According to Freddie Mac'; latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.92%, which is still near record lows in comparison to recent history!
The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.
Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain monthly housing budget.
The chart below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range, and planned to keep your principal and interest payments between $1,850-$1,900 a month.
With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000). Experts predict that mortgage rates will be closer to 5% by this time next year.
Act now to get the most house for your hard-earned money.
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Owning a home has great financial benefits, yet many continue to rent! Today, let's look at the financial reasons why owning a home of your own has been a part of the American Dream for as long as America has existed.
Zillow recently reported that:
"In reality, buying or renting a home is an intensely personal decision, with emotional and even financial considerations that go beyond whether to invest in this one (admittedly large) asset. Looking strictly at housing market numbers, there is a concrete point at which buying a home makes more financial sense than renting it."
What proof exists that owning is financially better than renting?
1. We recently highlighted the top 5 financial benefits of homeownership:
2. Studies have shown that a homeowner's net worth is 44x greater than that of a renter.
3. Just a few months ago, we explained that a family that purchased an average-priced home at the beginning of 2017 could build more than $48,000 in family wealth over the next five years.
4. 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!!
Owning a home has always been, and will always be, better from a financial standpoint than renting.
So, you've decided to sell your house. Youâve hired a real estate professional to help you with the entire process, and they have asked you what level of access you want to provide to potential buyers.
There are four elements to a quality listing. At the top of the list is Access, followed by Condition, Financing, and Price. There are many levels of access that you can provide to your agent so that he or she can show your home.
Here are five levels of access that you can give to buyers, along with a brief description:
In a competitive marketplace, access can make or break your ability to get the price you are looking for, or even sell your house at all.
The current narrative is that home prices have risen so much so that it is no longer a smart idea to purchase a home. Your family and friends might suggest that buying a home right now (whether a first-time home or a move-up home) makes absolutely no sense from an affordability standpoint. They are wrong!
Homes are more affordable right now than at almost any time in our country's history except for the foreclosure years (2009-2015) when homes sold at major discounts. As an example, below is a graph from the latest Black Knight Mortgage Monitor showing the percentage of median income needed to buy a medium-priced home in the country today in comparison to prior to the housing bubble and bust.
As we can see, the percentage necessary is less now than in those time periods.
The Mortgage Monitor also explains that home affordability is better today than it was in the late 1990s in 47 of 50 states.
Your friends and family have your best interests at heart. However, when it comes to buying your first home or selling your current house to buy the home of your dreams, getting the whole story from a real estate professional is crucial.
Mortgage interest rates, as reported by Freddie Mac, have increased over the last several weeks. Freddie Mac, along with Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors, is calling for mortgage rates to continue to rise over the next four quarters.
This has caused some purchasers to lament the fact that they may no longer be able to get a rate below 3.5%. However, we must realize that current rates are still at historic lows.
Here is a chart showing the average mortgage interest rate over the last several decades:
Though you may have missed getting the lowest mortgage rate ever offered, you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.
Every year at this time, many homeowners decide to wait until after the holidays to put their homes on the market for the first time, while others who already have their homes on the market decide to take them off until after the holidays.
Here are seven great reasons not to wait:
Waiting until after the holidays to sell your home probably doesn't make sense.
Multigenerational homes are coming back in a big way! In the 1950s, about 21%, or 32.2 million Americans shared a roof with their grown children or parents. According to an article by Realtor.com, "Nearly 1 in 5 Americans is now living in a multigenerational household - a household with two or more adult generations, or grandparents living with grandchildren - a level that hasnât been seen in the U.S. since 1950."
Another report that proves this point is the National Association of Realtors' (NAR) 2017 Profile of Home Buyers and Sellers which states that 13% of home buyers purchased multigenerational homes last year. The top 3 reasons for purchasing this type of home were:
Valerie Sheets, Spokesperson for Lennar, points out that,
"Everyone is looking for the perfect home for any number of family situations, such as families who opt to take care of aging parents or grandparents at home, or millennials looking to live with their parents while they attend school or save for a down payment."
For a long time, nuclear families (a couple and their dependent children) became the accepted norm, but John Graham, co-author of "Together Again: A Creative Guide to Successful Multigenerational Living," says, "We're getting back to the way human beings have always lived in â extended families."
This shift can be attributed to several social changes over the decades. Growing racial and ethnic diversity in the U.S. population helps explain some of the rise in multigenerational living; "Data suggest that multigenerational living is more prevalent among Asian (28%), Hispanic (25%), and African-American (25%) families, while U.S. whites have fewer multigenerational homes (15%)."
Additionally, women are a bit more likely to live in multigenerational conditions than are their male counterparts (12% vs. 10%, respectively). Last but not least, basic economics.
Valerie Sheets brings to light the fact that home prices have been skyrocketing in recent years. She says that, "As home prices increase, more families tend to opt for living together."
Multigenerational households are making a comeback. While it is a shift from the more common nuclear home, these households might be the answer that many families are looking for as home prices continue to rise in response to a lack of housing inventory.
Think your home insurance policy covers every mishap that can come your way? Keep thinking, friends.
The exact instances that are and aren't covered by typical home insurance depend entirely on the details of your policyâand, contrary to what you may think, each policy is quite different.
"Insurance policies are like snowflakes; no two are exactly the same," says Ashleigh Cloud Trent, an insurance adviser with Swingle Collins and Associates in Dallas. So if you want to know if the odoriferous damage caused by a demented skunk in your kitchen is covered, go read the fine print.
You donât want to be caught off guard. Most standard policies exclude certain things that homeowners might assume are actually covered. Don't bank on your insurance company footing the bill for the following unfortunate situations.
1. Home renovations
A lot of homeowners don't realize they need to take out a specific renovation policy if they're doing major work, even if the contractor has a builder's risk policy.
According to Trent, the builder's risk policy covers only new construction, not the existing structure.
"It's OK if you're just doing cosmetic updates; but if you're taking the roof off, that's more than a standard homeowners policy is designed to protect," she says.
Even if the house is a tear-down, a renovation policy will cover any liability issues for people who wander onto the property and get hurt.
"If someone gets hurt on the property, you're liable," she explains. "If neighborhood kids are playing around in the empty house, that's your liability."
2. Earthquake damage
If you live on a major fault line, it's probably wise to invest in earthquake insurance since it's not usually included in homeowners coverageâeven in the places that need it the most (e.g., California and the Pacific Northwest). If a quake strikes and you don't have this specific policy, you'll be liable for paying for repairs to your property on your own.
3. Slow leaks
Damaged caused by slow leaksâtechnically "seepage and leakage"âcan be denied coverage. Water damage has to be "sudden and accidental," explains Trent.
"A prime example is a client whose contractor nicked a pipe behind a wall. The pipe was connected to a seldom-used guest bathroom, so nobody noticed the leak,â Trent recalls. âWhen they rented out the home years later, the tenants called a few months later to report that the floorboards were warping."
The slow leak cased $25,000 in damageâand the homeowners insurance didn't pay out a nickel.
What if the earth opens up and swallows your house whole? Itâs totally not covered.
"Sinkholes are not covered under the normal home insurance. You would need to add additional coverage for earthquake and/or earth movement," says John Espenschied, agency principal at InsuranceBrokersGroup.com. Sorry, Floridians.
5. Sewer and drain backups
If the sewer backs up and fills your house with raw sewage, you might have to clean up the mess yourselfâand on your own dime.
"In a lot of places, when there's serious rain, the sewers and drains can back up into people's homes," says Trent. "Not all policies will cover that."
6. Meth labs that you had no idea were there
What if you unknowingly rent an apartment to the next Walter White? Thatâs too bad, says Rachel Munoz Florido of JnR Insurance.
"[Our] client's rental home exploded from a tenant's meth lab,â Florido says. âThis was not covered at all due to the exclusion for illegal activity and pollution exposure." (And this, dear readers, is why you have to screen your tenants.)
7. Acts of war
"If the U.S. government determines we are at war and your home is destroyed as a result of the war, you will not be covered," explains Espenschied. Destruction from acts of terrorism, however, is generally covered.
8. Keeping the historical society happy
If you live in a landmark area and you need permission from the historical society to make changes to your home, there might be a cap on how much your insurance will pay to fix a problem. And the historical society might dictate the material you use on your home, no matter how expensive it is.
"A hailstorm decimated all of these historic homes in Dallas recently," says Trent. "What should have been a $9,000 vinyl siding repair ended up costing homeowners $90,000 because the historical society insisted they useâ a specific type of shingle. A typical policy would not have made up that difference.
9. Smell damage
Smells that stick around your home and possessions aren't covered by most policies.
"We had a client in the process of renovating a home who put all of their belongings in a storage unit that happened to be right next to a restaurant," says Trent. "When he went to get his things back, all his possessions, including his mattress, permanently smelled like curry."
With a typical insurance policy, you'd be stuck replacing everything yourself or sleeping on a food-smelling bed.
Each year, most homeowners wait until the spring to sell their houses because they believe that they can get a better deal during the normal spring buyer's market. However, recently released data suggests that a seller's best deal may be available right now. The concept of 'supply & demand' reveals that the best price for an item will be realized when the supply of that item is low and the demand for that item is high. Let's see how this applies to the current residential real estate market.
It is no secret that the supply of homes for sale has been far below the number needed for over a year. A normal market requires six months of housing inventory to meet the demand. The latest report from the National Association of Realtors (NAR) revealed that there is currently only a 4.2-month supply.
Supply is currently very low!!
A report that was just released tells us that demand is very strong. The most recent Foot Traffic Report(which sheds light on the number of buyers out looking at homes) disclosed that there are more buyers right now than at any other time in the last twelve months. This includes more buyers looking at homes right now than at any time during last yearâs spring market.
Demand is currently very high!!
âWaiting until the spring to list your house for sale made sense in the past. This year is different. The best deal is probably available right now.