The Importance of Hiring a Real Estate Professional

 When a homeowner decides to sell their house, they obviously want the best possible price with the least amount of hassles. However, for the vast majority of sellers, the most important result is to actually get the home sold. In order to accomplish all three goals, a seller should realize the importance of using a real estate professional. We realize that technology has changed the purchaser’s behavior during the home buying process. For the past three years, 92% of all buyers have used the internet in their home search according to the National Association of Realtors’ most recent Profile of Home Buyers & Sellers. However, the report also revealed that 95% percent of buyers that used the internet when searching for a home purchased their home through either a real estate agent/broker or from a builder or builder’s agent. Only 2% purchased their home directly from a seller whom the buyer didn’t know. Buyers search for a home online, but then depend on an agent to find the actual home they will buy (53%), or to negotiate the terms of the sale & price (48%), or to help understand the process (60%). The plethora of information now available has resulted in an increase in the percentage of buyers that reach out to real estate professionals to “connect the dots”. This is obvious, as the percentage of overall buyers who used an agent to buy their home has steadily increased from 69% in 2001.

Bottom Line

If you are thinking of selling your home, don’t underestimate the role a real estate professional can play in the process.

What Boomers Want

What If I Wait Until Next Year To Buy A Home?

What If I Wait Until Next Year To Buy A Home? Posted: 14 Mar 2016 04:00 AM PDT  As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first-time or repeat buyer, you must not be concerned only about price but also about the ‘long term cost’ of the home. Let us explain. There are many factors that influence the ‘cost’ of a home. Two of the major ones are the home’s appreciation over time, and the interest rate at which a buyer can borrow the funds necessary to purchase their home. The rate at which these two factors can change is often referred to as “The Cost of Waiting”. What will happen over the next 12 months? According to CoreLogic’s latest Home Price Index, prices are expected to rise by 5.5% by this time next year. Additionally, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30-year fixed mortgage rate will appreciate to 4.5% in that same time. What Does This Mean to a Buyer? Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:

Home is Where the Heart Is

 Yesterday, we discussed the reasons why homeownership makes sense, financially. Today we wanted to touch on the emotional or ‘real’ reasons that many Americans strive to become homeowners. The Joint Center for Housing Studies at Harvard University performs a study every year surveying participants for the reasons that American’s feel are most important in regards to homeownership. The top 4 reasons to own a home cited by respondents were not financial.

1. It means having a good place to raise children & provide them with a good education

From the best neighborhoods to the best school districts, even those without children at the time of purchasing their home, may have this in the back of their mind as a major reason for choosing the location of the home that they purchase. 

2. You have a physical structure where you & your family feel safe

It is no surprise that having a place to call home with all that means in comfort and security is the #2 reason.

3. It allows you to have more space for your family

Whether your family is expanding, or an older family member is moving in, having a home that fits your needs is a close third on the list. 

4. It gives you control over what you do with your living space, like renovations and updates

Looking to actually try one of those complicated wall treatments that you saw on Pinterest? Want to finally adopt that puppy or kitten you’ve seen online 100 times? Who’s to say that you can’t in your own home? The 5th reason on the list, is the #1 financial reason to buy a home as seen by respondents: 

5. Owning a home is a good way to build up wealth that can be passed along to my family

Either way you are paying a mortgage. Why not lock in your housing expense now with an investment that will build equity that you can borrow against in the future? 

Bottom Line

Whether you are a first time homebuyer or a move-up buyer who wants to start a new chapter in their life, now is a great time to reflect on the intangible factors that make a house a home.

Interest rates at Historic Lows

 Just two weeks ago, we posted an article discussing where mortgage interest rates may be heading over the next twelve months. We quoted projections from Fannie Mae, Freddie Mac, the Mortgage Bankers’ Association and the National Association of Realtors. Each predicted that rates would begin to rise slowly and steadily throughout 2016. However, shaky economic news and a volatile stock market have actually caused rates to drop six out of the last seven weeks, and have remained at 3.65% for the past two weeks.  Rates have again fallen to historic lows yet many experts still expect them to increase in 2016. The only thing we know for sure is that, according to Freddie Mac, current rates are the best they have been since last April.

Bottom Line

If you are thinking of buying your first home or moving up to your ultimate dream home, now is a great time to get a sensational rate on your mortgage.

Student Loans

Does student debt help young homebuyers qualify for mortgages?

At face value, the answer is very clearly no — student debt increases the homebuyer’s debt-to-income ratio (DTI), making it more difficult to qualify for a mortgage. But that’s not the full story.

The combined amount of student loan debt borrowed has increased roughly 300% since 2005, according to the Federal Reserve Bank of New York’s (FRBNY’s)Consumer Credit Panel. On an individual basis, the average 25-year-old student loan borrower owes about $22,000 in student loans, according to a report published by the FRBNY.

So how can having student debt possibly help a young person qualify for a mortgage?

Student debt is increasingly a necessary burden for young people who want to make a solid living, as the cost of education rises. And since high incomes are a necessity in California’s pricey homebuying environment, those without college educations are often unable to qualify.

In fact, California has the highest total loan balance per capita compared to other states, according to the FRBNY’s Consumer Credit Panel. Most of this debt by far is due to mortgage debt. In fact, California’s per capita mortgage debt alone is higher than all debt combined of any other state except New Jersey.

One might assume California’s high mortgage debt per capita means our state has a higher than average number of homeowners. However, we know the opposite is true. With a homeownership rate of just 54% as of Q3 2015, California’s rate of homeownership is well below the nationwide average of 63%. Therefore, California’s high mortgage debt per capita is due entirely to high home values, particularly those found in its coastal, urban centers, nearest to stable, well-paying jobs.

Student debt is evidence of a college education (be it complete or incomplete). College educated individuals make more money — twice as much as high school grads on average, according to the National Center for Education Statistics — and are better situated to become homebuyers, despite the extra debt. In California, the share of individuals with a college degree has increased steadily since 2000, evidenced by the increased student debt balance per capita.

On the other side of the picture, high levels of student debt increases the potential homebuyer’s DTI. Student debt is increasingly taking up space in the DTIs of young adults which would otherwise be used to fund mortgage payments. Nationwide, the percentage of young adults taking out mortgages has declined for both student loan borrowers and non-borrowers alike. This decrease has been largest for student loan borrowers, according to the Cleveland Federal Reserve Bank. Still, young adults with student loans continue to take out mortgages more often than those without student loans.

The chart above shows the mortgage borrowing difference between 25-30 year-olds saddled with student debt and those free of student debt. Even as the percentage of 25-30 year-olds originating a mortgage declined in the aftermath of the Millennium Boom, those borrowing with student debt remained greater than those borrowing without student debt.

For those who wish to become homeowners, getting a college degree is still more likely to help achieve the dream than skipping college due to student loans. However, homebuyers with student loans need to accept the reality that even with a significantly higher income, their mortgage size will be reduced to suit the size of their student loan bill. Thus, less expensive homes will have to do for the next generation of first-time homebuyers, at least until their student loan balances are paid off, which will take ten years or longer.

Technology vs Community