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A Day at the Office

Many years ago when my kids were young and in grade school, one of my daughters had a “Take Your Child to Work Day.” The idea was for a parent to take their child to their workplace and show them what we did for a living, and answer any questions they may have.

As a Mortgage Broker, I decided to approach the assignment a little differently, by giving my daughter some “real life” examples. So instead of taking her to a boring office to watch papers being shuffled, I instead put her in my car and drove her around the neighborhood. I pointed out various homes that I had helped people purchase or refinance. I made sure not to point out homes of people she knew or mention any names, just to keep things confidential.

As we drove around and she asked me the types of questions kids ask, it occurred to me that I was getting as much out of this assignment as she was. I felt proud of helping various people in my community purchase a home and realize the American dream, particularly for those who really needed some expertise to make it happen. And I thought of others who were in some financial trouble that I was able to help consolidate their debt, who undoubtedly still lived in those homes because of what I did.

Sometimes when we try to teach our kids a lesson, we learn a little bit about ourselves as well. I guess you can say, it turned out to be a real learning experience for both of us.

Interest Rates Have Gone Up… What Should I Do?

You’ve been looking for a house for the last year or so and haven’t found the perfect one to call home yet. Or maybe you have but the prices are a little rich for you, so you’ve continued your search in the hope that you will find the perfect house at the perfect price. And then the Fed (as in Federal Reserve) throws you a curve.

Yes, interest rates over the last year or so have slowly been creeping up. At first, it was just a little annoyance, after all with rates at around four percent, even if they went up a little, they were still a bargain. Until they reached around five percent, and now they’ve become a concern. Suddenly, your casual search for a home has shifted into overdrive. Who knows where rates are going? You feel like a gambler at the table that maybe stayed too long trying to recoup some early losses.

If you find yourself in that situation, I’d like to offer you a little perspective. Interest rates have been my life for the last 31 years. It’s what I do…it’s who I am.

Back around 1990, I remember refinancing someone’s mortgage DOWN to the unheard of rate of 11.75 percent. Yes, you read that correctly, there’s no need to repeat it. As the decades have passed in my mortgage career, I have seen rates when they were up and rates when they were down. In the well over a thousand loans I have done in all that time, every person finished their loan with an interest rate, one they felt they could live with.

Now let’s face it, rates have been low for a very long time. So low, that if you’re of a certain age you probably don’t remember rates at five percent or above. The new normal has been with us for a long time.

So where does that leave you if you’re shopping for a new home and getting a little nervous that the rug is being pulled out from under you? My answer is simple, it’s time to put things in perspective. Although all of my clients ask about interest rates (and mine are certainly competitive), most of my clients are more interested in someone holding their hand through what can be a complicated process and getting a good deal at the end, both on the house and the mortgage. And that is why most of my clients are referred to me by previous clients or real estate professionals that understand what I bring to the table.

My advice to you if you’re still looking and getting a little antsy is this. Mortgage rates are still a bargain; they were at four percent, they are at five percent and will be at six percent. Stop looking backwards at what could have been. Instead, look forward at the opportunities that will arise as the Amazon type rate shoppers leave the buying market to those who seriously want to buy a home for their family and enjoy it for the next thirty years.

I don’t worry about the rocket type mortgage shoppers who think all there is to financing a home is pressing a button on their cellphone. Those are not my clients.  My advice is to find a good local real estate broker that understands what you are looking for. Spend as much time as possible looking at homes. Don’t be too particular about every nook and cranny about each home, and consult with a good home financing professional about your options, so that when the time comes, you will claim your stake in the American dream.

I wish you good luck!

WHICH DOWN PAYMENT STRATEGY IS RIGHT FOR YOU?

You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a home. The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders.

But there can actually be financial benefits to putting down a small down payment—as low as three percent—rather than parting with so much cash up front, even if you have the money available.

THE DOWNSIDE

The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search.

THE UPSIDE

The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE HAPPY MEDIUM

Of course, your home payment options aren’t binary. Most borrowers can find some common ground between the security of a traditional 20 percent and an investment-focused, small down payment. Give me a call and let’s talk about it.

Does it Make Sense to Refinance?

“Refinancing” is a scary word for many people, but that shouldn’t be the case for you. For many homeowners, refinancing can not only lower your monthly payments and help with your monthly budget, but it can save you thousands of dollars in the long run.

YOU’RE NOT TOO LATE

For years now, we’ve been hearing that interest rates will be on the rise, and although there have been some small increases, you’re still in a great position to drastically lower your interest rate. The general rule is if your mortgage interest rate is more than one percent above the current market rate, you should consider refinancing.

IT’S NOT TOO TIME CONSUMING

Don’t brush off refinancing just because it seems like a long and daunting process; it is not.  An informational call with a lending professional like myself to see how rates compare will only take a few minutes. And besides, isn’t the amount of money you could save worth the time and effort?

REFINANCING IS NOT JUST ABOUT LOWER RATES

If you’re sitting with high credit card balances or other outstanding loans at high rates, a refinance can be the perfect answer for you. A refinance can consolidate all your debt and roll it all in together with your mortgage into one low fixed rate. You can even add extra cash for whatever you need. Unlike consumer debt, your mortgage can be tax deductible (ask your finance professional).

ARMS CAN BE REFINANCED, TOO.

Seeing your Adjustable Rate Mortgage (ARM) increase after the introductory period can be incredibly stressful and place a squeeze on your budget. Many people assume they’re stuck, but ARMs can be refinanced just like fixed-rate mortgages. You can even switch to a shorter term fixed-rate mortgage, such as 15 or 23 years. The longer you’re planning to stay in the home, the more sense it makes to look into refinancing.

CHECK IT OUT

If you think you might be a candidate for a refinance, give me a call. A few minutes on the phone or even a short exchange of emails, will allow me to do a quick analysis to help determine if a refinance is right for you.

SHORT SALE AND FORECLOSURE: HOW ARE THEY DIFFERENT?

As unfortunate as it can be when homeowners fall behind on mortgage payments and must face the possibility of losing their homes, short sales and foreclosures provide them options for moving on financially. The terms are often used interchangeably, but they’re actually quite different, with varying timelines and financial impact on the homeowner. Here’s a brief overview.

A short sale comes into play when a homeowner needs to sell their home but the home is worth less than the remaining balance that they owe. The lender can allow the homeowner to sell the home for less than the amount owed, freeing the homeowner from the financial predicament.

On the buyer side, short sales typically take three to four months to complete and many of the closing and repair costs are shifted from the seller to the lender.

On the other hand, a foreclosure occurs when a homeowner can no longer make payments on their home so the bank begins the process of repossessing it. A foreclosure usually moves much faster than a short sale and is more financially damaging to the homeowner.

After foreclosure the bank can sell the home in a foreclosure auction. For buyers, foreclosures are riskier than short sales, because homes are often bought sight unseen, with no inspection or warranty.

DISPELLING REFINANCING MYTHS

“Refinancing” is a scary word for many people, but that shouldn’t be the case for you. For many homeowners, refinancing can not only lower your monthly payments and help with your monthly budget, but it can save you thousands of dollars in the long run.

YOU’RE NOT TOO LATE

For years now, we’ve been hearing that interest rates will be on the rise, and although there have been some small increases, you’re still in a great position to drastically lower your interest rate.

REFINANCING IS NOT JUST ABOUT LOWER MORTGAGE RATES

If you have consumer debt, such as auto loans, student loans or credit cards that are at high rates, then consolidating your debt into one low rate makes perfect sense. The idea is to wind up with one low monthly payment that is less than all the combined monthly payments you currently have. And you can have all the costs built into the loan so you have no out of pocket expense.

IT’S NOT TOO TIME CONSUMING

Don’t brush off refinancing just because it seems like a long and daunting process. An informational call with someone like myself to do a quick analysis takes just a few minutes. And besides, isn’t the amount of money you could save worth the time and effort?

ARMS CAN BE REFINANCED, TOO

Seeing your Adjustable Rate Mortgage (ARM) increase after the introductory period can be incredibly stressful and place a squeeze on your budget. Many people assume they’re stuck, but ARMs can be refinanced, just like fixed-rate mortgages. You can even switch to a shorter term fixed-rate mortgage, such as 15 or 23 years. The longer you’re planning to stay in the home, the more sense it makes to look into refinancing.

DO THESE THINGS FIRST BEFORE MOVING IN

Moving into a new home is an exciting time, and you’re probably daydreaming about decor and paint schemes and new furniture. But before you get into the fun stuff, there are some basics you should cover first.

Change the locks

Even if you’re promised that new locks have been installed in your home, you can never be too careful. It’s worth the money to have the peace of mind that comes with knowing that no one else has the keys to your home. Changing the locks can be a DIY project, or you can call in a locksmith for a little extra money.

Steam clean the carpets

It’s good to get a fresh start with your floors before you start decorating. The previous owners may have had pets, young children, or just some plain old clumsiness. Take the time to steam clean the carpets so that your floors are free of stains and allergens. It’s pretty easy and affordable to rent a steam cleaner—your local grocery store may have them available.

Call an exterminator

Prior to move-in, you probably haven’t spent enough time in the house to get a view of any pests that may be lurking. Call an exterminator to take care of any mice, insects, and other critters that may be hiding in your home.

Clean out the kitchen

If the previous occupants wanted to skip on some of their cleaning duties when they moved out, the kitchen is where they probably cut corners. Wipe down the inside of cabinets, clean out the refrigerator, clean the oven, and clean in the nooks and crannies underneath the appliances.

Ensuring that these initial tasks are taken care of will give you peace of mind before you move in.

UPSIZING YOUR HOME

Unfortunately, our homes don’t always grow with us. What may have initially worked fine for a single person, a young couple’s starter home, or a family with a newborn can quickly become too small as families expand and multiple generations live under one roof.

Remodeling and adding to your home is one option for creating more space, but it can be costly, and the size of your property may be prohibitive. That’s when moving to a bigger home becomes the best solution.

WHERE DO YOU NEED MORE SPACE?

The first thought when upsizing your home is to simply consider square footage, bedrooms, and bathrooms. But it’s important to take a more critical approach to how your space will actually be used. If you have younger children (or possibly more on the way), then focusing on bedrooms and bathrooms makes sense. But if your children are closer to heading off to college or starting their own families, it may be better to prioritize group spaces like the kitchen, dining room, living room, and outdoor space—it’ll pay off during the holidays or summer vacations, when everyone is coming to visit for big gatherings.

MOVING OUTWARD

If you need more space, but don’t necessarily want a more expensive home, you can probably get a lot more house for your money if you move a little further from a city center. While the walkability and short commutes of a dense neighborhood or condo are hard to leave beyond, your lifestyle—and preferences for hosting Thanksgiving, barbecues, and birthdays—might mean that a spacious home in the suburbs makes the most sense. It’s your best option for upsizing while avoiding a heftier price tag.

FINANCING

Call me about financing your next move or fix up, I’m always here to help!

5 NEGOTIATING TACTICS THAT KILL A SALE

Negotiation is a subtle art in real estate, but skilled negotiators can usually find some common ground that satisfies all parties. On the other hand, using the wrong negotiation tactics can sink a deal pretty quickly. Here are some negotiation tactics buyers (and real estate professionals) should avoid:

  1. Lowball offers: Going far below market value when you make an offer damages your credibility as a buyer and can be insulting to the seller. The seller has a range in mind that they’ll accept, and if you’re not even approaching the low end of that range, they won’t even consider the offer.
  2. Incremental negotiations: Don’t continue to go back to the seller with small increases in your offer ($1,000 or less). The constant back-and-forth can grow tiresome and lead the seller to consider other opportunities.
  3. “Take it or leave it”: Try not to draw a line in the sand with your initial offer. The seller can get defensive and consider other offers if you immediately show that you’re unwilling to budge. Even if it’s true, don’t make a show of it.
  4. Nitpicking after inspection: Obviously if inspection reveals a major issue, it should be factored into the final sale price. But insisting on a lower price for every minor repair can put negotiations in a stalemate.
  5. Asking for more, more, more: Some buyers will request that the sellers throw in add-ons like furniture or appliances that weren’t included in the listing. Try to avoid giving the seller a reason to build up resentment and think that you’re being greedy.

Remember that you are negotiating to achieve a desired result rather than just to “win” the argument. If you keep the big picture in mind, your negotiations will be successful.

5 CRITERIA FOR PRICING A HOME

When you put your home up for sale, one of the best ways to determine the asking price is to look at comparable sales. There’s rarely a perfect apples-to-apples comparison, so a pricing decision often relies on comparisons to several recent sales in the area. Here are five criteria to look for in a sales comparison.

  1. Location: Homes in the same neighborhood typically follow the same market trends. Comparing your home to another in the same neighborhood is a good start, but comparing it to homes on the same street or block is even better.
  2. Date of sale: It varies by location, but housing markets can see a ton of fluctuation in a short time period. It‘s best to use the most recent sales data available.
  3. Home build: Look for homes with similar architectural styles, numbers of bathrooms and bedrooms, square footage, and other basics.
  4. Features and upgrades: Remodeled bathrooms and kitchens can raise a home’s price, and so can less flashy upgrades like a new roof or HVAC system. Be sure to look for similar bells and whistles.
  5. Sale types: Homes that are sold as short sales or foreclosures are often in distress or sold at a lower price than they’d receive from a more typical sale. These homes are not as useful for comparisons.

I strongly recommend using a Realtor to determine the best selling price for your home. The information they have at their fingertips on all of the above criteria as well as their ability to pre-screen a prospective buyer will save you a lot of time and effort.

When you are ready to look into financing, I stand ready to help you with every available program to meet your needs.