Surfing MLS Sites ... My Secret Passion

I like to think of my current house as a starter home. If some harebrained housewives from Orange County can live in lavish homes that they don't deserve, maybe I can manage to find a house that I don't deserve as well. And so, it is a passion of mine to browse through MLS listings and imagine myself lying on an over-sized inner-tube in an infinity pool or having a nice soak in my jet-stream hot tub or whipping up a fancy meal in my fully updated kitchen, complete with stainless steel appliances and tropical brown granite. I imagine that my blood isn't even rich enough to understand the finer interior touches ... I have been excluded from having even a slight awareness of what is available to the elite!

Some MLS listing standouts from a recent browsing session:

Perhaps if my parents, sister, and in-laws sold our existing homes, and pulled all our cash together we could manage a place about oh 15 notches down from what you see here. However, we still probably wouldn't be able to manage the property taxes. It comes to mind that one of the ten commandments is to abstain from 'coveting your neighbor's home.' How interesting that lusting after real estate is an egregious enough sin that it made it into the ten commandments!

Mortgage Deductibility

I’ll keep it simple because I know I’d rather be watching some crazy Youtube video or skimming through a more interesting blog with scandalous celebrity pictures than reading about mortgage deductibility.

Here’s the skinny. According to financial-planning.com there are two types of mortgages for tax purposes. There is acquisition indebtedness which is a mortgage used to acquire or improve a home and there is home equity indebtedness, which is a mortgage borrowed against your home that you use for other purposes, unrelated to your primary residence. So taking out a home equity line of credit or refinancing against the equity you’ve built in your home to fund your child’s college education or buy a second property falls under home equity indebtedness. Interest paid on acquisition indebtedness is deductible up to 1M. Interest paid on home equity indebtedness is deductible, but only up to 100k. However, if you are one of AMT’s lucky victims you’ll find that interest on home equity indebtedness is non-deductible.

So if you’re thinking of leveraging the equity you’ve built in your home and taking out a home equity line of credit or cashing-out a portion of your home’s equity as you refinance, be wary of the tax consequences. Sure you may be able to use the additional funds to beat the odds in the stock market or buy a second property, but please make sure that you account for non-tax deductibility. In short, if you’re not subject to AMT, only 100k of home equity indebtedness is deductible. If you are subject to AMT none of it is deductible.

Now back to watching an anaconda swallow some type of wildebeest on Youtube.

3 High Impact/Low Cost Remodeling Jobs (Part II – The Baseboards)

Being hard-headed and foolhardy and deciding that I hadn't been punished enough from painting the kitchen cabinets, I took on the task of updating my baseboards, which has provided me with fodder for this blogpost.

My house came with skinny little wood veneer baseboards that were something less than attractive. I decided that a taller white baseboard (5") would better complement the walls that I had just updated from 'bone white' (which really did have a grayish tint that you would associate with the inside of a dried out bone) to a creamy french vanilla. In hindsight, I can confidently say that swapping out the baseboards provided the best remodeling bang for the buck.

I was able to save thousands of dollars by updating the baseboards on my own with the assistance of a crowbar, miter saw, and semi-gloss paint. I measured the entire perimeter of my house to determine the number of baseboards I would need (I bought baseboards that came in 16 foot pieces) and then set up a spreadsheet to determine how I would utilize each baseboard to maximize each board's full length. I set the baseboards down in the garage and used a paint roller to layer on a coat of antique white, semi-gloss paint. While waiting for the paint to dry, I tackled the task of removing the existing baseboards in my house.

Using a crowbar, I pried out the nails that held the baseboards against the wall. Surprising, I found it therapeutic ripping out the strips of low quality wood; it felt just like removing a deeply lodged booger. After the baseboards had dried, I set about using the miter saw to cut the appropriate edges for the corners of each of the rooms. I attempted to perform as few cuts as possible by documenting the number of inside and outside edges I would need to cut and leveraging the natural creation of an outside edge from an inside edge and vice versa. Check out the following video for a useful demo.

After cutting the baseboards, I hammered in a few thin nails to secure the trim and used wood putty to smooth out the indentation left by the nail head, and lastly touched up the trim with a few dabs of paint. Although it is recommended that you caulk the baseboards, I skipped that final step and still came out happy with the transformation of the rooms in my house.

Increase in Conforming Loan Limit

Read what Inman News has to say about the increase in the conforming loan limit below. To summarize, if you have a jumbo loan and live in a high-cost area, you may want to consider refinancing under a conforming loan with the new limit increase before the end of the year.

The economic stimulus package includes a provision that will temporarily raise the conforming loan limit to allow Fannie and Freddie to purchase or guarantee many jumbo mortgages originated between July 1, 2007, and Dec. 31, 2008.

The increase, to as much as $729,750 in high-cost areas, will also apply to Federal Housing Administration loan guarantee programs. Because the increase will be capped at 125 percent of the median home price for an area, the conforming loan limit will remain at $417,000 in markets where the median home price is $333,600 or less.

Although the increase will expire at the end of the year, industry groups like the National Association of Realtors have urged Congress to mandate a permanent increase in the conforming loan limit in passing legislation to increase oversight of Fannie and Freddie.

Permanent changes to FHA loan limits are being addressed in bills that would also lower minimum down-payment requirements and expand the pool of eligible borrowers by using risk-based pricing. Both the House and Senate have passed FHA modernization bills, but differences between them are being ironed out (see Inman News story).

3 High Impact/Low Cost Remodeling Jobs (Part I – The Kitchen)

After being handed over the keys to my new home, I was plagued with serious buyer’s remorse. I couldn’t believe that I had spent so much money on such a dump. I guess that’s what you get for spending 750k in the San Francisco Bay Area – a dump. The dreary backdrop of the leafless trees and cold March winds only augmented the nastiness of the situation. My in-laws home, where my husband and I had been staying (yes, I lived with my in-laws and even shared a twin bed with my husband for the first 6 months of our marriage!) was a dream in comparison to this cold, cheerless, little hobbit hole.

The Kitchen

The problem: The house was built circa 1960 and definitely looked the part. The kitchen’s tannish plywood cabinets, coated in a thin film of cooking grease, which clung to the air, and cheesy faux-wood laminate countertops would probably even make Laura Ingalls Wilder run for the prairie. The worst part of the kitchen was the fact that the previous owner had lined all of the cabinets with wood-patterned contact paper – classy.

The solution: My husband and I avoided the kitchen for about two months. After about two months of not stepping foot into the kitchen and not cooking a single thing, we noticed that the grease odor had dissipated. We slowly began to incorporate the kitchen into our lives, even sharing a few takeout meals in there. While eating in the kitchen, we would frequently comment on what an eyesore the cabinets were. The ugliness was so compelling that one day we finally set about the task of painting them, which is a cheap alternative to enhancing the appeal of your cabinets if you can’t afford to replace them. WARNING: If you have a life or have the money, we don’t recommend that you paint as it can be a long process. However, having neither a life nor the money (mortgage payments and 401k contributions sucking every dime out of my paycheck), I resolved to ‘update’ the cabinets with a fresh coat of paint.

Since our kitchen is small, I decided that white and not espresso (the color I was originally favoring) was most appropriate. We bought 3 gallons of primer and several cans of ‘antique white’ semi-gloss paint from Kelly-Moore (Note: Check your company to see if they have any perks or company discounts at home improvement stores; my husband’s company actually had a discount code for Kelly-Moore, which reduced the cost of a can of semi-gloss paint from $45 to $32). After extensive web research (hey, we’re busy people) on painting cabinets, we proceeded to unhinge all our cabinets (22 in total) and rubbed down all our cabinetry in a diluted ammonia solution to remove the grease build-up. We then gently wiped off the ammonia solution and let the cabinets dry overnight. After the cabinetry had completely dried, we rolled on several coats of primer (this project took multiple days). Exhausted from the work, my husband and I took a 3-week break and once again distanced ourselves from the kitchen. However, the kitchen’s mystical forces once again lured us back and we finally applied the final coat of antique white semi-gloss paint. As we began the process of re-hinging the cabinets one-by-one (usually one a day since we like to take projects in small steps, very small steps) the kitchen started coming together. When we re-hinged the last cabinet door, the clouds broke and the birds sang – it was beautiful. Our kitchen was actually somewhat presentable now – and it had only taken us 4 full fun-filled, glorious weekends. We couldn’t resist and applied a fresh layer of paint to our kitchen walls to complete the project (we didn’t bother stripping the walls with ammonia or applying primer this time and it turned out pretty well). We are now in the process of finding some cheap granite stores to swap out the laminate countertops with some good-looking rock. If you do a little research yourself or pester your friends who are house-buffs, you will definitely be able to find cheap granite stores with installation services – and at better rates than Home Depot or Costco! Some places that I’ve found in the Bay area include:

Granite & Stone Expo
1722 Junction Ave Ste E&C, SJ
(408) 437-9891

KZ Kitchen Cabinet
2128 N 1st St, San Jose, CA
(408) 441-1288

Union Stone
2201 Lafayette St
Santa Clara, CA 95050
(408) 988-6888

And hence our kitchen remodeling project: $110.23 for primer + wall and cabinet paint + labor (free – we only used our own blood, sweat, and tears, which makes it free). One thing I will mention is that you should be careful when painting your cabinet drawers. I was a little over eager and applied too heavy a coat to the cabinet drawers and now the drawers don’t slide as easily. The fact that I now need bulging finger muscles to open the kitchen drawers doesn’t matter as much to me since I am the queen of takeout and plasticware, but if you don’t want to have to battle your drawers to access the silverware, be light on the paint job for your drawers or don’t even bother painting the bottoms at all – give yourself a freebie.