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The Mortgage Process: What You Need To Know [INFOGRAPHIC]

The Mortgage Process: What You Need To Know [INFOGRAPHIC]

 

The Mortgage Process: What You Need To Know [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • Many buyers are purchasing a home with a down payment as little as 3%.
  • You may already qualify for a loan, even if you don't have perfect credit.
  • Take advantage of the knowledge of your local professionals who are there to help you determine how much you can afford.

Housing Market To “Spring Forward” This Year

Housing Market To “Spring Forward” This Year | Simplifying The Market

Housing Market To “Spring Forward” This Year

Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right.

Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.

That hasn’t happened this year.

Demand for housing has remained strong as mortgage rates have remained near historic lows.

The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2015 all fell in April, May or June.

Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.

Bottom Line

If you are planning on selling your home in 2016, let's meet up to evaluate the opportunities in your market.

 

Home Is Where The Heart Is

Home Is Where The Heart Is | Simplifying The Market

Home Is Where The Heart Is

Yesterday, we discussed the reasons why homeownership makes sense, financially. Today we wanted to touch on the emotional or ‘real’ reasons that many Americans strive to become homeowners. 

The Joint Center for Housing Studies at Harvard University performs a study every year surveying participants for the reasons that American’s feel are most important in regards to homeownership.

The top 4 reasons to own a home cited by respondents were not financial.

1. It means having a good place to raise children & provide them with a good education

From the best neighborhoods to the best school districts, even those without children at the time of purchasing their home, may have this in the back of their mind as a major reason for choosing the location of the home that they purchase. 

2. You have a physical structure where you & your family feel safe

It is no surprise that having a place to call home with all that means in comfort and security is the #2 reason.

3. It allows you to have more space for your family

Whether your family is expanding, or an older family member is moving in, having a home that fits your needs is a close third on the list. 

4. It gives you control over what you do with your living space, like renovations and updates

Looking to actually try one of those complicated wall treatments that you saw on Pinterest? Want to finally adopt that puppy or kitten you’ve seen online 100 times? Who’s to say that you can’t in your own home?

The 5th reason on the list, is the #1 financial reason to buy a home as seen by respondents: 

5. Owning a home is a good way to build up wealth that can be passed along to my family

Either way you are paying a mortgage. Why not lock in your housing expense now with an investment that will build equity that you can borrow against in the future? 

Bottom Line

Whether you are a first time homebuyer or a move-up buyer who wants to start a new chapter in their life, now is a great time to reflect on the intangible factors that make a house a home.

How To Get The Most Money When Selling Your House

How To Get The Most Money When Selling Your House | Simplifying The Market

How To Get The Most Money When Selling Your House

Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensuring you get the highest price possible.

1. Price it a LITTLE LOW

This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).

How To Get The Most Money When Selling Your House | Simplifying The Market

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. In that way, the seller will not be fighting with a buyer over the price, but instead will have multiple buyers fighting with each other over the house.

Realtor.com, gives this advice:

“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This too may seem counter intuitive. The seller may think they would net more money if they didn’t have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.

Research posted by the Economists’ Outlook Blog revealed that:

“The median selling price for all FSBO homes was $210,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $151,900. However, homes that were sold with the assistance of an agent had a median selling price of $249,000 – nearly $40,000 more for the typical home sale.”

How To Get The Most Money When Selling Your House | Simplifying The Market

Bottom Line

Price your house at or slightly below the current market value and hire a professional. That will guarantee you maximize the price you get for your house.

Low Inventory Causes Home Prices to Accelerate

Low Inventory Causes Home Prices to Accelerate | Simplifying The Market

Low Inventory Causes Home Prices to Accelerate

The National Association of Realtors (NAR) released their latest Quarterly Metro Home Price report earlier this month. The report revealed that home prices are not only continuing to rise but that the increases are accelerating. Lawrence Yun, Chief Economist at NAR, discussed the impact of low inventory on buyers in the report:

"Without a significant ramp-up in new home construction and more homeowners listing their homes for sale, buyers are likely to see little relief in the form of slowing price growth in the months ahead.”

Here are the percentage increases of home prices for the last two quarters:

Low Inventory Causes Home Prices to Accelerate | Simplifying The Market

What this means to sellers

Rising prices are a homeowner’s best friend. As reported by CoreLogic in a recent blog post:

“With demand strong and inventory thin, the share of homes selling for the list price or more has also returned to pre-bust levels. With inventory tight, homes are more likely to sell above the asking price.”

What this means to buyers

In a market where prices are rising, buyers should take into account the cost of waiting. Obviously, they will pay more for the same house later this year. However, as Construction Dive reported, the amounts of cash necessary to buy a home will also increase.

“These factors have created a situation where the market keeps moving the goalposts in terms of the down payment necessary for first-time homebuyers to get into a home.” 

Bottom Line

If you’re thinking of selling and moving down, waiting might make sense. If you are a first time buyer or a seller thinking of moving up, waiting probably doesn’t make sense.

Mortgage Rates Again at Historic Lows

Mortgage Rates Again at Historic Lows | Simplifying The Market

Mortgage Rates Again at Historic Lows

Just two weeks ago, we posted an article discussing where mortgage interest rates may be heading over the next twelve months. We quoted projections from Fannie MaeFreddie Mac, the Mortgage Bankers’ Association and the National Association of Realtors. Each predicted that rates would begin to rise slowly and steadily throughout 2016.

However, shaky economic news and a volatile stock market have actually caused rates to drop six out of the last seven weeks, and have remained at 3.65% for the past two weeks.

Mortgage Rates Again at Historic Lows | Simplifying The Market

Rates have again fallen to historic lows yet many experts still expect them to increase in 2016. The only thing we know for sure is that, according to Freddie Mac, current rates are the best they have been since last April.

Bottom Line

If you are thinking of buying your first home or moving up to your ultimate dream home, now is a great time to get a sensational rate on your mortgage.

Thinking of Buying A Home? What Are You Waiting For?

Thinking of Buying A Home? What Are You Waiting For? | Simplifying The Market

Thinking of Buying A Home? What Are You Waiting For?

With spring right around the corner, you may be wondering if you should wait to enter the housing market. 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 6.3% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.4% over the next year. The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects home values to appreciate by more than 3.2% a year for the next 5 years.

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

  1. 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 below 4%. Most experts predict that they will begin to rise over the next 12 months. The Mortgage Bankers Association, Freddie Mac & the National Association of Realtors are in unison projecting that rates will be up almost three-quarters of a percentage point by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

  1. Either Way You Are Paying a Mortgage

As a paper from the Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

  1. 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 whether 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 it is 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.

Bottom Line

If you are ready and willing to buy, find out if you are able to. Let's get to together to discuss finding you your dream home.

Are the Kids Finally Moving Out?

Are the Kids Finally Moving Out? | Simplifying The Market

Are the Kids Finally Moving Out?

During the recession, many young adults graduating from college were forced to move back in with their parents. This caused new household formations to drop dramatically from the long term average of 1.2 million formations annually to half that number. However, this may be the year this turns back around.

According to the Urban Land Institute’s report, Emerging Trends in Real Estate, household formations will increase dramatically. They project that 3.68 million additional households will be formed in the next three years. This brings household formations back to pre-recession numbers of 1.2 million a year.

What will happen in 2016?

One of the key indicators to an improving housing market is household formation: How many people are moving out and forming an independent living unit? Many of the people “moving out on their own” will be those Millennials who can finally move from their parents’ basements to their first home.

Not every person moving out will decide on an apartment. A certain percentage of consumers will decide that homeownership is a better option for themselves and their families.

Jonathan Smoke, Chief Economist at realtor.com, believes:

“Demand for for-sale housing will grow and will continue to be dominated by older millennials, aged 25 to 34. This demographic has the potential to claim a third of home sales in 2016 and represent 2 million home purchases.”

What about household formations moving forward?

And Louis Keely, the President of The Demand Institute, predicts strong household growth will continue over the next ten years:

“We expect new household formation to be robust over the next decade as the large millennial generation ages and forms new households of their own.”

Bottom Line

Here come the Millennials!! They will finally be entering the housing market in 2016 and will dominate real estate sales over the next decade.

Homeownership Finally Makes Political Debate

Homeownership Finally Makes Political Debate | Simplifying The Market

Homeownership Finally Makes Political Debate

Finally, the issue of homeownership has become a platform talking point in this year’s presidential debate. Yesterday, one of the candidates running for President spoke out about the importance of homeownership in America.

Hillary Clinton detailed a new economic agenda yesterday. In announcing her new agenda, she remarked:

“Homeownership is about more than just owning a home. It is about putting roots down in a community with better schools, safer streets and good jobs. And it is about building wealth, as homeowners build equity in their home one mortgage payment at a time…We must make sure that everyone has a fair shot at homeownership.”

This post isn’t political!

It doesn’t matter that it was Clinton who said it first. It doesn’t matter that she is a Democrat.

What matters is that EVERY candidate for our country’s highest office realizes the important role homeownership plays in the development of our nation.

The fact that homeownership was finally brought to the forefront of the debate is great news – no matter which way you lean politically.

Homeowner’s Net Worth is 45x Greater Than a Renter’s

Homeowner’s Net Worth is 45x Greater Than a Renter's | Simplifying The Market

Homeowner’s Net Worth is 45x Greater Than a Renter’s

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 in 2016 the net worth gap will widen even further to 45 times greater.

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

Homeowner’s Net Worth is 45x Greater Than a Renter's | Simplifying The Market

Put Your Housing Cost to Work For You

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 schedule an appointment to guide you through the process.

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