5 Stats That Prove the Real Estate Market Is Getting Stronger

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Whenever there is talk about an improving housing market, some begin to show concern that we may be headed toward another housing bubble that will be followed by a crash similar to the one we saw last decade.

Here are five data points that show the housing market will continue to recover, and that a new housing crisis is not about to take shape.

1) Mortgage availability is increasing, but is nowhere near the levels we saw in 2004-2006.

A buyer’s chances of being approved for a mortgage have increased over the last three years; That’s good news for the market. This is not a precursor to another challenge, as many experts maintain that it is still too difficult for many buyers to attain house financing.

As Jonathan Smoke, the Chief Economist of realtor.com, recently explained:

“The havoc during the last cycle was the result…of speculation fueled by loose credit. That’s the exact opposite of what we have today.”

2) The Housing Affordability Index, which measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home, based on the most recent price and income data. The current index shows that it is more affordable to buy a home today than at any other time between 1990 and 2008. With median incomes finally beginning to rise, houses should continue to remain affordable and housing demand should remain strong.

3) Home prices are well within historic norms. Prices have increased substantially over the last several years; However, those increases followed the housing crash of 2008 and national prices are still not back to 2006 levels. If there were no bubble (and subsequent bust), today’s prices would actually be lower than if they were measured by historic appreciation levels from 1987-1999.

4) Demand for housing, as measured by new household formations, is growing. The Urban Land Institute projects that 5.95 million new households will be formed over the next three years. Even if the homeownership rate drops to 60%, that would be over 3.5 million new homeowners entering the market.

5) New home starts are finally beginning to increase. This helps eliminate the number one challenge in the industry – lack of inventory. And it does so in two ways:

  1. Some first time buyers will, in fact, purchase a newly constructed home.
  2. Many current homeowners will move-up (or move-down) to a new construction and then put their current home on the market.

This means that there will be an increase in both new construction and existing home inventories.

Posted by The KCM Crew

Ready to Make an Offer? 4 Tips for Success

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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 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 4.7-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 home.

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 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 typically re-negotiate the terms or cancel the contract.”

Bottom Line

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

Posted by The KCM Crew

Be sure to talk with one of our agents today if you are looking for a new home!

Consider This Before Taking Out A Debt Consolidation Loan

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Consolidating debt is about more than combining your current debts into one loan — you’ll have to step back and change your financial habits in order to be successful.

Debt consolidation can look like a great fix for your financial woes, but it may not be the solution you really need.

Debt consolidation is the process of refinancing multiple balances into a single loan. You can take out one loan for the total amount of your current debt, then repay your existing debts with the funds from the new loan. Finally, you’re left with just the new loan to repay.

A debt consolidation loan can help make life a bit easier, reducing the amount of loans and debts you need to track. Making a single payment each month may even save you money in the long run if you can get a lower interest rate than your existing loan rates, and it can help you avoid sweeping a few bills under the rug (raise your hand if you’re renting in Boston, MA, or another pricey market and have felt the burden of a hefty rent in addition to student and car loans).

However, these benefits aren’t guaranteed, and what you save on your interest rate may be canceled out by origination fees and other charges. Consider these factors and be prepared to change the way you spend money before you consider a debt consolidation loan.

 

Debt consolidation won’t necessarily make things easier

The idea behind debt consolidation is a good one. You get to roll all your debt into one loan to focus on and repay. It makes your financial life simpler and may help you pay less on what you owe if you can get a lower interest rate.

But it doesn’t always work out this way. “I’ve worked with plenty of people pre- and postbankruptcy over the years,” says Jason Reiman, a certified financial planner. He’s the founder of Get Financially Fit!, a company based in Tucson, AZ, that helps people with their finances. “A leading indicator of bankruptcy, in my experience, is debt consolidation.”

Reiman says that consolidating loans (with the exception of student loans) usually provides you with a short reprieve. It’s often followed by taking on new debts outside of the ones you’ve already consolidated. Why do people do this? “Debt consolidation typically doesn’t produce the expected results simply because of mindset,” Reiman says. “As humans, we resist change and discomfort.”

And changing your financial habits to not rack up more debt after consolidation can be really uncomfortable. You must change how you behave with your finances, and that could mean going without the luxuries and the standard of living that caused you to get into debt in the first place.

Be prepared to learn and understand how you spend money

“Debt consolidation can look OK mathematically, but it has a tendency to ignore the emotional and psychological aspects,” Reiman says. And those factors do matter as much as — or more than — the numbers.

Your mindset and behavior are at the heart of any financial issue. While a debt consolidation loan can help some people, it won’t do anything for you if you’re not committed to changing your internal thought processes and switching up your spending patterns.

Reiman says that for any solution to be effective, you need to start with the real cause of the problem. Ask yourself a few important questions. “For example,” he suggests, “how did I get into this heavy debt situation in the first place?”

So if debt consolidation isn’t the answer for you because it doesn’t address the root of your financial troubles, what is the solution? Reiman offers one exercise to try. “Get out a piece of paper and a pen,” he says. “Divide the paper into four quadrants: physical, spiritual, mental, and financial. Jot down your thoughts and actions over the past three to five years which may have prompted you to add more debt to your life.” Reiman says we will remember times when things seemed to happen outside of our control. But by taking a look at how we thought and felt at that time, we can see patterns in how we acted and reacted.

“The purpose of this exercise is to help uncover the counterproductive actions,” he explains. “Only when you know how you arrived at your current situation are you able to make solid choices about changing it for the better.”

Clean up your finances before consolidating

If you feel that a debt consolidation loan is an important step in your journey to financial success, make sure you do everything you can to eliminate opportunities to create new debts in the future. Cut up your highest-interest credit cards and use a budgeting system you can stick to. Start building an emergency fund or a savings account with a cash reserve you can draw on if something comes up that your monthly budget can’t handle.

Then sit down and make a plan for how you’ll repay your consolidated loan. Will you cut back on your spending to help make those payments and avoid further debts? Will you work to earn more so you have more cash flow to put toward debt repayment?

Consider other options

Remember, a debt consolidation loan is only one strategy for repaying what you owe. “The process of eliminating small debts one by one, and achieving these small wins, is invaluable,” Reiman says. And he stresses the importance of simply having a plan and tracking your progress.

“If you have multiple debt accounts, consider using a free program like powerpay.org to crunch the numbers,” he says. The site will help you craft a plan of action that most likely doesn’t include consolidation. You can also use various debt payoff strategies, like the debt avalanche or debt snowball, to help you make progress.

“Get accountability and coaching and be open to change,” Reiman says. “It’s difficult but possible.” Your current level of debt might seem insurmountable, but don’t get overwhelmed. Take a deep breath, consider your options, and make a plan. Then dive in!

 

Posted by Kali Hawlk on Trulia

10 Uncommon Home Inspections To Consider Before Selling

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The savvy seller knows to get ahead of the game. Pest inspections, foundation assessments, mold testing — there are plenty of specialty inspections you can have done on your home while prepping it for sale.

Hiring these specialized inspectors can help reveal potential problems before you’re scrambling to close on your home sale.

Selling your home can be a frightening idea even if your market is booming. In particular, the home inspection can keep you up at night with fear.

What will the inspector discover inside your home for sale in Atlanta, GA? What hidden home flaws will end up costing you?

However, a savvy seller knows to get ahead of the game. From pest inspections to foundation assessments and mold testing, there are plenty of specialized precautions you can take to prep your home for sale.

Here are 10 uncommon presale home inspections you should consider before listing your property.

1. Termites and other pests

Mice are the pests you see; termites are the ones you don’t. A proper pest inspector will get into your home’s crawl space and turn up any evidence of critters in your beams. They can also spot dry rot, which is caused by fungi and can lead to wood disintegration.

2. Asbestos

If your home was built before 1975, there’s a good chance asbestos is present in one or more of its building materials. Scary but true. It’s most commonly seen as thermal insulation in basements, but pre-1970s, asbestos could be found in anything from window caulk to attic insulation.

Asbestos is hazardous only when it begins to crumble. Bring in an inspector to assess the condition of any known asbestos; if they recommend removal, tackle that before listing.

3. Foundation

If you live in an older home, the threat of foundation settling looms large. A bit of settling is expected, but when you’re heading into Tower of Pisa territory, that’s where the troubles begin.

Have a foundation engineer look for signs such as a cracked wall, twisted window frames, or horizontal cracks in the foundation itself — and then offer a timetable for repair. (Pro-tip: Foundations settle very slowly, and if a buyer plans to stay in the home for only a few years, they might not be as concerned.)

4. Electrical

Homes go through many stages: a home business here, a couple of rental apartments there. That also means a lot of electrical rewiring, which can lead to code violations. Bring in an electrician you trust who’s also familiar with the neighborhood architecture and history so they know what problems to look for.

5. Chimney

While that wood-burning fireplace is a major draw to buyers, prepare yourself for questions about its condition. A chimney inspector can make sure the flue liners and inside bricks are in good shape and that smoke is exiting the house properly.

If you have a nonworking fireplace with the potential to be reopened (another buyer draw), you might want to send someone to your roof to inspect the chimney exterior.

6. Lead

Just because lead paint was banned in 1978 doesn’t mean it isn’t still lurking in your home.

If you have any concerns — especially if your home will attract buyers with young children — bring in a certified lead abatement contractor. At the least, you’re doing the neighborhood a public health service.

7. Roof

Roof repair is one expense that makes buyers wish they had never entered the real estate market in the first place. Hire someone who specializes in your roof material (rubber, slate, etc.) to confirm whether damage exists, and get a firm estimate on the repairs or replacement so a buyer doesn’t overstate those costs later during negotiations.

8. Soil

If you live on a hill, you run the risk that soil could crumble in ferocious weather. Before you sell, a soil inspector can affirm your land’s stability. If you have a large plot that would captivate potential gardeners, an inspector can also test for soil contamination.

9. Trees

You’ve love that old chestnut in the backyard but have always wondered why its leaves grow so sparsely. Before pitching the idea of a treehouse to the next owners, bring in an arborist to test the tree’s long-term viability.

Tree care and removal are surprisingly costly, so buyers may be wary if those gorgeous and towering trees are unstable or otherwise unhealthy.

10. Mold

It’s not just for hypochondriacs anymore. The health dangers of mold are well-documented, and its threat is on the minds of real estate shoppers. A good mold inspector will ask you the history of the home, including past water damage, and then do a visual tour of your place before testing for various spores.

 

Posted by Meaghan Agnew on Trulia

 

Renters: Are You Ready to Buy a Home?

While you save up your down payment, take these 5 steps to get you closer to closing.

For renters planning to buy a home, preliminary steps like creating a budget and saving for a down payment are obvious. Here are five more advanced steps toward moving out of your rental and into a dream home of your own.

Understand the full cost of homeownership

As a renter, a single rental fee covers your monthly housing payment. But as a homeowner, four main factors go into your monthly housing payment: principal, interest, taxes and insurance (P.I.T.I.). Understanding these costs will help you determine how much house you can afford.

Together, principal and interest comprise your monthly mortgage payment, with the principal paying down your loan balance each month, and the interest paying your fee for borrowing the money. Use a mortgage calculator to determine how much of your payment goes toward principal versus interest each month.

Taxes refer to property taxes, which are assessed by the county you live in. They average 1.2 percent of your home’s value each year.

Insurance — paid to a homeowner’s insurance company of your choice — is required when you have a mortgage. Lenders require that your insurance cover the cost of rebuilding the home if it is ruined by fire or other disaster. This “replacement cost” is determined by your insurer, and must be agreed to by your lender. Insurance will typically cost $700 to $1,200 per year for a single family home.

For condo owners, there’s a fifth monthly cost category: homeowners association (HOA) dues. These fees cover common area amenities, landscaping, ongoing upkeep and reserves for future maintenance like roof replacement or exterior painting. These monthly dues range from $100 for cheaper condos to $1,000 or more for luxury condos.

Single family home buyers can take a useful cue from HOA budgets, which generally require that at least 10 percent of dues go toward reserves. Even if you’re not buying a condo, it’s a good idea to set up a similar savings plan for future maintenance like replacing a roof or major appliances.

Know your homeowner tax benefits

Mortgage interest and property taxes are deductible when you file your annual tax returns, and reduce taxable income.

These deductions significantly lower your cost of homeownership. For example, for a $300,000 home with 20 percent down and a 30-year fixed mortgage at 4 percent, monthly P.I.T.I. is about $1,545. Tax deductions reduce this total housing cost to about $1,215.

Study rent-vs.-buy math

Often, people judge the cost of renting vs. buying by comparing P.I.T.I. to a rental payment. But to get an apples-to-apples comparison, you actually have to look at after-tax-benefit homeownership costs and rent costs.

Using the example above of a $300,000 home that costs $1,215 per month after taxes, you could compare this residence to a home that rents for about $1,200. If the $300,000 home was more spacious or in a more desirable area, the math would seem to favor buying — but don’t forget this example requires a $60,000 down payment.

Identify mortgages that fit your budget and timeline

If you don’t have 20 percent to put down, you can still get a mortgage with as little as 3 percent down. However, if your down payment is less than 20 percent, you’ll have to pay mortgage insurance, which is about .85 percent of your loan amount, and isn’t tax deductible.

Your monthly P.I.T.I. (which includes mortgage insurance) is about $1,995 on a $300,000 home with 3 percent down and a 30-year fixed mortgage at 4 percent. After tax deductions, this total housing cost drops to about $1,614. And you’d only need $9,000 for the down payment.

You can also lower your rate and P.I.T.I. with a shorter-term loan like a 5-year ARM, but rates on these loans will adjust in 5 years, so you risk having a much higher payment if you plan to stay in the home longer than that.

Start preparing your credit score now

Credit scores are critical for getting the best mortgages with the lowest rates. Lenders want reliable on-time payment history as well as credit depth.

More credit accounts are better, so renters with only one credit card should consider obtaining more credit. Just note that your credit score can drop 5 to 15 points when you first open a new account, then will come back up when you’ve established a good payment history.

Have questions about purchasing a home? Check out our Home Buyers Guide.

Posted by Julian Hebron on Zillow

Why Getting Pre-Approved Should Be Your First Step

In many markets across the country, the amount 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:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. 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.

Posted by The KCM Crew

5 Steps to a More Organized Home for Back to School

This A+ plan will have your family ready to greet the first day of school with a smile.

As if summer isn’t crazy enough, the transition to school can make home life even busier and messier. Schedules are a mix of school activities and the last-hurrah-of-summer, and the house is strewn with important school papers and wet beach towels. Here are a few tips to help you organize the chaos this year.

Clean the fridge out (and off) and restock

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Clearing the front of the fridge of summer camp art projects and already-happened wedding invitations will signal a new season and leave room for important phone numbers and all those A+ papers your young scholars bring home.

Then, clean out the refrigerator, tossing all those picnic leftovers, and get it ready for quick breakfasts, packed lunches and after-school snacks. Anything grab-and-go is sure to be appreciated, especially during the first few weeks of school while your family is still getting used to the new schedule. A basket of fresh fruit by the door is also handy.

Take stock of closets and clothes

Courtesy of California Closets.

A new first-day-of-school outfit is a childhood ritual. But before you add to your child’s wardrobe, take stock of what they’ve outgrown during the summer months. And don’t forget the weather will probably be changing soon. See if your kids will be needing any new warmer clothes for the coming season.

A clean and organized closet and dresser will make getting out the door in the morning easier for everyone.

Similarly, catching up with laundry and creating a laundry system if you don’t already have one will keep your life running more smoothly.

Create a scheduling center

This is Mission Control for the family, so it should be in a central place in your home, such as the kitchen or entryway. You’ll want to keep a calendar, filing system, address book, notepads for taking phone messages, and plenty of pens, since they always seem to go missing.

This is also where paperwork should go to be sorted and put away, or signed and sent back to school. Create a system for paperwork and scheduling the family so Dad isn’t slated to tee off with his co-workers at the same time he’s supposed to chaperone a field trip.

Make mealtime easy

Meal-planning will save you time and money — not to mention protect your sanity when you’re running home from work and PTA meetings.

To keep the grownups fueled, set up a coffee station in your kitchen where they can grab a to-go mug easily.

Create a menu, and make a master shopping list to prep for the week. That way, you’ll know exactly what to make when everyone’s hungry, and you won’t waste ingredients.

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Shutterstock ID 117974122

Keep a list on your fridge to remind you of the week’s menu. And when inquiring minds ask what’s for dinner, you can direct them to the menu.

Prepping a few extra meals to throw in the freezer now will ease the busy first few weeks of school, too.

Tackle the mudroom and entryway

School brings with it a lot of paraphernalia: backpacks, lunch bags, gym bags, artwork, and library books. The mudroom or entryway will be the drop-off point and can quickly become a disaster without a system.

Courtesy of California Closets.

Are shoes taken off here? If so, make sure everyone has a designated spot for their shoes. Same with coats and backpacks.

Lunch bags should go in a specific place, or back to the kitchen to be cleaned out for the next day.

Establishing these routines at the beginning of the school year will help them become engrained so by the time winter, with its extra layers, and spring, with its muddy boots, come along, you won’t be pulling your hair out.

While the transition will take some getting used to, having solid systems in place in your home can help you ease the stress, and focus on the enjoyment of an exciting new school year.

Get more home design ideas to keep you inspired.

Posted by Natalie Wise on Zillow