Archives for March 2016

By Joe Szabo, Scottsdale Real Estate Team My wife and I bought our first home in July of 1999. We were newlyweds at the time, and in lieu of taking a honeymoon we decided to purchase a house and gut it. Our date nights involved going to Home Depot, and talking to plumbers and tradesmen for advice. During the five years we owned the house, we never refinanced because the interest rates weren’t attractive enough, but it’s a different story with our second home. We purchased our second house — where we’re still living — in 2004 with a 30-year fixed mortgage at a 5.5-percent interest rate. The first time we refinanced was in 2008 using a 30-year fixed note at a 4.25-percent rate. That reduced our monthly payment by about $300. We decided to pay the points upfront instead of doing a no-cost closing because it got us a much lower rate and a nice tax break. I never thought interest rates would drop lower than 4.25 percent, but they did in 2012. Before we could decide to refinance, we had to assess our timeline. We knew we’d be in our home for at least another five years, so I ran the numbers and found it would only take two years to reach a break-even point; everything after that would be gravy in our bucket. That’s why we decided to refinance in 2012 to a 30-year fixed rate mortgage at 3.25 percent. It saved us $120 a month, and brought our mortgage down to just under $1,000 a month. Once again, we decided to pay $2,500 in points upfront because it would save us money in the long run when we factored in amortization.

Rate race

Since I’m both a real estate broker and a real estate attorney, I was in a unique position in that I didn’t have to pay a closing company either time we refinanced; that saved us a significant amount of money. I also had connections in the lending field and knew how to shop around to get the best deal. After we got pre-approved, we’d sit back and watch interest rates daily because we knew we needed to pounce on the best rate. So we’d wait until the rates dropped significantly, then jump on it. The second time we refinanced there was a midday adjustment and the interest rate dropped a full quarter point in the same day. It was unbelievable.

Lessons learned

There’s an emotional satisfaction you get from refinancing. Any time you save a significant amount of money, you feel good about what you’ve achieved. You’ve not only eased your financial burden, but also gained a sense of security. I will say that the paperwork when you refinance is exhausting. You need tax returns, bank statements, and history of large deposits and large purchases, among other documentation. Sometimes you need to get errors fixed on your credit report. There was a questionable charge on one of our accounts, and it put a black mark on our credit. We eventually got the error removed, but it took time to dispute it. Over time, we learned an important lesson. We used to make larger monthly payments on our mortgage than what was required because we wanted to free up some of the equity in the home. And, from a psychological standpoint, it felt good to pay down our mortgage and come closer to being free of owing money to a lender. However, we eventually realized that by investing the money elsewhere, we could get a much higher return than using it to pay down our mortgage. So now we don’t accelerate our loan payments. Instead, we invest in private mortgages, where the return can be up to nine percent. We’ve also put some of the money we’ve saved into making home improvements. We updated a bathroom, a bedroom, and flooring. These days I don’t pay as much attention to daily fluctuations in interest rates because I don’t have a desire to refinance again. I definitely talk about refinancing in conversations with my real estate clients and with my friends and family — people are always asking me about where the market is heading — but I have no personal interest in refinancing. Granted, I still have my eyes open. If the perfect house came on the market and we wanted to buy it, we wouldn’t hesitate — especially with interest rates being so low.

Advice for first-time refinancers

There are a lot of ultra-low interest rates advertised by lenders online and plastered on billboards, but rates aren’t fixes. They’re teaser rates, and when you read the fine print, you realize you may not meet all of the qualifications. Unfortunately, there are a lot of bait-and-switch lenders. You should compare quotes from at least three lenders, and make sure they offer the same terms so you can get an apples-to-apples comparison. Let the lenders know you’re shopping around, and pit them against each other. Nine times out of 10, there’s room to negotiate, so don’t be afraid to ask for a better deal. Read more here Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.

By Joe Szabo, Scottsdale Real Estate Team This St. Patrick’s Day, Zillow took a look at the luckiest time to buy across the country. What we found: the home buyers who bought right at the bottom of the housing bust, allowing them to gain the most equity in their homes as the market bounced back. For example, a buyer who purchased a home in the Las Vegas metro in January 2012 has seen their home value increase an average of 75 percent. That’s a pot of gold — no rainbow required. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.

By Joe Szabo, Scottsdale Real Estate Team Price-conscious consumers are constantly looking for ways to snag savings. Be it a do-it-yourself bathroom backsplash or self-help legal documents, the current trend in real estate is shying away from enlisting a perceived-as-pricey professional. However, some projects are too complex, valuable, or regulated to take on as a layperson — and the result is often a frantic call to the local plumber or electrician. In the legal realm — particularly the transfer of real estate — there are definitely times when an attorney is not necessary, and the transaction will most certainly process without the assistance of a real estate lawyer. However, certain states mandate attorney involvement (or at least prohibit non-attorney over-involvement), making it unlawful to participate in a real estate settlement without a licensed attorney presiding. And certain transactions are too complicated, costly, or stressful to go it alone. Here are four situations when you should consult a real estate lawyer.

When it’s mandatory

A handful of states unequivocally mandate the involvement of a licensed attorney in a real estate transaction. These states take a dim view of non-attorney staff members preparing and conducting real estate settlements, calling such acts an “unauthorized practice of law.” This phrase actually derives from the rules of professional conduct (i.e., ethics) that govern attorney practice, and can result in sanctions against an attorney-supervisor for allowing this unauthorized practice with minimal oversight. Currently, Delaware, Georgia, New York, North Carolina, and South Carolina require attorney involvement, oversight, and direction in all aspects of a real estate transfer, from title review to signing documents. In Alabama, a non-attorney can perform a title search and issue title insurance, as long as a licensed attorney drafts all legal documents (e.g., deeds, mortgages and promissory notes). In all these states, the buyer has the unequivocal right to choose his or her legal representation; realtors, brokers, and lenders are not generally permitted to force a buyer to work with a certain attorney.

When it’s complex

For buyers in other states, working with a real estate attorney may still be advisable if the situation involves a complex or unique issue, such as:

• Oil and gas rights
• Riparian rights (i.e., access to water)
• Beachfront property
• Any property subject to an easement
• Adverse possession claim
• Historical property
• Preserved property (i.e., farm preservation)
• Zoning and/or land use disputes

When any of these issues arise at the outset of a real estate transaction, working with an attorney will inevitably be more cost-effective than dealing with a major conflict or claim later. In addition, the attorney can help review the title and ancillary documentation to ensure all documents comply with state and federal laws.

When it’s high value

Likewise, working with an attorney in a high-value residential transaction can be extremely important, particularly given the extent of the investment. When making a major real property purchase, buyers should ensure that the property is in prime shape — and demanding afull home inspection is one of the most important aspects of this process. Not only can an attorney work with the home inspector to ensure the property meets the buyers’ expectations, but the attorney can help negotiate with the seller if any issues arise. Also, high-end real estate may be subject to several liens, encumbrances, or judgments. A proper title search by an experienced real estate lawyer is the best way to ensure that these issues do not pass to the buyer on settlement day.

When it’s high stress

Lastly, not all real estate transactions are positive experiences, particularly if the seller is in a financial bind or the property is being sold from the estate of a recently deceased individual. When an air of emotion permeates the process, parties are apt to make rash decisions on price, contingencies, or conditions. And when a residential home sale feels “forced,” tempers may flare at the settlement table. By invoking the help of a legal professional to work through the process, buyers and sellers can participate in the transaction with confidence and a full understanding of what is happening, from the initial contract execution to the final closing. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.