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The FED (also know as the Federal Reserve) made an announcement yesterday that it will continue to buy upwards of 80 billion dollars worth of bonds each month. This had a very positive effect on the stock market, but what does it mean for your plans to purchase a home?

The FED was created by Congress to implement a sound monetary policy (low unemployment, stabilization, and growth). It operates independently, but under the oversight of congress, and has the ability to buy government securities (i.e. bonds), set the interest rate that banks are to pay on short-term loans, and set the minimum amount required to be held by banks in reserve as physical funds (i.e. tangible money).

When the FED purchases bonds, the demand for those bonds will increase. This, in turn, raises the present value. Because the interest rate is determined by “face value/present value.” Therefore, when the present value rises, the interest falls.

Accordingly, the FED buying up bonds means that interest rates will probably stay in the same range (but will not rise) until the FED changes its policy.

This is great news if you are currently on the house hunt! This means you still have a while to obtain a home loan at a lower interest rate, but don’t wait too long!

Have questions about purchasing a home? I am available 24-7 at abennette@weclosetheloan.com.

DISCLAIMER: This article is intended for informational purposes only and does not constitute legal advice. You should not rely or act upon any information contained in this article without seeking the advice of qualified legal counsel.

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Real Estate Agents are familiar with the normal course of a real estate deal: 1) find a client; 2) find or market property; and, 3) obtain commission at closing.  Certainly many brokers have experienced both quick successes and lengthy failures;  however, it seems somewhat unfair that in representing those clients who willfully interfere with closing a deal, the agent could possibly end up uncompensated for doing his or her job.

In a recent decision issued by the Worcester Superior Court, a broker may be entitled to his or her commission even if there is no closing.  In Ria K. McNamara, Inc. v. Forecast Shrewsbury Limited Partnership, et al., a Broker was awarded her commission when it was ruled that her client’s bad faith dealing caused a rental agreement with a prospective tenant to fall through.  The court recognized that the listing agent had successfully completed her part by securing a tenant to rent a commercial space.  Her client then used the prospective tenant as leverage to obtain a higher rent from the existing tenant.  Accordingly, the failure to close the deal was “directly and solely due to the bad faith dealing” of her client.  Therefore, the Court stated, the listing agent was still entitled to her commission.

While all brokers strive to have a special relationship with their clients and to represent their clients’ best interests, it is reassuring  to know that in those rare instances where an agent may have a client intent on interfering with a prospective deal, or the even rarer circumstance of a client dealing in bad faith, there is recourse for the agent and that agent can be compensated.

DISCLAIMER: This article is intended for informational purposes only and does not constitute legal advice. You should not rely or act upon any information contained in this article without seeking the advice of qualified legal counsel.

An adjustable rate mortgage (commonly called an ARM) is a mortgage product that typically offers a lower introductory interest rate for a fixed period, but after that fixed period expires the interest rate will change based on the market rate.  Most loans will offer a low interest for 5 or 7 years, and then change annually by adding a fixed amount (say 2.25%) to the market rate.

As an example, if you closed on a loan today that had a fixed interest rate of 3.5% for 5 years, but then became adjustable by adding 2.25% to the market rate, your principal and interest payments would not change until 2018.  Then in 2018, your rate will change by adding 2.25% to the market rate (typically based on the LIBOR).  The LIBOR stands for London Interbank Offered Rate and is published everyday in the Wall Street Journal.  Today, the LIBOR rate is approximately .7%.  (If the change was based on today’s rate, the interest rate would be 2.95%, which would actually lower the monthly payment). 

Once the adjustments are made, they are typically made once per year and most ARM products have a cap of 5.00% above the introductory rate.

Why would anybody get an adjustable rate mortgage when fixed interest loans are available?  This is something to discuss with your loan officer, but the prospect of paying less in interest for the first 5 to 7 years is very appealing particularly if you plan on selling your home within that 7 year time frame.  However, it is important to acknowledge that even if you do plan to sell your home, it is possible it will take longer than anticipated.  Consequently, if you elect an ARM, you must be comfortable with the terms even if you do not plan on carrying the loan for that long.

 Need the name of a loan officer? I am available 24-7 at abennette@weclosetheloan.com

DISCLAIMER: This article is intended for informational purposes only and does not constitute legal advice. You should not rely or act upon any information contained in this article without seeking the advice of qualified legal counsel.

When deciding to buy a house with your significant other, it is very important to have a conversation about more than just the furniture arrangement and what appliances to buy.  Recently I have seen more unmarried couples purchasing real estate than ever before.  Why is this important?

When two married people have jointly purchased a home and a divorce proceeding is initiated, then the Court will determine how to divide the real estate.  The Court is required to legally determine that the marriage has ended and determine how the assets are to be divided.  However, if two unmarried people own a home together and there is a dissolution of the relationship, the Court is not required to legally determine that the relationship has dissolved or how to divide the assets.

Obviously, you would not be buying a house together if you thought you were going to break up; but nobody gets married expecting to get divorced.  In order to protect yourself and your relationship, it is important to have this discussion.  

While it may be an uncomfortable subject, I recommend that you execute a joint agreement in the event of a break up that specifically indicates which person is allowed to stay in the home, how the proceeds are to be divided in a sale of the home, and whether you would buy out the other party’s interest to own the home alone.

Again, while it is not exactly a comfortable discussion to have, it is much better to have it now.

Any questions?  I am available 24-7 at abennette@weclosetheloan.com

DISCLAIMER: This article is intended for informational purposes only and does not constitute legal advice. You should not rely or act upon any information contained in this article without seeking the advice of qualified legal counsel.

With the wealth of information available online, sometimes searching for a home can feel overwhelming. How should you get started?

If you know the area (or surrounding towns) in which you would like to live, contact a broker that is very familiar with that area. If you know the basic size of what you are looking for (bedrooms/bathrooms), the broker will compile a concise list based on your criteria.

The most important thing to know as a buyer is that you do not pay your broker’s commission – it is paid from the Seller’s proceeds when you purchase. Brokers can be an invaluable resource, and with so little risk to you as a buyer, it is definitely worthwhile to contact one to start your home search.

I have a great list of veteran brokers in various areas of Massachusetts. I am available 24/7 at abennette@weclosetheloan.com and am happy to help get your search started!

DISCLAIMER: This article is intended for informational purposes only and does not constitute legal advice. You should not rely or act upon any information contained in this article without seeking the advice of qualified legal counsel.

This is a blog designed to help who are considering buying and selling property.

I am a real estate attorney headquartered in Brookline, Massachusetts working for a firm that has been in the real estate business for decades and represents hundreds of homeowners and prospective homeowners.

Whether you have barely considered buying a home or are attempting to sell your house, this blog is designed to help you navigate from the pre-offer stage to the closing table as now is the time!

The first tip of the day for new prospective purchasers:

Your credit score directly affects the interest rate of your mortgage. If you want to buy a home but have poor credit it is not an insurmountable obstacle. You can obtain a copy of your credit score for free. You can better your credit by paying down your loans and making sure you make your payments on time. Your credit score will also reveal any issues that have negatively affected your credit (i.e. late payments, delinquencies, etc.) If you believe those issues were reported in error, you can request the credit bureaus remove them from your credit score. Increasing your credit score could potentially save you thousands in interest over the term of your Mortgage.

Have questions about buying or selling? I am available 24/7 at abennette@weclosetheloan.com

DISCLAIMER: This article is intended for informational purposes only and does not constitute legal advice. You should not rely or act upon any information contained in this article without seeking the advice of qualified legal counsel.