Renovation Loans and Estate Planning
March 24, 2014
This week we were joined by John Markve from Markve & Zweifel as well as Larry Anderson and Matt Helling from Cambria Mortgage. The first topic of conversation was about probate. Probate is the process of clearing the title to assets that we don’t know what to do with. Some assets are not probate assets such as life insurance policies or retirement plans. They would have pay on death designations, so those would pay directly to the named beneficiary. If there is no named beneficiary, such as real estate, then the assets go through probate because we are unsure what to do with it. That’s the process of clearing the title, where a personal representative is appointed by the courts to administer the estate and then the personal representative collects those assets, sells the real estate, and then distributes according to the will.
Probate is a bit of a process so people often wonder how to avoid probate. One way is to have a transfer on death deed. These allow you to name a beneficiary that will take the property upon your death. That document is revocable and it does not create invested interest in the beneficiary. Transfer on death deeds are fairly inexpensive ways to make that transfer happen. Another way to avoid probate is by setting up a revocable trust. You can transfer your property to a revocable trust and then that separate entity owns the property. Under the terms of the trust, there’s a provision that the grantor continues to get all of the property during his/her lifetime and then upon death, it steps onto phase two which means the beneficiary inherits all property.
We also touched on renovation loans, specifically the different kind of loan options. With FHA you will hear the word 203k used a lot, which is the identifier of the FHA renovation project. There are two types of these loans. One is a streamline, which is like a cosmetic loan where it takes care of anything but structural type deficiencies on a property. The other type is a standard, which is used to put an addition on a property. When you are talking about conventional, there is the home-style loan. This will allow for unlimited work or construction to be done on a property. Home-style loans will allow you to buy a home, while simultaneously doing different levels of repair, upgrade, renovations, etc. Historically, they are a bit complicated, but with the aging housing stack, there is a lot of demand for these loans.
The last half of the show brought out some great questions:
Jeff Zweifel: Is there a refinance option for people that are in their home?
Larry Anderson: There is a refinance option. Similar to the purchase transaction, you take the existing mortgage balance, ask them for the contractor bid, and roll it into one loan. This gives you one loan, one closing, and one monthly payment.
Dan from Fridley: My brother passed and I’m the only living relative. I was named personal representative by the court. He had a long time girlfriend of 30 years and I want to take the assets from the estate, pay off the mortgage, and give the house to her. Am I able to do this?
John Markve: You can make a gift to her, but there are gift tax implications to this. You are limited to an annual exclusion gift of $14,000 a year, or you can use up some of your lifetime exclusion, which is one million dollars under Minnesota law and over five million under federal law, but then you have to file a gift tax return. You could set something up with her to sell the property to her and forgive portions of it over a period of time. You could also double your gifts with your spouse.
Text Question: Why not do a living trust versus a will and when would you not do it?
John Markve: The main reason not to would be the cost to set it up is more than a will. If you are not going to stay in your house for more than a few years you may not want to incur the cost of setting up a trust, transferring the property into the trust, then to just turn around and transfer it out of the trust. If you were ready to move to the south and sell your home, then a living trust would not be the better choice.
Mary from Minneapolis: We have a will done and we have one son who will get it all. In case he would happen to divorce his wife, would she have any interest in anything he gets from us?
John Markve: Inherited money is a non-marital asset. If you gave him real property such as a cabin and he and his wife use some of their marital assets to improve the cabin, then they’ve co-mingled the assets so then the spouse may have some interest. If he wants to keep it separately then he should segregate the assets and not co-mingle the assets with his marital assets.
Market Trends and Financing Misconceptions
March 17, 2014
This week we were joined by Garth Johnson from Minnesota REO Experts as well as Brett Leschinsky from WJ Bradley. We started off the show by discussing the current market trends with Garth Johnson. Something that has been dropping significantly in the market is inventory. It has dropped so much that there is actually a shortage of inventory for buyers to chose from. We have a 3 to 3 ½ month supply of inventory for sale, which equals 11,975 houses for sale with 22 consecutive months of decreased inventory. When you get under that number, you can feel the lack of options being a buyer in that market. Buyers are still thinking that they need a great deal in order to buy but they need to make sure they are looking at all the other factors that are involved when buying, such as the lack of inventory.
Given all of this information, it pretty much goes without saying that it has become a sellers market again. Coming into a sellers market, buyers need to make sure they are aligning themselves with a real estate team that can help them. They need to find the agent, find the loan officer to get pre-approved, find the title company, find the inspector, find the attorney if needed, and make sure to find a team that is going to be on top of the market and be able to find exactly what they want.
Brett Leschinsky brought up a few misconceptions buyers have of the financing process. A lot of buyers think that you have to have 20% down in order to buy a home. In reality, you have VA with 0% down, FHA that’s always been 3.5%, and conventional with 5% down. Due to so many changes over the past years in the financing process, it has become critical that you find an experienced mortgage professional versus someone that is part-time and may not necessarily be able to keep up with the changes.
When it comes down to finally closing on a home and you are competing with multiple buyers to get that property you need to consider all the ways to stay ahead of those buyers. Many people may think they are ahead of the game by getting pre-qualified, which may only mean that a lender has simply looked over your documentation but you should really be pre-approved as well. If you are pre-approved, that means that you have actually sent documentation in and even went through an underwriting system that gave an approval.
Garth Johnson talks about what to look for in an approval. When you’ve been around for a while, you see certain approvals from lenders that you know will for sure go through and will close. There are certain types of properties that only qualify for certain types of financing depending on the condition and sale price. Buyers need to align themselves with the right team and loan officer because there are a lot of programs out there that you don’t need to have 20% down. Buyers need to know that in the marketplace they don’t always need a lot of money down. Good credit and a few other things to prove they’re financially stable, yes, but having the actual money down right away is not always necessary.
John from Tailor Falls: We were looking at a home path home and we put an offer in on it. We got a call later saying that it was a multiple bid situation and that we needed to put in our best offer. We have dealt with multiple bids before and didn’t have any interest in dealing with that. A few days later, the realtor called back saying that our bid was accepted and was the highest bid. Were they just trying to raise the price of it by telling people there were multiple bids when our original offer ended up being just fine?
Garth Johnson: With home path, the agent that represents you submits the offer online on your behalf, but when there is a second offer that comes in before your offer would be accepted by the bank, that triggers a multiple offer situation. The bank has a form sent out to the agents that requires the buyers to sign submitting your highest and best offer. It sounds like somewhere in between, there was a miscommunication, that if you weren’t interested any more in competing with other buyers in a multiple offer situation that your offer should have been withdrawn. If your agent would have communicated that to the listing broker, then they could have withdrawn your offer and then at that point there may have no longer been a multiple offer situation. All the offers that were submitted online, if one hasn’t been accepted yet and another comes in, then it does cause a multiple offer situation.
John from Minneapolis: I have an existing home that I want to make a rental. I’m not sure how much money I should invest before renting it out, it does need new windows, new siding, but I’m just wondering how much money I should put aside for a new purchase versus putting money into the existing home?
Andy Prasky: Look into ROI’s on rental investments. See what things that you can put into the house that will give you the best returns. It also will depend on the client, whether it’s someone that will come into the home and take their shoes off and take care of it versus someone that has motor oil on their shoes and just walk through the house with dirty shoes.
Tips for Painless Loan Closings
March 14, 2014
There are a lot of steps in purchasing a home and a major one includes closing on a loan. Without the proper preparation this can be a stressful process but with these quick tips, it will become a lot easier! Click here.
Tune in this Saturday to hear the mindset you should have when going through the loan process.
New Construction Season!
March 10, 2014
This week we had Pat Flynn from Eternity Homes and Justin Jurkovich from WJ Bradley join us in studio. The first topic we discussed was trends in new construction. Energy efficiency has become one of the top trends that people are focusing on when building new. Pat Flynn discussed the most obvious reason for the energy efficiency trend, which is the amount of money that you can save. If a home is insulated and sealed properly, those monthly energy bills will dramatically decrease. Eternity Homes actually tests their new construction homes three different times throughout the building process. They test them at framing, after they are insulated, and then once more after the home is completely done to make sure that all the plates are tied together, OSB’s, Buildrites, and Styrofoam’s are installed properly. Testing these items will guarantee that air isn’t sneaking under the plates or that snow isn’t creeping in and then forming ice dams.
In the new construction business there are different eligible levels of energy efficiency that can be built into the home. The first is the energy-tested level where your home will meet or exceed the current energy codes and building officials. This level is given a rating of 100, which means the home will pass. The next level is the certified level meaning you are in the 60 percentile and you are quite a bit better than just the norm. The next is the advanced certified, ranging below the 60 percentile. Then there is also the master rating which is anything below the 50 percentile. Once you get to this level, you are looking at more than just the structure. It will include how the utilities are installed, how they are sealed, how the heating system works once installed, etc. Pat Flynn describes the levels like a golf game, the lower the score, the better.
Of course, when you want to build a new home, you have to think of how you are going to finance it. Justin Jurkovich discussed the differences between a one-time closing and a traditional “two-time” closing. One-time close involves you going in, going to a title company and then physically closing on a mortgage upfront and your dollar amount is set before the house is even built. We’ll say the amount is $300,000. Once you’ve signed your mortgage and your note, all that happens during the process is the home gets built and the builder will get paid out. Once the home is complete, occupancy is issued and you will go in for a modification, which will modify it from a loan you will be able to draw money out on. You will pay the final advance out and it’s now an end loan.
Two-time closes come in handy when there is potential for change in the home. Say you want to add granite countertops or a restroom in the basement, this hasn’t been factored into the budget on the front end and you’ve already signed for your $300,000. How is that going to get paid with your one-time close? With the one-time close, something like this would have to be paid out of pocket or it’s just not going to happen. There are definitely cost savings in a one-time close, but a two-time close really isn’t going to cost you that much more when you look at it in the grand scheme of things if you have the potential for changes or adds during your project. It might save you $3,000 over the course of the loan to do the one-time close, but if you decide to add that restroom in the basement, it’s $10,000 out of pocket. If you choose to go with the two-time close you will be paying about $15 a month extra, equivalent to about $3,000 more on the total loan which sounds a lot better than having to pay the $10,000 out of pocket for your new restroom with the one-time close.
Michelle: I have a 3 bedroom rambler in Cottage Grove I’m wanting to sell. Do you foresee the turn around with improvement on the home values changing anytime soon?
Chris: Everything metro wide is turning to the positive.
Andy: If you can keep up with the new construction that is coming in and prove that your home is updated like homes that are being built around you, then your home value will go up with the values of the new construction.
Text Question: Why can’t we find good mortgage rates for quality manufactured homes?
Justin Jurkovich: The biggest hurdle you will find on manufactured homes is that there are not a lot of lenders that will actually lend on then, so the amount of outlets you have is limited. WJB does lend on manufactured homes. Your rate really shouldn’t be drastically different than any other home if you find a lender that actually does the product.
Text Question: Which is more efficient, forced air or radiant air heating?
Pat Flynn: Forced air is the more efficient heating source and cooling. The radiant air over time has suggested that after 10 years or so you would recap some of those costs but as of now forced air is the most economical.
Radon and Buy and Bail
March 3, 2014
A lot of people have questions about radon and are smart to be finding out information on it due to the fact that it is the second leading cause of lung cancer, after smoking. With this being a huge safety issue in homes, we decided to focus part of our show this week on the topic of radon. Radon is an invisible, odorless gas that can come into your house through the decomposition of soil. It is a natural progression that can’t be stopped but can be prevented with the correct equipment. Here in Minnesota, we have higher levels of radon due to the glaciers that moved across the state centuries ago, so testing your house for radon is always a smart way to go.
For those of you that are looking to buy a house, there is a new statute that came out in January 2014 that requires the seller to disclose whether or not they have done a radon test. There are a few different ways to test your house for radon. There are do-it-yourself kits or you can have a professional come in and test it for you. If you do find out that your house has a higher level of radon, there are units that can be put in professionally. If you decide to have a company professionally install a unit, be sure to work with a company that will make recommendations and will be honest with what the unit will actually do for you and how much extra work you will have to do on the home because of it. The people that are looking for a house but decide they want to actually build new, have the luxury of radon systems that will be built into the home.
There is another topic that has been floating around the real estate industry that we wanted to focus in on and that is buy and bail. Jeff Winship from First Option Mortgage dove into the definition of this. Buy and bail is when someone is interested in purchasing a new home, but the home that they now have is underwater. There is an intent there to possibly commit fraud, maybe not intentionally, but ultimately it is what happens. People basically are going to buy another place and act like they are going to rent their current home out, but then just let it go.
You can go out and purchase another home but be aware that there is a reserve requirement, and those reserves are going to depend on what the equity position is or how much you owe against the current home you are leaving. If it’s anything less than 30%, the lender is going to require 6 months of reserves on the home that you are selling in addition to 6 months of reserves on the home that you are purchasing, essentially a whole year of payments.
A reserve is what your principal and interest payment is on the home. In addition to that would be your property taxes and your homeowners insurance. A lot of people that are departing from townhomes have an association that would be all encompassing in that number, so it would be that monthly payment and then your new projected payment on the home that you are buying.
Some great call-in questions we had included:
Dan from Fridley: I was recently appointed personal representative of my brother’s estate, and unfortunately am the only living relative, so I’ll be getting his home. He has a girlfriend of 30 years and I would like to take his assets, pay off the mortgage, and then give the home to her. Can I quick claim deed that?
Jeff Zweifel: I wouldn’t do anything without asking your attorney helping you with the probate proceeding. There is a process in probate, where you have to have your probate letters and so forth before you can deed the property. There could also be a tax consequence because it would probably be a gift since she is not an inheritor of the estate.
Jean from Mounds View: We have a quick claim deed with my mother’s house and someone just told us we should have a transfer on death and I was wondering if that is needed?
Jeff Zweifel: Go back and check with the attorney that helped you with that first deed because sometime deeds reserve a life estate which means it is not a complete transfer where it may be a better situation to try this transfer on death deed which is another form of transferring the property from your mother to yourself.
Darby in Glenwood: I’m in the process of selling my house and disclosed the radon level. The buyers acknowledged it and are okay with it, but the underwriters aren’t going through with the loan because of that level. The buyers are under an FHA loan, and I’m just wondering where to go next with this step.
Nick Kelvie: Radon is not an issue in any of the disclosures, but what could cause a problem is if you had an inspection. The seller’s disclosures won’t make a difference for underwriting, but if your inspection addressed the issue then that’s something we would have to address in underwriting.
No Spring Slowdown for New-Home Sales
February 28, 2014
Is it time for you to sell your house? Well, according to Realtor Magazine, new-home sales hit a surge in January and continue to stay steady.
Find out more information on new-home sales here!
Turning your Property into an Investment and the Healthy Economy Ahead
February 24, 2014
This week we were joined by Deb Newell from Real-Time Leasing and Jennifer Dierkhising from Wells Fargo. The first topic of discussion was alternative solutions for putting your home up for sale. An obvious alternative would be turning it into an investment property. Leasing your property instead of selling is a great way to build your investment portfolio and just ends up working better because some people cannot sell their property. If you decide to dive into owning investment properties there is the option of hiring a leasing company. A few things to look for when finding a good leasing company is figuring out what you need from that company. Do you want a full-service company or just someone who will find tenants an place them in your properties. You should also screen property management companies the way you would when trying to find a real estate agent. After all, you are giving them a huge asset in your life to take care of so you better be sure you trust them with it.
When you decide to turn your old home into an investment property, you should make sure you are as involved as you want to be with the leasing company. A full service company will take care of the maintenance, management, accounting, leasing, marketing, pretty much everything and if you have that personal connection with the property you may choose not to have them take care of that much so that you can still be involved. Another thing to consider when deciding how much responsibility you want to hand over to a leasing company is how much your time is worth. Many renters are going to call after 5pm about frozen pipes or a leaky faucet and if you are working a full-time job yourself and just want to go home after you’re done, then you may want to have the full-service leasing company so that they can deal with the issues that come in at all hours of the day.
Jennifer Dierkhising brought up an economist outlook for the year of 2014. There is a healthy economy ahead of us and you can definitely see it with how people are getting more confident in selling their homes. Appreciation is happening, 401k’s inflated a little bit last year, so people are starting to feel more prepared in making a move or buying a home. With this healthier economy, comes higher interest rates which really only makes people eager to buy and fight over homes because people are now happier and ready to spend the money.
In 2013 there was about a 2.8% increase in income across the board. With incomes increasing, property values tend to rise along with them. There are a lot of pent up people that are waiting to make a move but are watching inventory and as soon as inventory starts popping, people are going to be on it, buyers and sellers. With the new desire to buy and sell with this healthier economy, also comes a lot of new construction. When people can afford it, they love construction with the ability to build your home however you want to with whatever colors, your own appliances, etc.
Here are a few questions and answers from the show:
Tommy from St. Louis Park: If my girlfriend and I lease her townhouse, how does non-homestead tax enter into all of it?
Jeff Zweifel: Once you start leasing that other property, the taxes will go to non-homestead.
Anne from Stillwater: I have a life estate and am thinking about downsizing. Will that transfer to another home that I get or how would that work?
Jeff Zweifel: It will not transfer. You would have to create the life estate in your new home. In the old home that you are selling, when you transfer the property, the other parties that have the rest of the interest have to participate in transferring or selling your current home. You should seek legal advice from an estate planning attorney to create a life estate for your new home.
Jeff from Richfield: Is the absence or presence of radon a disclosable item in the truth in housing form?
Andy Prasky: Yes, there are new disclosure statements that started at the beginning of the year where there in a new radon portion in the statements.
Josh from Maple Grove: My wife and I are currently selling our home and have it listed high because its winter and we think we have leverage because we don’t want to sell necessarily right away. Do sellers have more leverage in the winter because they may not want to sell unless it’s high?
Andy Prasky: You really shouldn’t waste your time. Buyers are too smart right now and your house is worth what its worth. If you can’t sell in 8 weeks, you need to look at what’s wrong. There are 3 main things: price, condition, and location. Use feedback and market analysis to make changes to your property and then you should be able to sell much easier and faster.
Buying an Investment Property
February 21, 2014
When you think about buying an investment property you probably wonder where you even start. Below are some major questions to ask yourself before diving into the investment property industry.
What are the benefits of buying an investment property?
What should I consider before buying an investment property?
Can I use my current home’s equity to buy an investment property?
What basics should I understand about real estate loans?
How will you evaluate my mortgage application?
How can I get started with investment home buying?
How do I estimate what I might be able to borrow?
How can I find a property that meets my needs?
What occurs during the rest of the home buying process?
Get all the answers here!
Dealing with Encroachments and Easements and Financing Your Home
February 18, 2014
This past Saturday we had Randy Johnson from Liberty Title on the show to talk about encroachments and easements. First things first, let’s define each. An encroachment is an intrusion onto a property of another and an easement is the answer to that, where you get the privilege or right to use the property where your structure or your use is intruding onto the property of the other party.
A pretty popular easement is a driveway easement. So what happens if there’s not an easement in place and it’s a shared driveway? If there’s not a written instrument that delineates what the responsibility of each party is, the title company will raise an exception. It will be on the commitment and then goes to the lender. The lender will then delineate the responsibilities and who’s going to maintain the driveway, where it’s going to be located, etc. so there are no problems in the future.
What is an example of an encroachment? There are ones of temporary and permanent nature. For instance if a fence is put on the other parties property or a garage or pool were not plotted out correctly to begin with and went into the neighbors yard. In order to solve these issues, you should seek legal advice. You’ll then want to look at how accurate the info is that details the encroachment and also get a survey of exactly where the boundaries of the property are. A precautionary measure to take to avoid encroachment issues when purchasing a home or land is to make the previous owner figure it out by asking them to provide a certified survey.
John Castilone also joined us from WJ Bradley this week. Something that John has been noticing lately is that people are coming in with cash to purchase a house. Mortgage companies do not like cash because they want to be able to see where it is sourced from. The money needs to be in a bank for 60 days if it didn’t come directly from your payroll so that you can see that it is good money and not that you sold a boat or you took out a loan from someone else that the underwriter might not be aware of. Just some advice for those looking to purchase a home soon and looking for a smooth process!
There were a lot of great questions that were asked:
Mike from Roseville: We live in a townhome development and many more are becoming rentals, should we change the bylaws and limit the number of rentals to a certain percentage?
John Castilone: When people are looking at homeowner’s association rules and whether or not they are able to buy the property, typically there are limits of how many properties can be rented within those bylaws and that also fits into whether that homeowners association in that complex will fit in with the Fannie and Freddie guidelines.
Bruce: We built a house in 1995 on a lot that is divided by a pond and the only way I can access the other side of the pond is by an undeveloped strip of land that is owned by my neighbor. Recognizing that property will eventually change hands, do I have any easement rights for what I’m doing and if so what are they and how should I protect them in the future?
Randy Johnson: First, look at getting an actual easement recorded that describes the easement and gives you that written permission to use that property. Also, look at the size of the pond. A lot of ponds in Minnesota acquire lake status and if you have lake status then there are Riparian rights that you acquire with that which gives you some right to walk along the boundary of that lake or pond so you need to look at some of those issues to determine where you are at and seek legal counsel.
Q: Did a rule change with listings? Multiple listings in multiple neighborhoods are calling a tiny office or nursery without a closest a bedroom.
A: It really depends what city the bedroom is in. A closest does not always define what a bedroom is. Also, agents are helping you envision what a possibility you could have with it. For instance, say you need a three bedroom but it’s showing as a two bedroom and they’re using one as an office, but could easily turn it into a bedroom. They really aren’t trying to mislead you. Typically a bedroom always has to consist of 72+SF, an egress window, a door and would need to be finished to count as a bedroom.
Priciest and Most Popular Presidential Streets
February 17, 2014
Happy President’s Day! Did you guess the most popular street named after a president? (HINT: He was our founding father!)
That’s right, WASHINGTON!
The priciest street is named after Coolidge. This one was not that easy.
Click the image to find out more information!
Mortgage Rates Creep down Toward 4%
February 14, 2014
Find out what has been happening to mortgage rates since the beginning of 2014 with this CNN article.
Changes with Conventional Loans and the HARP Extension
February 10, 2014
This week we had Alissa Csiki on from Cambria Mortgage to talk about the new changes in conventional financing and the HARP extension. Something that is new and exciting about conventional financing is that about a month ago the 5% minimum down payment can now come fully from a gift. If someone wants to buy a home, mom or dad are now able to pay the full 5% down as a gift. This is bringing some major competition for FHA loans because there are more cost savings with the conventional route now.
Alissa also wanted to bring up the extension of HARP (Home Affordable Refinance Program) through 2014. HARP was designed to help refinance homes that were underwater. In order to be eligible for a HARP refinance, homeowners must meet the following criteria:
- The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009..
- The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May 2009.
- The current loan-to-value (LTV) ratio must be greater than 80%.
- The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months. Borrowers should contact their existing lender or any other mortgage lender offering HARP refinances.
Alissa mentions that you could have a credit score as low as 620 and still take advantage of the rates that come with HARP. This is an improvement from the 660 credit score that used to be the minimum.
A few questions that came up surrounding the HARP extension included:
Listener Mike from Holy Oak: Do manufactured homes qualify for HARP programs?
Alissa: Yes, they do qualify.
Listener Jeff: A lot of people have second mortgages, can you do HARP refinance on your first?
Alissa: Yes you can. You cannot combine mortgages so you would have to keep the second mortgage the way it is, but you could refinance the first and then you would have to subordinate the second.
Another hot topic was brought up when a listener asked to talk about the pros and cons of a contract for deed. First off, a contract for deed is a contract between a seller and buyer of real property in which the seller provides financing to buyer to purchase the property for an agreed-upon purchase price and the buyer repays the loan in installments. The seller retains the legal title to the property, but the purchaser obtains an interest in the title by virtue of contract.
To begin with answering what the pros and cons of a contract for deed would be, you should ask yourself a few questions. What is your goal? Why are you selling it? Is it because you want an income stream from contract payments? The reason why you should consider these questions is because a relationship is formed between a buyer and seller for a period of time with a contract for deed. You need to make sure you are comfortable with this person because you are basically going into business with them for at least a few years. The golden rule is that you get enough money down right away. The more money down you have, the more skin in the game the buyer will have.
There are provisions in your contract for deed that limit the amount of work the buyer can do on the house, so your buyer cannot just cut down the beautiful oak trees in the backyard or remodel your kitchen more than a certain amount that is agreed upon with the seller. Also, the buyer takes over the responsibility of the real estate taxes, the upkeep on the property, the insurance, so they don’t have the same rights as a tenant does. The overall lesson here is that there are definitely pros and cons to contracts for deeds, it just takes a minute to evaluate your situation and decide if the pros outweigh the cons in having a contract for deed.
Protecting Yourself from RadonRadon is the second leading cause of lung cancer deaths and the scariest part about it is that it goes undetected if you do not test for it.
Radon is an invisible radioactive gas that can be found all over the U.S. so testing for it is the only way to find out if your home has radon. Check out this website that gives all the basic information you need to know about radon and be sure to tune into the show at 10am on Saturday morning to learn more about it!
Moving Process and FHA Back to Work Program
February 3, 2014
This past Saturday’s show had a major focus on the planning that goes into moving. We had Mia Erickson and Kevin Quagliano from Alexander’s Mobility on to talk moving with us. There are so many things that you need to consider when you decide to put your house up for sale and planning for the move is one of them. Call a moving company as soon as possible so that you can get an estimate done and have the movers ready to go once the house is sold. Mia advises you to get two to three estimates before you decide which company to go with. These estimates will be done at no charge so jumping into the first one you get because it is convenient is not your best decision. Talk to a few more companies and listen to the references from your realtors because they will have formed good relationships with these companies and have a good idea of who is worth working with.
With all of that being said, we asked why people should pick Alexander’s as their moving company? Mia and Kevin said that Alexander’s takes relationships very seriously and are committed to fulfilling the service model their company built in an effort to “Wow” the realtors and the clients. Also, people should know that there is no benefit for a realtor to refer a company other than the fact that they want to help their customer in any way possible so they will offer the best company they know.
When you are selling a home, there is a lot of work that goes into the staging process. A stager or your realtor will come in to help make your house look presentable and relatable to the potential buyers so they advise you to take things out of the home that may prevent a buyer from seeing themselves living there. Alexander’s has a “stage and store” option where they can come in and take those items out of the house and store them safely for you so that you can present your home to the buyer in the best way possible. One last tidbit of information that is useful for those that are moving is how to keep the cost of the move low. Specifically with this time of the year, you want to make sure you are shoveling pathways for bringing items out of the home otherwise the crews will shovel for you, but you are paying them by the hour so it will cost more. Other things to do are disassembling all of the beds, color coatings, taking mirrors off of dressers, having boxes ready in garage and entry ways, pretty much any small task that is not hard for the person moving to do without a moving company.
Another focus of the show was on the FHA Back to Work Program. Mona Edick from WJ Bradley was on to discuss what this is. The FHA Back to Work Program allows buyers to purchase a home only one year out of a short sale, foreclosure, or bankruptcy with FHA financing and then taking advantage of today’s market and rates instead of waiting for the three year period. You do have to qualify for this by having 12 months of no late payments in your credit report, then proving you are reestablished. Many people suffer an economic loss of income from being laid off or hours getting cut, so they find themselves in situations where they have to go into foreclosure. With the FHA Back to Work Program, the people are helped back on their feet and back into a home with today’s great rates.
Mona also brought up the fact that rates have dipped down below 4% so people should start finding out if they can get a better rate or people that were considering entering the market should grab ahold of these good rates now. Also, if you are looking to refinance, you need to apply and see if you are qualified, and then mortgage companies such as WJ Bradley will look at the market and see where your value will come in and figure out if there is potential to refinance. After that is all said and done, they will lock in a rate for you and move forward.
The Second Priciest House in the Metro
January 28, 2014
The Twin Cities’ second most-expensive home listed at $22 million went on the market last week, a stately white brick manor known as Tanager Hill that’s perched on a hilltop overlooking Lake Minnetonka.
For more information and pictures on the house, check it out here.
January 27, 2014
This past Saturday we focused on the pros and cons of associations as well as how to deal with issues or concerns about the associations. Garth Johnson from MN REO Experts defines association for us. An association is a condition of the purchase agreement. For instance, you have a condo or townhome for sale, the Minnesota Association of Realtors has a form that goes with the contract to the condo or townhome. As a condition of the sale, the buyer gets to review all the association documents, which includes the budgets, bylaws, rules, resale disclosure certificates, and more. Within a 10 day period of receiving these documents, the buyer decides whether they agree with them. If the buyer doesn’t have any objections, then they move on with the purchase agreement and continue on with the financing, but if they do have objections, then they have the right to back out of the purchase in that 10 day period.
Associations are sometimes viewed as a hassle or an extra expense buyers/renters would rather not have, but you should consider what the association covers before you pass judgment. Depending on what you are renting/buying, associations may cover heat, electricity, outside maintenance, hazard insurance, up-keep of common areas such as pools and tennis courts, landscaping monuments and even more. Justin Jurkovich from WJ Bradley mentioned one thing to be cautious of when qualifying for a condo or townhome is that it will be counted against you in your debt ratio if they have associations covering heating bills. If you are looking at a single-family residence, heat and water bills would not be considered when qualifying for financing.
A few questions that were asked repeatedly about associations included:
Q: If you rent a townhome do you still have to pay association fees?
A: They do have to be paid by either the renter or the owner, it depends on what was agreed upon in the lease.
Q: What type of association is easier to work with: homeowner or management?
A: Those that are professionally managed are typically more organized and responsive but if they are a smaller association, they can’t afford a management fee so they stick with homeownership and do the best they can.
Q: How do you stop getting being billed by an association when you were forced to move out due to foreclosure?
A: If you are the renter, you wouldn’t be liable for dues unless it was included in the lease that you were responsible for them. This also may be a case where it was a big management company that was in charge of the association and they just need to bill someone so you need to call that company and figure it out.
14 Real Estate Terms Explained
January 24, 2014
You’re 26 years old, finally landed that job with benefits and security and are ready to enter the world of home ownership. Before you jump right into working with a realtor and finding the dream house, educate yourself. This article explains 14 real estate terms that everyone should understand when beginning to buy or sell a house.
Check out this article from the Business Insider and make sure to tune into 830 WCCO on Saturday at 10am for the Real Estate Radio Hour.
America’s 50 Best Places to Live
CNN just put out the 50 best small towns to live in America in 2013. Chanhassen, MN made it in the top 5! See which other Twin Cities suburb made the top 50 list here!
Short Sales and FHA’s and VA’s, Oh My!
January 20, 2014
This past Saturday’s show covered many different topics that our listeners had multiple questions on. The first one was short sales. A listener asked to give a definition for short sales. Wendy Haisley from Markve & Zweifel defined short sales as when someone has to leave a property due to income loss, inability to make the payments, wanting to sell or needing to sell due to divorce, relocation, etc., and they owe more than what the property is worth and cannot afford to pay off the mortgages in full. In order to help yourself, you accept an offer on the property subject to the lender approval and submit the offers to the lenders. The lender does a review that is necessary under their investor guidelines and decides if they are going to allow you to sell that property ‘short’, paying them less than what you owe and then waiving the balance so that you can move on without owing anything on your previous mortgages.
After hearing this definition, you might find yourself in a similar situation where you need to have a short sale. People do not always view short sales as the best option to choose from, but that’s because many people do not seek out the professional advice from their lender, realtor, or attorney. These professionals can help you get back on your feet without prematurely moving due to fear of getting kicked out of your house. Markve & Zweifel is a great place to seek advice in these cases. Check out their website here!
There were a few questions asked about requirements for loans. The first question asked whether or not you can be approved for a VA loan less than two years after a short sale if credit scores, income, debt, etc. are all good. Nick Kelvie from First Option Mortgage brought up the fact that there are many requirements for approval of VA loans including about a three year wait depending on your credit score. The answer to that question, unfortunately is no, you cannot be approved for a VA loan less than two years after a short sale. Lenders do require a minimum credit score of at least 620 for approval of a VA loan. There are also other income sources used to qualify for a VA loan including Retirement Income, Social Security Income, Child Support, Alimony and Separate Maintenance, BAH, BAS and Disability Income. To find out more about qualifying for a VA loan, check out this website.
Another listener asked about how to be approved for an FHA loan. A few things to be aware of before applying for an FHA loan is that you must be an occupant in the residence that you are applying for and it must be your primary residence. If your home exceeds the amount of the maximum mortgage amount for your area you would need to put additional funds down to hit the maximum loan limits. While there is a minimum credit score you need for an FHA loan, you will also need to be able to prove that you are capable of paying bills on time. You should also be able to show lenders a consistent work history for two years before applying for the loan and show that you will have three years of expected work after the loan approval. One other thing to work on is reducing your debt-to-income ratio below by paying off credit cards or loans. There is so much more information about FHA, loans but a good way to start is checking out these frequently asked questions here.
Changes in CFPB Mortgage Disclosure Forms
January 17, 2014
With the new year among us, there have been quite a few changes in the real estate industry. One of them includes the new CFPB mortgage disclosure forms. Many people are wondering if these forms are going to help or hurt borrowers. The Huffington Post touched on the changes in the forms here and whether they will be beneficial or not here.
Read the articles linked above to learn some basic information about the CFPB mortgage disclosure forms but make sure to tune in on Saturday to the Real Estate Radio Hour on 830 WCCO to find out more important information you need to know about the changes!
Kernels of Wisdom For First-time Home Buyers
January 13, 2014
Have you ever made a huge decision such as moving to a completely different city or attending a particular college without doing research first and finding out if it was the right fit for you? Your answer is probably no because these types of things are complete lifestyle changes that require you to think before doing. Another lifestyle change that requires some education is purchasing your first home. This week’s show was focused on the importance of research, education, and timeliness for home buyers.
Ed Nelson from the Minnesota Home Ownership Center gave some great insight into the first-time home buyer experience. Ed discussed how many people feel some sort of urgency when purchasing their first home due to rates and prices. People think they have to buy “right now” in order to get the best deal. This is a huge mistake. Yes, the market changes constantly, but when you are looking to purchase something that is a life investment, there should never be a rush. Educate yourself with reliable sources whether it be a family member that recommends a certain real estate company or checking out websites loaded with information on home buying such as hocmn.org.
A great question that was asked by a listener is what are some key characteristics to look for in a realtor. Jennifer Dierkhising was also in studio from Wells Fargo Home Mortgage and gave a wonderful answer to this question. Jennifer advises her customers to interview at least 3 realtors before signing on with anyone. You want to compare personalities, see how they communicate, experience levels and are they listening to your situation. Making sure a realtor is the right fit for your needs is one of the first big steps in the home buying process.
Now let’s weigh in on the renting versus buying topic that has sparked most of these conversations. Renting may be good for those that are unsure of events happening in their near future such as getting married and moving in with your significant other or getting a job promotion that requires you to relocate. For those people that do not foresee any big change in their future, don’t let fear or financial issues scare you away from purchasing a new home. After all is said and done, more and more apartments are being built each year, but rent is also increasing about 5% along with these new developments.
Andy Prasky brought up the fact that although housing prices may increase in the current market, the owner of a house will lock in on a rate and it will never go up. Renters have the uncertainty of whether their rent will increase and then may not have the means for that change. With the locked in rates that are guaranteed for a home owner, you are not only prepared financially for your payments but are also putting money towards an investment that is beneficial to yourself, not your landlord. You may be exhausted after reading this article because there really is a lot of work that goes into purchasing a home, but when you work with the right people and the right companies, this process becomes much easier and is a great investment into your future.
Tips for First-time Home Buyers
January 10, 2014
Buying your first house is a huge and exciting step in your life but can also be quite stressful if you are not fully prepared. If you have only rented before, the most stress you most likely had to deal with is making sure you have a high enough credit score and that your landlord has a good maintenance team. Buying a house requires so much more planning ahead of time. There are many extra expenses you might not fully be prepared for such as appliance breakdowns or title and settlement fees. The moral of this story is do your research before you dive into that 4 bedroom, 3 bathroom house with the adorable white picket fence.
Check out this story from MSN Real Estate for some great tips for first-time home buyers. Make sure to tune into the Real Estate Radio Hour on 830 WCCO tomorrow for even more information on the subject!
Tips and Tricks for Investment Properties and Changes with the New Year
January 4, 2014
The Real Estate Radio Hour had Deb Newell from Real Time Leasing on the January 4thshow and she gave some greats tips for taking care of investment properties in this wonderful (sarcasm) winter weather. One of the major issues a property can have when temperatures drop into the negatives is the potential for pipes to burst. Before winter weather hits, check in on all properties to make sure that the pipes are well insulated. Insulated pipes will be the number one way to prevent any pipe issues throughout winter. Another little trick for when the coldest days of the year hit is to open cabinets where pipes are hidden under to let the heat from the unit reach the pipes better, as well as flush the toilets more frequently.
So what happens when a pipe bursts and you have a unit full of cold renters with no family nearby to stay with while these problems are being fixed? Well, while most lease agreements do not include a subsection for this particular problem, Deb Newell recommends putting the renters up in a hotel and giving them a credit with a limit for the time being. This may be an expense many investment property owners do not take into mind so it is best to educate your tenants and insulate those pipes!
John Castilone from W.J. Bradley was also on the show this week talking about the changes that are happening with the New Year. As of January 1st 2014 there is a new power of attorney form. To read more on the changes with the power of attorney form, click here.
A Mankato listener called and asked the guys how the Loring Park area was for market value as they were contemplating buying there. Loring Park has weathered the housing slide very well due to its great location and all the close by amenities. Everyone agreed that would be a great place to invest. Since Deb was on, the conversation turned to making sure you know the rules of renting a condominium. Many associations have strict rules and regulations when it comes to renting them out. Prior to purchasing a property, make sure you know these rules because you don’t want to find out when it is too late. Those rules may deter the way you intended to use the home. Read more on association bylaws here.
Preventing Winter Weather Issues on Investment Properties
Minnesota has already taken a big winter weather hit this season, but it’s never too late to take precautionary measures to make sure your investment properties do not get tangled up in these messy conditions.
Check out this article from Fortune Builders on ways to prepare your investment properties for harsh weather! Be sure to tune in tomorrow, January 4th, at 10AM as The Real Estate Radio Hour covers this and other real estate related topics – 830WCCO!
Home Remodeling Posts Strongest Growth in Years
Often, remodeling activity is dominated by smaller projects from investors who had purchased single-family homes to turn into rentals. But home renovations are becoming more and more popular as more home owners regain equity and look to spruce up their homes.
Check out this blog post from Realtor Magazine!
Advice for First-Time Home Buyers
There is no such thing as the perfect home, but there is a home that is perfect for you.
If you’re considering buying a home for the first time, be sure to check out these tips from Realtor Magazine’s blog!
[ ‘mooviNG ]
adjective: in motion. operating. working. going. on the move. active.December 9, 2013
You may think differently with the holiday season in full swing… but the end of the year is a great time for growing families to move, and/ or renters to become homeowners. Tax savings, less competition, and upcoming changes for 2014 are all benefits to moving now!
Tax Savings : Closing on your new home by the 31st is great because you can deduct mortgage interest, property taxes, and points on your loan on your income tax return.
[If you’re not moving, you can still get big savings by taking action now. Make your January mortgage payment in December and get credit for the interest deduction – just a helpful tip!]
Less Competition : Generally throughout summer and into the fall months, the market stays very active. Then as winter hits, holidays pick up and people get busy. We see the market react to this as well and it slows. However, it never stops! Listing your home now, with fewer homes on the market can give your property the advantage it wants when it comes to potential buyers.
Upcoming Changes : New mortgage rules will go into effect at the beginning of 2014 and are meant to avoid a repeat of the housing crisis in 2008 and 2009. With the hope of making mortgage lending less risky, the standards for approving loans are being raised through the Qualified Mortgage (QM) Rule.
Those that will feel the biggest impact from this update will be those who are struggling with consumer debt and are living paycheck to paycheck. Anyone whose debt-to-income ratio is higher than 43%, will not get approved. Currently, less strict and around 45%, loan officers are noticing a lot of potential buyers are hovering around that mark. Just a few percentages down, can make a big difference. Banks will also limit the fees for originating mortgages to no more than 3% of the loan amount.
So what does this mean for you if you’re entertaining the thought of a move?
2014 Forecast : Mortgage rates gradually climbed in 2013 and are expected to rise to 5% in 2014. This, along with the QM rule, will define both the lending industry and the real estate market. In addition, the National Association of Realtors predicts the continuation of raising home prices. So if you’re thinking about it… buy/sell now and start 2014 already settled in your new home!
From our partners at Wells Fargo Home MortgageA Wells Fargo Home Mortgage Economic and Housing Market update:
The U.S. economy expanded 1.6% in the year ending in the third quarter of 2013. That’s weaker than the average annual growth rate of 2.3% posted since this recovery began in June 2009, and one-third of the growth rate seen during the first four years of the recovery begun in 1982.1 It’s this weak performance, along with the benign inflation numbers, that’s delayed the expected “tapering” of the Federal Reserve’s monthly purchase of $85 billion of financial assets.2
Personal income grew 2.0% in the year ending in September 2013, after accounting for inflation and taxes. Average annual growth in real disposable personal income has been 2.2% since 1999.3
Consumption expenditures grew by 1.7% in the year ending in September 2013, after accounting for inflation. Since 1999, average annual growth in real consumption spending has averaged 2.1%.3
The U.S. homeownership rate remained at 65.1% during the third quarter of 2013, its lowest level since 1995.4
Productivity, or output per hour worked, grew 1.9% at a seasonally adjusted annual rate during the third quarter but showed no growth over the past year. Since 1999, productivity has grown at a 2.2% average annual rate.5
The rate on 30-year fixed-rate mortgages in Freddie Mac’s survey averaged 4.35% in the week ending November 14, jumping from 4.16% a week earlier. The rate averaged 4.19% in October.6
- National Income and Product Accounts – GDP 3rd Quarter 2013 (Advance Estimate), Bureau of Economic Analysis, Department of Commerce, November 7, 2013. US Business Cycle Expansions and Contractions, National Bureau of Economic Research, www.nber.org/cycles/cyclesmain.html.
- FOMC Statement, Board of Governors of the Federal Reserve System, October 30, 2013. www.federalreserve.gov/newsevents/press/monetary/20131030a.htm.
- Personal Income and Outlays, September 2013, Bureau of Economic Analysis, Department of Commerce, November 8, 2013, www.bea.gov/newsreleases/national/pi/pinewsrelease.htm.
- Residential Vacancies and Homeownership in the Third Quarter 2013, US Census Bureau, Advance Monthly Retail Trade Report. November 5, 2013. www.census.gov/housing/hvs/files/currenthvspress.pdf
- Productivity and Costs, Third Quarter 2013 (Preliminary), Bureau of Labor Statistics, Department of Labor, November 14, 2013. www.bls.gov/news.release/prod2.nr0.htm
- Freddie Mac Primary Mortgage Market Survey, November 14, 2013. www.freddiemac.com/pmms/. The Federal Reserve Bank of St Louis Economic Data system (FRED) was used to collect historical data on Gross Domestic Product, real disposable personal income, and consumption.
Preserving character in an old home sweet home!4442 Longfellow Avenue, Minneapolis November 19, 2013
There is something so special about old and original features to a home. That’s why when renovating an older place, it’s important to try to bring it back to its former glory! Because it takes you back to a simpler time when natural woods and unique touches throughout made the place home.
Don’t get me wrong, builder grade homes often get a bad rep for using cheap materials and creating streets of identical homes, but the efficiency and (in most price ranges) the quality truly is there. Newer materials and updated appliances in today’s world is a must. However, taking the bones of a classic Tudor and refurbishing items throughout to make it ‘like new’ can still hold onto the charm because that’s there from the get-go.
4442 Longfellow Avenue in Minneapolis is my most recent renovation project. Built in 1926, this home had all the structural style and flare I was looking for. It just needed a little loving and some updates so a family in this century would be able to (and truly want to) live in it.
As you drive down Longfellow Avenue, just off Cedar (an easily recognizable street name for any city-goer, and so giving directions to your place is a breeze!), you’ll drive past years of history. Most of the homes along this street were built around the same time as 4442 and therefore give your neighborhood that classic neighborly feel! On the other side of the street – Hiawatha Golf Course! Lined with trees and glimpses of greens, your front yard view will always be in good shape! When 4442 was built, this view was still just a new park around Lake Hiawatha. Just a couple years before, the park board established a skating rink on the lake and a few years after 4442 was built, construction of the golf course began. The material from dredging the lake was used to build the rolling hills of the course making it more interesting and “sporty.” When it was complete, the charge to play nine holes was $0.35! Could you imagine?! Today, Hiawatha is a great city course where the holes are difficult but not too challenging. It is a Par 73, 18-hole course with a lot of practice space and ideal scenery.
The whole area actually has a lot to offer in addition to the golf course. Parks and trails everywhere and local businesses down Cedar are always nice to see. Of course there’s a Caribou down the way and a Super America. But there is also a Supervalu Foods, the Cedar Quick Stop, Carbone’s Pizzeria, Ice cream place down the street, and Tom’s Popcorn Shop… a landscaping company, photography, and repair shops. And all of this along bus lines. Also, a huge feature for this area – the walking paths around Lake Nokomis! Getting out and exploring your area is great to do early on. Picture yourself living here and the things you’d go out to see and the places you’d return to.
Pull up to 4442 and the red door greets you. Additional landscaping and a fresh coat of paint make all the difference in the curb appeal. You can definitely tell this is an older home, but one that has been taken care of in its 90+ years. It gives you a reason to move in and a connection to the past that already makes you feel like this is home, not just a house to live in for the time being.
Original but refinished oak hardwood floors spread throughout the main level but what I love most is the thick baseboard and unique crown molding. I chose a neutral color for the walls to bring out the white woodwork and gleaming floors. You’ll notice the classic vents in the baseboard and actual grates in the floor.
Unique windows, a wood burning fireplace, and built-ins are typical in older homes. But with a fresh coat of paint, good cleaning and a little elbow grease, they don’t look old. They look classic.
In the kitchen, your storage space seems endless. I kept the original floor-to-ceiling pine cabinets and just refinished them to shine. All the different nooks and crannies that were common in kitchens in the “olden days” are still there and the pull out cutting board as well. I did give the kitchen a face life by bringing in new stainless steel appliances and granite countertops because having items that work well in today’s fast pace world is just as important as maintaining the character. The kitchen is a perfect example of mixing old with the new.
Additional updates throughout the rest of the house were also done with functionality in mind. Adding a wool runner to the staircase kept the old-time feel but also make them cozy and comfortable to walk up and down. When you’re sneaking down to the kitchen for a glass of water in the middle of the night, you won’t miss a step. The upper level master suite is modern and looks fresh. So to bring some of the old up to the “attic,” I used some doors from the main level. The original doors now add the desired feel to the master suite and removing them from downstairs opened up the space to make maneuvering through the hallways more manageable.
In the olden days, they liked to close off the hallways to the bedrooms to keep those rooms cold for sleeping and the entertaining spaces like the dining and living rooms nice and warm. Today, lets face it, we like heat throughout the house and most homeowners prefer an “open concept layout” vs closing things off.
Although the basement is unfinished, it’s not a ‘creepy unfinished basement’ and definitely has that open concept layout so the potential for an additional family room is right there for you! Your back yard is modest but when you live in this kind of neighborhood, houses are fairly close to each other and you wouldn’t expect much for a yard. It is however, the perfect size for late summer barbeques and small get-togethers with the neighbors.
So… Who’s ready to move-in!? If this sounds like home sweet home, or if you would just like more information on this or other properties, contact me. I’d be happy to take you out on a showing!
adjective: glad that something has happened or not happened, that something or someone exists, etc.November 1, 2013
Staging your home is the best proven way to get top dollar for your property as you prepare it to sell.
This we know. We know we should de-clutter, de-personalize, neutralize, fix and clean before even putting our homes on the market. But what about for showings and open houses? REALTORS® often debate about how far to go to set the scene. Do you play music? Do you serve food?
Well I’m here to give my favorite answer to just about anything… It depends!
Who’s your audience? In a lower price range, you probably don’t need to turn down the duvet cover as if a maid had just been there because it becomes too artificial. Buyers may have a harder time placing themselves, their families, and their lifestyles in that setting. It may look nice and picturesque but the idea behind staging, especially for an open house, is to keep it realistic.
Having soft music playing in the background is a good idea but not always necessary for a showing or even an open.
Smells are key. We follow our nose – whether we realize it or not. Fresh baked cookies can be a nice touch, especially now in cooler temperatures. This will make the place smell homey and give you a simple snack to serve. However, don’t bake cookies for the smell and then not serve them, that’s just mean!
With the holidays around the corner, simple festive decorations can be a nice touch too… when done right. Stray away from personal knickknacks that add a ton of clutter. In a higher market, setting a Thanksgiving table might be a subtle way to say this is home. It will show that this formal dining room will be perfect for entertaining this holiday season. As always, the way and to what extent you set the table will depend on the style and price of the home.
Many often fear the market this time of year and traditionally it does slow down as the holidays pick up, but I say adding finishing touches and keeping your home show-ready will pay off in the end and you’ll be thankful you’re prepared
noun: the state of great comfort and extravagant living
adjective: luxurious or of the nature of a luxuryOctober 15, 2013
Minnesota’s real estate market has been, for the most part, going strong and steady in 2013. But does the market roaring back to life since 2009 apply to the Luxury Home Market as well?
With the shortage in real estate inventory and the fear and uncertainty buyers felt in 2009-2010, we’ve seen prices increase overall. When it comes to luxury homes in the Twin Cities, inventory is still fairly low but prices have been all over the place. Back in 2011, upper bracket homes originally valued at over $1 million, were selling for $700-800K! Thankfully as we’ve watched the market improve since then, we’ve seen $1 million listings back at the $1 million mark.
The improved luxury market doesn’t always mean you’ll sell your castle quickly however. The average days on market for a million price point, range between 27 and 40 months, according to the Minneapolis Association of Realtors. So if you’re thinking about listing, prepare to have your home on the market for some time. The Twin Cities offer great job opportunities, experiences, entertainment and lifestyles, but this isn’t New York or Los Angeles and the amount of buyers in that higher bracket is not as abundant in the Midwest. –
Mortgage Rates & Monthly Payments
Is now still a good time to buy?
September 15, 2013
… When life hands you lemons… What about when life hands you mortgage rates higher than you expected?!
As I’ve watched the housing market this summer, I have noticed some big changes. We started the summer with record lows in mortgage rates meaning buyers were everywhere – eagerly looking to get into their dream home. They had their financing worked out and attacked the market with multiple offers everywhere. Houses sold quickly. The hope was that was going to last, but unfortunately good things do come to an end – at least when referring to low interest rates. As these summer months flew by, rates began to rise and those eager buyers began to worry if it really was the right time to buy?
Sharply rising rates cause uncertainty. When rates are low it enables qualified homebuyers to get financing and they get excited to start looking and purchasing. When rates begin to rise that translates to higher monthly payments which can really scare off potential buyers. They start to think, can I really afford to pay more a month on my mortgage? Should I just stay where I am? Should I just continue to rent?
The best thing to do is to not react emotionally to the rate changes. In reality, historically, rates are still very low. They will go up and down with the economy, but when the rates rise, don’t automatically assume a home purchase is now out of reach. Look at the numbers and do the math. Figure out if the extra per month in your mortgage payment is really going to be the deciding factor, or if you can realistically afford it. When that number reaches an unrealistic amount, you’ll know your decision.
If you are wondering if it is the right time to buy or sell in today’s market, please let me know. I am happy to sit down and analyze if the time is right for you!
July 21, 2013
Summer 2013: Beaches. Water fights. Flip flops. Lemonade. Sunglasses. Late nights. Ice cream. Warm air. Bonfires. Pool parties. Barbecues. Blue skies. No school. Memories.
Summer is the perfect time for family vacations with the great weather offering endless outdoor activities to do together. Some people go to Disney world; some go to Yellowstone. Some spend the day at Valley Fair and it’s usually a jam-packed trip. If you’re thinking about ways to entertain your kids in a more low-key, comfortable place, you may be thinking about a second home or vacation home. Whether its out of state in the sunshine of Arizona or more local on the lake or in the woods, below are a few tips and tricks to finding the perfect place for you and your family.
Escape to a place that will feel like home, but with the carefree-ness of being on vacation.
Out of state?
Let’s face it, Minnesota’s weather can be crazy and unpredictable and even though it’s summer now, investing in a place out of state can be a great thing come winter – not to mention it’ll be more of an adventure to travel to!
The first thing you want to do is find a good realtor to help you look out of state. Buying property long-distance is always stressful and it may be challenging to find something on your own while you’re sitting in Minnesota. Use referrals and find someone you trust. Also talk to your lender. (This goes for all real estate investments.) Decide if this new home will be in your name as a second or vacation home, or if you plan to split it with other family members, friends, etc. and how you plan to structure the purchase. Will you rent it out while you’re back in Minnesota or will it stay vacant? Remember that real estate transactions vary state to state.
Land of 11,842 (or so) lakes!
Although the idea of traveling out of state may sound appealing, Minnesota is already the perfect setting for vacations year round. If you’re thinking about buying a cabin on the lake, you’ll be set for family vacations and getaways with the kids until they have kids… and their kids have kids! Boating, swimming, fishing, great views…. not to mention Minnesota Nice will allow you to make friends with your neighbors on the water.
Sounds ideal right? The value of your real estate purchase will most likely be decided by the quality of the lake and condition of your lakeshore. You’ll want to think about how you’ll use the lake. Is the lake fully recreational? Will you have a boat? Can you dock it? What kinds of covenants restrict you from installing the right kind of dock? You’ll also want to talk to the neighbors to learn what they love about the area and the lake… and what they don’t love about it.
Hunting vs. Fishing?
If you prefer the peace and quiet of the woods, maybe a hunting cabin is the way to go. You can still bring the family and escape to a place where you’ll get to think creatively for activities. A property on the lake is obvious; lets get out on the water! A place in the woods, you can go hiking, play games outside, or get competitive with some board games indoors.
What you’ll want to look out for when buying in the middle of the woods is making sure you’re not completely stranded. Do you have neighbors? Do you know who will maintain the road while you’re not there? Can you access electricity, water, sewage, and other utilities? You’ll want to make sure you will be able to ‘hook up.’
No matter what kind of property you’re interested in investing in, be sure to make full use of it! The summer is in full swing, and the memories are just waiting to happen.
July 18 –
Did you see this article from WCCO on Flipping homes?
Let us know what you think?!
Click the image to read the article!
Outdoor Get togethers!
June 08, 2013
Summer took a while to arrive this year, but now that it’s here, be sure to enjoy the warm weather out in your yard! Now is the time to invite over some friends and/or family and throw that summer bash you’ve been meaning to.
Not sure if your yard is up for a get together, though? Here are a few inspiring ideas to get you and your outdoor space ready.
Big or small, your yard should be a cozy environment. Outdoor fireplaces or fire pits are great ways to add this touch and are perfect for cool summer nights while making s’mores! If you have a large yard, think about creating smaller “rooms” to organize the space with functionality while creating that cozy feeling. Landscaping appropriately doesn’t have to be extravagant or accomplished by big projects either. Get creative and use/reuse/revamp what you have.
If you don’t have very much space to work with, think of pieces that have multiple uses. Find ways to marry form and function. Take some of the ideas in this issue for organizing small spaces and apply them outdoors as well. Keep in mind, less is more. Decorating is in the details but don’t clutter smaller spaces with tons of small objects.
Think outside the box. Always wanted a great garden? What about a vertical garden! Want to make use of all your outdoor spaces? Don’t forget about that side yard! What about after summer? Plant for all 4 seasons with spring forsythias, summer hydrangeas, early fall Japanese anemones that turn in late November, and a few evergreens to maintain some color all winter. With a little creative thinking, your yard can become the perfect place for entertaining.
Now that the scene is set, it’s time to add the people and the food. Fire up the grill while the kids play in the yard. It’s summer… show some color with lots of fruits and if you’re limited on table space, layer it up with tiered appetizer platters. A wire caddy can be a fun way to keep condiments organized and try smaller metal buckets filled with ice instead of a bulky cooler. This will keep drinks around the party for easy refills that are perfectly in reach.
Add some fun games and enjoy the sunshine. We’ve waited for it long enough!
The Do It Yourself Movement
May 15, 2013
In today’s world, DIY is a term everyone is familiar with. It even has it’s own television network that inspires many homeowners to tackle home improvement projects on their own.
The movement became fairly popular in the 70’s, but was coined already in the 50’s. People began to fix up old homes and homeowners began to look at their home as something to have fun with and decorate in their own styles. DIY projects can help you save money, add your own style, and give you something to do on a Saturday morning while you listen to the Real Estate Radio Hour!
It’s important to remember not all home improvement projects are worth doing on your own. When it comes to roof repairs, insulating your attic, installing a deck, or replacing your windows, you’ll want to hire a professional. Major renovation projects need to be done correctly. You don’t want to risk having to re-do something costly because you didn’t have it done right the first time.
That being said, it is possible to completely change the look and feel of a room, your yard or your porch, with simple projects that you can actually do yourself. Think back to the 90’s when something came about that changed the whole idea of DIY… Trading Spaces! Remember the show that made you dream of completely re-doing your living room without breaking the bank – made you appreciate a designed space?! Trading Spaces, Rehab Addict, Love it or List it, and other HGTV and DIY Network shows have accumulated over the years and are here to stay! People love them because our homes are where we spend our lives. They should reflect who we are and should be designed and decorated in a way that makes us enjoy coming home to it.
As today’s technology continues to advance, we have access to new ideas for improvements and projects 24/7. Remodeling, refinishing, and reusing items is a continuing trend, and the internet is where you can find unique ideas to create and innovate new ways to use certain objects. Great websites are all around us, but to sort out the clutter Pinterest has put everything in one place.
For those of us interested in… well, just about any topic, Pinterest not only stores your ideas on a virtual pin board to keep everything together, but also links to the websites with more detailed how-to’s and amazing before and after transformations.
If you haven’t already, join this DIY movement and take advantage of endless resources. Be sure to check out my Pinterest page and as summer approaches, get outside to tackle some new projects to get your house more organized, more inviting, a little more cozy, or just a bit more You!
Tis the Season… Tax Season
April 11, 2013
As a homeowner, you’ve probably been thinking about your home tax deductions, right? But as you calculate your returns, you’ll also want to be cautious of errors that accountants and tax professionals say are extremely common for homeowners. You can avoid suspicion from the IRS and still get a maximum return if you follow these helpful tips:
Remember what year you’re deducting for because you take a tax deduction for property taxes in the year you actually paid them. Don’t deduct the wrong year and end up claiming the wrong amount. This is a mistake many make and it’s very simple to avoid.
Home office deductions are complicated but working from home can have many advantages. CPA Chris Mahowald from MFK & Associates said when looking at the area of your home you use for business, figure out what percentage you use exclusively for business and then apply that to the various expenses you can deduct and write off on your return. Mortgage interest, real estate taxes, utilities, home repairs and maintenance, and homeowner’s insurance premiums can all be deducted by taking each expense and multiply it by that office percentage.
Tracking home expenses, such as maintenance and repairs, is important regardless of working from home. Keep documents, manufacturer’s certification statement or energy tax credits as well as lender statements confirming property tax payments, and have them ready when filing.
Did you refinance and not sure which points to deduct? Normally you deduct the points you paid your lender for securing your mortgage for the year you bought your home. However, if you refinanced you deduct the points for the life of the new loan. (For example: If you paid $3,000 in points to refinance into a 15-year mortgage, your tax deduction is $200/year.)
Selling your home for a large profit could mean paying capital gains taxes. If you’ve sold your home in the last year and your gain was over $500,000 be sure to note this. Forgetting to keep track will raise some red flags with the IRS. Mahowald clarified, “However, if you lived in your home for more than two years, it was your primary residence, and the gain was less than $500,000, the gain on the sale is not taxable.” With time limits, certain exclusions, and other details to look at, it’s a good idea to talk to your accountant or consult the IRS website for specifics.
Check out Form M-1PR for a refund. Minnesota has a property tax and renter’s refund that you as a taxpayer may be eligible for based on homeowners and renters that meet certain income requirements.
That means you have a choice. You can be one of those agents who waits until April 15th and risk an audit, or worse—major penalties. Or, you can get smart and develop a plan for attacking this and next year’s tax season.
Take the dread out of one of every business owner’s most feared seasons. Here’s how:
1. Round up your receipts and make them electronic
2. Start tracking your mileage now
3. Get your extension early if needed
4. Don’t neglect the obvious
5. Talk to your pro about your future, tooClick the image to read more from Trulia’s article
Your Curb Appeal
We all understand the importance of first impressions. When it comes to your home, the outside is the cover of the book that we tend to judge. So why not make it as appealing as possible and make a great first impression! Now’s the time! With warmer temperatures heading our way and the snow melting, you should start thinking about what to do about your home’s curb appeal! If your home is eye catching from the outside, everyone will also want to see what it looks like inside – especially buyers!The entrance is the best place to start if you’re thinking about upping your curb appeal.
Clean, welcoming and some fresh paint is all you really need. However, if you’re looking to make an even greater statement, get bold with a fun color and pay attention to the trim. Molding can be applied to the sides and top of the doorway and really draw people in. Be sure to clean up or replace your hardware as well. Shine up the doorknob and have any other accessories on your door match that overall style. This way everything is cohesive.
Where are they? Are they easy to find and read from the street? Do they reflect your home’s style? If not, think of creative, fun ways to accomplish this. If they are looking worn or outdated, add some life to them or replace them altogether. These, along with other outdoor hardware such as a wall-mounted mailbox or overhead light fixtures, will add style and interest to your curb appeal when they function collectively.
Don’t forget them! Clean the windows to add sparkle and shine – they’ll reflect your new and improved landscape during the day and emit the warm inviting glow from inside at night. If you want to add a new look, add-on window panes transform your plain windows into beautiful paned versions without the cost of buying all new!
This is truly what curb appeal is all about! A pretty landscape to your entry way can be accomplished in stages, so start by pressure washing your walkways and driveway. Making a clean path and getting rid of winter’s wet dirt will immediately make your home more inviting from the road (Also think about pressure washing your house). If you’re thinking about bigger projects, flower beds and areas where bushes and trees grow should be trimmed and cleaned. In addition, container gardening will add interesting touches to your landscape. They can accent your walkway or doorstep and are a quick, easy and affordable way to do so. Then, install outdoor lighting throughout your landscape which will make a huge impact by illuminating those clean walkways and beautiful flower beds.
Since the outside of your home is setting your guests up for what is to come when they enter, it’s a great idea to add some finishing touches to your curb appeal by accessorizing. Get creative – even subtle touches can add interest. Add weather-resistant artwork. If you have a swing or outdoor seating on your porch, add pillows or rugs that reflect your style. Think symmetrically – it’s the simplest way to arrange items at your front door and is overall pleasing to the eye. Also remember to coordinate with other improvements you made, via color schemes and styles.
Harsh Minnesota weather can get you down
-Literally! Find out how your house settles and sinks with moisture changes in the soil…
Here in Minnesota, we all know the weather can be brutal and with temperatures varying dramatically in the next few months, now is a good time to start thinking about how this affects your house!
The Real Estate Radio Hour crew, Chris Rooney and Andy Prasky, brought in foundation expert, Jesse Trebil from Jesse Trebil Foundation Systems to talk about your house settling as we enter that March/April freeze and thaw cycle.
“It’s normal to see a bit of settling, windows and doors sticking, and cracks appearing in your sheetrock. However, because of the drought Minnesota has been in since summer, we are seeing more and more issues this year,” said Trebil. It depends what kind of soil your house is sitting on and the lack of moisture in that soil. If your soil is expansive, such as black dirt or clay, it also shrinks when it loses moisture. This, according to Trebil, is what causes the issues.
“We have a pier system that can lift your house back to level so it’s not resting on the soil that has a tendency to fail,” said Trebil. They go around the foundation of your home and install these foundation piers, which are engineered to hold and support your house.
One listener asked for the price range to do this and because it varies with each house it is hard to estimate without knowing specific details. Trebil and his crew offers free estimates where they come and laser your house to tell exactly where it’s settling and where these piers would need to be placed. After doing this they can get you a firm price.
In addition, as we enter spring in the next few months, Trebil said we will also see a lot of wet basements. For those thinking about finishing your basement but have always been hesitant, Trebil said he had solutions to that as well. Their patented waterproofing system gets below the water table in your floor. “If you have a dry sub-soil below your floor, you’ll have a dry floor,” said Trebil. Draining water from your walls prevents seepage there as well.
To avoid mold growth in damp basements, Trebil discussed his E-3 Wall system made from a plastic stud and foam insolation. This snaps together and when finished looks exactly like ordinary walls. However, because it’s not made from organic materials, it will never rot. Check out www.safebasements.com for more information on any of Trebil’s solutions heard on the show this weekend.
Also joining Prasky and Rooney in studio was Matt Helling from Cambria Mortgage. “Andy and I have been seeing a lot of VA Loans recently,” said Rooney. Wondering if the qualifications have changed or loosened to allow more veterans to obtain these loans, Helling clarified this is not the case.
“The qualifications haven’t been changed, but we are seeing more and more of them,” said Helling. “People just didn’t know about the programs or didn’t understand them before. We’ve had veterans come in to take out a regular home loan who didn’t know they qualified for, what I think is, one of the best loan programs out there.”
VA Loans are true no-money down, 100% loan to value loans. They do not need mortgage insurance and the VA restricts costs so generally, closing costs and other fees are lower than conventional loans. “It’s a benefit that is earned,” stated Helling.
For more information on VA loans visit www.cambriamortgage.com or go to www.realestatradiohour.com to ask specific questions that Rooney and Prasky are happy to pass on to Helling himself. Stay tuned for next week!
Thinking about selling your home?
Before you call your Realtor, Tackle this “To Do” list…
- Paint the front door
- Add flowers! Remember, the front door is the buyer’s 1st experience so make it welcoming!
- Fix cracks in the sidewalk, steps, garage floor and driveway
- Prune the trees and shrubs
- Weed the flower gardens and freshen up the mulch
- Home Repair! Dented gutters, peeled window sills, loose siding… fixing these now will not give the future buyer any red flags.
- New roofs are always highlighted in a listing. So if your roof looks like it’s weathered too many storms, now would be a good time to replace it. Call your insurance agent first as it may be covered.
- If you are thinking of listing your home in the cold winter months, take photos of your gardens and landscaping over the summer, if you can. I love to see these displayed in the home book for buyers to see what your home looks like in the warmer seasons
- Dust light fixtures and fans, ceilings and woodwork
- Wash windows and screens
- Strip and re-caulk plumbing fixtures
- Scrub the grout in tiled areas
- Shampoo carpets and get those stains out – new carpet is expensive!
- Utility Room: Dust off your furnace and water heater. They will instantly look newer! Those spiderwebs will have to find another home.
- Organize every closet and cabinet… one at a time. This is the best time to donate, sell or give to a lucky friend anything that will not be going with you to your next home. Why wait until you sell, you still have to deal with it? This is also a great time to pack the things that you are keeping but don’t need in the next 6 months. If you clear out a wall in your storage area, then you can stack all of the moving boxes in an organized way. Now it will be easier to keep things clean for future showings.
- Paint the walls a warm neutral color… nothing is better than a fresh coat of paint. No more scuffs and dents. Your home will look clean and new.
- Deep clean appliances and don’t forget about the oven!
- Revive your cabinets and update your hardware. I use Restore-A-Finish. Apply it with a rag, let it sit and wipe away – so easy for rewarding results!
- If you have a little extra $ in your budget for updating your appliances and countertops, now is the time! Granite and Stainless Steel adds so much to the kitchen and buyers LOVE updated kitchens!
- Stacy Edwards Staging and Design for Chris Rooney & The Preferred Home Team ____________________________________________________________________
Your Tax Questions Answered!
On a typical Real Estate Radio Hour, hosts Chris Rooney and Andy Prasky say they can’t take legal questions or give out tax advise because they wouldn’t want to give out the wrong information. However, Saturday, January 19 was not a typical show.
With Rooney in Vegas, Prasky was joined in studio by Scott Kadrlik from Meuwissen, Flygare, Kadrlik & Associates to answer all your questions involving tax. As Prasky mentioned live, “Many investors watch the market and watch the stocks go up and down. But they want something that’s tangible.” A rental property can be a tangible trade and those that are curious about investing in real estate (if it’s for yourself… and especially if it’s an investment property) should know about some tax advantages to diving in!
“The best part of the Tax Act  is that nothing has significantly changed for 2013,” said Kadrlik – adding that there could be some limitations based on your income. However for the most part, 2013’s Tax Act will allow mortgage interest to still be tax deductible. Also, real estate taxes and mortgage premiums are all still deductible.
If you’re thinking about buying a home to fix up and then sell for profit, you will have to pay tax on that gain, according to Kadrlik. One listener called in asking this question and Kadrlik explained that generally when purchasing and flipping a home, you’re in the trader business. There is no way to exclude or defer the gain because you’re holding it for a period of time while you make improvements. However, if you’re thinking about selling your primary residence you can exclude up to $500,000 of gain on the sale. Kadrlik added, “People, quite often, don’t realize that you don’t have to pay taxes on the gain at certain levels.”
Also in studio, was Bruce Helmer, who hosts Your Money on 830WCCO on Sunday mornings. He was able to tag-team with Kadrlik about a lot of these things. As a financial planner, Helmer talks to many of his clients about where their money needs to go. “In my industry, I run into a lot of do-it-yourself-ers and I remind them this type of information is why you need to seek out professional advice,” Helmer said. You need the professional guidance when buying a home or doing your taxes so you make wise decisions and get it done right.
Helmer also discussed with Prasky why owning real estate, even if it puts you “in debt” is a smart choice. According to Prasky, sales overall are up 17% since last year and the home values are about where they were in 2006. We are seeing some recovery and with prices and interest rates down, it’s important to add real estate to your investment portfolio – it’s called good debt.
Helmer explained, “It’s ok to borrow money to buy real estate because you’re buying what’s an appreciated asset. You’re buying your family’s lifestyle.” Many waste their [borrowed] money on things they don’t need, racking up their credit and have outrageous interest rates that are not deductible. That is inefficient or bad debt, as Helmer called it.
“I believe in real estate as a diversified portfolio and when I say real estate, not just the home you live in, but real estate as an investment,” said Helmer. If you’re thinking about taking the plunge and buying a home, now is the time. So do some homework, ask your questions, and know what will be the best move for you.Mp3 of Saturday’s show is also available for you to go back and review. The listeners had excellent questions – many related to tax issues, so play it back and take notes, or contact the Real Estate Radio Hour crew with any other inquires. 800.246.1867
January 12, 2013
It’s always fun to recognize people for their accomplishments and that’s just what we did to start off Saturdays show. Andy Lindus, of Lindus Construction has a show the hour before Real Estate Radio Hour and we asked him to hang around to congratulate him (and everyone at Lindus) on being named Professional Remodeler Magazine’s “2012 Remodeler of the Year!”
Lindus Construction has been expanding throughout the country and continues to be innovative in their products and services. So, we wanted to congratulate them again for their hard work and achievements. We know when referring our clients to Lindus, they’ll be happy with the service and the way their remodeling projects turn out. We are seeing more and more people buying homes with intentions to fix it up and build it to their own wants and needs. On the show, Andy Lindus was able to point out some of the more popular projects he’s seen recently, and what we expect in 2013.
Decks seem to be a big deal – many are finally having them installed, or refinishing existing decks. We’ve all see the houses with the plate attached to them but no deck off the back patio doors. Lindus explained that many build their homes with the intention to finish the deck later, and then often times they move out and never got around to it. So the first thing the new homeowners do, is add the deck. In addition, this is the same scenario for unfinished basements.
These types of remodels are even more common with homes bought on short sale or foreclosures because the buyers are saving the money in the price of the home and can then, in many cases, afford to remodel right away.
We brought in Garth Johnson from Minnesota REO Experts to talk about what’s happening with bank short sales and in the foreclosure market. According to Garth, REO inventory is down and because of this, we are seeing more and more multiple offer situations. This is a topic many looking at buying veer away from because they don’t want to get into bidding wars. However, as we discussed on the show, it’s important to know what the bank is looking for in an offer. That way you can go into those situations more confidently and possibly end up getting the house you really want.
Yes, the dollar amount is important but it also comes down to the different contingencies the bank has to deal with – is it cash, is it subject to financing, will there need to be an inspection… etc. Most often, there will be financing contingencies but Garth added that banks don’t necessarily prefer FHA over conventional or vice versa. Justin Jurkovich from W.J. Bradley was also in studio to further discuss financing options and how things have been changing.
The market seems to be getting better with lower interest rates but another part of this, that Andy Prasky mentioned during the show, is there seems to be better loan programs now and more of them. Justin added that everything is being more thoroughly looked at for you to meet requirements, and they require more documentation for certain programs. Even so, with more options, it’s not a bad idea to consider refinancing or to ask your loan officer to help you look at some of those options.
We also discussed auctions with Garth and looked at where that process has been and will go in 2013. In the past, if the house wasn’t selling when on the market for 90-120 days, they would then look for another viable option to sell – auctions being one solution. However, now we sometimes see banks putting them up for auction before they even list them for sale. Another thing Garth has been seeing more and more of, are pre-bids. They list the house on MLS as an auction, but accept offers before the actual auction date. In any case, auctions can be tricky to navigate and as Andy suggested, it’s not a bad idea to have your real estate agent tag along with you.
We spent the remainder of the show answering listeners’ questions. Remember if you think of anything you’d like clarified/discussed or have other suggestions throughout the week, we’re always available here via the ‘Ask a Question’ button, or through our hotline 800.246.1867.
Until next week!
Seven ways to use less energy and lower your heating costs!
Cold weather is here and you’re probably wondering how to pay less for heating than you did last year.
- Check your heating and cooling ducts. If they leak, as much as 30 percent of your heat might be lost. You can cover accessible ducts with less than $100 worth of metal tape (a.k.a. “Foil Tape”) or mastic sealant.
- If it’s time to replace your top-loading washer, a front-loader will cost more, but will use a third to a half of the water, and less energy and detergent. Go with cold or warm water to save money.
- Change your furnace filters! And do it every 1-4 months, depending on the thickness of your filter (Every inch in thickness = 1 month of life). That will save you money on the system you have today. When the furnace needs replacing, consider an Energy-Star-certified model. It could cut power bills by more than $200 a year, per the Environmental Protection Agency
- Check the insulation in the attic. Floor insulation should stick up over the floor joists. If it’s below the joists, add more for energy saving.
- Turn the water heater down to 120 degrees to save on energy use. Insulate the pipes and the heater itself with an insulating blanket to reduce heat loss.
- Install a low-flow shower head and you’ll cut hot water use 25 percent.
- Turning the thermostat down when you are asleep or gone can save up to $200 a year. But a programmable thermostat will turn the heat back on before you wake up or get home. You won’t have an icy cold house.
Edick Valuation Services
New Year. New Resolutions.
Most of us make New Years resolutions and every year promise ourselves we’ll actually stick with them, and maybe in the past you have. This year we are giving you some good reasons you should stick to your resolutions because 2013 is all about your home.
It’s a brand new year and it’s overflowing with possibilities to improve, de-clutter, and fix your house. Based on the most common New Years resolutions gathered by a few different sources including Time Magazine, USA.gov, Houselogic.com and others, we’ve come up with a list of promises to your home that will keep you both determined and inspired the whole year!
5 HOME RESOLUTIONS TO ACCOMPLISH THIS YEAR
Lose Weight – CUT ENERGY USE
Start by checking your HVAC ductwork, which are infamous for wasting energy due to leaking. Solve this problem by sealing and insulating your ductwork. According to Energy Star, it could improve the efficiency of your heating and cooling system by as much as 20%. In addition to being more comfortable in your home, you’ll also keep your furnace, air conditioner or heat pump in better shape, longer!
Quit Smoking – PURIFY INDOOR AIR
Indoor air is full of dust, mold spores, pollen, and viruses and it only gets worse in the winter. To help eliminate these contaminants, maintain your HVAC system and change the filters on a regular basis. If you intend to remodel some rooms in your house this year, use low-VOC paints to keep the air pure, and burn real firewood in your fireplaces/wood stoves. This is better than pressed wood products because those could contain formaldehyde.
Get out of Debt – BUDGET IMPROVEMENTS
With all these new ideas for home improvements, it’s hard not to plan big fancy renovations. Just remember they come with a price, so budget out the year to prevent over spending and prioritize these improvements… What’s necessary and what can wait then decide which of those are in your budget. The U.S. Census Bureau says an average of $3,300 per household is spent on annual maintenance and home improvements.
Get Organized – DE-CLUTTER
This is a big one! Start going through things and sorting. Create more storage space and these day’s decorative baskets and other storage bins are appealing and affordable. So even if you have lots of stuff, organize so you can easily stash it and know where to find it when you need it. In addition, get creative with wasted spaces in your house. Turn that corner nook into something useful.
Drink Less – CURB HOME WATER USE
The average household uses about 400 gallons of water each day! You could dramatically cut that down by replacing your shower heads with low-flow ones. These reduce the amount of flow but keeps the pressure!
3 Tips for Selling Your Home in 2013
Over the past six months, we’ve seen some positive signs for the housing market. After years of declining home values, this could finally be the year to sell.
Buyer confidence is up. And along with the record low interest rates and rising rent rates, many are taking that confidence and putting it to action.
So if you’re thinking about selling in 2013, start planning. As this Zillow article mentions, you only have one chance to be “Just Listed” in this new market. So put your best foot forward and go from homeowner to successful home seller.
January 5, 2013 – Happy New Year!
We started off 2013 with a Real Estate Radio Hour dedicated to our listeners. Interacting with you and answering your questions on air, always makes for a fun show.
To start, we looked back at this time last year. What were we talking about then, and how has the market changed since then? As Chris recalled, last January, we were wondering when it would be turning around and as we have noticed in the last five/six months, the world of real estate is doing well. We’ve seen some positive growth and as I mentioned on the show, hope it flows over to the rest of the economy in 2013 as well.
We also discussed the Mortgage Forgiveness Debt Relief Act getting extended through 2013 and how that is good news for anyone facing foreclosures or short sales. A little extra help in these situations can make the transition smoother.
One listener facing a foreclosure wondered about what to do on the last day they can be in their house? It’s a scary situation and many fear having to turn in the key and leave with nowhere else to go. However, throughout the process a real estate agent contacts you to coordinate an exit strategy. Also, many banks offer relocation assistance.
In addition, many may have been thinking about refinancing. As our guests from Cambria Mortgage, Matt Helling and Alissa Csiki mentioned, 2012 was a reproductive year for mortgage financing and with the government buying mortgage bonds to keep rates low, traditional routes to refinancing are changing too. They advised that if you thought about refinancing before, and it didn’t work out for you, try again. 2013 is here with a big change to the HARP program – now allowing unlimited loan to value – which is helping more and more people.
Other calls came in from listeners thinking about selling and what to do to get your home market ready. If I owe more than my house is worth and am looking to sell… what are some of the home features that are currently big selling points? Should I do major upgrades like finishing my basement to add value? Should I make it a walk-out instead of a look out basement?
All of these are great questions and if you would like to hear from us with more details specific to your situation, let us know. Both Chris and I have brochures to help with these types of questions. As I mentioned on the show, we have checklists that can help get your house ready for showings as well as other useful tips and tricks. Hardwood floors, stainless steal appliances and other upgrades add value to your home and catch a buyer’s eye. Remodelers and builders always spend extra time and attention in the kitchen and bathroom. Upgrades to these rooms are what sell a house…. Just for your information!
Other features, like attention to your basement, are a personal decision. Some prefer walkouts, and some prefer lookouts. Finished basements do add square footage and therefore value to your appraisal. However, it’s also about way the basement is finished. I mentioned on the show that a big empty family room, although fun, useful and open to possibilities, doesn’t actually add too much value. If that family room has a nice fireplace or if you create some additional bedrooms down there… that’s where you’ll see an increase.
Another caller wondered what would be the best strategy for buying and selling. Buy first and then worry about selling? Or try to do both simultaneously? Our best advice is to buy first because it takes away a lot of that mystery. However, financially speaking, we realize that is not always a possibility. Many are worried about being out of house and home if things don’t time out well. Chris discussed a special case where one of his clients ended up buying their next home, then renting it out, while they waited for their current home to sell – something to consider.
As always, we enjoy hearing from our listeners and love shows like this, where we can spend time talking to you. If you had a question and didn’t get on the show, call the hotline (800.246.1867) or hit the ‘Ask a Question’ button on our home page.
We look forward to hearing from more of you next week!
Housing Trends from 2012
Today’s homebuyers want all kinds of different things from their homes, but one trend noticed throughout 2012 was flexibility. We always want things that serve multiple purposes and that includes the different rooms in our homes. MSN Real Estate asked home builders and those in the housing industry to keep their eyes peeled for what’s popping up in houses through the past year. Here are some pretty spectacular features…
H.R. 3648 – Extended
The Mortgage Forgiveness Debt Relief Act of 2007 was extended through January 1, 2014. The extension will exempt from taxation mortgage debt that is forgiven in a loan modification, short sale or foreclosure.
December 29, 2012
I was on vacation in Florida during Saturday’s show but Andy was able to wrap up the final Real Estate Radio Hour of 2012. He was joined in studio by Jennifer Dierkhising and Jordan Axelrod from Wells Fargo Home Mortgage to discuss refinancing and relocating via an interview Jennifer had done earlier in the week.
As discussed, it seems as though America is always on the move and we are naturally curious about looking for better opportunities. This is evident when it comes to our homes as well. Wells Fargo Home Mortgage can help by providing many options for home financing that can range from relocating benefits if you’re moving for your job, new construction financing, or options for homes needing renovations. The goal is always to make relocating as hassle free as possible.
Once your application and appropriate documents have been submitted, the underwriters can approve you. Your home mortgage consultant can help you with more details and information before the loan closing so the transaction is successful. Jennifer also mentioned the Preferred Payment Plan option. Check out the Wells Fargo page for more information! [would link to their page or website]
Andy was also joined by Jeff Zwiefel from Markve and Zweifel Law to discuss short sales. Many may think that foreclosures are the way to go, but Jeff made some good points about why short sales could be a better option. For one, if you’re thinking about getting back into the housing market sooner rather than later, a short sale may be the right choice. Jeff added you have a little more control in a short sale and don’t have to wait for the bank’s process, as you would in a foreclosure.
It is important to remember that short sales require you to be proactive. Many servicers for the lenders are not looking at short sales today and won’t allow them after the sheriff sale. Therefore it is critical to get an early start before the property goes into foreclosure. As Jeff recommended, as soon as you think you’re going down that route [you’re falling behind and are underwater] get both real estate and legal advise to determine if you should do a short sale. This way you are prepared before you’re too far into the foreclosure process.
Jeff also added that if your in the short sale process and have an offer pending, often times the bank will postpone the sheriff sale so your short sale can go through. He offers a useful kit he calls ‘Instructions for postponing a sheriff sale’ and is willing to send it to those interested. Check out M&Z’s page on our site for information on how to get in touch.
Jeff and Andy also discussed the tax relief act. I think that is something many are thinking about lately because it is supposed to end today, December 31, but could be extended. The act provides tax relief from debt cancelled by a lender to those going through a foreclosure. That cancelled debt is then considered income for the borrower. As Jeff discussed, this is something that makes sense and he feels it will be extended.
As always, Andy and Jeff also answered listener’s questions. We love hearing from you and your questions drive the show – so keep them coming!
Florida was great and the weather was just Ok. We were able to get Morgan to Disney and my son, Nick, participated in a baseball showcase. It was a great way to end the year and bring in the new year! I will be back on air this week and again thank you for listening!
Thoughts on the Mortgage Forgiveness Debt Relief Act?
The Mortgage Forgiveness Debt Relief Act of 2007 could be extended. Set to expire on December 31, the Act has played a major role in this 2012’s rise in short sales. Jeff Zweifel from Markve and Zweifel will be on the show this Saturday to discuss this further.
But just for your information before tuning in….
The Act helps people by forgiving or reducing mortgage debts over the past five years. According to the IRS, if your debt is canceled or forgiven, that canceled amount can be taxable income. The Act allows taxpayers to exempt mortgage debt that is forgiven by a lender during a loan modification, short sale or foreclosure.
Therefore, if extended, the provision would continue to be applied for debts forgiven since 2007. If it is not extended, 2013 borrowers would need to claim debt reduction/mortgage relief as income. This could be thousands of dollars for some people!
Tune in tomorrow at 10 am to hear more from Jeff, who specializes in short sales, only on 830 WCCO.
December 22, 2012
First of all, Merry Christmas everyone! Hope everyone’s enjoying some time off to spend with friends and family.
Saturday’s show was a little different than usual because we wanted to discuss some tips and tricks to growing your business. Since many of our listeners are not only homeowners, but also small business owners, we felt now would be a good time to bring in Kevin McArdle from McArdle Business Advisors. The idea was to have anyone out there who’s a small business owner, have a fantastic next year!
Small businesses drive the economy, but as Kevin mentioned on the show, a large portion struggle and can’t always put their finger on why! Some may think it’s all about what industry is doing well, but Kevin talked about specific traits that can create focus and clarity in your business, no matter what industry,
First off –
How are you different from your competitors and how can you create a different experience for your customers?
This is what most companies focus on on their websites. They want to convey to their potential clients that they have something of value that sets them apart from others.
Demonstrating your value is the second objective.
Your customers are coming to you with a problem in their current situation and it’s your job to create a contrast in the negative present and the positive future – as Kevin explains it. This is not in the product or service you supply. It’s about how their world changes and becomes better because of that product or service, which creates the value.
As important as both of these are, you also want to convey you’re different and have value by using what Kevin calls ‘consumer centric’ messaging.
When looking at your messaging, your websites, etc. 85% of the content is about you and your business. However, if you focused more on using ‘you’ phrasing, all of the sudden your value is easier for the customer to see. They can envision how your company will be of benefit because you are focusing on them and their current problems. By doing this you will differentiate yourself from your competitors.
It’s easy to say you’re about your customers, but it can be difficult to build messaging around that. Kevin talked about this in further detail on the show, but if you’re interested in discussing/ learning more, visit www.helpingcompaniesgrow.com.
We also had Justin Jurkovich from W.J. Bradley in studio to discuss the process of using your tax statements when thinking about buying a home. It’s important for borrowers to understand the process because many different people work with your file. If your loan officer presents your file to these people in the right way, your loan will go through! One way to make this process as simple as possible for the buyers, as Justin discussed, is to look at your taxes and use a direct deposit right from the IRS. Once the lender sees that, they don’t have to get 3-4 months of bank statements to worry about source and seasoning.
W.J. Bradley works hard to get everything about the borrower out on the front end instead of just doing a quick overview. As we discussed on the show, this is one of the things that sets them apart and creates value! – Lots of good things to think about and take away from Saturday’s show!
Stay tuned for next week….
A Note from Kevin McArdle
6 Keys To Accelerating Your Business
It’s becoming increasingly evident that small business is the growth engine of our economy and the key to creating over 90% of the new jobs in America today. Because so many of the Real Estate Radio Hour listeners are small business owners, they’ve invited me to join this Saturday!
I am an entrepreneur and business growth expert. If you are the owner, leader or manager of an entrepreneurial organization who wants to see your business consistently run better and grow faster, I can help you and your team simplify, clarify and achieve your vision.
Even the most successful entrepreneurs occasionally find running a business more challenging than they expected. Many work longer hours and get less return on their investment of time and money than they would like.
It doesn’t have to be that way. In this dynamic conversation, entrepreneur and business growth expert, I will introduce you to the Six Key Components of every successful business. I’ll arm you with a set of simple concepts and practical tools you and your leadership team can begin using right away to get better results.
President & Principal Consultant – McArdle Business Advisors
December 15, 2012
We covered a lot on this weekend’s show!
To start, we’ve seen a lot of houses with foundation issues and noticed how that affects the buying and selling process. Obviously there are certain problems you would want to get fixed right away, but especially when you’re thinking about selling. Once you know those problems, you can weigh your options – how much is it going to cost me to fix vs. how is my home perceived with the current foundation issues. We brought in foundation expert Jesse Trebil, who could help ease some of those concerns and answer some questions many homeowners have.
There isn’t a house in Minnesota that doesn’t have a crack in the foundation, Jesse said. It’s the “angry cracks” the professionals at Jesse Trebil Foundation System look for when evaluating a home. These are cracks that are leaking water or shifting and opening up. This movement means that the strength of your walls has been compromised – a cause for concern for anyone! So if you’re noticing bowing walls, uneven floors or sticking doors and windows, you may have a bigger foundation issue than just normal settling.
Jesse mentioned different techniques his company uses to fix these problems to save you time, money and eliminate the mess. Check out his website, www.safebasements.com to learn more. These are innovative ways to correct problems and Jesse Trebil Foundation System actually has patents on some of the products they use. Recently, they have developed a new wall system made of completely recycled materials so there is no risk of rot or mold growth – perfect for that damp basement you’re looking to finish. This non-load bearing energy wall is completely independent of the foundation, as well. So, as your foundation moves, these walls won’t bow or lean because of it.
In addition to Jesse, we also had Matt Helling and Alissa Csiki from Cambria Mortgage in studio. They talked about Jumbo mortgages since we seem to be running into those more and more, yet many are still confused by them. Matt clarified; Jumbo mortgages are any mortgage over $417,000 and occur through a private transaction instead of via the government. Because of this many view them as more of a risk and are hesitant because of their history of having exceedingly high rates. This however is no longer true and Matt and Alissa were able to explain why Jumbo mortgages are worth looking into.
Many of our clients that wanted to go with a Jumbo loan thought they needed to put 20-30% down. However, that is not the case. Alissa added that many believe they should put more down to get to that conforming $417,000 loan limit thinking there’s a huge difference in rates. But in the last few years, jumbo mortgages have become very competitive with conforming mortgage rates. Therefore, you could save your money, and put a minimum of 10% down and still get a great rate.
Thanks to Matt and Alissa for clarifying that Jumbo mortgages are no longer ‘jumbo’ concerns. Also, many worry about foundation issues and repair costs. So, hopefully this weekend’s show and Jesse Trebil helped ease some of those concerns, because in many cases it’s not as expensive to fix as you think.
Tune in next weekend to learn more!
December 8, 2012
We were able to look at many different angles to our topic of investment properties on Saturday’s show.
Ryan Edick from Edick Valuation Services was in with his wife Mona from Prime Lending and we got him talking about icedams. It’s a little late in the year, but the snow has arrived – and it will continue to fall. Icedams can be a concern for any homeowner and if you have an investment property, you’ll want to make sure the place is set to give your renters a worry-free winter.
As I mentioned on the show, it’s sometimes easier to find hot spots on your roof now that some snow has fallen. It can be like a blueprint of where your problems are before they become major issues. Ryan added the rule of thumb to preventing icedams and ultimately those bigger issues with water damages, is to have the right amount of both insulation and ventilation.
We’re always happy to provide our listeners with expert advice such as this. But that also applies to real estate in all areas. Chris and I don’t usually think of each other as competitors, but essentially that’s what we are. So we had another realtor ‘competitor,’ Paul Dorn, call in to talk about the Mendota area since that’s a place neither of us are too familiar with. Its fun to learn about new areas and the little nuances they hold, and it’s cool we can team up with another realtor to provide this kind of information to our listeners.
Currently, we are seeing the market going in the direction of rentals and therefore the need for rental properties is growing. With vacancy rates around 2%, rentals are a great investment and in fact 33% of buyers last year, were investors. So how do you get started in all this? What are the finance rates right now for investment properties? And how do you manage the property?
There are tons of websites out there to help you. Census.gov, city-data.com, rentrange.com, rentometer.com, neighborhoodscout.com, and walkscore.com are the few I mentioned on the show. These can help you determine rental and vacancy rates in certain areas. Once you have a rental property, these sites help you decide what to price it at.
As an investor you could put as little down as 10% with home path financing vs. 20 – 25% with traditional routes, as Mona Edick discussed. The current mortgage finance rates are amazing. She also helped us clarify the HARP Program is not just for single family homes, but can be used towards investment properties as well. They just need to be Fannie or Freddie owned.
So are investment properties worth it? We get asked that a lot – especially with a risky market. As we discussed on the show, if you’re a long term hold then you can be conservative in the risky market and ride the highs and lows. The extra cash flow is great, but if you used it to help dwindle down payments on the property and pay it off faster, the faster that extra cash is all yours.
Just some things to think about when it comes to investment properties – See you next week!-Andy Prasky
A Note from Mona Edick
Whether you’re thinking about converting your current home into a rental property and buying a new primary residence, or simply purchasing an existing investment property, you want to pay attention to the following:
- Down payment requirements
- Amount of reserves required
- Credit score
- Help such as property management companies, law firms, accountants, home inspectors – Real Estate Radio Hour is your one stop for help to start your portfolio
Mortgage Consultant, Prime Lending
We had a full studio on Saturday’s show! Our topics revolved around mortgages and John Castilone from W.J. Bradley was in to talk about what kinds of loans to get depending on different housing conditions. We were also joined by Garth Johnson with the Realty House and Minnesota REO Experts who brought in Chris Galler from the Minnesota Association of Realtors.
As always, we like to hear from our listeners – whether it’s a question or advice to others tuned in. One caller aided in our conversation on mortgage payments by offering a tip to those not interested in biweekly payments because they can come with additional fees. He said, take your monthly payment, divide by 12, then take that 1/12 and add it to your monthly amount. By the end of the year you’ll have made an extra payment – which is what the biweekly plan accomplishes too. John Castilone added whichever way you choose to do it; you want to make sure you’re making that extra payment, and this way is a convenient way for homeowners to do it themselves.
With Chris Galler in studio, we were able to really get into the mortgage interest deduction and what’s really happening right now. As he mentioned during the show, the current mortgage interest tax deduction is in place but changes are being looked at on multiple levels. This obviously would impact consumers and the prices in the future housing markets.
Having this deduction in place has been a major key in the success of home ownership. To continue that, Chris Galler and the Minnesota Association of Realtors are lobbying for all of us homeowners, but you can help too. One caller during the show expressed concern that foreclosure rates were going to rise if we take away the mortgage interest deduction. Talk to your representatives. It seems like this is a concern for many.
Housing is and always has lead the economy, as Chris Galler pointed out, and a lot of this has to do with the amount of jobs involved in designing, building, and selling a house. Andy mentioned construction permits are up 107% and because of the shortage of houses from when they weren’t building; we are seeing more and more apartment complexes going up.
So, some predictions from our experts for the future:
Garth Johnson expects the outcome of these building projects to lead to good inventory throughout 2013. In addition, more options could come from foreclosures and/or lenders repairing houses to get buyers into better places. This will be great for first time homebuyers!
John Castilone added the rates are going crazy and will continue in 2013. The Mortgage Bankers Association predicts 4.5% by December of next year.
Chris Galler agrees and believes there will be a continued positive growth. However, the key is good inventory!
On that note… see you next time…
Hope everyone had a great Thanksgiving!
I was on vacation and wasn’t able to be on the show, but was tuned in from Arizona. Andy called in from Florida to quickly touch on vacation properties down there! A couple of our agents at the Realty House were able to fill in for us and talk with host Denny Long about buyer expectations.
As Denny mentioned, it seems that most US markets are favoring homebuyers these days, but that doesn’t mean that the sellers are desperate and willing to take any offer thrown their way. Tommy Anderson talked about how aggressive the market is. As we’ve discussed in past shows, it’s fairly common to see multiple offers on one property, and Matt Helling from Cambria Mortgage reminded listeners to scout out your mortgage options and get a pre-approval early. That way you get ahead of your competition.
In addition, when thinking about purchasing it’s important to learn the art of the lowball offer. Along with Lauren Peters, Tommy discussed the advantages and disadvantages to offering less. You can throw it out there and see what you get. If you get the property, you may have made a great deal and got it for a great price. However, you don’t want your low offer to insult the seller. So, how do you find the middle ground between what you’re willing to pay and keeping the seller interested in you as a buyer?
Use your realtor! They can help you look into your options in more detail. For example as one caller discussed on the show, they were very interested in a house but had a large tree that caused drainage problems. In order to fix the problem they would need to remove the tree, which came at a cost. Their realtor suggested offering low to cover the project. When doing this, however, you want to do your homework and figure out what taking out that tree would cost you, so you can justify why you went low.
Another topic that seems to be of confusion is how to determine an offer price when looking at the market value, assessed value and appraised value. In many cases, they are all giving you a different number! That is because they Are different – in who does them, how they are used, and for what purposes. To clarify:
Your assessment/ Assessed Value refers to tax valuations. Municipalities have to meet their budget obligations and have an assessment office in charge of collecting taxes. They also may have an assessor who determines the amount of taxes that need to be collected from each owner.
Your taxes are based on the size and value of your property and these valuations are based on Market Value. As Lauren explained on the show, the assessments are not updated very often and don’t keep up with the ever changing market. So if the market is rising and houses sell for more, the tax assessments may still be less than the market value.
An Appraisal is conducted by a state-licensed appraiser, usually for the benefit of a lender, to determine if the amount requested to be loaned is appropriate for the property. Matt added that this value is the only one that really matters from a mortgage standpoint!
Hope that answers some questions. Both Andy and I will be back on the show again this Saturday! Until next time…
- Chris Rooney
A Note From Matt Helling
Just a friendly reminder that the City of Woodbury is still offering $25,000 in deferred financing to qualified first-time homebuyers or purchasers of foreclosed homes.
· Our interest rate is 3.00% simple interest
· Principal deferral reduces monthly payments by $70 per month on an ongoing basis
· Most lenders view our $25K as equity—conventional financing here we come… this means no PMI or FHA premiums for your borrower!
· Woodbury money is exempt from MRT—lower closing costs equals happier borrowers!
Let Cambria Mortgage welcome you home. Call us today at 877-942-0110. Hope everyone had a great Thanksgiving!
Vice President – Cambria Mortgage Sales Operations
Saturday’s show was all about our listeners. We wanted to get back to and answer a lot of questions we’ve had recently. Focusing on cosigners, since that seems to be an area of confusion, we brought in Mona Edick from Prime Lending to help us clarify.
Today’s market is doing well and now is certainly the time to buy. As Mona mentioned during the show, mortgage payments are low in many areas when compared to monthly rental rates. More and more young people, fresh out of college, are looking to buy and use FHA government loans to finance their first home. However, they are in debt with their student loans and don’t qualify for a home loan, so they are in need of a cosigner.
Cosigning is common and often confusion arises when something changes with the property; such as selling or unfortunately losing it to foreclosure. To clarify, cosigning doesn’t mean you’re entitled to ownership of that property – and therefore don’t have any right to tell the owner when they can sell. So you are liable for the loan but don’t have any rights – so be careful who you co-sign with, or require some ownership or governing rights. In addition, as Mona said, it’s a fairly simple process to assume your cosigner off the loan once you’ve established some credit.
We had many call in questions throughout the show and focused the remainder of the hour on answering them. Since housing prices have gone up in the last year, one caller was concerned about foreclosures because they are rising too fast. I agree the market as good, and as I’ve mentioned, now’s the time to buy. However, the options are somewhat slim and because of this, one property can get multiple offers with rising prices. For example, I had one property that had many competitive offers including one $40,000 over the asking price and they didn’t get he property!
This led us into a broader discussion of how appraisals work and how to determine the asking price. There are three kinds of appraisals; full, drive by, and no appraisal, with different fees associated with each. One caller asked if she could forgo the appraisal since they just refinanced the previous year. This is a possibility. Mona mentioned automated underwriting determines this based on the area and your financial situation. When trying to decide if you’ll need an appraisal or what kind it would be, your lender will look at your file and will use this system to decide how you’ll figure out the value of your property.
It was a great show getting to hear from so many listeners and we look forward to more interaction with you guys next time!
- Chris Rooney
A Note from Mona Edick
When it comes to getting co-signers to buy a home using FHA, I see a lot of hesitation from parents and grandparents. I have been able to get them to do this so they know that their child/grandchild can “assume” them off of the mortgage when they have paid off enough debt or increased their income enough to qualify on their own. The benefit to this is as follows:
- They get to take advantage of the current market.
- They get to take advantage of the current interest rates. When they assume the loan the interest rate does NOT change for them so they will remain locked in at today’s awesome rates.
- A lot of people believe that you have to refinance the co-signer off and in turn then risk higher rates down the road… This is not true.
With the Holidays coming up and family’s are gathering together, now’s the perfect time to look into this!
Mortgage Consultant, Prime Lending
Tune in 10AM this SATURDAY to learn more, 830 WCCO
During Saturday’s show we focused on first-time homebuyers with guest John Castilone from WJ Bradley. John brought in an article that discussed five smart moves for first-time homebuyers, and we felt these were accurate and helpful for anyone thinking about buying… whether it’s your first time or not. The process can seem overwhelming and because it is such a big decision, having some help is never a bad idea! So, using the article’s tips, we elaborated….
1) Get lender-qualified
The first thing to do is get pre-approved. You want to be honest with your lender about everything, including your credit. After you’ve done this, you’ll have a better idea of your budget and can start shopping around. In addition, once you’re approved you’ll want to find a real estate agent you trust and whom you feel will help you throughout the rest of the process.
2) Think ahead into the future
Always be thinking long term. There may be a very nice house that you love the paint colors and new appliances but its only a two bed one bath and you’re looking to start a family. Chances are you’d move out of that house within a few years and then this process of searching for the perfect house begins again! Start thinking about what your plan is for this property.
3) Stay educated
You want to be as prepared as possible. Asking lenders you already know to help or give advice is a good idea as well. As Andy, who must still have hunting on his mind, mentioned on the show… being prepared is important “You wouldn’t go hunting and not bring your gun!”
4) Remember your budget
John’s advised to find a happy medium between meeting your long term needs and what’s in your budget, adding currently we are in a real ‘sweet spot’ for interest rates! Buy for what you need.
5) Take your time
I’ve worked with people for two to three years! You want to make sure you know what you want and what you need with such a large investment. Keeping an eye on the market to see how long rates stay down or tracking different holding patterns can be a good way to stay current and know when to strike!
In addition to discussing this article we talked about the great opportunities for investment properties, and discovered some new useful apps for your phone. We thank John for being there to help us answer the many questions that came in throughout the show.
Until the next show!
– Chris Rooney
A Note from Chris Mahowald
There is a lot of misinformation out there about the additional 3.8% tax that begins in 2013. The answer to question about whether the 3.8% tax will apply to a home sale is that it might, it depends on each individual situation.
I will start by giving you a little background on the 3.8% percent tax. This tax applies to single individuals that have adjusted gross income over $200,000 and married individuals that have adjusted gross income over $250,000. The additional 3.8% tax is calculated on the taxpayer’s investment income. Investment income would be interest, dividends, capital gains, etc.
When an individual sells a house the gain on the sale of the home is only taxable if the gain is greater than $500,000 for married couples and $250,000 for single taxpayer’s and the taxpayer used the home as their principle residence for two out of five years.
So, if an individual that sells a house for a gain greater than $500,000 (or $250,000 for a single taxpayer) and the married couples adjusted gross income is greater than $250,000 ($200,000 for a single individual) then the portion of the gain that is over $500,000 (or $250,000 for a single taxpayer) would be subject to the 3.8% tax.
For example if a married couple that has an adjusted gross income of $300,000 sells their principal residence for a gain of $700,000, assuming they qualify for the $500,000 exclusion, they would pay the 3.8% tax on $200,000.
Christopher L. Mahowald, CPA
Meuwissen, Flygare, Kadrlik & Associates, P.A.
November 3, 2012
This past week’s show we covered a lot of different topics. We started off with our special guest, my daughter Morgan, to help me talk about the process of moving and how that affects a family (from a kids point of view). We just moved from Prior Lake this past June, where I have lived most of my life, to Minnetonka. We moved into an actual neighborhood (we had lived her whole life on acreage) so Morgan talked about how hard those changes were as a 9 year old, but how she adapted to the changes in a positive way.
That’s what’s important when moving. Staying positive. Enjoy your new home and make it the best place possible for you and your family. In addition, Morgan and I also talked about family traditions and she wants to make ours camping… I am hoping she considers the Holiday Inn a campground.
We were then joined by Jeff Flannery and Matt Helling of Cambria Mortgage to help us transition into the topic of reverse mortgages. Yes… the confusing world of reverse mortgages! This has always been a hot topic with Real Estate Radio Hour because, as I mentioned in the show, I’ve been doing this a long time and I’m still working on getting them down.
Why do a reverse mortgage?! As Jeff and Matt discussed, reverse mortgages can eliminate large mortgage payments and you can do a reverse for purchase to get into a home without a mortgage payment. They recommend welcoming others such as family members and even your financial planner into the process, so everyone is educated with what is going on. Also, one of our callers asked how does a reverse mortgage end?! Jeff explained only when the property is no longer the primary place of residence for the last surviving homeowner do you have to pay back the loan. The estate would sell the property, and through the sale, pay back the mortgage. These are non-recourse loans so that means if the payoff is higher than the value, they can not go after you for the deficiency.
To give people a better understanding of this they are hosting a seminar TODAY! November 8. Click the banner on the home page to get more information of where and when. Until next week…
- Chris Rooney