Real Estate: Do mortgage interest rates have an impact on purchasing power?

By Kristin Piccone

The real estate market of 2021 was aggressive and competitive.  It made a lot of buyers exhausted, frustrated and some have even made the decision to “hold-off until the market changes.”  The low inventory and extremely low interest rates drove a lot of buyers into the market to begin with. These lowered interest rates increased purchasing power.  Near the end of 2021, however, rates slowly started to increase and are expected to continue to rise in 2022.  

I spoke with Brian Gagnon of Northstar Mortgage to get his thoughts on mortgage interest rate trends: “With inflation showing signs of being more permanent than transitory and with the Federal Reserve promising to taper its bond purchases, I expect mortgage rates to modestly increase now and to increase into 2022. Mortgage rates tend to follow the U.S. 10-Year Treasury Bond yield, and I expect this figure to increase as our economy continues its recovery and if inflation remains elevated. While this may seem like bad news for those looking to invest in real estate right now or for any homeowners who are looking to refinance their existing mortgages, do not be discouraged. If the expected 2022 average rate, for a 30-year mortgage, increases to 3.5 percent, we must remember how historically low this is. Just three years ago, the average rate for a 30-year mortgage was almost 5 percent, so there remains a lot of buying power for individuals and for families. Also, with rising equities in people’s existing homes, cash-out refinances will remain a great option for many homeowners.”

Moreover, waiting for the market to change could play a significant role in how much your mortgage payment will be and/or how much house you will, effectively be able to purchase.  For example, when interest rates were 2.75 percent, the mortgage payment on a $400,000 home would be approximately $1,633 (principal and interest) per month.  As rates increase, that same home, at an interest rate of 3.75 percent, would be approximately $1,852 (principal and interest) per month.  Consequently, if you were previously approved for a $400,000 home, or looking to keep a certain monthly mortgage payment, your buying power could be lessened to $360,000 or less as rates increase. 

Overall, rates will still seem low compared to year’s past, but could be detrimental, nonetheless, to some.  Serious and savvy buyers will be ready and aware of the impact that any potential increase in interest rates will do to their purchasing power.  To be prepared, I would suggest working with a local, knowledgeable and trusted mortgage lender who will have a heads up of your financial standpoint and purchasing goals.  With this knowledge, the lender is able to keep an eye on market trends specific to your financial scenario and has the ability to advise or suggest actions based on trend performance, for example, rate lock.  On the flip side, I highly suggest working with a local, knowledgeable, and trusted real estate professional (Me!) who is able to act quickly when a home that meets your needs hits the market.  A pre-approval letter from the aforementioned lender, and getting into your prospective home in a timely manner, ensures that there will not be any delays when it’s time to make an offer. <

All in all, I would suggest that this is not necessarily the time to “wait and buy” OR “wait and see what the market does.”  I do not have a crystal ball, but we can see that rates are increasing; I know what I have been up to in real estate, and I am still experiencing multiple offer situations!  For this time of year, this tells me that the market is still going strong.  The bottom line is that any serious buyer should take the rising interest rates as motivation to buy sooner rather than later.  In the long run, waiting could actually cost you more money ~ yikes!

As always, I am happy to chat with you personally about your real estate goals.  Consider me as your local, knowledgeable, and trusted resource for ALL of your real estate needs.  There is never any obligation and I always keep your information confidential.  I value my work ethic and the service that I am able to provide to my clients.  Additionally, I align myself with like-minded industry professionals who are also ready to assist you; teamwork!

Happy New Year and wishing you much success in 2022! 

Kristin Piccone is a REALTOR for Landing Real Estate in Windham. Reach her at 207-951-1393 or by email at kpiccone@landinghomesmaine.com

Real Estate: What is Rental or Income Property Insurance?

By Jonathan Priest

As a property owner or landlord, you take risks by letting others live in your space. Not only do you risk them doing damage to your property, but you also take the risk of them possibly becoming injured on or because of your property.  Rental or income property insurance is designed to protect against these risks and to give you the coverage you need to continue renting your space successfully even when everything doesn’t work out perfectly.  

Rental insurance is available through many national insurance companies, and this policy is highly customizable as well. It’s possible only to get protection against the primary liabilities you may face or to increase your security to cover all the potential costs and issues you’ll encounter as a landlord. Only by working with an experienced insurance expert can you get a policy that is protective enough and that covers the specific issues you’re facing. 

Why is Tenant or Income Property Insurance important?

When renting out a piece of property, people move in and around that space all the time. This is a daily risk and when something goes wrong, that impacts your bottom line. Tenant insurance or income property insurance is protection against these potential issues. This insurance is meant to safeguard the property owner from liability lawsuits and help with significant damage to the property itself caused by the tenants or natural disasters.

Common things that are covered by such policies include damage to appliances, the plumbing system, fixtures in the home, water heaters, roofing and other significant areas of the home. These are all parts of the property that are expected to wear out and go bad eventually, but that can be covered against accidental damage and malfunctions under some policies. Since these areas of the home can be costly, it’s beneficial to have that added protection to prevent you from suffering from unexpected emergency repair costs.

Natural disasters are another fundamental area of concern for rental property holders. A lightning strike could do severe damage to the electrical lines throughout the house, while a fire could leave you without a home to rent at all. Hail storms can irreversibly damage roofing, and there are always risks for you to consider that can impact your investment in profound ways. Not only do these policies help with making necessary repairs when something goes wrong, but they can protect you if a tenant is injured in your home. You can also stay protected if you lose out on rental income for a long period of time because of something going wrong with the home that’s covered on your policy. 

Who is Tenant or Income Property Insurance made for?

As a landlord or property owner that’s renting out a home, apartment, condo, or another type of property, tenant or income property insurance is for you. This form of insurance is protection for anyone that’s renting a space for money that they own. If you own a property and you depend on it to generate income for you, it’s worth spending a small amount each month to protect that property with insurance. 

Property owners who don’t rent out their properties or have vacant spaces for extended periods may not want to use this form of insurance. Tenant insurance can be more costly than a basic home insurance policy because it considers the additional risks that renting a space creates. Most landlords and property owners that are running a real estate business can benefit from this insurance, though. 

Income property or tenant insurance is a critical investment that can seriously impact your ability to run a successful real estate business. With the right insurance policy, you are more protected, and your business is likely to be more stable overall. With the wrong policy, you open yourself to serious risks. It can be difficult finding the right policy, though, which is why it’s important to make sure you’re working to track down the suitable options for you. You can do this by talking with many different insurance companies and getting quotes yourself, or you can work with a local agent you trust to explain your options and get help faster. <

This article was brought to you courtesy of Farmers Insurance agent, Jonathan Priest, with an office at 57 Tandberg Trail, Suite 7, Windham. Call him at 207-893-8184 or send him an email at jpriest1@farmersagent.com 

Real Estate: What to expect in 2022 – The Housing Market

By Katie Kinney

The real estate market has been a wild ride for both buyers and sellers since the spring of 2020. We have seen record high purchase prices, extremely low mortgage rates and cutthroat competition among buyers in multiple offer situations.

The good news, according to experts, is that 2022 may bring more equilibrium to the real estate industry. Here are the key trends to pay attention to if you are considering buying or selling property this year.

Mortgage rates will rise, rates reached all time lows in the beginning of 2021, with 30 year fixed loans averaging less than 3 percent. “Mortgage rates are expected to slightly move up, to an average of about 3.5 percent,” Gay Cororaton, senior economist and the director of housing and commercial research with the research group of the National Association of Realtors (NAR) says.

Even with the slight rise, the rates will be still be low by historical standards, prior to 2020 rates were around 4 percent. While this means refinancing opportunities for existing homeowners may dwindle, borrowing will still be very affordable for new and existing buyers.

Smoother supply chains are predicted for the new year. Hopefully this change will help builders and homeowners get their homes listed sooner than later. Assuming the worst days of the past few years are behind us, home inventories should grow in the year ahead.

When the inventory rises, we should see price stability and a decline in the home buyer competition. The prediction is home prices will grow by 5 percent in 2022, compared to 15 to 20 percent growth in 2021.

Historically speaking a 5-plus percent growth from year to year is a normal trend. As far as the sell side goes, sellers should be prepared to price their homes aggressively and take advantage of the buyers still in the market.

This year should feel a little more normal to experienced real estate shoppers and calmer to first time homebuyers who have only experienced the past two years. Keep in mind, regardless of the market conditions, the advice for people interested in buying or selling remains the same. It is always important to be prepared and understand the current market. Having a knowledgeable agent at your side will make navigating listings or offers much easier.

Your realtor should also advise you on the specific dynamics of the real estate market you are listing or shopping in. < 

Katie Kinney is a broker with Landing Real Estate. Contact her by email at

katie@landinghomesmaine.com or by phone at 603-205-2276.

Real Estate: The Risks of Skipping a Home Inspection

By Carrie Colby

In the crazy real estate market we are in, many buyers are forgoing building inspections. This may make your offer as a buyer more attractive to the seller but there are significant risks in doing so. 

Just this week I put a house under contract for my buyers. While the sellers and buyers agreed on a purchase price the seller said they would be selling the house “As Is”. I recommended we go ahead and do an inspection anyway to make sure there were no major defects that would cost the buyers a considerable amount of money now or in the future.

Low and behold the inspection revealed that the septic failed and there is quite a bit of mold in the basement. Now I am in the process of finding out if the septic can be fixed or needs to be replaced and what it would cost to remediate the mold.

We will see how this pans out. Will the seller agree to have the septic fixed and mold removed? Will the seller stick to their “As Is” guns? Will the buyer decide to walk away or take on the repairs themselves?

That being said, as with any major purchase, buying a home requires a significant amount of due diligence to protect your interests and make an informed decision. A thorough, professional home inspection is a fundamental piece of the information puzzle. It’s nearly impossible to gain a complete and accurate overview of the home without it.

Here are a few of the main issues you may not learn about when you waive your right to a home inspection:

Unknown safety hazards
Without a home inspection, you may not learn about pressing safety issues that should be addressed before closing. Home inspections take several hours to conduct, and many safety issues will only be identified in the course of a normal home inspection. This includes concerns such as electrical hazards, fire hazards and carbon monoxide hazards.

Need for expensive repairs or replacements
You may think that major structural or maintenance issues requiring extensive (and expensive) work would jump out at you. Many problems that might give a home buyer pause are hidden by nature or by design, and it takes an experienced home inspector to suss them out. There is a laundry list of deal-breaking problems that have come to light during home inspections.

No maintenance plan for the home
Unlike vehicles, homes don’t come with a maintenance manual. When you get a home inspection, you’re not just getting a professional honey-do list. Home inspectors also give advice about the future maintenance needs of a home to help make sure the new owners are well-educated.

Knowing what big jobs may be coming in the next five to 10 years makes it easier to create a financial plan and be ready for them, like roof repairs or replacement, or a new furnace. Sometimes telling home buyers when to expect a repair is almost as valuable as finding major defects, as it allows you to budget,

A home inspection provides a home buyer with the information they need to consider in the overall home purchase equation. For example, a home that is selling at a lower price but will require major repairs in years shortly after the buyers move in may not be the right house for them. A better option may be to pay a bit more for a home with updated systems. <

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