Which Filter to Use?

A dirty air filter decreases the effectiveness of your HVAC systemfurnance filter because it inhibits airflow and allows dirt, dust, pollen and other materials to blow through the system.

The challenge is how often it should be changed to keep the system working efficiently and extend the equipment life.   Too often and you’re wasting money and not often enough and your increasing the operating and maintenance costs.

Fiberglass panel filters are inexpensive and easy to find but they’re not very efficient and they allow most dust to pass through.  They were popular years ago but there are much better products available currently.

Pleated air filters are available in MERV ratings from 5 to 12. As these filters collect dirt and other particles, they become less efficient to the point of impacting air flow.  Allergy sufferers can benefit from this type of filter.  These should be changed every two to three months based on local conditions.

HEPA filters stand for High Efficiency Particulate Arrestance. They are very efficient and more expensive than previously described filters.  Since they are very efficient, they require changing more frequently; possibly, every month.

Electrostatic air filters are permanent and washable. They generally cost more initially but the savings will be based on how long they last.  This type does not add to landfill issues or produce ozone.

Improperly maintained filters will lower the quality of the air in the home, have a negative impact on air flow, cause it to use more electricity and eventually require maintenance to the systems.

In an attempt to easily compare filters, a rating system was created called MERV, an acronym for Minimum Efficiency Reporting Value.  The rating from 1 to 16 indicates the efficiency of a filter based on standards set by ASHRAE.  Higher ratings indicate a greater percentage of particles are being captured in the filter.

To create a system to remind you when to change your filters, set a reminder on your electronic calendar to recur for whatever frequency you determine is best for you.   Be sure to keep a supply of filters on hand to be ready to change them out when the time comes.

Reverse Mortgage

With all of the encouragement from celebrity spokespersons like Fred Thompson, Robert Wagner and Henry Winkler, there is a growing awareness of reverse mortgages.  The fact is that our population is getting older and more than 25 million homeowners meet the age requirement.

39095344-small250.jpgA reverse mortgage will allow homeowners age 62 or older currently living in their home to tap into their equity. The amount available is determined by the borrower’s age, the home’s current value and current interest rates.  The loan proceeds can be received in a single, lump-sum or periodic payments.  The closing costs can be paid in cash or rolled into the loan amount.

There are no payments on a reverse mortgage but the homeowner is still responsible for property taxes, insurance, maintenance and other home costs.

When the borrower dies, moves or fails to fulfill the terms of the loan, the lender is paid from the sale of the home.  The borrower or their estate is not responsible for more than the proceeds of the sale.  However, if the proceeds are greater than the amount owed to the lender, the remainder goes to the homeowner or their heirs.

Unlike normal mortgage requirements, the borrower’s income and credit are not used to determine the amount of the loan.  The homeowner must occupy the home as their principal residence and it must be free and clear of encumbrances or have substantial equity.

Reverse mortgages are an opportunity to generate income or funds for capital expenditures but they can pose risks to homeowners.  HUD, the largest insurer of reverse mortgages, is concerned about misleading or deceptive program descriptions encouraging borrowers to obtain HUD reverse mortgages also known as the HECM (Home Equity Conversion Mortgage).  As of June 18, 2014, FHA will only insure fixed rate reverse mortgages where the homeowner is limited to a single, full draw made at closing.

A reverse mortgage, like any financial decision involving a home, is an important decision that deserves careful consideration, due diligence and expert advice.

For more information, check out The National Association of REALTORS® Field Guide to Reverse MortgagesFAQs about HUD’s Reverse Mortgages  and Reverse Mortgages – Alternative Home Equity Funding by Real Estate Center at Texas A & M.

Tell the Truth About the Price

Over the years I have watched a lot of real estate agents just take their clients offer at any price and then try to manipulate both the buyer and the seller.  Does that Realtor have an obligation to present an offer that their client makes regardless of how unreasonable it is?  Sure.  But does the agent who routinely does this without guidance offer any real benefit to you?

I recommend that you demand an agent who is able to prove to you that they can justify and defend the price you are offering.  Have them show you the case they will make to the seller to try to get your offer accepted.  Of course, you need to be making an offer in which the agent can have faith.

I also recommend that you find an agent who will be a great advocate for you, but who has the courage to look you in the eye and say you are nuts.  Ok, well maybe not in those words, but you get my drift.  Everyone wants a great deal, but do you want to spend hours just writing offers, or do you want that great house?  An agent who respects you enough to be honest with you is exactly the agent you want to hire.

A few years ago I had the privilege of working with with a delightful lady name Kerry and her family.  Kerry was referred to us by our mutual friend Heather.  Anyway, a home that very well fit Kerry’s needs came on the market, and even though she had never seen the home in person, Kerry made an offer.  (We had done some immediate legwork to make sure Kerry was comfortable with the home.)

So, Kerry made an offer, but not just any offer.  Kerry and her husband listened to our expertise and experience of the local market, then offered accordingly.

Was Kerry’s offer the highest price the seller received?  No, it wasn’t.  But we were able to justify and strategically explain why our offer made the most sense for the seller.  I am happy to say that Kerry has been in her home for about three years now.

But back to the main point.  If your agent cannot demonstrate to you a fair price with a solid strategy for presenting that price, then perhaps you need to find a new agent.  For many others, you just need to listen to the expertise of the Realtor you decided was best suited to help you buy your next home.


Fifteen Will Get You Three

15yearFreddie Mac chief economist, Frank Nothaft, says that affordability, stability and flexibility are the three reasons homebuyers overwhelmingly choose a 30 year term.  However, for those who can afford a higher payment, there are three additional reasons to choose a 15 year term: save interest, build equity and retire the debt sooner.

First-time buyers have a higher tendency to use a minimum down payment and are very concerned with affordable payments.  It is understandable that the majority of these buyers select 30 year, fixed-rate mortgages.

Consider a $200,000 mortgage at 30 year and 15 year terms with recent mortgage rates at 4.2% and 3.31% respectively. The payment is $433.15 less on the 30 year term but the interest rate being charged is higher.  The total interest paid by the borrower if each of the loans was retired would be almost three times more for the 30 year term.


Another interesting thing about the 15 years mortgage is that more of the payment is going to principal than interest from the very first payment.  It would take over 13 years on the 30 year mortgage for the principal to exceed the interest allocation.

Some people might suggest getting a 30 year loan and making the payments as if they were on a 15 year loan.  That would certainly accelerate amortization and save interest. The real challenge is the discipline to actually make the payments on a consistent basis if you don’t have to.  Many experts cite that one of the benefits of homeownership is a forced savings that occurs due to the amortization that is not necessarily done by renters.

What is a Seller’s Market?

price quantityIt is generally considered a seller’s market when the conditions favor the seller. This condition exists when demand is high and supply is low without any significant adverse economic conditions taking place.

Demand is determined by ready, willing and able buyers. Low interest rates with indications that they will begin to rise fuels part of this demand. Rising prices also creates a sense of urgency to avoid higher housing costs.

Inventory is currently below what is considered balanced in most areas, but is definitely balancing out in the Fredericksburg real estate market. In some areas and price ranges, homes are selling very quickly, with multiple offers and sometimes at above the listing price. When too many buyers are chasing too few properties, things get competitive and the seller is the beneficiary.

Even when buyers and sellers come to an agreement on price and terms, a challenge can occur if the appraisal doesn’t meet the sales price. Either the purchaser has to come up with the additional cash or the purchase price has to be renegotiated.

A typical seller wants the most money possible for their home in the shortest time frame with the fewest inconveniences. A Seller’s Market provides the most likely environment for this to happen.

Don’t Leave Home Without…

lockupPlanning a summer trip is usually focused on what you’ll do, see and experience. Enjoy it even more by spending a little time before you leave to make sure your home is safe while you’re gone.

Consider these suggestions along with your other normal efforts:

  • Tell your neighbors you’ll be out of town and to be aware of any unusual activity.
  • Notify your alarm company .
  • Discontinue your postal delivery.
  • Use timers on interior lights to make it appear you’re home as usual.
  • Don’t make it easy for burglars by leaving messages on voice mail or posting on social networks.
  • Post on social networks about your vacation after you’ve returned.
  • Remove the hidden spare keys and give one to a trusted neighbor or friend.
  • Lock everything, double-check and set the alarm.
  • Take pictures of your belongings in case you need them.
  • Disconnect TVs and other equipment in case of unexpected power surges.
  • Adjust your thermostat.
  • Arrange for lawn care.
  • Consider disconnecting the garage door opener.
  • Put irreplaceable valuables in a safety deposit box.

It’s nice to go out of town on a well-deserved trip and it’s always nice to get back home…especially when it is just the way you left it.

Home Appraisal Issues in the Fredericksburg real estate market

We have been watching the Fredericksburg real estate market recover in increments since the bottom occurred in 2006.  The market is actually recovering quite well as we have watched prices climb and buyers dip their toes into the market place as they consider buying a home.  But, whenever we have rising prices, that creates its own set of challenges and one of them is the appraisal.

Whenever prices are rising, it puts a lot of pressure on the appraiser.  They have to look back between 3 and 6 months and then figure out… what are homes selling for today as compared to this past sale?  That past sale (aka comp., as in comparable property) may no longer truly project market value if prices are rising.

Add to this situation the mindset of banks.  They, understandably so, were gun shy from being hammered by foreclosures and short sales.  But, because of this, they were very cautious and suspicious of appraisals that were trying to keep pace with rising prices.

So, this leads into a point I wanted to make.  Ask someone who doesn’t study the market (and this includes a lot of agents) and they will likely tell you this is a much bigger problem than it actually is.


If you take a look at the chart above, you will see that nationally appraisals came back with no problems 76% of the time.  So, 3 out of every 4 appraisals have no value issues.  Far from the epidemic a lot of the complainers seem to make it sound like.

Now, to be perfectly fair to all parties involved… this is not just an “appraiser” issue.  Quite frankly many homeowners and their listing agents overprice their properties.  In many cases the listing agent is expecting an appraisal issue because they know the market isn’t bearing the price they have on the property.  Nearly every home seller I have encountered thinks their home is worth more than the market will bear.  That is just the nature of how we as people work.

So, my suggestion to potential homeowners is to make sure you are working with an agent who has a solid grasp on the market, and do not overprice your home.  Every issue you have after your home goes under contract costs you more money than if it were handled before it went under contract.  Know your value.  Price it appropriately.  Move on to the next chapter of life.