General

Wells Fargo Says Credit Score of 500 OK

In a long-awaited shift, Wells Fargo is providing FHA mortgages to borrowers with credit scores as low as 500. The move comes after the National Association of Realtors® and FHA Commissioner David Stevens, among others late last year, criticized the country’s major banks for requiring credit scores as high as 650 in some cases before making loans. At NAR’s annual conference last year in New Orleans, Stevens said banks’ credit policies were out of sync with the FHA and artificially restraining home sales by as much as 20 percent. Under its new policy, Wells Fargo will accept borrowers with credit scores of 500 to 579 if those borrowers can make a down payment of at least 10 percent; gifted funds or other down payment assistance is not allowed. For borrowers with credit scores of 580 to 599, borrowers must put down 5 percent, with the same restriction on gifts and assistance funds. Borrowers with credit scores of 600 or higher can make a 3.5 percent down payment. The new policy took effect Jan. 15.

Home Price Stabilization Seen in Most Metro Areas during Fourth Quarter, Sales Up

American Attitudes About Home Ownership

According to a NATIONAL ASSOCIATION OF REALTORS® survey of 3,793 adults conducted by Harris Interactive and released in January 2011, home owners and renters agree that home ownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy.

• The vast majority of both home owners and renters say that owning a home is a smart decision over the long term. Even in today’s challenging economy, 95% of owners and 72% of renters believe that over a period of several years, it makes more sense to own a home.

• Home owners are much more likely to be satisfied with the quality of their family and community life than renters. While more than half of owners (56%) are “very” or “extremely” satisfied with the overall quality of their family life, only about one-third (36%) of renters report the same levels of satisfaction. Also, 43% of home owners are “very” or “extremely” satisfied with their community life, compared with 30% of renters.

• An overwhelming majority of home owners are happy with their decision to own a home. A full 93% of owners surveyed would buy again.

• Most renters aspire to home ownership. The majority of renters (63%) say they are at least somewhat likely to purchase a home at some point in the future. Among them, young adults (18- to 24-years-old) have the strongest aspirations for home ownership.

The survey also confirmed that home owners and renters continue to have concerns about the economy:

• In today’s market, many aspiring home owners face worries about job security and credit worthiness. Among renters who are “very” or “extremely” likely to buy a home in the future, three out of five consider confidence in job security or creditworthiness to be an obstacle.

• Home owners and renters both believe that the mortgage interest deduction should not be targeted for change. 74% of owners and 62% of renters say it’s “extremely” or “very” important that the MID remain in place.

Given the strong public support of and aspirations for owning a home, we need to keep in place policies that support and encourage responsible, sustainable home ownership.

Resources You Can Use:
REALTORS® may share the data above with their clients and communities. For additional information, check out these resources:

10 Questions to Ask Home Inspectors

Before you make your final buying or selling decision, you should have the home inspected by a professional. An inspection can alert you to potential problems with a property and allow you to make an informed decision. Ask these questions to prospective home inspectors:

1. Will your inspection meet recognized standards? Ask whether the inspection and the inspection report will meet all state requirements and comply with a well-recognized standard of practice and code of ethics, such as the one adopted by the American Society of Home Inspectors or the National Association of Home Inspectors. Customers can view each group’s standards of practice and code of ethics online at www.ashi.org or www.nahi.org. ASHI’s Web site also provides a database of state regulations.

2. Do you belong to a professional home inspector association? There are many state and national associations for home inspectors, including the two groups mentioned in No. 1. Unfortunately, some groups confer questionable credentials or certifications in return for nothing more than a fee. Insist on members of reputable, nonprofit trade organizations; request to see a membership ID.

3. How experienced are you? Ask how long inspectors have been in the profession and how many inspections they’ve completed. They should provide customer referrals on request. New inspectors also may be highly qualified, but they should describe their training and let you know whether they plan to work with a more experienced partner.

4. How do you keep your expertise up to date? Inspectors’ commitment to continuing education is a good measure of their professionalism and service. Advanced knowledge is especially important in cases in which a home is older or includes unique elements requiring additional or updated training.

5. Do you focus on residential inspection? Make sure the inspector has training and experience in the unique discipline of home inspection, which is very different from inspecting commercial buildings or a construction site. If your customers are buying a unique property, such as a historic home, they may want to ask whether the inspector has experience with that type of property in particular.

6. Will you offer to do repairs or improvements? Some state laws and trade associations allow the inspector to provide repair work on problems uncovered during the inspection. However, other states and associations forbid it as a conflict of interest. Contact your local ASHI chapter to learn about the rules in your state.

7. How long will the inspection take? On average, an inspector working alone inspects a typical single-family house in two to three hours; anything significantly less may not be thorough. If your customers are purchasing an especially large property, they may want to ask whether additional inspectors will be brought in.

8. What’s the cost? Costs can vary dramatically, depending on your region, the size and age of the house, and the scope of services. The national average for single-family homes is about $320, but customers with large homes can expect to pay more. Customers should be wary of deals that seem too good to be true.

9. What type of inspection report do you provide? Ask to see samples to determine whether you will understand the inspector's reporting style. Also, most inspectors provide their full report within 24 hours of the inspection.

10. Will I be able to attend the inspection? The answer should be yes. A home inspection is a valuable educational opportunity for the buyer. An inspector's refusal to let the buyer attend should raise a red flag.

Source: Rob Paterkiewicz, executive director, American Society of Home Inspectors, Des Plaines, Ill.,

Provision in Sweeping Bank Reform Law to Affect Mortgage Availability

A behind-the-scenes battle is forming over a provision to the sweeping bank reform law that will affect mortgage availability. At issue is a provision in the sweeping Dodd-Frank Act that requires banks to have “skin in the game” by retaining some of the risk of loans they package and sell.

The goal of the measure is to eliminate a problem leading to the financial crisis where lenders packaged and sold subprime mortgages they knew would fail. Lawmakers drafting the legislation also included a measure that would exempt certain mortgages from the risk retention rule if their loans met certain high underwriting standards.

But reaching an agreement on what the criteria will be for these high-standard loans dubbed “qualified residential mortgages” (QRM) is expected to be difficult and, depending on how regulators rule, a huge slice of the mortgage market could be exempted from risk retention—or only a small piece of the market.

That could have a major impact on what kinds of mortgages are available, and for what price. Mortgage rates have remained near historic lows but mortgage activity is near decade depths.

Reuters reported last week that a group of prominent investors and academics urged top U.S. officials to move quickly to enact the provision, citing the “chaotic situation in the mortgage market today.”

Ernest Patrikis, a partner at White & Case LLP in New York, said regulators must balance how conservative they want underwriting standards to be against how much lending they want to see. What they decide will have a major impact on the kinds of interest rates borrowers with different capabilities will receive. “The borrower that passes the test for a zero-risk retention mortgage will likely get a lower rate on their mortgage than someone that must buy a mortgage that doesn’t get exempted because banks will have to retain some risk there,” he said.

Bank regulators and the Treasury Department are required to work together to draft rules under the watchful eye of a newly formed Financial Stability Oversight Council made up of the heads of bank and securities regulators. A soon-to-be-formed Consumer Financial Protection Bureau, which will write rules for mortgages and other consumer-credit products, will want to be involved as well. Regulators aren’t expected to introduce a proposal for this measure until January.

Washington observers say that regulators, consumer groups and bankers generally already agree to prohibit more exotic or problematic loans from qualifying for the risk retention provision. Specifically, those with negative amortization loans, pre-payment penalties or balloon payments—many of the problematic structures that helped drive the financial crisis—won’t be permitted. Strong credit scores will also be a must as well as effective verification of borrower income.

However, squabbles are already taking place among banks, investors and consumer groups over whether the loans approved under the exemption should have down payments, and if so, how much money down is necessary. Other points of dispute: How many months of verification should be required for a borrower’s income (12 months? 24 months?) and how much debt can a borrower handle. The Mortgage Bankers Association is seeking to include interest-only loans in the definition but consumer groups are passionately opposed.

Big banks are seeking some sort of significant down payment, perhaps as much as a 30% stake by borrowers, arguing that it means homeowners have some skin in the game and would be less likely to abandon the mortgage.

Alternatively, consumer groups are either opposed to having any down-payment requirement or prefer a small down-payment condition.

Finally, smaller banks would like to see a 5% or a similarly small down-payment requirement if borrowers obtain private mortgage insurance and have high credit scores.

Kathleen Day, spokeswoman at the Center for Responsible Lending in Washington said having a high down-payment requirement for the QRM, in the realm of 30% money down, would limit a lot of responsible lending. “Non-standard, non-traditional and predatory products would become part of the universe of the common loan, and it would mean we have the status quo where bad loans are sold as legitimate products,” Day said.

Lisa Rice, president of the National Fair Housing Alliance, a consumer advocacy organization, said a small down payment doesn’t mean the borrower will be more likely to default on the loan. “There are many things that impact a mortgage,” said Rice. “You could take a person who only puts 3 percent down but got their loan at a safe deposit institution or credit union and that loan is better performing than someone who put 20 percent down, got a payment option (adjustable-rate mortgage) and the appraisal was over-inflated.”

Jaret Seiberg, analyst at MF Global Inc. in Washington said he believes regulators will agree to a down payment of 5% for fully documented loans with private mortgage insurance. “Yet this is a real fight, and we continue to worry that the market has ruled out an adverse outcome,” he said.

Wells Fargo & Co. suggested a 30% down-payment requirement, according to a letter the mega-bank sent to the Treasury. The bank argues that a qualified residential mortgage definition that encompasses a large portion of the mortgage market, such as one with a low down-payment obligation, would be ill-advised because it would hike costs for serving credit-worthy borrowers who seek mortgages outside of that definition.

MF Global’s Seiberg reports that some big banks seek a high down payment for the exemption so they can develop products for mortgages that don’t qualify. “A definition of QRM that encompasses a large portion of the mortgage market will produce a tendency to avoid lending to credit-worthy borrowers falling outside that definition,” Wells Fargo stated.

Tom Deutsch, executive director for the American Securitization Forum, which represents mid-sized and large financial institutions and mortgage investors said his members are generally seeking anywhere from a 5-20% down-payment requirement. He contends that a significantly higher down-payment QRM requirement would result in less credit availability for mortgages outside of that definition. “If you are a securitizer, you will have to hold some capital for every mortgage securitized outside of the QRM definition, which means banks will have less capital available to lend for non-QRM borrowers,” Deutsch said.

Seiberg adds that a high down-payment requirement for a QRM loan will mean that most banks and smaller independent mortgage lenders will drive a lot of their lending to Federal Housing Administration mortgages, which are also exempted from the risk-retention requirement.

“The rest of the market will likely reside with the biggest banks, which have the ability to house the mortgages on the balance sheet until the risk retention expires. Yet a low down-payment requirement keeps the door open to competition and should keep mortgage rates low,” Seiberg said.

Consumer groups are worried about access to credit in a scenario where FHA is the only lender for borrowers who can’t afford a 20% down payment.

(c) 2010, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services

Pending Home Sales Continue Recovery

Pending home sales rose again in November 2010, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the National Association of REALTORS®. The Pending Home Sales Index, a forward-looking indicator, rose 3.5% to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0% below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”

The PHSI in the Northeast increased 1.8% to 72.6 in November but is 6.2% below November 2009. In the Midwest, the index declined 4.2% in November to 78.3 and is 7.7% below a year ago. Pending home sales in the South slipped 1.8% to an index of 91.4 and are 7.2% below November 2009. In the West, the index jumped 18.2% to 123.3 and is 0.4% above a year ago.

“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”

The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3% around the end of 2011; at the same time, unemployment should drop to 9.2%.

For perspective, Yun said that the U.S. has added 27 million people over the past 10 years. “However, the number of jobs is roughly the same as it was in 2000 when existing-home sales totaled 5.2 million, which appears to be a sustainable figure given the current level of employment,” he explained.

“All the indicator trends are pointing to a gradual housing recovery,” Yun said. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”

Existing-home sales are projected to rise about 8% to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4% in 2012. The median existing-home price could rise 0.6% to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.

“As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2-3% in 2012,” Yun said.

New-home sales are estimated to rise 24% to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21% to 716,000.

Yun sees Gross Domestic Product growing 2.% in 2011, and the Consumer Price Index rising 2.3%.

For more information, visit www.realtor.org.

Should you sell in a down market?

Q: Is now a good time to sell my house, before it loses more equity, or should I wait until house prices go up again? What’s the best time of year to sell?
— Rolando

A: A great location can trump factors such as unemployment rates, low or high mortgage rates, mortgage access and other variables.

For example, a classic home on a tree-lined block near a prestigious university will always be in demand, despite the economy. The same goes for a quaint house that overlooks a lake or forest or one with a mountain view.

As for “losing more equity,” odds are good at this point in the cycle that your home has lost most of the value — and equity — it’s going to lose, give or take a few percentage points. But again, that value is only what someone is willing to pay for it, not market averages.

Markets in most parts of the country are closer to turning around than tailing off, with some notable exceptions. So I wouldn’t let the anticipation of further losses force your hand. If you’re resolved to wait for a vigorous run-up in value akin to what we saw in the middle of the previous decade, however, your wait could be long and futile.

Again, don’t mistakenly base your marketing strategy on the health of the overall market. Things such as comparative sales or “comps,” investment potential, mortgage-lending standards and interest rates are important in determining your potential homebuyers. But the product on hand — your specific address — should be the chief focus.

An accomplished agent can help you identify your home’s relative strengths and show you how to emphasize them. But hire carefully.

As for the best time of year to sell your home, the stock response is still spring because that’s when most buyers emerge. This is largely because a spring purchase allows families to plan moves that won’t uproot their kids from their schools in the middle of the term.

Today, “spring” really means “late winter.” If you want to sell next year, have your house on the market and ready for showings by mid- to late February. Many potential buyers are starting searches as early as possible because they also must sell their current home to make the purchase work.

Real Estate Provisions in the Tax Relief, Unemployment Insurance Reuthorization, and Job Creation act of 2010

On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (H.R. 4853) extending the Bush-era tax rates and a host of other expired and expiring provisions. The legislation is not "paid for," so there are no revenue raisers taken from real estate or other industry groups. The package provides temporary extensions of its numerous provisions. Some are retroactive, as well, so that the rules that had been in place previously will operate as if they had never expired.

Included in the bill are provisions that affect real estate investment and operations—such as energy-efficiency tax credits, capital gains, and more. A few key provisions of interest to REALTORS® include:

• Retention of Bush-era tax brackets through the 2011 and 2012 tax years;
• Retention of the capital gains tax rate of 15 percent for assets sold or disposed of during 2011 and 2012;
• Reduction of payroll taxes for employees and self-employed individuals during 2011;
• Extension of numerous energy efficiency credits through December 31, 2011, including: the Energy Efficient New Homes, Energy Efficient Existing Homes, and Energy Efficient Buildings credits.

For more detailed information on the provisions of this bill affecting real estate, home owners, and REALTORS® as small business owners, please see the see the full summary.

Congress has passed and President Obama has signed legislation (HR 4853) that

extends the Bush-era tax rates and a host of other expired and expiring provisions.

The legislation is not “paid for,” so there are no revenue raisers taken from real

estate or other industry groups. The package provides temporary extensions of its

numerous provisions. Some are retroactive, as well, so that the rules that had been

in place previously will operate as if they had never expired.

Only the provisions that affect real estate investment and operations are included

in this summary. The bill itself is vast, even though there are few expansions or

cutbacks of previous or current law.

Tax Rates:

tax years. Thus, there will be 6 brackets ranging from 10% to 35%. Also, the

backdoor rate increases that affect upper income taxpayers are repealed in 2010,

2011 and 2012. These backdoor rate increases are known as the personal

exemption phase-out and the limitation on itemized deductions.

Capital Gains:

2011 and 2012. Depreciation recapture tax rates remain 25%. No new limitations

are created for Section 1031 like-kind exchanges. The 15% rate is retained for

dividends received during those years. Small investors with incomes in either the

10% or 15% brackets will have a capital gains and dividend tax rate of 0%.

Payroll/Self-employment Taxes:

6.2% for employees and 12.4% for self-employed individuals. During 2011,

employee payroll tax rates will be 4.2% and self-employed individuals will have a

10.4% rate. This holiday is available only for earnings during 2011. The earnings

cap in 2011 is $106,800.

Estate Tax:

assets from an estate were required to use a so-called “carryover basis” in

determining the value of the assets they receive. Carryover basis is the amount

that the original owner of the asset paid for it. Prior to 2010, the heirs had always

received the asset with a “stepped-up basis.” Carryover basis requires heirs to

know when the decedent acquired his/her assets and at what price. Stepped-up

basis measures the value of the asset at its fair market value at the time of the

During 2010, the estate tax was repealed, but heirs who receivedFor many years, the payroll tax rates have beenThe tax rate will remain 15% for assets sold or disposed of duringThe Bush-era tax brackets will remain intact for the 2011 and 2012

 

Who Profits From Short Sales

For home sellers who owe the lender more than their home is worth, it’s not as bleak as it might sound. Negotiating a short sale with the lender could be the solution.

This means the seller or the seller’s agent sells the home to a buyer at market, or slightly below market value, and the lender agrees to accept the proceeds as payment in full on the mortgage, even though the sales price is less than the existing encumbrances.

The downside is lenders are not required to negotiate discounted payoffs, and there is no guarantee your lender will let you do a short sale.

Who Makes a Profit on a Short Sale?

The question is if the seller isn’t making any money on a short sale, who is making money? Because you know that somebody is going to come out ahead. And it’s not going to be the seller. The truth is everybody under the sun will make money on a short sale except the seller.

Let’s look at who profits from short sales:

• Existing Mortgagee Gains An Advantage But Not Necessarily a ProfitThe existing lender avoids filing foreclosure, avoids carrying the property on the books when nobody bids at the auction and avoids the time on market looking for its own buyer.
• Listing Agents and Buying Agents Profit From a Short Sale.Granted, the agents may take a hit on the commission because the lender will insist on a fee reduction, but the bottom line is the agents and their brokers get paid for selling the property.
• Title Companies Profit From a Short SaleThe tile company issues an owner’s title policy in favor of the new buyer and an ALTA policy in favor of the new lender. In some states, title companies provide abstract services instead, but, regardless, they get paid.
• Escrow Companies Profit From a Short SaleIn states where escrow companies act as an independent third party in real estate transactions, these companies come out ahead, too. They get paid by the lender or the fee is divided between the lender and the buyer.
• Real Estate Lawyers Can Profit From a Short SaleSellers of short sales should always seek legal advice before entering into a contract to sell on a short sale. So, the lawyers get paid. Some lawyers specialize in negotiating short sales and charge for that service.
• Tax Consultants and CPAs Profit From a Short SaleSellers of short sales should always seek tax advice before entering into a contract to sell on a short sale. There could be tax ramifications due to debt forgiveness.
• The Internal Revenue Service May Profit From a Short SaleThe IRS will collect its fair share if the lender issues a 1099 to the seller, providing the seller is subject to taxation on the short sale.
• The Buyer May Profit From a Short SaleIt is likely the buyer purchased the property at or a bit below market value, which lowers the buyer’s basis in the property and lowers its future taxation by the tax assessor. As a result, the buyer’s mortgage payment is reduced because the loan is less.
• The New Lender Makes a Profit on a Short SaleThe new lender makes money because a new loan generates new business and new revenue. A new loan pays the underwriter and loan processor as well.
• The Appraiser Profits From a Short SaleEven though the property may be selling for less than market value, the new lender will require that the buyer obtain an appraisal. Appraisers can earn $250 to $650 for an appraisal.
• The New Mortgage Broker Profits From a Short Sale.If the buyer’s loan involved packaging by a mortgage broker, that person will be paid points on the loan. Plus, the YSP could yield even a bigger paycheck to the mortgage broker.
• County Tax Assessor May or May Not Profit From a Short Sale.In areas where property is reassessed upon sale, the tax assessor will continue to collect property taxes on a timely basis and perhaps at a higher assessment value due to the resale value. Refinancing a loan does not ordinarily affect tax assessments.
• Insurance Companies Profit From a Short SaleThe buyer’s insurance company picks up a premium for insuring the buyer and the new home. In addition, the insurance agent earns a commission on the homeowner insurance policy.

However there is one really good reason for a seller to do a short sale. Short Sale Affect on 

December home-maintenance checklist

Congratulations on completing a year of home maintenance! For many of us, December is a month for celebrations, family gatherings and vacations. But if you find yourself prowling the house, feeling the need to do something useful, we have a holiday wish list for your home.

When the first major snowfall of the year hits — and it's likely to be this month if you live in North America — take advantage of the event to learn things about your house that only snow can show. Is the snow melting from your roof rapidly? That means heat is escaping from your home through the roof and you should consider adding some attic insulation. Rapid formation of icicles without a thaw is another indication that you're losing heat through the roof.

If you find that you are losing a lot of heat through your roof, take a look at the insulation on your attic floor. It should be uniformly thick and distributed evenly with no gaps. The vapor barrier side should be facing downward — toward the living space you are trying to keep warm. Also, the insulation should be dry.

There are many chores that need doing after a big snow; consider the tasks as your excuse to get outside and enjoy winter.

• Clear walkways with a snow shovel and sprinkle sand or salt on them for traction. (Be careful with the salt, though — it can leach into flower beds and is hard on pets' feet.)
• Check your roof for ice dams and break them up to release water if necessary. Frozen dams along the eaves cause melted snow to puddle above and possibly leak through the roof.
• Knock snow from tree branches to keep them from breaking under the weight.
• Consider sweeping snow from roofs that have shallow angles or little support (sheds, carports, lean-tos) if it can be done safely.

As a temporary measure to get through a cold winter with pipes intact, block north-facing crawl-space vents with a piece of plywood.

If an unusual cold snap is predicted and you live in an older, not-so-well-insulated house, leave the sink and bathtub faucets on at a slow trickle to keep pipes from freezing. This is especially important if the heat is turned off in the house for any period; for example, during the day when the house is empty.

If you have oil heat, you can save fuel and repair costs by cleaning some parts of the oil burner yourself. Turn off power to the system, lift the blower cover and then dust the blades of the blower. Lubricate the motor by pouring oil in the oil cups. If you're ambitious, you can even clean the oil strainer and replace the filter. Check the owner's manual to get details on do-it-yourself maintenance for your oil burner.

If you have forced-air heating ducts, check ducts once a year for leaks and seal with (yes) duct tape. Routinely vacuum dust from duct grilles, and have the entire system professionally cleaned annually, or as recommended by your heating system's maintenance manual.

If mice or rats have invaded your home despite efforts to keep them out, don't be softhearted. They can do damage that ranges from leaving a mess of droppings to chewing your home's wires, which can burn your house down. First, discern whether you have rats or mice: Rats make a lot of noise and leave half-inch droppings. Next, buy a dozen appropriately sized traps, bait half of them (peanut butter works well and is cheap) and place them without setting them. After the rodents have taken the first bait, rebait and set all the traps in one fell swoop. Wear gloves to dispose of the rodents, trap and all. (Do not try to reuse traps or you'll have a harder time going through with the chore.) Mice and rats breed like … well, rabbits, so keep repeating this cycle until you see no new evidence of these unwelcome, hazardous houseguests.

Take time to evaluate your home's emergency kit. A battery-powered radio, a first-aid kit, blankets, several gallons of fresh water, tools for shutting off gas and water lines, candles and matches, flashlights and batteries should all be included. Check the batteries — they can drain with time, even if not used. If you live in an area with extremely cold winters, make sure you have a backup heat supply, whether it's a wood stove and a well-stocked woodshed, or a backup generator. If you live in hurricane country, keep a supply of plywood for protecting windows. Residents of earthquake-vulnerable areas should have water and food to last several days. If you are a camper, consider keeping your camping supplies near your emergency stash — camp stoves, waterproof matches and tarps are all items that could come in handy should disaster strike.

Winter is the perfect time of year to itemize what changes you'd like to make in your house … because you're cooped up in it!

Take a day to sit and make a list of what you'd like changed, from new throw rugs to a complete remodel. If a remodeling job is on your list and you want to begin as soon as the weather warms, start talking to contractors this month. If you just bought a home, live in it for a full year before you undertake a major remodel. Become intimate with your house; watch how it interacts with its environment through spring, summer, fall and winter. This will help you decide what you truly need — and keep you from putting a sunroom in a spot that gets sun only two months out of the year.

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