Tuesday, September 20, 2011

Home Energy Audit




With the exception of a mortgage payment, the largest homeowner expense is utilities; and energy is the major component. There are lots of contributing factors such as air leaks, insulation, heating and cooling equipment, water heaters and lighting.

It's estimated that 75% of the electricity to power home electronics is consumed when the products are turned off. Computers, monitors, TVs, cable and satellite boxes, DVRs and power adaptors are spinning your electric meter even when they're not being used.

Unplugging devices can actually make a difference in the size of your electric bill. Plugging several of these offenders into a power strip with a single on/off switch may make the task easier. Most computers have options to put them into sleep mode or even turn off when not in use.

Take 3 1/2 minutes and watch Energy 101. Consider hiring a professional home energy auditor or do-it-yourself. The Department of Energy has a checklist with some valuable suggestions.

Monday, September 12, 2011

Converting a Home to a Rental

What's keeping you from taking advantage of the low prices and mortgage rates available today? Concerned that you may need to sell in a few years and won't be able to get your equity out of your home?

Suppose a buyer purchases a home and finds out that they need to move in two years. Instead of selling the home, they could convert it to a rental. It's possible that it could have a positive cash flow even with the small down payment. In most cases, the conversion would not accelerate the mortgage.

The price of homes and low interest rates combined with a very strong rental market in most areas has attracted a lot of investors. Non-owner occupied mortgages generally require 20-30% down payment compared to a 3.5% down payment for a FHA owner occupant.

The following example looks at a home that might have been purchased as a principal residence and then converted to a rental at the end of two years. There are certainly lots of variables to consider but the high indicated rate of return merits closer examination of the possibilities.

For the buyer who has good credit and ample funds for down payment and acquisition costs, there may never be as good a time to buy a home as now. For the buyer who is concerned that they might have to move in the near future, converting it to a rental might make a great investment opportunity.

Wednesday, September 7, 2011

Competing with Cash


It's not fair! 29% of all sales made in June and July 2011 were cash. How does a buyer who needs a mortgage compete with a cash buyer?

You've been looking for a home for months after thinking about it for years. You've found the home you want and meets your family's needs. You write a contract but before it's even presented to the seller, another offer comes in. With all the homes on the market, you'd think you wouldn't have to deal with multiple offers but you'd be surprised how many times it does happen.

There are some proven strategies that can minimize the advantage of an all-cash buyer.

Get pre-approved and submit the letter from the lender with the offer
Move fast to minimize competing with other offers
Submit larger than normal earnest money to show your sincerity
Be flexible about closing and possession
Avoid unnecessary contingencies in the contract
Write a letter emotionalizing why you want the home

Tuesday, August 30, 2011

Significant Problems



"The significant problems you face today cannot be solved at the same level of thinking you were at when you created them." Albert Einstein


The housing market has definitely caused significant problems for some people but is also providing some amazing opportunities for others. Agents aren't like retailers who wake up one day realizing they have the wrong merchandise on the shelves.

Everyone needs a place to live and whether you rent or buy, you pay for the house you occupy. While the home for sale remains the same, the methods that produce results have to change.

Listing agents are diametrically opposed to the objectives of buyer's agents. This is not to say that there cannot be a win-win situation but each agent is trying to negotiate the best price and best terms for their client.

Financing can make listings more marketable and structure a transaction to provide the buyer with the cheapest cost of housing. Personal experience is a great teacher but a very expensive way to learn. An expert, like a Residential Finance Consultant can provide information and tools to make better decisions to be able to profit in the current market.

Monday, August 22, 2011

Silent Killer



Carbon monoxide is colorless, odorless and toxic. It's called the "silent killer" in homes because some victims are not even aware that the deadly condition exists.

Homeowners must be concerned about unmaintained furnaces, water heaters and appliances that can produce the deadly gas. Other sources could include leaking chimneys, unvented kerosene or gas space heaters and even exhaust from cars operating in an attached garage.

The Environmental Protection Agency suggests the following to reduce exposure in the home:

• Keep gas appliances properly adjusted
• Install and use an exhaust fan vented to the outdoors over gas stoves
• Open flues when fireplaces are in use
• Do not idle car inside garage
• Have a trained professional inspect, clean and tune-up central heating systems annually

There can be many symptoms of carbon monoxide poisoning that can resemble other types of poisoning. Headaches, nausea, vomiting, dizziness and feelings of weakness or fatigue are a few of the most common symptoms. Lower levels of exposure may be mistaken for the flu.

Roughly half the states have laws regarding carbon monoxide detectors in homes. Regardless of the requirements, what person would want to put their family, guests or themselves at risk for something so deadly? The devices can be purchased for as little as $20 and plugged into the wall like a night light.

Monday, August 15, 2011

More To Sell



If you had a 3.5% mortgage on your current home and were buying another home, transferring your low interest rate mortgage would be ideal. Unfortunately, lenders don't allow that.

When buying a home today, it would be smart to think about selling it in the future. To have a good home with unique features makes it marketable. To have attractive financing that could be assumed would add to the salability.

Consider getting a FHA or VA loan to purchase your home. The present advantages are that these loans are priced competitively and a little easier to qualify for than conventional loans. The future advantage is that FHA and VA loans are assumable at the original note rate for qualifying buyers.

There's more to sell than the home itself when you have an assumable loan. The mortgage payment could lower the cost of housing significantly. A buyer may easily be willing to pay more for the home due to the attractive financing, especially if it helps their equity grow faster.




Wednesday, August 10, 2011

PRICE REDUCED!

Price just reduced on this ranch style home, with vinyl siding, hardwood floors, and a 1 car attached garage.

This home is located at:  20 New Amwell Road, Hillsborough, New Jersey 08844.

Go here for the tour:







To find out more information about this home, visit:
www.BillFlagg.com where there are many New Jersey homes for sale, foreclosures, investment properties, and more. Contact Bill Flagg today. He is the REO, Foreclosure, and Real Estate specialist for Essex, Union, Middlesex, Hudson, Somerset, and Morris County Real Estate.

Sold strictly AS-IS.

Tuesday, August 9, 2011

The Investment Alternative



To say the investment market is unsettling is an obvious understatement. The market is down 8% in the last ten days and the news doesn't give much hope that things are going to get better in the near term.

Preservation of capital is probably today's most important investment consideration and making a profit would be a bonus. Of all the conventional investment alternatives like stocks, bonds, mutual funds, gold, commodities, CDs and annuities, housing is the best asset class in America.

Homes have had a 30% to 40% price correction in the past four years. Mortgage rates are at near all-time low rates with 30 year terms available for investors. Rents have increased significantly over the past two years while vacancy rates have decreased. People will always need a place to live.

Five year certificates of deposits earn a little over 2% but rental properties are yielding eight to ten times more than that. Income properties are tangible assets that have benefitted dramatically in inflationary times. Cash assets can be devastated by inflation and diversifying into income properties can provide real protection.

Single family homes offer investors the opportunity to borrow large loan-to-value mortgages at fixed rates for long terms on appreciating assets with tax advantages and reasonable control. Investing in rentals can provide stability, safety and a higher rate of return.

Monday, August 1, 2011

Woulda - Coulda- Shoulda




It is the mantra of people who missed a great deal. It's the theme song of the procrastinator. It's the refrain that reminds us of the one that got away.

Some people are still beating themselves up because they didn't recognize the housing bubble was really going to burst. It is impossible to change the past but will they see the signs of the next housing trend?

In the past four years, prices have adjusted with 30% corrections nationally and much more in areas with high percentages of foreclosures. New homes are almost non-existent. Interest rates are slightly above record lows. Consumer goods are skyrocketing; our budget deficit and national debt are staggering and escalating inflation appears certain.

"Forget stocks. Don't bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing." states Shawn Tully, Senior Editor at-Large for Fortune magazine in a March 28, 2011 article.

"If I would have known that this was the best buyer's market ever, I could have taken advantage of the prices and interest rates; I should have fixed my cost of housing for years to come." Don't catch yourself saying this. You owe it to yourself and your family to get firsthand information to see what your options really are.

Tuesday, July 26, 2011

Wasted Water



A typical household uses 185 to 300 gallons of water a day and the majority of it goes down the drain from the toilet and the shower. Updating your commodes will serve as a conservation effort while lowering your water bill.

Today's toilets use less water, prevent staining and resist clogging better than the older toilets and you might be surprised at how easy they are to install. Replacements generally cost from $100 to $300.

Toilets made in the 1950's used, on average, seven gallons per flush. Compare that with one that only uses 1.6 gallons per flush and it's a big saving. Multiply by the times a toilet is flushed in a year and the number of toilets in your home and it will save a lot of water.

Watch this video to see how easy the project is done and even if you decide to hire a plumber, you'll have a better understanding of how it works.

Tuesday, July 19, 2011

I Want a Bigger/Nicer Home But...


There are homeowners that would like to have a larger/nicer home but are patiently waiting for the market to improve. A frequently heard objection is that they can't sell their home for what it is currently worth.

Buying up in a down market is actually advantageous because while you might get less for the home you're selling, you're also getting the larger home for less. For instance, if you had to sell a $200,000 home for a 10% discount, you might feel that you left $20,000 on the table. However, buying a $300,000 for the same 10% discount would put you $10,000 ahead on the sale and purchase.

The other obvious matter is that when the mortgage rates increase while you're waiting for the market to improve, it dramatically increases your cost of housing with higher payments. The cost of housing is affected by price and mortgage rates.

To accurately evaluate your current options, you need facts and assessment tools that will provide you the infomration to make an informed decision.

Monday, July 11, 2011

Targeting the Mortgage Interest Deduction



It's obviously going to be a Herculean task for Congress to balance the budget and reduce the deficit. It's sort of like the country song lyric that goes "everyone wants to go to Heaven but nobody wants to go now." It is estimated that the mortgage interest deduction cost the government $100 Billion last year which is why it is a target for cuts.

The Mortgage Interest Deduction has been part of Income Tax laws in this country since 1913. The United States of America is one of the few countries in the world that allow such a deduction. Our goverment has always supported homeownership as is evidenced in the different tax benefits it receives.

Mortgage interest deuction up to $1,000,000 in acquisition debt on a principal residence and second home
Deduction of interest on Home Equity debt of $100,000 over acquisition debt used for any purpose
Capital gain exclusion on up to $500,000 for married couples filing jointly and $250,000 for single homeowners
Favorable long-term capital gain rates if gain exceeds exclusion limits
Property tax deduction

There is an interesting relationship between a good economy and a healthy housing market. Contrasted to profits from the stock market which tend to be plowed back into other investments, profits from home sales tend to be spent on consumer products that directly benefit the economy.

The National Association of REALTORS supports the MID and reports that one job is created for every two homes sold. It further states that $60,000 is pumped into the economy for each home sold and that homeownership accounts for over $2 Trillion of the U.S. gross domestic product.

American homeowers are currently paying 80-90% of all federal income tax collected. Some economists believe that a healthy housing market is a leading indicator for economic recovery and that tampering with a significant homeowner benefit like the mortgage interest deduction would hurt the economy.

Wednesday, July 6, 2011

"I Do" Want a Home


Forget Macy's and Crate & Barrel. Set up your bridal registry at the bank and use the funds for the FHA down payment on a home. This could be perfect for people getting married who already have their household items and really need help getting into a home.

FHA has had this little known program that allows cash gifts since 1996. Sellers, builders, real estate agents or anyone with a financial interest are restricted fom making a gift contribution. It's not difficult to set up and it's available with any FHA lender.

Inform your mortgage professional early of your intention to obtain all or part of your down payment from gifts to the FHA homeowner bridal registry.
Open a savings account at your bank named "bridal registry account"
Friends and family are given account deposit information

Gift registries are commonplace and really benefit both the giver and recipient. Etiquette websites like Emily Post state that alternative registries are acceptable. Couples are now suggesting to friends and family that they want help with their honeymoon, education or furnishing a home.
Interestingly, this program is not limited to people intending to be married. It is available for other situations where gifts are typically received by individuals. Other occasions could include graduation from college or graduate school.

Tuesday, June 28, 2011

Who Represents You?


In almost every state in the U.S., buyers have the option of being represented by their real estate agent. This relationship creates responsibilities that require the agent put their client's interests above their own.

The duties a buyer or seller can expect to receive among others are honesty, accountability, full disclosure, representation and reasonable skill and care. In a nutshell, the agent who represents you is working in your best interest.

It's a special relationship that doesn't exist with most of the other professionals involved in a real estate transaction. Mortgage and title officers are limited to their duties of honesty, accountability and specific requirements under the Real Estate Settlement and Procedures Act.

This special relationship with your real estate agent makes it advantageous to have them coordinate your efforts with the other professionals in the home buying process. Since most buyers' and sellers' transactions are infrequent, the agent can bring valuable experiences to the transaction.

A Residential Finance Consultant is trained and has special tools to help you make better decisions when you buy or sell and in between. Our goal is to help you improve and maintain the investment in your home so we can earn the right to be your lifelong real estate professional.

Monday, June 20, 2011

Top 10 FHA Loan Advantages

Fannie Mae and Freddie Mac underwritten conventional, FHA and VA loans account for the vast majority of mortgages chosen by buyers to finance their home purchase. While buyers have the choice on which product to use, there are some considerable advantages to FHA.
  1. More tolerant for credit challenges than conventional loans.
  2. Lower down payments than conventional loans.
  3. Broader qualifying ratios - total house payment with MIP can be up to 31% of borrower's monthly gross income and total house payment with all recurring debt can be up to 43%.
  4. Seller can contribute up to 6% of purchase price - this money must be specified in the contract and can be used to pay all or part of the buyer's closing costs, pre-paid items and/or buy-down of the interest rate.
  5. Self-employed may qualify with adequate documentation - two year's tax returns and a current profit and loss statement would be required in addition to the normal qualifying and underwriting requirements.
  6. Mortgage Insurance Premium can be released in five years when the balance is 78% of original sales price
  7. Liberal use of gift monies - borrowers can receive a cash gift to assist in purchase from family members, buyer's employer, close friend, labor union or charity. A gift letter will be required specifying that the gift does not have to be repaid.
  8. Special 203(k) program for buying a home that needs capital improvements - requires a firm contractor's bid attached to the contract specifying the work to be done. The home is appraised subject to the work being done. If approved, the home can close, the money for the improvements escrowed and paid when completed.
  9. Loans are assumable at the existing interest rate - assumptions require buyer qualification but are actually easier than qualifying for a new mortgage. Closing costs are lower on assumptions than originating a new mortgage.
  10. If the rate on the assumable mortgage is lower than current rates for new mortgages, it could add value to the property.

Friday, June 17, 2011

National Association of Realtors: Call to Action


How will your market fare without buyers having access to the Mortgage Interest Deduction? Are you willing to find out? Even if we all agree that serious debt reduction considerations need to be made by Congress this year, do you think that the housing market can withstand further significant disruption that prevents buyers from entering the market?
Many of your fellow REALTORS® have already contacted their Representative in Washington, D.C. to let them know that they expect Congress to Preserve, Protect and Defend the Mortgage Interest Deduction (MID).

Taking action is easy. Just click on the link below or on the blue "Take Action" button to the right. When you get to the take action form, it should be pre-populated with your name and contact information. Our advocacy software will automatically connect your letter to the appropriate Member of Congress based on your address. All you need to do is click on the "Send this Message Now" button. If you wish to personalize the letter you are free to do so but it is not required.  It is that easy. It takes only two clicks and no more than one minute of your time.
The housing market is slowly stabilizing and slowly improving, but the housing market crisis won't end if we gut one of the most sacred tenets of achieving the dream of home ownership. Please act NOW and tell Congress to Preserve, Protect and Defend MID.
As REALTORS®, we need to come together and make our voice of experience heard on Capitol Hill. Please contact Congress today.
Thank you for your support,
NAR Government Affairs 



Tuesday, June 14, 2011

One More Chance?



Fixed Rate mortgages are at their lowest level for 2011 as reported in the current Freddie Mac weekly Primary Mortgage Market Survey. Many qualified buyers missed the opportunity last fall in October and November to refinance at record low rates. This may give homeowners one more chance to refinance and save money on their payments.

An important thing to keep in mind is that points paid in connection for refinancing a home are generally not considered prepaid interest and must be spread over the life of the mortgage. Some advisors suggest that you have the lender quote a "par value" loan to eliminate the points which will lower refinancing costs even though the mortgage rate will be slightly higher.

Additional income tax information is available in IRS Publication 936.

Monday, June 6, 2011

Cash Now - Mortgage Later?


You might think that a person who pays cash doesn't have many concerns or at least not the same ones as most people. Roughly, about 9% of people paid cash for their home last year with a considerably higher percentage paying cash this year.

The first question that comes to mind when I hear someone say they want to pay cash for a home is "Do you think that you might put a loan on the home in the future?" Paying cash may affect your ability to deduct the interest on a mortgage placed on the home at a later date.

Currently, a homeowner may deduct the interest on up to $1 million of acquisition debt. Paying cash for a home establishes acquisition debt at $0. At that point, the only deductible interest would be home equity debt which is limited to $100,000 over acquisition debt. You can get more information about this from IRS Publication 936.

On the surface, paying cash certainly seems simple but it may have consequences later. As a Residential Finance Consultant, I can point out the areas when advice from a tax professional is in order.

Tuesday, May 31, 2011

Start Your Projects




Summertime is almost here and millions of Americans will be starting home improvement projects. Whether they're classified as maintenance, updating or energy saving, they should make homeownership more enjoyable.

Remodeling magazine's 2010-11 Cost vs. Value Report suggests that some improvements are a better investment than others. Front door and garage door replacements are two of the easiest and return the greatest percentage of cost on resale.

Kitchen and bathroom updates transform an older home and instantly give visitors and buyers a fresh impression. Countertops and appliances can be expensive but yield great results. Painting the cabinets and replacing the hardware is much less expensive to change the look and feel of the rooms.
Energy efficiency enhancements can improve your enjoyment of the home and help save money on utility costs.

•Replace older appliances - refrigerators, ceiling fans, water heaters, air-conditioners
•Add insulation to keep your home cool in the summer and warm in the winter
•Seal air leaks around doors and windows; holes in attics and crawl spaces with caulk, spray foam or weather stripping - more information
•Seal all heating and cooling system ducts - more information
Looking through the eyes of a buyer could show you what features most date your home and could order the priority that you tackle the projects.

Friday, May 27, 2011

2010 Top High Schools in New Jersey-www.njmonthly.com

2010 Top High Schools in New Jersey-www.njmonthly.com

Any champion will tell you the toughest challenge is staying on top. But that’s just what Millburn High School managed to do in this year’s ranking of the state’s top public high schools. The Essex County school, which was number 1 in the New Jersey Monthly ranking in 2008, repeats as our high school champ in 2010.

In fact, the top of this year’s high school ranking is almost identical to the 2008 list, with McNair Academic of Jersey City and Tenafly High School repeating in the number 2 and number 3 spots, and Glen Ridge High School moving up one notch to number 4.

The Top High Schools list is based on data reported by the schools to the Department of Education for the 2008-2009 school year. Click here for an explanation of our methodology.

In addition to publishing the Top 100 Public High Schools in this section, we also have compiled the top 10 schools by District Factor Group, which ranks schools based on their socioeconomic peer group (click here to view the rankings by district factor group); and a list of the Top 10 Most Improved High Schools, based on our ranking. See the full rankings below.

What the rankings do not tell us is how the schools will fare after losing $820 million in direct state aid this year. Under Governor Chris Christie’s cuts, many of the state’s most successful school districts lost every penny of state cash assistance (although the state will pay for certain teacher benefits and the districts’ social security contributions).

That’s the case at Millburn High School, where aid was cut from $3 million for 2009-2010 to zero for the new school year. MHS principal William Miron says the cuts forced an approximate 7 percent reduction in his school’s budget. That has meant increasing some class sizes, eliminating some classes (five sections of Chinese instead of seven), merging a number of clubs, and cutting back sports schedules. Districtwide, about six administrative positions were eliminated, some through retirements; administrative responsibilities were spread among teachers through the creation of department-chair positions.

“We did a pretty good job of contracting without eliminating teaching positions,” Miron says.

A similar scenario is playing out at New Providence High School in Union County, which made a strong leap in the new ranking, moving from number 17 to number 5. The district’s state aid was cut from $1.48 million to zero. NPHS principal Paul Casarico reports that seven teaching and support positions were eliminated districtwide, including two and a half teaching positions at the high school. “Some of the opportunities that kids could take part in won’t be there this year,” Casarico says. At the high school, that means larger class sizes, fewer coaches (although no sports were dropped), and fewer clubs and activities.

Further down the rankings, Glassboro High School is also feeling the pain; its district lost $1.7 million, or 10 percent of its state funding. As a result, four and a third teaching positions were cut at the high school, and class sizes have grown, especially in electives like art and African-American history, says principal Santina S. Haldeman. Her school also cut several teams (cross-country, winter track, spring golf), the fall play, and an after-school weight-lifting program.

Glassboro, which has many students from low-income housing areas, has made good progress, moving from number 197 to number 188 in the rankings. (It is number 10 among its District Factor Group peers.) But Haldeman is concerned about hanging onto the gains. “I worry about what the future will bring,” she says. “I think this is just the beginning. I can’t imagine how it will be a year from now in terms of loss of teachers and programs.”

Click on the links below to read our Top High Schools rankings in the categories listed: CLICK HERE FOR FULL ARTICLE AND RANKINGS

Tuesday, May 24, 2011

Buy Now or Wait...




Uncertainty as to whether prices will continue to fall has to be one of the most common causes of buyer procrastination. Paying too much wouldn't be a smart thing but price isn't the only factor to consider. Interest rates have as much effect on housing costs as price.

A small increase in mortgage interest rates can offset a significant drop in home prices. If the price of the home were to come down by 5% but the interest rates were to go up by .5%, the payments might be close to the same.

In the example below, if the price of $175,000 home went down 5% but the interest rate went from 4.75% to 5.25%, the payments would actually be $4.98 more at the cheaper price. If while the buyer was waiting for the home to decrease 5% and the interest rate increased by 1%, the payments would actually go up by $55.30.

Then, of course, there is always the possiblility that the price of the home doesn't go down but the rate does go up by 1%. The payments would be $104.58 more per month, each and every month for as long as you have the mortgage on the home.

As a Residential Finance Consultant, I can provide solid information that will help you make better buying decisions. A home is a place to feel safe and secure, to raise your family, share with your friends and an investment. It's an investment in your marriage, your family and your future. You owe it to yourself to check out the real numbers in your market because every market is different.

Wednesday, May 18, 2011

Not So Fast Buyers!

One of the challenges buyers are having with financing may be their own understanding or lack thereof.

In a recent survey done by research firm Ipsos for Zillow, a surprising number of incorrect answers to true or false questions were given by prospective buyers.

Over 3/4 didn't realize how the mortgage rate was determined for a borrower thinking that annual income was the most important factor. Other considerations lenders do evaluate are credit score, debt-to-income and loan-to-value ratios.


A variety of myths seem to have influenced some of the common answers such as interest rates are set and released once a day; FHA loans are for first-time buyers only; prequalification commits the lender; lender fees are not negotiable and adjustable rate mortgages always go up.

Buyers' misunderstanding of actual mortgage practices may give some insight into why more of them are not taking advantage of the greatly reduced prices and incredibly low mortgage rates.

While getting solid information about mortgages and being pre-approved from a lender are very important, it is only one step in the home buying process. Success in buying a home in today's unique market should begin with a real estate professional that will coordinate all of the different parts of the transaction including mortgage, title, insurance and inspections.

Tuesday, May 10, 2011

Incentives to Buy





In one of the best buyer markets ever, sellers are not really doing much to encourage purchasers to act now.

Builders offer a variety of incentives such as upgrades, seller-paid closing costs, interest rate buy downs, washers, dryers, refrigerators or big screen TVs.

Interestingly, much of the resale market doesn't employ many of these techniques. According to the latest NAR Home Buyers and Sellers Profile, 56% of sellers are not offering any incentives at all.

25% offer a home warranty which is valuable but at an average cost of about $500, it probably doesn't do much to make the difference in the decision to buy or not.

With the tougher mortgage conditions that exist today, buyers are more discerning and looking for their best opportunity. When homes are similar in size, condition, location and price, the home with the most attractive terms will sell first.

Whether selling or buying, today's complex real estate market requires a professional who can structure a transaction to benefit all parties involved. A Residential Finance Consultant has the tools and information you need to make better decisions.

Tuesday, May 3, 2011

Mortgage Rates Inch Lower

Mortgage rates remained below the 5% mark, with the benchmark conforming 30-year fixed mortgage rate inching lower to 4.95%, according to Bankrate.com’s weekly national survey. The average 30-year fixed mortgage has an average of 0.37 discount and origination points.

The average 15-year fixed mortgage stepped down to 4.14%, and the larger jumbo 30-year fixed rate reset the low point of the year at 5.40%. Adjustable rate mortgages were also lower, with the average 5-year ARM dipping to 3.69% and the 7-year ARM dropping to an even 4%.

Mortgage rates were lower this week, but the movement in mortgage rates continues to be tame. Mortgage rates have remained within a one-third percentage point band since mid-December. The Federal Reserve did little to rock the boat, holding interest rates steady and changing very little in the post-meeting statement.

Fed Chairman Ben Bernanke’s initial press release was a historic event, but uneventful. While the Federal Reserve confirmed that they will halt their bond purchases at the end of June, this has been widely expected and any resulting volatility in bond yields or mortgage rates is far from certain. Mortgage rates are closely related to yields on long-term government bonds.

The last time mortgage rates were above 6% was Nov. 2008. At the time, the average 30-year fixed rate was 6.33%, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.95%, the monthly payment for the same size loan would be $1,067.54, a difference of $174 per month for anyone refinancing now.

Original Article

Tuesday, April 26, 2011

More Affordable Than Ever




The Housing Affordability Index reached a record high of 192.3 for February, 2011. Two contributing factors to the Index are the price adjustments homes have experienced in recent years combined with the unusually low mortgage rates make this an outstanding opportunity for buyers who can qualify.

Before the housing bubble burst in 2006, the index average for the year was 108. The high prices and higher interest rates restricted many buyers from purchasing. As the market started to deteriorate, which resulted in declining values and lower interest rates, the index started to rise.

The opportunities are not being seized by buyers and some real estate professionals feel that it's because there is confusion in the marketplace. Buyers are uncertain whether they would qualify and whether now is a good time to be purchasing a home.

All markets are different and every situation is unique. The only certain way to determine would be to investigate your individual situation. You owe it to yourself and your family to visit with a real estate professional who can show you the real cost of housing and recommend a lender.

The National Association of Realtors releases the index at the end of each month with a two month lag time for compiling the information. When the index is at 100, a median income family can afford a median price home. As the index increases, housing affordability increases.

Tuesday, April 19, 2011

Rent or Buy...You Pay for the House You Occupy




Whether you rent or buy, you pay for the house you occupy. You must live somewhere and there's a price to pay for it. A simple analysis will show you whether it's cheaper to rent or buy.

Some people don't have any choice but to rent because they don't have the means to qualify for a loan. But for those who do have a down payment and good credit, they actually have a choice of whether to rent or buy. In some cases, owning will cost significantly less than renting.

Rentals are in high demand in many markets and rents are going up. People who have experienced foreclosures and short sales have increased demand. The first comparison a discerning buyer needs to make is whether the house payment is lower than what they'd have to pay in rent.

The next comparison needs to consider the other benefits that accrue to an owner such as principal reduction, appreciation and tax savings. These can dramatically weigh in favor of owning rather than renting.

Tenants have made the decision to buy a home. The decision currently facing them is whether to buy it for themselves or their landlord.

Tuesday, April 12, 2011

Lower Your FHA Mortgage Payment




Most FHA loans have monthly mortgage insurance required that must stay in force until the unpaid balance is reduced to 78% of the original sales price. It would take about 10.5 to 12.7 years of normal amortization for loans with rates of 5% to 7% to reach that level.

As an example, a $175,000 home with a 5% mortgage for 30 years would have monthly mortgage premium of $163.46. This is eliminated when the unpaid balance reaches $136,500 which is 78% of $175,000. It can do that with normal amortization which would take about 10.7 years.

A faster way to reach that target balance would be to pre-pay the mortgage by making regular additional principal contributions or single lump sums. In the example used above, if a person made an additional $100 principal contribution with each payment, the 78% level would be reached in 7 years 8 months compared to the 10.55 with normal amortization.

If a person would increase their principal contribution by a little less that $300 a month, the need for the MIP would be eliminated at the end of five years which is the minimum amount of time it must stay in place for most FHA loans.

The benefits of making additional principal contributions will be to build equity faster, lower overall interest that you'll pay and shorten the time that you'll be required to pay the costly mortgage insurance. It will be necessary for the borrower to notify FHA when the target date has been reached if accelerating the amortization.

Thursday, April 7, 2011

Lower Assessment




Many homeowners are overlooking an opportunity to lower their property taxes by not challenging their tax assessment. Property values have decreased in the past two to three years and the assessment may not reflect the current market value.

Deadlines are critical and if the challenge isn't made in a timely fashion, the opportunity to lower the assessment can be lost for the year. You'll need tdo verify the deadlines for your area.

The process for the challenge is relatively simple and can be done by a homeowner or by professional representation. In some cases, if there is an obvious mistake, the state employee may be able to correct it without a hearing.

Check the property assessment record for common mistakes that can include the number of bedrooms, baths, lot size and square footage of the improvements. Documentation is required to verify the errors. If you have an appraisal, such as when you purchased the home, it can serve as proof of the discrepancy.

In other cases, a hearing is required before a panel of citizens who will listen to testimony from the taxpayer and a representative of the assessor's office. Based on the documentation presented, the panel will make a ruling to lower the value, make no change or in some cases, raise the valuation.

Recently closed comparables are the most common proof presented in a hearing. Comparables should be similar in size, condition and location. A knowledgeable real estate professional can filter the results generated in a MLS search to identify the most appropriate.

I’m prepared to supply the comparables, filing deadlines and other pertinent information you need to make a challenge. Lowering your assessment will result in lower property taxes and more money in your pocket.

Sunday, April 3, 2011

Mortgage Loans and Lenders to Avoid




In many cases, the seller and the buyer are actually represented by their real estate agent. In those situations, there is a fiduciary relationship created that requires the agent put the client's interests above their own.
There is generally no such relationship between buyers and lenders. Some of the housing crisis issues may have been avoided had the lenders been more concerned for the buyer's best interests.

The following are a few warning signs that should cause a buyer to do much closer investigation:

1. Claims that bad credit is not an issue
2. Prepayment penalty
3. Larger than normal loan charges
4. Rate gouging by brokers - yield-spread premium
5. Loans without escrow accounts for taxes and insurance
6. ARM loans that only go up and not down
7. Initial loan to secure property with plan to replace it later

As a real estate professional, I can recommend a lender who is experienced in your market and has a history of providing good service. A real estate professional can be a good intermediary between you and the lender.

Thursday, March 31, 2011

Home Inventory




Recently, a homeowner had a burglary and part of the insurance claim was denied because they didn't have proof of purchase or a current inventory of their personal belongings. This is something that could happen to anyone. Even if you had an inventory but it was several years old, it could cost you money.


Some homeowners who have placed an insurance claim for losses say that they realized something was missing months after they had filed. The inventory can actually serve as a guide to make sure you get compensated for all of your loss.
The best proof of purchase is to have a receipt for the item. The reality of the situation is that most people don't keep receipts. The next best item is to have an inventory and the more details like pictures, the better.
Contact me for a Home Inventory. Once you get it completed, put it somewhere safe so you'll have it when you need it. Saving it in the "Cloud" like Microsoft Office Live is convenient because you can acess it from any computer with Internet access.

Tuesday, March 29, 2011

Supersize a VA Loan




Since 2004, the maximum VA loan is the same as the maximum FNMA mortgage which is currently $417,000. Occasionally, a Veteran wants a loan in excess of that amount. If the Veteran will put a 25% down payment on the excess amount, a lender will loan the other 75%.

Example
Sales Price $475,000
Maximum VA Loan $417,000
Excess Amount $58,000
25% Required Down Payment on Excess $ 14,500
Adjusted Loan $460,500

VA loans are eligible for veterans of the military with a certificate of eligibility. A Veteran can get a 100% loan up to the maximum VA loan amount and the seller can pay their closing costs which would allow a Vet to get into a home with no down payment and no closing costs. The VA Funding Fee can be rolled into the mortgage or paid by the Seller.

When the Vet sells the home, their VA loan is assumable at the existing interest rates but does require qualification of the new buyer. The benefits would be a possible lower interest rate and lower closing costs.

There's more to finding the "Right" home than driving around looking at houses. A Residential Finance Consultant can help you make better decisions to help you understand the tax advantages, financing alternatives and investment aspects of homeownership.

Thursday, March 24, 2011

Tax Deadline Quickly Approaching




Besides the obvious Federal Income Tax deadline which is April 18th this year, the deadline for individuals who can qualify for the Homebuyers Tax Credit is quickly approaching - April 30, 2011.

The extension was granted for members of the military, Intelligence and Foreign Service who have served outside of the U.S. for at least 90 days between January 1, 2009 and May 1, 2010. The sales contract must be signed by all parties by April 30, 2011 and closed by June 30, 2011.

Qualifying taxpayers may be eligible for either the first-time credit of $8,000 or the current homeowner credit of $6,500. To get additional information from IRS.gov, click here.

This is a wonderful opportunity for a person to have a home of their own, to raise their family, share with their friends and feel safe and secure. We're in a market that is ripe with advantages for buyers who can afford it. Prices have come down considerably in the last two to three years. Interest rates are at an almost all-time low but are expected to rise soon. The selection of homes is good which allows buyers to find the home that meets their needs.

A qualifying veteran with eligibility could get into a home with no down payment, no closing costs if paid by the seller and the tax credit. These tax credits are refundable which means that any amount that isn't used to offset tax liability will be refunded to the taxpayer in a check. You're practically being paid to buy a home.

There probably will never be this combination of advantages available for buyers who qualify. Don't miss this opportunity. You owe it to yourself and your family to see that it may actually cost you less to own than to rent and what it will take to get into a home.

Tuesday, March 15, 2011

Buying A Home? Take Action!

If you haven't heard by now, FHA is increasing the annual Mortgage Insurance Premium again by .25% on April 18, 2011. Payments will be higher even if the interest rates remain the same.

Buyers who are ready to take action can still lock in the lower MIP. If they have a contract signed by all parties and get a FHA case number issued prior to 4/18/11, the lower MIP rate will apply.

For a $175,000 home at 5% interest, the new MIP will mean the buyer will pay $35 more to live in the same home. If you don't have to pay more, why would you?


Another possibility is that if interest rates go up .5% by the same effective date, you could pay $88 more to live in the same home. What would you spend $88.36 on if you don't have to make a larger payment?




April 18th is a Monday this year, so you'll probably need to get your contract completed by the previous Friday at the latest to give your loan officer an opportunity to order the case number. If you don't have a loan officer, your real estate professional can recommend a reliable one. Making good decisions will improve your entire homeowner experience and save you money.

Thursday, March 10, 2011

Your Real Estate Update

If you haven't heard by now, FHA is increasing the annual Mortgage Insurance Premium again by .25% on April 18, 2011. Payments will be higher even if the interest rates remain the same.

Buyers who are ready to take action can still lock in the lower MIP. If they have a contract signed by all parties and get a FHA case number issued prior to 4/18/11, the lower MIP rate will apply.

For a $175,000 home at 5% interest, the new MIP will mean the buyer will pay $35 more to live in the same home. If you don't have to pay more, why would you?

Another possibility is that if interest rates go up .5% by the same effective date, you could pay $88 more to live in the same home. What would you spend $88.36 on if you don't have to make a larger payment?






April 18th is a Monday this year, so you'll probably need to get your contract completed by the previous Friday at the latest to give your loan officer an opportunity to order the case number. If you don't have a loan officer, your real estate professional can recommend a reliable one. Making good decisions will improve your entire homeowner experience and save you money.

Wednesday, March 2, 2011

Mortgage Myths - Get the Facts Straight



* "It's impossible to get low down payment loans." - UNTRUE!
FHA down payments are only 3.5% and VA is 0%. In some areas, there may be some 100% USDA loans available.

* "It takes perfect credit to get a loan." - UNTRUE!
There is a relationship of better rates to better credit but many issues on a credit report may be explained. The way to know for sure is to speak to a reliable lender.

* "If I've had a bankruptcy or foreclosure, I can't qualify." - UNTRUE!
Credit history following a short sale or foreclosure is very important and there can be extenuating circumstances. It only takes a few moments with a reliable lending professional to find out if your individual situation will allow you to qualify.

* "Getting pre-approved is expensive." - UNTRUE!
Usually, the only expense to getting pre-approved is the cost of the credit report which could be around $35. The advantage is that you will know that you qualify for a particular mortgage amount.

* "I should wait to qualify until I find a home." - UNTRUE!
The best interest rates are only available for the highest credit scores. It can take time to qualify for a mortgage especially if there are issues that need to be corrected. It is to your advantage to start the qualifying process early in your home search.

* "All lenders are the same." - UNTRUE!
Reliable lending professionals will explain the entire process before collecting fees, quote fees up-front, have competitive products, do what is necessary to get the loan approved and close at the locked rate and terms. Ask for recommendations from recent borrowers.

* "Adjustable rate mortgages are more expensive than fixed rate mortgages." - UNTRUE!
Adjustable rate mortgages can be less expensive than fixed rates if the buyers' circumstances warrant it. There are many variables and you need to be aware of them before deciding which type of loan to finance your purchase; the ARM may provide the cheapest cost of housing.

Buyers and Sellers need solid information to make good decisions. The agent who represents you in the sales may be the BEST recommendation for a reliable lender. The mortgage plays an enormous role in determining the overall cost of housing and you need solid information to make good decisions. If you live in New Jersey and you are looking for your next home or you are looking to sell your current home, just contact me for expert advice.

Wednesday, February 16, 2011

Really?

Home prices have come down 20, 30, 40% or more in the last three years and mortgage rates are lower than they've been in 50 years and you still haven't bought a home. Really?

Housing affordability is over 180, an all-time high when 100 is considered good and you're still renting. Really? Are you waiting for it to get to 200? Do you think prices and rates are going to get lower? Really?

You know it's costing you more every month to rent than to own. Tax savings, appreciation and principal reduction lower the monthly cost of housing and yet you'd rather let your landlord benefit...Really? Have you heard that the average homeowner has 41 times greater net worth than a renter? Do you think it's a coincidence? Really?

And have you heard that most people want a place of their own; a place to raise their family; to share with their friends; to feel safe and secure. So, you'd rather go home after working hard all day to your landlord's home. You'd prefer to invite some friends over to your landlord's home for dinner next weekend. Really?

You haven't checked out whether you can actually take advantage of the best buyer's market ever. You haven't invested thirty minutes to find out the facts as they apply to you and your situation. Really? You're basing a decision on national news, chat rooms and Facebook. Really?

Every market is different. Every buyer is unique. If you want a home; if you have a down payment; if you have good credit, you owe it to yourself and your family to explore the possibilities...but with a real estate professional; someone who can really show you the reasons and really give you options.

Tuesday, January 25, 2011

Relationship Management:: 6 Bad Client Behaviors You'll Encounter



From the hard-to-please to the angry customer, difficult clients can make your job tough. Learn how to break the tension and salvage the relationship for six bad common client behaviors.

Do you have a client driving you crazy? Emotions can charge in a real estate transaction — especially nowadays — and you may increasingly find yourself working with nagging, impossible to please, overly negative, or know-it-all types that, well, might be starting to drive you a little nuts.

Sellers are upset over falling home prices; buyers may be dissatisfied with stalled negotiations or blaming you for their financing fiascos. Whatever the case, there’s a lot of unhappiness out there among buyers and sellers in a transaction — and you’re caught in the middle.

Complex short sale transactions, in particular, can understandably have your clients on edge. For example, Renee Sabath with Realty One Group in Las Vegas says she once had clients tell her, two days before closing on a trustee sale, that their friends had been advising her that the transaction could be handled differently. She had to provide plenty of reassurance to her questioning clients that she had their best interests in mind and were guiding them in the right direction.

But sometimes plenty of reassurance just won’t work. Sabath also has had clients she actually had to “fire” during the past two years.

“Doing a short sale is hard work and the payoff for me can take six months or even longer,” she says. “If the client does not return my calls or does not provide me with the necessary paperwork, I will tell them they are tying my hands, and I have given back listings when the seller is not performing. … Some people just need our guidance and patience, while I strongly feel there are people who we would be helping more to walk away from.”

Meet Six Difficult Clients
While you might not be able to win over every client, you can improve your client relationships — no matter how impossible they seem to please — by blending your communication styles and with lots of understanding along the way, says motivational speaker and bestselling author, Rick Brinkman who has written several books on dealing with difficult people, including Love Thy Customer (McGraw-Hill, 2005).

Here are six common difficult client behaviors that Brinkman has identified and strategies for winning over each:

1. Think-They-Know-It-All
How to identify them: You tell the sellers that their house should be listed at the price you’ve identified, but these clients know better than you. In fact, they know everything — at least they think they do. These clients’ know-it-all attitude has their ego front and center.

How to deal with them: Ask a lot of questions about what they say. “What will happen is they will quickly hit bottom,” Brinkman says. “They don’t have depth to their knowledge.” So, the best thing you can do is take a curious attitude and ask more and more specific questions until they start making big generalizations. Eventually, they’ll realize they don’t know as much as they’re professing.

However, be careful not to step on their ego. You want to derail bad ideas, not embarrass them. So, for example, refer to documentation in a nonthreatening way (e.g., “Have you seen this article?”) to make your point.

2. The Yes Person
How to identify them: These customers are highly agreeable but slow to deliver. Their people-pleasing tendency may get in the way of providing you with honest, valuable feedback to move forward in a transaction.

How to deal with them: Make it safe for these customers to be honest with you and show them there will be no relationship consequence if they say something negative. For example, say, “If none of these houses work for you, Mr. Buyer, it’s totally OK to tell me.”

You’ll need to make guesses at what they’re thinking so you can then provide such reassurance to them that it’s safe to provide honest feedback. By doing so, you’ll actually create a customer for life — they’ll perceive you as being sensitive to their feelings, Brinkman says.

3. The No Person
How to identify them: They’re discouraging and pessimistic. They’ll probably find something wrong with every house you show them or any idea you present for selling their house.

How to deal with them: Break them out of their negativity. Take out a piece of paper, draw a line in the center, and ask them to list positives on one side and negatives on the other about the house they’re viewing. Ask for the negatives first, since that’s more on their mind, Brinkman notes. Once they’ve exhausted the negatives, refocus their attention to list a few positives.

Remember, the No Person tends to zoom in only on negatives — so a No Person who sees three things wrong with a home thinks everything is wrong with it and will be unable to focus on any positives. The paper-pen method will help you to refocus the No Person’s attention on finding something positive. Plus, after a few homes, you’ll be able to develop a list of criteria to show deal-breakers and what the client really desires in a home.

4. The Nothing Person
How to identify them: They tell you nothing, providing no feedback, verbal or nonverbal. You may grind to a halt with a Nothing Person because “I don’t know” is often the first response to practically anything you ask.

How to deal with them: Try to guess at how they feel in a situation and offer statements to pry something out of them. Using the paper-pen method suggested above, you’ll likely need to guess the pros and cons to put on the lists about the houses rather than rely on them telling you (e.g., “This home has the open floor plan with the kitchen and living room. I’m guessing that’s a positive for you, right?”). They’ll be more apt to provide you with feedback on whether your guess is right or wrong. Don’t worry about guessing wrong — the aim is to get them to open up and externalize their thought process, Brinkman says.

5. The Tank
How to identify them: They are pushy, ruthless, and loud. They rant when something upsets them. They demand action. For example, “How dare you suggest listing my house for such a low price. You have no clue what you’re talking about!”

How to deal with them: Give the Tank 60 seconds to vent, no more and no less. If you allow a Tank to go longer, the verbal attack will escalate and it’ll be difficult to refocus. So after the 60-second tirade, interrupt using your client’s name and highlight some of the rant to show you were listening and reassure that you’re on the same side (e.g. “John, John. We both care about getting the most for your property. I heard you say ...”)

Then, repeat three of the statements you heard, Brinkman says. Why three? Brinkman, a naturopathic physician, calls it the generalization point, in which after repeating three statements back to a person that recounts what the customer said that person then subconsciously truly feels heard.

After you do a playback of what they said, offer your bottom-line solution, but make your solution direct and to the point. Tanks appreciate assertiveness.

6. The Grenade
How to identify them: You’ll feel like you want to take cover. The Grenade provides unwarranted tantrums that seem disproportionate to the circumstance. Unlike the Tank, who usually has a focused argument, the Grenade surfaces as explosive rants on anything and everything.

How to deal with them: Don’t give Grenades any time to vent: They feed on their negative energy, and it’ll only make them more angry. Immediately raise your voice to interrupt, using their name (e.g. “John, John. I care, I care ... You don’t have to feel this way. We’re going to work this out.”)

Don’t tell them to calm down; you’ll only make them more irate. Instead, you calm down: Take a breath and relax your tone, Brinkman suggests. Say: “Let’s take a moment and talk about it.” You want to create a break in the conversation to allow them time to calm down so they’ll be able to refocus on what their true concerns are.

Article written by: 
Melissa Dittmann Tracey is a contributing editor for REALTOR® magazine. She can be reached at mtracey@realtors.org Click here for full article and resource: click here