Kathy O'Brien Realty - Lake Champlain & Vermont

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Vermont Real Estate Market

Improving The Equity Of Your Home

I found this article to be relevant! Many sellers feel the value of their home does is not impacted by cosmetic improvements or fall out from the recession. The value of a home IS affected by supply and demand as this article points out.

Look at the improved equity position on a 15-year mortgage vs 30-year mortgage. Equity is the difference in what your home is worth and what you owe. Ideally, as the value goes up and the unpaid balance goes down with each amortized payment made, the equity grows from two directions. This dynamic leads to increasing a person's net worth much faster than many other investments. A homeowner has minimal control over value. It is necessary to maintain the property to avoid depreciation and make good decisions on capital improvements. After that, appreciation is generally controlled by supply and demand and the economy. Mortgage management is something that the homeowner does have control. Making the decision to select a shorter term mortgage at a lower interest rate can have an impact on equity build-up. Lower interest rates amortize faster than higher interest rates which will also affect equity growth. Currently, it is possible to get a 1% lower rate on a 15-year mortgage than a 30-year mortgage. Compare two alternatives of a 30-year and a 15-year mortgage. The payments will definitely be higher on the shorter term because it pays off quicker. However, if a person can afford the higher payments of $362.53 more per month in this example, the equity will be greater. Even after you take into consideration the higher payments, the increased equity is $17,236 at the end of the seven-year holding period.

Another decision that can affect equity build-up is making additional principal contributions along with the regular payments. Whether you're making an occasional lump sum payment toward principal or regular monthly contributions, it will save interest, build equity and shorten the term on a fixed rate mortgage. Estimate your personal savings with this Equity Accelerator.

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Investing in Lake Champlain Listings

Lake Champlain real estate is back in 2011 and prices are more reasonable than ever! I've noticed that sellers are finally pricing their lakefront homes realistically after reading and hearing bad news over the past 24 months even hearing stories at cocktail parties about the neighbor who took a loss on the sale of his home. But was it really a loss? Perhaps not! If you have lived in your home for over seven years, you have gained a profit; the declines only occurred in 2009 and 2010. Like the stock market, real estate investments are cyclical. Prices go up and down, and if you stay in your house, just like owning a stock for 20 years, you'll make some good money. The only avenue to speculate on real estate is through niche property, such as waterfront homes, bought at a good price. And this year, along with the next two to four years, will be an excellent time to buy a property on Lake Champlain or a lake-view home close to Burlington or in the Champlain Islands.

Real Life Success Stories

I had a client that bought a small cottage for $80,000 ten years ago and built an additional small, energy-efficient house on the three acres. Now the year-round property is worth approximately $500,000. The property needed a new septic ($20,000) and construction was about $200,000.

Ten years ago, another client bought a small summer cottage for $125,000 and it is now valued at $350,000. In another prime example, a summer lakefront cottage on Thompson's Point in Charlotte sold for $120,000 in 1996 and sold last year for $550,000 with renovations, but I don't think the renovations were more than $100,000! These opportunities still exist on Lake Champlain and on other lakes in Vermont. And it is a joy to experience a Vermont summer on a peaceful lake. Even if you only make it to Vermont for a couple of weekends a year, the rents on Thompsons Point in Charlotte can be as high as $1,200 per week. A great investment! Another worthy investment strategy is to find a short sale or foreclosure on Lake Champlain.It's a gift to live on Lake Champlain

Has the Economic Bubble Hit Vermont Real Estate?

The price category under $350,000 is active - not great - but active. Homes over $550,000 are having a tough time. Buyers just keep waiting. Of course, the banks are tough on lending. But why don't buyers simply write up offers? The Bubble has not hit us thanks to conservative building policies in Vermont. Sales are down by 20% in Chittenden County and sellers must be prudent about their list price if they want to sell in a timely fashion. Buyers should "go for it", though! Trade and throw out some offers, you would be surprised. Sellers will negotiate because they want to sell!