When getting ready to purchase a home, it’s crucial that homebuyers understand the amount of money involved in the process. While there are numerous financial obligations that need to be taken into account, prospective buyers must also ensure that they have liquid funds available for an earnest money deposit—money that gets deposited into an escrow account if your real estate offer is accepted, or gets ratified by both parties—when they make an offer on a home.

In its simplest terms, an earnest money deposit is a deposit that is handed over to the sellers (or their real estate agent) when a contract is signed and offered to purchase a home. This shows that the buyer is serious about the deal and is willing to “show you the money.”

While there’s no set amount that needs to be offered in an earnest money deposit, it’s important to talk to your agent before making a decision. Eventually, the money will get credited toward your down payment, so choosing an amount that will impress the seller should be taken into consideration.

In the third quarter of 2012, 29 percent of borrowers that refinanced an existing mortgage chose to shorten their loan term, based on the Freddie Mac Quarterly Product Transition Report released today. Further, refinancing borrowers clearly preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate.

There are times when you need to change the locks on your home to protect your family and possessions. It should always be considered when you move into a new home; when keys are lost, stolen or unreturned; or a cleaning or other service provider hasn't returned the key.

Replacing the lockset would give you a totally new mechanism that should work better and if you go back with the same manufacturer, you'll probably avoid any carpentry. You can order the locks online and have them work with the same key at no extra charge.

A: You can find out more about an existing property and neighborhood before you buy than you can a new home in a newly developed community.

When the home is on the outskirts of town, ask the developer about future access to public transit, entertainment venues, shopping centers, churches, and schools. Also review local zoning ordinances. A remote area can quickly turn into a fast food haven.

You want to ensure the neighborhood will not spiral out of control and lose its residential appeal.
Other things to consider:

• Ask homeowners already living in a development about the builder. If none currently live there, find out where the builder has previously built and speak to those owners to find out if the builder followed through on promises and needed repairs.
• Ability to make changes. Most homes in a development resemble each other. But the developer may impose restrictions on house color, landscaping, renovations, and other items that a homeowner may want to alter.
• Do not buy into the highfalutin images created by marketing experts. Form your own opinions about a property and only buy where you feel comfortable. After all, you are the one who will be living there.

A number of things can cause water damage to a home and it's important to know whether they're covered by your insurance policy. Some water damage may be covered and other may not be. Generally, you need an incident to invoke coverage rather than something gradual due to lack of maintenance.

However, some incidents are specifically exempt from homeowner policies such as floods. A flood can be described as rising water due to overflow of inland or tidal waters or unusual and rapid accumulation or runoff of surface water from any source.

Homes in designated high-risk flood areas with mortgages from federally regulated or insured lenders are required to have flood insurance.

Even if you don't live in a dedicated flood zone, you could be affected by flood damage. Review your policy about water damage and call your insurance agent to get a better understanding. Ask if you need to purchase additional coverage or separate flood insurance along with other questions.

Flood insurance can be purchased for the building and the contents. The average flood insurance policy costs about $600 per year. For more information, see the National Flood Insurance Program.

Recently, the Department of Veterans Affairs announced it has guaranteed 20 million home loans since its home loan program was established in 1944 as part of the original GI Bill of Rights for returning World War II Veterans. The 20 millionth loan was guaranteed for a home in Woodbridge, Va., purchased by the surviving spouse of an Iraq War Veteran who passed away in 2010.

Given the current low interest rates, the program has grown significantly in the past five years, with 71 percent more purchases and 20 times as many refinances processed in fiscal year (FY) 2012 than in FY 2007. Currently, there are 1.7 million VA guaranteed home loans in existence with a total value of $284 billion. VA has guaranteed 540,000 mortgages in 2012.

“The 20 millionth VA home loan is a major milestone and is a testament to VA’s commitment to support and enhance the lives of Veterans, Service members, their families and survivors,” says Allison A. Hickey, VA’s undersecretary for Benefits. “As a result of their service and sacrifice, as a group, they prove to be disciplined, reliable, and honorable—traits that are ideal for this kind of national investment.”

The program makes home ownership more affordable for eligible Veterans, Service members, and surviving spouses by providing access to lower cost financing. VA loans are also attractive within the mortgage industry because they protect lenders from loss if the borrower fails to repay the loan.

Mortgages guaranteed by VA have had the lowest foreclosure rate for the last 17 quarters and the lowest delinquency rate for the last 14 quarters compared to all other types of home loans in the nation, including prime loans, according to a report by the Mortgage Bankers Association.

Much of the strength of VA’s home loan program stems from the efforts of VA employees and its industry partners nationwide to ensure Veterans receive every possible opportunity to remain in their homes and avoid foreclosure. Since 2009, VA’s efforts have resulted in over $8 billion in savings to taxpayers in foreclosure avoidance.

Veterans may obtain a certificate of eligibility for a VA-guaranteed home loan through the joint Department of Defense—VA web portal eBenefits at www.ebenefits.va.gov.

To obtain more information about the VA Home Loan Program, visit the program’s home page at www.benefits.va.gov/homeloans.

A 30 year fixed-rate mortgage hasn't always been the standard. As part of FDR's New Deal in 1934, the Federal Housing Administration was created to help Americans purchase homes with affordable terms.

Prior to then, many loans had an amount due at the end of the term called a balloon. Most mortgages had adjustable interest rates even though some might be fixed for a short time. While banks would loan money on a home, they retained the right to call the note due at any time which could exert considerable stress on borrowers.

FHA, during this time, introduced mortgages that offered a fixed rate of interest to the borrower for a 30 year term. This fully amortized loan provided borrowers a financial vehicle that would help them achieve the American Dream while minimizing the risk of having a loan called without the resources to pay it off. It brought long-term stability to the housing market and helped stimulate the economic recovery at a very difficult time in our nation's history.

Roughly, a third of the mortgages created in 2011 were less than 30 year terms. Many homeowners, similar to those after the Great Depression, would like to get their home paid for as soon as possible. Shorter term mortgages typically have a lower interest rate but higher payments due to fewer years to amortize the mortgage.

The Remodeling Market Index (RMI) climbed to 50 in the third quarter of 2012, up from 45 in the previous quarter, according to the National Association of Home Builders (NAHB). Released recently, the RMI is at its highest point since the third quarter of 2005, tracking the positive trends recently seen in the rest of the housing sector.

The RMI component measuring current market conditions rose to 52 from 46 in the previous quarter, while the component measuring future indicators increased to 49 from 44.

An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future activity.

“The strength of the RMI, especially in owner-occupied properties, shows that home owners are investing in remodels as home prices stabilize,” saysNAHB Remodelers Chairman George “Geep” Moore Jr., GMB, CAPS, GMR, a remodeler from Elm Grove, La. “As owners become more confident that investments in housing will hold their value, they are beginning to undertake projects to improve their comfort that they had been putting off.”

All three indicators of current market conditions improved: maintenance and repairs rose to 56 (from 50), minor additions and alterations to 51 (from 47) and major additions and alterations to 49 (from 42). Current market conditions improved or held steady in all four regions in the third quarter of 2012. Current remodeling activity was particularly strong in owner-occupied housing; the sub-components of the current conditions index for owner-occupied housing were all well over 50, ranging between 55 and 60.

Future market indicators in every region but the Northeast experienced gains from the previous quarter: Northeast, 38 (from 41); Midwest, 50 (from 46); South, 52 (from 46); and West, 52 (from 42). All indicators of future market conditions rose: calls for bids, 48 (from 44); amount of work committed for next three months, 46 (from 43); backlog of remodeling jobs, 50 (from 46); and appointments for proposals, 51 (from 43).

“The improvement in the RMI provides more evidence that the remodeling industry is making the orderly recovery from its low point in 2009 as we’ve been expecting,” says NAHB Chief Economist David Crowe. “Although remodeling projects over $25,000 are now showing some signs of strength, they are still lagging behind smaller property alterations and maintenance and repair jobs. The recovery of the remodeling market in general, and large projects in particular, continues to be constrained by factors such as tight credit and problematic appraisals.”

For more information about remodeling, visit www.nahb.org/remodel.