Friday, January 13, 2017

Purchasing title insurance is important By Randee McDonald

Congratulations, you’ve finally purchased a home! But just as you begin to settle in, you become aware of a title issue with the property. You remember during the closing process that the title company asked you if you wanted to purchase an owner’s policy of title insurance. You were tempted at the time to save a few dollars and cut your closing costs. However, with title insurance being only a onetime cost to you at the time of closing, you decided it would be worth it.

Some title issues that may arise that are covered by title insurance include:

Naughty Neighbors: Your neighbor has built a shed, garage, pool, driveway or deck that is partly on your property.

Hidden Heirs: Perhaps the previous homeowner passed away or there was another family member with ownership rights to the house that wasn’t notified the house was being sold. You could lose out big time if the house was sold to you without clear title.

Unpaid Taxes: Although the title company will check for past due taxes, perhaps the tax collector’s office accidentally provided the wrong information (and yes, it happens) and mistakenly omitted or miscalculated the amount owed. Guess who pays for that mistake? Hint: it’s not the municipality or the title company – it’s you.

Mystery Mortgage: Just like with a lien or unpaid taxes, it’s possible that a title search may not turn up another mortgage on the property until after the closing has happened.
Had you not purchased title insurance, you may be left with negotiating with the neighbors, paying the lien, taxes, or mortgage. Going to court to avoid paying these items can often exceed the cost of these items themselves. And remember, there is a difference between an owner’s title policy and a lender’s title policy. The lender will require you to purchase a lender’s policy to only protect their interests in the property, not yours.

Title companies and municipalities use the best of their abilities to avoid the above situations. However, things happen, often out of our control. No one purchases automobile insurance hoping that they will use it someday! The same goes for an owner’s policy of title insurance. It should be purchased to protect the biggest – and often most important – investment of your life, your home.

Friday, January 6, 2017

Putting your house on the market? Have safety on your check list. By Amy Krikken

When you hear the word safety, what comes to your mind?
There are many areas where safety is of concern. 

We wear our seatbelt when we are in a vehicle, we wear a helmet when necessary, and some of us put on our snow tires for the season. 

What do we mean when we talk about safety in terms of real estate?  What are some items that should be on the forefront of your mind, if you are considering selling this Spring?  

Often things come up during the inspection process that point out deficiencies in the safety department.  Is there a missing railing in the home? Do you have smoke and carbon monoxide detectors properly installed and in working order?  When is the last time you had your chimney cleaned? Have you had your water tested, any potential buyer is going to ask for a copy of the results. How seamless could the process be if you preemptively provided these results?

Is your home older than 1978, might it have lead? How is your indoor air quality? Does anyone else in your neighborhood have a radon mitigation system, perhaps you could consider getting your home tested for Radon.

Any work that you can complete BEFORE you place your home on the market will work to your advantage, and stave off stress.  That old saying "Why put off until tomorrow, what you can do today?" could not be more appropriate when we are talking about shoring up the safety of your home.  

Safety is one aspect to consider when selling your home.  I am a Realtor, and I can assist you in optimizing the presentation of your home in the marketplace to get it sold.  Call or e-mail me today, 207-317-1338,      

Friday, December 30, 2016

2016 end of the year real estate review - By Matt Trudel

This was a very promising year for real estate. It was a year of growth as the number of houses sold this year compared to last year is almost eight percent higher. The median sale price for homes in Maine also rose 5 to 7 percent, and in Cumberland County for June, July, and August the median price was up almost 10 percent over the same period in 2015. New construction also took off this year and is showing no signs of slowing down over the winter.

Buyer's confidence in the real estate market's continued growth coming out of 2015 played a big part in the overall success that the market had throughout the year. Low interest rates and slightly lighter restrictions from lenders also played a large role. Buyer's had more purchasing power, especially with programs like the Maine State Housing First Time Homebuyer Program with interest rates at 2.9 percent at times.

Right now inventory is low for single family homes and the pool of buyers out there is still growing. If you pulled your house off the market because you think not many buyers want to purchase property in the winter, one could argue you are mistaken. People who are not serious about buying stop looking, but the buyers who are serious and need to purchase a home are out there no matter how deep the snow gets. So you may want to reconsider if you were one of the many who took your house off the market.

2017 looks to be another promising year of market growth and rise in pricing. We certainly have not gained back what we lost in 2007 and 2008, but we have gained some and will continue to do so over the upcoming years. A slight rise in interest rate will affect some buyer's purchasing power, but it won't slow the rise in home values very much. The demand is there and lenders will likely expand the debt to income ratio slightly with buyers who have exceptionally good credit.

Thinking of buying a home but not sure if you should wait till spring to start looking? Now is the time to get in the game as prices will continue to rise throughout the next few years. There is less competition from other buyers right now, so you hopefully won't get into a bidding war. Also, sellers who have their homes on the market are serious about selling their homes and are generally open to reasonable negotiations. This means that if you make a reasonable offer you will likely have a deal.

Need another reason to buy now and not later, how about the likelihood of another interest rate hike. Many strategists feel that it is inevitable that another rate increase by the Federal Reserve is going to happen, and more than likely to happen sooner than later. The tax benefits of home ownership are another reason to get in the game now. Most all home improvements are tax deductible and the interest is also a great deduction. One more great reason to buy is that it is probably still cheaper than renting since rental rates have also climbed over the last few years.

Either way, buying or selling, I highly recommend you contact a local real estate professional that has experience and knowledge. Interview several Realtors, find one that you feel comfortable with and that listens to your needs and desires. They are going to be working both for you and with you, and looking out for your best interests. Having a professional with knowledge, experience, and creative negotiating skills will make the whole process smoother and get you to your goals quicker. 

Five Star Realty wishes you all a Happy and Safe New Year! ~ Article by Matthew Trudel, Owner Five Star Realty, Windham

Friday, December 23, 2016

Rising rates - what now? - Rick Yost

On December 14th the Federal Reserve, citing concerns about rising inflation, raised bank to bank lending rates by .25 percent. While these rates are for short term lending, they do have an impact on 30-year mortgage rates. Mortgage rates since the election have risen about .5 percent. Those 3.5 rates are now 4.1 rates and will most likely climb higher in the new year, albeit at a slower pace. The Federal Reserve expects inflation and inflation drives up interest rates -including mortgage rates.

For home buyers, higher mortgage rates means they can buy less home for the same amount of dollars they could a month ago. Lenders use debt to income (DTI) ratios to calculate how much home borrowers qualify for. Lenders get a DTI by dividing a borrower's housing debt and non- housing related debt by a borrower's total income. On mortgage loans in Maine up to $424,000, a borrowers DTI cannot exceed 43 percent of income as a general rule. Rising interest rates push a borrower's DTI higher, pushing the total home price that the borrower qualifies for lower. Rates have risen a little over a half of a percent since the election. This adds about one percent to a borrower's DTI. This is an amount that can be made up relatively easily by paying down credit cards and other consumer debt if the borrower has any. Borrowers that were prequalified by a comfortable margin in DTI aspect of financing should be fine. Borrowers that were bordering on a 43 percent DTI should renew their pre-approval to make sure they still qualify for the amount they want to borrow.

For home sellers, the lack of inventory and buyer demand should overcome the ill effects of rising interest rates for 2017. A roughly $60 per month payment increase on a $250,000 home with 20 percent down should not derail a purchase. The most likely to suffer will be entry level homes in the $100,000 to $150,000 rate. Those buyers tend to the most vulnerable to rate increases. They are typically first time home buyers with high DTI. Even a slight rate increase negatively impacts their purchasing ability. The least impacted will be the second home and leisure sellers. The buyers of these homes tend to be more affluent and less effected by rate increases. The same inflationary fears due to a growing economy that drive borrowing rates up tend to drive up the stock market, bond yields and savings rates. All good things for those capable of purchasing a second home.

For homeowners with a typical home equity lines (HELOC) tied to the prime rate,
now might be the time to re-fi into a single mortgage. At prime plus two percent, current typical HELOCs will be about 5.75 percent and keep rising as the Federal Reserve continues to raise rates thru 2017. Switching to a fixed rate mortgage today, will help the wallet later.

All that being said, it is time to look at current mortgage strategies. Whether you are buying, using home equity or considering selling. A changing market in interest rates means a new game plan may be appropriate. I advise meeting with a mortgage professional to create the best options possible. 
Wishing you a happy and prosperous new year!

Rick is a realtor, real estate author, and long time Windham resident. You can reach Rick with all your real estate questions and needs at

Friday, December 16, 2016

How to save enough for a down payment on a house

A home is the most costly thing many people will ever buy. The process of buying a home can be both exciting and nerve-wracking. One way to make the process of buying a home go more smoothly is to save enough money to put down a substantial down payment.

Saving for a down payment on a home is similar to saving for other items, only on a far grander scale. Many financial planners and real estate professionals recommend prospective home buyers put down no less than 20 percent of the total cost of the home they’re buying. Down payments short of 20 percent will require private mortgage insurance, or PMI. The cost of PMI depends on a host of variables, but is generally between 0.3 and 1.5 percent of the original loan amount. While plenty of homeowners pay PMI, buyers who can afford to put down 20 percent can save themselves a considerable amount of money by doing so.

Down payments on a home tend to be substantial, but the following are a few strategies prospective home buyers can employ to grow their savings with an eye toward making a down payment on their next home.

- Decide when you want to buy. The first step to buying a home begins when buyers save their first dollar for a down payment. Deciding when to buy can help buyers develop a saving strategy. If buyers decide they want to buy in five years away, they will have more time to build their savings. If buyers want to buy within a year, they will need to save more each month, and those whose existing savings fall far short of the 20 percent threshold may have to accept paying PMI.

 - Prequalify for a mortgage. Before buyers even look for their new homes, they should first sit down with a mortgage lender to determine how much a mortgage they will qualify for. Prequalifying for a mortgage can make the home buying process a lot easier, and it also can give first-time buyers an idea of how much they can spend. Once lenders prequalify prospective buyers, the buyers can then do the simple math to determine how much they will need to put down. For example, preapproval for a $300,000 loan means buyers will have to put down $60,000 to meet the 20 percent down payment threshold. In that example, buyers can put down less than $60,000, but they will then have to pay PMI. It’s important for buyers to understand that a down payment is not the only costs they will have to come up with when buying a home. Closing costs and other fees will also need to be paid by the buyers.

- Examine monthly expenses. Once buyers learn how much mortgage they will qualify for, they will then see how close they are to buying a home. But prospective buyers of all means can save more each month by examining their monthly expenses and looking for ways to save. Buyers can begin by looking over their recent spending habits and then seeing where they can spend less. Cutting back on luxuries and other unnecessary spending can help buyers get closer to buying their next home.
- Avoid risky investments. Sometimes it’s great to take risks when investing, but risk should be avoided when saving for a down payment on a home. Traditional vehicles like certificates of deposit, and savings accounts can ensure the money buyers are saving for their homes is protected and not subject to market fluctuations. 

Saving enough to make a down payment on a home can be accomplished if buyers stay disciplined with regard to saving and make sound financial decisions.