NEW YORK (CNNMoney.com) -- Home sales posted their sharpest drop in 18 years this week. As a homeowner, you can't ignore the headlines. Here are the smartest moves you can make if you're selling your home or even staying put.

If you're planning on selling this spring, you'll want to assess the market like the pros do. Find out whether median prices are falling in your area by consulting a local agent, or the Web site for the local realtors' association.

Next, determine whether homes in your area are taking longer to sell. Agents track "days on market," that is the number of days it takes a home to sell. If that number is double what it was a year ago, you'll know your market is in trouble.

Consider waiting out the cycle (and it is a cycle). If you can afford to wait a year or two, you'll have more luck getting the best price for your home.

Now is not the time to spend a fortune on a new kitchen with all the bells and whistles or to add a first floor suite. The rule of thumb is that you should spend no more than 20 percent on renovations.

If you are planning upgrades this spring, make sure you stay well within that guideline or even less. The point is that you don't want to sink a lot of money into an asset that is losing value.

Even if you've been making your mortgage payments on time, foreclosures in your area can hurt your property value. In fact, for every home that goes into foreclosure in your neighborhood, your property value drops by about 1 percent.

So, if you have three foreclosed properties in your neighborhood, your home will fall about 3 percent. And it will stay depressed for at least two years, according to the Center for Responsible Lending.

To find out where the foreclosures are in your area, go to realtytrak.com or foreclosurenet.net and type in your zip code.

More than one in three homeowners don't know what kind of mortgage they have. In this kind of market, you can't afford not to know your loan terms.

So, whether you're selling or staying put, dig out those closing documents. Find out when exactly your rate will reset. You will find this on the Adjustable Rate Rider which is one of the first few pages in your documents.

You'll want to find out how often you're rate will increase and what caps there are to how much that increase can be. If you can't find these documents, call your real estate agent and ask. 

NEW YORK (Money Magazine) -- Pam and Mark Elmore weren't in the market for a home last summer. But when the Bend, Ore. couple happened to stop by a newly built house with a 1,000-square-foot patio, a fully equipped outdoor kitchen - fridge and range included -and a fire pit, they immediately realized they had to have it.

Now the Elmores cook dinner outside about four nights a week. "It opened up a whole new space in our house," says Pam. "We are constantly entertaining out here."

Good-bye, flipping houses. Hello, flipping burgers.

Americans, it seems, are rediscovering the pleasures of their own backyards. For many what was once a place for casual barbecues with friends has now become a full-fledged room with all the amenities of the indoors: gourmet appliances, light fixtures, cushioned furniture and even flat-screen televisions.

In colder parts of the country, homeowners are putting in heat lamps and fireplaces so they can lounge outside almost any time of year.

"The whole standard for outdoor space has changed," says Stephen Melman, director of economic services for the National Association of Home Builders.

A recent NAHB survey of builders and other industry professionals found that outdoor fireplaces are fast becoming standard in upscale homes, and almost two-thirds of architects surveyed by the American Institute of Architects last year reported an increase in demand for outdoor kitchens, patios and decks.

The most compelling reason to build an outdoor room is the pure pleasure of it. But you can reap practical benefits too: It's a relatively inexpensive way to expand your living space.

"The outdoors is basically a second living room for many of our clients," says Stefan Thuilot, a landscape architect in Berkeley.

In many regions Mother Nature will heat and cool the space so it won't increase your utility bills.

Property tax assessors typically base their valuations on "livable" (that is, indoor) square footage, so outdoor additions shouldn't raise your tax bill.

And though you probably won't recoup your full investment when you sell, you may get back a good chunk.

"In the upper end of the market, houses that have outdoor rooms sell faster and at the higher end of the price range," says Teri Herrera, a real estate broker in Bellevue, Wash.

But a back-deck remodel can easily morph into a six-figure extravaganza. You could spend $500 for a basic stainless steel grill - or $100,000 or more for a kitchen with granite countertops and luxury appliances; a fireplace can cost anywhere from a couple thousand bucks to $50,000 for a custom-built stone version.

But spending too much on a souped-up backyard isn't smart, especially in a weak housing market. Before you order an open-air home theater and invite your friends over for the barbecue of the century, you need to figure out what makes sense in your yard and match your dreams to your budget.

There's no lack of magazines to give you inspiration, but also put some thought into the following practical concerns:

What you'll do outside If you're aiming to entertain, you'll want enough space for a large table or sitting area; if you'd like to curl up with a book on chilly evenings, a fireplace might be the centerpiece of your design. If you're in a rainy region, you'll get more use out of an area that can be covered with a solid awning.

Once you have ideas, "audition" different parts of your yard with a portable grill and basic patio furniture, says Deborah Krasner, an outdoor-kitchen designer and author of "The New Outdoor Kitchen."

This will help you discover what parts of your yard have the best views or the least noise.

When Olga and Ken Hayes of Manchester-by-the-Sea, Mass. began designing their 1,000-square-foot backyard deck and garden sitting area, they thought about the movement of the sun.

"We put the living room and water garden on the eastern side so I could enjoy the morning light on the garden on a summer day," says Olga. "In the afternoons there's light on the western-side patio where we do our entertaining."

Your local rules Depending on where you live and the scope of your project, you may need approval from the city, says Julie Moir Messervy, co-author of "Outside the Not So Big House."

Many neighborhoods ban fences and pergolas, or covered awning structures, and others dictate what materials can be used. You may also need approval from your homeowners association to make drastic changes to your property.

Your neighbors' yards Peek over nearby back fences to make sure your plan isn't off the charts. "If you overspend for your area, you'll be hard-pressed to get that back in a resale," says John Bredemeyer, an appraiser in Omaha.

What you'll spend, what you'll get If you don't have the cash to fund the project, get a fixed-rate home-equity loan (about 8 percent today). It's a better deal than a variable home-equity line of credit, which currently has an average rate of 8.7 percent.

But don't take on tons of new debt for a project that won't necessarily recoup its costs at resale, says Burlingame, Calif. financial planner Barbara Steinmetz, especially if you're not going to be around long enough to enjoy it. Says Krasner:

"If you're not sure you'll be there for five years, put in a nice patio and buy a grill you can take with you when you leave."

Chances are, your wish list and your wallet aren't exactly in sync. To cut the budget down to size, keep these tips in mind.

Hire the right help For anything more extensive than a simple deck, you'll likely need an expert to help you map out the plan. But unless your renovation requires complex engineering work, you can probably hire a landscape designer for $50 to $100 an hour instead of a landscape architect, who may charge twice that much.

The typical plan takes about 20 hours, although this will vary. For an elaborate project it's often worth paying a 15 percent to 20 percent fee for a "design and build" firm that can do everything from sketching out your plans to subcontracting out plumbing and electrical work.

Do it in stages Unlike most indoor projects, outdoor rooms can be built over the course of many summers. This gives you more time to save for the big-ticket items and makes it more feasible for you to do some of the work yourself.

Consider trade-offs Instead of spending $10,000 for a custom-built fireplace, pay $200 for a portable fire pit or chiminea. If you like the look of an outdoor kitchen but aren't prepared to spend $20,000 on a full setup, opt for a high-quality grill set in cultured stone, says Kevin Schaffer, a landscape designer and president of Artisan Outdoor Living in Bend, Ore.

Flagstone is often considered the must-have material for patios, but at about $30 a square foot, it can be a budget breaker.

An elegant-looking alternative is stamped concrete, says Schaffer, which costs about $13 a square foot.

When Bill and Jackie Fritsch of Broomall, Pa. put in an outdoor kitchen and sitting room, they splurged for a $13,000 grill and $13,000 hot tub. The television, on the other hand, is "the cheapest flat screen I could find," Bill says. And it's getting plenty of use.

"For five years we never went out back at all," says Bill. "Now the patio furniture stays out until a week after New Year's." 

NEW YORK (Money Magazine) -- If prospective buyers looked at your house today, what would they see outside? A giant evergreen that looks as if it might swallow the station wagon, perhaps, scraggly old foundation plants or maybe a kitchen-table view of the neighbors' kids' trampoline?

If so, you have a truly inexpensive opportunity to boost your home's curb appeal. By spending $500 to $3,000 on plants and materials and a few hours of time, you can achieve a well-landscaped look without shelling out for professional help.

Besides the personal enjoyment you'll get from a prettier yard, landscaping adds more value than almost any other home renovation.

A recent Michigan State University study found that depending on where the house is located, high-quality landscaping adds 5 percent to 11 percent to its price.

If you have no immediate plans to move, all the better: Landscaping is the one home improvement that actually appreciates over time.

So how do you decide which projects to tackle? That depends on how long you think you'll be around to enjoy the results.

Edge the beds Cutting fresh edges where grass meets mulch makes the lawn look well kept. A move as simple as curving the edge of your flower beds could increase the value of your home by 1 percent, says horticulture professor Bridget Behe, the lead researcher on the MSU study.

Also, if your foundation plants are overgrown, widening the beds by two feet will make the shrubs seem smaller.

Nourish the grass For truly lush turf, ideally you should start regular fertilizer treatments a year before listing the house. But you can green up the lawn with just a single application.

Spend $45 on a broadcast spreader, which quickly distributes fertilizer over a lawn, enabling you to nourish a quarter-acre lot in about 10 minutes.

For a yard that size, expect each monthly application to cost about $20 (for straight fertilizer) to $30 (with weed killer).

Scatter color throughout For about $1 a plant, you can blanket your yard with petunias, impatiens and other small annuals that will flower throughout the current growing season.

Also invest a few hundred dollars in some larger perennials and in shrubs that stand at least four feet high.

"A few good-size plants have more sex appeal than 20 little ones," says Chicago landscape architect Douglas Hoerr.

Cut back the jungle Many everyday yard plants, such as azaleas, forsythia, hollies and rhododendrons, will fill out with new growth after a season or so even if you hack them down to stumps, says Christopher Valenti, a landscape contractor in Lewes, Del.

Be careful, though, of yews and junipers, which won't grow new leaves on old wood and may need to be removed altogether if they're severely overgrown.

Add drama with foliage A distinctive yard will make your home more appealing to buyers, says Los Angeles realtor Dana Frank. So replace plants that don't flower, or provide interesting foliage with eye-catching alternatives, like a patch of blackeyed Susans, a flowering crabapple or a cutleaf Japanese maple.

If you're planning to stay put, you don't need to spend hundreds of dollars for big plants. You'll save 50 percent or more by buying small ones and waiting a few seasons to get the full visual impact (when planting, make sure to space them based on the mature size listed on the label, not how they look now).

Consider new angles Most yards have almost all the plants along the foundation and the property lines. But if you place yours throughout different parts of the property, you'll create a depth of field that makes your home look farther away from the road, says architect Hoerr.

Try putting some near the house's corners to accentuate its shape, others near the street to define the yard, and some in between, where they can block unfortunate views and be admired from indoors. Many nurseries offer free design help to buyers.

Cover your rear It's nice to wave hello to your neighbors out front, but the backyard should be a private space. If yours feels overexposed, fencing can offer a quick fix.

For each eight-foot section, you'll pay about $100 (for a plain cedar stockade fence) to $300 (for an elaborate Victorian model), plus another $50 to $150 a section for installation.

You can also achieve the same effect at a much lower cost by planting small evergreen shrubs, although you'll have to wait a few seasons for full coverage.

Or, rather than pruning those hulking foundation plants, hire a landscaper to transplant them along the property line. As long as they're healthy and evergreen, it's a great way to maximize the value of the plants you already own. 

But don't kid yourself. home ownership comes with a slew of disadvantages, responsibilities, and downright headaches.

So before going any further, consider whether your lifestyle and finances make homebuying a smart move.

TIP: High costs mean you should be prepared to say put. Except in a roaring real estate market, it usually doesn't make sense to buy a home you'll own for less than three or four years. Reason: the high transaction cost of buying and selling property means you could lose money on the deal. If you do make money, you'll pay capital gains taxes if you're in the house less than two years.

So ask yourself if you can really stay put for that long. Will you need to move because you are transferred by your current employer or a new one? Are you thinking of going back to school?

TIP: It may make more sense to rent On the financial side, one key question is whether it costs more, on average, to rent or own in your area. The rule of thumb is that if you pay 35 percent less in rent than you would for owning - including the monthly mortgage, property taxes, and any homeowner's fees - then it's smarter to continue renting.

Only if all those answers still point towards owning should you proceed to the next step - getting the money right.

Getting the money right

For most people, buying a house involves a double financial whammy.

First you have to assemble a pile of cash for the down payment and closing costs. Then you must convince a bank to lend you an even more staggering sum - generally 80 percent or more of the purchase price.

So your first step, even before you start the actual hunt for a property, should be to get your financial house in order.

Credit reports are kept by the three major credit agencies, Experian, Equifax, and TransUnion. Among other things, they show whether you are habitually late with payments and whether you have run into serious credit problems in the past.

A credit score is a number calculated by Fair Isaac based on the information in your credit report. You have three different credit scores, one for each of your credit reports.

A low credit score may hurt your chances for getting the best interest rate, or getting financing at all. So get a copy of your reports and know your credit scores. Try Fair Isaac's MyFICO.com, which charges upwards of $50 for all three reports and scores.

Errors are not uncommon. If you find any, you must contact the agencies directly to correct them, which can take two or three months to resolve. If the report is accurate but shows past problems, be prepared to explain them to a loan officer.

Next, you need to determine how much house you can afford. You can start with one of the Web's many calculators. For a more accurate figure, ask to be pre-approved by a lender, who will look at your income, debt and credit to determine the kind of loan that's in your league.

The rule of thumb here is to aim for a home that costs about two-and-a-half times your gross annual salary. If you have significant credit card debt or other financial obligations like alimony or even an expensive hobby, then you may need to set your sights lower.

Another rule of thumb: All your monthly home payments should not exceed 28 percent of your gross monthly income.

The size of your downpayment will also determine how much you can afford.

If you haven't already, you'll need to come up with cash for your down payment and closing costs. Lenders like to see 20 percent of the home's price as a down payment. If you can put down more than that, the lender may be willing to approve a larger loan. If you have less, you'll need to find loans that can accommodate you.

Various private and public agencies - including Fannie Mae, Freddie Mac, the Federal Housing Administration, and the Department of Veteran Affairs - provide low down payment mortgages through banks and mortgage companies. If you qualify, it's possible to pay as little as 3 percent up front. For more, check out their Web sites at Fanniemae.com or Freddiemac.com.

A warning: With a down payment under 20 percent, you will probably wind up having to pay for private mortgage insurance, a safety net protecting the bank in case you fail to make payments. PMI adds about 0.5 percent of the total loan amount to your mortgage payments for the year. So if you finance $200,000, your PMI will cost $1,000 annually.

Increasingly, though, lenders are giving qualified buyers the option of using "piggyback loans" to cover a portion of a home's downpayment and avoid paying PMI. These second loans are usually in the form of a home equity loan or line of credit for 10 percent to 15 percent of the home's purchase price.

Once you've considered the downpayment, make sure you've got enough to cover fees and closing costs. These may include the appraisal fee, loan fees, attorney's fees, inspection fees, and the cost of a title search. They can easily add up to more than $10,000 - and often run to 5 percent of the mortgage amount.

If your available cash doesn't cover your needs, you have several options. First-time homebuyers can withdraw up to $10,000 without penalty from an Individual Retirement Account, if you have one, though you must pay taxes on the amount. You can also receive a cash gift of up to $12,000 a year (the limit for 2006) from each of your parents without triggering a gift tax.

Gift taxes are paid by the donor, not the recipient. (In fact, if your and your spouse's parents are both well-heeled, they can give you a total of $96,000 in one year - $12,000 from each of the four parents to each of you.)

Check on whether your employer can help; some big companies will chip in on the down payment or help you get a low-interest loan from selected lenders. You can also tap a 401(k) or similar retirement plan for a loan from yourself.

Picking a team

Don't buy a home without professional help.