Real Estate Live

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.

____________________

Elizabeth Razzi: Hello, everyone! Glad to see folks have submitted a bunch of questions before heading out into the warm weather we're supposed to get today.

_______________________

Maryann Haggerty: Thanks for joining us. What a hectic week here in Washington-- bit we're still here, ready and eager to chat with you about real estate!

_______________________

Washington, D.C.: So I was about to finally refinance then the rates went back above 5. I have a 30 year at 6.15. What is a good rate to refinance? When do you foresee the rates going down, either to the high 4's or lower?

Elizabeth Razzi: As you've learned...rates bounce unpredictably. I wouldn't count on the high 4's or lower....but you never know what news--or new govt programs--will drive them lower any given day. If you can lower your rate a full point, that would be pretty good -- at least if you plan to live in the home long enough to recoup the closing costs. Get out your calculator -- Take the estimated closing costs, divide by monthly savings and you'll find the number of months it will require for the refinance to be recouped.

Maryann Haggerty: If you're at 6.15, you might still save a noticeable amount, even if you don't catch the very very bottom of the market.

The lesson: Set your target rate, and if you see it, grab it. Perhaps you'll miss the very bottom. And perhaps you'll kick yourself for moving too quickly or too slowly. But it's a bird-in-the-hand situation, isn't it?

_______________________

Short Sale: Can you explain?

Elizabeth Razzi: It is a sale for a price that is less than (or "short") of the amount still owed on the mortgage loan. If you have a plump savings account, the lender will ask you to write a big check for the difference between the sale price and the amount you owe. But if you don't have the money to pay back the lender, the lender MAY agree to write off the difference, and accept your sales proceeds as full payment for the loan. Sometimes they'll try to go after you for the unpaid amount--the deficiency--later, so that's something that needs to be clarified in writing between the home seller & his lender.

_______________________

Arlington, Va.: I am ready to buy--have my down payment, broker, etc.--but I'm not seeing what I want on the market right now. In fact, since this past autumn I have not seen much movement in my local housing market: few sales, and very few new listings. I'm told things will pick up in the spring. Do you agree? When does the spring start, for real estate purposes? Feel like I've been looking at the same stagnant listings forever, and at some point I'll have to just renew my lease.

Elizabeth Razzi: I've heard people say springtime starts right after the Super Bowl. (Go Steelers...) And you probably have been looking at a stagnant pool of listings over the winter. New stuff should come on the market in February, March & April. Will your landlord accept a month-to-month deal? Never hurts to ask.

Maryann Haggerty: Yes, you get a lot less activity in the depths of winter, i.e., everything pretty much stopped in late autumn.

The "spring" selling season is going to be very closely watched this year. When will it start? Will any buyers step up? etc, etc...

_______________________

Annapolis, Md.: Our home has been on the market and vacant for a year. It's in very good condition, which our buyers' reviews have confirmed, but sits on a wooded lot set back off the road which is not attractive to many buyers as we've discovered. We've always priced our home competitively low and even lower than our agent has recommended. We recently dropped the price again and had over 20 buyers come through an open house on a frosty day with over 8 private showings in the past 2 weeks, some of which were 2nd showings. Yet, still no offers!

My question: what else can we possibly do? If we didn't quickly get offers with this level of action in January should we expect not to get one? We are already beyond the price point we need to repay the mortgage and the bridge loan associated with the purchase of our other home. Help.

Elizabeth Razzi: It least your price was low enough to attract attention. Maybe you need to turn your focus to the property itself. Do you need to clear some brush or trees to make an inviting entrance? You really might benefit from hiring a home stager and renting (or borrowing) some furniture to make it appear lived in. A year-long vacant house deep in the woods might be a scary place. You might -- might -- be able to raise the price a tad, if the house becomes attractive enough.

Maryann Haggerty: Yeah, something's wrong. It's not the price scaring people off (though perhaps they think, once they see it, that it's not worth the money.)

Then again, consumer confidence is SO low right now that maybe people just decided this is not the time for them to take the plunge.

_______________________

Las Vegas, Nev.: As you know, we are #1 in foreclosures. What is the impact on the credit history and future borrowing ability if a person simply packs up and walks out on a home where they have been unsuccessful in renegotiating mortgage terms with their lender? Refusal to renegotiate was verbalized as "Your loan was sold in a package and re-sold several times. There are too many levels which would have to agree to the new terms and that will never happen." Thank you.

Elizabeth Razzi: Oh, it's about the most damaging thing you can do to your credit history. Every time you fill out a loan application from here on out, you will be asked if you ever had a foreclosure. And you will be kept from new mortgage loans for about 3-7 years, depending on the lender. Eventually, your credit will be rehabilitated, though.

Maryann Haggerty: From the perspective of your credit rating, a foreclosure and a walk away are the same: Bad.

(We'll look for a link to a story we ran about that a couple weeks ago.)

I was talking to folks who were in Las Vegas this week for the International Builders Show--yes, the biggest annual gathering of the home construction industry was held in Vegas this year, which proves that the universe has a twisted sense of humor-- and the stories I was hearing about market conditions were just plain scary.

_______________________

Upper Marlboro, Md.: Gave up on trying to sell a house in NE D.C. and will start renting it soon. Our realtor told us that the only people that have come through their offices are Section 8 people. Those were the only applications that we received, and we have accepted one. Is this normal in D,C,? He says it is.

Maryann Haggerty: Well, it depends on your neighborhood and your price range.

Elizabeth Razzi: Don't forget a benefit of Section 8 -- Uncle Sam's payments are reliable.

_______________________

Ashburn, Va.: Hello Maryann and Elizabeth! I'm submitting early as this question (2 actually) have been weighing on my mind for a bit. I'm in the market to purchase a home. My price point is $250K max and I'm not having luck finding homes in the District that I like. My ideal home is a 3 br/1.5 ba townhouse relatively close to a metro stop. (I really want to cut my commute as much as possible!) Cosmetic work is fine but major rehab is out. So far I haven't found anything at my price point that I like. Many need extensive work making the unaffordable in the end. The homes I like are way out of my range. It seems like a vicious cycle! My questions: Should I wait to see how the market does as the summer approaches and hope that prices drop more? This way there may be more in my range :) Or should I look in MD/VA for a home instead of the District? My realtor has suggested staying away from PG County because of the foreclosure rates and tumbling home value. I just want a home that I like and won't burden me with extensive repairs or an equally grueling commute. I will probably be in this house for 5 years or more. It really is a starter home :) Thanks so much for taking my questions!

Elizabeth Razzi: Affording that first home in the Washington area is STILL at tough task. You have to cast your net as broadly as possible--and I would include Prince George's, Montgomery and the closer-in parts of Northern Virginia. Why not? (Perhaps because your real estate agent doesn't know those markets and fears losing a commission?) And, yes, foreclosures in Prince George's have been high, but it's a big county. Many of the foreclosures are clustered in the fastest-growing parts of the county, where farmland was recently turned into housing. Close-to-metro still commands a relative premium. Good luck.

_______________________

Anonymous: I'm a Real Estate Agent. I do the majority of my business here and also live in Park Fairfax, a 132 acre park/condo complex just a mile from the Pentagon, a 10 minute walk to Shirlington's theatres, restaurants, library, grocery and shops. There are over 1500+ units in the complex and like other great neighborhoods, a very low inventory exists, only 6 properties for sale. And yet, the sales prices have been held low. Any suggestions on how to edge the prices upward, and have the appraisers accept the price, including seller subsidy?

Elizabeth Razzi: Ooh, nicely done plug for Park Fairfax. And it is an-old reliable neighborhood. How can you edge prices up? You can't. The price is what the market says the price is. And appraisers are limited on accepting seller subsidies. I believe there can be only 3 percent subsidy before it gets deducted from the price.

_______________________

Fairfax, Va.: Thanks ahead for posting my comments. I am very curious as to how many others might be in this situation. An observation from the field-My parents bought their home in Manassas in 1987 for $193k. They still live in it. Through helping kids to pay for college and such, they have refinanced several times over the years. The last time they refinanced, they did an ARM. My father told me they have done several ARM loans over the years and had never really lost out. Well now they owe about $350 on their house and would like to refinance to a fixed loan because their ARM jumped to 9.5 percent. Despite an over 6 figure income, stable employment and a credit score in the 750 range no one will refinance them. Why? Because there are so many foreclosures and short sales that they will only appraise their 22 year old home at the low $200's, So, disgustingly after 37 years of smart financial decisions and 22 years of taking care of and paying for their home they are stuck with a monthly mortgage that is on the increase, and are upside down in their home almost 200k. It's not just people that bought during the "boom period" that are suffering--a lot of people that just wanted to tap into their home's equity and use that personal wealth that they had earned by staying in a home that long. They just wanted to do what their parents had been able to do. They did not go out and buy some overpriced home that was new in 2004. They just used their home to pay for their children's education and now they are 200k in the hole on their home and are having to stall what they put into retirement because they are paying on a loan that there is no hope in refinancing. Is it unfair that so many hard working people are being penalized both by corporate greed and the greed of the consumer. It is affecting everyone. Especially those near retirement. Really what good are lower rates if people can't refinance into those rates.

Maryann Haggerty: By my math, your parents have already taken at least $157K in cash out of that house. They're upside down only because of that.

Unfortunately, they're trying to get out of that ARM at a time when the market is in worse condition than it has been in decades. It's possible that the market has swung too far to overcompensate for the problems, or maybe not. We can't tell when things will change, I'm sorry to say.

Elizabeth Razzi: Previous generations didn't tap the personal wealth that they had "earned" through rising home values. They usually strove to pay off their mortgages in time for retirement. Changes to the tax laws during the 1980s made home-equity debt the ONLY tax-deductible debt...and gave rise to the boom in home-equity lending. (It used to be called plain-old second mortgages.) It is unfortunate that your parents are now dealing with a high-rate ARM. Perhaps you and your siblings can help them with the payments, seeing as the debt is tied to your education.

_______________________

washingtonpost.com: Walking Away, And What It Leaves Behind (Post, Saturday, January 10, 2009.)

Maryann Haggerty: Here's the article I referred to earlier about walkaways.

_______________________

N.Y. Transplant: My husband and I are looking to to move to the D.C. area within the next 12 months. We have a 12-month old son, and will be moving from our Manhattan apartment to the Maryland suburbs. We'd like your view on renting in Bethesda versus buying. We have a little bit saved up, but certainly not a 20% down payment on a 3-4 bedroom house in the Bethesda/Potomac/Rockville area. What do we have to consider? Our idea behind renting is that we could continue saving up for the down payment we definitely don't want to lose out on the slowing housing market and our buying power in today's economy. Thank you!

Maryann Haggerty: I think renting can be a great option when you move to a new location. It lets you get a feel for where you really want to live, what the markets are really like, etc.

For one thing: Bethesda isn't our only nice suburb.

Elizabeth Razzi: Ah, welcome to the Washington area. I predict you'll fall prey to what I call the Ponderosa Syndrome. Manhattanites cannot get a place big enough once they leave the island! I absolutely recommend renting for a year. It's the best way to get to know an area. And you have a few years before you need to commit to a specific school system. And..by all means, explore the whole metro area. Why limit yourself?

_______________________

Delayed Selling: I listed my house for sale as soon as President Obama won, because I knew that the country was going to turn around. It still hasn't sold yet! Isn't he going to help me?

Elizabeth Razzi: Funny. Thanks for the laugh.

Maryann Haggerty: Have you invited him to stop by the open house?

_______________________

Maryann Haggerty: Folks, we would LOVE to talk with more of you about your refinancing questions/situations/war stories. We'll try to answer what we can today, but if you are willing to speak with a reporter for possible newspaper articles, can you also e-mail me directly at haggertym@washpost.com?

Muchas gracias!

_______________________

Washington, D.C.: What is a good web site to check the dial 30-year-mortage rate?

Maryann Haggerty: I regularly check www.hsh.com and www.bankrate.com, though both of them recently have gotten annoyingly aggressive with people trying to sell you loans rather than just giving rates. Maybe that will go away soon.

Also, Wells Fargo will send you daily updates, as will many other lenders.

Elizabeth Razzi: I check hsh and bankrate, too. I also find it useful to pick a single lender (like maybe your bank or credit union) and check their rates daily -- just to see which way the trend is going.

_______________________

McLean: Re: My question: what else can we possibly do? If we didn't quickly get offers with this level of action in January should we expect not to get one? We are already beyond the price point we need to repay the mortgage and the bridge loan associated with the purchase of our other home. Help.

Answer: Do what I did when I had to sell my home in Bowie that sat for 6 months in a PG City market. Offer a realtor bonus. Then, realtors would have an EXTRA incentive to get their clients to buy!

Elizabeth Razzi: Well, maybe. But the agents have already brought people to look...and they're not biting. Thanks for the suggestion.

_______________________

Washington, D.C.: We only have about 10% equity. Is it worth it to try to refinance? Lower rates would save us a ton (esp. to get out of a high-interest HELOC) but it seems like most places want at least 20% down.

Elizabeth Razzi: You're highly unlikely to get a refinance approved with only 10 percent equity.

Maryann Haggerty: Though you want to check what the situation is with an FHA loan! There are insurance fees, but if your loan is onerous, it might be worth it.

_______________________

Fairfax w/Upside-down Parents: Er, uhm (stutter), has it occurred to you to stowe the blame on the public (which doesn't do your parents any good), but instead start paying back your parents for the college educations? Insist on it, in fact? Versus blaming others and decrying that your parents can't roll college debt into a fixed loan? Just a thought.

Elizabeth Razzi: Er, uhm, thanks for the thought.

_______________________

To Refinance or Not Refinance in 22314: Happy Friday Ladies! With lowering interest rates I'm seriously thinking of refinancing or at least looking into it. While lowering my mortgage is appealing, I can't help think that there must be some drawbacks to refinancing that I might not have considered. Do I need to have cash on hand for the process? If I do refinance, how will that effect selling my condo in the near future if I find I can afford to upgrade to larger space? Any other cons to consider? Thanks so much!

Maryann Haggerty: A lot depends on how much equity you have.

Many refis roll all fees into the loan, which means you need little cash, as long as there's equity. (Though you somehow always end up needing at least several hundred bucks.)

If you have plenty of equity, I don't think a refi will affect a possible sale. (In other words, you won't be under water.)

Elizabeth Razzi: Happy Friday, 22314! There are costs to a refinancing, even if they get rolled over into the new loan amount. Essentially, you've borrowed the money for the refinance. The other--often overlooked--downside of refinancing is that you stretch out your indebtedness longer. A 30 year loan refinanced after 5 years becomes, essentially, a 35-year loan. That's not a big deal if you're going to sell in a few years, though.

_______________________

Washington, D.C.: I went to settlement on a new condo about 1 1/2 years ago with a $250,000--30 year interest only mortgage at 6.75 percent. Since principal payments will kick in after 10 years and I basically only have been paying interest since my first payment, is it worth it to pay anything towards the principal if I plan to sell it within the next 5 years? Due to declining property values, it would probably be difficult to refinance to a lower rate because I don't have a ton of equity and at the same time, the appraisal might not necessarily come out in my favor? With the uncertainty surrounding the economy, it just seems like a better option right now to keep any extra cash in a money market account where I would have easy access for everyday expenses in the event I get laid off. Thoughts?

Elizabeth Razzi: A refinance is almost certainly out of the question, probably due to a lack of equity. Take a look at those interest-only loan documents. You are adding to your indebtedness over time. So..the decision is whether you should start paying principal, or saving the cash for a possible layoff. I vote with saving every dollar possible for an emergency fund. Break Glass in Case of Layoff. Don't make it too easy to tap, either. Consider sealing some of it off in short-term CDs, just to make it harder to spend.

Maryann Haggerty: I agree: Cash cushion is the No. 1 priority.

Just recognize that without equity, you could be underwater if you have to sell, which means that some of that cash might have to go toward the mortgage anyway.

_______________________

U Street: With all this talk about Obama and his recent visit to the U Street area, do you envision all this excitement will lead to real estate sales picking up in this area considering all the excess condo inventory?

Elizabeth Razzi: I just don't see how the man's visit to Ben's Chili Bowl is going to turn around the condo market.

Maryann Haggerty: Geez, yeah. Except for making parking more difficult for a little while, I don't see a connection there.

_______________________

For the $250K buyer...: Look in Riggs Park. You may have to take a bus to the Metro, but the houses are the size you want and in that price range. Three train lines go to the Ft. Totten Metro. And people, stop thinking you can live right above the Metro for dirt cheap. Even in a bust market that's prime real estate.

Elizabeth Razzi: Thanks for the tip...

_______________________

Alexandria, Va.: I know you've probably told us before, but where should I look (online?) to get current mortgage rates for a refinance? On my other refinance checklist-get our credit scores, call our current lender first for their rate, anything else?

Maryann Haggerty: Just start looking at the web pages of various lenders. Use the quote from your current lender as your benchmark.

One of our columnists, Jack Guttentag, had a piece last week offering tips on how to shop around for rates. Let's see if we can find that...

Elizabeth Razzi: When I have seriously shopped for a mortgage of my own, I narrowed my choice down to 3 or 4 lenders and then tracked the rate/points combo for the type of loan I wanted over a week or two. I checked their web sites every day and made myself a little chart. That's how I could tell who seemed to be most competitive.

_______________________

washingtonpost.com: Shop Around Wisely for a Loan (Post, Saturday, January 17, 2009.)

Maryann Haggerty: Here are some tips on how to shop for a loan, as I promised

_______________________

Arlington, Va.: A Buyer's Market?: After sitting out the last several years, I am finally ready to dip a toe into real estate in this area, but have hardly found it to be a "buyer's market." I have a preapproval and a down payment, but I can't find what I want. The pickings are so slim! Is this a time-of-year thing, and can I expect to see more come on the market as spring starts? I think prices should continue to go down too, because some things are still way overpriced!

Maryann Haggerty: Time of year is a big part of it.

But so are expectations. You still aren't going to find many 4BR/3BA houses in Arlington selling for a song.

Elizabeth Razzi: The variety of listings will almost certainly pick up in the next few months. But, hate to say it, you have to remember that "more than I can afford" is different from "overpriced."

_______________________

Springfield, Va.: We bought in the Summer of 2007 with a 5/1 ARM. I'd like to refinance to a 30 yr fixed but homes in our neighborhood are selling for less than what we paid (although not by much). Is it a lost cause? I know we have a few more years on our ARM but the sooner I can get a stable mortgage the better I'll sleep at night! Thanks!

Maryann Haggerty: Broken record time: Depends how much equity you have.

If you bought with a 5/1 ARM zero-down, you have no equity.

Up until Dec. 31, FHA had a program, FHASecure, meant to get people out of ARMs and into fixed loans. That expired, but keep an eye on the news to see if similar programs are approved.

Elizabeth Razzi: Agreed!

_______________________

I'm in the same boat...: Like a previous poster, I can't find what I want (townhouse/duplex close to metro (up to 1 mile walk) with a tiny (I do mean tiny) yard and no MAJOR reno), but I am looking throughout NoVa. If my husband and I cannot find this, what we think we should be able to afford here, then we will continue to rent. It is sad--please give us some hope!

Elizabeth Razzi: Seriously, Metro Bus can extend your target area. And prices go down once you get beyond walking distance of the train. Consider some of the older, smaller detached houses, too. They can have prices competitive with some townhouses.

_______________________

Arlington, Va.: My husband and I have decided to buy our first house. We know who we would like our realtor to be (based on many suggestions from people we trust). So, my question, if you can answer it, when do we contact the realtor? Our lease on our apartment is up July 1, so we'd like to move in, sometime in June. Is now too soon?

Elizabeth Razzi: No, I don't think it's too soon to get started. You'll want to get a loan pre-approved right away. And if you happen to find something you want early, you can negotiate the timing of closing and move-in date.

Maryann Haggerty: Credit rating first. Then loan approval.

Feel free to call the agent now; she may have her own thoughts on the best schedule for you. You'll want to meet her and make sure you're as comfortable as your friends lead you to believe you will be.

Let's say you want to close on June 15. (A target, NOT a deadline.) You'll probably want a signed contract at some point between April 15 and May 1. (The loan approval process has slowed down immensely in the last few weeks because of the refi explosion.) If you're the decisive type, and know exactly what you can afford, what you want and where you can afford it, you've got plenty of time.

If you're like me and mull such decisions for unconscionable periods, you want to start looking right after half time Feb. 1.

_______________________

About the parents in Manassas: I am amazed at the number of people who have taken money out of their house (or planned to and now can't) to pay for their kids' college educations, and now that decision has come back to bite them. Maybe they should have been living in a less expensive house and putting money away in the bank for college? I liked your comment about the kids helping the parents out with the mortgage -- after all, the kids are the direct beneficiaries of the original bad decision.

Elizabeth Razzi: Well, now is it really a bad decision? They were able to pay their kids' tuition (a wonderful leg up, in my humble opinion) with tax-deductible money. Now they have to pay back the money. Sure, saving ahead of time is ideal. But we don't know their entire financial picture.

Maryann Haggerty: The decision really only bites you if you have to sell or refi at a particular (bad) time.

Among other things, if the other option is college loans--as it is for most people!--home equity can be a much more conservative option.

(And a $193K house in Manassas, even one bought 22 years ago, isn't exactly a Beverly Hills mansion.)

_______________________

Is it unfair that so many hard working people are being penalized both by corporate greed and the greed of the consumer.: I just have to point out that this persons holds their parents blameless.... and points to the 'greedy consumer'- but their parents aren't included-because it was for "their children's college education." Well, I hate to say it but, like homeownership, college can't be afforded by everyone.

Elizabeth Razzi: I just don't see how any of us benefits from this effort to assign blame. Look at the words we're using, "greedy," "unfair," "blameless." It doesn't help anything.

_______________________

McLean: Who can we give credit to for the real estate law that proves true every time. "LOCATION, LOCATION, LOCATION!"

Elizabeth Razzi: I think it was the same guy who gave directions on how to get to Carnegie Hall. (Practice, practice, practice.) Actually, I'm thinking Mark Twain....but that's a guess.

Maryann Haggerty: Wasn't it Will Rogers who suggested you buy land 'cause they aren't making any more of it?

_______________________

Baltimore, Md: Home builders in peril: I'm not asking for names, but have you heard of any major homebuilders who may be facing bankruptcy? I ask, because I spent many years doing advertising for builders and went through the bust of the early 80s in D.C. when a number of local builders went out of business. I can't help but think that some of the big national builders, who may be sitting on land they paid a hefty price for 18 months ago, aren't heading for Chapter 7. Thanks.

Elizabeth Razzi: I have been seeing small builders and their suppliers show up in the bankruptcy notices published in the Post each Monday. Some of the big builders learned a lesson from the '80s and early '90s recessions and kept their construction more closely tied to contracts-in-hand. And they learned to take options on land instead of buying it. That's helping them weather this recession. But, you're right, they are hurting badly.

Maryann Haggerty: If you read the SEC filings of the big builders, you see that many are writing off land options. That's all land they DIDN'T buy.

Obviously, we're watching this closely.

_______________________

A 30 year loan refinanced after 5 years becomes, essentially, a 35-year loan.: Or you CAN cut your loan period! Generalizing, I refinanced my 30 year load to a 20, keeping same payment. Will pay off 10 years earlier and save lots of moolah.

Elizabeth Razzi: True! I've done the same thing in years past. Refinanced to a lower rate but kept my payment the same, with a plan of paying off the loan early. But many, many people don't have the wiggle room--or discipline.

_______________________

Arlington, Va.: I just refinanced my house on Wednesday... at the rate of 4.87%. I have to say, that this was the easiest refi I've ever done. If you have good credit and good equity, it really is pretty simple to accomplish.

Elizabeth Razzi: Good for you! Thanks for the report.

_______________________

Arlington, Va.: Hi, I asked in the last chat about making multiple offers at the same time but Maryann said it'd be costly. I chatted up with an agent last week and he believed there's no harm doing so and it should be as simple as adding a contingency clause in the offer as an out. I appreciate the agent's professional knowledge, but would you suggest consulting with a RE lawyer if and when I'm ready to go ahead with this idea? Right now there're a few properties (well only three) I like but none separates really itself from the pack so I wouldn't know which one to bid first even if I want to.

Elizabeth Razzi: Hi, I wasn't part of last week's chat...but here's my opinion anyway. Any offer written with so much wiggle-out room isn't much of an offer, from a seller's standpoint. Making multiple offers is fraught with danger. You could at least be facing lawyer's bills.

_______________________

$250K max, 3 br/1.5 ba townhouse, close to Metro: Hahahah. I can't believe you didn't call this person out--that sounds like a joke to me. Three bedrooms near a metro in the District? You can easily rent a property like that for $3,300+ a month, so why would anyone sell it for $250,000? Unless the Federal Government goes bankrupt (hmm...), prices for a three bedroom near a metro will NEVER come EVEN CLOSE to $250,000 ever. I mean, heck, I'd like a place in Georgetown, 4 bedrooms and an English basement, indoor/outdoor swimming pool, 4 car garage, helipad, $500,000 max... should I wait until March to see if something like that is on the market?

Elizabeth Razzi: Yes, the target price is very low, but property condition can vary a lot, too.

_______________________

Washington, D.C.: Hi Maryann and Elizabeth-- Curious if you've heard anything directly or anecdotally about home owners experience in hiring contractors amidst the slump. We're proceeding with an extensive kitchen/bath remodeling that's been postponed for a few years at least in part due to difficulty finding the right contractors for the job without paying a king's ransom. Not so much a gamble on home prices as an effort to enjoy our current home.

Maryann Haggerty: We're hearing that they're returning phone calls, which is always the first step.

Get multiple bids. Check references. In times like this, I would consider asking the contractor on a big job for trade references, too-ie, is he paying his suppliers.

The odds increase in times like these that a contractor's financial problems will hurt your job. So you want to keep that in mind.

_______________________

Columbia, Md.: Re: Fairfax, Va. Their ARM jumped to 9.5%? Shouldn't the rate on an ARM be at historical lows?

Maryann Haggerty: Depends on the loan, its index (ie, the rate it is linked to) and more. Many ARMs came with low intro rates.

(But yeah, a lot of ARMs are going down, too.)

_______________________

Washington, D.C.: I went to closing on a new condo about a year ago, but can't find anything in my settlement docs indicating that I must stay with the mortgage lender for a specific amount of time in order to avoid a penalty. Is there typically a time period that a lender will require you to keep your loan with them before you could explore refinancing options with others willing to offer a more competitive rate?

Maryann Haggerty: Such a clause--known as a prepayment penalty--should be very clearly outlined in the mortgage docs. They exist, but are far from universal.

Elizabeth Razzi: A lot of subprime loans had prepayment penalties. They weren't so common on ordinary loans. Be very glad.

_______________________

Fairfax, Va.: I often see people write in about buyers who made a bad decision in buying an overpriced house. But when I bought - I bought the house that was the best deal I thought I could get for what I wanted. NOW I know that it was "overpriced," but how the heck was I supposed to know that at the time? I merely compared the house I bought to what else was available and based my decision on that. Why should those of us who bought before the house market tanked be blamed for something we couldn't possibly know about? And compared to the Midwest, EVERYTHING here is overpriced.

Maryann Haggerty: Yes, many people seem to have developed very sharp bargain-hunting abilities in retrospect.

_______________________

Washington, D.C.: In response to the person in Fairfax with upside parents-this attitude is exactly why the country is so overly indebted. They weren't tapping accrued savings they were BORROWING money against their home to compensate for money that they hadn't saved.

Elizabeth Razzi: Thanks for adding to the debate.

_______________________

FHASecure like Program: Check out http://www.hud.gov/local/va/homeownership/fhaforeclosure.cfm. It is in effect through September 30, 2011.

Maryann Haggerty: That's a good link and very much worth looking at. But it's not quite FHASecure--the programs in the link are aimed at people near foreclosure; I didn't think the questioner was in that boat.

_______________________

Logan Circle: I'm lucky... our house is holding its value, we have a lot of equity in it, and our credit rating is great. We too thought we'd like to refi to take advantage of lower rates, but it just doesn't seem possible. I've looked at a couple of internet sites, and despite the fact that we would be refiing at about 60% of the appraised value, the rates all seem to be 6% or above. What's up with that? Is it because we have a Jumbo? Is anyone actually getting these lower rates?

Maryann Haggerty: Trust me, people have locked in at these wonderful rates. (But not for a real jumbo, more than $625,500.) Rates did indeed pop back up this week. So you have to keep looking.

_______________________

Fairfax: We're getting ready to move to Mass and will sell here and buy there. We're in a position to buy before having to sell (and can afford it - lucky us). What do you think the mortgage rates will do? Should we buy sooner or do you think they might go lower before May? Yes, I know I'm asking for a prediction, but even a twinkle might help.

Elizabeth Razzi: Sorry...that kind of speculation is 100 percent a roll of the dice. Even if you can afford to carry two loans, wouldn't it be so much less stressful, financially, to sell here, rent there, and then buy?

_______________________

Rockville: If bankruptcy judges (or banks themselves) write down principle on certain mortgages (which they have been given/have the power to do) -will that be reflected in public records? Won't this further damage property values for years to come? I can't see where there is any good outcome (as far as price stability) for housing for years. What is your take on this?

Maryann Haggerty: I assume the modified mortgage will indeed be recorded.

Price stability is not the goal of cramdowns (that is, when a bankruptcy judge can order mortgage modifications). Keeping people in their homes/preventing foreclosures is the goal. I haven't thought this one through in detail, but it strikes me that the neighbors are worse off with a foreclosure than with a cramdown, because there's a much greater chance the house will sit empty, depreciating.

_______________________

Elizabeth Razzi: Thanks for chipping in to the chat, folks! See you in two weeks, and have a great weekend.

_______________________

More than I can afford: There are unrealistic expectations, and there are overpriced homes. Yes, call me crazy, but I expect to be able to afford a modest home within a mile of a metro for less than half a million dollars. Or is the metro (or even a bus/metro combo) now a luxury for those making over 200k?

Maryann Haggerty: If they're overpriced vis a vis demand, they won't sell, especially in this market.

So in some places, yes, Metro is a luxury.

_______________________

Maryann Haggerty: Wow! It's later than I thought.

First: Please, if you want to talk more about refinancing, e-mail me directly at haggertym@washpost.com.

Then: Take a look at tomorrow's Real Estate section! Elizabeth, in her new role as reporter (yippee!!!) writes about how builders are responding to demand for smaller and more energy efficient homes.

We also look at pluses and minuses of FHA loans.

Have a wonderful weekend!

_______________________

Editor's Note: washingtonpost.com moderators retain editorial control over Discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions. washingtonpost.com is not responsible for any content posted by third parties.