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Today is a Skills Market

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In today's ultra-competitive real estate market where there is only 1.7 months supply of inventory compared to 6 months in a balanced market, and the average home is getting 4.8 offers per sale, it is more important than ever to have the right person "champion" your cause. In the Middle Ages, it became customary for a person of nobility to appoint a "champion" to fight for them in their stead.   Trial by combat ended in the 15 th to 16 th centuries but the practice of "fighting" or speaking in one's behalf continues even to this day. Lawyers will take up the cause of their client to win justice for them.   Professional athletes are recruited for their abilities to help their team become victorious.   Craftsmen of every type imaginable are in high demand because of their finished product. Sellers' and buyers' objectives are different and, in many cases opposing in nature.   Sellers, rightfully so, believe they should get th

Existing Homeowners May be Facing Higher Payments

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As a current homeowner, you may be basking in the consolation that you bought before the market got crazy with higher prices and interest rates. However, it doesn't mean that you may not be facing higher mortgage payments for next year. Most homeowners pay their taxes and insurance into an escrow account with their mortgage payment.   The lender monitors the account to be sure there are enough funds available when the taxes and insurance are due.   If there is a shortage, it could cause your payment to increase. In 2021, the national average increase in home prices was just under 20% but may have been considerably higher in some local markets.   The increased value of homes doesn't just affect buyers, in can affect the assessed value of properties across the board resulting in their property taxes going up. Various taxing authorities, like state, city, school, and other special districts, can establish the rate they charge and exemptions that apply.   In most sit

Homeownership and the Three M's

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Homes are valuable assets and must be maintained so they function properly, are safe, enjoyable and hold their value.   Attention to maintenance, minimizing expenses and managing debt & risk will protect your investment. Maintenance It is interesting that people understand the necessity to maintain a car and regularly have the car inspected, repaired and do regular maintenance.   Even though a house could be worth many times more than a car, homeowners regularly neglect what should be routine maintenance. Failure to maintain a home properly adversely affects the value.   Many times, buyers will discount the price they are willing to pay for a home more than the actual cost of the repair or expenditure.   A home in good condition instills confidence while a home in less than good condition generates concern about unknown items that may also need repair. HVAC systems, as well as appliances, run more efficiently when they are maintained which will result in lower util

Will Selling Your Home Increase Your Tax Bill?

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With home prices rising 20% nationwide in the past year and in some markets, even dramatically more, many homeowners are excited about the equity in their homes.   In the past, most homeowners were not concerned about profit from the sale being taxed but some may be surprised. The profit homeowners make on the sale of their homes have enjoyed a generous exclusion.   Since 1997, for qualified sales, single taxpayers exclude up to $250,000 of capital gain and married taxpayers filing jointly, can exclude up to $500,000 of gain. Prior to the Taxpayer Relief Act of 1997, homeowners over the age of 55 were only allowed a once in a lifetime exclusion of $125,000.   The new rule greatly increased the amount of excluded profit to the extent that most homeowners did not think about paying tax on the profit from their principal residences. Section 121, commonly called the Home Sale Tax Exclusion, requires that you owned and used the property as your principal residence for two out o

Buying a Home...Ask for a CLUE Report

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People purchasing a used car have most likely heard of CARFAX vehicle history reports to help them avoid buying a car with costly hidden problems.   Less likely are buyers to know that there is a way to discover some of the repair history of homes they are interested in. Lexis Nexis C.L.U.E. (Claims Loss Underwriting Exchange) is a claims history database that enables insurance companies to access consumer claims for the previous seven years when they are underwriting a risk or rating an insurance policy. An insurance underwriter could identify a previous claim for substantial damage to a property and try to find out whether the repairs were completed properly before assuming the risk as a new insurer.   Similarly, a buyer could benefit from knowledge of former claims that may affect the value of the property or possible, future repairs. A CLUE report can discover insurance claims on a home to investigate whether the repairs were done properly.   These reports are not dire

Coordinating the Sale and Purchase of Your Home

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Usually, it is easier to buy a home than to sell a home but that isn't necessarily the case currently. In today's market, it can be scary to sell your home before buying another because you could find yourself without a home. Most sellers will not accept a contingency on the sale of a buyer's home in today's market.  So, let's look at some of the alternatives that homeowners are using to facilitate the transactions.  If you have the income, credit, and cash available, the replacement home can be purchased with a new 80-90% loan-to-value mortgage and sell the existing home after you have moved into the new home.  This would require making two payments for a while but probably gives the seller the least amount of pressure to find the replacement property before the existing one is put on the market. If the mortgage on the new home has the option to recast the payment, additional down from the equity in the previous home after it sells would lower the paym

A New Opportunity for Homebuyers

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You may not have heard of anyone assuming an existing mortgage for over thirty years and didn't know they were even possible any longer.   The reason is simple, it didn't make financial sense but now that interest rates are increasing, it may be an opportunity for some homebuyers. Conventional loans added clauses to mortgages back in the early 80's that gave the noteholder the right to raise the interest rate if a loan was assumed, as well as require the new buyer to qualify for the loan.   This essentially ended the practice of assuming conventional mortgages. Then, in the late 80's, FHA and VA mortgages did impose the right to qualify the new buyers, but the big difference was that the mortgage rate would remain the same as the original borrower.   Even so, it still effectively ended the assumptions of FHA and VA mortgages because rates on mortgages trended down for the next thirty years. There was really no benefit to assume a mortgage that still require