What is PMI?

When it comes to buying a home, whether it is your first time or your fifth, it is always important to know all the facts. With the large number of mortgage programs available that allow buyers to purchase homes with down payments below 20%, you can never have too much information about Private Mortgage Insurance (PMI).

What is PMI?

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. Freddie Mac goes on to explain that:

“The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $30 and $70 per month for every $100,000 borrowed.” 

According to the National Association of Realtors, the average down payment for all buyers last year was 10%. For first-time buyers, that number dropped to 5%, while repeat buyers put down 14% (no doubt aided by the sale of their homes). This just goes to show that for a large number of buyers last year, PMI did not stop them from buying their dream homes.

Here’s an example of the cost of a mortgage on a $200,000 home with a 5% down payment & PMI, compared to a 20% down payment without PMI:

 The larger the down payment you can make, the lower your monthly housing cost will be, but Freddie Mac urges you to remember:

“It’s no doubt an added cost, but it’s enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

Bottom Line

If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, let’s get together to discuss our market’s conditions and help you make the best decision for you and your family.

Spring Forward Safety Checklist

Daylight savings is this Sunday, March 11th! Don’t forget to change your clocks! The National safety council also ask everyone to take this time to check a few things around your house:

1. Check your smoke and carbon monoxide detectors. Did you know that each detector has an expiration date? If you didn’t purchase your home in the last few years it’s possible that you don’t have the proper amount or type of detectors in your home. Call your local fire department’s fire prevention bureau or visit their website for guidelines to help keep you and your family safe. At the very least, change your batteries and test each system!

2. The National Safety Council recommends every family have an emergency plan in place in the event of a natural disaster or other catastrophic event. Spring is a great time to review that plan with family members. Have a home and car emergency kit.

3. Dispose of unused, expired or unwanted medicines and prescriptions.  You can take unwanted or expired medicines to a prescription drop box or take-back event near you. NSC offers free Stericycle Seal & Send envelopes, so you can send your unwanted medication to be safely destroyed.

4. Does your home have a fire extinguisher? Does everyone in your home know where the extinguishers are kept? Most extinguishers last between five and 15 years, according to manufacturers. Check the tag on your extinguisher for dates and manufacturer’s instructions. A fire extinguisher with a gauge should be checked every month to make sure it is properly charged.

There may be a few inches of snow on the ground in Boston, but spring is right around the corner! Only 20 days til Opening Day at Fenway Park!

 

12 questions to ask your contractor before you hire

Making updates to your home is a great way to add value and make your space work for you. I am constantly  asked for contractor recommendations by my clients, unfortunately i’ve also been on the receiving end of a few horror stories. Here are some helpful tips and questions you should ask before hiring a contractor. 

QUESTIONS
  1. Are you licensed in Massachusetts?
  2. How long have you been in the business?
  3. Can I have the contact information for at least three references?
  4. Will you be pulling permits and handling town inspections? Will you make sure the final permit is signed off on?
  5. Do you have up to date liability insurance? Can you provide me with a copy.
  6.  Who will be my primary point of contact throughout the process?
  7. What is the payment schedule?
  8. What type of warranty do you offer for the work?
  9. What time will they arrive each day? What time does the work day end?
  10. Will you clean up at the end of each day? at the end of the job?
  11. What is the timeline for the project?
  12. How often are their projects completed on time and on budget?
A FEW TIPS
  1. Ask for an itemized AND detailed estimate
  2. What is/is not included (trash removal? a full clean up or broom clean? who will fix the accidental hole in the wall?)
  3. Who is their supplier? Is it cheaper for you to purchase some of the materials direct or does he get a discount?
  4. Ask the community! Many of us are part of an online community bulletin board (Facebook, NextDoor) ask for personal recommendations and feedback
  5. Always collect and compare multiple estimates
  6. Is your contractor the one actually pulling the permit for the work?
  7. Unexpected costs are likely to arise when you’re remodeling an older home. Create a budget, and build in some room for these repairs (i’m not talking about upgrades!). Older homes can come with old wiring and plumbing that you might not have been aware of – no matter how good your home inspector. A buffer in your budget is always a good idea.
  8. Read reviews on sites like Angie’s List, Home Advisor and Yelp

Want to check a contractors license? Visit the state’s guide to hiring a contractor.

Average Home Seller Profits at 10 Year High!

Prices are rising and homeowners are staying put longer, and that means more homeowners can cash in when they go to sell. Home seller profits surged to a 10-year high in the fourth quarter of 2017. Sellers saw an average home price gain since purchase of $54,000, up from $47,133 a year ago. In Boston, Cambridge, Newton markets the average seller profit was $141,800, that’s an average Seller ROI or 54%.

“It’s the most profitable time to sell a home in more than 10 years, yet homeowners are staying put longer than we’ve ever seen,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “While home sellers on the West Coast are realizing the biggest profits, rapid home price appreciation in red state markets is rivaling that of the high-flying coastal markets and producing sizable profits for home sellers in those middle-American markets as well.”

That $54,000 national average seller profit represents an average 29.7 percent return on investment compared to the original purchase price. That is the highest average home seller return on investment since the third quarter of 2007, according to ATTOM Data Solutions’ Q4 2017 Home Sales Report, released this week.

In downtown Boston and the immediate suburbs each week we’re seeing only a few new homes hit the market in each neighborhood and in each price point.  With such little competition they are quickly snapped up in bidding wars by Monday.  At our own open houses in neighborhoods like South Boston, Jamaica Plain, Newton and Somerville we’re seeing buyers out actively looking each weekend. The rising interest rates and somewhat mild winter are certainly helping to get buyers out into the market.

Meanwhile, homeownership tenure set a new record high in the fourth quarter of 2017. Homeowners who sold in the quarter had owned their homes on average 8.18 years, up from 7.78 years in the fourth quarter of 2016. It is the longest average home seller tenure since ATTOM Data Solutions has tracked it starting in the first quarter of 2000.

 

Five Things You’ll Love About 65 Green Street, Jamaica Plain

 

 

Contact me for more information about this development, or others:  MarkRyanHand@gmail.com

 

Here are five features I think you’ll love about 65 Green Street, the new eight-unit condominium development in a prime part of Jamaica Plain.

1. Location. When it comes to finding the best possible location for your city home, you’re often faced with a tradeoff: be able to walk to trendy restaurants or roll out of bed and make the train in minutes flat. Owners at 65 Green Street won’t have to make this version of Sophie’s real estate choice. Exit the building stage right, and a few blinks later, you’ll arrive at the Green Street Orange Line Station. Exit stage left, and before your stomach growls even once, you’ll find yourself passing City Feed, the Centre Street Café, JP Licks, and a host of other restaurants and retail shops that dot this key section of Centre Street, Jamaica Plain’s version of Main Street.

2. Not-So Vanilla Features. 65 Green Street has high ceilings. Super high. Like, Everest high. And when you combine the high ceilings with 65 Green Street’s over-sized windows, you get not only a lot of light but also the feeling that the living area in the residence exceeds the amount stated on the listing sheet. To get more space costs money, but the illusion of more space is priceless.

All of 65 Green Street’s residences have unique layouts, and all except Unit 204 have privately deeded outdoor space. 65 Green Street’s three penthouses also come with large private roof decks and two-car parking.

65 Green Street has a large package delivery room, a bike storage area, remote building access, and some thoughtful environmental friendly finishes—a.k.a. green finishes.

3. Something You Don’t Get. 65 Green Street has a lot of impressive features, but my favorite feature of the development might be what you don’t get: noise from your neighbors. Listing agent Mark Hand, an associate partner of the Residential Group at William Raveis Real Estate, said there are 30-inches of space between 65 Green Street’s second-floor ceiling and the floor of its third floor. As a result, the residences don’t have unsightly soffits or unattractive visible air ducts. But perhaps the biggest benefit of the large space between the ceiling and next floor is the soundproofing the developer installed. Asked why the developer went to such extents on the sound matter, Hand said, “They’ve been building since the 80s. They know the issue is always sound.”

4. That JP Vibe. JP has eclectic residents, intimate restaurants, an abundance of nature, and sense of community. Watermark Development Inc., a JP-based firm with 30-years of development experience whose website proudly asserts, “WE BUILD WHERE WE LIVE,” understands what makes JP JP. To put together the best possible plan for the site, Watermark engaged a collection of architects and designers at Embarc, a studio that has worked on nearly a dozen JP developments. And to make sure buyers saw the development with the proper JP perspective, Watermark contracted Mark Hand, a co-worker of mine who is part of a team that has sold more than 200 JP condos.

5. The Value Equation. One long-established and somewhat well-known Hub real estate tradition is for a South End or Brookline buyer to stroll by a JP condo and say, “SOLD!” That’s because JP buyers are often convinced that they get much more for their money than buyers in those other two locations. In 2017, buyers were paying more than $800,000 for the average Brookline condo and more than $1.2 million for the average South End condo. So what are they supposed to say when they see they can get a brand new condo with all the bells and whistles and live in one of the very best locations one market over? “I’ll take two!”

 

 

Written By:  David Bates, The Bates Real Estate Report

What Impact Will the New Tax Code Have on Home Values?

Every month, CoreLogic releases its Home Price Insights Report. In that report, they forecast where they believe residential real estate prices will be in twelve months.

Below is a map, broken down by state, reflecting how home values are forecasted to change by the end of 2018 using data from the most recent report.

What Impact Will the New Tax Code Have on Home Values? | MyKCM

As we can see, CoreLogic projects an increase in home values in 49 of 50 states, and Washington, DC (there was insufficient data for HI). Nationwide, they see home prices increasing by 4.2%.

How might the new tax code impact these numbers?

Recently, the National Association of Realtors (NAR) conducted their own analysisto determine the impact the new tax code may have on home values. NAR’s analysis:

“…estimated how home prices will change in the upcoming year for each state, considering the impact of the new tax law and the momentum of jobs and housing inventory.”

Here is a map based on NAR’s analysis:

What Impact Will the New Tax Code Have on Home Values? | MyKCM

Bottom Line

According to NAR, the new tax code will have an impact on home values across the country. However, the effect will be much less significant than what some originally thought.

Boston Residents: Have you claimed your Residential Exemption?

Owning a home and living in Boston have many perks! One of those perks is our low tax rate. Did you know that if you own and live in your property as a primary residence, you qualify for Boston’s exemption?

Here are a few key facts:

  • For Fiscal Year 2018, you have until April 2, 2018, to file an application
  • This year, the residential exemption saves qualified Boston homeowners up to $2,538.47 on their tax bill
  • To qualify for any exemption, you need to show that you have an ownership interest in the property.
  • You need to have owned and lived in your home as your primary residence on January 1 before the current fiscal year. For example, to be eligible for Fiscal Year 2018 (July 1, 2017 to June 30, 2018), you need to have owned and occupied your property as your primary residence on January 1, 2017.
  • The city will apply the exemption amount to your third-quarter tax bill that is issued in late December.

Thanks Boston, we appreciate the tax savings! Aren’t sure if you’re currently receiving your Residential Exemption? You have an online record with the City of Boston’s assessing office – it’s public record.

Just search for your property here: City of Boston Assessor 

Want to file your application? Start here

What other towns offer a Residential ExemptionCambridge  and Brookline and Somerville

*Brookline’s residential exemption is actually calculated differently, it’s a percentage of the total assessed value of a home, not exceed 20%

2017 | Our Year in Review!

Thank you to all of our clients for your continued support! The future looks bright in 2018!

What costs are associated with buying a home?

 What it Costs to Buy a Home

Do you know what it actually costs to buying a home? You’ve saved for years and you finally have enough for your down payment (Congratulations!). You’ve also identified a great home you’d like to put an offer on – besides the downpayment, what other costs are associated with buying your dream home?

What are closing costs?

In a nutshell, mortgage closing costs typically run from 2% to 5% of the loan cost, and they include property taxes, mortgage insurance, title search fees and more.

 

The mortgage: I can’t stress this enough, and it’s a conversation I have with most of the first-time buyers that I work with. ALWAYS use a local lender. Avoid the big guys, even if thats where you do your banking from! I have half a dozen qualified, local, reputable lenders with years of experience that I am happy to refer you to! I could go on for days with horror stories of clients who didn’t take my advice – but i’ll save that for another day.

  1. Downpayment: Is it 3.5%, 5%, 10%, 20% or more?
  2. Don’t let the monthly payment surprise you: Online mortgage calculators can be a bit misleading. Your monthly mortgage note contains principal and interest payments but often much more than that. Your local lender will be able to give you a good faith loan estimate of what your monthly costs will look like – provide them with the purchase price, taxes and monthly HOA fee (if applicable). Aren’t sure where to find this info – just ask me.
  3. The CD, your Closing Disclosure: Your lender is required to outline your closing costs in the Loan Estimate. The Closing Disclosure is a document you’ll receive before the closing day. Take the time to review them closely and ask questions about things you don’t understand. This used to be called the Settlement Statement, it’s a breakout of all the fees and funds paid/due for your transaction

So what fees will you need to pay?

  • Home Inspection: The cost of a home inspection in Boston varies based on the size of the home and the inspector. You can get an estimate from the home inspector upfront before scheduling. They start around $550 and go up from there. A 2400SF home with an added radon test, can run as high as $1200. I have plenty of inspectors that i’m also happy to refer you to.
  • Attorney Fee: Chances are you probably know a few attorneys personally, but are they real estate attorneys? Often times buyers have a friend of the family who can represent them for a discount – but most real estate attorneys charge a nominal pre-disclosed flat fee ($600-1200). Which is unlike a criminal defense attorney who charges by the call/meeting/email. I have dozens of great attorneys i’m happy to recommend. Before you hire Uncle Joe, find out what he’s going to charge. Does he have real estate law experience? Whose conducting the title search? Can he represent you and handle the paperwork at closing for the bank (unlinkly) but that will save you more money too.
  • Appraisal fee: It’s important to a lender to know if the property is worth as much as the amount being borrowed. This is for two reasons: The bank needs to verify that the amount you need for a loan is justified, and the bank also wants to make sure it can recoup the value of the home if you default on your loan. These can cost between $300-400
  • Application fee: This covers the cost of processing your request for a new loan and includes costs such as credit checks and administrative expenses. The application fee varies depending on the lender and the amount of work it takes to process your loan application.
  • Prepaid interestMost lenders require buyers to pay the interest that accrues on the mortgage between the date of settlement and the first monthly payment due date, so be prepared to pay that amount at closing; it will depend on your loan size.
  • Loan origination fee: This is a big one. It’s also known as an underwriting fee, administrative fee or processing fee. The loan origination fee is a charge by the lender for evaluating and preparing your mortgage loan. This can cover document preparation, notary fees and the lender’s attorney fees. Expect to pay about 1% of the amount you’re borrowing. A $300,000 loan, for example, would result in a loan origination fee of $3,000.
  • Mortgage insurance application fee: If you put less than 20% down, you may have to get private mortgage insurance. (PMI insures the lender in case you default; it doesn’t insure the home.) The application fee varies by lender.
  • Upfront mortgage insurance: Most lenders require borrowers to pay the first year’s mortgage insurance premium upfront. Expect to pay from 0.55% to 2.25% of the purchase price for mortgage insurance, according to the Urban Institute.
  • Homeowners insurance premiumRequired by your lender, one year of homeowner’s insurance is paid in advance before closing.  Some condo associations include insurance in the monthly condo fee – but there are two types of insurance with condos, so we’ll need to determine what kind of policy you’re required to obtain. The amount of insurance varies depending on the type of home and how much coverage you and the insurance agent is adequate for your home. If your home sits in a flood plain, that could also raise your costs significantly – but this is something i’ll always find out for you before you write your offer!
  • Property taxes: Buyers typically pay two months’ worth of city and county property taxes at closing. The taxes are rolled into your monthly loan payment.
  • Title search fee: A title search is conducted to ensure that the person selling the house actually owns it and that there are no outstanding claims or liens against the property.  Title search fees are about $200, but can vary among title companies. The attorney you hire can tell you what these costs will be upfront.
  • Lender’s title insurance: Most lenders require what’s called a loan policy; it protects them in case there’s an error in the title search and someone makes a claim of ownership on the property after it’s sold.
  • Owner’s title insurance: You should also consider purchasing title insurance to protect yourself in case title problems or claims are made on your home after closing.

Who pays my buyers agent?

The seller.

New homeowner expenses

Finally, having some money set aside for unexpected household expenditures will help keep you from tapping into your last-resort emergency savings — or taking on credit card debt.  Most home inspectors will tell you that no home is perfect, and while a hot water tank is working great at the time of inspection and through the closing day – they can let go whenever they want. Having a few thousand set aside just in case is always a good idea.

 

The Cost of Waiting to Buy

Over the course of the last 12 months, home prices have appreciated by 7.0%. Over the same amount of time, interest rates have remained historically low which has allowed many buyers to enter the market.

As a seller, you will likely be most concerned about ‘short-term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price, but instead about the ‘long-term cost’ of the home.

The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 4.7% over the next 12 months.

What Does This Mean as a Buyer?

If home prices appreciate by 4.7% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today:

What is the Cost of Waiting Until Next Year to Buy? | Samantha Jason

Bottom Line

If buying a home is in your plan for 2018, doing it sooner rather than later could save you thousands of dollars over the terms of your loan. Lets get started on your home search today! Samantha@ResidentialGroup.com