Monday, November 3, 2014



The holiday season is right around the corner, and the housing market could not provide homeowners with better news!
Over the past year, the housing market improved by leaps and bounds. Several factors, such as fewer distressed properties, low inventory, and high demand, converged to drive up home prices and give equity back to homeowners who haven’t had equity since the housing bubble burst.
If you found yourself struggling in recent years, or just waiting to sell until the housing market turned around, it’s important to know that the time is now! Let’s take a closer look at how the market has improved and why the turnaround in the market affects you, too!

When the housing bubble burst between 2007 and 2008, home values plummeted. Almost overnight, homeowners nationwide saw the equity they built in their homes vanish.

For many, the situation worsened as recession gripped the United States in the wake of the bubble burst.
As the recession deepened, more and more families struggled financially. Hit hard by unemployment and a worsening economic landscape, many found themselves unable to afford their mortgages. Facing the threat of foreclosure, many were forced to try and sell their homes. However, because home prices had fallen so precipitously, many found that they owed more on the home then the home was worth.

These homeowners, called “distressed homeowners,” numbered in the millions. In the years following the housing crisis, the sheer volume of distressed properties weighed heavily on housing prices, keeping all home prices low. However, over the past couple years, the housing market has begun to rebound.

More recently the number of distressed properties has fallen to levels not seen since before the housing crisis, and the reduced number of distressed properties is positively affecting home values.

 First, both the economy and the housing market are improving. As homeowners’ financial situations improve, far fewer find themselves facing the threat of foreclosure. Additionally, fewer homeowners are forced to sell at bottomed out prices, as they are in a better position to wait until they recover value in their homes.

 Second, as things started to look up, investors flocked to the housing market. Both small investors and large-scale investment firms bought huge quantities of foreclosed upon and distressed properties, taking them off the market in bulk. Without the millions of distressed properties keeping prices low, home prices have skyrocketed over the last couple years.

As mentioned previously, with fewer distressed properties on the market, home prices have been able to recover significantly.
In fact, April 2014 marked the 26th month of consecutive home price gains, with a gain of 10.5% over April 2013. (Shockingly, a double-digit gain of 10.5% was the lowest gain 14 months!)1 To see just how sharply home prices have increased, refer to the following graph.
 The graph shows the percent change in home prices year-to-year since 1988. If you look at the last couple years, you can see just how sharply prices have increased!

While the reduced number of distressed properties allowed home prices to begin to recover, many
factors fueled the skyrocketing prices. Chief among those factors is the development of a seller’s market.
As the United States economy improved and home prices recovered, more people were in a position to
buy a home.
When the housing crisis hit, many homeowners who wanted to sell were forced to wait until
the market recovered. For many, that time is now. In fact last year, more than three million homeowners
regained equity, according to the National Association of REALTORS3. Additionally, unemployment
decreased and more Americans started to enter the housing market. At the same time, home
affordability remained low. The result was a sharp uptick in demand.

However, there have not been enough properties to meet the increased demand. During the housing
crisis, new home construction came to a stand still. Consequently, there are not enough new homes on
the market today. Additionally, many homeowners are still waiting to sell their home. Some are waiting for
home prices to rise even more, while others are waiting for more homes to choose from. The result is
even less inventory on the market.

This imbalance in supply and demand has contributed significantly to the rising home prices in recent

The current market conditions provide a “perfect storm” for those looking to sell their homes. Because
inventory has remained so constrained, homeowners are able to get more for their homes than they
realize, as buyers enter bidding wars over the properties that are available. In April, the median time on
market for all homes was just 48 days!

In this crazy market, people are even making offers on homes not on the market!
These market conditions won’t last forever, though! More homes are expected to enter the market,
balancing supply and demand. Consequently, home prices are expected to grow much more slowly next

As a real estate agent in today’s market, I make it my business to have the most up-to-date information
and can help you understand exactly what your current situation is. If you have been underwater, it is entirely
possible you are not anymore. If you have been holding off until the market started to recover, that
time is now.

Contact me today for a free valuation of your home
and let me help you determine your best option!

Monday, October 13, 2014

Homeownership Expenses You Might Not Anticipate

We asked a few financial bloggers to share their experiences and advice on the expenses of buying and owning homes.

Purchasing a home is an exciting time, especially for first-time buyers. However, the financial commitment is sometimes overwhelming.
Beyond the standard mortgage, taxes and insurance calculations, homeowners inevitably face unexpected fees, repairs and lifestyle adjustments when settling into their new homes. We asked a few financial bloggers to share their experiences and advice on the expenses of buying and owning homes.

What was the most unanticipated expense of buying your home?

Two years ago, we purchased our home in New York after owning homes in Georgia and Florida, and we were surprised at how much higher our closing costs were in New York versus the other states. The biggest surprise was the lawyer fee we were required to pay. When we purchased homes in the past, everything was handled through the escrow agent, and additional legal fees were not required. — Shannon McLay of Financially Blonde

What are the most surprising expenses you encounter as a homeowner?

The surprising expenses are seasonal: decorating the house for the holidays, planting flowers in the spring, home projects in the summer. While it’s easy to think about the weekly and monthly routine expenses, those are more difficult to plan around. — Joe Saul-Sehy of Stacking Benjamins

Which bills increased when you became a homeowner?

Condo fees and heat! When we were renting, our landlord paid for heat and hot water. Let’s just say, now that we’re homeowners we’re taking shorter showers and wearing more sweaters in the winter. — Student Debt Survivor

What is the most expensive cost of owning a home vs. renting?

The answer has got to be maintenance. We would never have had to buy a new roof as renters, but we had to pay approximately $15,000 for the entire roof to be reshingled. The others would to have new landscaping put in ($7,000), and all windows, which were installed in 1961, were replaced with double-pane windows ($15,000). Ongoing expenses, like utilities (natural gas, electricity, water, trash), gardeners, property tax, and insurance are not all that costly, but they add up over the course of a year to just under $10,000. — Save and Conquer

How did your budget change after buying a home?

We were very aggressive with saving our money prior to buying our house. We were saving over 50 percent of our income. We didn’t go out very often, and we tried to eat at home. We bought a fixer-upper because it was in a better location and the price was more affordable than new builds. DIY Network and Pinterest make DIY updates seem so easy and affordable. Prior to homeownership, we never had to worry about paying for repairs or really about updating our apartment. We were renters. Now, I have to make sure any purchase fits in our budget. I’m also saving for bigger improvements like the patio. Instead of going shopping for clothes and shoes, I’m allocating that money to Lowe’s or Home Depot! So far, we have had to call a plumber to fix a leak, the exterminator to exterminate, and now, our garbage disposal is broken. $100 here and there adds up. — Savvy Financial Latina

What advice can you offer prospective home buyers beginning their shopping experiences?

Transitioning from a renter to a homeowner can be an expensive endeavor. You need to have much more money in your emergency fund to cover various things that can go wrong. Don’t forget to budget for property taxes, home insurance, repairs, HOA fees, utilities, furnishing and landscaping. There are many more expenses when you’re a homeowner. — Retire By 40

What saving strategies did you use to prepare for the expenses of homeownership?

I’m not sure if it’s a savings strategy, but whenever my wife or I wanted to spend on certain things, we’d say to ourselves, “We’re saving for a house.” That helped us focus on our priorities and goals, and not spend on things that we might have otherwise. I think it is also important to try living on your future budget as a homeowner to ensure that you can afford to buy a house. — Living Rich Cheaply

What financial concerns do you have about purchasing a home now?

My main reservation is that I don’t know how long I plan on staying in one area. I still want to travel the world before I buy. When I’m ready, I’ll create a realistic budget for a home and stick to it. Too many people create a budget and go over, and then fail to realize that they still have to pay property taxes, property, insurance and more. — Alexis Schroeder of FITnancials

How can first-time buyers financially plan for the total costs of homeownership?

Save as much money as you can. If you’re able to save for a 20 percent down payment, that’s even better. Once you move in you’ll be amazed at how often something will need your attention. That will generally take money. Go in with having money set aside to cover things that might pop up. You should also put money aside each month to cover those things. You might feel it, but the last thing you want is to be surprised by an expense and not be financially prepared for it. — John Schmoll of WiseDollar

Friday, September 26, 2014

What You Don't Know About Your Credit Score... Could Cost You!

Today we are excited to have Nabil Captan as our guest blogger. Nabil is a nationally recognized credit scoring expert, educator, author and producer. In today’s post, he explains how what you don’t know about your credit score could end up costing you. Enjoy! – The KCM Crew

Informed consumers considering a home purchase today want to do the right thing and plan ahead. Many do not seek immediate professional guidance from a Realtor or a mortgage loan officer. Instead, they hunt for hours online, looking at numerous websites for available homes for sale. They also consult websites to find the best interest rate and terms for future monthly mortgage payments. Many consumers feel betrayed, cheated and at times embarrassed to learn that the credit scores they counted on, to get that specific interest rate for their loan, are not used by mortgage lenders.

When shopping for a good mortgage interest rate, consumers also need to know their credit score, and utilize an online mortgage calculator to compute future monthly mortgage payments. A Google search for “credit score” will yield hundreds of results. The consumer accepts the provider’s terms and conditions to get a free credit score. Terrific! Unaware that in exchange they just received a meaningless credit score that lenders never use. They also handed over their Non-Public Personal Information (NPPI) to that credit score provider for life.

Before we go any further, let’s look at available credit scoring products available to consumers today:
  • FICO credit score from Fair Isaac Corporation/, range 300 to 850
  • Plus Score from Experian, range 320 to 830
  • Trans Risk Score from TransUnion, range 300 to 850
  • Equifax Credit Score from Equifax, range 300 to 850
  • Vantage Score from all three bureaus, two ranges, 300 to 850 and 501-990
What is a FICO Score?

In 1958, Bill Fair and Earl Isaac, a mathematician and engineer, formed a company in San Rafael, California. They created tools to help risk managers make a better decision when taking financial risk. Today, 90 percent of all lenders use the FICO score, first created in 1989 by Fair Isaac, and it’s the only score Fannie Mae and Freddie Mac, the Federal Housing Agency and Veterans Affairs will accept in underwriting loans they guarantee.

What is a Consumer Score?

The three credit bureaus, in their understanding of the credit scoring model created by FICO, decided to create their own scoring models, and in 2004 – 2006 they unveiled the “consumer” scores: Plus Score, Trans Risk Score, Equifax Credit Score, and Vantage Score. However, these are not genuine FICO scores, and mortgage lenders don’t use them. Consider this comparison: Would you buy a watch that gives the approximate time of day?

The three credit bureaus work with major financial institutions, professional organizations, comparison sites, personal finance businesses, clubs such as Costco, AAA, Sam’s Club, and many data-mining brokers to bombard consumers in the race of the free credit score mania, all with the enticement of a “consumer” score that is not used by lenders, in hopes of obtaining subscriptions or fees from consumers. Fees that are totally unnecessary!

Know Your Score

Gaining access to one’s own credit report and credit score prior to loan approval with no strings attached could be helpful, and at all times beneficial. With little effort, inaccuracy of information can be instantly corrected at the credit bureau level, and with a few simple steps, credit scores could be enhanced. For example, paying down revolving account balances before a creditor’s statement-ending date (the creditor later updates account information with the credit bureaus), thus reducing revolving account balances at a particular point in time, will positively add more points to a score. It’s priceless.

More Information

Consumers have a legal right to access their annual credit report at no charge once a year from, a site sponsored by the three major credit bureaus: Experian, Equifax and TransUnion.

These reports provide all the basic consumer data, but do not reveal a credit score. If you have a need for the FICO credit score that is actually used by mortgage lenders, is the website to visit. For $19.95 per bureau, consumers can purchase a customized credit report with a genuine FICO score.

Additional websites to visit: the Federal Trade Commission ( and the Consumer Financial Protection Bureau ( for true answers to questions about any financial concepts, financial products, dispute and complaint submissions, and much more.

Today’s homebuyer has instant access to answers. To be relevant in today’s market, real estate professionals need to know the absolute correct response to basic credit questions. It’s important.

Copyright 2014 Nabil Captan, Captan & Company. All rights reserved.