When Is a Good Time to Rent? Not Now!

When Is a Good Time to Rent? Not Now! | MyKCM

People often ask if now is a good time to buy a home. No one ever asks when a good time to rent is. However, we want to make certain that everyone understands that today is NOT a good time to rent.

The Census Bureau recently released their third quarter median rent numbers. Here is a graph showing rent increases from 1988 until today:

When Is a Good Time to Rent? Not Now! | MyKCM

As you can see, rents have steadily increased and are showing no signs of slowing down. If you are faced with the decision of whether you should renew your lease or not, you might be pleasantly surprised at your ability to buy a home of your own instead.

Bottom Line

One way to protect yourself from rising rents is to lock in your housing expense by buying a home. If you are ready and willing to buy, let’s get together to determine if you are able to, today!

Building Your Family’s Wealth Over the Next 5 Years

Building Your Family’s Wealth Over the Next 5 Years | MyKCM

Over the next five years, home prices are expected to appreciate 3.24% per year on average and to grow by 21.4% cumulatively, according to Pulsenomics’ most recent Home Price Expectation Survey.

So, what does this mean for homeowners and their equity position?

As an example, let’s assume a young couple purchases and closes on a $250,000 home in January. If we look at only the projected increase in the price of that home, how much equity will they earn over the next 5 years?

Building Your Family’s Wealth Over the Next 5 Years | MyKCM

Since the experts predict that home prices will increase by 4.0% this year alone, the young homeowners will have gained over $10,000 in equity in just one year.

Over a five-year period, their equity will increase by over $43,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth.

Bottom Line

Not only is homeownership something to be proud of, but it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, let’s get together to find out if you are able to, today!

Student Loans = Higher Credit Scores

Student Loans = Higher Credit Scores | MyKCM

According to a recent analysis by CoreLogic, Millennial renters (aged 20-34) who have student loan debt also have higher credit scores than those who do not have student loans.

This may come as a surprise, as there is so much talk about student loans burdening Millennials and holding them back from many milestones that previous generations have been able to achieve (i.e. homeownership, investing for retirement).

CoreLogic used the information provided on rental applications and the applicants’ credit history from credit bureaus to determine if there was a correlation between student loan debt and credit scores.

The analysis concluded that:

“Student loan debt did not prevent millennials from access to credit even though it may delay their homebuying decisions.”

In fact, those with a higher amount of debt actually had higher credit scores.

“Renters with student loan debt have higher average credit scores than those without; and those with higher debt amounts have higher average credit scores than those with lower student loan debt amounts.”

Bottom Line

Millennials are on pace to become the most educated generation in our nation’s history, with that comes a pretty big bill for education. But there is a light at the end of the tunnel:

“Despite the fact that student loan debt has grown into the nation’s second largest consumer debt, following mortgage, and has created a significant financial burden for millennials, it does not appear to prevent millennials from accessing credit.”

Homeowner’s Net Worth Is 45x Greater Than A Renter’s

Every three years, the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a Forbes article, the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that by the end of 2016, the net worth gap will widen even further to 45 times greater.

The graph below demonstrates the results of the last two Federal Reserve studies and Yun’s prediction:

Homeowner’s Net Worth Is 45x Greater Than a Renter’s | MyKCM

Put Your Housing Cost to Work for You

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.

The latest National Housing Pulse Survey from NAR reveals that 85% of consumers believe that purchasing a home is a good financial decision. Yun comments:

“Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.”

Bottom Line

If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, let’s get together and evaluate your ability to buy today!

You Need an Agent Who Will Put You First

You Need an Agent Who Will Put You First | MyKCM

When it comes to buying a home, whether you are a rookie homebuyer or have gone through the process many times, having a local real estate expert who is well versed in the neighborhood you are looking to move into, as well as the trends of that area, should be your goal.

One great example of an agent who is in your corner and is always looking out for your best interests is one of the main characters on ABC’s Modern Family, Phil Dunphy.

For those who aren’t familiar, the character Phil is a Realtor with a huge heart who always strives to do his best for his family and his clients.

In one recent episode, Phil even shared the oath that he created and holds himself accountable to:

“On my honor, I promise to aid in man’s quest for shelter, to recognize I’m not just in the business of houses — I’m in the business of dreams in the shape of houses. To disclose all illegal additions, shoddy construction, murders, and ghosts. And to put my clients’ needs before my own.” 

While this might seem silly, and it was definitely written with humor in mind, the themes of helping someone achieve the American Dream and putting a client’s needs above your own are not to be taken lightly. 

Bottom Line

When you make the decision to enter the housing market, as either a buyer or a seller, make sure you look for an agent who exemplifies these values and will help you through every step of the process.

The Past, Present & Future of Home Prices

The Past, Present & Future of Home Prices | MyKCM

CoreLogic released their most current Home Price Index last week. In the report, they revealed home appreciation in three categories: percentage appreciation over the last year, over the last month and projected over the next twelve months.

Here are state maps for each category: 

The Past – home appreciation over the last 12 months

The Past, Present & Future of Home Prices | MyKCM

The Present – home appreciation over the last month

The Past, Present & Future of Home Prices | MyKCM

The Future – home appreciation projected over the next 12 months

The Past, Present & Future of Home Prices | MyKCM

Bottom Line

Homes across the country are appreciating at different rates. If you plan on relocating to another state and are waiting for your home to appreciate more, you need to know that the home you will buy in another state may be appreciating even faster.

The Past, Present & Future of Home Prices

The Past, Present & Future of Home Prices | MyKCM

CoreLogic released their most current Home Price Index last week. In the report, they revealed home appreciation in three categories: percentage appreciation over the last year, over the last month and projected over the next twelve months.

Here are state maps for each category: 

The Past – home appreciation over the last 12 months

The Past, Present & Future of Home Prices | MyKCM

The Present – home appreciation over the last month

The Past, Present & Future of Home Prices | MyKCM

The Future – home appreciation projected over the next 12 months

The Past, Present & Future of Home Prices | MyKCM

Bottom Line

Homes across the country are appreciating at different rates. If you plan on relocating to another state and are waiting for your home to appreciate more, you need to know that the home you will buy in another state may be appreciating even faster.

Don’t Disqualify Yourself… Over Half of All Loans Approved Have a FICO Score Under 750

Don’t Disqualify Yourself… Over Half of All Loans Approved Have a FICO Score Under 750 | MyKCM

The results of countless studies have shown that potential home buyers, and even current homeowners, have an inflated view of what is really required to qualify for a mortgage in today’s market.

One such study by the Wharton School of Business at the University of Pennsylvania, revealed that many Millennials have not yet considered purchasing a home, simply because they don’t believe they can qualify for a mortgage.

The article quoted Jessica Lautz, the National Association of Realtors’ Managing Director of Survey Research, as saying that there is a significant population that does not think they will be approved for a mortgage and doesn’t even try. The article also quoted Fannie Mae CEO Tim Mayopoulos: 

“I do think that there’s a sense out there in the marketplace among borrowers that credit may not be available, especially for people with lower credit scores.”

Ellie Mae’s Vice President, Jonas Moe recently encouraged buyers to know their options before assuming that they do not qualify for a mortgage:

“Many potential home buyers are ‘disqualifying’ themselves. You don’t need a 750 FICO Score and a 20% down payment to buy.”

So what credit score is necessary?

Below is a breakdown of the FICO Score Distribution of all closed (approved) loans in August from Ellie Mae’s latest Origination Report.

Don’t Disqualify Yourself… Over Half of All Loans Approved Have a FICO Score Under 750 | MyKCM

Over 50% of all approved loans had a FICO Score under 750. Many potential home buyers believe that they need a score over 780 to qualify.

Bottom Line

If owning a home of your own has always been a dream of yours and you are ready and willing to buy, find out if you are able to! Let’s get together to determine if your dreams can become a reality sooner than you thought!

How Historically Low Interest Rates Increase Your Purchasing Power

How Historically Low Interest Rates Increase Your Purchasing Power | MyKCM

According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.47%. Rates have remained at or below 3.5% each of the last 16 weeks, marking a historic low.

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 at or about $1,100 a month.

How Historically Low Interest Rates Increase Your Purchasing Power | MyKCM

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, $6,250). Experts predict that mortgage rates will be closer to 4% by this time next year.

Act now to get the most house for your hard earned money.

Starting to Look for a Home? Know What You WANT vs. What You NEED

Starting to Look for a Home? Know What You WANT vs. What You NEED | MyKCM

In this day and age of being able to shop for anything anywhere, it is really important to know what you’re looking for when you start your home search.

If you’ve been thinking about buying a home of your own for some time now, you’ve probably come up with a list of things that you’d LOVE to have in your new home. Many new homebuyers fantasize about the amenities that they see on television or Pinterest, and start looking at the countless homes listed for sale with rose-colored glasses.

Do you really need that farmhouse sink in the kitchen in order to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Could the man cave of your dreams be a future renovation project instead of a make or break now?

The first step in your home buying process should be to get pre-approved for your mortgage. This allows you to know your budget before you fall in love with a home that is way outside of it.

The next step is to list all the features of a home that you would like, and to qualify them as follows:

  • ‘Must Haves’ – if this property does not have these items, then it shouldn’t even be considered. (ex: distance from work or family, number of bedrooms/bathrooms)
  • ‘Should Haves’ – if the property hits all of the must haves and some of the should haves, it stays in contention, but does not need to have all of these features.
  • ‘Absolute Wish List’ – if we find a property in our budget that has all of the ‘must haves,’ most of the ‘should haves,’ and ANY of these, it’s the winner!

Bottom Line

Having this list flushed out before starting your search will save you time and frustration, while also letting your agent know what features are most important to you before starting to show you houses in your desired area.