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Private Mortgage Insurance or PMI

PMI stands for private mortgage insurance. It is not a female condition.

Private Mortgage Insurance

Private mortgage insurance is a policy that you pay for. Do you know what needs to happen in order for you to collect from this insurance that you pay for? Please don’t kill the messenger but, your mortgage lender is the one who will collect any payouts from this insurance. That’s because the insurance is to cover the mortgage lender in case you default on your loan.

Huh?

That’s correct. You pay for the insurance, but someone else collects the payout.

Why Do I Need Private Mortgage Insurance

When you purchase a home and put down less than 20% of the purchase price, private mortgage insurance is required with a conventional mortgage. And if you’re purchasing with an FHA mortgage, there’s a similar program. Should you default on the loan, the lender will foreclose on the home. The lender will then sell the home. Should the sale bring in less than what the lender is owed, included back interest, the insurance will pay the lender the difference.

However, you won’t need to pay the PMI forever. Once you have built up sufficient equity in the property, which would be 20% of the value, you can then cancel your PMI.

What Does Private Mortgage Insurance Cost

Last year the average buyer made a cash down payment which averaged 10%. First time buyers averaged 6% down. As a result, many buyers did not make the typical 20% down payment. However, this didn’t stop them from buying their dream home because they needed to pay PMI. The cost on the PMI depends upon both your credit score and the amount of the mortgage compared to its value. You can expect pay somewhere between $30 and $70 per month for every $100,000 that you borrow as your PMI premium.

Bottom Line

Even though paying PMI is an expense, don’t let that stop you from buying a home. The expense of PMI will go away, and when it does, that means you’ve gained equity in your home. Give us a call when you’re ready to either buy or sell a home, because we can help.

Are you looking at condos in other Monmouth County towns?

Related Blog Posts:

Did You Save the 20% Down Payment?

Surprise! You’ll Need More Cash

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Home Hasn’t Sold


If your home hasn’t sold, you should check the price. We’re in the middle of a very hot real estate market. As a result, homes are selling quickly and getting good prices.

Is It Priced Right?

Demand is remain strong and many real estate professionals are reporting they are having bidding wars with many of their listings. In Monmouth County, there’s only a 90 day supply of condos or townhouses available at the current consumption rate . This means, in English, there aren’t enough homes for sale to allow everyone who wants to buy one, find one. In addition, many homes are also selling either at or above the asking price.

A possible reason why your home hasn’t sold is the condition. Is it clean, neat and odor free? Does it need fresh paint or new flooring? What’s the kitchen like? These are all reason why your home hasn’t sold. Can you correct these issues? However, if you can’t, or simply don’t want to, a pricing adjustment can solve that issue. For the right price, buyers will overlook any defect.

Old Appliances or Systems

Are you appliances near the end of their life span? Is the HVAC system and the hot water heater also near the end of their useful life? These are big ticket items and expensive to replace. We’ve been successful in overcoming these issues in the past by offering a home warranty. You, the seller, purchase the warranty. The warranty is a service contract on the above items. If any if these item cease to work within one year, the new owner will make a call, pay a small co-pay, and the service company will either fix or repair. And you can pay for the warranty from the proceeds at closing.

Bottom Line

If your home hasn’t sold, you may need to adjust your price. Even though the market is hot, buyers will not pay drastically over the market price. So if your home is still on the market  and you’re not receiving any offers, think seriously about reducing the price.

When you’re ready to either buy or sell a home, please contact us.

We have a site that tells about active adult communities in Freehold. If interested, look at Riviera at Freehold, Enclave, Regency at Freehold or Silvermead .

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Radon in Homes

Radon is a radioactive gas which be found in homes in all areas of the United States. Radon comes from the natural decay of uranium buried underground. When this radioactive gas works it’s way to the surface, it can get into your home through cracks and holes in the home’s foundation. And make no mistake, this gas that you can’t touch, smell or see can be hazardous to your health.

A natural danger

Most people are aware that smoking is the number one cause of lung cancer. Few people are aware that Radon is number two. The EPA estimates that Radon causes 20,000 people in the United States to die each year. Furthermore, the EPA reports that almost 15% of US homes has elevated levels of Radon. When this deadly gas accumulates in closed in areas, prolonged exposure can eventually, be as deadly as smoking.

The closed in areas most likely to accumulate radon are the basement and crawl spaces. However, any closed in space is susceptible to accumulation. And the more time you spend in those areas, the higher your exposure levels will be.

Where Can Radon Be Found?

Again, radon can be anywhere in the US. Here, in Monmouth County,17.5% of homes have radon levels which are over the acceptable limit. And just because your neighbor’s home doesn’t have elevated levels of radon doesn’t mean that your homes doesn’t. In fact, the results can change over time. A home that was free of radon can change into one that does have radon.

How Do I Know If My Home Has Radon?

When a home changes ownership, the home inspection process often includes a radon test. To test for Radon, a test kit is left open in the testing area (a basement) for 3  – 5 days, then sent to a lab. After which, a report will be returned stating whether or not elevated levels exist. However, you also have the option of performing a radon test in your home. The kits are inexpensive and have simple to follow instructions.

What to do if high levels are found?

Remediation to decrease high levels is easy. All you need to do is write a check. A contractor does the work. Typically a hole is made in the basement,crawl space or foundation slab and a plastic pipe is inserted which vents the radon gas outside the home to dissipate. A fan is included inline with the pipe to draw the radon out.

Bottom Line

Many homes in the Freehold area have high levels of Radon. Please get your home tested, because your life could depend on it.

If you have questions or comments, please call me. And when you’re ready to either buy or sell a home, please call me.

Would you like to search for a condo in other Monmouth County towns?

 

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What’s Included With The Sale?

When you buy a home, do you know what’s included with the sale?

What’s Included With The Sale?

When you purchase a home, there aren’t any rules as to what is included in the purchase.And that’s because every transaction is unique.  However, there are some items that are usually included.

Unless it’s a knock down property, the building(s) is included. In order to close the sale, the seller needs to provide a Certificate of Occupancy. The Certificate of Occupancy (CO) requirements vary from town to town. The object of a CO inspection is to ensure that the property is fit and safe for people to live in.

Fire Code CO Inspection

It seems many towns, in order to reduce costs,  only do a fire inspection. With a fire only inspection, there must be smoke and carbon monoxide detectors, in addition to a fire extinguisher. Each town has it’s own specifications as to the style of fire extinguisher, most towns follow building code guidelines.

Complete CO Inspection

Many towns require a more complete CO inspection. Most towns require a heating system, however, air conditioning is not necessary. Also required are a working bathroom, a working kitchen sink, a stove and hot water. Unless it’s a handyman special sale, these items are always included in the sale. Possibly they’re not all in working condition, but they are included. In this case, the town can issue a provisional CO, allowing people to move in after the repairs are completed and re-inspected.

What’s Typically Included

Now that we’ve gone through what the towns require, let’s talk about the rest. Typically, many items are included in the sale, but not always. Most of the time, the refrigerator, washer / dryer,window treatments,garage door opener,light fixtures and ceiling fan(s) are included. I like to use the premise that if it’s attached, it stays. But again, not necessarily.

In the MLS Listing, you’ll see listed what is and what isn’t included in the sale. As a rule, personal property (furniture, pictures etc.) aren’t included. However, sometimes items aren’t listed either way. When we write a contract for a purchase, if any of the items above aren’t listed as included on the MLS Listing, we add those items to the contract. If the seller agrees, they stay. If not, it’s a negotiable item.

For some reason. many people seem to have a strong attachment to the dining room chandelier. As a result, commonly that item isn’t included. If it’s removed, the seller must either put a cover on the receptacle or install a replacement fixture.

What Else Stays

There’s no reason  why you can’t request the seller leaves an item that’s not normally included in the sale. In that case, we add them to the contract. As a result, we’ve included many items in the home purchase. A few items we have gotten included with the sale are Pool Tables, Projection TV, Various furniture, Garage refrigerator and Freezers. But one thing I’m prod to have gotten for the new owner is…

A BMW 325i

Bottom Line

A few things are necessary to remain with the house. Everything else is negotiable. If everything that will remain is spelled out in the contract, there will be no mistakes.

When you’re ready to either buy or sell a home, please give us a call.

Would you rather look at active adult communities in Freehold? The communities are Riviera, The Enclave, Regency at Freehold and Silvermead.

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Monmouth County Housing Shortage

Are we experiencing a housing shortage in Monmouth County?

Monmouth County Housing Shortage

I’ve said it before, more than once. And I’m sure you heard it from any other sources too. We are in a housing shortage situation in Monmouth County.

To put it simply, there aren’t enough housing units available in Monmouth County for everyone who wants to buy one. However, it goes a little deeper than that, because it isn’t just the people who are looking to buy that have this challenge in front of them. As a matter of fact, people who want to rent are also having a challenge in finding suitable housing.

Rental Unit Shortage

Quite simply put, there just aren’t enough rental units available. Recently, I read an article about the rising demand for rental units. It stated that nationally, every year 325,000 new rental units  must be built. And nowhere near that number of rental homes are being built. On average, over the last few years, only about 60,000 apartments were built built each year. Furthermore, in this country every year there are 1 million new households created who want to rent. And between the limited new construction and the existing supply of rental homes, there just aren’t enough rental units to meet the demand. As a result, the growing demand for rental apartments will make a significant impact on the economy of this nation for years to come.

The Solution

I’m not an expert, I’m just a Realtor who has been in the business a long time. But the solution I see is simple. Don’t rent, buy.

Here’s how I see it. When you rent, at the end of the year all you have is a stack of cancelled checks. If you own instead, you’ll have equity, tax deductions and the sense of well being that accompanies home ownership. And, quite often, the monthly cost of owning a unit similar to the rental unit you’re looking for may be less in the long run.

Now, I realize that you need a down payment and closing costs to purchase a home, but it may not be as much as you think. At the bottom of this post are links to other posts that discuss these issues.

Bottom Line

Rather than hunt for an apartment, hunt for a home of your own. Speak with a mortgage lender to find out if you can qualify for a mortgage. You may be pleasantly surprised. And when you are pleasantly surprised, call us. We can help you find your new home.

Related Blog Posts:

Did You Save the 20% Down Payment?

Why Would a Seller Pay Your Closing Costs?

Hey – there are some fantastic active adult communities in Manchester, such as Renaissance, Leisure Village West and Leisure Knoll. You should check them out.

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What Is A Real Estate Appraisal ?

When selling a home, the buyer will get a real estate appraisal.

What Is An Appraisal ?

You decided it’s time to sell your home. Soon you received a good contract from a ready and able buyer. Congratulations! Your home is sold!

Or is it? Because you may need to sell it again. And that’s because of the buyer’s mortgage company.

The mortgage company will be sending out someone to do a real estate appraisal on the property. And if the appraisal says that the the selling price is higher than the property’s value, you have an issue to address.

The Mechanics of the Appraisal

As an example, let’s say that you were asking $350,000 for your home. However, due to the lack of available homes in the area, numerous people who want to buy the home. As a result, a bidding war has started., and the selling price gets bid up to $380,000. Hey that’s great you think. We got $30,000 more than the asking price. Woo Hoo!

But now comes the issue. If the real estate appraisal comes in at $360,000, the buyer won’t be able to get the mortgage they need. And this is because the appraiser’s opinion is that the property  isn’t worth $380,000. The lender will only loan up to 80% of the home’s value, which means the buyer cannot get the necessary mortgage to proceed with the purchase. Here’s the numbers.
Purchase Price                                        $380,000
Down Payment 20%                                $76,000
Mortgage Amount                                 $304,000

Appraised Value                                    $360,000
Down Payment                                        $76,000
Maximum Mortgage                             $288,000

Under the scenario above, the buyer will be short $16,000 that’s necessary to close the sale.

What Happens Next?

If and when this situation arises, one of two things will typically happen.

First the buyer will somehow, find and extra $16,000 to make up short fall. However, this isn’t very likely. After all, if you were buying a home for $380,000, but your mortgage company said it was only worth $360,000, how would you feel? Most people wouldn’t like to overpay for the home by $20,000.

Here’s the second, and more likely option. The buyer will ask the seller to reduce the price by $20,000 in order to meet the appraisal, and therefore be able to complete the sale.

Exceptions

Many times, the buyer’s down payment is more than 20%, in which case they can probably borrow the necessary amount. And with other programs which require smaller down payments, they can also borrow the necessary amount. However, that doesn’t negate the fact that the buyer’s will feel they’re overpaying.

Bottom Line

What would you do in this situation? What I would do is reduce the price and let the sale go on. After all, I’d be getting more than I was initially asking for the home, and it gets done. And if the sale falls through, you may not get that price again.

When you’re ready to either buy or sell a home, please give us a call.

Related Blog Posts:

Did You Save the 20% Down Payment?

Hey – there are some great Active Adult communities in Jackson, such as Westlake, Four Seasons at South Knolls, Four Seasons Metedeconk and Winding Ways.

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Carbon Monoxide and Smoke Detectors

Are your carbon monoxide and smoke detectors located correctly?

Carbon Monoxide and Smoke Detectors

When used properly, these inexpensive instruments can save your life. However, if installed in the wrong locations, they won’t perform the tasks they’re designed for. As a result, you may lose not only your life, but the lives of others. Building and fire codes require both of these detectors to be present in your home. The location of carbon monoxide detectors for residences is specified as in each room which has a fuel burning appliance, such as a fireplace, furnace, hot water heater or oven. In addition, one must be located within 10 foot of a bedroom door. Most homes will require multiple detectors. As to smoke detectors, one per floor.

Some towns have additional requirements that require more than the state codes. Check with the local fire board for more info.

Carbon Monoxide Detectors

These will detect this deadly, odorless gas. Make no mistake, if this gas builds up in your home, it can kill. And you won’t even notice it, you’ll just go to sleep – forever. In fact, over 500 people in the US die each year from carbon monoxide poisoning.

Now that you know where to place the detectors, exactly where do they go? On the ceiling? Head height? Knee height?

If you’re not sure, you have lots of company. Bunny and I are Realtors. As a result, we’re in lots of homes every week. And I always check the location of the carbon monoxide monoxide detectors because quite often they’re wrong. And if they are, I’ll tell my clients, and if the owners are home I’ll tell them.

The proper answer is below head level when you’re in bed. That’s because carbon monoxide is a heavy gas, and starts to build at the floor level. And you want to have the detector sound the alarm before you start to breathe it in. Use 16″ off the floor as the proper height, which is the height of the typical wall outlet. What a coincidence. They make plug in detectors, maybe that’s what you could use.

Smoke Detectors

This on’s easy, almost everyone knows the proper location, which is on the ceiling. Smoke rises, therefore, you want the detector where it starts to accumulate. Again, one per floor.

Combination Detectors

There are manufacturers that make and sell combination carbon monoxide and smoke detectors. From what you’re read above, where is the proper location for one of the combo detectors? If you answered that the proper location is in the garbage can, you’re correct.

How Long Do They Last?

Carbon Monoxide detectors should be replace every 5 years. Smoke detectors last longer, 8 – 10 years.

Bottom Line

Many are battery operated, however, even the plug in units have a battery backup. Please be sure to change the batteries regularly. And if a unit starts to beep, don’t remove the batteries – replace them.

When you’re ready to either buy or sell a home, please contact us. We can help.

Would you like to search for condos in other Monmouth County towns?

 

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Is Now a Good Time to Sell?

Do you think it’s a good time to sell?

Is Now a Good Time to Sell?

More and more, many Americans are answering yes to that question. In fact, sixty two percent of Americans think just that. However, twenty six percent of Americans think it isn’t a good time to sell. Let me think for a moment. Sixty two and twenty six? My antiquated math tells me that equals 88. (If I asked my granddaughter that question, the common core method she is forced to use in school would take her at least 5 minutes to calculate the answer. I showed her one time a list of 7 numbers each with between five and seven digits. I asked her how long it would take to add those numbers using common core methods. She said at least an hour. I had her add them using the way I taught her, which is how I was taught. She did it in under one minute. But I digress.) Continuing – 100 percent minus 88% means that 12% of Americans have no idea of whether or not now is a good time to sell their home. And that alone is a sorry state of affairs.

Rising Home Prices

Back on subject. Home prices have risen almost seven percent over the past year. And almost 79% of home owners who have a mortgage have at least 2-% equity in their home. Also, many are of the opinion that they can use that equity to purchase a home that fits their current needs better. However, the rising prices have many worried that they may not be able to afford payments on a new home.

Do the Research

You’ll need to do some research In order to make the determination of what you should do. We can help you with that research. How? We can give you an idea of what your present home will sell for, and how much you’ll walk away with if you sell.  In addition, we’ll work with you to decide how much you’ll need to spend on a new home that will fit your needs. If you’d like to get started on that, just give us a call.

Would you like to search the homes for sale in other Monmouth County towns?

Related Blog Posts:

Freehold Condo Real Estate Market

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The American Dream Returns

Do you think the American Dream has returned?

The American Dream Returns

During the housing crisis, many Americans lost their homes to either short sales or foreclosure. Some of these people were forced to either wait for a certain period before they could qualify for a mortgage. Yet others could get a mortgage relatively quickly, but the rates would be extremely high. However, there are signs that many are planning on buying their own home again because the waiting period is now over for them. And once again, they’re ready to realize the American Dream of owning their own home.

Improved Credit Scores

Between January 2016 and November 2018, 2.8 million former homeowners had the foreclosures and short sales dropped from their credit reports. Many have already purchased their new homes. And more than 50% of the remaining people have credit scores which will allow them to qualify for a mortgage.

According to a recent survey, 6% of Americans who lost a home to either a short sale or foreclosure plan to buy one this year. In addition, 39% plan to purchase one in the next 3 years, while 58% are planning within 5 years. This is a significant number of Americans who are, once again, welcoming the return of the American Dream. However, nearly a third of those Americans report that they’re afraid to own a home again.

The Economy Aids Buyers

Many of these potential buyers have concerns. Since the 2012 bottom of the real estate market, home prices have risen over 50%. And these prices are now, nationally, 11% over the 2006 peak. And many are concerned about another potential housing bubble. However, credit standards are tighter now. Lenders no longer grant mortgages to anyone who can fog a mirror and has a decent credit score. Today’s buyers need to actually prove that they have the necessary income to purchase a home. And this was not the case during the housing crisis. When you take the fact that wage growth has increased since then and couple that with low mortgage rates, there’s a much more stable market out there today.

Bottom Line

Many of these potential buyers are being careful. They’re not ready to spend as much as the mortgage lenders qualify them for. They’re, as a rule, opting for smaller, more affordable homes in the hope that they’ll better be able to withstand another bubble.

If you’re one of the many who have been patiently waiting for your own American Dream to return, call us. We can help you, as we’re helped hundreds of others achieve the American Dream.

Would you like to look for homes in other Monmouth County towns ?

Related Blog Posts:

Did You Save the 20% Down Payment?