Rising Interest Rates Are Causing a HUGE Shift in the Real Estate World of Supply and Demand

Rising Interest Rates Are Causing a HUGE Shift in the Real Estate World of Supply and Demand

By: Michelle Lorenzetti, Investment Broker

Rising interest rates are causing a HUGE shift in the real estate world of supply and demand. No one has a crystal ball but all signs appear to be pointing towards a recession, even though reports on gross domestic product looked positive for us last week. The 30-year fixed rate mortgage is at 7.08% - 20-year high - since April 2002, and really contributing to slowing in the housing market. On top of this, there are higher costs all over, which means low consumer confidence. Many buyers are “waiting” and the decrease in demand has shrunk buyer pool and real estate prices even further down. When rates rise, purchasing power of borrowers shrinks. The average loan amount in September was $305,550 –way lower than the February peak of $340,000.” Many sellers are still not comprehending this – and still think they can get a number they are wanting – just because that is the number they need! Not the case! Sellers need to understand the facts of the market, and if they want to take advantage before rates go higher they should do so now. It helps we have a huge amount of closed data on the books with the higher purchase numbers due to the sellers’ market we’ve enjoyed over the past year

and a half, and still kind of a low inventory. We are still seeing people buy – even multiple offers - when a property is priced right. Definitely NOT at the same velocity we had a few months ago for sure, still moving, just slower. The overpriced listings will not be moving anytime soon – that is for sure.

I have also seen many deals that are in process just “fall apart”. Even to the point of buyers just forfeiting their deposits. As they have explained; they just cannot afford the payment and have to walk away. So, what can we do about this? Stay informed and aware of what is going on – and make the best decisions for you! It’s also VERY smart to have funds in reserve, just in case! And if you were one of the lucky people who sold at the top of the market and made a good profit congratulations! (I was one of them too!) And a little good news for buyers – I feel they will be able to start presenting offers with terms that sellers may consider given the way things are going. They have not had a chance to compete for some time. Just keep in mind this shift is not “instant” or “overnight”, so again just keep a close eye of what is going on out here and how it affects you.

About Michelle Lorenzetti

CT Real Estate Broker, Investor, Wholesaler. Agent to Investors. Expert in locating off market deals & passing them on to my Investors. Specialties include significantly discounted single family rehab projects, commercial & multi family projects with owner financing. Many of my clients offer package deals. To learn more about my current off market deals please e-mail michellelorenzetti@sbcglobal.net or call 860-335-0681

10 Things You Should Know About Purchasing Home Insurance

From: insureonline.org

1. You Need Home Insurance Homeowners need to purchase home insurance to protect their homes and personal property. Those who rent need insurance to protect their furniture and other personal property. Everyone needs protection against liability for accidents that injure other people or damage their property.

2. Decide How Much Coverage You Need The better your coverage, the less you will have to pay out of your own pocket if disaster strikes. In some cases, your lender decides how much coverage you need and may require you to buy a policy that covers at least the amount of the mortgage. It is important to note that the amount of coverage you buy for your house, contents and personal property will affect the price you pay. 3. Compare Deductibles The deductible is the amount you have to pay out of pocket on each claim and applies only to coverage on your house and personal property. Make sure when choosing a policy that you are comfortable paying the deductible if you make a claim. Remember, a policy with a $100 deductible will cost more than one with a $250 deductible. Higher deductibles may be available at a reduced price. 4. Replacement Cost or Actual Cash Value? You have the option to choose to insure your home and belongings for either replacement cost or actual cash value. Replacement cost is the amount it would take to replace or rebuild your home or repair damages with materials of similar kind and quality, without deducting for depreciation. It is important to insure your home for at least 80 percent of its replacement value. Actual cash value is the amount it would take to repair or replace damage to your home after depreciation.

5. Shop Around Before You Buy You are not required to purchase insurance from the company your lender recommends. There are a number of unbiased sources available to find out what different insurers charge for identical products and services, including your state insurance department, consumer publications and your public library. 6. Ask Your Agent About Discounts In some states, insurers offer lower prices for such things as insuring your home and car with the same company, installing deadbolt locks or alarm systems or replacing the roof. 7. Basic Coverages Available Whether you own or rent, there are different packages of home insurance offered to protect your home and belongings. Each package protects against a specified number of events that cause damage to property. Three examples are fire, windstorm and theft. In addition, each package policy usually contains four additional types of coverage: property damage, additional living expenses, personal liability and medical payments. 8. Where to Shop Check the newspaper and yellow pages of the telephone directory for companies and agents in your area. In addition, ask your neighbors, relatives and friends for recommendations on insurance companies and agents. Remember to shop around to get the best price and service. 9. Read Your Policy Carefully You should be aware that a home insurance policy is a legal contract. It is written so that your rights and responsibilities as well as those of the insurance company are clearly stated. When you purchase home insurance, you will receive a policy. You should read that policy and make certain you understand its contents. Keep your policy in a safe place and know the name of your insurer.

10. Review Your Home Insurance

Needs Every Year Check with your insurance agent at least once a year to make sure your policy provides adequate coverage. The addition of a room, new insulation or remodeling add value to your home and therefore may increase replacement cost.

Top 10 Fall Maintenance Tips for Landlords and Property Managers

By: Alecia Pirulis, from apartments.com

In many parts of the country, when temperatures cool and the leaves start to fall, deep freezes and piles of snow aren’t far behind.

To prepare for winter’s annual assault on roofs, siding, and walkways, do these 10 fall maintenance tasks to get your rental property ready, and ensure your tenants stay warm, dry, and happy. 1. Clean the roof and gutters Gutter cleaning may not be a fun job, but it’s something you need to do every year. While you’re at it, use a rake and leaf blower to get the leaves off the roof. Clogged gutters and piles of leaves and twigs in roof valleys are the main reasons ice dams and icicles form. Besides creating extra weight for the roof to support, these freezing weather hazards eventually melt to form pools of standing water that cause leaks. Consider getting gutter guards, but choose wisely. Installing gutter guards can keep out leaves and debris, but be wary of wire mesh guards. They may keep out large debris, but the pine needles and small leaves they allow to pass can block water flow. Mesh guards prevent you from reaching into the gutters, which complicates the task of cleaning. Alternatives include micromesh guards, which keep out pine needles and even shingle grit, and hinged guards that you can lift out of the way when cleaning. 2. Trim overhanging branches Ice storms happen, and iced-over branches that overhang the roof can snap off and damage the roof. Even if that doesn’t occur, overhanging branches are sources of roof debris that can cause ice dams, and they provide a bridge for rats, squirrels, ants, and other pests onto the roof and into the attic. Getting rid of them is an

important part of fall maintenance.

Branches that can potentially interfere with power lines should be the first to go. Working around power lines is hazardous, so this is probably a job for a pro. While you’re cleaning up the branches, don’t forget to prune back ivy and other creeping vines that have reached roof height. 3. Rake the leaves

Autumn wouldn’t be as beautiful without falling leaves, and raking them up is a fall maintenance job that every property owner should do. If you haven’t already assigned this job to your renters in the lease, you might want to offer them a nominal rent reduction so you won’t need to do it yourself. You might also consider hiring a landscaping contractor or a local teenage entrepreneur. Removing and properly disposing of leaves protects the lawn and garden, prevents slipping hazards when the rains start, and keeps the homeowner’s association and neighbors happy. 4. Check weatherstripping and insulation Drafts coming through unsealed doors and windows drive up the heating bill and can make tenants uncomfortable and even unhealthy. Foam weatherstripping lasts from five to 10 years, depending on quality, and should be replaced when it cracks or shrinks. The best time to do this is in the fall, after the days of harsh, foam-degrading summer sunlight are over and before the cold winds blow.

You can control drafts coming through window and door casings by removing the casings and spraying foam insulation in the gap between the window or door frame and the studs. It will probably take a pro about a day to do this to all the doors and windows. If you pay the heating bills, you’ll recover the expense by saving 10 to 15 percent in energy costs over the course of the winter.

5. Clean or replace HVAC filters Cleaning and replacing HVAC filters is a routine task that you should do every year, and ideally it should be part of your fall maintenance regimen. Central heating systems work 24/7 during the cold months, and they run more efficiently when the filters are clean. Replace all the return air filters as well as any filters on the heater housing itself. 6. Patch holes

Small animals see your basement, attic, and the insulation in your walls as refuges from the cold winter winds. Some critters can get in through holes as small as 1/4 inch in diameter. Patch smaller holes with caulk or foam spray, and use wire mesh, sheet metal, or plywood to cover the larger ones. Be sure to check the attic vents for holes or frayed edges. Do you have rot in the eaves or foundation? Dig it out and fill it with epoxy filler

to prevent rodents from eating their way into your property. 7. Drain exterior faucets

Burst pipes are a perennial winter hazard, and they often occur in pipes feeding hose bibs on the side of the house or in the garden. Prevent burst pipes by turning off the valve to these faucets, then opening each one to allow water to drain out. It’s a good idea to leave the faucets slightly open to ensure that any ice that does happen to form in the pipes has room to expand. 8. Turn off and drain the sprinkler system Most sprinkler systems have a drain valve located at the lowest point in the system; if you can’t find this valve, you may need to get one installed. To use this valve effectively, you first need to turn off the main water supply, then open the valve for each zone while the drain valve is open. This allows the water backed up behind each zone valve to flow out through the drain.

9. Check and clean the chimney If your property has a wood stove or a fireplace, yearly chimney maintenance is a must. Creosote builds up quickly. Not many landlords or property managers are equipped with chimney cleaning equipment, so this is another job for a pro. Don’t forget to check the damper and clean the spark arrestor. 10. Do a fall maintenance safety inspection Loose decking boards and rotted stair treads are irritating in the summer, but they become hazardous in the winter when buried in ice and snow. When you’re replacing popped nails or rotted boards, pay special attention to the railings, especially on outdoor staircases. You want to make sure they can support someone who loses their footing. Applying a non-slip coating to the treads may prevent that slip from occurring in the first place. Preparing your rental for winter protects your investment and minimizes the chances of getting emergency calls in the dead of winter. It reduces the chances of an accident on your property. You’ll sleep better at night, and so will your renters.

For More Information Visit Our Website: landlordcollections.net Give Us A Call: (800)-369-6153

5 Tips for Buying a Home With Mortgage Rates at 20-Year Highs

By: Ellen Chang, with finance.yahoo.com

Buying a home as mortgage rates continue to increase has become more challenging. Some potential buyers have retreated to the sidelines and are taking a break until mortgage rates start declining again or for home prices to fall to a level they can afford. Home prices have not declined year-overyear because the number of listings have fallen as potential sellers concerned by high mortgage rates decide to stay in place. Even as the sales of homes declined by over 30% from a year ago, new listings are down nearly 20% because many prospective sellers balk at giving up a 2% or 3% mortgage rate. Pending home sales declined by 35% year over year during the four weeks ending October 23, according to a report from Redfin. The dip is the largest annual decline and the fewest homes under contract in any October since at least 2015 when Redfin began its weekly housing market records. "Until this month, the pullback in the housing market could be described as something of a return to pre-pandemic conditions before sub-3% mortgage rates ignited a home buying frenzy in 2020 and 2021,” said Taylor Marr, deputy chief economist for Redfin, a real estate company. “But now both mortgage purchase applications and pending sales are below 2018 levels. A fouryear setback is a serious correction. With mortgage rates still elevated, we are in for further sales declines, but those should eventually bring price relief to those who need to move this winter.”

Some potential homeowners either can not wait or need to move now. Here are five tips for buying a home as mortgage rates exceed 7%.

Look For Homes on the Market Longer

Consider looking at homes that have been on the market for 30 or 60 days and making a lower offer, Marr said. “Not everything is dictated by asking prices, buyers should account for the fact that home values are likely about to decline when determining their offer price,” he said. One strategy is to offer $475,000 on a $500,000 listing, Marr said. If you like a home and can comfortably afford paying $475,000 for it and believe home prices will decline by 5% in the next year, you can factor that into your negotiations. “When prices were soaring at the height of the pandemic and expected to grow 10% year over year, buyers often priced that into offering over asking price, and it also works the other way around,” he said. Some sellers are also willing to help buy down your mortgage rate, which would mitigate some of the impact of higher rates. "Every set of market conditions comes with its own tradeoffs," said Sacramento real estate agent Michael Cendejas. "Today many homes are staying on the market for a month or two. While mortgage rates are much higher now, buyers have the opportunity to negotiate. We've gotten sellers to agree to a lower price and to provide a credit, which enables the buyer to buy down their mortgage rate to below 6%."

Pay Discount Points

Some mortgage lenders offer discount points which are fees you pay now in order to lower your interest rate. When you pay for points, you receive a lower interest rate and pay less over time, according to the Consumer Financial Protection Bureau.

“Points can be a good choice for someone who knows they will keep the loan for a long time,” said the federal consumer protection agency. The points are calculated in relation to the loan amount - each point equals one percent of the loan amount. “As in other times of higher rates, mortgage companies are getting creative with the products they offer,” said Bill Golden, a real estate agent and associate broker with Keller Williams Realty Intown Atlanta. “You can often pay some discount points upfront to buy the rate down.”

There are products out there like the 3-2 -1 buydown loan where the homeowner pays a buydown fee at closing and your rate is 3% less for the first year, 2% less for the second year, 1% less for the third year, and then remains at the full rate for the rest of the life of the loan, he said.

Refinance Your Mortgage Later

Most people will refinance their mortgage within the first three years during this current environment, Golden said.

Refinancing does mean starting over on a mortgage and resetting the clock on the payoff date and paying closing costs again, but a lower rate means more of your payments will go towards the principal amount. “We have a saying in the real estate business - you marry the house, but date the rate,” he said. “We all know that rates fluctuate over the years,so buy the house you want and just know you can always refinance when rates come back down, which they will.”

Mortgages With Lower Down Payments

There are several types of governmentbacked mortgages that require low or no down payment.

Instead of paying 20% for a down payment for a traditional 30-year mortgage, a FHA loan is backed by the Federal Housing Administration and lets you only provide a down payment as low as 3.5% since the intent was to encourage first-time homebuyers. Mortgages backed by the Veterans Administration, known as VA loans, don't require any down payment. They're only available to veterans or active-duty military who meet a minimum service requirement. For people buying homes in rural areas, there's also the option of a zerodown mortgage backed by the U.S. Department of Agriculture. The USDA defines "rural" as "any town, village, city, or place" with fewer than 20,000 people that is not located within a Metropolitan Statistical Area. These government-backed mortgages typically carry lower interest rates than so-called conforming mortgages, meaning home loans that meet the standards to be purchased by Fannie Mae and Freddie Mac. The average U.S. fixed rate on Tuesday for a 30-year conforming mortgage was 7.05%, according to Optimal Blue. That same day, the average rate for a mortgage backed by the FHA was 6.86%, while a VA loan was 6.73% and USDA was 6.92%.

Adjustable Rate Mortgages

There are several types of adjustablerate mortgages, or ARMs, that carry lower rates.

Typically, the rates for ARMs are fixed for five, seven or 10 years, meaning the mortgage rate only resets – with caps on the interest rate change –after that time period. They can be a good option when mortgage rates are high.

7 Energy Saving Tips for the Fall

By: Santee Cooper, with santeecooper.com

After a blazing hot summer, it’s exciting to welcome cooler weather during a transition into fall. The humidity breaks, the landscape changes colors, and holidays begin to arrive. But if you’re not careful, higher energy consumption can creep into the season, too. Fall is the ideal time to switch the energy saving tools and habits used throughout your home to make sure you’re set up for savings when your next energy bill arrives. Here are seven ways how you can save on your energy bills this season:

Let the sun heat up your rooms

Use curtains to your advantage. During the day, opening the curtains to let in sunlight from south-facing windows will help warm the room without using any extra energy. In the afternoon, close the curtains to hold in heat and keep the chill out. Use the sun’s energy and warmth to your advantage!

Seal cracks, leaks and drafts

Before it gets too cold, check your windows and doors for gaps and open areas that could let heat out or cold in. Using weatherstripping and caulking before you’re in the thick of winter will contribute to significant savings if you catch the drafts in time. Additionally, you should check cut-throughs for pipe access, recessed lighting, entries to unfinished spaces and chimneys for gaps that could be affecting your insulation.

Reprogram your thermostat

During the summer months, we recommend setting your thermostat at 78 degrees so your system doesn’t have to work too hard to bring the temperature down. As we move into fall and the cooler weather it brings, we recommend reflecting the same idea with your heat. Keeping the temperature set so that the heat doesn’t turn

on until it’s 68 degrees or lower will help it run systematically without being overworked or using too much power. A good practice is to find a temperature you like and leave it there for day-to-day use. If you’re going to be away for a while, set it low – 65 or lower – and step up recovery two degrees at a time when you return. A programmable or smart thermostat is a great way to stay on track as you can set it and forget it.

Service your heating system

Transitioning to fall is the perfect time to make sure your heating system is operating properly. Not only should you change the air filter monthly, but you’ll also want to make sure it is functioning properly and using the right amount of energy for the size of your system and home. If you need to upgrade, it’s best to get it out of the way before it’s an emergency and too cold outside for comfort.

Assess your fireplace

Your fireplace is a large, but sometimes not obvious, pathway for air to escape. The damper should stay closed unless a fire is burning so that warm air from your heating system doesn’t escape through the chimney. Check the seal to make sure the damper is as snug as possible. Tempered glass doors and an air exchange system that blows warm air back into the room will also help keep the heat where you want it - inside your home. You can also purchase energy-efficient grates that help draw cool air toward the fireplace and direct warm air back into the room.

Replace your indoor air filter

Reverse ceiling fans

We think of ceiling fans as a tool to cool us down, but they can also work to keep us warm. When you set the direction of the fan to turn clockwise, it pushes warm air that has risen to the ceiling back down into the room. It also helps to redistribute air so the air coming out of the vents reaches all parts of the room rather than having warmer and cooler pockets of air in different areas. No ceiling fans? Consider installing them in rooms you use most for a simple way to consistently help maintain your energy usage.

This tip is helpful year-round but is one that can be easily forgotten. When dust and dirt build up on HVAC filters, it makes the entire system work harder than it needs to, therefore using more energy. Set a reminder to change your filters monthly or sign up for a subscription so your filters stay dirt- and allergen-free, keeping your system working at an optimal level.