New Year's Resolution? Financial Fitness

2016 is just around the corner, and while you are thinking of your New Year’s resolution of a better diet, more exercise, spending more family time, etc.,don’t forget about your financial fitness.  It’s time to take a break from the holiday shopping and eating out, and get your finances in order before the New Year.  I’ve always found this time of year a great opportunity to review my portfolio, understand where my spending is going (or NOT), and give my finances a little love.  Just like diet, exercise, and physical fitness, financial fitness is something we should do more than once a year.  Without reviewing your financial discipline and rigor to understand where you are, it’s difficult to improve and build wealth over time.  It won’t happen in one year, but if you keep chipping away at it, month-by-month, year-by-year, you’ll be amazed at what you can accomplish. As I’ve said before, ‘You Can’t Own Everything’, but ‘You Can Own Anything’, if you have a plan and the discipline to stick to it.  

Here’s a quick little financial fitness checklist I thought I’d share before the New Year:

7. Evaluate Your Spending

Reviewing a year’s worth of spending all at once can be an eye-opening exercise, but it’s the best way to cut back on all of those little unnecessary purchases that add up throughout the year. If you’re not using a personal finance app, there are quite a few available and most are free.  Here’s a link to a useful blog post from our friends at MoneyUnder30.com.  Most of these apps come in handy to not just track your spending, but to monitor your investments and calculate your entire net worth.  

6. Check Your Credit Score

If you’re ever going to want a mortgage, apartment, house, or car, having good credit is crucial. Your credit score can also be used to determine the price you pay for insurance, affect future job offers, etc. Keeping tabs on your credit should be a regular priority, and it’s easy to do through any of the top three credit reporting agencies.  The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.  Again, it’s free, just takes a little time and discipline on your part to make it happen!

5. Make Charitable Contributions

December 31 is the deadline for contributing to a charitable organization and still being able to deduct it from your taxes, so there is no better time to give back. And remember, contributions don’t have to be cash. You can donate cars, clothing, food, household goods, and even shares of stock. Donating highly appreciated shares of stock from a taxable brokerage account has a triple benefit. It helps your charity, it can provide you a deduction on the full amount if the charity is qualified, and it can avoid capital gains tax on profits.  If you don’t have a favorite charity yet, but want to see how effectively a charity uses your donation, check out Charity Navigator.

4. Start Or Fund Your Child’s 529

529 plans are the college savings vehicle of choice for most parents. That’s because they allow contributions to grow free of federal taxes and, in some cases, provide for a state tax deduction, too. In most states, December 31 is the cutoff for annual 529 contributions to be counted in that tax year, so contribute what you can.  My wife and I opened up our kids 529 plans the month they were born and have been contributing to them monthly ever since.  Our son is now 17, daughter 14, and still not sure if we have enough saved, but 529’s provide a tax savings benefit while establishing a solid foundation for your children’s education over time.

3. Estimate Your 2015 Taxes

You don’t have to file your tax return until April 15, but it’s good to have an idea of what it will amount to by the time the deadline comes around. Try a service like Turbo Tax to estimate your tax, and you’ll be prepared in case you end up owing money to the IRS.  It’s better to know now and have 90+ days to prepare if you owe Uncle Sam!

2. Max Out 401k / IRA Contributions

Maxing out your 401k is one of the best ways to reduce your taxes and save more money for your future self. Funds you contribute to a 401k account are pre-tax dollars, meaning they’re taken out of your paycheck before you pay taxes on them. The benefit is that you lower the overall amount of income that you have to pay tax on now, and the money in your 401k can grow tax deferred until retirement.  The maximum you can contribute to a 401k account in 2015 and 2016 is $18,000. You can contribute up to $24,000 if you’re 50 or over.  If you are in an employer matched 401k, it’s ideal to contribute the maximum amount your employer will match since that’s basically FREE money!  If you don’t have an employer sponsored 401k, but have an IRA, hitting the contribution limits on your retirement account goes a long way toward your financial fitness later in life. The limit on both traditional and Roth IRA contributions for 2015 is $5,500 ($6,500 if you’re 50 or older). If you haven’t hit those amounts yet, now is a good time to make a little push to get there. The IRS is actually your friend in this area because you have until April 15, 2016, to make your 2015 contributions, so make a plan now. Again, this is all about financial fitness for life!

1. Rebalance Your Portfolio

Some people know what mix of investments they have when they create their portfolio, but that mix can change over time based on the performance of each type of investment and how subsequent contributions are invested. At the end of the year, see what your investment mix looks like and make any necessary adjustments to better reflect your investment goals and risk tolerance.  If you are using a personal finance app that I mention in #8 above, these will usually give you a view of your portfolio mix.

How will you use the end of the year to improve your financial fitness? Do you have financial to-do’s to add to my seven?  If so, I’d love to hear them!

MORTGAGE APPLICANTS: School up on the new forms for 2016

If you're among the lucky few who will pay all cash for your home, you can stop reading right now! If you are among the many who will be taking out a mortgage loan, however, and who may have read home buying articles that stated the required forms included a HUD-1 Settlement Statement, a Good Faith Estimate, and a Truth-in-Lending disclosure form, keep reading.

These forms will no longer be used for borrowers who submit a mortgage application on or after October 3, 2015 (this date was extended from August 1, 2015). Hopefully, the change will be for the better. It's a move meant to simplify matters for consumers, consolidating the information conveyed and highlighting the significance of important loan terms.

The replacement forms will include  a "Loan Estimate" and a "Closing Disclosure." They were created by the Consumer Financial Protection Bureau,  after a long process of several years gathering input from consumers and real-estate industry groups.

• The Loan Estimate: This form will be provided to consumers within three business days after they submit a loan application. It replaces the early Truth in Lending statement and the Good Faith Estimate, and provides a summary of the key loan terms and estimated loan and closing costs. Consumers can use this new form to compare the costs and features of different loans.

The second form, the "Closing Disclosure," will come your way three business days before your close of escrow. Its purpose is to provide a more final accounting of the transaction, covering the same terms, but with exact statements of costs and required cash.

• The Closing Disclosure: Consumers will receive this form three business days before closing on a loan. It replaces the final Truth in Lending statement and the HUD-1 settlement statement, and provides a detailed accounting of the transaction.

It’s still early as we’re only a few months into the new process and forms used by mortgage lenders.  However, if you are going to obtain a mortgage to purchase a home, it’s a good idea to review the new Loan Estimate and Closing Disclosure forms as you will see these for any mortgage in 2016 and the foreseeable future.

Your Home is Too Bright - 10 Reasons Your Home is Not Selling

My wife and I sold our second home in 2005.  Given we were ‘experienced’ home sellers, I attempted to sell our home on my own.  We prepped our home to what we thought was PERFECT, listed it online on a Thursday and put out Open House signs that Saturday.  We did multiple Open Houses where I spent Saturday and Sunday sitting in the home waiting for buyers/agents to come through.  We did get some traffic, but no offers.  After 3 months, my wife and I were frustrated and decided to hire one of the top real estate agents in our area.  The first thing our agent did was coach us on how to eliminate buyer turn-offs and make our home appealing to the masses, not the perfect buyer.  Homebuyers are a notorious picky bunch.

What’s keeping your perfect home from selling? As the homeowner, you may be overlooking some obvious buyer turn-offs such as these:

1. Pet water bowls in sight

Your house might not smell of dog, but if a potential buyer spots Fido’sbowl, you might ending up feeling sick as a dog when you lose the sale. Even a hint of a canine resident can send fraidy-cats running.

2. Hot tub time machine

Although you might think that groovy backyard hot tub will impress, potential buyers might view it as a huge hassle — just think about the expense and aggravation of removing it to expand the deck!

3. Too much light

No one wants to live in a cave, but the flip side also can be true: sometimes a room is just too bright.  When a buyer walks into your home, you don’t want them to say, “Wow … too much light. I feel like I’m on display.”

4. Dated hardware

The hardware and fixtures you installed in the ’90s might be off your radar, but potential buyers may find them dated.  A quick and easy fix is to switch the brass lighting, cabinet hardware, and door hardware to brushed nickel.

5. Visible signs of mold or mildew

You already know this one isn’t good, but having mold and mildew in the house is even worse than you might think. Buyers see it and imagine spacesuits, masks, and thousands upon thousands of dollars in repairs running out of their bank accounts.

6. Personal artifacts

You might cherish those years of enjoyment gazing at your child’s artwork, the prize fish you caught, or your creepy-cute doll collection, but those are all turnoffs to buyers.

7. Dirty laundry

You’ve probably heard the expression “Don’t air your dirty laundry in public.” (If not? Bless your heart. It means don’t discuss private issues in public.)

But in the case of showing your home, you can take the phrase literally. If buyers see your dirty laundry, they’ll flee before they look at the rest of the house.

8. Odd use of space

Buyers want to visualize themselves living in the home. Why make things difficult for them by showing your space in an unconventional way?  When buyers see four tables in the same room or a loveseat in the dining room, it can be quite confusing.

9. Dirty windows

We know it’s a pain to clean the windows (inside and out), but it can make a world of difference to buyers when they can actually see the world around them.

10. Unfriendly reading material

Any object in the home can make an impression on a potential buyer. I remember an attorney’s condo that was filled with books on litigation.  Yikes. The last thing a buyer wants to think about is getting sued by a seller.

At the end of the day, as you prep your home for sale, put yourself in the shoes of the mass buyer.  As the seller, your goal is to appeal to most buyers as possible so in many cases, the more neutral the colors, the pictures, the magazines on the coffee table, etc, the better your chances of capturing the most buyers.  These recommendations are not that expensive, but do take a little bit of time and thought to put yourself in the shoes of the mass buyer.

What are some of your experiences with buyer turnoffs, either as the seller or the buyer? We would love to hear about them!

15 Ways to Prep your Home on a Budget

When my wife and I sold our first home in 2000, we didn’t know where to start to get top dollar for our home.  We were still in our 20’s and didn’t have a lot of money to sink into our home to get it ready to sell.  We’ve now sold multiple homes and wanted to share some of our learnings and recommendations.  

Sinking a bunch of money into home improvements probably isn’t high on the priority list for you. But inexpensive upgrades are crucial for curb appeal and to leave a strong first impression to buyers.  The good news is that it doesn’t cost a lot to stage your home to sell and make a big impression. Here are a few easy ways to upgrade on the cheap.

1. Kick up your kitchen a notch

Changing the knobs on your cabinets is an easy fix. If your appliances don’t match, order new doors or face panels for them to create a uniform look.

2. Buy new “jewelry” for your sink

Swap out the faucet set in your kitchen for a spiffier version. It costs a few hundred dollars and will draw attention away from, say, an outdated dishwasher.

3. Spruce up that bath

Replace old or broken toilet seats with new ones and consider re-grouting your shower or floor tiles if they look dingy or outdated. Clean grout says “new bathroom” — or at least one that hasn’t been showered in a thousand times.

4. Ditch those hoarder tendencies

Declutter! If you must, rent storage space for a couple of months and remove any unnecessary items (including furniture) from your home. The more uncluttered your home, the larger it will look.

5. Decor your front door

Install a new handle and lock and give your door a coat of fresh paint. If budget allows, add a new light fixture too.

6. Sell it with flowers

Add plants or flowers along the walkway that potential buyers will use to enter your home.

7. Make it sparkle

Power-wash your front walkway or porch. It’s the first thing buyers will see, so it should look bright and clean.

8. Scrub, scrub, scrub

Wash all of your windows (inside and out) and replace heavy drapes with sheer curtains, which will let in more light.

9. Invest in a few bags of mulch

It’s inexpensive and can instantly tidy up flower beds or line walkways, giving the feel of professional landscaping.

10. Really clean your floors

Really, really clean them (as in more than just doing a once-over with the vacuum). Rent a steam machine to give your carpets a deep scrub. If you have hardwood floors, have them buffed and polished.

11. Switch out your switch plates

If your outlets and switches are mismatched or look grimy, replace them with new ones. Stick with white and opt for a contemporary style.

12. Hang a pendant light in your kitchen

Doing so instantly adds a modern edge to the space and creates a focal point.

13. Increase the wattage in your light fixtures

It’s a subtle change, but new, brighter bulbs make small spaces feel larger.

14. Undo the unsightly

Is your storm door on the decline? Remove it. Carpeting looks worse for the wear? Rip it out. The less “unclean” your home looks, the newer it will feel to a buyer.

15. Give your guest room a purpose

If the guest room is currently the catchall for everything you don’t know what to do with, clean it out and repurpose it as an office or make it a real space for guests.

Did you know we can help? Our Real Estate Concierges Handyman services can take care of these low budget items for you, saving you time and stress! Let us help stage your home for a successful resell. Give us a call @ 855-REC-6700 or email at concierge@reconcierges.com.

4 Financial Terms Every Home Buyer Should Know

Financial fitness and money management generally isn’t a fun topic for most of us--it can be boring, scary, and frustrating. In Fidelity’s recent study, 39% of millennials worry about finances and 25% don’t know who to trust.  How do you know if you can afford to go to that music festival with your friends today and not need that money later? Are you aware of where much of your money goes, or how to best allocate it? These are all common questions that potential home buyers have as they start to plan for the future…..Your financial fitness depends on your financial knowledge; so let’s look at 4 financial terms that every homebuyer should know and why:

1. Debt-to-Income Ratio – This is a ratio of your total monthly debt payments divided by your monthly take-home pay or after-tax pay.  This is an important ratio to understand when purchasing a home as it’s a key measure for mortgage companies to qualify you for a loan.  To qualify for a conventional mortgage, your Debt-to-Income should be less than 45%.  For a first time homebuyer, there are programs out there that you can qualify for with up to 55% Debt-to-Income ratio.  For example, if your after taxes take-home pay is $5,000/month, all of your monthly debt payments should not exceed $2,250.  Your monthly debt payments would include mortgage + car loans + student loans + credit cards + personal loans = $2250 or less.

2. Credit Score (aka FICO) - One of the most common ways credit scores are calculated is the FICO method, from Fair Isaac Corporation. A FICO credit score can range anywhere from 300 to 850. FICO credit scores are calculated based on five categories of information:

1. Payment history - 35% or 297.5 points
2. Amounts owed -30% or 255 points
3. Length of credit history - 15% or 127.5 points
4. New credit - 10% or 85 points
5. Types of credit - 10% or 85 points

The graph below shows the relative weight that each one of these categories has in the calculation of your credit score.

Category Possible Points

Payment history	297.5
Amounts owed	255.0
Length of credit history	127.5
New credit	85.0
Types of credit	85.0
Totals	850

Credit Score Ranges

700-850 A "very good" or "excellent" credit score. You should not have a problem getting a loan from a lender.

680-699 A "good" credit score. Though not considered very good or excellent, most lenders will not have a problem giving you a loan.

620-679 An "acceptable" credit score. Lenders will most likely require you to provide supporting information regarding your income, time in your current home, bank statements, time with current employer, etc.

580-619 An "okay" credit score. 620 is the prime rate cut-off point, so you can expect to pay a higher interest rate with any lender who is willing to give you a loan.

500-579 A "bad" credit score. You may still be able to get a loan with a score like this, but you will most definitely be paying a higher interest rate.

350-499 A "very bad" credit score. You can still get a loan with this low of a credit score, but you may be better off turning it down and cleaning up your credit score over the next several years. Otherwise, the interest on the loan may be too difficult to handle.

Generally speaking, you need at least a 620 credit score to qualify for a conventional mortgage.  However, there are FHA or first time homebuyer programs out there where you can qualify with as low as a 580 credit score.

3. Assets - Of the “four legs of the table” (Debit, Income, Credit, Assets), assets are the least discussed, and yet may be the most important. Assets are usually categorized into 4 main areas:

• Business Ownership - you own your own business or % of someone else’s business
• Real Estate - primary residence, investment/rental properties, vacation home, etc.
• Paper/Liquid Funds - savings, checking, stocks, mutual funds -
• Commodities - oil, gas, gold silver, etc.

So, your assets include, real estate, cars/boats, checking/savings account, stocks/bonds, money markets, mutual funds, jewelry, etc.  Lenders look at your assets to make sure you have the needed down payment (the difference between the purchase price and the loan amount which may or may not be the same as the money deposit at contract signing), but also reserves after closing in case an emergency arises you have the means to continue paying your mortgage.  The key areas that lenders look for:

• Monies needed for closing costs (fees to the lender and third parties for things like appraisals, title insurance, settlement services, and so on)
• Monies needed for Pre-Paids (homeowners insurance, flood insurance, real estate taxes, etc.) and establishing escrow accounts for future payments
• Monies for Reserves- the money you still have left after closing. Monies that would be available, if a problem were to arise

4. PMI (Private Mortgage Insurance)- Another real estate related term, but another important one to learn. PMI is a policy that all mortgage lenders require if you’re putting less than 20% down payment of a home. It protects the lenders against a loss in case you default on the mortgage. Your PMI will be paid monthly along side with your mortgage payment, but once your balance reaches under 80% of the property value, you can have your lender remove the PMI.  This generally takes 7-8 years with a 3.5% - 5% down payment.

How many of these did you already know? Understanding the intricacies of personal finance can give you a huge edge moving forward--especially as you look towards buying that first house!.

Any questions you may have about Real Estate finance terms, let us know and happy to talk you through it.  Call us at 855-REC-6700 or email at concierge@reconcierges.com .

Don't Overlook These 7 Neighborhood Details

You know you want to live in a safe place, but what else should you be looking for when evaluating a new neighborhood?  If you’re in the market to buy a home or rent a home, location is crucial. Quality schools, low crime statistics, commute times, and even grocery stores are likely already on your neighborhood checklist. But what could you be missing when it comes to evaluating a new neighborhood?

1. Where will you go to have fun?

It’s natural to focus on proximity to your job when you’re looking for a place to live. After all, you probably travel between home and the office more frequently than you travel anywhere else.

But don’t forget about your downtime. Does the new place offer easy access to your favorite hobbies? Will you have to drive farther in rush hour traffic to get your kids to their after-school activities, or get up earlier on weekends to get to your favorite hiking trail? Make a list of the places you go most often to relax, and make sure getting there from your new home won’t take all the fun out of it.

2. Read the fine print

If your neighborhood has a community association, make sure you’re familiar with all of its guidelines before you decide to paint your house bright yellow. There may be community rules on what you can and can’t do with your new home. The covenants, conditions, and restrictions, also known as CC&Rs, govern things like whether you can paint your house, put up a satellite dish, keep a vehicle on the street, or store a boat. Make sure you understand all fees imposed by the community association, and factor them in when you’re figuring out how much rent or mortgage payments you can afford.

3. Homeowners associations and property managers

Your new neighborhood’s property manager or homeowners association (HOA) will make a huge difference in your quality of life. Look for obvious signs of their management abilities, such as whether the administrative building is kept in good repair.

If you’d like to dive into a more thorough search, many large property management companies share their ratings online. Talking to neighbors can be useful as well, and you might try searching the online archives of your local newspaper to see if the HOA has received any press — good or bad.

Problems with the HOA may explain suspiciously low rents. You’ll want to know before you move in if the HOA has declared bankruptcy or imposed a special assessment on members.  

Check how responsive the HOA is by making a phone call to the main number.  Do they answer or are you sent to an answering machine/service?  If so, leave a message and see how long it takes them to return your call.

4. Taxes and insurance

If you’re moving to a new area, you may not be aware of the differences in taxes from one municipality to another. Property taxes can change dramatically when you cross a political border like the city limits or the county line, and some cities charge local income tax on top of what you’re already paying to the state and the federal government.

Car insurance may also be higher depending on where you park at night, so talk to your insurance company and your accountant before you make an offer or sign a lease. You don’t want any expensive surprises.

5. Connectivity

Property listings usually reveal what kind of sewer and water access the property has, but you may not think to check for other types of utilities. Will you have high-speed Internet access in your new home? You may also want to find out what cable companies provide the best service in the area. Cell phone reception has improved a lot in recent years, but pay attention to how many dropped calls you experience in your potential new neighborhood. You may find that you need a new carrier along with your new address.

6. Light and noise

The basketball hoop in the cul-de-sac seemed like a great indicator of a kid-friendly community when you were house hunting, but it may not seem so charming when the neighborhood teenagers are shooting hoops late into the night. If you’re sensitive to noise or light, look around with an eye toward protecting your sleep. Pay attention to busy roads, streetlights, bus and train routes, and bars and restaurants. If you love to be in the thick of things, you may be thrilled by the activity, but if you’re a light sleeper, you may want to invest in a white-noise machine — or find another neighborhood.

7. Walkability

Don’t forget to check the Walk Score of your new address. Being able to walk to a cafe, a library, and a grocery store will save you money and keep you healthier. Maybe you’ll even decide to ditch the car altogether.

If you’re moving to a rural area, you can still think about potential walks from your home, but instead of walking to the bakery on a Saturday morning, you may be walking across a field to have a cup of coffee with a neighbor, or walking to your favorite bird-watching spot in the woods. Take it a step further and look for bike lanes. A good network of bike lanes and well-kept sidewalks indicates a local government that’s willing to invest in the health and safety of its constituents.