Three Reasons Why Pre-Approval Is the First Step in the 2020 Homebuying Journey

Three Reasons Why Pre-Approval Is the First Step in the 2020 Homebuying Journey | MyKCM

When the number of buyers in the housing market outnumbers the number of homes for sale, it’s called a “seller’s market.” The advantage tips toward the seller as low inventory heats up the competition among those searching for a place to call their own. This can create multiple offer scenarios and bidding wars, making it tough for buyers to land their dream homes – unless they stand out from the crowd. Here are three reasons why pre-approval should be your first step in the homebuying process.

1. Gain a Competitive Advantage

Low inventory, like we have today, means homebuyers need every advantage they can get to make a strong impression and close the deal. One of the best ways to get one step ahead of other buyers is to get pre-approved for a mortgage before you make an offer. For one, it shows the sellers you’re serious about buying a home, which is always a plus in your corner.

2. Accelerate the Homebuying Process

Pre-approval can also speed up the homebuying process, so you can move faster when you’re ready to make an offer. In a competitive arena like we have today, being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.

3. Know What You Can Borrow and Afford

Here’s the other thing: if you’re pre-approved, you also have a better sense of your budget, what you can afford, and ultimately how much you’re eligible to borrow for your mortgage. This way, you’re less apt to fall in love with a home that may be out of your reach.

Freddie Mac sets out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

Local real estate professionals also have relationships with lenders who can help you through this process, so partnering with a trusted advisor will be key for that introduction. Once you select a lender, you’ll need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac also describes the ‘4 Cs’ that help determine the amount you’ll be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or Cash Reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

While there are still many additional steps you’ll need to take in the homebuying process, it’s clear why pre-approval is always the best place to begin. It’s your chance to gain the competitive edge you may need if you’re serious about owning a home.

Looking for a reputable local lender to get your pre-approval started? Call, text, email or PM me today! 

Dani

December 2019: The Buyer Stakes Are High Because Inventory Is Low

December 2019: The Buyer Stakes Are High Because Inventory Is Low | MyKCM

The reality of what we’re seeing this month is that homes are selling fast. In today’s strong seller’s market, bidding wars are common and expected with starter or entry-level homes.

In most areas of the country, first-time buyers have been met with fierce competition throughout their homebuying experience. Some have been out-bid multiple times before finally going into contract on a home to call their own.

Right now, inventory is the big challenge. Here’s what we know today:

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), there is currently a 3.9-month supply of homes for sale, which can drive this kind of hefty buyer competition. Remember, anything less than 6 months of inventory is a seller’s market.

Even though the month’s supply of inventory is not increasing, ironically, the number of homes for sale is. This means homes are coming up for sale, but they’re being sold quickly. The graph below shows the year-over-year change in inventory over the last 12 months.December 2019: The Buyer Stakes Are High Because Inventory Is Low | MyKCMAs depicted above, the percentage of available inventory has fallen for four consecutive months when compared to the previous year.

So, what does this mean? If you’re a buyer, be sure to get pre-approved for a mortgage and be ready to make a competitive offer, so you can move quickly. Chances are, homes high on your wish list are likely going to go fast.

Bottom Line

If you’re thinking of buying a home, make sure you’re taking the right steps at the beginning of the process, so you’re a top contender if you ultimately find yourself in a bidding war. Let’s get together to discuss what you need to do to make your move toward homeownership.

Ready to start looking for a new home? Begin your search at https://nexthomevictors.realgeeks.com/dani-hallsell/ .  Have a real estate related question? Call, text or email me; I answer questions for free!

Dani

Have You Budgeted for Closing Costs?

Have You Budgeted for Closing Costs? | MyKCM

Saving for a down payment is a key step in the homebuying process, and it’s not the only piece you need to include in your budget. Another factor that’s important to plan for is the closing costs required to obtain a mortgage.

What Are Closing Costs?

According to Trulia,

When you close on a home, a number of fees are due. They typically range from 2% to 5% of the total cost of the home, and can include title insurance, origination fees, underwriting fees, document preparation fees, and more.”

For those who buy a $250,000 home, for example, that amount could be between $5,000 and $12,500 in closing fees. Keep in mind, if you’re in the market for a home above this price range, your costs could be significantly greater. As mentioned before,

Closing costs are typically between 2% and 5% of your purchase price.

 Trulia gives more great advice, saying,

“There will be lots of paperwork in front of you on closing day, and not enough time to read them all. Work closely with your real estate agent, lender, and attorney, if you have one, to get all the documents you need ahead of time.

The most important thing to read is the closing disclosure, which shows your loan terms, final closing costs, and any outstanding fees. You’ll get this form about three days before closing since, once you (the borrower) sign it, there’s a three-day waiting period before you can sign the mortgage loan docs. If you have any questions about the numbers or what any of the mortgage terms mean, this is the time to ask—your real estate agent is a great resource for getting you all the answers you need.”

Bottom Line

Let’s get together to discuss the homebuying process, to be sure your plan includes budgeting for what you need to purchase your dream home – without any surprises!

Thinking about buying a home? Download my free Buyers Guide, “Things to consider when buying a home”.

Dani

Millennial’s, The True Cost of Not Owning Your Home

The True Cost of Not Owning Your Home | MyKCM

There are great advantages to owning a home, yet many people continue to rent. The financial benefits are just some of the reasons why homeownership has been a part of the long-standing American dream.

Realtor.com reported that:

“Buying remains the more attractive option in the long term – that remains the American dream, and it’s true in many markets where renting has become really the shortsighted option…as people get more savings in their pockets, buying becomes the better option.”

Why is owning a home financially better than renting?

Here are the top 5 financial benefits of homeownership:

  1. Homeownership is a form of forced savings.
  2. Homeownership provides tax savings.
  3. Homeownership allows you to lock in your monthly housing cost.
  4. Buying a home is less expensive than renting.
  5. No other investment lets you live inside of it.

Studies have also shown that a homeowner’s net worth is 44x greater than that of a renter.

A family that purchased a median-priced home at the start of 2019 would build more than
$37,750 in family wealth over the next five years with projected price appreciation alone.

Some argue that renting eliminates the cost of taxes and home repairs, but every potential renter must realize that all the expenses the landlord incurs are already baked into the rent payment – along with a profit margin!

Bottom Line

Owning a home has many social and financial benefits that cannot be achieved by renting. Let’s connect to determine if buying a home is your best move.

Begin your journey by downloading “A Millennial’s Guid to Homeownership”

Dani

Taking the Fear Out of the Mortgage Process

Taking the Fear Out of the Mortgage Process | MyKCM

A considerable number of potential buyers shy away from the real estate market because they’re uncertain about the buying process – particularly when it comes to qualifying for a mortgage.

For many, the mortgage process can be scary, but it doesn’t have to be! 

In order to qualify in today’s market, you’ll need a down payment (the average down payment on all loans last year was 5%, with many buyers putting down 3% or less), a stable income, and a good credit history.

Once you’re ready to apply, here are 5 easy steps Freddie Mac suggests to follow:

  1. Find out your current credit history and credit score– Even if you don’t have perfect credit, you may already qualify for a loan. The average FICO Score® for all closed loans in September was 737, according to Ellie Mae.
  2. Start gathering all of your documentation– This includes income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify your savings).
  3. Contact a professional– Your real estate agent will be able to recommend a loan officer who can help you develop a spending plan, as well as help you determine how much home you can afford.
  4. Consult with your lender– He or she will review your income, expenses, and financial goals in order to determine the type and amount of mortgage you qualify for.
  5. Talk to your lender about pre-approval– A pre-approval letter provides an estimate of what you might be able to borrow (provided your financial status doesn’t change) and demonstrates to home sellers that you’re serious about buying.

Bottom Line

Do your research, reach out to professionals, stick to your budget, and be sure you’re ready to take on the financial responsibilities of becoming a homeowner.

Ready to start looking for a new home? Begin your search at https://nexthomevictors.realgeeks.com/dani-hallsell/ .  Have a real estate related question? Call, text or email me; I answer questions for free!

Dani

5 Tips for Starting Your Home Search

5 Tips for Starting Your Home Search | MyKCM

In today’s market, low inventory dominates the conversation in many areas of the country. It can often be frustrating to be a first-time homebuyer if you aren’t prepared. Here are five tips from realtor.com’s article“How to Find Your Dream Home—Without Losing Your Mind.”

1. Get Pre-Approved for a Mortgage Before You Start Your Search

One way to show you’re serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage. Even if you’re in a market that is not as competitive, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach. This will help you avoid the disappointment of falling in love with a home well outside your price range.

2. Know the Difference Between Your ‘Must-Haves’ and ‘Would-Like-To-Haves’

Do you really need that farmhouse sink in the kitchen to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Before you start your search, list all the features of a home you would like. Qualify them as ‘must-haves’‘should-haves’, or ‘absolute-wish list’ items. This will help you stay focused on what’s most important.

3. Research and Choose a Neighborhood Where You Want to Live

Every neighborhood has unique charm. Before you commit to a home based solely on the house itself, take a test-drive of the area. Make sure it meets your needs for “amenities, commute, school district, etc. and then spend a weekend exploring before you commit.”

4. Pick a House Style You Love and Stick to It

Evaluate your family’s needs and settle on a style of home that will best serve those needs. Just because you’ve narrowed your search to a zip code doesn’t mean you need to tour every listing in that vicinity. An example from the article says, “if you have several younger kids and don’t want your bedroom on a different level, steer clear of Cape Cod–style homes, which typically feature two or more bedrooms on the upper level and the master on the main.”

5. Document Your Home Visits

Once you start touring homes, the features of each individual home will start to blur together. The article suggests keeping your camera handy and making notes on the listing sheet to document what you love and don’t love about each property you visit.

Bottom Line

In a high-paced, competitive environment, any advantage you can give yourself will help you on your path to buying your dream home.

Are you thinking about buying a home? Download my free Buyers Guide, “Things to consider when buying a home”. And start you home search at mynexthome.com.

Dani

What to Expect from Your Home Inspection

What to Expect from Your Home Inspection | MyKCM

You made an offer and it was accepted. Your next task is to have the home inspected prior to closing. Agents often recommend you make your offer contingent upon a clean home inspection.

This contingency allows you to renegotiate the price you offered for the home, ask the sellers to cover repairs, or in some cases, walk away if challenges arise. Your agent can advise you on the best course of action once the report is filed.

How to Choose an Inspector

Your agent will most likely have a shortlist of inspectors they’ve worked within the past to recommend to you. HGTV suggests you consider the following five areas when choosing the right home inspector for you:

1. Qualifications – Find out what’s included in your inspection and if the age or location of your home may warrant specific certifications or specialties.

2. Sample Reports – Ask for a sample inspection report so you can review how thoroughly they will be inspecting your dream home. In most cases, the more detailed the report,
the better.

3. References – Do your homework. Ask for phone numbers and names of past clients who you can call to discuss their experiences.

4. Memberships – Not all inspectors belong to a national or state association of home inspectors, and membership in one of these groups should not be the only way to evaluate your choice. Membership in one of these organizations does, however, often mean continued training and education are required.

5. Errors and Omission Insurance – Find out what the liability of the inspector or inspection company is once the inspection is over. The inspector is only human, after all, and it is possible they might miss something they should see.

Ask your inspector if it’s okay for you to tag along during the inspection, so they can point out anything that should be addressed or fixed.

Don’t be surprised to see your inspector climbing on the roof or crawling around in the attic and on the floors. The job of the inspector is to protect your investment and find any issues with the home, including but not limited to: the roof, plumbing, electrical components, appliances, heating and air conditioning systems, ventilation, windows, fireplace and chimney, foundation, and so much more.

Bottom Line

They say, ‘ignorance is bliss,’ but not when investing your hard-earned money into a home of your own. Work with a professional you can trust to give you the most information possible, so you can make the most educated decision about your purchase.

Are you thinking about buying a home? Download my free Buyers Guide, “Things to consider when buying a home”. And start you home search at mynexthome.com.

Dani

How Property Taxes Can Impact Your Mortgage Payment

How Property Taxes Can Impact Your Mortgage Payment | MyKCM

When buying a home, taxes are one of the expenses that can make a significant difference in your monthly payment. Do you know how much you might pay for property taxes in your state or local area?

When applying for a mortgage, you’ll see one of two acronyms in your paperwork – P&I or PITI – depending on how you’re including your taxes in your mortgage payment.

P&I stands for Principal and Interest, and both are parts of your monthly mortgage payment that go toward paying off the loan you borrow. PITI stands for Principal, Interest, Taxes, and Insurance, and they’re all important factors to calculate when you want to determine exactly what the cost of your new home will be.

TaxRates.org defines property taxes as,

“A municipal tax levied by counties, cities, or special tax districts on most types of real estate – including homes, businesses, and parcels of land. The amount of property tax owed depends on the appraised fair market value of the property, as determined by the property tax assessor.”

This organization also provides a map showing annual property taxes by state (including the District of Columbia), from lowest to highest, as a percentage of median home value.How Property Taxes Can Impact Your Mortgage Payment | MyKCMThe top 5 states with the highest median property taxes are New Jersey, New Hampshire, Texas, Nebraska, and Wisconsin. The states with the lowest median property taxes are Louisiana, Hawaii, Alabama, and Delaware, followed by the District of Columbia.

Bottom Line

Depending on where you live, property taxes can have a big impact on your monthly payment. To make sure your estimated taxes will fall within your desired budget, let’s get together today to determine how the neighborhood or area you choose can make a difference in your overall costs when buying a home.

Thinking about buying a home? Download my free Buyers Guide, “Things to consider when buying a home”.

Dani

How Much Do You Know About Down Payments?

How Much Do You Know About Down Payments? | MyKCM

Whether you’ve owned a home before, or you’re ready to jump into homeownership for the first time, there are always a lot of questions swirling around about what is truly required for a down payment, and how to best source down payment assistance. Let’s tackle these two today.

1. How much do you really need for a down payment?

There is a long-standing misconception about down payment requirements. A survey from Fannie Mae shows only 17% of consumers know the minimum options are actually between 1 – 5% of the purchase price and 40% don’t know how much they need at all.How Much Do You Know About Down Payments? | MyKCMThere are many mortgage loans available that require as little as 3% down for first-time buyers, and some ask for only 3.5% down from repeat buyers. There are even loans available for Veterans that provide 0% down payment options too.

We’ve mentioned recently that you don’t need to come up with a 20% down payment to buy, and we’ve also shared how quickly you can save for a 3% or 10% down payment, depending on where you live. If you’re planning to put down just 3%, the research shows it may be possible in most states to have enough saved for a down payment in less than a year. That puts homeownership in a much closer reach for many potential buyers, maybe even you!

2. How can I get help with my down payment?

Regardless of the loans available, many buyers still need assistance with a down payment. The great news is, there are a lot of ways to tap into down payment assistance options. Here are just a couple of them:

Assistance from Family Members

The National Association of Realtors (NAR) said, “a third of recent first-time buyers received down payment assistance from family members.” They also mentioned, “the average net worth of those aged 75 and over stands at $264,800…They just might offer the boost the next generation needs to become homeowners.

That means one of the ways to find help with a down payment is to accept a gift from a family member. If this is an option for you, make sure you talk to your loan officer before you accept the money, to ensure you document the process the way it is required by your loan. This way, it will be received properly and you can still potentially qualify.

Down Payment Assistance Programs

The reality is, not everyone has a loved one or a family member who can provide help with a down payment. There are, however, more than 2,500 down payment assistance programs available (by local areas like city, county, or neighborhood), and some of them are even specifically for first-time buyers.

The gap, as mentioned in the same survey, is “only 23% of consumers are familiar with low down payment programs.”

That’s why it is so important to get familiar with these options by doing your homework before you plan to buy a home. Determine what is available in the area where you ultimately want to live, so you have all the details you need to take advantage of the down payment assistance option that is best for your family.

Bottom Line

If buying a home is one of your long-term goals, you may be able to get there sooner than you think by tapping into one of the many down payment assistance programs available.

Are you thinking about buying a home? Download my free Buyers Guide, “Things to consider when buying a home”.

Dani

3 Powerful Reasons to Buy a Home Now

3 Powerful Reasons to Buy a Home Now | MyKCM

Whether you are a first-time buyer or looking to move up to the home of your dreams, now is a great time to purchase a home. Here are three major reasons to buy today.

1. Affordability

Many people focus solely on price when talking about home affordability. Since home prices have appreciated throughout the past year, they assume homes are less affordable. However, affordability is determined by three components:

  • Price
  • Wages
  • Mortgage Interest Rate

Prices are up, but so are wages – and interest rates have recently dropped dramatically (see #2 below). As a result, the National Association of Realtors’ (NAR) latest Affordability Index report revealed that homes are MORE affordable throughout the country today than they were a year ago.

“All four regions saw an increase in affordability from a year ago. The South had the biggest gain in affordability of 6.9%, followed by the West with a gain of 6.0%. The Midwest had an increase of 5.8%, followed by the Northeast with the smallest gain of 1.8%.”

2. Mortgage Interest Rates

Mortgage rates have dropped almost a full point after heading toward 5% last fall and early winter. Currently, they are below 4%.
3 Powerful Reasons to Buy a Home Now | MyKCMAdditionally, Fannie Mae recently predicted the average rate for a 30-year fixed mortgage will be 3.7% in the second half of 2019. That compares to a 4.4% average rate in the first quarter and 4% in the second quarter.

With mortgage rates remaining near historic lows, Fannie Mae and others have increased their forecasts for housing appreciation for the rest of the year. If home price gains are about to re-accelerate, buying now rather than later makes financial sense.

3. Increase Family Wealth

Homeownership has always been recognized as a sensational way to build long-term family wealth. A new report by ATTOM Data Solutions reveals:

“U.S. homeowners who sold in the second quarter of 2019 realized an average home price gain since purchase of $67,500, up from an average gain of $57,706 in Q1 2019 and up from an average gain of $60,100 in Q2 2018. The average home seller gain of $67,500 in Q2 2019 represented an average 33.9 percent return as a percentage of original purchase price.”

The longer you delay purchasing a home, the longer you are waiting to put the power of home equity to work for you.

Bottom Line

With affordability increasing, mortgage rates decreasing, and home values about to re-accelerate, it may be time to make a move. Let’s get together to determine if buying now makes sense for your family.

Ready to search for your NextHome? Visit MyNextHome.

Dani