Thirteen Rules for Millennials Looking to Buy

Here are thirteen rules for Millennials looking to buy (while avoiding a housing bubble burst):

  1. If you can’t afford it, don’t buy it.
  2. Don’t jump into a home purchase blindly. Do your research, learn about the area , get advice from others, and study all the available data.
  3. No more creative financing: buy properties with traditional 30- or 15-year fixed loans  – and know what your mortgage payment will be each month for the entire mortgage term.
  4. Always put 20% down .
  5. Whatever the bank says you can afford, subtract 20%, and you’ll never be house poor.
  6. You’re not just buying a house, you’re buying a neighborhood .
  7. It’s harder to get a mortgage because qualifications are more stringent these days. Keep great financial records, and be patient throughout the process.
  8. Don’t expect the market to bail you out. That means no overpaying for a house you can’t really afford in hopes of market appreciation making up the difference.
  9. Less is more. A smaller, practical, easy-to-maintain house is the new, big, rambling mansion.
  10.  Stay on top of your credit, and shoot for an excellent score (above 750).
  11. Plan to stay in your home at least 5 years. Think you’ll need to sell before then? Keep renting until you know you can stay put for a while.
  12. Budget for the ongoing costs of home ownership – not just the monthly mortgage payment. Be sure you have the funds for property taxes, insurance, maintenance, upkeep, and even an emergency repair fund.
  13. If you are questioning your job security and your ability to get a new job quickly in the event of a layoff – don’t buy yet.

To a generation who saw risking everything and buying homes with zero down as the norm, these rules may seem new. But, as they say, everything that’s old eventually becomes new again. In this new era, Millennials simply need to look back to get ahead and buy safely, sanely, and securely in the current housing market .

This article originally appeared on Trulia.com .ERA SOLD Sign

How to Choose the Right Neighborhood

Any good Realtor will share the mantra, “location, location, location” when talking about the attributes that help a home hold its value and potentially appreciate. However, no one neighborhood is right for every buyer. Determining which community meets your needs and your budget requires research and some soul searching about your priorities.

Establish Your Priorities
Before a Realtor can begin to help you look for a home, you (and your spouse or partner) should develop a list of needs and wants. For some buyers, the home itself is of paramount importance: they want a particular style or size or a big yard. For others, the neighborhood is more important. If you have an unlimited budget you may be able to find the perfect home in a desirable neighborhood, but since most buyers need to meet a budget, you may have to compromise on either the house or the community.

Next, think about what amenities you’d like to have nearby or whether you’d like to live in a rural area without neighbors. If you like to swim or golf or play soccer or your kids do, facilities for those sports should be on the list of things you look for in a neighborhood. On the other hand, you could be more focused on easy access to cultural amenities or nightlife. Think about whether you’d like to live in place where residents interact often or whether you prefer to have cordial but distant relationships with your neighbors.

Schools Matter – Even If You Don’t Have Kids
If you have children or are planning to have a family in the future, buying a home in a community with good schools is already likely to be a priority. Even if you don’t have children to educate, though, you should be aware that homes located in a good school district typically hold onto their value better than those in less highly regarded districts. In fact, Redfin real estate company completed a nationwide study in 2013 that shows that Americans pay $50 per square foot more for homes served by a top-ranked school than for homes served by an average-ranked school.

The Fair Housing Act prevents Realtors from providing information directly to buyers about specific schools, but they can share links to websites that rate schools and to local school systems.

Transportation Issues
A major consideration for most home buyers when it comes to choosing where to live is how they’ll get to the places they go regularly. In communities near or in a city, prime locations are typically close to public transit options. Many suburban communities are being designed around a “town center” concept so that residents can walk to restaurants, shops and entertainment and sometimes even to work.

When you’re looking for a home, you should consider how convenient it is for you and for future potential buyers when you’re ready to sell.

Homes that are located close to a subway station or to popular commuter routes are often more costly than those that require a longer commute to a city center, so ask your Realtor to show you areas that may have similar attributes but are less expensive. Alternatively, if living in a particular neighborhood is your number one priority, you may need to compromise in terms of the size home you buy or its condition.

How to Compare Communities
It’s important to visit a prospective neighborhood at various times of day and on both weekdays and weekends to get a feel for what it would be like to live there. Look at how the homes are maintained to see if they meet your standards. Try to talk to residents about what the community is like and test out your commute at the time of day you typically go to work.

Finding the right neighborhood takes some legwork, but it’s important to choose a place to live where you want to come home every night.

Oct 7, 2013 / Realtor.com     By: 

Economists are predicting housing prices to continue to rise next year — but only at about half the rate that they did in 2013, Money Magazine reports.

DAILEY REAL ESTATE NEWS/TUESDAY, DECEMBER 17, 2013

However, “for a sustainable recovery, you want to see more balance between buyers and sellers,” says David Stiff, chief economist at CoreLogic Case-Shiller.

Home sales will likely see modest growth next year, says Lawrence Yun, chief economist at the National Association of REALTORS® . Strict underwriting practices by lenders, rising interest rates, and tight inventories in many markets will moderate sales growth. NAR has predicted home sales of about 5.12 million for 2014, which is close to the same level forecasted for 2013.

Meanwhile, inventory levels are expected to see some improvement in 2014. In September, they rose 1.8 percent compared to a year earlier, according to NAR data. That marked the first increase in inventory levels since late 2011.

Still, expect 2014 to continue to be a seller’s market while inventory levels remain tight, analysts say.

Fewer distressed homes on the market also will likely mean investors will take a step back, leaving more room for home buyers to step in. Investors’ share of residential home purchases dropped from 23 percent earlier this year to 17 percent in September, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking survey.

But buyers will likely be greeted by higher mortgage rates. The 30-year fixed-rate mortgage is expected to increase from a 4.5 percent average to more than 5 percent in the new year.

Also, buyers will still face tight underwriting standards. While real estate professionals are reporting that qualifying for a loan is getting easier, the speed of processing the loan has not improved. Virginia real estate professional Rob Wittman told Money Magazine that buyers might want to consider using local lenders with ties to nearby appraisers for faster closings.

And sellers shouldn’t underestimate buyers in the new year, either.

“Buyers are smart these days — they know where the market is and know that rates are higher. They aren’t going to bite on a list price above recent comparables,” says Sara Fischer, an agent with San Diego-based Redfin.

Economists are predicting housing prices to continue to rise next year — but only at about half the rate that they did in 2013, Money Magazine reports.

However, “for a sustainable recovery, you want to see more balance between buyers and sellers,” says David Stiff, chief economist at CoreLogic Case-Shiller.

Home sales will likely see modest growth next year, says Lawrence Yun, chief economist at the National Association of REALTORS® . Strict underwriting practices by lenders, rising interest rates, and tight inventories in many markets will moderate sales growth. NAR has predicted home sales of about 5.12 million for 2014, which is close to the same level forecasted for 2013.

Meanwhile, inventory levels are expected to see some improvement in 2014. In September, they rose 1.8 percent compared to a year earlier, according to NAR data. That marked the first increase in inventory levels since late 2011.

Still, expect 2014 to continue to be a seller’s market while inventory levels remain tight, analysts say.

Fewer distressed homes on the market also will likely mean investors will take a step back, leaving more room for home buyers to step in. Investors’ share of residential home purchases dropped from 23 percent earlier this year to 17 percent in September, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking survey.

But buyers will likely be greeted by higher mortgage rates. The 30-year fixed-rate mortgage is expected to increase from a 4.5 percent average to more than 5 percent in the new year.

Also, buyers will still face tight underwriting standards. While real estate professionals are reporting that qualifying for a loan is getting easier, the speed of processing the loan has not improved. Virginia real estate professional Rob Wittman told Money Magazine that buyers might want to consider using local lenders with ties to nearby appraisers for faster closings.

And sellers shouldn’t underestimate buyers in the new year, either.

“Buyers are smart these days — they know where the market is and know that rates are higher. They aren’t going to bite on a list price above recent comparables,” says Sara Fischer, an agent with San Diego-based Redfin.

Making the Most of Your Buyers’ Winter Search

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 03, 2013
The holidays are the perfect time of year for some home buyers to purchase a house and snag a great year-end deal — but limited inventory may be the Scrooge.

After a challenging home-buying season in the spring and summer, many buyers say they plan to reignite their home search during the winter, according to a recent realtor.com® survey. They’re hoping for less competition from all-cash buyers and fewer bidding wars during that time.

However, winter often brings about limited inventories of homes for sale, so buyers will likely find fewer choices. It seems that buyers expect that: 45 percent of those surveyed in the realtor.com® Winter Home Buyer Report say they believe they’ll be up against inventory challenges again during the winter months.

Some real estate agents are grappling with that issue by finding homes that aren’t officially on the market to increase their buyers’ choices. They are even drumming up “old expires” — homes that were listed several years ago but never sold — to see if the owner will reconsider selling. Some brokers are also sending letters to home owners in their buyer’s preferred neighborhood to motivate a home owner to consider selling.

Still, buyers shopping for a home in winter may find sellers more amenable to striking a good deal. Particularly during the holidays, sellers can be highly motivated to sell before the end of the year, says Tim Deihl, associate broker at Gibson Sotheby’s International Realty in Boston. Buyers may be able to take advantage of that sellers’ urgency.

“A seller who’s looking to move a piece of real estate during the holidays is a seller who needs to sell, because nobody in their right mind would pick that as the most convenient time to list their property,” Deihl says.

Source: “Holiday home-buying may pay off,” Bankrate.com (Dec. 2, 2013)

Competing Against a Cash Buyer?

House-with-cash-300x211.jpgIn many real estate markets today, there’s a lot of talk about cash buyers. These buyers have a reputation for swooping in and “stealing” homes out from under other buyers, simply because someone with cash doesn’t need a loan. Regular buyers relying on credit are often intimidated by what appears to be a “lose-lose” situation. They assume that if they need a loan, they can’t compete.

The truth is, someone buying a home with credit can still compete against cash buyers and win. Do you have a 20 percent down payment? Are you well employed? Do you have cash reserves in addition to your down payment? Do you have very little debt? Do you have good credit? If so, your purchase should be as bullet-proof as a cash buyer’s.

Here’s what you need to do to compete against a cash buyer.

Structure your offer as if it’s a shoo-in

Ask your lender to write not only a pre-approval letter but to verify that you’re a well-qualified buyer. Get your agent or mortgage professional to provide some financial information about you with your offer (if you’re OK with that, of course).

See if your mortgage professional can take it a step further. Have your lender take as much of your loan through the process as possible. Send the lender a copy of the preliminary title report, if available. If you’re buying a condo, find out if a condo questionnaire is available and give it to your lender. If you take any of these steps, let the seller know.

Shorten the loan and appraisal contingencies

Ask your lender how quickly an appraiser can be sent out to the property and how long the loan would take to turnaround. In some parts of the country, loans are being approved in less than 14 days.

Pre-order an appraisal

This may not be as easy with a bigger bank. But smaller banks, direct lenders or mortgage brokers can line up the appraisal in advance. At the time your offer is written, tell the seller the appraisal has already been ordered.

Have the inspection immediately

Along with the quick appraisal and loan contingencies, get your inspector in and out. Shelling out a few hundred dollars and getting the inspections done within days of having your offer accepted shows the seller you mean business.

Pay extra

Paying more money to beat a cash offer may sound counterintuitive, but cash buyers nearly always expect a discount from the seller simply because they’re offering cash. As a result, the cash buyer will often make a lower offer. To increase your chances, top the cash offer.

If a seller is faced with a few thousand dollar difference, the seller probably wouldn’t risk it. But what if your offer is 5 percent higher than the cash buyer’s? The seller, perhaps wanting the best of both worlds, may ask the cash buyer to raise his or her offer. Some cash buyers will come up, but not always enough to match.

Bottom line: Stay in the game and know your limits. Do you plan to live in the house for many years and it’s the home of your dreams? Overpaying isn’t the end of the world, so long as you’re within a reasonable range.

Make yourself known to the seller

Some buyers write “love letters” to the sellers, hoping to appeal to their personal side. Does this work? Sometimes. If you’re competing with a cash buyer, particularly an investor who plans to rent the home out, it can’t hurt to get a little personal.

When a seller’s agent presents an offer, the seller always wants to know more about the potential buyer. Ask your agent to write a cover letter and an introduction. Let the seller know who you are, why you like the home and what your intentions are. It usually works.

But not always. Sometimes a seller just doesn’t want to take a risk with someone getting a loan, and nothing you do — aside from paying all cash — will change that. So do the best you can and be realistic. Make sure your financial “‘house” is in order. Work with a good local real estate agent and start working with a local mortgage professional well in advance. Structure your offer to show that you’re ready to roll. And who knows? It just might go your way.

DATE:NOVEMBER 1, 2013 | CATEGORY:TIPS & ADVICE | AUTHOR:

 

What Are Points??

What Are Points and When Should You Pay Them?

Robert Koellner, Excel Financial Group – November 2013

Points are up-front fees paid by the borrower to obtain a better interest rate on a loan. One point equals one percent of the loan amount. And while a lower interest rate may result in a lower monthly payment, it is important to consider how long you intend to be in the loan and to compare current interest rates to historical market trends. This will help you to determine whether paying points is a worthwhile investment.Let’s look at a sample scenario. If you take out a $300,000 mortgage and decide to pay one point in order to lower your interest rate, this would translate into an up-front cost of $3,000. To keep things simple, we’ll assume that paying this one point will save you $50 a month. This means it will take you 60 months to recoup the cost of that point. If you decide to refinance or sell the home before the 60-month mark, your money is lost ñ not to mention the opportunity cost of not having this money invested elsewhere. In this scenario, you would only benefit financially from paying points if you were to remain in that mortgage for no less than 60 months.It’s also important to remember that interest rates run in cycles. When rates are at historical lows, it makes more sense to pay points if you plan to stay in that mortgage for an extended period of time. If it’s unlikely that rates will go down in the near future, then there will be no need to refinance.

When interest rates are high, however, there is a strong likelihood that they will come down again before too long. Therefore, this is not a good time to pay points. The chances of refinancing in the near future are extremely high, and you will likely not be in the loan long enough to recoup the up-front cost of the points.

Tax deductibility is another thing to consider when choosing whether or not to pay points. For new purchases, interest from both points paid and your mortgage are tax deductible up front. For refinances, however, points are not deductible up front. Instead the deductions are spread out over the term of the loan (unless the entire loan is paid off early), making points more costly in comparison. There is an exemption if savings from the refinance was used to improve the home.

Ultimately, there’s a lot to consider when it comes to points and whether or not they are a worthwhile investment. An experienced mortgage professional will work with you to determine the best course of action based upon your specific situation. Request a comprehensive cost comparison to see whether paying points could be financially beneficial to you.

Residential sales volume tops $1.5 billion in Northern Colorado

TODAY’S NEWS        November 7, 2013

Residential sales volume in three metropolitan areas in Northern Colorado has exceeded $1.5 billion year-to-date, according to data from Information and Real Estate Services.

From January to October 2013, more than $1.56 billion in residential real estate has changed hands, a 26 percent increase from the $1.23 billion sold at this point in 2012.

In individual markets, the largest increase was seen in the Greeley market, which saw a 46.5 percent increase from $174 million to $255 million.

Sales volumes in Loveland increased by 25.9 percent and in Fort Collins by 21 percent.

Residential sales in Northern Colorado have increased significantly in 2013, with more homes selling at higher dollar amounts. Homes are also on the market for shorter periods of time, with the average number of days on market decreasing from 106 to 86 year-over-year across the region.

Changes in median sales price in October were less dramatic than previous months, with the price in Greeley staying flat at $165,000.

In Fort Collins, the median home price increased by 4.5 percent to $256,000. Loveland saw the greatest price increase, by 10.9 percent to $260,000.

Residential Sales Volume Tops $1.5 Billion in NoCo

Northern Colorado Business Reports
November 7, 2013

Residential sales volume in three metropolitan areas in Northern Colorado has exceeded $1.5 billion year-to-date, according to data from Information and Real Estate Services.

From January to October 2013, more than $1.56 billion in residential real estate has changed hands, a 26 percent increase from the $1.23 billion sold at this point in 2012.

In individual markets, the largest increase was seen in the Greeley market, which saw a 46.5 percent increase from $174 million to $255 million.

Sales volumes in Loveland increased by 25.9 percent and in Fort Collins by 21 percent.

Residential sales in Northern Colorado have increased significantly in 2013, with more homes selling at higher dollar amounts. Homes are also on the market for shorter periods of time, with the average number of days on market decreasing from 106 to 86 year-over-year across the region.

Changes in median sales price in October were less dramatic than previous months, with the price in Greeley staying flat at $165,000.

In Fort Collins, the median home price increased by 4.5 percent to $256,000. Loveland saw the greatest price increase, by 10.9 percent to $260,000.

I love working with Buyers and they love working with me!

Home Buyers Need You More, Despite Internet Growth

DAILY REAL ESTATE NEWS | WEDNESDAY, NOVEMBER 06, 2013

Internet growth in home buying is growing, but buyers who use the Internet are more likely to say they need a real estate agent, according to the National Association of REALTORS®’ 2013 Profile of Home Buyers and Sellers survey.

In fact, the highest share of buyers in the survey’s history — 92 percent — reported using the Internet to search for a home to buy. Forty-two percent of buyers reported starting their home search by looking for properties online, while 17 percent said their first step was to contact a real estate agent.

The Internet is helping buyers to find the home they ultimately purchase too. Forty-three percent of buyers said they found the home they purchased online, up from 8 percent in 2001.

Despite home buyers increasingly relying on the Internet for their home search, the overwhelming majority turns to a real estate agent for extra help.

Eighty-eight percent of buyers said they purchased their home through a real estate agent. Among those who used the Internet to search for homes, that share grew higher — up to 90 percent, according to the NAR survey.

“While the vast majority of buyers use the Internet during the homebuying process, the Internet does not replace the real estate agent in the transaction,” according to the report. “In fact, buyers who used the Internet were more likely than those who did not use the Internet to purchase their home through an agent.”

Buyers ranked the following services highest that agents’ can provide them in their search: finding the right property, helping to negotiating terms of the sale and price negotiations, identifying comparable properties, and assisting with paperwork.

Source: “Homebuyers More Likely to Use Real Estate Agents, Even as Internet Usage Hits an All-Time High,” Inman News (Nov. 4, 2013) 

Fannie, Freddie Retain Higher-Priced Mortgage Limits

 

DAILY REAL ESTATE NEWS | MONDAY, NOVEMBER 04, 2013

Mortgage giants Fannie Mae and Freddie Mac will continue to fund higher-priced mortgages at current limits at least through the middle of next year, federal regulators announced.

The Federal Housing Finance Agency, which oversees Fannie and Freddie, was planning to lower limits by the end of the year in a move designed to decrease its role in the market and bring more private capital to the mortgage business. But Ed DeMarco, FHFA acting director, says: “We are not making a change there in the immediate term.”

In 2008, government-backed mortgage limits were increased from $417,000 to up to $729,750 in some high-cost areas. In 2011, limits were reduced to $625,500 in high-cost areas, but FHA’s limits remain at $729,750. The limits were scheduled to decrease at the end of this year.

The housing industry has been lobbying against any drop in the loan limits, concerned it could hamper the housing recovery.

The National Association of REALTORS®, along with other housing industry associations, recently wrote to Congress, urging the FHFA to delay reducing the loan limits.

“While high-cost loans make up a low percentage of all loans, it is simply a matter of equity for those living in high-cost markets where many millions of families live,” NAR wrote. “Without higher loan limits in these areas, many hard-working, middle-income families will be denied homeownership just because they happen to reside in an area of high home prices. Lowering loan limits also would … create confusion and uncertainty for potential borrowers and lenders, especially in the months leading up to any reduction. There is already turbulence enough in the regulatory environment for mortgage lending.”

DeMarco said that FHFA would provide at least a six-month warning of any changes to the limits in the future.

Source: “US extends backing for higher-priced mortgages,” CNBC (Oct. 24, 2013)