Real Estate Information

So you’ve finally found the piece of Chester County real estate you’ve searched for months! What next? Before you sign a contract, make sure it contains a home inspection contingency, a clause stating that your offer is contingent dependent on the results of a home inspection.

A home inspection is of primary importance because it allows you to obtain an unbiased professional assessment of all the components of the property. It is a step necessary for you to decide if you will stay with your original offer, renegotiate based on documented issues and needed repairs, or back away from the purchase of that piece of Chester County real estate altogether.

Selecting a qualified inspector is vital. Your realtor can provide you with the names of reputable firms, or you can go online to research services offered and credentials. Specific information you should know about the inspector and the inspection process included the following:

      1. Credentials and background: Is he/she licensed in your state? Is he affiliated with any respected organizations such as the American Society of Home Inspectors? Membership in these groups requires that inspectors follow strict guidelines about ethics and continuing education. Be sure to inquire about experience and training. A construction-based background is a plus, as is attending a college with an emphasis on construction or attending a home inspection school.

    2. Fees: Although you don’t want to spend money unnecessarily, this is not a place to scrimp. Your house purchase is a very large investment, and you need to know as much as you can about it. Do remember that money spent on a quality inspection now will be returned to you by avoiding unexpected costly repairs in the future.  The price of an average inspection varies depending on the age, size, and condition of the house. Some inspectors base their fees on the list price of the Chester County real estate. Get estimates from all you contact, but don’t assume that the lowest priced is the best choice for you.

    3. Type of report: Some inspectors use computer generated onsite reporting, some a handwritten checklist, and others a computer generated report you won’t receive for few days. By and large, the last option is in your best interests since it gives the inspector time to review his findings, look up any questions he may have, and send you a detailed, descriptive report. He should also be able to provide you with pictures of the problem areas. Feel free to ask him for a sample report.

    4. The actual inspection: Make sure that you will be allowed to accompany the inspector and ask questions as he checks out the house and grounds. This is a good time for you to become familiar with the home‘s inner workings, locate shut-off valve and breaker panels, and pick up tips on operating and maintaining different systems.

    A thorough home inspection of an average home should take between 2 ½ and 4 hours and should cover both internal and external components of the property. Major items examined should include:

            a. Siding, foundation, brickwork, etc.

            b. Insulation

            c. Deck, roof, garage

            d. Attic/basement

            e. Driveway and walkways

            f. Electrical system

            g. Plumbing

            h. Doors and windows

            i. Heater, air conditioner, and hot water heater

            j. Ceilings, walls, and moldings

Having your Chester County real estate inspected will allow you to make an informed decision about the purchase of a house and will provide you with both essential knowledge and peace of mind.

The Federal Housing Administration (FHA) is a government agency whose main objective is to help people who do not qualify for conventional lending programs obtain home loans. The FHA is not in itself a lender; rather it insures a loan, thus making banks/lenders more willing to grant a home loan on real estate to those in underserved groups.

Because of the economic downfall and the increased number of foreclosures, the FHA, in an effort to strengthen its capital reserves, as made significant changes to its policies, effective this summer. Basically, the changes involve insurance premiums, FICO scores (credit rating), seller concessions, and increased enforcement of lenders.

Mortgage insurance premiums: The previous upfront premium payment of 1.75% of the loan amount has been raised to 2.25%. The option of financing this amount into the loan is still available. In addition, the FHA has requested the authority to increase the annual MIP from its current .55% in an effort to reduce the upfront MIP costs.

FICO scores: The new minimum score for those with a 3.5% down payment has increased to 620 (up from 500).

Seller concessions: In previous years the seller could pay up to 6% of the buyer’s closing costs and fees. It is proposed that amount be lowered to 3%.

Lender enforcement: The FHA will make public (on the HUD website) lender performance; increase its monitoring of lender performance and adherence to the new guidelines; and pursue further legislation to increase its enforcement capabilities.

Additionally, in November 2009 new rules affecting the insuring of the condominium segment of Chester County real estate became effective. FHA insurance availably will be subject to location restrictions based on noise concerns, safety, flood possibility, and wetland disturbance.

                Condo-based changes include:

                1. Increase the loan limits.

                2. Eliminate the practice of separating condo loans from single-family home loans.

                3. Set the owner-occupation requirement at 50%.

                4. Reduce the unit presale requirement from 50% to 30%

                5. Limit the number of FHA loans in any on building to 30%

                6. Cap the number of units in any one building which can be owned by one investor at 10%.

                7. Replace the “spot check” approval process with a more streamlined one when a condo project has not been previously approved

                This is a list of approved condos. 

Investing in Chester County real estate can be quite profitable and safe. Such a transaction can also be challenging, especially for first-time investors, and requires prior planning, a time commitment, realistic goals, and careful consideration of the following factors.

1. Selecting a property. First decide on a location and the type of property you are interested in. You might also consider proximity to good schools, public services, shopping centers, highways, etc.
   
   Another decision will deal with the type of property you want to own--a single family residence, a multi-family unit, or a vacation rental home. Discuss with you realtor and tax advisor the pros and cons of each to decide which will be most advantageous for you.
2. Examining your finances. In addition to a monthly mortgage payment, investment property expenses can also include taxes, property management fees, utilities, insurance for fire and floods, repair and maintenance costs, condo fees, and periods of vacancy. Be prepared to have cash on hand for a 20% to 30% down payment (or investigate other options). A helpful tool to assist you in calculating costs and probable financial outcomes is www.goodmortgage.com.
   
   Also keep in mind that long term (5 to 10 years) ownership is usually best for the average investment. The shorter the length of time you hold the property, the greater the risk.
3. Repairing and updating. Some investment properties require initial repairs/renovation ranging from cosmetic to structural. Unless you have the time and expertise needed to make such repairs, look for skilled professional to do the work for you. Keep in mind that most renters are looking for a good location and a home that is clean and in good working order; granite counter tops and top of the line appliances are usually neither necessary nor cost effective.
4. Acting as a landlord. Being a successful absentee owner of Virginia Beach real estate will require diligence and responsibility. Carefully screen all potential tenants. Run a credit check and find out from prior landlords if they were good tenants who paid the rent on time, treated the property with care, and were considerate neighbors. The more selective you are, the more successful your lessor/lessee relations will be.

As a landlord you have both rights and responsibilities, and you need to be mindful of each. The Pennsylvania Landlord and Tenant Act covers rental agreements, remedy provisions, application fees, security deposits, and a wealth of other information and laws relating to the rights and responsibilities of both the landlord and the tenant.

Learn more about investing in Chester County real estate.

Search all Chester County real estate and homes for sale.

To a Chester County home loan shopper, there may seem to be an endless--and confusing--array of mortgage types. Of course you want to choose the option that is best suited to your current and future financial situation, but understanding the terminology, types, and monetary ramifications is not always easy. Mortgages generally fall into four categories (fixed rate, adjustable rate, step, and balloon) according to the interest rate and duration of the loan.

Basic terminology;

    Fixed rate--The interest rates do not change during the life of the loan, thus allowing you to know the amount of your payments.

    Adjustable rate (ARM)--the interest rate is tied to certain indexes plus a margin and can fluctuate up or down, thus affecting each payment,

    Step--the interest rate and monthly payment remain the same for a specified period of time. After that the interest will change to the prevailing rate and will remain there for the duration of the loan.

    Balloon--a loan payment that expands after a certain amount of time. Basically it functions similarly to a fixed rate mortgage in the earlier months/years with a delayed steep increase at the end,

The following information, courtesy of Mortgages.Interest.com, outlines the type of mortgage, the loan characteristics, and the situations most appropriate for each one. If, for instance, you plan to live in your Chester County real estate more than 10 years and desire stability in payment amounts, then a fixed rate mortgage is for you. If, however, your finances are currently strained, but you know that in 5 to 10 years your monetary situation will improve or that you will most likely move within 10 years, then an ARM or balloon mortgage may be better for you. Being familiar with these options allows you to discuss them intelligently with your real estate agent and/or lender and then select the type which best fits your circumstances.

 Fixed rate mortgage (30, 20, 15, 10 years)*

• Interest rate & monthly payment remain the same for the entire term of the loan

• plan to live in property more than 10 years

• like total payment stability

0/1 year adjustable rate mortgage

• Interest rate & monthly payment remain the same for 10 years

• Starting the 11th year, interest rate adjusted every year, so payment is subject to change every year for remainder of loan

• plan to live in property more than 10 years

• like initial payment stability, can accept later changes OR

• plan to move within 10 years

•   want loan to remain in force in case plans change

7/23 (2-Step) or '30 due in 7' mortgage

Interest rate & monthly payment remain the same for 7 years

• Conversion option: On the 8th year, interest rate adjusted to reflect prevailing interest rates, resulting payment will remain the same for remainder of loan

• plan to live in property more than 10 years

• can tolerate one payment adjustment OR

• plan to move within 7 years

• want to remain in force in case plans change

7/1 year adjustable rate mortgage

• Interest rate & monthly payment remain the same for 7 years

• Starting the 8th year, interest rate adjusted every year, so payment is subject to change every year for remainder of the loan

• plan to live in property more than 7 years

• like initial payment stability, can accept later changes OR

• plan to move within 7 years

• want loan to remain in force in case plans change

7 year balloon mortgage

• Interest rate & monthly payment remain the same for 7 years

• At the end of 7 years, loan is due in full. Borrower must refinance into new loan at prevailing interest rates

• plan to live in property more than 7 years

• are willing to refinance at prevailing market rates OR

• plan to move within 7 years

• like payment stability

In addition, there are variations of the ARM, step, and balloon mortgages which differ primarily in the duration of the loan and of the planned residency.

Another good source of information for first-time Chester County home buyers is the Department of Housing and Urban Development (HUD), an agency which oversees FHA loans. This type of loan is particularly useful if you have little money for a down payment, less than great credit, or large monthly bills. An FHA loan requires as little as 3% down (and it can be a gift from a relative or friend). In terms of your credit rating, the FHA is primarily concerned that for the past two years you have paid bills in a timely manner and have been steadily employed. With FHA you have to wait only two years after declaring bankruptcy, and your debit-to-credit ratio can be higher than for a conventional loan. You can qualify for an FHA loan if your monthly payments are no more than 43% of your income, and, as with conventional loans, you can choose from many types.

Of course, there are some negatives to consider before taking on an FHA loan. Interest rates generally run about 1/8 of a percentage point higher than conventional rates, but the real disadvantage of an FHA loan is that the borrower must pay an up-front insurance premium of 1.75% of the mortgage if the down payment is less than 20%. This cost can, however, be added to your total loan amount.

So there you have it--an easy-to-understand guide to mortgage types. As always, you should feel free to contact me anytime with questions. I am glad to recommend a number of outstanding mortgage lenders if you are interested in talking with one.

Interested in conserving the environment? Intrigued with the idea of providing a haven for neighborhood wildlife AND reducing the amount of work, water, and chemicals needed to keep your landscaping alive, well, and attractive? Read on…

Winter is the perfect time to plan a backyard wildlife habitat for your Chester County PA home and design a garden that provides essential kinds of wildlife, such as birds, butterflies, amphibians, and small mammals. Because natural environments are quickly disappearing due to rapid development, greener gardening techniques which are mindful of the ecosystems and needs of native creatures have become essential.

There are many online sites which provide detailed instructions for turning your property into a mini-sanctuary for wildlife, but the initial steps are relatively simple and include providing food, water, cover, and space.

Provide Food for Wildlife

Everyone needs to eat! Planting native herbs, grasses, shrubs, and trees is the easiest way to provide the foliage, nectar, pollen, berries, seeds and nuts that many species of wildlife require to survive and thrive. You can also incorporate supplemental feeders and food sources.

Supply Water for Wildlife

Wildlife need clean water sources for many purposes, including drinking, bathing and reproduction. Water sources may include natural features such as ponds, lakes, rivers, and wetlands; or human-made features such as bird baths (change water 2 to 3 times per week), puddling areas for butterflies, installed ponds, or rain gardens.

Create Cover for Wildlife

Wildlife require places to hide in order to feel safe from people, predators, and inclement weather. Use things like native flowers, leaves, shrubs, thickets, brush piles or even dead trees. Remember to utilize both the horizontal and vertical spaces in your yard.

Give Wildlife a Place to Raise Their Young

Wildlife need a sheltered place to raise their offspring. Many places for cover can double as locations where wildlife can raise young, from wildflower meadows and bushes where many butterflies and moths lay their eggs to caves where bats roost and form colonies.

Green gardening for your Chester County PA home targets a reduction in water and chemical use, a decrease in the size of the area covered with turf grass, and generous use of mulch. How you maintain your garden or landscape (either formal or casual) can have important positive or negative effects on the health of the soil, air, water and vegetation that we all use! Here are some sustainable gardening techniques that you will help you conserve and protect our natural resources.

Mulching

Mulch helps keep water in the soil and available to the plant, rather than evaporating into the air. This can help reduce water consumption. As mulch breaks down, it provides nutrients to the soil, which can help reduce or eliminate the need for additional fertilizers. Be sure to use mulches that are from sustainable forestry practices (not Cypress tree mulch) and are free from pests and diseases. Your cooperative extension office can help you find sources of mulch in your local community.

Reducing Lawn Areas

Grass lawns often require chemicals and frequent maintenance. Gas-powered lawnmowers produce high amounts of greenhouse gases, which contribute to the air pollution that causes global warming. Since lawns are often made of only a few types of plants that most animals do not consume, they do not provide a lot of value for wildlife. Replacing grass lawns with native wildflowers, bushes, and trees provides the food, shelter, and cover that help to maintain healthy, natural ecosystems and reduces your time and labor working on the lawn!

Xeriscaping

Xeriscaping is an approach to landscaping that minimizes outdoor water use while maintaining soil integrity through the use of native, drought-tolerant plants. This is a common practice in drier areas, where water supplies and water quality are in very short supply.

Removing Invasives and Restoring Native Plant Communities

Native plants are better for the environment than exotic plants, generally requiring less fertilizer and other additives, less water, and less effort in pest control. They are especially important to native wildlife, such as pollinators, that may have coevolved with a particular species. Pollinators often rely on a certain type of flower as a source of food, while the flower depends on the pollinator to transport its pollen to other flowers for reproduction. When non-native or exotic plants are used, they often upset the delicate balance of a local ecosystem and sometimes even out-compete native species (hence the term invasive) to the point of extinction. Wildlife benefit more when native plant communities remain intact or are restored to their natural habitats, thus providing the best source of food for wildlife.

How to get started? Inventory what is presently in the backyard of your Chester County PA home and consider what can stay, what should go, and what is needed. Locate a list of plants and trees that are native to your area. Contact your local nurseries or agriculture extension office or search for assistance on line. Two informative sites are National Wildlife Federation and Wildlife Habitat. Also, give yourself a pat on the back for helping to restore natural habitats--and look forward to spring!

Yes, it’s tax season again, and given the state of the economy, saving every penny is very appealing. As an owner of Chester County real estate there are many deductions and tax credits you will want to take claim on your 2009 return…provided you qualify of course!!

Here are a number of money-saving ways to reduce the amount of tax you owe--or even increase the amount of your refund!

First, let me explain the difference between a tax deduction and a tax credit.  A tax deduction reduces (adjusts) your taxable income. A tax credit reduces your tax dollar for dollar. You do not have to itemize deductions to claim a tax credit.  

Tax Deductions for Primary Residence

Tax deductions on your primary residence include:

• Interest paid on your mortgage
• Refinancing points paid in 2009
• Real estate taxes
• Interest on major home improvement loans
• Mortgage insurance premiums
• Home improvements required for medical care
• Any sales commission, legal fees, or closing costs associated with the sale of Chester County real estate in 2009

Home Energy Efficiency Improvements Tax Credits

Consumers who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in existing homes can receive a tax credit for 30% of the cost, up to $1,500, for improvements "placed in service" starting January 1, 2009, through December 31, 2010. See Federal Tax Credits for Energy Efficiency for a complete summary of energy efficiency tax credits available to consumers.

Residential Renewable Energy Tax Credits

Consumers who install solar energy systems (including solar water heating and solar electric systems), small wind systems, geothermal heat pumps, and residential fuel cell and microturbine systems can receive a 30% tax credit for systems placed in service before December 31, 2016; the previous tax credit cap no longer applies. Details are explained here.

Home Buyer Tax Credit

• First-time buyers who have not owned a home in the last three years are eligible for a credit of 10% of the purchase price, not to exceed $800,000. Ownership of a vacation home or rental property not used as a prime residence does not disqualify a buyer as a first-timer.
• Current home owners, or those who have owned and lived in a principal residence for at least 5 consecutive years of the last 8, may qualify for a credit of up to $6500.