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What Home Buyers Need to Know When Mortgage Rates Rise – Even Just a Fraction

October 25, 2018

 

By now, we’ve all grown accustomed to the screaming, panic-inducing headlines: “Mortgage Rates Are on the Rise!” But what does this actually mean to home buyers? With mortgage interest rates notching up just small fractions of a point, is it really as big a deal as experts are making it out to be?Well, yes. And they’re about to go up again.

As it turns out, those teeny, tiny increases can cost home buyers hundreds of dollars a year, and thousands of dollars over the life of their loans. And they’re likely to keep rising as the Federal Reserve continues increasing its key interest rate. (Mortgage rates are different, but often follow the same trajectory as the federal ones.) The latest Fed hike is expected this month, with more on the horizon.

“When you’re talking about a 30-year mortgage, a small increase in mortgage rates adds up to a lot of money,” says Senior Economist Joseph Kirchner of realtor.com®. “If you’ve got a house in mind and you’re ready to pull the trigger, don’t dillydally. Interest rates will definitely go up … so you’re going to be paying more money for the same house.”

And they’re not just a buyer’s dilemma. Rising mortgage rates limit just how much buyers spend on homes—and therefore serve as a bit of a check on just how high sellers can price their abodes. It can prevent some folks from becoming buyers, meaning there are less offers to go around.

How much can higher rates add to a mortgage bill?

So what does this all mean? Well, current mortgage rates are 4.65% on 30-year, fixed-rate loans. If they increase by just one full percentage point, it costs typical home buyers an additional $147 a month—or almost $53,000—over a 30-year period. (This assumes that a home is about $300,000 with a 20% down payment.)

Even much smaller increases really add up. If mortgage rates tick up by just 0.05%, it can cost typical buyers $2,600 or more over the life of their 30-year loans.

Rates are expected to rise to between 5.5% and 6% over the next two years if the economy keeps humming along, according to Len Kiefer, deputy chief economist at Freddie Mac.

Those escalations can make it harder for buyers to qualify for loans on the abodes of their dreams, forcing some to purchase smaller residences, fixer-uppers, or properties in less desirable or farther-out neighborhoods as a result. Some may even be priced out of the market altogether.

But don’t panic just yet.

It’s important to realize that rates are still low. Yes, they’re more than 0.8% higher than they were a year ago, according to Freddie Mac data. But they’re nowhere near the peak of 18.63%, in October 1981. So, you know, breathe.

“We’ve experienced low rates for a very long time,” says Kiefer. He pointed out the last time that rates rose above 5% was way back in 2011. “[So] the increases that we’ve seen are likely to stick.”

Mortgage broker Chris Brown has seen fewer buyers seeking loans over the past few months as a result of the increases.

“Buyers are starting to come to the realization that real estate prices have moved up significantly over the last six or seven years and, combined with higher rates, the homes they were once targeting are no longer in their price range,” says Brown of CB Investments in Huntington Beach, CA. “It has forced them to either settle for a lesser home than they expected or temporarily put off the home search. [And] a lot more buyers are opting for the latter.”

What should buyers do to get the lowest-cost mortgages?

Hope is not lost for those striving to protect their pocketbooks from rising rates. Consumers should start by looking for the cheapest loans with the lowest mortgage rates.

“Shopping for a mortgage is like shopping for anything else,” says Eric Tyson, co-author of “Mortgages for Dummies.” Some lenders offer specials to lure in customers while others have consistently lower prices. “You can certainly check with the bigger banks and credit unions in your area, or online.”

They may also want to consider getting a rate lock with their mortgage providers. This means that they’re guaranteed a certain rate once they turn in their offer. So if rates go up, buyers don’t have to worry about it. The downside, however, is that not all rate locks are free. And if rates fall, buyers can’t take advantage of them.

Should buyers consider adjustable-rate mortgages?

Another option is an adjustable-rate mortgage, known as an ARM. This loan typically starts with a lower interest rate that then goes up after a set period of time. The proliferation of ARMs was partly responsible for the housing crash about a decade ago as rates—and therefore monthly payments—suddenly ballooned and homeowners couldn’t afford the new, higher bills.

But newer regulations have since been put in place to make them safer for consumers. In addition, most of these loans come with a cap that limits just how high interest rates can go.

Miami-based mortgage loan originator Sylvia M. Gutiérrez has been advising her clients to consider ARMs, which typically fix interest rates for three-, five-, seven-, or 10-year periods.

“The lower initial rate allows you to qualify with a lower mortgage payment,” says Gutiérrez, also the author of “Mortgage Matters: Demystifying the Loan Approval Maze.” “[And] today’s ARMs are much stabler than pre-recession ARMs.”

But folks need to pay close attention to when those rates are likely to adjust and just how high they could possibly go before signing on the dotted line. And they shouldn’t bank on being able to refinance at a lower interest rate down the line, because rates are just going to keep going up, says realtor.com’s Kirchner.  – ClientDirect

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

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What You Should Really Know About Browsing for Homes Online

October 18, 2018

Oh, let’s just admit it, shall we? Browsing for homes online is a window shopper’s Shangri-La. The elegantly decorated rooms, the sculpted gardens, the colorful front doors that just pop with those “come hither” hues.Browser beware, though: Those listings may be seductive, but they might not be giving you the complete picture.

That perfect split-level ranch? Might be too close to a loud, traffic-choked street. That handsome colonial with the light-filled photos? Might be hiding some super icky plumbing problems. That attractively priced condo? Miiiight not actually be for sale. Imagine your despair when, after driving across town to see your dream home, you realize it was sold.

So let’s practice some self-care, shall we, and set our expectations appropriately.

  • Step one, fill out our home-buyer’s worksheet. The worksheet helps you understand what you’re looking for.
  • Step two, with that worksheet and knowledge in hand, start browsing for homes. As you do, keep in mind exactly what that tool can, and can’t, do. Here’s how.

You Keep Current. Your Property Site Should, tooFirst things first: You wouldn’t read last month’s Vanity Fair for the latest cafe society gossip, right? So you shouldn’t browse property sites that show old listings.

Get the latest listings from realtor.com®, which pulls its information every 15 minutes from the Mulitple Listing Service (MLS), regional databases where real estate agents post listings for sale. That means that realtor.com®’s listings are more accurate than some others, like Zillow and Trulia, which may update less often. You wouldn’t want to get your heart a flutter for a house that’s already off the market.

BTW, there are other property listing sites as well, including Redfin, which is a brokerage and therefore also relies on relationships with brokers and MLSs for listings.

The Best Properties Aren’t Always the Best Looking

A picture, they say, is worth a thousand words. But what they don’t say is a picture can also hide a thousand cracked floorboards, busted boilers, and leaky pipes. So while it’s natural to focus on photos while browsing, make sure to also consider the property description and other key features.

Each realtor.com® listing, for example, has a “property details” section that may specify important information such as the year the home was built, price per square foot, and how many days the property has been on the market.

Ultimately though, ask your real estate agent to help you interpret what you find. The best agents have hyper-local knowledge of the market and may even know details and histories of some properties. If a listing seems too good to be true, your agent will likely know why.

Treat Your Agent Like Your Bestie

At the end of the day, property sites are like CliffsNotes for a neighborhood: They show you active listings, sold properties, home prices, and sales histories. All that data will give you a working knowledge, but it won’t be exhaustive.

To assess all of this information — and gather facts about any home you’re eyeing, like how far the local elementary school is from the house or where the closest Soul Cycle is — talk to your real estate agent. An agent who can paint a picture of the neighborhood is an asset.

An agent who can go beyond that and deliver the dish on specific properties is a true friend indeed, more likely to guide you away from homes with hidden problems, and more likely to save you the time of visiting a random listing (when you could otherwise be in the park playing with your canine bestie).

Want to go deeper? Consider these sites and sources:

  • School ratings: Data from GreatSchools.org and the National Center for Education Statistics, and the school district’s website
  • Crime rates and statistics: CrimeReports.com, NeighborhoodScout.com, SpotCrime.com, and the local police station
  • Walkability and public transportation: WalkScore.com and APTA.com
  • Hospital ratings: HealthInsight.org, LeapfrogGroup.org, and U.S. News and World Report rankings

Just remember: You’re probably not going to find that “perfect home” while browsing listings on your smartphone. Instead, consider the online shopping experience to be an amuse bouche to the home-buying entree — a good way for you to get a taste of the different types of homes that are available and a general idea of what else is out there.Once you’ve spent that time online, you’ll be ready to share what you’ve learned with an agent.

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

Smart Home Tech

October 11, 2018

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

 

Your Fall Home Maintenance Checklist: 7 Tasks to Tackle

October 4, 2018

Once autumn’s chill is in the air, we don’t think twice about swapping our tank tops for sweaters and stocking our pantry with pumpkin-spice everything. So why wouldn’t we prepare our houses for the chill, too?Yes, that first freeze can often take us by surprise, leading to major headaches and thousands of dollars in repairs. So before you start stuffing your bookshelves with decorative gourds and planning the best Thanksgiving dinner your in-laws will ever eat, take a swing through these simple fall maintenance tasks. We promise a little prep work now will help keep your home running smoothly all season long.

1. Prep your pipes

The term “winterization” is a bit of a misnomer: Yes, you’re prepping your home for winter, but the hard work needs to happen in autumn. And that’s especially true when it comes to your pipes.

DIY: “Shut off all faucets and valves, and drain any outdoor piping, like sprinkler systems, before the temperature drops,” says Jane Li, a senior project manager at Mercury Insurance. To be extra careful, Li recommends putting away any outdoor hoses and wrapping socks around outdoor faucets.

Call in the pros: If your winterization efforts uncover a leaky pipe, hire a plumber to fix the mess before the temperature drops. On average, a plumber will cost $300, but a broken pipe could run you upward of $5,000, depending on how much water damage there is. In other words, consider this money well spent.

2. Keep out the critters

Just as you’ll spend more time indoors when the weather cools, rodents and pests will seek out a warm place, too—like your home.

“Mice especially are flexible little creatures and can get through holes that aren’t much bigger than a dime,” says Karen Thompson, an editor at InsectCop.net, which researches and evaluates pest-control products and methods.

DIY: Take a tour of your property, seeking out any cracks that might let a critter sneak inside. Seal any openings with spray foam or steel wool.

“As a bonus, doing this will let you not only avoid rodents, but also ants and fleas,” Thompson says.

Call in the pros: If there’s evidence these pesky little guys have already infiltrated your space, consider bringing in a pro. An exterminator will charge between $90 and $250 for an initial consultation, and costs will scale from there depending on what you need.

3. “FALL”-proof your space

Whether you’re getting up there in years or frequently hosting elderly parents, use the fall season to prevent, um, falls.

“Falls make up almost one-third of all nonfatal injuries in America, and a little prevention can go a long way toward keeping you safe,” says Jason Biddle, who runs The Helping Home, a resource for aging in place.

DIY: Use the “FALL” mnemonic to make sure your place is slip-proof:

  • Floors: Scan your floors for fall risks. Look for clutter, slipper stairs, and loose rugs. Add sticky padding to prevent slips.
  • Activities:: What does your daily routine look like? You might need grab bars in the shower, or a second handrail by the stairs.
  • Lighting: Is your home bright enough to see any potential hazards? “A well-lit home can help [you] avoid tripping on dining table legs, floor planters, and out-of-sight power cords,” Biddle says.
  • Leaving: Examine your porch and outdoor paths. Are there any broken steps or overgrown shrubs that might trip you up when leaving your home?

Call in the pros: Your home might require a major aging-in-place adjustment, like installing a lift or wheelchair ramp. Costs for a motorized stairway lift start at $3,000, and a wheelchair ramp could run $1,500.

4. Remove or cover your air conditioner

Unless you live in the desert or the deep South, you probably don’t run your air conditioner during autumn. But you might be letting your system waste away if you leave it sitting out in the elements all fall and winter long, which can damage the fan and coils.

DIY: “Window units should be removed, covered, and placed in an area like the garage for safekeeping until they’re needed again,” says Richard Ciresi, who runs Aire Serv in Louisville, KY. Outdoor AC units should be properly covered.

Call in the pros: If you’ve noticed your HVAC system running sluggishly all summer, now’s a great time for an inspection, which will probably cost a little more than $300.

5. Check the fireplace

Your wood-burning fireplace has been sitting dormant for months now. Make sure it’s good to go before you light it up.

DIY: Before getting your fireplace inspected, make sure you’re not putting any living things in danger.

“Check the top of the chimney for areas where birds may have nested,” Ciresi says. But check local laws first: It might be illegal to relocate active nests. Once the birds have moved on, however, you can break up the nest freely. (Just be sure to wear gloves.)

Call in the pros: Most chimney sweeps can help break up a nest, too. Besides, you’ll be needing their help for another fall must-do: sweeping the chimney. A professional inspection and sweep will cost between $100 and $250.

6. Prep your firewood pile

Nasty pests like carpenter ants or termites love hiding out in your firewood. Don’t let them hitch a ride inside.

DIY: If you’re building a firewood pile this autumn, make sure to keep those logs at least 20 feet from your home.

“This ensures that even if the wood has pests, they are less likely to transfer from the wood to your home,” Thompson says. Firewood should also be elevated during storage, which makes it even more difficult for bugs to sneak inside the wood.

Call in the pros:If you spot termites in your firewood pile, call in the pros before hauling a single log inside. Treating a local infestation might set you back $150.

7. Switch your ceiling fans

Your ceiling fans are designed to cool you off during the summer—but they also serve a need during the chilly seasons.

DIY: “Many people don’t realize the difference made with the simple reversal of your ceiling fans,” Ciresi says. “Hot air always rises, and ceiling fans are uniquely designed to direct airflow exactly where you need it most.”

Every ceiling fan has a switch hidden on its base. When the mercury level drops, flip that switch so the fan is moving clockwise.

“This updraft allows hot air to get pushed down into your rooms,” Ciresi says. “This is especially useful in rooms with very high ceilings.”

Call in the pros: Pay attention to your home’s temperature on chilly days. Are you still cold? Consider an energy audit, which will cost about $400—but may help you save tremendously on your energy bills over the next few years.

By: Jamie Wiebe, ClientDirect

 

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

 

Real Estate @ A Glance – September 2018 Edition

September 24, 2018

Local Market Update - San Diego County - Real Estate
Real estate is about location, location, location . . .  If you have questions about the market in your specific area, please contact me via email or call 619-888-2117.

 

Rising home prices, higher interest rates and increased building material costs have pressured housing affordability to a ten-year low, according to the National Association of Home Builders. Keen market observers have been watching this situation take shape for quite some time. Nationally, median household income has risen 2.6% in the last 12 months, while home prices are up 6.0%. That kind of gap will eventually create fewer sales due to affordability concerns, which is happening in several markets, especially in the middle to high-middle price ranges.

While some are starting to look for recessionary signs like fewer sales, dropping prices and even foreclosures, others are taking a more cautious and research-based approached to their predictions. The fact remains that the trends do not yet support a dramatic shift away from what has been experienced over the last several years. Housing starts are performing admirably if not excitingly, prices are still inching upward, supply remains low and consumers are optimistic. The U.S. economy is under scrutiny but certainly not deteriorating.

 

 

 

 

 

How energy-efficient windows work

September 20, 2018

 

Kevin Clark/The Washington Post/Getty Images

Getting energy-efficient windows for your home is widely lauded as a way to cut down on drafts and save money on heating bills … only how much do these replacement windows cost—and really save you, anyway?

To help you crunch the numbers and do some concrete cost-benefit analysis, here’s everything you need to know about adding energy-efficient windows to your home.

Several elements contribute to the overall energy efficiency of windows:

Frames: If you have old windows, they are likely to have aluminum frames. The problem with that is aluminum allows hot and cold air to easily pass through from one side to the other. “A vinyl or fiberglass frame [which you’ll find in updated windows] is much more energy efficient,” says Michal Bohm, owner of BM Windows, a replacement window company in San Diego. Both of these materials are poor conductors of heat, and thus better insulation.

Number of panes: Most older windows have a single pane of glass that lets the heat of your home slip out during the winter months. (And do a similarly so-so job of keeping your air conditioning contained during the summer.) Energy-efficient windows will have two, or even three, panes to cocoon your home.

Fancy glass: In between these panes of glass, manufacturers of energy-efficient windows insert an inert gas like argon or krypton. Because these are denser than air, they reduce the amount of air that is transferred into and out of your house.

These insulated glass units (IGUs) also feature what’s known as low-emissivity (“low-e”) glass. Think of it as sunscreen for your house.

“Low-e glass features a microscopically thin layer of metallic oxides that both control infrared light and reflect the sun’s ultraviolet rays,” says Larry Patterson, franchise owner of Glass Doctor, a Neighborly Company in Dallas. “This has the combined effect of reducing solar heat gain in the summer and lowering home heat loss in the winter.”

Window installation: How your windows are installed can also make a huge difference in their performance. “You can buy the most expensive windows on the market, with the best energy- efficiency ratings, but if they aren’t installed properly, you won’t see the energy savings,” Bohm says.

Hint: When you’re ready to upgrade, think about hiring a replacement window company that has a professional installation team, rather than a company that outsources the installation to subcontractors or general laborers.

How much will energy-efficient windows save you?

The U.S. Department of Energy estimates that you’ll save between $126 to $465 a year by replacing single-pane windows in your home. Already have double-pane windows? You can still reap savings by switching them out with energy-efficient ones, but far less. Plan on $27 to $111 per year.

Where you live also matters.

“The average savings overall are about $250 in warmer states and $150 in colder states,” says David Bakke, a personal finance expert at Money Crashers.

Since the average replacement cost runs around $150 per window, depending upon how many you have to replace, you may see savings after even one year or two.

Do energy-efficient windows have other benefits?

Energy-efficient windows are also excellent at reducing noise pollution. “Most homeowners report that 60%-75% of exterior noise is muted when they installed IGUs in their home,” says Patterson.

Low-e coatings on windows also help reduce sun damage to your furniture, carpets, and even personal items like photos by up to 75%.

Plus, consider the value you could add to your home. Notes Bohm, “a conservative estimate would be to expect to recoup about 70% of the purchase price of your replacement windows when it comes time to sell your home.”

Combine that with your monthly energy savings, Bohm adds, and “your windows should more than pay for themselves.”

What are the best energy-efficient windows to buy?

Fortunately, “Manufacturers have made significant technology advancements over the years, and new labeling requirements allow you to more easily compare window performance,” says Mark Montgomery, vice president of marketing for Ply Gem Windows.

Any windows you choose should have an Energy Star rating. This means the windows will meet or exceed energy code requirements.

Next, pay attention to what’s called the National Fenestration Rating Council (NFRC) label. This lets you geek out on comparing such nitty-gritty properties as U-factor (the rate of the window’s non-solar heat loss or gain) and solar heat gain coefficient (SHGC—the fraction of solar radiation that passes through the windows). If your eyes just glazed over at that list, don’t panic. Energy.gov’s comprehensive Efficient Windows Collaborative can help you select the right windows based on your geography and climate.

Keep in mind, too, that many cities, states, and utility companies offer incentives or rebates for homeowners who decide to upgrade to energy-efficient windows. Ask a window company what’s available in your area, or search for current deals on Energystar.gov.

Article from: realtor.com

 

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

 

What is Mills Act?

September 13, 2018

 

Information provided by SOHO.

A historical designation can provide a property tax reduction. San Diego is a relatively young town, but many residents are beginning to take notice of one of our most valuable resources, our historic sites and houses. The Mills Act, named for San Diegan James Mills, a former State Senator, provides an important monetary incentive designed to encourage the preservation, maintenance, and restoration of designated historic properties. If you have questions on the calculation of the assessed value, please call the Assessor’s Office at (858) 505-6262.

What is the Mills Act?
The Mills Act provides that property that is subject to a historical property contract be valued using the rental income that could be expected from that property rather than using comparable sales to establish the assessed value. This generally results in a much lower assessment if the property has been recently purchased.

How does my property qualify for the Mills Act?
It must meet qualifying criteria such as significant architecture, association with a historically significant event or person, or location in a historic district, such as Marston Hills. Once designated as a historical site, the owner can then enter into a voluntary contract with that city.

How long is the contract an is it canceled if I sell the property?
The term of the contract is ten years, however, it is automatically extended unless the property owner cancels the contract. The new owner would receive the full benefit of the contract because the contract goes with the property.

Is the property owner required to open the property to the public?
No, the law was revised in 1985 when new legislation relaxed the rules to encourage the preservation of historic properties. Prior to that time, any property under contract had to be open to the public for tours. After the 1985 revision, many additional properties have been placed under contract.

Do all historical properties in San Diego County qualify for the Mills Act?
No, only the City of San Diego, the City of Chula Vista, the City of Coronado, the City of Escondido, the City of La Mesa, and the City of National City have enacted ordinances to grant the Mills Act exclusion. The County of San Diego has also passed an ordinance for historical properties in the unincorporated areas of the county.

How many properties are benefiting under the Mills Act in San Diego County?
Currently, there are approximately 370 properties under contract with the various cities that receive this property tax benefit.

What is the Assessor’s role in the process?
Although the individual cities actually place the property under a historical contract, the Assessor’s Office must determine the actual assessed value based on a formula under State law, using the income that could be generated from the property.

What kind of savings can I expect on my property tax bill?
Typically, property owners can expect a 20% to 70% savings on their property taxes. Under State law, the lesser of 1) the current market value, 2) the Proposition 13 value, or 3) the restricted value based on the rents will be used to calculate your property taxes. It is possible that the Proposition 13 value may actually be lower than the restricted value, and the property would receive no benefit.

Since I have owned my property for many years and already have a very low assessment, is it worthwhile to apply for the Mills Act?
Some owners who would receive no benefit still apply for the Mills Act. It can be a selling point to a potential buyer because the property would not be reappraised at its full market value upon sale if the property were already under a historical contract.

Once my property is listed on a historic register, are there any binding restrictions that will affect my property?
Yes, once that property is designated on a Federal, State, or local register, it is subject to the rules and regulations of the Office of Historic Preservation of the Department of Parks and Recreation, and the U.S. Secretary of the Interior’s Standards for Rehabilitation, and the Historic Building Code. In effect, the owner must protect, maintain, and rehabilitate the property into perpetuity.

Mills Act Benefits
-10-year contract, which is renewable
-Once a property is designated as a Historical Property, it must be permanently maintained as a historical site

  • Who should I contact if I want to place my property under the Mills Act?
    Each city has its own ordinance and criteria to determine if a particular property qualifies.

Do you have questions about the Mills Act? Are you thinking of buying a historic home or home that could receive historic designation? Just send me an email or call 619-888-2117 – I can help.

 

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