July 22, 2010
The Biggest Mistakes Home-buyers Make
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Buying a home is the biggest purchase most people will ever make, yet many go into it blind. Here are the most common, and costly, mistakes homebuyers make.
Not knowing your credit score. If you're even toying with the idea of buying a home, you must find out exactly what your FICO score is. If you find it is less than ideal, wage a systematic campaign to raise it. Too many borrowers ignore this step and get surprised when they get interest rate quotes. Once you've pored over your credit history and corrected any errors, your next step is to pay down revolving debt balances to no more than 30% usage. That will help raise your score significantly. The lower your score, the higher your costs of borrowing. Fannie Mae and Freddie Mac, for example, charge higher up-front fees to borrowers with credit scores below 740. For a buyer with a credit score between 680 and 700, the fee comes to 1.5% of the mortgage principal. On a $200,000 mortgage, that adds up to $3,000. Someone with a 740 score pays nothing. Lower-score borrowers also get saddled with higher interest rates, about a 0.4 percentage point more for the below 700 borrower. That costs an extra $62 a month -- $744 a year -- on a $200,000, 30-year, fixed rate loan. Buying a car before a house. Anytime consumers open new credit accounts -- credit card, auto loan, etc. -- their FICO score could drop, according to Craig Watts, a spokesman for Fair Isaac, the creator of FICO scores. "Hence the admonition to not open other new accounts while your mortgage application is in process," he said. A big purchase would use up a considerable proportion of a borrower's total credit limit, which results in a drop in the score. Lenders often continue to check credit scores in the weeks before closing. "The lender will likely slam on the brakes if the applicant's credit scores have suddenly dropped below the minimum required for the requested loan rate," Watts said. Skimping on the home inspection. Buying a pig in a poke can cost buyers big bucks, just when they can least afford it. So It's vital to find all the costly flaws before you buy. Many homes on the market today are distressed properties -- foreclosures and short sales -- and that only increases the importance of good inspections, according to David Tamny, president of the American Society of Home Inspectors. "The owners usually didn't have the money to keep up these homes," he said. "There's a lot of deferred maintenance." A home inspection can find problems with the foundation, electrical, plumbing, roof, attic insulation, and heating and air conditioning. In some states, separate licensed inspectors offer mold or termite inspections. Often homebuyers, who may be strapped for cash, stint on inspections and look for the cheapest way to go. That can lead to disaster. The cost of repairs far exceeds the cost of inspection," said Tamny. No contingencies. When signing a sales contract, buyers usually have to put up 1% to 3% in "earnest money," which they don't get back if they pull out of the deal except under certain conditions spelled out in the contract. Sellers try to limit the grounds for canceling, and inexperienced buyers may sign contracts that don't include common exceptions, such as uncovering major problems during the home inspection, failing to obtain financing and failure of the house to appraise. Failure to obtain financing is common these days because lenders have become very picky; underwriting is very strict. Even if your mortgage company is still willing to finance your purchase, the house itself may be worth less than you've contracted to pay for it, and the lender will pull its approval. With residential real estate markets still slow, sellers usually accept contingency clauses, but if they resist, it may be better to rethink the deal. Losing a deposit of $2,000 to $6,000 on a $200,000 home hurts. Not budgeting for insurance. Don't underestimate insurance costs and fail to budget for them. Many homebuyers don't understand just what is -- and what is not -- covered. Standard policies pay for theft and wind, fire, lightning, hail and explosion damage. Not covered is flooding, earthquake damage or problems caused by neglect of routine maintenance, according to Jeanne Salvatore, spokeswoman for the Insurance Information Institute, an industry-sponsored educational group. "The most important thing before you buy a home is to find out what it will cost to insure it," she said. "Insurance needs to be calculated into the cost of owning a home. Unlike a mortgage you can pay off, you'll be responsible for insurance costs forever." For flood insurance, most buyers use the National Flood Insurance Program. Earthquake coverage may be available through a state authority or some private companies. Depending on location, flood insurance can run into a lot of money. The cost of $250,000 worth of government flood coverage on the building and $100,000 of its contents can go as high as $5,714 in high-risk, coastal areas. Source: CNN/Money.com |
| About Cornerstone Financial Mortgage
Cornerstone employs a team of experienced professionals who are committed to providing the highest level of service while fulfilling the varied needs of our customers. We build our business on satisfied customers - home buyers, homeowners, realtors and builders. Cornerstone strives to create value for all our partners - value for our customers, investors, shareholders, employees and the communities where we do business. Eric Baitinger
Sr. Mortgage Consultant 215.654.6085 Email Me Visit My Website |
June 9, 2010
The "GOOD NEWS" from Europe
| With all the uproar concerning the European crisis, we must spend a few minutes to look at the bright side. The market's reaction has brought us two very important pieces of good news. First, oil prices have moved significantly lower. Just a few weeks ago we were looking at gas prices hitting $3.00. Now the price of oil is down around 20 percent from its recent peak. What is really extraordinary about this is that the retraction is happening while oil is spilling out into the open waters in one of the largest oil disasters in our history. Ordinarily oil would be skyrocketing, not because of the immediate loss of oil, but because the long-term prospects of offshore drilling has dimmed. Why are lower prices good news? Lower energy costs not only take the pressure off inflation, it gives the consumer more money to spend. Consumer spending helps "fuel" the economic recovery. The second present is comprised of lower rates. Everyone was talking about higher rates being a foregone conclusion. Well, it just goes to show that you can never predict the future. Lower rates free up more money for spending just like lower oil prices. With the recovery in the real estate markets underway, but on very shaky ground because impending foreclosures and "shadow inventory," lower rates are absolutely necessary to help the recovery continue. The Federal Reserve Board has indicated several times that this is the case. Lower rates provide opportunities to refinance debt and purchase homes at incredibly low bargain prices. They help car sales and also small businesses throughout the nation. The stock market may not like what is happening overseas as a fiscal crisis is painful. However, there is good news that will help our economy in the long-run. Homeownership continues to be a bargain! |
| Prime Time for Owning a Home
The national median home price for the quarter was $175,000. "Homeownership continues its more than year-long trend of remaining within reach of more households than it has for almost two decades," said NAHB chairman Bob Jones. "With interest rates still hovering at low levels, companies starting to hire new employees and the economy beginning to rebound, this should encourage more home buyers to enter the market and help further stabilize housing and the economy." The NAHB judges a home to be affordable if a family making the metro area's median income could devote no more than 28% of their take-home pay toward housing costs. Indeed, since this report was released the European debt crisis has forced rates lower and increased affordability even more (see related story). This is truly a once-in a life-time buying opportunity. Source: CNN/Money |
| Unmarried Women Trump Men
He reminded sellers to treat young women as viable buyers, not bystanders, by doing something as simple as handing them a brochure when they enter a for sale home. These women tend to stake their claim on homes in the 1,700-square-foot range predominantly in the Washington, D.C., California and Texas markets, Warrick said. After segmenting the market, Warrick noticed that young women, especially those rooted in secure industries like health care, make more money than their male peers. Source: MarketWatch |
| About Cornerstone Financial Mortgage
Cornerstone employs a team of experienced professionals who are committed to providing the highest level of service while fulfilling the varied needs of our customers. We build our business on satisfied customers - home buyers, homeowners, realtors and builders. Cornerstone strives to create value for all our partners - value for our customers, investors, shareholders, employees and the communities where we do business. Bruce Neumann Sr. Mortgage Consultant 215.601.7755 cell Email Me Visit My Website Eric Baitinger Sr. Mortgage Consultant 215.654.6085 office Email Me Visit My Website |
May 26, 2010
6 Ways to Ensure a Remodeling Project Pays Off
| Just a few years ago you could count on getting the bulk of your money back for almost any homeimprovement project you took on. According to a study from Remodeling magazine, the average return on value for an upgrade declined from 87% in 2005 to 64% in 2009. But these six rules will help you maximize your return on your remodeling investment. Rule No. 1: Repairs get the biggest returns. The smartest money now goes into "un-deferring" needed maintenance. That's because while buyers might appreciate enhancements like Jacuzzis and Sub-Zeros, they won't tolerate a house with a leaky roof or antiquated plumbing. "If a property is known to have issues, today's buyers won't even look at it," says appraiser Jim Amorin. And trying to keep problems a secret can cost you big-time. If buyers discover them during inspection, it's now common practice to ask sellers not only to pick up the tab for the repair but also to pay a penalty to compensate the buyer for the inconvenience of having work done. So the $20,000 you saved by putting off a roof repair, say, could turn into a $30,000 credit to the buyers at closing, says Amorin. Rule No. 2: Remodeling beats adding on. McMansions have gone the way of the SUV and large additions don't pay off either. "There's been a fundamental shift toward quality over quantity," says real estate agent Ron Phipps. Having a big, formal living room plus an everyday family room is less desirable than having a multi-use common space. So rather than adding on, you're better off repurposing existing square footage by reconfiguring the floor plan or capturing unused basement or attic space. Want an eat-in kitchen? Knock down the wall between the kitchen and dining room ($2,000 to $8,000, depending on whether it's load-bearing or contains plumbing). That will instantly create a large eat-in kitchen and give the whole house a more open feel, without a huge investment to make up at resale. Rule No. 3: Eco-friendly upgrades can save cash. Some green improvements pay you back long before you sell your house. Install energy-efficient features, such as EnergyStar appliances and extra wall insulation, and you'll see lower energy bills every month. Add in the federal tax credit of up to $1,500 that lasts through 2010, plus many local rebates and incentives, and the work may pay for itself in just five years. Green features are also increasingly a selling point, says Phipps. "Most people in the market right now are first-time buyers in their thirties, and they've been raised to care about carbon footprints and being eco-friendly," he says. The best way to go green is with a whileyou're- at-it job: When it's time to replace your furnace, for example, upgrading to super-efficiency might add only $500 (after tax credits), compared with standard new equipment, but it will save you and your buyers someday $150 or more in annual heating costs. Rule No. 4: Tech infrastructure trumps cool gadgets. Home electronics seem like a deal, since prices have fallen about 50% over the past three years and continue to drop, according to Stephen Baker, president of industry analysis at NPD Group, a market research firm. Still, that doesn't change the fundamental problem with expensive built-in technology. Put in a $10,000-plus home theater today, and something better will come along tomorrow and make your system look as if it's ancient. Tech infrastructure is different, however. Anytime you're opening up walls for a construction project, have cabling and Ethernet ports installed. At about $80 a room, it's a low-cost way to provide the capability for whatever technologies come along. Rule No. 5: Let the Joneses be your guide. During the boom, you could be the first on your block to have a luxury kitchen, spa bathroom, or in-ground pool and count on others following suit. And even if the neighbors never took your lead, there was plenty of equity growth to cover your costs. Nowadays that fudge factor is gone. "You really have to keep your house's amenities in line with the neighborhood," says Kermit Baker, director, remodeling futures program at Harvard's Center for Housing Studies. If other houses on the block have real marble countertops, add one to your house, but if everyone still has faux bluemarble Formica from the '70s, you're not getting your money back. Keep your projects design-neutral so they'll appeal to the greatest number of people. Choose neutral colors and traditional electrical and plumbing fixtures unless your house has a modern architectural style. Rule No. 6: The new payback time is five years. As with any investment, the longer your time frame, the lower the risk. Don't take on a big project if you're likely to move in less than three to five years. There's just too much chance that any money you put in, aside from necessary repairs or superficial cosmetic work, could be lost while the housing market continues to meander. But if you plan to stay awhile, don't delay starting a project. Home improvements are a bargain right now, with contractors bidding 10%, 20%, even 40% lower for the same work than just a year or two ago, says Bernie Markstein, senior economist for the National Ass. of Home Builders. Source: Money Magazine |
| About Cornerstone Financial Mortgage
Cornerstone employs a team of experienced professionals who are committed to providing the highest level of service while fulfilling the varied needs of our customers. We build our business on satisfied customers - home buyers, homeowners, realtors and builders. Cornerstone strives to create value for all our partners - value for our customers, investors, shareholders, employees and the communities where we do business. Eric Baitinger
Sr. Mortgage Consultant 215.654.6085 Email Me Visit My Website Bruce Neumann Sr. Mortgage Consultant 215.601.7755 direct Email Me Visit My Website |
 Copyright 2010, All rights reserved The Hershman Group www.originationpro.com |
April 7, 2010
The Fed's Message
| The Fed's Message In response to our protracted recession and financial crisis, we have experienced a long period of fiscal stimulus from the Federal Reserve Board. In a typical cycle we focus on the Fed's actions with regard to rates. However, during this cycle their activity has extended far beyond traditional stimulus. Certainly, keeping short term rates near zero for over a year has been very significant. Remember at the beginning of the crisis we were focusing upon subprime loans and the lurking danger of rate increases because of rising adjustables. As most adjustable rate indices moved to less than 1.0%, this threat became secondary to many other issues within the housing sector. The Fed has supplied hundreds of billions in stimulus to help stabilize the economy. Paramount has been their purchases of Treasuries and mortgagebacked securities (MBS). The Treasury purchase program has winded down and now the Fed says that they are on track to end the MBS purchase program. These actions have been significant in their efforts to keep long-term rates low to facilitate the recovery, especially in the housing sector. Now that the economy has stabilized and it looks like the recovery is beginning, the Fed is returning fiscal policies to normal. The next action would be an increase in rates and the speculation has started in this regard, despite the fact that the Fed has indicated that rates will remain low for an "extended" period of time. The Fed also has indicated that because the recovery is expected to be fragile, they remain ready to reintroduce fiscal stimulus as needed. The more immediate question is, how much will home loan rates rise when the Fed stops purchasing securities? This will be a good test to see if the financial markets have indeed begun to return to normal. |
| Seniors Ready to Fuel the Market?
He and other trend spotters believe this dominant group of home owners will lead the industry out of its slump. Baby Boomers approaching retirement continue to be interested in buying into active-adult communities, but their moves are slowed due to a decline in the value of both their retirement savings and their current homes. To encourage seniors to find a way, 51 percent of builders of active-adult housing cut prices in the third quarter of 2009 - often as much as 25 percent or more - according to a survey by the National Association of Home Builders. Practitioners point out that new isn't always best. Buying an existing home in an active adult community can be a particularly good deal because these communities have extensive amenities, including golf courses and gyms. Some new construction projects on which builders have trimmed prices are not nearly as well equipped. Source: Investor's Business Daily |
| Tax Credit Deadline Near
Indeed, the percentage of U.S. home sellers who cut their asking price declined again in February and sellers made slightly smaller reductions in prices, real estate website Zillow.com reported. Nearly one in five homes, or 19.5 percent, listed for sale on the Zillow website had at least one price reduction as of the end of February, down from 19.8 percent in January. The percentage of homes on the market with price reductions has declined steadily for much of the past year. Sources: Reuters and Money Magazine Get with your loan officer quickly to act
before the tax credit expires! |
March 9, 2010
What Do We See in the Shadows?
| The economy is on the road to financial recovery. It will be a long and hard road, but we are on our way. There are many obstacles that could cause us to break down on this road. None is more important than the concept of "shadow inventory." What is that? These are homes which the banks are not foreclosing upon because they are trying to work out solutions with present homeowners or frankly they don't want to flood the markets all at once and depress prices. How many homes are casting a shadow over the markets? Projections vary, but suffice to say that there are several million homes that will be foreclosed upon in the next two years. That is a lot of homes. It is good news that increased investor demand cited by the John Burns Consulting Firm study discussed in the last section may help mitigate the overall effect upon pricing. We keep saying this and it bears repeating. Real estate led us into recession and it must lead us into recovery. There are many factors that can help "soak" up shadow inventory. The weak dollar is increasing demand from foreign investors. The tax credit is bringing more first time buyers into the market and now move-up buyers as well. Low rates are keeping homes affordable, especially when compared to renting in many markets. Government efforts at modifications are also expected to keep many in their homes. Even builders are helping by bringing less homes to the market. Not one of these is by itself enough to absorb several million homes. But if we put all these factors together, it very well may happen. Keep in mind that all the while, the population of this Nation is rising. This means that sometime in the future there will be growth in the real estate market and our economy. In the meantime, we will navigate the long and winding road. |
| Investors Around the World Arrive
"This could be a once-in-a-generation opportunity for real estate investment," says Arthur Wong, whose Calgary, Alberta-based U.S. Real Estate Fund has invested $5 million in properties in the U.S. Southwest and plans to buy millions more. Buyers from countries like Brazil, Canada, France, and the Netherlands, whose currencies are particularly strong against the dollar, are spending millions on luxury condos in New York City, Las Vegas, and Miami. Foreign buyers also find the warm climates of California, Texas, and Arizona attractive. Peter Zalewski, a principal with Miami-based Condo Vultures, says he has sold foreign condo buyers seven bulk deals in downtown Miami alone, with investors coming from Argentina, Canada, Colombia, Italy, Norway, and Venezuela. It is obvious the investor demand cited by John Burns Consulting Firm in their study discussed in the next section will not be only coming from within the United States, but also from all over the world. Real estate is on sale right now. Source: MSNB |
| The Need for Speed
Another possibility is to propose a leasepurchase deal or land contract to the seller. If the deal is structured properly, both buyer and seller could walk away winners. Source: CNN.com/Money |
| About Cornerstone Financial Mortgage
Cornerstone employs a team of experienced professionals who are committed to providing the highest level of service while fulfilling the varied needs of our customers. We build our business on satisfied customers - home buyers, homeowners, realtors and builders. Cornerstone strives to create value for all our partners - value for our customers, investors, shareholders, employees and the communities where we do business. Bruce Neumann Sr. Mortgage Consultant 215.601.7755 cell Email Me Visit My Website Eric Baitinger Sr. Mortgage Consultant 215.654.6085 office Email Me Visit My Website |
February 4, 2010
URGENT BUYING INFORMATION!
Mortgage rates edge up slightly
Average rates for 30-year fixed mortgages inch above 5 percent this week
On Thursday February 4, 2010, 11:54 am EST
McLEAN, Va. (AP) -- Rates on 30-year fixed mortgages rose slightly this week, inching above 5 percent, Freddie Mac said Thursday.
The average rate on a 30-year fixed mortgage was 5.01 percent this week, up from 4.98 percent last week. Last year at this time, the average rate for a 30-year fixed mortgage was 5.25 percent.
**Rates fell to a record low of 4.71 percent set in early December. They've been held around 5 percent by a Federal Reserve program to pump $1.25 trillion into mortgage-backed securities to try to keep rates low and make home buying more affordable.
**That program is set to end March 31.**
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.
The average rate on 15-year fixed-rate mortgages rose slightly to 4.40 percent from 4.39 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.27 percent, up from 4.25 percent a week earlier. Rates on one-year, adjustable-rate mortgages dropped to 4.22 percent from 4.29 percent.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 point for 30-year and 15-year mortgages. It averaged 0.6 point for five-year loans and 0.5 point for one-year loans.
December 24, 2009
Time is a finite resource -- treat it preciously
| Time Management: Part II Last month we began our work on time management by stressing that time is our greatest resource. If you ask every business person for a selfassessment, almost all of them would reply: I need to manage my time better. This month we will become more specific by adding pointers that may help you conserve your most precious resource.
Start Dealing With Priorities. Stephen Covey in his Seven Habits Series has indicated that our problem is not managing time, it is managing ourselves. We must first decide to deal with matters of importance to us in order to accomplish our mission in life. This means that we may have to stop dealing with urgent matters that may mean more to other actors in our life. Therefore, we must learn to say no when it is appropriate. Take the time to analyze how much time you spent doing what in a particular week. Write it down. How much time did you spend accomplishing tasks that you consider essential to your success? The next time you make a list of items to accomplish the next day, prioritize them. Try to accomplish the list in accordance with your own priorities instead of acting on the wishes of others. Start one day at a time, moving in this direction for the entire week. Identify your goals. Before you can prioritize, you must recognize what is important in your life. Spend some time determining what you would like to accomplish next year and in the long run. Goals should be personal and professional. They must be specific. If you would like to retire: When? Where? With how much income? It is hard to prioritize if you do not determine what is important to you. Most of us move through life without a clear definition of what is important and what is not. Start the day with a plan. Never leave your house without a plan of action. Each day formulate a checklist of items to accomplish. Sunday is a good time to plan for the week. After you have finished writing, analyze your list. Is it realistic? Can you eliminate items of lesser importance? At the end of each day, re-analyze your list. Did you accomplish what you had hoped? If not, why not? Are you going to start the next day with the same set of priorities, or did you learn something through today's experience? Interrupt the interruptions. Many times we cannot work on priorities because we allow others to intervene with their priorities. Sometimes we must learn to say no if the interruption prevents us from accomplishing our objectives. Many feel they are letting others down by putting them off. In reality, i f we make them understand the importance of our present task, they will respect our choices. As Covey says, First Things First. Work on one task at a time. If you are trying to accomplish too many tasks at once, you are likely to get nothing accomplished. Take a good look at your desk or work area. File everything away except for your next priority. Do not stop working on that project until it is finished and filed away. This may mean holding phone calls and putting a halt to the fires you may get called upon to douse. Let someone else keep the office from burning. Organize-Now! Stop spending your time looking for everything. Organize your office and your life. Put everything in its place and file every day for a few minutes rather than dedicating a whole week to the task at the end of the year. Do not handle papers or email twice-act on them at once. Every time you put a piece of paper in a file, remove and trash another piece of paper in the same file. Barbara Hemphill, in her Taming the Paper Tiger Series indicates that the trash can is a major organizational tool. Now the file will not grow bigger than your office. Do not make copies of memos that are in the memory of the computer. Remember, the goal of a paperless office is why we became automated in the first place. Hire Someone. If you would like to make a six figure income, then don't spend your time stuffing envelopes and handing out fliers. No matter what it says in the back of magazines, no one ever became rich stuffing envelopes. Hire someone for menial tasks that take your time. Spend your time on the priorities such as marketing and selling. Don't begin tomorrow with yesterday's task. It is too easy to put off tomorrow what you should have accomplished today. Bad habits are hard to break. Remember, you pared your list to include only priorities. If it was important, get it done. If your list was too ambitious, adjust it for tomorrow. However, tonight you are working late. If we have more time, we can make more money-with less stress! Certainly that is not a bad goal! |
| Live as if you were to die tomorrow. Learn as if you were to live forever. --Mahatma Gandhi |
CORNERSTONE Mortgage
December 24, 2009
Something to Be Thankful For...
| It has been a rough year for many around the world. The economic crisis which started three years ago as a downturn in an overheated U.S. real estate market has spread worldwide. Many would ask what they have to give thanks for in a year in which so many have lost their jobs and houses. We believe there is a lot to give thanks for. For one, after declaring that the economy could withstand the downturn, the government soon came to realize that we must apply strong medicine. Starting in 2008, we did apply this medicine in a variety of ways from record low interest rates to making sure that the banking system did not collapse. We have not addressed the long-term issue of deficit spending, but most would agree strong measures were warranted. In every challenge there lies opportunities. For example, the down market has made real estate a bargain and millions are becoming owners for the first time. The recent extension and expansion of the tax credit shows the government will continue to apply strong medicine. Low rates, low prices and a government subsidy point to a bargain that many have not seen for many years. Even the recent lull in housing starts bodes well for the long-term prospects of real estate because analysts agree that the market will not rebound permanently until the excess inventory is off the shelves. As the bad news has brought opportunities, the good news of a rebounding real estate market can also create problems. For one, don't expect record low rates to be with us forever. The Federal Reserve Board has kept short-term rates close to zero and also has brought long-term rates down by purchasing mortgage securities. As the market rebounds, less help will be needed and when the government backs off, the record sale on real estate we have witnessed may be over. |
| Home Market Rebounds
Total state existing-home sales, including single-family and condo, increased 11.4 percent to a seasonally adjusted annual rate of 5.30 million units in the third quarter from 4.76 million units in the second quarter, and are now 5.9 percent above the 5.01 million-unit pace in the third quarter of 2008. Sales increased from the second quarter in 45 states and the District of Columbia; 28 states and D.C. saw double-digit gains. Year-over-year sales were higher in 32 states and D.C. Lawrence Yun, NAR chief economist, said the tax credit is a significant factor. "We can't underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector," he said. "It's given buyers the confidence they needed to get off the fence and take advantage of extremely affordable housing conditions. The buying conditions this year are the most favorable on record dating back to 1970, but the tax credit is allowing buyers to set aside any reservations about waiting for a better deal." Source: NAR |
| About Cornerstone Financial Mortgage
Cornerstone employs a team of experienced professionals who are committed to providing the highest level of service while fulfilling the varied needs of our customers. We build our business on satisfied customers - home buyers, homeowners, realtors and builders. Cornerstone strives to create value for all our partners - value for our customers, investors, shareholders, employees and the communities where we do business. Bruce Neumann Sr. Mortgage Consultant 215.601.7755 cell Email Me Visit My Website Eric Baitinger Sr. Mortgage Consultant 215.654.6085 office Email Me Visit My Website |
December 16, 2009
Are You Paying To Much in Property Taxes?
You know that your home's value has gone down. So why doesn't your property tax fall as well? Home prices fell 27% from the 2006 peak to the end of 2008, according to the S&P/Case-Shiller Index, while the amount municipalities collected in property taxes rose 12% from 2006 to 2008. Keep in mind that this drop is an average. Some areas have experienced much smaller decreases.
There's a simple fix: Dispute your home's assessment. Simple, but not always easy. Municipalities are flooded with homeowners seeking tax reductions, and many towns are reluctant to deliver "because they can't find money anywhere else," says Leslie Sellers, president-elect of the Appraisal Institute. That means your argument has to be airtight. Follow these steps to help the assessor see it your way.
Learn the rules
Each municipality's assessor reevaluates properties periodically, usually every one to three years. Those who do so every five to 10 years often adjust assessments annually based on market factors. You can appeal your assessment in any year, as long as you do so within a certain amount of time after you get your tax bill - typically within 30 to 90 days. Don't get a bill because you pay through mortgage escrow? Call town hall and ask for a copy.
In a few areas, your assessment must be off by a minimum percentage for you to make an appeal. For example, in New Jersey, it's 15%. Call your assessor to see if such a limit applies.
Obtain the facts and develop rapport with the Assessor
First, check the accuracy of your official property record,. This should be available online or in the assessor's office. Factual errors aren't uncommon. Prove that, say your house has three bedrooms rather than four, and your tax can get lowered immediately.
Also gather info on comparable homes using real estate sites like Zillow.com or with the help of a Realtor. Look for homes like yours within a mile of your address that sold within two months of the municipality's assessment date for less than your home's assessed value. Forget about foreclosure sales as most towns won't consider them. If your home is older or smaller than the "comps" you found, adjust the price down; if you recently renovated, adjust up. Collect five solid comps - more is overkill.
Next, informally discuss your findings with the assessor. He or she is probably inundated by angry homeowners, so stand out by being pleasant. "If you establish a rapport, it will be harder for him to tell you no," says Melinda Blackwell, a property tax attorney in Dallas. Can't get a meeting, or the meeting goes nowhere? Time for a formal appeal.
Test-drive a hearing
While some municipalities allow online appeals, most require in-person hearings, usually at the county level. File your appeal as quickly as possible so that you'll be at the front of an increasingly long line. (In Clark County, Nev., for example, 6,019 homeowners appealed their property taxes this year, more than triple the number in 2006. Can't get a date until after taxes are due? Pay up; you'll get a refund if you win.
While you're waiting, sit in on a hearing to see the format. When your turn comes, you don't need anyone to represent you. Just give board members a packet with copies of your tax statement, data on your five comps and any additional evidence. For example, if you're arguing that your house's assessment should be lower than that of your neighbor's because yours has a leaky roof, include photos of both roofs and repair cost estimates.
If you lose and the annual amount you're being overcharged is at least a few thousand dollars, it may be worth it to make an appeal at the state level. In roughly half of states, you must do so through a state review board; in the rest, you file a complaint in state tax court.
You'll need a property tax attorney or a property tax consultant if you're appearing before a board. To avoid hourly fees of $150 to $400, ask if your pro will take your case on contingency. Most demand half of your first year's tax savings. But remember: If you win, those savings should accrue for years to come. It is obvious that appealing your property taxes is serious business. However, the ordeal can be well worth the hassle.
Source: CNN Money
November 13, 2009
Obtaining the Best Appraisal in Any Market
| Obtaining the Best Appraisal in Any Market No one has been affected more by this "housing valuation yo-yo" than the real estate appraiser. Sworn to identify the accurate value of a property to support mortgage loans that are secured by real estate, the appraiser has to deal with a variety of factors. These factors include all parties of the transaction having a vested interest in supporting the sales price-including the seller and purchaser. The factors also include trying to nail down the right data to support the sale which is increasingly difficult when values are changing rapidly, especially in markets where there are distressed sales. Finally, in the era of tighter financial regulations, agencies have made it more difficult for appraisers to communicate with the participants to obtain up-to-date information for fear that the appraiser will be subject to undue influence. What does this mean? It means that if you want to obtain the most accurate appraisal of your property, you must be proactive in the process. Here are some tips to help you further your goals in this regard. Be at the property with your real estate agent when the appraiser visits. Don't just be there to greet them, be proactive during the inspection. Stay with the appraiser every step of the way and point out features that you feel are important. Make sure the appraiser does not miss anything of importance. It is understood that as a homeowner you may not know what is important and what is not important. That distinction does not matter. It is up to the appraiser to decide and if you do not give them all the information, they can't make a good decision. Ask as many questions as you can. Does the appraiser have the right boundaries of the property and even the right boundaries of the neighborhood? Does the appraiser know distinctive information about your neighborhood that may make it more attractive, such as distance from schools and other amenities? If you have a recent survey of the property that would help. You should have copies of other important documents ready to give to the appraiser. These might include the latest tax bill and copies of invoices for any major home improvements. While the cost of every improvement does not necessarily add the same amount to the value, knowing the cost will help the appraiser come up with the most accurate value for each improvement. The real estate agent should play a role in providing information, as well. A great determinant of the home's value will be determined by the use of what is called "comparables." Comparables are other properties that have sold that will determine the value of your property. If your next door neighbor sold his/her house for "x" dollars just a few weeks ago and their house is the same model, has the same improvements, is the same size and is in the same condition, you can see why this data would be important. On the other hand, even when everything seems to be the same, there can be differences. Perhaps your neighbor had to sell quickly because of a relocation and that means the price was discounted. With so many distressed sales out there, this fact could be very important. Many times the information available on comparable sales are not accurate. Going back to your neighbor, perhaps you added an extra bedroom that they do not have, but it shows in the data as having that extra bedroom. Beyond the neighbor, this is why the real estate professional is so important. Your agent should know much about these comparables and should actually be suggesting the best comparables for your property. When the appraisal does not come in at the agreed sales price, this does not mean that you should accept the value. The appraisal is the property of the lender and the purchaser. Will they provide you with a copy of the document for review? It is important to make sure the value is accurate and the purchaser has a vested interest in determining this as well. |
| About Cornerstone Financial Mortgage
Cornerstone employs a team of experienced professionals who are committed to providing the highest level of service while fulfilling the varied needs of our customers. We build our business on satisfied customers - home buyers, homeowners, realtors and builders. Cornerstone strives to create value for all our partners - value for our customers, investors, shareholders, employees and the communities where we do business. Bruce Neumann
Sr. Mortgage Consultant 215.601.7755 direct Email Me Visit My Website Eric Baitinger Sr. Mortgage Consultant 215.654.6085 direct Email Me Visit My Website |
