Follow These Two Suggestions When Purchasing A New Home

Springtime is a time when many home buyers come into the housing market. This spring, the housing market is still going strong with tons of competition. If a homebuyer finds a home they like, there is no time to think if you want to compete for an accepted offer. Here are two important things you should take action on before purchasing a home.

Bulk Up Your Credit Score

A homebuyer's credit score can either hinder or boost your chances of purchasing a home. Credit scores determine whether a homebuyer can get approved for a loan. Before starting the home buying process, a homebuyer needs to make sure their credit score is 650 or higher.

Lower Your Debt-To-Income Ratio

A homeowner's debt-to-income ratio is very important. It can not only affect getting a mortgage but can also affect the price of a home a homebuyer can purchase. A good debt-to-income ratio is less than 43% according to the Consumer Financial Protection Bureau. For example, if a homebuyer's monthly income is $5,000 and monthly expenses are $1,000, then the debt-to-income-ration is 20%.

If you are considering purchasing a home, make sure to not only follow these two things but also contact a Realtor. A Realtor can help you with the process from start to finish. They will find the perfect home for the perfect price.

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What Homeowners Want To Know About Homeowners Insurance

 

Realtor.com asks home shoppers what they would like to know about homeowners insurance and their questions were answered by Allstate insurance experts. If you are in the market for a home, you should become familiar with homeowners insurance. It is important to get good homeowners insurance and understand your policy. Here are some questions and answers below.

1. I’m a first-time home buyer. What should I consider when choosing insurance? – Cynda from Florida

Just like the home you choose, your insurance policy will fit you and your needs. A musician will be interested in protecting their musical instruments while other homeowners might want protection on their garage because of their car collections.

An insurance expert can help you set up your policy with your unique coverage. You can get a personalized quote and make sure all your needs are covered.

“Your home is one of your most valuable assets,” say the experts at Allstate. “Make sure your homeowners insurance protects you and your family in many kinds of situations involving not only your home itself but also the things you own.”

2. What are the most common types of claims? What is the claims process like? – Emily from Colorado

Prepare for the unexpected, that is why homeowners insurance is so important. Many homes get damaged from wind, hail, plumbing failures, theft, and fire. When you do have to put a claim in for damage to your home, your insurance company will work with you and answer all your questions and concerns. Your agent will help you with the process by assessing the damage and helping you recover your losses.

3. How is condo insurance different from home insurance? How can I make sure my condo insurance has the coverage I need? – Maria from Virginia

Condo insurance is different because it only covers your unit and the belongings in the unit. Usually, the condo building is insured under your condo association's insurance policy which covers things like the boiler room, the roof, hallways and other shared spaces. Make sure to get your agent to explain what is covered. Some policies will cover the wall and floor in your specific unit.

4. Are there any surprising things that aren’t covered by a typical homeowners insurance policy? – Emily from Colorado

Surprisingly a flood and earthquake damage are not covered in a regular insurance policy. Both require a separate additional policy on top of your regular homeowners insurance. Make sure you have a clear understanding of what is covered. Things such as an outside sewer or drain might need additional coverage.

5. Does my homeowners insurance cover small damages, like a stolen bike? – Maria from Virginia

This would be under personal property coverage which usually covers theft. Make sure the stolen items are worth more than your deductible before you claim it on your insurance. If your deductible is not met your insurance will not pay for the claim. Make sure to review coverage limits with your agent who will customize your coverage to fit your needs. An agent can help you choose any additional coverage if you take note of the possessions such as sports equipment and riding lawn mowers that might need to be part of your policy.

6. What are some things homeowners can do to help lower the cost of their homeowners insurance? – Emily from Colorado

There are several things you can do to help reduce your rates. Increasing your deductible can reduce your premium payments. Bundling policies such as home and auto will give you a discount. Other ways you might get a discount are if you are a new homeowner, switch insurance providers without having a recent claim,
set up automatic payments to pay your insurance premium or are age 55+ and retired.

Remember when looking for homeowners insurance always seek a professional's advice. Even though a policy is cheaper than another, it might not cover everything you need. Shop around and talk to a couple of insurance agents in your area for the best fit and price for you.

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New Challenges For New Home Construction

The housing market began with a bang in 2021 but with the demand for new homes came some uncertain challenges. Builder's confidence is strong with such buyer's high demand. The shortage in home inventory and low mortgage rates coupled with buyer's high interest and a new generation of buyers hitting their peak home-buying years makes for a great time for new home construction.

Zillow reported in their New Construction Consumer Housing Trends Report 2020 that 40% of those buyers who purchased a new construction build, were only interested in buying a new construction home. On the negative side, these new construction buyers hit more obstacles this year than in the past.

Close to half (45%) new construction buyers are under 40 years of age and 70% of new construction home buyers are first-time home purchasers. This shift in demographics has changed what a first-time home buyer might find challenging and what this demographic might struggle with.

This young generation struggled with several top challenges during the purchasing process. A fair price for a home seems to be a challenge. It was sighted that 30% of new construction buyers found that determining a fair price for a home was hard in 2019 and this rose to 37% in 2020. Many blame COVID-19 for this reason. The transaction of coordinating the build of a new home with the sale of their current home was also hard to handle for 36% of new construction home buyers.

The relationship between the sales agent and the home builder has become extremely important. In 2019 84% of new construction home buyers relied on their sales agent to communicate with the builder. In 2020 this rose to 90% which was a 17 point increase over last year.

Challenges can be overcome with help from a Realtor. A Realtor can help a buyer with pricing and financing. They can also be a great mediator between the buyer and home builder. A professional sales agent will help both the building process and purchasing process become an easy streamlined process.

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Homebuyers Weekly Mortgage Demand on the Rise

According to the Mortgage Bankers Association, the total mortgage application volume rose 4.1% the week of July 13th from the week before. Homebuyer demand is hotter than ever, especially with the record low mortgage rates.

“Mortgage applications increased last week despite mixed results from the various rates tracked in MBA’s survey,” said Joel Kan, an economist for the trade group. “The average 30-year fixed-rate

mortgage rose slightly to 3.20%, but some creditworthy borrowers are being offered rates even below 3%.”

There was a small increase to 3.20% in the average contract interest rate for a 30-year fixed-rate mortgage with a conforming loan balance of $510,400 or less. For loans with a 20% down payment points (including the origination fee) went up from 0.33 to 0.35. The average on the 30-year fixed mortgage was 88 basis points higher than it was at the end of June.

This small jump encouraged homebuyers to act which increased the refinance application volume up 5% for the week and 122% from the same week a year ago. According to the seasonally adjusted index data “the refinance share of mortgage activity increased to 64.8% of total applications from 64.2% the previous week.”

Mortgage applications to purchase a home rose 2% the week of July 13th and were reported at 19% higher than this time last year. That marked the ninth straight week of annual gains. According to Fannie Mae chief economist Doug Duncan, close to 60% of all outstanding loan balances have around a half-percentage point incentive to refinance.

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This Year Homeowners Are Looking For Greener Areas

What most homebuyers today are looking for in a home will be completely different than what a homebuyer pre-pandemic sought in a new house.

“The pandemic has brought about a seismic shift in people’s perspective on housing,” said Jordan Ayan, an agent who leads the North Scottsdale Luxury Real Estate Team at the Lifestyle Collection, under Keller Williams Realty in Arizona. “They are thinking more about where they want to be and what kind of environment they want to be in.”

People want to live in a less congested area now. Many homeowners work from home more because

of the times so traffic is not a problem anymore. Homebuyers are looking for a more laid-back lifestyle, where they can both work and decompress.

Homebuyers will be looking for very efficient spaces such as tucked away home offices. Home offices have become very popular since the pandemic.
“The office was somewhat of a flex space, previously,” said Laura Powers of the Laura Powers Property Group, part of Compass in Houston. “Maybe it was also a guest bedroom or more of a library. Function has become much more critical.”

Homebuyers want a separate living space from their home office. When working from home, you need a quiet space with privacy. Ideally, the home office would have built-in shelving, space to move around, and good natural lighting.

Homes have become the live, work and play of 2020. Homeowners are taking formal living rooms and updating them to a comfortable place to relax. Many are “tech-free zones” where homeowners can get away from screen time.

Many Realtors have found that homebuyers are seeking larger garages, extended foyers and

mudrooms. They are also interested in LEED-certified homes that are environmentally friendly and built to the standards of the U.S. Green Building Council.

Outdoor covered areas such as patios, porches, decks, and outdoor kitchens are another must. Since the COVID-19 pandemic, everyone has been stuck at home. A nice area to enjoy the outdoors is a must during these times. In Florida, Realtors have reported that access to the water has become more popular along with docks, pools, expansive decks, covered patios, fire pits and outdoor kitchens.

In urban areas, homeowners use public parks and greenspace for their outdoor living, however, with the pandemic many of these spaces are restricted. Homebuyers are now seeking an outdoor space included in their urban home.

“Any other time, we would talk about parks and the neighborhood. But now, they might not even be able to use it,” said Patrick Ryan, owner and managing broker at Genuine Real Estate in Chicago. “So outdoor space at home has become huge.”

Homebuyers in the suburbs are seeking homes on a golf course with views of the greens and larger lots. Many even want extra acreage where they can have distance between their neighbors. Others have emphasized a guest house or in-law suite for multi-generational living.

“They want space. They don’t want to be cooped up,” Ryan said. “But they also want community and to be able to connect with their neighbors.”

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Tips to Find the Best Loan for A First Time Homebuyer

There are many different kinds of mortgages to choose when purchasing a home. Not every mortgage is right for you. Here are some tips to follow when choosing which mortgage best fits your needs.
Do your homework. You will want to first research special mortgage programs. There are a great number of programs out there which can assist first-time home buyers. Programs can help with down payments, lower your interest rate or help with other expenses you might have such as a student loan. These programs can help you along the way by allowing you to build equity in your home. Professionals can help with finding the best program to suit your needs, check with your lender or Realtor.

Go with a local. Big programs such as federal programs are more well known but there are many programs for first time home buyers through their city or state. Detroit and Baltimore have used first-time home buyer programs to promote revitalization in their downtown areas. Many states have used

programs to urge first-time homebuyers to purchase their first home in rural areas. Always check your city or state government’s websites to see if there are any programs available to assist you. Another resource would be the community development or housing department.

Don’t overlook your mortgage rate. An obvious focal point is the price of your home. This is not the only thing you should focus on. Your mortgage rate is just as important. This number can tell you how much you will pay in interest every month. The lower the rate, the less you will pay. The easiest way to lower your rate is by a good credit score. Not every first-time buyer has a solid 20 % to put down with an excellent credit score. Many lenders allow you to purchase discount points with can lower your interest rate. Purchasing points is prepaying your interest rate which lowers your overall interest rate by approximately .25%. There are positives and negatives to buying down your rate with discount points. Your lender can help you with this decision.

There’s always an adjustable-rate mortgage (ARM). This can be a great way to start off your first home buying experience. How an ARM works is simple. You will start off with a set period with a fixed rate which will then adjust after a certain period of time. In other words, if you have a 5/1 ARM, you will have a fixed rate for 5 years and then after the 5 years, your interest rate will adjust every year. The rates will not always rise but can also fall. If the rates have gone down you could end up paying less but if it goes up, you will pay more. This is a great way for a first-time to use the first 5 years to improve credit, lower debt and raise your income in order to get a 15 or 30-year fixed-rate mortgage.

Just like an employer interviews for the right employee, the same goes for the right lender. You need to talk to several lenders about getting a mortgage. Shopping around can give you negotiating power and the lowest mortgage rate. You will want to research average rates for your area.

Have your paperwork in order. When applying for a mortgage, your lender will want your monetary life story. Get all your documents together before meeting with a lender. Many lenders will not lock in a rate and start your application until they have all your documents.

Keep your finances the same. Do not make a huge financial change when you are in the process of obtaining a mortgage. Do not apply for a new credit card, get a new car loan, or change jobs. If you do this, the mortgage lender will have to start your application process all over again. You will need to wait even longer to close on your new home.

Getting a loan for a home can be a daunting task but if you do your due diligence, the process will be a lot less painful in the end.

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Tips for Standing Out When Selling in a Crowded Market

A day ago CNBC.com reported that the Fall housing market will shift to a buyer’s market. Good news for those searching for a home to purchase but not quite what a potential seller of a home wants to hear. According to the website, fewer consumers believe now is a good time to purchase a home.

The site reports that appraisals have gotten more stringent and potential buyers are more cautious and are willing to take their time when it comes to purchasing a home.

These factors are contributing to  an increasingly crowded housing market. There is more competition sellers have to face. If you are planning to sell your home in the near future, here are seven tips to follow to help stand out in the crowded market.

Just like the game show title, “The Price Is Right”, price your home out of the market and it will be bypassed by potential buyers. Pricing becomes crucial in a crowded market. It is a fine line for those selling their home who want to get top dollar but want to sell fast. Pricing your home slightly lower (approximately 2% lower) than comps in your area will make your home stand out above similar listed homes in your neighborhood. The slightly lower price will be inciting to buyers when there is an abundance competition.

Always have your home’s “game face” on. If someone comes knocking at your door unexpectedly and wants to see your home, they should be welcomed into a show-ready home. It is always good to deep clean and de-clutter before you list your home. Remember, to always maintain a tidy house throughout your listing. Sellers need to be able to showcase their home at a drop of a hat.

Remember the saying “try to see it through someone else’s eyes”? This also holds true when it comes

to selling your home. Homeowners get used to the clutter or how their home looks after they have lived there for a long time. The cramped closet or clutter in the corner becomes a part of your home that you really do not notice anymore. Walk into your home looking at it from a buyer’s point of view. What should be fixed or de-cluttered? You want to put extra emphasis on features that buyers would like to have in their home.

Now days many buyers look through photos via their Realtor or the internet. The same floorplan can look very different when presented in a photo. It is crucially important to have professional photographs done of your home. A professional photographer knows how to stage and photograph a home to give it an edge over the other homes listed for sale in your neighborhood.

Again the age old saying “keep your friends close and your enemies closer” can come in handy when you and a good many of your neighbors are selling your home at the same time. Do not look at your neighbors as competition, rather look at them as teammates. Get together and work on selling you neighborhood as a great place to live. A great way to do this would be to hold a joint open house.
Highlight your homes best assets. If you renovated or made any upgrades, show them off. Make sure your home’s listing features a list of upgrades or renovations that sets your home apart from the other listings.

Last and most importantly work with a Realtor. Choose a Realtor who has a lot of inside knowledge on your neighborhood. A Realtor is trained to look at real estate trends to determine how best to sell your home and give it a leg up on the competition.

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