Does Moving Up Make Sense?

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With prime home buying and selling season upon us, it’s a good time to ask yourself if a move up is right for you. Sometimes we talk with buyers that are considering a move but faced with the reality of a larger mortgage payment, find that its best for them to wait. Or some clients need to know what their home might sell for in order to decide if moving into a new home is right for them. There are many things to consider when deciding if selling your home and buying a new home is right for you. Whatever the case, we are here to help you decide whats best for you and your family.

Whether your family size is growing, you are running out of space or simply want to seize the opportunity to “move-up” to your next home, below are a few questions to consider as you weigh your options.

  1. Have you built substantial equity in your current home? Home equity can be defined as the value of a home, minus the amount of outstanding debt. Although equity does not generally develop in the first few years of home ownership, five or more years of home payments may create significant unrealized gains.
  2. Has your income or financial situation improved? Homeowners should consider their overall financial situation including current and future expenses in order to make an educated decision on price range for a new home. For example, an increase in salary may allow for an increased mortgage.
  3. Has your lifestyle changed? Lifestyle changes are one of the most common reasons people choose to move. Starting or adding to a family may require an extra bedroom or additional square footage, as well as a desire to live closer to work or family may provide the impetus for a move to a larger home.
  4. Is your current residence one that could potentially be rented out? For those homeowners who are ready to make a move but are concerned about purchasing a new home before the current property is sold, renting out the current residence may be a viable option. We also work with a variety of clients who decide they want to find a home to purchase before they sell their current home.
  5. Are interest rates attractive? A low interest rate means lower mortgage payments on homes of the same price. I’d be happy to refer you to a mortgage advisor should you need to check on interest rates.

No matter what you decide, you need an expert team to help you balance a concurrent purchase and sale transaction seamlessly. Nearly two-thirds of our client base is either moving up or downsizing and we have successfully assisted them with both sides of the transaction. If you want to discuss any of the questions above or have more to ask, don’t hesitate to give us a call or email! Nicole.emanuel@cbnorcal.com, (408) 410-2060.

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Decoding Your Homeowners Insurance Policy

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Have you ever wondered what those confusing terms on your homeowners insurance policy mean? While there are standard coverage levels that most insurance agents will recommend based on the replacement value of your home,  it’s good to really understand what’s right for you and your family. This month, our Coldwell Banker Blue Matter blog takes to explaining some of the more common terms in any insurance policy and what they mean. See link here or read on for the text below. As always, give us a call with any questions you may have on your policy.

“Insuring a house is a must for any homeowner. Guaranteeing that your home is protected against every possible risk can be difficult, however, particularly for property owners who don’t properly evaluate their homeowners coverage.

Let’s face it — your home insurance policy can be confusing. If you fail to understand the ins and outs of your policy, you might struggle to get the right coverage for your home.

Fortunately, we’re here to help you take the guesswork out of some of the most confusing aspects of your homeowners policy, including:

Actual Cash Value vs. Replacement Cost

Actual cash value (ACV) refers to the value of your home and possessions at the time that they are lost or stolen. If your homeowners coverage states that you’ll receive the ACV for your home or belongings, depreciation will be factored into the total amount that your insurer pays for your claim. Thus, if a roof that was predicted to last 30 years is destroyed 15 years after installation, you might only receive about half of its initial cost due to depreciation.

The replacement cost represents the total cost to replace items that have been damaged, destroyed or stolen. For instance, if your clothing is destroyed in a home fire, your insurance company will cover the costs to replace your clothing.

An insurer usually will pay out a replacement claim in two installments. First, the company may provide you with a payment for the ACV of the claim, or a certain percentage of the replacement cost. You then will need to submit a receipt or other documentation to verify that you have completed repairs or purchased a replacement to receive the remaining claim amount.

In most instances, the replacement cost will exceed the ACV. Or, if you choose an ACV policy, you may be able to save money on your home insurance.

Flooding

A flood represents an accumulation of water due to a rain storm, hurricane or other natural disasters and is not covered by a standard home insurance policy. Comparatively, a home water leak due to a pipe burst is not a flood and will often be covered by your homeowners insurance.

Flood insurance is advisable for homeowners who live in high-risk areas, but it’s also recommended for homeowners in low-to-moderate risk areas as well.

Even 1 inch of water from a hurricane or heavy rain can cause significant home damage. As such, if you purchase flood insurance to supplement your homeowners policy, you’ll be consistently protected against flooding.

Total Value of Your Home

Your home insurance should cover the total replacement cost of your house, which includes both the cost of your house and the cost to rebuild your residence if it is destroyed. This means the total value of your home could exceed the original cost of your house.

If your home is destroyed in a natural disaster, you’ll need to account for the costs associated with materials, labor and other resources to rebuild your property. As a result, your home insurance policy should cover the total replacement cost of your home to ensure that you’ll be able to replace your residence after a disaster.

The 80 Percent Rule

An insurer typically will not cover the full cost of damage to your home if you neglect to purchase home insurance that equals 80 percent of your house’s value. Therefore, understanding the “80 percent rule” is key to getting the necessary coverage to protect your residence and belongings.

To better understand the 80 percent rule, let’s consider an example.

According to the 80 percent rule, an individual who owns a home with a replacement cost of $300,000 will need at least $240,000 in home insurance coverage. If this homeowner suffers $150,000 in fire damage but only insures a property for $220,000, he or she will not be fully covered for losses.

In the example given, the insurer would pay out $137,505 — approximately 91.67 percent of the claim amount — to cover the fire damage. This total represents a percentage that equals the total coverage that the homeowner purchased ($220,000) divided by the insurer’s 80 percent requirement amount ($240,000).

Liability Coverage

A standard homeowners policy will typically provide personal liability coverage up to $300,000 per accident. It also is important to note that liability costs can exceed your coverage amount, and umbrella policies are available to deliver extra liability insurance.

An umbrella policy offers additional coverage against injuries, property damage and various personal liability situations. It may even cover your legal costs for defense if you face a personal liability lawsuit.

Dedicating the necessary time and resources to evaluating your home insurance can deliver long-lasting benefits. Ultimately, with the right home insurance in place, you’ll be protected against numerous risks both now and in the future.

About Ryan 

Ryan Hanley is the Vice President of Marketing at TrustedChoice.com and the Managing Editor of Agency Nation. He is also a speaker, podcaster and author of the Amazon best-seller, Content Warfare. Ryan has over 10 years of insurance expertise and blogs frequently to help consumers understand complicated insurance topics.”

Bay Area Market Update: Saving for a Downpayment in today’s market

ing_19047_00263-2-1024x768In this month’s edition of Market Watch, we discuss the downpayment hurdle buyers face in our local Bay Area markets as well as review the market activity from each of our office managers around the Bay Area.

“Saving for a down payment can often be challenging for first-time homebuyers, particularly in high-cost areas like Northern California, and it is likely an issue that most consumers carefully weigh before the housing hunt begins.

A recent report outlined just how much homebuyers would need to save for a 20 percent down payment in major metropolitan markets across the country. Not surprisingly, some of the largest down payments are required in markets throughout California.

A median-priced home in the U.S. is $192,500, which means buyers need $38,500 for a 20 percent down payment, according to the report by Zillow. But in most market areas in California, the down payment cost is much higher and the income burden is greater. In fact, metro areas in California were among the cities where homebuyers needed to save the highest percentage of income to cover a 20 percent down payment.

For homebuyers in areas like San Jose, San Francisco and Los Angeles, saving a year’s worth of income wouldn’t even cover a 20 percent down payment, according to the report. Buyers in those markets need to save at least 180 percent of the average income in those cities.

In San Jose, for example, the median 20 percent down payment translates to $192,320. That represents 182 percent of the average income and is roughly the same as the median price for a home in the U.S.

San Francisco-area buyers are faced with a median 20 percent down payment of $164,920, which is 180 percent of the average income.

The down payments are particularly steep when compared to the nation as a whole: the average American homebuyer sets aside two-thirds of his or her annual income to make that 20 percent down payment.

“It’s a big number,” Zillow Senior Economist Aaron Terrazas told CNN Money. “Very few are saving for a down payment in one year, it’s something they do over multiple years. And for renters who have been faced with rising rent and health care costs, it’s very difficult to put away any money at all.”

There are programs to assist first-time homebuyers, particularly those that offer smaller down payment requirements. While it is possible to put down less than 20 percent, that often translates to a higher interest rate and the extra cost of private mortgage insurance for homebuyers.

“Saving enough cash for a down payment is a major barrier to homeownership, especially in expensive markets, where a 20 percent down payment can cost nearly $200,000,” said Zillow Chief Marketing Officer Jeremy Wacksman. “While it’s possible to buy a house with a smaller down payment, 20 percent ensures the best rates. As important as it is to find a monthly payment you can afford, some buyers’ budgets will come down to the amount of cash they can bring to the table.”

Here’s what our local Northern California offices had to say about market conditions as we started the new year:

East Bay – The East Bay market has had limited inventory and steady buyer demand and sales activity. Almost every property is receiving multiple offers because of the low number of homes available for sale, our Oakland manager reports, and buyers are eagerly waiting for more homes to come on the market. In fact, the office had 5 multiple offers. Sales associates have multiple buyers and many of them are looking for the same home, she added. The Oakland office has observed that many properties are being repaired and staged to be listed in the future, possibly by March.

 

San Francisco – The start of the new year was marked by a bump-up in listings. Total inventory was 30 percent higher compared to a year earlier, shares our Lombard office manager, but sales and buyer traffic have lagged. Entry-level priced homes and fixer uppers are seeing the biggest demand, while the mid- to upper-priced condos have seen the largest number of price reductions, he said, with two-thirds of closed condo transactions selling at or under asking price.  The Lombard office had 2 multiple offers and 3 properties under contract. With mortgage interest rates expected to climb this year, open houses and broker tours have been well attended, and sellers are noticing increased demand and not waiting until the Super Bowl to sell in hopes of “catching a more-than-ready and able buyer,” according to our Market office manager.

San Francisco Peninsula – There was a significant slowdown in activity, due in part to the holidays and inclement weather, with our Burlingame, Burlingame North, Half Moon Bay, Palo Alto Downtown, and Redwood City managers reporting that sales activity decreased. Several offices in region held open houses during the last two weeks – 6 in the Burlingame office, 4 each in the Burlingame and Half Moon Bay offices, and 2 in the Palo Alto Downtown office. Demand seems to be healthy. Our Redwood City manager says there are still a lot of buyers, with very limited inventory, and both the Half Moon Bay and Burlingame offices dealt with multiple offers (2 each).

Santa Cruz County – The Santa Cruz area has seen a decline in overall sales but an increase in sales activity in the high-end market. Inventory is steady when compared to the level of listings a year earlier, however sales are off by about 25 percent. Previews® luxury property sales, on the other hand, have climbed, with 15 more unit sales recorded compared to the same period last year. Open house activity is on the rise in the region.

Silicon Valley – The new year has started off on a strong note, with sales activity and prices picking up in some parts of Silicon Valley. Gains in inventory are starting to emerge, but inventory is still not sufficient to meet the robust buyer demand in most areas. There are currently only 32 active listings in all of Willow Glen with only 3 of those listings priced under $1 million. Sales associates are reporting heavy traffic at open houses and strong buyer demand, says the San Jose Willow Glen manager. Many of the homes that had been lingering on the market have either gone off the market or have been absorbed, said our Los Altos office manager, and there is a little more than a month’s worth of inventory. With such a limited number of homes available for sale, properties are still receiving multiple offers and some are going for over the asking price. Average sales prices climbed in multiple communities, according to our San Jose Almaden office manager. The average sales price so far for January in Almaden is $1,216,000, which is 4 percent higher than January 2016 ($1,169,000).  Blossom Valley’s average sales price is up 9 percent to $695,000 in January 2017 compared to $633,000 in January 2016.  Santa Teresa had the largest increase of average sales price in January.  It is currently $829,000, which is 23 percent higher than the $674,000 average sales price recorded a year earlier.  Cambrian was down with an average sales price of $883,000 from $1,024,000 in January 2016 ( -14 percent).  The luxury market — homes priced over $3.5 million — is steady but somewhat flat with days on market and inventory creeping up; frenzy bidding and/or multiple offers is the exception as opposed to the rule, shared our Los Gatos manager.

South County – Listings are down and sales have been slow and flat since the beginning of December in South County. The holiday season, coupled with the election and economic uncertainty that goes along with it, and the perception that mortgage interest rates are on the rise, has caused sellers and buyers to postpone or delay their real estate decisions. “The old saying that the real estate market doesn’t hit its stride until after the Super Bowl seems to ring true this year,” says our Gilroy & Morgan Hill manager. The office had 7 open houses and 10 properties under contract.”

See link HERE for full article.

3 Rules to Remember When Shopping for a Mortgage

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3 Rules to Remember When Shopping for a Mortgage

Since you’re in the market for a new home, you’re probably in the market for a new mortgage. Here are 3 critical shopping tips for anyone looking for a new loan.

  • Know the Terms
    All the terms of a loan matter. Unfortunately, shopping for a mortgage is not as simple as finding out how much a lender will let you borrow and at what interest rate. You’ll want to get a complete breakdown of what any offer your receive means to you on a monthly basis as well as how much money you’ll be spending over the life of the loan.
  • Not all Mortgages are the same
    There are several mortgage types available to residential home buyers. Most people will shop for a traditional fixed rate mortgage, but other options are available including adjustable rate loans (ARMs), Federal Housing Administration loans (FHAs), and Veteran’s Administration loans. You’ll want to be sure to understand what kind of loan a lender is offering you.
  • Fees, Fees, Fees
    Most loans have fees associated with them in additional to the principal amount bowered to buy the home. You can sometimes borrow the money need to cover these fees, but that will obviously increase the overall amount of debt you undertake. Some fees are paid up front, and others are not due until closing.

If you’d like to chat with personally about how to shop for a mortgage and what other questions you can ask lenders to find the best deal, give me a call at any time. I’m happy to get you started on the right path so we can start looking for your new home!

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Bay Area 4th of July Event Schedule

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If you are looking to check out some awesome fireworks displays or fun 4th of July events this holiday, look no further. We have compiled a list of the top events around the South Bay – click on any of the links to take you to the website for more information on each event. Wishing you a fun and safe independence day!

Cupertino 

Children’s parade begins at 10 a.m. at Memorial Park. Pancake breakfast, flag raising, live entertainment, children’s carnaval and food! Monday, July 4, 2016. 7a.m. – 5p.m. Memorial Park Amphitheatre and Blackberry Farm. Cupertino, CA. (408) 777-3120.

Gilroy High School

City of Gilroy’s Annual Fireworks! – Fireworks at approximately 9:15 p.m. Monday, July 4 2016. 750 W 10th St, Gilroy, CA 95020.

Milpitas Sports Center Complex

“Red, White and Boom” Concert and Fireworks Show

The “Waving the Red, White & Blue” Pool Party event starts at 1 p.m. in the Milpitas Sports Center. Individuals will able to purchase food, enjoy music, games, and fun for $ 3 per person. As for the “Red, White & Boom” concert, the show starts at 7 p.m. with the doors opening at 6 p.m. Fireworks begin at 9:15 p.m. with admission being $3 per person ( 2 years and older). Monday, July 4, 2016. 1325 E. Calaveras Blvd. For more information please call (408)586-3210.

Morgan Hill Outdoor Sports Center

Freedom Fest – Patriotic singing, parade, entertainment and fireworks on the green at around 9:30 p.m. Monday, July 4, 2016. 16500 Condit Rd, Morgan Hill, CA.

Mountain View – Shoreline Amphitheatre 

4th of July Fireworks Spectacular With San Francisco Symphony – “A Night At The Movies” with music from Inside Out, Star Wars: The Force Awakens, E.T., Harry Potter and the Sorcerers Stone, Raider of the Lost Ark and more on July 4th, 2016, Monday at 8:00 p.m. Shoreline Amphitheatre. (650)967-4040.

San Jose, The Alameda Avenue

Rose, White, and Blue Parade – Enjoy a family holiday filled with history, patriotism and roses! Live music, arts and crafts booths, antique cars and a picnic on the Alameda. Monday, July 4, 2016. Parade starts 10 a.m. at Lincoln High School parking lot at 555 Dana Avenue. If you want to participate in the parade applications are required for vehicles, walking groups, musical groups, marching units, floats and equestrian units. Applications must be submitted by June 14. Festival located at The Alameda between Hanchett and Hester Ave. For more information please call (408)436-8581.

Discovery Meadow, Downtown San Jose

New Century of Service – Enjoy this free, family-friendly event with a fireworks show at approximately 9:30p.m. after dusk with free Symphony Summer Pops music at 5:30 p.m. Monday, July 4, 2016. Discovery Meadow. 180 Woz Way, San Jose, CA 95110.

Santa Clara’s Central Park

4th of July All-City Picnic and Fireworks Extravaganza – Celebrate 4th of July with an all-city picnic and fireworks at 9:30pm! Beginning at 12p.m., relax and enjoy live entertainment, good food, carnival games, face painting, dancing and a flag dedication from the Mayor. Central Park, 909 Kiely Boulevard, Santa Clara.(408) 615-3140.

Santa Clara – Great America 

Make sure to turn your head to the skies high above California’s Great America as we present our fireworks extravaganza to celebrate our great nation! Located at the Redwood Amphitheater inside the park. Fireworks after dusk.

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Boosting Your Home’s Curb Appeal

What would buyers see if they drove up to your home? Go ahead, take a look. Stand outside your home and try to look at it through a buyer’s eyes. First impressions are lasting impressions. If buyers see paint peeling, a crack in a window or an unkempt yard, they are apt to speculate that there are other, more substantial things wrong with the home.

That first impression, or curb appeal, can make the difference in the amount of money a buyers is willing to offer on a home listed for sale.

Here are some suggestions to enhance the curb appeal of your home to get ready for sale or even just to spruce things up a bit this summer: 

  • Mow the lawn, clean up and yard and prune shrubs and trees 
  • Scrub or paint the front porch and door. Sometimes an interesting pop of color on the door can really modernize the look of an older homea-little-front-door-love-curb-appeal-doors-painting.jpg
  • Check the porch or deck and hand railings to ensure they are secure 
  • Wash the windows, make them sparkle!! 
  • If you have time time and money, paint the exterior of the home. Try to stick to more neutral palates as some bright colors can be an immediate turn off for some buyers. Add color by painting the door a different color, instead. Exterior-before-after.jpg
  • Pick up and put away toys and bikes, outdoor bins are also great for storing these items 
  • Check that the lawn furniture is in good shape or, if not, store it away 
  • Add charm to the front and backyard by adding flower pots and planting fresh plants 

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  • Repair and paint the fence, if needed 
  • Repair the roof, gutters, and downspouts if needed 

These improvements are essential before a home sale and could mean an increase in sales price.  Feel free to call or email and let me know if I can answer any questions for you or make suggestions on how to improve your homes curb appeal!

 

Advantages to Home Ownership

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If you’re thinking about buying a new home there are many things to consider, including the tax benefits of owning a home. 

Sure, filing taxes may become a little more complicated, but you may be able to deduct home-related expenses and the savings on can add up to thousands or even tens of thousands of dollars. Because the tax rules for homeowners can be tricky, I recommend you consult with a tax professional before deciding what you can and cannot deduct. But in general, you can figure on a number of significant tax breaks associated with homeownership, including:

Mortgage interest. The biggest tax break is reflected in the house payment you make each month since, for most homeowners, the bulk of that check goes toward interest. In most cases, the interest homeowners pay is deductible. This may mean a reduced tax bill overall and a bigger refund.

Property taxes. As a homeowner, you are entitled to deduct payments of real estate tax on your property if you claimed itemized deductions on your tax return. The IRS allows you to deduct real estate taxes on your primary residence and any other homes you own. There are no limits on the dollar amount of real estate taxes you can deduct.

Loan deductions. When homeowners borrow against the equity of their home to finance other investments, the interest they pay on the new loan is also tax deductible, within IRS guidelines. Generally, equity debts of $100,000 or less are fully deductible.

Improvements on your residence: While you generally cannot deduct improvements to your home on your taxes, such items can lower your tax bite down the road. Improvements such as a family room addition, a kitchen makeover, or a pool increase the “basis” of your home – i.e., the purchase price plus improvements. When you go to sell, the higher your basis is, the less you will have to pay in capital gains taxes if you pay at all.

Tax-free profits. The government allows homeowners to keep tax-free profits from the sale of a home that has been their primary residence for at least two years. Single taxpayers don’t owe taxes on the first $250,000 of profit from the sale of a principal residence, while married homeowners get $500,000 when filing jointly.

These tax savings can add up quickly. On a $500,000, 30-year mortgage loan at five percent, for example, a homeowner would end up paying nearly $25,000 in the first year in interest alone. At a 33 percent federal and state income tax rate, the mortgage interest deduction alone would save more than $8,200 in that tax year! But again, tax laws are complicated and everyone’s tax situation is different. Consult your tax professional to see how the rules apply to your situation. In the meantime, if you have any questions about purchasing a home and how much you can afford, feel free to give me a call!