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Thursday, December 22, 2011

11 must-knows about early mortgage payoff

11 must-knows about early mortgage payoff
Seniors close to retirement can boost return on investment
By Jack Guttentag
Inman News™

Q: Will I save money if I make my regular monthly payment early?

A: No, paying early merely allows the firm servicing your loan to earn interest on your money until the payment due date. This is not the case, however, if you have a simple interest mortgage (SIM). Because it accrues interest daily, the earlier you pay a SIM, the more interest you save.

Q: How do I know if my mortgage is "simple interest"?

A: Your note will say that interest accrues daily. Also, the monthly payment on a SIM varies month to month, so if your payment is always the same, you do not have a SIM.

Q: What is the best time of the month to make an extra payment?

A: If you include it with your regular payment and pay before the grace period, the extra payment will be applied to the current balance. If you make the extra payment after the grace period, it might be applied to the current balance, or it might not be credited until the following month, depending on the systems/policies of the servicer. You should find out where the servicer's cutoff is for receiving credit in the current month.

Q: If I make a large extra payment, will my future scheduled payments be lower?

A: On a fixed-rate mortgage, the scheduled payment is not affected by the extra payment. You just pay down the balance faster. On an adjustable-rate mortgage, the scheduled payment remains the same until the next rate adjustment. At that point, the payment is recalculated based on the reduced balance, the new rate and the original term. So unless it is offset by a rate increase, the payment will drop.

Q: Would I be better off investing excess funds rather than paying down the loan balance?

A: Not very likely. Paying down the loan balance is an investment carrying a yield equal to the mortgage rate, with no default risk. There are no riskless investments today that pay a yield that even comes close.

Q: Would this apply to a high-tax-bracket borrower who deducts mortgage interest payments?

A: Yes, what matters is the after-tax yield on the mortgage repayment relative to other investments, and the tax-rate adjustment affects them equally.

Q: Isn't it better to make extra payments in the early years of a mortgage when the regular payment goes largely to interest than in later years when most of it goes to principal?

A: No, the return on investment is not affected by where the mortgage is in its life cycle. While the allocation of scheduled payments between principal and interest changes over the life of the mortgage, extra payments go entirely to principal, no matter what stage of its life cycle the mortgage is in.

Q: Is there a way to escape a prepayment penalty clause?

A: No, the clause is there to protect the lender, or the ultimate investor if the loan was sold, which it probably was. Investors pay extra for the protection. I have never heard of a case where a prepayment penalty clause was voluntarily waived.

Q: Should seniors close to retirement pay off their mortgage?

A: It is a prudent move if they have the assets to do it, because the rate they are paying on their mortgage is higher than the return they can earn on assets having a high degree of safety. Paying off their mortgage also clears the way for a reverse mortgage in the future, should the need for additional income arise.

Q: If I have two mortgages, which do I pay down first?

A: In general, pay down the mortgage carrying the higher rate. However, if that mortgage is fixed-rate while the lower-rate mortgage is adjustable-rate, the decision must consider the possibility that the rate on the adjustable will increase in the future.

Q: Is a biweekly payment mortgage a painless way to pay it off sooner?

A: Making half the monthly payment every two weeks is not painless, because it requires an extra monthly payment every year, and the lender will charge you for the privilege. An alternative approach that is equally effective, and which is entirely within your control, is to increase your scheduled monthly payment by 1/12 of the payment.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Wednesday, December 14, 2011

3 options for buying home after short sale

3 options for buying home after short sale
REThink Real Estate
By Tara-Nicholle Nelson

Q: I experienced a hardship two years ago and had to sell my house via short sale. I am now ready to purchase a home but heard I would have to wait another year because of FHA rules. I have been paying my rent on time and my credit is in the 700s. What programs or other options do I have in terms of obtaining a loan? I want to purchase a house for $70,000. --T. Jordan

A: I'm glad to hear that your hardship has passed, and that you've been able to get your finances back in shape. Whoever you've spoken to is correct: There is a three-year waiting period after a short sale before you can qualify for an FHA loan on a new home. As I see it, though, you have three clear options:

1. Wait a year. The fact is, time flies -- and you're only 12 months away from the expiration of the FHA waiting period. Frankly, there are so many homes on the market right now, including an enormous percentage of distressed properties with condition problems and such, that between getting their own financial ducks in a row and house hunting, it is taking many homebuyers more than a year from the time they get started to get into contract, even without any waiting period.

Unless you have an uber-urgent reason to move or are very flush with cash (see No. 2, below), my advice is to wait the year. In the meantime, pay your bills on time -- every time -- and work with your mortgage and real estate brokers to make sure all your other financial ducks are in a row so there are no surprises when your waiting period is up.

2. Get a non-FHA loan. FHA is popular -- especially among those who only have the cash to make the FHA minimum 3.5 percent down payment -- but it's not the only game in town. The vast majority of conventional (non-FHA) loans available from mainstream lenders are insured by Fannie Mae and Freddie Mac.

Both these agencies impose a shorter, two-year, post-short-sale waiting period, as long as the borrower is coming in with a 20 percent down payment. If you wait an additional two years, the minimum down payment requirement comes down to 10 percent, but by then you will qualify for the 3.5 percent FHA mortgage.

3. Plead the case of extenuating circumstances. FHA guidelines do make an exception for the three-year, post-short-sale waiting period for former homeowners/wannabe borrowers who can document that they were forced to do the short sale by extenuating circumstances. The most common fact scenarios that fit the bill are a job transfer to another area (not job loss) or a natural disaster that affected the property (e.g., fire, flood, etc.).

Beyond that, whether a "hardship," to use your terminology, rises to the level of an extenuating circumstance for purposes of qualifying for an FHA loan is up to the discretion of the lender, but things like a job loss, the adjustment of a mortgage or the decline of the home's market value do not count.

If you had, say, an accident or illness that resulted in a temporary disability, it might be worth the effort to plead your case. Speak with your mortgage professional about whether you can make a credible argument in favor of shortening your waiting period.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Tuesday, December 13, 2011

Real Estate Market Update October 2011

So far this year we have had a classic economic struggle of Good vs. Evil. The Good Side *Values are stable to rising (even Case-Shiller shows metro Detroit values are up!) *We are creating jobs in Michigan *Consumer Confidence moved up a bit *Strong pent up buyer and seller demand *Record low combination of prices and interest rates The Evil Side *Lack of saleable home inventories *Larger percentage of homes with little to no equity *Slow job growth *Stock market volatility To date, good has won out over evil, but the market did pause a bit in the last 45 days, with the pace of buyer demand sliding (but still ahead of last year at this time). There are a couple of potential causes. The stock market/European "noise" has been distracting (3rd quarter 401K statements came out in Oct, which may have scared some), but the main cause may be that we simply do not have enough saleable homes. If you don't have enough logs for the fire, it will eventually die down. We could be in for a strange stair- step real estate recovery cycle: sales rise, depleting inventories, then fall from fewer homes to sell which causes values to rise (fewer listings=feeding frenzy), which brings more homes back into the market (more sellers can now sell), and the cycle starts over again. It is a scenario that occurs with every recovery but exaggerated today because lower home equity levels are keeping a lid on inventories. Price per square foot has continued to rise compared to last year, with available homes for sale up slightly as well (mainly over $250,000). The available home levels feel lower, because it has actually fallen over the past 90 days (as it did last year as well). The seasonal shifts make it difficult to judge the true market momentum without comparing to the same time last year. Pending home sales are at a faster pace than last year as well, causing the Months Supply of Inventory to decrease over the past 90 days, which is putting positive pressure on values. Our best leading market indicators are open house visitors, website visits, and the number of showings on our listings. As you can see from the chart, compared to the same time last year, all three have positive trends, with the showing count giving some mixed signals (confirming the October slowing).

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Monday, December 12, 2011

4 Tips for Efficient Downsizing

4 Tips for Efficient Downsizing

The organizational benefits of downsizing can be very rewarding. You can save time, restore order, relieve stress, free up space and, perhaps most importantly, save money.

While the process may seem overwhelming to your clients, sharing the following tips will help them accomplish the task.

1. Try not to focus on the entire house at once. Take on one project at a time and don’t allow yourself to get overwhelmed. If the room itself is too much to take on, focus on one area at a time.

2. Evaluate what you have. If you haven’t used or thought about something in over a year, it’s probably safe to get rid of it. Craigslist and eBay are great online tools that will help you cash in on things that you don’t need anymore. Or donate items you no longer need.

3. Properly store irreplaceable items. Meaningful items such as old photos, yearbooks, wedding dresses, and christening gowns should be properly stored in sealed containers. You may even want to go one step further with old photos and convert them to a digital format to ensure that they will always be safe.

4. Stay positive. Getting rid of items that remind you of your past can be an emotional process. At first it might seem difficult to part with certain things. Concentrate on what’s important to you and visualize what your home will look like when you have de-cluttered and re-imagined your space.

Promote yourself as a REALTOR® who specializes in working with downsizers. Downsizing requires a unique set of skills and a great deal of planning and patience. Clients might find themselves needing the services of others, such as stagers, de-clutterers and junk removers, as well as a storage plan for the things they want to keep safe. With the right connections, you can help homeowners find someone who is familiar with the situation and can assure that the process moves smoothly.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Thursday, November 3, 2011

Real Estate Market Update September 2011

Michigan Market Update - September 2011 September pending sales fell somewhat from August but still finished ahead of last September. For Southeast Michigan, we have had four consecutive months of a rising average price per square foot. That can be explained by a combination of fewer lower priced bank sales and good old fashion appreciation. How much of each is tough to tell, but certainly there is at least some sprinkling of appreciation in the mix. Bank owned values have bounced around a bit while non-bank values have moved steadily upward in the past three months. Average Price per Square Foot and Median values tend to follow the same trends so looking at both can help confirm a market direction. Another exciting opportunity is the strength of our single-family home rental market. While home values were declining, rental rates and demand for rental homes remained firm (as an unfortunate result of so many home owners now forced to be renters). So investors can now get reasonable cash on cash returns when in the past they were lucky to just cover their costs (our web sites have an investment analysis button on each listing). The other side of that coin is that Metro Detroit is one of the strongest markets to own in lieu of renting. The chart below shows an extreme example of the power of owning vs. renting. In the example, because the Buyer saves $350 per month over renting, they can actually lose money on the home (in this case the home falls in value over 20%) and still make a great return on their investment (down payment plus loss on sale)! So as a renter/buyer, if you have any interest in being a homeowner in the next five years, go after it now, there will be not better time to do it! For Company news: Trulia has just released a report showing that 69% of the errors in on line listing postings (price, status, etc.) come from third party syndicates (like Point2, List Hub, etc.). What does that mean to our Sellers and us? Most all brokers use these services to send their listings to various sites, so they are more prone to errors. We distribute directly whenever possible to ensure that our listing information on the web is accurate. So even if another broker says they send their information to some of the same web sites as we do, our information is the most accurate and up to date. Thank you

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

5 Reasons for a Mortgage Refinance Other Than Lowering Your Payment

Visit for more articles like this.


If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Monday, October 31, 2011

Ask The Experts: When Buying a Home Is a Good Idea

Ask The Experts: When Buying a Home Is a Good Idea

Posted By susanne On October 26, 2011 @ 3:53 pm In Today's Home Spun Wisdom

[1](MCT)—With housing prices so low, buying a home or rental property may sound tempting. But is it a good investment? This week, Jonathan Lederer, a wealth management adviser in Sacramento, California, offers his advice.

Q: With home prices dropping and so many foreclosure sales, it seems like a good time to invest in real estate. But what are the risks long-term? How do you compare investing in “real” property vs. something like REITs or other real-estate stocks or mutual funds?

A: With the home prices low in much of the country, some consider residential real estate an attractive investment.

In fact, a recent Wall Street Journal featured an article, “It’s Time to Buy That House,” that said the combination of reasonable price-to-rent ratios and historically low mortgage rates makes this a good time to buy a home or purchase residential rental property.

If you are looking to purchase rental property, I strongly recommend that you first project the internal rate of return (IRR). To do this, you need to estimate the annual rental income and then subtract the annual mortgage expenses, property management fees, property taxes and other costs. When calculating the net operating income each year, be sure to do it on an after-tax basis, as you can frequently deduct rental income, mortgage interest and depreciation expenses.

Finally, you need to estimate the net sales proceeds at the time you expect to sell, then discount all of these projected cash flows back to the present. It would also be wise to determine the expected IRR under several different scenarios, such as strong appreciation, no growth and declining prices.

Once you have forecast your expected return on the rental property, the next logical step is to compare this rate of return with those of other investment opportunities. At present, one can earn an annual yield north of 4 percent on publicly traded REIT funds. Since geographically and economically diversified REITs are highly liquid (i.e., they can be bought and sold online with a click of a mouse), astute investors should demand substantially higher rates of return on residential property, which is illiquid and highly dependent on local economic conditions.

Considering that one can currently purchase certain corporate bond funds at yields greater than 8 percent, I would require at least a 10 percent IRR before purchasing residential rental property.

When forecasting cash flows on a rental property, remember some structural head winds that may continue to pressure residential housing. First, considering the glut of houses-turned-rentals, it is not always easy to find renters in a timely manner. Moreover, it may be difficult to raise rents unless the economy improves substantially.

Finally, the economic situation today is much different than in the early 1980s, when California housing prices began to gain roughly 6.5 percent a year for the next 25 years.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Tuesday, October 18, 2011

Is Your Loan Modification Stuck?

Is Your Loan Modification Stuck?

Posted By Suzanne On October 17, 2011 @ 3:56 pm In Consumer News and Advice,Finance and Economy,Real Estate,Real Estate News,Real Estate Trends

If you’re on the verge of losing your home, or you know someone who is, then you also know about the long, bureaucratic process involved in applying for a loan modification from a lender. The most common approach is to apply under the new Home Affordability Mortgage Program (HAMP), but lenders also accept modifications from mortgage holders because lenders really don’t want to take the house – they just want their money.

In many cases, however, the approval process takes longer than many homeowners can afford. But one expert believes it doesn’t have to be that way, and that there are solutions for homeowners whose applications seem stuck in the mud.

“Applying for a loan modification can be an extremely stressful process,” said Stephfan Nurse, CEO of Consumer Education [1], makers of mortgage reduction software designed to help people through the modification process. “Even if you send in your documents and your lender tells you everything is okay, you may still have a great amount of anxiety because you have no idea what the lender is doing with your file. You may not know what the next step is and how long it takes to move through each step in the process. Your lender may tell you what the next step is, but you may not understand why it will take so long. There are reasons, however, why the process can get stuck, and there are ways to move that process along, if you understand what goes on behind the scenes.”

Nurse’s tips for making the process smoother include:

• Account Numbers – It often happens that when you fax your paperwork to your lender, the lender either says they lost your paperwork or they just didn’t receive it all. This isn’t because they are incompetent. It’s because they receive thousands of faxes each day, and they use an image scanning technology to capture them all and place them in the appropriate file. In that system, a cover sheet that has your account number on it will get placed correctly, but the following sheets that lack your account number can be easily misplaced. The solution is to put your account number on every page of your paperwork, so they have a better chance of placing all your paperwork in your file.

• Complete the Paperwork – When your file gets assigned to a document manager, typically about 30 days after you first applied for the modification, the document manager’s job is to check to make sure all your required documents are ready to be submitted to the negotiator/specialist for review. If you have an incomplete file, even if you’re missing just one single required document, the document manager will note your account as having an incomplete file and move on to the next file to review. At this point, a generic letter is automatically mailed to your home requesting the additional information your file lacks. This letter can take up to two weeks to get to you, and then another two to four weeks before they look at your updated information. The key is to never send an incomplete package to your lender. It can lead to a delay or even a flat out denial.

• Follow Up – Finally, follow up every week with your lender to make sure all the documents they have are up to date. Don’t worry about being a pest. After all, it’s your house on the line if things get stuck in neutral. If you do this consistently, you will avoid getting caught in the delay cycle.

“The process is like any other, and it can be rife with mistakes and bureaucratic snafus,” Nurse added. “But if you take the steps to reduce the opportunities for error, your application can move through the process much faster and you’ll have a much better chance at being approved.”

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Wednesday, August 31, 2011

The Basic Steps of Foreclosure

The Basic Steps of Foreclosure

By Jennifer Dixon

(MCT)—Fannie Mae has publicly assured homeowners going through foreclosure that they will be protected from losing their homes while applying for a federally funded loan modification. They can apply for a modification at any point before or during the foreclosure process. If a modification is approved, homeowners can keep their homes if they make their adjusted payments. Absent that, here are the stages of a typical foreclosure:

1) In default: A loan is in default when a mortgage payment is 30 days late.

2) Warning: When a loan is 60 days past due, the bank, credit union or mortgage company warns that foreclosure is the next step.

3) Proceedings begin: After 90 days, the lender refers the loan to its foreclosure department, and hires a local lawyer to begin foreclosure proceedings.

4) Sale advertised: The lender’s lawyer advertises the property for sale for four consecutive weeks in a local newspaper. The sheriff’s sale date is listed in the advertisement.

5) Sale held: The sale is held on the published date. A sheriff’s employee conducts a courthouse auction and the highest bidder wins, usually the bank that owned or serviced the mortgage.

6) Sheriff’s deed: The winning bidder gets a sheriff’s deed that lists the last date the homeowner can redeem, or take back, the property, usually six months from the date of the sheriff’s sale. During this redemption period, the homeowner can live in the property or try to sell it.

7) Redemption period: To redeem a property, the homeowner must pay off the mortgage and all interest and late fees, court and attorney fees, title and appraisal fees, taxes and insurance. Otherwise, they will be evicted from the home.

(c) 2011, Detroit Free Press.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Tuesday, August 30, 2011

Tips for Struggling Homeowners

Tips for Struggling Homeowners

(MCT)—Struggling to make your mortgage payments? Already in default?

Housing counselors say the most important advice is not to wait to get help. Read the notices and contact your lender or loan servicer to discuss your situation. Putting off these talks will likely make things worse.

And also know your rights:

—You do not have to miss a payment to qualify for the U.S. Home Affordable Modification Program, known as HAMP.

—Under HAMP, a bank is not to proceed with a foreclosure sale until a borrower has been evaluated for HAMP, and if eligible, an offer has been made.

—To learn more about HAMP, go to Housing counselors and lenders can tell you of other programs or payment alternatives.

—Housing counselors are certified to give free advice about finances and are to know what they’re doing, says Greg Sterns, financial education manager at Lighthouse of Oakland County in Pontiac, Michigan, a nonprofit that offers housing and financial counseling.

Sterns said housing counselors also may refer borrowers to other free legal services, as well.

(c) 2011, Detroit Free Press.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Saturday, August 20, 2011

July Market Update

Michigan Market Update - July 2011

July sales and buyer activity followed the same positive path as the prior four months. It is too early to see if any of the stock market uncertainty will trickle down to our local real estate sales but the big offset to any financial market concerns was the statement by the Federal Reserve to keep interest rates low for the next two years. Certainly a reduction in consumer spending, specifically auto, will cause a slowing of our local recovery, but as we saw throughout this recession, low rates and low prices have drawn thousands of people into the market.

Locally sales rose about 8% over last July, which was expected, and anything less would have been a concern since last year sales fell off once the tax credits expired. Buyer inquires, written contracts and home values (in some cases), have shown a steady rise for the past four months (on a seasonally adjusted basis). Not quite a trend you can take to the bank, but all good news. You will not see these same positive numbers for Michigan for a few months since the national indexes such as Case-Shiller use date that is anywhere from 4 months to 2 years old (example; a short sale written in 2009, based on 2009 values that finally closes in June of 2011 will show up on Case-Shiller as a 2011 sale with a 2009 price). The national data will begin to show what we see everyday late this year.

One of the biggest challenges in a market that is changing direction is managing the mixed signals of the Seller's need to still be aggressive in pricing and Buyer's need to be aggressive in their asking price for the multiple bid properties. Time on Market is a great way to look at how each should approach their asking/offer price.

The vast majority of homes that sell are on the market for less than 90 days. A home on the market for over 90 days has only a 21% chance of selling. So for Sellers, if their home has been on the market for more than three months, it is time for a price or condition change. For Buyers, if they are bidding on a home that has been on the market for less than 90 days, expect some aggressive competition for the home.

Please remember you may call or email about any property you're interested in no matter who the property is listed by.

Thank you,

Suzanne O'Brien
Your Expert Advisor
P: 313-516-6644

Friday, August 5, 2011

Small Money Saving Tips That Add Up

Small Money Saving Tips That Add Up

By Barbara Pronin

Let's face it: A dollar only goes so far, especially these days with the price of gasoline at outrageous highs. Saving, for many, has been put on the back burner in favor of wringing the most from every dollar we have.

But savings don't have to be huge to add up in a meaningful way, says Trent Hamm, founder of the financial website Hamm offers 10 little money-saving tips that can add up to big dollars over time:
•Switch bank accounts: Instead of paying maintenance fees and earning next to zero interest, switch to a bank like ING Direct, where you will earn interest on both savings and checking accounts.
•Master the 30-day rule: Wait 30 days when tempted to make a significant purchase. You may find the urge to own it fades.
•Make your own gifts: You can make food mixes, cookies, soaps and many other gifts that cost less and mean more, especially when presented to the recipient with a heartfelt note.
•Invite friends in: Almost any activity at home costs less than going out. Have dinner. Play games. Watch a rented movie-and keep your hand out of your pocket.
•Make a list: Don't go to the grocery store without a list. It will help you buy only what you need and discourage impulse buys.
•Try generic brands: the only difference between a name brand and a market brand may be only the marketing, and the savings can add up.
•Clean out closets: Clear out what you don't need and have a yard sale, give it to a consignment shop, or donate it to charity for the tax deduction.
•Clean your car's air filter: It only takes a few minutes, and a clean air filter can save up to 7 percent on gas mileage.
•Swap babysitting: If you live in a neighborhood with lots of kids, swapping babysitting chores with a neighbor or two will save everyone money.
•Start a garden: It's an inexpensive hobby if you have a yard and it will provide exercise while saving you money on produce.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Top Trend in Kitchen Remodeling Uncovered

Top Trend in Kitchen Remodeling Uncovered

For years, we've heard that if you want to sell your home, start by remodeling your kitchen. Why? Because it has the highest return on investment. But in today's age, when most homeowners are choosing to stay put longer rather than sell, how does that impact kitchen home improvement projects? And how do these projects change, depending on influences like families with young children, generational wants, sustainable trends and the like? Moen®, a leading faucet brand in North America, takes a look at today's American kitchen-no longer a place to simply cook and eat, it's now the "real" living room-a place for living, working and entertaining.

"Given the current economic challenges, it's no surprise that consumers are saving rather than spending. And when they do spend, they're doing so from cash on hand; rather than credit," says Jack Suvak, senior director of research and insights, Moen. "This change in spending behavior has had a dramatic impact on remodeling projects. Most homeowners are choosing to perform 'room lifts'-small updates to personalize a room-rather than undertake major remodels."

Suvak continues, "Plus, homeowners are choosing to personalize renovations to fit their needs, rather than update a room for the next family that will be living in the house. In the kitchen, this might include everything from creating solutions that better integrate the management of electronic devices, to creating 'kid level' storage areas, to adding safety features for aging boomers."

Kitchen Influences: Children, Generations and More

The kitchen has evolved from a closed-off satellite to the most open, doted-upon room in the house. How are homeowners creating live-in value in this hub of activity?

Families with Children
Moen's research found that families with children living in the home are even more engaged in their kitchens than their counterparts without kids; and are more likely to view the kitchen as a place where activities or conversations frequently happen. With regard specifically to kitchen remodeling, respondents with children are significantly more likely than those without children to have remodeled or made improvements to their kitchen in the past year, used a kitchen designer or architect, or spent more on kitchen improvements. And families with children living in the home are far more likely to say they would spend more money on their kitchen remodel if they had it to do over.

When Moen queried designers about the challenges of creating live-in value for families with children, there are clear differences for families with kids of different ages. As children grow older, the kitchen evolves from a potentially dangerous place to a space for sharing food preparation and cooking experiences. Designers stated the number one concern when remodeling kitchens for families with children in each of three age groups are:
Younger than five years old: Safety

Age five to 12 years old: Places for kids to play or work

Age 13 or older: Ability to have two or more cooks in the kitchen at one time

Utilizing this research, sample ideas to perform "room lifts" for families with children include: creating a "kid zone" (away from the stove) to enable room for child-friendly cooking, putting in a desk-like environment for computer work or homework, or adding an island with a faucet and sink, to allow for two prep areas.

Generational Differences
While families with children have very specific desires in terms of creating a kitchen with live-in value, so do the different generations.

By far, Millenials (age 18-34) have the highest demands in what they would want in a dream kitchen. The majority of their "wish list" items include those with technological advances, such as:
•A microwave that allows for swiping a package bar code, enabling the microwave to cook to exact directions
•A TV screen built into a kitchen wall or appliance
•Technology that would allow putting a dish in the oven, programming it to refrigerate and then turning the heat on from a phone or computer

Boomers (age 45-64) also had specific "wish list" items, mostly around entertaining large groups. Examples include:
•A cook-top with special-purpose features (built-in grill or wok, rotisserie attachment)
•Commercial or professional-grade appliances
•Built-in coffee pot connected directly to plumbing
•An oven that dramatically reduces cooking times without microwaves

Green in Certain Categories
Contrary to what many might believe, designers say their clients are more concerned about the project costs than being green. The costs of environmentally friendly products and materials are still seen as higher than non-green products; and these higher costs discourage consumers who are already reluctant to spend more on their kitchen remodels.

That being said, there are certain categories that homeowners who are creating live-in value want to be sustainable, more than others:
•Energy-efficient appliances are almost standard in product selection
•Cabinetry, countertops and flooring that use sustainable or natural materials such as bamboo, cork and stone are being requested more frequently
•More consumers are asking about energy-efficient lighting, as well as water-saving faucets and showering for their homes
•More consumers are showing concern about air quality by requesting non-toxic, low-VOC finishes

"As the demand for water-saving functionality increases, Moen continues to introduce options to help homeowners achieve stylish looks with faucets and showerheads that feature flow optimization, without sacrificing performance," adds Suvak.

Move Over, Dining Room
Since 2004, Moen has observed that homeowners were not using their dining rooms as often, and the kitchen/family room was taking on a more significant role in the home habitat. That observation has not changed over the last decade, and even this simple thought has an impact on how remodeling projects create live-in value:
•Laptops are now a kitchen utility; because homeowners don't want to be isolated in the home office or den-meaning designers must now allocate an area for laptop and mobile device recharging
•Second sinks are becoming more prevalent on center islands, so the cook can interact with the family while prepping or cleaning up from a meal
•The lack of good space and industrial design leads to using the sink, and area around the sink, as storage

Copyright© 2011 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Thursday, August 4, 2011

Avoid credit dings when mortgage shopping

Avoid credit dings when mortgage shopping
How to steer clear of 'borrower in distress' label
By Jack Guttentag

Borrowers in distress often contact many lenders hoping to find one who will approve them. For this reason, multiple inquiries can have a negative impact on a consumer's credit score. But multiple inquiries can also result from loan applicants shopping for the best deal. The challenge to the scoring system is to distinguish borrowers in shopping mode from borrowers in distress mode.

Hard inquiries vs. soft inquiries

Consumers need not be concerned about inquiries they make, such as ordering a credit report. Self inquiries don't affect the credit score. Neither do inquiries from your existing creditors, potential employers, or businesses considering whether or not to solicit you. These are sometimes called "soft inquiries."

The inquiries that may affect your credit score are those by new credit grantors to whom you have given your Social Security number along with explicit authorization to check your credit. These are "hard inquiries."

Distinguishing borrowers in shopping mode from those in distress: The ignore rule

Two credit-scoring rules developed by Fair Isaac Corp., which pioneered the development of credit-scoring models, are designed to protect the scores of borrowers who shop multiple lenders for the best deal. The quotes below are from

The "ignore rule" is that "the score ignores mortgage, auto, and student loan inquiries made in the 30 days prior to scoring."

The 30 days includes the day of the score, which is not evident from the wording. It is a good rule, but borrowers are not warned about other types of credit that are not ignored. A very important one is credit cards. Because I happened to need a new business card while researching this article, I decided to see what impact my card shopping would have on my score.

I had a mortgage lender friend make a credit inquiry to obtain my score, then I shopped two card issuers and had my friend inquire again. My score had dropped 13 points. All credit card inquiries are treated as indicators of distress.

Mortgage borrowers today face the hazard that the 30-day period can expire while their loan is still being processed. If the lender decides to recheck the borrower's credit, which some do as a standard practice, the mortgage inquiries that had previously been ignored will then hit the score.

Distinguishing borrowers in shopping mode from those in distress: The consolidation rule

The "consolidation rule" is that "the score looks on your credit report for mortgage, auto, and student loan inquiries older than 30 days. If it finds some, it counts those inquiries that fall in a typical shopping period as just one inquiry when determining your score."

The consolidation rule is expressed in such a way that most readers interpret it to mean that mortgage, auto and student loans are consolidated together. That is how I read it originally. In fact, what it means is that all mortgage loans are consolidated, all auto loans are consolidated, and all student loans are consolidated. If you shop for one of each type, they constitute three inquiries.

The shopping period during which inquiries are consolidated is 15 days in one version of the scoring model and 45 days in another. Because borrowers don't know which model is being used by their credit grantor, they should assume the period is 15 days.

But the most serious concern about the consolidation rule is whether the scorers can accurately associate inquiries with the correct loan type, especially in the case of mortgages.

Does consolidation always work?

One of the motivations for this article was a claim made to me by Jack Pritchard, a long-term mortgage veteran, that mortgage inquiries were not always consolidated because the reporting system did not always identify them accurately.

I posed this issue to Fair Isaac Corp. and was told that "the credit reporting system is a voluntary one and ... lenders report what they choose to report to the bureaus, and each bureau represents that information a little differently on its credit reports."

While this reply confirmed that proper identification could be an issue, Fair Isaac claims that their systems work around this problem by giving the borrower the benefit of any doubt. If the system is not sure, it consolidates.

But this leaves open the possibility that the system has no doubt but is wrong. Pritchard pointed to mortgage inquiries from credit unions and finance companies as particularly prone to misclassification because other types of loans are originated out of the same offices. At his suggestion, I asked Fair Isaac what would happen if a mortgage shopper generated an inquiry from a credit union and a finance company?

The reply was that "the credit inquiries would in all likelihood be de-duplicated by the FICO scoring algorithm. Inquiries from both credit unions and finance companies are eligible for de-duplication." The italics are mine, and clearly suggest that there is no assurance that "de-duplication" (Fair-Isaac-speak for consolidation) will occur.

Bottom line for now

A case can be made that loan inquiries should be added to the list of borrower characteristics, such as sex, race and ethnicity, that, as a matter of public policy, can't be used in developing credit scores. The information could continue to be compiled and provided to lenders, but could not be used by the credit-scoring algorithm.

Meanwhile, borrowers shopping for credit should minimize the number of hard inquiries by ordering their own score, which does not count as an inquiry, providing that score to all the vendors they shop. You tell them that they can check your credit when you are ready to authorize it. This will reduce the number of hard inquiries to one, from the vendor you finally select. And do not seek new credit cards during the period you are shopping for a loan.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Wednesday, August 3, 2011

Monday, August 1, 2011

Helping Your Child Deal with Friends Who Get Mean

By Heidi Stevens

RISMEDIA, July 16, 2011—(MCT) —A girl at your daughter’s lunch table is aiming some petty barbs at her. (“Who invited you to the conversation?”) How should you coach her to respond?

Parent Advice
• Coach her to ignore the nasty comments and practice looking through people. In the first place, if she says nothing, she can’t be misquoted. She can’t add fuel to the fire or get in trouble with teachers if she says nothing. Besides, mean girls hate to be ignored. — Marie Grass Amenta

• A talk about what it takes to be a good friend could be in order, but let your child figure this one out. If you always step in, you are communicating that you don’t think that she is capable of dealing with problems. I recently heard of a college freshman who didn’t get her way about something and her mother stepped in and placed a call to the university. If you don’t teach your kids to cope they never grow up and you can never let go! — Dawn Lantero

Expert Advice
Before you start crafting responses, help your daughter pinpoint what she truly is upset about, says Michelle Anthony, co-author of “Little Girls Can Be Mean: Four Steps to Bully-Proof Girls in the Early Grades” (St. Martin’s Griffin).

Is it the biting comment? Does she feel teamed up on? Is she hurt that another girl she considers a friend didn’t come to her defense?

“How you help guide her should be 100 percent dictated by what she’s most upset about,” says Anthony. By asking the right questions, you can help her defuse the situation and learn to analyze the complicated world of female friendships.

“What defines a friendship for you?” Anthony suggests. “What are some qualities that matter? Let’s go through some of these girls and see if they have these qualities. Is one of your friends different when you’re alone together than when you’re all in a group? And is that OK because you really like the fun alone time, or is that not OK because a friendship should be a friendship no matter where you are and who’s around?”

Next you can ask her what she wants to accomplish. “Fix the friendship? Find a way to move away from the friendship? Find a way to confront the mean girl? What she decides to do dictates what you try to help her do,” Anthony says.

Coaching her to stick up for herself in the moment is great, Anthony says, but assure her that she’s not a failure if she decides to remain mum.

“We always want our kids to be assertive, but we’re never surprised when they can’t be,” says Anthony. “We tell them, ‘If this isn’t the right situation, you can choose one that’s better for you. You don’t have to respond on the spot if that’s awkward or embarrassing for you.’ You don’t want her to feel like a double failure because she decided she was going to say something and then didn’t say it.”

Help your daughter determine a time and place to confront the situation on her terms—before or after school, for example.

And as good as it may feel to help her craft a biting zinger, resist the temptation.

“That never helps,” says Anthony. “It just elevates the tension and rivalry and causes kids to choose factions, which never helps your own daughter. You want to help her make kind and respectful choices.”

(c) 2011, Chicago Tribune.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Saturday, July 30, 2011

7 qualities of a top listing agent

7 qualities of a top listing agent
REThink Real Estate
By Tara-Nicholle Nelson
Inman News™

Q: I'm preparing to list my home, and am starting to research listing agents to represent me. Besides being comfortable with my broker, what is the most important quality I need from them: negotiating skills or marketing skills? Both are very important to me. Frankly, I'm afraid of being "roughed up" by aggressive buyers in this market. --Michelle

A: You're spot on, Michelle. Both marketing and negotiating will be uber-important to have in the broker or agent you choose to list your home and get it sold.

Some might see marketing as the most important because, to put it plainly, if your home is not exposed widely and aggressively to prospective buyers, you'll never have the buyer viewings and offer(s) that must come in for you to even be faced with the high-class problem of negotiating the price and terms of a sale.

However, I don't see marketing skills as the requirement so much as your listing agent having a clear, comprehensive marketing plan that she is able to present to you with case studies or specimens of marketing she's done for recent properties somewhat similar to yours. It's critical that an agent's marketing plan for your home include details such as:
•how she would help you prepare or stage your property for sale;
•what her plans are for listing the property on the local multiple listing service(s) and publicizing it to other brokers;
•what onsite marketing she would recommend (i.e., yard signage and/or open houses); and
•how and where she would place your home's listing online, down to which sites she'd list it on and how many pictures she would include.

All essential.

But negotiating is essential too -- especially if you're very concerned about being bullied or taken advantage of.

Ultimately, though, when it comes to negotiations, you're going to be faced with making the ultimate decisions about what your bottom-line price and other terms are, including whether you're able to offer incentives like closing-cost credits or whether you can afford to contribute to any repairs the buyer's inspectors require.

What I suspect you want is to feel like you're protected, which will come from having an agent you trust who's "got your back," but also has the experience and knowledge of local standard negotiating practices and buyer psychology that comes only with experience -- and I mean recent experience getting homes sold in today's market climate.

I cannot emphasize enough that one efficient method of finding such a listing agent is to get referrals! Look to any family members, friends, work colleagues and neighbors whose homes are on the market now and ask them if they would strongly recommend their agent, and why.

If it's tough to get referrals, go into the various online real estate websites and their local discussion boards, and see which local agents are giving sensible, knowledgeable answers to consumers' questions in those forums. During your interview process, ask for references -- and call them! Speak to their recent past seller clients, to see how happy they were with the agents' service.

And I'd suggest you look for several other items beyond marketing and negotiating skills, or even trustworthiness and experience.

If I were listing my home one of my top priorities would be to find an agent who seems to have nailed the art and science of pricing their listings -- I'd want to find an agent whose listings regularly sold quickly, relative to other homes in the area, and for sales prices that were at, near or even above the asking prices.

That's an agent whose pricing recommendations you can trust, and an agent who likely has another strong skill you need: the skill of being able to have frank, tough conversations with their clients about what their homes are worth, and can support those list-price recommendations with facts and sound reasoning.

I'd also prioritize an agent with strong relationships: with their past clients; with mortgage professionals; with other agents in the area; with property preparation vendors (like stagers, painters, handymen/women, landscapers and such); with inspectors, engineers and contractors; and with local escrow companies.

And, if I were listing my home as a short sale, I would absolutely limit my listing agent search to agents who have a strong, proven track record of getting short sales closed -- ideally short sales that involved the same bank or banks as my mortgage lender.

This is by no means an exhaustive list of questions to ask and traits to seek in your listing agent candidates, but these are certainly where my top priorities would lie.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Friday, July 29, 2011

Couple Documenting a House Flipping Business and Revealing the True Work Involved

Couple Documenting a House Flipping Business and Revealing the True Work Involved

RISMEDIA, July 21, 2011—”This business is a people business and I don’t know many people who would want to meet with and sell their house to someone working in their pajamas,” states Danny Johnson, a full-time house flipper in San Antonio, Texas. Danny and his wife, Melissa, are now making their house-flipping business transparent and sharing everything they do to flip houses on their new blog,

If you have ever seen the house flipping reality television programs or have done any research on flipping houses, you’ve undoubtedly come away with a feeling that it seems easy enough to do. Many gurus will tell you it’s possible to make millions, working in your pajamas just 5 hours a week. Of course, they are trying to sell their information products to as many people as possible. Who wants to buy a program that tells you there is a lot of work involved?

Danny says there is a lot more to flipping houses than the shows or the gurus would want you to believe. That is why he started blogging about his day-to-day trials as a house flipper. “I wanted to allow people to see how much work is involved in the aspects of the business that the shows tend to ignore,” claims Danny. The areas he referred to were related to how people are finding such great deals with so much equity and buying them with huge discounts and the real costs involved. There seems to be a simplifying of the numbers on many of the reality shows. “Many assumptions are being made that are very far fetched and leave out a lot of the true costs involved in buying and selling a house,” Danny informs us.

Danny and his wife have been flipping houses since 2003 and have learned many hard lessons while flipping over 120 houses. The main thing learned is that the business requires a lot of education and hard work. This should come as no surprise, they said, as most things worth doing require hard work and dedication. This is what bothers them so much, they say, when they see shows and gurus talking about how easy it is to jump in and make a fortune. “It’s just not realistic,” Melissa stated.

As can be seen on their house flipping blog, they filter through dozens of leads to find deals worth pursuing. They then talk about all of the negotiating and patience that is required to get the deal done and closed. Following along with them, you really get a sense of how much of a people business it really is. Their house leads come from people with all sorts of different motivating circumstances which require a fast home sale in exchange for some equity. It appears that a lot of the quality leads come from people that inherit properties and people that want to sell their home, but cannot afford or just don’t desire to fix up the house to a condition suitable for a normal home buyer.

“We are sharing everything that is involved in running a successful house flipping business and we want to help people to get a better idea of what it takes to do this,” Danny continues. “We’ve seen too many people get into this business only to find out that they made some serious mistakes due to lack of education and real direction.”

You can read about Danny and Melissa’s real estate adventures in how to flip houses on their blog,

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Thursday, July 28, 2011

Tough Real Estate Market Inspires Creativity All Around

Tough Real Estate Market Inspires Creativity All Around

By Tammy Joyner and Rachel Tobin

RISMedia, June 16,2011—(MCT)—The housing market’s continuing funk has metro Atlantans using a grab-bag of creative strategies to buy, sell or just tread water so they can make a career move.

For instance:

• Renting out a property has become the end-run around the market’s chokehold on mobility. More homeowners are turning to real estate agents to keep an eye on their homes, not sell them. Homeowners typically rent out their homes so they can buy or rent somewhere else. This has created a new line of property management work for the real estate industry.

• Home-staging has increased in popularity as a tool—and a necessity—for selling homes now that a yard sign and a quick sweep of the front steps won’t get the job done. Today, clearing clutter and redecorating in neutral hues and designs is key to finding potential buyers.

• Consumers and real estate professionals alike are embracing all sorts of technology. Virtual home tours are de rigueur. A twist on barcodes called QR lets people check out a home on a cell phone or other mobile device. Multiple listing services are not only helping consumers find homes but providing financial help as well.

• With stricter mortgage requirements in place, little-known federal and local programs are emerging as rich uncles for would-be home buyers, and not just for those with low income or first-time home buyers.

“It’s like trying to find buried treasure,” says Rob Chrane, president and founder of Workforce Resources, a 3-year-old Atlanta company that connects people with hard-to-find financial resources.

In metro Atlanta two to three dozen home-buying assistance programs are available, Chrane says. Real estate agents use down-payment assistance programs to market homes. A first-time homebuyer in metro Atlanta could be eligible for help on a home worth up to $300,000. And if you are interested in buying property built with tax breaks, there are deals too.

David Stevenson bought a move-in-ready, three-bedroom, two-bath 1,400-square-foot home in Rex for $55,000 under the federal Neighborhood Stabilization Program, set up in 2009 to help communities deal with foreclosures.

Stevenson used the $5,000 he got through the program to pay his closing costs.

The program targets educators, medical personnel, police officers, fire fighters and military families and requires at least a $500 down-payment, good credit and other criteria.

“I’ve been so happy. I’ve been telling all my friends about the program and how great it is,” says Stevenson, 51, a quality assurance technician for QuikTrip Kitchens who stumbled upon the NSP program while house-hunting.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Wednesday, July 27, 2011

Pruning Basics: Keep Your Yard in Tip-Top Shape by Pruning Landscape Plants

Pruning Basics: Keep Your Yard in Tip-Top Shape by Pruning Landscape Plants

RISMEDIA, June 2, 2011—Pruning takes many forms. Whether it’s cutting old, overgrown shrubs to the ground for rejuvenation or removing faded blooms from roses, regular pruning creates healthy growth and beautiful plants. Armed with a little knowledge and the right tools, you can tackle pruning with confidence—and get terrific results.

When to Prune
Knowing the right time to prune is crucial. Pruning at the wrong time typically won’t damage plants, but it can sacrifice that year’s flowers or fruit. Use this guide to schedule pruning in your yard.

Late spring/early summer. Prune spring- flowering shrubs and trees which flower before July 1 immediately after the flowers fade. Plants in this category include forsythia, bridal wreath spiraea, weigela, and mock orange.

Midsummer. Several deciduous trees produce a heavy sap flow in early spring. Pruning branches in this season won’t kill the tree, but the sap flow can bleed onto outdoor furnishings, patios, cars, and walking areas. Avoid a sticky situation by pruning these trees in midsummer. Bleeder trees include maple, dogwood, elm, walnut, and birch.

Fall/early winter. Spring- and summer-blooming hawthorns and viburnums are typically grown for their fruits, which attract wildlife. Don’t prune these plants after flowering. Instead, allow fruits to mature, and then prune plants after wildlife consumes fruits.

Winter/early spring. Prune summer-blooming trees and shrubs in winter or early spring, before new growth emerges. These plants include abelia, butterfly bush, peegee hydrangea, sweet bay magnolia, and hybrid tea roses.

Good to Know
High-quality pruning tools will last many years with proper maintenance. Keep cutting surfaces clean and sharp. Lubricate metal parts regularly to prevent rust. Use tools only for pruning plants—using them to cut other materials can dull and even damage blades.

The Techniques to Know
No matter what kind of plant you’re pruning, you’ll use three basic techniques. Pinching is typically done by hand, using thumb and forefinger. It’s a good method to increase bushiness and curtail and control plant size.

Thinning involves removing branches back to the trunk, a main branch or the soil line. With thinning cuts, don’t remove the branch collar (the wrinkled area near the trunk or main branch). This area contains the cells needed to heal the cutting wound. Slicing into the branch collar creates an opening for infection and disease to enter healthy wood.

Heading back shortens branches to a healthy bud or lateral branch. Place cuts roughly 1/4 inch above the bud or branch.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Tuesday, July 26, 2011

What to Do If a Tornado Is Heading toward You

What to Do If a Tornado Is Heading toward You

By Fred Mann

RISMEDIA, June 2, 2011— (MCT)—A lesson from the tragedy in Joplin, Mo., is that tornadoes may strike with little or no warning, hidden by rain or nearly transparent until they kick up dust and debris. You might be shopping, visiting a nursing home, driving a car or attending a movie.

Emergency officials recommend following these basic guidelines if you find yourself in an unfamiliar building when a tornado approaches:

• Get to the lowest level, find an interior room or hallway away from windows, and try to put as many walls between you and the storm as possible. Flying debris is the leading cause of fatalities and injuries in a tornado.

• If you plan a trip to a so-called big box store and severe weather is predicted, stay home. Big box stores generally are built of light-weight materials that may meet code but are inadequate to protect against a tornado. In addition, they are filled with loose items that can turn into deadly missiles in a tornado.

• If you must go to a big box store, stay aware of weather alerts. If you are in a store when a tornado approaches, the best option is leave and find cover outside in a ditch or low-lying area.

• In high-rise apartment buildings or office buildings, get to the lowest floor, then pick a place in a hallway in the center of the building. Central stairways are good if enclosed by concrete, not glass. Elevators are not good places to go because buildings could lose power.

• Stay away from glass walls and windows, no matter how small.

• Crouch as low as possible to the floor, facing down, and cover your head with your hands.

• In houses or other small structures, prepare a safe place to go in advance. If there is no basement, a center hallway, bathroom or closet on the lowest floor is the best place to wait out a storm.

• Hide under a heavy work table or under stairs to avoid crumbling walls, chimneys and debris. Avoid areas on lower floors beneath heavy objects such as pianos, refrigerators and beds.

• Bathtubs and commodes are anchored into the ground and sometimes are the only things left standing after a storm. Get into a bathtub with a cushion or heavy blankets over you.

• In a pinch, put a metal trash container over your head to protect against flying debris.

• In schools, shopping centers, churches and other large structures, avoid areas with wide, free-span roofs. If possible, get under a sturdy table and use your arms to protect your head and neck. Crouch down and cover your head. Stay away from windows and outside walls.

• In churches or theaters, get under seats or pews, protecting your head with your arms.

• In vehicles, don’t try to outrun a tornado. If a tornado is visible far away and the traffic is light, you may able to drive out of its path by moving at right angles to the storm. Otherwise park the car as quickly as possible out of traffic, get out immediately, and head for the nearest sturdy building, or lie flat in a ditch or low-lying area.

• If you are caught in the tornado, stay in the vehicle with your seat belt on. Put your head down below the windows, covering your head with your hands and a blanket if possible.

• Don’t take shelter under overpasses. Deadly airborne debris can easily be blown into those areas.

• Mobile homes aren’t safe, even if securely tied down. Residents should abandon them and go to the nearest sturdy building or shelter immediately.

• If you are outdoors, get to a sturdy building or low-lying area. Keep your head and neck covered.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Monday, July 25, 2011

Sunday, July 24, 2011

When paying points pays off

When paying points pays off

By Jack Guttentag
Inman News™

Lenders generally offer borrowers alternative combinations of interest rate and points: Low rates are offered when the borrower pays points to the lender, and high rates are offered when the lender pays points to the borrower. Points paid by the borrower are an upfront cash outlay, whereas points paid by the lender are used to pay the borrower's settlement costs. On a 30-year fixed-rate mortgage (FRM), a lender might offer 10 or more combinations.

Borrowers frequently don't choose the combination that is best for them for the same reasons they often don't select the best type of mortgage: their own ignorance, poor advice, and inadequate disclosures. Some borrowers don't understand that there is a choice to be made, and their loan provider (loan officer or mortgage broker, henceforth LP) may have no interest in taking the time to explore an issue that can be avoided.

One way to avoid it is to simply steer the borrower toward the rate that carries zero points -- or close to it. While steering borrowers toward a mortgage that carries a larger commission for the LP is now illegal, it is not illegal to steer a borrower toward the mortgage that involves the least time and effort for the LP.

Borrowers saddled with LPs that would prefer not to be bothered should take control of the decision themselves. The issues are not that complex, and are summarized in the table below.

Borrower Is Income-Short

Borrower Is Cash-Short

Borrower Expects to Have Mortgage 4 Years or Longer

1. Select High Fees, Low Rate

2. Select Rate at Zero Fees

Borrower Expects to Have Mortgage Less Than 4 Years

3. Select Rate at Zero Fees

4. Select Negative Fees, High Rate

Borrowers with long time horizons, defined for convenience as more than four years, profit from paying points that reduce the rate because they will enjoy the benefit of the lower rate for a long period. The higher fees can be viewed as an investment that earns a high rate of return. The longer they hold the mortgage, the higher the return. I have two "Points Calculators" on my website that calculate the rate of return in any given case.

If the borrower with a long time horizon is also income-short, the case for paying points is clear-cut because the lower rate reduces the payment. This is box 1 in the table.

Borrowers with short time horizons will profit by selecting a high-rate mortgage on which the lender pays some or all of the borrower's settlement costs. The profit arises from the short period over which the borrower pays the higher rate needed to reduce the upfront cash outlay.

If the borrower with a short time horizon is also cash-short, the case for paying a higher rate is clear-cut. The borrower reduces the cash outlay and doesn't pay much to do it. This is box 4 in the table.

But some borrowers may be forced to compromise. If the borrower has a short time horizon and is income-short, as in box 3, he is in a conflict situation. Though he would profit from paying a higher rate, he can't afford it. A compromise is necessary, perhaps by selecting the rate closest to zero fees.

Similarly, the borrower with a long time horizon but cash-short, as in box 2, is in a conflict situation. Though he would profit from paying points, he can't afford it either. The compromise of selecting the rate closest to zero fees makes sense in this case as well.

The United States is unique in offering borrowers the rate/point option. To my knowledge, it is not offered anywhere else in the world. While the option provides little benefit to many borrowers who depend on others for guidance, borrowers do not need a Ph.D. to find their own best path.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Saturday, July 23, 2011

Friday, July 22, 2011

Ways to Avoid Falling into the Worry Trap at Work

Ways to Avoid Falling into the Worry Trap at Work

By Liz Reyer

RISMEDIA, July 22, 2011— (MCT)—Q: I’m a worrier. I dwell on what might happen, for example, at a meeting, and then revisit what did happen over and over. I know this isn’t productive, but I can’t seem to stop it. This mostly happens at work; it’s not as big a deal at home. Suggestions?

A: Remaining grounded in the present moment leads to greater contentment and productivity.

It’s easy to get caught in a rumination cycle. Before an experience, there are so many unknowns to consider, and after, so many “if only” possibilities. You’ve already recognized that this isn’t helpful, which is the first step to changing your pattern.

Because this is a work-focused issue, it suggests that it’s situational. Take some time to identify the triggers. Are there certain types of meetings or projects, or prospective interactions with certain individuals that set off your thinking? Also notice situations at work that don’t lead to this ruminating, and put it all together to understand the patterns that may be at play.

You’ll then want to plan ways to catch yourself in this cycle. Know your cognitive, physical and emotional cues. For example, if you know that you start getting crabby or get a stomachache when you start to worry, watch for those feelings so you can see if you’re falling into worry.

Finally, develop a set of tools to facilitate breaking the habit. If you’re worrying prior to an event, get in the habit of asking yourself, “What’s happening with this right now?” If it isn’t posing a problem then, choose to think about other things. This is possible, but it does take discipline.

Another option is to ask yourself, “What can I do right now to get a desirable outcome?” This can lead to useful planning and preparation. Use a similar approach after the fact, asking yourself about ways you can learn from the experience.

Now that you’ve increased your awareness of your worry triggers and some approaches to breaking the pattern, it’s time to put them into action. Here’s one method that may be useful as a starting point.

When you start your day, use your commute time for relaxation and distraction. Music, audio books or quiet can all be very calming. If your mind drifts to work, observe it and let it drift away. You’ll be able to focus on that once you arrive, and will be better prepared if you’re fresh.

Then, when you arrive at work, take a few minutes to reflect back on recent experiences, gaining closure on any stressful events or interactions. Scan forward to anticipate any trigger events that might be coming up so that you can take a proactive and constructive approach to challenging areas, rather than a “fretting” approach.

At a more general level, look at your orientation to living in the moment. Looking backward and forward rather than being present in the current moment is common, and developing a sense of presence will make all of this much easier. Mindfulness practices are very helpful for this and can serve as a great preventive device for worrying.

Take a big-picture approach through developing mindfulness, while learning to better anticipate and address episodes of worry.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Thursday, July 21, 2011

5 Questions to Ask Your Mortgage Professional

5 Questions to Ask Your Mortgage Professional

Posted under: Home Buying | July 20, 2011 10:31 AM | 12,010 views | 18 comments

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Everyone knows you’re supposed to be proactive and assertive when you take out a mortgage, carefully collecting and evaluating all sorts of information before you make the biggest deal of your life. But when the mortgage broker starts shooting sheaves of papers (OK, PDF documents) at you, it’s easy for your eyes to glaze over at the sight of so many zeroes, and tempting just to start signing whatever it takes to get that house!

Here are 5 questions every smart buyer (or refi-er) should add to the list of issues to cover with your mortgage professional:
1.Are you a bank, a broker, or both? Generally speaking, mortgage lenders that are banks or have their own banking divisions (which many reputable brokerages do) have more control over the appraisal process, including the ability to submit your file to a pool of appraisers they know have some knowledge of your local neighborhood. Given the fact that non-local appraisers and the inability to communicate with appraisers under relatively new guidelines for brokerages are responsible for killing loads and loads of deals, working with a company that is or has a bank could be a deal-saving move, especially if the property is in an area that hasn’t had many recent sales or is otherwise challenging to appraise.

Also, some broker/banks that originate loans and sell them straight to Fannie Mae or Freddie Mac under the FHA loan programs offer the same benefits of an FHA loan - low down payment and moderate qualification guidelines - without the “overlays” imposed by some larger banks, which actually place a more restrictive set of guidelines on FHA loan programs. For example, FHA guidelines do not impose a minimum credit score, but many banks overlay their own 640 minimum FICO requirement. Broker/banks that sell straight to Fannie and Freddie often mirror the FHA minimum guidelines precisely.

Finally, brokerages with their own in-house bank and a large roster of lenders and programs provide the advantage of offering a wider range of fallback options than plain old banks or plain old brokerages - Plans A, B, C and D, if you will - which many borrowers need these days, in the (increasingly common) case your first choice bank or loan program doesn’t work out.
2.Will you explain my Good Faith Estimate to me? May I also have a fee sheet or estimate of funds to close? The current, national standard Good Faith Estimate (GFE) is pretty clear, clarifying all sorts of deal points, from the broker’s commissions to the costs associated with the loan, but as a point of customer service, you should ask your mortgage pro to explain it to you (if they don’t do so under their own initiative).

The one shortfall of the the latest edition of the GFE is that, while it clearly shows the costs associated with a particular loan scenario, it does not always show so clearly the actual amount of funds you’ll need to close the transaction (which might be more or less than those costs)! So, ask your mortgage representative to prepare a fee sheet or an estimate of funds to close as early in the transaction as possible.
3.How long will it take to close my loan? How much time will I need for loan and appraisal contingencies? The time frames for closing your mortgage - which often drive the time frames for closing your home purchase - often vary widely depending on the type of loan and even the type of lender you work with.(Large bank loans originated by the bankers who sit inside the branch are notoriously slower to close, on average, than loans originated by brokers.) Similarly, the time it takes to get through the FHA loan appraisal and underwriting process might be much longer than it would take, all things being equal, to clear those hurdles and remove your loan and appraisal contingencies on a Conventional (i.e., non-FHA) mortgage.

When you first meet with your prospective mortgage pro, talk with them about these time frames, so they can help you set realistic expectations and insert realistic time frames into your offer when you make it, to minimize the drama of a contingency clock that ticks way faster than your mortgage process.
4.Are there any fees for the mortgage loan application/approval process? Some lenders charge for credit checks up front, and most require that you pay for your appraisal in advance (although the latter happens only after you find and get into contract on your property. One of the first questions you should ask, when you sit down with a new mortgage broker is how much cash you’ll have to come up with just for the privilege of having them run your application and take the first steps down the road to loan approval.

5.How long have you been originating loans? And how long have you been with your company? Mortgage pros who have been around for a long time have the knowledge of advance troubleshooting, workarounds and backup plans, and the current underwriting practices it takes to get a loan closed in this restrictive mortgage market. If you found them in some way other than a referral, you can even ask for references from a few clients. Most mortgage pros who have been in business for awhile will be able to give you names and numbers of clients they’ve worked with on multiple purchases and/or refis: that’s a very good sign. You’ll rest a lot easier if you know that your loan is in the hands of a seasoned pro who others like you trust with their largest asset - and largest financial obligation.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Thursday, June 23, 2011

#1 Cause For Homeowner Insurance Claims

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Thursday, June 16, 2011

How to Choose a Neighborhood: 5 steps to finding a place where you belong

How to Choose a Neighborhood: 5 steps to finding a place where you belong

By Liz Gray,

STEP 5 -- Close the Case

You've chosen your neighborhood. Now for the hard part: finding a house you love. Luckily, you've narrowed it down to a few streets. Now, make sure to:
•Find out how much house you can afford. The amount of money a lender offers you is often more than you can truly afford to pay. Use FrontDoor's handy mortgage calculator to add all your current debts and see how much you can afford. You don't want to be stuck eating ramen noodles for the next 15 to 30 years.
•Compare your loan options. Ask yourself these basic questions to find out what mortgage is right for you. Decide between fixed and adjustable rate mortgages with FrontDoor's comparison tool. Then, try another tool to see which loan term is best for you.
•Draw up your vision of home. It worked for your neighborhood -- now think about what you want in a home. Write your own vision of home and stick to it while you're house hunting. Don't know a Craftsman home from a contemporary one? Learn about 18 different home styles and find the right one for you.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Wednesday, June 15, 2011

How to Choose a Neighborhood: 5 steps to finding a place where you belong

How to Choose a Neighborhood: 5 steps to finding a place where you belong

By Liz Gray,

STEP 4 -- Find the Clues

Once you've done the background research, visit neighborhoods that made the preliminary grade in person. There's no better way to paint a real picture of life in the neighborhood. Use your senses to get a complete picture of the prospective community.

•Remember your first impression. What do you notice first about the neighborhood? Do the streets have curb appeal? Are the houses well-maintained? Do the shops and restaurants look hip and inviting? You'll want to feel good about where you call home, and impress buyers when you're ready to move on.
•Visualize yourself in the neighborhood. Think of your daily routine. If you can't live without a morning latte, is there a coffee shop nearby? Where will you walk your dog or go jogging? You'll enjoy the neighborhood more if it's easy to do what you like.
•Observe the neighborhood at different times of the day. Driving through will help you get a snapshot of life in the community -- good and bad. Do the roads turn into a parking lot after school or during rush hour? Are people using grills or decks in the evening? Are neighbors and kids socializing or do people keep to themselves? Are the streets well-lit at night? These visual clues can help you decide if you'll fit in.
•Make sure the local schools make the grade. Even if you don't have kids, pay a visit to the nearby schools. High ratings are great, but seeing the buildings is much more telling. It will be easier to sell your house later if the schools are nice.
•Look for warning signs. Be on the lookout for signs that the neighborhood is in trouble. Do you see abandoned buildings or vandalism? Are there a lot of "For Sale" signs or rentals? If the community goes downhill, so does your house's value.

•Stop and listen. Bird and nature sounds are generally pleasant, but what about noise from the highway, airport, hospital, train tracks or nearby clubs and bars? It's not very relaxing to listen to trains screech by during your morning coffee -- especially not every morning.
•Talk to your future neighbors. Ask how they like the area, and get the dirt on anything they don't like about the place. What do they want to change? What's their favorite place to hang out? If they're rude to you, they probably wouldn't be good neighbors anyway.
•Talk to more people. You'll get the best information from regular people who aren't trying to make a sale. (Read: not your real estate agent.) Hit up your waiter for information when you're checking out the local food, or ask a gas station attendant to spill what they know about your chosen neighborhood.

•Specifically, are there any? You can't experience unpleasant smells on the Internet and they're not advertised in tourism brochures, but they can certainly affect your decision to live in an area. Take a big whiff of the air, and ask around if you smell any fishy (or just bad) odors.

•No, I'm not asking you to lick your prospective home's mailbox. But ask yourself if the neighborhood matches your taste in a living environment -- and if it meets your criteria. Just because it's a nice neighborhood doesn't mean it's the one for you. If the neighborhood meets your list but still feels wrong, search out another area. Trust your gut feeling -- after all, you're the one who has to live there.

Stay tuned for step 5.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Tuesday, June 14, 2011

How to Choose a Neighborhood: 5 steps to finding a place where you belong

How to Choose a Neighborhood: 5 steps to finding a place where you belong

By Liz Gray,

STEP 3 -- Get the Suspects

With your area of the city in mind, start digging up information. Find interesting neighborhoods online, ask local real estate agents for recommendations and compile all the background information you can, including:
•School information: Look into the local public and private elementary, junior and high schools, as well as daycare programs.
•Crime statistics: Most real estate sites have statistics that tell you how the zip code's crime rates measure up to the national average. If you want specifics, call the local police station.
•Parks and recreation: How far is it to the closest park or recreation center?
•Neighborhood associations: Does the community you're looking at have one, and, if so, are there lawn or construction restrictions? Is there a yearly fee?
•Tourist attractions: Get a guidebook or check out the convention and tourism bureau's Web site to see all the city has to offer.

Stay tuned for step 4.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Monday, June 13, 2011

How to Choose a Neighborhood: 5 steps to finding a place where you belong

How to Choose a Neighborhood: 5 steps to finding a place where you belong

By Liz Gray,

STEP 2 -- Zero In on the Area

If you're moving within the same city, you may already know the various neighborhoods. Choose the ones that best match your list of wants. If you're moving to a new city, you'll have to do more research. Start by picking a part of town to search in. For instance, if your job is on the west side of town, start there. In a really large city, narrow it down to a few-block radius, say, SoHo in New York City. This will make your search more focused.

Stay tuned for step 3.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Sunday, June 12, 2011

How to Choose a Neighborhood: 5 steps to finding a place where you belong

How to Choose a Neighborhood: 5 steps to finding a place where you belong

By Liz Gray,

If houses are like spouses, a neighborhood is like the extended family. But while you can have a good marriage and still dread holidays with the in-laws, you'll never love a house if you don't like your neighborhood.

How can you choose the right community? Become a neighborhood detective. Figure out what you're looking for, do research and find a neighborhood that fits your description. You don't even have to wear a trench coat -- but it probably wouldn't hurt.

STEP 1 -- Profile Your Perfect Neighborhood

Before you start scrutinizing neighborhoods, turn the magnifying glass back on yourself.

Think about what you're really looking for in a new neighborhood. Remember, you'll probably have to make compromises, so put the "must-haves" at the top and the "would- like-to-haves" at the bottom. Not sure what fits your lifestyle? Here's a list of 12 types of neighborhoods to get you started.

Here are some things to consider:
•Do you have children or are you planning to have children anytime soon? Parents know that the first thing to do when looking at a neighborhood is to research the school system. Even if you're single, living in an area with a much sought-after school system raises your property value. If you have kids, you'll also want to live close to parks and community centers.
•What type of home do you want? Are you interested in a single-family home or an apartment, townhouse or co-op? Read more about the different types of homes.
•How far are you willing to commute? Do you plan to drive, walk or take mass transit to work? Do you have a car or would you be willing to get one?
•Do you want to be in a historic neighborhood or a new development? Historic neighborhoods have tons of character, but often require lots of repair work and are governed by community associations with strict standards. Newer developments have more modern features, but are typically far from the city center. Read more about the different types of architecture styles.
•What is your current community lacking? If you're currently landlocked, but have always wanted to live on the waterfront, put that at the top of your list. If you're a coffee junkie, having a Starbucks down the street may be a dream come true.
•Do you want to be able to go places on foot? Would you like to be within walking distance of shops, restaurants and bars? Or would you be willing to drive to nearby businesses?
•Think about what you don't want in a neighborhood, too. If you can't stand late-night noise, you'll probably want to steer clear of the college area or an area with a lively bar scene.

Stay tuned for step 2.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

Saturday, June 11, 2011

Owning a Home Essential to the American Dream, Survey Shows

Owning a Home Essential to the American Dream, Survey Shows

RISMedia, June 10, 2011—Despite the ups and downs of the housing market, home owners and non-owners alike consider owning a home essential to the American Dream.

That’s the key finding of a recent survey of people likely to vote in 2012 that was conducted on behalf of the National Association of Home Builders (NAHB) by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C.

“The survey results show that Americans see beyond the immediate housing market to the enduring value of homeownership,” says NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “An overwhelming 75 percent of the people who were polled said that owning a home is worth the risk of the fluctuations in the market, and 95 percent of the home owners said they are happy with their decision to own a home,” Nielsen says.

“Homeownership is worth the risk, pure and simple,” says Neil Newhouse, a partner and co-founder of Public Opinion Strategies. “Even though the market is weak, people who don’t own say they want to buy a house. Almost three-quarters of those who do not currently own a home, 73 percent, said owning a home is one of their goals. And among younger voters who are most likely to be in the market for a home in the next few years, the percentages are even higher,” Newhouse says.

One of the more striking aspects of the survey results is the intensity of sentiment among potential voters, according to Celinda Lake, president of Lake Research Partners. “People believe overwhelmingly that owning a home is an anchor to the American Dream,” she says. “It’s an anchor to your retirement, and it’s an anchor to your personal economic well-being.”

Among the other survey results:
• Homeownership and a retirement savings program are considered by voters to be their best investments.
• 80 percent of home owners would advise a close friend or family member just starting out to buy a home.
• Saving for a downpayment and closing costs is the biggest barrier to homeownership.
• Americans believe that owning their own home is as important as being successful at their job or being able to pay for a family member’s education.

“Owning a home isn’t just a policy to people,” says Lake. “It isn’t just a commodity to people. It is a core value.”

This national survey of 2,000 likely 2012 voters was conducted May 3-9, 2011 by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C. It has a margin of error of +2.19 percent.

Public Opinion Strategies is a national political and public affairs research firm based in Alexandria, Va. Founded in 1991, it has conducted more than 6 million interviews with voters and consumers in all 50 states and over two dozen foreign countries.

Lake Research Partners is a leading public opinion and political strategy research firm providing expert research-based strategy for campaigns, issue advocacy groups, foundations, unions and non-profit organizations.

If you would like expert advise and representation in your next move, please contact me.

Suzanne O'Brien
(313) 516-6644

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