The lending landscape shifted measurably earlier this month when the standard-bearer for first-time buyers and low-to-moderate income borrowers became more expensive than its private business counterpart.

On April 1, fees for low-down-payment mortgages insured by the Federal Housing Administration went up for the third time in two years. The hike in fees serves a two-fold purpose: one, to help shore up the FHA's sagging mortgage insurance fund, which is dangerously low; two, to reduce the government's footprint in the mortgage market.

Only time will tell whether the first objective will be reached. But the second goal -- allowing private mortgage insurance (PMI) companies to gain a larger market share -- is likely to be met because PMI is now the less expensive alternative.

How much less expensive? Over a five-year period, borrowers with a 760 FICO score who make a 5 percent down payment on a 30-year, $170,000 mortgage could save more than $4,000 by opting for a loan insured by Genworth Financial, one of a half-dozen private mortgage insurers.

Of course, most folks don't have that high a credit score. But for nearly all borrowers who can come up with a down payment of at least 3.5 percent on a loan of up to $625,000, PMI is now probably the better deal.

The FHA has always been the first choice of borrowers with low down payments who couldn't meet the private sector's more rigid underwriting standards. And during the housing debacle, the agency picked up the slack as private insurers backed out of the market. A couple companies even went out of business altogether.

But the FHA paid dearly for its efforts in supporting the market. Foreclosures are up significantly, and the health of the insurance fund from which claims are paid is at or below the level required by Congress.

So, as of April 1, the agency raised its annual premium by 0.05-0.1 percent, depending on the loan amount and the all-important loan-to-value ratio. That's on top of an earlier 0.1 percent increase in the annual fee instituted last April, as well as the 0.75 percent hike in the upfront mortgage insurance premium, which is now 1.75 percent of the loan amount.

As a result, the choice between mortgages with private mortgage insurance and those insured by Uncle Sam has never been clearer.

Lenders require insurance, either private or government-based, on mortgages in which there is a down payment of less than 20 percent. Such loans are considered more likely to default than those in which borrowers have more of their own money on the line.

Here's how a 30-year, $170,000 FHA-insured loan with 5 percent down compares with one insured by Genworth.

The interest rate on the FHA loan is 4 percent, but because of secondary market fees charged on conventional loans, the rate on the Genworth-backed loan is 4.375 percent. But even though the privately insured mortgage carries a higher rate, it is still cheaper because the FHA's insurance fees are higher.

First, there's the 1.75 percent upfront mortgage insurance premium. In this case, that amounts to $2,975, bringing the total loan amount to $172,975. Then there's the 1.3 percent monthly premium, which adds $184.17 to the monthly mortgage payment, bringing your total monthly payout to $1,009.98.

Genworth, on the other hand, isn't charging an upfront premium, so the loan amount remains at $170,000. Moreover, its monthly premium is just 0.59 percent, or $83.58. So the total monthly payment is $932.37, a difference of $77.61 a month. Over a five-year period, the savings is $4,656.60.

Now look at the same loan with 10 percent down.

Again, the coupon rate is somewhat higher on the Genworth-insured loan because of the secondary market charges. But the company wants no upfront fee, whereas Uncle Sam wants 1.75 percent at closing. Thus, just as with the "5 percent down" scenario, you are borrowing $172,975 with an FHA-insured loan versus $170,000 otherwise.

The other big difference is the monthly mortgage insurance premium: the FHA's 1.3 percent, or $184.17, versus Genworth's 0.44 percent, or $62.33.

In total, then, the monthly payment would be $1,009.98 on the government mortgage as opposed to $911.12 for the privately insured loan. Over a five-year period, the savings on this 10-percent-down mortgage is $5,931.60.

Another advantage a privately insured loan has over one backed by the government is that PMI can be cancelled. And in a market where housing values are rising, this is an extra added benefit on top of lower monthly costs.

Currently, the FHA will allow borrowers to cancel coverage once their loan-to-value ratio reaches 78 percent of the original loan balance. But starting June 3, the government will require borrowers to pay the premium as long as the loan is in force. In other words, the only way the insurance can be ended is by refinancing or otherwise paying off the loan.

On the other hand, PMI can be cancelled at the borrower's request when his equity reaches 20 percent -- as long as he is current on his payments and the value is backed by a new appraisal. Termination is automatic when the loan amortizes to a 78 percent loan-to-value ratio -- again, as long as you are current.

The "Ten Best Home Improvements" is an oft-cited list in newspapers and shelter magazines. But what about the worst improvements?

Since the bad ones rarely rate a mention, here's a look -- realizing, of course, that we're not talking about personal taste, need or comfort. This list, rather, comes from a strictly return-on-investment point of view.

-- Swimming pools. Pools top everyone's list of don't-do-its, if only because not everyone wants one. So if you put a pool in your backyard, you are eliminating better than half your potential market, and you haven't even put up a "For Sale" sign yet. You want to appeal to the largest buyer pool possible, no pun intended.

Beyond that, there's the cost. The experts maintain that unless you are in a neighborhood where pools are an anticipated amenity, not an unexpected one, you'll be lucky to recoup half the cost. Ditto for basketball and tennis courts.

Doug Rogers of Century 21 Millennium in Pineville, La., recently went on a listing appointment in a subdivision of $200,000 houses. Once he got there, the owners "couldn't wait to show me" their new $45,000 pool. And, of course, they wanted to ask $260,000 for their otherwise ordinary house.

At closing, though, the pool netted them just $7,000, which means they took a loss of $38,000.

Better to join a country club or perhaps the local YMCA. In Virginia, where pools are good only three months out of the year, John Statton of RE/MAX Action Real Estate in Mechanicsville says you can join a local pool for $300 a year -- without the increase in homeowners' insurance that owning a pool brings.

It's "weird but true," says Northern California agent Lloyd Binen. "In Silicon Valley, as many people take pools out as put them in."

-- Converting a garage. You might not want to park your family jalopy under covered space, but the next owners may. And once you seal off the garage doors or remove them altogether, you're done.

And let's face it: Garages make lousy dens, if only because they're cold. You have to insulate and run new ductwork to carry conditioned air to the space. That's likely to put too much of a load on your HVAC system, which was probably sized for the original house.

Phil Hopkins of Desert 2 Mountain Realty in Payson, Ariz., tells of an investor he knows who has flipped some two dozen houses in the last three years: His best returns are on those with converted garages. The investor buys low, turns the garage back into a garage, and makes a killing.

The people who owned Wallingford, Conn., agents Pat and Wayne Harriman's place before them converted the one-car garage into a master bedroom. "It's a huge room, and very nice, but no garage is a point of contention amongst buyers here," they posted on ActiveRain.com, the real estate chat site where "worst improvements" is a frequent topic. "It will come back to haunt us when we go to sell."

-- Granite countertops. There tends to be wide disagreement on this one. However, the majority of ActiveRain bloggers seem to believe that it's a poor investment to top your counter with granite in a Formica neighborhood.

Thomas McCombs of Century 21 HomeStar in Akron says that in five years, granite will be "the first thing that marks a home as being outdated." But Travis Parker of Team Linda Simmons in Enterprise, Ala., looks at it the other way. Newer homes feature granite, so owners of older homes have to keep pace or drastically reduce their asking prices, he says.

-- Home office. Converting that extra bedroom you never use into an office, complete with bookshelves and other permanent built-ins, is great if you work at home, but most people still don't. In fact, most people would rather have the extra bedroom, the ActiveRain contributors maintain.

-- Over the top. Updates are one thing, but don't overdo them. Bringing your post-WWII bathroom into the 21st Century will increase your home's market value, but adding a steam shower and carved marble tub probably won't, says Anthony Razhas of Real Estate eBroker in Carlsbad, Calif.

Remember, your idea of "luxury" may be a buyer's idea of "bizarre." Monique Ting of INET Realty in Honolulu once showed a house with a hot tub in the middle of the family room. "My clients were not impressed," she says.

-- Anything too personal. Highly personalized spaces -- a wine cellar, koi pond or darkroom, perhaps -- are not likely to bring a high resale value, says Michelle Roberts of Coldwell Banker Sea Coast Realty in Wilmington, N.C. "They appeal only to folks with the same likes as you," she says.

"Save your special things for the house you are going to live in until you die," advises Rick Snow of First Choice Realty in El Paso, Texas. Jane Peters of Power Brokers International in Los Angeles agrees. "If you upgrade," she warns, "upgrade for your own pleasure, not with the idea you are going to make a killing."

Many owners make improvements thinking they will add value, but Allen Deaver of Sky Realty calls them "Free Gift With Purchase." Case in point: Deaver's own brother.

"He built a beautiful water garden that covered almost half an acre," the Kyle, Texas, agent says. "When he got ready to sell, he was sure the water garden would make a big difference. The day after the sale, the new owner had a dump truck bring a load of dirt to fill in the water garden."

-- Bright colors. Painting is a great way to spruce up a house, but leave the bold, bright colors to the next owner. If would-be buyers have to re-paint your orange walls, they'll offer less -- often much less. Better to stick to neutral shades.

-- Do-it-yourself. If you don't have the tools and know-how, leave the job to the experts, no matter how easy it looks on paper. Amateur work sticks out like, well, a sore thumb.

-- Obtain a permit. This goes hand-in-hand with not doing it yourself. Most places these days require a permit for almost everything, so if one or more are necessary, make sure you or your contractor obtain them. Otherwise, you or your buyer may have to redo the work so it meets the local code requirements, and that devalues your house.

Do you know the difference between implied and written warranties? How about being preapproved for a mortgage as opposed to prequalified? Or an appraisal vs. a broker's price opinion vs. a home inspection?

Many neophyte homebuyers don't know, so here's a quick tutorial:

-- Warranties. These are promises that the seller makes to stand behind his product. Builders typically guarantee their homes to be free of defects in workmanship and materials. Federal law requires that all warranties be available for buyers to read before they sign a contract.

Generally, the warranty against poor workmanship -- loose floor tile, for example -- is for a year. Coverage for the plumbing, HVAC and electrical systems usually lasts two years, and protection against structural defects that render the house unsafe typically runs for a decade.

Some warranties are backed only by the builder. In other cases, the builder purchases the warranty from an independent company that assumes responsibility for claims. But all define exactly what's covered and the responsibilities of both the builder and the buyer in resolving problems.

Additionally, every state has an implied warranty that can last as long as four years, depending on the state. So even if you don't receive a written warranty from the builder, you may be protected under state law. Or if you have just a one-year written warranty, you may be protected longer under your state's implied warranty law. Many states extend implied warranties to second, third or even later buyers.

If you are buying an existing home, either you or the seller can purchase a one-year "warranty" to cover the building's systems and appliances. But "warranty" in this case is a misnomer; these are service contracts with deductibles and other limitations.

In either case, new home or used, never rely on so-called spoken warranties, which are promises made orally by a salesman. Always get it in writing. Otherwise, the promise may prove to be an empty one.

-- Loan approvals. Getting prequalified is the first step in the mortgage process. You supply the lender with basic information about how much you earn, how much you owe and your other assets. The lender, in turn, supplies a letter saying that you are qualified to borrow up to a certain amount, which should determine the price range in which you shop.

Generally, real estate agents will not show property to anyone who is not prequalified in this manner. But prequalification letters are riddled with loopholes that allow the lender to escape for any number of reasons. The real promise is when you are preapproved.

With a preapproval, the lender has had time to review and verify the information you supplied in your loan application. If you are preapproved, you are good to go with one condition -- whether the house you choose will appraise at a value high enough for the lender to recoup its investment should you default on your promise to pay.

-- Appraisals. Here's where things really get tricky, so let's start with the difference between a home inspection and an appraisal.

An inspection is a complete, top-to-bottom examination of the house by a third party to make sure all systems are in working order and to spot any issues that may need repair. It has nothing to do with value, only the condition of the property.

An appraisal, on the other hand, is strictly a valuation. While it takes condition into consideration, it is mostly concerned with what the property should sell for on the open market. It is an analysis based on the house itself, plus the neighborhood, recent sales, demand and other factors that impact value.

There are all kinds of appraisals. For example, in a "drive-by" appraisal, the appraiser simply makes sure the house is standing where it's supposed to be.

Then there's a broker's price opinion, or BPO, in which a real estate professional offers his or her educated guess as to the property's value. And there's a competitive market analysis (CMA), which an agent will use to help a buyer make a reasonable offer or help a seller set a reasonable asking price.

If you are paying $300 or more for an appraisal, make sure you are getting the real thing, which is a formal opinion of market value by a licensed or certified independent appraiser. After all, you, too, want to make sure that the house you want to buy is worth what you are willing to pay for it.

That's not to say drive-bys and BPOs don't have their place in the greater scheme of things. They do. A drive-by may be all the lender requires when housing prices are rising rapidly, and informal BPOs may be all the lender wants when the property is involved in a distress sale.