Reno Sparks Real Estate Today

Firing Up the Fireplace

Fireplaces can be great.  The condition of the chimney is an important factor in safe fireplace use.  The Chimney Safety Institute of America says a faulty chimney can cause something worse than smoke in the living room.  They recommend that a chimney be examined by a professional once a year.  The chimney not only gets dirty from use, but bricks weather and con become loose with age.  Flues can crack or become blocked.   A pro can recognize problems, quickly evaluate them, and offer recommendations for safer use.  

Creosote builds up as the cozy fire burns.  It reduces the flue's ability to draw off smoke and can cause odors.  More importantly, it can ignite quite easily.  That's when a chimney fire occurs.  A build up of only 1/8 of creosote means it's time to clean.

A number of things can cause chimneys to malfunction or become dangerous:

• There must be sufficient air reaching the fire, and there must be a good draw to pull the smoke up the chimney.

• A back draft may be caused by a lack of air reaching the fire in an airtight house, or caused by a malfunctioning flue.  The flue may be constricted by  creosote or bird nests.  The chimney may note be tall enough or it may be constricted by trees.

• In older homes, the flue may need to be relined.  Homes more than 50 years old probably don't have flue linings at all.

• Commercial fire additives that claim to prevent creosote build up usually don't work.

To find a professional chimney sweep contact the Institute at 800.536.0118 or at www.csia.org.

Ty Kirkpatrick, TEK Inspections LLC, www.tekinspections.com,  775.746.4990

ARM Yourself with Knowledge

While Adjustable Rate Mortgages (ARMs) have taken a beating recently in the media they are not always a bad alternative.  Depending on the index that your loan is tied to a homeowner will frequently save thousands of dollars in yearly interest expense over their counterparts that have fixed rate mortgages.  While the previous statement is true it is an individuals choice to be honest and accurate with their mortgage planner when originating a mortgage and pick the product available that best suits their individual needs.  The questions that need to be addressed prior to the initial consultation would include:

• How long will you be in the home?
• What is your financial outlook for the near future (1-5 years)...will it grow,shrink or remain stable?

• What are your investment strategies?  Will you utilize a side interest bearing account to capitalize on the arbitrage from the money you are saving by implementing an ARM strategy?

• Will there be upcoming expenses to consider:  college tuition, an elderly parent to care for, etc.? 

While ARMs are powerful tools if used properly there is also a certain level of risk to account for.  Risks include market volatility in regards to housing prices as well as rising interest rate environments.  A traditional fixed rate product would mitigate interest rate fluctuations while there is no loan product available that alleviates the risk associated with price deterioration.

If you currently have an ARM loan with rates that are below current fixed rate pricing, it is still important to seek mortgage planning advice to evaluate if you would benefit from a refinance prior to your current loans adjustment date by establishing a new fixed rate mortgage.  Remember that market volatility for pricing declines may make it impossible to perform a refinance at a later date without being forced to come to the closing table with money to close.  Below is a graph that illustrates upcoming reset dates for ARM (notice that we are currently in a trough with resets scheduled to peak through 2011):   

 

 Jason Norris, MBA, CMPS, President MFG Mortgage Services, LLC 1.775.322.0496   

Nevada Has Highest Percentage of Households that are Upside Down

Nevada leads the U.S. in the proportion of households whose mortgage debt exceeds the current estimated value of their homes, a condition known as being “upside down” or "under water," according to a new study by First American CoreLogic and reported by the Wall Street Journal on October 10, 2008.  According to this report it is estimated that 48% of owners of single-family homes with mortgages in Nevada are under water. That compares with 18% nationwide.

Many Americans are under water because they bought homes at or near the peak of the housing boom and put little or no money down. Others separated equity from their homes during this rapid moment of market appreciation to pay off consumer credit or general examples of consumer consumption.  Home values in the Las Vegas metro area have fallen 36% since peaking in early 2006, estimates Zillow.com.  Housing depreciation is similar but not as severe in Washoe County with the exception of a couple neighborhoods that were the hardest hit; these include Double Diamond in Reno and Wingfield Springs in Sparks.

Many underwater homeowners can wait for prices to recover. The problem arises for those who lose jobs or have to move. They will have trouble selling their homes for enough to pay off their mortgage and thus may face foreclosure, a short sale or would benefit from seeking a loan modification.  Consult with a local real estate or lending professional to seek advice in regards to which appropriate alternative best mitigates your current equity situation.

Jason Norris, MBA, CMPS, President MFG Mortgage Services, LLC 1.775.322.0496