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August 27th, 2015 1:34 PM
Don’t Get Caught In The Renter’s Trap

Posted: 25 Aug 2015 04:00 AM PDT

Don't Get Caught In The Renter's Trap | Keeping Current Matters
There are many benefits to homeownership. One of top ones is being able to protect yourself from rising rents and lock in your housing cost for the life of your mortgage. The National Association of Realtors (NAR) released their findings of a study in which they studied “income growth, housing costs and changes in the share of renter and owner-occupied households over the past five years in metropolitan statistical areas throughout the US.”

Don’t Become Trapped

The study revealed that over the last five years a typical rent rose 15% while the income of renters grew by only 11%. If you are currently renting, this disparity in growth could get you caught up in a cycle where increasing rents continue to make it impossible for you to save for a necessary down payment. The average renter in the United States pays 30% of their income on housing compared to that of a homeowner who can expect to spend 15%. In many metro areas the percentage of income spent on housing is even higher and continues to rise every year. Like in San Francisco, CA, where the average renter spends 59% of their monthly income on housing or nearly 65% in Boston, MA. Homebuyers who purchased their home over the same five-year period locked in their housing costs and were able to grow their net worth as home values have increased and their mortgage balances have gone down.

Know Your Options

Perhaps, you have already saved enough to buy your first home. HousingWire reported that analysts at Nomura believe:
“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment. It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)
As we have reported last week, over 60% of Millennials who recently bought a home put down less than 20%; 36% put down less than 5%. Your dream home may be more attainable than you ever imagined!

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible to get a mortgage.

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Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 27th, 2015 1:34 PMLeave a Comment

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Should I Wait to Put Down a Bigger Down Payment?

Posted: 26 Aug 2015 04:00 AM PDT

Should I Wait to Put Down a Bigger Down Payment? | Keeping Current Matters
Some experts are advising that first time and move-up buyers wait until they save up 20% before they move forward with their decision to purchase a home. One of the main reasons they suggest waiting is that a buyer must purchase private mortgage insurance if they have less than the 20%. That increases the monthly payment the buyer will be responsible for. In a recent article, Freddie Mac explained what this would mean for a $200,000 house: Difference Between a 5% and 20% Down Payment | Keeping Current Matters However, we must look at other aspects of the purchase to see if it truly makes sense to wait.

Are you actually saving money by waiting?

CoreLogic has recently projected that home values will increase by 4.3% over the next 12 months. Let’s compare the extra cost of PMI against the projected appreciation: PMI vs Appreciation | Keeping Current Matters If you decide to wait until you have saved up a 20% down payment, the money you would have saved by avoiding the PMI payment could be surpassed by the additional price you eventually pay for the home. Prices are expected to increase by more than 3% each of the next five years. Saving will also be more difficult if you are renting, as rents are also projected to increase over the next several years. Zillow Chief Economist Dr. Svenja Gudell explained in a recent report:
"Our research found that unaffordable rents are making it hard for people to save for a down payment ... There are good reasons to rent temporarily – when you move to a new city, for example – but from an affordability perspective, rents are crazy right now. If you can possibly come up with a down payment, then it's a good time to buy a home and start putting your money toward a mortgage."
Laura Kusisto of the Wall Street Journal recently agreed with Dr. Gudell:
“For some renters there may be a way out: Buy a house. Mortgages remain very affordable.”

Mortgage rates are expected to rise…

Freddie Mac is projecting that mortgage interest rates will increase by almost a full percentage point over the next 12 months. That will also impact your mortgage payment if you wait.

Bottom Line

Sit with a real restate or mortgage professional to truly understand whether you should buy now or wait until you save the 20%.

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Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 26th, 2015 4:25 PMLeave a Comment

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Existing-Home Sales Soar to Highest Level in Eight Years

increaseExisting-home sales increased in July, while low inventory levels and rising prices are the largest factors lowering sales to first-time buyers to their lowest share since January, according to a report from the National Association of Realtors (NAR) released Thursday.

Total existing-home sales rose 2.0 percent to a seasonally adjusted annual rate of 5.59 million in July from a downwardly revised 5.48 million in June. July sales were at the highest pace since 5.79 million in February 2007. Existing sales have now increased year-over-year for ten consecutive months and are 10.3 percent above the pace a year ago at 5.07 million.

The report also found that single-family home sales increased 2.7 percent to a seasonally adjusted annual rate of 4.96 million in July to their highest level since 5.08 million in February 2007. Single-family sales were 4.83 million in June, and are now 11.0 percent above the 4.47 million pace a year ago.

Source: NAHB

Many economists believe that the growth in existing-home sales can be mostly attributed to growth in the employment sector.

“In some markets, this boost has been led by job growth –a key sign that the recovery is on track,” said Selma Hepp, Trulia’s chief economist. “As millennial employment improves, young adults will continue to move out of their parent’s homes and form their own households, first as renters and then as homeowners.”

Lawrence Yun, NAR chief economist added, “The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now. As a result, current homeowners are using their increasing housing equity towards the down payment on their next purchase."

According to the NAR, the median existing-home price for all housing types in July was $234,000, which is 5.6 percent above July 2014. This in increase marks the 41st consecutive month of year-over-year gains. The median existing single-family home price was $235,500 in July, up 5.8 percent from July 2014.

"Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand," Yun said. "Realtors in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains."

NAR reported that total housing inventory declined 0.4 percent to 2.24 million existing homes available for sale at the end of July. This total is now 4.7 percent lower than a year ago when inventory levels reached 2.35 million.

“Tight inventory across the country continues to put pressure on home prices,” Hepp said. “As more potential buyers are being pushed out of the market, home sellers may be reluctant to sell if there is a perception that they might not be able to find another home to buy–thus perpetuating the problem.”

Another decline was recorded in the percent share of first-time buyers in July for the second consecutive month. First-time buyers in July lowered to 28 percent from 30 percent in June, the lowest share since January of this year which was 28 percent.

"The fact that first-time buyers represented a lower share of the market compared to a year ago even though sales are considerably higher is indicative of the challenges many young adults continue to face," Yun said. "Rising rents and flat wage growth make it difficult for many to save for a down payment, and the dearth of supply in affordable price ranges is limiting their options."


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Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 20th, 2015 5:08 PMLeave a Comment

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August 18th, 2015 7:47 PM

Buying and Selling “Off-Season”

Buying and Selling “Off-Season”

There are many variables that determine what is considered the peak buying and selling season in real estate. It varies by geographical region and is affected as well by the economy. Generally speaking, for home sellers, many real estate experts have traditionally considered the “peak season” to be around late January to early May. Reasons varied from buyers wanting to close late spring or early summer when school ends, moving during good weather, and not wanting to interfere with summer breaks and vacations. The negative impact on buyers during this peak time can be more competition resulting in higher prices and lower inventory.

home search onlineTimes have changed and there ARE benefits to buying and selling “off-season”. Many of today’s buyers AREN’T shopping around school schedules, many are single first-time buyer’s, couples with grown children that are ready to downsize, job relocations, as well as investors in income property. Today’s buyers are savvy and use the Internet to preview listings year round, which means real estate can be very active outside the peak months. A serious buyer is always looking. With fewer houses on the market in the fall and winter, sellers have less competition. Also, selling in fall or winter could allow the seller to take advantage of the coming new spring inventory for buying a new home.

Additional off-season benefits for buyers and sellers can be a faster turnaround for services such as lenders, appraisers, settlement attorneys and inspectors. In many areas, the weather is better and scheduling is easier for showings, as fewer buyers are coming through.

Once summer ends, many sellers whose listings have stayed on the market will be more desperate for offers. They may have purchased a home contingent on selling their old home. If you are a buyer and are having difficulty finding the right house, ask your agent to look at listings that were recently taken off the market and request a showing if the owner is still motivated to sell.

To attract serious buyers, it is important to price your home to sell. Consider adding a home warranty to add value to your listing and give potential buyers confidence. Staging a home with the colors of the fall and winter season can create a warm and welcoming feel. Keep it simple, clean and uncluttered. When selling a home, you need to make the best first impression, no matter what the season!


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Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 18th, 2015 7:47 PMLeave a Comment

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August 7th, 2015 1:13 PM
Freddie Mac: Equity Matters (a Lot!)

Posted: 23 Jul 2015 04:00 AM PDT

Freddie Mac: Equity Matters (a Lot!) | Keeping Current Matters
According to a Merrill Lynch survey, over 80% of the people in this country believe that homeownership is still “an important part of the American Dream”. There are many financial and non-financial reasons people feel this way. One of the biggest reasons is because it helps build family wealth. Last week, Freddie Mac posted about the power of home equity. They explained:
“In the simplest terms, equity is the difference between how much your home is worth and how much you owe on your mortgage. You build equity by paying down your mortgage over time and through your home's appreciation. In a nutshell, your money is working for you and contributing toward your financial future.”
They went on to show an example where a person bought a home for $150,000 with a down payment of 10%, resulting in a loan amount of $135,000. The buyer secured a 30-year fixed-rate mortgage at 4.5% with a monthly mortgage payment of $684.03 (not including taxes and insurance). They then illustrated what would happen after seven years of making a mortgage payment, assuming 3% per year home appreciation (the historic national average): Home Equity Calculation | Keeping Current Matters And that number continues to build as you continue to own the home. Merrill Lynch published a report earlier this year that showed the average equity homeowners have acquired at certain ages. Average Home Equity by Age | Keeping Current Matters

Bottom Line

Home equity is important to building wealth as a family. Referring to the first scenario above, Freddie Mac explained:
“Now, if you continued to rent, and made the same payment of $684.03 per month, you'd have zero equity and no means to build it. Building equity is a critical part of homeownership and can help you create financial stability.”


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Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 7th, 2015 1:13 PMLeave a Comment

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New Report Finds Waiting to Buy a Home Could Cost Thousands

New Report Finds Waiting to Buy a Home Could Cost Thousands

With interest rates and home prices expected to climb in the next year, the financial penalties of delaying or forgoing a home purchase in today’s market have become very steep, according to the inaugural Opportunity Cost Report released recently by realtor.com®, a leading provider of online real estate services operated by News Corp subsidiary Move, Inc.

The proprietary report examines a wide range of factors, including the long-term financial impact of owning versus renting a home, the likely monetary gain renters forego in waiting to buy and the financial benefits of homeownership by market.

“Current market conditions give buyers the opportunity to build substantial wealth in the long-term, compared with renters and later buyers, in advance of the projected increase in mortgage rates and continuing price appreciation,” says Jonathan Smoke, chief economist for realtor.com®. “The problem is inventory is low, which has many would-be home buyers –especially first timers – standing on the sidelines and missing out on potentially material financial gains.”

Nationally, the estimated wealth an average buyer would accumulate over a 30-year period based on today’s dollars totals $217,726. Although some markets are more buyer-friendly than others, national data shows homeowners see significant financial benefits as compared to lifetime renters. In 88 percent of MSAs, buying a home produces a financial benefit of at least $100,000 over 30 years.

Ten markets offer an especially considerable upside to owning, with estimated 30-year financial gains above $500,000, and opportunity costs of waiting three years as high as $200,000. These MSAs, in California and other Western states, are relatively expensive markets with strong housing demand and limited supply. The potential long-term wealth in these areas is the greatest nationwide, and likewise, the long-term financial penalty for delaying ownership is substantial, due to price appreciation, escalating rents, and higher mortgage rates on the horizon.

“This analysis looks solely at the financial reasons to buy a home, based on assumptions about rising mortgage rates and changes in home values,” Smoke says. “It’s important to remember that a home purchase decision is deeply personal. Potential buyers need to consider factors such as upcoming life events, job security and potential relocation, in addition to financial benefits, because they too can have a significant impact on ownership.”


Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on August 3rd, 2015 4:54 PMLeave a Comment

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July 31st, 2015 11:19 PM

Exciting Changes to Freddie Mac Guidelines!

Freddie Mac recently announced some exciting changes to their current policies and underwriting guidelines. These changes are considerably positive, to both industry professionals and consumers. Here are the changes that will have the biggest impact to you and your business:

Debt-to-income ratio calculation
Effective for loans closing on or after August 1, 2015, the minimum monthly payment amount that must be included in the debt-to-income ratio (“DTI”) calculation for deferred student loans will decrease from 2% to 1% of the outstanding balance.

Increase in Maximum Number of Financed Properties
Effective for loans closing on or after October 26, 2015, the maximum number of financed properties that a borrower may own or be obligated on, will increase from four (4) to six (6) when the transaction is for a second home or investment property (1-unit only). In addition, the maximum Loan-to-Value (LTV) for these purchase transactions will be 85% (mortgage insurance applies).

Rental Income
Effective for loans closing on or after October 26, 2015, Freddie Mac is removing their previous requirement that the borrower have a two-year history of managing investment properties, in order to use rental income for qualifying purposes.

Rent Loss Insurance
Effective for loans closing on or after October 26, 2015, Freddie Mac is removing their previous requirement that the borrower have at least six (6) months of rent loss insurance coverage, when using rental income from the subject investment property for qualifying purposes.

The removal of these restrictions will make a measurable difference in your homebuyers’ purchasing power, and lighten their burden of proving their creditworthiness.

USDA Upfront Guarantee Fee Increase

USDA Rural Development announced an increase to the upfront guarantee fee on Guaranteed Rural Housing (GRH) Loans from 2% to 2.75% beginning with Conditional Commitments issued on or after October 1, 2015. Fortunately, the annual fee is unchanged and will remain at .50%.

I hope this information gives you and your clients more opportunities to succeed in today’s housing market. If you have any further questions or would like to learn more, please do not hesitate to contact me!

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Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on July 31st, 2015 11:19 PMLeave a Comment

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Tips for keeping your home safe while away

Tips for keeping your home safe while away

Going away on vacation should be a tranquil experience, but worrying about the safety of your home while you’re away can defeat the reason you left in the first place. It only takes a little pre-planning to ensure your home is safe and sound when you return. If a house sitter is in your budget and you know someone responsible and trustworthy, it can be the best solution for taking care of your home while away. For many of us, this isn’t the case, so here are some measures that can help protect your home while away on vacation.

Newspapers and Mail

If you’ve got a helpful neighbor, ask if they will pick up your mail/newspaper daily. If not, contact the newspaper to stop delivery and tell the USPS to put a hold on your mail during the time you will be away. It’s a good idea to have a friend or neighbor come by and check periodically to be sure the newspapers and mail have stopped, just in case. Also, they can pick up any packages that have been delivered or materials that solicitors may have left behind.

Yard

If you have a gardener, keep them on schedule while you are away to water (or check sprinklers), mow, and keep your yard clean. Weather effects such as a broken limb in the driveway or knocked over pots, left for weeks, is a sure sign no one is home. If you live in a windy area, be sure all furniture and plants are secure.

Electronics

Unplug computers and other expensive electronics that could be affected by power surges. Unplug all small appliances such as coffee makers, toasters etc. Many appliances use power even when turned off.

Lights

Install a timer switch for a few lights inside and outside your house. One or two lights on a timer will give the appearance of someone being home. Outdoor motion detector lights also work well for security. Leaving lights switched on the entire time you are gone is a waste of electricity, and having lights on all night may draw even more attention. Check out your local home improvement store or online resources for a variety of timer options.

Social Media

Be aware of your chatter on social media. Letting everyone in your social network know you are gone for the month in the tropics could get the word out beyond your circle and potentially make your home a target.

Water

Consider turning off the water lines to the inside of the house (unless you have appliances requiring water such as an icemaker.) A burst washing machine hose, leaky faucet, or cracked toilet tank could be disastrous while away.  If you have a sprinkler system outside which you plan to keep on, have someone check on it periodically.

Water Heater

If your water heater has “vacation mode”, set it. It will run less and save energy.

Alarm System

If you have an alarm system, be sure you have a sign/sticker visible. This can act as a deterrent. Be sure to leave the code/key with someone you trust. Let the alarm company know you are away and give them the contact number of that person.


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Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on July 29th, 2015 12:24 PMLeave a Comment

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July 28th, 2015 9:43 AM
5 Reasons You Should Sell Now!

Posted: 27 Jul 2015 04:00 AM PDT

5 Reasons to Sell You House Now! | Keeping Current Matters
As the temperature continues to rise, buyers are coming out ready to purchase their dream home. Here are five reasons that you should list your house for sale now.

1. Strong Buyer Demand

Foot traffic refers to the number of people out actually physically looking at homes right now. The latest foot traffic numbers show that there are significantly more prospective purchasers currently looking at homes than at any point in the last two years! These buyers are ready, willing and able to purchase… and are in the market right now! Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

The National Association of Realtors reported last week that housing supply as slipped to a 5.0-month supply. This is still under the 6-month supply that is needed for a normal housing market. This means, in most areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. 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. The choices buyers have will continue to increase. Don’t wait until all this other inventory of homes comes to market before you sell.

3. Home Prices Are Skyrocketing

Daren Blomquist, President of RealtyTrac, recently shared insights into why “2015 is a Great Year to Sell” by saying:
"So far in 2015, [sellers] are realizing the biggest gains in home price appreciation since 2007. In June, sellers sold for above estimated market value on average for the first time in nearly two years."
One major factor driving prices up is the lack of inventory available for the amount of buyers in the market. Often buyers, who find a home that they would like to make an offer on, are met with the reality that they aren’t the only ones interested.

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 19.4% from now to 2019. 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 near 4% right now. Rates are projected to increase by a full percentage point over the next year according to Freddie Mac.

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.

That is what is truly important.


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Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on July 28th, 2015 9:43 AMLeave a Comment

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July 24th, 2015 2:32 PM
Home Sales Will Remain Hot This Summer

Posted: 22 Jul 2015 04:00 AM PDT

Home Sales Will Remain Hot This Summer | Keeping Current Matters
People always talk about the “spring buying season” when they talk real estate. However, this year it appears as though the summer real estate market will be just as hot. The most recent Foot Traffic Report released by the National Association of Realtors (NAR) revealed that there are more buyers out looking at homes right now than at any other time in the last two years including the past two springs (in orange below). Foot Traffic | Keeping Current Matters The Foot Traffic Report is compiled from data on the number of properties shown by Realtors. NAR further explains:
“Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future."
We can see that the number of prospective purchasers out looking at homes has been greater each month this year compared to the same month in 2014. And, though foot traffic fell off last June as compared to May, this year it has increased nicely. Foot Traffic Comparison | Keeping Current Matters

Bottom Line

The housing market will remain strong throughout the summer and into the fall, making for one of the best years in real estate over the last decade.

Posted in:General
Posted by Cheryl Talbot ABR,GRI,e-PRO,SFR on July 24th, 2015 2:32 PMLeave a Comment

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