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.

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.

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

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.

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.

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.

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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.

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.

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.

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.

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.

"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.

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.

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.

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 

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.

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.

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.

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