How do State Loan-to-Deposit Ratios Impact You?
Lurking silently in the background behind the sub-prime mortgage meltdown is a quiet ratio few potential home buyers or investors bother to watch—the state loan-to-deposit ratio. This seemingly insignificant ratio might have a boring name, but it is actually one of the most exciting numbers to watch if you are contemplating a mortgage or other real estate loan.
The state loan-to-deposit ratio measures how much a bank is able to loan by comparing it to the amount of cash on reserve. When the Federal Reserve decides to increase or decrease the ratio, it impacts the amount of new loans state and local banks can issue to consumers. The current trend is a strong tightening of lending standards that require greater deposits on hand to write new loans.
Potential buyers contemplating the purchase of new or pre-existing Vermont homes should keep a close eye on the following trends that could make it much more difficult to obtain a mortgage or real estate loan in the future:
1. State loan-to-deposit ratios.
2. Rising interest rates
3. Tougher under-writing standards
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What quick easy home repairs can I do myself?
When viewing Vermont homes for sale, it can be disconcerting to see so many homes in need of small repairs. Home owners become accustomed to the sound of a dripping sink or other small items to the point they no longer notice. Learn how easy it is to handle many common problems without breaking the bank with these quick-fixes every home owner can manage with just a few simple tools:
1. Dripping Sink. Although a constantly dripping sink is a huge irritation, it is one of the easiest and least expensive repairs to make. Simply unscrew the end of the faucet and take it to the local hardware store to find a "washer" that matches. The time requirement is less than ten minutes, and total cost should be under $5.
2. Toilet Repair. The humble toilet is almost always an easy item to fix. And don't worry, it hardly ever involves anything worse than taking off the tank lid. Common toilet culprits include the flapper, handle or float ball and require no more skill than the ability to unscrew the old item and replace it with a new one. The project should require less than ten minutes and cost between $5 and $15.
3. Patch a Crack. Settlement cracks or even a hole in the wall can be quickly corrected with a concrete patch or joint compound and paint. Simply visit the local hardware store and ask the clerk to match the color of your home or wall with the proper paint and pick up a small spatula to apply the compound or filler. Total time requires less than 20 minutes and costs under $20.
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What Can You Learn From Real Estate Records?
When it comes to residential real estate, few people have ever taken the time to actually read real estate records. While they might not make it to most people's top ten lists, there is actually a lot to be learned from reading real estate records. Learn how to locate, read and use real estate records when searching for Vermont new homes or pre-existing Vermont homes for sale.
The top two sources for Vermont real estate records include the local Clerk of the Court and Property Appraiser office where the property is located.
The Clerk of the Court records all legal related information including mortgages, deeds, title changes and other ownership or transference documentations. Other relevant real estate related information that might be of interest are liens, back taxes and notifications of major work to be performed on the property.
The Property Appraiser is a good place to begin research related to the date the house was built, square footage, taxation and special assessments, easements, zoning and other information about the property.
Make a habit of reading real estate records for all properties of potential interest. Ask about any discrepancies between the official data and what you see when viewing the property. Often it could indicate potential problems or unlicensed work.
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Waht tools do I need? What makes a great house warming gift?
Searching for the perfect welcome gift for the first time home buyer? Preparing to move into your new Vermont home and think you have everything ready? Chances are you have already forgotten one of the most important parts of any purchase—a well stocked tool box.
Here are some tips for assembling the perfect tool box:
1. Get the Box. A good tool box should be comfortable, durable and versatile. Load them up in the store to test before buying.
2. Drill. Most people prefer a cordless drill, but be sure to purchase one with a little extra strength and double battery back-up.
3. Hand Tools. A hammer, assortment of Phillips and flat screwdrivers, pliers and Crescent wrench should be found in every tool box.
4. Duct Tape. Ask any home owner, and they will tell you duct tape has more uses than almost any other item in the house. A close second is probably WD-40. Buy them both. You will be glad you did.
5. Tape Measure. Make sure it is at least 25 feet.
6. Spatula. Get a few different sizes to apply spackle and fill holes when painting.
7. Utility Knife. Cut open boxes, trim items and general purpose cutting.
8. Flashlight. Locating those late-night leaks is a lot easier with a flashlight.
9. Level. Unless you want every picture in the house hung at an angle, get a level and learn to use it.
10. Stud-Finder. Essential for keeping the shelves on the wall instead of the floor.
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Should I buy new or used?
When viewing Vermont homes for sale, the conversation invariable turns to the question of whether to buy new Vermont homes or search for pre-existing, older Vermont homes for sale. There are advantages and disadvantages to each. Here to help sort through the hype and get to the facts are a few quick tips to keep in mind when evaluating Vermont real estate:
Old Homes: The Good.
- Quality. Older homes often used timber and dimensions that are unavailable or unaffordable today. The workmanship associated with many older homes is unsurpassed.
- Character. Few things can compete with the character and style of many older homes that feature unusual floor plans and charming handcrafted touches.
- Cost. Oftentimes there are significant savings to be realized, especially when compared to newer versions of the same materials and craftsmanship.
- Hazards. Lead paint, lead soldered plumbing, aluminum wiring and asbestos are just a few of the common hazards hiding in many older homes.
- Hard to Repair. Dimensional differences, lack of standardization and changes in building codes can make it difficult and costly to repair older homes.
- High Insurance. Older homes are typically harder and more expensive to insure for many of the same reasons they are harder to repair. Houses more than 75 years old might be forced to find alternative insurance methods as companies increasingly refuse to insure them.
- Lifestyle. Many new homes are built for today’s busy lifestyle and include floor plans designed to maximize closet space, media rooms and amenities most used by home buyers.
- Leisure. New homes make more space for play time by including large garage areas, porches, pools and a lot of additional electricity to power all the gadgets and games used by the average family. Internet and telephone connections, cable and other communications are standards rather than costly additions.
- Looks. Standardized looks might not be as charming, but they make repairs less expensive repairs and offer a reliable resale value.
- Cost. Plain and simple. New homes cost more.
- Questionable Quality. While the majority of new homes are of superior quality, the fact that they are new means there hasn't been enough time to tell how things will settle. Normal settlement issues and other problems can arise up to two years after a house has been built.
- Change. Time takes its toll on more than the house. Neighborhoods and communities also change. New homes are usually built in new subdivisions or developments that don't always have a well defined character.
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How can Residential Real Estate Can Make or Break You?
Over the past several years there has been tremendous interest in residential real estate as an investment. Unfortunately, many people fail to understand the fundamentals before plunging into the market. Residential real estate has historically been an excellent investment, but it follows well defined trends and personal financial ratios. Understanding those trends can be the key to future prosperity, while failure to recognize the risk is a fast track to ruin. Learn how residential real estate can make or break you with these quick tips:
1. Understand Risk. Real estate may not fall to zero like some stocks or bonds, but there is still an inherent risk. Remember, once stocks or bonds fall the deal is done, but real estate requires maintenance, taxes and insurance year after year even when it isn't performing up to expectations.
2. Understand Inflation. Residential real estate is often cited as a great hedge against rising rates of inflation. Unfortunately insurance, repairs and taxes often rise faster than the rate of inflation. Even when the market cools down, taxes and insurance are likely to remain red hot for years to come.
3. Understand Ratios. All financial decisions are based on ratios; upsetting the balance can be detrimental to your long term financial health. Growth in one area requires contraction in another to compensate, so while it is possible to take advantage of short term situations, in the long run these average tends to hold true. Typically the following have been considered sustainable averages:
- Housing: 25 to 30 percent of household income
- Other debt including car loans, credit cards and student loans: 10 to 15 percent
- Savings: 10 percent
- Food: 15 percent
- Transportation: 15 to 20 percent
- Entertainment: 5 percent
- Everything else comes out of whatever remains.
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Face Foreclosure for a Fancy Ride?
Ahh, a great new home and a beautiful shiny car in the driveway. It has been the American dream since the fifties, but increasingly that dream is turning into a nightmare for more and more families throughout the nation.
The Problem
Irrational Ratio. Historically people spent less than 15 percent of their incomes on the cost of transportation, but that has now grown to nearly 30 percent for many households—a percentage rivaled only by residential real estate.
Rising Rates. Expensive cars aren't the only problem. Experts predict gasoline could reach as high as $5 a gallon, and insurance rates are sky rocketing throughout most of the nation. Even maintenance is becoming major expense as the cost of tires and oil changes react to rising inflationary pressures.
No Wiggle Room. Consumers that bought big cars and even bigger houses have no extra cash to spare when it comes to paying for rising rates of gasoline, maintenance and insurance. Worse, most new cars rapidly depreciate, leaving car owners "upside down" on payments and unable to sell the vehicle. Since most people need transportation to get to work, the loss of a car severely impacts the financial future of the entire household.
The Solution
Don't Buy More Than You Can Afford. If you don't have at least ten percent in savings plus a little extra money left over each month, start searching for more affordable transportation options. Cars are not good investments since they depreciate in value. Don't throw your hard earned money away by spending it on an item that loses value every day.
Tools Not Status. Cars are not status symbols; they are transportation methods that allow you to live a certain lifestyle. On the other hand, the neighborhood you live in will impact your future and the lives of your entire family for years to come. From the quality of the schools to proximity of amenities, nearly every aspect of your life will be impacted by the decision of where to buy.
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