4 Reasons to Buy a Home During the Holidays

December 2, 2014| Vera Gibbons| Zillow Blog| Link

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In the market for a new home? Here are four reasons to add real estate shopping to your December to-do list.

Bargain prices

Did you know that, historically, home prices are lower in December than in any other month?

As for the overall housing picture, if you’re not yet in the market, you’ll like this news: While home prices are continuing to rise, it’s happening at a much slower pace.

According to a recent report from Zillow, U.S. home values are currently up 6.4 percent year-over-year and have been slowing for nearly two years. Next year home values are expected to grow at 3 percent — roughly half their current pace.  These changing dynamics, and a shift toward healthy stabilization, put more power in the hands of buyers.

Low mortgage rates     

What’s driving affordability? Low mortgage rates. Currently hovering in the 4 percent range, rates are projected to edge up to 5 percent by the end of 2015, according to Zillow Chief Economist, Stan Humphries.

To put this in perspective, did you know that if rates go up by just one percentage point, your purchasing power is reduced by a whopping 11 percent? Find out how much waiting to buy could cost you.

Motivated sellers

If sellers are listing their home for sale this time of year, this likely means they’re serious about shedding the weight of their residences.

Regardless of why that is – perhaps they’ve recently gotten divorced, have to relocate for a new job opportunity, or are under some other personal pressure – this puts you, the buyer, in a much better position to negotiate and ultimately cut a deal, particularly since competition is minimal this time of year.

Tax savings

At the end of the year, everyone is looking for ways to lower their tax bill. And closing on your new home before Dec. 31st is one way to get some breaks.

After all, you can deduct home purchase costs, including mortgage interest, property taxes and points — while you build equity and save yourself a significant amount of money.

Millennials Looking Toward Homeownership

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A recent survey shows that Millennials want to buy a home and move out of the City.

6 Ways to Ace Your First Home Purchase

 DaveRamsey.com| Link

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Buying your first home is a mixed-up bag of emotions. Amid all the excitement, there’s an underlying doubt: “What if I mess this up?”

Look, no home is perfect, and you can’t avoid every mistake. But that doesn’t mean you’re doomed to failure your first time around. There are steps you can take to make your American Dream a success.

We asked Dave’s Facebook fans to share their lessons learned. Here’s what they had to say.

Do Budget for the Unexpected

If there’s one thing you can count on as a homeowner, it’s that Murphy will show up. Anything that can go wrong will. When that happens, you’ll need a solid emergency fund to get you through.

Just ask Christine D. from Loa, UT. Nearly every appliance in her new home broke within the first year. “We thought the home warranty would protect us but found they were horrible to work with,” she says.

Keep Murphy at bay by piling up enough cash to cover three to six months of expenses before you take the leap into home ownership. Couples can build an even bigger buffer by buying a home based on just one income. That way, if one of you loses your job or decides to stay home with the kids, you can still afford the mortgage.

Carol F. from Raynham, MA, learned the value of this approach when her husband became terminally ill. “I am so thankful we did this,” she says. “Had we required two incomes to make the mortgage, we would have lost it.”

Don’t Bite Off More Than You Can Chew

Two words of advice made a frequent fan appearance: Start small.

“Always remember the bigger the house, the bigger the bills,” Nick R. says. And forget what the bank is willing to loan you. “Just because you qualify for a certain amount doesn’t mean you have to buy a house at that amount,” he adds.

If you’re getting a mortgage, aim for a payment of no more than 25% of your monthly take-home pay on a 15-year fixed-rate mortgage and plan to put at least 10–20% down. Be sure to factor additional costs like maintenance and repair into your budget as well.

This is especially true if you’re in the market for a fixer-upper. Krista B. of Baton Rouge, LA, suggests making an itemized list of projects and costs before buying a fixer-upper. “It will always cost more than you think in your head when you put it on paper,” she says.

Do Look to the Future

It’s easy to get used to the mobility that comes with renting, but home ownership requires long-term commitment. Before jumping into the perfect home today, ask yourself whether it will still be practical tomorrow.

Kristi M. and her husband bought their first home in 2003, assuming they’d be there five years max. Then the recession hit. “We didn’t think about schools or area when we were 21,” she says. “Now with two kids, I really wish we would have thought about those things back then!”

It also pays to look into future plans for the surrounding area. Kristine C. of Marysville, WA, suggests reading city and county construction proposals. “The quiet back road we bought our first home on was slated to be a six-lane highway in 20 years, and we had no idea because we didn’t think to research it!”

Don’t Ignore Location, Location, Location

It may sound cliché, but location matters—a lot. So how do you know what to look for?

Lea B. offers these ideas: “Drive by the home at all times of the day and night. Physically go into the schools where your kids will attend. Talk to neighbors. Stop by the nearest police station and ask about the crime rate.”

It’s also wise to consider convenience. Paul S. from Marion, IA, recommendsthinking about places you go frequently. “Not just work because that likely changes anyway,” he says. “Things like grocery stores, gas stations, church and schools are more likely to be static over a number of years.”

Do Pay Attention to Details

Many folks regret getting so caught up in the enormity of the decision that they overlooked the little things. Here are just a few small details they said make a big difference.

—“Turn the shower on, run the sink water, and flush the toilet at the same time to check for water pressure limitations,” Antoinette M. of Artesia, NM, suggests.

—“Make sure electrical switches are in common places,” Sarah W. says. One of her bathrooms has the switch behind the door while the other one has the switch outside the bathroom.

—Maddie S. from San Antonio, TX, recommends counting your closets and testing all the kitchen drawers to make sure they actually open.

—“Think hard about the amount of maintenance the yard and garden will need,” Sally H. says.

—David G. likes to change the oil on his cars to save a buck, but his HOA doesn’t allow it. “Make sure you can live within the HOA rules before you own it,” he says.

Don’t Rush

There’s no need to sprint to the finish line with your first home. You don’t want to stumble on a purchase with that many zeroes at the end!

“When in doubt, wait a while,” Chris C. of Austin, TX, says. “There’s time. Take it slow.”

A good real estate agent can help you navigate your options. Look for a pro who has your best interests at heart and doesn’t hurry the process.

“If that isn’t the case, don’t feel intimidated—find one who is!” Anne S. of Greenwood, IN, advises. “This is a huge decision and should not be made under pressure while dealing with someone who just wants to sell you a house and move on.”

Success Starts Here

Buying your first home is serious business, but it doesn’t have to be stressful. An experienced real estate agent can make reaching your goal of homeownership an enjoyable experience by helping you find great deals on homes, negotiating the contract on your behalf, and handling all the paperwork.

What You Don’t Know About Your Credit Score… Could Cost You!

Keeping Current Matters Blog| September 24, 2014| Link

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Informed consumers considering a home purchase today want to do the right thing and plan ahead. Many do not seek immediate professional guidance from a Realtor or a mortgage loan officer. Instead, they hunt for hours online, looking at numerous websites for available homes for sale. They also consult websites to find the best interest rate and terms for future monthly mortgage payments. Many consumers feel betrayed, cheated and at times embarrassed to learn that the credit scores they counted on, to get that specific interest rate for their loan, are not used by mortgage lenders.

When shopping for a good mortgage interest rate, consumers also need to know their credit score, and utilize an online mortgage calculator to compute future monthly mortgage payments. A Google search for “credit score” will yield hundreds of results. The consumer accepts the provider’s terms and conditions to get a free credit score. Terrific! Unaware that in exchange they just received a meaningless credit score that lendersnever use. They also handed over their Non-Public Personal Information (NPPI) to that credit score provider for life.

Before we go any further, let’s look at available credit scoring products available to consumers today:

  • FICO credit score from Fair Isaac Corporation/myfico.com, range 300 to 850
  • Plus Score from Experian, range 320 to 830
  • Trans Risk Score from TransUnion, range 300 to 850
  • Equifax Credit Score from Equifax, range 300 to 850
  • Vantage Score from all three bureaus, two ranges, 300 to 850 and 501-990

What is a FICO Score?

In 1958, Bill Fair and Earl Isaac, a mathematician and engineer, formed a company in San Rafael, California. They created tools to help risk managers make a better decision when taking financial risk. Today, 90 percent of all lenders use the FICO score, first created in 1989 by Fair Isaac, and it’s the only score Fannie Mae and Freddie Mac, the Federal Housing Agency and Veterans Affairs will accept in underwriting loans they guarantee.

What is a Consumer Score?

The three credit bureaus, in their understanding of the credit scoring model created by FICO, decided to create their own scoring models, and in 2004 – 2006 they unveiled the “consumer” scores: Plus ScoreTrans Risk ScoreEquifax Credit Score, and Vantage Score. However, these are not genuine FICO scores, and mortgage lenders don’t use them. Consider this comparison: Would you buy a watch that gives the approximate time of day?

The three credit bureaus work with major financial institutions, professional organizations, comparison sites, personal finance businesses, clubs such as Costco, AAA, Sam’s Club, and many data-mining brokers to bombard consumers in the race of the free credit score mania, all with the enticement of a “consumer” score that is not used by lenders, in hopes of obtaining subscriptions or fees from consumers. Fees that are totally unnecessary!

Know Your Score

Gaining access to one’s own credit report and credit score prior to loan approval with no strings attached could be helpful, and at all times beneficial. With little effort, inaccuracy of information can be instantly corrected at the credit bureau level, and with a few simple steps, credit scores could be enhanced. For example, paying down revolving account balances before a creditor’s statement-ending date (the creditor later updates account information with the credit bureaus), thus reducing revolving account balances at a particular point in time, will positively add more points to a score. It’s priceless.

More Information

Consumers have a legal right to access their annual credit report at no charge once a year from annualcreditreport.com, a site sponsored by the three major credit bureaus: Experian, Equifax and TransUnion.

These reports provide all the basic consumer data, but do not reveal a credit score. If you have a need for the FICO credit score that is actually used by mortgage lenders,myfico.com is the website to visit. For $19.95 per bureau, consumers can purchase a customized credit report with a genuine FICO score.

Additional websites to visit: the Federal Trade Commission (ftc.gov) and the Consumer Financial Protection Bureau (cfpb.gov) for true answers to questions about any financial concepts, financial products, dispute and complaint submissions, and much more.

FHFA’s Dramatic Easing of Mortgage Standards

Realtor Mag Daily Real Estate News| October 21, 2014| Link

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Federal Housing Finance Agency Director Mel Watt on Monday announced plans to expand home buyers’ access to mortgages by loosening up lending standards.

During the Mortgage Bankers Association’s annual conference, Watt said FHFA will release guidelines “in the coming weeks” to allow increased lending to borrowers with down payments as low as 3 percent. FHFA, which regulates Fannie Mae and Freddie Mac, also will help lenders who sell loans to the mortgage giants by easing standards on borrowers who don’t have perfect credit profiles. The move is expected to help open up the credit box to first-time buyers, self-employed borrowers, borrowers who have had recent job switches, and borrowers who faced financial hardship during the recession.

Watt said on Monday that Fannie and Freddie would not force repurchases from lenders of mortgages that are later found to have minor flaws in them, as long as borrowers have kept up with their mortgage payments for 36 months. Watt also said that lenders wouldn’t be forced to buy back bad loans if flaws were later discovered in the reporting of borrowers’ finances, debt loads, and down payments — as long as the borrowers would have qualified for the loans had the information been accurate.

“Minor, immaterial loan defects should not automatically trigger a repurchase request,” says David Stevens, CEO of the Mortgage Bankers Association. “As a result, lenders will be more confident in offering mortgages to qualified borrowers.”

FHFA said it will clarify to lenders when it will force buy-back loans that were issued based on inaccurate information. FHFA acknowledges that it failed to provide lenders with enough clarity in the past. That caused lenders to get cautious with lending after facing a flood of high-dollar settlements from loans they issued that later turned sour.

“We know that this issue has contributed to lenders imposing credit overlays that drive up the cost of lending and also restrict lending to borrowers with less than perfect credit scores or with less conventional financial situations,” Watt said. Addressing such issues are “critical to ensuring that there is liquidity in the housing-finance market and to providing access to credit for borrowers.”

Buyer Optimism Is At An All-Time High

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Why You Should Sell Your House Now!

October 6, 2014| Keeping Current Matters| Link

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School is back in session, the holidays are right around the corner, you might not think that now is the best time to sell your house.  But with inventory below historic numbers and demand still strong, you could be missing out on a great opportunity for your family.

1. Demand is Strong

Foot traffic refers to the number of people out actually physically looking at home right now. The latest foot traffic numbers show that there are more prospective purchasers currently looking at homes than at any other time in the last twelve months which includes the latest spring buyers’ market. These buyers are ready, willing and able to buy…and are in the market right now!

As we get later into the year, many people have other things (weather, holidays, etc.) that distract them from searching for a home. Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing supply is still under the historical number of 6 months’ supply. This means that, in many markets, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market in the near future.

Also, new construction of single-family homes is again beginning to increase. A recent study by Harris Poll revealed that 41% of buyers would prefer to buy a new home while only 21% prefer an existing home (38% had no preference).

The choices buyers have will continue to increase over the next few months. Don’t wait until all this other inventory of homes comes to market before you sell.

3. The Process Will Be Quicker

One of the biggest challenges of the 2014 housing market has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. Any delay in the process is always prolonged during the winter holiday season. Getting your house sold and closed before those delays begin will lend itself to a smoother transaction.

4. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 19% from now to 2018. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with an interest rate in the low 4’s right now. Rates are projected to be over 5% by this time next year.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market. Perhaps, the time has come for you and your family to move on and start living the life you desire.

 

Sunday Funny…

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What Can A Realtor Do For You?

NegotiatingTheDeal

88% of home buyers have used a realtor in 2014. When it comes to buying a home, the majority of buyers agree they need a realtor to negotiate for good prices and better terms of sale.

A Homeowner’s Net Worth is 36x Greater Than A Renter!

September 22, 2014| Keeping Current Matters| Link

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Over the last six years, homeownership has lost some of its allure as a financial investment. As homeowners suffered through the housing bust, more and more began to question whether owning a home was truly a good way to build wealth.

The Federal Reserve conducts a Survey of Consumer Financesevery three years, and just released their latest edition this past week.

Some of the findings revealed in their report:

  • The average American family has a net worth of $81,200
  • Of that net worth, 61.4% ($49,856) of it is in home equity
  • A homeowner’s net worth is over 36 times greater than that of a renter
  • The average homeowner has a net worth of $194,500 while the average net worth of a renter is $5,400

Bottom Line

The Fed study found that homeownership is still a great way for a family to build wealth in America.