Maintenance Must Dos

Don't let poor maintenance affect your home's value.

Keep your furnace filters clean to increase efficiency and possible repairs

Drain your water heater once a year to remove harmful sediment.

Clean coils on baseboard heaters.

Check circuit breakers and replace weak breakers to prevent shorts.

Check under sinks for leaks to avoid water damage.

Replace major mechanicals before they go bad to prevent costly emergency repairs.

Check outside of your home to make sure there are no leaks from loose gutters, missing or damaged flashing, missing or damaged weatherstripping.

Also check for standing water around foundations, cracks in foundations or missing splash blocks on downspouts.

Make your house last longer, retain more resale value and prevent costly repairs that could have been prevented.

Are you paying too much for financing?

I work with Kim Luckett with Homeservices Lending. Her office is loacted in my office and I have found her to be very helpful. She is very straight forward and honest.

I was talking with her yesterday and she mentioned several points that are good to be aware of when discussing financing. She indicated that while interest rates are an important factor in the calculation of mortgage payments that things like; loan origination fees, private mortgage insurance, points, rate buy downs, etc... all go together to account for your monthly payment as well as closing costs.

Interest rates continue to go down and there are lots of different mortgage products that are available.

She can help you navigate through the whole process.Her number is 502-327-2516.

I think it would be worth giving her a call and see if she can help.

Buyers have the ability to buy

Since 2005 the economy has added 4 million new jobs, wages have grown by 8% and houshold wealth has grown by $5 trillion dollars.

When you add interest rates expected to remain low and availability of homes to chose from buyers will be able to find some very good investment opportunities.

Success Story

A recent client of mine was able to sell their current home in 10 days at full price and purchase their move up home at a roughly $30,000 discount from the builder.

The Louisville market remain strong despite what you might have heard.

Credit Worthiness

Your credit worthiness has always been important to the home buying process. It not only allows you to shop for the mortgage product that best fits you situation but can also affect the total cost of your mortgage.

In light of recent problems with the sub-prime mortgage market, lenders are beginning to reevaluate how they manage risk. Some are considering adding fees in order to improve their ability to be weather losses.

Don’t let your credit worthiness affect the cost you have to pay for a mortgage.

If in doubt about your situation, contact a mortgage consultant who can give you advice and direction on how to position yourself for the most cost effective mortgage possible.

National average data doesn't reflect strength of Local Markets

Louisville is akin to other local markets throughout the country that while not setting huge rates of appreciation it is also not likely to fall victim to bursting bubbles.

This was most recently reiterated by Lawrence Yun the chief economist for the National Association of Realtors

“A national picture of the real estate market is just about as valuable as giving a national high temperature for the day".

The following is an example featuring the Kansas City real estate market which in many rfespects mirrors the Louisville market.

Although the Realtors report that the national median price declined 2 percent during the third quarter compared with a year earlier, the price in the Kansas City area declined just 0.7 percent, to $157,000.

That difference speaks to the fundamental fact that Kansas City historically has not been a particularly volatile housing market. Although we didn’t soar as high during the recent housing boom, we are equally unlikely to suffer as much as the national average during the correction.
Now, consider this little nugget that often goes unnoticed amid the nationwide hand-wringing over housing.

Ninety-three of 150 metropolitan markets tracked by the Realtors actually posted median home price gains during the year ending in the third quarter. Although Kansas City wasn’t among them, most of those gainers are midsized markets in the country’s vast middle section akin to ours.

The focus on recent declines in nationwide housing values also tends to ignore the previous — and, admittedly, unsustainable — run-up in values.

Despite the recent 2 percent dip in median home prices nationwide, the Realtors report that the typical seller posted a 38.8 percent increase in value over the past six years.

Now, none of this is intended to downplay the housing market correction that is under way both here and across the country. It’s as real as the “reduced” sign down the street.

Clearly, it’s a buyer’s market, with 15,788 existing homes available for sale in the metropolitan area, according to the latest report from the Kansas City Regional Association of Realtors. That’s eight months of supply at the current sales rate, which is more than the six-month supply typically considered to be a balanced market. And that’s the main reason the sales price has slipped a bit over the past year.

But at this point it’s hardly a disaster. The local housing market is simply undergoing a needed, if painful for some sellers, market correction. Prices are coming down some to clear a backlog of accumulated inventory, and include a recent increase in foreclosure properties. But mortgage rates also are drifting lower for qualified buyers, which should help demand. And assuming the broader economy doesn’t slip into recession, the local housing market will turn the corner sometime next year.

Bottom line: It’s a great time for buyers, and a tough time for sellers. Markets adjust.

Net worth higher for home owners

According to the Federal Reserve Board they consitantly find that the net worth of a homeowner versus a renter is staggering.

The average net worth of a homewoner is $184,000 versus $4000 for renters.

Do you have the right smoke detectors installed?

In metro Louisville you are required by city ordinance to have either a hardwired smoke detector(one that uses your home's electricity for power) or a ten year non-replaceable lithium battery smoke detector.

When you sell your home you must certify that you have the appropriate smoke detector.

Even if you are not selling your home you are still liable for damages to property and residents as a result of not having the appropriate smoke detectors installed.

Not worth the risk!

Has your home been tested for Radon gas accumulations?

Radon gas is created by the decomposition of radio active material present in the earth. It dissipates very rapidly to the atmosphere. It has been linked to long term health effects.

This is only a problem is when the gas accumulates in the basement or crawl space of a home. The geological make up around the Louisville area is susceptible to radon gas accumulations.

When buying a home in the Louisville area you should seriously consider have a radon test performed during your home inspection process. If unacceptable levels of Radon gas are found you have an opportunity to ask the seller to install a radon mitigation system at their expense. Radon gas levels below 4 pCi/l are considered safe. Some home test as high as 100 plus.

Radon mitigation systems may cost $700 and up to install and can reduce radon levels to below 2 pCi/l.

Definitely worth the $80-$150 cost for the testing.

Be sure to choose the right lender

Choosing the right lender can afford you protections that may not be obvious!

Ask you realtor for the risks you may be avoiding!

Final walkthrough prior to closing

Don't forget to do a final walk through before you close on your new home!

Stake Surveys

Purchasing a stake survey is highly recommended!

Stake surveys, in a significant percentage of cases, uncover defects that could dramatically reduce your property's value.

Possibilities include;

A neighbor's house or shed could be on your property

Your house could be on top of a utility easement rendering it unmarketable

Your yard may not be as big as you think

Fences, sheds would have to be demolished if they are in a utility easement

Don't get a surprise you can't live with!

Louisville real estate areas

The Home Inspection Process

A home inspection is a critical part of the home buying process. Not only will it uncover any deficiencies your home may have it will also highlight important on-going maintenance requirements.

The first step is the selection of a licensed inspector. The most widely used method of selection is through personal referrals from friends, family or your Realtor.

Once you have selected an inspector you will need to schedule between two and four hours for completion of the inspection. This amount of time is required to thoroughly inspect your home from the ground up.

It is advisable that you attend the inspection in order to have first hand knowledge of the inspector’s findings.

Once the inspector has finished the inspection, a complete report of his finding will be created. The inspector will review the report with you.

Any safety or structural concerns will be the first priority, followed by cosmetic concerns and important features of your home such as the main water shut off valve.

Safety and structural concerns may require you to request repairs and or replacements from the Seller. You may also consider voiding the contract if the issues are serious enough. Your Realtor can assist you in making these decisions.

You will be left with a copy of your inspection for future reference.

The results of your inspection will have to, in most cases, be disclosed to future buyers. Again, your Realtor can advise you in regard to prevailing disclosure requirements.

Don't miss this important step!

Home Ownership Benefits You Might Not Realize

The National association of Realtors has found, through a systematic review of research, that home ownership is an unbeatable way to provide the kind of stable housing that leads to a wide variety of household benefits for the community.

Some of these are:
Higher educational performance and better behavior of children
Lower community crime rates
Lessened wlfare dependancy amoung households
More hosuehold participation in civic affairs
Better household health

Your Credit Score and Mortgages

Your credit score is a very important part of successfully obtaining a mortgage.

Lenders each have their own parameters for extending a mortgage to home buyers. The credit score is the single most important parameter second only to income.

Credit scores can range from 300 to 850. They indicate to a lender the amout of risk you present. A score of 660 is considered to be below average risk with anything over 750 being considered almost no risk.

Your credit history is tracked by any or all of these credit reporting firms;
Beacon at Equifax
FICO Risk Score at Transunion
Experian/Fair Issac at Experian

It is a good practice to sign up for, usually free, credit reports to not only check your score but assure yourself that you aren't experiencing identity theft.

Sales and Mortgage Process from Start to Finish

Purchaser applies for pre-approval as soon as possible after meeting with Realtor.

Purchaser makes an offer with an initial deposit.

When the offer is accepted, it becomes a binding contract.

Home inspection is done, if called for in the contract, and purchaser releases inspection contingency if no major problems are found.

Seller and seller’s agent provides lender with current lien holder’s name, address, account numbers and a copy of the deed.

Lender order’s appraisal.

Appraiser calls seller and seller’s agent to set appraisal appointment.

Once processor and originator receive and review documentation and establish that it is complete and correct, the loan is packaged and sent to underwriting.

Underwriting approves the loan request (with or without conditions) , rejects or sends for further information.

Once all additional requirements are satisfied, then the loan is approved and all parties are notified.

Insurance, necessary inspections, repairs, survey, title, etc., are ordered.

Closing is scheduled by lender and all parties are notified.

Closing takes place and title is transferred from the seller to purchaser. The new deed and mortgage are recorded amd made part of the public record at the County Clerk’s office.

Housing As an Investment

Housing is a key driver of the economy and continues to be a solid investment for the majority of American households. Housing provides steady returns largely unaffected by volatile movements in the stock market.

Housing wealth has a more immediate impact on consumer spending than stock wealth and has sustained the U.S. economy since the beginning of this decade.

Homeownership is the traditional starting point for American families to accumulate wealth, according studies by the National Association of Realtors®, America’s leading advocate for homeownership.

NAR reports that the national median existing-home price increased 9.3 percent in 2004 and is projected to rise 5.6 percent this year. Since record keeping began in 1968, the national median home price has risen every year, even during recessions and periods of sales decline. Typically, home values rise at the general rate of inflation, plus one-to-two percentage points.

Buying a home should be approached as a long-term investment, providing both equity accumulation and tax benefits over time. Despite some high profile media reports, it’s important to note that most of the country has never experienced even a temporary downturn in home prices since modern recordkeeping began.

Low mortgage interest rates, a growing number of households, economic growth and an improved labor market have been driving Americans in record numbers to purchase a home. In addition, over the last few years, Americans have shown a readiness to pull their money out of stocks and put it into real estate, often as a second home – a wise and practical move that provides safer returns in a tangible asset. In fact, 36 percent of home sales in 2004 were second homes, including 23 percent for investment purposes.

The sharp changes in the financial markets over the last few years underscore the stability of residential real estate as a safe choice for consumers. Although it’s possible for local housing markets to experience temporary price corrections, most of the peaks and valleys in home prices that deviate from a normal, gradual increase tend to smooth themselves out during the typical period of homeownership.

Dollar for dollar, the rate of return on an individual’s cash downpayment on a house is substantial. Homebuyers typically use their own money to cover only a small portion of the purchase price, yet the home appreciation they realize is based on the total value of the property.

First-time home buyers make a median downpayment of 3 percent, while repeat buyers put 22 percent down – thanks to the equity they’ve build in their previous home.

According to Harvard University’s Joint Center for Housing Studies, there is a dramatic increase in the rate of return on housing the longer it is held. For instance, the typical homeowner who experiences an annual home appreciation rate of 5 percent and who made a cash downpayment of 10 percent will generally receive a 94 percent return on that cash after owning the home only three years. After owning for five years, a homeowner can expect a rate of return on the downpayment to increase to 225 percent; after 10 years, the rate of return jumps to 623 percent.

The stock market has experienced wide swings in value over the past 20 years. During that time, overall home values have continued to rise steadily and contribute significantly to household wealth and spending patterns.

Housing is not a quick-in, quick-out investment. When purchased for the long term, housing is one of the safest investments a consumer can make. In addition to the savings accumulated through a buildup of equity and tax advantages, a home provides shelter. No paper investment provides this benefit.

Homeowners accumulate significantly more wealth than renters. Clearly, owning a home is the best way for most families to build a nest egg.

Homeowners use their home equity to get cash for emergencies as well as for the purchase of big-ticket items, and have more confidence in housing wealth gains than stock gains that could prove to be unsustainable. In addition, the capital gain people realize from the sale of their home is a significant source of downpayment funds for most repeat buyers; those funds are also used for other purposes that stimulate the economy through consumer spending.

Home Buying Myths

Myth: I had some debt when I was young and I ruined my credit. I’ll never get a mortgage.

Reality: You don’t know what your credit history shows until you look. And if you do have blemishes from the past – even a bankruptcy - many lenders will overlook problems if the past two years show good credit practice on your part.

Myth: I heard you need to put 25% down to buy a home. But my friend says that you can get a mortgage with no down payment at all!

Reality: Both scenarios are uncommon. Although there are a variety offinancing programs available, most require you to put at least 3%-10% down, butrarely would you need 25%.

Myth: If I have several agents looking for homes on my behalf, I’ll find a house more quickly.

Reality: Like most relationships, this one thrives on communication, loyalty and trust. By working exclusively with one agent you will improve both the process and the results.

Myth: If I want an agent to represent me as a buyer. I’ll have to pay them myself.

Reality: Buyer representation means that the sales associate you select works with your best interests in mind. In most cases, however, they receive a portion of the commission paid by the Seller.

Myth: I should find a new home first before I sell the one I now own.

Reality: If you find a buyer for your home first, you’ll have more negotiatingpower in both the sale of your current home and the purchase of a new one.

Myth: I just made an offer on a home I love, but so did several other people. I’m worried that someone else will outbid and get it.

Reality: Different sellers are motivated by different things. In addition to price, a seller will look at the other terms of the offer – contingencies, closing date, required repairs. Many times a “clean” offer from a pre-approved buyer will be more attractive, even if the price is slightly lower.

Home Buyer Realities

Choose a Realtor that fits your personallity.

There is no "right" time to buy any more than there is a "right" time to sell. If you find the right home don't worry about small changes in interest rate. Changes usually don't chank that fast and a good home doesn't stay on the market very long.

Don't ask for too many opinions. It's fine to ask for advice but the too much input can make your decision much harded.

Accept that no home is perfect. Focus on the things that are important to you and let the minor ones go.

Don't try to be a killer negoitiator. Trying to "win" in a negotiation could cost your the home you love.

Remember that you home doesn't exist in a vacumn. Don't get so caught up with the physical features of the home at the expense of ammenities and noise levels that have a big impact on the value of your home.

Don't wait until you find the right home to get approved for a mortgage. Presenting an offer contingent on getting approved will reduce your negotiating power.

Factor maintenance and repair costs. Don't leave your self short and let your home deteriorate.

Accept that some buyer's remorse is inevitable for first time home buyers.

Choose your home first because you love it and secondly think about appreciation. Homes in the Louisville market consitenty raise from 3%-5% annually.