What is Home Equity

Why Do I Want It? One of the benefits of home ownership is the opportunity 

to build home equity. But what is home equity and why should you want it?

First let's define 'home equity.' In the simplest terms, equity is the difference between how much your home is worth and how much you owe on your mortgage.

Now let's figure out exactly how much home equity you have. If you paid cash for the entire asking price of your home, you own 100% of the equity.

If you took out a mortgage, subtract the amount of your loan from the price you paid for your home. Let's say you and the property's seller agreed on a price of $250,000. You decided to put down 5% of the purchase price, which is $12,500, and you borrowed $237,500. That means you have $12,500 of home equity, assuming the property appraised for $250,000.

In other words, your home equity is the difference between the appraised value of your home and the amount you currently owe on your mortgage.

There are two ways to build equity:

1. Increase the value of your property.
2. Decrease the amount of debt on your property.

You can increase the value of your property by installing attractive landscaping and remodeling the kitchen and bathrooms, for example.
You can also let the value of your home grow over time. If you live in an increasingly popular neighborhood where property values are going up overall, then it's realistic to expect that your home equity will increase as well.
However, it's important to note that some markets appreciate faster than others. It's also possible for home values to depreciate due to economic conditions, the condition of your home deteriorating, or a in neighborhood home values.

You'll automatically decrease the amount of your mortgage loan by making your monthly mortgage payments. If you want to whittle it down even more, try to pay a little bit extra each month.

Now that you've built up your home equity, what can you do with it?

If your family is growing and it's time to buy a bigger home, you can sell your house and you'll get cash in return for your equity. You can then use that cash for the down payment on a bigger place.

Homes in the affordable price ranges are feeling the effects of inventory shortage the most, with homes that get listed in these ranges selling within days and above the asking price. 

Are you ready to sell? Please feel free to explore our website at Precision Realty & Assoc. LLC and if you have any questions or would like to see  homes in person, PLEASE give us a CALL 801-809-9866 today.

Mortgage Rate Upswings Impact Housing?

Insight report, Freddie Mac economists have looked at how rising mortgage interest 

rates could impact the housing market, as well as what ripples past increases have caused.

“History has shown that periods of rising mortgage rates can be challenging for U.S. housing and mortgage markets,” said Len Kiefer, Deputy Chief Economist, Freddie Mac. “In historical episodes of rising rates, home sales slipped, housing starts stalled, and mortgage originations swooned. 

Home builders are doubly affected by increasing mortgage rates because they use financing to fund construction costs.

When interest rates on funding for new construction and mortgage rates rise simultaneously, home builders are squeezed by a fall in demand and an increase in costs. However, though rates have moved higher recently, mortgage credit is still historically cheap if borrowers can get in while the getting is good.”

So where does Freddie project mortgage interest rates to go in 2018, and what would the impact of those changes be? The Insight report says that if rates continue to hover between 3.5 and 4.5 percent and inflation remains low, originations, home sales, and housing starts should each increase by 5-10 percent this year.

If, on the other hand, rates spike by 1.5 percentage points, Freddie forecasts originations to fall by 30 percent, with home sales and starts also ping between 5-11 percent.

Exhibit 1 contains a plot of the 30-year fixed rate, with the shaded periods denoting the increasing rate environments. Since 1990, no episode has matched the magnitude of rate increase of the late 1970s. The largest increase was 2.4 percentage points from October 1993 to January 1995.

Kiefer asks, “If rates rise, will housing markets follow the historical precedent, or will they buck the trend and maintain momentum?

It's uncertain, but with a solid labor market, rising household incomes, and a demographic tailwind from a large young adult population coming of age, U.S. housing markets could show modest growth this year even with higher mortgage rates.'

Tax Refund Can Help You Buy a Home

The IRS began accepting tax returns on January 29, and estimates nearly 155 million individual tax returns will be filed in 2018.

If you're expecting a refund this year, here are three ways it could bring you closer to homeownership:

1. Save for a down payment. Saving for a down payment can be one of the biggest barriers to homeownership. But today's homebuyers persistently overestimate the size of the down payment they need. 

Depending on your credit history and other factors, many borrowers can make a down payment of about 5 to 10% — not 20%, as a lot of people falsely assume. 

With Freddie Mac's 3% down mortgage – Home Possible Advantage^®–qualified borrowers could make down payment of as little as $6,000 for a $200,000 home. 

Down payment assistance programs can also help you bridge the cash gap. There are thousands of programs across the country that can help you save on your down payment and closing costs. A great place to start is right where you live. Many state, county, and city governments provide financial assistance for people in their communities who are well qualified and ready for homeownership. Check out the programs available in your market and see if your eligible.

2. Pay for closing costs. A homebuyer typically pays between about 2% and 5% of the home purchase price in closing fees, but the amount varies widely depending on where you live. See where your state stacks up and understand your costs.

3. Lower your interest rate. You can pay discount points to buy down your mortgage interest rate. A 'point' equals one percent of the loan. It's essentially an upfront interest payment to lock in a lower interest rate on your fixed–rate mortgage. So, if you are borrowing $200,000, paying one discount point would mean paying $2,000 upfront at closing — but it may end up saving you more in interest payments over the life of the loan. See how paying extra points might lower your rate.

“What’s Missing From the Housing Recovery?

A stronger demand for condos may be on the horizon, Neal says.  

The location of condos in pedestrian-friendly city centers may make them desirable to both younger generations and downsizing baby boomers. 

The condo market has softened in recent years, but some housing analysts are wondering why. Several economists have pointed to condos as a more affordable alternative to traditional single-family homes, as demand for lower-cost housing from first-time buyers picks up. While townhome construction is reportedly now on the upswing, the construction of condos has been mostly stagnant.

Realtor.com® notes in a new article that builders generally have an easier time renting out apartments in multistory buildings and towers on a monthly basis than selling condo units. It can also be more difficult to obtain financing on constructing condos than apartment rental buildings.

Adding to the difficulties, some cities and state laws have left condo builders liable when issues arise from new developments, which can result in costly lawsuits. Banks have sharply curbed lending for condo construction, too, scarred from the losses of the recession and the housing crisis.

Condo construction comprised just 7 percent of the multifamily market in 2016, according to U.S. Census Bureau data. That is down from an average of 22 percent a year from 1985 to 2003. The condos that are being constructed tend to be high-end units in high-cost cities.

“Apartments have always been a larger share of the multifamily construction, but it’s even higher now,” Michael Neal, an economist at the National Association of Home Builders, told realtor.com®. “Virtually all of multifamily construction is apartments.”

Existing condo and co-op sales rose 1.6 percent in January to a seasonally adjusted annual rate of 620,000, the National Association of REALTORS® reported this week. But sales are still 4.6 percent below a year ago. NAR reports that the national existing condo price was $231,600 in January, 7.1 percent higher than a year ago. 


Source: New Condos,” realtor.com® (Feb. 22, 2018)

Renting Vs. Buying

5 Questions to Ask Yourself, When temperatures , it can be hard to think about anything other than staying warm.

But if you've got a snow day, take a few hours to get your financial life in order. Answer these five questions and you'll be ready to make major decisions by the time the spring thaw comes.

Are you ready for homeownership? The decision to rent or buy is a personal one that depends on your financial situation, future plans and lifestyle. Buying may make sense if you plan to stay in your home for at least five to seven years and you're interested in building long–term equity. 

How's your credit? A decent credit score is important whether you're renting or buying. Landlords and lenders look at your credit score to decide whether you're likely to pay on time. Generally, the better your score, the lower your mortgage interest rate is likely to be. That means a good credit score saves you money in the long run. 

If your score isn't as good as you'd like it to be, you can improve it by paying your bills on time, especially car payments and credit cards. If you want to make even more headway, start paying down your long–term debts. If it's possible, put any extra cash toward the debts with the highest interest rates first. 

What if you don't have a credit score? Don’t worry. Lenders we work with have access to technology that can assess people without credit scores if they have payment references like records showing on-time housing payments.

How much can you afford? Fully understanding your finances is critical. It will not only help you determine your price limit, but it will also help you understand if your budget can cover a major repair such as a new roof or furnace if you choose to buy.

Do you have enough saved for a security deposit or down payment? If you've decided to rent, you'll probably need to put down a security deposit and pay one or two months of rent up front. That's a total of four months of rent in advance. 

If you're looking to buy a home, you'll need a down payment. Ignore anyone who tells you that you must put down 20%. Most homebuyers put down between five and 10%. And some products, such as Freddie Mac's Home Possible Advantage^®mortgage, allow a down payment as low as three% of the purchase price.

After considering your answers to these questions, are you ready to buy a home? If so, the first step is to research lenders and find one that you're comfortable with. Don't have a lender in mine contact you local Real Estate Agent for referral, they can also answer some of your questions as to what to ask the lender.

Then, before you begin house hunting, it's a good idea to get pre–approved for a mortgage. This will allow you to negotiate with confidence – and close the deal faster so you can make your dream of homeownership a reality.

Lack of Housing Supply Influence Higher Home Prices

“While the good news is that Realtors in most areas are saying buyer traffic 

is even stronger than the beginning of last year, sales failed to follow course and far lagged last January’s pace. It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth.”

Existing-home sales ped both month-over-month and year-over-year in January 2018, experiencing their largest annual decline in over three years

The median existing single-family home price was $241,700 in January, an increase of 5.7 percent over January 2017’s totals. The median existing-home price for January 2018 was $240,500, up 5.8 percent from January 2017’s median of $227,300. According to NAR, January marked the 71st straight month of year-over-year price gains.

Although total housing inventory at the end of January increased 4.1 percent to 1.52 million homes, that still puts the total 9.5 percent lower than a year earlier (1.68 million). Moreover, inventory has been falling consistently year-over-year for 32 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, as compared to a 3.6-month supply in January 2017.

“Another month of solid price gains underlines this ongoing trend of strong demand and weak supply. The underproduction of single-family homes over the last decade has played a predominant role in the current inventory crisis that is weighing on affordability,” Yun said.

Are you ready to Sell? Your agent will research sale prices on other Comparable Homes in your neighborhood to help you set your sale price.  It’s important to get the price right the first time.

“However, there’s hope that the tide is finally turning. There was a nice jump in new home construction in January and homebuilder confidence is high. These two factors will hopefully lay the foundation for the building industry to meaningfully ramp up production as this year progresses.”

“Demand stayed high despite headwinds of high prices and low inventory facing homebuyers. As a result, existing home sales accounted for 26.1 percent of inventory sold, staying above 2005’s peak rate of inventory sold.”

With the home buying season imminent, we look forward to seeing when last year’s high in housing starts and permits will manifest in inventory.”

You can read NAR’s full breakdown of home sales by clicking here.

How Many Homes Will It Take to Find 'The One'?

When you're house hunting, you can start feeling like Goldilocks pretty quickly:
This one's too small, that one's too big, and

that other one has crazy wallpaper—the list of 'not quite right' goes on and on.
The average home buyers will visit 10 homes over 10 weeks' time before they find 'the one'—that special place that inspires an offer. But that number can vary widely: Some may fall in love with the first place they see, while others feel compelled to check out several dozen.

To prove that the path to homeownership can take some wild turns, we got three home buyers to reveal how many houses it took to find the perfect place.

Let their stories inspire you to find your dream home!

Becky and her husband toured only one house—one!—before buying it. Given they had so few reference points, how did they know there wasn't something better out there? The secret, says Dacona, was doing a thorough vetting job online. 

Take-home lesson: Doing thorough research online can really help you narrow your options—and save you time and effort. Make sure to vet the home and the neighborhood using Google Maps, and use tools such as Precision Realty.com to get neighborhood info.

'It took five years and 50 houses'

'I looked at houses for years.'  'You name it, I looked at it. There was always something just not right. The yard was too big. The yard was too small. It was too far from town.'

It was an exhausting process, but when he saw the quaint yellow Victorian in Philadelphia, Eliades immediately knew it was perfect.


'I knew I wanted a Victorian house that wasn't too big, that had a wraparound porch, that I could drive to the grocery store from in five or 10 minutes,' he says of his home since 2002. 'And I wanted to be in a community. I wanted to have neighbors!'
He and his wife made an offer on the spot. 'We didn't even pull out of the driveway, didn't think about it overnight,' he recalls.

Take-home lesson: Sometimes you have to shop around to get a firm handle on what you like—and dislike—and what your market has to offer. So don't think of it as wasted time if it takes a while for the right house to appear; consider it time well spent honing your house hunting skills.

After 63 houses, we bought a home that wasn't for sale'

After seeing a mind-boggling number of homes, Lynne and her husband couldn't find anything they wanted—that is, until their agent realized that the listings were too limited.


'She said to us, 'You seem to be constipated. 

What will make you move on a house?'' Freda recalls. 'She put us in the car and drove us through an area she thought we'd like. All of a sudden, we saw a house that made my husband shout out, 'That one! That house right there!''

The house wasn't on the market, but the real estate agent said she'd sold the house to the owners and offered to check in to see if they were ready to move on.

'She marched up to their door that night and asked them if they'd ever considered selling,' Freda says. 'They replied with 'actually, my husband just got a new job and we are thinking about moving!' So the next day, we went inside to take a look.'
Freda's husband was sold on the exterior and the location, and Freda loved the floor plan.

'What sold me is the wife had iris wallpaper in the bathroom, my favorite flower! It clicked for us,' Freda says. 'There was room in the back for a pool, with a fence already up, and it had a huge Florida room in the back. We agreed to buy it even without knowing the price.'

Take-home lesson: If you spot your dream house, but it isn't for sale, it never hurts to ask.
'Don't settle for something close.'  'The right one will come about!'

Home Construction Rose 9.7% in January

Housing construction got off to a strong start in 2018, which could 

help boost economic growth and ease home-price increases in the coming months.
The number of new housing units under construction rose 9.7% from a month earlier to an annual rate of 1.326 million, the Commerce Department said Friday. That marked the third increase in four months.

Builders also showed signs they are planning to ramp up construction later this year. The number of permits they lined up to build units rose 7.4% last month to an annual pace of 1.396 million.

Nonetheless, economists said the numbers suggest that 2018 will continue a trend of gradual improvement in new-home construction that will remain well below normal levels.

“This is a generational issue because we’ve fallen so far behind in supply that we’re still playing catch up,” said Robert Frick, corporate economist with Navy Federal Credit Union. “We’ve still got years to go before we see these numbers improve to normal levels.”

Housing starts numbers are volatile and can be subject to big revisions. The margin of error for the January rise of 9.7% was plus or minus 16.8 percentage points.

Economists said the report was encouraging because starts rose despite frigid January weather across many parts of the country.
More disappointing was that last month’s gains were overwhelmingly driven by an increase in multifamily starts, which tend to be especially volatile and are unlikely to remain at such high levels, economists said.
Apartment starts surged 24% in January, while construction of single-family homes rose just 3.7%. Permits for buildings with five units or more likewise were up more than 25%, while permits for single-family homes fell 1.7%.

Over the longer-term, new-home construction is picking up. Total starts rose 7.3% in the 12 months through January, while single-family starts rose 7.6% during that period.

Tendayi Kapfidze, chief economist at LendingTree, said the tax code changes could boost builder margins by 10% to 15%, which could in turn encourage them to build more homes at the low end, where profit margins are thinnest. “Home builders are able to be a little more aggressive in terms of getting out there and building homes,” he said.

6 Ways to Mess Up Getting a Home Mortgage

Getting a mortgage is, by general consensus, the most treacherous part of buying a home. In a recent survey, 42%  of home buyers 

said they found the mortgage experience “stressful,” and 32% found it “complicated.” Even lenders agree that it's often a struggle.

 

If you're out to buy a home, you have to be vigilant. To clue you into the pitfalls, here are six of the most common ways people mess up getting a mortgage.

Waiting until you can make a 20% down payment

A 20% down payment is the golden number when applying for a conventional home loan, since it enables you to avoid paying private mortgage insurance (PMI), an extra monthly fee of 0.3% to 1.15% of your total loan amount. But with mortgage rates where they are today—in a word, low—waiting for that magic 20% could be a huge mistake, since the more time passes, the higher mortgage rates and home prices may go!

All of which means it may be worth discussing your home-buying prospects with lenders right now. To get a ballpark figure of what you can afford and how your down payment affects your finances, punch your salary and other numbers into a home affordability calculator.

Meeting with only one mortgage lender

About half of U.S. home buyers only meet with one mortgage lender before signing up for a home loan. But these borrowers could be missing out in a big way. Why? Because lenders' offers and interest rates vary, and even nabbing a slightly lower interest rate can save you big bucks over the long haul.

In fact, a borrower taking out a 30-year fixed rate conventional loan can get rates that vary by more than half a percent, the CFPB has found. So, getting an interest rate of 4.0% instead of 4.5% on a $200,000, 30-year fixed mortgage translates into savings of approximately $60 per month, or $3,500 over the first five years.

So to make sure you're getting the best deal possible, meet with at least three mortgage lenders. You’ll want to start your search early (ideally, at least 60 days before you start seriously looking at homes). When you meet with each lender, get what's called a good-faith estimate, which breaks down the terms of the mortgage, including the interest rate and fees, so that you can make an apples-to-apples comparison between offers.

Getting pre-qualified rather than pre-approved

Mortgage pre-qualification and mortgage pre-approval may sound alike, but they’re completely different. Pre-qualification entails a basic overview of a borrower’s ability to get a loan. You provide a mortgage lender with information—about your income, assets, debts, and credit—but you don't need to produce any paperwork to back it up. In return, you’ll get a rough estimate of what size loan you can afford, but it's by no means a guarantee that you'll actually get approved for the loan when you go to buy a home.

Mortgage pre-approval, meanwhile, is an in-depth process that involves a lender running a credit check and verifying your income and assets. Then an underwriter does a preliminary review of your financial portfolio and, if all goes well, issues a letter of pre-approval—a written commitment for financing up to a certain loan amount.

Bottom line? If you're serious about buying a house, you need to be pre-approved, since many sellers will accept offers only from pre-approved buyers.

Moving money around

To get pre-approved, you have to show you have enough cash in reserves to afford the down payment. (Presenting your mortgage lender with bank statements is the easiest way to do this.) Nonetheless, your loan still needs to go through underwriting while you're under contract for your loan to be approved. Because the underwriter will check to see that your finances have remained the same, the last thing you want to do is move money around while you’re in the process of buying a house. Shifting large amounts of money out or even into your accounts is a huge red flag.

So if you're in contract for a home, your money should stay put.

Applying for new lines of credit

If you apply for a new credit card or request a credit limit increase a few months before closing, watch out: Credit inquiries ding your credit score by up to five points. So, don’t let the credit inquiries add up.

'Worse than the actual hit on your credit score is any pattern of trying to borrow more money all at once,”  Translation: Applying for multiple lines of credit while you’re buying a house can make your mortgage lender think that you’re desperate for money—a signal that could change your mortgage terms or even get you denied altogether, even if you've got a closing date on the books.

Changing jobs

Mortgage lenders like to see at least two years of consistent income history when pre-approving a loan. Consequently, changing jobs while you’re under contract on a property can create a big issue in the eyes of an underwriter.

Your best bet? Try to wait until after you've closed on your house to change jobs. If you're forced to switch before closing, you should alert your loan officer immediately. Depending on the lender, you may simply need to provide a written verification of employment from your new employer that states your job status and income.

Mortgage Rates Reach 4-Year High

Mortgage rates continued to inch higher this week, marking the sixth consecutive week for borrowing cost increases for home shoppers.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we've made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers.

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 15:

• 30-year fixed-rate mortgages: averaged 4.38 percent with an average 0.6 point, rising from last week’s 4.32 percent average. Last year at this time, 30-year rates averaged 4.15 percent.
• 15-year fixed-rate mortgages: averaged 3.84 percent, with an average 0.5 point, increasing from last week’s 3.77 percent average. A year ago, 15-year rates averaged 3.35 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.63 percent, with an average 0.4 point, rising from last week’s 3.57 percent average. A year ago, 5-year ARMs averaged 3.18 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Source: Freddie Mac

More Markets Hitting Record-High

Home Prices: It’s a good time to be a homeowner: Nearly two-thirds of housing markets across the country saw home prices at all-time highs in the fourth quarter of 2017.

The national median existing single-family home price in the fourth quarter was $247,800, up 5.3 percent from a year ago. Ninety-two percent of the markets measured by NAR saw an uptick in single-family home prices. Twenty-six metros—or 15 percent—saw double-digit increases. Home prices are now at their all-time high in 64 percent of the markets NAR tracked.

“A majority of the country saw an upswing in buyer interest at the end of last year, which ultimately ended up putting even more strain on inventory levels and prices,” says Lawrence Yun, NAR’s chief economist.“Remarkably, home prices have risen a cumulative 48 percent since 2011, yet during this same time frame, incomes are up only 15 percent. In the West region, where very healthy labor markets are driving demand, the gap is even wider.”

The increase in home prices is “certainly great news for homeowners, and especially for those who were at one time in a negative equity situation,” Yun adds. “However, the shortage of new homes being built over the past decade is really burdening local markets and making homebuying less affordable.”

At the end of the fourth quarter, there were 1.48 million existing homes available for sale, which is 10.3 percent lower than a year ago.

“While tight supply is expected to keep home prices on an upward trajectory in most metro areas in 2018, both the uptick in mortgage rates.  “In areas where home building has severely lagged job creation in recent years, it’s going to be a slow slog before there’s enough new construction to cool price appreciation to a pace that aligns more closely with incomes.”

By Region
Here’s a closer look at how existing-home sales fared in the fourth quarter of 2017:

• Northeast: Existing-home sales increased 10.1 percent in the fourth quarter but are 0.4 percent below levels a year ago. Median single-family home price: $268,100, a 4.2 percent increase from a year ago.
• Midwest: Existing-home sales rose 6 percent in the fourth quarter and are 2.3 percent higher than a year ago. Median single-family home price: $193,800, up from 7.2 percent a year ago.
• South: Existing-home sales increased 3.8 percent in the fourth quarter and are 1.8 percent higher than the fourth quarter of 2016. Median single-family home price: $221,600, up 5 percent from a year ago.
• West: Existing-home sales reached an annualized rate of 1.23 million, which is unchanged from the third quarter. Sales were up just 0.3 percent from a year ago. Median single-family home price: $374,400, up 7.2 percent from the fourth quarter of 2016.

Source: National Association of REALTORS®

Pros and Cons of Buying a Home

It's well known that Spring is the busiest season for home sales. But just because Spring is a busier real estate season than the others doesn't make it better for buyers.

Buying a home in winter has its advantages, but also brings its own set of challenges. Being aware of both the pros and cons of buying a home in winter might give you a leg up on the competition:

#1: Less Competition

As we jump into 2018, home prices are rising steadily (if not strongly) in most of the U.S. In 2017,nearly 25 percent of homes sold in a bidding war, pushing up prices further.

Pros. One of the best reasons to buy a home in the winter is there are fewer buyers looking, so there is inherently less competition for the homes that are listed for sale in your neighborhood.

 Cons. On the other hand, sellers often wait until later in the Spring to list their home for sale. (The number of homes on the market is often referred to as the 'housing inventory.') Fewer homes listed means there will be fewer homes to see and choose from.

#2 Sellers Are Motivated

In the winter, many homeowners are distracted by the holidays and keeping their home in spotless condition for showings becomes less important. But sellers who do decide to sell at this time of year are often motivated to sell quickly.

Pros. When a seller is motivated, they're often willing to negotiate on price, closing costs, the closing date or what will be included in the terms of the deal, whether it's furniture, appliances, or light fixtures.

Cons. Some winter listings are there because the property has been for sale for awhile. It's become 'stale' (in real estate terminology) and those sellers may feel a little burnt by the whole process. While these sellers should be motivated, they're often not, and if you go in with a lowball offer, you might find it rejected outright rather than being countered.

#3 Inclement Weather Showings

Today, most agents post dozens of photos of the interior and exterior of a home online. While you can see a lot about a property online, there's nothing like going to visit it in person. However, there are some pros and cons to doing it during the worst weather of the year.

Pros. When you see a home in the middle of a snowstorm, in the rain, or when the wind is blowing, you get to see a property at its worst, and gives you insight as to how the structure, mechanicals, and hardscape perform under adverse conditions.

Cons. You may not be able to spend as much time inspecting the exterior as you would on a fine, dry day.

Here's the bottom line: If you're ready to buy a home, there's no need to wait for a change of seasons to find the right home.

Which Mortgage Is Right for You?

FHA vs. Conventional Loan: FHA versus conventional loan: If you need 

a mortgage to buy a house, you may find yourself weighing these two options. What's the difference, and which one is right for you?

While the majority of home buyers might assume they should get a conventional home loan, about 40% end up with FHA loans, which are insured by the Federal Housing Administration. 

To help you decide whether an FHA or conventional loan is better for your circumstances, here's more information about each, including their distinct advantages to you as a home buyer as well as what you'll need to qualify (which may vary by lender).

Conventional lenders look for borrowers who have well-established credit scores, solid assets, and steady income. As such, these loans have higher barriers to entry than the FHA-backed options. You'd better have your A-game on!

Typically, you need at least a 620 credit score and ideally a 20% down payment,although you can put down as little as 5% if you so wish—just know that on any down payment under 20%, you’ll have to pay private mortgage insurance, an extra monthly fee meant to mitigate the risk to the lender that you might default on your loan. (PMI ranges from about 0.3% to 1.15% of your home loan.)

Most conventional loans also require a maximum 43% debt-to-income ratio, which compares how much money you owe (on student loans, credit cards, car loans, and—hopefully soon—a home loan) with your income 

Conventional loan advantages
Conventional loans don't require mortgage insurance, as long as you put down at least 20%.
Conventional loans can cover higher loan amounts than FHA loans, which are restricted to county limits.
Conventional loans, on average, are processed faster than FHA loans.

FHA loans are great for first-time buyers or people without sterling credit or much money. Created by the Federal Housing Administration, these loans are insured by this government agency, so that guarantees that lenders won’t lose their money if borrowers default on their mortgage. In short, it allows lenders to take on riskier borrowers, while also helping hopeful home buyers in less-than-ideal circumstances achieve the dream of homeownership.

To qualify for an FHA loan, you need at least a 3.5% down payment and a credit score of 580. Applicants with lower credit scores (e.g., 500) may not be out of the running entirely, but must cough up a larger down payment of at least 10%.

These loans also have looser debt-to-income requirements of up to 50%. 

FHA loans may be a boon to home buyers (particularly first-timers) who might not qualify for a loan otherwise, but they do have a few disadvantages. For one, they’re usually capped at $417,000 (in certain high-cost areas, the limit is $625,000)—meaning you may have limited buying power. Also, because the federal government insures these loans, you have to pay an upfront mortgage insurance premium (currently, the fee is about 1.75%) and annual mortgage insurance (typically 0.85% of the borrowed loan amount), which remains throughout the life of the loan (or until you can refinance the loan into a conventional mortgage).

FHA loan advantages

FHA loans have lower down payment requirements (3.5%) than conventional loans (typically 5% to 20%).
FHA loans have lower credit score requirements (as low as 580 for qualified borrowers).
FHA loans have less stringent DTI requirements (50% or less) than conventional loans.

FHA vs. conventional loan: Which should you pick?

Generally if you have the means and qualifications to afford a conventional loan, this is the one to opt for, since it has fewer restrictions (and is faster to get). However, if you're a less-than-ideal home buyer with a mediocre credit score, down payment, or income, then an FHA loan may be the best—or only—avenue open to you.

Check with your lender to know where you stand.

FHA loan requirements                                                             Conventional loan requirements
Minimum down payment: 3.5%                                                  Minimum down payment: 5% to 20%
Minimum credit score: 580                                                          Minimum credit score: 620
Maximum debt-to-income ratio: 50%                                        Maximum debt-to-income ratio: 43%

Home Prices to Escalate, Fueling Bidding Wars.

Inventory Shortages in both the new- and existing-homes sectors, along with high buyer demand, have 

 prompted home prices to escalate, fueling bidding wars. Despite a red-hot real estate market, most aspiring buyers can still afford to buy a home—if they can find one. But it may not be that way for much longer.

“Buyers should be prepared.” “It’s going to be more expensive to afford a house over the course of 2018. … Interest rates went up a little bit, and home prices went up as well.”

Mortgage rates have increased for the past five consecutive weeks. Lawrence Yun, chief economist for the National 

Association of REALTORS®, predicts that mortgage rates will reach 4.5 percent by the second half of the year.

As mortgage rates continue to inch higher, consumers are bracing for steeper home buying costs this spring. Households earning the national median income of $68,000 a year could afford about 59.6 percent of new and existing homes that were sold in the fourth quarter of 2017, according to the National Association of Home Builders. 

The trade group’s latest report looks at home prices, mortgage interest rates, and median household income across 238 U.S. metros.

Thank the lack of homes on the market, and of construction to build new ones, for the price bumps. The lack of inventory has led to bidding wars, offers over asking, and a whole lot of frustration.

Are you ready to Sell? Your agent will research sale prices on other Comparable Homes in your neighborhood to help you set your sale price.  It’s important to get the price right the first time.

Hope to Buy a House Together Someday?

Pop These Questions Now, Love may be blind, but if you and your significant other hope to buy a home 

together someday,  That can mean you'll need to pop some questions about money—right now.

'Couples often go house shopping first before they even think about the mortgage.' 'But that's like getting married before your first date!'

Talking about finances with your partner can be uncomfortable, but let's face it, while you may love her quirky sense of humor or his sunny smile, a lender is looking only at the cold, hard numbers. And even if your finances are in order, if your partner's aren't, it could jeopardize your home-buying dreams.

'When a couple purchases a home together, lenders will assess the couple’s ability to purchase jointly. 'One person’s credit or income could affect the couple's ability to qualify for a mortgage at all.'

So before you start hitting open houses, make sure to ask these questions to help you size up the person you love like a lender would.

How much debt do you have?

If you two are serious, odds are you've talked about each other's incomes, but if you've never talked about debt, brace for some surprises—the bad kind.
You should also both come clean about your credit card debt. It's going to come out anyway: Any debt you're carrying will show up once you undergo the pre-approval process for a mortgage: car loans, personal loans, and even child support obligations (that's a whole other kind of surprise).

All this matters because of a thing called your debt-to-income ratio—that's a number your lender will look at to decide if you can afford to pay back a loan. To get it, the lender will add up all of your monthly debts and divide them by your combined monthly income. To qualify for a mortgage, that number cannot be over 43%, according to the Consumer Financial Protection Bureau, but ideally should be under 36%.

For example, if your joint take-home income is $8,000 a month and you pay $1,000 a month toward debts, that would mean your debt-to-income ratio is 12.5%. Add in a mortgage, and that number changes. In this scenario, a monthly mortgage payment of $1,880 would boost this debt-to-income ratio up to the recommended max of 36%.

If you're not sure, punch your numbers into an online home affordability calculator to get a ballpark idea of how much home you can afford.

What's your credit score?

Your credit score is a number that represents how well you've paid off past debts. And it's really important to lenders because, as they see it, that number shows how likely it is that you'll make your mortgage payments in the future. A low credit score could disqualify you from getting a loan, or it could mean you won't get the best rates. Both you and your partner will have your own credit score; even for married couples, they're not combined.

So how do you check your score? You can get a free copy of your credit report at AnnualCreditReport.com, and pay a small fee for your actual score. As for what number passes muster, a credit score over 700 is ideal. The minimum credit score required for a mortgage among most lenders is around 660.
The good news is that low scores can be fixed: Here are some ways to raise your credit score.

How much money do you have for a down payment?

Ideally, the two of you will be able to put 20% down on a property. That's a big chunk of change: On a $300,000 home, a 20% down payment is $60,000. And don't forget you'll need to pay closing costs, which can be anywhere from 2% to 7% of the purchase price of the home.

So where is all this money going to come from? Your down payment can come from savings, a gift from a family member, or part of a retirement account that you can cash in. (The latter is not ideal and can have tax implications.)

Another option is, you can put down less—some mortgages will accept as little as 3% down—but then you'll be required to pay an extra monthly fee called PMI, or private mortgage insurance.

Who owns (and is paying for) what?

'Prior to signing paperwork, you should talk about who is going to be responsible for how much of the payment,' says Lewis. 'Are you going to split it 50-50? How much can each of you afford?' Talk about what is going to be comfortable for each of you going forward.

You should also talk about whether both of your names will be on the title, which is the legal document proving you own the property. If you're both contributing to payments, 'you absolutely want both people on the title,' says Lewis. Otherwise, depending on your marriage status and what state you live in, one of you may not legally co-own the home.

What happens if we break up?

Yeah, we know you don't want to think about it. But in case of a split, you should have a plan in place. Nobody likes to talk about breaking up, but having these conversations before something happens will protect both of you in case things don't work out.

Selling Your Home?

Don't Neglect These 6 Maintenance Tasks, If you're a homeowner, 

you already know that keeping your property in tiptop shape requires dedication and patience for ongoing maintenance. But what if you've put your home on the market, or even accepted an offer? 


Sure, a well-cared-for house shows better:Small things like broken doorbells and leaky faucets make buyers wonder if your property also has bigger issues elsewhere. But more important, a little routine maintenance can help you avoid a catastrophic problem down the line (e.g., burst pipes, roof leaks, critters moving into your attic) that could devalue your property and derail that sale.

Right now there are fewer homes on the market and every buyer is different.  What does that mean to you?  Your house just may be the best one for some of the buyers that are buying right now. That is why you, as a seller, need to be well informed before you go live on the market. 

Let us go the extra mile by researching your property to show you what your home would most likely sell for in today’s market. With no obligation and we will prepare a comparative market analysis for you. Call us today and let us know how we can HELP today.

To prevent minor issues from escalating into full-blown, money-sucking, sale-killing problems, focus on these six important areas you can’t afford to neglect.

1. Keep up the yard and walkways

Whether you're still living at the home or not, you'll want to make sure to keep your landscaping tidy—remove dead tree limbs, rake leaves, and clean out flowerbeds. “If your home does not have a well-maintained exterior, (potential buyers) will keep driving,” he cautions. “Plus, this kind of neglect can be a bull's-eye for vandals to break into your property.”

2. Clean the gutters and check the roof

This one's easy to forget about, even when you don't plan on going anywhere. But when it comes to gutter and roof issues, neglect can cause a dangerous domino effect.

Overflowing gutters can damage your foundation, and also lead to drainage issues. And, of course, you don’t want buyers seeing puddling water as they approach your house.

3. Service your heating systems

It’s not sexy, but the hidden guts of your home need regular attention, whether you’re still living there or not. That means having your HVAC systems professionally serviced.

First up, your furnace: If you get it addressed before you list your home, it won't smell like dust when you crank up the heat during an open house on a chilly day. While you're at it, have the duct work and filters cleaned as well. And if you have baseboard heaters, vacuum those out, too.

4. Keep the critters out

If you don’t want to add 'family of raccoons included' to your listing (and pay the hefty tab for getting them out), inspect the inside and outside of your home for any areas that need to plugged up. Take care of holes from damaged siding or fascia under the roof line—and do it promptly.

“In a colder climate, squirrels look for somewhere warm to go, and they’ll find their way into your property. Stove and dryer vents, for example, should be covered with wire mesh to deter pests.

5. Wash your windows

Most people associate sparkling windows with spring-cleaning, Roberts says. But if your house is on the market, it doesn't matter what time of year it is—you need to get those babies squeaky clean.

“If buyers walk through your home and all they see is dirty windows, that’ll really mar the showing process,' she says.

6. Check the calendar

Depending on what time of year you bring your house to market, pay attention to any details that scream, 'We don’t live here or care anymore,' Roberts says.

That means tackling seasonal tasks such as clearing away lawn mowers in the fall and storing shovels in the spring.