Category: Financial

March 24, 2017

4 Great Reasons to Buy This Spring!

Here are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.9% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.8% over the next year.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained around 4% over the last couple months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison, projecting that rates will increase by at least a half a percentage point this time next year.

An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

 Call or TEXT us today to discuss loan possibilities. 619-544-6444 or email us at SanDiego@benchmark.us 

3. Either Way, You are Paying a Mortgage

There are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move on with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

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February 12, 2017

The Impact of Homeownership on Educational Achievement

The National Association of Realtors recently released a study titled ‘Social Benefits of Homeownership and Stable Housing.’ The study confirmed a long-standing belief of most Americans:

“Owning a home embodies the promise of individual autonomy and is the aspiration of most American households. Homeownership allows households to accumulate wealth and social status, and is the basis for a number of positive social, economic, family and civic outcomes.”

Today, we want to cover the section of the report that quoted several studies concentrating on the impact homeownership has on educational achievement. Here are some of the major findings on this issue revealed in the report:

The decision to stay in school by teenage students is higher for those raised by home-owning parents compared to those in renter households.
Parental homeownership in low-income neighborhoods has a positive impact on high school graduation.
Though homeownership raises educational outcomes for children, neighborhood stability may have further enhanced the positive outcome.
Children of homeowners tend to have higher levels of achievement in math and reading and fewer behavioral problems.
Educational opportunities are more prevalent in neighborhoods with high rates of homeownership and community involvement.
The average child of homeowners is significantly more likely to achieve a higher level of education and, thereby, a higher level of earnings.

Bottom Line

People often talk about the financial benefits of homeownership. As we can see, there are also social benefits of owning your own home.

*The next two Thursdays, we will report the study’s findings on the impact homeownership has on civic participation and a family’s health.

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February 10, 2017

Buyer Demand Is Outpacing the Supply of Homes for Sale

The price of any item is determined by the supply of that item, as well as the market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”

The darker the blue, the stronger the demand for homes in that area. Only six states had a weak demand level.

Call or TEXT us today to discuss loan possibilities. 619-544-6444 or email us at SanDiego@benchmark.us

Seller Supply

The Index also asked: “How would you rate seller traffic in your area?”

As you can see from the map below, the majority of the country has weak Seller Traffic, meaning there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes.

Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet the buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together to help you capitalize on the demand in the market now!

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Call or TEXT us today to discuss loan possibilities. 619-544-6444 or email us at SanDiego@benchmark.us

February 7, 2017

Thinking of Making an Offer? 4 Tips for Success

So you’ve been searching for that perfect house to call a ‘home,’ and you finally found one! The price is right, and in such a competitive market that you want to make sure you make a good offer so that you can guarantee your dream of making this house yours comes true!

Freddie Mac covered “4 Tips for Making an Offer” in their latest Executive Perspective. Here are the 4 Tips they covered along with some additional information for your consideration:

1. Understand How Much You Can Afford

“While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”

This ‘tip’ or ‘step’ really should take place before you start your home search process.

As we’ve mentioned before, getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).

2. Act Fast

“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.”

According to the latest Existing Home Sales Report, the inventory of homes for sale is currently at a 3.6-month supply; This is well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream homes.

Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.

3. Make a Solid Offer

Freddie Mac offers this advice to help make your offer the strongest it can be:

“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.”

Consider ways of making your offer stand out! Many buyers write a personal letter to the seller letting them know how much they would love to be the new homeowners. Your agent will be able to help you figure out if there are any other ways your offer could stand out above the rest.

4. Be Prepared to Negotiate

“It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford.

Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”

If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home.” If the inspection uncovers undisclosed problems or issues, you can discuss any repairs that may need to be made, with the seller, or cancel the contract.

Bottom Line

Whether buying your first home or your fifth, having a local professional on your side who is an expert in their market is your best bet to make sure the process goes smoothly. Happy House Hunting!

CALL ME TO GET PRE-APPROVED TODAY! 616-544-6444 – CARL
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January 20, 2017

Why Pre-Approval Should Be Your First Step

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:

Capacity: Your current and future ability to make your payments
Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
Collateral: The home, or type of home, that you would like to purchase
Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.

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January 11, 2017

3 Tips for Making Your Dream of Buying a Home Come True

Is your goal for 2017 to buy a home of your own? Realtor.com recently shared ‘5 Habits to Start Now If You Hope to Buy a Home in 2017’ … below are the top 3:

#1 Automate Your Down Payment Savings

Saving for a down payment is often one of the biggest barriers to homeownership cited in survey after survey. One way to jump start your savings is to automate your checking account to automatically save a small amount of your paycheck into a separate savings account or ‘house fund’.

“Amassing enough for a down payment takes discipline & perseverance, but setting up automatic savings can make it easier. If you never see the cash, you won’t spend it.”

#2 Build Your Credit History & Keep It Clean

When you go to apply for a mortgage, lenders will want to see that you have been able to pay off past debts. This means staying on top of your student loans, credit cards and car loans and paying them on time!

Credit bureaus recommend using no more than 30% of the credit available to you.

#3 Practice Living on a Budget

Downsizing your spending now will allow you to save more for your down payment & pay down other debts to improve your credit score. A recent study showed that “95% of first-time buyers were willing to make sacrifices to buy their home faster.” (below are the top 3 sacrifices made)

Some Highlights:

Realtor.com recently shared “5 Habits to Start Now If You Hope to Buy a Home in 2017.”
Setting up an automatic savings plan that saves a small amount of every check is one of the best ways to save without thinking a lot about it.
Living within a budget now will help you save money for down payments and pay down other debts that might be holding you back.

https://goo.gl/xR6PWh

January 6, 2017

Homeowner’s Net Worth Is 45x Greater Than A Renter’s

Federal Reserve reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

Every three years, the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a Forbes article, the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that by the end of 2016, the net worth gap will widen even further to 45 times greater.

The graph above demonstrates the results of the last two Federal Reserve studies and Yun’s prediction.

Put Your Housing Cost to Work for You

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.

The latest National Housing Pulse Survey from NAR reveals that 85% of consumers believe that purchasing a home is a good financial decision. Yun comments:

“Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.”

Bottom Line

If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, let’s get together and evaluate your ability to buy today!

Call Me for more info: Carl at 619-544-6444

Original Article

January 3, 2017

Demand for your homes is very strong right now while the competition is at a historically low level.

As we are about to bring in the New Year, families across the country will be deciding if this is the year that they will sell their current house and move into their dream home. Many will decide that it is smarter to wait until the spring “buyer’s market” to list their house. In the past, that might have made sense. However, this winter is not like recent years.

The recent jump in mortgage rates has forced buyers off the fence and into the market, resulting in incredibly strong demand RIGHT NOW!! At the same time, inventory levels of homes for sale have dropped dramatically as compared to this time last year.

Chart above showing the decrease in inventory levels by category.

Demand for your home is very strong right now while your competition (other homes for sale) is at a historically low level. If you are thinking of selling in 2017, now may be the time.

Article: https://goo.gl/1ocaYi

March 11, 2016

You Can Save for a Down Payment Faster Than You Think

In a study conducted by Builder.com, researchers determined that nationwide, it would take “nearly eight years” for a first-time buyer to save enough for a down payment on their dream home.

Depending on where you live, median rents, incomes and home prices all vary. By determining the percentage of income a renter spends on housing in each state, and the amount needed for a 10% down payment, they were able to establish how long (in years) it would take for an average resident to save.

According to the study, residents in South Dakota are able to save for a down payment the quickest in just under 3.5 years. Below is a map created using the data for each state:

What if you only needed to save 3%?

What if you were able to take advantage of one of the Freddie Mac or Fannie Mae 3% down programs? Suddenly saving for a down payment no longer takes 5 or 10 years, but becomes attainable in under two years in many states as shown in the map below.

Bottom Line

Whether you have just started to save for a down payment, or have been for years, you may be closer to your dream home than you think! Meet with a local real estate professional who can help you evaluate your ability to buy today.

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August 11, 2015

The Four C’s of Borrowing

A well-made table has four solid legs, and a well-made borrower is aware of the four C’s of borrowing: character, capacity, collateral and credit. These are the four legs you bring to the table for borrowing. What does each of these legs mean and how does each one keep your table up?

Character

Character is your work and income history. Every borrower needs to show the ability to repay the loan. Have you been regularly employed for at least two years? Banks wants to see that you have a regular income so you can make your loan payments. If you are a job hopper or your income is sporadic because your line of work is seasonal, you may be viewed as a risk. While child support and alimony can be viewed as income, it must be verified and continued for at least three years. If you’re self-employed and own your business, banks want to calculate the average of your monthly net income over two years. Payments of income such as commissions, bonuses and overtime also need to be averaged over two years. By averaging everything over those 24 months, banks can get a better gauge of your ability to repay that loan.

Capacity

Capacity is what you can afford. Are you already leveraged to the hilt? The rule of thumb is that your housing costs (mortgage, taxes, insurance and HOA) should be no more than 38 percent of your monthly income. But after adding in the rest of what you owe, your total ratio of debt to income (DTI) should be no more than 43 percent of your monthly income. If your DTI ratio is higher, your debt load is too heavy and the banks fear you can’t carry that weight, but may make exceptions depending on the overall scenario.

Collateral

Collateral is the house. It is what the lender uses to make sure that if you don’t pay back the money loaned to you, there is something there to help the lender get the money back. This is done through a process called foreclosure, in which you give the home back to the lender in exchange for the balance you owe on the home (not a good idea and will negatively affect your credit). That is the reason most lenders require money down and if you do not put 20 percent down your lender will likely require mortgage insurance. This insurance protects the lender and not the borrower. Banks want you to have enough for a down payment and closing costs. If the bank covers those costs, it usually will be in exchange for a higher interest rate.

Credit

Credit is your payment history, and is undoubtedly the most important C. Banks know that if you regularly paid your debts in the past, you most likely will continue to pay your debts. To establish credit, you should have at least two years of debt payments and four accounts reporting your credit. How is your credit scored (analyzed)? The higher your score, the better your credit is, and the easier it is to get a loan and a favorable interest rate. Did you make any late payments in the past two years? Do you have any judgment, liens, bankruptcies or loan modifications? Any of those negative actions will bring down your credit score. The lower your credit score, the less likely you will qualify.