Real Estate

title-insurance

Title Insurance: What is it and why do I need it?

Purchasing a home is the largest investment that most people make in their lives.  As part of the home buying process, title insurance is often required, especially if you are financing the purchase, and is always recommended.  However, many people do not understand what title insurance is or why they are required to purchase it.  […]

Purchasing a home is the largest investment that most people make in their lives.  As part of the home buying process, title insurance is often required, especially if you are financing the purchase, and is always recommended.  However, many people do not understand what title insurance is or why they are required to purchase it.  Instead, people tend to view title insurance as a necessary closing cost with little or no explanation.  This article addresses what title insurance is and why it is important.

Title insurance is an insurance policy that covers title issues that arise after you purchase or refinance a property.  Title insurance guarantees that the seller of the property owns it free and clear of any liens or encumbrances and that the seller is able to transfer clear title to you as the purchaser.  If a title issue comes to light that negatively impacts the property after you close on the purchase, title insurance will kick in and do what is needed to resolve the issue.  For example, you may find when you try to sell the property that a prior mortgage was never satisfied or you may learn at some point that a prior deed was fraudulently recorded.   Likewise, a search of a property with a mortgage foreclosure in the chain of title may reveal a glitch somewhere in the process that causes a cloud on the title.  Without title insurance, you would be responsible for any costs needed to clear the issue.  This may involve hiring attorneys, paying outstanding liens or unsatisfied mortgages, or possibly even losing the property.

Unlike homeowner’s or mortgage insurance, both of which cover potential future issues, title insurance covers from the time of purchase back in time.  The title insurance premium is a one-time fee that is paid at the time of settlement.  In Pennsylvania, the premiums charged by most title insurance companies are regulated and approved by the Pennsylvania Insurance Department.  Your title insurance premium includes a title search of the property, the preparation of standard closing documents including the settlement sheet, and the handling the settlement itself.  Tax certifications, notary fees, recording fees, and similar fees are paid in addition to the title insurance premium.  In Pennsylvania, the buyer is commonly the party to pay these fees.

Both lender’s title insurance policies and owner’s title insurance policies are available in connection with a transaction.  If you are taking out a loan to purchase the property, the lender will almost always require you to purchase a lender’s policy.  Lenders also require a lender’s policy if you are using real estate that you own as collateral for a loan separate from a purchase.  A lender’s policy is issued in the amount of the mortgage and protects the mortgagor in the event that an issue arises.  Many lenders also require endorsements to the policy (for an additional fee, of course) based on specific circumstances of the purchase.  For example, endorsements are often required in lieu of a survey, if a property is part of a condominium or planned unit development, or if the loan has a variable interest rate.  A lender’s policy lasts throughout the term of the mortgage.

In addition to a lender’s policy, most purchasers also elect to purchase an owner’s title insurance policy.  An owner’s policy is issued in an amount equal to the property’s purchase price and protects you (as opposed to the lender) as long as you own the property.  When purchased along with a lender’s policy, the cost for an owner’s policy is minimal.

Many lenders, real estate agents, and builders are affiliated with title insurance companies and, in turn, often recommend an affiliated agent to issue the title insurance policy and handle settlement.  These affiliated relationships must be disclosed to buyers in writing and you, as the buyer, always have the right to shop for and choose the provider of these services.  Since the cost of title insurance is regulated and any cost savings would be minimal, you are encouraged to choose the agency that you are most comfortable dealing with to protect one of the largest investments that you will ever make.

Share This:

mortgages-spelled-out

Mortgages, Spelled Out

Picture the spelling bee in your mind.  The elementary school-aged child stands under the bright light, alone listening intently as the pronouncer provides the history of the word the child is required to spell.  The voice echoes through hidden auditorium speakers, “its background is both Old French and Latin; the root word is ‘mort.’” Then […]

Picture the spelling bee in your mind.  The elementary school-aged child stands under the bright light, alone listening intently as the pronouncer provides the history of the word the child is required to spell.  The voice echoes through hidden auditorium speakers, “its background is both Old French and Latin; the root word is ‘mort.'” Then there’s silence.

“Mortgage.  M o r t g a g e; Mortgage” spills the child nervously into the microphone.  Rightfully so; it’s one of the most commonly misspelled words in the English language.

Logic and reason suggest the process itself should then be equally as challenging; and lonely, right?

No and No.

First, let’s do a quick little test.  Don’t worry; there’s no right/wrong answer no pass/fail; only bragging rights among friends.

Grab a pen or a pencil and a blank sheet of paper.  Ok; close your eyes.  No cheating now… Don’t look at your wristwatch (if you don’t wear a watch because Apple or Samsung tell your time don’t look at your phone).  Spin that watch under your wrist.  Flip that phone over.

Now open your eyes.  The task?  Sketch a detailed picture of your watch/phone screen.  Artistic talent is not a criterion.

You have 15 Mississippi’s; without a watch or phone timer, you’ll have to do it like we did on the school playground… count it out loud or in your mind; it’s part of the test.  Ready, set… GO.

Did you manage to draw each and every detail?  Is the sketch higher or lower than the standard you quickly advanced yourself credit for?   Here’s a good question… did you draw the actual time and date?

Right.  Items we interact with time and time again on a daily basis.  When asked to sketch a rendering with elementary distraction we find it harder a task than we initially thought.  Now imagine nothing was more important; life depends on it.

Ok.  Let’s go get a Mortgage.

Wait.  Wait.  Do we want to put no money down or a lot of money down?  Do we want to borrow a lot or just a little?  What’s the best use of our money?  Are you a first-time buyer or is this your 2nd or 3rd time buying a home?  Are you a Veteran?   What is a transfer tax in the State of Pennsylvania and how much is it?   Appraisals… cool… I get a copy, right?  Can I afford all of this?  What effects do real estate taxes have on the process?  Just what is a title company/closing attorney and what crucial, important role do they play? What’s a flood zone?  What are points and do they benefit the lender or me? How does all of this work in the present market conditions?

We will need to choose a type of loan, a term for that loan and the type of rate.  We can choose among conventional, FHA, VA, Rural Housing (USDA), first-time buyer, construction, swing or Jumbo.  All of these loan programs offer solutions to meet specific needs; individual needs.  Some require little to nothing out of pocket while others are tailored to what you determined is best for you.  Terms are available between 10 and 30 years each with options for fixed or adjustable rates.

Regardless of the type, term or rate the Federal Government requires lenders collect a 2-year history of residency, a 2-year work history, 2 years of income tax returns & w2s/1099s, 2 months of bank statements and 1 month of pay stubs in order for a mortgage loan to be compliant with its regulatory standards.  Everything we need to succeed… hey, we come across all that in the course of our day, month and year (que Emeril; BAM!).  Thanks Emeril.  That’s really good news because time is running on the low side… the closing date just around the corner and it’s pretty important; it’s where we’re going to live.  We can sketch that out, right?

Right so… how is it that we defy logic and reason?  Service; S e r v i c e.

Minute by minute, hour by hour, day by day, month by month award winning service paints a perfect picture of your immediate future.  It starts with meeting the Loan Officer, then to processing, after that the money is wired and into the title company you go!  Pick up the keys.   Regardless of what the industry would lead you to believe… that can be done with eyes closed.

A free consultation with a quality loan officer will answer all of your questions select the loan type, the term and the rate structure that meets your individual needs.  That won’t be done in general; rather, it’s at this moment that you meet your banker as both an educator and trusted advisor.  In the midst of your search you and your real estate agent and your loan officer will communicate on a consistent basis.  You and your real estate agent ratify the purchase contract.  Lastly, the loan officer will collect a formal application tailored specifically to you.  You’ll walk out knowing exactly how what you’ll be spending.

Processing will review the necessary documents you’ve submitted ensuring they meet regulatory standards and work with you to achieve compliance.  When put to task and coupled with your help processing can complete your review and approval in a day or two.

The closing department then works together with the title company your real estate agent recommended.  The property’s ownership history is clean.  The cost to close is sharpened to the penny and the loan funds are wired to the title company in advance.  You’ll receive a copy of the finalized settlement cost statement reminding you of how much cash is required and your transaction is funded.

The total process can be completed in just 8 days; many times, over.  Whether a buyer’s market, a seller’s market or in between you need service you can trust, and it is present in the industry.  You can be a priority.  Your closing date provides more than enough time for that level of service.

Call and ask questions, too; they’re important.  Find the artist that draws your picture day in and day out.  One who uses one of the easiest words to spell, not one of the hardest.  Time will fly when you’re having fun. F u n; Fun.

We’ll stand on your stage, by your side and at the ready – holding a perfectly painted picture in one hand and Webster’s dictionary in the other.

Share This:

Quality of Life in the Lehigh Valley

As a fiscal conservative and small business owner keeping my eye on the bottom line is something I must do if I expect to stay in business.   However, living in the Lehigh Valley and selling homes here as a Realtor, makes quality of life as important to me as quality of schools, proximity to major […]

As a fiscal conservative and small business owner keeping my eye on the bottom line is something I must do if I expect to stay in business.   However, living in the Lehigh Valley and selling homes here as a Realtor, makes quality of life as important to me as quality of schools, proximity to major highways and employment.   Who wants to live in a place that has nothing to do, no place to go and no entertainment?   We are lucky to live in an area where local government has budgeted for and is aware of how good quality of life can affect the economy of the region as a whole.

First, let us talk about parks and recreation, starting with the biggest amusement park in the area, Dorney Park.  Wow has that changed since I was a kid and you could drive right through it.  Now it rivals any amusement park in the state if not the country.  Not a bad deal either, if you get your kid a season pass and take advantage of some of their promotional deals.

Trexler Nature Preserve is an outdoor park on 1,100 acres with the Lehigh Valley Zoo near its center. The preserve provides a habitat for elk, plains bison, and whitetail deer. There are miles of trails for hiking, walking, mountain biking, and bird watching. The Lehigh Valley Zoo is a big attraction all by itself within the preserve. The zoo features penguins, giraffes and loads of other animals.   Another scenic state park is Jacobsburg Environmental Education Center which is a 1,186-acre PA state park near Wind Gap in Bushkill Township.  The park offers 18 miles of cross-country skiing trails, fishing, and hiking

How about Lehigh Valley Rails to Trails which are former railroad beds converted to trails for biking, walking or jogging.  The Saucon Trail runs about 7 miles from Hellertown to Coopersburg ending at the Living Memorial Community Park.  Ironton Rail Trail is a 9.2-mile course that includes a 5.2 mile almost fully paved loop through developments and parks.  If you love nature and enjoy outdoor fitness, find a trail near you.  You won’t be disappointed.

Next, let’s talk sports.  If you have not seen an Iron Pigs game at Coca-Cola Park, you don’t know what you’re missing.  From the great food to the live music to the entertainment between innings.  It’s great fun, and the baseball is not bad either.  If hockey is your thing, you have to go to a Phantom game.  They play at the newest arena in the area, the PPL Center.  You can catch Villanova play Lafayette in hoops or catch an Elton John concert.  If winter sports are what you’re into, then we have two outstanding resorts, Bear Creek Mountain Resort in Macungie and Blue Mountain Resort in Palmerton.  Both have skiing, tubing, restaurants and banquet facilities.

Golf anyone?  Boy, do we have the golf courses.  I think we are spoiled here in the Lehigh Valley. We have about 12 courses within 25 minutes of Allentown.  The prices are reasonable for a round and average from $25.00 to $70.00 per round.  Try finding those prices closer to Philly.  You can’t!

If you’re a car enthusiast, the valley has some great places to visit.  America on Wheels Museum focuses on the history of transportation technology.  See some iconic automobiles and learn about the history of the industry.  Held at the Macungie Park, Das Awkscht Fescht is one of the country’s largest antique and classic car shows for over the last 50 plus years.  Also held at the Macungie Park the weekend before Labor Day, is the Wheels of Time Rod & Custom Jamboree. The car show boasts over 2,000 street rods and custom vehicles.   There is live entertainment, games for the kids and plenty else to see.

I’m just scratching the surface with what I mentioned.  I left out the State Theatre, the Crayola Experience, Sands Casino, SteelStacks, the wineries and micro-breweries, and all the great restaurants.  The Lehigh Valley offers such a variety of things to do, places to go and things to see, making it a great place to live and work.  What does that do for all of us you ask?  Well, it keeps your property values up.  It makes it really inviting for companies and industry to move here which keeps unemployment down and disposable income up.  It helps the tax base which provides for good schools and good government.

The Lehigh Valley is an exceptional place to live!!

Share This:

real-estate-leases

Why are Real Estate Lease Negotiations Often Like Playing Poker?

There are two main reasons. The first is that there is often a lot of bluffing. Each side will bluff as long as is necessary to get what it wants. The second reason is that in poker, there’s only one winner of each hand. Each person wants to win, and therefore everyone else must lose. […]

There are two main reasons. The first is that there is often a lot of bluffing. Each side will bluff as long as is necessary to get what it wants.

The second reason is that in poker, there’s only one winner of each hand. Each person wants to win, and therefore everyone else must lose. Players watch their opponents for signs of weakness, or for giving away information about what they have. So, it’s “Win/ Lose.”

Sometimes this attitude carries over into lease negotiations. One side or the other (or both) perceives that the negotiations have to be “win-lose.” “I win, and you lose” is an expression frequently used.

The problem is that “win/lose” often doesn’t work when negotiating a lease. If you made a deal (i.e., signed a lease) but didn’t trust the other side, or if the negotiations were bitter and you signed a lease anyway, you’re facing a potential disaster. You’ve signed a lease, and now you have to live with it. You’re stuck with the other side, probably for years. If you saw the Academy Award-winning movie “The Sting” and remember the brutal, high stakes poker game between Paul Newman and Robert Shaw, you will understand what I mean. That is NOT the kind of negotiation to have and expect that the relations between the parties (who were enemies) will automatically improve.

Early in my real estate career, I was told a story about a large negotiation that occurred in New York in the early 1980s. The landlord desperately needed to lease a large amount of space, and the prospective tenant knew it. The tenant not only obtained a below-market rent but pressured and then obtained so many significant concessions that eventually the deal became very personal to the landlord. The landlord reluctantly signed the lease but exacted his revenge when it was time to negotiate a renewal of the lease. The story may be apocryphal, but the message was clear to me: don’t infuriate the other side.

Sophisticated negotiators know better than to infuriate the other side. To them, it’s more important first to know their needs and priorities and identify if someone can reasonably meet those needs. It’s “win-win” rather than “win-lose.” Bluffing is part of the process, but only to a point. If you don’t get what you need, you’ve lost.

In the early 1990s, I was the lead negotiator for the lease of over 60,000 sq. ft. of office space for my employer. (This was a large deal at the time.) The landlord’s chief representative was the nicest negotiator I have ever met. She was pleasant in every instance where we disagreed, and our side never felt any hostility. As a result, we simply recognized that there were disagreements, so we resolved them amicably. The needs of both parties were met.

Stephen R. Covey described this very well in his masterpiece book “The Seven Habits of Highly Effective People” when he discussed “Win/Win or No Deal.”

There are many, many parts to a commercial lease. What is very important to one side may be minor to the other side. So, one of the keys is to find out what the other side really wants and simultaneously determine if those things are important to you, while you decide what you want and see how important they are to the other side. Rent is only one aspect.

So, what could be important? Here are some examples: timing (how soon can the tenant occupy the premises); length of lease term; options to renew; annual rent increases; options to expand to adjacent space; an option to decrease the amount of space leased; option by the tenant to terminate the lease early; an option by the tenant to purchase; the landlord’s right to relocate the tenant within the building or complex; hours of operation (if in a retail building); the tenant’s right to not remove its renovations and improvements after the lease ends; and the tenant’s right to self-repair (if the landlord doesn’t perform the repairs as required). There are many more.

In my career, I have represented two multibillion-dollar organizations hundreds of times each as both landlord and tenant. I have also represented clients (both landlords and tenants) who only had 2-5 employees.

Life is too short to become involved in lease negotiations that eventually resemble brutal poker games. I strongly recommend that you avoid them at all costs.

Share This:

Looking Back to Look Ahead: 2018 Market Wrap Up and What to Expect in 2019

Consumers should expect home sales to flatten and home prices to continue to increase, though at a slower pace, according to a residential housing and economic forecast session at the National Association of Realtors® (NAR) 2018 REALTORS® Conference & Expo in November. As Lawrence Yun, chief economist for NAR, presented his 2019 housing and economic […]

Consumers should expect home sales to flatten and home prices to continue to increase, though at a slower pace, according to a residential housing and economic forecast session at the National Association of Realtors® (NAR) 2018 REALTORS® Conference & Expo in November.

As Lawrence Yun, chief economist for NAR, presented his 2019 housing and economic forecast, he was joined onstage by Lisa Sturtevant, President of Lisa Sturtevant & Associates, LLC, who discussed the importance of affordable housing in the U.S.

Much of Yun’s presentation focused on recent declines in home sales, but in the context of long-term trends to illustrate the housing market’s actual performance.

“Ninety percent of markets are experiencing price gains while very few are experiencing consistent price declines,” said Yun. “2017 was the best year for home sales in ten years, and 2018 is only down 1.5 percent year to date. Statistically, it is a mild twinge in the data and a very mild adjustment compared to the long-term growth we’ve been experiencing over the past few years.”

In Lehigh and Northampton counties, year to date, home sales are up 0.1 percent, according to the Greater Lehigh Valley REALTORS® most recent market report released for October. The Median Sales Price is up 8.1 percent. The Lehigh Valley is known, as seen here, for following national housing trends. Carbon County, which is its own unique market, has been experiencing a stellar year, partly due to homebuyers looking for inventory not currently available in the Allentown-Bethlehem-Easton area. In Carbon, home sales and home prices, year to date, are up 13.4 percent and 17 percent, respectively.

As to the possibility that we are currently experiencing a small bubble, Yun was quick to shut down any speculation. “The current market conditions are fundamentally different than what we were experiencing before the recession ten years ago,” said Yun. “Most states are reporting stable or strong market conditions, housing starts are under-producing instead of over-producing, and we are seeing historically low foreclosure levels, indicating that people are living within their means and not purchasing homes they cannot afford. This is a stronger, more stable market compared to the loosely regulated market leading up to the bust.”

Yun’s words on foreclosure levels hold true for the Greater Lehigh Valley. According to October market statistics for Lehigh and Northampton counties, only 1.1 percent of the available market (23 properties) were labeled as lender-mediated. In Carbon County, lender-mediated properties came in at 0.6 percent (two properties). Lender-mediated properties are those marked as foreclosed, REO, bank owned, pre-foreclosure or short sale.

Both panelists also discussed housing affordability. While the U.S. is experiencing historically normal levels of affordability, potential buyers may be staying out of the market because of perceived problems with affordability. “NAR research shows that a lower percentage of consumers think that now is a good time to buy, while more are indicating that it is a good time to sell,” said Yun. “Problems could arise if the market is flooded with too many sellers and not enough buyers. Fortunately, that does not appear to be the case, as indicated by months’ supply of inventory at below five months.”

Again following the national trend but marching a tad lower, the Months Supply of Inventory for Lehigh and Northampton counties in October came in at 3.0 months. In Carbon County, the Months Supply of Inventory was 6.1 months. Carbon has been a more balanced market between buyers and sellers throughout the year, while Lehigh and Northampton counties have seen more buyers than there are sellers.

Sturtevant discussed the importance of homeownership on a social level – how homeowners tend to be in better physical and mental health and have greater opportunity for economic self-sufficiency. Additionally, communities with more homeowners tend to be more economically prosperous and better able to attract and retain workers.

“I am a researcher, not an advocate; but the results of my research have compelled me to see the importance of affordable, stable housing, and the positive economic impact to local communities,” said Sturtevant.

Looking to next year, Yun shared his forecast for home sales and median home prices. “The forecast for home sales will be very boring – meaning stable,” said Yun.

With a few months of data remaining in 2018, Yun estimates that existing-home sales will finish at a pace of 5.345 million—a decrease from 2017 (5.51 million). In 2019, sales are forecasted to increase to 5.4 million, a 1 percent increase.

The national median existing-home price is expected to rise to around $266,800 in 2019 (up 3.1 percent from 2018 this year and $274,000 in 2020. “Home price appreciation will slow down – the days of easy price gains are coming to an end – but prices will continue to rise.”

All of these forecasts, however, are dependent on higher levels of home production. “All indications are that we have a housing shortage. If you look at population growth and job growth, it is clear that we are not producing enough houses.”

Commenting on the overall health of the U.S. economy, Yun noted that the economy is “good.” He noted that we have low unemployment, record high job openings, historically low jobless claims, job additions for eight straight years and wages beginning to increase. “This type of activity in the economy should support the housing market, even as interest rates rise,” said Yun.

* National data provided by the National Association of Realtors® and Lawrence Yun, NAR’s Chief Economist and Senior Vice President of Research

Share This:

Lehigh Valley Homes Spent an Average of 30 Days on the Market in August

The Greater Lehigh Valley REALTORS® (GLVR) reported August data showed that while home prices are at or approaching record highs in many markets, mortgage default and foreclosure rates sit near historic lows. In the Lehigh Valley, lender-mediated activity in August made up only 2.0 percent, or 40 properties, of the market. That said, according to […]

The Greater Lehigh Valley REALTORS® (GLVR) reported August data showed that while home prices are at or approaching record highs in many markets, mortgage default and foreclosure rates sit near historic lows.

In the Lehigh Valley, lender-mediated activity in August made up only 2.0 percent, or 40 properties, of the market. That said, according to Justin Porembo, CEO of GLVR, the rise in home prices is outpacing the rise in household income.

“The national median household income has risen 2.6 percent in the last 12 months, while home prices are up 6.0 percent,” Porembo said. “That kind of gap will eventually create fewer sales due to affordability concerns, especially in the middle to high-middle price ranges.”

Back at home, prices in August continued to gain traction. The Median Sales Price increased 6.5 percent to $213,000.

Closed Sales increased 4.7 percent to 907. Pending Sales were up 6.3 percent to 798. Inventory levels shrank 17.1 percent to 2,035 units, leading to a Months Supply of Inventory that dropped 19.4 percent to 2.9 months. Days on Market was down 21.1 percent to 30 days.

“While some are starting to look for recessionary signs like fewer sales, dropping prices and even foreclosures, the fact remains that the trends do not yet support a dramatic shift away from what has been experienced over the last several years,” said Sean LaSalle, 2018 President of GLVR. “Housing starts are performing admirably if not excitingly, prices are still inching upward, supply remains low and consumers are optimistic.”

Carbon County has continued its stellar year with another solid month. Closed Sales increased to 66, versus 58 the previous August, and the Median Sales Price increased to $142,750. Pending Sales climbed to 82, and there was an increase in New Listings, which hit 103. Inventory was up 4.0 percent to 368 units.

The Greater Lehigh Valley REALTORS is a not-for-profit trade association that represents more than 2,000 REALTORS® in Carbon, Lehigh and Northampton counties. REALTORS® are distinguished from real estate licensees by subscribing to a strict code of ethics and standards of practice as define by the National Association of REALTORS®.

As the voice of real estate in the Greater Lehigh Valley, the Greater Lehigh Valley REALTORS® is pleased to offer market insights on its website, www.GreaterLehighValleyRealtors.com. Just click “Market Trends” in the main menu.

Share This:

Buying Real Estate in the Lehigh Valley; Knowing your Lender Options

Whether you are a first-time home buyer or a seasoned investor, the home buying landscape has changed dramatically over the past ten years. This is especially the case here in the Lehigh Valley where we have seen incredible growth in both new business and development. This has translated into a 20,000 + growth in the […]

Whether you are a first-time home buyer or a seasoned investor, the home buying landscape has changed dramatically over the past ten years. This is especially the case here in the Lehigh Valley where we have seen incredible growth in both new business and development. This has translated into a 20,000 + growth in the workforce, or almost a 10% increase from January 2008. This, combined with higher wages and a decrease in unemployment, has led to a boom in real estate. What does all of this mean? More people need mortgages! I recently read an article that said 40% of Americans felt “buying a home was the most stressful event in modern life.” How do you alleviate this problem? You do it by finding a lender you are comfortable with, one you feel a good rapport with.

Having direct communication during the mortgage process is critical. Being accessible seven days a week by phone or email has been essential to my success.  Most importantly, taking the time to ask the right questions and to listen when first starting the mortgage process is key. Everyone has different expectations when working with a mortgage professional.  You want to find the one who meets yours.

Another necessary component to have in a lender is flexibility. The wide range of diversity here in the Lehigh Valley means your lender needs to have the right program to fit your needs. This is where many people run into challenges. Not all lenders offer the same programs or can structure mortgages in the same ways. One group of people who can benefit from more attention is physicians. Lehigh Valley is considered a regional healthcare mecca with a tremendous amount of healthcare facilities and medical professionals, and these numbers are growing exponentially. Many of these healthcare providers are coming into the housing market with hundreds of thousands of dollars in student loan debt. Under traditional income and debt calculations for determining mortgage eligibility, this level of student loan debt can be prohibitive, even with a physician’s salary. Fortunately, some lenders, myself included, have programs in place to work with physicians in this exact situation. In many cases, we can exclude some or all of the student loan debt from their monthly obligations in order to help them qualify. For medical residents about to complete their residency, often we can use their new higher salary upon completion of their residency program. Physicians account for a huge part of the local economy; it is imperative to offer programs such as these in order to make their dreams of home ownership a reality.

Another area that is underserved in the Lehigh Valley is our self-employed business owners. They have always been a major contributor to our country’s growth and well-being. Unfortunately, they struggle to qualify for mortgages in a lot of instances and are turned down by their banks because they do not meet traditional requirements or guidelines. Recognizing this, there are a handful of mortgage bankers out there who will cater to these folks by using alternative documentation to source their income. By doing this, we can get a very good picture of their overall creditworthiness, ability to repay the mortgage, and are then able to help them buy a home. We offer similar programs for investors who are looking to expand their rental property holdings but are ‘maxed out’ in the number of financed properties they can qualify for through conventional financing. These programs are part of a growing recognition of the importance of being able to help everyone who is financially responsible and can afford a home, even if they don’t fit into the metaphorical box.

Last, but certainly not least, is our veteran population here in the Lehigh Valley. Eligible veterans are in a better position to buy a home than most. The VA mortgage program is by far the most flexible and easiest to qualify for. Surprisingly, there are a lot of veterans who do not take advantage of this opportunity. Like anything else, much of this comes down to lack of awareness and having a reliable source of information that can be trusted. Many new buyers out there, especially millennials, have been misinformed about what is needed to buy a home or to qualify for a mortgage. There are many options to help people buy homes (no down-payment options, down-payment assistance programs, grants, etc.).  You just have to know where to look for them.

Basil Leonetti is a Branch Manager with American Financial Network Corp. here in the Lehigh Valley.  He has over 20 years of experience in the mortgage and financial industry.  He specializes in helping all types of buyers, but truly views working with veterans as an honor and a privilege. Please feel free to contact him directly at 610-442-3331 if you have any questions.

Share This:

Penn State’s Franklin Gets Motivational on Football, Charity, and Community

James Franklin, the 16th head football coach in the storied history of Penn State University’s Nittany Lion program, headlined the Greater Lehigh Valley REALTORS® (GLVR) 6th Annual Signature Event on Thursday, May 31, 2018. Franklin, who drew close to 700 attendees to the Sands Bethlehem Event Center, discussed his philosophy on teams and the importance […]

James Franklin, the 16th head football coach in the storied history of Penn State University’s Nittany Lion program, headlined the Greater Lehigh Valley REALTORS® (GLVR) 6th Annual Signature Event on Thursday, May 31, 2018.

Franklin, who drew close to 700 attendees to the Sands Bethlehem Event Center, discussed his philosophy on teams and the importance of team building and mentoring – all of which are crucial to success on the football field, in business, and in life.

“Franklin provided valuable insight and inspiration to salespersons within and outside of the real estate industry,” said GLVR CEO Justin Porembo. “With Franklin’s teamwork message, we were excited for our Realtors® – and salespersons outside of our industry – to hear how working together can better their lives and their community.”

Several nuggets of wisdom from Franklin included:

  • On work ethic: “No one is going to out-work us. No one. You don’t get to East Stroudsburg University to Penn State University without knowing how to work. Wake up every morning ready to attack. There is no such thing as a snooze button. You do a back handspring out of bed and attack.”
  • On competing: “Compete in everything you do. Compete in the classroom. Compete in the weight room. Compete when it comes to community service. Compete in everything.”
  • On sacrifice: “Do you want to be successful? Yes. But very few people are willing to do the things necessary to be successful. Success is being disciplined to make the right decision moment after moment after moment. You don’t take the path of least resistance. You must be willing to make the decision that the common person wouldn’t make.”
  • On healthy relationships: “The only way you’re going to be successful is with positive, healthy relationships in your building, in your organization. Ask yourself, ‘Is this going to foster healthy, positive relationships in our organization?’” If not, you better believe we’re not going to do it.
  • On motivation: “I gave all the pre-game speeches at Vanderbilt. What happens when you’re the only one talking? You start turning into Charlie Brown. ‘Wah wah wah, wah, wah.’ We’re constantly asking other people, coaches and players to motivate our team. If I have to get the team fired up two minutes before running out to play in front of 100,000 fans, we’ve got a problem.”
  • On resumes: “Resumes are the most ridiculous things. References are more stupid than resumes. You’re going to give me a list of people that are going to say wonderful things about you? I’m not hiring anyone unless I know you or someone I know knows you and can vouch for you. I’m going to call people who will tell me the truth.”
  • On community service: “I’m a huge believer in community service. We fill the entire football program on buses. We go down to Penn State Hershey Children’s Hospital and assault the hospital with the most positive attitude you could imagine. Once you realize in life you can get everything you want by serving others, it comes back to you tenfold.”

With the community in mind, a charity auction followed Franklin’s speech. And, yes, Franklin got competitive and helped drive up the bids. In total, $11,400 was raised. The Boys and Girls Club of Bethlehem received $6,600, and the local Penn State alumni chapter received $4,800.

Attendees had the opportunity to bid on various kinds of Penn State memorabilia, some of it signed by Franklin. Items included a mini helmet, game tickets, posters, and more. Kevin Smith of K.D. Smith Auctions was the auction’s master of ceremonies.

Going Beyond the Transaction

The charity auction is not the only assistance GLVR has recently provided to the Boys and Girls Club of Bethlehem. On June 19, 2018, Realtors®, sponsors and affiliates converged on the club for tasks and activities that included yard work, window cleaning, arts and crafts, dodgeball and basketball, and time spent with some amazing kids.

The Boys and Girls Club of Bethlehem is part of a nationwide affiliation of local, autonomous organizations of Boys & Girls Clubs. These clubs, which help children ages 6 to 18 develop the qualities needed to become responsible citizens and community leaders, have opened their doors to youth in communities across the country, serving as a “home away from home” for nearly 4 million kids each year during the critical time after school and in the summer.

The time spent with the Boys and Girls Club is part of a Quarterly Community Events Program. The program was launched in 2017 in a joint effort with GLVR’s Young Professional Network, Diversity and Community Involvement Committee and Affiliate Committee.

In addition to working with the Boys and Girls Club, the Association has organized blood drives with Miller-Keystone Blood Bank, cleaned up parks in Carbon, Lehigh and Northampton counties, created a team for the March of Dimes walk, collected donations for Third Street Alliance, assisted the Big Brothers Big Sisters of the Lehigh Valley with their annual “Bowling for Kids’ Sake” fundraiser, volunteered at the Lehigh Valley Cystic Fibrosis Foundation of the Lehigh Valley’s Great Strides fundraiser, and more.

As Porembo always says, “We’re not just here for the transaction, we’re here to help build the community. We soon hope the word ‘community’ comes to mind when you think of our Realtor® members.”

Share This:

Lehigh Valley Economy Swinging Above its Weight Class

The Lehigh Valley has continued to see strong economic growth over the past year, which speaks to the remarkable diversity among the region’s various economic sectors, a sign of a well-balanced and multifaceted economy. In fact, the Lehigh Valley’s economy has never been better. Yes, never. The Lehigh Valley’s gross domestic product (GDP) – the […]

The Lehigh Valley has continued to see strong economic growth over the past year, which speaks to the remarkable diversity among the region’s various economic sectors, a sign of a well-balanced and multifaceted economy.

In fact, the Lehigh Valley’s economy has never been better. Yes, never.

The Lehigh Valley’s gross domestic product (GDP) – the measure of total economic output – has reached an all-time high of $39.1 billion in 2017. That marks a more than 4 percent increase in the Lehigh Valley economy over the previous year, which itself had been a record-high number.

To put that into perspective, that means the regional economy of the Lehigh Valley is now larger than that of the entire state of Wyoming ($38.5 billion) or Vermont ($31.5 billion), as well as 108 other countries in the world. The Lehigh Valley is the 65th largest economy in the United States, jumping up eight spots from the year before, and if we were a country, we would be the 87th largest in the world.

As if that wasn’t impressive enough, the Lehigh Valley was also recently named by Site Selection magazine as one of the Top 5 regions in the Northeastern United States in terms of economic development for the second consecutive year.

Based on the magazine’s tracking of total projects by region, the Lehigh Valley ranked behind only the New York City, Philadelphia, Pittsburgh, and Boston metropolitan areas in the Northeast. The Lehigh Valley was the only region in the population range between 200,000 and 1 million to make the top five list.

You need only to look at the four heavy-hitters the Lehigh Valley shares that list with to see that we are swinging well above our weight class. This past year has been a significant one for economic growth in the Lehigh Valley, and we continue to be the fastest-growing region in the state of Pennsylvania.

What makes a solid economy is a balance and opportunity for people of all incomes and skill levels. Economic growth is meaningless if it doesn’t enhance, not harm, a region’s quality of life and strive to create an opportunity for all people, not just the educated or highly skilled. The best pathway for people to realize the fullness of life is the opportunity for meaningful work that pays a life-sustaining wage. To me, that is the aim of economic development

The Lehigh Valley economy is like a sturdy table standing on four legs. Our top four economic sectors are within $2 billion of each other. Our largest economic sector is finance, insurance, and real estate at $7.9 billion. Manufacturing is second with $6.9 billion. We’re the rare community in the United States with a growing manufacturing base helping to lead our economy.

Third and fourth are professional and business services & education and health care. They each generate about 5.3 billion in output. Each individual subsector saw year-over-year GDP growth from 2016 to 2017, according to the U.S. Department of Commerce’s Bureau of Economic Analysis.

Gone are the days when the Lehigh Valley economy depended entirely on one industry, or on a single employer like Bethlehem Steel. Our growth has been broad-based and balanced. All of our eggs are no longer in a single basket.

LVEDC tracked 31 business attraction or expansion projects in the Lehigh Valley that were either announced, under construction, or completed in 2017, creating more than 2,200 jobs and retaining more than 1,300. The organization also provided access to $17.2 million in financing in 2017, resulting in another 810 jobs either created or retained.

The region’s economic success story has started to attract international attention. The Lehigh Valley was the subject of a 24-page dedicated supplement in the In-Flight magazine of American Airlines, the world’s largest airline, which serves nearly 200 million passengers a year.

Additionally, the region’s booming logistics and e-commerce sector was the focus of a front-page article in The New York Times, which notes that the Lehigh Valley “provides a gateway to the nation’s biggest metropolitan area” due to its proximity to highways and easy access to much of the Eastern Seaboard.

Our economy is growing. Our renaissance is well underway — but far from finished. What’s happening here is the envy of many communities and regions across America who’ve yet to find their way back from economic change, and our today’s and tomorrows are even brighter than our storied past.

Share This:

How Tax Reform Really Affects Current and Prospective Homeowners and the Real Estate Professional

I have been approached by many REALTOR® members recently who have asked me my thoughts on The Tax Cuts and Jobs Act and what it means for homeowners and real estate professionals. Well, many homeowners, homebuyers, real estate investors and members of the National Association of REALTORS® (NAR) may initially see a benefit from the […]

I have been approached by many REALTOR® members recently who have asked me my thoughts on The Tax Cuts and Jobs Act and what it means for homeowners and real estate professionals. Well, many homeowners, homebuyers, real estate investors and members of the National Association of REALTORS® (NAR) may initially see a benefit from the reform. The final bill includes some big successes as a result of the REALTOR® effort. The exclusion for capital gains on the sale of a home was saved, and the like-kind exchange for real property was preserved. Many agents and brokers who earn income as independent contractors or from pass-through businesses will see a significant deduction on that business income.
There is, however, a large concern that this bill reduces the tax benefits of homeownership and will impact some markets more severely than others. In Pennsylvania, our markets are very different, and it’s hard to generalize about its effect on real estate. The changes have, however, affected NAR’s projection for the market with slower growth in home prices. In markets with higher-priced homes and higher taxes, the market may experience price declines as a result of the legislation’s new restrictions on mortgage interest and state and local taxes. Unfortunately, the tax code no longer provides strong incentives for most people to become homeowners since the increase in the standard deduction would greatly reduce the value of interest and tax deductions as tax incentives for homeownership. However, even with the changes in the code, being a homeowner still allows you to build wealth and equity- something renters cannot say.
Looking at some provisions that will impact homeowners the most, the tax code now sets a cap on the combined total of state and local property taxes and incomes or sales tax deductions at $10,000 instead of the full amount of those expenses. The new law reduces the amount of deductible mortgage debt on primary and secondary homes. These two items were priorities for NAR, the Pennsylvania Association of Realtors® and the Greater Lehigh Valley REALTORS® as we met with our Congressional delegation locally and in Washington, D.C. Initially, language in both Senate and House bills threatened to totally eliminate the SALT deduction and would reduce the Mortgage Interest Deduction (MID) to $500,000 for new homeowners. Thanks to the hard work of Realtors® and staff from across the country, we were able to make the change to the state and local tax and had MID bumped up to $750,000 (from the previous $1 million mark).
In the Lehigh Valley, the median sales price in 2017 was $185,000. According to Multiple Listing Service statistics, less than 3 percent of the available market – 63 homes – is listed with a price of $751,000 or above. Since the impact of the MID change will only be felt by property owners with mortgages above $750,000, I do not anticipate the change to the MID cap to have a significant impact on Lehigh Valley property owners.
Looking at the bigger picture and beyond the MID, and despite not getting all of the items we wanted in the final bill, I am optimistic that the tax changes will not negatively impact the housing markets in Carbon, Lehigh, and Northampton counties.
So, we have a general idea of how the tax changes will affect Pennsylvania and the Lehigh Valley, but how will they affect current and prospective homeowners and the real estate professional? The National Association of REALTORS® has a great summary of provisions that affect the aforementioned parties. They also provide examples that are for illustrative purposes and based on a preliminary reading of the final legislation as of December 20, 2017. Individuals should consult a tax professional about their own personal situation. You can find this information at https://www.nar.realtor/tax-reform.

Share This: