80% of Renters Believe Homeownership is a Part of Their American Dream

According to the latest Aspiring Home Buyers Profile by the National Association of Realtors (NAR), 82% of surveyed renters desire to own a home in the future, with 80% believing homeownership is a big part of achieving their American Dream.

The profile went on to state that 50% of millennials believe that their rent will increase, with 20% believing that an increase in rent will be the catalyst that pushes them to consider buying a home vs. renewing their lease.

So, what is holding renters back?

What would make renters take the plunge?

NAR’s Chief Economist, Lawrence Yun believes that,

“Housing demand in 2018 will be fueled by more millennials finally deciding to marry and have kids and the expectations that solid job growth and the strengthening economy will push incomes higher.”

Yun goes on to warn that,

“However, with prices and mortgage rates also expected to increase, affordability pressures will persist. That is why it is critical for much of the country to start seeing a significant hike in new and existing housing supply. Otherwise, many would-be first-time buyers will be forced to continue renting and not reach their dream of being a homeowner.”

Bottom Line

If you are one of the many homeowners whose houses no longer fit their needs and are looking to move up to your dream home, now is a great time to list your starter home! First-time buyers are out in force looking to achieve their American Dream.

 

Posted by The KCM Crew

Whether you’re buying or selling, check out our website to get started!

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The Cost of NOT Owning Your Home

Owning a home has great financial benefits, yet many continue to rent! Today, let’s look at the financial reasons why owning a home of your own has been a part of the American Dream for as long as America has existed.

Zillow recently reported that:

“In reality, buying or renting a home is an intensely personal decision, with emotional and even financial considerations that go beyond whether to invest in this one (admittedly large) asset. Looking strictly at housing market numbers, there is a concrete point at which buying a home makes more financial sense than renting it.”

What proof exists that owning is financially better than renting?

1. We recently highlighted the top 5 financial benefits of homeownership:

  • Homeownership is a form of forced savings.
  • Homeownership provides tax savings.
  • Homeownership allows you to lock in your monthly housing cost.
  • Buying a home is cheaper than renting.
  • No other investment lets you live inside of it.

2. Studies have shown that a homeowner’s net worth is 44x greater than that of a renter.

3. Just a few months ago, we explained that a family that purchased an average-priced home at the beginning of 2017 could build more than $48,000 in family wealth over the next five years.

4. Some argue that renting eliminates the cost of taxes and home repairs, but every potential renter must realize that all the expenses the landlord incurs are already baked into the rent payment– along with a profit margin!!

Bottom Line

Owning a home has always been, and will always be, better from a financial standpoint than renting.

 

Posted by The KCM Crew

Ready to start searching? Click HERE to find all of our latest listings!

The Cost of Renting vs. Buying a Home [INFOGRAPHIC]

Some Highlights:

  • Historically, the choice between renting or buying a home has been a tough decision.
  • Looking at the percentage of income needed to rent a median-priced home today (29.2%) vs. the percentage needed to buy a median-priced home (15.8%), the choice becomes obvious.
  • Every market is different. Before you renew your lease again, find out if you can put your housing costs to work by buying this year!

Posted by The KCM Crew

Be Careful Not to Get Caught in The Rental Trap!

 

There are many benefits to homeownership. One of the top benefits is being able to protect yourself from rising rents by locking in your housing cost for the life of your mortgage.

Don’t Become Trapped 

A recent article by ConsumerAffairs addressed the continuous rise in rents, stating:

“The cost of putting a roof over your head continues to go up. Not only are home prices still rising, but the cost of rent rose 0.5% in June.”

Additionally, in the Joint Center for Housing Studies at Harvard University’s 2017 State of the Nation’s Housing Report, it was revealed that,

“Despite a slight improvement from 2014, fully one-third of US households paid more than 30 percent of their incomes for housing in 2015. Renters continue to be more likely to face cost burdens…the number of cost-burdened renters (21 million) considerably outstrips the number of cost-burdened owners (18 million) even though nearly two-thirds of US households own their homes.”

These households struggle to save for a rainy day and pay other bills, including groceries and healthcare.

It’s Cheaper to Buy Than Rent 

As we have previously mentioned, the results of the latest Rent vs. Buy Report from Trulia shows that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers show that the range is an average of 3.5% less expensive in San Jose (CA), all the way up to 50.1% less expensive in Baton Rouge (LA), and 33.1% nationwide!

Know Your Options

Perhaps you have already saved enough to buy your first home. A nationwide survey of about 24,000 renters found that 80% of millennial renters plan to eventually buy a house, but 72% cite affordability as their primary obstacle. Aside from affordability, one in three millennial renters have concerns about their credit scores, and another 53% said that a down payment is an obstacle.

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream homes. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap that so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Let’s get together to determine if you can qualify for a mortgage now!

 

Posted by the KCM Crew

Renting or Buying… Either Way You’re Paying a Mortgage

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There are some people who have not purchased homes 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 Entrepreneur Magazine, a premier source for small business, explained this month in their article, “12 Practical Steps to Getting Rich”:

While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

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

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.23% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

Posted by The KCM Crew

Do You Know the Real Cost of Renting vs. Buying? [INFOGRAPHIC]

Some Highlights:

  • Historically, the choice between renting or buying a home has been a close decision.
  • Looking at the percentage of income needed to rent a median-priced home today (30%), vs. the percentage needed to buy a median-priced home (15%), the choice becomes obvious.
  • Every market is different. Before you renew your lease again, find out if you could use your housing costs to own a home of your own!

 

Posted by The KCM Crew

7 Smart Tips For Renters With Bad Credit

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Wondering how to rent with bad credit? Even if you’re a first-time renter, there are ways to land a place without a perfect score.

Bad credit? You might have a tough time qualifying for that rental you love so much.

Real talk: Many landlords now rely on a credit check to vet potential renters, especially in competitive markets. (Just try hunting for an apartment for rent in Chicago, IL, and you’ll feel the pinch of a poor score.) Like it or not, your credit history can be used to assess how much of a financial risk you may pose to a landlord. Are you going pay your monthly rent on time, or does your credit report indicate that you have a history of paying bills late?

But there’s hope. Many renters lease apartments with bad credit (or no credit at all, if you’re a new college grad, for example) and work to boost their scores while renting. So how can you land an apartment if your score is lackluster?

Here’s how to rent with bad credit:

  1. Find a guarantor or co-signer. This is both the easiest and most complicated approach: Ask a parent, trusted friend, or relative with good credit to co-sign the rental application with you. In theory, it’s an easy solution, because while you’ll be the only one living in the apartment, your co-signer agrees to cover the payments in the event that you default on your rent. This can provide a landlord the extra reassurance they need. Of course, it’s complicated because someone else is on the hook for your behavior. You don’t actually want your co-signer to be forced to make payments for you, so be sure the monthly rent is an amount you can afford comfortably. Be realistic about what might happen to your relationship with your co-signer if you default on the lease.
  2. Be honest and show progress. Sometimes, bad credit isn’t a reflection of bad money management. You may have lost your job, suffered from medical problems, or experienced another financial setback that was out of your control. If this is the case, be upfront about it — before the landlord even runs your credit check. Your willingness to admit and own up to your bad credit is a point in your favor. It also gives you the opportunity to talk about the steps you’ve taken, and are currently taking, to improve your credit score. Whether it’s a proven track record of paying your bills on time or references from recent landlords, this will show your prospective property manager that you’re responsible and committed (even if your credit is less than perfect).
  3. Pay rent in advance or increase your security deposit. Bad credit makes landlords nervous because it indicates that since you defaulted on past bills, you might default on the rent. By paying a month or more in advance or offering a two-month security deposit, you can alleviate their concerns. Not only does this show your commitment, but it also provides them with extra cash that can cover some of the losses and damages should you skip out on the rent. (Which, of course, you won’t.)
  4. Get a roommate. Willing to share your living room and kitchen? Find a roommate. If the landlord will allow just one person to sign the lease, see if your roommate is willing to sign it solo. (Alternatively, try to move in with a roommate who is mid-lease and can add you without a credit check.) This way, the person on the lease is the one with more solid credit. Roommates come with another benefit: you’ll be able to share the bills. By reducing your financial burden, you can continue to pay down debt and repair your bad credit faster — a true win-win!
  5. Show solid income and offer to pay via direct deposit. Even if your credit history is a little shaky, being able to show a history of regular, consistent income can go a long way toward making a landlord feel better about you. When applying for an apartment, have proof of income ready, such as recent pay stubs, tax returns, and even a letter from your employer verifying your employment status and income. Offering to have your rent automatically deducted from your bank account can also help.
  6. Compromise by paying a little more. Some landlords charge additional “risk” fees if your credit score is poor. You may want to consider taking the hit if you really love the apartment, or if you need to quickly find a place to live. If you’re dealing with an individual property manager who is inclined to deny your application, you may be able to negotiate a slightly higher rent as a gesture of good faith.
  7. Bring recommendations. You’d bring letters of recommendation for a job application; why not bring the same when you’re trying to rent? Letters of recommendation can reassure a potential landlord that you’re a responsible person who won’t cause them any problems. Ask for letters from current and previous employers, landlords, and even past roommates who can vouch for your character. Even if your previous landlords were only for short-term rental arrangements, their endorsements can hold weight.

 

Posted by Paula Pant on Trulia