Tuesday, December 28, 2010

Take the Mystery Out of Real Estate Appraisals

Appraisals are meant to help buyers avoid a potentially bad real estate investment. It’s meant to help the lender determine how much money they will lend (both for purchases and refinancing).

There are other types of appraisals, too—those that determine the assessed value of your home for property tax purposes or determine how much replacement coverage an insurance company will place on your home.

Arriving at an appraisal value is no easy task. For example, some of the major factors have more to do with the neighborhood, such as:
  • Type of area-- housing development, acreage, condo, and or townhome
  • Recent sales prices of other homes in the area
  • The amount of time between when it’s listed and when it’s sold
  • The distance to schools, shopping, fire and police services
  • The condition of other homes in the neighborhood
Now, for the home itself. After determining if the home is in good condition (or not), here are some of the factors the appraiser will take into account:
  • Total square footage of living space
  • Other buildings such as garages, storage barns, etc.
  • Age of the home
  • Size of the lot or acreage
  • Number of bedrooms & baths
  • Unusual features (like 2 kitchens)
  • Extras (like fireplaces, sound system, swimming pools, etc.)
And the final step is putting it all together by comparing your home, to other homes that have sold. Since no two homes are exactly alike, the appraiser makes “adjustments”. If your home has 2 bathrooms, and the home down the street has 2-1/2 baths, the appraiser will make a dollar adjustment because you have ½ a bath less than the other property.

That’s where local knowledge, understanding of value adjustments, and unbiased judgment by the appraiser makes the difference. And yes, tax assessors basically use the same criteria when determining the value for tax purposes.

Monday, December 20, 2010

5 Housing Predictions for 2011 from Freddie Mac

  1. Low mortgage rates. With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0 percent to 0.25 percent for most (or all) of 2011, relatively low mortgage rates will be a feature of the 2011 mortgage market. Thirty-year fixed-rate loans are likely to remain below 5 percent throughout the year, and initial rates of 5/1 hybrid adjustable-rate mortgages will likely remain below 4 percent in 2011.
  2. Prices have hit bottom. House prices are likely to begin a gradual, but sustained recovery in the second half of 2011.
  3. Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market in the New Year, likely translating into more home sales in 2011 than in 2010.
  4. Refinances will dwindle. Many eligible borrowers have already refinanced and the federal Making Home Affordable refinance program is expiring on June 30. While fixed-rate loans are likely to remain low, they will move up gradually, making it even less likely that refinances will be attractive to most home owners.
  5. Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings — known as the "seriously delinquent rate" — generally crests within a year of the start of the recovery in payroll employment, and this economic recovery appears to fit within that pattern. Payrolls began to rise last January, and by the spring the seriously delinquent rate had begun to fall.

Monday, December 13, 2010

Who needs a Mortgage Deduction?

  • Repealing the mortgage interest deduction (MID) is a form of tax increase.
  • Families with children would bear more than half of the total increase.
  • IRS data show that taxpayers in the 35 - 45 age group take the largest MID on average compared to any other age group of taxpayers.
  • First time home buyers would be hurt the most if the MID is curtailed.
  • Current data from the IRS show that 65% of the taxpayers who have claimed the MID made less than $100,000.
  • The housing market has not emerged from the crisis that began in 2007.

Congress: The Facts Speak for Themselves

The 1.1 million members of the National Association of REALTORS® strongly oppose proposals to reduce the mortgage interest deduction (MID). Hard-working American families’ budgets are already stressed. Reducing or eliminating the mortgage interest deduction would pull even more money directly out of their wallets. If this crucial deduction is eliminated or reduced, home values will further erode. That’s something America simply can’t afford in this unstable housing market.

Monday, December 6, 2010

Carbon Monoxide Poisoning: What to Watch Out For!

Any appliance or device in your home or garage, that burns fuel, can produce carbon monoxide. Some causes of carbon monoxide poisoning are:
  1. Dirty chimneys in fireplaces or wood stoves
  2. Improper installation of gas stoves
  3. Portable heaters
  4. Appliances using gas or kerosene
  5. Cracked furnace exchange
  6. Cigarette smoke
  7. Vehicle exhaust
  8. Improper ventilation for gas dryers
  9. Disconnected or damaged water heater flue
Carbon monoxide is referred to as a “silent killer” and if you feel strange or suddenly feel sleepy, get fresh air, open windows and doors and turn off all appliances and fuel-burning devices. While carbon monoxide detectors aren’t foolproof, they should help you before it’s too late.