Newer homes can be cheaper

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Understanding the difference: Home equity line of credit vs, Second Mortgage

NORFOLK, VA, Jul 10, 2013—At some point in life—maybe your oldest is off for college or you're finally ready to put on that home addition—you may want to tap into the equity of your home. You have several options here, and two that are commonly confused are the home equity line of credit, and the second mortgage. Below, Louis Eisenberg, Associate Broker REALTOR ABR SFR of Prudential Towne Realty gives us a breakdown of the difference.

“A second mortgage is any loan that involves a second lien on the property,” says Eisenberg. “You receive a lump sum at the beginning of the loan, and every month you pay down the principal and the interest.” The second mortgage can be fixed or variable, and the available amount is often based on the difference between your home's current value and the outstanding principal balance on your first mortgage.

“As second mortgages are subordinate to first mortgages--meaning your first mortgage gets paid off first should the loan default—they are riskier for lenders and often come with higher interest rates,” says Eisenberg.

A home equity line of credit (HELOC), like a second mortgage, lets you tap up to about 80 percent of the appraised value of your home, minus your current mortgage balance. The way the money is distributed, however, is much different than a second mortgage.

“Similar to a credit card, you are given a limit and are able to borrow up to that limit for a certain period of time, which can be anywhere from 5 to 20 years,” says Eisenberg. However, because it is set up as a line of credit, you will not be charged interest until you actually make a withdrawal against the loan, although you will be responsible for paying closing costs.

Unlike a second mortgage which can be fixed or variable, a home equity line of credit is always adjustable.  “It's of the utmost importance that you understand the terms of the loan,” says Eisenberg. “If, for example, your loan requires that you pay interest only for the life of the loan, you will have to pay back the full amount borrowed at the end of the loan period or risk losing your home.”

So which option is better for you? A HELOC is best if your monetary needs will be spread out over a length of time, like if you're renovating your home or paying for a college tuition.  A second mortgage is probably best if you need all of the funds at once, as it's a fixed-rate.
For more information on taking out another loan, please contact Louis Eisenberg, Prudential Towne Realty, leisenberg@prudentialtownerealty.com, (757) 572-7244, or www.LouisEisenberg.com 

How to win your home bidding war

NORFOLK, VA, Jul 02, 2013—When entering a bidding war, you need to put your best foot forward. With multiple offers to consider, the seller needs to see that you're serious and ready to act fast. Below are a few tips to help you knock out the competition.

Be prepared. While it might seem smart to you to lay your offer on the table right away, don't do so unless you're fully prepared, pre-approved for a loan, and have all of your paperwork and finances in order. “Otherwise, the seller won't take you seriously and will pass your offer over for someone who has completed their homework,” says Louis Eisenberg, Associate Broker REALTOR ABR SFR of Prudential Towne Realty .

Be quick. “This may seem counterintuitive to being prepared, but it's important to act fast when you see a home you like, or it will go to another bidder,” says Eisenberg. This is why it's important to get your finances in order before you even begin searching. That way, you can put an offer in right away when you find a good fit.

Don't overbid. Offering more than the home is listed for may seem like a way to get a leg up on the competition, but overbidding and exceeding the home's appraised value can decrease your chaces of a loan--and the seller (or their agent) knows that. “If you overbid, be sure you can afford the excess cost flat out,” suggests Eisenberg.

Don't underbid. “In a bidding war, your offer needs to be just right,” says Eisenberg. Just like the seller won't take you seriously if you overbid too much, they surely won't consider your lowball offer if they have offers from many other buyers. To find your “Goldilocks” price point, figure out the maximum you can afford, and then offer that.

Get under their emotional skin. Last year, everyone was back to writing “love letters” to the sellers of a home they were crazy about. Talk about why you love this home, and why you can see yourself in it. “Does that third bedroom look perfect for your new baby? Is that basement office perfect for running your business? Talk about that,” Eisenberg notes.

Home Remodeling More Popular Than Ever as New Home Prices Rise

According to the Census Bureau, a 28.9 percent rise in new home sales since last year -- coupled with a lack of premium existing properties on the market -- is causing home renovation spending to hit a six-year high. Power Home Remodeling Group cautions homeowners to spend smartly on remodeling projects by investing in fundamental improvements such as roofing, siding and window replacement that will earn the biggest return on investment in this time of cautious optimism as the housing industry continues to slowly improve from the recession. According to Remodeling Magazine, homeowners who invest in an upgrade to vinyl siding will recoup around 72 percent of the renovation's costs in added value to the home.

"Homeowners are investing money in their homes again as the cost of renovations is less than the cost of buying a new property and selling their existing property. Though it may be tmpting for homeowners to make personalized improvements, it is important to spend money wisely when renovating and focus on upgrading basic home functionality to get the biggest bang for their home improvement buck," says Corey Schiller, Power's chief executive officer.

Power offers the following tips for exterior home improvements that update a home's style and curb appeal while also making it more valuable:

• Vinyl Siding – Updating the exterior of your home with vinyl siding will help increase your home's curb appeal while boosting its energy efficiency. Replacing the exterior of your home with vinyl siding will cut down on the maintenance of your home's facade and the project can recoup up to 72 percent in added home value.

• Energy Efficient Windows & Doors – New, energy efficient windows are ideal for insulating a home from extreme temperatures that change with the seasons. If a window overhaul is unrealistic, replacing windows in key rooms of the home where the sun rises and sets can make a huge impact. Old or improperly sealed doors can also significantly affect a home's energy efficiency by allowing air to easily escape. Installing a new door can provide more effective insulation than older ones. Window and door replacement can recoup up to 74 percent in added home value.

• Roofing – Though roofing typically lasts between 20 to 30 years before needing a full replacement, weather can loosen or damage shingles, putting a home at risk for water damage and air leaks. Fixing small issues before they turn into a huge headache can help save you time and money in the future. However, if your roofing needs to be replaced, the project can recoup up to 62 percent in added home value.

Reprinted with permission from RISMedia. ©2013. All rights reserved.

 

For more information on Home Remodeling, contact Louis Eisenberg, Prudential Towne Realty, 109 E. Main Street, Norfolk, VA 23510, (757) 572-7244 www.LouisEisenberg.com

 

Keep your home remodel safe and stress free

NORFOLK, VA, Jun 24, 2013—Remodeling your home can be overwhelming. After planning out your project, hiring your contractor or builder, and laying out the dates and details, then the real work begins as your home is turned into a construction zone. Below are a few tips to remain safe and stress-free in a possibly chaotic environment.
Plan ahead. “Since your home will become a worksite once the remodeling begins, inconveniences will arise that can be minimized with a little planning,” says Louis Eisenberg, Associate Broker REALTOR ABR SFR of Prudential Towne Realty . Begin by having a frank discussion with the contractor to set guidelines and develop a clear understanding upfront about the various project stages and the processes involved.
Talk, for example, about where building materials will be stored, how to best protect your belongings from dust and debris, areas of your home that will be off limits to workers and whether you will need to vacate the home for any reason over the duration of the work.
Relocate essentials. If a kitchen or bath will be out of commission, plan accordingly. “It’s okay to move the refrigerator, microwave and toaster oven to the basement or another designated area where you can prepare meals to avoid eating out,” Eisenberg notes.
Keep a professional environment. “Have a conversation and lay out rules that dictate how workers can conduct themselves in your home,” Eisenberg suggests. Will they be able to use your bathroom, or should a portable toilet be provided? Will they be prohibited from smoking, playing their radios or using profanity?
Create a safety zone. Finally, remember to preserve a safe haven in your home where you can flee the chaos and dust and attempt to maintain your sanity. This can be one off-limits room, like the living room or bedroom, that is free from construction and still provides an enjoyable atmosphere.
By following these tips, you can help assure that your construction experience will be as stress-free as possible.

For more information on remodeling, please contact Louis Eisenberg, Prudential Towne Realty, 109 E. Main Street, Norfolk, VA 23510,t leisenberg@prudentialtownerealty.com, (757) 572-7244, or www.LouisEisenberg.com

The top five summer selling and staging tips

NORFOLK, VA, Jun 18, 2013—While the busiest home buying season—spring—is almost behind us, buyers are still searching, and summer is looking like a prime time for selling your house. With a little dedication, you can get your home sold by Labor Day.

Be open – “Having a flexible schedule can make or break your summertime sale,” notes Louis Eisenberg, Associate Broker REALTOR ABR SFR of Prudential Towne Realty. Between vacations and events, it may be hard to find time to show your home.  Buyers may want to stop by first thing in the morning before dropping little Jimmy off at camp, or they may want to swing by after dinner. Be sure to maintain an open schedule for showing, and your home sale will happen much faster.

Focus on curb appeal – This is important in any season, but during summer, your garden is growing faster than you can manage it. “If you don't have time to focus on the outside of your home, consider hiring someone to take care of it during the period your home is listed,” Eisenberg suggests.

Make an outdoor living space - In addition to a well-manicured garden and lawn, your yard should have an outdoor living space, if possible. No need to go install an outdoor kitchen; simply setting a table next to the grill, or some comfortable looking chairs grouped together, will look equally as inviting. “Allow your buyers to imagine themselves spending their summer evenings lounging around your yard,” says Eisenberg. Sold!

Watch the air temp – While we've covered how to make the outdoor of your home inviting, you should also be focused on the interior. Too much air conditioning and your buyers will be shivering all throughout their house tour. No AC? They may be itching to get back out into cool air. Have a comfortable temperature inside, and your showings will be more enjoyable, and successful.

Embrace the season – Go through the home and lighten up any accessories you can; throw pillows, hand towels, curtains and drapes should feel light and bright.  “Decorating for the season helps your potential buyers feel a connection with the space, as it's in sync with the outdoor environment. Think light blues, yellows, and greens,” says Eisenberg.

For more information on selling your home this summer, please contact Louis Eisenberg, Prudential Towne Realty, 109 E. Main Street, Norfolk, VA 23510, leisenberg@prudentialtownerealty.com, (757) 572-7244, or www.LouisEisenberg.com

What is a mortgage credit certificate?

NORFOLK, VA, Jun 12, 2013—With the market making a rebound, buyers who had been on the fence are coming to the table to make the best out of mortgage rates before they continue to rise. For those who have been having difficulty qualifying for a mortgage, Louis Eisenberg, Associate Broker REALTOR ABR SFR of Prudential Towne Realty suggests trying for a mortgage credit certificate.

“A mortgage credit certificate, or MCC, makes it easier for eligible buyers to qualify for a mortgage loan,” says Eisenberg. “Offered by many city and county governments, they allow first-time buyers to take advantage of a special federal income tax write-off.”

Under MCC programs, the lender can reduce the housing expense ratio – the percentage of gross monthly income applied toward housing expenses – by the amount of the tax savings. “Normally, lenders reject loans if the housing expense ratio is too high,” Eisenberg explains.

Program requirements for MCCs vary, although most adhere to the following guidelines:

• The buyer must live in the home being purchased with an MCC-assisted mortgage.
• Total household income cannot exceed certain limits.
• The buyer cannot have owned a principal residence within the past three years. This restriction may be waived if a property is purchased within a certain targeted area.
• The purchase price must fall within an established limit.

“If you are interested in applying for an MMC, call your local housing or redevelopment agency for more information, or contact your real estate agent,” Eisenberg suggests.

For more information on applying for a Mortgage Credit Certificate, please contact Louis Eisenberg, Prudential Towne Realty,  leisenberg@prudentialtownerealty.com, (757) 572-7244 or www.LouisEisenberg.com