Appraisal vs Assessment: What’s the Difference?

The difference between an assessment and an appraisal is significant. The two words are not interchangeable, contrary to popular thought. A look at each of these terms will show two very different looks at your home’s value.

An appraisal determines the market value of a specific home at a specific time. The appraiser determines this value based on recently sold homes within the past 90 days. They are of equal (or similar) comparison and are located within approximately one mile from your home. Adjustments are made for differences that might include location and square footage as well as the number of bathrooms.

An assessment, on the other hand is notably different. It is determined by the town or municipality to set property taxes. The amount of taxes you’ll pay is based on the assessment. But here’s the thing: the number is based on stats from previous fiscal years.

For example, a home sold in 2016 has a tax assessment based on sales from 2013 or 2014.

In a nutshell, an appraisal is based on very recent sale prices and are used to determine value. Assessments are based on the past and are specifically used for taxes.

I hope this helps clear up any confusion. If you need further clarification, please contact me at 617-965-1236.

Ready to buy a new home or refinance the one you own? Please get in touch and I’ll be happy to answer your questions and help guide you through the process. I look forward to speaking with you.

Second Home vs. Investment Property

If you ever hear someone say they are interested in buying a second home as an investment property, stop them right there. A second home and an investment property are not the same thing. There are several distinctions that set them apart. Let’s take a look.

A second home is just what it sounds like: another location for you to reside at various times of the year. So let’s say you own a home in Needham but you’re interested in buying a winter home in Miami. That falls into the “second home” classification.

An investment property, on the other hand, is intended to generate a return on investment, either through rental income or resale (or both). Examples of investment properties include two-family houses and renovation/flipping projects.

To avoid charges of fraud, your second home should be a considerable distance from your primary residence. The rule of thumb is approximately 50 miles (Wellesley to the Cape, for example, is about 80 or 90 miles.) A two-family second home is unlikely to be approved because it is, by design, intended to be a revenue generating property.

A downpayment on a second home carries less risk and therefore may be the home purchase you can make with the least amount of money down. Your downpayment on an investment property, however, will be higher because the risk is higher. The two-family investment is viewed as a risk by the banks because you’ll be counting on the rent coming in. There’s no guarantee of tenant reliability or year-round occupancy.

I hope this helps clear up any confusion. If you need further clarification, please contact me at 617-965-1236.

Ready to buy a new home or refinance the one you own? Please get in touch and I’ll be happy to answer your questions and help guide you through the process. I look forward to speaking with you.

FHFA Increasing Loan Limits in 2017

There’s some good news for those homebuyers looking for a larger loan amount in 2017. The Federal Housing Finance Agency recently announced that loan limits for are rising. The limit on conforming loans moves up from $417,000 to $424,100. This is the first increase in the baseline loan limit since 2006. That’s good news for those of us in the industry, but it’s better news for homebuyers.

A conforming loan — not to be confused with a conventional loan — is a mortgage loan that follows Fannie Mae guidelines. On its surface a $7000 increase may not seem like much when considering a $400,000 mortgage, but that extra bit of cash can come in very handy for those seeking the best financial advantage as possible when purchasing a new home.

Loans that exceed this new limit are considered high balance loans. This translates to higher pricing with the least flexibility. Staying under the cap will get a mortgage with the most underwriting and highest flexibility. Nonconforming or jumbo loans carry a higher interest rate than conforming loans, increasing monthly payments and negatively impacting affordability.

The new loan limit will allow more buyers to borrow more money without having to put more money down. Homeowners can refinance bigger loan sizes while staying within the conforming loan limits.

This increase comes at a time when mortgage rates have increased slightly to just over 4.0%. That’s still an excellent rate, compared to 6% in 2008 and 8% in 2000.

This bodes well for the real estate industry as a whole, with the Federal Housing Finance Agency showing greater confidence in the recovery of home prices across the country. 2017 will be another great year for homebuyers.

Ready to buy a new home or refinance the one you own? Please get in touch and I’ll be happy to answer your questions and help guide you through the process. I look forward to speaking with you.

How to Qualify for a Mortgage When the Banks Say No

People sometimes ask me why they should use Westchester Morgtage instead of one of the big banks. It’s a fair question, with an answer that goes beyond great service.

The lending industry bases their approval decisions on the following three criteria. Banks tend to take a conservative approach but mortgage brokers have more flexibility to offer their clients.

1. Credit score. Are you paying your bills on time? Have you defaulted on a credit card or fallen behind on your car payment? The bank will determine the risk of lending you money based on your previous bill-paying history.

2. Income. The bank will take a look at your income and assess your ability to repay both your existing debts and your future expenses. You’ll need to earn enough for them to feel confident in your ability to pay all your expenses while comfortably paying your mortgage premium each month.

3. Equity. This is your collateral available to secure the mortgage. The bank will offer you better rates when you pay a higher amount on your downpayment.

If the bank feels your credit history, income or equity are questionable, they will decline your mortgage application. So now what?

Here’s where an experienced mortgage professional can get a “yes” when the banks say “no.” First, I will get your paperwork and documentation organized up front. If you are divorced or in the process of divorcing, it is critical to show the divorce decree or separation document.

My job is to understand all your income sources and represent them properly for the underwriter. I also look for additional income. Alimony, child support and bonus income are sometimes left off the application and could very well be the difference between the approval or denial of the mortgage.

I dig much deeper than the banks for my clients. If you want the best chance to be approved for a mortgage, starting with Westchester Mortgage is the best path to take. Do you know someone who is thinking about using a bank for their mortgage? Please have them call me so I can help them gain every advantage in securing a mortgage approval.

 

April’s Home Improver

Grimebusters: Silly Putty and Alcohol

That is one grimy keyboard. Grab your silly putty and alcohol.
When was the last time you took a good long look at your computer keyboard? If you haven’t cleaned it in a while you may have noticed anything from dust and crumbs between the keys and dirt and grime smudged on the keypads and spacebar. Pretty gross.
Now before your inner germaphobe starts freaking out about the bacteria you’ve been dabbing onto your fingers with every word you type, there is a fast and easy solution to cleaning up your keyboard without a lot of effort.
1: Silly putty. Remember this stuff? If you’re over 35 or so, you may have used silly putty to pull up cartoon images from newspaper ink when you were a kid. Silly putty can also pick up those pretzel crumbs, pet hair and lint that may have found their way into your keyboard. Just press on some silly putty and all that garbage that’s been hiding between those hard-to-reach nooks and crannies around the keys will be lifted right up into the putty. Awesome! But what about the grimy keypads?
2: Rubbing alcohol. Pour a small amount of alcohol onto a paper towel or cloth. Next, gently rub the alcohol into the keypads until they start to sparkle. Important: Do not use water. Water has a way of ruining keyboards. Instead, use rubbing alcohol. It dries quickly and won’t short circuit your keyboard.
Here’s a video link. Click the image below.
The result should be a keyboard that looks brand new. Enjoy!

Tax Advantages of Your Mortgage

It’s tax time already. Although we get a few extra days with this year’s tax deadline falling on April 18th, we’re only a month away. Today we’re discussing the tax advantages and incentives that come with owning a mortgaged home.
If you have recently purchased or are planing to buy a new home, you may not be aware of the significant tax breaks that come from your mortgage and your home itself.
One of the largest tax breaks for homeowners is the
deduction of interest paid for the year. By now, you should have received documentation from your lender indicating the total interest you’ve paid.
Have you recently refinanced? There is a tax benefit. Because you pay more interest than principal in your first few years of a new mortgage, your deductions are higher.
Your property taxes are also a major deduction, especially if you are in a highly taxed city or town. This also applies to homeowners without a mortgage to pay.
Home improvement costs may lead to additional tax breaks. Look for the Energy Star logo on new appliances in your home. Energy-saving water heaters, windows, doors and more may give you a bigger tax break than you had imagined. Check out the Energy Star website to see which changes to your home are tax deductible.
I strongly recommend you meet with a tax professional to understand the opportunities for tax deductions and learn of other breaks you may qualify for as a homeowner. Need a recommendation? I have someone I trust who can help. Call me at 617-965-1236 for the referral or to answer any mortgage-related questions.
Ready to purchase a new home or refinance the one you own? Please get in touch and I’ll be happy to help guide you through the process. I look forward to speaking with you.

March’s Home Improver
When Should I Seed My Lawn?
A beautiful, green, well-kept lawn makes your home more attractive to potential buyers while becoming the envy of your neighbors who struggle with patchy grass that just can’t compete.
Here are some grass-growing secrets that can help you upgrade your home’s curb appeal.
1. When is the best time to seed my lawn? You would think it would be right now, with the first day of spring just a few days away. Typically, the best time to seed a lawn is in the fall. This is due to cooling temperatures and soil that isn’t too moist from melting snow and seasonal rains.
2. What problems may I run into by seeding now? Cool soil temperatures can slow or prevent seed germination. Springtime weeds can sometimes be a cause for concern.
3. Can I use a weed killer? Bad idea. Liquid and granular weed preventers can prevent germination and kill immature seedlings. In effect, you’re killing weeds and your grass at the same time. The rule of thumb is to work on weeds only after your young grass has been mowed at least four times.
4. What are my options for spring seeding? First, test your soil. Most turf grasses work best with neutral soil. Ask your landscaper to test it before planting. If it’s a DIY project, you can buy a soil test kitfor under $25. Also, be sure to choose a grass that works best for New England climate and sun exposure.
5. How do I improve my lawn quickly before putting it on the market? Calling a professional is always recommended. An experienced landscaper has the knowledge to get the seeding job done with a better chance of success than a homeowner who is not working in lawn care on a daily basis. It may be well worth the investment if your current lawn is an eyesore and you’re getting ready to list your home.
6. What about sod? If you need a lawn in a hurry, sod is the way to go. Although the initial cost is higher and lots of watering is critical, your instant lawn is installed free of weeds and can be walked on very soon after it’s planted.

3 Ways to Stay Ahead of the Competition

Just because you’ve found the home of your dreams doesn’t mean you’re going to move into it. Many factors including price, location, inventory and time of year may bring in multiple offers from eager buyers. So how can you gain an advantage over the competition? Here are three helpful tips:

1. Pre-approval. Before you even start looking for homes, meeting with your mortgage professional is critical. A pre-approval means you have provided documentation of income and assets. This is different from pre-qualifying, which is typically done in conversation wherein you talk about your income and assets. It’s virtually meaningless until you back up what you say with the paperwork for pre-approval. Also, you should know how much you’re willing to put down. The stronger the downpayment, the more confidence the seller has in you and your offer.

2. Waive the Home Inspection. This saves time and money, but is it smart? There is a way around it. Bring a home inspector to the Open House. While you’re checking out the size of the bathroom and imagining your furniture in this house, your home inspector is walking around checking for things like termite or water damage, asbestos, knob-and-tube wiring, heating and AC issues and more.

3. Write a Personal Letter. You may not realize it, but selling a home can be just as stressful to the owner as it is to the buyer. By writing a personal letter, you are making an emotional appeal to a seller who is probably feeling sentimental about the home. Talk about how you would want to raise your family in this home just as they did; that you want your kids to benefit from attending the same school as their kids. Make a genuine appeal that ties your future to their past and that just might be what tips the scales in your favor.

Of course, there are no guarantees. But these suggestions have proven successful for many happy new homeowners. For more ideas, please give me a call at 617-965-1236.

February’s Home Improver
Re-painting Kitchen Cabinets

Replacing your kitchen cabinets can be cost-prohibitive. But what can you do when your formerly new cabinets have lost their looks over the years? If you’re up to the task, painting your cabinets can make them look like new for much less than the cost of replacing them.

Here are step-by-step directions:

1. Remove the cabinet doors and hardware. (Tip: Put a note on each one indicating location so they’ll go back in the right places.)

2. Clean all cabinet surfaces and allow them to dry completely.

3. Sand down the surfaces enough so that the paint adheres and lays flat.

4. Apply primer-sealer first. Let to dry, before painting.

5. Apply paint with a spray, brush or roller (for flat surfaces only). Let it dry. Put hardware back on doors and hang them on the cabinets.

Remember to use a drop cloth and tape off the areas around the cabinets. If you think a project like this is beyond your skill set or patience, hiring a professional painter will still cost significantly less than bringing in all new custom cabinetry. Good luck!

If Money Doesn’t Buy Happiness, What Does?

With the Powerball jackpot now over a billion dollars, many people purchasing tickets have fantasized about how incredible life would be if they somehow managed to beat the 292-million-to-1 odds and won the biggest lottery payout ever.

It would truly be amazing and it would certainly present opportunities that the average person could never imagine. But don’t be discouraged if/when you don’t win. After all, wealth and happiness are two very different concepts.

A recent article in the Wall Street Journal discussed a survey of divorced women and their relationship with money. The majority of the women polled felt that they were more secure about their finances than when they were married.

This may seem incongruent, given that most of the women left a two-income household. Now, with less money and more responsibility, they feel more content.

How can this be?

The answer is control. Many women do not have enough of a say regarding their finances while married and they have little control over their spouse’s spending. The author went on to point out a poll that mentions financial issues as the leading cause of divorce, ahead of compatibility. It makes sense that divorced women with less money but more control over their spending could very well be more content than they were in their marriage.

Do you have a friend or relative who is newly divorced or considering the possibility? I can give her expert guidance on securing the mortgage that works best for her.

For those of you who are already content but want more, there’s always Powerball. Good luck!

If you have questions about mortgages or you are preparing to purchase a new home, please get in touch and I’ll be happy to help guide you through the process. I look forward to speaking with you.

January’s Home Improver

Marie Kondo’s Tips for Tidying

Even though we’re still a couple of cold and snowy months away from spring cleaning, your home may look its most cluttered in the winter. Boots, bulky coats and snow shovels are all within reach when they are normally in storage most of the year. Snowed-in kids break out their toys and games and many don’t put them back as neatly as they found them.

Marie Kondo is the author of the bestselling book, “The Life-Changing Magic of Tidying Up.” It has been at or near the top of the nonfiction chart for over a year. Here are some of her rules for decluttering:

  • Declutter not by room, but by category. Start with the easy stuff (old documents) and proceed to the things that are more difficult to part with (photos and mementos).
  • Only keep items that “spark joy.” Ask yourself that question when you pick up each item.
  • Rather than looking at what you want to get rid of, choose only the items you need to keep. Are they truly necessary?
  • Fold and store things carefully in drawers to maximize space. There are many YouTube videos demonstrating her technique.

Have fun decluttering and tidying your home!

Understanding the Generational and Cultural Perception of Debt

Debt is a four-letter word. Many people won’t talk about it, much less take it on, but you may be surprised to know that debt can be a good thing.
Millennials hate debt, probably because they are drowning in it, primarily from high college loans, auto loans and high-interest credit cards. The debt they have amassed at a young age has kept them from buying homes. Instead they’re opting to rent or just live with mom and dad longer than expected, which is leading to a later start on marriage and family.
Debt is not exclusively generational; it’s cultural, too. Many people who come to the United States are surprised by the “debt culture” here. They tend to avoid debt at all possible costs. Many immigrant families don’t use credit or debit cards. Everything is paid in cash. They rent, save money efficiently and pay everything off quickly. A loan? That’s another four-letter word they avoid.
But there is a difference between “good” and “bad” debt. Anything that depreciates over time is considered bad debt. An auto loan, for example, may be necessary, but your car will be worth much less than what you paid for it at the end of the loan. A home loan, on the other hand, is an investment. A manageable mortgage will leave you with a higher property value on the day of your final mortgage payment. Because property values always increase over time, real estate is one of the safest investments you can make.
Mortgages allow for the redistribution of financial assets over time. They free up cash to pay for those life events that cause those poor young Millennials to struggle in the first place. With interest rates at just under 4%, a home loan is the cheapest money you can borrow.
When it comes to debt, it’s all about perception. Knowing the difference between good and bad debt is a start. I can help you or your children find the right mortgage that will begin what may be the most important investment of their lives.

Please get in touch and I’ll be happy to help guide you through the process and answer your questions. I look forward to helping you.

November’s Home Improver

Tips to Keep Your Home Out of Probate

Guest Article by Lauren E Miller, Esq.

You may have heard stories before of homes that are “stuck” in probate. But what does this mean? What is probate, and should you avoid it? If you are interested in learning the answers to these questions, then read on!
Probate property is any property that is held in your sole name at death. After you pass away, probate is the process through which your assets are transferred to your named beneficiaries (if you have a will) or to your heirs (if you pass away without a will). In the case of your home, the way it is titled on your deed determines whether or not your home is a probate asset.
So what are some examples of ways to title your home that will not avoid probate?
1. Your sole name. If your deed has your name only, and you pass away, your home becomes a probate asset.
2. Multiple names as tenants in common. Unlike “joint tenants,”ownership as “tenants in common”does not include the right of survivorship. For example, let’s say that you and your sibling have equal ownership in a home that you inherited from your parents, as tenants in common. If you die, your fifty percent share will go to your beneficiaries or heirs, and not to your sibling. This means that your 50% share must go through probate.
Here are some ways to title your home that will avoid probate:
1. Joint tenants with right of survivorship. This title allows a property to pass directly to the other person(s) named on the deed.
2. Tenants by the entirety. This type of ownership functions similarly to joint tenants, but is a special title only allowed for married couples. Tenants by the entirety ownership also takes advantage of certain asset protection rules created specifically for married couples.
3. Title in the name of a trust. The are various types of trusts, many of which allow your assets to bypass the probate process.  If your title is in the name of the trustee of your trust, your home can avoid the probate process. Please note: simply having a trust does NOT mean that your house will avoid probate, your house must be placed into the trust before you pass away. If you have questions regarding a specific trust, please consult an attorney.
Okay, so now you know ways to title your home to avoid probate, but why should you care?  Probate is a long and costly process. Most probates in Massachusetts take a minimum of one year. Any assets that must go through probate are inaccessible to the heirs or beneficiaries for months after you have passed away, and real estate cannot be sold right away either.
Now that you understand the basics of how probate works for real estate, ask yourself: Is my home titled to avoid probate?
If you have questions regarding keeping your home out of probate, please contact Lauren E. Miller, Esq., of Ladimer Law Office, PC at (508) 620-4565 or at lmiller@ladimerlaw.com.

Home Buying Confusion: Know the Big Difference Between Assessments, Appraisals and CMAs

Buying or selling a home is stressful enough without worrying about the difference between assessments, appraisals and CMAs. One might think these terms are synonymous, but they’re not. In fact, they are very different. Let’s have a look at the distinction and clear up some confusion among these three terms.

A home appraisal is created by a licensed real estate appraiser to give an unbiased evaluation of a home’s value. This is used to set a fair market value on the home. This is different from a Comparative Market Analysis (CMA), which is provided by a real estate agent. For financing purposes, appraisals are used–not the tax assessment or CMA.

Recent sales data and knowledge of the local market are factored into the CMA which helps determines the value. The real estate agent then compares the property to similar homes in the area and provides a biased evaluation, in favor of the seller.
A tax assessment is set by the city or town. Your taxes are used to pay for local government, public safety, general infrastructure, public schools and libraries. Local governments may update assessments when market conditions or revenue need to change.
The tax assessment is based on average market values.
Now here’s where the confusion comes in. Assessed values have typically come in lower than appraisals, which causes confusion and for good reason. Here’s why:
The data gathered to estimate the value of your home that you plan to sell in 2016 is based on sales from 2014. So the tax assessment is based on data that’s two years old. That delay in data is why your assed value is showing a lower number than what your appraiser determines.
OK, so now that we’ve got that part out of the way, here’s another point of confusion: the tax assessment for Fiscal Year 2016 runs from July 1, 2015 through June 30, 2016.
As the climate of the real estate market changes and rates begin to rise again, the tax assessment may start catching up to the appraised value. If you’re thinking about buying a new home, this may be the best time to make the investment and secure a mortgage at a low rate.
I hope this clarification helps clear up the confusion. Need more help selling your old home and buying a new one? Please get in touch and I’ll be happy to help guide you through the process and answer your questions. I look forward to helping you.

October’s Home Improver

Trick-or-Treat! What Should Kids Eat?

If you’re a Halloween traditionalist, you’ll expect your kids to finish making the rounds in the neighborhood with a bag filled with chocolate bars, candy, bubble gum and other sweet treats. You’ll also expect them to over-indulge in their plunder until they either reach a frenzied sugar high or they just make themselves sick. That, unfortunately, is the secret trick hidden in the treats.
So how do you temper the sugar rush with something that won’t spike their insulin levels to unnatural highs — without being the family that gives out boring treats? Here are some suggestions.
1. Packaged Foods. Almonds, peanuts and others (ask if allergic before handing out). Mini raisin boxes. Packaged crackers and cheese. Granola and breakfast bars. Juice boxes and fruit rollups (with real fruit).
2. Art Supplies. Crayons and coloring books, stickers, colored pencils, character-shaped erasers, stamps (not postage!), mini colored markers.
3. Toys and Fun Stuff. Snap bracelets, trading cards, bubbles, silly putty, fake eyeballs, spiders, bats, slime and other spooky stuff. Rubber balls, wax vampire teeth, yo-yos and wind-up toys.
Have a Happy and Safe Halloween!

You Don’t Need a Spouse to Buy a House

Real estate trends occur for many reasons. The economy is often a factor, but other influences determine changes in demographics. The steady increase of women choosing career over family, combined with fewer couples marrying — or staying married — has led to a rising trend of single women buying homes.
The National Association of Realtors recently published statistics showing that single women account for 23% of first-time home buyers. That’s significant growth in a category that has slowly but steadily risen since the late 1990s. In contrast, single men make up just 15% of first-time home buyers.
What about repeat buyers, you ask? The numbers remain in line. Single women comprise 15%, while single men account for just 8% of second time (or more) home purchases.
With divorces and the overall slowdown of marriages leaving more single adults in the market for housing, it’s easy to see why single women are buying more homes on their own than ever before. Back in the ’90s, 52% of first-time buyers were married couples. Today that number is just 40%.
These statistics reflect my client base. It is very common for divorced or single women to contact me about buying a home. Some have children and some do not. What they don’t have is a spouse.
As this demographic grows, it presents more opportunities for me to help these women make smart financial choices about their mortgages. I love helping them understand the process and make good decisions for themselves, their finances, and their future.
If you know a single woman who is tired of renting or is divorcing and wants to know their options for buying a home, please have them get in touch with me for a consultation. I would be more than happy to answer their questions.

September’s Home Improver

Get Your Mind Into the Gutter

The fall is unforgiving when it comes to clogged gutters. If you haven’t already cleaned them out in the past few weeks, you should take care of it as soon as you are able. Leaves will be falling before you know it and if your gutters are already clogged, you may experience some unexpected damage to your home.
Here’s why:
Your gutters and downspouts control the flow of rainwater around your home. When they are clogged, the excess water has nowhere to go. This often causes the exterior of your home to decay prematurely and the cost for repair is typically much larger than the cost to pay a professional to clear your gutters. Notice more mosquitoes around the house than usual? Standing water in your gutters is a literal breeding ground for those pests.
You may think that the summer doesn’t add leaves so the gutters are probably fine. However, soil accumulated from the winter and spring can cause weeds to grow and thrive in the gutter and downspouts, causing heavy blockages even before the first fall leaves begin to change colors.
If you think you’ve got nothing to worry about because there aren’t many trees in your area, think again–especially if you happen to own a house with asphalt shingles. The granules in the shingles fall away during harsh weather and make their way into gutters and downspouts. Remember that brief but battering August hailstorm? That may have triggered an asphalt granule mini avalanche.
For all of these reasons, it is well worth taking the time to have your gutters thoroughly inspected and cleaned.