With home values rising all over the country, tapping into that equity that most of us are building once again can be incredibly tempting! When used wisely, home equity can help send your kids to college or launch a business. However, there’s always risk to using home equity loans as they can often make you more susceptible to foreclosure.
A recent study by the Federal Reserve found 30% of Los Angeles homeowners who lost their homes during the foreclosures crisis wouldn’t have defaulted had they not cashed out their home equity. Researchers said that borrowing against your home’s equity may cause problems for a few reasons:
- Your payments will go up as your total mortgage gets bigger
- If home prices fall, you have less equity to lose.
- If you fall upon financial hard times, your financial cushion is thinner.
- If you end up having to look into a short sale, home equity lines of credit are a nightmare!
Despite the Federal Reserve study, home equity can be a smart tool when you want to build wealth. Home equity lines can be used to buy and renovate rental properties. When the value of a rental property rises, you can refinance, pull cash out, and buy another rental property. Unfortunately, some folks don’t use their equity as wisely. Oftentimes home equity lines of credit are used to pay off credit card bills, buy vehicles or ‘toys’. In general, if the asset you’re purchasing with your asset is going to depreciate – don’t do it! Things like clothes, vehicles, bills, food, vacations all depreciate or lose value over time. Use your equity to purchase appreciating assets or things that will eventually lead to more money for you like buying real estate, training or education, home improvements, starting or buying a business.
To find out if you have equity in your home, contact me for a free market evaluation and referral to a local lender who can help you draw on that equity you’ve built. I can even help you determine which home improvements will give you the biggest bang for your buck!
Despite what you might think – there are some real advantages to buying a home in the summer!
- Less competition: There is less competition from other buyers! Since many don’t want to brave the 100+ degree temperatures in July & August, these are good months to search because they can translate to lower prices and better deals.
- Prices decline: Historically the summer months tend to have the lowest prices per square foot than the rest of the year.
- More time from your Realtor: Your real estate agent probably isn’t as busy during the later summer months so you may get more of their time and expertise!
- Ugly Ducklings: Some of the houses that are still on the market during this time have been on the market a long time! That could mean a better deal for you! Especially if you’re able to look past some of the bad paint, bad lighting, or maybe the home is just dirty. All of these are easy things to change once you own the property, and if you can look through these items, you may be able to get an even better deal!
Purchasing a home is one of the most important decisions in a person’s life and deciding on a particular house comes with many options. Forty-five percent of recent buyers used open houses as a way to narrow down their choices and find their dream home. Buyers in Western Pinal County will have the opportunity to do just that on April 20, 2013 as Realtors® hold open houses from 10:00 am until 2:00 pm as part of the Realtor® Nationwide Open House Weekend.
Realtors® will be available at the open houses to answer questions about the home buying process and local market conditions. Visiting open houses can be helpful when buyers are trying to decide what features and amenities they want in a home. Also, working with a Realtor® can be a real asset. Realtors® visit hundreds of homes with buyers each year, and have a unique understanding of what buyers’ value in their local markets. Their expertise and knowledge can help you achieve the dream of home ownership.
A complete list of the many homes to be open for viewing will be published in the Tri Valley Dispatch on April 17, 2013 and in the Casa Grande Dispatch on April 20, 2013 – it can also be found by clicking here.
Common mistakes made by buyers these days range from falling in love with the decor to trying to time the market. Whether you’re a first time homebuyer or a seasoned buyer – make sure that you aren’t making any of these mistakes!
- Timing the market: Many buyers were holding off until prices dropped further last year, then all of a sudden, prices started rising – and incredibly quickly! The age old question… how to time the market so you buy low and sell high? Well good luck – if you figure that out, you’ll be rich… or you will have found the world’s first working crystal ball! The truth is – analyzing the trends, digging into the statistics, and listening to the advice of your wise Realtor will help you navigate the market. While even they can’t time the market, they can help to ensure you’re finding the right home and at the right price.
- Don’t settle for the wrong area: Each area has its own personality and demographics so be sure to do your research on the items that matter to you. For example, if you’re a devout vegetarian, you may want to ensure that there are plenty of grocery stores within the area that provide really diverse and fresh produce. Since most real estate professionals recommend that when you buy a home, you should stay at least 5 years to recoup the costs of purchasing that home, its pretty important that you find the right area to call home!
- Don’t buy a fixer-upper if you don’t know how to fix it up: This is a tough lesson to learn and some of us can’t be persuaded otherwise until they experience it for ourselves! The actual costs of renovations can be overwhelming and oftentimes the true costs aren’t explained up front, once you’re knee deep in a project, you figure out all the additional items that are required – or highly recommended – and suddenly you’ve blown your budget! Before jumping into a contractor special, be sure you’ve spent some time with a local house-building group or help out a friend with a project in their home.
The market is constantly changing and navigating through a home search can be quite overwhelming. By working with a good Realtor, they can help you narrow down your search and provide you with data so that you can make an informed decision.
Buying your first home can be incredibly overwhelming – even buying your third, fourth or hundredth home can be a daunting experience! First time homebuyers and even seasoned investors can become confused by concepts and terms Realtors use everyday. For example, many clients assume a home warranty and homeowners insurance coverages are one and the same, or very similar.
There are very different purposes behind each and a definite reason to have both! A home warranty program is a service contract which is designed to help repair or replace major systems and appliances that become inoperable or need repair due to normal use. Many times a home warranty plan comes in handy! For example, I purchased a home built in the 80′s with original AC units where both units worked fine at closing, but over the years the south unit started to fail. My home warranty company replaced my air handler for the south unit for a $55 service fee out of my pocket – they took care of the rest, including removal of the old unit, installation of the new one, and all associated costs!
As for a homeowner’s insurance policy is designed to compensate or reimburse a homeowner for damages or losses covered by the policy that were incurred by an unknown event – such as a burglary or fire.
A great example of how both work together is in the case of a plumbing leak. Say a pipe is leaking under a sink and this leak is undiscovered until it causes so much damage to an adjacent room that portions of drywall must be removed and replaced. An insurance policy would most likely cover the cost of the removal, repair and replacement of the drywall and possibly belongings ruined by the leak, but the home warranty coverage would repair the actual plumbing leak under the sink.
Curling up by the fireplace is part of any picturesque winter scene, but only if your chimney and fireplace are in tiptop shape. To keep the cozy fires going safely all winter long, start thinking about your fireplace now with these maintenance tips.
First, make sure to schedule a yearly chimney sweep and inspection. It’s best to hire a professional certified by the Chimney Safety Institute of America. Check http://www.csia.org for a searchable list of professionals in your area. The pros will help remove creosote, a byproduct of burning wood that can cause chimney fires, as well as check for leaks or damages that might have occurred during the dormant summer months. After the sweep, repairs may be necessary. Common issues might include odors, water leaks and damages from animals that might have been calling your chimney home.
A simple chimney cap ($50 or more, depending on materials and size) or screen can prevent unwanted critters and protect your chimney from damaging elements.
In between checkups, consider cleaning the firebox (where the wood burns) at least once a week when the fireplace is in use to prevent ash buildup. Use a wet or dry vacuum with a disposable bag, but make sure the ashes cool for at least four days after a recent use to avoid any live sparks in the vacuum bag.
Homeowners depend on their kitchen appliances to run smoothly every day. But when the washing machine begins to overflow and the fridge won’t keep things cold, it might be tempting to replace the machines with newer models. Before shopping around, here are a few tips from retailers Lowe’s and Kellum Appliances to determine whether to repair or replace, keeping in mind age, repair costs and energy efficiency.
First check the owner’s manual. If the appliance is relatively new, the warranty should cover the cost of replacement parts. Contact the appliance manufacturer or retailer where the item was purchased. They may be able to diagnose the problem and offer solutions.
Next, figure the cost of repair and compare it to the cost of purchasing a new appliance. If the appliance is relatively new, replacing a part may be more practical than buying a new machine. But if the repair cost is more than half of the purchase price, replacement is a better option.
Many of today’s models with the ENERGY STAR label are more energy-efficient, so upgrading to a newer model will save more money in the long run. Replacing a dishwasher manufactured before 1994 will save more than 10 gallons of water per cycle and about $30 to $40 per year in utility bills, while ENERGY STAR washers use 37 percent less energy and more than 50 percent less water than standard models.
If finances dictate upgrading only one appliance, start with the refrigerator. Because it runs continuously every day, it uses more electricity than other appliances, so a replacement will see immediate savings in utility bills.
As more homeowners choose to live in their homes longer as they age, many of them are improving their space with universal design features to help them live more comfortably. Before making any improvements, the National Aging in Place Council outlines the most common universal design modifications.
Are the entryways accessible? Adding a ramp or constructing no-step entries can help those confined to a wheelchair or who have trouble climbing stairs. Open floor plans and wider hallways make everyone feel less cramped and allow people to move around easily. Wider doorways provide easier access to other parts of the home and enable people to move large items in and out of the house.
To improve safety in bathrooms, install grab bars and elevated toilets. Make sure there’s enough turnaround space for someone in a wheelchair, and consider lowering the bathroom sink and adding a roll-in shower with multiple showerheads. A non-slip floor and shower surface will help everyone stay on their feet. In the master bedroom, consider reconfiguring an existing walk-in closet or building a new one with storage at different heights.
In the kitchen, lower cooking surfaces and countertops built at varying heights will appeal to home cooks who have difficulty bending over or have height limitations. Wall ovens and microwaves should be mounted at reachable heights, and storage and shelf space should be abundant and accessible.
Well-placed skylights and ceiling lights will aid those with poor vision and make the home more personable and safe. Installing rocker switches and door lever handles can aid people with poor hand strength as well as those carrying groceries into the house.
A universally-designed home provides smart solutions for everyday living that everyone can enjoy.
What a refreshing outlook! In Arizona we’ve been experiencing a greatly improved housing market and it’s wonderful to hear this outlook for the entire nation! Lawrence Yun, chief economist of the National Association of REALTORS said that the housing market clearly turned around in 2012, at last week’s annual National Association of Realtors Conference and Expo. “Existing-home sales, new-home sales and housing starts are all recording notable gains this year in contrast with suppressed activity in the previous four years, and all of the major home price measures are showing sustained increases,” Yun said.
Yun further went on to say he sees no threatening signs for inflation in 2013 but anticipates inflation to rise in the 4 to 6 percent range by 2015. He predicts interest rates will begin to rise gradually and average 4 percent in 2013 and mid 4% range in 2014.
With rising housing demand and a continued decline in available inventory, Yun predicts higher home prices. “Real estate will be a hedge against inflation, with values rising 15 percent cumulatively over the next three years, also meaning there will be fewer upside-down home owners,” Yun said.
In the Casa Grande area, we’ve already been experiencing the very positive conditions he predicts for the rest of the nation. In Casa Grande, the median price of sold single family homes rose 27.96% from $92,250 to $118,000 from October 2011 to October 2012. The increasing price trend shows more dramatically in homes for sale, with the October median listing price of $135,000 compared to $105,000 just one year ago, increase of 28.6%. The median price of homes in escrow with pending sales increased 39.5% from a median price of $91,400 in October 2011 to $127,500 in October 2012.
While the numbers reported above may seem discouraging to Koenig Estates homeowners because we may have significantly more money invested in our homes, I find that it is good news. With increasing prices and activity in the lower price ranges, opportunities develop for higher price range buyers who may find our neighborhood attractive. Also, improving market conditions across the country will once again allow second home buyers and cross country moves. Arizona will always be an attractive winter home with the beautiful climate 8 months of the year and annual 340 days of sunshine.
One of the most common questions I hear from sellers is, “Are homes selling close to their list price?” The answer is – YES! When properties are listed at or near market value, they sell very quickly and typically for list price or above.
If you have any real estate related questions please don’t hesitate to ask – we are your neighbors and are here to help!