006 and now my house is probably worth $70,000 less than I owe on it. That's the risk I took, I just have to look at this as a long term investment. Are values better in D.C.? I saw a real estate agent on HGTV say that values are stable in the D.C. market. Is this true?

Maryann Haggerty: All the numbers show that values in the District, so far, have been more stable than those in PG. (Although if real estate agents are saying that on HGTV, I begin to question the validity of that statement.)

Even before things started going really sour, PG had a very high concentration of expensive sub prime loans, even among people whose income would tend to indicate that they should have been prime borrowers. This is one of the pieces of evidence that many people have long cited to make the argument that these loans were unjustly foisted off on minority borrowers and in minority neighborhoods.

Elizabeth Razzi: Prince George's also had the open (agricultural) land available for new home development. That allowed a rapid increase in supply, which is keeping values lower now.

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Sympathy or not: What most people don't get is that the people getting the bailout are not getting off scott free. Their credit is damaged, they may have some tax issues to resolve afterwards, and they have restrictions on what they can do with their homes. For example, many will not be eligible for home equity loans or any other form of credit for years after this. Many will be stuck in that home for a minimum amount of time (something like 2 years), so if their life changes, they cannot make decisions to accommodate. It isn't a walk in the park, folks. It's debt remediation and it comes with a price. Believe me, you don't really want to pay the price if you don't have to.

Elizabeth Razzi: Two cents more...Thanks.

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Alexandria, Va.: If anyone has doubts about getting a home inspection they need to check out the "Home Inspection Nightmares" site on This Old House: http://www.thisoldhouse.com/toh/info/0,,20211283,00.html

A home inspection costs peanuts compared to the house you want to buy, and it's absolutely foolish not to get one.

Elizabeth Razzi: So many comments come in at the last minute!!!

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Alexandria, Va.: Sorry forgot to add that there is no PMI with NACA. I bought a house with them for $359K and all I have to do is pay a membership fee of $50/month for 10 years along with my mortgage payment. The fee supports the organization and if you pay off the loan in less than 10 years, you don't have to continue paying it and it is a LOT less than several hundred dollars a month for PMI.

Elizabeth Razzi: One experience with NACA...

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Elizabeth Razzi: Thanks, everyone. Have a wonderful, safe Thanksgiving! This Sunday's column is all about credit--and whether it's still going to be there when you need it. Bye.

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Forestville, Md.: I sent in the question regarding the community where resales were asking for the same as new homes. The new construction homes have gone down in price. The base price now for the new homes is $259,000. There is a move-in ready home now listed in the 280's. The resales/foreclosures are between $250,000-$335,000. There were a few foreclosures recently listed in the $230's and are now under contract. The builder is pretty prominent and has many communities in the area with new construction.

Maryann Haggerty: Thanks. I don't see how anyone expects $300K on one of those foreclosures, but hey, they can ask.

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Maryann Haggerty: Whoops. Looks like it's 2pm, and we need to move on. A whole flood of questions came in near the end; sorry we weren't able to get to them.

In the Saturday Real Estate section, we feature an article about the resurgence of rent-to-own deals, and also a piece about the housing futures market.

And as always, look for Elizabeth's column in the Sunday Business section!

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