3 Questions to Ask Before You Buy Your Dream Home

If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interests at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.

Ask yourself the following 3 questions to help determine if now is a good time for you to buy in today’s market.

1. Why am I buying a home in the first place? 

This is truly the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.

For example, a survey by Braun showed that over 75% of parents say, “their child’s education is an important part of the search for a new home.”

This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the top four reasons Americans buy a home have nothing to do with money. They are:

  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space

What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

2. Where are home values headed?

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the median price of homes sold in May (the latest data available) was $252,800, which is up 5.8% from last year. This increase also marks the 63rd consecutive month with year-over-year gains.

If we look at home prices year over year, CoreLogic is forecasting an increase of 5.3% over the next twelve months. In other words, a home that costs you $250,000 today will cost you an additional $13,250 if you wait until next year to buy it.

What does that mean to you?

Simply put, with prices increasing each month, it might cost you more if you wait until next year to buy. Your down payment will also need to be higher in order to account for the higher price of the home you wish to buy. 

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long-term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates.

The Mortgage Bankers Association (MBA), NAR, and Fannie Mae have all projected that mortgage interest rates will increase over the next twelve months, as you can see in the chart below:

Bottom Line

Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

 

Posted by The KCM Crew

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Home Buying Myths Slayed [INFOGRAPHIC]

Some Highlights:

  • Interest rates are still below historic numbers.
  • 88% of property managers raised their rent in the last 12 months!
  • The credit score requirements for mortgage approval continue to fall.

Posted by The KCM Crew

The 5 Greatest Benefits of Homeownership

Recently, Freddie Mac reported on the benefits of homeownership. According to their report, here are the five benefits that “should be at the top of everyone’s list.”

  1. Homeownership can help you build equity over time.
  2. Your monthly payments will remain stable.
  3. You may have some tax benefits.
  4. You can take pride in ownership.
  5. Homeownership improves your community.

Let’s expand on each of Freddie Mac’s points:

Homeownership can help you build equity over time.

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 reported that now the net worth gap is 45 times greater.

Your monthly payments will remain stable.

When you purchase a home with a fixed rate mortgage, the majority of the payment (principle and interest) remain constant. On the other hand, rents continue to skyrocket. Your housing expense is much more stable if you own instead of rent.

You may have some tax benefits.

According to the Tax Policy Center’s Briefing Book -“A citizen’s guide to the fascinating (though often complex) elements of the federal Tax System” – there are several tax advantages to homeownership.

Here are four items from the Briefing Book:

  • Mortgage Interest Deduction
  • Property Tax Deduction
  • Imputed Rent
  • Profits from Home Sale

You can take pride in ownership.

Most surveys show that a major factor in purchasing a home is the freedom you have to design the home the way you want. From paint colors to yard accessories, you don’t need a landlord’s permission to make the house feel like a home.

Homeownership improves your community.

The National Association of Realtors recently released a study titled ‘Social Benefits of Homeownership and Stable Housing.’ The study explained:

“Homeownership does create social capital and provide residents with a platform from which to connect and interact with neighbors…Owning a home means owning part of a neighborhood, and a homeowner’s feelings of commitment to the home can arouse feelings of commitment to the neighborhood, which, in turn, can produce interactions with neighbors.”

Bottom Line

There are many benefits to homeownership. That is why it is still a critical piece of the American Dream.

Posted by The KCM Crew

5 Reasons Why You Should Not For Sale By Owner!

In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their homes on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers.

Here are the top five reasons:

1. Exposure to Prospective Buyers 

Recent studies have shown that 94% of buyers search online for a home. That is in comparison to only 16% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

2. Results Come from the Internet

Where did buyers find the homes they actually purchased?

  • 51% on the internet
  • 34% from a Real Estate Agent
  • 8% from a yard sign
  • 1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

3. There Are Too Many People to Negotiate With 

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale by Owner:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find some problems with the house
  • The appraiser if there is a question of value

4. FSBOing Has Become More And More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years. 

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. You Net More Money When Using an Agent 

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $185,000, while the typical house sold by an agent sells for $245,000. This doesn’t mean that an agent can get $60,000 more for your home, as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, let’s get together and discuss the options available in your market today.

Posted by The KCM Crew

How Long Does It Take to Buy a House? Use This Handy Timeline to Plan Ahead

inxti/iStock

How long does it take to buy a house? It’s a big question, especially for people who hope to time their home purchase with when their rental lease is up. Or before the start of school. Or when you’re closing on the sale of your old home. Or any number of other time-sensitive situations you’re trying to manage. While timing a home purchase is tricky and will vary based on a variety of factors, many experts estimate that you should expect the home-buying process to take a minimum of four months.

Talk about a long slog, eh? Yet there are good reasons why buying a home is no impulse purchase. To help illuminate what’s going on, here’s a rundown of the various stages you’ll encounter to help you time your house hunt just right.

Stage 1: Getting mortgage pre-approval

Your first step shouldn’t be toward all those exciting open houses; it should be to a lender, presuming you need a mortgage to make your home-buying dreams happen.

“You’ll want to speak to a mortgage broker to start the loan process early so there are no surprises,” says Realtor® Beverley Hourlier with Hilltop Chateau Realty, in San Diego.

There are a couple of reasons for this: One, unless you’re really organized, it will take you a while to gather all the documents you need to show your lender, including pay stubs and tax forms. Two, if the lender finds out that your finances are less than ideal for homeownership—because of, for instance, a poor credit score—it can take months to clean up your finances so you’re in better standing.

If your finances are in good shape, you can get pre-approval, which is a guarantee that the bank will lend you a certain amount of money. Having this guarantee in hand is a major asset when home shopping, because it shows sellers that you can afford their home and mean business.

If your financial circumstances don’t change much by the time you close the deal, you can ask a lender to extend that promise for an additional 90 to 120 days or longer; you can also lock in a great interest rate so it doesn’t rise by the time you’re actually buying a home.

Stage 2: Finding the right home

While looking at real estate listings online is fun and easy, things slow down once you get to the point where you’re visiting houses in person. After all, you can’t just pop in whenever you want; you can visit only during an open house (often only on the weekends), or schedule individual appointments at times that work for the seller.

So in the same way you have to kiss a lot of frogs before finding a prince, you’ll likely need to see a lot of homes before you find one you love. On average, people see 10 houses before they make an offer, but that number can be much higher.

According to Realtor® Melanie Atkinson with Coldwell Banker Residential Real Estate, in Tampa, FL, “The last thing you want is to feel rushed or make a decision in haste that you will later regret.”

Stage 3: Closing the deal

Once you’ve found the right house and made an offer that’s been accepted (which can typically happen in a few days), the waiting game really begins. On average, it takes around 50 days to close on a loan, from the time lenders pre-approve your mortgage application to the day you sign all the documents and get the keys.

Can you see now why getting pre-approval early is so important? In fact, securing financing is the most common holdup in buying a house. Even with a pre-approval, it can still take 30 days for the lender to do its due diligence by conducting a home appraisal to make sure it’s a good investment (since after all, the lender’s money is on the line).

Meanwhile, it will also take time for you to do your own due diligence to make sure the home isn’t hiding some glaring flaw you’ll regret inheriting. You can do this by checking the sellers’ property disclosure statements for any problems they’re aware of, and also hiring a home inspector to check out the house from top to bottom for any problems. All of this takes time.

Bottom line: As much as people complain about how long the home-buying process takes, it’s all in the interests of making sure you’re happy once you move in. So when in doubt, start now! If you’re worried you’ll find your dream house too soon, there are ways to negotiate with a seller so that it all works out.

Posted by Cathie Ericson on realtor.com

10 Ways To Protect Your Home While On Vacation

Heading out of town for the summer? Don’t make it easy for burglars to find out.

Keep your home from being a target with these easy tips.

The season of long weekends and beach getaways is upon us, and the last thing any homeowner wants to imagine when they’re soaking in the sun or taking a dip at the lake is a burglar snooping around their empty home. While there is no use in being paranoid about your belongings while you’re away, home security shouldn’t be taken lightly. And it’s the right season to be wary: The U.S. Bureau of Justice Statistics has found that household burglary rates are highest in the summer.

So whether you’re getting away for the day or weekend or taking an extended vacation, put these 10 summer holiday safety tips to work and make your home less of a target for robbers this season — or any season.1. Beef up security systems

  1. Sure, you’ve set the alarm and have motion-activated lights outside, but there are some additional things you should consider doing to protect your home. For instance, install a heavy-duty lock strike plate on your door; it’s the weakest part and where thieves may try to break in. You can also add sash pins to double-hung windows to make them more secure.

    2. Make your home look lived in

    One big clue to burglars that you’ve gone away during the summer? An unkempt lawn. Be sure to mow it before you leave — or hire someone to keep it trimmed while you’re gone — so your home looks well cared for. The same precaution can be transferred to winter months — if you’re expecting a big snow, have someone on retainer to shovel your walk and driveway.

    3. Don’t keep your windows open

    String lights can be a great way to illuminate a deck or outdoor space during summer months, but don’t run electrical extension cords through your windows. If your windows don’t close and latch, you’re sending burglars an invitation to invade.

    4. Don’t fall for door-to-door solicitations

    A common way to scope out what kind of goodies you have in your home is by posing as a charity asking for donations. If someone comes to your door, don’t open it, or ask for an ID that links them to the charity — and don’t let them see inside.

    5. Use the latest tech

    Take advantage of a devices like FakeTV, which mimics the flickering light of a TV to make it look as though you are home. Other home automation devices, like Wi-Fi-enabled security systems or plug-in devices that allow you to turn lights on and off remotely with your cellphone, can also help ward off thieves.

    6. Keep your valuables out of sight

    That shiny new laptop, your favorite jewelry, or basically anything valuable you’ve forgotten to stash out of sight could tempt burglars. Before you head out of town, do a quick walk-through in each room and hide all valuables.

    7. Make a record of valuables

    It’s a good idea to take pictures of your stuff — particularly big-ticket items such as laptops and TVs — and keep serial numbers in a safe place. Should the worst happen, you’ll have a record of what was taken and be able to confirm your things are truly yours if they are recovered by police.

    8. Do your packing out of sight

    Sure, you have to make room for the bikes, load up the boogie boards, and stash away some snacks, but be smart about where you pack up the car. If possible, keep your car in the garage or out of sight, advises Heather Dodson, a real estate agent at Team Leung in Greensboro, NC.

    9. Be smart about boxes

    If you’ve bought new gear to bring along on your summer vacation, don’t leave the empty boxes on the curb for everyone to see. Instead, break down the cardboard and put it in your container for recycling or trash pickup.

    10. Don’t publicize your vacation plans

    It’s hard to fight the allure of Facebook and Instagram. But it’s probably not the best idea to share your travel plans online with your 500 closest friends. Your Facebook profile might not be as private as you think — and it’s better not to take the risk.

    Posted by Ginny Gaylor on Trulia

Your New, Bigger Space: 5 Ways to Win at Upsizing Your Home

What to do with all that new space? Experts weigh in on filling it affordably and thoughtfully.

As a new generation graduates from renting to homeownership, they face plenty of uncertainties: How much homeowners insurance is enough? Is a home warranty necessary? How do you fill a 4-bedroom home with the stuff that used to be in a 1-bedroom apartment?

Transitioning from an apartment to a larger home is always tricky, but making that move — known as “upsizing” — is extra complicated for today’s young home buyers because they’re really going big.

“When Millennials do become homeowners, they leapfrog the traditional ‘starter home’ and jump into the higher end of the market by choosing larger properties with higher prices, similar to homes bought by older buyers,” states the Zillow Group Report on Consumer Housing Trends. “They pay a median price of $217,000 for a home—more than Baby Boomers, and just 11 percent less than Generation X. The Millennial median home size is 1,800 square feet, similar in size to what older generations buy.”

Many millennial home buyers move from small apartments into 1,800 square feet or more. Photo from Zillow listing.

When you upsize from an apartment into a spacious new home, opportunities abound — plenty of closet space, a yard for the dog, and extra rooms for that home office, spare bedroom, or home gym you’ve always dreamed of.

But once the moving van’s gone and the boxes are unpacked, new homeowners often face the harsh reality of upsizing: The furniture, wall hangings, and knickknacks that fit so perfectly in your small apartment occupy only a fraction of your larger home’s space. And that spare bedroom would be perfect — if only you had a spare bed.

Many new homeowners’ first instinct is to hit the discount stores and buy affordable pieces to fill the space. While budget-friendly furniture has its place, it shouldn’t make up the bulk of your new acquisitions.

There are plenty of ways to use what you already have — and optimize your spending for the things you don’t — to make your new house a cozy home.

Don’t buy things just to fill space

It’s tempting to stockpile new furniture and decorations, but it’s an effort that can easily backfire, according to Jennifer Dwyer, professional organizer and owner of Seattle-based A Logical Mess. Inevitably, the measurements are wrong, or the piece doesn’t match your existing style or decor.

“People naturally want to fill the space, but you really have to consider how you’re going to use it,” advises Dwyer. “Wait until you move in, place the furniture you have already, and assess at that point.”

Start by placing the pieces you have, then decide what to add. Photo from Zillow listing.

It’s OK to sparsely furnish the new place while you get a feel for your new home and the style you’re after. “You can tell when people just go to, say, Pottery Barn and buy what’s on the showroom floor,” says Jason Mathews, owner of Seattle interior design and home staging firm, Jason Mathews LLC.

Prioritize with a special piece

To furnish a large living room or family room, Dwyer recommends investing in a sectional couch. Like a dining room table that expands to seat more people, a sectional sofa pulls apart and goes back together depending on design preferences. And such sofas often have expansion pieces you can buy later to further fill space, adds Dwyer.

Sectional sofa components can be separated and expanded to change the room. Photo from Zillow listing.

Mathews agrees that a sofa is a good investment piece. “It’s something you’re going to use every day,” he says. Furthermore, sectionals pull apart to create more than one focal point in a room — think an L-shaped seating area and coffee table in one part of the living room, and a smaller couch and lamp in another for a cozy reading nook.

Not everything needs to be a statement piece, both Dwyer and Mathews emphasize. Once your sofa is in place, find inexpensive side chairs or perhaps an antique table to repurpose as a coffee table.

Place furniture thoughtfully

Furniture arrangement can make a big space seem smaller. Area rugs are ideal for anchoring furniture groups and making a space feel more homey.

A patterned area rug defines a space within a larger room. Photo courtesy of S+H Construction.

“The great thing about rugs is that they don’t have to be expensive — even a large rug,” Mathews says. He advises centering the rug, then placing furniture on and around it. “Even if the rest of the room is empty, you’re starting out with a cozy spot.”

Homeowners often make the mistake of pushing furniture right up against the walls. But pulling the furniture toward the center of the wall helps minimize an expansive room.

In an expansive room, arranging furniture away from the walls creates natural living areas. Photo from Zillow listing.

“Even just six inches off the wall,” advises Mathews. “It gives the room a chance to breathe a bit.”

Decorate your space

Once you’ve furnished your new home, it’s time to decorate. Items like a standing coat rack in an entryway or decorative vases in a stairwell are classic pieces that also fill space — and they don’t have to be expensive.

“I’m a big fan of T.J. Maxx and Ross,” says Dwyer. “You can play around with ideas, and if they don’t work out, you’re not out a ton of money.”

A few well-chosen decorations give a room a personal touch. Photo from Zillow listing.

Give extra rooms purpose

Empty rooms hold such promise: Will you have a home office? An extra bedroom for visiting families? A place for a treadmill, weight set, and stationary bike?

It’s OK to take some time to think it over — just shut the door if the emptiness bothers you. But whatever you do, don’t use that extra space as a storage room, warns Dwyer, or it will never become anything else.

“Find a home for everything, and don’t leave those boxes lying around,” she says. “If you don’t know where to put it, you probably don’t need it in your new home.”

Posted by Sheila Cain on Zillow