In preparation for warmer summer days, spring is the perfect time to have your air conditioner serviced. With regular service, air conditioning units can continue to function in the most efficient and effective way possible. Neglected units are more costly to run and deliver poorer air-cooling quality.

DIY air conditioner maintenance

Several components of your air conditioning unit are easy for you to maintain. According to the US Department of Energy, the most important item is to check your filter. A dirty or clogged air filter reduces normal airflow. When airflow is reduced, the filter no longer outputs cool air at optimum levels. In addition, the blower may force some air around the filter, so the air entering your rooms may have dust particles, pollens and other allergens that a clean HEPA filter would block.

Some air conditioner filters are reusable and can be removed and rinsed out with a hose. Others require replacement, so you may need to check them more than once during the warm season. You especially may need to replace them after times of high pollen or dust, or if your pet sheds. Some filters are located in the air conditioner unit itself, and some are located in the grates or grills. Filters in room air conditioners typically are located behind the grill that faced the room.

Another component that homeowners can easily care for are the coils. As dirt and grime builds up on the coils, they become inefficient at absorbing heat. Clean the evaporator coils, located in the unit, annually.

Check outdoor condenser coils, usually enclosed in a cover with fins, and clean dirt and debris from the fins gently with a broom. Better yet, purchase a fin comb at a local big box retailer or HVAC dealer to clean built-up debris from your air conditioner’s fins. If any of the fins are bent, they can block airflow and reduce your efficiency. The fin comb will straighten bent finds, opening up the airflow. Remove any weed or plant overgrowth from the coil casing. Trim foliage at least 2 feet away so that the condenser has adequate airflow.

If you have a room air conditioner, check the seals that connect to the window to make sure there are no leaks. Use foam window sealing strips to fill in the space so that no warm air enters around the cooled air.

If you have access to your air conditioner’s drain channels, clean them with a stiff wire occasionally to make sure water deposits do not block them and cause excess humidity in your home.

When to call an expert

Always call an expert if your air conditioning unit makes strange noises, does not cool at all, or cycles too frequently. A certified HVAC technician will inspect wiring, mechanical parts like fans and motors, and test and refill the refrigerant lines.

Servicing your air conditioning system now will insure that your home is comfortable once temperatures hit the 80s.

Compliments of Virtual Results

In the vocabulary of real estate, various ratios help buyers and mortgage services determine the viability of a purchase. A ratio is a way of expressing the relationship between two values or amounts. Usually, ratios compare how much of one thing there is to another such as a 20 to one student-to-teacher ratio. Expressed as 20:1 or 20/1, it means that on average, there are 20 students for every one teacher. In real estate, there are many sets of ratios used to determine the value of a purchase or sale. Different ratios apply to homebuyers, investment property buyers, sellers, and mortgage lenders. Since ratios are guidelines that can make or break a deal, knowing how ratios affect you and how you can control them will make your real estate transactions smoother. Three that apply to homebuyers are the debt-to-income ratio, the loan-to-value ratio and the price-to-income ratio.

Debt-to-Income Ratio (DTI)

The most important ratio to homebuyers is the debt-to-income ratio. Also called the debt-service ratio, it expresses the relationship between how much money a borrower makes monthly and his monthly long-term debt obligations. Lenders use these figures to determine the maximum amount of monthly mortgage payment you can handle.

The first number, known as the front or top ratio, is the percentage of your monthly before tax (gross) income, and any other regular payments (child support, rental income, trust disbursement, etc.) used to pay your housing expenses, including mortgage principle, mortgage interest, property taxes, mortgage insurance and association dues.

The second number, the back, or bottom ratio, uses the same income and housing expenses as the front ratio, but also adds in any long-term obligations such as school loans, vehicle loans, and other consumer debt (like that couch you bought on a three-year note). It is the percentage of your income used to pay housing and long-term debt expenses.

A commonly used ratio is 33:38 (or 33/38), which means that you spend 33 percent of your income for housing, and no more than five percent more is obligated to consumer debt service. That leaves 62 percent of your income to live on (food, auto, health and life insurance, utilities, clothing and other expenses).

If you make $6000 per month from all sources, for example, you have $1980 (33%) available to spend on housing, and another $300 (5%) available for long-term obligations. As you can see, if your housing costs go down (lower mortgage payment) you can have more available for long-term debt. FHA guidelines are 31:41, and VA guidelines do not have a front-end ratio, but do have a back end of 41. While ratios are simply guidelines, it is important to know where you stand before seeking a mortgage. Since the debt-to-income ratio is entirely in your control, if you are thinking of buying a home in the future, let us help you figure out where you are and put in place some strategies to get you where you need to be to qualify for a loan.

Loan-to-Value Ratio (LTV)

The loan-to-value ratio is a comparison between the mortgage amount and either the appraised value (for refinance) or purchase price (for new purchase) of your home. Lenders factor your loan-to-value ratio into their underwriting considerations. A lower LTV typically allows the borrower to get lower interest rates while a higher LTV is riskier for the lender, so the borrower might pay higher interest rates. A high LTV also often requires private mortgage insurance (PMI) to protect the lender.

To figure your home’s LTV, divide the mortgage amount by the purchase price or appraised value. A conforming loan typically requires an 80% loan to value, so if your purchase price is $200,000 then an 80% loan would be $160,000 and you would need a down payment of $40,000. If the LTV ratio is very high, where the loan amount is higher than the appraised value, the home is “upside-down” (worth less than the mortgage amount).

Price-to-Income Ratio or Price

While the DTI is based on your personal income, and the LTV is based on a specific home’s value, a price-to-income ratio is based on the affordability of housing for a given geographical area. Typically, it is the ratio of median home pricing to the median household disposable income. This numbers lets you determine if a home is over- or under-priced for an area, or if it is a potentially good investment if you plan to sell your home after a short time. It also gives lenders one more factor in determining risk for the size of loan they might offer.

We can help you determine if an area is right for your budget, if your debt-to-income ratio is on target, and if the price-to-income ratio for the community you’re looking at has affordable pricing for the families living there. Call us and we’ll help set you on the right path to home ownership.

In the vocabulary of real estate, there are three terms that indicate a home’s valuation: the Appraised Value, the Assessed Value and the Market Value. Rarely are these three values the same amount, so it is easy to confuse them when considering buying a home, obtaining a mortgage and contemplating ongoing costs of ownership. We’ll tackle them one at a time and then show you how they relate to each other.

Appraised Value

An appraisal is a valuation report completed by a licensed professional appraiser to determine property value at a given point usually for the purpose of obtaining a mortgage. It is an underwriting tool used by banks and other lenders to determine if the property is appropriate collateral for the loan they would be extending to a buyer for an original mortgage, or homeowner for the purpose of refinancing or obtaining a line of credit.

The appraiser uses recently sold comparable properties in the evaluation, accounting for differences in specific amenities such as square footage, the age of the roof, exterior and interior materials, the type and age of heating and cooling equipment, and a variety other factors to set a basis for the appraisal. The appraiser combines these numbers with other valuation methods such as the cost to rebuild the property (similar to the cost basis for homeowner insurance), or in the case of investment properties, the potential for income from rents or leases.

These numbers are not fixed. That is, there is no single list of values from which the appraiser draws. The appraisal relies on the appraiser’s own experience, understanding and knowledge of the area and property type. For the buyer, the appraisal that the mortgage lender uses is important because it determines how much money the lender is willing to extend to the borrower for the property. For an existing homeowner, an appraisal gives an indication of what a home will sell for, or the amount of a line or credit or second mortgage a bank will extend. During a home sale or refinance, the appraiser typically is the choice of the lender but paid for by the borrower. Having a proper appraisal is important to both the buyer and the seller since it determines the loan-to-value (LTV) ratio.

Assessed Value

An assessed value most often is performed by the taxing agency of a municipality—tax assessor—for the purpose of determining the tax basis of the property. The “assessment” is a percentage of the assessed value that the homeowner pays to the municipality as tax for capital improvements to roads, water and fire services, schools, and other essential services. Typically, the percentage amount of an assessment is the result of a vote on a levy.

Different from an appraisal where amounts are based on comparables, an assessment determines values for an entire neighborhood, city, or county during the evaluation period. The assessment is then an assigned number value to which the dollar amount may fluctuate as the municipality has need of more or less income. Therefore, while the actual tax rate may change from year to year, the assessment only changes when the values become outdated due to larger changes in the municipality’s structure, such as an increase in fire or 911 services, for example. Some cities or states only reassess homes when they are sold or transferred to new owners.

Market Value

In real estate, market value is not the same as assessed or appraised value. For example, the price of popcorn at a movie theater might be $5.00 per bag, while that same amount of popcorn at a convenience store might be $2.00 and a similar bag at the grocery store would be just $.50. We are willing to pay each of these prices based on the location and convenience to ourselves at that place and time. In the same way, the market value of a home is the price for which a specific property will sell under a specific set of circumstances in its current condition at a specific time—typically 1 to 3 months.

There is no actual way to determine exact market value, given that if any of the circumstances change, the market value changes. The seller’s circumstances may change, the property circumstances may change (tornado, hurricane, imminent domain), the buyer circumstances may change (new business relocates to area), the community circumstances may change (school loses funding, commercial or industrial building built nearby) or any of a myriad of factors. So true market value is the price a house will sell for in the 30 to 90 day period. It is not what it will sell for in one week—that would be a price below true value—nor the price of the house if it hasn’t sold for 90 days—the price is higher than the market value.

How the Assessment, Appraisal and Market Values Relate

While each of these may be similar in amount to each other at a specific point, a property’s assessed may trail behind the appraisal and market values if the municipality has not upgraded the assessment in some time. Additionally, the appraisal must relate to comparables that the appraiser can prove to the lender, but cannot account for buyer-perceived value in a specific neighborhood, street or development. For example, if all of a buyer’s friends or family live in a two-block radius and a home becomes available in that neighborhood, the perceived value to that buyer may be higher than to another buyer. A motivated buyer may be willing to pay a higher price for a home than its appraised value, thereby adjusting the true market value.

Every industry has its own vocabulary, and real estate is no exception. If you are newly in the home-buying market, you may find yourself stumped by the lingo, acronyms, abbreviations and jargon commonly used in real estate sales materials, online listings, contracts and the like. We do not want you to be confused, so in this series of posts, we will define several terms for you in everyday language. Abatement is one real estate term or expression with which to become familiar.

Abatement

In general legal terms, the word abatement means removal or diminishing of something. In residential real estate, the term most refers to property tax in the form of a property tax abatement. Since property taxes are ongoing annual homeowner expenses even after you completely pay off a mortgage, having access to a property tax abatement or real estate abatement is a valuable savings when buying a home. For example, if a city, county, state or other property-tax entity offers a tax abatement, it could reduce the monthly housing costs by up to 3% during the abatement period.

Property tax abatement programs make it easier to qualify for a mortgage by reducing your income/debt to housing cost ratio. In addition, as long as the abatement continues in effect, it adds to the attractiveness of your home when you decide to sell.

Certain abatements are for one-time improvements to an existing property can vary widely depending on the area. They can be as for upgrades or enhancements as different as:

• Installing a green roof or other environmentally friendly additions
• Renovation that increase the property value
• Conversion of non-residential buildings to residential use

Improvements must conform to the abatement requirements, building codes and permitting processes, so if you are planning to purchase a home that you intend to renovate, make sure that we know so that we can advise you on the abatements in effect for the properties that we show you.

In addition to state and local abatements, there are even some federal tax incentives for restoring and preserving homes designated as historic of historical civic value. Other abatements are for qualified newly constructed homes.

Some cities have property tax abatements in effect for years. These most often are set in place to attract buyers to neighborhoods or areas that are under redevelopment, in the process of revitalization, or have lower demand. The specific qualification requirements for abatements differ from area to area, so be sure to talk with us about access to potential abatements when you are house hunting.

Asbestos and Lead-Paint Abatement

Other uses of the word abatement relating to real estate include certain expenses associate with buying older property, or property being repurposed from commercial to residential. For example, when purchasing a home built before 1978, any renovations or improvements to a home might need to conform to lead paint abatement requirements. Another potential abatement cost is asbestos removal. Prior to the 1970s, asbestos was used as insulation in ducts and pipes, as vermiculite attic insulation, in wall and ceiling acoustical tiles, concrete exterior siding, floor tiles and other common home materials contained asbestos. The Environmental Protection Agency regulates asbestos removal, so if you plan to make changes to an older property, we can help you navigate the ins and outs of asbestos abatement and recommend qualified professional asbestos removers. Certain homes may qualify for an asbestos or lead paint removal grant.

Call us …

We can help you determine what the home you are considering buying might qualify for, so be sure to ask us about both tax abatements and asbestos or lead paint abatement grant programs when you call.

So, you’re thinking of buying a home … where do you begin? Potential buyers new to the real estate market may not know exactly what they want in a home, or where they want to live. The dream homes in magazines are a great way to get ideas, and looking at pictures of homes online can narrow down some likes and dislikes for you. However, to get the feel of the right home for you and your family, and a sense of what is important for your new home to have, plan to take advantage of open house events.

Here are some tips for making the most of your open house visits.

DO dress comfortably. You may be climbing stairs, checking out basements and attics, or walking from home to home in a single neighborhood, so wear clothing appropriate for both in and out-of-doors.

DO allow plenty of time for each home you plan to visit. If you like the home, take time to drive or walk through the neighborhood afterward.

DO bring your list of likes, dislikes and must-have’s. Make sure to add to your list options or new ideas you see in an open house. These will help your real estate agent find the right home for you.

DO sign in. However, if you already have a real estate agent, or plan to use a specific agent, be sure to inform the host. Remember, this is how an agent makes his living. You don’t want your home-buying experience marred by conflict between agents each having a claim on your purchase.

DO make a list of questions for your real estate agent to ask the selling agent.

DON’T bring children to an open house. Most often, the open house is still the homeowners’ home and contains their belongings, which might be an unintended tempation to small hands.

DON’T expect an open house to be childproofed.

DON’T bring pets to an open house.

DON’T look in cupboards, closets or drawers that the host indicates are off-limits. Your agent can arrange for a more in-depth viewing at another time.

DON’T be deceived by air fresheners and other masking odors. Each of us responds to differentodors subconsciously. If you sense an overabundance of deodorizers, the source simply may be a recently removed litterbox, or it could indicate a deeper problem like mold. Make a note to look for the source on a private visit to the house with your real estate agent.

DO ask permission before pulling out your camera phone. Respect the seller’s privacy.

DON’T ask questions about what type of offer the owner will entertain. Those negotiations are your real estate agent’s job. The selling agent represents the interest of the seller, not the potential buyer. Write down your questions and follow up with your own real estate agent as soon as possible.

DON’T arrange a follow-up visit with the host unless she is your agent. Let your own agent arrange for a return viewing.

DO collect the host agent’s business card and contact information to pass on to your agent.

If you want to make an offer on the home, DO call your agent as soon as possible.