How Long Do You Intend to Own the Property?

The first question you should ask when analyzing refinance options is how long you intend to own the subject property. If your intent is to sell the property in the next 5 years, it may not be worth the cost of refinancing (more on that later). If you intend to hold the property for the long term, accepting a reduced interest rate may be worth the upfront cost.

How Much Lower Should My Refinanced Rate Be?

A general rule, is that in order to make a refi worthwhile, you must enjoy at least a 1% reduction in your interest rate. Given that rates currently sit at 6.69% this would mean that your original mortgage would need to have been 7.75% (as they were in November 2023) in order for a refi to make financial sense.

What is the Cost to Refinance?

Fees for a refinance can vary, depending on your location and the financial institution you are using. It is also important to understand that commercial refinances can be more expensive then residential, as often times banks will require points to be paid (a percentage of the refinanced amount) along with increased prices on appraisals as compared to residential refis. These closing costs can easily exceed $10,000 in certain circumstance. Be sure to get a good faith estimate of closing costs early in the process so you can understand the ball park costs and compare them with the benefit of the reduced interest rate.

Simply because Vermont real estate rates are dropping does not mean that they will continue to do so. Mixed messages from the Federal Reserve on when and how much rates will continue to drop remains an open question. If you are considering a refi in Vermont, don’t fall into the interest rate trap, without running all the math to determine whether it makes sense now, or, if it is better to wait it out for a better deal.

The content in this post is for information purposed only and should not be considered legal advice. Any specific legal questions should be directed to a Vermont licensed attorney.

Can Anything Be Done to Reduce My Tax Bill?

32 VSA § 4403 provides for a limited window each year to appeal your tax appraisal. The statute provides only 14 days from the receipt of the valuation to request this appeal to the board of civil authority. Any untimely appeals would be required to wait until the following year before being heard.

Inspection Requirement

The statute provides that at least members of the board shall inspect the property within 30 days of the hearing. This site visit is required before an appeal determination is rendered.

Appeal to Director of Civil Court

Should the taxpayer disagree with the board’s determination, they have a right to appeal to the director of the civil court in the county where the property is located. This appeal must occur within 30 days of the board’s decision and shall be filed with the Superior Court.

What Can Be Done to Prepare for a Vermont Real Estate Tax Appeal?

There are no hard and fast requirements for evidence to be presented to the board of civil authority. However, in order to best argue a reduction in the taxed value, enlisting the services of a real estate appraiser can be the most compelling evidence.

Appraisers are qualified to determine a fair market value of the property and, if requested, to testify as to their findings in front of both the board and director of the superior court. A list of certified Vermont real estate appraisers can be found HERE.

This is not legal advice and should not be construed as such. All legal questions should be directed to a licensed Vermont attorney.

An Enhanced Life Estate Deed also referred to as a Lady Bird Johnson Deed (courtesy of President Lyndon Johnson) has served an important role in many Vermont landowner’s estate plan for many years. The basic premises of an ELED is to convey property to a third party (often children or grandchildren) that reserves all rights to the owner, while they are alive.

It is important to distinguish a life estate deed from that of an ELED. While a Life Estate Deed only bequests to the grantor a right to reside at the premises for their natural life, the Vermont Enhanced Life Estate Deed Act provides the following protections:

(a) a common law life estate, with the exclusive use, possession, and enjoyment of the property; and (b) the right to convey the property (emphasis added).

Simply put, if you convey an ELED, you do not forfeit any rights while you are alive and, if you decide at a later date to sell the property, or convey it in a different way then is set forth in the ELED, you have the right to do so by executing a new conveyance instrument such as a deed or mortgage.

Does a Vermont Enhanced Life Estate Deed Avoid Probate?

In simple terms, a legally executed ELED allows the named Grantees title ownership upon the Grantor’s death. Similar to a transfer upon death designation (TOD), the asset avoids the need for probate and thus limits the complexity of the estate when it is time to appoint an executor and begin seeking court approval for the transfer of assets to the named beneficiaries.

Seek the Right Advice for Limiting the Complexity of Your Vermont Estate

Although no one can fully predict what the future will bring, there are reasonable steps that can be taken in order to lighten the burden on your loved at the time of your passing. An Enhanced Life Estate Deed may just be one of those steps you can take now, to meaningfully lighten that load now, while ensuring some peace of mind for those dearest to you.

Disclaimer

The above content should only be considered informational. None of the content should be considered legal advice. Readers of this content should consult with their own attorney regarding any specific questions they have on estate planning or any other legal matter surrounding it.

The frustration for many propective Vermont homebuyers has become readily apparent as elevated interest rates persevere and the housing supply remains low. The Wall Street Journal has recently reported that 2023 home sales are on track for the slowest year since 2011. Given this trend, those who have been holding off on making an offer in fear of a bidding war may see an opening to purchase a home at or below listing price as the housing market enters winter market.

Can You Afford At Least 2 Years of Higher Interest Rates?

Recent releases from the U.S. Federal Reserve have provided little optimism that interest rates will fall anytime soon. In fact, as reported by CNN, most federal officials expect at least one more quarter point rise before rates remain flat for an extended period of time.

With this reality, homebuyers must ask whether they can afford mortgage rates, which remain above 7%, for an extended period of time. Running a budget projection using a Mortgage Calculator is a great way to start this analysis. Using this tool will not only provide you with a monthly mortgage payment based on a certain purchase price, but will also provide an amortization schedule that will show the amount of interest you will be expected to pay over a set period of time.

Do the Cold Winter Months Provide a Buying Opportunity?

According to a 2021 study by Attom, the fall and winter months provide the best buying opportunity. It was reported in the Attom study that October saw a slim 2.9% premium on fair market value, compared to an 11.5% premium in May. This ultimately means that the lack of inventory and interest as fall turns to winter has compelled many homebuyers to accept a lower offer when the cost of maintaining the home begins to rise from the increase in heating fuel and, especially in the northeast region, snow removal.

Is Appreciation in the Vermont Real Estate Market Beating Inflation?

Housing prices in Vermont rose by close to 9% in 2021 and more than 10% in 2022, according to the latest financial report from the state’s Department of Finance and Management. The State has anticipated an additional 8.9% increase in Vermont housing prices in 2023.

With current inflation rates at 3.7% and the Federal Reserves continued efforts to dampen inflation down to the 2% mark, the Vermont housing market appears to be a solid investment based on the anticipated continued rise in housing value.

When Other’s Fly it May be Time to Buy

Finding a real estate deal in Vermont has become increasingly difficult due to the tailwinds that buyers are facing. A combination of inflation, increased interest rates and lack of inventory have limited the opportunities for those looking to jump into the ever-appreciating Vermont housing market. However, there still remain deals to be had if prospectors are willing to take on additional risk.

Disclaimer:

The preceding content should only be considered general information and shall not constitute as legal advice. Readers interested in purchasing Vermont real estate should contact a Vermont licensed attorney for specific legal advice.