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When Homebuying First Search the Neighborhood

December 17th, 2015 No comments

Everyone has heard the real estate expression location, location, location. In fact, there are not many factors that can influence the value of a home more than the location. While you may fall in love with a particular home because of the layout, features, or character if it is located on a main intersection next to a fast food restaurant you may have difficulty selling it in the future.

Most people start first with choosing a town and then start to narrow their search by neighborhoods based on their lifestyle. One of the top considerations is schools. A good school system can drive up property values and hold them. You will also pay a premium for a home and you will pay more property taxes in a good school district. Even if you do not plan on having children, the quality of the town’s schools will affect your property values.

The safety of the neighborhood is an important consideration. The website www.neighborhoodscout.com checks the safety history of crime for most every city and town in America. Street lighting and sidewalks are also part of the safety check.

Is there easy access to the highway? Do you mind driving an additional 20 minutes to get from your neighborhood to the highway? If you are commuting this is a definite factor to consider. Also check and make sure that your neighborhood is not an easy cut through for people to access the highway. Proximity to shopping, grocery stores and restaurants is an important consideration in choosing a neighborhood. The convenience of getting to these necessary places definitely impacts quality of life.

If the neighborhood is near railroad tracks you will want to check the train schedule to determine how the noise will impact your life. Do they run at night interrupting sleep or do they run during the weekday when you are at work? On the flip side some commuters are thrilled to be in close proximity to the train. Similar to the railroad tracks, highway noise should be a consideration. A neighborhood near high tension lines can also create problems selling. Some people don’t want to look at them and others are concerned about potential health risks.

For some lifestyles the ability to walk to stores and restaurants is a major selling point in urban areas. For others having a great environment for running or walking the dog is important. Access to parks and playgrounds are a consideration.

You can always renovate a kitchen or bath or sometimes add an addition to your home, but the location of the home is not something you can change. Shopping location first is a smart approach to home buying.

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November 25th, 2015 No comments

Drafting a solid offer, or purchase contract, for a new home is a bit like walking a tightrope. As a buyer, you want to pay the lowest possible amount for your new home, and have flexible terms for items such as earnest money deposits, mortgage commitments, and closing dates. As a seller, you want to get as much as you can for the property, with few contingencies and a quick timeline, making is a seamless transaction.

The offer on a house should be a combination of price and terms. Everything is negotiable starting with the price, the terms, the occupancy date and what personal property is included in the sale, such as appliances and light fixtures.

Good real estate agents are invaluable when you are ready to decide on an offering price. The buyer should know what comparable properties in the neighborhood are selling for. Your agent can provide you with statistics of the list price versus the sales price for the neighborhood. They can provide you with an average price per square foot. You should compare the price and quality of other homes you have seen with the one you have decided to purchase. Then make your opening bid something that’s fair and reasonable and it not going to offend the seller.

When putting together your offer you want to avoid making unreasonable demands such as a lightning-fast closing date. This is especially important as a result of changes in the residential mortgage industry that took effect on October 3, 2015 (“TRID Regulations”) which has increased the amount of time that may be needed by your mortgage lender to get your loan closed.  Your offer is more likely to be accepted if you are considerate of the fact people are trying to carry on with their lives, move and all the other stuff that goes along with that. Being pushed out of your house can be very unsettling.

The price you offer will depend on what the market is like. Are people in bidding wars for homes or are the properties sitting on the market for 6 months? If the market is hot and you offer exactly what the seller is asking, you will get his or her attention and your offer will most likely be accepted. Offer a bit more than asking price, and you may chase other buyers away whose offers are at or below the list price. At the other end of the spectrum, a very low offer may insult the homeowner. A trained real estate agent who is familiar with the local market will have the best read on what your seller is likely to accept.

If you’re looking to make the strongest offer possible, make sure it’s not so high that you can’t afford it. Keep in mind the additional costs involved in home ownership such as property taxes, utilities, homeowner association dues and insurance. New homeowners also need to be prepared to pay for repairs, maintenance and potential property tax increases.  

Beyond price there are terms to the offer. Time limits are set for a response to the offer, either it is accepted, rejected or a counter offer is brought into the negotiations.  Deadlines and dates are also set for a closing date and date for moving in. In addition, contingencies are outlined, such as the offer being conditional on the inspector’s report.

An offer is far more attractive to a seller if the buyer is preapproved for a mortgage loan. Keep in mind that a preapproval is not to be confused with a prequalification or a firm, written mortgage commitment. Preapproval means that the mortgage company has done the same due diligence necessary for full approval. The seller knows the offer is sound and is unlikely to fall through because the buyer was unable to secure financing. Buying a home is generally the largest financial transaction you make and knowing what to expect can help you negotiate the process.

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Get Pre-Approved for Your Home Loan Before you Go House Hunting

November 6th, 2015 No comments

Are you aware that there is a big difference between a home buyer being pre-qualified and a buyer who has a pre-approved mortgage? Just about anybody can get pre-qualified for a loan. Getting pre-approved means a lender has taken a more in depth look at your financial information and they’ve let you know how much you can afford and how much they will lend you.

Being pre-approved will save you a lot of time and energy since you are not running around looking at houses you can’t afford. In a competitive housing market a serious buyer should pursue a pre-approval from a lender in advance of beginning a home search.

A pre-approval is generally a written statement from a lender stating the lender’s preliminary determination that a borrower would qualify for a particular loan amount under that lender’s guidelines. The determination and loan amount are based on income and credit information. Most pre-approval letters are good for 60 to 90 days.

Generally the documents you need to get pre-approved are the same documents that you would need to get a mortgage. That includes most recent pay stubs, two years’ W-2s, last two federal tax returns, two months’ of bank statements of all types of accounts and your credit report. A pre-approval is not a loan commitment, but it helps speed up the underwriting and loan approval process.

The pre-approval process also gives you an opportunity to look at your credit score and determine if you need to fix any unexpected errors on your credit report. A credit score difference of 700 to 680 can severely affect one’s ability in terms of down payment.

A pre-approval letter also helps you prove to real estate agents and sellers that you’re a credible buyer and able to act fast when you find the home you want to buy. Some sellers might even require buyers to submit a pre-approval letter with their offers.  A pre-approval letter can make you stand out in a competitive real estate market. If you make an offer on a house without a pre-approval, your offer may not be taken as seriously as an offer from another person with a pre-approval.  

While none of the pre-approval process is as interesting as attending an open house, it is an important part of the home buying process. You can avoid a lot of disappointment and confusion by starting your home buying journey with a pre-approval.

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October Brought New Mortgage Regulations Designed to Help Borrowers

October 23rd, 2015 No comments

On October 3rd of this year we experienced big changes in mortgage regulations aimed at helping consumers understand the terms of their mortgages before signing the paperwork.

The changes are implementation of a five-year-old law that has forced mortgage lenders to overhaul the way they process mortgage loan transactions. The changes were prompted by the 2010 Dodd-Frank financial law.  

Basically the changes are designed to simplify forms long required by the federal government that disclose loan terms, such as a mortgage’s interest rate and prepayment penalties. The rules also require that consumers see the final terms at least three business days before closing, a change meant to ensure they have time to understand what they’re agreeing to before signing on the dotted line.

The Consumer Financial Protection Bureau boiled down four different disclosure forms into two easily comparable documents: the Loan Estimate and the Closing Disclosure. The Loan Estimate replaces the Good Faith Estimate and the initial Truth-in-Lending disclosure, while the HUD-1 Settlement Statement and the final Truth-in-Lending statement are merged into the new Closing Disclosure. Instead of bundling the costs the new forms show exactly how much borrowers pay for each service separately, making comparisons easier.

To give borrowers time to understand the documents, they will receive an initial Loan Estimate no later than three business days after applying. The Loan Estimate must include the amount of the loan, interest rate, monthly payment, estimates of taxes and insurance, and the amount of cash required to close.

Lenders are also required to provide a five-page Closing Disclosure, outlining the final costs, at least three business days before the closing date.  Lenders will face a penalty if they don’t give borrowers the required three-day period to review the documents. This will require delays if there are any changes made to the loans.

These new forms and regulations should ensure that borrowers have time to understand the details of the mortgage, have time to ask questions and experience no surprises when they attend the closing and finalize the home purchase.

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What to expect from your Real Estate Agent when you decide to sell your home

September 29th, 2015 No comments

When homeowners decide it is time to sell their home they begin the process by choosing a real estate agent to list their home. Often sellers ask family, friends and neighbors for recommendations.  It is a very personal business relationship and many experts suggest that homeowners speak with several real estate agents to determine the best match. It can also benefit the homeowner to receive numerous listing price comparisons to better understand the current market conditions. The real estate agents will provide you with a detailed market analysis to determine the market value of your home by comparing your property with recently sold comparable properties. They will list your home for sale in the Multiple Listing Service (MLS), and provide marketing and other advice related to the sale.

Your agent may also make recommendations regarding repairs, staging, and other updates to assist with the sale of the home. Curb appeal is important and a professional real estate agent can view your home through the lens of a potential buyer. Their suggestions are based on what they hear when they show a home.

A Massachusetts seller’s agent (also known as a listing agent) will also inform you of certain legal obligations – such as the requirement to have working smoke and carbon monoxide detectors, the obligation to fulfill the requirements of the lead paint law for homes built prior to 1978, and inspection requirements for homes serviced by private septic systems.

Once the process has begun and offers are made on your property it is the seller’s agent’s responsibility to present all offers to you and negotiate offers on your behalf. He or she may also make recommendations or offer advice if the buyer requests repairs or price adjustments after receiving a home inspection report. A listing agent has a fiduciary duty to the seller to negotiate in your best interests and keep confidential your personal information.

In Massachusetts real estate agents are prohibited from providing legal advice. They may not draft contracts beyond filling in the blanks on standard REALTOR® Association forms, such as an Offer to Purchase or a Purchase and Sale Agreement. An attorney licensed to practice law in Massachusetts must draft any addenda or significant changes to these forms. In addition, real estate agents may not draft a deed or any other legal document related to the sale of a home. Real estate agents should not provide other legal advice such as your legal rights and obligations under a purchase contract, zoning advice or opinions, or advice regarding title matters.

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New Data Shows South Shore Rents Rising

September 3rd, 2015 No comments

The rental market south of Boston is reporting a surge in prices over the last 12 months according to data released by the real estate data firm Axiometrics. The change in average rents in the South/southeast suburban market have risen 9.92% over 12 months through July 2015.

Developers have been changing the Boston skyline and are building high-end luxury apartments in the city. We have seen very little new development of rental units in the suburb, but that seems to be changing. People are being priced out of the city and renters are looking at Quincy and Weymouth for more space and lower rents.

There is still a wide price gap between the city and the suburbs. The average rent in the south suburbs is $1,777 a month, Axiometrics said. They report that is about one-third lower than rents in areas such as Newton or Cambridge and close to half what renters pay in downtown Boston, where the average rent it $3,599 a month.

But a look at Quincy shows change in in the air. Modern luxury apartments are under construction on Willard Street in Quincy; Quarry Edge 445 will include 24 units of housing with 2 bedrooms, 2 bathroom apartments renting for between $2150 to $2450 a month with garage parking and storage extra. Across from the Quincy Adams MBTA Station construction has begun on the 180 unit Zero Penn development. In Marina Bay the former Ocean Club property is being converted into a 352 unit residential apartment complex and site preparation has begun for a 169 unit West of Chestnut residential and commercial development project at the 1400 Hancock Street block in Quincy.

Demand is up and rents across the region are likely to continue on this upward trend.  As they do, even more important to have your lease and/or rental agreement reviewed by an experienced attorney prior to signing the same.

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Get Your Credit in Check Before you Begin House Hunting

August 14th, 2015 No comments

Having a good credit score makes buying a home and acquiring a lower mortgage easier because it reflects how well you manage your debt. You are entitled to one free credit report every 12 months from each of the three national consumer reporting companies: Experian, Equifax, and Transunion. Take advantage of these resources to better understand how you can strengthen your credit as a potential home buyer as well as track any discrepancies that need correcting before you start applying for a mortgage.

Your credit score reflects your creditworthiness at a given point in time. Along with use by mortgage lenders your credit score is used by car loan lenders, credit card companies, landlords, cell-phone companies, and even potential employers, your score is the key to your financial life. Your credit score, also known as a FICO score, is based on information from your credit report and calculated according to your rating in five general categories: record of paying bills on time, your total indebtedness, the length of your credit history, the number of new accounts or credit requests, and your credit mix.

Lenders use your credit score to determine if they’re going to grant credit or not. The median FICO score is 720 out of a possible 850. The riskiest customers have scores below 600. Higher scores are better and translate to lower interest rates.

 If you want to improve your credit score, consider the following tips:

  • Pay your bills on time.
  • Get current with missed payments.
  • Understand that paying off a delinquent loan won’t remove it from your report.
  • Contact your creditors or a credit counselor if you’re having trouble.
  • Keep balances low (lenders want to see that you are at least 50% below the available credit limit).
  • Pay off debt rather then moving it around.
  • Don’t close unused credit cards.
  • Don’t open unneeded credit accounts.

Keep in mind the following things that can harm your credit score:

  • Unpaid medical bills and parking tickets can hurt your credit score.
  • Heavy credit use can lower your score, even if you pay large balances off in full in a short time.
  • Your credit score will drop if you sign up and use store cards for initial discounts.
  • Multiple credit inquiries will lower your score, which often happens when you are purchasing a new car
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First Time Homebuyers Making a Comeback

July 24th, 2015 No comments

A recent report examining housing costs by the rental site Zumper found that Boston had the third-highest rental prices in the country, behind San Francisco and New York. The report examined April housing costs in Boston and found “rents increasing 3.1 percent, with a one-bedroom median (cost) of $2,350.”  “Two bedrooms were up 2.2 percent in April, to $2,750.” Those rental fees certainly make purchasing a home a desirable option but with home prices rising and tougher mortgage approval standards first time buyers face some challenges.

However, a new trend seems to be emerging based on nationwide mortgage tracking that shows first time homebuyers are finding a way to get back in the market. The National Association of Realtors reported on June 22 that first time purchases rose in May to 32 percent of all buying activity, the highest it’s been since September 2012.

A couple of factors are fueling this trend. First are the employment numbers. According to a report by the New England Economic Partnership, a nonprofit group of regional economic researchers, in the 12 months ending in April the state added 66,000 jobs, while the unemployment rate fell more than a percentage point, to 4.7 percent, well below the national average of 5.4 percent.

Wage and salary growth has also been impressive, boosted by the concentration of high-paying industries such as technology, biotech, and health care, and by a tightening labor market.

In the last half of 2014, wages and salaries in Massachusetts grew at about a 10 percent annual rate, double the national rate, according to the report. In the beginning of 2015, wages and salaries grew at about a 5 percent annual rate, in Massachusetts and nationally.

Another factor for first time buyers came in late January when the Federal Housing Administration cut its annual mortgage insurance premium rate. That has made 3.5 percent down payment loans affordable to first time buyers with FICO scores and debt to income ratios that would cause rejection elsewhere in the market. Mortgages are more affordable as interest rates remain historically low and the threat of rising mortgage interest rates is creating a bit of urgency for buyers to enter the market.

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Residential Pool Owners are Wise to Be Safety Conscious

July 13th, 2015 No comments

With summer in full swing nothing sounds better than having a swimming pool in the backyard to enjoy. However, before you buy the new home with a pool or install one on your current property there are some liability issues to consider.

A homeowner can be held liable in some circumstance for any injuries or deaths that occur as a result of a backyard pool. This can include people that you have invited onto your property but you can also be held liable when someone in injured or drowns while you are away and the person did not have permission to be on your property. This is particularly true in the case of a trespassing child.

There is case law and statutory law in Massachusetts that creates a duty on the part of landowners to make safe any artificial conditions existing on their land that might attract and ultimately injure children, even trespassing children.

The theory behind the attractive nuisance doctrine is that children, because they are curious and inexperienced, will be drawn to these potentially dangerous conditions, but will not be able to appreciate the danger.

Homeowner liability stems from a failure to do what a reasonable person would do under the circumstances. Homeowners are expected to protect guests and prevent unwanted visitors with security measures and by keeping the pool and the area around the pool in good condition.

In Massachusetts, cities and towns have statues regarding construction and maintenance of residential swimming pools, including requirements for special covers, locked gates and fencing. For example, in Hanover, MA the town requires that “All pools must have a fence at least four feet high surrounding the pool area with self-latching gates that are inaccessible to small children. Above ground pools may not need separate fencing on the ground however an enclosure fence with self-latching gate is required at the ladder.” Homeowners are required to provide the manufacturers information sheets showing fence type, gate and locking device. In addition, doors leading directly from the house to the pool need a pool door alarm.

With the stakes this high homeowners are wise to incorporate every safety precaution for backyard pools.

Financial Considerations in Buying a Condominium

June 23rd, 2015 No comments

How well a Condominium is run and how well it is funded are important points to know in making a decision to buy a unit. Both of these items will affect your personal finances as well as your investment in the property.

The first consideration is what is the monthly condominium fee and what does it cover? You will find there are a wide range of fees. The fees are generally used to maintain the common areas of the complex, but these can differ. You need to know exactly how much the fees and what they cover in order to set your budget.

You also need to know how much money the condominium association has in the capital reserve account and how much is funded annually. This money is set aside for the inevitable upkeep and repairs of buildings or grounds. It is generally recommended that the fund should contain at least 10 % of the annual revenue budget. If the capital fund is not well funded there is a higher risk of each owner receiving a special assessment. You are entitled to receive the budgets from the last two years and the current reserve account funds statement.

What about special assessments? These can be one time fees for capital improvements payable by every unit owner. Are there any pending improvements in the near future for the condominium? These fees can potentially be for new roads, parking lots, elevators or roofing and can run into the thousands. This past winter resulted in special assessments for many condominiums when they exceeded their snow removal budget. Condo unit owners should be prepared for these unexpected fees.

Is there any legal actions pending? Legal disputes between owners and developers or with the condominium association are not uncommon and can be a sign of a poorly run organization. If there are legal challenges there will be attorney’s fees which would be payable out of the condominium budget and could result in a special assessment.

An experienced real estate lawyer will have the knowledge to assist buyers with these potential issues by reviewing the Master Deed and ammendments, Condominium Budget and Capital Reserve Fund, and the Condominium Association’s meeting minutes.  Finally, a review of any rules and regulations is important to determine whether there is anything to prohibit you from using your condominium in the manner in which you anticipate such as a prohibition against cats or dogs.

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