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Refinancing: A Smart Move

Author: Hogan Willig

August 7th, 2014

Should I refinance my mortgage? This is a question many people ask. Luckily, there are a number of reasons why refinancing may be a smart financial move.

Refinancing a mortgage means paying off an existing loan and replacing it with a new one. The most common reason a person may look to refinance is to get a lower mortgage rate. It is important to pay attention to the current average rates in order to get the lowest rate possible. A homeowner may also refinance in order to shorten the term of their mortgage or convert from an adjustable-rate mortgage to a fixed-rate mortgage, or vice-versa. It is wise to consider refinancing a mortgage now, while the interest rates are near record lows.

A refinance is also a way to get cash in your pocket. This can be done by getting a mortgage on a paid-off house. Although this isn’t technically a refinance, it’s a similar idea. This is a great option for individuals who are mortgage-free and have thought about purchasing a second home, an investment property, or starting a business. This way, they can cash out their first home and use the money to fund a larger purchase.

When used carefully, a refi can be a valuable tool to consolidate debt. Cash-out refis have dwindled since the housing bust began, however there are still a few. Many use these funds to pay off credit cards, lower overall debt service, and save money.

Some homeowners also decide to refinance in order to consolidate two mortgages.  The most common situation is to combine the first mortgage with the home equity line of credit. Although some home equity lines of credit often have low rates, many people want to refinance to get rid of them in fear the rate may jump to a greater percentage a few years down the road.

Lastly, refinancing may be a viable option for an individual attempting to address family matters. Divorces tend to lead to refis often as a means of removing the absent spouse from the note; thus, the other party is no longer legally responsible for the loan payments. Using a full service law firm like HoganWillig is a benefit in such a situation where a marital case and a real estate transaction are taking place simultaneously, because they can both be handled under one roof.

10 Summer Moving Tips to Make For a Breezy Transition

Author: Hogan Willig

July 21st, 2014

It’s summertime and the real estate market is in full swing. Are you getting the moving bug? When it’s time to make the big move, will you be ready? Read these 10 Summer Moving Tips to make sure you’re prepared.

  1. Decide whether or not your move is manageable to do yourself with a few helpers, or if you will need to hire a licensed moving company. To decide, take into account your lifestyle, household size, budget, and your time frame. If a moving company is what you decide, make sure to get at least 3 different quotes so you are sure to be getting the best deal.
  2. Plan to unpack BEFORE you pack. It is important to take photos of each room in your new house so you can get an idea of where you want your furniture, appliances, and decorations to go. This way, you can pack these items together. On moving day, list the major items that need to be assembled first so that you can begin enjoying your home sooner.
  3. Pack strategically. In the moving whirlwind, it’s easy to simply throw things in boxes and figure it out later. But trust us, if you take the time to go through years of accumulated belongings ahead of time, it will make for a much cleaner, clutter-free home. Keep in mind these options when choosing what to hang on to; donate to charity, give to a friend, recycle or trash.
  4. Schedule for your children. Moving with small children can add to the stress of moving day. Much more can be done if you don’t have to tend to and keep an eye on the young ones. Consider daycare or a babysitter so they aren’t underfoot.
  5. Consider your animals. Sometimes pet-owners forget the stress that can be put on animals, not to mention the constant in-and-out of visitors. It is smart to arrange for a pet-sitter or a daycare facility to keep your animals happy and healthy.
  6. Keep track of the small stuff. Oftentimes furniture and other objects need to be broken down to make transportation easier. Make sure to put small screws, nails, washers, etc., into small labeled baggies, instead of taping them to the furniture. This way you can personally carry these easy-to-lose items on moving day.
  7. Take pictures of your electronics. This tip will help keep your sanity later when trying to remember which plug gets connected where. This will prevent headaches when setting up technology in your new home.
  8. Consider getting full value insurance protection. If you are using a professional mover, this may cost a few more dollars, but it is worth it. Investing in full value protection means that any lost or damaged items will be repaired, replaced, or paid for at current market value. Accidents happen.
  9. Unpack one room at a time according to basic needs. It is a good idea to start with the kitchen and at least one bathroom. While packing, mark boxes “Basic Needs” for these rooms so it’s easy to find the initial items you’ll want handy on those first few days of being in your new home.
  10. Know your rights. If using a professional moving company, research your rights as a consumer. You may also enlist the help of The Better Business Bureau (BBB) if the moving company fails to live up to its promises. Do research before you decide on which company to hire. Read reviews and ask friends and family for suggestions and who to avoid.

At HoganWillig, we do our part in making sure your move goes as smoothly as possible. These 10 tips, along with the help of our large real estate team, will make sure you are happily in your new house in no time! Call us today at 716-636-7600.

Caution in Co-signing

Author: Hogan Willig

June 7th, 2014

Speaking from a recent graduate’s point of view, getting approved for a loan at my age, on your own is a tough venture. Many companies offer lower interest rates and better loan terms with a co-signer.  Co-signing is when a parent, or individual, agrees to guarantee a debt on the student’s behalf. This meaning that they will be responsible for making the loan payments if the student does not. Often times, this is the obvious answer. However, financial planners have cautioned millennials and their parents to think about the implications of co-signing first. Som Hanvanich, a financial planner in Kettering, Ohio, states, “Adult children should ask their parents to co-sign only if they absolutely need to, and parents should agree to co-sign only if they absolutely could afford to make the debt payments.”

There are a few things that should be discussed before becoming a co-signer. Before taking out a loan, the student should plan how the funds are going to be paid back. There should also be a plan in place if the student can’t make the loan payments.  Most importantly, parents are cautioned to consider other alternatives before settling on becoming a co-signer. It is important to keep in mind that once the student has a stable income, it is wise to remove the co-signer from the loan. Otherwise there may be severe consequences for the individual. A report by the Consumer Financial Protection Bureau, found that if the co-signer dies or files for bankruptcy, the student could be responsible for making the remaining balance of the loan payment in full. Co-signing can surely help a student in need, just be sure to consider other options and consequences before making the decision.

How to Draft a For Sale by Owner Contract

Author: Hogan Willig

May 24th, 2014

Spring is finally here! If you are selling your house without the aid of a real estate agent, here is some information you need to know. One of the most important things you will need to do is create a For Sale By Owner (FSBO) contract for you and the buyer. This document will explain the terms and conditions of the sale, as well as the obligations of each party. Here are a few things the contract must contain:

  1. It seems obvious, but make sure you state the names of the parties to the contract and note which one is the buyer and which one is the seller.
  2. Include a description of the property being conveyed. This should not only contain the street address, but also a legal description of the property, which can be found in the deed (the instrument that conveys legal ownership of the property from the seller to the buyer).
  3. Lay out the payment terms so that it is clear when the buyer will pay the seller and how much he or she will be paying. Also note what the purchase price is.
  4. List and describe any easements or other restrictions on the property. An easement occurs when the homeowner has granted another person the right to use a portion of the homeowner’s property. Common restrictions are those imposed by a homeowner’s association.
  5. Describe what property will be conveyed with the house. Usually, contracts will state that all plumbing, kitchen cabinets, heating, doors, windows, tool sheds, etc. will be included in the sale, while all furniture and kitchen appliances are excluded from the sale.
  6. List and describe all contingencies. These are conditions that must be satisfied before the contract is binding on the parties. The most common contingencies found in FSBO contracts are a buyer’s inspection contingency (where the buyer conditions closing on an acceptable home inspection) and a financing contingency (where the seller conditions the sale on the buyer obtaining a loan or other form of financing).
  7. Include required disclosures. New York law requires every seller to complete a standard property disclosure form, which can be accessed at https://www.dos.ny.gov/forms/licensing/1614-a.pdf. This contains 48 basic questions, such as: whether the property is located near a landfill, whether it is built upon a flood plain, and whether there is smoke or fire damage. In addition, if you are selling a house built before 1978, you must comply with the Residential Lead-Based Paint Hazard Reduction Act of 1992. This requires homeowners to disclose all known lead-based paint present in the house and provide the buyer with a pamphlet about lead-based paint by the EPA.
  8. One section should state that the seller will provide to the buyer, at least 15 calendar days before the closing date, a draft of the propose deed, abstract of title (this document describes a person’s legal relationship with the property), and an instrument survey map of the property.
  9. Include a section describing what will happen should one of the parties default. If the buyer defaults, the seller may retain the down payment. If the seller defaults, the purchaser may be entitled to specific performance of the contract.
  10. The contract should also provide for a period of time (called “escrow”) before closing, but after an agreement has been signed, so that inspections, disclosures, and financing may all be taken care of.
  11. Finally, there must be a signature block so that both parties can sign and have their signatures notarized.

Often times, people remodel and update their homes prior to putting them on the market. There are several steps you can take to protect yourself from unscrupulous home improvement contractors. First, you should research the permits and inspections that must be done before work can take place on your home. An easy way to do this is by contacting your local building and codes office. Second, make sure you obtain references from a potential contractor and verify the company is insured. That way, if a worker is injured on your property, you will not be liable. Finally, under New York law, all contractors are required to provide a written contract to the homeowner. Before signing, make sure this includes a timeline for the work to be done and a payment schedule.

Selling a home is a long and tedious process. Because complex legal issues often arise, it is always best to obtain legal advice before signing any contracts or agreement. If you are selling your home and wish to speak with an attorney, please contact the Real Estate department of HoganWillig at (716)636-7600.

Benefitting Service Members, Number of VA Loans Continues to Rise

April 16th, 2014

The number of VA-guaranteed loans reached a record high in the year 2013, with no signs of slowing down.  The steady increase represents an upward trajectory since the collapse of the housing market.  The Department of Veterans Affairs guaranteed approximately 630,000 mortgage loans in fiscal year 2013, about half of which were borrowed with the purpose of refinancing.

Reasons for the increase include not only historically low interest rates on the loans, but also the fact that service members view the loans as the most viable option compared to other alternatives in the tough lending climate of the last six years.  Another big incentive for first-time homeowners is that the VA loans do not require a down payment.  They also save buyers money by not requiring private mortgage insurance, which would otherwise add to monthly payments and thus, increase the cost to the borrower over the life of the loan.

To qualify, the loan must be for a primary residence, and the borrower must show enough monthly income after personal debts and housing costs to meet “residual income” levels, which are determined by the department.  However, this prudence pays off; according to the Mortgage Bankers Association, VA loans have yielded the lowest foreclosure rate for the last five years.

If you are a service member interested in becoming a homeowner, please feel free to contact the Real Estate Department of HoganWillig at (716) 636-7600.

Ensuring Proper Flood Insurance Coverage

Author: Hogan Willig

January 10th, 2014

Homeowners should be aware of the important regulations regarding flood insurance.  Any loan that is federally guaranteed for a residential property located within a Special Flood Hazard Area (SFHA) must have flood insurance coverage.  For homes located within these high-risk areas, there is a 1 in 4 chance of flooding over the duration of a 30-year mortgage.  It is important to be aware of this, as standard homeowners’ insurance policies do not cover losses due to flooding.  If you are unsure as to whether your home is located within a Special Flood Hazard Area, you can take a look at the maps on file with your local town building department.  For a general estimate, you can complete the “One Step Flood Risk Profile” here: http://www.floodsmart.gov/floodsmart/.

Although flood insurance is required for these high-risk areas, statistically about 20% of flood-related claims come from moderate to low-risk areas.  For this reason, you may wish to secure coverage anyway, especially since it is not included in the regular homeowner’s policy.  Also, certain lenders may necessitate flood insurance, even if it is not federally required.  If you would like further guidance on this matter, contact one of our real estate attorneys at (716) 636-7600.

Septic Systems

Author: Bruce Ikefugi

November 29th, 2013

For the past two years, the number one post closing issue relating to home sales has been septic system failures.  Many septic systems in Western New York seem to have reached the age of around 50 years, which seems also to be about the end of life for many of its parts – tank, leach field, filters.  If you have a septic system you should have it pumped out every two to three years.  If you are thinking of buying a home with a septic system you should check with the County Health Department and the Town Building Department to see what records they may have regarding the age and capability of the system.  Often the Health and Building Departments have no records.  This is not does not in itself create a problem, but you will want to know, whether you are the seller or the buyer, that the capacity of the system is sufficient to service the home.  This is traditionally calculated based on the number of bedrooms.  Because of the increase in failures, we are now suggesting to all our buyers that they have the septic system professionally inspected, along with the house.


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