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CategoriesSelling Real EstateBuying Real Estate Market and Trends Homeownership Home Finance Acts of Agents RE Manners Staging The Examined LIfe Credit Ready Favorite LinksIncredible Agents.comArchivesFebruary 2007Benefits of Home OwnershipPosted at 3:18 AM, Feb. 28, 2007Tax Advantage:
Depending on what your tax bracket is, you could save between $2,000-$3,000 dollars per year.
Example: Mortgage interest deduction: $120,000 loan @ 6.75%= $8,100 write off
If you fall into the 28% tax bracket, you would receive $2288 (28% of
$8100 back on your returns.
Build Equity:
As you make your monthly mortgage payment, a portion of each payment goes towards paying down the principal.
TIP: If you pay above the amount owed, an extra $50 per payment (and be sure to have it designated towards principal and not interest), you can shave years off your loan. Another option is to do bi-weekly payments. You end up making 13 payments per year instead of twelve, thus, taking off approximately 8 years off your loan and save yourself thousands of dollars in interest.
Appreciation:
Over time your property will appreciate in value. Assuming a modest 4% annual appreciation rate, your $150,000 property will be worth $182,000 in 5 years.
TIP: Worried about saving money for junior’s college education? You could purchase a multi unit property, rent and maintain it, and in about the time college applications are due, you have enough appreciation in this property to sell and pay for college.
Own vs. Rent:
With a mortgage payment of $800/month, your scenario would look like this (assuming 6.75% 30 year fixed rate, $120,000 loan, and annual appreciation of 4%)
After 3 years After 5 years After 10 years
Mortgage Balance $116,000 $112,000 $102,000
Est. Property
Value $168,000 $182,000 $222,000
Return on
Initial Investment $22,000 $39,000 $90,000
With a rental payment of $800/month, you will have paid the following:
(Assuming your management company never raises your rent)
$28,800 over 3 years
$48,000 over 5 years
$96,000 over 10 years
Buy Now vs. Later:
Waiting to “save” more for a down payment.
Unless you are expecting a huge raise, winning the lottery, or a grand inheritance; the rate of savings will never pace with home appreciation rates. Don’t believe me check your local bank! Plus, there are dozens of options that may just suite your needs both short term and long. Getting in the door of homeownership is what opens up the options for future dream homes.
Waiting for the “right” time.
No time like the present. If you ask any Real Estate Professional, when is the best time to buy? They will most likely answer “a year ago”. Coulda, woulda, shoulda plagues everyone when it comes to real estate investing.
Waiting for “life” to happen.
If you are one of those individuals who is waiting due to fear of making the commitment, or buying on your own is giving up the dream of finding the perfect spouse, you are ridding the excuse train. Life is what happens when you make other plans, and opportunity comes to those who are prepared. Instead of thinking your life will become more complicated, or that you are giving up on a fairy tale future, think of it as taking care of your financial future, nothing could be more liberating and appealing!
10 Questions to Ask A Condo Board Before You BuyPosted at 4:13 PM, Feb. 27, 2007
10 Key Factors About Condos
1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.
2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. Have an attorney review property docs, including the master deed, for you. We will also ask for the minutes from the meetings of the last 6 months if possible. You will have an idea of purposed changes that have not yet been recorded. You will need a copy of the common insurance policy for your insurance carrier, this can usually be found in the condo docs. In addition, some associations require 30 days for board approval where they run credit and background checks on potential owners before a paid assessment letter will be released for closing.
3. How much does the association keep in reserve? How is that money being invested? This is especially important for New Construction buyers. It is typical for new developments to estimate monthly assessments at a lower fee, which can be enticing for home shoppers. However, this can lead to an increase in dues after the association has been turned over from the developer and the true operational costs are examined. Most developer’s purchasing agreements require additional deposits of monthly assessments to help build a reserve. Note, this is not a credit to the buyer as months paid.
4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.
5. What does and doesn’t the assessment cover—common area maintenance, recreational facilities, trash collection, snow removal? You will also want to inquire into move in charges, credit check fees, and deposits necessary before moving in. Each association is different and therefore, charge their own fees.
6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.
7. How much turnover occurs in the building? What are the restrictions for move in arrangements?
8. Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.
9. Is the developer reputable? This is where you will need to do some homework. Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. We can request an engineer’s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren’t in good repair, they become your problem once you buy.
10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you’re buying, may require separate assessments. Also, inquire as to who manages the building if separate from the association. Professionally managed buildings may make better living conditions.
Understanding Assessments
All associations are made up of a President, Vice-President, and Treasurer. The association is responsible for creating the condo/townhome declarations for which all owners adopt.
Examples include but not limited to, pets, moving days/times/fees, security, garbage, insurance, water, cable hook up, storage, common areas, parking, landscaping, repairs, improvements, and snow removal.
There are costs associated with all services and benefits. These costs are split between each unit and unit owner. How much you pay is determined by the actual percentage of ownership in the community you own.
Special assessments by definition is a levy or tax customarily imposed against only those specific parcels of real estate that will benefit from the proposed public improvement like a street or sewer.
In its use with condo ownership, it is referring to an extra one time or monthly charge to each owner for a specific repair/project for a designated length of time. It is due to inadequate reserves, which would be depleted or greatly hindered with the expense. This is generally voted on before being levied, however, some by-laws permit the board to act without expressed majority.
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View more entries tagged with: Condo Boards, What To Ask A Condo Association, Condo Association, Condos 5 Things to Avoid When Purchasing A HomePosted at 4:05 AM, Feb. 26, 2007
Changing your job before or during the loan process can create a real problem in qualifying you for a loan, particularly if that job is in a different line of work or at a lower rate of pay than your current job. Many loan programs require borrowers to have a two-year work history. During the loan process, it can create time delays as the new job will need to be verified and you will need to provide a copy of your first pay stub prior to closing.
It is best to leave your money where it is until your loan has closed. Moving your money to a new bank or even into a new account can wreak havoc with the verification process. Most new accounts opened or large deposits made in the last six months will have to be explained as to the source of funds. If you are transferring money from an investment or retirement accounts, make sure you keep the withdrawal/deposit receipts and make sure you clearly show where you deposited the money.
Your loan officer will advise you if it is necessary to pay off bills to help you qualify for a loan. They will also show you the best way to pay off bills to make sure you have evidence needed to verify the bill has been paid in full.
As tempting as it may be, do not start shopping for furniture. Buying big-ticket items, like TVs, cars, furniture, etc., changes your debit ratios, which may alter the amount of a home loan you can qualify for, or make it difficult to get it approved.
You may have heard this a thousand times, but what you may overlook is the little things. Like for example, the 10% off your purchase if you sign up for “store” credit card. Any time you hand over your social security number, its best to assume they will be running a credit check on you. This can affect your FICO score, thus decreasing your chances of qualifying for the best loans and rates. Refrain from giving out your social security number (this would apply to even certain contests) and applying for any type of credit. { 0 comments } { add comment } { Permanent Link }
View more entries tagged with: Purchasing A Home, Buying Real Estate, Changing Jobs, Credit Protection, What To Avoid In Real Estate Energy AuditsPosted at 1:58 PM, Feb. 23, 2007
The claim is that an energy audit by professionals can use special equipment to determine if there are any “leaks” in your home. Plus, unlike a consumer who would restrict conservation and weatherizing to caulking and installing a programmable thermostat (all by the way, very good things to do), we are more often lead to believe by our actions we have done all that we can do. Whereas a professional audit would gauge the air-tightness of the entire house, including the insulation of the attic and walls. The results are not only to tell you where you are leaking your energy, but specific actions to correct and prevent. The catch, it is estimated a professional audit can run between $350 and $500. Is it money well worth investing with the possibility of savings over the long haul? To find a full listing of independent energy raters, visit www.KeepingUWarm.com { 0 comments } { add comment } { Permanent Link }
View more entries tagged with: Energy Savings, Energy Audits, Peoples Gas, Weatherizing, Energy Conservation, Energy Bills, Gas Bills, Natural Gas How Good Are Zillow's Prices?Posted at 12:52 PM, Feb. 15, 2007This is a featured article on the Wall Street Journal that finally rings some sense to a long debate about on-line home estimates and the craze surrounding these sites. Click on the link to read the full article http://www.realestatejournal.com
When I first heard about Zillow.com it was from a friend looking for direction with what to do with his house. He purchased within a year, recently married, and with great sadness, was diagnosed with a rare and deadly disease. So naturally he entertained selling his home and started his search online. Since I was unfamiliar at the time of this site, I decided to investigate on my own.
What I found was enough to not only stun me, but enrage me as well. For my research, I chose to use my own home. My neighborhood is a small, long-standing one snuggled in the boundaries of a more notorious community. Naturally, I figured my home would probably be under-estimated in value. What most consumers fail to note, is these types of sites cannot differentiate between communities, neighborhoods, school boundaries, etc. with the accuracy necessary for proper valuation.
After entering my address, I noticed the first fatal error. The system was using our beloved city’s public record sites. Now, us professionals in the industry will clearly testify that you do NOT rely on the accuracy of these records. Just as an example, there is a woman in my neighborhood where her property is listed in the tax records under her deceased father’s name, her deceased mother’s name, her name, and her and her husband’s name. So, without cross checking for error, you would have conflicting information as to who the current owner is.
In addition, records from our large metropolis unfortunately, does not work in real time. A property could have been re-assessed, sold and sold again before the system ever catches up. Why then is that important? My home and many like it, where listed in the public records as 1 bedroom, 1 bath homes. Now, bear in mind, my home isn’t new. The homes in my area date back more than 70 years, and none of them by original construction were 1 bedroom.
Needless to say, after I stopped laughing I plunged further into my personal home evaluation to a shocking discovery that Zillow.com estimated my home at over $600K. Currently 3 bedroom homes in my specific neighborhood have an average market value of $360K. We have on an average year, sufficient number of homes for sale and sold for comparison.
Now addressing the homeowner’s ability to customize the information such as recent repairs, etc. to generate a clear estimate according to these sites. This is yet another fatal error. Can I get a “realty check” amen from the real estate industry when I say that homeowners rarely have grounded opinions as to not only what improvements are worth, but also how they relate in determining resale value?
Arguable you say? Ok, then lets look at how one specific job; repair/improvement in your home can yield several different cost values. I recently inquired about tuck pointing an area on my home, all of the estimates came from a legitimate referral service (Angie’s List) and ranged from $500 to $3500, for the same job. I had the exact same experience when I dormered my upstairs attic space. I had quotes from $28K to $98K, with very similar details of work to be done. Now of course logic tells you that depends on what they are doing, what materials, labor etc. But do we, as average consumers know how to break down the charges and weigh out the pros and cons of each one?
Well what if some of these values are coming from homeowners who are adjusting for work THEY themselves had done? I don’t know about you, but the home depot slob job for a bathroom upgrade doesn’t weight necessarily the same in value as one that was done by professional hands. Or even on the reverse end where someone over pays for an upgrade/repair/improvement and thinks they should not only recoup that, but tack on profit as well.
Despite the sound reasoning of professionals, which consumers believe we are all about getting the listing therefore cannot be trusted; the confessions of these site representatives that even state that these sites should NOT be bankable information; the public is still obsessed with having that control. News tip, getting the information is only a fraction of the responsibility. What and how you use it, determines the ultimate success or failure with selling/buying a home.
I do believe that consumers have a right to understand what’s going on around them. Your home is perhaps the largest investment you own. I am not advocating as a real estate professional that we should keep information like this under lock and key. What I do hope, is that the public will have that light bulb moment that what we do as a profession, is much more detailed and carries a great deal of responsibility then we are given credit for. You cannot be a monkey and do our job well! Having the information is not what empowers you, knowing how to use it, does.
In closing, use these sites for basic information (preferably not a means to spy on your neighbor or boss as statistics seem to indicate) regarding your investment. But when it comes to making a serious change, i.e. refinancing, home improvements, investing by equity, and buying/or selling a home, do the smart thing and consult a professional. After all, its what we do.
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View more entries tagged with: Zillowcom, Zillow, Pricing, Internet Research, Comparative Market Analysis 15 Things You Probably Never Knew or Thought AboutPosted at 4:55 AM, Feb. 14, 2007In recognition of Valentine's Day, as we celebrate love, pine love, and perhaps even grieve love, remember this:
1. At least 5 people in this world love you so much they would die for you.
2. At least 15 people in this world love you in some way.
3. The only reason anyone would ever hate you is because they want to be just like you.
4. A smile from you can bring happiness to anyone, even if they don't like you.
5. Every night, SOMEONE thinks about you before they go to sleep.
6. You mean the world to someone.
7. If not for you, someone may not be living.
8. You are special and unique.
9. Someone that you don't even know exists loves you.
10. When you make the biggest mistake ever, something good comes from it.
11. When you think the world has turned its back on you, take a look: you most likely turned your back on the world.
12. When you think you have no chance of getting what you want, you probably won't get it, but if you believe in yourself, probably, sooner or later, you will get it.
13. Always remember the compliments you received. Forget about the rude remarks.
14. Always tell someone how you feel about them; you will feel much better when they know.
15. If you have a great friend, take the time to let them know that they are great.
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View more entries tagged with: People, Love, Thoughts, Family, Friends February is Free Credit Report MonthPosted at 4:45 PM, Feb. 13, 2007As a reminder, February in Illinois is the start of a new calendar year for your free annual credit report. Under the Fair and Accurate Credit Transactions Act of 2003, you are entitled to a copy of your credit report from all three credit bureaus. Do note, however, that your FICO score will not be included, but may be purchased at an additional charge. Also as fair warning, this is the not the easiest task to do, but worth it.
To request your free copy, go to: www.freecreditreport.com, or www.annualcreditreport.com
Or you can buy your reports with your FICO scores at www.myfico.com for around $45. This option is worth it if you haven't seen yours in the past 12 months or so.
I strongly recommend checking your credit report regularly in order to identify false or incorrect information AND to be aware of any un-lawful activity. Believe it or not, about 25% of credit reports out there have serious enough errors on them to have caused employers not to hire applicants according to a Consumers Report article in 2005. Not knowing what's on your report can cause you more harm then you realize.
If you are not new to your credit report, I suggest using the free reports as a means to monitor your credit. Order one now and in four months, order a copy from another creditor, and again in another four months, order a copy from the last creditor. Its a free way to assure there is no monkey business going on with your credit. I even recommend signing up for the email alerts provided by TransUnion that will notify you of any noticeable changes or inquiries to your credit.
Managing your credit is more important now than ever. Jobs, car and mortgage rates, even what insurance companies decide to charge you can be affected by what your credit score is. Not to mention the growing crimes of identity theft. By being proactive, you reduce the chances of misuse and potentially save yourself thousands of dollars.
Julie Woodward-Trenker, ABR, ASP, RFS
e-PRO Certified Real Estate Sales Consultant
Coldwell Banker Residential Brokerage
Serving the Chicagoland Area
Direct: 773-469-2037
Direct fax: 773-622-8859
e-fax: 17737265461
eMail: julie@jwtrenker.com
www.REwithJulie.com
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View more entries tagged with: Credit Report, Free Credit Report, Fico, Credit Scores, Bad Credit, Good Credit, Credit Repair New Tax Deduction for Mortgage InsurancePosted at 9:14 AM, Feb. 2, 2007This is a really good article that relates back to an earlier entry I made regarding changes in Private Mortgage Insurance. PMI can and probably will, at least in the next year, benefit homeowners versus doing a piggy back loan. Click on the link to learn more: New Tax Deduction for Mortgage Insurance
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View more entries tagged with: Private Mortgage Insurance, Tax Deductions, Irs, Filing Taxes |
There are 5 major things to avoid before and during the loan process..jpg)
A recent insert with my awaited Peoples Gas bill suggested a way to help with putting a cap on the ever-increasing energy prices.
View more entries tagged with: Benfits Of Homeownership, Buying A Home, Buyers, When To Buy, Rent Vs Buy