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From the desk of Robert Abbott - Berkshire Hathaway Home Services Abbott Realtors
AS SEEN IN THE BERGEN RECORD
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Staging a Smaller Home

stageThe number one reason homebuyers purchase a home is to get more space. So if you’re looking to sell a smaller home, use these tips to attract buyers.

Bring in more light. Reflective surfaces like mirrors or polished wood floors can bounce more light into any room and make it brighter. When it comes to furniture, glass-topped tables look light and show more of the floor, which makes any space look larger.

Move curtain rods up to the ceiling and replace heavy drapes with lighter fabric, blinds, or shutters. Don’t let drapes fall across the floor. You want every inch of floor space to show.

Reduce the number of pieces of furniture in the house, especially bulky furniture, oversized pillows and furniture with skirts. Stage your home with sleek low-slung furniture with simple lines. Your home will look on-trend and appealing.

Take advantage of built-in bookcases, cabinets and entertainment areas to help you save space. The less that’s on the floor, countertops and tables, the bigger your home will look.

The less stuff you have, the better your home will show. Pack up out-of-season clothes, and pack up collectibles and trinkets that create clutter.

With a small home, less is more. By showing your home at its best, the right buyer will see the beauty of a small space.

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All About Wood Floors

woodHardwood floors never seem to go out of style – their beauty and durability is appreciated by generation after generation of homeowners. So if you’re planning to install wood floors, you’ll want some basic information in order to choose wisely.

According to Hardwoodinfo.com, hardwoods are “deciduous trees that have broad leaves, produce a fruit or a nut, and generally go dormant in the winter. Popular hardwoods include oak, ash, cherry, and maple.

Softwoods, says the site, are conifers, evergreen and cone-bearing trees including cedar, pine, and redwood. Softwoods are generally used for behind the scenes construction lumber, while the beauty of hardwood grains make them preferable for display purposes, such as in cabinets and flooring.

Sometimes older homes feature pine floors, and cedar is often used to line storage closets, but generally, hardwoods are preferred for high traffic areas like living rooms and dining rooms.

If you’re buying wood floors, you can get them unfinished, and they’ll be sanded, stained and polished on site, or you can buy pre-finished hardwoods. You can also buy engineered hardwood floors, in which several thin layers have been bonded together in planks for easy installation and water resistance.

Caring for hardwoods and softwoods is easy – use only cleansers that are recommended for wood. Keep floors swept often, as dirt, grit and debris carried by shoes can scratch and penetrate the wood. Avoid wearing heels on hardwood floors and put furniture protectors under furniture legs if there is no carpeting.

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GOLDEN HOME EXPERTS

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As the aging population increases, more and more people have aging relatives with financial and/or physical and cognitive difficulties living in their current homes. There are many factors in the decision-making process of “what comes next? “and can be extremely difficult to navigate. This was the primary reason why we created a special group of Berkshie Hathaway HomeServices Abbott Realtors agents called the “Golden Homes Experts”.

Our mission is to provide our Senior clients with superior service, caring professional sales agents, and to give the entire family a sense of peace during what can be a tumultuous time. Call us at 201-447-6600 for more information.

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(left to right) Mary Sullivan, Darlene Jelen, Michele Italia, Dorothy (Dotty) Monopoli, Janeanne (Nan) Mitchell, Fabian Taliercio

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IS A 15 YEAR MORTGAGE FOR YOU?

Article courtesy of Realtor.com

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One of the best ways to eliminate your mortgage debt is moving into a 15-year fixed-rate loan. With the average spread a full 1% compared to its 30-year counterpart, a 15-year mortgage can provide an increased rate of acceleration in paying off the biggest obligation of your life.

Can you pull it off?

In most cases, you’re going to need strong income for an approval. How much income? The old 2:1 rule applies. Switching from a 30-year mortgage to a 15-year fixed-rate loan means you’ll pay down the loan in half the amount of time, but it effectively doubles up your payment for each month of the 180-month term. Your income must support all the carrying costs associated with your home including the principal and interest payment, taxes, insurance, (private mortgage insurance, only if applicable) and any other associated carrying cost. In addition, your income will also need to support all the other consumer obligations you might have as well including cars, boats, installment loans, personal loans and any other credit obligations that contain a monthly payment.

The attractiveness of a 15-year mortgage in today’s interest rate environment has mass appeal. The 1% spread in interest rate between the 30-year mortgage and a 15-year mortgage is absolutely real and for many, the thought of being mortgage-free can be very tempting. Consider today’s average 30-year mortgage rate of around 4% on a loan of $400,000—that’s $287,487 in interest paid over 360 months. Comparing that to a 15-year mortgage over 180 months, you’ll pay a mere $97,218 in interest. That’s a shattering savings of $190,268 in interest, but there’s a catch—your monthly mortgage payment is going to be significantly higher.

Here’s how it breaks down. The 30-year mortgage in our case study pencils out to a $1,909 monthly payment covering principal and interest. Weigh that against the 15-year version of that loan, which comes to $2,762 a month in principal and interest, totaling $853 more per month, but going to principal. This is why the income piece makes or breaks the 15-year deal. Independent of your other carrying costs and other credit obligations, you’ll need to be able to show an income of $4,242 a month to offset just a principled interest payment on the 30-year fixed-rate mortgage. Alternatively, to offset the principled interest payment on the 15-year mortgage, you would need an income of $6,137 per month, essentially $1,895 per month more in income, just to be able to pay off your debt faster. As you can see, income is a large driver of debt reduction potential.

What to do if your income isn’t high enough

When your lender looks at your monthly income to qualify you for a 15-year fixed-rate loan, part of the equation is your debt load.

Lenders are going to consider the minimum payments you have on all other credit obligations in the following way. Take your total proposed new 15-year mortgage payment and add that number to the minimum payments on all of your consumer obligations and then take that number and divide it by 0.45. This is the income that you’ll need at minimum to offset a 15-year mortgage. Paying off debt can very easily reduce the amount of income you might need and/or the size of the loan you might need as there would be fewer consumer obligations handcuffing your income that could otherwise be used toward supporting a stable mortgage plan.

Can you borrow less?

Borrowing less money is a guaranteed way to keep a lid on your monthly outflow maintaining a healthy alignment with your income, housing and living expenses. Extra cash in the bank? If you have extra cash in the bank beyond your savings reserves that you don’t need for any immediate purpose, using these funds to reduce your mortgage amount could pencil very nicely in reducing the 15-year mortgage payment and interest expense paid over the life of the loan. The concept of the 15-year mortgage is “I’m going to have to hammer, bite, chew and claw my way through a higher mortgage payment in the short term in order for a brighter future.”

Can you generate cash?

If you can’t borrow less, generating cash to do so may open another door. Can you sell an asset such as stocks, or trade out of a money-market fund in order to generate the cash to rid yourself of debt faster? If yes, this is another avenue to explore.

You may also want to explore getting additional funds via selling another property. If you have another property that you’ve been planning to sell such as a previous home, any additional cash proceeds generated by selling that property (depending upon any indebtedness associated with that property) could allow you to borrow less when moving into a 15-year mortgage.

Are you an ideal match for a 15-year mortgage?

Consumers who are in a financial position to handle a higher loan payment while continuing to save money and grow their savings would be well-suited for a 15-year mortgage. The other school of thought is to refinance into a 30-year mortgage and then simply make a larger payment like you would on a 25-year, 20-year or 15-year mortgage every month. This is another fantastic way to save substantial interest over the term of the loan, since the larger-than-anticipated monthly payment you make to your lender will go to principal and you’ll owe less money in interest over the full life of the loan. As cash flow changes, so could the payments made to the loan servicer, as prepayment penalties are virtually nonexistent on bank loans.

There is an important “catch” to taking out a 15-year mortgage—you also decrease your mortgage interest tax deduction benefit. However, if you don’t need the deduction in 15 years anyway, the additional deduction removal may not be beneficial (depending on your tax situation and future income potential).

If your income is poised to rise in the future and/or your debt is planned to decrease and you want to have comfort in knowing by the time your small kids are teenagers that you’ll be mortgage-free, then a 15-year loan could be a smart move. And when your mortgage is paid off, you’ll have control of all of your income again as well.

Proximity to retirement is another factor borrowers should consider when carrying a mortgage into retirement isn’t ideal. These consumers might opt to move into a faster mortgage payoff plan than someone buying a house for the first time.

Keep in mind that to qualify for the best interest rates on a mortgage (which will have a big impact on your monthly payment), you need a great credit score as well.

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