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.

Why a 3% Downpayment is a Terrible Offer For Some Buyers

One of the pitfalls of buying a new home is paying too little for your downpayment. Making the right decision involves an analysis of the costs related to your debt and your income.

When banks offer low downpayment programs in the 3% to 5% range, it doesn’t necessarily mean you should jump at the chance. When you put down a small amount to buy your home, you’re mortgaging a higher loan amount. This can be a costly mistake.

I have recently advised a divorced mom with three kids to put down more than half the cost of her home from a recent inheritance. While this was more than she had expected to put down, she realized that this initial payment would be the best solution and would help her comfortably handle her monthly expenses.

To make the mortgage work, we needed to assess her debt-to-income ratio (DTI). When we talk about debt, we mean more than just the monthly bills. We also factor in costs like the principle, property taxes, condo fees and insurance premiums.

By putting down a big chunk of her inheritance, it created a DTI that was under 45% of her gross income. Hitting this number is critical for certain types of mortgages and banks are far more likely to be as comfortable lending you the money as you would be paying it back.

I help my clients review programs that allow those 3%-5% downpayments, but I also advise them on the risk vs. reward when taking an offer that seems like a blessing but could turn out to be a financial curse you’ll have to live with for many years to come.

There’s no reason to buy a home without talking to a professional first. Get in touch if you or someone you love is in the early stages of buying a home.

August’s Home Improver

Fall Home Prep Checklist

The transition from summer to fall is drastic, particularly for families with children. As the kids get ready to return to school, you may find yourself getting your home ready for the autumn weather and a more regimented family schedule. Here’s a checklist of suggestions to get your home ready for the fall.

1. Close Your Pool. But wait until the weather dips below 90º. You may still need it for another few weeks.
2. Clean Your Gutters. If your gutters are slightly clogged now, they won’t stand a chance once the leaves start to fall.
3. Clean Out The Garage. Move the summer stuff to the back and keep your rake and shovel up front. If it’s cluttered, empty it out so you can fit your car in there when the weather changes.
4. Take Out Air Conditioners. You may also want to purchase covers if you choose to leave them in.
5. Fall Cleaning. This is just like Spring Cleaning, but in September.
6. Change the Decor. Buy a new welcome mat, change your sofa pillows, consider bath towels in fall colors, buy candles that match the feeling of the season.
7. Clean Up Your Mudroom. Move out the flip-flops and summer hats to make room for boots, coats, scarves and everything else the fall weather requires.
8. Change Your Artwork. Move hanging art to other rooms to switch it up. From pictures of your summer vacation.
9. Get Your Pets Ready, Too! New dog and cat beds make your home look neater and your pets feel more comfortable. And don’t forget a raincoat for Rex. Speaking of which…
10. Break Out Your Umbrellas. Buy an elegant umbrella stand for your nice clean mudroom. Add new umbrellas that open when you click the button on the first try — and haven’t been blown inside out a few times over the years.

Reality Check: Longer-term Mortgages Make Sense

I have a friend who hates bills. Hates ’em! She can’t pay them fast enough so she doesn’t have to look at them. Hating bills isn’t necessarily a bad thing. In my friend’s case, her quick payments have yielded a stellar credit rating.
Imagine her surprise when I suggested that she opt for a 30-year mortgage rather than the 15 she was considering.
My friend has good job. She’s recently divorced and has two young children to support. A one-income homeowner with two dependents needs all the financial flexibility she can allow herself. While her income and excellent credit is enough to qualify her for a 15-year mortgage, it may tighten her budget enough to restrict her from paying for unexpected home repairs, a new car and even a much-needed vacation–for 15 years!
The fact is, we’re always paying for something when it comes to our homes. While it may seem like paying the mortgage quickly is a great goal, all we’re really doing is moving our money around differently. It’s easy enough to get the idea in your head that paying off the mortgage leaves you with nothing left to pay. Unfortunately, my bill-hating friend will never be free from paying property taxes, homeowners insurance, repairs and renovations.
A 30-year mortgage isn’t always right for everyone, but in many cases it makes the most sense. Focusing on paying more in a shorter period could make you put off paying for a roof leak that has, over the years, turned into a roof replacement.
There’s also your quality of life to consider. That trip to Europe you’ve always wanted to take. That car with the heated leather seats you dream about every winter. The opportunity for your children to attend the best schools. All of these things are compromised when your mortgage payment doesn’t leave you the financial flexibility to spend your money on the things that are most important to you. It’s great to own a home that you love, but your unnecessarily high mortgage payment should never prevent you or your children from living a fulfilling life.
Do you have a friend or relative in need of mortgage advice? Please contact me. I will be happy to help.
June’s Home Improver
Avoiding a Summer of Mosquito Bites
Question: What is the deadliest insect in the world? Most people think about swarms of killer bees or those horrible fire ants they always show on the National Geographic channel–so called because it feels like your skin is on fire after you’re bitten. Scary!
The deadliest insect, however, is the mosquito. While many of us see the mosquito as a nuisance more than anything else, these flying pests are notorious carriers of awful diseases, including West Nile Virus, dengue fever and malaria.
To avoid the stinging and scratching, remove any standing water around your home. Mosquitoes breed in water, so keeping things dry will force them to seek out breeding grounds elsewhere.
1. After it rains, dump out water that may have filled flower pots and watering cans. When possible, store them upside down when not in use to avoid water accumulation.
2. Keep gutters clear so that water can move through them. A clogged gutter is a common breeding place for mosquitoes.
3. Clean your birdbath. Regularly changing the water in your birdbath will wipe out any mosquito larvae before they hatch.
4. Folds in tarps and pool covers can create pockets of water that mosquitos love. Clean them out weekly and keep your tarp folded flat when not in use.
Remember to use insect repellent to keep yourself safe from mosquito bites. According to the Centers for Disease Control, you should choose a big repellent with one of the following active ingredients: DEET, picaridin, IR3535 or, for those seeking a natural remedy, the plant-based oil of lemon eucalyptus.

Co-Signing a Mortgage: Is It Worth The Risk?

There are several circumstances that require co-signing for a mortgage. The most common scenario involves a married couple. The two incomes combine to sufficiently cover the cost of the monthly mortgage payment. Other cases include parents co-signing for their child’s first home; adult children co-signing for their aging parents whose income has diminished at retirement; siblings or friends helping each other out. The fact is, most people with good credit and assets can co-sign for someone else. Whether the co-signer feels a familial obligation or they just want to help someone, the question remains: Is the risk worth the reward?

Let’s look at that married couple. What happens if they divorce in a few years and the wife remains in the home? While she has now taken over paying the mortgage, her ex-husband’s credit is still at risk, even though he is not making the payments. If she is late with her payment or defaults on it, they will equally share in the liability. There is an option to refinance, but what happens if the ex-wife does not qualify on her own? The ex-husband may choose to keep his name on the mortgage, especially when children are involved.

In the case of friends or family co-signing, it is important to understand that what began as an act of kindness can quickly turn into a regrettable decision. When it comes to your hard-earned credit, you must consider the history as well as the potential of the person you’re signing for: Why is their credit low? Do they have a stable job history? Will their income increase over time? Do you trust that this person with poor credit and/or limited assets will take on and consistently pay a monthly loan over 15 or 30 years?

Worst case scenario: As the co-signer, you are responsible for the loan if the homeowner defaults on the payment. If you already have a mortgage of your own to pay, you now have two. In addition, because the homeowner defaulted on the payment, your credit has taken a hit in the process.

None of this is meant to say that all co-signed mortgages are a mistake. Many of them work out perfectly with no issues. The point here is understand your responsibilities as a co-signer and if you choose to proceed, be ready to take on the full responsibility of the mortgage.

If you are recently divorced and need information about refinancing or if you have further questions about co-signing for a mortgage, please contact me at 617-965-1236 or email me.

April’s Home Library Improver

Marijuana: The Unbiased Truth About The World’s Most Popular Weed by Kevin P. Hill, M.D.

Typically, this space is reserved for home improvement or gardening tips — although I suppose this could fall under “gardening.” My husband, Dr. Kevin P. Hill, had his book published recently and I am excited to tell everyone about it! 
Marijuana: The Unbiased Truth About the World’s Most Popular Weed, by Kevin P. Hill, M.D., explores the history and debunks the myths about this controversial plant’s colorful 2000-year history.
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From the publisher: “Whether you’re a parent concerned about your child’s use, someone with an illness considering medical marijuana as a treatment option, a user who has questions about its effect on your health, or if you’re just trying to make up your mind about legalization, this book will give you the most current and unbiased information you need to make informed decisions about marijuana.”
The book is available in paperback and as an e-book. You can buy it at the following retailers:

The Harsh Truth About Women and Finance

One of the more memorable acceptance speeches delivered at this year’s Academy Awards was from Best Supporting Actress, Patricia Arquette. Her remarks about gender equality and the pay gap between men and women struck a chord that lasted beyond the show, and she recently spoke at an event sponsored by the United Nations on the same topic.

In 2015, it is shocking — though not surprising to some — that women would be paid less for doing the same job as men. Yes, times are changing but perhaps not fast enough in this case. Ms. Arquette made the comment that change starts with women.

I mention this because of a Boston Globe article written recently about how women lag behind men in financial literacy. This is another example where there should be gender equality. The gist of the article says that women scored lower than men in answering questions related to money and finances.

It also goes on to say that the women who were polled were more financially vulnerable than their male counterparts.

Whether or not a gender pay gap is a factor, the truth is that women today need to understand their finances as well as men for a number of reasons.

In the case of a divorce, a woman who may have relied on her husband now bears the full responsibility for her financial well-being.

Among married couples, we know that women tend to outlive their husbands and at some point they need to have a solid grasp of their financial situation.

Obviously there are many exceptions to the rule and plenty of women are both the breadwinner and the decision-maker of the family when it comes to finances. However, it is important that all women (and men, too!) learn and understand how their finances work so that they can make informed decisions at critical moments in their lives.

Here’s the link to the quiz to test your financial capability.

March’s Home Improver
Crocus Focus

There are a few sure signs of spring. First is the end of snow (which may or may not be the case after this record-setting year). Next, there are the clocks “springing ahead” to Daylight Saving Time. Finally, there is the emergence of the beautiful crocus plant.

The crocus is a perennial bulb that is a member of the iris family. It blooms in several colors, including purple, white and saffron. In fact, the spice saffron is made from crocus flowers.

Why does the crocus tend to bloom before other plants? One thing we know is that the crocus will bloom at the first reasonably warm day and will remain unharmed even with a few remaining snowstorms left in the season.

The crocus is also resistant to insects, though a hungry squirrel may have its way with it. Its hardy nature makes it a plant you can expect to see growing in your yard for many years to come.

If you plan to plant crocus bulbs, the best time to do it is in the fall. The bulbs settle in for a long winter’s nap before poking up through the soil at the first sign of spring. Some varieties of crocus actually bloom in the fall and should be planted in late summer. Clearly, this plant enjoys a change in seasons.

The crocus looks best when it grows under trees and in large flower beds. Your blooming crocus will display its stunning colors as its delicate leaves sway in the breeze. Following a brutal winter, this amazing flower offers hope for a warm and beautiful spring.