The Almighty (dollar)
I think we are all aware the concept of “common sense” is a bit of a myth. You see it (or the lack thereof) every weekend on 16 as logic flies out the window somewhere around the entrance to the Kanc. and “every man for himself” becomes the norm. Instead of whining about traffic (this paper is not big enough for that discussion), I’d like to encourage (impart?) a little common sense when it comes to your finances and the purchase of a home.
First on the list is debt. Nearly all of us carry it like an albatross around our necks. There can be a healthy debt load but there can also be the dangerous kind. We’re not going to delve into all the potential woes if your debt becomes too much of a monster. The goal here is to trim it down to a more manageable and tolerable level. As I mentioned last week, I just had to purchase a new (to me) truck. It turns out I have great credit (owning a home and not missing payments will help with that!), but there were still a few blemishes on my report that caught me by surprise. It turns out I was carrying too much of a debt load and I got “dinged” a few precious points because of it.
On average, Americans carry almost $60,000 in household debt and about $11,000 in credit card debt. That is a significant weight to bear even in a strong economy. With unemployment rates as high as they are, those numbers become even more stressful. Long gone are the days when people only purchased what they had the cash for. It is important to note that not all debt is a negative thing. The average student today graduates with $25,000 in student loans. You’ll have a hard time convincing me that that is a bad debt (Unless that student majored in causal relations in alcohol consumption!). The lesson here is to be crystal clear of where your debt load stands and your plan for shrinking it.
We often sing the praises of home ownership and you’ll be hard pressed to find someone that doesn’t believe it is a great long-term investment. Now that the lending companies have started using more intelligent lending practices and have raised the bar for buyers, it is more important than ever to have a healthy credit score and a decent chunk of money for a down payment. In order to start the process towards that end, you will need to evaluate your “in-come” and “out-go” and make adjustments as necessary.
You do not need a degree in accounting (more student loans!) to get a solid handle on your budget. On a simple piece of paper, make note of your monthly bills including the checks you write for heat and lights as well as the debit card swipes for groceries, gas and candy bars. If you have never done this exercise, chances are you’ll be slightly amazed. The first time I put my expenses down on paper, I couldn’t believe how much money I was wasting in small, seemingly insignificant chunks. A simple cup of coffee on the way to work can easily add up to $50 every month and $600 a year! We all know $600 can buy a whole lot of coffee beans and filters for the coffee machine on our kitchen counter.
One of the more common ways to start working on your debt is to focus on the high interest loans first. We should all know by now that paying the minimum amount is never going to get us anywhere. If you target the high interest loan first, pay the minimum on the others and put any additional money towards the targeted high interest bill. This is a slow and steady process, but you will be pleasantly surprised at the results when the balance starts to shrink and you’re soon able to eliminate that expense. Imagine how quickly you will pay down your next targeted loan when you apply the previous payment to that bill!
If you can’t increase the payment right now you must at least make your minimum payments on time. Never, ever pay late. I learned this lesson when I was still in High School and it has stuck with me ever since. If you absolutely cannot make this month’s payment, and it happens to all of us, contact the lender and make sure they are aware. Many lenders will work with you and won’t report the missed payment to the credit bureaus. As someone who has owned rental property in the past, I promise you the knowledge that a payment is immanent versus wondering if my tenant has just decided to stop paying, makes all the difference in the world. This impacts my budget and my perception of said tenant.
Remember that your credit score is based on your ability to pay and your history of payments as well as the amount of available credit you have. If you have $30,000 in available credit, but you are using $25,000 of that, you are using over 80% of your limit. This is a scary ratio for lenders and it will start to negatively impact your score. The lesson here is once you pay off a credit card, assuming there are no annual fees, do not close that account. If the card you just paid off was at $10,000, your available credit is now up to 50%. Still too high for most lenders, but it looks far better than the 20% you had before.
The idea of adjusting your lifestyle along with your spending habits is not very attractive to many people. At this point it comes down to an alignment of your priorities. I love eating out for dinner. It is nice to meet with friends in a social place, have a decent meal (prepared and cleaned up by someone else). As I was going through the process of evaluating my budget, I realized the amount of money I was spending on these meals. This was clearly an unnecessary expense and one that I could easily remedy by a weekly trip to the grocery store. The sacrifice was not fun. I would obviously prefer to enjoy the full night out with friends. But a simple adjustment of eating at home and then joining up with my friends saved me the money for the meal but retained the real goal of a fun night out.
Making adjustments to your spending is never fun. We are living in a society that rewards immediate gratification and thinking long-term is no longer the norm. If you can adjust your mindset and maintain your goal of living in your very piece of North Conway real estate (or just living debt free), that long-term reward will be an even sweeter treat when you finally attain it.
Homeless!
“Before you criticize someone, you should walk a mile in their shoes. That way, when you criticize them, you’re a mile away and you have their shoes.” ? Jack Handey
Perhaps it is age. My 40th birthday is in my rear view mirror now. But, I have been making a concerted effort to put myself in the shoes of the person I’m getting frustrated with (typically behind the wheel) and find a way to justify their actions. Of course I am, much like you, the best driver in the whole world. So often times it is a struggle to find the rationale in other people’s actions. I’m confident we cannot truly know another man’s struggle until we have experienced that same thing.
If you read along with us last week, I was in some sort of “imparting wisdom” mood and you got a little advice for not stressing out over everything. If you missed it, the abridged version is this: Just try and relax a little. As I sit here today, I am a mere weeks away from closing on my house and dealing with all that goes along with selling a home and finding a new place to hang my hat. I can’t help but think how valuable this experience would be for anyone working as a professional in real estate.
The same could be said for many of the transactions involving a significant change to your life. Of course the passing of a loved one is at the top of the list for stressful life events, but housing/moving is number 5 on a number of surveys I found. Large monetary events always seem to be at the top of the list and buying or selling a house along with the stress of moving can create quite a bit of tension. Standing at the jewelry counter and choosing an engagement ring for the love of your life involves more than just a shiny chunk of metal. A quality salesperson knows this and can ease the buyer through the process with compassion and education. If the person behind the counter were of the mindset that they were simply selling a piece of jewelry and were anxious to move on to the next patron, the experience would be sullied at best.
In real estate, the amount of money involved and the social and environmental ramifications that come along with uprooting your home and your life is greatly multiplied. In the Mount Washington Valley, like most beautiful resort towns, many of our homes are merely toys. Mountain lovers and those who frequent the area for the many reasons we love it here, buy and sell homes as a place to vacation and escape the noise of the bigger cities. These folks are a different type of client and the process does not hold as much gravity as that of the year-round resident uprooting their life and moving on.
As the home seller prepares for closing, there is always a question about the process. Since a little hiccup could delay closing for a week or more, the seller has to juggle movers, temporary housing, storage units, cleaners, pets, kids, schooling and even their jobs. This is enough of a headache when they are simply moving across town, but what if the move is across the state or even the country? A flippant comment from your agent to just “store your stuff and crash with friends for a while” would turn anyone’s stomach!
Some of the best real estate agents, car dealers, builders and in general “sales people” are those that have been trained in consultative sales. We are all involved in sales in one form or another. Whether “selling” your kids on the idea of cleaning their rooms or selling an actual product to a consumer, the idea of matching someone’s need with a solution is where the magic happens. Gone are the days of “What do I have to do to put you in this car today”. Or at least, I hope they are.
Having just been through the process of buying a truck, it was refreshing to have been approached in a consultative way. The dealer asked me what I was looking for, what my budget was and proceeded to work towards that end. Never once did he try and sway me in a direction that I did not want to be taken. He was also very informative and educated me on some of the newer technologies available. I truly felt as though he were looking out for my best interests. With that kind of treatment, I was happy to work with his dealership and will recommend them to anyone looking for a used vehicle.
With the car dealer, real estate agent and any “broker” of a significant purchase event in your life, I would encourage you to work with those that have either walked in your shoes or have enough experience in the industry to empathize with the process you are going through. I don’t believe you have to have bought or sold your own home to be a good real estate agent. But I do feel you should truly understand the process and offer your consultation, not just a dotted line.
Don’t sweat it!
Don’t sweat it!
I’m a worrywart. I learned it from my mother and she learned if from hers. I’m sure this long-standing tradition continues on up (down?) our family tree. There are countless books, tapes, programs, videos, classes and other educational devices that extol the benefits of being worry-free. And there is no question that most of them are pointing us in the right direction. There is a pile of truth behind the notion that worrying never solved anything. Stressing about something has never altered its inevitability. Wow, I think I got a little philosophical there, sorry. The point is, life is full of bumps and bruises but worrying about where they may come from will change nothing.
Right out of the gate, I would like to clarify that there is a vast difference between worrying or stressing about some future event and logically planning or strategizing about it. I don’t want to encourage, nor will I ever adopt, the mentality of sliding through life without looking ahead. A couple weeks back I mentioned Mr. Flanagan, my driver’s education instructor’s advice. Essentially encouraging us to look beyond the hood of the car and focus our attention down the road. This tends to keep the car on a smoother path and deters the driver from adjusting the steering wheel every couple of seconds. I would reiterate that sentiment for today and simply add that while looking ahead, not only should we make the effort to not worry about what “may” happen, we should be erring on the side of optimism. Rhonda Byme’s book The Secret covers the power of positive imagery well enough that I won’t belabor it here.
I’m on this kick today because I’m currently neck-deep in multiple transactions on both sides of the proverbial table. With a Jackson, NH real estate transaction and all the different people and factors involved, it is rarely a perfectly smooth ride. This is not to say that there are always insurmountable issues or problems, but more so the inevitable bumps along the road. What I’m slowly learning and trying to integrate into my life is this pattern of being prepared and letting the process work itself through. My worrying about it will never impact the outcome.
I will be the first to say that the outcome is not always what you wanted. My friends needed to get a signature from one of the homeowners on their road in order to get a mortgage. Something about a private road and liability concerns. (I know you are as surprised as I was that it had to do with the threat of future lawsuits.) After months of finagling, jumping through hoops, phone calls and visits, the homeowner would not sign. All was seemingly lost. If you have been reading along for the past few months, you know these folks have been working rather hard to buy this house. This was one more hurdle that needed to be overcome. Some creative work by the mortgage broker and a very amiable seller and they are back on the path to home ownership.
After all they have been through, their initial reaction could have been to simply give up at this last challenge. But they stayed positive, asked a few more questions and worked through it. Worrying about whether the guy would sign the paper or whether this was the final nail in the coffin of their purchase, would have accomplished nothing and moved them no closer to owning this home. This is also a testament to the lending professional. She understands that my friends can afford this home and are quite motivated to make it theirs. Rather than give up and move on to the next buyer, she is a solution finder and works to make deals happen. She does not spend her time worrying about what “could” go wrong.
From where I sit, the potential for stress is pretty strong. In this rebuilding real estate market I have a buyer for one of my listings and a very limited number of contingencies. My struggle, in this and all of my deals, has been to stay focused on the positive and not worry about every little thing that might go wrong. Will they get financing? Will the radon levels be OK? Will the home inspector find something wrong (and expensive to fix.)? And then every one of those factors can have their own pieces to add to the pile. If the radon is high (and it was) can we get it mitigated in time for closing? Who is going to pay for it? Will the buyers walk if the sellers don’t offer to pay? OK, you get the point. What I’m working on is making my life a little less stressful and trying not to worry about every little detail. At the end of the day, it won’t help one bit.
Will things still go wrong even if you remove that stress from your mind? Of course. This is life and life presents plenty of challenges. The trick is to prepare for what may come and deal with it when it does. Anything else you do is simply a waste of your precious time and will likely cause high blood pressure, poor judgment, lower concentration, lowered immune system and a host of other physical and emotional ailments related to stress. Keeping our eyes focused on the end result helps maintain a positive attitude and will likely keep you steering straight ahead instead of reacting to every little dip and bump in the road.
The seller’s home is brand new, so naturally the inspector didn’t find any issues. The buyers agreed to pay for half of the radon mitigation system and the radon guy is happy to get paid after closing. (How nice is that?) At this point, we are simply waiting for the appraisal and we’ll slide into the closing without a hitch. Unless, of course….
Oh, what a relief it is.
It’s akin to the feeling you get as a kid when Christmas morning is finally here. The anticipation has built up for weeks and now you awake to the smells of breakfast and the scene of Santa’s bounty left behind. Regardless of whether your gift is a pair of socks or that new easy-bake oven you’ve been eyeing all this time, the feeling of relief is the same.
For those of us who spend lots of time traveling, it is that relaxing sensation when you finally arrive at your destination. After long hours on the road or in the air, when you finally plop down your travel bag and can take a hot shower, fall into own bed and get some overdue sleep or just wash-up and spend some long awaited, quality-time with your couch! The nerves ease, the shoulders relax and once again you can feel at “home”.
What got me on this kick today is that beautiful white stuff that has finally fallen from the sky and blanketed our beautiful valley! The ski resorts have done an admirable job of getting their trails in order. The snowmakers have been spending countless hours making up for Mother Nature. And the groomers have been “making mountains of mole-hills” in the best way possible. Now, two weeks in a row, we finally have the pleasure of natural snow for the rest of the area. I’ll admit it is nice to hit the slopes and enjoy the work of the “machines”. But more than anything, I enjoy a simple drive through the back roads to take in the quiet beauty of snow covered trees and homes. What a relief.
It is one of the many reasons we live in this beautiful area. I love summertime. I enjoy hiking, biking, fishing, kayaking and just stepping outside of my house without shivering. Summer offers peepers at night, warm days in the sun and countless activities for all ages. But winter and snow offer something even more special. Sure, the temperatures are a little less friendly but the scenes created by nature’s frosting are second to none. Hiking along a frozen sidewalk in the woods without stumps and rocks to trip over is quite a treat. And sliding your way back down that trail is a well-deserved reward for your hard work. There’s a good reason they are called the White Mountains!
Finding that sense of relief can come in various forms. If you are trying to sell your Jackson, NH real estate, there is nothing better than the arrival of that offer in the amount you were hoping for. For buyers, when you find that perfect piece of North Conway, NH real estate in which you can envision building your new life, you know your exhausting search is finally over. For those of us “in” the business, when two people are able to meet in the middle, agree on price and conditions and make their way to the closing table, there is no better feeling. Not only are you happy you were able to service your seller appropriately and find a buyer. But, the feeling of helping someone find a place to call home is also something special.
Ask anyone in the real estate industry how the market is going and more often than not, you’ll get an answer with a tone of relief. While the homes are not “flying off the shelves” like they did 6 or 7 years ago, the general consensus is one of optimism. Consumer confidence is getting back where it belongs, lending companies are putting together smart loans with appropriate levels of caution, and day-by-day people are buying up homes and getting on with their lives.
Relief can come in many forms. For some it is the privilege of first tracks on a freshly groomed slope after a long week at work. Others find solace in an evening with friends and family. In the warmer months, a quiet morning on a peaceful pond is just the thing. Still there are those, like myself, that find their rejuvenating relief on the top of Mount Washington and the silence of the snow covered forest along the way. Whatever your pleasure, I hope you find your own sense of relief this weekend.
Winter Maintenance Tips
I don’t think anyone likes the idea of home maintenance, especially in the bitter months of winter. Here’s a quick-read from our friend Carla Hill at Realty Times that talks about some of the more simple tasks you can take care of this winter. Not only to maintain the quality of your North Conway real estate, but possibly even save you some money!!
It may be cold outside, but it’s no time hibernate when it comes to home maintenance. Have you ever wondered how some friends or neighbors live in older homes that are still in good working order? This isn’t just a lucky coincidence.
Houses require careful attention, especially in the Winter, in order to keep in good working order. If you take the extra time each season to check your home over and perform the necessary maintenance, then you’ll be sure to have a sturdy home for years to come.
First, it’s important to keep your family safe and warm when it’s chilly outside. Do a twice yearly check on your windows and doors for air leaks. Under most circumstances you can easily fix these with caulking.
Are your windows in need of a more energy efficient upgrade? Have you thought about installing storm windows and doors? These are important questions to ask yourself. If you have older, non-insulated windows it may be time to replace them. You can even deduct some of these upgrades from your incomes taxes!
If you find leaks, then take the necessary action to fix them pronto. You may find that some doors continue to leak air even after you’ve made them “air-tight.” This means it is time for Plan B. Storm doors work wonders for keeping out the elements. Many stores also sell draft blockers that sit at the bottom of you doors.
Next, schedule a time to service your heating system. Central heat and air units need to be checked over. When a unit is well-serviced it will save you fuel and thus money.
If your home is older, then you might consider a trip to the attic to check ductwork. You never know what critter has chewed through ducts or what parts have become disconnected.
While you’re in the attic take a hard look at the state of your insulation. Is it adequate for your region? Is ductwork well-insulated? Older homes can sometimes be completely devoid of attic insulation. If so then it’s time to bring in some reinforcements. Insulation is relatively inexpensive and can save you big in the long run.
Do you heat using a wood burning fireplace? Is it imperative for your safety to have your chimney cleaned and checked multiple times during the Winter season if you use your fireplace regularly. Chimney fires happen all the time.
There are smaller issues to attend to as well. Did you know that your ceiling fans have two settings for the blades? You want to be sure to reverse your fan in the Winter so that it pushes the hot air (which naturally rises) back down into your living spaces.
Gutters become full of leaves and other debris. If you fail to clean your gutters they can begin to hold water which can eventually rot away the siding and roof of your home.
When the weather drops below freezing you need to keep your pipes from freezing. Let faucets drip and unhook all outdoor hoses.
Finally, every responsible homeowner is stocked with the proper tools. Keep sand or salt on hand to de-ice slipper steps and sidewalks. Invest in a heavy duty snow shovel or snow blower.
Your home is your biggest asset and literally keeps a roof over your head. Be kind and take care even during the chilly Winter months.
Early Adopters Thinking Long Term
New Hampshire has a few “Firsts” that we can be proud of. On January 5th, 1776 NH’s congress ratified the first-in-the-nation state constitution. (I knew my birthday had some special significance!) In 1938, Earl Tupper of Berlin, invented… you guessed it, Tupperware! In 1963, NH legislature approved the first legal state lottery in the Country. NH also produced a couple of the nation’s “largest” pieces. In 1998 Red Hook Ale Brewery took delivery of a barrel measuring 16 feet high by 10 feet wide with a capacity of 7,200 gallons. And, back in 1914, Amoskeag Mills in Manchester manufactured the largest American flag at 95 feet long and 50 feet high.
There is a whole list of these at nh.gov if you want to check out all 60 of them. And while being noted for a “First” or any other superlative in the nation is a nice accolade, it comes with inherent risks. I’m fairly certain the folks that first joined Galileo in the “the earth is not flat” club, were not widely appreciated. It takes a special kind of person to be able to objectively look at a situation and make an informed decision regardless of the social implications. I can hear the words of the proverbial mother in the back of my head saying “If everyone else jumped off a bridge…” For the record, the answer was typically, Yes! Who wouldn’t want to jump off a bridge into the river!?
As we ponder daily decisions as menial as what flavor of bagel to have for breakfast, I can’t help but wonder if one of the secrets to the early adopters is thinking long-term. What got me started on this is the fact that while being an early adopter is not always easy, it sometimes pays dividends. There’s no question the folks that bought Google stocks a few years ago are pretty happy with their decision right now. Those that can see through the haze of figures and calculations and realize something is too good to be true are happy they ran from Enron when they did. And those investors and everyday homeowners that could see the writing on the wall with the real estate market are comforted with their decision to sit tight and trust their gut.
Real estate is typically a long-term entity. Even with the typical homeowner moving every 7 years, this is still a significant amount of time for the market to move around. If we look at this last “blip” on the real estate radar it actually works out. Looking back to around that 7-year mark, the market was a bit more volatile and houses were almost “flying off the shelves”. Now here we are in present day, with a market slowly gaining strength and buyers starting to get their confidence back.
There are those that don’t have the stomach for long-term investing. When it comes to my own finances, I tend to be rather impatient and want to see dividends quickly. I am the type of person who would rather save my pennies for a couple years and then invest a thousand dollars into something rather than putting 20 dollars a week into an account. The result is eventually the same, but I like to see the bigger numbers more quickly. Real estate can also be that “investment”. While I may not see an immediate turnaround with my investment, if I can sit tight and ride out a few bumps, the end result is usually a healthy payday in a stable entity.
People won’t always be using Google. Just ask William Powell Lear, innovator of the Eight-track tape. (Yes, the same guy that brought us the Lear jet.) Technologies change, societies change, priorities change and people change. But, one of the things we will always need is a place to hang our hat. The theory says that you won’t lose money investing in real estate; you lose money when they HAVE to sell real estate. The trick here is to keep your eyes set far enough down the road that you get caught up in every little bump along the way.
My driver’s education teacher once told me to stop looking at the hood of the car and look down the road. The problem with looking so close to the front of the car is your instinct is to adjust the steering wheel every time the car starts moving in one direction. The result is constant swerving and an instructor with an upset stomach. Once I adjusted my line of sight farther down the road, I stopped swerving and made minor adjustments resulting in a smoother ride.
The lesson here is to make the effort to adjust your thinking, and your vision, to longer term. I’m confident this can be rewarding in many facets of our lives. For those of you still hanging on to your New Year’s resolutions, you understand the sacrifice and benefit of thinking long term. If your resolution was to lose weight, passing up that side of fries might be challenging in the moment, but you will thank yourself in a few weeks when your pants start to fit better! Yes, that is the voice of experience! J
Selling in A Buyer’s Market
What does it take to sell North Conway, NH real estate in a buyers’ market – A fresh coat of paint? A kitchen overhaul? Lowering your asking price or offering incentives? From cosmetic to strategic, smart sellers can take advantage of a few simple tips to get the most out of their properties. Here are six strategies from the professionals to help you convert your “For Sale” into a “Sold”:
Curb appeal. Although the last couple days have been a little misleading, we are finally getting through our Spring here in the upper valley and tip-toeing our way towards Summer. Though they may be obvious, cosmetic upgrades like painting and planting can truly go a long way to making a lasting (and Positive) first impression of your home. Once they step inside the door, make sure your home is Clean, Clean, Clean!! No foul odors, no clutter, their first impression of the inside is nearly as important as the actual “curb” appeal. Make it count!
Big Fixes. If your budget allows, invest in bigger improvements. Focus on “make or break” rooms like bathrooms and kitchens. If you have watched any home improvement shows in the past few years, you have heard them say: “Kitchens and Baths sell homes”. Our clients are no different. People want an open spacious place to cook (with plenty of storage) and a bathroom they are not ashamed of. If your budget is limited think about smaller home improvements in these areas that could help close the deal. Better lighting, updated vanity or cabinets (even just the doors!) and better organized or expanded closets and shelving are just a few of these ideas.
The Internet. There are countless tools available to assist you in gauging your property value and even those that will include the home improvements you have made. Using online resources allows you to engage in a dialogue with your real estate broker and can assist you in setting the right price for your home. You can also do your own CMA (competitive market analysis) on properties LIKE your home that are either currently on the market or that have recently sold. Your broker can likely help you with the latter.
Transparency. No, this doesn’t mean installing glass walls on the exterior of your home! Getting a preliminary professional home inspection and sharing it with potential buyers will go a long way towards helping them understand your home’s condition. It will also reinforce your position as a trustworthy and responsible seller. You should also be clear about recent improvements you have made, and provide estimates on other optional upgrades – especially any for which you would be willing to foot the bill. Much like buying a used car, people’s biggest fear is that something will go wrong as soon as they drive off the lot (or take possession of their new home). You can put a lot of a buyer’s fears to rest by being up front and providing this professional service.
Go the extra mile. You can have your home pre-inspected and follow up by actually DOING the necessary repairs. Allow potential buyers to see the report and receipts for the work. This goes along well with the point from above, but this is taking it a step further and potentially eliminate any of the objections that might arise from needed repairs. Unless someone is in the market for a “fixer-upper”, they will typically want to simply move in and settle. If they feel they will need to make repairs and upgrades after the closing and it will delay their ability to enjoy their new home, they could just move on.
Be realistic. Selling in a buyer’s market takes skill, strategy and patience. In most of the country, increased inventory has given buyers the opportunity to be more selective in the home they want and the price they are willing to pay. Properly priced homes are selling and your sales associate will work with you to determine what that price should be. There are certainly folks out there that are looking for the next “screaming deal”, but we are seeing that there are even more people that are willing to pay a fair price and are simply excited about the number of choices they have.
People will always be buying and selling homes. Families grow, jobs move, kids go off to college, etc. With interest rates down and inventory high, this is a great time to be in the market as a Buyer. Your job as a Seller is to make sure that when they come across your home, they can see themselves living there and you have made it easy for them to say “Yes” and add that final finishing touch: A “Sold” sign!
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Should I Own My Home?
Sure there are lots of reasons to own your own home. We, as Realtors, spend lots of our time talking about the benefits and working to connect buyers with the new home of their dreams. And people have a myriad of different reasons to buy a home. Life throws things your way that can be out of your control. Whether a growing or shrinking family, a new job or just a desire to relocate for your own reasons, there are always folks looking at North Conway, NH real estate and looking to make a home here. Our friends over at Market Street settlement published this article about some other great reasons to “own” that new home versus renting it. I think you’ll appreciate their perspective.
A soft real estate market that is ripe with all the conditions that should entice people to purchase a home still has some renters asking, “Why own my own home?”
Low interest rates, lower home prices and an improving job market still have some buyers sitting on the fence fearful of an uncertain real estate market. Real estate agents and even sellers are finding that prospective buyers (current renters) may need a little more “emotional” attention in these market conditions. They may need a little more explanation to ensure that they understand the benefits of purchasing your home rather than renting another.
While deciding to own a home or rent one is very personal, many tend to let fear of the unknown be the driving force in making their decision and that can later create an unhappy decision.
Here are five top reasons to at least consider owning your own home.
No more landlords: This may be a highly influential factor depending on a potential buyer’s experiences. Many renters have poured a ton of money into a home that they’re living in to keep it at the standard of living they enjoy, only to find that their landlord is soon planning to sell the home. Their hard-earned cash and money invested into their rented home will then only benefit the seller.
Making a home your style: This is much more difficult to do in a rental. Yes, as I just mentioned, you can make some modifications, but many things that can be done to a home you own can’t be done to one you’re renting. Taking into consideration Homeowner’s Associations or planned community development restrictions, owning still provides more control and flexibility over renting.
Weighing the costs of homeownership: Of course, with homeownership you won’t be calling the landlord to come fix your toilet or dishwasher. So, having a financial reserve is important to carry you through the months when you run into unexpected troubles. Websites such as GinnieMae.gov offer price charts that help you compare how much you’ll save by buying or renting. It’s a helpful tool that allows you to analyze factors such as how much tax savings you’re likely to receive, how much possibly equity you’ll gain, and how much your rent may increase.
Long-term plans tilt the scale toward owning: In a recent Tampa Bay article, Walter Molony of the National Association of Realtors said, “For people with long-term plans, the rent vs. buy equation is tilting heavily toward buying because housing affordability is at record highs dating back to 1970,” he explains. “Homes are undervalued in many areas—selling for less than the cost of replacement construction—and rents are rising at a faster pace. Many people are considering ownership now as a hedge against inflation.”
Low interest rates and affordable homes will not last forever: If you’re not ready to buy or simply can’t afford to own a home, even the historically low interest rates and exceedingly affordable home prices might not move you to take the leap into homeownership. However, understanding that these conditions won’t last forever is important. Sometimes when conditions persist, we tend to think they’ll always be this way.
Distressed sales will begin falling in 2013 and that would then cause home prices to creep upward, predicts Moody’s Analytics. With little activity on the homebuilding front, and still a heavy supply, it’s not expected to increase much more. Also, the number of new households each year is rising, which is expected to help alleviate the oversupply in the coming years.
Written by Phoebe Chongchua
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Overcoming Home Buying Obstacles
Hurdling Over the Typical Home Buying Bumps
Last week we talked a bit about getting your credit score in line and ensuring that all of your finances are in order. This is a good idea whether you are buying North Conway NH Real Estate or considering any type of large financial investment. In fact, it’s just a good idea, period! That said, there are a few other obstacles that tend to trip up buyers when they begin this process. My friends, that I have mentioned a few times, have run into problems with their hopeful new home being located on a “private road” and are going through the process of getting an indemnifying letter signed by all parties that own homes on that road. In and of itself, this is not a huge ordeal. But at the end of what has been a rather lengthy and frustrating home-buying process, this is exactly not what they needed!
So what other “bumps in the road” might pop up? These are items that should interest anyone involved in or thinking about delving into some sort of real estate transaction. If you are a buyer, the correlation is quite obvious. If your listing your home for sale, it is a good idea to be aware of what your buyers are going to need and perhaps even discuss these with your agent. While the three most important words in real estate are “location, location, location” I would submit that we could tweak that a bit to read “location, preparation and knowledge”.
Regardless of the price, location, size or condition of the home being purchased, there are almost always going to be “issues” with the sale. I don’t say this to be overly negative or pessimistic, but merely realistic. If you had the purchase of a home go smooth as silk, there is a good chance you had a hard-working agent behind the scenes keeping the process moving along. Not all bumps are insurmountable or even note-worthy. Often it is a necessary signature or the installment of a railing on some stairs. Clearly not deal-breakers but small adjustments needed to satisfy a lender or home inspector. Let’s look at a few of these bumps on the financial side of things.
Finding a Down Payment
Unless they’ve won the lottery or are one of those fortunate folks to be independently wealthy, your buyers are going to need to borrow money. Nearly all mortgages these days require a down payment though the percentage will vary greatly. VA loans allow the buyer to put zero down and there are even still a few government programs available that will allow this for qualified buyers. (I was amazed to find these as well!) The two most popular loan types currently are FHA and “conventional”. These two loans will require the buyer to come up with between 3 and 10 percent of the purchase price. While 3% is not a massive amount of money, if you are not prepared and have not been saving your pennies, this can come as quite a shock.
Most lenders also have pretty strict rules about where this money can come from. “Gifts” and other forms of help from family are closely watched and sometimes forbidden. Maybe it’s just that banks are not in the holiday spirit.
Meeting Lender Ratios
The majority of banks will require a “front-end ratio” of 33%. In plain English, this means your monthly home payment, including taxes, insurance and the mortgage amount (PITI), cannot exceed 1/3 of your monthly gross income. As an example, if the earnings of the people signing for the loan (i.e. you and your spouse) are $6,000 per month, the maximum PITI payment most banks will allow is going to be $1,980. Using these round numbers, that should get you a house in the $300K range.
There is also what is referred to as the “back-end ratio”. This will incorporate the PITI payment as well as all of your monthly debt payments. That percentage is required to fall between 41 and 50 percent of your gross monthly income. If you include mortgage insurance (PMI), your back-end ratio cannot exceed the 41% level. By putting down at least 20% on your loan, you eliminate PMI and likely qualify for a higher back-end ratio and a higher loan amount.
Obtaining an Appraisal at True Market Value
To be clear, the appraisal process and the associated frustrations felt by lenders, sellers, buyers and agents alike has nothing to do with the actual professionals doing the appraisal itself. In 2009 (and for FHA in 2010) a well intentioned, but flawed process was put in place that requires all appraisals to be assigned at random from a pool of appraisers. In the past, a lender would choose an appraiser that they had worked with before, was experienced, local and knew the area and the local market. This typically would result in a fair appraisal and one that reflected the true value of the home.
When I was first getting my construction loan the randomly assigned appraiser that showed up lived nearly 2 hours from my town and knew nothing of the vast differences between towns in my market. Think of it as the appraiser assigning the same value to duplicate homes on main street Jackson vs. main street Ossipee. While the houses themselves may retain similar value based on the construction quality and amenities, the market value of those two properties will vary greatly.
This hurdle is not really something you can control. I was lucky enough to be at my home for the appraisal when I converted my construction loan into a conventional one. I took the opportunity to walk the person through the house while explaining the market and the area. This was helpful, but she was also a far more local resident and was familiar with the area. The result was a more accurate appraisal and a more appropriate loan amount. The result of an inaccurate appraisal could be a buyer unable to get a loan for the asking price or being forced to come up with the difference in cash.
Loan Conditions
The process of underwriting can be a bit nerve-racking. It is a more detailed credit analysis that takes place before the lending institution actually grants the loan. Some of the additional items they review are employment history, salary and financial statements and the borrower’s credit history. They also review the evaluation that your bank provided to them which includes your credit needs and ability to repay the loan. This process gets particularly sticky when buyers have had a varied past of loans, credit issues and banking “hiccups” with an ex-spouse. If the buyer’s name was on any of those notes when issues came up, they could be disqualified from buying a home until the issues are remedied. Disclosure is the best policy here. Make sure your lending institution is well aware of anything the underwriters might find during their research. At the end of the day, the bank is going to mitigate as much risk as possible and starting off your relationship with them by withholding information (that they will likely find anyway) is not a good idea.
In most walks of life, the motto of the Scouts organizations (boys and girls) of “Be Prepared” is great advice. I don’t share these items to scare anyone away from buying Jackson NH Real Estate to purport that nobody will ever qualify for a mortgage. The opposite is actually the case. The better you are prepared, as a buyer or a seller, to handle any issues that arise during the process of the home sale, the more likely the sale will go through. Rather than be blindsided by a hiccup right before closing or an unexpected financing challenge, get yourself educated. Plan for the worst, but anticipate and expect the best!
Here’s a few links if you’re in the market!
North Conway Homes for sale under $500,000
Conway Area Homes for sale under $500,000
Jackson NH Homes for sale under $500,000
Attitash Condos
Fryeburg Maine Real Estate
Jackson NH Real Estate
Mountain View Homes
Ossipee NH Real Estate for sale
Log Homes
Ski-Trailside Homes
As Your Credit Score goes up, Your Interest Rate Goes Down
If you’ve started the process of financing north conway real estate, you have inevitably run into the negotiation of your interest rate for the mortgage. There are many factors that determine the rate you end up with. One of the more critical pieces of that nasty little puzzle will be your credit score.
Most of us have had small hiccups in our financial past. In my fist year of college, I had to learn the hard way that my debit card was not tied to an endless supply of cash (though it seemed that way for a couple months!!). If this is your first home or first mortgage and the first time you’ve seen you own credit report, you might be surprised at how much information it includes. I won’t attempt to cover how the credit companies come up with your specific score, but will cover a few simple ways to get and keep that score healthy and high. If you have never looked at your credit score, there are multiple ways to get a free copy (from the 3 main agencies). This will give you time to make any corrections necessary prior to approaching the lending company.
Through this information or through this simple three digit number, creditors will decide whether or not to approve you for the credit card or the loan you are applying for as well as where to set your rate. While you may still be able to get a credit card or a loan with a low credit score, it will usually have higher interest rates because you will be deemed too risky to lend money to.
First and foremost, you should get a copy of your report and take the necessary steps to correct any errors you find. For example, if you noticed that a particular report contains an unpaid debt but you previously paid it, you have to correct the error by sending a letter and the proof that you paid the debt in full. It is the responsibility of the credit bureaus to correct these errors, but it is up to us to bring those errors to their attention. I have heard a couple horror stories about friends’ school loans never being cleared from their reports after they were paid in full. Most reporting agencies will provide free reports once a year, but you can always request additional reports if necessary. You will be unable to correct these errors if you don’t know about them.
Although not an immediate step, you should always pay financial obligations on time. Do not underestimate the value of this simple step. While not always possible, it is also a good idea to pay your bills ahead of the scheduled due date. If you have problems in making payments on time, you may also consider automatic payments or some other type of direct payment plan. Something that was taught to me many years ago is to maintain communication with your financial company. If you know you are going to be late on a loan, credit card or even utility bill payment, make contact with the company and work out some equitable arrangement. While they won’t be happy that you are missing a payment, at least they know you were willing to take responsibility and are not just leaving them hanging.
The next best thing you need to do is pay down the debt you have. For example, if you have a credit card, you don’t have to pay all of it at once. The point to all this is to pay down your credit card debt up to the point that it will not have a balance that exceeds 50% of your credit limit. This will not only show that you have the ability to pay, it will also increase the amount of money you are able to borrow. While I would never encourage anyone to empty his or her savings to pay off a debt, the money you owe is actually costing you money every month. Basic finances tell us that it is better to save 10% than “earn” .5%.
Use credits on a minimum basis. If you are using credit cards, avoid making purchases beyond your credit limit and attempt to keep your balances as low as possible. One of the more common pieces of advice I encourage all my buyers to stick to is avoiding large purchases prior to going for a loan. While you may have the money or the credit, it does not look good to the lending companies to be making big purchases leading up to the purchase of a home. While some things are unavoidable such as a broken washing machine or other costly repair, these should be explained so there are no surprises at closing.
There are a bunch of factors that determine your credit score and determine your interest rate, both for a north conway real estate mortgage as well as a personal loan. It’s no secret that having steady income that exceeds your monthly expenses will help you get the money you want to borrow. But your credit score helps increase that dollar amount and lower your interest rate.
