The Effect of Coronavirus On Mortgages

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There is no question the coronavrius pandemic has had a severe impact on our daily lives. Financially, it’s brought a very strong economy into a recession almost overnight. In the past three weeks more than 17 million U.S. workers filed for unemployment after a staggering number of layoffs.

Real estate sales slowed during stay-at-home orders and as of April 5, new home listings were down 27% nationally year-over-year.

You may have heard talk of the Fed cutting rates to 0%. Let’s be clear, though, that mortgage rates and the Fed’s rates are two different things. But there is some good news for buyers. Two weeks ago, the rates for a 30-year fixed-rate mortgage dropped to 3.29%, hitting an all-time low. This week, they rose to 3.33%, but that’s still significantly lower than the very reasonable 4.12% from a year ago.

While a low rate may make purchasing a new home or refinancing your existing one a desirable option, there are things you should consider. Is your job and income secure? (That may be difficult to answer given the uncertainty of what’s to come.) Do you have assets and savings along with good credit? This is particularly important now because banks may be more stringent than ever in approving mortgage applications.

This is where I can help. I know how to navigate towards a mortgage approval in difficult times. I have experience and success working with clients in the post-9/11 economy as well as during the recession in 2009. This is a similar situation and together we can figure out if buying now is right for you, your family, or friends.

We’ll get through this as we have in the past. We have learned hard lessons and that makes us more equipped to take on challenges as we adjust to the new economy.

I wish you all good health and if I can be of any help to you myself or through my trusted network, please call 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.

Tips for Making Staying Home More Interesting

If you are a non-essential worker and you find yourself housebound during the coronavirus, you may find yourself getting restless. If you live alone, you may feel isolated and if you have a family, you may feel like there’s no escape from the kids running around and looking for something to do. After all, how much Tiger King can you take?

Here are some ideas to make your 24/7 stay-at-home life a little more interesting.

  1. Learn something new. Watch a TED Talk every day.
  2. Start a blog on Medium and get paid for if it takes off. Or just read the thousands of articles published daily.
  3. Update your résumé and use free Canva templates to get creative with it.
  4. Self-publish that book that’s been sitting on your computer for free with Kindle Direct Publishing.
  5. Have fun with leftovers and miscellaneous food items and stage a “Chopped” competition with your family.
  6. Try 63 science experiments with the kids using stuff from around the house.
  7. Do the Getty Museum challenge. It’s becoming very popular! Use household items to recreate famous works of art.
  8. Have Virtual Happy Hour with friends (for adults) and Virtual play dates (for the kids) with Zoom or Google Hangouts.
  9. Plan a scavenger hunt in your house by hiding items in different rooms and have the kids hunt them down.
  10. Try a free 30-day yoga challenge.

April’s Home Improver: Spring Cleaning & Donating

Since most non-essential workers are spending more time at home than they have in years, we’re hearing of a lot of small home improvement projects. But most of all, people are keeping busy with spring cleaning. You may notice you have quite a few things in your home that you no longer use or need. Donating to charities can give your possessions a second life while decluttering your home. Here are a few ideas of places to donate.

  1. Non-perishable foods. Local food pantries are always in need of non-perishable items. If you have canned goods you’ll probably never use as you clean out the cupboard, you can always donate them to a food pantry in your neighborhood.
  2. Old books. For those who prefer paper books to Kindle or Apple e-books, you may have accumulated a stockpile of novels you no longer need. Why not donate them to the military? Check out Operation Paperback and send some books to our troops!
  3. Old clothes. If you have gone through your closets and realized you’ve got clothes in good shape that you and your family will probably never wear again, you can always make a donation to a charity that will gladly accept them along with other household items you may want to donate. Here is a list of charities you can help.

Solutions for Separations

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Divorces and separations can be very stressful and complex situations to resolve. They are especially difficult when homes and children are involved.

How do you work out a fair arrangement? Can child support be extended? How do figure out what to do when one partner leaves and the other stays?

This is another reason why working with professionals and asking the right questions can reduce the anxiety and help you financially. We all know that attorneys will be involved, but sometimes asking your mortgage broker for advice can be a big help. I’m happy to partner with attorneys and mediators to be a sounding board for things like debt-to-income ratio calculations, housing budgets, realistic mortgage payment options, and income sources. I do not give legal advice but I understand what attorneys look for and provide them with helpful information.

Over the years, I have worked with clients in these situations and offered advice that has made a difference in their lives. Recently I worked with a couple to arrange a buyout when one partner stayed in the home while the other bought a condo nearby and needed a new mortgage. This involved a re-finance on the home which resulted in a lower rate, and the mortgage on the condo.

Recently, I helped a divorcing woman buy her husband out of the family home. She needed the child support to count as part of her income. The underwriter looked at the children’s ages (18+) and initially declined it. But I knew the kids were still living at home with their mom when not in school. With the help of a family law attorney who provided Massachusetts-specific statutes around this issue, I was able to ultimately get it approved when it would otherwise have been declined.

If you or someone you know is thinking of separating or is in the process of divorcing, it’s worth your time to discuss your options with me. Give me a call 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.

Autum Musings

The fall season is here and it’s starting to feel like it outside. Mornings are darker and chillier. Leaves are changing color. Pumpkin spice is everywhere. Here are a few things you may not know about the fall.

  1. Leaves don’t actually change color. Well, they do, but they’ve had those colors all along.
    Those stunning red, orange, and yellow pigments are actually present all year; they’re hiding under the surface. When sunlight diminishes in fall, chlorophyll breaks down, letting the plant’s hidden red, yellow, and orange hues shine.
  2. Squirrels get smarter in the fall. When they bury nuts and seeds in hundreds of scattered hiding places that serve as emergency winter reserves, a typical squirrel shows a 15 percent increase in the size of its hippocampus –the memory and emotion center of the brain –compared to the rest of the year.
  3. In foliage-blessed states like ours, “leaf peeping” is a $3 billion dollar business in New England, where millions of out-of-state visitors flock to take in the changing colors.
  4. In Massachusetts, the most popular Halloween candy is Butterfinger. Here’s a map with the most popular Halloween candy by state.

October’s Home Improver: Using the Whole Pumpkin

OK, so for years you’ve mastered the art of pumpkin carving. Your jack-o-lanterns are the envy of the neighborhood. But what have you done with the inside of the pumpkin? Did you just scoop it out and toss it in the trash? If you did, you’ve missed out on the benefits of this versatile member of the squash family.

  1. Pumpkin Stew. It may sound weird, but don’t knock it till you’ve tried it. Pumpkin in stew adds texture and flavor that will make you want to use it for every stew you cook this fall. It’s also delicious (and full of nutrients) in your Chili.
  2. Pumpkin Pie. Where do you get your pumpkin pie? At the store? Come on now! You just pulled the main ingredient out of your Halloween pumpkin. Make a pie out of it!
  3. Roasted Pumpkin Seeds. After you’ve taken the time to carefully pick out the, I don’t know, million or so pumpkin seeds, don’t toss them! Roast them.
  4. Make a Cocktail. This Pumpkin Spice cocktail is described as “interesting” by the author, but hey, it’ll be a big hit with the adults at your Halloween party!
  5. Feed the Animals. If you are allowed to feed wildlife that may be passing by your home, consider carving up your pumpkin into chunks after Halloween and leaving it out for deer and other animals who might enjoy it.

Finding the Money for Your Downpayment

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In an ideal world you’ll have saved enough money for the downpayment on your home and you’ll be easily approved for your new mortgage. Unfortunately we don’t live in an ideal world and certain circumstances can make you feel like you’ve got no choice but to find a way to raise the funds necessary for your downpayment. Some of these scenarios include:

  • Divorce, especially when children are involved
  • Moving out of parents’ home in an uncomfortable situation
  • Skyrocketing rents that are higher than mortgage payments

Reasons like these and others may inspire you to get creative in finding the money you need to buy your home. The one thing you should never do is take out a big loan. Even if your intentions are honorable, your debt-to-income ratio can be skewed to the point where you’ll be instantly turned down. Here are some other ideas:

  1. Borrow from a family member. Yes, this can be dangerous if you’re concerned about paying it back quickly, but if you have the ability to repay the loan, you’ll probably get it at a very low rate of interest or possibly without interest at all. Some families who have money saved may even gift it to you so you won’t have to pay it back unless you want to.
  2. Cash in your 401(k). Be careful here. Severe penalties and taxes could diminish the total. You may have $30,000 saved, but with penalties and tax payments, it could drop that amount to somewhere around $14,000. Still, dire circumstances call for big sacrifices. This is a personal decision that only you can make.
  3. Take a second job. If you can handle it, the extra money should go straight to your downpayment fund. It’s not easy, but millions of Americans hold down multiple jobs and deposit their paychecks directly into a bank account for their downpayment.
  4. Government programs. Veterans can apply for assistance through VA loans. In some cases you won’t need a downpayment for your mortgage and the rate is usually lower than what is offered by commercial lenders.

Making these hard decisions can require some help. I provide my clients the most sensible options for their unique situations and act like a sounding board to help them make the best decisions.

Buying a home takes time, care and analysis on my part to help you find the best path to secure and pay off your mortgage. Call me at 617-965-1236 to discuss how I can help.

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.

Om

Today is National Meditation Day, so let’s take a moment to focus on the benefits of this ancient practice.
Did you know that more than 380 peer-reviewed research studies on transcendental meditation have been published in over 160 scientific journals?
The research shows that meditating regularly has some very specific health benefits.
  1. Reduced cortisol. This is a stress hormone. Meditating can reduce the release of it. The studies found a noticeable reduction of stroke and heart attack in those with coronary diseases compared with people who did not meditate.
  2. Reduced anxiety and depression.
  3. Improved memory and brain function.
  4. Reduced insomnia.
  5. Greater inner calm.
  6. Normalized blood pressure.
To learn more about different types and techniques of meditation, check out this article from the Mayo clinic.

May’s Home Improver: Know Your Ants!

There are many types of ants crawling in yards, trees and homes around the world. Some are harmless and others, like the notorious bulldog ant of Australia, will bite and sting you until you’re dead.

In Massachusetts, we mostly have kindler, gentler ants, but that doesn’t mean they can’t be aggressive and hazardous to your health.

Let’s start with the common little black ant. What’s he doing in your house and why is he traveling with so many friends? He’s probably foraging for food. If you’ve ever seen a long trail of ants heading for your trash bin or trudging towards an errant fruit loop, it’s because they’re hungry. They won’t bite you but they have a sweet tooth, so be careful what you leave around the house.

Next, we have the flying ant, also called the swarmer. Mostly harmless, but menacing. I hate these things! Who thought it was a cool idea to give ants wings? I suppose its better than a flying rat, but aren’t those just bats?

OK, time for some next-level ant toughness. The carpenter ant. Now don’t expect them to make you a bookshelf. Their name implies that they’re workers, but they can be quite destructive. Carpenter ants
enjoy infesting wood that’s been weakened by moisture. Some people mistake their them for termites when they gather during mating season. But carpenter ants don’t actually eat wood like termites. Instead, they destroy wood by burrowing down into it and building nests. Fun!

Finally we have the fire ant. Stay away from these freaks! The good news is they’ll probably avoid coming into your home. But if their nest is upset in the yard, they get mean. They have no problem racing after you and stinging you (yes, they both bite and sting). The stings are very painful and can be dangerous for people and pets with certain allergies. Lucky for us, these fire ants aren’t the same as the venomous South American fire ant, which has made its way to Australia and causes millions of dollars in damage every year.

Pre-Approval Letter vs. Loan Commitment

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From time to time we use this space to clear up industry
terminology. Recently I was asked about the difference between a pre-approval letter and loan commitment. Both are similar, yet there are subtle differences between these two mortgage terms and they should not be used interchangeably.

Let’s start with pre-approval letters. These are nearly mandatory in today’s real estate market and have been in existence for more than two decades.

A pre-approval letter is submitted by the buyer along with their purchase agreement. Its primary purpose is to assure the seller that the potential buyer has met the basic criteria to be granted the mortgage. The buyer’s income, credit score, debt levels and down payment source are verified at this time.

On the other hand, a loan commitment letter is created when the buyer’s information has been fully reviewed and he or she has been given the clearance to close on the sale. Occasionally, a loan commitment letter is issued along with additional conditions which must be met before they are cleared to close.

The loan commitment letter protects both the seller and the buyer from financing issues that may crop up prior to the closing. So what issues can occur from the time of the pre-approval letter? The biggest concerns are loss of income and credit problems that may lower your score.

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.

Credit Card Debt is Up Again. Now What?

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When the bottom dropped out of the market in 2009, people became more careful about spending and accumulating debt. But once the economy started improving, consumers felt more comfortable about spending. Now, eight years later, we are seeing a return to our less careful days of money management. In fact, we’re setting new records of debt.

In June, Americans officially logged their highest collective debt in history. Of the $1.021 trillion in outstanding revolving credit, $1 trillion of it is credit card debt. This tops the previous record of $1.020 trillion, back in the carefree spending days of April, 2008.

Yikes! What does it all mean in the world of mortgages?

For one thing, it could effect your ability to secure your mortgage. According to a recent report, credit card delinquency is up to 4.4% and may be trending toward the 8% or more reached during the recession.

This is a wake-up call to consumers and specifically homebuyers. With more access to credit cards, people are spending money they don’t have and paying a major price for it, both literally and figuratively.

When I work with homebuyers, I look for three things: Credit, Cash and Capacity. Let’s start with credit. Lower credit scores, combined with the loan-to-value ratio, can affect the interest rate that you’d be eligible for. If your credit is not stellar, buying a home is not impossible, and this is where working with me can make a big difference in your homebuying experience.

When it comes to cash, I encourage buyers to make sure they have a cushion beyond the purchase to replace and/or upgrade parts of their home, whether it’s the air conditioning, a new bathroom or an unexpected but necessary home improvement project.

Finally, and perhaps most important, is capacity. Have you developed a saving discipline over time that prepares you to take on your largest debt? For new homebuyers, I look at their bill-paying history from the bottom up. Starting with small monthly debts like rent and utilities; followed by credit cards and auto loans. If you’re having trouble making these monthly payments, I may advise you that now may not be the best time to buy. I feel it’s my responsibility to guide you in the right direction. If I see potential problems with making your monthly mortgage payment, I’ll let you know.

So what can you do if you’re concerned about taking on the debt of a mortgage? Pre-planning is the key. People don’t always jump right into parenthood. They start to learn to nurture at a young age. First a goldfish, then a cat, then a dog, then a baby. The same is true with homebuying. Take the time to pay down your debt and bring up your credit score. Make all your payments early or on time every month. These actions will put you in a more responsibly deserving place to take on debt you can comfortably control and pay off in a timely manner.

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.

Buying a Home? Ask About Murderers and Ghosts

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Remember “The Amityville Horror”? It was a huge late-1970s bestseller and movie about a family that was terrorized by a house of evil spirits. It turned out to be a hoax, but there was one part of the story that was just as terrifying, yet absolutely true.

In 1974, 23-year-old Ronald DeFeo, Jr., used a rifle to kill his parents and four younger siblings as they slept in their large Dutch Colonial home at 112 Ocean Avenue in Amityville, N.Y. The house remained empty until it was purchased by the Lutz family 13 months later at a bargain price of $80,000.

When notorious murders make headlines for weeks or even months, homebuyers typically know what they’re getting themselves into. But what happens when someone dies in a house by way of murder or natural causes? Does the real estate agent have to disclose this potential deal-breaker to the buyer?

Yes and no.

According to an article on boston.com, real estate agents are “not required to affirmatively disclose that there might have been a homicide or suicide on the property.” This means that they are not required to offer the information, but they are expected to confirm the information if asked. So, ask.

The article goes on to talk about paranormal activity, which is another little detail that may be left out by an agent looking to unload a property that may or may not have a few ghosts rattling chains in the master bedroom at midnight.

If you’re a buyer, do your homework before you embark on a tour of available properties. If you’d like help creating a list of questions, please get in touch.

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.

When is an ARM Better Than a Fixed?

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The world of mortgages has a short menu. Will it be an Adjustable Rate Mortgage (ARM) or a Fixed Rate Mortgage? You’ll often hear people say that a fixed-rate mortgage is always the best move
— that’s not necessarily the truth. Homebuyers sometimes have unique circumstances that allow them to take advantage of the initial lower rate of an ARM.

First, let’s distinguish between the two. The interest rate of a fixed-rate mortgage never changes. An adjustable-rate mortgage, on the other hand, resets its interest rate at pre-specified times. For example, a “7/1 ARM” indicates the interest rate is locked in for the first seven years and adjusts annually after year seven. Because rates have been lower in recent times, homeowners generally opt for a 30-year fixed-rate mortgage to lock in that low rate for the life of the loan.

So when might it make more sense to go with an ARM? Here are a few scenarios:
Changing Cities, Changing Jobs. If you think you’ll be moving within a short time frame but prefer not to rent, an ARM is option that could work very well. For example, a student who’s doing a medical residency may wind up practicing in another state after she graduates. Because she’s uncertain where she’ll land after graduation, an ARM may be the better choice for a few years.
Investment Property. If you’re buying an investment property but only plan to hold onto it for a limited period, why not take the lower rate?
Salary Bump. If your budget is stretched now, but you’re confident your salary will increase in the next 5-7 years, you could start with an ARM and then refinance your mortgage before the rate goes up.
First-time Homebuyers. In cases where financing a 30-year fixed is not a viable option, first-time homebuyers may choose an ARM and either sell or refinance later.
While ARMs usually have caps in place for rate increases, there are usually no caps or limits to how much the first adjustment after the reset point will be. If you wind up staying beyond the first interval of your ARM, you could face a larger rate increase than you can afford. This is why we only recommend ARMs for the short term, even though it’s entirely possible the rate could adjust down.

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.

3 Downpayment Myths Debunked

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When it comes to mortgage downpayments, there seems to be some confusion about how much you really need to put down on a new property. Let’s take a look at three common misconceptions.

1. The 20% Rule. If you were to ask the average person on the street about downpayments, the majority of them would say 20% is required. While 20% is a common guideline, it’s not necessarily the reality. In fact, there are a number of low downpayment programs available.

2. It Has to be ONLY my money. Gift funds are a great option. A gift may be provided by a spouse, child, or anyone related to the borrower. It must specify the dollar amount and an official gift letter is required stating that the funds were a gift and no repayment is expected.

3. First-time Homebuyers Only. While the industry has always encouraged first-time homebuyers, it’s a myth to think current and previous homeowners will be forced to submit 20% and not a penny less. I have worked with numerous clients over the years who have preferred a smaller downpayment so they can keep some money for repairs and additions to their new home.

Don’t be fooled by these misconceptions that have seeped into the general consciousness. There are more options for low downpayments than you may have imagined. If you or someone you know would like to explore the possibility of a low downpayment option, I can help. Call 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.

The One Question That Saves Thousands of Dollars

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I’ve been working with homeowners for many years and I discovered long ago that eager buyers set themselves up to fail by taking the wrong approach in their excitement of making what is often the largest purchase of their lives.

Whether I’m advising couples, divorced women, single men or anyone else across all demographics, the majority of these home buyers start house-hunting with the amount of money in mind that has been determined with their pre-approval. It’s a mistake and can lead to serious financial issues.

The question I start with is a simple one: What do you need to live happily and comfortably over the next several years? That change of mindset–focusing on their needs rather than what the bank tells them they can afford–makes a huge difference.

Let’s face it: in many ways, we are a nation of impulse buyers. Why buy a Toyota when you can buy a Lexus, right? I’ll tell you why. Because you can’t afford it. You only think you can.

First-time homebuyers often find themselves in serious debt when they learn of unexpected costs to maintain their homes in addition to their monthly mortgage payment, property taxes, utility bills and more. Then suddenly one winter they have ice dams and roof repairs and mold remediation. The typical homebuyer thinks of a dream home, not a nightmare scenario that stretches their budget to the limit and beyond.

When buyers work with me they have a professional who helps them make practical decisions that will serve them well over the life of the mortgage. Consider me the reality check you never asked for, but really need. You can’t put a price on good advice, but you can always afford it. I’m happy to help.

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.

Appraisal vs Assessment: What’s the Difference?

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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.