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Think Outside the Box for Ways to Spark Interest in a Well-Priced House

Q: We live in a small town and have a nice brick home with an updated kitchen on two acres. The property also has a two-car garage and a pole barn. Before selling we painted and fixed up. The proper- ty was for sale at $166,900 for seven months but did not sell. Now the asking price has been reduced to $159,900 – but still no buyers. Brokers say the house is well priced. What can we do?

price has been reduced to $159,900 – but still no buyers. Brokers say the house is

A: Buyers compare properties according to their cri- teria – and those interests and preferences may be very different from those of sellers. If you believe the house is competitive in terms of condition and that the price is right, then perhaps it would be useful to change your offer. For example, instead of reducing the price again you might offer to pay the first $3,000 (or what- ever number) of the purchaser’s closing costs. For a buyer with limited cash, help at settlement may be more important than a cost that will add a few dollars per month to a 30-year mortgage.

Q: We own a house that needs renovations worth $70,000. We would like to tear our current house down and buy a manufactured house for $70,000 to put on our one-acre lot. We still owe $50,000 and our lender will not lend us addition- al funds. What can we do?

A: By itself the land has value, so you have an asset. Look into an FHA 203k mortgage – this is financing designed for those who want to fix-up a property. However, because you now owe $50,000 and you want to borrow $70,000, you will need financing worth at least $120,000. Is such debt comfortable for you? If not, it may make more sense to sell the current proper- ty “as is”and to find another residence.

Q: I have been in my home for 12 months and seen what I believe to be about 28 percent appre- ciation. Our loan is now equal to less than 80 percent of the home’s market value and yet our lender refuses to end private mortgage insurance (MI) coverage. Are they required to end this cost?

A: No. Lenders are only required to end MI when the original loan balance is reduced 22 percent. Lenders might end MI coverage before then. However, they typ- See ASK OUR BROKER, Page 2

ESTATE

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The Composite Picture:

Plastic,Wood Combine for Top Deck Option

BY CHARLES SCUTT

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H ow much wood can a deck-lover chuck? All of it, if he prefers a deck that requires little maintenance and is built

to last. Move over, redwood, cedar and pressure- treated lumber; the forecast calls for compos- ites, which figure to grow in popularity as the decking material of choice, say the experts. The advantages of composite decking over traditional wood materials are significant. Composite materials do not require sealing,

staining or painting every year and they won’t warp, peel, splinter or crack like many wood-based decking materials, says Steve Weinstein, brand manager for the outdoor liv- ing products division of LP Building Products, Nashville,Tenn., manufacturer of WeatherBest Decking. Most composite decking “will look as good as new for many years without cracking or splitting and is resistant to termites, mold and mildew,”Weinstein says. Rod Johnson, senior product merchant for lumber at The Home Depot,Atlanta, Ga., says most composite decking material is made of wood flour and plastic (polyethylene or

polypropylene). Different brands have vary- ing degrees and amounts of these materials. “The plastic shields the wood from insects and moisture damage, while the wood fiber protects the plastic from ultraviolet ray dam- age and adds stability,”Johnson says. Composites are well suited to all regions, since the materials are built to withstand extremes, from high heat and humidity to snowy and freezing conditions. Low maintenance isn’t the only reason decking materials are growing in popularity. “The ability to incorporate different shades

See COMPOSITE, Page 2

Tips to Ensure Your Home Fits Your Future

BY PAUL ROGERS

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The future is what home buying is all about: Finding that four-bedroom split-level that’s big enough for the kids you’re planning to have and locking into the lowest 30-year fixed interest rate you can get. Unfortunately, that is where the forethought generally stops for

many homebuyers.

should be thinking,‘What do I

gage.

“One of the biggest mistakes

need when I’m 40?’The 40-year-

It

sounds contrary to conven-

people make is that they really

old should be thinking where he

tional thinking, says Cutaia, but

don’t do forward thinking.They think immediate and don’t think into the future,”says Anthony Cutaia, real estate investment

needs to be when he’s 50-60 years old.” Sometimes that kind of think- ing means challenging conven-

“you shouldn’t be concerned about getting into a mortgage where you are making principle payments.”

advisor, mortgage broker and co-

tional buying wisdom and some-

A

standard mortgage is like a

host of the radio show,Talk About Mortgages and Real Estate.

times it means simply consider- ing how your life might change

forced savings program with the drawback that the money is not

“A 23-year-old is thinking,‘What do I need today?’ when he

after a decade.The place to start is that fixed-rate 30-year mort-

See FUTURE FIT, Page 2

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COMPOSITE

CONTINUED FROM PAGE 1

of colors gives homeowners a larger choice and easier palette to mix and match varying colors for a unique look,”Johnson says. Most composite decks are advertised as lasting 25 years or more. Composite brand war- ranties range from 10 to 25 years. Who’s buying composite decking? “Generally, step-up homes for households earning more than $75,000 and home- owners between the ages of 35 and 54 are the prime buyers for single-family dwellings,” Weinstein says. There are a few drawbacks to composite decking.A deck built with low-maintenance compos- ite material typically costs 30 to 50 percent more up front than treated wood, says Johnson.“But considering the time and money needed to maintain treated wood, a homeowner can recoup the cost after a few years.” Many composite decking brands also are susceptible to stains and fading – as much as 10 percent after installation unless the material has an ultraviolet (UV) inhibitor built in. Despite many claims, no deck- ing product is truly maintenance- free, says Dave Tibbetts, president of Atlanta Decking & Fence, an exterior design company based in Atlanta, Ga. Composite decks

FUTURE FIT

CONTINUED FROM PAGE 1

easily accessible when you need it. In addition, after paying the mortgage, many people have lim- ited funds for other long-term or unexpected needs, like college tuition or a family emergency.An interest-only mortgage gives you better control of your savings. “If you can reallocate and make minimum payments and put the difference into an educa- tional fund, it’s a whole different philosophy. Now you’re planning for the future,”says Cutaia.“The property is going to appreciate whether you are paying principle or interest only.” The concept is even more critical for the 50-year-old buyer. Cutaia poses this hypothetical:A man works all his life to pay off a mortgage by age 66.Ten years later he needs the money for medical reasons. He can get it with another mortgage, but that costs money itself – and his cir- cumstances may have changed, his income is likely lower, he may

still need to be scrubbed clean with soap and water and hosed off. “Composite material can be impacted by mold and should be protected accordingly,”Tibbetts says.“And most are not as good as decking replacement on older decks, since they require tighter spacing of joists due to reduced dimensional strength.” And even though the longevi- ty of composite decking is impressive, it still needs to be installed atop wood or pressure- treated framing, which will inevitably need to be replaced long before the composite planks wear out. There are more than 60 brands of composite decking on the market, available in several main types. Virgin vinyl decking, one of the most popular choices, includes grooves in its surface to make the vinyl more slip resist- ant. However, the grooves can collect dirt and since vinyl deck pieces are hollow, unlike their composite and recycled plastic brethren, the product can squeak or squish under foot. Trex, a composite decking product used on deck surfaces, was one of the first widely mar- keted non-wood alternatives. It is comprised of 50 percent stretch polyethylene film and 50 percent hardwood flour. Polypropylene composite, available in products like CorrectDeck, is considered to be

be unemployed or his credit scores may have declined, mak- ing him ineligible. “If 30 years ago he set up a savings program to put money aside, he would have gotten a greater rate of return and com- pounded savings. He’d still have the house but also have the cash,”says Cutaia.“When you become 70 or 80 years old, all the equity in the world is mean- ingless.You can’t go into a super- market and say,‘I have $200,000 in equity but no cash.’” Interest-only isn’t for every- one.“Certain mortgage products can be both a blessing and a curse no matter the age group,” says Ron Chicaferro, executive vice president of Thornburg Mortgage, Santa Fe.“For example, interest-only loans can be a very useful tool for any age but shouldn’t be used as a way to qualify borrowers when they wouldn’t qualify normally.Any age borrower needs to be careful when dealing with a mortgage lender.” The point for prospective buy- ers is to investigate alternative mortgage vehicles and find the

significantly stronger than its polyethylene competition.These products are typically comprised of 90 percent recycled plastic and wood products, usually a combination of plastic bags or milk jugs and sawdust. If you plan to hire a profes- sional to construct this deck,“do your homework and solicit bids from at least three contractors,” says Tibbetts.“Ideally, it would be best to hire someone who has experience with alternative decking material.” It’s also important that your contractor “research the product by contacting the dealer or man- ufacturer to learn the construc- tion details involved with the chosen alternative decking mate- rial,’Tibbetts says. Weinstein recommends checking out the Web sites of the various manufacturers and visit- ing lumber yards that carry these products.“There are many colors and textures to choose from, but make sure the manufacturer is a reputable one and will stand behind his product,”he says. © Content That Works

one that fits best not only with current lifestyle but also with future goals. Mortgage, though, isn’t the only forward-thinking exercise recommended for homebuyers. Experts suggest contemplating the following:

Family size. Sure, you might have some idea of the number of kids you want to have, and you’ll plan accordingly. But society is different these days. If you think your son or daughter is leaving home for good when she goes off to college, think again. More children are coming back to roost after earning that bachelors or even masters degree.And with medical costs rising alongside life expectancies, aging relatives are increasingly looking for living assistance with family.The empty nest may not stay empty for long. Retirement activities.After retirement, chances are you are going to be around the house more than in the past.“You want to think about where you’re going to be spending that time – will you have a workshop or a garden,”says Barbara Fickett, spokesperson for the American

Ask our broker

CONTINUED FROM PAGE 1

ically want a “seasoned”mortgage – a loan that is per- haps two years old so they can assess the borrower’s payment practices.

Q: We’re buying a house on a land contract. We have five years to pay monthly installments of $500 and at the end of five years we have the option of paying a large sum of money for this house. Do we have to stay five years before we can get out of this contract? The house needs more work than we ever imagined. The value is $20,000 less than what we are being asked to pay.

A: A land contract is an installment purchase.You will not have title until some or all payments have been made.The monthly payment is for the use of the prop- erty; some of the rent, or all of it, may be applied to the purchase price.Also, you are buying a home where a price has been established five years in advance – so if local home values increase you could be getting a bar- gain, but if values fall you’ll likely re-negotiate or buy elsewhere. To determine what you can or cannot do – and what the penalties might be for doing something you should- n’t – you have no option but to have an attorney or legal clinic review the actual agreement.

Q: I’m interested in the Florida real estate mar- ket. I’ve been thinking of getting involved and seeing what’s available. However, I live in Pennsylvania and don’t really know too much about which areas in Florida are safe bets. How can I find the right connection?

A: I’m one of those who believe that the best real estate investments are local – wherever “local”is for you.The reason is that you can then closely monitor both the property and local market trends so you have

a good idea of what’s going on. If Florida or some other area is of interest, then make

a point of spending time there. Subscribe by mail to a

local newspaper. Check the local MLS online on a daily basis. Get to know local brokers and lenders.At the same time, look for properties in your local community. You never know what may turn up.

© Content That Works

Do you have a question or a quandary about buying, sell- ing or renting? Peter G.Miller, author of The Common-Sense Mortgage, specializes in providing real solutions to real estate dilemmas. E-mail your questions to peter@contentthatworks.com.

Homeowners Association, Stamford, Conn. Getting around. No one likes to think about it, which is proba- bly one reason so many don’t. But anyone nearing retirement age needs to imagine oneself with less flexibility and energy. “If you’re considering a multi- level structure, ask yourself if you are going to be able to handle the stairs,”advises Fickett.“Or think about how a two-story house may be adapted to single- floor living.” No one knows exactly what the future holds, but homebuyers can certainly take action to be better prepared for a broader range of eventualities. © Content That Works