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As expected, and going against the wishes of some, the Fed increased policy rates by a quarter percent at their December meeting. This is the fourth hike this year and the ninth since 2015. Previously, the benchmark rate was kept at a record low for seven years.
What does an increase mean?

• It could cause banks to increase their “prime rates,” which are often used to calculate interest on consumer products like credit cards, private student loans, and home equity lines of credit (HELOCs). Adjustable Rate Mortgages (ARMs) may be directly impacted as well.

• Fixed mortgages are typically based on long-term rates, which are not directly affected by Fed rate changes. However, Fed policy does influence mortgage rates, which can rise in anticipation of future Fed action. There are exceptions, yet home loan rates will typically follow overall interest rate trends over time.


Here’s something new:

Officials initially projected three additional Fed rate hikes for 2019, but that number dropped to two. Fed members say they will continue monitoring economic data to make future decisions.

In this volatile economic season, please reach out to us to discuss how all of this might affect your real estate decisions.

NOTE:  this article was graciously shared by Mark Ferguson, Senior Loan Officer, MVB Mortgage.

Amazon Effect

 

Amazon recently announced their selection of Crystal City – Arlington, VA as the future home of one of their two additional headquarters. The news was met with delight and trepidation by the Northern Virginia and general Metro community.

Homeowners, naturally, had visions of dollar bills dancing through their heads as they anticipated accelerated appreciation of their homes. Commuters  feared traffic congestion beyond present levels. Developers envisioned windfall profits.

Increased employment, greater appreciation, and profits, oh my!

A few facts (as presented by NVAR and their panel of experts during their December 12 presentation on the “Amazon Effect” at George Mason Business):

  • Amazon HQ2 will be located in Crystal City which is part of South Arlington. That areas has been renamed, National Landing.
  • The HQ2 timeframe will be 16 years to complete the process.
  • 25,000 employees (will be really 38,000 jobs) are expected.
  • 75% of the effect will be “inside the Beltway.”
  • The Washington, D.C. area is larger and denser than Seattle.
  • The absorption rate is expected to be about 1% per year over the 16 years.
  • The biggest bump in real estate values came to the Arlington area in early fall 2018.
  • The arrival of Amazon does not increase the housing demand significantly over time.
  • The residential markets with greatest impact will be Arlington and Alexandria.
  • The average Amazon employee income is expected to be approximately $150,000
  • The employees will flock to the best schools.
  • The Amazon Effect will not only impact residential, but commercial properties, as well,
  • Existing real estate problems of supply and affordability will remain.

The six experts all warned to guard against the “hype wave” and to be strategic.

The KEY: this will be a 16 year project, which according to the experts, will be absorbed within ordinary area growth.

The question asked almost daily, “How will this event impact our real estate value?” is best answered by, “The impact happened at the anticipation phase.”

 

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What exactly does it mean to you when your mortgage has been “sold?”

 

The sale of mortgage “paper” and/or servicing is common practice.

 

Federal law requires that the outgoing mortgage holder must send you in writing, notification of the sale and provide you with the new company’s contact information. The new company must also send you in writing their “welcome” letter and provide you with clear instructions on how and where to pay your mortgage. To learn more, visit http://www.consumerfinance.gov/askcfpb/215/what-happens-if-my-mortgage-servicer-changes-what-do-i-do.html

 

So what could possibly go wrong? Realize that many of the servicing agents are not located in the United States; data from the loan package is often manually entered into a new database; and escrow accounts can slip into an abyss. Because you, the mortgagor, are ultimately responsible for your mortgage, taxes, and insurance; you must be vigilant.

 

The subject of escrows held by a lender (or lender’s servicing company) has been tested in court and it has been determined that “when the lender holds escrow funds for property tax payments, a fiduciary duty exists.” This is a very important decision inasmuch as the lender has the obligation to you to pay all taxes and insurance (should they be collecting for that as well) in a timely manner.

 

A client recently contacted us for help sorting out the sale of their mortgage and getting their taxes paid on time. After two months of phone calls, and several emails, their property taxes were finally paid. However, the County and Town tax records now show  that late payment interest and penalty fees had been levied and received. This indication is not on the servicer’s record, it is on the homeowner’s record.

 

What’s a homeowner to do?”

 

  1. Open all lender correspondence promptly.
  2. Act on the correspondence immediately.
  3. Do not be put off by promises or delays.
  4. Keep copious notes of names, times, dates, and agreements. Record the conversations, if possible (they record theirs)
  5. Follow up, follow up, follow up.
  6. Get everything in writing.
  7. Keep all contact numbers handy.
  8. Do not hesitate to contact the investor of your loan to let them know of your problems inasmuch as the investor usually contracts the servicers.

 

If you have any questions, you can always contact us.

By Andrea Justus

As the weather improves a good number of us are looking at our gardens and landscaping and thinking, where do I start?  Here are some easy tips for preparing your garden.

Remove all dead garden debris as it may harbor pests or disease from last year.   After the debris is removed it is time to weed.

Remove all growing weeds by the root using a hand weeder – tilling can break apart and spread roots resulting in more weeds down the road.  It is tempting to use technology to get things done faster.  I prefer not to use weed spray in my vegetable garden and find that pulling by the roots lasts longer. My favorite hand weeder is the type that telescopes with a claw on one side and a hoe on the other.  A weed hoe is also helpful in soft soil to loosen the plants so you can pull them by the roots.

Prepare the soil – Incorporate compost by digging in with a garden fork. Refresh soil in raised beds, talk with your local gardening supply store or Master Gardener for soil amendment recommendations.   Incorporate appropriately labeled dry vegetable fertilizer before planting vegetables.   Time release fertilizer is best as the plant can absorb it over time.

Know the appropriate planting dates for summer vegetables. There are many resources available including the library, plant labels, local plant nurseries, and the Virginia Cooperative Extension Master Gardeners.  See  http://loudouncountymastergardeners.org/ for the Master Gardeners events calendar for planting information and to learn where in the county they are holding lectures or Garden Clinics in season.

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Have stakes, trellises, twine, hoses and other garden tools ready for when the vegetables are ready to be planted.  Pay attention to planting depth, for tomatoes plant them up to the first set of leaves to establish strong roots and plants. After planting it is helpful to sprinkle some Preen between the rows  to minimize summer weeding, (do not use Preen in beds if you are going to plant seeds for a second harvest).

Water in all plantings.  Consider covering the rows and walkways in straw to keep weeds down and help plants retain moisture. Hand watering works well for many people, remember that what you water grows whether it is weeds or vegetables.  You can avoid watering weeds by using a garden watering system of hoses with water holes every 12 inches. These systems are relatively inexpensive, convenient, and last a long time especially when covered in straw.

Get started! Rediscover the fun of growing things and share the hobby.

To talk to Andrea about gardening, or finding the farm of your dreams, click here!

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Most art is delicate and potentially fragile. How you handle your art during and after a move can determine your future enjoyment of the piece(s) and their value.

For the past 20 years, we had hung a beautiful limited edition print on a wall in the basement. This was mostly because the wall was large enough for the piece and because we had tired of it in our every day living space. Several says ago, during a discussion about art and artists, I took a close look at the piece. I discovered some tiny black dots on the Japon paper.

The print, framed by conservation standards, was installed on an exterior below-grade wall. Regardless of the finish level of the wall, the structural cinder block must get moisture that was trapped by the art. SO now, mildew in the  paper of a pretty valuable piece of art.

Naturally, my first thought was to contact an art conservator and organize its restoration. This is where a whole new world of art services came alive. Art conservators do not conserve paper. They restore/clean paintings – oils, linen, canvas, and the like. Paper restorers handle prints on paper. Yes, the same experts that restore books, restore art prints.

You know that some art will appreciate over time. We just never know what piece(s) might become valuable in the future. Most people buy art for its aesthetic value and not so much for investment. However, sometimes artists gain in notoriety and if their work survives long enough in good condition, the value could increase.

If you want to both enjoy and preserve your art, handle it carefully and install it with consideration of potential moisture (even condensation that forms inside a sealed frame).

Should you need a conservator of antiques, paintings or paper, we have now amassed a list of conservators who can help and/or direct you to solving your. Some have performed work for us personally, others have been recommended and have significant credentials. Give us a call and we will gladly share our list.

 

(read this to the end – see for your self)

The news about the Federal Reserve and the Fed Funds Rate is often touted as a reason to anticipate increased mortgage interest rates. As with much of the media, “news” can be manipulated to stimulate emotional reactions from joy to fear. The fear in this case would be of increasing interest rates.

What actually happens when the “Fed” raises the ‘Fed Funds Rate’? Well, those rates apply to funds that banks borrow from the Federal Reserve for periods less than 90 days, but longer than one day. Raising the rate by .25% on banks does not necessarily affect mortgage rates at all.

The Federal Reserve serves an important function in the United States – insuring deposits from bank default (within established limits) and monitoring and controlling monetary policy in hopes of maintain a stable economy with limited fluctuation. Monetary policy is complex and very carefully monitored by financial institutions and corporations.

Borrowing money to purchase a home typically falls under the term, mortgage. Mortgages consist of two components – principal and interest. While we all know about principal, the interest component often seems like hocus pocus in a black box. Interest is the amount that lenders charge for the privilege of lending money.

Because mortgages are typically a long-term commitment on the part of the lender, economic projections are used to set prevailing interest rates. Lenders look at the risk of inflation and the potential opportunity cost of leaving their money at a set rate for a prolonged period of time.

Mortgage interest rates are typically affected by long term bond yields and the 10-year Treasury bills. Obviously, every aspect of the monetary markets trickle down to affect interest rates, however, mortgage rates are not as sensitive to the “Fed Rate” as they are to the Treasuries or Bond Yields.

Why does this information matter to you? You are barraged by offers, threats, and disinformation to act “quickly” to refinance or to buy now. Yet, the reality is that mortgage markets are more insulated than reflected in the news.

However . . . depending on your sensitivity to rate fluctuations, a small move in mortgage interest can affect mortgage qualification. The best solution is to work with a knowledgeable lender who can guide you with correct information with which you can make good decisions.

If you are thinking of buying or refinancing, we have an excellent list of lenders who have worked for our clients who produce loans on time and on budget. Call us today.