Monday, December 21, 2020
The Holiday's Aren't Stopping Homebuyers This Year
What To Do When Applying For Forbearance
Wednesday, November 25, 2020
First Things First
If you are making a particular meal for the first time, it is essential to have a recipe so that it turns out the way it should. Knowing the ingredients and preparation can guide you through the process.
Buying a home is really no different than making a new recipe. There are certain things that need to be done, many of which should occur in a particular order to save time, money, effort and disappointment.
Your first inclination may be to start searching the Internet for homes and schedule some showings or possibly visit open houses. Even though this is very gratifying, it shouldn't be done until you have gone through the preliminaries.
Buying a home for the first-time implies you haven't been through the process before and even though, you may have a rough idea of what needs to be done, selecting the right agent in the beginning will give you the benefit of years of personal and professional experience that can help you avoid some of the common mistakes made when buying a home.
This agent can direct you to find the other team members that are required like the lender, title company, inspectors and others. Each member of the team has an important role to play that if not done correctly, could cause delays and possibly, jeopardize the transaction.
An important step is getting pre-approved so that you'll know exactly what price mortgage and home you'll qualify for. This may even allow you to lock-in a mortgage rate before you contract for a home. The pre-approval could also prove very helpful in negotiating with the seller by removing some of the doubt in their mind regarding an unknown buyer. Another advantage to pre-approval is that if you are competing with multiple offers, you have the advantage of being more of a known commodity.
You'll need to assemble some documents for the lender including pay stubs from the past two months, W-2's from last year, proof of additional income, tax returns for the past two years, bank statements for the last three months, list of all open credit accounts and balances, copy of driver's license and history of residence for past two years.
Buying a home is one of the most important decisions in your life and it should be done with care and research. When all the things are done in the right order, finding the "right" home is just like following a recipe. For more information, download this Buyers Guide that includes great information to help you through the process.
Wednesday, November 18, 2020
More Time at Home
We are all spending more time at home and will probably need to continue to do so for a while longer. Depending on the makeup of your family, your home is now a home office, a gym, a virtual classroom and considerably more meals have been prepared in your kitchens in the past six months than normal.
Some businesses have undergone a metamorphosis that has shown them that maybe they do not need the big commercial spaces for their employees. They realize that they can be just as productive with their work force offsite which will cut expenses.
If this scenario sounds familiar, it may be worth exploring what moving would look like for your situation. To analyze the options, you will need to know what your home is worth and what the net proceeds will be after selling it.
You will need to know what homes are available with the amenities you are looking for together with the prices and mortgage money. Depending on the interest rate on your current mortgage, there may not be much difference in payment for a larger mortgage at today's incredibly low rates.
Another option that some homeowners are considering is to not reinvest all the proceeds from the sale of their existing home into the new home. They are reserving some of the cash as a contingency fund for the unexpected. This strategy is providing peace of mind in uncertain times.
It is said that an investor is faced with three decisions every day: buy, sell, or hold. The equity in a home represents, for most people, their largest investment asset. While it is an asset, it is also an amenity.
Prudential thinking would insist on protecting your investments, but it would also suggest that you would evaluate alternatives to avoid missing opportunities. Having the facts available will make the options clearer and possibly, the decisions will become obvious.
We are available to help you assemble the information you need to consider what is best for you.
Wednesday, November 11, 2020
Moving "Down" in an "Up" Market
Selling a home and buying a lower priced home that meets your current needs can be to your advantage in an "Up" market like the current one with low inventory. The advantage is that you can maximize the price for the home you're selling and not have to reinvest it all in your replacement.
Just to illustrate the point, let's say there is a 10% premium in the sales price of a home currently. If you're selling a home for $750,000, it would be $75,000. If you replaced the home with a $500,000 home, the premium would be $50,000 which means you're $25,000 ahead.
Let's further assume that your home is debt free so that when you sell it, you have a large cash equity. Instead of paying cash for the replacement home, get an 80% loan at today's low interest rates and reinvest the proceeds to supplement your retirement.
You may be able to get as low as a 2.5% mortgage and earn significantly more on the proceeds in other investments.
Home prices are up significantly over last year and they're selling on average in three weeks. Inventory is down and there is less competition for your home than normal which can lead to a higher price. Closed sales increased 9% from August to September according to a Zillow report.
Moving down in an "up" market may be to your advantage. It could lower your cost of housing by saving on property taxes, insurance, utilities and maintenance while being able to take cash out of your home to reinvest in your retirement.
You'll be using "other people's money" to free up your equity that you can reinvest at a rate higher than you'll be paying on your mortgage. The difference would be profit.
To explore this opportunity, give me a call and we'll look at your numbers.
Wednesday, November 4, 2020
Cutting Your Housing Costs in Half
Cutting the price will generally bring buyers of anything out of the woodwork that were not serious before. Some renters could easily lower their monthly cost of housing by half or more by purchasing a home with all the financial benefits that come with it.
The most obvious thing in today's market is that the mortgage payment could be less than the rent the tenants are paying. With mortgage rates hovering around 3%, this is a major factor of the savings.
The two other major contributing factors are appreciation and amortization of the mortgage, neither of which benefit tenants continuing to pay rent. According to the FHFA House Price Index, home prices rose 5.4% from July 2019 to July 2020. There were 400,000 less homes on the market during the summer of 2020 than the previous summer which is influencing appreciation.
With each payment a homeowner makes on their mortgage, a portion is used to reduce the principal amount owed. This is like a savings account for the owner because it lowers their unpaid balance and increases their equity.
The equity becomes an asset that can be accessed by doing a cash-out refinance or a home equity line of credit once the equity has reached 80% loan-to-value.
A $300,000 home purchased with an FHA loan at 3% for 30 years would have a payment of approximately $2,013 including principal and interest, taxes, insurance, and mortgage insurance premium. If the tenant were paying $2,400 in rent, this would be a savings of almost $400 a month.
The monthly principal reduction would average $500 a month for the first year which would lower the net cost of housing. The other major item to consider would be the appreciation. Assuming, in this example, the home was appreciating at 3% annually, the monthly appreciation in the first year would be $750 which would further lower the cost of housing.
| Rent | $2,400 |
| Total House Payment | $2,013 |
| Less Monthly Principal Reduction | $513 |
| Less Monthly Appreciation | $750 |
| Plus Estimated Monthly Maintenance | $200 |
| Net Cost of Housing | $950 |
In this example, it would cost over $1,400 per month more to rent than to own.
A different approach to this would be that the equity in this home in seven years would be $121,579 based on appreciation and principal reduction. If the same person continues to rent, there would be no equity build-up.
If you're curious as to how much you could cut your housing cost, go to the Rent vs. Own or contact your real estate professional.
Wednesday, October 28, 2020
Some Mortgage Interest May Not be Deductible
Banks are concerned about making loans that will be repaid not about making loans that are tax deductible for homeowners. It is good business for the bank but how is the homeowner supposed to know?
Most homeowners and potential homeowners are aware there are tax benefits associated with ownership. For instance, mortgage interest and property taxes have been deductible expenses from federal income tax since it was enacted in 1913.
The current law provides that homeowners can deduct the interest on Acquisition Debt which is the amount of debt incurred to buy, build or improve a first or second home up to $750,000. The amount of acquisition debt decreases as payments are made and it cannot be increased unless the additional funds borrowed are used for capital improvements.
It is not uncommon for a homeowner to refinance their home for any number of reasons. It could be to get a lower interest rate that would lower the payments or remove mortgage insurance. However, when additional funds are borrowed for reasons beyond "buy, build or improve", the excess is considered personal debt and the interest is not deductible according to IRS.
Maybe this is not important if the owner is taking the standard deduction because it is higher than the total of the property taxes, qualified mortgage interest and charitable deductions made by the taxpayer. Currently, it is estimated that 90% of homeowners are electing to use the increased standard deduction implemented with the 2017 Tax Cuts and Jobs Act.
A confusing issue that occurs at the end of the year is when the lender reports to the borrower the amount of interest that was paid. While that amount is most probably accurate, the bank doesn't know if it is qualified mortgage interest for the borrower.
It is the responsibility of the taxpayer to keep track of outstanding acquisition debt and whether part of the balance is considered personal debt.
Another area where it could become important is if the property was lost due to foreclosure, deed in lieu of foreclosure or a short sale. The provisions of the Mortgage Forgiveness Act have been extended through 12/31/20 which exempts the forgiven debt from being considered income and therefore taxable. However, it only applies to acquisition debt. Any part of a mortgage refinance that is considered personal debt could be taxable in that situation.
As an example, let's say that homeowners originally borrowed $300,000 to purchase a home that they owned for 15 years. During that time, the home appreciated significantly, and they refinanced it twice. Once, they made some improvements and took out cash to pay off personal loans and the second time, it was only a cash out.
| Original acquisition debt | $300,000 |
| Remaining acquisition debt including improvements | 225,000 |
| Unpaid balance on current mortgage | $550,000 |
| Personal debt | 325,000 |
In the example above, the personal debt of $325,000 would be considered income on foreclosure and recognizable as income on that year's income tax return.
If you have never refinanced your home or have refinanced it but never taken any money out of it except to make capital improvements, your unpaid balance in most likely acquisition debt. However, it you have refinanced your home and pulled money out of it for purposes other than capital improvements, those funds may be considered personal debt.
This article is for information purposes. If you are unclear about the current acquisition debt on your home or need advice for your individual situation, contact your tax professional. Additional information can be found in IRS Publication 936, Home Mortgage Interest Deduction.
Wednesday, October 21, 2020
Seven Questions to Ask Before You Choose an Agent
The concern today when putting your home on the market should not be whether you'll get a contract; it's whether you are going to recognize the majority your net proceeds without any unnecessary delays.
What you realize from the sale of your home has to do with maximizing the sales price while minimizing the sales expenses. Interestingly, the buyers will be trying to minimize the price they have to pay for your home and possibly, have you pay some of their expenses.
Taking a few pictures with a cell phone and putting a sign in the yard may be enough to get a buyer but successfully selling a home in today's market requires expert marketing and expert negotiations.
Marketing begins with the preparation of the property to optimize the first impressions it makes to potential buyers. A skilled professional can make recommendations that can help the home sell for the most money and in the shortest amount of time. Cleaning, painting, depersonalizing, removing unnecessary items and possibly staging are a few of the recommendations you might receive.
93% of buyers rely on the Internet to search for properties and information and is something they engage even before they find an agent. Positioning the home so it only can be found effectively in the search is making it appeal favorably and requires careful consideration.
Professional-level photography will make the property look appealing. Experience knowing the right angles, the proper lighting, and having the right lens are only a few of the things can make a property stand out from the competition.
Negotiations plays a huge part in the sale of any home. There will be negotiations during the offer/contract stage with the buyer and the other agent. After that, there may be negotiations regarding inspections, repairs, the appraisal, or anything that might threaten the ultimate closing.
The following are seven questions that you can ask when interviewing an agent to market your home. The answers should help you evaluate and select an agent who can represent you and your interests.
- Do you use a professional photographer?
- Have you sold homes in this area recently?
- Explain your timetable for preparation, "going live" and market exposure.
- Describe your efforts during the negotiation process.
- Do you have a pricing analysis, showing actives and solds, for my neighborhood?
- Which properties will be our strongest competition?
- How do you get the most exposure to get competing offers?
On the surface, it may appear that all agents are the same. They are all be licensed to sell real estate and can put your home in the MLS for other agents to find. Experience and skill sets can vary widely among agents and the questions provided in this article can help you determine who can do the best job for you in today's environment and the market your home is located.
Wednesday, October 14, 2020
Four Things Sellers Should Do Before the Sign Goes in the Yard
Just like buyers should be pre-approved before they begin to look at houses, Sellers should have their home pre-approved. The reasons are similar: appeal to the "right" buyers, discover issues with the home early, improve marketability, increase negotiations position and close quicker.
For the seller, there are few things that need to be done before the sign goes in the yard and definitely before prospective buyers see the home. The first is to understand that once you decide to sell the home that it needs to appeal to the broadest base of buyers and that means depersonalizing your home.
Once the home is sold, you will need to pack your things for the new home. Think of this as starting the process early. Get moving boxes and make decisions on what you intend to give away or discard in each room and closet. Identify and pack those items before the home goes on the market. This will be the first wave of making your home more marketable.
When your home hits the market, it needs to be a neutral commodity and not "your" home. A good rule of thumb is to remove items that involve religion, hunting and sports. That means removing personal items like family photos or collections displayed in the room.
Next, in round two, go through every room to remove the items that make too large of a statement or take up too much room. Pool tables may be appropriate in a game room, but they are not in a dining room or a living room.
Personal collections may have taken you years to accumulate and you're proud of them but the people who come to see your home will either not appreciate them or they will become distracted by looking at them instead of the home. The livability of your home needs to be the focal point. The buyers need to visualize themselves living in the property that will become "their" home.
The four most important rooms to address are the primary bedroom, kitchen, living room and dining room. These rooms have a major influence on buyers when determining whether "it is the right home." Bright colors, possibly used as accent walls, should be neutralized.
After you have depersonalized the home and removed non-essential items that could make the rooms or closets look small, you might want to consider another technique referred to as staging. Rearranging furniture so the room shows to its best advantage is simple and doesn't cost a thing. You might decide that a coffee table or statement piece would be nice and your REALTOR® or stager can suggest a place to rent it rather than buying it.
Once the home is depersonalized and staged, you are ready to have a professional photographer take the pictures that visually describe your home to potential buyers long before they ever look at the home physically. These will be used on websites, portal sites, MLS, and social media. Anyone with a point and shoot camera thinks they are a photographer but a pro with the correct wide angle lens, who understands lighting and has an "eye" for what makes a great picture is worth every dime you'll spend.
One more consideration should be to have the home inspected before it goes on the market. It won't replace the buyer's inspections but it will discover any items that need repair and they should be done before the home goes on the market. This will probably save you money because it might cost less to repair them than they'll want in second round of negotiations when their inspector finds it.
Another benefit is that if their inspector identifies a problem area that your inspector did not, you have a basis for legitimate disagreement that could just be personal opinion instead of a "fact."
While the process of depersonalizing should take part before you put the home on the market, you'll want you have the benefit of your real estate agent's experience to help you with the process. At age 18, a person can expect to move nine more times but by age 45, they may only expect to move another 2.7 times. Your REALTOR®'s experience can be valuable not only in saving your time and money but actually, make the difference in a successful sale.
Wednesday, October 7, 2020
Selling or Buying Smart Homes
More and more homeowners are employing smart home technology within their homes. It may start with a video doorbell or lights and progress to other devices. The smart-home device market is rapidly growing and Forbes research expects it to grow from $55 billion in 2016 to $174 billion in 2025.
The popularity of these high-tech features will require a few additional steps to consider when selling a home. The seller should determine which items will and will not stay with the sale of the home and identify them in the listing agreement.
Confusion can arise when a home's marketing mentions its smart-home technology and is unclear if a piece like the hub, which is easily considered personal property but is integral to the working of the system. Some might consider it an accessory and others a component.
A smart home can contain multiple technology devices connected to the Internet that allow them to be controlled or accessed from computers, tablets or most commonly, on mobile apps. Many of the devices can also be accessed through a hub like an Amazon Echo or Google Home.
Thermostats and lights may have been some of the first such devices but the video doorbells added a new level of WOW factor by being able to see and talk to the person at your door and even get a video recording. Porch pirates are now seeing their images on social media caught in the act thanks to these devices.
Homeowners sometimes start with one item like a smart sprinkler system control. When they find out how cool it is and that it actually saves them money not to mention how convenient it is, they starting planning their next smart-home device purchase. Some of these items absolutely are permanent and become real property and others, border between personal and real property.
If the seller is including smart devices with the sale of the home, they should have administrative access and any personal information removed and return the devices to the default settings. The seller should also review the privacy settings and delete the permissions for their personal mobile devices. For the benefit of the buyer, any manuals or warranties should be left for the new owner.
Equally as important, the buyer should verify that the smart devices have been returned to their factory settings and no longer coupled with the seller's mobile devices. The buyers can create their own account to register the devices in their name. Then, as security updates are available, they will be notified. At the same time, the buyer will want to create new access codes and preferences.Wednesday, September 30, 2020
Alternative Investments
In a recent article, The Wall Street Journal reported that investors have rarely been this flush with cash. The economic uncertainty due to the pandemic and the volatility of the stock market has caused assets in money-market funds to increase to approximately $4.6 trillion, the highest level on record according to Refinitv Lipper.
The question becomes should an investor be "out of the market" until things settle down or should they seek to find alternative investments to produce satisfactory results. Even in the middle of this uncertainty, residential rental property has been a stable performer.
Rents are continuing to increase along with values. Investor mortgages are available at 80% loan-to-value at fixed interest rates for 30-year terms. Most other investments must be purchased for cash or at best, are limited to low loan-to-value loans, at floating interest rates for relatively short time frames.
The use of borrowed funds, especially at today's low interest rates, contribute to the rate of return and in some cases, increase it. This characteristic is known as leverage.
Income properties enjoy specific tax advantages like long-term capital gains rates lower than ordinary income rates, standard depreciation, which is a non-cash deduction, as well as expensing many big-ticket items in the year purchased.
Tax deferred exchanges are available for investors wanting to avoid the tax due on sale and defer the profit into the replacement property.
One of the most cited reasons people invest in rental homes is that they feel they are more in control. They understand a rental home because it is the same type of property and requires the same maintenance as the home they live in. They can make the decisions to improve it, repair it, what rent to charge and when to sell it. For most owners, a home represents their largest financial asset. That familiarity becomes a natural bridge to decide to invest in rental property rather than something they are less familiar.
If you'd like to know more about the benefits, download the Rental Income Properties guide and call me at to discuss what kind of opportunities are available.
Wednesday, September 23, 2020
Smart Sprinkler Controller
It seems like most homes have sprinkler systems and if they do, they have some form of controller to automatically turn the water on and off for the time and days you feel necessary. It seems like basic functionality and if it isn't broken, you may not feel the need to replace it.
Today, there are so many smart home devices that are not only convenient, but they'll end up saving you enough money to pay for the upgrade. There are different manufacturers, but you should at least consider the Rachio if for no other reason than the easy installation procedure.
The process is simple. Unplug the old controller and disconnect the wires being sure to label which wires went to which stations. Using the Rachio template, mark three spots on the wall, drill holes in the drywall, insert the anchors into the holes and screw the new controller to the wall.
This model has convenient wire connectors that do not require crimping a wire around a screw. It is quick and easy to put the numbered wires in the corresponding slot. The directions are simple and easy to follow. When complete, connect the power source and plug it into a wall socket.
Now, install the Rachio app to your phone and continue following the instructions to connect the controller to the Wi-Fi. In minutes, you'll be sitting in a lawn chair making adjustments and seeing what it will do.
Some of the features you'll find very convenient are the multiple schedules that can be created and easily switched from one to another. As you set up each zone, you can take a picture of the area and be able to identify with a glance which area you want when individually selecting one.
Another thing you might like is that when you're trying to track down a broken head or just need to adjust it, you can turn on a zone from your phone while looking at the yard. When you identify which head is the culprit, turn the water off from your phone, make the adjustment or repair and turn the water back on to test it without having to go back and forth to wherever your controller is located.
Rachio will even monitor the weather to skip a scheduled cycle in case of rain, high wind or freezing temperatures. You could literally be anywhere in the world where you have an Internet connection and you'll be able to adjust your watering cycle. This device really does save time and money while being fun to operate.
Wednesday, September 16, 2020
How Does It Measure Up?
People are always looking for a "down and dirty" way to determine the value of a home and square footage seems to be one of the most common things used by people whether they are buyers, sellers or real estate agents. While it seems straight forward, there are several variances that can lead to inaccurate determinations.
The market data approach to value uses similar properties in size, location, condition and amenities to compare with the subject to arrive at a price. Differences in any of these things can affect the price per square foot. Appraisers are trained and licensed to make these adjustments but the differences are not necessarily objective and that is where opinions start to influence the value.
Even if a person were to make accurate adjustments, they would be based on the assumption that the square footage of the comparable properties is correct. That leads to the next area of concern: how was the subject property measured.
It is commonly accepted to the measure the outside of the dwelling on detached housing. Is it customary in this area to include porches and patios under roof and if so, do they get full value or only partial value? Is there any value given to the garage since it isn't living area? What about other areas that do not have HVAC coverage?
Some areas don't give consideration to basement square footage at all. Others might give some value if it is finished or has access directly to the outside like a walk-out basement. Similarly, attic space could be finished and under HVAC but if the ceiling height is not standard for the home, it may not receive value.
The problems become exacerbated when different comparables are not treated consistently and yet the common denominator ends up being an average of the square foot price of each. This is calculated by taking the sales price and dividing it by the number of square feet being quoted.
The source of the square footage should be listed to help determine the accuracy. It could be what the builder said it was to the original purchaser. If there is a set a plans available, that might seem credible but it is not uncommon for the builder to make changes while the home is being built which could increase or decrease the square footage.
Another source is the tax assessor. In many cases, they don't actually measure the home but take the word of the builders or appraisers for it. If permits were obtained to add on to the home since it was built, it should be reflected in the square footage. However, sometimes permits are not secured properly.
After reading this, you may think that more doubts have been introduced than solutions and you are correct. It takes diligence on the part of all parties to determine the correct amount. The most highly trained person will be the appraiser and they should be measuring the home in its "as is" condition but understand that even a competent person can inadvertently make a mistake.
Wednesday, September 9, 2020
It's Worth Digging a Little Deeper
There are hundreds of thousands of people who believe, for one reason or another, they cannot afford to buy a home currently. Some people may not for any number of reasons but it would be very surprising to know how many who can buy but have gotten some bad information along the way. It's worth digging a little deeper to find out the facts.
John and Karen have been renting a home for the last five years at $2,000 a month. During that time, the value of the home they were renting went up by $30,000 in value while the unpaid balance decreased by $18, 400. Even though they were fortunate enough the rent remained constant over the five years, they missed out on close to $50,000 of equity that the owner realized instead of them.
Another thing to consider with today's low interest rates, it is quite common for a mortgage payment to be lower than a tenant is paying rent for a similar property. So, in this example, John & Karen paid more to rent than a house payment would have been and missed out on the equity build-up that occurred due to appreciation and amortization.
The simple fact is when tenants like John and Karen pay their rent, the landlord is the beneficiary of the rent received as well as the equity earned. Over time, the rent paid by John and Karen and other tenants will pay for the landlord's rental. It a great concept and a good investment.
True, not everyone can afford a home. A buyer needs money for a down payment and closing costs. They also need to have income and good credit to qualify for the mortgage. Some of these may seem insurmountable but instead of imagining that buying a home is not in the cards at the current time, talking to a real estate professional is a better route to take.
There are lots of low-down payment mortgages available including 100% financing for qualified veterans and USDA eligible buyers. It is sometimes more difficult to find sellers willing to pay all or part of a buyers closing costs when inventory is low, but lenders do allow it. It is a matter of finding the willing seller.
The source of the down payment could be a gift from a family member as long as there is no repayment expected. It's amazing how many parents or grandparents might be willing to help a relative get into a home. Funds for a down payment may be available as loans or withdrawals from qualified retirement programs like IRAs or 401k plans. It's worth investigating based on what retirement programs you have.
Good credit is necessary to qualify for a loan but buyers should not assume that theirs is not adequate. A trusted mortgage professional can assess a situation and may be able to suggest some things that will not only raise the score enough to be approved but possibly, even raise the score enough to qualify for a better interest rate.
There are a lot of misunderstandings about whether a person can or cannot qualify for a home at this time. Instead of relying on second hand information or something that might be floating around on the Internet, spend some time with a real estate professional who can give you the facts, assess your situation and if necessary, point you in the right direction to get help from a trusted mortgage professional. Call to schedule an appointment where we'll help you dig deeper to determine whether you can buy a home now.
Download our Buyers Guide to give you more information.
Friday, September 4, 2020
Wednesday, September 2, 2020
Grilling Safety
More people grill in July, June & August than any other months and correspondingly, there are more injuries, as well as fires, due to grilling accidents in those months. Even though Labor Day is in September, we still need to be aware of safety.
Close to 20,000 patients per year visit the emergency room due to injuries involving grills. Approximately half of the injuries involving grills are thermal burns. If you are around fire, there's a chance of getting burned.
About 2/3 of American households own at least one outdoor barbecue, grill or smoker. Interestingly, gas grills contribute to more fires than charcoal grills. In addition, there are over 10,600 home fires started by grills each year.
While grilling is associated with celebrations, good food, fun and friends, it is important to make sure that accidents don't interrupt your activities.
- Only use BBQ grills outdoors and in ventilated areas
- Place the grill away from home or anything that could be flammable
- Keep grill stable
- Keep fire under control
- Keep children away from grill
- Never leave the grill unattended
- The grill lid should always be open before lighting it.
- Grease should not be allowed to build up in the grill
- Use long-handled utensils
Gas/Propane
- Check the tank hose for leaks before using it for the first time each year by using a light soapy water solution to see if bubbles appear.
- You should not smell gas when the grill is lit. Move away from the grill and call the fire department.
- If the flame goes out, turn off the gas for 15 minutes and open the lid before re-lighting it.
Charcoal
- Never add any starter fluid or other flammable liquid to a fire
- Only use charcoal starter fluid and not gasoline, kerosene or other flammable liquid.
- Keep starter fluid away from heat sources and out of reach of children.
- Electric starters have a coil that ignites the charcoal.
- When finished cooking, close off the grill vents to suffocate the fire and save some of the remaining charcoal.
Practice safe grilling and enjoy any occasion to cook outdoors and share time with your family and friends.
Wednesday, August 26, 2020
Forbearance is Not Forgiveness
Forbearance is a temporary postponement of mortgage payments. The lender can grant this option to a borrower instead of forcing the property into foreclosure. The CARES Act provides protections for homeowners with mortgages that are federally or Government Sponsored Enterprise backed or funded such as FHA, VA, USDA, Fannie Mae and Freddie Mac.
A mortgage holder should contact the lender to explain the temporary difficulty they are having making payments and ask for relief under forbearance or other options. Once the lender grants approval, it is important for the borrower to get the terms of the forbearance agreement in writing to be clear about when the payments will resume and how the missed payments will be recovered.
Generally speaking, homeowners in a forbearance plan will not incur late fees and it should not adversely affect their credit. Unfortunately, borrowers must be vigilant to see that the lender is protecting them from delinquent credit marks according to their agreement.
Forbearance is easy to receive but not so easy to recover from. Free credit reports can be obtained on a weekly basis until April 21, 2021 at www.AnnualCreditReport.com. Reports are available from Experian, Equifax and TransUnion. This will allow borrowers to monitor whether the lender has inadvertently reported items inaccurately.
Prior to the end of the forbearance period, borrowers should contact their loan servicer, the company that accepts their payments. Review the terms of the forbearance plan and expectations for repayment. Verify the unpaid balance and that there are not any payments marked as late or delinquent during the forbearance period.
One more item to discuss with the loan servicer is the payment of the property taxes and insurance. Since multiple mortgage payments may have been missed and most payments include 1/12 of the annual amounts for these items, there may not be enough to pay for them when they become due.
Since it is estimated that there are over four million borrowers in forbearance currently, it may be difficult to talk to the servicer but starting the process early and being persistent will be helpful.
At the end of forbearance, the borrower needs to resume regular payments and establish a plan with the lender to repay the missed payments. The terms are negotiated between the borrower and the lender.
One way is through a loan modification which can restructure the loan. In some cases, it would add the missed payments to the loan balance and recalculate the payments for the remainder of the term.
A borrower could pay the forbearance money in cash but the practicality of that is not realistic. If the person couldn't make the payments during forbearance, they probably don't have the liquidity to pay them afterward. This option is entirely at the buyer's election.
Forbearance is a temporary way to postpone the mortgage payments with the understanding that you will be able to resume repaying the loan. If the circumstances that caused the issue initially become permanent, then, other remedies must be considered. If there is equity in the property, selling the home may be the way to materialize it for the homeowner.
Please contact us at if you need to know what your home is worth and how long it would take to sell it. We're happy to provide this information as a service without obligation so you can be aware of your options.
Wednesday, August 19, 2020
Building a Pool Is Just the Beginning
During the first major stay-at-home event that most of us have experienced in this country, a pool can give you and your family enjoyable recreation without leaving the home. For those without a pool, the NPD group reports that the Covid-19 pandemic has increased pool building by 161% this year.
When your children are small, pools become a magnet for not only your children but their friends as well. It can also be a great place for the summer holidays, Memorial Day, 4th of July and Labor Day. Any day during the summer, especially on the weekends, can be an opportunity to enjoy the pool, cook outside and bask in the sun.
Some of you may have even made the transition from your children enjoying the pool to your grandchildren. Usually, there is an interim where you may have wished that your home didn't have a pool so you would not have the maintenance and required upkeep. Then, the new generation of family starts using it regularly and again, you are glad you have a pool, so you'll see the grandchildren more.
For those people who don't have a pool but are considering one, there are some things that you need to think about.
If you've watched some of the TV shows like Pool Kings, most of those builds look like resorts or water parks and the price tag that comes with them can be staggering. Even a modest gunite, in-ground pool with a limited amount of decking can be as expensive as a luxury car, especially after including the cost of landscaping and pool furniture.
If you finance the pool as a home improvement, the term will probably be between seven to fifteen years. If you refinance your current mortgage and wrap the cost of the pool together, you could get a 30-year term.
Pool cleaning and chemicals depend on the size of the pool but will generally start at about $175 a month through a service. Your utilities will see an increase because you're going to use more electricity and water than you did before you had a pool.
Then, of course, there is food and refreshments to consider for not only your family but your guests. There are also pool toys, floats, sunscreen, towels and other minor things that do add up.
People going through the pros and cons of building a pool usually tell themselves that the house will go up in value. It is true but not nearly as much as the cost of the pool. Long time pool owners will tell you that they have had lots of great memories and it has been a good investment in their family. It just may not be a good financial investment.
Once you've made the decision to build a pool, find a reputable pool builder, ask for references and check them out. Ask friends who have pools, who built them and would they use the company again. Most pool companies hire and coordinate with subcontractors to do the work. It is important to know that the builder will be around if something goes wrong and how they'll solve the issue.
The Better Business Bureau has some suggestions about hiring a pool contractor and they warn about scammers who are eager to take advantage of the increased demand for pools.
Wednesday, August 12, 2020
Three Reasons to Refinance
Three reasons to refinance a home include lowering the cost of housing, shortening the term of the mortgage to pay it off sooner or to using the equity to accomplish another purpose.
Replacing the mortgage at a lower interest rate, which is entirely possible in today's market, would reduce the payment. On the other hand, shortening the term of the mortgage could make the payments increase but would allow the home to be paid for sooner. In either case, the equity would not be reduced unless the refinancing costs were rolled into the new mortgage.
Refinancing the home to take money out would increase the mortgage on the property and lower an owner's equity; careful consideration should be made before doing so.
Mortgage rates are considerably lower than credit card rates and usually lower than short term borrowing like student loans or car loans. For that reason, homeowners will sometimes refinance to payoff higher cost debt.
Some people refinance for more than their current balance to improve their cash position, possibly, to have funds available in case they need it. Other reasons could be to use it for an investment such as rental property or other things. Still others may use it to make capital improvements on their home like remodeling or a pool.
Another legitimate reason to refinance may be to combine a first and second lien on the home that might result in lower payments and a savings in interest.
One more situation that causes a person to refinance a home is to remove a former spouse or co-borrower from the existing mortgage. In the case of a divorce, a couple may no longer be married and one of the former spouses may have no financial interest in the home any longer but because they signed the note originally, they are still liable along with the other spouse. This could be an untenable position.
There can be a lot of reasons that cause a homeowner to refinance the home. The equity is a valuable asset that has powerful borrowing power combined with the good credit and income of the homeowner. A Refinance Analysis can help you to determine the new payments and how long it will recapture the cost of refinancing.
For the recommendation of a trust lender, give me a call at .
Saturday, August 8, 2020
Homebuyer Moving Changes
Will We See a Surge of Homebuyers Moving to the Suburbs?
As remote work continues on for many businesses and Americans weigh the risks of being in densely populated areas, will more people start to move out of bigger cities? Spending extra time at home and dreaming of more indoor and outdoor space is certainly sparking some interest among homebuyers. Early data shows an initial trend in this direction of moving from urban to suburban communities, but the question is: will the trend continue?
According to recent data from Zillow, there is a current surge in urban high-end listings in some larger metro areas. The month-over-month increase in these homes going on the market indicates more urban homeowners may be ready to make a move out of the city, particularly at the upper end of the market (See graph below):
Why are people starting to move out of larger cities?
With the ongoing health crisis, it's no surprise that many people are starting to consider this shift. A July survey from HomeLight notes the top reasons people are actually moving today:
- More interior space
- Desire to own
- Move from city to suburbs
- More outdoor space
More space, proximity to fewer people, and a desire to own at a more affordable price point are highly desirable features in this new era, so the list makes sense.
John Burns Consulting notes:
"The trend is accelerating faster than anyone could have predicted. The need for more space is driving suburban migration."
In addition, Sheryl Palmer, CEO of Taylor Morrison, a home building company, indicates:
"Most recently, we're really seeing a pickup in folks saying they want more rural or suburban locations. Initially, there was a lot of talk about that, but it's really coming through our buyers today."
The National Association of Home Builders (NAHB) also shares:
"New home demand is improving in lower density markets, including small metro areas, rural markets and large metro exurbs, as people seek out larger homes and anticipate more flexibility for telework in the years ahead. Flight to the suburbs is real."
Will the shift pick up speed and continue on?
The question remains, will this interest in suburban and rural living continue? Some, like Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) think the possibility is there, but it is still quite early to tell for sure. Yun notes:
"Homebuyers considering a move to the suburbs is a growing possibility after a decade of urban downtown revival…Greater work-from-home options and flexibility will likely remain beyond the virus and any forthcoming vaccine."
While much of the energy behind this trend has largely been accelerated by the current health crisis, monitoring the momentum over time is critically important. Businesses are discovering new and innovative ways to function in remote environments, so the shift has the potential to stick. Much like the economic recovery, however, the long-term impact may hinge largely on the health situation throughout this country.
Bottom Line
Early data is showing a shift from urban to suburban markets, but keeping an eye on this trend will help us understand how it will ultimately play out. It may just be a temporary swing in a new direction until Americans once again feel a sense of comfort in the cities they've grown to love.
Experts Weigh-In on the Remarkable Strength of the Housing Market
Experts Weigh-In on the Remarkable Strength of the Housing Market
America has faced its share of challenges in 2020. A once-in-a-lifetime pandemic, a financial crisis leaving millions still unemployed, and an upcoming presidential election that may prove to be one of the most contentious in our nation's history all continue to test this country in unimaginable ways. Even with all of that uncertainty, the residential ...
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