With interest rates at historic lows, we are seeing most buyers take advantage of low cost financing by obtaining a mortgage for the purchase of their beach house.  In many cases, even those with funds available to buy in cash are opting to finance their purchases.  Low interest rates also mean that buyers can afford more house for their money.  Today we have a guest blog post from local Mortgage Broker Jason O’Keefe discussing the impact of interest rates on loan costs.

When looking into financing the purchase of a property, one of the most important terms of your loan is the interest rate. It is the key component that drives how much interest you will pay to your lender over the life of the loan you obtain.  

Say for example you take out a 30 year loan for 400k with an interest rate of 3.75% , you end up paying a total of $326,886 in interest to your lender. However, if your lender issues you a lower interest rate of 2.75% the total amount of interest paid to your lender is reduced to $247,867. That change in rate results in a significant savings of $79,019…. 

Of course rates vary depending on your credit score, down payment, loan program, and other factors but you can see that it’s imperative to be rate conscious and make sure you are getting the best rate available out there at the time. That is one of the key benefits of working with a broker who can shop your mortgage to multiple lenders across the country, as opposed to limiting yourself to just one or two local lending institutions.   

With rates at historically low levels it’s currently a great time to obtain financing for a new home purchase or refinance your existing loan.  

In today’s fast moving real estate market it’s very important to obtain a prequalification letter from your lender before making an offer on a property, in fact most realtors require it in order to set up an appointment to view a home.  

Always happy to answer any financing questions that may come up, as there are a lot of moving parts when going through the process of purchasing a new home.  

Jason D. O’Keefe 
InterContinental Capital Group | NMLS # 60134
265 Broadhollow Road, Suite 220 
Melville, NY 11747 
631-697-3266 
jokeefe@icghome.com 
intercontinentalcapital.com 

Thank you to Jason for guest writing on our blog! We hope this was helpful and are happy to answer any questions. 

Now that we’re into November and you’ve probably gotten every last bit of use out of your beach house, it’s time to think about how to safely close your home for the winter. We’ve put together a checklist to help walk you through the big jobs and the often-overlooked details to ensure your home stays in great shape until next year.

• As the weather is getting colder, you’ve probably already had your last weekend at your beach house. It's important to have the water drained from your home before temperatures dip below freezing.  It's best to give your plumber plenty of notice to ensure they're able to drain your house in time.  If you’re delaying closing up for the season thinking you could possibly get one more weekend in at your home, this leaves the door open to a mad rush for the plumbers when word comes of the first freeze of the season, so plan accordingly.

• Bring your bikes, wagon, and BBQ inside for the winter to prolong their lifespan.  Many homeowners lay down a large tarp to protect their floors and then move the majority of their outdoor furniture inside to protect it for the winter.

• Leave nothing in the house that can attract pests.  This includes all foods including cereal, sugar, breads, crackers, and even birdseed.  Soaps and shampoos should also be removed from the premises, or at a minimum, tightly secured in a plastic bin with strong latches.

• It's best to remove your canned food, bottled water, soda, wine and beer, as it will freeze and could burst its container.  Liquors with high alcohol content will not freeze, so are okay to store.

• Most cleaners and powders can be left under the kitchen sink.

• Some utility providers will allow you to suspend services for the winter months.  Do not have PSEG turn off your electric until your plumber has finished draining your home.  Your electric needs to be on in order for the plumber to run their pumps.  You can just turn off the main electric breaker for the winter rather than turning off your account, however you'll still be charged a small monthly minimum service fee.

• Make sure that your chimney has a cap to prevent animals from getting into your house.  During the cold winter months, animals will seek shelter wherever they can find it, so it is important to make sure that all openings to your home are secure. 

• Make sure not to block access to your water heaters and washing machines, whether they're located inside your house or in your shed.   You’ll need to have them drained so there should be access to them.

• If you bag up your linens for the off season, put a few dryer sheets in the bags to absorb any residual moisture and keep them smelling fresh.

Even though most residents depart for the winter months, we're here year round for all of your real estate needs.  If you find yourself in Ocean Beach stop in and say hello!  Even if you can't make it here, you can keep up with the local goings on about town on our facebook and instagram.

By: Abigail Mago, Licensed Associate Broker

abigail@fireislandrealestate.com

A very common question that I'm asked by buyers is "When is the best time to buy on Fire Island?"  Many people assume that the Summer is the peak of the buying season, because that is when the island is busiest, but that's not actually the case.  Most serious buyers actually do their shopping during the Fall or Spring months.  The best time to buy depends a lot on what your plan is for the home.  If you're buying a property and planning to renovate, or are purchasing a rental investment, your best bet is likely to purchase in the Fall.  If you're looking for a turnkey home for your personal use, then buying in the Spring is likely ideal timing.  There is also an argument to be made for shopping during the dead of winter, when sellers are likely seeing the least showing activity on their properties.  Buyers utilizing bank financing should also take the extended timeline required for mortgage processing into consideration.

Whether it's light cosmetic updates to transform a house into a home, or a major structural overhaul, we find that a large proportion of buyers purchase with the intention of renovating.  If this is the case, you’ll want to purchase early in the fall to allow yourself enough time to make your desired improvements so your home will be ready to be enjoyed for the Summer season!  If your project is more substantial and requires architectural drawings and building permits, it could take several months just for the design and permitting process, so make sure to factor that into your timeline.

If you’re looking to purchase an investment property on Fire Island, you might be tempted to wait until the Spring to close so as to avoid the cost of carrying the house through the Winter months, however that timing might not be ideal, even if the home you're buying doesn't need any work.  As a vacation rental homeowner on Fire Island, even though your guests likely won't start staying with you until the Spring and Summer seasons, the booking season actually occurs primarily over the winter months, so closing in the fall is beneficial to allow time for the property to be marketed and booked up in advance of the season.  If you wait until the Spring to purchase your investment property, you may run into another complicating factor with respect to properties that already have bookings for the upcoming season.  In that case, the rent is prorated in accordance with the date of the closing, providing a large incentive for the seller to push the closing out as far as possible, and a large opposing incentive for the buyer to close as quickly as possible.  For example, if the home has $100k of rental income booked for stays between June 1^st– Sept. 1^st, if the closing occurs in May, the buyer would be entitled to keep all of the rental income. If the closing occurs halfway through the rental period, the buyer would only get to keep half of the rental income ($50k in this example) and if the closing were to occur in September after the rental period, the buyer wouldn't get any of the rental income and the seller would keep the full $100k.  If you're shopping in the spring, the seller of a rental property is definitely going to take that into account, so you would likely find yourself in a more favorable negotiating position in the Fall.  While you would have to pay for the carrying cost of the house during the winter months, you would still have money coming in over that period, because rent is customarily paid in advance on Fire Island, with a substantial deposit being put down at the time of booking.

If you're lucky enough to find your dream turnkey beach house, in that case the best time to buy is likely in the Spring, so you can move right in and start enjoying!  This way you also avoid carrying the cost of the house all winter while you probably won’t be using the home. Make sure you plan for enough time for your mortgage to be processed if you’re purchasing with financing, as many buyers underestimate how long it can take.  The fastest mortgage I've ever seen was done in 30 days, but it is much more common for mortgage deals to take up 90 days, particularly with the bigger banks which tend to be slower to get things done.

Many buyers ask what time of year sellers tend to be the most negotiable.  Every individual's situation is different, but many sellers will be more eager to sell in the Fall after the close of the season rather than the Spring, when they've just endured a cold Winter and it feels like Summer is just around the corner and they may be eager to enjoy one last Summer at the beach.  Additionally, there’s less buyer activity in the dead of Winter so if you choose to look then, you'll have less competition from other buyers and the seller may be more receptive to your offer at that time.

All that being said, I counsel my clients that the time to buy has less to do with the season and more to do with when the right property for you becomes available.  Fire Island is a small market with a relatively limited supply, so if a property comes on that meets your criteria, it's usually wise to jump on it.  This is particularly true if you are looking for something very specific in terms of location or amenities.  If you only want to be in a specific area or if you want to purchase something rarely available like bayfront, oceanfront, a home with a pool, 5+ bedrooms, or an oversized piece of property, and nothing appropriate is available during your initial search, you're best off monitoring the inventory on a regular basis so you won't miss out when the dream house pops up.  Be sure to follow us on facebook and instagram for real time listing updates.  If you have any more questions about purchasing a home on Fire Island, please feel free to reach out to us. We look forward to the opportunity to be of service to you!