Getting a mortgage doesn't have to be scary if you have the right team

Getting a mortgage doesn't have to be scary if you have the right team

Fall Maintenance

It may be hot now but it's a good time to get ready for Fall maintenance once the weather cools

                     

                          
                       

                       


                       

Fall Maintenance Checklist

                       

You’ll be ready for winter’s worst and head off expensive repairs when you complete this checklist of 10 essential fall maintenance tasks. Read

                       

                       
                       
                       
                       

                       

Visit houselogic.com for more articles like this.

                             

Copyright 2014 NATIONAL ASSOCIATION OF REALTORS®

                       
                     

Sometimes even the Wall StreetJournal misses

Homeownership: This Time the Wall Street Journal Got it Wrong

by Steve Harney on May 6, 2014 in For Buyers

• 45Share
• 90Share
• 32Share
• 6Share

Our founder, Steve Harney, occasionally asks to do a personal post on what he sees as important to our industry. Today is one of those days. Enjoy! – The KCM Crew

I have been a subscriber to the Wall Street Journal (WSJ) for as long as I can remember. In my opinion, it is the single greatest source of financial information and insights available. I don’t always agree with their analysis but I always respect their position.

However, in an article this past weekend,The New Math of Renting vs. Buying, they flat out got it wrong. Below are a few excerpts from the article and the reason why I believe the analysis to be incorrect.

The Cost of Renting is Lower than the Cost of Owning

In the article, they discuss that homeownership is more expensive than renting in many large metropolitan areas.

"The monthly cost of renting was lower than buying in 20 large metropolitan areas at the end of last year, the most recent period for which data are available, according to figures provided exclusively to The Wall Street Journal by Deutsche Bank. That is up from 15 large metropolitan areas a year earlier.”

The challenge is that more recent data from two very reliable sources has shown that not to be the case. Among the 35 largest metro areas analyzed by Zillow in the first quarter, every metro showed it would be cheaper to buy than rent if you plan to live in the home for at least 4.2 years.

According to a study by Trulia:

“Homeownership remains cheaper than renting nationally and in all of the 100 largest metro areas. Rising mortgage rates and home prices have narrowed the gap over the past year, though rates have recently dropped and price gains are slowing. Now, at a 30-year fixed rate of 4.5%, buying is 38% cheaper than renting nationally.” (emphasis added)

Renters Don’t Have All the Expenses of Homeowners

The article goes on to explain that as a renter you have many less expenses than you would have as a homeowner:

"Renters, for example, don't pay property taxes, homeowner's insurance and, in most cases, maintenance costs. These expenses can cost homeowners about 3% of the price of their home annually, experts say.

While those costs can be folded into monthly rent, apartment renters often pay a smaller share as landlords spread the costs among many tenants, says Stijn Van Nieuwerburgh, director of the Center for Real Estate Finance Research at New York University. If a window breaks or the toilet plugs up, your landlord—not you—pays for the repairs."

Don’t kid yourself – the landlord does not pay the taxes nor pay for repairs. The tenant does. It is incorporated in the rent. It is true, if it is an apartment building, that the property taxes are shared by all tenants. However, realize that the amount of property taxes for an apartment building with “many tenants” will be far greater than a single family residence.

We think this situation is best explained by Eric Belsky, Managing Director of the Joint Center of Housing Studies at Harvard University, in his paper on homeownership - The Dream Lives On: the Future of Homeownership in America:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.” (emphasis is mine)

Investing the Difference in Payments Will Net a Renter More Money

The WSJ article claims that, if a renter invests the difference between their rent payment and a potential mortgage payment had they purchased, they would be better off financially in the long run.

"Renters don't end up with a valuable asset, as buyers do when they pay off a mortgage. But renters might be able to make more money by investing the monthly savings, as well as the cash they would otherwise use for a down payment, he says."

They go on to explain their reasoning as follows:

"The value of the average single-family home increased by 3.6% a year in the three decades through 2013, compounded annually, according to mortgage giant Freddie Mac. By contrast, the compound annual return on the S&P 500 over that period was 11.1%, according to Chicago-based investment-research firm Morningstar."

As to the idea that the return on investment would be greater by investing in the stock market rather than purchase a home, I think the article in the WSJ forgot that housing is a leveraged investment. Belsky, in his paper, explains:

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.” 

That 3.6% average annual appreciation is really an 18% return on cash to a home buyer putting down 20%.

They also assume the renter will save any difference in housing expense. However, that does not happen in reality. In their ongoing research for their paper, Beer and Cookies Impact on Homeowners’ Wealth Accumulation, Eli Beracha and Ken H. Johnson reveal that homeownership creates a ‘forced savings’ plan:

“It appears that homeownership creates extra wealth mainly through its ability to force owners to save rather than through property appreciation.  Thus, homeownership appears to be a self-imposed savings plan, which through time leads to greater wealth accumulation as compared to comparable renters.  In short, buying a home makes Americans save.”

And Belsky from Harvard agrees:

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

To further make this point, we can look at a study by the Federal Reserve which showed that the net worth of a homeowner ($174,500) is 30 times greater than that of renter ($5,100).

Bottom Line

Looking at financial advantages of homeownership from every angle still reveals that it is a much better investment than renting.

As the economy improves new households predicted to form

 

To understand what this will mean to your selling of buying a home just get in touch with me

Trends in Homes

Top Home Trends – 2013

  While the word trend suggests a fleeting fancy, statistics indicate that a lot of these home innovations are here to stay.  They will continue to grow and evolve, influencing future home trends.  Here’s a review of some of the most-popular home trends consumers were willing to spend their money on this year.
Smarter Technology – With busier lifestyles and the cost of technology decreasing, it’s becoming more common  to control a home system from one single device, such as a smart phone or tablet.  Systems such as security, temperature, and lighting can be controlled from a central location in the home or from the palm of your hand while you are on the go.  Giving homeowners more control, more efficiency, and more peace of mind!


Going Green – This trend appears to be here to stay.  We will definitely continue to see an increase in all things green, environmentally friendly, and sustainable including building materials, paint, flooring options, countertops, plumbing and electrical; even home furnishings and accessories.  Efforts to conserve water and energy have also skyrocketed through the use of lower water sinks and toilets, more efficient furnaces, and improved insulation.

Outdoor Living – This trend began a few years ago and continues to inspire homeowners to think beyond terraces and decks.  With better furnishings, fire pits, curtains, and even televisions, many outdoor spaces now have the same feel and functionality as indoor rooms.  They have become the perfect spot for family time and entertaining guests.  Screened in porches have also risen in popularity; many with fireplaces, that allow this space to be used nearly year-round.


Outdoor kitchens – Partnering with the desire to spend more time outdoors is the increased interest in outdoor cooking.  This has created a need for some very elaborate outdoor food prep areas.  Some of the most popular amenities include sinks, storage, beer taps, refrigerators, countertops, even pizza ovens.  Many homeowners have carried it even further by starting gardens and growing some of the food they eat.  Gardens are great family-friendly projects and reflect our society’s growing interest in health.

Media Fever – Seems like more and more families are choosing to stay at home these days rather than travel.  This has increased the appearance and comfort level of in-home media rooms.  Designs now include more comfortable seating, tables, enhanced lighting, better televisions / projectors, and sound equipment.

Streamlining – Many consumers are opting for smaller homes with more of the high-tech, trendy features mentioned here, instead of larger homes that are harder to maintain.  Furnishings are trending along the same scaled-back lines, less bulk and fluff; many even serve multi-purposes.  Couches that convert to beds, ottomans that provide seating and storage, and coffee tables that can rise for dining purposes.

Stylish, Functional Kitchens – Renovations appear to be more popular than additions, with kitchens as the most popular room to re-do.  Kitchens are not just for eating any more.  They are being used for cooking, socializing, doing homework, and paying bills.  Design features include upscale appliances, top-notch lighting, handcrafted cabinets, expensive countertops, and closer attention is being paid to every little detail.  Bath renovations and master suites with more functionality are also top renovation choices.

Newer Neutrals – Neutrals still remain more popular than vibrant hues.  However, neutrals are no longer restricted to white, cream, or beige.  Any warm, subdued color that offers a fresh background can be considered a neutral, blue-gray is quite popular!  And little “pops of color” are still used to bring neutral decors to life.  Accent pieces and accessories in colors such as raspberry, varying shades of yellow, even orange and purple are showing up everywhere.

While these may be the current top market trends, your home improvements should still be chosen
 based on what you need, what your heart desires, and what your wallet will allow!

Home for the Holidays

Home for the Holidays


Here are some tips on how to get your home ready for the holidays so your guests will feel welcomed and comfortable


1.Create Space for Guests- Move family’s luggage to a spare bedroom, clear out your coat closet, and have an umbrella stand handy if it is raining. This will provide them with a welcoming space for their belongings.

2.Freshen up the Bathroom- Once the bathroom has had its usual cleaning, set out guest hand towels and a new bottle of hand soap.

3.A Warm Glow- Light some candles but be sure to keep an eye on them if they are in places such as a bathroom or hallway.

4.Entryway Impression– Sweep your steps and front porch area to eliminate leaves, cobwebs, and dirt. Shake out your doormat and remove any clutter. Replace any outside lights that burnt-out. Keep in mind, your entryway is really your home’s first impression.

5.Quick Decorations- Make a centerpiece out of a wooden platter and some small white pumpkins or a vase full of fall branches. Use fall colored placemats to spruce up your table.

Most of all enjoy spending time with your family and friends! Have a wonderful Holiday!

Outdoor Holiday Decorating Safety

Benefits of Home Ownership extend to kids

How to Avoid Potential Deal Breakers

How to Avoid Potential Deal Breakers


It is highly beneficial to work with a knowledgeable real estate professional who can advise and guide you through your home buying or selling experience. Since the unexpected is still a possibility, below are steps on how to avoid potential deal breakers.



Foreclosure date falls before buy date: With the high number of foreclosures in today’s economy, this is all too common. You find the perfect home, sign the papers, and then the home is foreclosed before you can secure your funding and seal the deal!

How to avoid: Find out the foreclosure date in the beginning and work hard to get everything done as quickly as possible!



Credit problems: The amount and type of debt you have can influence your ability to get a mortgage. Lenders do not like to see delinquency on loan payments, arrears on child support, or a high debt to income ratio.

How to avoid: Prepare ahead of time and take the steps to clean up your credit. Do your best to make timely and full payments on all your debts. Another thing to avoid…do not make large purchases (appliances, new car, etc.) until after your mortgage has been funded!



Who owns what? A home buyer thinks they are getting a 6000 sq. ft. lot, only to find out otherwise. Lot lines, shared driveways, and fences can be big stumbling blocks in a real estate transaction.

How to avoid: Review the title report carefully! They are not always easy to read, but take the time to do so carefully. Still not sure, have your real estate agent review it with you!



Proposed property use: Planning to run a business from your new home? Your dream may fizzle, if the home is not zoned for a particular use or if a homeowner’s association has the ability to deny your request.

How to avoid: Be sure to check into the zoning requirements and review any by-laws that may exist for the home.



Personal property and fixtures: Disputes over fixtures and personal property are common. It’s important to know the difference. Wall-mounted TV’s have become a frequent issue! Property that is permanently attached or fixed to real property which once removed will cause “permanent” damage to the real property is considered a fixture. Fixtures remain with the property!

How to avoid: Home sellers – if it is something special to you, remove or replace it before you list your home. Also make sure it is excluded when the offer is written.



Unexpected inspection findings: On a purchase of this size, home buyers should know what they are getting. Inspections can be deal breakers when an agreement cannot be reached on who will pay for repair costs, should a problem be discovered.

How to avoid: Sellers can have inspections done prior to putting the home on the market and can have problems fixed in advance. Home Buyers still have the option to get their own inspections performed. Repairs almost always cost the seller less if the buyer knows about if before making an offer.



Being an educated consumer and being “prepared” for the unexpected

goes a long way with holding a deal together

Be a Savvy Home Buyer

Be a Savvy Home Buyer


When searching for a home, you will find some things you can live with, but others should raise a red flag! Read on to discover the pitfalls you’ll want to avoid and which ones you can fix!



Some Red Flags

Asbestos – Asbestos has been proven to pose serious health risks. Check attics and around plumbing for asbestos insulation. Be sure to opt for a home inspection when looking at older homes if the insulation looks worn or is disintegrating.



Plumbing and Wiring – Amateur plumbing could cost big bucks if you have to rip out pipes and replace floors or walls because of leaks! This is also true for novice electrical work. Non-professional wiring can lead to shorts and cause sparks and fires. Look for exposed wiring in the basement and S-traps under the sinks; these are sure signs of shoddy workmanship!



Buried Oil Tank – Removal of an old tank can be very expensive! If left intact, you run the risk of an environmental issue; the clean-up and repairs from this could easily cost upwards of $40,000! Since this is a hidden pitfall, be sure to ask the home seller and check all details of the home’s listing information.



Water damage –Water damage found on basement walls could indicate poor drainage around the home and result in having to hire expensive experts to dig, repair, and re-grade! Water spots found in high corners could be a sign of a leaky roof or pipe damage. Check out this blog post on dealing with water damage in a flooded basement.



Shaky foundation – Take notice of uneven floors, crooked chimneys, cracks in the bricks, or even doors and windows that stick. These can all be signs of a structural issue with the home’s foundation. Serious structural issues could cost thousands of dollars if you need to repair!



Pests – Hard to spot on your own, you’ll want to hire an inspector to check the home thoroughly before buying! Wood-destroying insects (termites, carpenter ants, etc.) could cost you thousands, if undetected and untreated!



Problems you can fix:

Old Roof – Old does not necessarily mean bad, just make sure you start saving $ right away so you are prepared to replace in the future.



Ugly carpet or wallpaper – Not deal breakers! Can easily be replaced, as long as they are not being used to disguise a bigger problem!



Electric appliances – If you prefer gas, you can replace them and have a propane tank installed or the gas company run a line to your home.



No Central A/C – Window units can be used until you decide to spend the money to have a system installed.



Being a smart home buyer can make

your biggest purchase, your best purchase!

Winterize Your Home

Winterizing Your Home   


For those of you dreading the long, cold months of winter that lie ahead, taking the time this fall to follow these simple steps will save you money on heating while keeping you warm.



Block the leaks – With energy costs on the rise, nothing makes more sense to homeowners than checking for any and all leaks around your home. On a breezy day, walk around and check the obvious sources of leaks: windows, doors, electrical outlets, etc. Caulking and adding outlet gaskets are two easy fixes for these trouble areas.



Windows – As you check for leaks, it is also a good time to replace your screens with storm windows.



Clean the gutters – This may be an ongoing chore through-out the fall season. Keep all spouts, gutters, and drains free of leaves and debris. Clear gutters will keep water moving away from your home and prevent icy clogs and back-ups.



Reverse the fans – Not often thought about, but your ceiling fans can impact the comfort of your home during the winter. Adjusting the fan to rotate in a clockwise direction will push warm air down into the living area.



Wrap the pipes – A pipe burst in the dead of winter is a nightmare! Check for un-insulated pipes in your home (crawl spaces, garages, basements) and get them wrapped. Remove hoses and drain all water from outside faucets before the first frost.



Check the furnace – This should be done monthly to keep the furnace filter clean and air flowing efficiently. Replacing the filter is an easy way to keep your home comfortable ALL year round. An annual “check-up” by a professional is also a good idea.



Thermostat –Turning the temperature down a few degrees when you leave is a huge energy saver; every degree lower can save you between 1% and 3% on your energy bill. A programmable thermostat is a great way to eliminate this from your morning to-do list.



Insulate – Check the attic and other unfinished areas. It is recommended that you have a minimum of 12 inches of insulation. If you decide to add more insulation, avoid the type with paper backing, this will act as a vapor barrier and cause moisture problems.



Check the chimney – Last but not least…take a look at your chimney if you plan on using it over the winter. This should be done at least once a year, more often if you are using a woodstove. A chimney cap is also good idea for keeping foreign items out of the chimney. If not in use, close the damper to avoid cold drafts.



Stay Ahead of “Old Man Winter” and Protect Your Home!

Obama Victory Keeps Focus on Pending Rules, Reforms

Obama Victory Keeps Focus on Pending Rules, Reforms

Home Cost v. Price

Cost vs. Price Explained


by The KCM Crew on November 7, 2012 · 0 Comments



We have often talked about the difference between COST and PRICE. As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As a buyer, you must be concerned not about price but instead about the ‘long term cost’ of the home. Let us explain.



Yesterday, we reported that the Mortgage Bankers Association (MBA) is projecting that mortgage interest rates will inch up over the next twelve months. On Monday, we explained that many experts are calling for home prices to also increase over the next year.



What Does This Mean to a Buyer?

Here is a simple demonstration of what impact certain changes would have on the mortgage payment of a home selling for approximately $200,000 today:

5 States With the Highest Foreclosure Inventories

5 States With the Highest Foreclosure Inventories

Value of Takeaways when selling

A time-honored business principal maintains that consumers generally base their buying decisions on emotion. Only later do they use logic, often to rationalize their emotional decisions.

Homesellers, working closely with their agents, will prepare their homes to evoke positive and personal emotions for those who come inside. They should also create “takeaways” that will keep those fond memories resonating in prospective buyers.

“One effective takeaway is a personal letter from you describing your experience of falling in love with the home when you were the buyer,” said Kay Steele Faulk, a Lake Village, Ark. freelance writer.

The letter, presented on brightly colored stationery, can describe the fun of meeting your new neighbors and the warm friendships you’ve established in the neighborhood. It can also recall joyous holidays around the home, show pictures of your home during special times and list neighborhood activities scheduled throughout the year.

“You should recall a memorable moment of coming home, such as after the birth of a child or after a long vacation, because these are all things buyers can relate to emotionally, they will serve to reinforce the positive feelings buyers experienced at your home,” Faulk said. “And to satisfy buyers’ logic—which they will use to justify their emotional connection to your home—also describe the loving care you’ve given the home while there.”

Once all the words are in play to touch upon the emotions, then it’s time to write about things that will relate to buyers’ practical sides.

Russell Goldstein, a New Jersey-based writer who often helps homebuyers prepare personal letters, stresses that this is the perfect way to say all the little things you can’t always place in advertisements and fliers.

“You can list your routine maintenance tasks plus any remodeling, updates or upgrades you’ve done in the years you have lived there,” he said. “Include anything that gives buyers a sense of confidence in your home’s current condition, and be sure to mention any special features you paid high dollar for, such as thicker exterior walls, which have better insulation values. These are your home’s key marketing details that make it a better buy than the competition down the street.”

A second effective takeaway is a home brochure created around high-quality color photographs of your home’s interior and exterior. “Use photos that highlight your home’s most appealing features,” Faulk said. “Just be sure each photo has a caption or short description that helps buyers remember. Even with a brochure, you still need that all-important section meant to satisfy buyers’ logic. This can simply be a descriptive sentence followed by a list of your home’s key marketing details and the T.L.C. you’ve given [the home] as owner. To make for easy reading, use bullet points to highlight each item of your list.”

If you’re good at writing warm personal letters or if you have the ability to create a professional-looking brochure, it’s quite acceptable to save money by doing it yourself. If not, turn to a professional copywriter to create a compelling takeaway that ensures a lasting emotional connection with buyers.

Spooky Smells and Sounds in your House

At times the unexplained noises and odors found in your own home can seem terrifying. Here are some simple and reassuring explanations.

SAVE ON UTILITIES

Announcing Homesale Connex to help you save on your utilities and more.


How Homesale Connex works

1. We research great deals with trusted, proven suppliers.

2. Sign-up to take advantage of lower electricity, natural gas, heating oil, cable and

security rates, plus coupons and rebates for appliances.

3. Then the system will monitor each account, advise you on renewal periods, and

new provider opportunities.

No sign up or membership costs. Just go to:

http://www.homesaleconnex.com/go/agordon

to check the deals in your area.

Or give me a call and we can discuss.

The Psychology of Color in Your Home

Click here for more

Don’t Drench Your Home Sale by Ignoring Plumbing Issues

Don’t Drench Your Home Sale by Ignoring Plumbing Issues


A plumbing checkup should be among your top priorities when preparing your home for sale. Your buying prospects might flush toilets, turns on faucets and inspect the showerheads, while more seasoned “experts” will look under the cabinets for leaks and check for water spots around key areas. The last thing you want is to drench a buyer’s enthusiasm because you didn’t fix a simple plumbing issue.

Major plumbing renovations may be huge selling points, but many homeowners can get as much credit by simply fixing leaks and changing out a few faucets. If you can’t make repairs yourself invest in a reputable plumber.

Before allowing prospective buyers into your home, make sure you have strong water pressure and that there are no stains on any of the porcelain. Hire a local housecleaning company to remove difficult stains.

If you do nothing else, take care of any leaks in your plumbing system, as these will be instant deterrents for buyers. Check as much of your plumbing as possible for corrosion or rust. If your house has more than one story, a smart buyer will look at ceilings for water stains from leaking pipes. Make sure to paint the ceiling following repairs.

Prospective homeowners tend to focus on places where they can use their hands, so make sure that all the hot and cold water knobs are easy to turn, and that the faucets do not leak. Also ensure that sinks and tubs drain easily.

Finally, updated fixtures catch the eye of prospective buyers. A relatively small investment for new faucets can pay off when prospects walk through.

No buyer wants problems. Take care of simple plumbing issues and keep your sale from going down the drain.

For questions about this or any other real estate matter don't hesitate to give me a call.

Renting versus Buying

RENTING VS BUYING


Owning your own home has often been referred to as the “American Dream”. Before the housing crisis began in 2007, it wasn’t even a question as to whether or not you should try to buy a home. The thought was…..If you could afford it, you should do it!! The housing crisis has definitely taken its toll and made people stop to think before taking this leap. With current mortgage rates at an all-time low, the question has come up again, repeatedly. This could be the best time for renters to become first time homeowners.

Even though the real estate market has changed dramatically over the past few years, your thought process should still be the same as in the past. Some factors you should consider:

•Hope for appreciation. As in the past, your home should appreciate in value over the years. The beauty of your home is more than just an increasing dollar value. Being able to make your home into something that reflects you personally is also a very rewarding.

•Stay put. Be sure you are ready to stay in the same place for at least 4 years. Moving too early can cost you more than just the hassle of packing all your belongings. Moving too quickly will not allow you to build much equity in your home.

•Be ready. Don’t just be emotionally ready to buy, make sure you’re financially ready as well. Build your credit and savings before buying; having both of these items in tip-top shape will help you secure a better interest rate on your mortgage!

•Location. Buy in an expanding area. An area with a growing economy and employment opportunities will help bring greater value to your home purchase.

Still unsure about taking the big step, here are a few more items to ponder:


Advantages Disadvantages

Buying:

•Freedom to paint, remodel and change landscaping

•Build Equity

•Sense of stability, security

•Not dependent on landlord for upkeep

•Responsible for maintenance

•Higher costs, taxes, insurance, etc.

•Less mobility

•Possibility of equity loss or even foreclosure



Renting:

•Little or no responsibility for maintenance

•Easier to move

•No additional costs, like taxes or maintenance charges

•No equity is built up

•No control over rent increases

•Dependent on landlord to make timely repairs, etc.

•No freedom to decorate



Bottom line: after considering the factors above, if you feel like you are in the right place and at the right time in your life to buy a home, I'll be happy to help!