Archive for November, 2017

A Single Underlying Factor When Applying for a Mortgage

Every mortgage lender develops their own unique guidelines for evaluating the factors contained in a home loan application. These may change from time to time so that their portfolios stay “balanced”—that is, so that the cumulative risk represented by the entire batch of home loans do not exceed the level of risk they wish to assume.

Potential Bedford mortgage applicants are bound to be curious about which factors are more or less influential for that decision. Their curiosity is why you can find hundreds of “Top 5” and “Top 7” lists of “mortgage application factors”—and why home loan originators pay top dollar to advertise on them.

Given that the factors mortgage companies examine are hardly secret, it’s not surprising that all of the lists are pretty similar. It’s also true that the individual factors all have something to do with a single underlying element. (I’d call it the “hidden factor” if it weren’t right out there in the open). Here’s a typical list seen as it relates to that single underlying factor:

  1. Down payment (underlying factor: size of loan). If, say, $50,000 will be available for the down payment, a $200,000 home loan would be easier to grant than one for $600,000. Many mortgage firms have relaxed their requirements—but inevitably look harder as a down payment percentage declines.
  2. Debt level; aka Debt-to-Income ratio (underlying factor: size of loan). Lenders analyze an applicant’s monthly cash flow to determine how much will be available to pay the monthly mortgage payment. The size of the loan—thus amount of the payment—determines if that’s easily doable.
  3. Loan type (underlying factor: size of loan). Conventional loans carry stricter qualifying factors than do other types. For instance, if the size of the loan is beyond the conforming loan limitation, jumbo loan requirements pitch in.
  4. Employment history (underlying factor: size of loan). Starter homes requiring smaller loans are often right-sized for younger borrowers with shorter employment records.
  5. Credit Score. Typical descriptions say things like, “Borrowers who need to finance more will need a higher credit score of 700 or above…” In other words (you guessed it), underlying factor: size of loan.

Success when applying for a mortgage loan does involve all these factors—­and more­­—but that’s just another way recognizing the common sense notion that home loans are granted to those who can demonstrate the ability to repay. The last time that notion was abandoned, the global financial crisis ensued.

The corollary for house hunters is equally clear: determine your comfortable budgetary range first­­­–then go out and find your new home. The mortgage lenders will fall into line—and I’ll be delighted to help!

Joan Parcewski, Realtor & Notary

LAER Realty Partners           http://www.JoanParcewski.LAERRealty.com

JParcewski@LAERRealty.com    cell 978-376-3978

Laer Realty PartnersJoan Parcewski Full Picture 102017

 

For Potential Billerica FSBO Sellers, Points to Ponder

It’s illuminating to visit For Sale by Owner websites from time to time to see if there are any new insights to be gleaned. True, as a licensed Billerica Realtor®, I’m not likely to learn much new when it comes to selling Billerica homes—but that’s not the motivation. Call it ‘opposition research:’ the reason is to uncover any areas where the services I provide aren’t superior to what a do-it-yourselfer can come up with on their own.

Here are some takeaways from the FSBO sites Google recently presented as the most frequently consulted sites. I’ve included my opinion about the pronouncements—either valid or less than valid:

Valid: Valuing your house is an important step toward FSBO success. Absolutely true, if “valuing your house” means incorporating the latest Billerica comparable sales adjusted for the features that make your property unique.

Valid but irrelevant: Your lender will more likely sell your mortgage to another bank, sometimes within the first 72 hours. Although this is sometimes true, it has nothing to do with anything a potential Billerica FSBO owner needs to worry about.

Valid: “This should be no cause for alarm.” The reason why the above pronouncement about mortgage lenders’ procedures is a non-issue.

Less valid: “[name of an online service] is a free tool that instantly estimates your home’s value…”   As has been shown time and again, automated systems (even the top 3 national ones) can come up with wacky valuations—it’s why they ask homeowners for corrections. Compiling a carefully researched, up-to-the-minute comparable presentation is only one part of what you can expect from any licensed Realtor. Both are free.

Less valid: Whether you list your home with an agent…or sell your house on your own, it is going to involve considerable effort on your part. More candid would be pointing out that the considerable marketing, advertising, and negotiating activities in addition to timely compliance with all legal and financial deadlines are parts of the considerable effort that your Billerica agent undertakes for non-FSBO sellers.

Valid: Another pricing [tactic]…is calling a real estate agent for a Comparative Market Analysis…the agent’s point of view could be valuable. I couldn’t agree more!

Billerica FSBO properties are commonly passed up by serious-minded house hunters wishing to avoid non-professionals in such a major transaction. Since those are the prospects sellers should try hardest to attract, that’s one point you never find on any FSBO web site.

In case you’ve been toying with the For Sale by Owner idea, I hope you’ll first give me a call for a no-obligation discussion of your property and goals—and what makes the most sense for you!

Joan Parcewski, Realtor & Notary

LAER Realty Partners           http://www.JoanParcewski.LAERRealty.com

JParcewski@LAERRealty.com    cell 978-376-3978

 

Laer Realty PartnersJoan Parcewski Full Picture 102017

 

Augmented Reality: Next Burlington Real Estate Tool

Burlington real estate has greatly benefitted from one offshoot of “virtual” technology. Just click on a listing’s “virtual tour” button and a progression of two-dimensional views of the listed property parade across your laptop or smartphone screen.

Those Burlington listing virtual tours are real estate’s first step toward “VR”—Virtual Reality. VR is the more immersive version that allows viewers to move around within three-dimensional renderings of computer-generated environments. A current example is the TV commercials depicting delighted VR goggle-wearers experiencing animated fictional worlds. They demonstrate two things: 1) the people who don the goggles look as if they truly do feel as if they are surrounded by a mind-bending realistic version of reality; and 2) they also look as if they are disconnected from the actual world around them (as when they duck to get out of the way of something that doesn’t really exist).

As it relates to Burlington real estate, there is a slightly different emerging technology. You might say that it’s half-way between today’s virtual tours and full virtual reality. This is “AR”—Augmented Reality—which combines the real and virtual worlds. It allows consumers to superimpose computer-generated images into real life scenes. Some applications are already popping up, with more on the way thanks to support from the latest operating system releases which allow software developers to dream up applications that take advantage of the possibilities.

IKEA is one company that has developed an application to project how any given furniture model would look in a customer’s own home environment. Customers need a copy of the company catalog and access to IKEA’s website. Simply click on the sample item shown on the site, then position the catalog on the floor where the furniture would be placed. Just point your smartphone at the scene and take the picture—the app recreates the scene with the IKEA piece in place, properly scaled with lighting and shadows correctly rendered!

My guess is that it certain that Burlington homeowners will soon have a lot of AR remodeling aids to help them visualize design choices. One countertop manufacturer has already developed an application that shows exactly what different surface finishes would look like atop an existing counter.

House hunters will benefit, too. The Realtor.com web developers are working on “augmenting reality” in the same way that Hollywood adds subtitles to movies. Their “Street Peek” application will allow house hunters to walk down a street, point their smartphone (Android, at first) at a house, and watch a cartoon bubble pop up over its roof with text showing whether it is for sale, the listing price or most recent sale price, and other information drawn from the NAR database. For Burlington new home buyers choosing model home variations as well as for builders eager to show the potential of an unfinished space, the only current drawback is the difference between the look of the real thing and the computer-generated image. Count on that difference rapidly disappearing.

Whether you are buying or selling, I work to keep my clients informed about the coming advances in the tools affecting their Burlington real estate options. Call me!

Joan Parcewski, Realtor & Notary

LAER Realty Partners           http://www.JoanParcewski.LAERRealty.com

JParcewski@LAERRealty.com    cell 978-376-3978

Laer Realty PartnersJoan Parcewski Full Picture 102017

Your Burlington Homeowners Insurance Annual Checkup

It’s one of those Burlington documents most of us stash in a safe, out-of-the-way place—somewhere in the furthest recesses of a linen closet or at the back of a bureau drawer. Renters do the same: they don’t actually read the thing, but they know they want to keep it somewhere where they hope they’ll never have to find it.

The document that they value and simultaneously avoid is their Burlington homeowners or renter’s insurance policy—the thing they make sure to purchase and hope to forget. As much as I consider it my job to cater to my clients’ every wish, it is also a document that I’m afraid prompts me to risk violating that part of my job.

Sorry, everyone. You really should go find it and give it a read. Once a year, even.

The fact is, it’s certainly time for your Burlington homeowners insurance policy’s annual checkup!

How do I know that you haven’t done that for at least a year? It’s because when your agent sent you this year’s policy renewal, you may have read the cover letter and the top page, but that’s when your eyes glazed over and you remembered you had something else to do right then. You stuffed it back in the envelope until later (which was when you stashed it in the safe place).

Unless you are the one-in-twenty who likes legal minutiae, you figure you’ll read it when you need it, which you fervently hope is never. I sincerely join you in that hope, but all the industry experts are deadly serious in recommending that you bite the bullet and review your policy at least once a year.

Why? Many reasons—here are just a few:

  • Type of coverage. Is it ACV or Replacement cost? ACV stands for “actual cash value” which means depreciation is deducted in the event of loss.
  • Liability limits. ‘Nuff said.
  • Accurate inventory. As your possessions come and go, they need to be reflected in the policy. This is where over-insuring is most commonly spotted. Here’s the National Association of Insurance Commissioners’ handy inventory worksheet.
  • The amount of deductible in your Burlington homeowners or renter’s policy is where you can reap significant savings…if you are willing to absorb more of the expense should a loss occur.
  • If you have more than one type of insurance policy with the same company or are a long-term customer with few claims, you might qualify.

After your house insurance checkup, you should experience some degree of relief. After all, not only are you newly confident that you are accurately covered, but even better: now you don’t have to read the thing for another year!

My job is helping my Burlington clients make the most of their real estate opportunities and decisions. Whenever you can use some help or advice, do give me a call!

Joan Parcewski, Realtor & Notary

LAER Realty Partners           http://www.JoanParcewski.LAERRealty.com

JParcewski@LAERRealty.com    cell 978-376-3978

Laer Realty PartnersJoan Parcewski Full Picture 102017

 

Buying Your Billerica House in a Hurry? Not So Fast!

 The goal of owning your Billerica home free and clear is usually thought of as the sunniest eventual outcome of the process that begins with buying your Billerica house. The vision of the day when you make that last mortgage payment is an attractive one: whether in retirement or sooner, a “free rent” future has great appeal.

So when financial planners argue against the wisdom of paying off your mortgage, it makes for interesting reading. One such planner is Ric Edelman, whose article “11 Great Reasons to Carry a Big, Long Mortgage” presents a laundry list of the possible financial benefits. As one of the nations’ foremost financial advisers, Edelman also has a well-earned reputation for brash presentations (his PBS series made the most of that). And he really does list eleven reasons why “you should have as big a mortgage as you can get and never pay it off.”

Some of the reasons are fact-based—but not really pertinent. For instance, Reason #1 is that your mortgage doesn’t affect your home’s value. True: whether its value rises or falls depends largely on the current Billerica market…but that isn’t a reason for or against carrying home loan debt.

The same is true for Reason #2, which is that a mortgage “won’t stop you from building equity…” The logic here is the same: even if you never paid down your home loan’s principal at all, if the expected market value rises (it’s “almost certain to grow in value over the next 20 years”), your equity would grow independently.

More convincing are the remaining nine reasons, leading off with Reason #3, “A mortgage is cheap money.” This will earn head nods from every financial analyst, and it’s doubly true with today’s incredibly low interest rates. It may only be useful to those who have ideas for places where the “cheap money” can produce juicy profits—but what financial planner can’t suggest a few?

The other reasons deal with:

  • tax benefits
  • the dwindling real cost of mortgage payments over time due to inflation
  • the liquidity provided by refinancing (“selling without selling”)
  • the wealth creation possibilities of money invested sooner rather than later

Each of these can be illustrated by graphs and charts (and believe me, they are).

Whether you are more of the less-owed-the-better mindset or Edelman’s big long mortgage school, one thing holds true in both cases: buying your Billerica house is the necessary first step. I can be of immediate value in that department—call me to see what I mean!

Joan Parcewski, Realtor & Notary

LAER Realty Partners           http://www.JoanParcewski.LAERRealty.com

JParcewski@LAERRealty.com    cell 978-376-3978

 Laer Realty PartnersJoan Parcewski Full Picture 102017

 

Bedford Home Selling Negotiations are More than a Game

When it comes to appraising and developing appropriate responses to offers on your Bedford home, I’m there to offer counsel and guidance. Even so, you are the ultimate decision maker. Especially for Bedford homeowners without previous selling experience, becoming familiar with some practical pointers for home selling negotiations is well worth doing. Bedford sellers can find one rich source at the National Association of Realtors® web site. This month’s World Series finale undoubtedly inspired the title for a list of home selling negotiation pitfalls. Published the morning of Houston’s Game 7 victory, it dealt with errors in home selling negotiations. It was subtitled “Negotiation Hardball Fouls.

Although the first “foul” was “starting a bidding war,” that was a slight overstatement. Obviously, a bidding war is any Bedford seller’s ideal situation. What was spotlighted was how that situation could be mishandled. One misstep is setting an offer deadline too far in the future because time-pressed buyers might disappear. Another foul ball is passing up an already strong offer that might not reappear.

Another home selling negotiation tactic that Bedford sellers should think twice before adopting is being overly tough when responding to repair requests. That’s similar to “being stubborn” about a host of other relatively minor points like setting the closing date, closing cost payment requests, and squabbling over inclusion list items.

Another tactic that might result in an expensive misfire: threatening to put the property back on the market. The problem here isn’t only the stigma sometimes attached to the “put back on the market” tag. It’s also the fact that interested buyers you’d expect to return might have moved on.

The valuable insight that underlies all of the NAR examples is a guiding principle I believe to be valid for all home selling negotiations. When you are coming down the home stretch (or are in game 7 of the Series), evaluate every aspect of an offer as part of the whole transaction. Individual details that might seem emotionally important lose their clout when viewed in relation to the whole. In other words, as every major (and minor) league batting coach will tell you, if you want to make contact, keep your eye on the ball.

No matter how exciting it might be, any World Series Game 7 is only a game. When it comes to selling your Bedford home, it’s a much more meaningful exercise to the families it will affect for years to come. I keep that in mind during every aspect of your Bedford home’s sale, from the listing’s preparation to the final home selling negotiations. Call me!

Joan Parcewski, Realtor & Notary

LAER Realty Partners           http://www.JoanParcewski.LAERRealty.com

JParcewski@LAERRealty.com    cell 978-376-3978

Laer Realty PartnersJoan Parcewski Full Picture 102017

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