Winterizing Your Home

 

What a difference two weeks can make. When I wrote this column, our valley hadn’t burned, so let me begin by sending my condolences to all those who’ve lost so much.

For those of us in the fortunate position of still having a house that is standing, now is the time to prepare it for winter. These tips will keep the structure in good condition and its inhabitants safe and comfortable.

Smoke Detectors and Carbon Monoxide Alarms – Be sure to test your alarms each fall, and change the batteries before they wake you in the middle of the night, or worse, don’t wake you at all. Newer models have 10-year batteries that do not require changing, so you may opt to replace your alarms rather than just switching out the batteries this year.

Fire Extinguishers – If you have a fire extinguisher (and you should), make sure it is still pressurized (check that the little indicator points to green), and put it next to an exterior door (not in the garage behind several boxes).

Lint Trap – In your clothes dryer, you should remove the lint from the trap after every single load. Lint loves to catch fire. While you’re at it make sure the vent from the dryer to the outside is clear of lint as well.

Extension Cords – If you are foolish enough to have extension cords in traffic areas (like I do), consider moving them or make sure they are well secured. If the cords look damaged, replace them.

Railings, Walkways, and Steps – Secure railings and loose boards and fix tripping hazards.

Roof – A 30-year roof doesn’t mean you should ignore it for 30 years. Repair loose shingles and check flashing, eaves, and soffits. If your flashing needs new mastic (sealant), apply it.

Chimney – Before you fire up your fireplace, have a chimney sweep repair cracks and clean the flue.

Gutters, Downspouts and Drainage – Clear debris and be sure the splash block at the bottom of the gutter directs water away from your house. While you’re at it, confirm that the soil around your home directs water away from your house, too.

Outside Faucets – It only takes one freezing night to burst an uninsulated pipe. Adding insulation is cheap and easy, and it helps avoid a potentially expensive repair. This is also a good time to store hoses for the winter.

Windows and Doors – Add caulking and weather stripping as needed.

Redwood Decks – Re-stain decks and hammer any nails that need attention.

Shrubs and Trees – Cut back any shrubs that grow right next to the house. It’ll save the paint and prevent critters (two-legged and four-legged) from hiding where they shouldn’t. Trim trees up six-feet from the ground.

Leaks – After the first rain, walk around and check for signs of water, including inside closets and attics. While you’re in the attic, make sure you have ample insulation and that it’s in decent condition.

Tile, Tubs and Showers – Repair grout and caulking before problems get worse.

Refrigerator – Vacuum and clean the coils to keep your fridge from working harder than it needs to. Dust works as an insulator on the coils, making it harder to cool the air.

Heating/Air Conditioning – Replace the filter every few months, and if it’s been a few years since you last had the unit serviced, consider an inspection.

Water Heater – Flush your water heater and it will last longer. The particulates in water sink to the bottom of your tank, creating an insulation barrier and causing tanks to rust faster and work less efficiently.

It’s easy to put off routine maintenance, but if you take care of your house on a schedule, it typically saves time and money in the long run.

If you have questions about real estate or property management, contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business in Ukiah for more than 40 years.

 

 

 

 

 

Indecision is Not a Decision

Indecision is Not a Decision

There could be some legitimate reasons for not buying a home but indecision is not one of them. Indecision is rooted in not having enough information to move forward to own a home or continue renting.18443593-250.jpg

If you keep renting, at the end of the year, you have had a place to live and a pile of receipts that helped the landlord pay for his house. Deciding to buy a home will give you a place to live that is yours and all the things that come with that.

When you consider principal reduction, appreciation and tax savings, your monthly cost of housing could be much less than the rent you’re paying. The principal reduction included in each payment is like a forced savings account that increases as your mortgage balance decreases. Your equity in the property will also grow due to appreciation as the home goes up in value. The equity is part of your net worth and an investment in your family’s future.

The income tax savings can be an additional financial consideration if the combined interest and property taxes are greater than the allowable standard deduction.

Trends are showing that both tenants and homeowners are staying in their homes longer. It’s been said that whether you rent or own, you’re paying for the home. Do you really want to buy the home for your landlord? Check out your numbers on a Rent vs. Own and then, call us to help make it happen.

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Dumb Reasons People Don’t Buy the House They Want

When you decide you’re in the market to buy a house, you can: 1. Do this the smart way, and maximize the likelihood that you’ll end up with a house you like and can afford; or 2. Do this the dumb way, and rush headlong into a complicated process without the support or information you need to be successful.

It always amazes me how many people opt for #2.

Most people don’t buy and sell houses very often, so it’s understandable that they don’t know much about the process, but if you’re going to make one of the biggest purchases of your life, it seems as though a little homework and some help from experts would be a good idea, right?

Mistake #1: Not Selecting a Realtor

The first mistake some people make is to try to save money by opting to go without a Realtor. A good Realtor can save you time and money. They walk you through the process, preparing your for each step so you have as few setbacks and surprises as possible. (Is it self-serving for me to say this? Yes. But is it true, anyway? Yes.)

Mistake #2: Not Getting Qualified for a Loan Up Front

The second mistake people make is to start looking at houses before they know what they can afford. This wastes time and can be very disheartening. It’s far better to schedule an appointment with a loan broker to get “pre-qualified” or “pre-approved” for a loan. Pre-qualified consists of sitting down with your Realtor to figure out roughly how much income you have and how much debt you carry (car payments, insurance payments, tuition payments, etc.), as well as whether you have any savings for a down payment. Being pre-qualified is much better than not being pre-qualified, but it’s not as good as being pre-approved.

To become “pre-approved” is more involved, but it can dramatically increase the chances of getting the property you want. Pre-approval requires a thorough review of all your assets, liabilities, tax returns, W-2s, credit history, and any other relevant financial information to begin the process of applying for a loan. Basically, the only difference between being pre-approved and applying for a loan is that when you’re pre-approved, you haven’t found your property yet.

Getting pre-approved increases the chances of having your offer accepted, and it puts you ahead of your competition, if you have any.

Mistake #3: Choosing the Wrong Loan Broker

Working with an out-of-town or online loan broker can be a risky business. Real estate loans are complicated, so ask your Realtor for a referral so you know you have a loan broker you can trust, one who will walk you through the process—and look out for your interests.

Mistake #4: Putting in a Low-Ball Offer

In a seller’s market, sometimes it’s wise to put in a full-price offer. Sound crazy? It’s not. It’s fine to negotiate in a buyer’s market, but don’t lose your dream house because you thought you were supposed to play hardball.

Mistake #5: Messing Up Your Financing With a Big Purchase

Once you’re in escrow, don’t buy a car with $500-a-month lease payments (or make other, similarly expensive purchases), because big purchases can change whether you still qualify for your loan.

Mistake #6: Running Out of Cash

In addition to a down payment, you’ll need cash for several other expenses when you buy a house. You may have to pay a premium for private mortgage insurance, fund a lender’s escrow account, or pay upcoming property tax and insurance bills. Plan accordingly (your Realtor can help you with this).

Sometimes escrows fall through, but you can reduce the chances of a failed escrow by avoiding these unnecessary mistakes.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

 

Risk Rate Relationship

Risk Rate Relationship

Regardless of what a lender quotes on mortgage rates, the actual rate a borrower pays is based on a number of variables. Lenders determine whether to loan money and at what rate based on the risk involved with the transaction.Sorry not available.png

Factors that increase the risk that the loan will be repaid will proportionately increase the interest rate charged to the borrower. If the risk becomes too high, the loan will not be approved.

  • Loan amounts – conventional mortgages above conforming limits as set by Fannie Mae and Freddie Mac are considered jumbo loans and generally have a higher interest rate.
  • FICO score – the lowest interest rate is reserved for the highest score; the lower the score, the higher the rate the borrower will pay.
  • Occupancy – borrowers occupying a home as their principal residence are considered a better loan risk than second homes and investment properties.
  • Loan purpose – purchase transactions generally have the lowest interest rate with refinancing for better rates and terms being priced slightly higher. An even higher rate might be charged for refinancing and taking cash out of the property.
  • Debt-to-Income Ratio – a borrower’s monthly liabilities divided by their gross monthly income develops a ratio that helps lenders to assess the borrower’s ability to repay the mortgage.
  • Property Type – some types of property are considered higher risk than others which could adversely affect the rate.
  • Loan-to-value – the lower the percentage of the loan to the appraised value of the property will generally lower the interest rate.

Any combination of these factors could limit a borrower’s ability to secure a mortgage at the rate initially quoted. Pre-approval by a trusted mortgage professional can be the best way to know what rate you can expect to pay. Please call for a recommendation of a trusted mortgage professional.

Til next time… May all your deals be easy ones!
Follow me on Twitter @yourmendorealty

Clint Hanks                                   707-391-6000

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Time to Buy, Thanks to a Loosening of Loan Restrictions

If you’ve been waiting for home prices to fall before you jump into the market, you might have a long wait. It still costs less to buy a house than it does to build one, and with recent changes to rules covering many conventional loan programs, now could be a great time to embark on the adventure that is home ownership.

The two biggest government-sponsored buyers of residential real estate loans are the Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, and the Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac. As of July, they’ve loosened restrictions, making it easier for people to get home loans.

First, they decided to eliminate derogatory credit remarks on some credit reports, which will improve some people’s credit scores and help them qualify for a larger loan amount, or perhaps a lower interest rate. Second, they increased the debt-to-income ratio from 45 to 50 percent. If your combined monthly income is $6,000, the 45 percent debt-to-income ratio would only allow you to put $2,700/month toward monthly debt. Now, with that same income, you can put $3,000/month toward debt. Debt includes things like your mortgage payment, any car payments, revolving credit card debt, and student loans. If your situation allows you to put the additional $300/month toward a mortgage payment, that enables you to spend almost $60,000 more on a house at today’s rates, potentially moving you from a two-bedroom, one-bath house with a single-car carport to a three-bedroom, two-bath house with a two-car garage.

This change is important because Fannie Mae and Freddie Mac own a huge percentage of mortgage loans, and influence even more. Banks underwrite to Fannie Mae and Freddie Mac standards so they can sell to them.

So, if you want to buy a house, you may be able to get a larger loan with the same income. I understand that there are benefits to renting over buying—like having a landlord who is responsible for the structural repair and upkeep of your home, but there are many great perks to owning your own home as well.

First, real estate is one of the best long-term investments you can make. Although home prices may rise and fall in the short term, the trend during the last 40 years is clearly upward. Ask your parents what they spent on their first house and you’ll see what I’m talking about.

Another benefit to owning over renting is that much of your new monthly housing cost is tax deductible. Interest rates remain near historic lows. In fact, in my 40 years in the real estate business, the lowest interest rate for a 30-year, fixed-rate mortgage I recall was 3 percent, and it was only that low for about a day. Today, rates range from about 4 to 4½ percent. Compare that to the peak interest rates in the 1980s, when they were above 14 percent, and you’ll understand why I’m so enthusiastic about today’s rates.

Finally, there are benefits to home ownership that you can’t put a price on. It feels empowering when you don’t need anyone’s permission to change the landscaping, replace the carpet, or paint your dining room lavender.

All in all, these changes from Fannie Mae and Freddie Mac will allow more buyers to qualify and at higher prices than they would have in the past. But remember, just because you can qualify for more, doesn’t mean you should. Review your personal finances and consider the fact that your mortgage payment won’t be your only house-related expense; you’ll need to budget for repairs and upkeep, too.

If your situation supports it, now could be the perfect time to venture into the world of home ownership.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.