UNDERSTANDING THE STATE'S NEW REGULATIONS
Jeffrey C. Turk, Esq.
Marcus, Errico, Emmer & Brooks, P.C.

Effective January 1, 2010, a new regulation relating to the installation and maintenance of certain smoke detectors takes effect.  This article is intended to provide basic guidance to ensure that residential property owners, property managers, and real estate brokers understand and comply with the new Massachusetts law concerning smoke detectors which goes into effect next year.  While the new law may not impose these new requirements on a specific property, it is imperative that owners ensure that their properties comply with these laws, both from a public safety and liability viewpoint.  To avoid problems and determine the precise requirements for your properties, members are encouraged to consult with legal counsel.

SMOKE DETECTOR TECHNOLOGY

Currently, there are two primary detection methods used in modern smoke detectors: ionization and photoelectric.  Ionization detectors typically have a constant current running between two electrodes.  When smoke enters, it interrupts the current, setting off an alarm.  Ionization detectors are often faster to alert than photoelectric detectors.  However, ionization detectors are unable to differentiate between smoke and steam.  As a result, they are prone to false alarms when steam from a shower or other source interrupts the current.  This is especially true when the ionization detector is placed in close proximity to a kitchen or bathroom. 

Photoelectric detectors emit a beam of light. In the absence of smoke, the beam passes in front of the detector in a straight line. When smoke crosses the path of the light beam, some light is scattered by the smoke particles, directing it at a sensor and triggering an alarm.  Photoelectric detectors are less sensitive to false alarms from steam or cooking fumes but can take longer than ionization detectors to alert.

 There has been an ongoing debate as to whether to require property owners to replace their ionization detectors with photoelectric detectors.  On one hand, property owners have raised concerns about the cost of replacing smoke detectors which continue to be operable.  On the other hand, the fire departments have suggested that the elimination of false alarms outweighs the additional costs.  The new regulations were enacted to resolve this ongoing debate.

NEW REGULATIONS

In recognition of the relative strengths and weaknesses of photoelectric versus ionization smoke detectors, the Board of Fire Prevention Regulation has passed a new regulation (527 CMR 32.00 et seq).  Under the new regulation, owners of certain residential buildings will be required to install and maintain both ionization and photoelectric smoke detectors.  While the new regulation does not change the locations where smoke detectors are required, it does allow the installation of both technologies in certain locations. 

Under the new regulation, a smoke detector utilizing both technologies is required in all the same locations, except within 20 feet of a kitchen or a bathroom containing a bathtub or shower.  Within 20 feet of a kitchen or bathroom containing a bathtub or shower, only a photoelectric smoke detector is allowed.  An ionization detector is prohibited in these places due to their tendency to be set off by steam.

All property owners should determine what type of smoke detectors they are currently using.  Subsequently compliance can be achieved by installing two separate detectors using these technologies, or by installing one detector which uses both technologies.

WHAT PROPERTIES ARE AFFECTED BY THE NEW REGULATION?

Determining whether a specific property is affected by the new regulation requires a case-by-case analysis and, therefore, property owners are encouraged to consult with legal counsel to determine the specific requirements for their property.  That being said, the following types of properties are impacted by the new regulation:

• Residential buildings under 70 feet tall and containing less than six dwelling units.

• Residential buildings not substantially altered since January 1, 1975, and containing less than 6 residential units.

• All residential buildings sold or transferred after January 1, 2010, which are less then 70 feet tall, have less than six units, or have not been substantially altered since January 1, 1975.

For all properties in these categories, compliance is mandated by January 1, 2010.  It should be noted that the law does not apply to these larger buildings or those which were substantially altered since January, 1975, as these properties already were required to upgrade their fire safety systems under other existing laws.

Now is the time to buy!

Last week, the benchmark 30-year mortgage rate fell below 5 percent to reach an all-time low of 4.96 percent.

This rate is down from two weeks ago when it hit 5.01 percent.  "The outlook is very positive that these low mortgage rates will persist at least through the first half of the year. That is the timetable laid out from the Federal Reserve for pumping up to $500 billion in mortgage-backed bonds," said Greg McBride, senior financial analyst for Bankrate.com.

Low interest rates mean more affordable mortgage payments. Act now and get into your dream home today!

According to a recent report from Global Insight, an economic and financial analysis forecasting firm, current housing statistics indicate that now is the right to time to buy.

They claim that the U.S. housing market as a whole is undervalued by 3.8 percent. Global Insight analyzed 330 metropolitan areas in the United States and found that 241 metro areas experienced price declines in the third quarter of 2008 in comparison to 150 metro areas in the second quarter.

The markets that were hardest hit were in areas that were most overvalued three years ago. This study, a combined effort by HIS Global Insight and National City Corporation represented 78 percent of all existing housing units in the United States.

Low intrest rates and increased affordability make today's market a buyer's dream!

Source: Global Insight (12/03/2008)

Hello Neighbors!

Wow, when they called today's real estate market a "shifting market," they were right on target. It keeps shifting, and shifting, and shifting ... Every time we turn on the news there's a new development that affects our economy and therefore the ability of buyers to "buy" and the sellers to "sell."

SHIFT, the most recent book by Gary Keller, co-founder and Chairman of Keller Williams Realty Inc., begins with the following paragraph: "The Real Estate Market has shifted drastically and dramatically. Sales volume and the number of transactions have dropped significantly. Inventory has reached an all-time high. Buyers have never been more reluctant. Fear is rampant, anxiety is high, and people are getting out of the business left and right. Sounds familiar? Sure it does. The year was 1979!"

Does it make us feel better to know that this has happened before? What did we learn from it in 1979? Fast forward to 1987 and it happened again. Changing tax laws this time had a disastrous affect again. Well guess what? History repeats itself. Now we are faced with this again, in 2008 but this time there are real differences.

In 1979 mortgage interest rates topped 18 percent. Last week buyers were still getting approved at under 6 percent through local lenders. That is a huge difference! Today's sellers, with the help of their real estate agents, are becoming realistic with today's pricing, bringing our market back on track.

The real estate business is "cyclical." An experienced real estate agent and a mortgage broker will understand this and be prepared to give counsel that is in tune with the current market. Remember though, the news you heard last week is "old news," so stay in touch with your local, trusted real estate agent for updates on this ever changing market.

We are participating in seminars, conference calls, webinars, and many other training events to stay on top of the game to better assist you.

 Real estate remains your single most valuable asset if handled correctly.

Your real estate consultant,

Jason Parisella

Why are team?  Well, we are three strong professionals to walk you through the challenges of this market.  Whether you need advice and a market value on your property or a consultation to start the process as a Buyer, we are the team to call!  Both myself, Sarah Byrne & Jason Parisella are constantly changing our team systems to be the best team to represent your purchase or sale.  This ever changing market leaves Buyers with a lot of questions these days.  Begin your journey with a call to Jennifer Sullivan, Buyer Specialist for Jason Parisella Team.  Over a cup of coffee...I can explain to you the home buying process as well as put this market into perspective for you.  Efficiency & Effectiveness are the keys to identifying your next property!   

Financing Solutions with David Reed

Five Year Increments

Which is better, a 30-year or a 15-year fixed rate mortgage?  A common and important question which, when answered, affects both the monthly payment and the amount of interest paid on a mortgage loan. While paying less interest over a shorter timeframe seems to be the obvious answer, the difference in monthly payment is surprising to some.

For instance, on a $300,000 note at 6.25 percent over 30 years, the principal and interest payment is $1,847 per month. Whereas on that same loan amount over 15 years at 6 percent, the payment jumps to $2,531! It's easy to understand why most choose a 30-year loan over a 15-year loan; not only is the payment lower but it takes less income to qualify.

On the other hand, more money goes to interest on a 30-year loan compared to a 15-year loan. Using those same figures, the 30-year note yields $364,920 of interest, most of it in the first 10 years of the loan, while the 15-year loan only requires $155,580. That's less than half the interest that a 30-year loan produces!

So, which is better? Maybe neither.

While few lenders advertise this, there's a compromise available to you. Loan payment periods can actually be acquired in five year increments. You don't have to choose between a 30 and a 15-year loan! You can select a 10, 15, 20, 25 or 30 year mortgage. Some lenders even offer 40-year loans. Now it's possible to both keep monthly payments manageable and save on interest charges.

Financing Solutions with David Reed

For first-time buyers, often the first thought that comes to mind is, "I need a down payment." This is often followed by the question, "Now, where do I get that down payment?"

Depending upon the loan type, a home mortgage typically requires 3 to 5 percent down. If you have the money, then you're set. But what if you don't?  What if you're renting? You can afford a mortgage within your means, but coming up with the down payment money needed to begin the transaction can be challenging. So, where can you turn?

One of the most overlooked sources of down payment funds is likely right under your nose-in the form of government bonds and local grant programs.

These programs either provide outright monetary grants for down payment or money to buyers in the form of a forgivable loan. In essence, the government will help you buy your home and you typically only have to pay back the money if and when you sell that same property.

In the past it was challenging to find these special programs, but now all you need is your agent, a computer, an Internet connection, and a search portal such as Google or Yahoo.  Enter the search terms "down payment assistance (followed by your city, state or province)" and see what pops up! It might just be the answer to helping you buy your first home.

Written by David Reed, author of Mortgage 101 and Mortgage Confidential.

Numerous closing costs come with any mortgage. There's a fee for an appraisal and a fee for a credit report... and the lender has its fees, too. And don't forget about the attorney fee, title insurance and escrow charges. Closing costs can vary from state to state and province to province, but you really don't have much choice of whether you want a survey or if title insurance is right for you. There will be a variety of services performed and records searched by different companies, and none of these come free of charge.

But there is one closing cost that you can control: discount points or, more simply, points.

A discount point reduces the interest rate on your mortgage. One point is equal to 1 percent of your loan amount, so on a $200,000 loan one point equals $2,000.

Why do some lenders charge points? In reality, all lenders pretty much have the same rates; it's just that sometimes a lender will advertise a rate with a point or a rate without a point. But the decision to pay a point is yours alone.

A point will typically reduce your interest rate by a quarter of a percent on a 30-year mortgage. If your lender offers a 6.5 percent rate with no points, then you may also get 6.25 percent with one point. So how do you decide?

It's simple. Just take the difference in monthly savings gained with the lower rate and divide that into the point. The result equals how many months it will take to "recover" the amount

you paid in points. Let's look at an example.

A 30-year fixed-rate mortgage of $200,000 at a 6.5 percent interest rate would mean a monthly principal and interest payment of $1,264.14. By paying an additional $2,000 in the

form of a point, your rate would drop to 6.25 percent and the resulting payment would drop to $1,231.43; saving you $32.71 each month. When you divide that $32.71 monthly savings into $2,000 you get 61.14, or about 61 months. Your recovery

period is slightly over five years. That's a little long in my opinion and I've never been a big fan of paying points. Instead, I'd encourage you to take that same amount and pay down your principal.

Remember: The quarter percent difference in interest rates when paying a point is an imprecise, general mortgage rule of thumb. Whichever rate you get, be sure to divide the savings into the points paid to see how long it will take to recoup the difference.

By David Reed