Welcome to Real Estate Live, an online discussion of the Washington area housing market with Post Real Estate editor Maryann Haggerty and author 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 has 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: Happy new year, folks! (Well, let's hope it's a happy one. At least it's a new one.)

Thanks for joining me this week. I'm handling chat duties by myself today, because Elizabeth is traveling. So I'll dive in and see what I can answer, etc. If you have questions or observations, the sooner you send, the better.

Unless you wnat to read tooo mnay tyxpoes near the end of this houre.

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Arlington, Va.: So are we witnessing a SECOND housing bubble bursting, what with inaugural rentals being overpriced and greedy landlords looking to score some quick cash crying foul?

Maryann Haggerty: I don't think that one even merited being called a bubble, because it never had any air in it. It was hyped from the start. Asking prices on craigslist do not a market make.

That said, my husband this morning SWORE that he knows someone who got big money for their Cap Hill townhouse. I know it wasn't us.

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Arlington, Va.: I'd been wondering for weeks if people were actually getting the outrageous prices they were asking for inauguration housing via Craigslist and other venues. ($600 a night for a basement room a mile from the metro?!) Now I'm noticing a lot of people are trying to rent their parking spaces by the Orange Line for upwards of $100 a day. Any indication that this might be a more, um, reasonable way to profit, given that all the Virginia bridges will be closed and people are relying on metro?

Maryann Haggerty: Well, wouldn't Metrobus be a less expensive way to get into the Orange line? Or even, take a cab?

Still, yeah, at least this is a more friendly way to gouge the tourists.

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Greensboron, N.C.: Please help -- I'm just hopeless at understanding financial matters. Should my husband and I refinance our mortgage? We have a 30-year fixed rate mortgage with Wells Fargo. We also have childcare expenses that are absolutely draining us, and a lower monthly mortgage payment would help. What would that mean? Would we have more to pay over the course of the thirty years? What other ramifications would come from refinancing? Thanks.

Maryann Haggerty: There are a number of things you should take into account in order to make the most of the current historic refinancing opportunities.

• First, your credit has to be bright and shiny.
• You need sufficient equity. This can vary, but the more the better. And be conservative in valuing your home.
• If you switch from a 30-year loan that has been partially paid down to a new 30-year loan, yes, you will be paying for longer. Whether you pay MORE over that term is up to you. You could decide, a few years in the future, to accelerate the payment of principal. Many people do that.
• Then it's a matter of shopping around and doing the math. Determine upfront costs and monthly savings. Divide the cost by the savings to determine how long it takes you to break even. Will you still be in the house then?

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NW, DC: Can you help a couple of financial novices with a refi question? We'd like to renegotiate or refi our mortgage, which is currently 6.25 percent. Our house is worth about three times what we owe on it. We'd also like to add in money to do a much-needed kitchen renovation. Our credit scores are top notch, but our household income is a bit lower than average for this area. What should our first steps be? Do we ask our current lender to renegotiate terms and add in money for our renovation? Should we apply for a separate home equity loan, or add the renovation money into the original mortgage? Thanks millions for any tips.

Maryann Haggerty: Start with your current lender. Sometimes you'll get a break on fees from them. That gives you a base bid to compare as you shop around.

Ask about putting that kitchen-renovation money into your main loan, if you're comfortable paying for it over the long term. That will get you the best rate -- and since the money is going directly into home improvement, I think most folks would consider that wise.

A home-equity line carries with it interest rate risk -- i.e., it is likely an adjustable rate. That can be a good idea if you have equity and don't want to refi -- but your rate is so high by current standards that I can't imagine why you wouldn't want to refi if you can. You will likely save a noticeable amount.

And on income, the question isn't whether your income is as high as that of your neighbors. It's whether it's high enough to support the loan amount you want.

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Falls Church, Va.: I'm hoping to sell my 1 bedroom condo next year. My HVAC unit is currently 25 years old but still working. Would it be better to replace it before putting it on the market or would not replacing it not impact the sale, from a buyer's perspective?

Maryann Haggerty: Does "still working" mean "functions correctly" or does it mean "makes funny noises but sometimes actually blows out cold air?"

If it really works, then no need to spend the money to replace it before you sell.

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DC: Should I expect to pay all the same closing costs, again, for a refinance? I closed two years ago on a 30-year fixed rate and would like to take advantage of the new lower rates but seems crazy to pay another 4-5,000 in closing.

Maryann Haggerty: Refi closing costs can be a lot lower. For instance, the District does not charge transfer or recordation taxes on the refi of a property with four or fewer units. You get some other breaks, too.

That said, there are still costs. That's where the math comes in: Divide upfront costs by monthly savings to find your breakeven point in number of months. Compare that with how long you plan to be in the house.

You often roll the costs into the loan in the form of slightly higher interes. (That's what you're doing with any no-points or no-closing-costs loan.) People tend to do this on refis because deducting refi mortgage points is less advantageous than deducting purchase loan points.

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Bowie: Maryann, I live in what must be one of the least expensive non-dump townhouses in the metro area. (I'd estimate current market value at $200k). My kitchen still has its original early-80s appliances and decor. Since kitchen remodeling is supposed to be one of the more resale-recovery of upgrades, can you suggest what would be an appropriate project for a low-end house like mine?

Maryann Haggerty: You want to keep the costs down.

That means means Kenmore appliances, not Sub-Zero. Formica counters, not granite. Nice stock cabinets, not custom. (But not cheapo ugly cabinets, OK?) Attractive vinyl or laminate floors, not Brazilian rainforest hardwood.

Evaluate what others in your neighborhood have done -- i.e., your competition in terms of a sale. If they're all granite, you might be at a disadvantage.

Go for attractive and functional. For instance, in those stock cabinets, you might be able to get pullout drawers for not much more.

I find Ikea kitchens quite attractive, flexible and cheap. Not everyone agrees with me on this.

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Arlington, Va.: Hi Maryann -- Happy New Year! It has always been a dream/plan of mine (husband) to build our own house. Nothing elaborate, just a nice place with the space our family needs. A lot has become available in Arlington that could work. We are running the numbers and feel there is a lot in our favor right now. Low interest rates, lower costs of construction, my job is stable, etc. But of course, the current economy makes me nervous! Anything we should consider that we may be missing?

Maryann Haggerty: I can recommend a couple books. "The Brand-New House Book" by our columnist Katherine Salant and "Your New House" by Alan & Denise Fields. These are a few years old; you may find newer ones if you browse your library.

Make sure you talk with a loan officer to see if money will be available.

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Refinancing: I just want to make note that the statement "--You need sufficient equity. This can vary, but the more the better. And be conservative in valuing your home" is not necessarily true -- you need to check with your lender, and not having equity shouldn't dissuade you from looking into it. We bought a home in April with an 80-15-5 mortgage (so 5 percent down), so have almost no equity, and almost didn't even bother checking into it b/c of this mis-advice. Our lender, a major broker, was happy to let us re-finance, which we are doing right now to save $350 a month, and considering the closing is only about $2,200, it will pay for itself in a matter of months. Since we've been making payments less than a year on the original mortgage, that adds up to big bucks over 30 years.

Maryann Haggerty: Thanks for the observation -- you lucked out and got a really good deal.

But many loan officers are telling us that without equity, they can't make deals work

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Lompoc, Calif.: Can you foreclose (by choice) with tenants still in an active one year lease occupying the house you intend to foreclose on?

Maryann Haggerty: I don't know California law, so you'll have to check that. In most places, you can indeed foreclose on the loan. The question becomes how you treat the tenant after the foreclosure. In the District of Columbia, for example, you can't evict the tenant unless you are actually moving into the home yourself. In other places, you just have to give the tenant relatively short notice.

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Washington, D.C.: Hi. My fiance and I are looking to buy a home. We are looking in N. Va. (Fairfax and Arlington counties) for a single family home that we can stay in for 10-15 years. We hope to start a family fairly soon after we get married. Thing is...what about Fairfax county school district? I saw that Fairfax county is at a budget shortfall due to decreasing tax revenue. This will impact the schools. Should we consider Arlington county schools instead because there is a lesser budget shortfall? What do you think about this?

Maryann Haggerty: You are talking about two of the best school districts in the nation. I can't imagine how a couple years of tight budgets would destroy what Fairfax has built up over so many years.

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Washington, D.C.: If you have excellent credit (FICO score of 805) and 20 percent down payment, is there any benefit in using FHA loans? I am in the market for my first home and a few friends are urging me to look into FHA loans. They do not know my credit score or how much I intend to put down. Thanks.

Maryann Haggerty: Unless there's something I'm missing, there's no advantage to an FHA loan if you're putting down 20 percent, unless you need to take advantage of the slightly higher debt ratios that FHA allows.

Your friends, as you say, don't know what your situation is. You need to talk to a lender. And FHA loans come from the same lenders as non-FHA loans, so they can make the ocmparisons for you.

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Washington, D.C.: Dear Maryann and Elizabeth,

I have been renting my Petworth home for the past year while watching home values plummet across the US. Since July, my property values have held and gone up considerably...until the last few weeks. I really thought that my corner of the world was immune to the housing turmoil. Especially with all the new Obama folks moving into the DC area. What has changed with the real estate market in urban DC? What should I expect?

Maryann Haggerty: I'm not sure how you've decided that there's been a notable shift in your property value in the last few weeks. Can you tell me more?

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That said, my husband this morning SWORE that he knows someone who got big money for their Cap Hill townhouse. I know it wasn't us. : You sure? Sounds like he's breaking you in easy with his story about a "friend." I think he made a deal with some renters, and you'll be surprised that morning!

Maryann Haggerty: Well, considering that I'm planning to walk to and from work that day, I may not even notice that there are a couple extra folks around the house!

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Burke, Va.: Hello, Maryann and Elizabeth. My parents live in Pennsylvania, but would like to move near Washington, DC to be closer to my sister and me. However, we are concerned that it will be very difficult to sell their current home in this market. They have nearly paid off their mortgage and so have a large amount of equity in their current home. My question is, is it possible for them to purchase a new home, without selling their current home first, by getting a new loan that would pay off the remainder of the old loan and cover the cost of the new house? They could then move first and worry about selling their old home later, and not have to pay two mortgage payments each month. If this is not possible, what other options might we consider?

Maryann Haggerty: You're talking about some type of bridge financing.

That's usually a relatively short term loan (perhaps a year) meant to be paid off when House No. 1 sells. It's more expensive than the sell-first, buy-next strategy, but people do it all the time.

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DC and closing costs: Do you have a link to some information that tells you what you should or should not need to pay when refinancing (versus buying a home)? For example, do you need to pay for a new title? Thank you much!

Maryann Haggerty: The title insurance is generally lower (you pay for a reissue rate policy, assuming it hasn't been too long since your last loan.)Taxes are set by the government.You will need an appraisal, but probably not a new survey. The other stuff -- document fees, application fees, etc. -- are set by the lenders, and you need to ask them.

These folks have some nice DC-Md-Va specific calculators that deal with some, but not all, costs:

http://www.titlepros.com/calculators/titleInsPremium.php

If I poked around, I might find a more complete list. (Or I guess I could ask a reporter to do that and call it a story. Thanks for the idea!)

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HVAC: RE: the HVAC question. Just my point of view, but when we bought this past summer, we definitely noted the age of the appliances and factored that in to our offer. Granted, we bought a house so it might've been different had we been in the market for a house. But, just to let you know that we looked at those kinds of things.

Maryann Haggerty: Yes, you looked and factored it in. But you wouldn't have added 100 percent of the cost of a new system to your bid if the seller had spent the money up front, I bet.

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Washington, DC: Hi, Maryann. What about the prospect of refinancing from a 30-year loan to a 15-year loan, but with the knowledge that we may sell in a year or so? Is the refinance worth it or should we just pay more on our current mortgage?

Maryann Haggerty: It depends on your rate. HOWEVER, in that short time frame, you probably really are better off just paying the loan down faster.

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Alexandria, Va.: Re: the schools commment -- first of all, you have absolutely no clue what will happen with the budgets in either county 10 years, five years or even one year from now. You could pick Arlington, and five years from now they could have a shortfall, and Fairfax could have a surplus. Second of all -- even in those counties' worst years, they are still among the wealthiest in the nation, and have school systems that are in another league than many other places - your dilemma is the kind of problem you want to have.

Maryann Haggerty: Yeah. What's the opposite of having to choose between two evils?

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Sterling, Va.: Hi Maryann and Elizabeth,

I wrote in a while ago about deciding whether or not I should but my first home. I'm happy to report that I have my closing date set for 1/21 and now the only thing in my way is my home inspection tomorrow. My question is: Realistically how much can I expect to negotiate on repairs needed for my bank-owned home? I know the contract states there will be absolutely, "no repairs" but I'm wondering if people ask for repairs and get them or at least another price reduction? I'm soo close to getting my house I can almost smell the fresh paint but I'm just worried that we'll find a $20,000 mold problem or a $15,000 plumbing leak and I'll have to forget about the house. Thanks!!

Maryann Haggerty: You can ask, but the contract says no repairs. Banks are not known for their flexibility in these matters. If you're working with an agent who has up-to-date experience with this particular bank, ask her advice, too.

And keep your fingers crossed.

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Arlington, Va.: Why is that we can't make multiple offers simultaneously to different listings? I had a few houses I'd like to put offers in but my agent was against it and said only one at a time. My thinking is the first seller accepts our offer gets the sale and the other offers expire automatically. What's wrong with it???

Maryann Haggerty: Well, the offers DON'T expire automatically. Each one has a separate expiration time. If Seller A accepts your offer, how is Seller B supposed to know that? You could have two accepted offers and it would cost you to get out of one of them.

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FHA Loans: The person considering getting an FHA loan should be aware that he/she will be paying Private Mortgage Insurance (PMI) in addition to his/her mortgage payment every month. Something to avoid if at all possible.

Maryann Haggerty: Definition of terms: On an FHA loan, you pay a Mortgage Insurance Premium, or MIP. On a non-FHA loan with less than 20 percent equity, you pay Private Mortgage Insurance (PMI). That's what the Private is meant to express.

You pay MIP up to 22 percent.

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Arlington, Va.: Do you have any recommendation on how to convince my wife that there really is no need to rush to buy a home, especially in this economy, and that we should buy on our own terms and when we're comfortable? Just because we've been renting for almost two years doesn't mean 'enough of waiting, let's buy now,' right? Is there a book or something that can convey this message better?

Maryann Haggerty: Nope. No marital advice. And I doubt you'll find a book that helps either.

You know why? Because there is no right or wrong answer to that question. There is only the answer that is right for the two of you. And you have to talk that out. What makes each of you comfortable? Why? (i.e., I'm guessing here that for you, "comfortable" means a lower purchase price, while for her "comfortable" means a home she owns.)

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Maryann Haggerty: Looks like I'm a few minutes over time. I'm sorry if I didn't get to your question.

Tomorrow's Real Estate section features a story on mortgage walkaways and the consequences, and another on geothermal heating/cooling systems, in addition to the usual consumer advice, etc.

Have a lovely weekend. We'll chat again on Jan. 23 (this time with Elizabeth helping me!) Maybe we can compare notes on whether anyone actually rented out their places?

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