BEWARE - Mortgage Pitfall!

My mortgage company lets me have until the 15th of the month before they assess a late payment penalty and give me a frowny face on my credit report.  That's pretty nice of them, isn't it?  It's like getting to keep your money another two weeks for free!  Except, it's not free.

This is a quote from LendingTree.com:

Finally, keep in mind that closed-end loans (e.g., a 30-year mortgage) differ in some respects from open-ended loans (e.g., a home equity line). If you make a payment later on an open-ended loan, you could owe more interest and a smaller amount of your payment might be applied to interest expense because the interest is calculated on the number of days between your payments

What does this mean?  It means that when you get the money to them on the fifteenth you are paying fifteen days late.  There is no "late payment fee" thrown at you, but the interest for those additional days is tacked on to what you already owe!  This usually doesn't rear its ugly head until you reach your last payment on the loan or you sell your property and settle up with your lender at closing.  You may actually have to bring money to the table to sell your house because of this additional interest.

The bottom line is this:  pay your mortgage on time.  If the 1st of the month falls on the weekend or a holiday, have your payment to the lender on the 30th or 31st of the preceding month.  Avoid this mortgage pitfall.  It could save you thousands.

Water, water everywhere...

When is that last time you replaced your washing machine hoses?  Let me guess, you have no idea.  Well, me neither.  That makes it time to replace them.

According to one source (the packaging my new hoses came in), broken hoses are the number one cause for homeowner's insurance claims.  Even if it isn't true, it's believable.

I recommend you just go right ahead and get new ones.  A $15 investment now could save you a $1000 deductible later on.  Put them on the grocery list or whatever you have to do to remember.

Here's a tip:  take some masking tape, write today's date on it, and wrap it around one of the hoses.  Reading that date in a few years sure beats trying to remember when you last changed the little buggers.

I just found a great website from HGTV:  FrontDoor.com.

This website is one of the best I have seen for home buyers, sellers, owners, and even renters.  It is well organized and very easy to navigate, too.


For buyers, it has a listings search function for homes for sale.  All it needs is the ZIP code, and it will show you what is listed in Conway (or anywhere else).  There are links for first-time buyers and experienced buyers.  For sellers (including FSBO's), there are links giving you information on how to think like a salesman, market your home, and close the deal.  The site also has videos for everything from moving tips to staging your property.

How's the market?

Real estate agents (like me!) get asked one particular question on a semi-daily basis, "How's the real estate market?"  Most of us will give you a pat answer:  Great! or Fantastic! or Couldn't be better!  Other agents will say that it is just horrible.  Still others say that it is just ok.  I personally try to back up my answer with some actual data.

In January 2008, single-family, residential  house sales were a little over $330,000,000.  In January of this year, the figure jumped to almost $370,000,000.  That's $40,000,000 in additional sales.  An increase of over 9% since a year ago!  Conway real estate is (compared to the rest of the nation) simply booming.

When people ask me about the market, I'm ready with a response...."The market is going great!"

A lockbox holds the key!

When you list your property for sale, an agent will usually put a lockbox on your door that holds the one thing keeping criminals out:  the key to the locks.  Now, I ask you, which of the following lockboxes would you choose to have on your front door?

The combination lockbox (left) has three major drawbacks.  First, it can be left unlocked.  Yeah!  If the last agent doesn't spin those little wheels, the key is available to anyone who walks up!  Second, the box doesn't care who knows the code. When the correct four-digit code is used, anyone can access the house key.  Third, the plastic door holding the key inside is about 1/6 of an inch thick. How secure do you feel now?

The lockbox on the right is the GE Supra Lockbox.  It requires an infrared 'key' that resembles a cell phone to open.  These electronic keys are issued only to individuals who should have access to listed houses and require the user to enter a PIN code to work.  The lockbox records the showing agent and the time it was accessed and transmits that information to the listing agent.  The house key, which is stored in a metal container encased by the box, is then released to the agent.

The one I'd choose? The one that can't be opened without another key.  My suggestion to anyone listing their property with an agent is to ask what type of lockbox will be used for key storage.  If it's not the Supra lockbox, talk to another agent.

Easy, peasy email notification

Did you know that you can receive automatic email notification of new and recently updated MLS listings?

It takes me about 10 minutes to set it up.  You can get updates when houses come on the market in your price range, with the amenities you seek, and all without having to waste time checking Realtor.com every day.  You will receive a notice when prices change for properties matching your search criteria, too.

To get started, you can give me a call (501.514.2319) or send me an email with your parameters, and the emails will start to trickle in.  There is also a link on each email that will allow you to stop them from coming.  Easy, convenient, and you are in control!

Homestead Tax Credit...don't miss it!

I recently had the unpleasant experience of telling a client that they had unnecessarily paid a few thousand dollars in extra taxes over the past few years. To their credit and my surprise, they took it well. They also vowed to never again pay the superfluous tax. What they now know (and you need to know) is referred to as the Homestead Tax Credit.

Taken from Arkansas.gov:

Homeowners in Arkansas may receive up to a $350 property tax credit on their homesteads. Eligibility for the credit is confined to a homeowner's principle place of residence. A homeowner is defined as someone who the owner of record, by deed or by recorded sales contract, or the beneficiary of a revocable trust owning the homestead. Nursing home or retirement center residents who own a home are also eligible for the credit; as are people who have deeded theirs homes to others while retaining a right to live in it until they die (A Life Estate).

Only one homestead per property owner is eligible to receive the tax credit.

Every home owner in Arkansas needs to be aware of this tax credit.  To get it, there is one thing you do have to do:  contact your county assessor and tell them you want the credit applied to your taxes. It's just that simple.

If you are not sure you have taken advantage of this "gift" from the government, email me your address, and I will let you know what the tax records say about your property.  You can also contact your county assessor for this information.

Insulation recommendation

When my wife and I bought our house, we knew next to nothing about home ownership.  We knew the obvious stuff (change your AC air filters, watch for leaks around the water heater, drip the faucets in really cold weather, etc), but we didn't know about the nuances of having to care for the entire structure and everything around it.

Once, when I was crawling around our not-too-spacious attic, I spotted a hole in the house.  Not a hole in the roof, mind you...a hole in the house.  Right next to the master bedroom, a "void," about three feet by three feet, was present that went all the way down to the foundation.  It was an area where the designer/builder couldn't make proper use of the space, so they just drywalled it off.  There is one huge problem with this:  there was nothing to insulate those interior walls against the hot/cold air in the attic.

I always noticed an extreme temperature change around this part of the house, but it never occured to me that there was a nine square foot hole in the attic insulation causing it.  To fix the problem, I took a large piece of styrofoam and blocked off the hole.  That did it.  The temperature in the house is much more even now.

I know that your house may not have that specific problem, but I wrote this post to encourage you to take a fresh look at your property (read:  investment) and see what you can do to increase the quality of life in your home.  Look for areas where extra insulation can benefit your utility bills.  Inspect your doors and windows for ways they can be sealed better.  Every little bit helps when it comes to keeping the cold and heat outside, and the comfortable temps inside.

Prepayment chicanery

Ready to save potentially thousands of dollars when you buy your next house?  Just say this to your lender:  "I don't want a prepayment penalty."  That's it.

A prepayment penalty is simply a fine for paying your loan off early.  If you want to sell your home or even refinance it, and you have a prepayment penalty clause in your agreement, you will pay a 'premium' to do it.  Lenders who include these clauses like them because they discourage the borrower from breaking the relationship with the lender, thereby keeping their customer.

Sometimes, a lender will offer a lower interest rate to entice the borrower to include the penalty.  As a borrower, you should ask yourself if saving an extra $35 per month is worth possibly thousands in fees down the road.  Personally, I have never signed a loan agreement that included a prepayment penalty.  I recommend you think twice before you sign one.

Interest rates expected to increase in 2010

What is the worst thing that you can do to hurt yourself in real estate dealings?  The answer is procrastinate.  I have heard the story over and over again.  People find a property that is what they want, they research it, compare it to other properties, call an agent, view it, and then....wait.  Wait for what?  The seller to get desperate, everything to feel right, the moon to shift phases, whatever.

It happens to sellers, too.  They are ready to sell.  They have done their due diligence, and even contacted an agent.  Then....they stop.  They wait.

The result?  Many times buyers lose the property.  It sells or goes off the market.  For sellers, their neighbors sell and move away while our potential sellers stay behind wringing their hands on what they should do.  Something else that can put on some pressure for both?  Interest rates increase.

That is a really likely scenario to become reality in 2010.  Don't take my word for it.  How about a quote from one of Freddie Mac's economists:

"The Federal Reserve's scheduled phase-down of it's multi-billion dollar purchases of mortgage backed securities, plus expected moderate growth in the economy, will force rates at least a percentage point higher."
-Amy Crews Cutts, Deputy Chief Economist with Freddie Mac

We have become accustomed to four percent interest rates:  4.5%, 4.75%, 4.875%.  This will not last forever, folks.  The interest rate is tied to the economy.  The economy is improving (no matter what your friends tell you).  This is a good thing.  We want a strong economy.  However, the incentive to hold interest rates down is slipping away.  They are beginning to edge up right now.

If you are ready to buy, do it.  If you are ready to sell, do it.  If you aren't ready for either, then don't do either.  But, please don't allow procrastination and worry to stop you from making a good decision.