Tips To Follow When Purchasing a Home in the Current Market

While today's housing market is not in the buyer's favor, people are still purchasing homes. Most potential buyers will need a mortgage and there are many steps to this process. When deciding if this step is right for you, take into consideration the following things regarding the process.

Now may still be a good time to buy a home

This is a personal decision, there is no right or wrong time to purchase a home in general. Whether a buyer's market or a seller's market you should take the leap when it makes the best sense in your life. Ann Thomspon, with Bank of America, says that consumers will always want to purchase a home and need to purchase a home.

Especially with the changes we have seen in the last year due to COVID-19, our home has become our live, work and play space. People have placed a greater emphasis on the value of a home.

“A second bedroom that can be used as a home office, or an outdoor space, are now more desired, prompting many people to move or buy for the first time,” says Rick Rudman, CEO at Curbio, a home renovation technology company.

Get pre-approved ASAP

The first step before even looking at listings is to see how much home you can afford. Pre-approval is the first step to let you know what you can afford and to prove to others that you are financially able.

In the current seller's market, a buyer needs to prove to agents and sellers that they are serious. “These days, in some markets, you need a pre-approval just to start looking at homes,” says Ann Thompson, retail sales executive of the West with Bank of America.

Prepare for bidding wars ahead of time

A seller's market means bidding wars are inevitable. The record-low mortgage rates coupled with low inventory is causing a panic among buyers. Sellers are entertaining multiple offers, many receiving multiple all-cash offers.

“Potential buyers now should prepare themselves by discussing, with their real estate agent, how much a home is worth beforehand, so that they can go into a bidding war with the strongest offer tactics, while also knowing when to back away if the price escalates,” says Thompson.

Understand appraisal gaps

With bidding wars comes bids over the asking price. These high bids cause appraisal gaps. An appraisal gap is a disparity between the offer you put on a property and what the property is deemed to be worth by a lender.  Even if you are approved for $350,000 and you offer $350,000 on a $300,000 listing price that doesn't mean the lender will give you the full $350,000 on the home. If the appraisal comes in at $300,000, you will have to come up with the $50,000 out of pocket.

“In this market, we are seeing a lot of appraisal gaps being written into contracts. Please be sure to understand how that works before agreeing to it,” says Shanon Schinkel, branch manager and mortgage lender at HomeTown. “Also, check with your lender before agreeing to it. Using that money for an appraisal gap can change your ability to qualify.”

Keep track of changing rates and terms

Today's mortgage rates are beginning to rise and the historical low rates we have seen in the last year will be a thing of the past. Schinkel reports that over the last six weeks, the rates have crept up. You will want to keep track of where the rates are and where they will be going during your home buying process. Shop around for rates and terms for the best deal.

Research down payment assistance programs

This market is hard for buyers but especially challenging for new home buyers. Down payment assistant programs can help. There are programs offered through government organizations and private agencies. You will want to research all of these avenues to see if you are eligible.

“There is a shortage of houses in many markets. This is creating bidding wars, offers over asking, and appraisal gaps—houses are going quickly,” says Schinkel. “But there are still many great opportunities if you’re patient and have a great real estate agent and lender.”

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May 2021 Home Sales Highest Level Since 2005

The past year has been a whirlwind for the housing market in a good way. There has been a boom in sales

as seen in pending home sales up the highest level of sales for May since 2005. According to the National Association of Realtors, May 2021 was up 8% compared to April 2021 and 13% from the sales in May 2020.

“May’s strong increase in transactions – following April’s decline, as well as a sudden erosion in home affordability – was indeed a surprise,” said Lawrence Yun, NAR’s chief economist. “The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3%, and from an uptick in listings.”

All four regions saw an increase in pending home sales in May. The Northeast had a 15.5% increase, the Midwest climbed 6.7%, the South rose 4.9% and the West increased to 10.9% month over month.

Although the market is still hot, weekly mortgage demand did take a 7% downturn in May 2021.

“While these hurdles have contributed to pricing out some would-be buyers, the record-high aggregate wealth in the country from the elevated stock market and rising home prices are evidently providing funds for home purchases,” Yun said.

The could have stemmed from the home price increases. The S&P Case-Shiller National Home Price Index rose 14% year over year in April 2021. This increase was the largest gain in its 30-year history. The median home price has also increased which has made it harder for first-time homebuyers.

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Checklist For Getting Your Home Summer Ready

Summer is a fun time where most of us can enjoy the outdoors. When it comes to your home, you want to keep the hot summer days out. There are several things you can do to help keep cooling costs down and prevent hot-weather mishaps. Getting your home ready for the hot, humid summer days is a task every homeowner should do. According to the Good Housekeeping Institute and Trane Residential, there is a must-do summer checklist.

“Between the soaring temperatures and uptick in extreme weather, your home might have to work a lot harder this summer,” says Rachel Rothman, the institute’s chief technologist. “Plus, you want to make sure all major systems are in order before heading off on any long holidays.”

Take Care of Cooling Equipment

Many homeowners forget these important tasks, in order for your central system to work efficiently a homeowner should change the HVAC filter every 90 days. A dirty filter can send dust and dander back into your home. Worst of all a dirty filter can add stress to your HVAC system.

Your central AC system should be serviced at least once a year, preferably every season. A professional will run a range of maintenance duties that a homeowner is not able to do. Annual tune-ups will extend the life of your equipment by several years or more. A typical service will run between $100 to $300 per service.

Check the Temperature

Having a thermostat that will adjust the indoor temperature throughout the day can save tons on your utility bill. In fact, Wi-Fi-connected devices can lower cooling costs by as much as ten percent according to the U.S. Department of Energy.

Keep Humidity and Air Pollutants in Check

Bugs and other pests love humidity. Moist air creates a perfect environment for dust mites, mold, and other allergens in your home. According to the U.S. Environmental Protection Agency, a homeowner should keep humidity levels below 60%. The study concludes that ideally, a home should have a humidity level between 30 and 50 percent.

A stand-alone dehumidifier is a perfect tool to lower moisture levels in a small space such as a basement. If you live in a drier climate, then a humidifier can help put moisture back into your home's air.

Be Prepared for Extreme Weather

Summer means unpredictable weather and is a high time for storms in many areas. Storms mean power outages and for this, a homeowner should look into getting a backup generator. Storms can also wreak havoc on your gutter system so make sure they are in good working order. Clean them out and make sure the water drains properly away from your home.

FEMA suggests every homeowner have an emergency kit with 72 hours worth of supplies. Each kit should include (3 gallons per person), non-perishable food, a battery-powered or hand crank radio, a flashlight with extra batteries, a first-aid kit, dust masks, a whistle to signal for help, and a wrench or pliers to turn off utilities.

Be on the Lookout for Pests

Summer is the season for ticks, termites and carpenter ants. These insects love moist soil and rotting wood so make sure your gutter system is cleaned out and working properly. Keep things like mulch, firewood and dense shrubbery away from the foundation.

A good way to determine if you have any pests is to look for piles of sawdust along baseboards—a telltale sign of carpenter ants. Termites, meanwhile, like to shed their wings along windowsills, walls, and other entry points.

Make your home and its surroundings a negative space for insects such as mosquitoes and ticks. Remove all standing water from birdbaths, gardening pots or any other container around the outside of your home. Keep your grass mowed. Ticks love tall grass in shady parts of the yard.

Being a homeowner is a lot of work but well worth it. If you are in the market for a new home, contact your local Realtor.

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Five Things To Consider Before Buying Your Family A Home

The housing market is hot right now and there are more buyers than there are homes to purchase. The

housing market is booming right now because of the low mortgage rates and a recovering economy. It is reported that 8.3 million to 9.2 million first-time homebuyers will hit the market by 2022. Even though this is a hot market, it might not be the best time for your family to commit to owning a home. Below are several things to consider before diving into the responsibility of homeownership.

1. Pre-approval is a must.

Getting a pre-approval will not only relay the message that you are a serious buyer but will also give you an idea of how much you can spend on a home. When you are pre-approved a seller knows you are a serious contender and puts you above offers with no pre-approval.

"There are two main things a seller wants to know about buyers: Are they willing to pay my price and can they close a deal if we agree?" says Dale Taylor, a realtor in Chicago.

A good place to start is by using an online home-affordability calculator to see how much money you should be able to borrow. Once you have established this, check out several mortgage lenders in your area. It is a great idea to shop around for the best rates and mortgage offers. You not only want the best bang for your buck but you also want to choose a lender who is happy to help answer questions, trustworthy and easy to reach.

2. Do not let emotions make the decision.

You might take a tour of a listing and say it is love at first sight but that doesn't mean you need to jump right in. Look at all the features of the home from a practical point of view. A home on a hill might have awesome curb appeal but might not be the best choice for families with you kids who like to roller-skate or ride their bikes.

According to Trulia.com half of all homeowners find at least one or not more things they do not like about their current home. There might be a cute three-bedroom bungalow that you love, but it might not have any closet space or back up to a busy street. Remember, always think long-term when investing in a home.

3. A home costs more than just the mortgage.

There are many more expenses than just your monthly mortgage payment. There will be real-estate taxes and homeowner's insurance on top of your principal and interest payment. Tax Foundation states that depending on the area you live in, your property taxes will average about 1.1% of your home's value per year. If you need $250,000 worth of insurance coverage, that will be about $1,477. You will also need to add your utilities to the monthly cost.

There are also some upfront fees you will also have to consider. You will need to set aside around 2% to 5% of the purchase price for your closing costs. A local Realtor can help you through this process.

4. There is a big difference between an appraisal and an inspection.

Banks will need an official appraisal and you will need to hire a licensed appraiser. An appraiser will give the bank a firm value of the home. An inspection will let you know if this home is a reliable purchase.

A lot of times buyers will make their contract contingent on the home inspection. A home inspector has certain criteria the home must meet to be deemed satisfactory. It is always a good idea to have a professional inspector inspect the home you are about to purchase. An inspector can make sure everything is up to code before you go through with the contract.

5. Read the whole contract.

Purchasing a home is a long-term investment and one of the biggest milestones in your life. You need to make sure everything in your contract is in order. You might look at a home love it, put it under contract, close and discover they took the refrigerator. You have to make sure everything is listed in the contract. If you do not understand any wording, ask your Realtor to explain the meaning. Make sure you are comfortable with what you sign.

If you decide to go through with purchasing a home, go through a local sales agent. A Realtor can help you find the perfect floorplan that will fit your family, in a neighborhood you are comfortable in, and in the right school district.

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Another Gain In Single Family and Multifamily Permits

 

The U.S. housing market is still going strong. According to the National Association of Home Builders, the total number of single-family permits issued year-to-date nationwide reached 276,110 in March, up 25.3% over the March 2020 level of 220,416 and total number of multifamily permits issued year-to-date nationwide reached 131,227 in March, up 20.4% over the March 2020 level of 108,977.

Single-family permits were high in all four regions. The Midwest reported a 40% increase, next the Northeast with a 27.3% increase, followed by the West with a 23.9% increase and the South saw a 23.1% increase. There was also an increase in 49 states and the District of Columbia.

The highest growth rate was 300% from 20 to 80 in the District of Columbia between March 2020 YTD and March 2021 YTD. The top 10 states on the list accounted for a total of 62.8% of the total single-family permits issued. The top 10 metropolitan areas with the highest number of single-family home permits were Dallas-Fort Worth-Arlington (13,094), Houston-The Woodlands-Sugarland (12,745) and Austin-Round Rock (6,189), and two were in Florida; Tampa-St. Petersburg-Clearwater (5,219) and Jacksonville (3,391).

All four regions also saw a gain in multifamily permits in March 2021. The South reported the highest at 22.1%, the Northeast 21.3%, the West 20.3% and the Midwest 13.5% increase. During the time between March 2020 YTD and March 2021 YTD 36 states saw an increase in multifamily permits.

The highest was seen in New Mexico with an increase of 1,267.7%. The top 10 metropolitan areas with the highest number of multifamily home permits were New York-Newark-Jersey City, NY-NJ-PA (9,222), Austin-Round Rock, TX (7,359), Los Angeles-Long Beach-Anaheim, CA (6,661), Dallas-Fort Worth-Arlington,TX (5.594), Seattle-Tacoma-Bellevue, WA (5,555), Washington-Arlington-Alexandria, DC-VA-MD-WV (5,183), Philadelphia-Camden-Wilmington, PA-NJ-DE-ME (3,881), Phoenix-Mesa-Scottsdale, AZ (3,095) and Nashville-Davidson-Murfreesboro-Franklin, TN (2,888).

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Buying Your First Home, Here's the Scoop on How Much Money You Should Set Aside

 

Buying a home is a big life decision and knowing the facts before you buy can be priceless. Many buyers are shocked when they see how much money they need upfront to purchase a home. According to Unison’s 2019 Home Affordability Report, it takes buyers across the country an average of around 14 years to save for a home downpayment.

“As a general rule of thumb, experts say you should not be spending more than 30% of your income on housing expenses,” says USA TODAY Housing and Economy reporter Swapna Venugopal. “Aside from the mortgage payment, this includes costs like mortgage interest, property taxes and maintenance.”

The price of an existing single-family home rose 18.4% to $334,500 in March 2021. Here are some things you can do to achieve your goal of saving for a downpayment.

Start with savings, income, good credit

Before you even start your home search, you need to look at your finances and understand where you stand with your financial obligations. A good thing, to begin with, is how much house can you afford with your current income, how much you have saved for a downpayment, the mortgage you can qualify for, and what the local real estate market is currently doing. There are other living expenses and costs that come with owning a home. You will have annual taxes and home maintenance to pay for.

“You should have secure employment, some savings set aside, and be able to secure a good mortgage with an excellent credit score,” says Omer Reiner, a licensed Realtor and President of FL Cash Home Buyers LLC in Florida.

In order to get good rates on a mortgage, you will need good credit. It is best to check your credit score by obtaining your credit report before you start your home search. The rule of thumb says a good score is around 670 - 739. It depends on the lender, but a score closer to 700 is ideal if you’re thinking about getting preapproved for a mortgage,” Venugopal says.

The down payment

The down payment is a big part of the deal when it comes to owning a home. The down payment is a percent of cash that you pay at the closing. Usually, you need to put at least 20% of the purchase price down upfront.

If a downpayment is a concern, some government-backed loans from FHA or USDA will allow as little as 3.5% down or no down payment. If you have to put less than 20% down, then you will also have to have private mortgage insurance (PMI). Most lenders require PMI which does increase your monthly expenses.

Mortgage terms

Just like anything else, lenders are in competition and want your business. When shopping for a mortgage, ask what the rate and closing costs are. You will want to get preapproved by a lender who will verify your income and credit. A seller is more prone to choose a buyer with a pre-approval than one without.

Get a quote from several lenders for a mortgage. Have your credit reviewed for the quotes. It would be a disappointment to be told you could get a certain rate and then be given a higher rate because of your credit score.

Closing costs

The down payment is only one part of the finances you need to bring to the table at closing. Homebuyers will have to also pay closing costs which include expenses on title insurance, attorney fees, appraisals and taxes.

A homebuyer should be prepared to pay 1% to 5% of the sale price. Remember when buying a house you should also have money set aside to cover home maintenance, repairs and upgrades.

If you are in the market for a new home, call a local Realtor who can help you through the home buying process.

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Questions Homeowners Should Ask Themselves Before Downsizing

 

One of the most popular reasons to downsize is becoming empty nesters but this is not the only reason to downsize. Many homeowners just want a smaller home or move to the city into a high-rise condo. If you are considering downsizing your home for whatever reasons, making an informed decision is best. Before taking the leap, do an honest evaluation of what you feel your outcome will be if you decide to downsize. Here are several questions Realtor.com advises those who are seeking to downsize need to ask themselves.

Does it make financial sense to downsize?

Just because you downsize doesn't mean you are saving money. If you are downsizing to a condo, there will be additional condo fees that will add to your monthly expenses. Homeowner association fees for townhomes and condos usually include things such as landscaping, maintenance of common areas, trash and pest control.

“Consider the amount you will spend on these fees, and be mindful that HOAs tend to go up every year,” says Susan Bozinovic, a Realtor® with Century 21 Town & Country in Troy, MI.

Also, there are many other factors that can increase your expenses such as your new mortgage, taxes, cost of insurance, home maintenance and upgrades. You might be moving into a more expensive area of town or your smaller new home might need upgrades or renovations before moving in.

2. What are the financial implications of selling my home?

“Sellers need to be aware of how this sale affects their overall financial picture in regard to possible property tax increases or basis transfers and capital gains tax, and how that fits into their long-term financial planning,” says Wendy Gladson, a real estate consultant at Compass in Los Angeles.

You need to take into consideration other expenses that will occur when selling your home. These other expenses include local real estate transfer taxes, loan payoffs, home warranty, commission fees. You might be selling your home for $50,000 more than you paid for it but these fees will affect your bottom line.

3. What am I most excited about leaving behind?

Leaving a home that has many memories is hard. A smaller home means less cleaning and maintenance but make sure you are ready to leave your bigger house. If you dream of sitting outdoors on your patio instead of cleaning rooms that are rarely ever used then it is time to downsize.

4. Where will I park?

If you are downsizing to live in the city, then parking might be an issue. In the city, you might have to rent a space in a parking garage or park on the side of the street. This is not the only issue, if you are still moving in the suburbs, some smaller homes only have a one-car garage. It would not be fun to have to move cars each time you need to go somewhere.

5. What will I do with all my stuff?

A smaller living space will mean fewer rooms. If you currently have a home office, a gym, guest room or two living rooms then you will need to get rid of some of your furniture. Go through your stuff and determine what you want to keep. If you do not have enough space in your new home, then a storage unit might be the answer.

6. Should I consider a condo instead of a smaller house?

There are pros and cons to both a condo and a single-family home. There is less privacy in condos but you do not have to keep up with a yard. There is less maintenance with a condo but there are higher HOA fees associated with condo living.

7. Is the floor plan practical for your needs?

When you are downsizing, every square inch is a place to put your stuff. The floor plan is very important when it comes to getting the most space out of a smaller home.

8. Where do I want to move?

This is determined by several factors. If you are not yet retired then you will probably want to be close to work. Those that can work from home need to make sure to have some space for a home office.

When making a decision to move to a new city, state or country, make sure to determine if there are the services and lifestyle options you want in the new areas. A good idea would be to rent for a year in the new area to make sure that it is right for you.

9. Am I ready to downsize?

A good idea would be to take a look at homes in your desired area before you make a decision to downsize. You might envision yourself in a quaint one-bedroom bungalow but actually walking into one and visualizing you living there is the best way to determine if you could live in a smaller space.

“That’s when you’ll realize how small smaller really is. You’ll find yourself comparing what you have now to what you’ll have in the smaller home,” says ays Leneiva Head, principal broker/owner of Welcome Home Realty in Antioch, TN.

In a smaller home, you will have smaller rooms as well. You might be in a space that is more confined than you would want. Being mentally prepared for such a move is imperative. If you jump the gun and downsize without thinking through your decision, you could be making a big mistake.

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