Posts with tag 'Shopping for Home '

The pandemic has changed the way many of us live, work, and attend school—and those changes have impacted our priorities when it comes to choosing a home.

With virtual school and working from home a reality for many families, the need for additional space has only intensified. A growing number of buyers are choosing homes which offer more space both inside and out.

But not everyone is permanently sold on suburban or rural life. Instead, some are choosing to purchase a second home as a frequent getaway, often where they can work or homeschool for awhile, if necessary. Without the requirements of a five-day commute, many homeowners feel less tethered to their primary residence and are eager for a change of scenery after spending so much time at home earlier in the year.

If you're feeling cramped in your current space, you've probably considered a move. But what type of home would suit you best: a move-up home or a second home? Let's explore each option to help you determine which one is right for you.

WHY CHOOSE A MOVE-UP HOME?

A move-up home is typically a larger or nicer home. It's a great choice for families or individuals who simply need more space, a better location, or want features their current home doesn't offer—like an inground pool, a different floor plan, or a dedicated home office. If you're struggling with a lack of functional or outdoor space currently, a move-up home can greatly improve your everyday life.

Most move-up buyers will sell their current home and use the proceeds as a down payment on their next one. I can help you estimate how much you could expect to net if you sold your existing home. And with mortgage rates at their lowest level in history, you may be surprised how much home you can actually afford.

To learn more about mortgage rates, contact me for a free copy of my report "Lowest Mortgage Rates in History: What it Means for Homeowners and Buyers"!

If you like where you are but are longing for that vacation vibe, a second home may be a better choice for you.

WHY CHOOSE A SECOND HOME?

Once reserved for the ultra-wealthy, second homes have become more mainstream. Home sales are surging in Southwest Michigan as more people come into the area searching for a place to escape the crowds and quarantine in comfort. Instead of trips, some families are channeling their vacation budgets into vacation homes that can be utilized throughout the year.

A second home can also be a good option if you're preparing for retirement. By purchasing your retirement home now, you can get financed while you're still working, lock in a low interest rate, start paying down the mortgage, and begin enjoying the perks of retirement living early. Down the road, when you're ready to sell your current home and make the second home your primary residence, you will see significant savings on your property taxes.

One advantage of choosing a second home is that you can offset a portion of the costs—and in some cases turn a profit—by renting it out on a platform like Airbnb or Vrbo. However, be sure to research whether short-term rentals are allowed in the specific location where you plan to buy, as some areas have restrictions.

WHICH ONE IS RIGHT FOR ME?

You may read this and think: I'd really like both a move-up home AND a second home! But if you're dealing with a limited budget (aren't we all?), you'll probably need to make a choice.  These three tasks can help you decide which option is right for you.

1. Determine Your Time and Financial Budget

You may meet the bank's qualifications to purchase a home, but do you have the time, energy, and financial resources to maintain it? This is an important question to ask yourself, no matter what type of home you choose.

Most buyers realize that a second home will mean double mortgages, utilities, taxes, and insurance. But consider all the extra time and expense that goes into maintaining two properties. Two lawns to mow. Two houses to clean. Two sets of systems and appliances that can malfunction. Second homes aren't always a vacation. Make sure you're prepared for the labor and carrying costs that go into maintaining another residence.

Of course, some move-up homes require more work than a second home. For example, if your move-up option is a major fixer-upper, you'll probably invest more energy and capital than you would on a small vacation condo by the beach. Have an honest discussion about how much time and money you want to spend on your new property. Would a move-up home or a second home be a better fit given your parameters?

2. Rank Your Priorities

If you're still undecided, make a wish list of the characteristics you'd like in your new home. Then rank each item from most to least important. This exercise can help you determine your "must-have" features—and which ones you may need to sacrifice or delay. Here's a sample to help you get started:

3. Explore Your Options

Once you've determined your parameters and priorities, it's time to begin your home search.

If you're still not sure whether a move-up home or a second home is right for you, I can help.

Contact me to schedule a free consultation. We'll discuss your options and help you assess the pros and cons of each, given your unique circumstances.

I can also send you property listings for both move-up homes and second homes within your budget so you can better envision each scenario. Sometimes, viewing listings of homes that meet your criteria can make the decision clear.

LET'S GET MOVING!

Whether you're ready to make a move now or need help weighing your options, I'd love to help. I can determine your current home's value, put you in touch with a lender so you are certain of your buying power, and show you local properties that fit within your budget. Waterfront homes are in high demand, so if you have one you don't get much use out of anymore, now is a great time to cash in. Or, if your heart is set on a second home in another market, I can refer you to a worthy agent in your dream locale. Contact me today to schedule a free, no-obligation consultation!

It's been all over the news, if you can filter through the negativity, and even if you completely ignore the news, you probably know someone who has been affected by this:In July, the average 30-year fixed-rate mortgage fell below 3% for the first time in history.¹ And while many Americans have rushed to take advantage of this unprecedented opportunity, others question the hype.

Are today's rates truly a bargain? While average mortgage rates have drifted between 4% and 5% in recent years, they haven't always been so low. Freddie Mac began tracking 30-year mortgage rates in 1971. At that time, the national average was 7.31%.² As the rate of inflation started to rise in the mid-1970s, mortgage rates surged. It's hard to imagine now, but the average U.S. mortgage rate reached a high of 18.63% in 1981.³ Fortunately for home buyers, inflation normalized by October 1982, which sent mortgage rates on a downward trajectory that would bring them as low as 3.31% in 2012.³ Since 2012, 30-year fixed rates have risen modestly, with the daily average climbing as high as 4.94% in 2018.⁴ 

So what's causing today's rates to sink to unprecedented lows? Economic uncertainty.

Mortgage rates generally follow bond yields, because the majority of U.S. mortgages are packaged together and sold as bonds. As the coronavirus pandemic continues to dampen the economy and inject volatility into the stock market, a growing number of investors are shifting their money into low-risk bonds. Increased demand has driven bond yields—and mortgage rates—down.⁵

However, according to National Association of Realtors Chief Economist Lawrence Yun, "the number one driver of low mortgage rates is the accommodating Federal Reserve stance to keep interest rates low and to buy up mortgage-backed securities." According to Yun, "we will see mortgage rates stay near this level for the next 18 months because of the significance of the Fed's stance."⁶

^{HOW DO LOW MORTGAGE RATES BENEFIT CURRENT HOMEOWNERS?}

Low mortgage rates increase buyer demand, which is good news for sellers. But what if you don't have any plans to sell your home? Can current homeowners benefit from falling mortgage rates? Yes, they can!

A growing number of homeowners are capitalizing on today's rock-bottom rates by refinancing their existing mortgages. In fact, refinance applications have surged over the past few months—and for a good reason.⁷ Reduced interest rates can save homeowners a bundle on both monthly payments and total payments over the lifetime of a mortgage.

The chart below illustrates the potential savings when you decrease your mortgage rate by just one percentage point. When it comes to refinancing, the bigger the spread, the greater the savings.

Estimated Monthly Payment On a 30-Year Fixed-Rate Mortgage

Be sure to factor in any prepayment penalties on your current mortgage and closing costs for your new mortgage. For a refinance, expect to pay between 2% to 5% of your loan amount.⁸ You can divide your closing costs by your monthly savings to find out how long it will take to recoup your investment, or use an online refinance calculator. For a more precise calculation of your potential savings, we'd be happy to connect you with a mortgage professional in our network who can help you decide if refinancing is a good option for you.

HOW DO LOW MORTGAGE RATES BENEFIT HOME BUYERS?

We've already shown how low rates can save you money on your mortgage payments. But they can also give a boost to your budget by increasing your purchasing power. For example, imagine you have a budget of $1,500 to put toward your monthly mortgage payment. If you take out a 30-year mortgage at 5.0%, you can afford a loan of $279,000.

Now let's assume the mortgage rate falls to 4.0%. At that rate, you can afford to borrow $314,000 while still keeping the same $1,500 monthly payment. That's a budget increase of $35,000!

If the rate falls even further to 3.0%, you can afford to borrow $355,000 and still pay the same $1,500 each month. That's $76,000 over your original budget! All because the interest rate fell by two percentage points. If you've been priced out of the market before, today's low rates may put you in a better position to afford your dream home.

On the other hand, rising mortgages rates will erode your purchasing power. Wait to buy, and you may have to settle for a smaller home in a less-desirable neighborhood. So if you're planning to move, don't miss out on the phenomenal discount you can get with today's historically-low rates.

HOW LOW COULD MORTGAGE RATES GO?

No one can say with certainty how low mortgage rates will fall or when they will rise again. A lot will depend on the trajectory of the pandemic and subsequent economic impact.

Forecasters at Freddie Mac and the Mortgage Bankers Association predict 30-year mortgage rates will average 3.2% and 3.5% respectively in 2021.^9,10 However, economists at Fannie Mae expect them to dip even lower to an average of 2.8% next year.¹¹

Still, many experts agree that those who wait to take advantage of these unprecedented rates could miss out on the deal of a lifetime. "With rates now at all-time historic lows, it's hard to imagine that people may be holding out for something even better," warns Paul Buege, president and COO of Inlanta Mortgage.¹² Positive news about a vaccine or a faster-than-expected economic recovery could send rates back up to pre-pandemic levels.

HOW CAN I SECURE THE BEST AVAILABLE MORTGAGE RATE?

While the average 30-year mortgage rate is hovering around 3%, you can do a quick search online and find advertised rates that are even lower. But these ultra-low mortgages are typically reserved for only prime borrowers. So what steps can you take to secure the lowest possible rate?

1. Consider a 15-Year Mortgage Term

 Lock in an even lower rate by opting for a 15-year mortgage. If you can afford the higher monthly payment, a shorter mortgage term can save you a bundle in interest, and you'll pay off your home in half the time.¹³

2. Give Your Credit Score a Boost

The economic downturn has made lenders more cautious. These days, you'll probably need a credit score of at least 740 to secure their lowest rates.¹⁴ While there's no fast fix for bad credit, you can take steps to help your score before you apply for a loan:¹⁵

• Dispute inaccuracies on your credit report.
• Pay your bills on time, and catch up on any missed payments.
• Hold off on applying for new credit.
• Pay off debt, and keep balances low on your credit cards.
• Don't close unused credit cards (unless they're charging you an annual fee).

3. Make a Large Down Payment

 The more equity you have in a home, the less likely you are to default on your mortgage. That's why lenders offer better rates to borrowers who make a sizable down payment. Plus, if you put down at least 20%, you can avoid paying for private mortgage insurance.

4. Pay for Points

Discount points are fees paid to the mortgage company in exchange for a lower interest rate. At a cost of 1% of the loan amount, they aren't cheap. But the investment can pay off over the long-term in interest savings.

5. Shop Around

Rates, terms, and fees can vary widely amongst mortgage providers, so do your homework. Contact several lenders to find out which one is willing to offer you the best overall deal. But be sure to complete the process within 45 days—or else the credit inquiries by multiple mortgage companies could have a negative impact on your credit score.¹⁶

^{READY TO TAKE ADVANTAGE OF THE LOWEST MORTGAGE RATES IN HISTORY?}

^{Mortgage rates have never been this low. Don't miss out on your chance to lock in a great rate on a new home or refi for your existing mortgage. Either way, I can help. I'd be happy to connect you with the most trusted mortgage professionals in my network. And if you're ready to start shopping for a new home, I'm an Accredited Buyers Representative and I'd love to assist you with your search - all at no cost to you! Contact me today to schedule a free consultation.}

The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

Sources:

1. CNN Business -
   https://www.cnn.com/2020/07/16/success/30-year-mortgage-rates-record-low/index.html
2. Freddie Mac -
   http://www.freddiemac.com/pmms/pmms30.html)
3. Value Penguin -
   https://www.valuepenguin.com/mortgages/historical-mortgage-rates
4. Federal Reserve Bank of St. Louis -
   https://fred.stlouisfed.org/graph/?g=NUh
5. Bankrate -
   https://www.bankrate.com/mortgages/how-interest-rates-are-set/
6. Washington Post -
   https://www.washingtonpost.com/business/2020/06/25/mortgage-rate-remains-historic-low/
7. Yahoo! Finance -
   https://finance.yahoo.com/news/mortgage-refinancing-makes-big-comeback-151500346.html
8. Bankrate -
   https://www.bankrate.com/mortgages/is-no-closing-cost-for-you/
9. Freddie Mac June 2020 Quarterly Forecast -
   http://www.freddiemac.com/fmac-resources/research/pdf/202006-Forecast.pdf
10. Mortgage Bankers Association Mortgage Market Forecast July 15, 2020 -
    https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary
11. Fannie Mae July 2020 Housing Forecast -
    https://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_071420.pdf
12. Washington Post -
    https://www.washingtonpost.com/business/2020/06/25/mortgage-rate-remains-historic-low/
13. Investopedia -
    https://www.investopedia.com/articles/personal-finance/042015/comparison-30year-vs-15year-mortgage.asp
14. Money -
    https://money.com/mortgage-rates-below-three-percent/
15. Experian -
    https://www.experian.com/blogs/ask-experian/credit-education/improving-credit/improve-credit-score/
16. Equifax -
    https://www.equifax.com/personal/education/credit/report/understanding-hard-inquiries-on-your-credit-report/

Traditionally, spring is one of the busiest times of the year for real estate. However, the coronavirus outbreak—and subsequent stay-at-home orders—led many buyers and sellers to put their moving plans on hold. Across the country in April, new listings fell nearly 45%, and sales volume fell 15% compared to last year.¹

Fortunately, as restrictions have eased, we've seen an uptick in market activity, most notably here in Michigan where real estate had been completely shut down. And economists at Realtor.com expect a rebound in July, August, and September, as fears about the pandemic subside, and buyers return to the market with pent-up demand from a lost spring season.²

Click Here to Read More...

These days, it seems like everyone's looking for ways to cut costs and stretch their income further. Fortunately, there are some simple steps you can take to reduce your household expenses without making radical changes to your standard of living. When combined, these small adjustments can add up to significant savings each month.

Here are 20 things you can start doing today to lower your bills, secure better deals, and begin working toward your financial goals.

1. Refinance Your Mortgage - For prime borrowers, mortgage rates are at or near historic lows. Depending on your current mortgage rate and the terms you choose, refinancing could save you a siz...

Click Here to Read More...

Home, wherever it may be, is a place like no other. It's where we can relax and truly be ourselves.  It's where so much of life happens, where memories are made. So the decision to sell is one that weighs heavily on many homeowners, especially when a change of circumstances makes it necessary. Having a caring and experienced professional at your side can mean the difference between heart-wrenching disappointment and the chance for a fresh start.

Ideally, everyone involved in the transaction should be thoroughly committed to a speedy and successful closing. In reality, failure to communicate and a lack of urgency often create unnecessary stress. Buyers, sellers, agents, lenders, inspectors, appraisers, and title companies all have to work together to bring the transaction to cl...

Click Here to Read More...