Thursday, July 12, 2007

How are interest rates determined?

Interest rates are affected by a number of factors. The Federal Reserve, which is charged with maintaining the stability of the nation's financial system, raises or lowers short-term interest rates in an effort to maintain that stability. The Fed regularly takes these actions in response to economic ups and downs that the country goes through on a fairly routine basis.

Short-term rates are raised in what are called expansions -- good times -- to keep the economy from building too fast and risking inflation. The Fed will lower short-term rates when the economy is contracting -- slowing down.

So what have rates been doing? The Federal Reserve raised short-term rates 17 times between June, 2004 and June 2, 2006, and they have remained at that point since then.

Long-term rates, like Mortgage Rates, aren't affected as quickly by economic conditions as are short-term rates, but there is a trickle down factor and they reflect the impact eventually.
Unlike short-term rates, Mortgage Rates typically change daily and as a rule of thumb, bad news in the economy brings on lower rates, and good news makes rates climb.

What is the cutting edge house color? GREEN

What is the cutting edge house color? GREEN

Did you know that the average U.S. home causes twice as much greenhouse emissions as a single car? It’s true. So it shouldn’t surprise anyone that “green” home building is poised to be the next big push in the environmental awakening. “Green” homes or environmentally sensitive housing are already afoot in other areas of the nation and are about to be the next trend here in the St. Charles area.
While some may see this as another politically correct fad, “green” homes offer owners greater durability, less maintenance costs, and lower energy bills than typically constructed houses. “Green” homes may include energy-efficient appliances, water efficient faucets, better ductworks and air filtration systems, and low-emissivity windows (which keep heat from filtering in or out of the windows). Some of the tricks of the trade for “green” home design include using recycled rainwater, solar chimneys, rooftop gardens, geothermal cooling systems, and solar panels.
Commercial construction is ahead of the residential market as far as building “green.” But environmentally-friendly developments are on the rise. Highland Park in St. Charles is touted as Missouri’s first “green” residential community. Its 245 condominiums and town homes are designed with recycled and sustainable materials and energy-efficient systems.
Now, the big question is “What constitutes a ‘green’ home?” Well, it depends on who you listen to. MSNBC reports that there are 80 different local and state “green” building organizations and at least two different national groups promoting their guidelines for constructing “green.” I believe there will soon be a national standard adopted for what qualifies as a “green” home and all these organizations are simply jockeying for their interests to be embraced.
The best-known group in “green” building is the U.S. Green Building Council (USGBC). This non-profit group developed its own point rating system for “green” commercial projects in 2000. Their new construction rating system is based on five categories: sustainable sites, energy and atmosphere, water efficiency, indoor environmental quality, materials and resources. To find out more about building an environmentally-conscious home visit sure to consult your realtor for locally established ways to go “green” when you are building your new home.

Thursday, May 24, 2007

Do you know your debt-to-income ratio?

Commonly referred to as DTI, your debt-to-income ratio tells lenders what % of your income you have available for a house payment after fulfilling your other recurring obligations each month.
Recurring debt includes credit card payments, child support payments, car payments and other obligations that will not be paid off within 10 months (for conventional loans).
Lenders prefer that this number is not more than 36%, but depending on the strength of your loan application your number might be higher or lower.
To calculate the DTI ratio, take your total gross annual income and divide it by 12 to get your gross monthly income. Then add up all of your recurring debts including your house payment. Then divide your gross monthly income by this number and you will have your DTI ratio.
If your ratio is higher than 36%, then it may mean you are stretching your income too far. In addition, too much revolving debt can drive down your credit scores.

Improving your home’s curb appeal

What is the charm factor of my house? When it comes time to sell, most homeowners’ concerns turn to “curb appeal.” A new welcome mat just isn’t enough anymore. Competition among sellers is fierce so the goal is to make your home so attractive from the roadway that all who pass will want to see the inside.
I suggest that my clients perform this curb appeal test. On your way home, stop the car in the roadway and try to see your home with an objective eye. Ask yourself these questions:
1. What is the first impression of my house and the property? Does it look cluttered or too bare?
2. What is the best exterior attribute of the house or the lot? How can I enhance that?
3. What is the most unflattering feature of the home or lot? What can be done to fix it, remove it, remodel it, add to it or hide it?
Then park the car where a potential buyer would and walk towards the house noticing if the approach is clean and tidy or what improvements are needed.
Don’t forget about evening curb appeal too. One quick way to improve nighttime curb appeal is with lighting. Pathway lighting along sidewalks or the driveway can make a dramatic difference, as well as replacing front porch and garage lights with updated fixtures.
To grow your home’s curb appeal I suggest giving your front door a little attention. The door can be repainted (along with matching shutters), replaced with a new and more attractive door or perhaps the addition of a quality storm door is the perfect finishing touch. Then top off the transformation with a welcoming seasonal wreath.
Be sure to get rid of all mold or mildew on the house and roof, find a hidden place for all gardening items and tools, rake and dispose of fallen leaves, clean windows and gutters, and trim tree limbs that hang near or touch the roof.
Many sellers turn to landscaping when an outdoor spruce-up is needed. Be careful not to overwhelm the property and the potential buyers with obscure, high-maintenance plants. Predicting the weather, especially in St. Charles, is an inexact science so be careful not to lose money and plants to an unexpected cold snap. Colorful hanging flower pots spaced evenly along the front porch can add life to a white house. If you have always considered adding a water feature or an architectural element to the garden go ahead and do it. These projects can be inexpensive and enjoyable for the do-it-yourselfer and will at the very least make the house stand out among other homes. “I’d like to go back and see the house with the waterfall.”
Other easy projects that are sure to raise your home’s charm factor are to replace the beat-up mailbox with a brightly colored or ornamental iron mailbox, install awnings, paint and stencil a wooden porch floor, add ceiling fans to a roomy front porch, or simply add a flag stand to display “Old Glory.”

Tuesday, May 1, 2007

Do you know your housing ratio?

This is very beneficial information to have when deciding how much to spend on a new house or determining whether to refinance. This is also one of the many factors that lenders review when deciding whether or not to lend you money.

Your housing ratio simply measures the amount of your income that you spend on a house payment(s). To calculate the housing ratio, take your total gross annual income and divide it by 12 to get your gross monthly income. Then divide that number by your total house payment. Make sure you include taxes, insurance and any 2nd mortgage payments.

Fannie Mae recommends that you don’t spend more than 28% of your gross monthly income on a house payment. Again, this is a rule of thumb and there are many other factors that a lender takes into consideration including how much you spend on other debt per month and your credit scores before determining whether you are qualified for a loan.

But in general it is a good ideal to not go much higher than 28%. Studies have shown the higher the housing ratio is; the harder it can be for people to make their payments on time.

Sellers – Choose the right upgrades and get better bang for your buck

Your home is your sanctuary and when it comes time to sell, you want someone else to think of it as their sanctuary too. So how do you make your home stand out among all the new construction homes available? It is all in the upgrades.

To prepare your home for sale, the tricky part is deciding where to begin. This is where your real estate agent comes in.

Too many times I have witnessed well-meaning sellers make improvements to their home which are not appealing to the masses. My clients use my complimentary home inspection for an early glimpse as to what buyers may want repaired or improved.
Heating and cooling efficiency items are becoming more common upgrades in the St. Charles area. Homeowners are spending the extra $150 for this perk. I am also starting to hear more about solar alternatives as an amenity.

Many people believe the bathroom is the place to start upgrading. Sellers can turn a dated bath into a luxurious haven by installing a jet tub, a double bowl vanity or pedestal sinks.
An inexpensive way to upgrade any room is with improved lighting. But a great impact can be made in a bathroom with the addition of new vanity lights, a shower recessed light, or a skylight. A major bathroom remodel provides a great return on investment when the house is sold.

The kitchen is the heart of the home for most buyers. Granite countertops and stainless steel appliances are “in” and that may be all it takes to bring a kitchen into the 21st century. However, a blast-from-the-past kitchen in need of a significant overhaul will be worth the investment when the house sells.
Sellers should not forget to consider the outside of their home when contemplating improvements. The addition of a deck is the most economical way to add square footage to a home and usually brings a significant return on your investment.

The top 10 remodeling projects with the highest return on investment (ROI) according to REALTOR magazine are:
10. Sunroom Addition
9. Roof Replacement
8. Family Room Addition
7. Deck Addition
6. Basement Remodel
5. Attic Bedroom Remodel (adding an extra bedroom)
4. Moderate Kitchen Remodel
3. Bathroom Remodel
2. Siding Replacement

And the number one remodeling project with the highest return for sellers is window replacements.

Minor touchups can also be invaluable for sellers. Nothing says (or smells) of an upgrade like freshly painted walls. Other worthwhile minor fixes include: installing new ceiling fans, pressure washing the house and sidewalks, installing closet organizers, repairing all cracks in walls and ceilings, among others.Make sure your chosen contractor follows all the current county building codes and applies for the necessary permits. Saving the $50 and skipping the permit process will only come back to haunt you when your house goes on the market.

Tuesday, April 3, 2007

The Do’s of Buying New Construction

Today, the American dream seems to consist of owning a new home, not just any home. According to industry sources more than 70 percent of home buyers want a new house.
While new construction buyers are preoccupied with visions of spotless carpets and faultless faucets, it is my job to act as their voice of reason. The fact is buying a newly built home is not necessarily easier than buying an existing home. Buyers can not let down their guard. To be a proactive new construction buyer, follow my advice below.

Do have your own real estate agent. Many buyers mistakenly believe that using the developers’ sales agent will get them a better deal. Register your agent’s name with the builder and determine if he/she is required to be with you on the first and/or all visits. Then your agent is the point of contact between the salesperson/builder and you, the buyer.

Do find a reputable builder. It is not that difficult to research builders especially if they have other subdivisions in the area and if you have chosen where you want to build talk with homebuyers there. The reality is that some builders cut corners while others make sure the home they produce is top quality. There is also a wide-ranging difference in builders’ customer service after the sale.

Do review the builder’s warranty. Some builders offer their own one-year “bumper to bumper” warranty and some offer the preferred 2-10 home warranty which is guaranteed by a third party and covers serious structural defects for up to 10 years.

Do stay involved. It is crucial to be a regular presence on site to check for fireplace size, closet locations, rooflines, etc. Ask questions and speak up as soon as issues arise.

Do hold that lot. Put a deposit check down to secure the lot you want. Afterward, most builders will expect a sales contract within 2 to 10 days.

Do have a home inspection performed. Never waive your right to a walk-through and a home inspection prior to closing. I believe this to be so important that I provide a free home inspection to my clients. Remember, even well-meaning builders can omit features or make mistakes and an inspector is your last line of defense before closing.

Do consider resale features. When people build a home for themselves the tendency is to customize to their family alone. Although many buyers say this is their last house, it is rarely the case, so build a house with some resale characteristics in mind. Also, you don’t want to be the most expensive house in the neighborhood, this too may hamper the home’s resale ability.

Do negotiate. Although the negotiating process of offers/counteroffers is not as commonplace in the new construction realm but in today’s market many builders are willing to throw in extras such as a fireplace or upgrades such as the heating/cooling system to make the sale. Smaller builders are usually more likely to negotiate and inventory or spec homes are more likely to be negotiated.

Tuesday, January 30, 2007

Top 10 Real Estate Book of 2006

Here are the 10 best real estate books of 2006:

1. "Trump-Style Negotiation," by George Ross (John Wiley and Sons, Hoboken, NJ), $24.95, 259 pages. This unique book offers insights into Donald J. Trump's big-thinking negotiation style, which leaves the contract details to his trusted adviser, George Ross. Only serious real estate buyers, sellers, real estate agents and investors will study this extremely well-written book that reveals negotiation tactics not found elsewhere, illustrated with many actual examples from Trump acquisitions.

2. "The Automatic Millionaire Homeowner," by David Bach (Broadway Books, New York), $19.95, 244 pages. If you could read only one real estate book, whether you are a renter considering a home purchase, a current homeowner, a seasoned realty investor or a real estate agent, this is the book for you because it shows how home ownership can lead to wealth. The book's two themes are (a) renters can become millionaires by investing in their first house or condo and (b) that residence can become the foundation for a better home or more investment property in future years.

3. "Buy Even Lower," by Scott Frank and Andy Heller (Kaplan Publishing Co., Chicago) $18.95, 238 pages. Aimed at real estate investors and real estate sales agents, this book, by two full-time corporate executives and part-time realty investors, shows how they buy single-family houses at targeted below-market prices and then either buy and hold, buy and flip, or (their favorite) buy and lease-purchase. The authors favor "ugly and awful" three-bedroom, two-bathroom houses in middle-income neighborhoods.

4. "Real Estate Debt Can Make You Rich," by Steve Dexter (McGraw-Hill, New York), $21.95, 156 pages. The two audiences for this book, which explains why real estate debt is good, are (a) home buyers and realty agents who want to understand the inner-workings of the mortgage industry and (b) investors who need to know how "good debt" can be created to maximize realty profits. The mortgage-broker author reveals how avoiding "inexperienced and inept loan hacks" can obtain the best mortgages to buy a home or investment property. The book includes the best compilation of real estate Web sites available.

5. "Bubbles, Booms, and Busts; Make Money in Any Real Estate Market," by Blanche Evans (McGraw-Hill, New York), $16.95, 167 pages. This extremely well-researched and up-to-date book explains the signals of local rising, falling or neutral local home sales markets, and how to profit in any situation if you take a long-term perspective on home sales. "Except for local economic shocks, like the collapse or exit of a major employer, home prices nationwide have not gone down since the Great Depression," the author reminds readers.

6. "Success as a Real Estate Agent for Dummies," by Dirk Zeller (Wiley Publishing Co., Indianapolis, IN), $21.99, 350 pages. Whether you are a new real estate agent, a longtime "old pro" agent or an individual thinking about becoming an agent, this basic book by a real estate "coach" explains what is involved in selling real estate for sales commissions, how to use sales time management profitably, and how to get started fast by contacting expired listings and "for sale by owners." The book includes an invaluable list of Web sites for realty agents plus the author's advice how to gain competitive advantages by obtaining a "slice of the market."

7. "Everything You Need to Know Before Buying a Co-Op, Condo, or Townhouse," by Ken Roth (AMACOM Publishing, New York), $18.95, 197 pages. The real estate attorney author shares his many legal and real-life personal experiences so readers don't make costly mistakes when buying into the unique lifestyle of these properties. Heavy emphasis is placed on the pros and cons of homeowner associations, including "condo commando" members who seek to take charge of the "mini-democracy" members.

8. "Who Says You Can't Buy a Home?" by David Reed (AMACOM Publishing, New York), $17.95, 182 pages. This mortgage-broker author is on the side of home buyers and real estate agents as he explains how mortgage lenders look at borrowers in this "tell all" book." "Anyone with steady income, no matter how bad their credit rating, or even with no credit, can find a mortgage to buy a home," the author reveals.

9. "Confessions of a Real Estate Entrepreneur," by James A. Randel (McGraw-Hill, New York), $29.95, 256 pages. This book's theme is "add value" to real estate, whether you invest in raw land, houses, run-down factory buildings with rezoning potential, or fixer-upper apartments and offices. The self-deprecating author shares his mistakes and his successes, along with his advice to invest with as little of your own cash as possible so profits can be maximized. Negotiation strategies are heavily emphasized throughout this unusual book.

10. "The Reverse Mortgage Advantage," by Warren Boroson (McGraw-Hill, New York), $21.95, 169 pages. Virtually all the key aspects of senior-citizen reverse mortgages are thoroughly explained in this detailed but easy-to-read book that emphasizes the potential pitfalls as well as the major benefits. The author shatters the reverse-mortgage myths, such as "the bank owns the house," the supposed high costs, and even the scary stories of early reverse mortgages, which are no longer possible.

For more information please go to

Thursday, January 25, 2007

The 25 Best Affordable Suburbs, We Made the Cut!

BUSINESS WEEK'S list of "The 25 Best Affordable Suburbs in the US"-2006

  1. Baltimore (Columbia, MD)
  2. Washington D.C. (Herndon, VA)
  3. Alburquerque (Sandia Heights N.M)
  4. Atlanta (Roswell, GA)
  5. Boston (Sharon, MA)
  6. Charlotte (Matthews, NC)
  7. Chicago (Lake Zurich, Ill)
  8. Cincinnati (Evandale, Oh)
  9. Dallas (Flower Mound/Lweisville, TX)
  10. Denver (Castle Rock, Colo)
  11. Fort Lauderdale (Weston, Fl)
  12. Houston (Sugarland, TX)
  13. Indianapolis (Noblesville, In)
  14. Iowa City (Coralville, Iowa)
  15. Kansas (Shawnee, Kan)
  16. Los Angeles (Santa Clarita, Claif)
  17. Minneapolis-St Paul (Lakeville, Minn)
  18. Newark (Livingston, NJ)
  19. New York (West Nyack, NY)
  20. Omaha (Elkhorn, Neb)
  21. Philadelphia (West Chester, PA)
  22. Sacramento (Folsom, Calif)
  23. Salt Lake City (Kaysville, UT)
  24. Seattle (Mukilteo, Wash)
  25. St. Louis (Saint Charles, MO)

More Info: search "Best Affordable"

Tuesday, January 23, 2007

The New I-64 is Coming, Will You Be Ready?

Not sure HOW or IF the Highway 40 Construction will affect you. Here are some quick facts from the website:

Contract: What is being built for the contract?

The project has a budget of $535 million and will include Interstate 64 from west of Spoede Road to east of Kingshighway. The project will rebuild all 12 interchanges including a new interchange at I-170, add one lane in each direction from west of Spoede to I-170, and reconstruct the bridges and pavement. We are getting everything we need with this project.

Traffic: Will north-south roads remain open to help with traffic flow?

Gateway Constructors will keep the major north-south roads open during construction. These roads include Lindbergh, Brentwood, Hanley and Kingshighway. They will be under construction to build the new interchanges with I-64, but they will remain open.

Bridges: Why is MoDOT concerned with the bridges?

There are more than 40 bridges on or over I-64 in this project. New bridges are given a rating of a 9. Half of the I-64 bridges are rated 4 or 3. At a level 2 they are closed. Replacing these bridges is a major reason for doing this project and doing it now.

Extra Lanes: Why isn't MoDOT adding more lanes? Aren't you going to address the congestion?

MoDOT will be improving traffic flow with the project through the addition of more lanes. Between every interchange there will be dedicated exit only lanes for longer merging. In the area of Brentwood, I-170 and Hanley, more lanes will be added as dedicated exit lanes to each of those interchanges. One additional lane for I-64 traffic traveling through will be added from Ballas Road to I-170, but not east of I-170.
The congestion east of I-170 is a result of out-dated design and operational problems such as steep hills and short on and off-ramps especially in the Brentwood, I-170 and Hanley areas. There are 30,000 fewer vehicles using I-64 east of I-170. Traffic flow along I-64 will be greatly improved by improving the overall roadway design, interchanges and the addition of exit only lanes between interchanges

For More Details please visit

Get the Biggest Remodeling Bang for your Buck

REALTOR Magazine Annual Cost vs. Value Report

For Saint Louis & St. Charles County

Bathroom Remodel$13,924$10,39574.7%
Minor Kitchen Remodel$18,819$13,53071.9%
Siding Replacement$9,507$7,66280.6%
Attic Bedroom Remodel$46,825$32,74969.9%
Deck Addition$15,063$9,72964.6%
Basement Remodel$63,580$44,08369.3%
Window Replacement$10,753$8,75181.4%
Roof Replacement$15,835$9,59560.9%
Family Room Addition$78,714$48,02161.0%
Home Office Remodel $22,061$12,37456.1%
Sunroom Addition$54,334$30,56356.2%

Source: REALTOR Magazine

Friday, January 19, 2007

St. Charles’ brighter 2007 real estate market

The national news coverage of the 2006 real estate market could be kindly described as gloomy. Frankly, it sounded like the apocalypse. Headlines read: Real Estate Investing Slows, Great Upheavals in the Nation’s Real Estate Market, The Housing Slump, Real Estate Bubble is about to Burst, etc.

The truth is I did not experience a great downturn in the market. What I did see was fear. I saw people who were so inundated with doom’s day news coverage that they believed the local market was in worse shape than it really was.

Those of you considering your initial step into the St. Charles County real estate market or any local market should be selective regarding the news. Make sure that when it comes to the real estate market you get a local perspective. Markets differ greatly across the country and national reporting cannot accurately reflect conditions here in St. Charles County. So trust your chosen real estate professional to give you a true picture of what should be expected.

The year 2006 in the St. Charles area was not a bust or a bubble but a “transition year.” Although the national markets on the east and west coasts have definitely been unstable, the Midwest has remained somewhat above the fray. Real estate trends for the year ahead are promising. But the market has changed and adapted and so must buyers and sellers.

The seller’s market of the past will stabilize and become more balanced with existing home sales likely to rise gradually throughout the year. But this will only happen with increased flexibility from sellers.

I have seen successful sellers make minor to broad home improvements in order to sell their home. It may become more commonplace for sellers to repaint the home’s interior and/or exterior, replace efficiency systems, upgrade appliances, change flooring, etc.

I offer sellers a complimentary interior design consultation with a licensed designer to make my listings more enticing for potential buyers. As we see on HGTV, it is entirely possible to make a room or two more eye-catching just by rearranging what is already there. Sellers can also take advantage of my free pre-listing home inspection which is helpful in letting sellers know what the buyers’ inspectors are going to find. So then they can choose what they want to improve/repair early on.
Preplanning is necessary to sell a home. You can’t change the location but you can amaze and astound buyers with the condition and the price.

Speaking of price, another job for today’s sellers is to be proactive in setting an effective price. Gone are the days when a home could be listed at a higher price and then reduced after so many days still on the market. There is no longer that high level of buyer motivation where the buyers feel the need to act quickly or they will lose their desired house to others. In order to sell a house fast, the home must be priced right or there has to be a frenzy going on and it is rare to see the latter.

There is a great potential for more reasonable housing costs to materialize with the emergence of greater seller flexibility. This trend would help the market make its upswing and would surely excite first-time home buyers.
New construction sales may continue to slide but to correct this, home builders are reducing their inventories nationwide and are dangling enticing incentives. The National Association of Home builders reported that 77 percent of builders were offering some sort of sales incentive to sell down their completed homes in December.So my New Year’s prediction is that we will see headlines this year peppered with words like “upswing” not “downturn” and “stable” not “slump.”