Green Mortgages -

"Going Green" is all the rage these days, and it's been around for some years now in the world of mortages.

As a matter of fact, there was an article in the Boston Globe about "Green Mortgages" today. The article details how folks can apply for green (energy efficient) mortgages if the properties conform to certain criteria. This type of mortgage first showed up in 2003.

The criteria are different with each lender, but the bottom line is that if you invest up-front in energy efficiency than your downstream costs for energy to run the home will be less. Less volatility in the on-going energy costs for a home translate into possibly a larger debt ratio (affordability ratio) that a lender is willing to offer. If the difference is even $50 a month in affordability, depending on the terms of the mortgage, this can translate into another $12,000 to $15,000 of purchasing power. In some cases this can make a huge difference in what unit a person buys.

Designed for developers, it is still possible for a single-family, or condo homeowner to apply and get a "green mortgage." Understanding the requirements, and how your home uses energy are the keys to success in getting one.

If you have questions, I'm more than happy to talk with you about identifying properties that could be considered for a green mortgage and working with lenders who might be able to write a green mortgage.

Loan-to-Value / Appraisal vs. Assessment

Terms, Glorious Terms!

Loan-to-Value Ratio (LTV):

When you divide the value of the property, set by bank appraisal, by the amount of the loan, you get the LTV or Loan-to-Value ratio.

Traditionally, if your LTV is 80% or lower, you get more favorable mortgage interest rates.

If your LTV is higher than 80% you may be forced to carry Private Mortgage Insurance (PMI) which is a monthly insurance payment necessary to insure that in a case of default the mortgage will be covered.

PMI, in almost everyones eyes is a bad use of money. You pay a premium monthly and get little or nothing in return, the mortgage company benefits.


Property Value: Appraisal vs. Assessments

Appraisal:

When folks talk about their property they often look at it's value in the broadest sense. What they feel it will bring in the current market compared to other properties on the market, or currently sold. Though this is the basis of a bank appraisal, it's not the same.

An appraisal is an analysis of a property done by a licensed real estate appraiser who is hired by a lending institution to value the property that is being considered for purchase to see if that property is worth the mortgage amount.


Assessments:

Value of a property as seen by the local municipality for tax purposes. In Massachusetts this is an interesting phenomena, all in itself worthy of future treatment on it's own, but suffice to say, this is the assumed fair market value of a property as determined by the local Assessor.

Wow - It's been a week.....affordability?

So, lots has happened in the last week or so. The Pats are still undefeated and the bottom still hasn't fallen out of the local Real Estate market.

We finally got some much needed rain too.

So, have you ever wondered how much house you can afford? Or to put it another way, how much of a mortgage can you carry?

Well, there really isn't any magic to figuring out what's affordable and what isn't. Also, there are plenty of mortgage companies around who have money to lend. Even though the national news media wants you to believe that all the mortgage companies are folding daily.

Though every ones situation is different, there are some basic tenets to affordability that are true for everyone. These are based on:

• What is your income?
• What is your current debt?
• What do you have for a down payment?
• How good is your credit?

Mortgage companies and banks will take this information and use it to calculate what it is that they are comfortable loaning to you. Historically, banks and mortgage companies hated to see their mortgage customers carrying more than approximately 35% of their income in debt.

In the not-to-distant past, we've seen mortgage companies who allowed customer mortgages and other debt creep up to 50% of income.

It doesn't take much to see that when 50 cents of every income dollar is covering debt, there's a greater chance that the borrower may end up in trouble. Even rising energy costs can be enough to upset that egg basket.

So, if you are wondering what it is that lenders want to see, and if you are a fiscally conservative person, if you are looking to purchase a home, the banks are starting to look for debt to income ratios back down near the 35% of yesteryear.

So, let's convert that to an example:

Annual Income: $100,000 or monthly that's: $8,333.33

Monthly other debt: (car, loans, etc.) $1,200

Mortgage amount that can be carried at 35% of income at 6% for 30 years fixed is approximately $290,000

Depending on your deposit, that might just translate into a two-bedroom condo in a fairly nice area.

So, look at your situation and maybe you can come up with a better understanding of what it is you can afford when it comes to buying a house.

Soon to come: Loan to Value and Appraisal vs. Assessment

- Geof

Dynasty?

The Sox have done it again, they swept the Colorado Rockies in 4 straight.

Congratulations to all involved!

Go Pats!

- Geof

Another Globe Headline

Well, by now we should be used to the headlines in the Globe. Yesterday it was about how the Mass. Real Estate market has had the biggest drop in a year.

Then it goes on to mention that the 50-some-odd cities and towns around Boston don't seem to be affected by this trend as much as all the others.

Anyway, the news still isn't fantastic, but if you read the articles you'll find that it also isn't all that bad.

Just my $.02

Random Observation: Tim Wakefield you are a class-act!

Go Sox!

- Geof

ALCS - YeeHa!

It's a beautiful day, 75 degrees, CAVU.

So the Old Town Team sent the Indians home last night. I guess it really isn't Tribe Time is it?

Cleveland is a formidable opponent, almost the entire team was hitting in the 300's, even the ninth batter, Blake, was hitting .318 for the series.

Lot's of folks contributed to last nights win, the team was managed beautifully and I can't wait for Wednesday night.

Go Sox!

- Geof

Foreclosures

Today's Globe carried a couple of stories about local foreclosures. They concentrate on areas outside of Boston, Essex County, Northern Middlessex etc. There is also an article about the Middlesex North Register of Deeds Richard P. Howe Jr. (Search Boston.com for Richard Howe) and his views on the market. All of these articles give insight into what's happening.

They are all worth a look-see (IMHO). If you are interested in copies I might be able to help.

Go Sox!

- Geof

Today's Market

I never get tired of the question on peoples' lips when they see me. "How's the market?" is typically what they're asking. Depending on who it is and when they are asking, I can never tell if they are truley interested in what's going on in the marketplace, or if they are looking to find out how good/bad things might be from my reaction.

Anyway, needless to say, when I get the question "Hows' the market?" I enjoy answering them as honestly as I can. It's always with what I know to be the state of the local market, the one I do my best to understand on a daily basis so I can best help my clients make informed decisions.

To answer the question for today I would say that the market is pretty robust in our little neck of the woods. The number of properties that are selling not only remains constant in units over last year, but in truth there are more units selling this year, year-to-date, than last year in the same time frame.

The next question I typically get is: "But I hear that the market's falling apart, nothings selling and what about those foreclosures from the sub-prime mortgage markets?"

Of course, there is no definitive answer to these questions, and there are actually three questions being asked in one breath.

First, the stories of the market's demise are greatly exagerated (to boldly misquote a famous American writer). These types of headlines sell! They are also usually pretty general in nature or tell the story of some extreme situations.

Secondly, all real estate is local, truley local. I'm happy I don't work in other areas of the country. Some markets in Florida, Nevada and Southern California are really scarey! But here in our little corner of the world, though prices may be softer than 18 months ago, the number of units selling are outpacing last year year-to-date.

The third question is all about the sub-prime mortgage issues. Yes they exist and are putting a damper on the overall market, but in the immediate area the number of properties moving into foreclosure are fewer than some cities and towns not to far from here. Mortgages are available and if you understand your financial situation and do your homework you can avoid most of the "upsets, issues and surprises" that make up the horror stories folks love to tell.

In summing up, if you're looking to buy or sell, the time may be right for you. Each situation is uinique and worth looking at independently to determine what the best course of action might be.

Cheers -

Geof