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In 1963, Martin Luther King, Jr. inspired a powerful movement with his famous “I Have a Dream” speech. Through his passion and determination, he sparked interest, ambition, and courage in his audience. Today, reflecting on his message encourages many of us to think about our own dreams, goals, beliefs, and aspirations. For many Americans, one of those common goals is owning a home: a piece of land, a roof over our heads, and a place where we can grow and flourish.
If you’re dreaming of buying a home this year, start by connecting with a local real estate professional to understand what goes into the process. With a trusted advisor at your side, you can then begin to answer the questions below to set yourself up for homebuying success.
The process of buying a home is not one to enter into lightly. You need to decide on key things like how long you plan on living in an area, school districts you prefer, what kind of commute works for you, and how much you can afford to spend.
Keep in mind, before you start the process to purchase a home, you’ll also need to apply for a mortgage. Lenders will evaluate several factors connected to your financial track record, one of which is your credit history. They’ll want to see how well you’ve been able to minimize past debts, so make sure you’ve been paying your student loans, credit cards, and car loans on time. If your financial situation has changed recently, be sure to discuss that with your lender as well. Most agents have loan officers they trust and will provide referrals for you.
According to ConsumerReports.org:
“Financial planners recommend limiting the amount you spend on housing to 25 percent of your monthly budget.”
In addition to knowing how much you can afford on a monthly mortgage payment, understanding how much you’ll need for a down payment is another critical step. Thankfully, there are many different options and resources in the market to potentially reduce the amount you may think you need to put down.
If you’re concerned about saving for a down payment, start small and be consistent. A little bit each month goes a long way. Jumpstart your savings by automatically adding a portion of your monthly paycheck into a separate savings account or house fund. AmericaSaves.org says:
“Over time, these automatic deposits add up. For example, $50 a month accumulates to $600 a year and $3,000 after five years, plus interest that has compounded.”
Before you know it, you’ll have enough for a down payment if you’re disciplined and thoughtful about your process.
As tempting as it is to pass the extra time you may be spending at home these days with a little retail therapy, putting that extra money toward your down payment will help accelerate your path to homeownership. It’s the little things that count, so start trying to live on a slightly tighter budget if you aren’t doing so already. A budget will allow you to save more for your down payment and help you pay down other debts to improve your credit score.
A survey of millennial spending shows, “68% reported that shelter in place orders helped them save for their down payment.” Danielle Hale, Chief Economist at realtor.com, also notes:
“If there is any silver lining to the current economic landscape, it’s that mortgage rates are hanging around record lows…Additionally, shelter-in-place orders helped many who were fortunate enough to keep their jobs save for a down payment — one of the largest hurdles of buying a home. The combination of low rates and the opportunity to save is enabling many millennials to move up their home buying timeline.”
While you don’t need to cut all of the extras out of your current lifestyle, making smarter choices and limiting your spending in areas where you can slim down will make a big difference.
If homeownership is on your dream list this year, take a good look at what you can prioritize to help you get there. To determine the steps you should take to start the process, let’s connect today.
Even in today’s sellers’ market, setting the right price for your house is one of the most valuable things you can do. According to the U.S. Economic Outlook by the National Association of Realtors (NAR), existing home prices nationwide are forecasted to increase by 4.5% in 2021. This means experts anticipate home values will continue climbing next year. Danielle Hale, Chief Economist for realtor.com, notes:
“We expect price gains to ease somewhat in 2021 and end 5.7% above 2020 levels, decelerating steadily through the spring and summer, and then gradually reaccelerating toward the end of the year.”
When it comes to setting the right price for your house, the goal is to increase visibility and drive more buyers your way. Instead of trying to win the negotiation with one buyer, you should price your house so that demand is maximized and more buyers want to take a look.
As a seller in today’s market, you might be thinking about pricing your house on the high end while so many of today’s buyers are searching harder than ever just to find a home to purchase. But here’s the thing – a high price tag does not mean you’re going to cash in big on the sale. It’s actually more likely to deter buyers.
Right now, even when there are so few houses for sale, your house is more likely to sit on the market longer or require a price drop that can send buyers running if it isn’t priced just right from the very beginning.
It’s important to make sure your house is priced correctly by working with a trusted real estate professional throughout the process. When you price it competitively from the start, you won’t be negotiating with one buyer. Instead, you’ll likely have multiple buyers competing for the house, potentially increasing the final sale price.
The key is to make sure your house is priced to sell immediately. This way, it will be seen by the greatest number of buyers. More than one of them may be interested, and it will be more likely to sell at a competitive price.
Let’s connect to price your house correctly from the start so you can maximize your exposure and your return.
If you’re currently feeling the stress of affording your mortgage payment, or if you know someone who is, there’s still time to get help. For homeowners experiencing financial hardship this year, the CARES Act provides mortgage payment deferral options, creating much-needed relief in these challenging times.
It’s important, however, to understand how forbearance works. It’s not automatic. You need to take action now and apply for the program before these options expire.
A study by the Urban Institute determined:
“Approximately 400,000 homeowners who became delinquent after the pandemic began have forgone forbearance and become delinquent. These borrowers may not know they are eligible for forbearance.”
Thankfully, there’s still time to apply for forbearance, even if you’re just learning about it now. Doing so may be the game-changer you need to stay in your home, just when you need it most. Mike Fratantoni, Senior Vice President and Chief Economist at the Mortgage Bankers Association (MBA), explained:
“The increase in new forbearance requests may be the result of additional outreach to homeowners who had previously not taken advantage of forbearance opportunities.”
If you need to apply for forbearance but aren’t sure how to begin the process, the Consumer Financial Protection Bureau (CFPB) published 5 steps to follow when requesting mortgage forbearance:
Look at your mortgage statement to find the phone number for your servicer (the company you send your mortgage payment to every month). The Consumer Financial Protection Bureau encourages you to use the number on your statement to avoid scams.
Explain your situation so your servicer can determine your best course of action. Be sure to ask any questions you have about the process.
The CARES Act protects homeowners with federally backed loans (FHA, VA, USDA, Fannie Mae, and Freddie Mac). In addition, some private servicers are also providing forbearance programs.
Depending on the plan available to you, there are different options you may be able to consider. Your servicer will help you get a better understanding of what’s available.
The CFPB also recommends asking questions like:
A written agreement allows you to see exactly what type of program you’re agreeing to. It also helps you make sure it matches what you discuss with your provider over the phone.
Help is out there for homeowners in need, but it’s important to apply now while this benefit is still available. The Consumer Financial Protection Bureau says: don’t wait, forbearance is not automatic. It must be requested. Reach out to your mortgage provider today so you can get the assistance you need to protect the hard-earned investment you’ve made in your home.
If you’re one of the many homeowners thinking about taking your house off the market for the holidays, hang on. You definitely don’t want to miss the great selling opportunity you have right now. Here’s why this month is the optimal time to make sure your house is available for holiday buyers.
The latest Existing Home Sales Report from The National Association of Realtors (NAR) shows the inventory of houses for sale has dropped to an astonishing all-time low. It now sits at a 2.5-month supply at the current sales pace.
Historically, a 6-month supply is necessary for a ‘normal’ or ‘neutral’ market, in which there are enough homes available for active buyers (See graph below):
When the supply of houses for sale is as low as it is today, it’s much harder for buyers to find homes to purchase. This means competition among purchasers rises and more bidding wars take place, making it essential for buyers to submit very attractive offers.
As this happens, prices rise and sellers are in the best position to negotiate deals that meet their ideal terms. So, if your neighbors decide to remove their listings this season, your house may quickly rise to the top of a holiday buyer’s wish list if you stay on the market.
Today, there are many buyers who are ready, willing, and able to purchase. Record-low mortgage rates and a year filled with unique changes have prompted buyers to think differently about where they live and to take action. The supply of homes for sale is not keeping up with this high demand, making now the optimal time to sell your house.
Home prices are appreciating in today’s sellers’ market. Making your home available over the next few weeks will give you the most exposure to buyers who will be actively competing against each other to purchase it.