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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.

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.

The Best Mortgage Program I have Come Across in 30 Years

I am not one to make bold statements, but I am so excited about what this loan can do to help first time homebuyers, buyers that are moving up, or even real estate investors, I want to shout it from the rooftops. But let me get down from the ledge and explain, so you’ll understand why I am so excited.

Prospective homebuyers always seem to have the same complaint. “Every home I look at needs work.” Realtors are just as frustrated trying to sell those homes, and home sellers are not willing to make those repairs, because their sights are set elsewhere; they just want to get out.

So what does a prospective homebuyer do? Banks don’t typically finance more than the mortgage to purchase the home itself. A home equity line or loan will not net the buyer enough money to make the upgrades, because they are based on the current value of the home, not on what it may be worth after the repairs or expansion. And most if not all of what is referred to as the “loan to value” has been used up by the mortgage itself. So it’s sort of a catch 22. A very frustrating one for the buyer, the realtor and the home seller.

Until now…

Enter, The Fannie Mae HomeStyle Mortgage. THE BEST MORTGAGE PROGRAM I HAVE COME ACROSS IN 30 YEARS! I may have mentioned that earlier.

Here is what is so special about HomeStyle.

The Fannie Mae HomeStyle Mortgage allows a prospective homebuyer to purchase a home and add money to fix up or expand all in one mortgage. And that isn’t even the best part!

The best part is that the amount of money borrowed is not based on what the home is worth today, but instead uses “after improved value.” That means if you’re adding a bedroom, a new kitchen, an extra bathroom or anything else, this loan will base the home’s value on what it will be worth after the home is improved!

Think of what that means. If you’re a first time homebuyer, you can borrow up to 97% for purchase and improvements based on what what the home will be worth after the work is done. This also means instant added equity to the home itself, because a home with five bedrooms is worth considerably more than a home with three, and we all know what a new kitchen can do to the value of a home.

Everyone is happy! If you’re a homebuyer, you can now pay for the improvements to a so so home on a great block or school district and turn it into the home of your dreams. If you’re a Realtor, think of all those homes no one wants to touch because it costs too much to fix. If you’re a seller, your listing just got so much more attractive. This loan is also available to investors, and can also be done as a refinance. It is also good for second homes as well.

So now you know what I’m so excited about. If you’re in the market for a new home, check out what all the excitement is about. Many lenders don’t carry this loan, but we do. And I’ll be happy to explain all the details to you.

Together, let’s try and make your dreams come true!

Mortgage Rates are Rising, What to Do?

If you’ve been following the stock market or just watching the news lately, you are probably aware that the market has been on a roller coaster lately, and certainly not for the faint of heart. Most analysts agree that this has been caused by the very volatile bond market, which controls mortgage interest rates. For the first time in years, there has been significant movement due to the threat of inflation in a strong economy. This has sent mortgage rates to their highest levels in four years.

A little perspective…

There are different ways to look at what’s been happening depending on what your needs are. One thing to keep in mind is that there is no reason to climb out on a ledge; things aren’t nearly as bad as you might think. Although rates have moved up from their historic lows, they are still very low. In general, fixed rates that were in the high threes, currently reside in the mid fours. To put things in perspective, I remember refinancing clients down to the incredibly low fixed rate of 11.75% for a 30 year fixed rate back around 1980, and they were very happy to get such low rates! Don’t live and die with every eighth of a point. A half percent rise on a 30 year fixed will cost you about $30 a month for a hundred thousand dollar loan.

Some ideas to think about…

If you are looking to purchase, keep your monthly payment down by putting down a little more upfront cash. A lower loan to value will give you a lower interest rate. If you can come up with the cash, this is a great option.

Pay a discount point or two at closing to bring down your rate. A point is one percent of your loan amount or $1000 on a $100,000 loan. Points can be included in the mortgage on a refinance. If you hold the mortgage over a significant point in time, you will “pay yourself back” that investment in the initial few years of the loan, but will continue to enjoy the lower rate for the full term of the loan.

Think about an ARM. 5/1 adjustable rate mortgages are about a half percent lower than fixed rate mortgages. After the initial five year term there is the risk of the rate going up based on market conditions, so you’ll have to keep your eye on fixed rates to see if it makes sense to refinance at some point. There are also 3/1, 7/1 and 10/1 programs. The longer the initial fixed period the higher the initial rate. If you don’t plan on holding the property for much longer than the initial period, this may be the perfect solution for you. Keep in mind that you will have to pay closing costs again if you refinance, but they can be included in your loan.

Finally, if you are worried about rates going up and are looking to purchase, you probably want to accelerate your shopping so that you can apply for a mortgage as soon as possible and lock in a good rate. If you are looking to refinance from either a higher fixed rate or from an ARM, the same rule applies. If you are moving from a higher fixed rate, at some point a refinance will no longer make sense, so don’t over shop to get the world’s lowest rate; it might be time to pull the trigger. If you are trying to go from an adjustable to a fixed rate, keep in mind that in a higher rate environment all rates will go up, so the same rule applies.

The bottom line…

Don’t panic! Rates don’t generally move that quickly; there will be ups and downs. However, the reality is that after a decade or more of historically low rates, in a healthy economy, rates will probably find a comfortable place given inflation and other economic factors. Better to be prepared and ahead of the curve so that you can make your decisions wisely. I’m here to help if you need me!

A Great Financial Technique to Get Your Home Sold Faster

For most people, the prospect of selling their home can be positively daunting. First of all, there are usually plenty of things to do just to get it ready for the market. Besides the traditional clean-up, painting and fix-up chores that invariably wind up costing more than you planned, there are always the overriding concerns about how much the market will bear and how much you will eventually wind up selling it for.

Will you get your asking price, or will you have to drop your price to make the deal? After all, your home is a major investment, no doubt a rather large one, so when it comes to selling it you want to get your highest possible return.

Yet in spite of everyone’s desire to get the top dollar for their property, most people are extremely unsure as to how to go about getting it. However, some savvy sellers have long known a little financial technique that has helped them to get top dollar for their property. In fact, on some rare occasions, they have even sold their properties for more than they were worth using this powerful financing tool. Although that might be the exception rather than the rule, you can certainly use this technique to get the most money possible when selling your property.

Seller carry-back, or take-back financing, has proven to be a surefire technique for closing deals. Even though most people do not think about when it comes to selling a property, they really should consider using it. According to the Federal Reserve, there are currently over 100 Billion dollars of seller carry-back (seller take-back) loans in existence. By any standard, that is a lot of money. But most importantly, it is also a very clear indication that more people are starting to use seller take-back financing techniques because it offers many financial benefits to both sellers and buyers.

Basically, seller take-back financing is a relatively simple concept. A seller-take back loan is created when a property is sold and the seller performs like a lender by assisting in financing all or part of the total transaction. In effect, the seller is actually lending the buyer a certain amount of money toward the purchase price, while a traditional mortgage company usually funds the balance of the purchase price.

A seller take-back loan is secured with the property. The loan then becomes the secondary mortgage and is fully secured by the property. In most seller take-back financing transactions, the buyer repays the seller with interest in accordance to mutually agreed terms over a period of time.

Usually, the terms call for the buyer to send the payments, consisting of principal and interest, on a monthly basis. This is advantageous because it creates a steady monthly cash flow for the note holder. And if the note holder decides to cash out, he or she can always sell the note for a lump sum cash payment.

Regardless of market conditions, seller take-back financing makes sound financial sense; it provides both buyer and seller with flexible financing options, makes the property easier to sell at higher price and shortens the sales cycle. It also has the added advantage of being an excellent investment that generates a steady cash flow and high return. If you ever need immediate cash, you can always sell the note. The first mortgage holder must be made aware of this second lien on the property in case there are any restrictions. Also, make sure to use an attorney to draw up the paperwork and have the mortgage properly recorded.

If you are planning to sell a property, then consider the many benefits of seller take-back financing.

New Conforming Mortgage Loan Increases for 2018

According to Fannie Mae and Freddie Mac, the two government sponsored corporations that buy home loans from lenders, the new one family mortgage limit for conventional conforming loans starting January 2018 will go from $424,100 to $453,100. As a point of reference, the loan limits held steady for about a decade at $417,000 until the beginning of last year. It is an indication of the increased value of today’s real estate market.

What this means for you:

If you are looking to purchase a home, that is the maximum amount you can borrow before the mortgage is considered a High Balance or Jumbo mortgage and higher rates kick in. This gives you an extra $29,000 to borrow. For some, it will give them extra buying power and a lower monthly payment for the extra amount of money.

FHA has increased their maximum mortgage in New York from $636,150 to $679,650 for government insured mortgages. Depending on your credit score, you can put as little as 3 percent down to purchase a home using one of these programs.

Lenders have generally relaxed their credit score and debt to income requirements from a few years ago. With rates expected to increase in 2018, if you are thinking of purchasing or refinancing to a lower rate or to consolidate your debt, now is the perfect time to do so.

Give me a call to discuss your personal situation.

“What’s Your Mortgage Rate?”

Here is the one question I get more than any other by typical home buyers shopping for a mortgage:

What’s your mortgage rate?

I get that a lot from mortgage shoppers that are not familiar with the mortgage process. It’s sort of like walking into a shoe store and asking “how much for a pair of shoes?” For the shoe salesman, the answer would depend on factors like, style, size, material etc.

It works the same with mortgages. Rates depend on factors such as loan size, the loan to value (how much you are borrowing in relation to the selling price or home value), and of course your credit score.

If you see an ad with a low mortgage rate in nice large font, ask yourself this question. How do they know anything about the home I’m buying, the mortgage I’m looking for, or what my credit profile looks like? There is no “one size fits all” when it comes to mortgage rates (or shoes).

If you see a mortgage rate advertised on the internet that seems too good to be true, trust your instincts, steer clear and have a conversation with a reputable mortgage professional. That’s the one way to determine the only rate that you should really be interested in, and that’s the rate that you’ll be paying.

Reflections on 30 Years in the Mortgage Industry

The year was 1987, and when I started my mortgage gig, mortgage brokers were a new phenomenon in the industry. Back then, people were used to going to their local bank for a mortgage. There were not many flavors to choose from; whatever your bank had to offer dictated your choice, and if you didn’t qualify under your bank’s standards, you didn’t get a loan; plain and simple.

When I started out, rates were well into the double digits. So the industry created the adjustable rate mortgage. Until 2008 when everything changed, there was every type of mortgage available to the consumer. No Income Verification, Hybrid Mortgages, Piggyback Loans; you name it we had it. Then along came home equity loans, which made for even more choices to the consumer.

Mortgage Brokers were doing three quarters of all new mortgages at one point, and people had long stopped asking what we did. As rates continued to fall, people refinanced and refinanced again. They took money out of their homes for vacations, new cars and just to pay off higher priced loans.

Then came 2008, and it all came crashing down. Banks failed, markets crashed, and the industry would never be the same. Banks were running scared, and suddenly nobody was getting a loan unless they could prove every nickel they made. It took a few years until things started getting better. With new regulation and continuous education standards, many of the shysters and car dealers were forced out of the industry.

Those of us that actually knew what we were doing and were never out for a quick buck survived. Housing prices came back, rates stayed low and a happy medium was reached between the borrower and lender. No Income Verification Loans no longer exist, but lenders are back to lending again. If you qualify, you will get a loan, but now there are tiers when it comes to rates. The better your credit score, the lower your loan to value the better your rate will be.

As I hit the 30 year mark this month, I am proud to have originated well over a thousand loans, with integrity and honesty. I have held hands with my clients from beginning to end, and I am proud to say that most of my loans have come from satisfied clients recommending me; the sincerest form of flattery.

I don’t expect to do this for another 30 years, but it has been an honor and a pleasure to have helped so many purchase their first and second homes and refinanced so many out of their debt.

So on this, my 30th anniversary in the mortgage industry, I thank all those that I have had the opportunity to help, and look forward to helping all those that need my help in the future.