PHILADELPHIA (Press Release-August 31, 2010) – PECO today filed joint settlement petitions with the Pennsylvania Public Utility Commission (PAPUC) reflecting agreements reached with all interested groups on the increases in natural gas and electric delivery charges beginning Jan. 1, 2011.

“We are pleased to have worked cooperatively with all involved to reach these agreements,” said Denis O’Brien, PECO president and CEO.  “These settlements will help us continue to provide reliable gas and electric service and quality customer care while also managing the impact of these changes to our customers.”

The settlement reflects a $20 million overall increase in natural gas delivery rates and a $225 million increase in electric delivery rates.  Specifically, with these increases PECO will:

• Continue to invest in our electric and natural gas delivery systems – replacing equipment, upgrading infrastructure and investing in new technology.  We plan to invest about $1.7 billion in our electric delivery system and $380 million in our natural gas delivery system during the next 5 years – ensuring reliable service to customers and employing thousands of people in our regional workforce.
• Continue to improve customer service, and expand our natural gas energy efficiency programs.
• Increase assistance to low-income customers by providing more tailored assistance programs and limiting total program costs.

Based on these settlements and electricity purchases to date, PECO now estimates that total prices for residential electric customers will increase less than 10 percent.  For the typical residential electric customer, the increase will be less than $8 per month.  The actual prices that electric customers will pay beginning Jan. 1, 2011 will be determined following PECO’s final electricity purchases this fall.

Costs for our residential natural gas customers are now expected to increase about 8 percent.  For the typical residential natural gas customer, the increase will be less than $8 per month.  The final prices that natural gas customers will pay beginning Jan. 1, 2011 also will be determined later this fall.

This is PECO’s first electric delivery rate request since 1989 and only the second natural gas delivery rate request in 23 years.  The delivery charges are the portion of the bill that covers PECO’s costs to deliver electricity and natural gas to customers.  They represent about one-third of a customer’s overall bill.

The commodity charges, or the electricity and natural gas used by customers, make up the remaining two-thirds of a customer’s total bill.  These charges are passed along directly to customers at exactly the price that PECO pays. 

Customers can offset this increase by taking simple steps to use less energy.  For example, just by replacing five incandescent bulbs with CFLs and raising the thermostat two degrees during the summer customers can save more than $8 a month – totally offsetting the expected increase.

PECO Smart Ideas, our full suite of energy-efficiency programs, has products and programs to help save energy and money:

• PECO has discounted CFL bulbs at more than 700 area stores.  These light bulbs use up to 75 percent less energy and last about 10 times longer than traditional light bulbs.
• PECO is paying rebates to customers who purchase qualified energy-efficient electric appliances, and upgrade to high efficiency natural gas heaters and water heaters.
• PECO is paying incentives to customers who allow us to pick up older, energy-wasting refrigerators and freezers.
• PECO has developed an online home energy audit to help customers understand how they currently use energy and how they can use less. 

PECO also offers payment options, like Budget Billing, to help customers manage their bills.  Budget Billing divides energy costs evenly throughout the year.  Customers also can potentially save money by choosing a competitive electric generation supplier.  To learn more about shopping for a competitive electric generation supplier visit the PAPUC’s website at www.papowerswitch.com.

Programs also are available to help customers who may be struggling to pay their energy bills.  Through PECO’s Universal Services programs, we assist more than 130,000 low-income customers each year with reduced rates, free energy-efficiency improvements and Federal Low-Income Home Energy Assistance Program funding.

As part of the PAPUC review process, the proposed settlements will be reviewed by two administrative law judges prior to final PAPUC ruling later this year.  For more information about upcoming changes in our energy market and how PECO can help, visit www.pecoanswers.com.

###

Based in Philadelphia, PECO is an electric and natural gas utility subsidiary of Exelon Corporation (NYSE: EXC). PECO serves 1.6 million electric and 485,000 natural gas customers in southeastern Pennsylvania and employs about 2,400 people in the region. PECO delivered 83.7 billion cubic feet of natural gas and 39.4 billion kilowatt-hours of electricity in 2008.  Founded in 1881, PECO is one of the Greater Philadelphia Region's most active corporate citizens, providing leadership, volunteer and financial support to numerous arts and culture, education, environmental, economic development and community programs and organizations.

A home inspection is of primary importance because it allows you to obtain an unbiased professional assessment of all the components of the property. It is a step necessary for you to decide if you will stay with your original offer, renegotiate based on documented issues and needed repairs, or back away from the purchase of that piece of Chester County real estate altogether.

Selecting a qualified inspector is vital. Your realtor can provide you with the names of reputable firms, or you can go online to research services offered and credentials. Specific information you should know about the inspector and the inspection process included the following:

      1. Credentials and background: Is he/she licensed in your state? Is he affiliated with any respected organizations such as the American Society of Home Inspectors? Membership in these groups requires that inspectors follow strict guidelines about ethics and continuing education. Be sure to inquire about experience and training. A construction-based background is a plus, as is attending a college with an emphasis on construction or attending a home inspection school.

    2. Fees: Although you don’t want to spend money unnecessarily, this is not a place to scrimp. Your house purchase is a very large investment, and you need to know as much as you can about it. Do remember that money spent on a quality inspection now will be returned to you by avoiding unexpected costly repairs in the future.  The price of an average inspection varies depending on the age, size, and condition of the house. Some inspectors base their fees on the list price of the Chester County real estate. Get estimates from all you contact, but don’t assume that the lowest priced is the best choice for you.

    3. Type of report: Some inspectors use computer generated onsite reporting, some a handwritten checklist, and others a computer generated report you won’t receive for few days. By and large, the last option is in your best interests since it gives the inspector time to review his findings, look up any questions he may have, and send you a detailed, descriptive report. He should also be able to provide you with pictures of the problem areas. Feel free to ask him for a sample report.

    4. The actual inspection: Make sure that you will be allowed to accompany the inspector and ask questions as he checks out the house and grounds. This is a good time for you to become familiar with the home‘s inner workings, locate shut-off valve and breaker panels, and pick up tips on operating and maintaining different systems.

    A thorough home inspection of an average home should take between 2 ½ and 4 hours and should cover both internal and external components of the property. Major items examined should include:

            a. Siding, foundation, brickwork, etc.

            b. Insulation

            c. Deck, roof, garage

            d. Attic/basement

            e. Driveway and walkways

            f. Electrical system

            g. Plumbing

            h. Doors and windows

            i. Heater, air conditioner, and hot water heater

            j. Ceilings, walls, and moldings

Having your Chester County real estate inspected will allow you to make an informed decision about the purchase of a house and will provide you with both essential knowledge and peace of mind.

Congress recently extended the home buyer tax credit closing date to September 30. The measure would give more time to thousands of qualified home purchasers, who through no fault of their own are unable to meet the current closing deadline of June 30; however the measure would not extend the deadline for home buyers to qualify for the tax credit. The deadline extension applies only to homebuyers who have ratified contracts in place as of April 30, 2010, but could not close before June 30.

The April 30 deadline created a surge of home sales in April. Let’s take a look at the local Chester County real estate market for June.

Downingtown Area School District saw a 8% increase in sold listings in June 2010, compared to June 2009.  Pending listings have decreased by  36% and active listings have decreased by 29%.  There was a 2% increase in average sales price to $339,082, while market times decreased by 8 days.

In the West Chester Area School District, there was an increase in Sold listings  of 27% when compared to June 2009.  While pending sales decreased by 31% in June 2010 when compared to June 2009.  Average sales price increased by 4% to $375,664 and active listings decreased by 9% from June 2009.  Market times have decreased by 7 days.

Sold listing have increased by 11% in the Coatesville Area School District in June 2010 when compared to June 2009.  The average sales price increased by 2% to $233,785 and active listings decreased by 15%.  The number of pending home sales decreased by 60% when compared to June 2009, while homes were on the market on average 23 days more than in June 2009.

A word of caution...markets within a school district can be very different from neighborhood to neighborhood. For the latest Chester County PA real estate market conditions in your neighborhood, please call me at 610-564-SCOT or visit ChesterCountyHomeSource.com.

Because of the economic downfall and the increased number of foreclosures, the FHA, in an effort to strengthen its capital reserves, as made significant changes to its policies, effective this summer. Basically, the changes involve insurance premiums, FICO scores (credit rating), seller concessions, and increased enforcement of lenders.

Mortgage insurance premiums: The previous upfront premium payment of 1.75% of the loan amount has been raised to 2.25%. The option of financing this amount into the loan is still available. In addition, the FHA has requested the authority to increase the annual MIP from its current .55% in an effort to reduce the upfront MIP costs.

FICO scores: The new minimum score for those with a 3.5% down payment has increased to 620 (up from 500).

Seller concessions: In previous years the seller could pay up to 6% of the buyer’s closing costs and fees. It is proposed that amount be lowered to 3%.

Lender enforcement: The FHA will make public (on the HUD website) lender performance; increase its monitoring of lender performance and adherence to the new guidelines; and pursue further legislation to increase its enforcement capabilities.

Additionally, in November 2009 new rules affecting the insuring of the condominium segment of Chester County real estate became effective. FHA insurance availably will be subject to location restrictions based on noise concerns, safety, flood possibility, and wetland disturbance.

                Condo-based changes include:

                1. Increase the loan limits.

                2. Eliminate the practice of separating condo loans from single-family home loans.

                3. Set the owner-occupation requirement at 50%.

                4. Reduce the unit presale requirement from 50% to 30%

                5. Limit the number of FHA loans in any on building to 30%

                6. Cap the number of units in any one building which can be owned by one investor at 10%.

                7. Replace the “spot check” approval process with a more streamlined one when a condo project has not been previously approved

                This is a list of approved condos. 

Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the National Association of Realtors®.

The Pending Home Sales Index rose 6.0 percent to 110.9 based on sales contracts signed in April. This figure is up from 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6 and reflects increases of 7.1 percent in March and 8.3 percent in February.

Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects sales contracts and not closings, which usually occur with a lag time of one or two months.

Let's look at May real estate sales to see how the local Chester County market is faring.

Downingtown Area School District saw a 14% increase in sold listings in May 2010, compared to May 2009.  Pending listings have decreased by  56% and active listings have decreased by 45%.  There was a 13% decreased in average sales price to $292,054, while market times decreased by 34 days.

In the West Chester Area School District, there was an increase in Sold listings  of 29% when compared to May 2009.  While pending sales decreased by 32% in May 2010 when compared to May 2009.  Average sales price increased by 6% to $342,317 and active listings decreased by 8% from May 2009.  Market times have decreased by 31 days.

Sold listing have increased by 28% in the Coatesville Area School District in May 2010 when compared to May 2009.  The average sales price increased by 8% to $235,468 and active listings decreased by 7%.  The number of pending home sales decreased by 33% when compared to May 2009, while homes were on the market on average 6 days more than in May 2009.

A word of caution...markets within a school district can be very different from neighborhood to neighborhood. For the latest Chester County PA real estate market conditions in your neighborhood, please call me at 610-564-SCOT or visit ChesterCountyHomeSource.com.

1. Selecting a property. First decide on a location and the type of property you are interested in. You might also consider proximity to good schools, public services, shopping centers, highways, etc.
   
   Another decision will deal with the type of property you want to own--a single family residence, a multi-family unit, or a vacation rental home. Discuss with you realtor and tax advisor the pros and cons of each to decide which will be most advantageous for you.
2. Examining your finances. In addition to a monthly mortgage payment, investment property expenses can also include taxes, property management fees, utilities, insurance for fire and floods, repair and maintenance costs, condo fees, and periods of vacancy. Be prepared to have cash on hand for a 20% to 30% down payment (or investigate other options). A helpful tool to assist you in calculating costs and probable financial outcomes is www.goodmortgage.com.
   
   Also keep in mind that long term (5 to 10 years) ownership is usually best for the average investment. The shorter the length of time you hold the property, the greater the risk.
3. Repairing and updating. Some investment properties require initial repairs/renovation ranging from cosmetic to structural. Unless you have the time and expertise needed to make such repairs, look for skilled professional to do the work for you. Keep in mind that most renters are looking for a good location and a home that is clean and in good working order; granite counter tops and top of the line appliances are usually neither necessary nor cost effective.
4. Acting as a landlord. Being a successful absentee owner of Virginia Beach real estate will require diligence and responsibility. Carefully screen all potential tenants. Run a credit check and find out from prior landlords if they were good tenants who paid the rent on time, treated the property with care, and were considerate neighbors. The more selective you are, the more successful your lessor/lessee relations will be.

As a landlord you have both rights and responsibilities, and you need to be mindful of each. The Pennsylvania Landlord and Tenant Act covers rental agreements, remedy provisions, application fees, security deposits, and a wealth of other information and laws relating to the rights and responsibilities of both the landlord and the tenant.

Learn more about investing in Chester County real estate.

Search all Chester County real estate and homes for sale.

Basic terminology;

    Fixed rate--The interest rates do not change during the life of the loan, thus allowing you to know the amount of your payments.

    Adjustable rate (ARM)--the interest rate is tied to certain indexes plus a margin and can fluctuate up or down, thus affecting each payment,

    Step--the interest rate and monthly payment remain the same for a specified period of time. After that the interest will change to the prevailing rate and will remain there for the duration of the loan.

    Balloon--a loan payment that expands after a certain amount of time. Basically it functions similarly to a fixed rate mortgage in the earlier months/years with a delayed steep increase at the end,

The following information, courtesy of Mortgages.Interest.com, outlines the type of mortgage, the loan characteristics, and the situations most appropriate for each one. If, for instance, you plan to live in your Chester County real estate more than 10 years and desire stability in payment amounts, then a fixed rate mortgage is for you. If, however, your finances are currently strained, but you know that in 5 to 10 years your monetary situation will improve or that you will most likely move within 10 years, then an ARM or balloon mortgage may be better for you. Being familiar with these options allows you to discuss them intelligently with your real estate agent and/or lender and then select the type which best fits your circumstances.

 Fixed rate mortgage (30, 20, 15, 10 years)*

• Interest rate & monthly payment remain the same for the entire term of the loan

• plan to live in property more than 10 years

• like total payment stability

0/1 year adjustable rate mortgage

• Interest rate & monthly payment remain the same for 10 years

• Starting the 11th year, interest rate adjusted every year, so payment is subject to change every year for remainder of loan

• plan to live in property more than 10 years

• like initial payment stability, can accept later changes OR

• plan to move within 10 years

•   want loan to remain in force in case plans change

7/23 (2-Step) or '30 due in 7' mortgage

Interest rate & monthly payment remain the same for 7 years

• Conversion option: On the 8th year, interest rate adjusted to reflect prevailing interest rates, resulting payment will remain the same for remainder of loan

• plan to live in property more than 10 years

• can tolerate one payment adjustment OR

• plan to move within 7 years

• want to remain in force in case plans change

7/1 year adjustable rate mortgage

• Interest rate & monthly payment remain the same for 7 years

• Starting the 8th year, interest rate adjusted every year, so payment is subject to change every year for remainder of the loan

• plan to live in property more than 7 years

• like initial payment stability, can accept later changes OR

• plan to move within 7 years

• want loan to remain in force in case plans change

7 year balloon mortgage

• Interest rate & monthly payment remain the same for 7 years

• At the end of 7 years, loan is due in full. Borrower must refinance into new loan at prevailing interest rates

• plan to live in property more than 7 years

• are willing to refinance at prevailing market rates OR

• plan to move within 7 years

• like payment stability

In addition, there are variations of the ARM, step, and balloon mortgages which differ primarily in the duration of the loan and of the planned residency.

Another good source of information for first-time Chester County home buyers is the Department of Housing and Urban Development (HUD), an agency which oversees FHA loans. This type of loan is particularly useful if you have little money for a down payment, less than great credit, or large monthly bills. An FHA loan requires as little as 3% down (and it can be a gift from a relative or friend). In terms of your credit rating, the FHA is primarily concerned that for the past two years you have paid bills in a timely manner and have been steadily employed. With FHA you have to wait only two years after declaring bankruptcy, and your debit-to-credit ratio can be higher than for a conventional loan. You can qualify for an FHA loan if your monthly payments are no more than 43% of your income, and, as with conventional loans, you can choose from many types.

Of course, there are some negatives to consider before taking on an FHA loan. Interest rates generally run about 1/8 of a percentage point higher than conventional rates, but the real disadvantage of an FHA loan is that the borrower must pay an up-front insurance premium of 1.75% of the mortgage if the down payment is less than 20%. This cost can, however, be added to your total loan amount.

So there you have it--an easy-to-understand guide to mortgage types. As always, you should feel free to contact me anytime with questions. I am glad to recommend a number of outstanding mortgage lenders if you are interested in talking with one.

Home Sales Surge in Response to Tax Credit

Winter is the perfect time to plan a backyard wildlife habitat for your Chester County PA home and design a garden that provides essential kinds of wildlife, such as birds, butterflies, amphibians, and small mammals. Because natural environments are quickly disappearing due to rapid development, greener gardening techniques which are mindful of the ecosystems and needs of native creatures have become essential.

There are many online sites which provide detailed instructions for turning your property into a mini-sanctuary for wildlife, but the initial steps are relatively simple and include providing food, water, cover, and space.

Provide Food for Wildlife

Everyone needs to eat! Planting native herbs, grasses, shrubs, and trees is the easiest way to provide the foliage, nectar, pollen, berries, seeds and nuts that many species of wildlife require to survive and thrive. You can also incorporate supplemental feeders and food sources.

Supply Water for Wildlife

Wildlife need clean water sources for many purposes, including drinking, bathing and reproduction. Water sources may include natural features such as ponds, lakes, rivers, and wetlands; or human-made features such as bird baths (change water 2 to 3 times per week), puddling areas for butterflies, installed ponds, or rain gardens.

Create Cover for Wildlife

Wildlife require places to hide in order to feel safe from people, predators, and inclement weather. Use things like native flowers, leaves, shrubs, thickets, brush piles or even dead trees. Remember to utilize both the horizontal and vertical spaces in your yard.

Give Wildlife a Place to Raise Their Young

Wildlife need a sheltered place to raise their offspring. Many places for cover can double as locations where wildlife can raise young, from wildflower meadows and bushes where many butterflies and moths lay their eggs to caves where bats roost and form colonies.

Green gardening for your Chester County PA home targets a reduction in water and chemical use, a decrease in the size of the area covered with turf grass, and generous use of mulch. How you maintain your garden or landscape (either formal or casual) can have important positive or negative effects on the health of the soil, air, water and vegetation that we all use! Here are some sustainable gardening techniques that you will help you conserve and protect our natural resources.

Mulching

Mulch helps keep water in the soil and available to the plant, rather than evaporating into the air. This can help reduce water consumption. As mulch breaks down, it provides nutrients to the soil, which can help reduce or eliminate the need for additional fertilizers. Be sure to use mulches that are from sustainable forestry practices (not Cypress tree mulch) and are free from pests and diseases. Your cooperative extension office can help you find sources of mulch in your local community.

Reducing Lawn Areas

Grass lawns often require chemicals and frequent maintenance. Gas-powered lawnmowers produce high amounts of greenhouse gases, which contribute to the air pollution that causes global warming. Since lawns are often made of only a few types of plants that most animals do not consume, they do not provide a lot of value for wildlife. Replacing grass lawns with native wildflowers, bushes, and trees provides the food, shelter, and cover that help to maintain healthy, natural ecosystems and reduces your time and labor working on the lawn!

Xeriscaping

Xeriscaping is an approach to landscaping that minimizes outdoor water use while maintaining soil integrity through the use of native, drought-tolerant plants. This is a common practice in drier areas, where water supplies and water quality are in very short supply.

Removing Invasives and Restoring Native Plant Communities

Native plants are better for the environment than exotic plants, generally requiring less fertilizer and other additives, less water, and less effort in pest control. They are especially important to native wildlife, such as pollinators, that may have coevolved with a particular species. Pollinators often rely on a certain type of flower as a source of food, while the flower depends on the pollinator to transport its pollen to other flowers for reproduction. When non-native or exotic plants are used, they often upset the delicate balance of a local ecosystem and sometimes even out-compete native species (hence the term invasive) to the point of extinction. Wildlife benefit more when native plant communities remain intact or are restored to their natural habitats, thus providing the best source of food for wildlife.

How to get started? Inventory what is presently in the backyard of your Chester County PA home and consider what can stay, what should go, and what is needed. Locate a list of plants and trees that are native to your area. Contact your local nurseries or agriculture extension office or search for assistance on line. Two informative sites are National Wildlife Federation and Wildlife Habitat. Also, give yourself a pat on the back for helping to restore natural habitats--and look forward to spring!

Owning a home is its own reward, but homeownership can also bring rewards at tax time. This year is especially beneficial for people who are in the market to buy a home, thanks to the $8,000 first-time buyer credit and the $6,500 tax credit for repeat buyers.

Current homeowners can benefit, as well. Tax credits are available for owners who improve the energy efficiency of their home, including replacing exterior windows, skylights and doors and installing efficient heating and air conditioning systems. Certain home improvements may qualify for as much as 30 percent of the project cost, up to $1,500.

Homeowners also enjoy a mortgage interest deduction; allowing them to deduct all the interest paid on up to $1 million in mortgage debt. If you bought a home in the past year, be sure to provide a copy of your HUD-1 statement to your tax preparer. The interest you paid at closing is not reflected in your year-end mortgage statement. Points and other closing costs may also be tax deductible.

Many housing markets were affected by an extremely harsh weather in February. Take a look at what February looked like in our local market:

Let's look at February real estate sales to see how the buyers are taking advantage of these tax benefits in Chester County.

Downingtown Area School District saw a 7% increase in pending sales in February 2010, compared to February 2009.  Sold listings have increased by 19% and active listings have increased by 16%.  There was a 15% increase in average sales price to $349,711, while market times decreased by 19 days.

In the West Chester Area School District, there was a decrease in active listings  of 21% when compared to February 2009.  While pending sales decreased by 3% in February 2010 when compared to February 2009.  Average sales price increased by 5% to $348,806 and sold listings decreased by 31% from February 2009.  Market times increased by 16 days.

Pending sales have remained consistant in the Coatesville Area School District in February 2010 when compared to February 2009.  The average sales price decreased by 10% to $185,725 and active listings decreased by 11%.  The number of homes sold decreased by 19% when compared to February 2009, while homes were on the market on average 3 days more than in February 2009.

A word of caution...markets within a school district can be very different from neighborhood to neighborhood. For the latest Chester County PA real estate market conditions in your neighborhood, please call me at 610-564-SCOT or visit ChesterCountyHomeSource.com.

Here are a number of money-saving ways to reduce the amount of tax you owe--or even increase the amount of your refund!

First, let me explain the difference between a tax deduction and a tax credit.  A tax deduction reduces (adjusts) your taxable income. A tax credit reduces your tax dollar for dollar. You do not have to itemize deductions to claim a tax credit.  

Tax Deductions for Primary Residence

Tax deductions on your primary residence include:

• Interest paid on your mortgage
• Refinancing points paid in 2009
• Real estate taxes
• Interest on major home improvement loans
• Mortgage insurance premiums
• Home improvements required for medical care
• Any sales commission, legal fees, or closing costs associated with the sale of Chester County real estate in 2009

Home Energy Efficiency Improvements Tax Credits

Consumers who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in existing homes can receive a tax credit for 30% of the cost, up to $1,500, for improvements "placed in service" starting January 1, 2009, through December 31, 2010. See Federal Tax Credits for Energy Efficiency for a complete summary of energy efficiency tax credits available to consumers.

Residential Renewable Energy Tax Credits

Consumers who install solar energy systems (including solar water heating and solar electric systems), small wind systems, geothermal heat pumps, and residential fuel cell and microturbine systems can receive a 30% tax credit for systems placed in service before December 31, 2016; the previous tax credit cap no longer applies. Details are explained here.

Home Buyer Tax Credit

• First-time buyers who have not owned a home in the last three years are eligible for a credit of 10% of the purchase price, not to exceed $800,000. Ownership of a vacation home or rental property not used as a prime residence does not disqualify a buyer as a first-timer.
• Current home owners, or those who have owned and lived in a principal residence for at least 5 consecutive years of the last 8, may qualify for a credit of up to $6500.

Home sales surged in the fourth quarter of 2009 with many areas seeing double digit gains according to the National Association of Realtors. Total existing-home sales (single-family and condo) jumped 13.9 percent above the third quarter and 27.2 percent above the fourth quarter of 2008. Distressed property sales accounted for 32 percent of the fourth quarter transactions, down from 37 percent from 2008.

Lawrence Yun , NAR chief economist, said the first-time home buyer tax credit, combined with record low interest rates, played a dominant role in fourth quarter sales. Yun went on to say, “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”

Let's look at January Chester County real estate sales to see how the housing recovery is progressing locally.

Chester County Real Estate Sales Statistics - Janaury 2010

Downingtown Area School District saw a 16% increase in pending sales in January 2010, compared to January 2009.  Sold listings have increased by 31% and active listings have decreased by 8%.  There was a 17% decrease in average sales price to $337,836, while market times decreased by 2 days.

In the West Chester Area School District, there was an increase in active listings  of 19% when compared to January 2009.  While pending sales increased by 16% in January 2010 when compared to January 2009.  Average sales price decreased by 13% to 359,445 and sold listings increased by 43% from January 2009.  Market times decreased by 21 days.

Pending sales have increased by 35% in the Coatesville Area School District in January 2010.  The average sales price decreased by 4% to $203,082 and active listings decreased by 15%.  The number of homes sold decreased by 11% when compared to January 2009, while homes were on the market on average 38 days less than in January 2009.

A word of caution...markets within a school district can be very different from neighborhood to neighborhood. For the latest Chester County PA real estate market conditions in your neighborhood, please call me at 610-564-SCOT or visit ChesterCountyHomeSource.com.

Basic terminology;

    Fixed rate--The interest rates do not change during the life of the loan, thus allowing you to know the amount of your payments.

    Adjustable rate (ARM)--the interest rate is tied to certain indexes plus a margin and can fluctuate up or down, thus affecting each payment,

    Step--the interest rate and monthly payment remain the same for a specified period of time. After that the interest will change to the prevailing rate and will remain there for the duration of the loan.

    Balloon--a loan payment that expands after a certain amount of time. Basically it functions similarly to a fixed rate mortgage in the earlier months/years with a delayed steep increase at the end,

The following information, courtesy of Mortgages.Interest.com, outlines the type of mortgage, the loan characteristics, and the situations most appropriate for each one. If, for instance, you plan to live in your Chester County real estate more than 10 years and desire stability in payment amounts, then a fixed rate mortgage is for you. If, however, your finances are currently strained, but you know that in 5 to 10 years your monetary situation will improve or that you will most likely move within 10 years, then an ARM or balloon mortgage may be better for you. Being familiar with these options allows you to discuss them intelligently with your real estate agent and/or lender and then select the type which best fits your circumstances.

 Fixed rate mortgage (30, 20, 15, 10 years)*

*Interest rate & monthly payment remain the same for the entire term of the loan
*plan to live in property more than 10 years
*like total payment stability

0/1 year adjustable rate mortgage1

*Interest rate & monthly payment remain the same for 10 years
*Starting the 11th year, interest rate adjusted every year, so payment is subject to change every year for remainder of loan
*plan to live in property more than 10 years
*like initial payment stability, can accept later changes OR
*plan to move within 10 years
 *want loan to remain in force in case plans change

7/23 (2-Step) or '30 due in 7' mortgage

Interest rate & monthly payment remain the same for 7 years
*Conversion option: On the 8th year, interest rate adjusted to reflect prevailing interest rates, resulting payment will remain the same for remainder of loan
*plan to live in property more than 10 years
*can tolerate one payment adjustment OR
*plan to move within 7 years
*want to remain in force in case plans change

7/1 year adjustable rate mortgage

*Interest rate & monthly payment remain the same for 7 years
*Starting the 8th year, interest rate adjusted every year, so payment is subject to change every year for remainder of the loan
*plan to live in property more than 7 years
*like initial payment stability, can accept later changes OR
*plan to move within 7 years
*want loan to remain in force in case plans change

7 year balloon mortgage

*Interest rate & monthly payment remain the same for 7 years
*At the end of 7 years, loan is due in full. Borrower must refinance into new loan at prevailing interest rates
*plan to live in property more than 7 years
*are willing to refinance at prevailing market rates OR
*plan to move within 7 years
*like payment stability

In addition, there are variations of the ARM, step, and balloon mortgages which differ primarily in the duration of the loan and of the planned residency.

Another good source of information for first-time Chester County home buyers is the Department of Housing and Urban Development (HUD), an agency which oversees FHA loans. This type of loan is particularly useful if you have little money for a down payment, less than great credit, or large monthly bills. An FHA loan requires as little as 3% down (and it can be a gift from a relative or friend). In terms of your credit rating, the FHA is primarily concerned that for the past two years you have paid bills in a timely manner and have been steadily employed. With FHA you have to wait only two years after declaring bankruptcy, and your debit-to-credit ratio can be higher than for a conventional loan. You can qualify for an FHA loan if your monthly payments are no more than 43% of your income, and, as with conventional loans, you can choose from many types.

Of course, there are some negatives to consider before taking on an FHA loan. Interest rates generally run about 1/8 of a percentage point higher than conventional rates, but the real disadvantage of an FHA loan is that the borrower must pay an up-front insurance premium of 1.75% of the mortgage if the down payment is less than 20%. This cost can, however, be added to your total loan amount.

So there you have it--an easy-to-understand guide to mortgage types. As always, you should feel free to contact me anytime with questions. I am glad to recommend a number of outstanding mortgage lenders if you are interested in talking with one.

Prices on foreclosed properties are often thousands below market value. Add to this savings getting closing costs paid or getting new appliances and buying a foreclosure becomes an even better deal. Add the home buyer tax credit and buying a foreclosed home becomes a no brainer.

Interested in buying a foreclosed home? We are glad to provide you with a list of foreclosures and guide you though the home buying process. Contact us today!

Basic facts:

Changes: Originally slated to end in November 2009, the credit deadline has been extended to April 30, 2010. If you have a binding, signed contract and settle on a Chester County home before July 30, 2010, you are also eligible.

First-time buyers are those who have not owned a home in the last three years. They are eligible for a credit of 10% of the purchase price (not to exceed $800,000), up to $8000. Ownership of a vacation home or rental property not used as a prime residence does not disqualify a buyer as a first-timer.

Repeat buyers, or those who have owned and lived in a principal residence for at least 5 consecutive years of the last 8, may qualify for a credit of up to $6500.

Income levels have been increased to $125,000 for individuals and $225,000 for couples.

Military exception: For an active-duty member of the U.S. military serving an extended tour (90+ days) more than 50 miles from home, the deadline is April 30th   (or June 30) 2011.

Applying for the credit is easy. Buyers purchasing in 2010 will have the option to claim the credit on their 2009 (by filing an amended return) or 2010 income tax return. Applicants will use the new IRS form 5405 and attach copies of their HUD settlement form.

Important notes:

• Applicants must be 18 years of age at time of settlement.
• Principal residences may include single family homes, condos, townhouses, co-ops, and duplexes.
• For married couples, the homeownership history of  both parties must qualify for the credit.
• Recipients of the credit must own and live in the purchased home for at least 3 years or face repayment of the credit amount.
• Your Chester County home may not be purchased from any family member.

Remember that a tax credit is far more advantageous than a simple deduction as it provides a dollar-for-dollar reduction in what a taxpayer owes. If the amount of  the credit exceeds the amount owed, a refund will be issued.

If you have specific questions or need additional information, contact a tax professional or the Internal Revenue Service at 1-800-829-1040 or www.irs.gov.  

Enjoy the new year in your new Chester County home!

Search all Chester County homes for sale. 

Scott Darling of RE/MAX Action Associates in Exton, PA has earned the prestigious Certified Distressed Property Expert^® (CDPE) designation, having completed extensive training in foreclosure avoidance, with a particular emphasis on short sales. At a time when millions of homeowners are struggling with the possibility of foreclosure, the skills and education accumulated by Darling will help benefit Chester County area residents and communities. 

Short sales allow the distressed homeowner to repay the mortgage at the price that the home sells for, even if it is lower than what is owed on the property. With plummeting property values, this can save many people from foreclosure and even bankruptcy. More and more lenders are willing to consider short sales because they are much less costly than foreclosures. 

Today, more than 13 percent of homeowners are delinquent on their mortgage or in the foreclosure process. This is occurring across all price ranges, and the fastest-growing category of homes in foreclosure is the luxury home market. 

“The CDPE designation has been invaluable as I work with homeowners and lenders on complicated short sales,” said Darling. “It is so rewarding to be able to help families save their homes from foreclosure.” 

Alex Charfen, co-founder and CEO of the Distressed Property Institute in Austin, Texas, said that agents such as Darling with the CDPE Designation have valuable perspective on the market, and training in short sales that can offer homeowners real alternatives to foreclosure, which can be devastating to credit ratings. 

“These experts better understand market conditions than the average agent, and can help sellers through the complications of foreclosure avoidance,” he said. 

The Distressed Property Institute provides live and online courses to train real estate professionals how to help homeowners in distress, with a particular emphasis on handling short sales. 

“Our goal is to help as many homeowners as possible, by educating as many real estate professionals as possible,” Charfen said. “Darling has demonstrated a commitment to the struggling homeowners, and will provide much-needed assistance in stabilizing the community.”

Are you or someone you know behind on mortgage payments? Don't delay! Contact Scott for a personal consultation. He may be able to help you save your home and your family!

Home Buyer Tax Credit Expansion and Extension  

• The $8,000 tax credit will be extended and available for first-time home buyers through May 1, 2010.
• A new $6,500 tax credit will be available for repeat buyers who purchase between December 1, 2009, and May 1, 2010. To qualify, buyers must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years.
• Prospective buyers with binding contracts in place as of April 30, 2010, will be allowed an additional 60 days to complete the transaction.
• Income limits are expanded to $125,000 on a single return and $225,000 on a joint return.
• Limitation on the cost of a purchased home is $800,000. 

If you know anyone looking to buy their first home at a time when prices and interest rates are still down, or if you are thinking of buying another home and getting the new $6,500 credit please contact me today.

Location is the one thing you can't change about a property. Location is about being in a desirable neighborhood and close to (but not necessarily next to) valued amenities or planned ones -- employment opportunities, good schools, shopping, public transportation, major highways, parks and recreation, cultural activities, etc. A good location is also about not being on a high-traffic street, near noise, next to run-down properties, in a flood plain, etc.

Structural integrity:

Make sure the Chester County home you buy doesn't come with a cracked foundation, pest infestation, drainage issues, mold or other problems that may be difficult and expensive to correct. A home inspection will help you determine if these items are an issue.

Size:

The size of a home is important, especially if you're just starting to raise a family. You don't want to buy a home that is perfect for the two of you, knowing you want children in the next couple of years and making the home you buy too small. 

It's easier and less expensive to reconfigure existing space (turning a basement into a family room or a garage into a bedroom, for example) than to build an addition. And, you can only add that addition if yard size and zoning restrictions allow.

Bathrooms:

It is significantly more cost effective to remodel a bathroom than to add one, so look for a home that has the number of bathrooms you really want.

Bedrooms:

Find a home with at least the minimum number of bedrooms you require, but with space (perhaps an attic or enclosed porch) that could eventually be converted to a bedroom should you need another one in the future.

Cosmetics:

Although a neon pink bathroom might make you cringe, that's exactly the type of problem you can easily and inexpensively correct. You could repaint it yourself for around $50, or hire someone else to do it for a few hundred more.

Other items:

You can change -- or add -- over time without too much effort or cost: carpeting, landscaping, appliances, hardware and fixtures, lighting, countertops, cabinets, upgraded doors, vanities, closet space, siding, windows and lots more.

Buy a Chester County home with "good bones" in a good location. A home you're likely to enjoy living in for many years to come -- improving as you go. When you get ready to sell, you'll have exactly what other buyers are looking for!

Learn more about buying a Chester County home by visiting ChesterCountyHomeSource.com.

Search all Chester County homes for sale.

Calculating Capital Gains

(+) PURCHASE PRICE - Price paid for property

(+) COST OF PURCHASE - Transfer fees, attorney fees, inspections

(+) COST OF SALE - Repairs, commissions, attorney fees, inspections

(+) COST OF IMPROVEMENT - Room additions, deck, for example, though not replacing existing

(=) ADJUSTED COST BASIS OF YOUR HOME

(-) AMOUNT YOU SELL YOUR HOME

(=) CAPITAL GAIN 

A Special Real Estate Exemption for Capital Gains
Even though the above calculation may indicate you owe Capital Gains, there is a special real estate exemption. Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a Chester County home is exempt from taxation if you meet the following criteria: 

• You have lived in the home as your principal residence for two out of the last five years.
   
• You have not sold or exchanged another home during the two years preceding the sale. 

NOTE: As of 2003, you may also qualify for this exemption if you meet what the IRS calls "unforeseen circumstances" such as job loss, divorce, or family medical emergency. 

Learn more about selling your Chester County home by visiting ChesterCountyHomeSource.com.

Search all Chester County homes for sale. 

Always consult a tax attorney regarding current tax laws.

Myth: Checking a credit report can either damage or lower your score. A credit report can be conducted by you or someone like an employer as many times as desired with out having any impact on your credit score. Reviewing your credit report will never change your credit score. Just make sure that reports are retrieved through the bureaus or a legitimate score seller.

Myth: Age, sex, and income are factors that affect your score. None of this information plays a role in determining your score. A higher income may make it easier to pay off debts, but income and net worth have no impact of credit scores.   

Myth: A credit score can be destroyed by shopping for a loan. When seeking to extend credit, too many inquiries can have a negative impact your credit score. However, when several inquiries are made by the same type of lender with in a 14 day period they only count as one inquiry against your credit.

Myth: Your score can be hurt by credit card offers. When companies offer you their credit cards it does not have any affect on your score. Unless, your take advantage of all the offers and carelessly use all of the credit available. The number of credit cards a person manages does not matter. The important thing is maintain a low ratio of used to available credit.

Myth: Credit scores of married couples are shared. A credit score can only belong to one person, just as one person can only have one score. A married could does not share a credit score, but their scores could have an affect each others. When opening a joint account, the information accumulated from that account's activity will be reflected on both people's credit report. If all of the couple's accounts are joint, then their scores will be somewhat similar.

Myth: Closing unused accounts improves credit scores. Unused accounts most likely contain available credit, which is an important part of a credit score. Closing unused accounts removes available balances from the equation. This causes your ratio of used to available credit to increase, ultimately affecting your credit score.

Myth: Paying off bills is a quick way to boost credit. Over time, a good record of properly paying bills will improve credit. Credit reports reflect your long term history, scores do not change overnight.