HOW RISING INTEREST RATES CAN IMPACT AFFORDABILITY

Chances are, you’ve probably heard a friend, neighbor or relative say they’re “waiting till prices come down further” to purchase real estate. Logic says we should support their desire to stay in a holding pattern; after all, buyers are getting deals every day right? Well, sort of.

Certainly home prices have dropped - dramatically even in some areas of the country - but I’m here to tell you that one of the most common myths among buyers is that waiting for a home price to drop is the best way to “get a deal.”

The truth? Interests rates can have a much more significant effect on price. In other words, locking in low interests rates will almost always nullify any price drop. Here’s the other caveat: the longer you wait for a home's price to drop, the more likely it is that interest rates will go up.

Let’s look at an example where an increase in interest rates are applied to a 30-year loan. As you’ll see in the table below, the effect of an increasing interest rate is huge - much bigger than a 10 percent drop in home price. Conversely, a drop in interest rate can significantly decrease the total interest paid over the life of a mortgage loan.

Example Home Purchase	Rates Up 1% and  Prices Steady	Rates Steady and Prices Drop 10%	Rates Up 1% and Prices Drop 10%
Home Price	Home Price	Home Price	Home Price
$250,000	$250,000	$225,000	$225,000
Interest Rate	Interest Rate	Interest Rate	Interest Rate
4.23%	5.23%	4.23%	5.23%
Principal & Interest	Principal & Interest	Principal & Interest	Principal & Interest
$981.54	$1,101.93	$883.39	$991.74
Total Interest Paid	Total Interest Paid	Total Interest Paid	Total Interest Paid
$191,693	$245,869	$172,523	$221,282

The first scenario in the second column is historically more likely to happen than the latter two. And as we’ve witnessed over the past five years, mortgage rates have been falling to historical lows, making homes even more affordable for buyers.

It’s important that potential home buyers understand the positive financial impact low interest rates have on the cost of home ownership. For those who can afford to buy, trade up, or invest, our current market can save you thousands of dollars over the life of a typical mortgage loan and offer a lifetime of opportunity.

GETTING TO KNOW THE NEIGHBORHOOD BEFORE BUYING A HOME

There is a reason the term “location, location, location” is used so commonly within the real estate industry.  

The location of a property is one of the most important considerations when selecting a home, as it will affect the value of your home, your day-to-day life, and even your own and your family's safety.  

So what can you do to find out a little about the area in which you are considering a home purchase, and what in particular should you be looking for?

Know Your Needs

The biggest obstacle to finding a home in an area that can meet all of your needs is not knowing clearly what those needs are.  While it may be nice to live near the lake, or by your favorite restaurant, what is it that you and your family will need and want in order to have an enjoyable and functional lifestyle?  Facilities such as grocery stores, good schools, and community centers may be necessary for families, whereas access to theaters, good restaurants, and a vibrant nightlife may be important to young professionals.

Get The Info

When searching for your dream home, knowing where to look before starting out can help make the task easier and faster. So before getting started with the house hunting, do a little neighborhood hunting first.  There are a number of resources online, from municipal Web sites to forums, that you can use to find out about prospective areas that may be right for you.  Contacting a real estate agent is also another great resource in finding an area that can meet your needs.

Check It Out For Yourself

All the research in the world can never replace experience, and if you are planning to purchase a home you will want to be sure the location is right before making what will likely be the biggest investment of your life.  Taking a walk in the area, trying out the local facilities, and getting to know some of the locals can really help you to determine whether the area will be a fit for you and your family.  You may also want to check out the area at different times of the day, or even the year, if these are considerations that may affect your happiness in your new home.

A little extra work can really mean not only choosing a home that is right for you, but making sure it is in an area that can meet all of your needs.

BUYING A HOME THAT CAN GROW WITH YOUR FAMILY

If you are a first time homeowner, or are purchasing a home after a major life change such as marriage or having children, what should you consider to be sure your new home can grow with your changing family?  

The time and effort that go into purchasing and decorating a new home, not to mention finding it in the first place, means that you'll want to ensure that your home will be right for you and your family for years to come.  So what should you look for in your new home so that it will give you enjoyment and be functional both now and in the future?

Size

Though a cute two-bedroom home may be right for a newlywed couple, this type of space will likely soon be outgrown if there are any children in your future or if you and your spouse like to entertain.  You will also want to consider the number of bathrooms and the facilities in them.  Having only one toilet or shower can certainly put stress on a growing family.

Features

Special features of a home, such as a finished basement, central air, and a large yard can make your home a more functional and enjoyable space, especially if you have or are considering starting a family in the near future.  You may also want to consider the age of the home you purchase and its features or appliances, as this may lead to future costs that may put stress on your financial situation at a time when one spouse may be at home caring for the children.

Location

Location is also an important consideration when choosing a home that can grow with your family.  Choosing a safe neighborhood is always an important point when selecting a family home, but you will also want to consider the proximity of good schools, community centers, and shopping.  Also, facilities such as parks and libraries can make a neighborhood truly a great place for families.  You may also want to consider the demographics of the area in which you are purchasing in order to be sure it is a match with your values.

As the old adage goes, home is where the heart is, and choosing a family home that is right for your family can really make all the difference in having a happy, fulfilling, and safe family life.

TRACK MILEAGE WITH MILEBUG

As a real estate agent, I spend a lot of time on the road. Thought I’d share this app I just came across for getting the maximum tax deduction for mileage.

Handy Tax Deduction App: Milebug

Spend much time in your car for business? That's a rhetorical question for most real estate agents I know. Agents are some of the most mobile people I know. The miles can really add up, and when it comes tax time it’s important to get that accurate deduction! If you’ve recently completed your own taxes and have vowed not to let mileage slip away next year, read on!

If you're still tracking your data in a little spiral notebook, this year might be the right time to upgrade to a more mobile solution: Milebug.

Milebug lets you easily log mileage for tax purposes. Check out some of the features:

• Use the Mileage Tracker for multiple businesses and multiple vehicles with a simple choice
• Setup frequent destinations and purposes for easy use later
• Choose either kilometers or miles
• Define custom rates for business, charity, medical and other
• Watch your deductions add up with each addition to your tip log
• Email HTML and Excel-friendly reports to your home computer

MileBug mileage tracker for iPhone/iPod Touch, Nokia or Android OS makes it easy to keep records for those who are always on the go, or who just want a central, simple place to keep track of their expenses and mileage.

Learn more about Milebug and download the app.:

http://milebug.com/

I hope you find this helpful! I’d love to log a few miles right now showing you some of my newest listings. Why not drop me a line? valerie@valeriemcconville.com

HOME WARRANTY PROS & CONS

Do you know what goes into a home warranty? While it can provide you with a little peace of mind, you need to understand exactly how home warranties work before you invest in one.

The idea of a home warranty can sound great. According to the National Association of Realtors, a home warranty is defined as, “a service contract, normally for one year, which helps protect home owners against the cost of unexpected covered repairs or replacement on their major systems and appliances that break down due to normal wear and tear. Coverage is for systems and appliances in good working order at the start of the contract.”

It sounds simple: You insure critical systems in the home, and should something go wrong with those systems, the cost of repairs is largely covered by the insurance company. And it’s true, a home warranty can give you exceptional value, especially in the first year of home ownership, when you’re still getting a feel for the overall health and maintenance status of your home.

Sellers often offer a home warranty to allay buyers’ concerns over their first year in the home. In fact, in states where foreclosures are common, home warranties are practically the norm. If a buyer likes two homes about the same, a warranty can be a competitive advantage.

But as with all insurance policies, the fine print matters. When researching home warranties, you must be certain of what the policy covers, and how the insurance company honors claims. For big ticket items like heating and cooling systems, the home warranty can be a massive cost savings, often reducing out-of-pocket expenses to less than 10% of the total. However, with smaller appliances and simple repairs, the claim can cost you as much as the repair would on its own. Plus, it’s vital to know if the warranty will replace versus repair aging appliances. (Many companies will try and repair an old stove or refrigerator rather than replace the unit with a more energy efficient model.)

You should also be aware when a home warranty isn’t required on certain home features. For instance, if you have a dishwasher or hot water heater that is already under manufacturer’s warranty, the home warranty coverage may be superfluous. If you have major systems with considerable age on them, though, the warranty can be worth the investment.

Be aware of the terms of the warranty when it comes to maintenance and neglect. Occasionally home warranty companies will try to get out of paying for repairs or replacement by claiming you haven’t kept up with routine maintenance issues. To ensure you don’t get caught out on these technicalities, understand how the insurance company justifies these claims.

Insurance is always a complex business, but don’t shy away from investigating a home warranty if you’d like some protection from major, catastrophic repairs. It all comes down to the terms of the contract, and with a little diligence you can get the coverage you need. If you have any questions about where to get home warranty quotes, get in touch with a REALTOR® today. 

valeriemcconville@realtyexecutives.com

ARE YOU READY FOR WINTER?

The winter months are quickly approaching, and I'm hoping that you'll have a warm, cozy season in your beautiful new home!  

In fact, I'm including with this letter some quick tips for making sure that you and your new home are ready for the winter months ahead!  

I hope that you find these tips to be helpful and useful. 

FIVE QUICK TIPS TO GET YOUR HOME READY FOR WINTER

Roof repairs: If you can safely get onto your roof to inspect for missing shingles or other factors that may lead to a leaky roof, now's the time to do it!  If not, call in a professional organization and have them take care of the rooftop work for you.

Seal it off: Inspect doors and windows to ensure that the weather-stripping is in good condition.  This will keep your house warmer and cozier in the winter months.

Hot stuff: Make sure that your heater and ventilation systems are in good working order!  Clean out accessible ducts and replace filters where necessary.

Chimney sweep: Creosote, a black substance that builds up in the chimney when wood is burned, can cause chimney fires.  Inspect your chimney for creosote and call a chimney sweep to keep your fireplace safe and functional.

Gutter check: Now's the time to clean out those rain gutters again!  If you want to do it yourself, make sure that you can safely access the gutters and then scoop out any debris, blast the drains clean with a high-powered hose, and repair any leaks you may find along the way.

PEST CONTROL TIPS FOR FALL & WINTER

When the cooler months roll around, pests look for reliable sources of warmth and food... that includes your house! Here are some practical tips for keeping them out.

When the temperatures begin to dip, humans aren’t the only ones who appreciate the warmth and shelter of a cozy home. Insects, rodents, and other small mammals are also drawn to the comforts your house provides. 

Ever have a mouse die in a wall? It’s not the sort of smell that one appreciates during the holidays. No one wants an expensive electrical repair when a rat chews its way through wiring in the attic or basement, either. Do yourself a favor and protect yourself from pests this Fall and Winter. Here are some tips:

1. Inspect the outside of your home for ways animals may sneak in. Often utility vents and areas under eaves have gaps which should be sealed or screened.

2. Look for gaps around door and window frames, and caulk or repair those gaps. Tiny entry ways can lead to big problems.

3. Examine trees around your home. Are any branches close to or touching the roof? These branches can be pathways for rodents to access your roof and any access ways the roof may provide to your attic, walls, or crawlspaces.

4. Make sure your garbage and recycling bins have tight fitting or locking lids. Hungry animals will find those scraps, trimmings, and drips, and they can more or less provide an invitation to come close to the house. It’s not a bad idea to buy containers with latches or locks that won’t interfere with garbage pickup, but will deter most animals. (Raccoons are particularly clever, though!)

5. If you have a wood pile for a fireplace or other stove, keep it at a distance from your home. If you’ve been keeping it close to the house because of the cover a roof provides, consider relocating the wood and using a tarp to keep it dry.

6. Inside your home, try not to store food on countertops as it will attract flies and rodents. Airtight containers inside of cabinets an drawers is a better bet.

7. Never leave dirty dishes in the sink overnight if you can help it. Just like food on the counter, it’s an invitation for bugs.

8. Wash your floors with a water and a cleaner. Food residue from spills will attract ants.

With a little prevention, you can keep your home pest free this season. Even with the best protection, pest control can become a necessity, though. If you need a referral for a trusted pest control company, talk to your local real estate agent today!