Tuesday, December 31, 2013

Number of home buyers paying with cash increasing

One of the real estate industry trends of 2013 was fairly easy to spot. Cash buyers accounted for one-third of all home sales in the past 12 months. This is about where it has been for the last three years.

Surprisingly, cash home sales took a jump in November, according to RealtyTrac. Cash sales accounted for 42 percent of all homes purchased in November, which is the highest level since RealtyTrac began tracking it. The percentage of cash sales in October was higher than average at 38.4.

Who pays cash?

There are certain segments of the population that have the liquid assets available to pay cash for homes.

  • flippers

  • retirees who are downsizing

  • wealthy who are investing or purchasing vacation homes

  • investors who expect the market to improve enough for a good return on investment through rentals

  • overseas buyers

  • people who have trouble getting financed

What it means

While the housing market is slowly heading back to normal, the rising number of cash sales is a sign that recovery is not complete. The pace is simply not sustainable.

The trend upward in cash-only sales began when mortgage rates began to tick up. Buyers with cash are willing to forego the tax advantage of carrying a mortgage to save on interest. Other savings for cash buyers include loan origination fees, appraisals and some closing costs.

Other advantages for cash buyers include avoiding the loan qualification process and the ability to close the deal very quickly.

Tuesday, December 24, 2013

How your property taxes are paid

Last week, we talked about where your property taxes go. This week, we’ll talk a little about how they are paid, which for most homeowners is a line item on their mortgage statement.

For most borrowers, holding property taxes in escrow is required by the lender. Some lenders who will let you do it still discourage it by charging you more interest. Today, though, most banks won’t even give you the option of not having an escrow account unless you can prove you have a certain amount of funds on hand or you have a certain amount of equity in your home, usually 20 percent.

No matter what state you live in, if you have a mortgage, chances are pretty good that your lender pays your property taxes through an escrow account. In fact, many people never even become aware of the monthly allocation until their mortgages are paid in full and they are directly responsible for paying the property taxes themselves.

Even if your bank pays your personal property taxes, you should receive a copy of the bill at least once each year, whether you pay your property taxes directly to the tax authorities or through your mortgage lender.

Always keep the latest copy of your tax bill where you have easy access to it. You never know when you might need it to prove residency. For example, some school districts require it when you enroll the kids in school, particularly if you're enrolling them in a new school. And you'll ALWAYS need it to do your income taxes, too!

The obvious reason to use an escrow account is, quite honestly, convenience. Simply adding it to your mortgage payment, not worrying about the paperwork, ensuring that it is paid on time... it honestly negates any cons related to escrow.

Some people who own their home continue to use an escrow account because they can set it on autopilot and don’t have to worry about making the payments when they are due.

Tuesday, December 17, 2013

What do property taxes pay for?

The end of the year brings holiday celebrations, New Year’s resolutions, football playoffs and bowl games, and for many, the dreaded property tax bill.

If you're like most people, you look at your property tax statement and automatically think "That's too high." But if you take a closer look, you'll see that your property taxes are spent in a lot of different areas, which is why it’s so hard to get lower taxes overall.

Depending upon where you live, your property taxes fund any number of state and local government functions. Here are the most common lines you'll see on your property tax.


By far, public schools are the largest single line item in nearly any property tax bill. A commitment to providing the best possible education often leads to higher local property values. In addition, the houses in neighborhoods with higher rated schools generally have higher prices. Although public school systems get funding from a variety of sources, including federal government, state government, fund raising efforts, the largest source is generally from property taxes. This is also why any tax reduction attempts meet strong resistance from both school employees and parents of school-aged children.

Public roads and parks

Although a lot of money from gasoline goes to roads, those are mostly financed by state and federal government. City and neighborhood street repair comes from property tax. Public park maintenance is funded as well.


Depending upon the area in which you live, your property tax bill may also include certain utility costs that are provided by the county or municipality, which could include sewer, water and maybe garbage collection.

Government administration costs

This is a relatively small part of the local budget, but it covers salaries and benefits for municipal administrative staff and the buildings that house them.

Public safety

Many people mistakenly think that traffic citations fund police budgets, but most of their operating budget is provided through property taxes. Firefighters are also included in this category. This includes not only salary and benefits for policemen and firemen, but support personnel as well the acquisition of buildings and police cars.


Although they’re not usually very large parts of your tax bill, they are considered highly desirable in most communities and largely beyond political haggling. When a tax increase is on the ballot, it rarely fails.

City and county allocations

Both rely primarily on real estate tax revenues to support their operations, so taxes are usually collected and paid to both. In many cities and counties, one government agency may collect the tax under a single bill, then apportion the funds, so you may pay your taxes to your municipality who then forwards the required portion to your county.

Tuesday, December 10, 2013

The pros and cons of buying a home during the holidays

Two weeks ago, we talked about the pros and cons of selling your home during the holiday, so this week we'll talk about why buying your home at the same time presents challenges and opportunities.

The pros

The holiday season can be a good time to find a home. If you are planning to buy a home, but are waiting until the market heats up in the Spring, you might want to reconsider.

Right now, interest rates remain low, but because there is less demand for mortgage loans, you could get an even better rate.

Prices can be lower because sellers may drop their asking price

Fewer buyers = Less competition

Homeowners who keep their homes on the market are motivated sellers

Tax deduction for the current year

Fewer closings = faster transactions

The cons

Of course, there are some disadvantages to trying to buy a new home during the holiday. There's a shortage of inventory—the best homes in your price range may not be available because the seller may choose to wait until Spring. The market is slower because many agents schedule vacations at this time of the year. A blanket of snow can hide defects in the home's exterior and the landscape as well.

If you’re considering buying a new home, this time of year could prove to be advantageous. It could be the best time of year to buy. Talk to your REALTOR® to discuss your options.

Tuesday, December 3, 2013

How to get a better rate on your mortgage

When you buy a new home, you can reasonably expect that the cost of borrowing will add up to a great deal of money. Anything you can do to shave even tenths of a percent off the percentage rate can potentially save you thousands of dollars over the 30 years you'll carry the mortgage.

There are a number of things you can do to help yourself get a better rate on your mortgage:

Check your credit score

To get an idea of what your credit score is, you can check with free services or at MyFICO.com, which costs around $20. Looking at these reports can give you a general idea of what your score is and how to improve it. If you pull your own scores, make sure to compare them to what your lender is seeing.

Fix any errors on your credit report

Look through your credit report from each company for errors and negative items. Try to fix any errors that you find as quickly as possible. Each reporting agency will have details about disputing information. If the issue is not resolved after filing a complaint, contact the Consumer Financial Protection Bureau.

Pay your bills on time

From time to time, it's easy to put off paying a bill on its due date. It really seems insignificant, especially if you're having trouble making ends meet. Just one late payment, though, can cause your credit score to drop.

Reduce the amount of debt you owe

One of the criteria your mortgage lender looks at is your debt-to-income ratio, which is simply how much debt you are carrying compared with your monthly income. This number affects whether you qualify for a loan and what your interest rate will be.

Keep your old accounts open

Part of your credit score is based on the length of your credit history. It will not hurt to keep an old account open until your mortgage is secured. It may even be beneficial to keep your oldest account open even if your annual fee is due.

Don't apply for any new credit

When you decide that you're going to apply for a mortgage, don't apply for new credit of any kind. Not only can it mess with your debt to income ratios, if you have few accounts or a short credit history, inquiries can have a greater impact on your credit score.

Make sure to discuss your credit scores – and how they affect your mortgage rates – with your lender. They may be able to make other suggestions about how to improve your credit score so that you may qualify for a lower rate, which could save you a lot of money in the long run.

Tuesday, November 26, 2013

Selling a home during the holidays

The holidays are in full swing. People are busy planning parties, shopping, trying to reach goals for the year, making travel plans. Probably not the best time to sell your home, right?

Not necessarily.

This could be an opportune time to sell your home. Of course, there are some cons to trying to sell at this time of year, but selling now offers you some distinct advantages over waiting until after the first of the year.

  1. People looking for a home over the holidays are more likely going to be serious buyers.

  2. A lot of sellers take their homes off the market, which means serious buyers have fewer homes to choose from

  3. Less competition right now means more money for you.

  4. The number of homes on the market will drastically increase after the first of the year. Less demand means less money.

  5. Houses show better when they’re decorated over the holidays.

  6. Buyers are more emotional during the holidays and tend to spend more money, which means you can get closer to your asking price.

  7. Because they are likely to be on vacation, buyers have more time to look at new homes over the holidays and are more likely to come on weekdays.

  8. The tax break they receive is a motivating factor for many buyers.

  9. Companies traditionally use January to relocate employees who can't wait until there are more homes available in the spring.

It should be noted that there are some drawbacks to selling your home during the holidays. You may prefer not to schedule showings and closings at this time. You may not want to move during this time – not only are schedules hectic, the weather is not always cooperative. Speaking of the weather, if you live in a colder climate, snow and ice cuts down on foot traffic.

If you’re considering selling your home, it could be the best time of year to sell. Talk to your REALTOR® to discuss your options.

Tuesday, November 19, 2013

Why flood insurance rates are rising

As a homeowner, you may have noticed two developments concerning flood insurance recently:

  1. You now have to buy flood insurance

  2. It's really expensive

This is not due to your insurance company raising rates because they are paying for damages caused by Hurricane Katrina, Superstorm Sandy, or Midwest flooding in 2012. It is due to the Biggert-Waters Insurance Reform Act of 2012. The Act made sweeping changes to the National Flood Insurance Program and they just kicked in last month. At the point that Congress passed the new law, NFIP was $18 billion in debt.

How does it affect homeowners?

Biggert-Waters phases out flood insurance subsidies on hundreds of thousands of older homes. This means that premiums will necessarily skyrocket. Homes sold after Biggert-Waters passed in July, 2012, or those whose policies lapse, will see their premiums immediately go up to the non-subsidized actuarial rate.

Part of the Act raised what's known as the base flood elevation (BFE) for certain areas, which means that some homeowners who never had to carry flood insurance now have to. If your home is now in a high risk zone, you may have to raise your home by putting it on pylons, which could cost tens of thousands of dollars, but will not significantly increase the value of the home.

Homeowners who have properties in the new FEMA flood zones could experience flood insurance premium increases of 500-1000%. Mortgage payments in effect double when seeing that kind of increase. This means that property values go down. Owning a home along the nation's coasts and river valleys becomes less attractive. Building a new home in these areas becomes almost impossible.

Reaction to Biggert-Waters is gaining momentum as homeowners realize exactly how it affects their homes’ value and premiums. If you find that your premiums have risen, talk to your insurance representative.

Tuesday, November 12, 2013

Moving truck driving tips

Many people choose to rent a moving truck rather than hiring professional movers in order to save money when they move. Make sure to review all safety information with the rental business before driving the truck.

Here are some guidelines for safe truck driving.

Drive defensively

Practice these basic driving habits so others know your intentions and to help prevent accidents.

  • Check the mirrors for other vehicles frequently.

  • Never tailgate. Trucks require more time and room to stop.

  • Never use the passing lane on the interstate.

  • Allow more room and more time for lane changes.

  • Watch sharp turns. Trucks are longer and wider than cars, so they need more turning area.

  • Always use your turn signal to let other drivers know your intentions.

  • And, of course, always wear a seatbelt!

Vehicle safety

  • Make sure to familiarize yourself with the truck before hitting the road.

  • Never drive if you are over-tired.

  • Avoid medication and never drive under the influence of alcohol.

  • Bring a friend or family member to help with the driving.

  • Stop every two hours or so to prevent fatigue.

  • Stop regularly for coffee or soda and a snack, or just to stretch your legs.

Backing up

  • Avoid backing up if you can. If you must back up, have someone direct you from the side at the rear.

  • If you're towing anything, it's best to NEVER back up.

Save money on fuel

  • Obey the speed limits.

  • Gradually build to the desired speed.

  • On the highway, keep a consistent speed and don't attempt to pass.


  • Set the emergency brake every time you park.

  • Turn the wheels away from the curb with the truck faced uphill; toward the curb when facing downhill.

  • Look for "drive-through" parking spaces to avoid backing.

  • If you're stopping at a hotel, always park in well-lit areas. Lock all doors and padlock the safety chains if you're towing anything.

  • At road stops and restaurants, park where you can see the vehicle.


  • Allow at least five vehicle lengths between you and the vehicle ahead of you.

  • Brake earlier than you think you need to.

  • Ease off the accelerator when stopping to avoid shifting cargo.

Avoid height-related accidents

  • Know the height of the vehicle you're driving.

  • Be aware of low canopies, overpasses, bridges, tree branches, parking garages and signs prohibiting truck traffic.

  • Don't use the drive-through at a restaurant. Park the truck and walk in.

Tuesday, November 5, 2013

Does checking your credit hurt your score?

One of the myths surrounding personal credit scores is that checking your own credit reports and scores will make your score go down. That myth has been around for nearly as long as credit reporting agencies.

This myth hurts home buyers because it discourages them from checking their credit report in order to know what’s in it. If your report has erroneous information, at worst it could result in you being turned down for a loan. At best, it could cost you thousands of dollars by paying a higher interest rate than you should.

The simple fact is that checking your own scores does not affect them in any way. It’s what’s known in the industry as a “soft” inquiry. When you make the request, it will show up in your report, but it does not affect your score.

A “hard” inquiry from any potential creditor can adversely affect your credit score because it represents potential new debt that doesn’t yet appear in your credit report as an account. One piece of advice: If you have a friend who works at a bank or car dealership, don’t have them pull a credit report just so you can see it. If you don’t have a long credit history, this hard inquiry could affect your score enough to cause a problem.

Requesting a copy of your own credit report will not affect your credit scores. An inquiry will be added to your report as a record that you requested it. This type of inquiry is sometimes called a “soft” inquiry because it is shown only to you. Therefore, you can check your own credit report as often as you like with no effect on your credit scores.

You can request your own scores from any number of sites for a minimal cost. Ask your REALTOR® to recommend where you should make a request.

Tuesday, October 29, 2013

Seven things that kill your home sale

Your home can be immaculate, in a great neighborhood and priced right. But when a prospective buyer walks in, they can be persuaded to turn and walk out. Obviously, they're motivated; otherwise they wouldn't have wasted the trip.

If your home has any of following six problems, you may see the buyers turn on their heels and head in the direction of the next property. Two of them, you can't do much about. The others can be fixed, but the cost ranges from not much to quite a bit.

Seven deal-breakers for homebuyers

The backyard isn’t family-friendly

The back yard is something that potential home buyers give great consideration to when buying a home. They imagine cookouts, landscaping, gardens, kids playing and tire swings. If it doesn't match up to their expectations, it's a deal breaker... and there's not much you can do about it.


You can try to cover it up but it's going to be found in the inspection if you have it. Fixes range from a new piece of drywall behind the bathroom sink to calling out a remediation crew. Don't hide it, especially if you've spent the money to have it removed.

Foundation problems

A crack in the foundation can cause a myriad of other mostly cosmetic, but costly, repairs, from repairing drywall to doorframes. Many buyers walk away from foundation problems. Most lenders require foundation problems to be repaired before closing. And even a fixed foundation can be a deal-breaker because potential homeowners are worried about the damage that it has caused.

Personal belongings

Your sense of style and taste may not appeal to the potential buyer. Ask your REALTOR® about staging your home for sale. He or she will have some suggestions about what should be put in storage until you complete the move. For higher end homes, you may want to consider hiring a staging consultant.

The house is dirty or smelly

Pets, mildew, smoke... these are all turn-offs to potential buyers. Permanent smells and stains, if they aren't a deal-breaker, may mean you'll have to drop the price on your home because the new owner will have to pay to have it cleaned or do it themselves... which can be a big undertaking.

Pest infestation

This is especially true of termites. The damage they can cause is not always immediately apparent. A certified termite inspector knows what to look for and how to eradicate them.


You can have the perfect house, the right number of bedrooms, a great kitchen, plenty of storage space, a clean inspection and a perfect back yard, but if the location is horrible, your house is going to sit for a while.

Tuesday, October 22, 2013

What is eminent domain, and should I be worried?

One of the things that property owners must be concerned with is eminent domain, which is defined as "the right of a government or its agent to expropriate private property for public use, with payment of compensation."

City, county, state and federal governments can claim eminent domain for any number of reasons. For example, if your property is impeding a road expansion, it may make the claim in order to make the land available for public use.

If you receive notification that a government entity is considering an eminent domain designation on your property, there are two things you should know:

1. They have to pay you fair market value for it.

2. Their offer will be on the low end of fair market value.

Eminent domain power can and has been abused. There can exist a conflict of interest when a developer lobbies a city government for a redevelopment project, only because it plans to construct new buildings for office, retail or housing in order to line their pockets.

The first thing you need to do when faced with eminent domain is hire an attorney who specializes in the area.

  1. Agency with the interest in your property will hire an appraiser to inspect and appraise your property.

  2. Agency makes an offer, usually a low one.

  3. If you don't accept their offer, and are unable to negotiate a fair deal, they will schedule a public hearing. The agency has to prove their case that acquiring the property is necessary for the public good.

  4. They will file a complaint against you in Superior Court, and you will be served a summons which requires a response.

  5. They will deposit "probable compensation" and file a motion for prejudgment possession with the Court. At this time, you may object once again. If their motion is approved, they may take possession of your property within 30 days.

  6. At this time, your attorney will obtain appraisal reports from appraisers and other experts to establish your property's fair market value. These reports are filed with the Court and presented to the agency who filed for eminent domain.

  7. Mediation - the two parties come to an agreement, if one can be reached.

  8. If you can't come to a compromise, they are forced to make a final offer.

  9. If you still do not accept the offer, a trial will be held to determine fair market value of your property and hear any other issues.

Your rights as a property owner vary by your home state. You need to be informed of those rights and the process. For instance, depending on your home state, you may be able to recover attorney fees from the agency who filed the case. Do your homework. Most importantly, hire a successful attorney who specializes in eminent domain cases.

Tuesday, October 15, 2013

Lenders using new criteria to determine credit risk in mortgage loans

A low credit score doesn't necessarily result in an automatic turn down for a mortgage loan.

Mortgage lenders are looking for borrowers who are good risks, even though they may have little or no credit history. Lenders are now looking at additional criteria, some that they may not have considered a few years ago, in order to find new home buyers who are good risks, even though their credit score may not show it.

Those most likely to gain from this new way of looking at financial history include young adults and new immigrants. They are more likely to be approved without being subjected to extremely high interest rates because their scores are not high.

This "non-traditional" data that lenders are now looking at when considering home loan applications includes:

Information in public records, including property records and professional licenses. A license indicates that a person is a better risk because they have a steady income and commitment in the community.

Rental payment is another category that reporting agencies have begun to consider. Late payments could be an indicator of future behavior.

Utility payments and cell phone bill payment history can also be an indicator of whether a person with little or no payment history takes paying their bills seriously.

The takeaway for many is that even though you may have little credit history, or may have a score that falls somewhere between bad and good, you may be able to secure a loan from a mortgage lender. The first thing you need to do is talk to a lender to see what you qualify for and what a loan will cost. A mortgage lender will also be able to tell you how to improve your scores so that you can get a better rate.

Tuesday, October 8, 2013

What the government shutdown means for home buyers and sellers

With Congress unable to come to an agreement, we've got a situation known as a partial government shutdown. The last time this happened was in 1995 when there was a shutdown that lasted for 21 days.

Many agencies, such as NASA, have furloughed non-essential personnel. Still others are operating at full capacity, including the military and TSA. There are many, including Housing and Urban Development, which are operating with skeleton crews.

Early reports stated that the Federal Housing Administration would stop processing loan applications. This is not the case. The first contingency plan issued by HUD mistakenly stated that FHA would be unable to endorse any single-family loans and that staff would be furloughed.

The announcement sent a panic through the real estate market. After noticing the error, HUD issued a statement saying that its Office of Single Family Housing will continue to endorse new loans even in the event of a lapse in appropriations.

The FHA is funded through multiyear appropriations. There will be some reductions in staff and furloughs, but it will be able to operate. Because the department will be short-staffed, there could be some delays, but the paperwork will be processed. Multi-family operations, however, are funded on a year-by-year basis. During a shutdown, condo projects would be put on hold because the FHA will not be able to underwrite them.

It is unknown at this time how much of a delay we can expect in single-family loan applications or what the long-term impact of a lengthy shutdown will be. In its statement, HUD said that it does not expect the impact on the housing market to be significant, provided the government shutdown is brief.

Tuesday, October 1, 2013

How unemployment affects mortgage rates

When Federal Reserve Chairman Ben Bernanke announced last week that the Fed would not curtail its bond buying program, the mortgage industry breathed a sigh of relief. Rates dropped slightly after the announcement.

Interest rates had been rising steadily since May, when Bernanke said the Fed was considering trimming the stimulus program, which pumps $85 billion into the American economy every month.

According to Zillow.com, after declining to a low of 3.21% in December 2012, the national average for a 30-year fixed-rate mortgage was recently 4.44%, more than a point higher less than a year later.

What the Fed said

Although pundits and politicians paint these numbers as rosy, the Fed's announcement as a barometer of the nation's economy isn't quite as positive. Here are the highlights:

  1. The Fed will maintain its plan to keep short-term rates at record lows at least until unemployment reaches 6.5 percent.

  2. It doesn't project the unemployment rate to reach that level until the end of 2014 or beyond.

  3. The Fed predicts that inflation will start to rise next year, to somewhere between 1.4% and 2%. Currently it's about 0.8%.

The Fed's announcement assured the mortgage industry that the stimulus would continue for at least a year. But the announcement said, in a nutshell, that the economy is still not improving as quickly as it would like.

Why the Fed's announcement matters

As it stands now, this is a manipulated market, according to a piece on Bankrate.com. (link to http://www.bankrate.com/finance/mortgages/mortgage-analysis.aspx) One analyst was quoted as saying that rates are probably headed to 5 - 6%, once the Fed cuts back on its stimulus efforts and lets the market decide where mortgage rates should be.

What it means for home buyers

The announcement has a definite effect on the environment if you're looking to buy, sell or refinance your home.

Loans are still cheap... for the time being. We're not likely to see the rates go as low as they were late last year, but for the foreseeable future, rates are likely to drop a bit. If the economy continues to improve as anticipated, rates will keep inching up.

Tuesday, September 24, 2013

Reasons you should buy a new home before selling your current home

Last week, we discussed the reasons you should sell first, then buy a new home. That is optimal for most people. But there are situations in which buying a new home first, then selling your current home is the right thing to do.

If you have the cash on hand for a down payment and have the means to pay for two mortgages while selling your existing property, buying first offers several advantages.

No pressure to find your dream home

If you're under a deadline to move out of your existing home because the new owners are moving in, you're likely to compromise on what you're looking for in a new home. Buying first offers you the opportunity to look for a new home without any pressure to purchase. You're more likely to hold out for your dream home, rather than settling for one without some of the features you desire.

Wasting money on rental

Finding the right place to rent is almost as difficult as finding a new home. Property managers won't usually sign a month-to-month lease, and they don't like signing a short-term lease. And if they do, they charge more for the same property. So if you sign a six-month lease and find a new home immediately, you'll still be on the hook for whatever is required to break the lease.

You'll only have to move once

Let's face it... moving is a hassle. If you sell your home, and aren't able to find a new home, you either have to move into a rental or move your entire home into storage while you live with friends or relatives. In essence, you're moving twice - once when you move everything to the storage facility, and again when you find a new home.

Knowing the market is essential. Take a hard look at your budget and be realistic about your financial situation. Talk to your mortgage lender to make sure that you can qualify for a second mortgage on a new home. As always, talk to your REALTOR® to take the temperature of the housing market in your area.

Tuesday, September 17, 2013

Four reasons you should sell your home before buying another

Whether you're moving to a new, bigger home, or downsizing when you become empty nesters, the timeline of buying and selling homes rarely coincides perfectly. So the question is, "Should we sell first or buy first?"

Selling your home before getting serious about buying a new one has some distinct advantages, no matter what the market is doing.

Time is on your side

By selling first, you give yourself the ability to negotiate on both sides of the equation. You can always ask the buyer for a later move-out date so you can have a little extra time to find a new home.

You can be sure how much cash you'll have on hand

With your first home sold, you have the added advantage of using equity to make a larger down payment and can play hard ball when it comes time to make an offer on home #2.

You're more likely to get your target price

If you buy first, you may be forced to take an offer that is much lower than what is fair. Agents know that if you've bought another home, they have an advantage during the negotiation. You'll want to avoid having two mortgage payments. They also know that most people's income will not qualify for a second mortgage with most lenders. They will use that to their advantage.

Most agents will not allow a contingency clause

If you make selling your home contingent upon finding a new one, you are in essence under no obligation to sell. That leaves them with a huge question about their future. Smart agents will not allow this to happen.

Tuesday, September 10, 2013

Tips for loading a moving truck

Whether you’re moving across the country or across town, if you’re not hiring a professional mover, renting a moving truck can save you time and energy. Done properly, it can also save you money in replacement costs in the event of damage to furniture and appliances.

After making sure that everything is packed properly, loading the truck correctly is perhaps the most important step to take that will ensure your belongings arrive safely. If you’re using friends and family to move, make sure to let them know what your strategy is for loading the truck.

Here’s what they all need to know about loading a moving truck so the ride is smooth and everything arrives at your new home safely.

  • Make sure the path from the door to the truck remains free of obstacles such as boxes

  • Use the ramp into the trailer on every trip

  • One or two people should be designated to be in the truck to load everything in tightly, while the others carry everything in

  • Load the front of the truck to the top and work your way toward the back

  • Stack items from floor to ceiling

  • Heavy items go on the bottom and lighter items on the top

  • Packing items tightly will help avoid shifting in transit, so try to avoid any open space

  • Use rolled-up rugs, bags of linens, pillows, etc., to fill void areas

  • Strap tiers in as you go - it’s safer to use more ties and straps than you think you’ll need

  • Cover appliances and furniture with pads and blankets

  • Load the largest, heaviest furniture and appliances first and put them against the walls to help distribute the weight evenly throughout the truck

  • Remove legs and feet from furniture

  • Sofa and loveseat should be placed on their end if possible

  • Between mattresses is a great place to store wrapped pictures and mirrors, headboards and footboards (but only one per space)

  • Make sure items that can cause damage are not loaded against fabric or wood furniture

  • Tables with thin legs should not have anything stacked on top of them

  • Load fragile items or awkward-shaped items on top and secure tightly

  • Place light-weight loose items on top

  • Any light machinery such as lawn mowers, tillers and weed eaters should be drained

  • of gas and oil, then covered with a tarp away from mattresses and furniture covered

  • in fabric

  • Keep gas operated items such as lawn mowers, weed eaters, etc., on the truck floor, covered with tarp or plastic sheeting and away from fabric items

Tuesday, September 3, 2013

Pros and Cons of Using Your Home's Equity to Buy Another Home

Although interest rates have risen over the last six months, they are still relatively low. In many markets, home sales have begun to accelerate, which could make this a good time to invest in real estate.

Like many, you may want to buy a second home - for vacation, retirement, or as a rental - but find yourself without cash on hand to make a proper down payment.

Many opt to use equity from their home in order to buy another. Equity is simply the difference between what you owe on your mortgage and your home's value on the market. If you owe $75,000 on your home but it's worth $155,000, your equity is $80,000.

As with any financial move, there are risks, but there are some advantages to using equity to purchase another home.

The pros

Banks can offer more favorable terms
Costs of loans (title search, etc) are typically lower
If you have enough equity in your first home to pay cash for a second home, you'll always have a free place to live

The cons

You'll be increasing your monthly mortgage payment
Increased risk of foreclosure in the event of job loss, etc
You're increasing the amount you have in one type of investment
Mortgage interest paid on an equity line or loan on your home might not be tax deductible
Your home would be subject to foreclosure if anything went wrong with the deal

There are some options when it comes to using the equity in your existing home to purchase another. Talk to your mortgage lender and your tax attorney to discuss the best option for you.

Tuesday, August 27, 2013

How to avoid injuries while moving

It's exhausting to pack everything you own and move it from one home to another. Preparation, common sense and keeping an eye on safety will go a long way towards avoiding injuries while moving.

Common injuries

Moving can take a toll on your body in a variety of ways. Most injuries occur either because we're careless or because we're unprepared for the repetition of lifting and moving. One is avoidable; the other is not.

Cuts - With all the boxes, there are bound to be paper cuts. They just happen - and they're annoying. You can also get cuts on broken glass (mirrors, pictures, etc.) and from box cutters. Make sure to practice good knife safety.

Blisters - You're most likely to get blisters on your hands and feet. You'll be doing a lot of heavy lifting and walking while carrying things. Wear gloves. And proper footwear.

Scratched Eyes - Moving generates a lot of dust and particles that can end up in the eye. No one wants to wear safety goggles while moving. Make sure to clean off what you're moving. Injuries to the eye can also occur when someone is getting something to carry and turns quickly, hitting the person behind them in the eye. Maintain a safe distance and communicate when you're behind someone.

Broken Fingers - There are a number of ways to break a finger while moving. Probably the most common way is while moving furniture and getting the hand caught between it and the wall, floor or railing. But, injuries to the hand can also occur when something moves when you least expect it. Exercise extreme caution and keep your hands safe.

Foot injuries - Broken toes and twisted ankles are fairly common while moving. Dropped furniture wreaks havoc on toes, so make sure you're wearing proper footwear. This will also help prevent fatigue. Be aware of any areas where footing is unsafe - sidewalks, doorways and stairs. A lot of times, vision will be impaired while carrying items, so keep walkways clear at all times.

Back Injuries - Perhaps the most common and avoidable injury. You can avoid injury and strain by lifting using good technique.

  • Bend at the knees, not the waist.

  • Lift with the legs, not the back.

  • Form a good base by keeping your feet shoulder width apart

  • Lift smoothly and slowly; don't jerk.

  • Keep the object you're lifting close to your body.

  • Don't twist your body.

  • Avoid lifting things over your head.

  • Pay attention to your footing when moving anything.

  • Make sure you have a good grip.

  • Push rather than pull.

  • Use a dolly whenever possible.

Have a first aid kit available

Although preventing injuries is optimal, they can and will occur. Make sure to have a first aid kit when you're moving and immediately treat any minor injury. Your first aid kit should include:

  • Band-Aids

  • Hand Towels

  • Adhesive tape

  • Non-adhesive dressing

  • Alcohol swab

  • Safety Pins

  • Crepe bandage

  • Scissors

  • Sterile eye wash solution

  • Antiseptic

  • Gloves

You may be tempted to pack as much stuff into a box as possible. Don't! Exercise some restraint and keep boxes to a 30-pound limit. Pack books in small boxes to keep it under the weight limit. If you have a bad back or are prone to back strain, wear a support belt.

Injuries are common, but preventable. A little caution and common sense will help keep your move injury-free.

Tuesday, August 20, 2013

Make your move be more environmentally friendly

Between the cardboard, bubble wrap and fuel, moving all of your possessions to a new home can definitely increase your carbon footprint. If you have made the decision to make your life more ecologically friendly, you can take some steps to make sure that you can make your move environmentally responsible as well.

Find a green mover

If you plan to use a professional mover, do some research and find one that provides rentable crates for packing your belongings. Some will even use trucks that use bio-fuel. Ask the company what steps they take to be more eco-friendly. Don’t be afraid to ask questions before you hire them.

Packing material

A lot of the material used in packing for a move isn’t good for the environment, including bubble wrap and packing peanuts. Finding alternatives is fairly easy, and can cut down on the overall cost of your move.

  • Use green packing peanuts made from bioplastics, a form of plastic derived from renewable sources such as vegetable oils or corn starch.

  • Wrap your breakables in clothing, towels, sheets and blankets to save on bubble wrap.

  • Use newspaper as a buffering material in your boxes to prevent items jostling together and breaking, but don't wrap things like fine china in newsprint, as the ink can come off.

  • For extra padding, pack your glasses and stemware in clean socks.

Eliminating cardboard boxes

Practically everything you own will be put into boxes that will then be thrown away or recycled. Take these steps to eliminate the number of cardboard boxes you’ll require to complete your move.

  • Save and use original boxes for fragile electronics such as TVs and computers.

  • Make use of all of your baskets, laundry bins, hampers, and suitcases.

  • Reusable plastic boxes can be found at some home improvement and hardware stores. Do a search to see if anyone rents plastic moving bins; they can be cheaper than cardboard and much better for the environment.

Cutting down on fuel usage

Even if you’re only moving across town, you can cut back on the amount of fuel you’ll need. If you’re moving across the country, the steps you take can make an even bigger difference.

  • Declutter and donate to lighten the load. The less you have to move, the smaller the truck that you'll need and the less fuel you'll use.

  • If you’re moving cross-country, consider shipping those things you won’t need immediately via Greyhound. It’s an inexpensive shipping option for large items.

Tuesday, August 13, 2013

Home prices, interest rates aren’t the only thing on the rise

Like many prospective homebuyers, you may have waited for interest rates to continue the downward trend. However, those rates started an upward trend a few months ago.

In addition, the housing market has engaged in a start and stop recovery, but for the most part, home prices have begun to rise after hitting bottom a year ago. The good news for buyers is that the market hasn’t realized a full recovery, so the house that you’re considering buying is a better value than it was a few years ago.

That’s not all, though.

Closing costs are on the rise

On average in the past year, closing costs are up six percent in 2013, according to Bankrate.com. Many buyers don’t shop around for the best deal on closing costs such as title, credit check, and appraisals. Providers of these third-party services haven’t really had to compete for business over the past few years, so they’ve had carte blanche to charge fees as high as they thought they could.

Saving money on closing costs

There are ways to save yourself some money on closing costs. You just need to know where to look, what to look for, and ask the right questions of the right people.

Watch out for garbage fees

These are duplicate or excessive processing and documentation, underwriting and application fees. Chances are, you may be charged for the same services you're already paying for.

Shop around for lenders

Ask prospective lenders to provide an estimate for closing costs in order to compare the costs.

Negotiate with the home sellers

Ask the home seller to credit you for paying some of the closing costs. They’ll be reducing the asking price of their home, but it never hurts to ask.

Ask your REALTOR®

They will know how and where you may be able to cut costs and make recommendations. Every dollar you save on closing costs is a dollar in your pocket.

Tuesday, August 6, 2013

De-stressing your move

Moving is hectic enough without worrying about schedules and paperwork. A little due diligence will go a long way towards helping you de-stress everything with a moving binder to keep track of everything.

Yes, it seems like something right out of the OCD handbook. By spending a couple of bucks on a binder and some tabs, you'll save yourself time, stress and quite possibly, some money in order to keep your move organized and on schedule.

Although you may have your own in mind, here are some tabs you might want to include in your moving binder:


You can find a number of online lists available to print and use. Include tasks and packing lists, just to name a couple.


Know when and who to call to have your utilities shut off or transferred. Schedule appointments accordingly and you'll want to include these on your timeline.

Loan Documents

Your mortgage documents should be available for easy access and reference until the move is complete. Then it goes into the safe deposit box.


Use this for any purchases that will be made for the move or getting the house ready for the new owners. If something doesn’t fit, or you need to return or exchange for any reason, there is no searching for the receipt.


Keep your schedule, list, contract and contact numbers here for easy access. You'll also want to have a list of items that the moving company will not move.


If you're having your home built, keep contact numbers for your contractor, warranties, paperwork, etc.


You'll want to include any appointments, including closing, utility shut-offs, walk-through, signings, etc. Print a calendar and include everything on it. Print an extra one and put it on the refrigerator so everyone knows what happens and when.

A little planning and organization will help you make your move go more smoothly. A binder will help you keep track of all the paperwork and schedules associated with the move.

Tuesday, July 30, 2013

Moving your pet

You've sold the house and closed on a new one. Timelines are set in motion for the move. You've talked to the kids and scheduled the movers. Make sure that you're not leaving out the furry members of the family when it comes to the logistics of your move.

There are two challenges facing pet owners when it comes to moving to a new home. The first is the actual moving. The second is helping your pet to adjust to the new surroundings. (Cats take longer to adjust to new surroundings. As with anything else, they are stubborn and move at their own pace.)

Here are some guidelines.

Keep them out of the way

On the day of the move, keep the pet in a crate or closed room. Doors opening and closing, strangers in the house, boxes everywhere - all of this can cause anxiety. Plus, people with boxes don't need a skittish pet running around when they've got full arms.

Using a crate

When transporting, it's best to use a crate. Your pet should always ride up front with you; never in the cargo area of a moving van. If you're flying, make sure it adheres to airline guidelines. Your pet should be able to 1) stand up; 2) turn around; and 3) lay down naturally.

Packing their bag

Everyone has a travel bag, right? You’ve got CDs, magazines, books. Kids have DVDs, video games, gadgets and books. Packing a travel bag for your pets will help make the ride easier. The kit should include:

  • Water bowl

  • Food bowl

  • Chew toys

  • Food

  • Leash

  • Water

  • Waste bags

  • Towels

  • Litter box

  • Kitty litter

Stretching their legs

Stop often to let your dog walk around. However, it's a good idea to not let your cat out.


If your pet gets really anxious during long travel periods, you may want to ask your vet about sedation. If you're flying, however, tranquilizers and altitude are not a good mix for your pet.

Pet-proof your new home

Look for things left behind by previous occupants such as cleaning products and sharp objects. In the back yard, look for poisonous plants and mushrooms and eradicate them.

Exploring the new home

Help your dog get familiar with new surroundings in the house, yard and neighborhood. Take long walks on a leash to help him explore the new territory.

Cats take longer to adjust to their new homes. Put them in a closed room in their crate with the door open. Place the litter box, food and water dishes, toys and scratching post in the room with them. Even though this may not be "their" room, it will help your cat to be more comfortable.


Make sure their nametag has your updated information. If they happen to get out to explore new surroundings, it will help whoever finds them get in touch with you sooner. Update licenses as soon as possible.

Finding information

Search for new resources including groomers, sitters, dog parks, veterinarians and boarding facilities.

Moving is difficult for everybody in the family. Pets are no exception. By making sure that your pet has everything they need during the move and for the first few days of living in their new home, the transition for your pet will be smoother and quicker.

Tuesday, July 23, 2013

Points – what they are, when to buy them and when to avoid them

When you take out a mortgage on your home, you will notice, of course, that you don't just pay the principal plus interest. There are a variety of added money that goes into making your monthly payment, including fees and points. Those points are what we'll be discussing today.

Good points

A point equals one percent of the principal amount of a mortgage. If the mortgage is $200,000, each point is $2,000. By paying more points on a loan, homeowners can negotiate a lower interest rate, which will then lower their monthly payment.

Each point you pay can reduce your interest rate anywhere from one-eighth to one-quarter of a percent. The discount depends upon the lender and the daily fluctuations in the mortgage market. You can purchase up to four discount points or even more. Keep in mind that discount points are tax deductible.

Bad points

Origination points is actually a fee that you're charged when you take out a mortgage. These points do not provide any value and should be avoided if possible. If you have a bad credit rating, the lender may require these points in order to make a loan.


There are two major points to consider when thinking about whether to purchase discount points. The first, of course, is whether you can afford them. Points are paid up front, just like the down payment, which is usually a requirement. Points, being optional, do not have to be purchased. After paying the down payment, you may not have enough cash on hand to pay for them.

Secondly, you'll want to determine when you'll break even on the points. It's a financial decision, after all. Let's say your mortgage is $100,000 at 6 percent, your payment is $599.55 per month. If you purchased three discount points, your interest rate would drop to 5.25%, and your monthly payment would be $552.20 per month. The points would cost you $3,000 and you'd realize a savings of $47.35 per month. Your break-even point is 63 months on your purchase. Considering that the standard loan is 360 months, if you plan to stay in your home for many years, you would realize significant savings.

For more information on points, talk to your mortgage lender or real estate agent.

Tuesday, July 16, 2013

Reasons why people move

According to data, American homeowners will buy and sell their homes between five and seven times. To some who find a home and stay in it for decades, this seems to be an odd phenomenon.

You may not think you're in danger of moving any time soon, but chances are, you'll move within the next few years.

Home is too small

An increasing family size is probably the number one reason people buy a new home.

Home is too big

Some people call it downsizing, or maybe empty nest, but some people find they have too much house. Kids move out; a big house is hard to clean and maintain; utilities are expensive. Some people find that they don’t need all that space and a smaller home makes more sense.

Better schools

The neighborhood you live in usually dictates where your children go to school. Some schools are better than others and parents find themselves looking for better schools to give their kids the best education.

Change in personal relationship

Getting married, moving in together, and yes, breaking up or divorcing usually means that a move is imminent.

Save on commute time

For some, the commute is a time to wind down from the day. However, depending upon where you live, commute time could be an hour or more in a car, using gas that isn’t getting any cheaper.

Job change

Whether you’re taking a new job across town or being transferred across the country, a change in employment is probably the second most common reason to move.


Although it may seem shallow, people long for bigger and better. As they grow more successful and make more money, it’s natural to want a larger home with more amenities.

Neighborhood changes

Neighborhoods evolve, and not always for the better. It may start to experience more crime. Or perhaps the new interstate went in a half mile away and you constantly hear the low-grade hum of traffic.

The yard

Some people love a big yard and all the work that goes into it, with landscaping, mowing, planting and maintenance. And some people hate it.

See family more often

Seeing family, being in close proximity is important to some people.

See family less often

For others, the farther away, the better.


With the advancing age of baby boomers, there are more retirement communities for active age retirees than ever. Some want to spend their retirement doing what they love – fishing, golf, on the beach – which is why Florida is so popular for retirees. But many will find or build a lake house and move there.

Health problems

For those with physical ailments such as bad knees or back, downstairs laundry rooms become physically demanding and in some cases, downright dangerous. For people with mobility issues, moving to a one-story home (or even an assisted living facility) becomes a necessity.

Cost of maintenance or remodeling

Replacing the roof, air conditioner or heating system, or major renovation, is a cost that often can’t be recovered fully when the home is sold. So many people choose to move rather than commit the resources.

Serial remodeler syndrome

There are those who enjoy taking on the challenge of a fixer-upper. Once the work is completed, they become restless because there is nothing left to do and they are ready to move on to the next project.

Cash on hand

Some people would rather have cash in their savings account rather than in equity in their home. Yes, it’s odd.

Lifestyle change

For some people, home ownership becomes less of a priority, and they choose to liquidate to pursue other interests. For some, it may be travel; for others, something that gives their life purpose.

Tuesday, July 9, 2013

Are we in a buyer’s or seller’s market?

Conditions in real estate go in cycles and buyer’s and seller’s markets are usually measured in months or even years. And it’s usually easy to tell whether the buyer or the seller has the advantage. Emphasis on usually…

The different markets are easy enough to define. When there are more homes for sale than buyers looking for a home, it’s a buyer’s market. Supply is greater than demand, and it follows that homes will be lower priced, making it a more attractive time for buyers.

By contrast, a seller's market occurs when the number of buyers outnumbers the number of homes available. This leads to sellers receiving offers from a number of different buyers, which can drive up prices.

Conditions in the market are volatile today. Industry experts debate on whether it’s a buyer’s or seller’s market. But one thing they can agree on – these days it’s almost impossible to predict from month to month what is going to happen.

No matter which market we’re in, whether you’re a buyer or seller, there are some things you can do to give yourself an advantage.

If you’re a buyer in a seller’s market

  • Get pre-qualified and have your lender write a letter indicating that amount. Strengthen your offer by submitting that letter with your offer.

  • Make your first offer your best offer. You’ll want to try to avoid negotiation. If you are competing with others for this home, you may not get a second chance.

  • Avoid including items in the offer asking the seller to pay fees usually paid by the buyer.

  • Showing some flexibility on the closing date is a favor to the seller; it gives them time to relocate.

  • Shorter inspection deadlines may make your offer more attractive.

  • If possible, try to have a larger than required down payment.

If you’re a seller in a buyer’s market

  • Visit open houses in the area to determine if your house measures up to the competition.

  • Make sure your home looks its best inside and out.

  • Set a realistic price and make sure you are competitive.

  • Consider offering incentives such as leaving appliances or furnishings or specific items such as pool tables or décor unique to the home.

  • Be prepared to negotiate on price, closing date, needed repairs or allowances. In a buyer’s market, you never know when you’ll see another offer.

No matter which market we’re in… or whether you’re a buyer or seller… it’s a good idea to consult the experts. Your REALTOR® will help you determine the best course of action.

Tuesday, July 2, 2013

Buyers aren’t the only ones who go to open houses

If you’re planning to sell your home, your real estate agent may advise you to schedule an open house to help sell it. He’ll help you get the home ready to show, talk to you about minimizing the personal effects in the house, and in case you didn’t already know this, he’ll tell you not to be home during the open house.

For many sellers, it’s odd to think about dozens of strangers walking around their home. But potential home buyers aren’t the only people who will show up at your open house.


Your neighbors will drop by to see inside the home, either because they’re curious or nosy. One is good; the others, not so much. The good neighbors are usually good to have around because they can tell potential buyers more about the neighborhood, schools, etc.

Other sellers

Yes, other sellers do (and should) frequent open houses to see how their home stacks up against the competition.

DIY home decorators

Especially in upper-end homes, people will stop by an open house to look for inspiration for their home’s décor.


It’s rare, but it happens occasionally. Better safe than sorry. Lock up the jewelry.

Serial open house attendees

There are some people who simply can’t resist an open house.

Other real estate agents

Whether they were the agent who lost the listing or one who is viewing the home as a potential for some clients, real estate agents will attend open houses that are not their own.

An open house can potentially help you sell your home quickly. Make sure that you’re in communication with your REALTOR® if you have any questions about the process.

Tuesday, June 25, 2013

Despite recent trends, buying a home is still cheaper than renting in the long run

If you're preparing to buy a new home, recent trends may have you thinking you've missed the perfect opportunity. Home prices, which were down after the bubble burst a few years ago, are starting to recover. In addition, interest rates are rising. These two developments may have you reconsidering a move.

Many may think that continuing to rent seems like a more viable option compared to buying a home. They choose to wait till interest rates come back down. For most, however, this is a mistake that will cost them money in the long run because many in the industry think that interest rates will continue their climb slowly upward.

If you're in the same situation, don't worry. Depending upon where you live, buying a home will still save you money over the long term. There are three things that make buying a home cheaper:

Interest rates

The simple fact is that higher rates mean a higher cost of owning. For most, rates would have to climb to over 10.5% in order for renting to be the better option.

Itemized deductions

Usually, mortgage interest and property tax payments are deductible, depending upon the state in which you live. The average American family is in the 25% tax bracket. On average, regardless of whether you own or rent, buying is 44% cheaper. If you only take the standard deduction, buying is still 35% cheaper than renting.

Staying put longer

The cost of buying and selling a home can be more than 10% of the home's value. If you stay in the home longer, you're able to spread those costs over more years. Forbes says that buying is 44% cheaper than renting if you stay put for 7 years, 37% for 5 years, and 20% for 3 years.

Based upon those three things, you would have to have a high interest rate, not take deductions and sell your home quickly in order for renting to be the better option.

The tipping point

Forbes discusses the tipping point, (http://www.forbes.com/sites/trulia/2013/06/14/buying-cheaper-than-renting-til-mortgage-rates-hit-10-5/) which is the interest rate at which renting a property is cheaper than buying it. Because of taxes and cost of living, areas primarily in California, New York and Hawaii have the lowest tipping point.

That being said, for every one of the top 100 largest metropolitan areas, buying is a better deal right now. Depending upon where you live, the tipping point ranges from 5.2% in San Jose, CA to 35.8% in Detroit.

If you're considering buying a home, although you may have missed THE PERFECT time to buy, now is still a very good time. Home prices are just beginning to rise and interest rates are still very low. Talk to a REALTOR to discuss your options.

Despite recent trends, buying a home is still cheaper than renting in the long run

If you're preparing to buy a new home, recent trends may have you thinking you've missed the perfect opportunity. Home prices, which were down after the bubble burst a few years ago, are starting to recover. In addition, interest rates are rising. These two developments may have you reconsidering a move.

Many may think that continuing to rent seems like a more viable option compared to buying a home. They choose to wait till interest rates come back down. For most, however, this is a mistake that will cost them money in the long run because many in the industry think that interest rates will continue their climb slowly upward.

If you're in the same situation, don't worry. Depending upon where you live, buying a home will still save you money over the long term. There are three things that make buying a home cheaper:

Interest rates

The simple fact is that higher rates mean a higher cost of owning. For most, rates would have to climb to over 10.5% in order for renting to be the better option.

Itemized deductions

Usually, mortgage interest and property tax payments are deductible, depending upon the state in which you live. The average American family is in the 25% tax bracket. On average, regardless of whether you own or rent, buying is 44% cheaper. If you only take the standard deduction, buying is still 35% cheaper than renting.

Staying put longer

The cost of buying and selling a home can be more than 10% of the home's value. If you stay in the home longer, you're able to spread those costs over more years. Forbes says that buying is 44% cheaper than renting if you stay put for 7 years, 37% for 5 years, and 20% for 3 years.

Based upon those three things, you would have to have a high interest rate, not take deductions and sell your home quickly in order for renting to be the better option.

The tipping point

Forbes discusses the tipping point, (http://www.forbes.com/sites/trulia/2013/06/14/buying-cheaper-than-renting-til-mortgage-rates-hit-10-5/) which is the interest rate at which renting a property is cheaper than buying it. Because of taxes and cost of living, areas primarily in California, New York and Hawaii have the lowest tipping point.

That being said, for every one of the top 100 largest metropolitan areas, buying is a better deal right now. Depending upon where you live, the tipping point ranges from 5.2% in San Jose, CA to 35.8% in Detroit.

If you're considering buying a home, although you may have missed THE PERFECT time to buy, now is still a very good time. Home prices are just beginning to rise and interest rates are still very low. Talk to a REALTOR to discuss your options.

Tuesday, June 18, 2013

Insurance companies scaling back water damage coverage

Homeowners have not been very profitable for insurance companies historically and the recent weather events (hurricanes, floods and tornadoes) have caused them to lose money. As a result, companies have looked for ways to squeeze profit from policies and may be squeezing homeowners as a result.

For example, it has come to light recently that many companies are not writing new policies in hurricane areas, especially Florida. But insurance providers are also cutting coverage in ways that are not covered by the news; that affect homeowners across the country; and that you may not know about until it’s too late.

The 14-day rule

Many insurance companies have quietly changed their policies over the past few years. In days past, if a slow leak developed in your plumbing, which is capable of causing extensive floor and drywall damage and mold growth, you didn’t have to worry about being covered.

Damage caused by a single event, like a dishwasher whose valve fails and flooding your kitchen, is covered. Many insurance companies have instituted the 14-day rule. In many cases, the source may be hidden behind a wall or foundation. Also, the evidence of the leak does not show itself immediately. If the leak occurred over more than 14 days, chances are you may not be covered.

What you should do

On your side, watch your water bill; an unusually high bill may point to a big leak. Keep a watchful eye for evidence of water damage, particularly around sinks, tubs and toilets. You may also consider buying wireless water alarms. They are inexpensive and will go off at the smallest leak.

Most people don’t read their policy. If you have a new policy or recently renewed your policy, call your agent and ask about coverage for such events. They may advise you to increase your coverage. The important thing is to know what your policy covers and what it doesn’t. That’s not the kind of surprise you want.

Tuesday, June 11, 2013

The Difference between Rate and Annual Percentage Rate

When you buy a house, chances are that you’re not paying cash. You’ll need to secure financing in order to pay for it. One of the things that you’ll notice is that the rate and the annual percentage rate (APR) are not the same.

The advertised interest rate is the cost of borrowing money and expressed as a percentage. Lenders must comply with the Truth in Lending Act, which requires that the APR be published as well. This number, also expressed as a percentage, includes the interest rate and:

  • Points – both origination and discount

  • Underwriting, loan processing and document prep fees

  • Commitment fee

  • Attorney and/or title closing fees

  • PMI (private mortgage insurance) or MIP (Mortgage insurance premium) for FHA

  • Prepaid interest

Why APR is important

If you’re considering two different loans with the same rate, the APR lets you know the true and total cost of the loan. The advantage of APR is that it allows you to more accurately compare the cost of borrowing from different lenders, since they may have different fee structures. A lower rate may not be your best option. It is possible that a lender may charge a higher interest rate but lower fees.

Why APR isn’t important

The fees associated with the loan are usually paid up front. It is calculated over the life of the loan, which is usually 30 years. If you’re going to sell your house in a few years or you plan to refinance, the APR may not be as big a consideration to you.

Although interest rate and APR are expressed as simple percentages, the way both are calculated are fairly involved. Make sure to ask your mortgage lender to fully explain all costs and fees of your loan so that you have a good understanding of the total costs.

Tuesday, June 4, 2013

Items most movers won’t move

Depending upon the state in which you live (or are moving to), there are some things your movers will not move. To save time and headache, ask for a list of items from your moving company.

Some items will not be moved because they pose a danger to you and the mover. They can also damage your belongings as well. For those reasons, the insurance companies that cover the movers will not allow certain items to be transported.

If the company you choose does not supply you with a list, be sure to ask for one.

Hazardous, flammable and explosive material

Of course, some of these items you will want to take with you. Some you should consider leaving behind or taking to places that will properly dispose of them. Some common hazardous items include: acids, bleach and solvents; ammunition and weapons; flammable and explosive material such as kerosene, fireworks, propane tanks, aerosol cans, fertilizer, charcoal, engine oil and gas.

Perishable items

Moving companies will avoid taking perishable items simply because if there is a delay in delivery, items will spoil or die. These items include food, plants and pets. Regarding house and outdoor plants - check with your new home state concerning any plants that you may or may not bring to your new home.

Personal and financial

You should personally transport any items or anything of a financial or personal nature that cannot be replaced. Items that would be very inconvenient if the moving truck is delayed are also included on this list:

  • Cash and jewelry

  • Bonds, financial statements, stocks and checkbooks

  • Address books, photos and personal files

  • Keys, both car and home

  • Computers and software

  • Medicine

This is by no means a complete list. Check with your moving company representative for a complete list of items they will not transport to your new home.

Tuesday, May 28, 2013

Clearing up escrow confusion

When you buy a house, you're going to hear the word "escrow" thrown around often. It's one of those terms that people just accept without really knowing what it is. Then later, there is confusion because they forget that when you purchase a home, usually there are two escrows involved.

First things first. Here is the definition of escrow: a bond, deed, or other document kept in the custody of a third party and taking effect only when a specified condition has been fulfilled. (Oxford Dictionary)

When you make an offer on a house, your agent will have you write an earnest money check, which will be deposited in escrow while you and the seller negotiate the details of the contract. The check is deposited with an impartial third party - an escrow agent, title agent, or closing attorney - who is not involved in the transaction.

They manage all the incoming paperwork and money from buyers, sellers, lenders and agents. In addition, they handle the title search, schedule the closing meeting, disburse the funds and send the paperwork to the county. When all of this is completed, escrow closes.

You'll receive a statement of escrow closing. Make sure to look this over carefully. If you spot any discrepancies, report them to the closing agent immediately. This statement should be kept with your most important financial records. You’ll need it when you file taxes, too.

Your second escrow

You'll also have escrow for taxes and insurance, which can be abbreviated as "T&Is." Your mortgage lender may require you to begin funding this escrow account by making a payment into the account at closing. They may ask for the total of the first year's estimated T&Is upfront or they may add it to your monthly payment.

No matter how payment is arranged, the escrow is revisited every 12 months. If you overpaid, you may get an escrow refund. This is common. Your lender will then recalculate the cost for taxes and insurance and the amount that goes into your escrow fund will change. Because the value of your home will go up and down, you may see a fluctuation in your monthly payment from year to year.

Tuesday, May 21, 2013

Understanding the home inspection process

Although a home inspection is not required by law, it is always a good idea to have an objective third party inspect a home you wish to buy. A reliable home inspector can save you literally thousands of dollars in unexpected home repairs.

Paying for the inspection

Usually, the buyer pays for the inspection. But everything in real estate is negotiable. Put it in the contract to split the cost of the inspection to see what the seller says. If they are motivated – and confident in what the inspector will find – they may agree, which will save you a few hundred dollars.

What home inspectors look at

Home inspectors start by looking at exterior features: outside walls, soffits, decks, roof, chimneys and drainage conditions. On the interior, they examine the condition of windows, doors, plumbing fixtures, electrical outlets and switches. They examine the heating and cooling systems. They also look at the attic and crawl space to ensure that they have adequate insulation and ventilation.

And what they don’t

Home inspectors are generalists and usually not qualified to assess things like pools, septic systems and trees and shrubs. If you want to have a termite inspection done, expect to hire a specialist in that area.

Accompany the inspector

A written report doesn’t give you the whole picture. Although it’s not required, if you go along on the inspection you’ll have a better indication of the issues associated with the home.

Questions to ask

It is essential that you trust the home inspector. Make sure to ask questions about the inspector’s background and qualifications, their training and what they’re looking for when they perform their inspection. Here’s a list of questions to ask your inspector (http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/insp/inspfaq) as suggested by HUD.

Finding a home inspector

If you’re in the market for a new home, ask your real estate agent for a list of trusted home inspectors that they use regularly. You can also ask friends and relatives for a referral. Make sure to do some research on the inspector; look for reviews online. In addition, make sure to ask to see a sample report. That way you’ll ensure that you’re comfortable with what the inspector reports and how they report it.

A home inspection is protection for the investment that you’re planning to make. Weighed against the potential cost of repairs and what you pay for your home, it is a wise decision to protect your investment.

Tuesday, May 14, 2013

15-year mortgage

For decades, when home buyers were discussing the terms of their mortgage, it was generally understood that it would be paid off in 30 years. But a couple of decades ago, buyers started hearing about the option of a 15-year mortgage.   The allure of the shorter term mortgage is obvious: Shorter terms means you pay less interest.

It isn’t the deal it once was

Using the mortgage calculator at Realtor.com, we can see just how much your payment will be. With a buying price of $200,000 and a 20% ($40,000) down payment, your payment will be $1,086 on a 15-year mortgage at 2.75% APR. On a 30-year mortgage for the same house, same down payment, with 3.5% APR, your payment will be $718. That’s a difference of $368.

The drop in interest rates isn’t what it used to be. In the 1980s, there was a discernible difference in interest rates. The monthly payment on a 15-year mortgage at 8.5% would be $1575, while the same house at 10.5% for a 30-year note would be $1,463. That’s a difference of $108.

Strain on the budget

Many home buyers find that coming up with the extra money month in and month out is prohibitive. Any change to your financial situation could make it more difficult. Having children, buying a new car, a bout of unemployment… anything could put a strain on your already tight budget.

Less flexibility

Paying over 50% more on your mortgage requires fiscal discipline, to be sure. It also means the difference between investing in retirement, taking vacations and spending less money on almost everything in your life.

Paying off your mortgage early

Many people are opting for the 30-year mortgage and taking steps to pay it off early. There are many options for homeowners who want to pay down their mortgage at an accelerated rate. Paying bi-weekly is one option. Simply paying more is another. As your salary rises, pay that much extra on your mortgage. You can also apply windfalls such as tax refunds and bonuses to your principal.

For more ideas about your mortgage options, talk to your REALTOR® and loan professional. They should have ideas to determine your best course of action.

Tuesday, May 7, 2013

Research the schools when moving

Whether you’re moving across town or across the country, if you have children, one of the biggest considerations when buying a home is the schools they will attend. It is important, but it doesn’t have to be a daunting task and there are resources available that you should look into before making a buying decision.

Use online resources

Fortunately, finding information about schools online is relatively easy. Most districts have a website, so that’s a good place to begin your search. The sites vary in terms of how comprehensive and helpful they are, but most will provide a list of district schools, contact information, schedules, after school programs. Check the individual school website for information about contacting PTO officers. One of the most important pages you’ll need to see is the one highlighting enrollment procedures, so you’ll know exactly what you need to get started.

For a more objective view of the schools in the area, websites such as GreatSchools.org, GlobalReportCard.org and NeighborhoodScout.com offer information about district standardized test scores as well as parent reviews.

Don’t forget social media. Many schools have Facebook and Twitter pages. Do a quick search there and do some looking around.

Coordinate your efforts

There are two common mistakes when trying to coordinate buying a home with choosing a school. The first is finding a school and getting their children enrolled only to discover there are no homes in the area, or none that they can afford. The other is finding their dream home and starting the process of buying it, then finding out there are no schools in the area.

Connect with other parents

The best source of school information is, of course, other parents, so it is beneficial to speak to them about the schools in the area. As stated before, there will be information available on the school’s website about PTO; reach out to them personally. The officers are usually the most involved and will be great sources of information about teachers, principals and administration.

Seek out local resources
Talk to your REALTOR®, who will usually have great information about schools. If they are not experts, they usually have a colleague who they can use as a resource. If you’re relocating for your job, send out an email blast to your future co-workers and ask them for information and recommendations about schools. Check local papers for stories about the schools on your list.

Contact the schools

Once you’ve narrowed your search to a few schools, contact each one directly. Talk to the principal or administrator and have a list of questions ready for them. Ask them to recommend several parents that you can talk to as well.

Have a backup plan in place

Whether you choose a public or private school, there is no guarantee that you’ll get in. Be sure to have a back-up plan in case the school you choose doesn’t work out. Enroll your child in the school that is your first choice, but make sure that you know if there are slots available at two or three other schools on your list, just in case things don’t work out.

Once you’ve settled on a school, make sure to check the website and contact them to ensure that you have all the paperwork and documentation necessary to enroll.

Coordinating choosing a school and finding a home is a necessity when making a move. Doing due diligence by researching the school and reaching out to local resources and other parents will help make the transition process for your child more smooth and eliminate worry for you.