Real Estate: Important things to know when buying your first house

By Carrie Colby

Acquiring your very first home will probably go down in your history books as one of the tremendous leaps you ever take. Not only does this new feeling spark a deep sense of pride, but also the overwhelming relief from the burden of regular rent payments. Generally, owning a home can provide a feeling of being more in control of your life. You now have the opportunity to design the layout, flow, and look of your home. 

Above conducting robust due diligence, here are a few more things an aspiring homeowner might want to think about before taking the plunge into home ownership.

1. Expert intervention is key
Whether you like it or not, somewhere in the search for a new home, you are likely to interact with two or more players in the real estate business. So, the sooner you identify a reliable professional, the better for your decision-making. Finding a good real estate agent and a mortgage broker to guide you through the home-buying process will minimize your chances of making mistakes. The real estate agent you choose should understand your needs and help you better understand the market to boost your negotiation power.

2. Financial and psychological readiness
Determine if you are truly ready to buy a home. Are you ready to handle all the house bills and costs of repairs all by yourself? Once you become a property owner, the expenses are all on you. Are you fully aware of all the taxes and insurance costs related to your new home? You’ll want to calculate the total expenses in advance to ensure that you can cover them once you purchase the property.

3. Understand your payment options
It is always crucial to research the best payment options and loan types for your new home before venturing into a new purchase. This way, you will be better placed to learn about all the available loan types in the market, compare their terms, and choose the loan product which suits your needs.

4. Personal savings and investment plans
Is your current income sustainable enough to accommodate your new home payments and still meet your daily expenses? Can you last long enough in the new home to be able to recoup your costs and realize a good return on your investment?

5. Never forget a home inspection
It is good practice to have a professional home inspection before committing to buying a house. A thorough home inspection will help you identify any hidden problems with the home, thus saving you money before buying.

6. Look into your future prospects
Your starter home should, at the very least, be able to accommodate your future plans. It would be best to employ a wider lens of perspective when assessing your current versus your future needs. Do you intend to start a family, for instance? Is the house big enough to house your kids? Is the neighborhood safe enough to raise your kids?

7. Check your lifestyle preferences
It’s important to align what you add to your life with your lifestyle. Can you really afford the home? You must also figure out how the property fits into the vision of your day-to-day life.

A budget-friendly home helps, but you also do not want to settle for something that doesn’t make you happy. Be honest with yourself and with what you can afford while getting what you really want.

Conclusion
A good home should afford you some peace of mind at the end of a long, tiresome day. Proper fact-finding should become your primary mission before committing to a property. Having said that, should you feel confident enough, go for it. Owning a home is one of the most liberating feelings in the world, with zero regrets when done right. 

Carrie Colby is a Broker with Allied Real Estate, 909 Roosevelt Trail in Windham. She can be reached at 207-232-5497. <

Real Estate: Making a list and checking it twice

By Jonathan Priest

It’s Christmas in July!  OK, not really, but in this exciting installment of “I’m Licensed To Sell Insurance So You Should Listen To Me,” I DO want you to make a list and check it twice!  Why?  Because as a renter or homeowner, part of your responsibility as a policyowner or “named insured” is to keep accurate information as to the inventory of your personal belongings!  

Back in the Golden Age of Insurance, before computers were widespread and commonly used, a decimal point was an underwriter’s best friend.  Premiums were calculated manually, and insurance companies would send out small, mostly blank ruled pamphlets for their customers to notate the items that they owned, in order to more easily facilitate replacement of items that were damaged in a covered claim.

While we’ve moved away from ledger books as a society, it still makes sense to keep a record of the things that you own in your home, your shed and your garage.  Now that most of us have a video recording device that fits in our pocket, and remote storage capability for said videos, it’s never been easier to take a few minutes and stroll through your house, taking video of all the items in your possession!

Picture this:

It’s family reunion time!  Uncle Ray really wants to run the grill, and against your better judgement (he did swap a Hemi into his John Deere back in 2002, but surely his judgement’s improved since then, right?) you allow him to turn on the propane, watching as he carefully thumbs the spark switch and the burners ignite. 

“I got this under control,” he says.  “Go finish up the deviled eggs and the ambrosia salad!”  You turn your back… and as soon as you’re around the side of the garage, he grabs his new turkey fryer out of the back of his RAM 2500 and sets it square on the grill, perilously close to your vinyl siding…

You see where I’m going with this, right?

You might say to yourself, “I know what I have, I don’t need to bother with that foolishness!”  I beg to disagree.  I have had customers come to me months and even years after a loss to file a supplemental claim, as they forgot about the item or items during their first attempt to notify the insurance company of all of the damaged (or stolen) property. 

Speaking of stolen property, that can be the toughest loss to come back from and be made whole again; it sometimes takes several weeks or months to realize that you’ve been burgled, if you don’t catch the perpetrator in the act!  A great and inexpensive way to help protect against theft is by installing a security camera or a Ring-style doorbell camera, particularly in this age of “Porch Pirates” who cruise through neighborhoods looking for newly delivered packages to steal off folks’ front steps!  These can also very often give you additional discounts on your home insurance.

When it comes to specialized items like jewelry, firearms, antiques and musical instruments, I highly recommend adding scheduled personal property coverage to your home or renter’s policy.  For a relatively small additional cost, additional protection is afforded on these items, provided the company has received evidence of value like an appraisal, bill of sale or similar documents. 

In many cases, there is no deductible in the event of a loss of a scheduled item, and the coverage is much more comprehensive, with additional benefits like “Pair and Set” on items like earrings, so that if one goes missing or a stone falls out, the company will provide multiple replacement options to choose from in order to make sure you get the closest possible “twin” to match the remaining piece.

There are also many specialized additional coverages available for cell phones, tablets and computers, and home office equipment as well!  When your insurance agent calls looking for you to schedule an annual policy review, ask them about these additional benefits, discounts and coverages so you are as informed a consumer as you can be! <

Jonathan Priest is a MetLife property and casualty specialist in Windham. Call him at 207-893-8184 for your home, auto, life or business insurance needs.

Real Estate: Let’s talk refinance

By Skylar Welch

Let’s talk refinances. When someone thinks of a refinance, they usually think of lowering their monthly payment or cutting the term of their loan, however there are so many other uses of a refinance.

2020 was a difficult year for so many people for so many reasons. One of which was the financial burden that people incurred when their work shut down, they were furloughed, or their hours were cut. Many couples were forced to have one parent leave their job or cut hours to stay home and homeschool their children. During this time, people racked up credit card debt, took out personal loans, and financially over-extended themselves. Now, they are having a difficult time digging themselves out from under the high interest debt and keep their heads above water.

Does this scenario sound familiar to you? If you currently own a home, a great option for you, may be a cash out refinance. Interest rates are still extremely low and with a cash out refinance, you can take cash out of the equity you have in your home, to pay off all of the debt you have, whether it be credit card debt, a second mortgage, installment loans or student loans, while locking in at a low, fixed interest rate, amortized over a longer period of time. This way, you pay off your debt, and lower your monthly payments, to put yourself financially in a much better place!   

If you haven’t noticed lately, the market is crazy.  Properties are flying off of the market as fast as they are listed, and buyers are having difficulty putting properties under contract. A lot of people want to sell their home, but they have nowhere to go, causing a stalemate in the market. An option that homeowners have, is taking a cash out refinance, to make the improvements or fix what is needed, to turn their current home, into their forever home, rather than trying to throw themselves into this difficult market. Home values are higher than ever, so there is no better time to make this happen.

Another common trend during the last year, is a lot of people have found themselves spending a lot more time at home, leading to a lot of home improvement projects! Whether it be to add a garage, put on an addition or create a pool and patio oasis, coming up with the funds to make these dreams a reality, can be difficult.

However, if you currently own your home, taking a cash out refinance, to take equity out on your existing home, can be a great option! Again, you can lock in at a low interest rate and receive the cash you need to make the improvements you want, while adding value to your home!

One last way to use a cash out refinance, is to pull some equity that you have in your home, to use as a down payment on another property.

Whether you have been looking to purchase a second home at the lake or on the ski mountain, or if your dream is to start investing in real estate, coming up with the down payment, can sometimes be tricky. A cash out refinance can be a great option to obtain the cash, rather than having to pull out of your retirement or take out a high interest personal loan.

These are all some great ideas on how to use the equity you have in your home, as a financial tool. Next time you think of a refinance, don’t just think of it as a way to lower your interest rate (because lets face it, if you have purchased a home in the last three to five years, you likely have a great interest rate), but start thinking of it, as a way to put yourself in a better financial situation or to add value to your home. <

Skylar Welch owns Maine Pointe Lending is at 202 US Route 1, Suite 102 in Falmouth. Call 207-949-3568 or find them online at www.mainepointelending.com. They’re also on Facebook at https://www.facebook.com/skyeclosesmaine/

Real Estate: Waiting on Bated Breath, The Appraisal

Submitted by Lisa DiBiase 

What is an appraisal?

When buying and selling a home, there’s no getting around the home appraisal if the buyer is taking out a mortgage to purchase the home. You can’t wave a magic wand to raise the fair market value of any property. My favorite quote is “you are what you are” which means it’s worth what it’s worth. But this doesn’t mean you shouldn't educate yourself about the appraisal process. The objective of an appraisal is to provide an independent and impartial cost analysis of real property according to the National Association of Realtors®, NAR. The appraiser’s client is the lender. However, the appraisal protects a buyer against paying more for a home than it’s worth, which could put their financial future in jeopardy. For example, if the buyer loses their job a year later after purchasing the property then they are “upside down”. This means they can’t sell the house for the amount owed on the mortgage, which leads to foreclosure. However, if they buy it at the right value and something happens a year or two into it they can get out without losing their skin. They may not make any profit, but they may not suffer any loss or at least as big a loss. To come up with an accurate value gauge, the appraiser conducts deep research of the comparable sales data and uses an on-site visit to verify the home’s size, features, and condition.

How does the appraisal impact a real estate transaction?

There are a few primary reasons homes fail to appraise. Let’s explore a few options:

1. The contract price is over appraisal value. In rising real estate markets it’s common for buyers to compete for a house and drive up the price above market value. At that point the biggest mistake sellers make is assuming that the buyer will bring extra cash to the table as needed. The reality is traditionally the buyer has saved all the money they have for closing costs and down payment and usually not much more than that. On the other hand, there are buyers out there who do have cash on hand and can cover the difference between the contract price and appraisal value. This is known as “bridging the gap”.

If the appraisal comes in below the contract price, there are still options.

1. Seller can lower the price.

2. Buyer can bring the additional cash to bridge the gap between the contract price and appraisal value.

3. Buyer and Seller can renegotiate the purchase price and terms of the contract to work in the favor of both parties. This is also why pricing your house right from the start is so key. Don’t hire the agent who is going to flatter you with an empty promise to sell your house for more. Find one who’s done their homework and has the comps to prove it.

2. An appraiser finds an issue with the house that impacts its value.

 In some cases, an appraiser will identify an issue with the property that must be factored into the appraisal. This could be a room addition that doesn’t have a permit. In that case the appraiser may mark the room as a “cost to cure” line item on the report, which could lower the appraised value for a given amount. Some types of loans like FHA (Federal Housing Administration) also require specific problems like broken or cracked windows or peeling and flaking paint to be corrected before a house can appraise.

3. The appraiser was inexperienced or doesn’t know the area.

There are a lot of nuanced factors that go into appraising a property accurately. “Geographic competency” or an appraiser’s knowledge of the local area can make a big difference in whether an appraisal arrives at the true market value of a home. Other issues can be as simple as the appraiser rushing through the data compilation or applies short cuts. Lastly, If the appraisal value does not come in at contract price, there is one last ditch effort and usually the very last resort. Appeal the appraisal. This is not a guarantee and the appraisers are typically not thrilled when their professional opinion is being questioned. If you plan to appeal the appraisal, here are a few tips:

1. Contact your lender and find out what the steps are for their appeal process. Each lender has different processes.

2. Study the appraisal carefully. Review the basic information used in the appraisal for your home's actual features. Does it have the correct number of bedrooms, bathrooms, square footage etc.

3. Research the comparables used in the appraisal. Note any advantages that your house has over the comps used. Do you have a larger kitchen or perhaps it has upgraded finishes. Whatever advantages you can find, they should be able to prove that your home has a higher market value than the comps and that it is properly adjusted in the appraisal. Run the most recent sales in the last 6 months and sooner to make sure that a sale that supports your market value didn’t just recently close and perhaps was missed during the time the appraisal was being completed.

4. Last resort would be to order a new appraisal, but that can be costly with no guarantee of a different outcome.

You can present this information to your lender who will then forward to the appraiser for review. Hopefully the new information you bring to the table will help the appraiser reassess their opinion of value.

What can you do to prepare for the appraisal?

Here’s a short list of things you can do to prepare for an appraisal:

1. Deep clean the inside of your home. Act like you are showing the house all over again to buyers. Definitely make sure you’ve dealt with any issues related to pests and pets. First impressions are so important.

2. Secure your pets. This allows the appraiser to work more efficiently and can focus on your property without any distractions.

3. Spend an afternoon cleaning up the yard. No need to get too fancy. Just make sure the front of the house looks nice and tidy. Pull any weeds, mow the lawn, trim the hedges, edge the grass, brush away cobwebs, and clear leaves and debris. You can’t necessarily put a price on curb appeal, but appraisers can take it into account when reconciling that final value.

4. Touch up your paint on the outside of your home. It may not seem like a big deal, but appraisers will factor peeling paint into their evaluation, especially if they are doing an FHA mortgage appraisal. No need to repaint the whole house, just touch up the few places to make it shine.

Getting through the appraisal process is the last hurdle of the sale of a home. Working with a local Realtor® who knows the area is critical to having well-informed choices available to you as a consumer and ultimately guiding you successfully through the sale. 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. <

Lisa DiBiase is a Broker/Owner. She and her company represent buyers and sellers in the Greater Portland area. For all your real estate needs contact lisa@landinghomesmaine.com

Real Estate: Defending your home against moisture, dampness and humidity

 By Nicole Foster, Broker/ REALTOR

Moisture can be one of the most damaging problems for a home and when left untreated can result in costly repairs and unhealthy living conditions. It is important for homeowners to objectively evaluate their property during the summer months to check for repairs that should be completed and upgrades that can be budgeted for such as storm doors or rain gutters to direct water away from surfaces.

Outside

Walk across the street or find a place where you can view your roof and bring binoculars if helpful. Inspect for missing shingles which may have blown off in a storm, and look for any that are curling or lifting. Even one missing shingle can be a source for eventual water intrusion and damage. A roof with dark streaks from algae, moss, mold or mildew growth can appear unsightly and compromise the life span of your shingles. It is easy to remove the growth using equal parts bleach and water (pressure washers can damage shingles so are not recommended) but you will need to pre and post rinse any plants around your foundation to prevent damage. There are products which you can purchase designed for this purpose that you can purchase locally or online. Branches from nearby trees close enough to drop leaves or pine needles onto your roof should be cut back and removing select trees can help to allow a greater passage of sunlight on and in your home. Make sure to clean out rain gutters which may fill with leaves so they can properly function, as well.

Exterior paint is what protects wooden surfaces from rotting. Areas with flaking or peeling paint should be sanded and fresh paint applied to prevent further damage.

Power washing can be a highly effective way to remove damaging staining and discoloration from mildew and mold, bird droppings, pollen and other grime which accumulates over time on outdoor surfaces like exterior siding, decking, driveway and walkways. Help to keep your home looking fresh by purchasing a pressure washer for several hundred dollars or hiring a professional company to help with this. If you are a new homeowner doing this yourself be cautioned that you should begin at the lowest setting and use the least force possible to avoid permanent damage to wood surfaces, windows and screens, brick mortar or even personal injury.

Incorporate a perimeter of crushed stone or brick surrounding the foundation of your home instead of using wood mulch which holds in moisture.

Indoors

 “It’s not the heat…. it’s the humidity.” Once the temperature reaches above 60 degrees it is time to turn on the dehumidifier for optimal indoor air quality. “When humidity levels are high, molds can be a problem in bathrooms, kitchens, and basements. Make sure these areas have good air circulation and are cleaned often. The basement, in particular, may need a dehumidifier.” according to the American Lung Association. Dehumidifiers work by removing the excess moisture from the air and collecting it in a bin or dumping it down a drain depending on your model. Keep the humidity in your home below 50% to reduce the growth of dust mites, molds, bacteria and other organisms as well as combat musty odors and feel more comfortable.

Turning your air conditioning unit to “Auto” instead of the “On” setting can help to reduce condensation and remember to clean drip pans and filters.

Many of the tasks that we do each day create moisture and disburse it into the air including cooking, drying clothes by using a gas or electric dryer as well as indoor line drying of clothes, showering and more. Make sure you are using the necessary ventilation by running the bathroom fan for 20 minutes after showering, using range hood fans when cooking and opening windows when possible. Clean out your dryer vent by removing the cover and vacuuming out as much as possible or purchasing a cleaning kit with brushes and check to make sure there are no loose fittings or blockage causing moisture to build inside your home when using.

Check for indoor plumbing leaks which may have developed under bathroom and kitchen sinks or laundry area that could be contributing to overall indoor moisture, as well. <

Nicole Foster is a Broker and Windham resident specializing in new construction since 2006.