Category Archives: buyers in sacramento

Home Equity Increasing as Home Prices Rise [INFOGRAPHIC]

Home Equity Increasing as Home Prices Rise [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • 91.9% of homes in the US have positive equity
  • 256,000 homes regained equity in the third quarter of 2015
  • 37.5 million homes have significant equity (defined as more than 20%)

How Long Does It Take To Save A Down Payment?

How Long Does It Take To Save A Down Payment? | Keeping Current Matters

In a recent study conducted by Builder.com, researchers determined that nationwide it would take “nearly eight years” for a first-time buyer to save enough for a down payment on their dream home.

Depending on where you live, median rents, incomes and home prices all vary. By determining the percentage a renter spends on housing in each state and the amount needed for a 10% down payment, they were able to establish how long (in years) it would take for an average resident to save.

According to the study, residents in South Dakota are able to save for a down payment the quickest in just under 3.5 years. Below is a map created using the data for each state:

Years Needed to Save 10% Down | Keeping Current Matters

What if you only needed to save 3%?

What if you were able to take advantage of one of the Freddie Mac or Fannie Mae 3% down programs? Suddenly saving for a down payment no longer takes 5 or 10 years, but becomes attainable in under two years in many states as shown in the map below.

Years Needed to Save 3% Down | Keeping Current Matters

Bottom Line

Whether you have just started to save for a down payment, or have been for years, you may be closer to your dream home than you think! Meet with a local real estate professional who can help you evaluate your ability to buy today.

Buying A Home? Do You Know The Difference Between Cost & Price?

Buying A Home? Do You Know The Difference Between Cost & Price? | Keeping Current Matters

As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As a buyer, you must be concerned not about price but instead about the ‘long term cost’ of the home.

The Mortgage Bankers Association (MBA), the National Association of Realtors, Fannie Mae and Freddie Mac all projected that mortgage interest rates will increase by about three-quarters of a percentage point over the next twelve months.

According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 5.2% over the next 12 months.

What Does This Mean as a Buyer?

Here is a simple demonstration of what impact an interest rate increase would have on the mortgage payment of a home selling for approximately $250,000 today if home prices appreciate by the 5.2% predicted by CoreLogic over the next twelve months:

Cost of Waiting | Keeping Current Matters

What You Really Need To Qualify For A Mortgage

What You Really Need To Qualify For A Mortgage | Keeping Current Matters

A recent survey by Ipsos found that the American public is still somewhat confused about what is actually necessary to qualify for a home mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today.

1. Down Payment

The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 36% think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 5% or less.

Below are the results of a Digital Risk survey done on Millennials who recently purchased a home.

Millennials & Down Payments | Keeping Current Matters

2. FICO Scores

The Ipsos survey also reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. In actuality, the average FICO scores of approved conventional and FHA mortgages are much lower.

Below are the numbers from the latest Ellie Mae report.

Average FICO Score | Keeping Current Matters

Bottom Line

If you are a prospective purchaser who is ‘ready’ and ‘willing’ to buy but not sure if you are also ‘able,’ sit down with someone who can help you understand your true options.

Don’t Let Rising Rents Trap You!

Don't Let Rising Rents Trap You! | Keeping Current Matters

There are many benefits to homeownership. One of the top ones is being able to protect yourself from rising rents and lock in your housing cost for the life of your mortgage.

Don’t Become Trapped

Jonathan Smoke, Chief Economist at realtor.com recently reported on what he calls a “Rental Affordability Crisis”. He warns that,

“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”

The Joint Center for Housing Studies at Harvard University recently released their 2015 Report on Rental Housing, in which they reported that 49% of rental households are cost-burdened, meaning they spend more than 30% of their income on housing. These households struggle to save for a rainy day and pay other bills, such as food and healthcare.

It’s Cheaper to Buy Than Rent

In Smoke’s article, he went on to say,

“Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.”

 “While more than 85% of markets have burdensome rents today, it’s perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why aren’t those unhappy renters choosing to buy?”

Know Your Options

Perhaps, you have already saved enough to buy your first home. HousingWire reportedthat analysts at Nomura believe:

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.

It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream home. As we reported last week, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible to get a mortgage.

California Real Estate: Who Pays For What?

RE Fees

Customary Fees

In most areas in California, at close of escrow the buyer pays:

  • escrow fees (50/50 split)
  • title insurance fees (for 2 policies protecting the interests of themselves and their lender)
  • loan origination fee and discount points
  • miscellaneous doc drawing and courier fees
  • inspection and appraisal fees
  • loan closing costs, like prepayments of property taxes, interest, insurance and homeowner’s insurance or HOA dues, when the buyer is obtaining a loan with an impound account or as otherwise required by the buyer’s lender.

And the seller pays:

  • escrow fees (50/50 split)
  • broker commissions
  • a re-conveyance fee to their lender
  • buyers home warranty

However, ALL of this is open to negotiation. These are standard practices, but vary more and more in this market climate.

Also, be aware that with bank-owned properties the standard allocations are somewhat different. For example, banks often will pay for the buyer’s title insurance policy, assuming the buyer uses a title provider the bank chooses. Or, the bank may defer to the buyer to elect the title company at which point the buyer is responsible for title and escrow fees.

Also, costs like HOA transfer and documentation fees, city and county transfer taxes, and even escrow fees are often negotiated between buyer and seller. Additionally, many times buyers agree to “pay” their customarily allocated fees, but then negotiate a closing cost credit from the seller that covers some or all of that.

Loan closing fees vary significantly by loan type (i.e., FHA vs. conventional). Also, transfer taxes also vary widely in different California counties; I see transactions where buyers need to be prepared to pay anywhere from 2 to 6% of the purchase price in closing costs – depending on the location. Again, this can be reduced if the buyer is able to negotiate for the seller to pay some or all of their closing costs.

JUST LISTED: 3 Bed 2 Ba in Elk Grove, CA

**JUST LISTED**

8737  Springhouse Way,  Elk Grove: Located in the beautiful Seasons community, this lovely 3 bed 2 bath home is ready for your buyer. Near new hickory laminate flooring throughout, high cascading ceilings, wildly popular open floor plan, and for the cook in the family, you’ll thoroughly enjoy the large counter and cooking spaces for those gourmet meals! So much to see, near great schools, close to fine dining, entertainment, highways, and more.

3 bed,2 ba
1,667 sq ft
Listed at: $277,000

Contact Nick Lacy for showings and more info:
(510) 734-6136 direct
(916) 509-7110 office

Why Does A Seller Need to Know How I’m Financing My Purchase: What’s the Best Financing Method?

Puzzled LookAs a buyer, have you wondered why is what type of financing you use important? Or why does the seller need to know how you are financing your purchase? Or both?

The type of financing you use is important because, as a seller, you have the right to know how someone plans to purchase your property as well as to see evidence of that person’s ability to purchase. In addition, certain types of financing may not be accepted.

As a seller, you can choose what financing terms you will accept or will not accept. Most sellers are, of course, open to as many financing types as possible. However, in rare instances, specific financing types are sometimes prerequisites to being able to make an offer to purchase. For example, pending HOA litigation in a condo development would trigger this prerequisite. The HOA company will only allow sellers to accept owner occupied buyers with all cash offers or conventional financing.

Additionally, financing has its strengths and weaknesses. A general rule is outlined below recognizing there are always exceptions, and the seller has the final say.

STRONGEST
Cash
Conventional Loan
FHA Loan
FHA with DPA (Down Payment Assistance)
VA Loan
WEAKEST

As you can see, cash is at the top of the list – it is still and will always be king. The VA loan is at the bottom of the list and it is bitter sweet.

Nicknamed the “No-No Loan” the VA loan is structured to be a great tool and benefit to allow our vets to become homeowners. No down payment, no closing costs. The VA buyer isn’t even allowed to pay certain costs associated with closing the loan. Sounds great in theory, however, those costs get passed on most times to the seller who gets to say yes or no to paying them. In a competitive market, this offer gets placed on the bottom of the pile because the seller is netting the least from these offers.

The other loans in between have varying resemblances to the VA loan because they require the seller to give up potential proceeds to make the loan happen for the buyer.

Ultimately, the more cash the buyer puts in, the more of the risk they are taking. The less cash the buyer puts in, the less risk. To a seller, the seller would rather see more risk to ensure your commitment and to increase the possibility of closing.

The above is offered as a guideline and is not set in stone as to what will always happen. There are many other ways your broker/agent can ensure you are making a strong offer no matter what your financing. In all that you do as a buyer, choosing a savvy broker/agent will ensure you are making the strongest offer for your money and budget.

One More Time…You DO NOT Need 20% Down

One More Time You Don't Need 20% Down | Keeping Current Matters

A recent survey by Ipsos found that the American public is still somewhat confused about what is actually necessary to qualify for a home mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today.

1. Down Payment

The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 36% think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less and the number has increased through the first quarter of the year as shown by the graph below:

Percent of Low Down Payments | Keeping Current Matters

2. FICO Scores

The survey also reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. In actuality, the average FICO scores of approved conventional and FHA mortgages are much lower:

Average FICO Scores | Keeping Current Matters

Bottom Line

If you are a prospective purchaser who is ‘ready’ and ‘willing’ to buy but not sure if you are also ‘able’, sit down with someone who can help you understand your true options.