Ahhh Warmth.....

Our Pellet Stove

We just bought (hopefullly) the last 100 gallons of heating oil that we will need this winter (we heat almost exclusively with a pellet stove now) and use oil for domestic hot water only. The bill was for $3.25 a gallon (great price) but none-the-less a lot more expensive than the $6-10 a day for pellets and electricity to heat the house. If we get through until Saturday using only two more bags of pellets we will have heated approx. 2500 sq. ft. of living space for a fuel cost of approximately $212.14. And we've had some pretty cold days/nights these last few weeks.

Our fuel cost last year for the same period of time was approximately 290 gallons of oil at a per gallon price of $2.69 or roughly $780.

Gas would have also been over $700 for the same period of time.

I am so glad we switched to a perpetually renewable, easily obtained, non-toxic, carbon-neutral source of heat for our house. My biggest problem with the new fuel is the plastic bags they come in.

As an aside, I just shut the stove off for the evening, I didn't realize that it had reached 68 in the house. I don't remember the last time our house was warmer than 60 on a January evening.

Granted the pellet stove takes a little commitment (feeding and cleaning) and getting used to, but it's a joy to have around and we've reduced our carbon footprint ever so much more.

Go Pats!

Geof

Happy New Year (Belated)

So, another year is behind us. Lots happened last year, here's the recap.

Observations

• More properties sold in our market area than during the previous year
  
• We moved to a new office in Belmont Center (Come on by to visit)
• As a company we were able to realize higher prices for our clients than our competitors
• Our local market seems to have been missed by the much touted mortgage meltdown and subsequent foreclosures

We're looking forward to the upcoming year, buyers are out there looking and learning, the feeling is one of cautious optimism among my colleagues that the spring will bring out buyers (and sellers) and that good properties that are priced well will continue to bring strong offers.

On The Environment

We just installed a pellet stove in the house - we are moving one more step towards reducing our carbon footprint. I'm researching adding solar panels to the house, and an on-demand hot water heater as further steps to reduce our families carbon footprint. More later.

Thanks for stopping by....

Go Pats!

Geof

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