Sunday, March 22, 2015

Real estate terms to know - By Rick Yost

Realtors, like many professions, have their own unique terms and acronyms that are used regularly. It is easy to forget that home buyers are not familiar with these terms that realtors
use daily in the home buying process. The most confusing part of buying a home is the mortgage process and the many confusing words used. Here are some of the more common terms and what they mean.

Conventional loan - The most typical loan. This type of loan is best suited for home buyers with good credit and a 20 percent down payment. New rules from Fannie Mae and Freddie Mac allow for down payments as low as 3 percent.

FHA loans - These loans are good for first time home buyers. They are also good for those with less than pristine credit, typically less than a 650 credit score. These loans can require a down payment as low as 3 percent.

Fixed-rate mortgage - These mortgages feature interest rates that will not change over the life of the loan. If a home buyer gets a 4 percent interest rate on their loan today, the interest rate they pay for the next 30 years will be 4 percent.

Adjustable-rate mortgage - The interest rates on these mortgages change over time. The initial interest rate is locked for a predetermined amount of time (five years for example) and then the interest rate will rise and fall with a selected index (often the prime rate). These mortgages are attractive for the initial interest rate that is typically less than a fixed-rate mortgage. Adjustable rate mortgages are often referred to as ARMs.

Private mortgage insurance - If a home buyer has less than 20 percent for a down payment, lenders require private mortgage insurance. The private mortgage insurance fee is tacked on to your monthly mortgage payment. This fee can range from .03 percent to 1.15 percent of the loan amount divided by 12. The fee can go away after the homebuyer has 20 percent equity in their home. These are general guidelines and home buyers should check with their lender for the exact terms of their private mortgage insurance. Private mortgage insurance is often referred to as PMI.

Points - Points are prepaid interest. Homebuyers can prepay interest on their loan in order to lower their monthly mortgage payment. Points often make sense if the homebuyer plans on staying in the home for a long time. One point is equal to one percent of the loan amount. For example, one point on a $150,000 loan is $1,500.

Closing cost – These are the costs associated with the purchase of a home. They are paid when the home is legally transferred from the seller to the buyer, also known as the closing. These costs can include lender fees, points, title insurance, pre-paid taxes and interest, appraisals, survey fees and more. These costs can run between two and five percent of the home purchase price.

Prequalified/ pre-approved - These terms refer to a home buyer’s status with their lender. Prequalified is a general term that means with very little documentation a lender has determined that a homebuyer qualifies to purchase a home in a certain price range. Pre-approved means that a lender has stated that the home buyer can borrow the amount needed to purchase the home they want as long as there are no drastic changes in the homebuyer’s life (job loss, missed payment). This requires much more documentation and time. Pre-approval is usually not sought until the homebuyer is truly ready to buy.

 I hope that knowledge of these terms will make the home buying process a little less intimidating.

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

Monday, March 16, 2015

Lack of inventory makes now a great time to sell - By Lisa DiBiase

New England has seen record-breaking snowfall this year, with storms dumping multiple feet of snow in some areas. In January, New England existing-home sales already showed signs of a winter dip, which had been partially attributed to the winter conditions in some parts of the country, according to the National Association of REALTORS®.  In the Northeast, existing-home sales plummeted 6 percent in January and the Midwest has dropped 2.7 percent.
Good news Mainers, these statistics do not reflect our market!  Maine real estate sales continued to climb in January, fueled by second-home buyers and those not deterred by the weather. Maine Listings released monthly statistics which show that sales of Maine’s single-family existing homes jumped 8.6 percent in January 2015 compared to last year. We are eagerly waiting to hear the release of February's statistics.

What does this mean to buyers and sellers?  Simply, the lack of inventory we have on the market today moves us towards a sellers’ market.  A sellers’ market is defined as a scarce supply of inventory where the sellers can keep prices high.  Additionally, in a sellers’ market there are more buyers than homes for sale.  Since supply is less than demand, homes will be higher priced. In Maine, the new inventory that hits the market each month is selling, thus leaving us no new supply of homes to sell.

As we approach the 2015 spring market, the mortgage lending climate remains highly competitive, including Maine Housing which offers the Advantage Program and other really great programs for first-time home buyers to stay in the game.  With the mortgage interest rates still at an all-time low, this continues to be a solid time for buyers to keep buying and sellers to keep selling.

As I have said before, please call a local REALTOR for all your real estate needs no matter how big or small.  We are trained professionals here to make your life easier. It's best to surround yourself with the right team of professionals that can continuously give you the right advice for all your circumstances.

Creating a home inventory is easy, yet important - Submitted by Tricia Zwirner

A home inventory is an excellent way to expedite the insurance claims process after theft, damage or loss. This record of your insurable assets will not only help you in the settlement of a covered loss or claim, but will also help verify tax-deductible property losses and determine the right amount of insurance coverage you need.

Here are a few steps to make creating a home inventory as easy as 1-2-3.

1. Choose a Method
While a home inventory can be as simple as a list or a visual record, an effective home inventory should include both for added security.

State Farm HomeIndex®
Your inventory: Simplified™. State Farm HomeIndex is a free online tool that combines the home inventory list with the visual record, all in one place. HomeIndex makes documenting your valuables especially easy because it walks you through the inventory process, allows you to share your inventory with your agent, and can even help you when you move.

Home Inventory List
A comprehensive home inventory list catalogs your belongings and should include the item description (make, model, and serial number, if applicable), value and purchase date. You can create your own list using a spreadsheet or fill out a home inventory checklist that's ready to go.

Visual Record
A visual record of your possessions shows proof of ownership. This can be accomplished with a video walk-through of your home or through a series of photographs.

2. Document Thoroughly
Your home inventory should support the claims process for events ranging from the total loss of your home by fire to the theft of a few items. That's why it's important to thoroughly document your belongings to ensure proper coverage.

A good way to start is to move from room to room, listing items as you go. Don't forget to include the items in your basement, attic, garage, and any detached structures, such as tool sheds. Also, pay special attention to your most valuable possessions, such as antiques, art, jewelry, collectibles and electronic equipment. If you have any questions about which items are covered by your policy, contact your insurance agent.

Keeping proper documentation will also help to facilitate the claims process. This documentation, which can be scanned for digital storage, includes:

Credit card statements
Other transaction documents
Appraisals (include the appraiser's name and address)

Once you've created your home inventory, make sure to update it as you acquire or get rid of items over time.

3. Keep Your Home Inventory Safe
Don't let your home inventory become part of a property loss. Whichever inventory method you choose, it's important to keep a copy in a bank safe deposit box or other secure location away from your home. This is another advantage of using an online tool like State Farm HomeIndex — it secures your information on the Internet, so you can access it from anywhere, whenever you need it.

Things to consider when buying your home - By Carrie Colby

When you’re buying a home, it’s easy to let emotions get in the way of reality. Here are few things to consider when buying your home.

Visit at various times of day.
That seemingly quiet residential street may be a noisy, highway-feeder street during morning or evening rush hour. The adjacent school may seem like a nice perk if you’re buying in the summer, but during the school year, daily playground noise and extra traffic may be more than you bargained for.

Talk to neighbors.
How many people in the neighborhood own their homes? What do neighbors say are the pros and cons of the area?

If the neighborhood has an association.
Ask how often does the neighborhood get together? Do they have a block party every year? The fact that they’re having a gathering says they care about their community, that they want to get to know each other, that they’re willing to socialize that way. People who behave that way are building a community. They’re going to look out for your kids; they’re going to look out for your house.

Really pay attention to disclosures provided. Even better if the seller is willing to speak with you.
Ask what past problems are the sellers aware of? Even if the issues have been fixed, it’s good to know that the house may be prone to, say, ice dams or water leaks so that you can take preventive measures rather than find out the hard way. If you know that the basement flooding was solved by building up the landscaping in a particular area, you won’t level the ground there.
Get a home inspection.
 Virtually all houses have defects. Some are obvious, and most are curable. But knowing what needs repair can help you negotiate a lower price — or at least prepare you for costs you’ll soon incur. Strongly consider getting above and beyond a general building inspection make sure to get inspections for septic, air quality and water quality.

Get detailed records on past improvements.
 This isn’t always possible. But if you’re told the house’s exterior was painted two years ago — and then see a receipt noting the whole project cost just $1,000 — then you’re forewarned that cheaper materials were used and that you may be looking at repainting sooner than you thought.

Don’t assume remodeling will be easy.
 If you voice your ideas to the sellers, you may glean valuable insights. For instance, perhaps that shower is in an odd location because, when the previous owners remodeled 10 years ago, they discovered a costly structural impediment to putting a shower where it would seem more appropriate.

Ask for utility bills.
You may love the Cape Cod architectural style and the charm you are looking for but have older windows and insulation, or the high ceilings in a newer home, but those winter heating and summer cooling bills may not fit your monthly budget.

Explore the surrounding area.
If you’re new to the area, you may not know that only three blocks away, this pretty neighborhood backs up to a dumpy commercial zone or a less-than-savory part of town. If the home is near an airport, fire station, police station, hospital or railroad track, expect to hear trains, planes or ambulances throughout the day and night. Make sure you’re not too close to a dump, a farm or other areas that may generate odors.