New Year’s Resolution: Become A Homeowner!

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Image source: Marisol Casben

Its that time of year again when everyone is setting their sights on new goals. From being healthier to save money to try new things, January 1st is when we all want to set ourselves up for a successful year.

One major goal many people have is to become a homeowner. This is a huge goal but very attainable. With Hall Financial, we can make it very simple and easy for you to obtain a mortgage.

Here is a step by step list of everything you need to make your homeownership dreams come true:

  1. Obtain preapproval from Hall Financial, you will need:
    1. Two years of W2s
    2. Your most recent pay stub
    3. Two months of bank statements
    4. Copy of driver’s license
    5. Credit Report
  1. Start house shopping
    1. Need a realtor? No problem, Hall Financial has preferred partners.
    2. Find a house. Put an offer in, and get it accepted!
  1. Loan documents
    1. Sign all documents
    2. Obtain homeowner’s insurance and provide to your processor.
  1. Closing
    1. Review closing documents.
    2. Schedule closing with your processor.
    3. Confirm closing date, time, and place with your realtor and processor.
    4. Sign all final documentation.

Enjoy your new home!

HOMEOWNERSHIP = HAPPINESS

Happy Couple Keys

Source: Google

Recent studies have shown that 93% of homeowners say that having a house makes them happier than renting did.

Why is that?

Experts are coining it “The Homeownership Effect” explaining that owning a home can make you a better person because you naturally find yourself enjoying new hobbies like gardening, landscaping, cooking, and if you are a big spender maybe even remodeling.

Besides allowing you to find and create more hobbies for yourself, it has been said by the Consumer Financial Protection Bureau, that owning a home helps with financial responsibility and overall better well-being. These can be attributed to homeowners living in an affordable, comfortable home located in a connected neighborhood with a reasonable commute.

However, don’t think that owning a home is the magic key to happiness. There does take a level of preparation and making sure you can comfortably afford things like property taxes, insurance, and unexpected (but relatively normal) home repairs. If you are curious whether or not your family is ready for this next step – click here – to talk with someone today about your current situation.

Mortgage Market Update- 9/12/2019

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Even though summer is coming to a close and purchase season is slowing down. Freddie Mac reported that the average interest rate for a 30-year fixed rate dropped to another 3-year low at 3.49%. And as the unemployment rate remains historically low, this means that homebuyer demand is improving along with affordability.

August brought some significant good news, so take a deep breath and find solace in our current economy. Why? Fannie Mae is also predicting that the economy should continue to support the current refinance activity. How do we know that? August’s refinance volume was 150% higher than it was last year, which is in correlation to the increase in the demand for homes and affordability.

And if you are still thinking about refinancing know that Black Knight is here to tell us that roughly half of the homeowners across the United States are sitting on a combined total of 6.3 trillion dollars in tappable equity. We haven’t seen eligibility this high since the early 2000s.

3% or 20% – What’s Best For Me?

Down Payment

Image source: Google

It is no secret that times have changed since our grandparents and even our parents have purchased homes. So much so, that with new programs and requirements, brokers/lenders have stated, you aren’t required to have the 20% down payment that you heard about growing up.

But now you are thinking… how much should I save for a down payment?

Here’s the good news it doesn’t have to be difficult, and you can do what works best for you and your family. To put it in perspective, if we were still required to put down 20% on a home loan, based on Mr. Cooper’s math, it would take renters nearly seven years to save for a 200K home on an average salary of 56K a year. Seven years!

However, there is a benefit to putting 20% down.

1.     Right away, there is more equity in your home.

2.     Lower monthly payment.

3.     Lower rates.

4.     You aren’t that high of a risk to your lender.

5.     You won’t need mortgage insurance.

6.     Future buying power.

Click here to calculate your ideal mortgage down payment.

 

Market Update: Is Renting Cheaper Than Buying?

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According to a recent survey done by Freddie Mac, 82% of renters think renting is more affordable than owning a home. But according to the actual data, renters spend more of their income than homeowners. Up to 36% of renters are spending a whopping 1/3 of income monthly! Even with these facts, renters still think it’s cheaper to rent due to the misconceptions of the amount of money needed for a down payment, as well as looming student loan debt.

Purchase season, who has the power?

Realtor.com just provided data that reveals Millennials are finally ready to dominate the market. In January 2017, Gen X finally gave up its spot at the top for the most new mortgages. Millennials have held this position strong as their share of the mortgage market continues to rise. At the end of 2018 they were responsible for 45% of all new mortgages. However, while they are taking on larger mortgage payments, their down payments are significantly lower. The average for Millennials was only 8.8% while Gen X boasted an 11.9%.

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Roofstock is a real estate platform for buying and selling single-family rental homes. The company just announced that is it introducing a new program that will allow consumers to invest in a share of a single-family rental home without having to act as the landlord. With this new program investors can reap the reward of property ownership without the risk. Roofstock itself will be responsible for the financing, the insurance, property management, asset management, and the leasing. Profits from investment will be price appreciation, along with tax benefits and potential dividends. Investments can start as low as $5000.

According to LendingTree, 86.5% of mortgages borrowers now have a rate under 5% regarding a 30-year fixed. The most common rate offered was a 4.625%, which accounted for 19.2% of borrowers. This is notably below 2018. In 2018 87.3% of purchase mortgages were given a rate under 5%.

Over the past week purchase applications have rose 2% after four consecutive declines. This is also increased 2.5% from last year. With interest rates remaining low, there is certainly incentive for not only purchasing, but for refinancing as well. The refinance index just moved forward 6% from the previous week, while the purchase index moved forward 7%. This is a solid 3% higher than where the index was in 2018.

Lackluster Home Sales and Baby Boomers

In an analysis of 54 metropolitan areas, RE/MAX National Housing Report has conveyed the largest inventory increase in a decade. Although home sales themselves have scaled back by 11% on an annual basis, the increase in inventory has averaged 6% year-over-year. This greatly improves the market as there was a multi-year scarcity of homes for sale. Compared to just last year, January which is typically a slower month for home sales, had an improvement of .5 overall.

Baby Boomers continue to retire in waves without adequate savings to support themselves and their family during their golden years. It is becoming extraordinarily clear that the country is on the brink of a retirement crisis. As health care costs continue to skyrocket and pensions dwindle, Social Security is simply insufficient for the longevity of this generation. This all sounds doom and gloom, until it’s pointed out that many Americans are literally sitting in a pile of cash; their homes. Capitalizing on the equity of one’s home can solve many later in life money issues.

The Department of Housing and Urban Development announced its plan for awarding $10 million in “sweat equity” grants to nonprofit organizations. The funding is sourced from HUD’s Self-Help Home-ownership Opportunity Program. The actual money in combination with the labor from both volunteers and home-buyers will lower the overall cost of home-ownership. A minimum of 50 hours is required for a single ownership household, and the hours are doubled for a household of two. Community service is another requirement for eligibility. During the initial round of grants awarded more than half of the capital, around $5.3 million is going to Habitat for Humanity.

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While inventory is at a decade high, the affordability of homes for sale on the market is at a decade low. With only 56.6% of homes being affordable for the country’s median income, the National Association of Home Builders is calling on policymakers to make some changes. The Chief Economist of the NAHB, Robert Dietz indicates that wage growth is under performing while home appreciation continues to rise.

The U.S. Census Bureau’s most recent American Community Survey reported homeowners are currently spending more money per month than renters in all 50 states. This data was compiled tracking the median housing costs from 2013-2017. Costs such as mortgage payments, home insurance, property taxes and maintenance are making it far more expensive to own a home. However, experts say while renting saves money month to month it will not pay off in the end. Investing in a home can increase the home’s equity and look to put cash back in your pocket.  A mortgage is a major expense, but once it is dropped off the monthly spending homeowners can expect a significant increase in their savings.

Loan Insights, Rent Burdens, & More.

12.17.2018

Photo Source: Unknown.

CoreLogic’s Loan Performance Insights report for September 2018 was released last week, showing the nation’s labor market and increased home prices overall has had a positive impact on serious delinquent loans and foreclosure rates—the overall delinquency rate is down 0.6 percent since September 2017. The 30-day delinquencies showed an increase of 0.4 percent but is being entirely attributed to Hurricane Florence.

Will more homeowners tap into their home equity in 2019. While increases in home prices might keep some homebuyers from making a move, it’s also resulting in record levels of home equity, and more homeowners are projected to have more opportunity to tap into that equity. Consumers in need of paying off higher interest rate credit card debt or in need of home improvements are prime candidates. This also allows for homeowners who might otherwise upgrade to a bigger home save money by tapping into that home equity and invest in home additions or upgrades.

Builder Confidence dropped four points to 56 according to the National Association of Home Builders Housing Market Index. Buyer Traffic was the only piece below 50, the threshold. Current Sales and Future Sales, however, both remained in the 60s. A reading above 50 signals growth. We should note Builder Confidence dropped significantly in areas with high home prices—the current deterrent of buyers is not mortgage rates thanks to recent declines. The demand is still there but consumers are hesitating due to “rising home costs.”

While the overall level of homelessness across the nation has fallen despite housing costs continuing to increase, the rent burden is becoming so extreme it’s risking thousands of Americans becoming homeless. Many areas are already pass the 32 percent tipping point, where over 32 percent of a household’s income is going to rent. Monroe Country in Florida is almost double, “with a median market rate rent consuming 62.9 percent of the area’s median household income.” That’s insane.

Ann Arbor, MI might rank as the No. 1 best small college town in the nation but it was ranked third overall for best college towns and cities, regardless of size—Austin, TX scored the hot seat. Ann Arbor is noted for its low unemployment rate of only 3 percent but the college town is also known for its social environment and academic and economic opportunities. The city is booming with part-time jobs for college students.

The Federal Reserve meets this week and there’s an 80% expectation they will hike rates another quarter point. Wednesday we find out their decision after their two-day meeting but more importantly, we’re hoping for any indications of what 2019 will look like for rate hikes.

Home Renovations on the Rise.

least debt cities

Photo Source: Realtor.com

The level of New Homes on the market is at the highest since January 2009—almost 10 years! New Home Sales, however, were down almost 9 percent in October, below expectations; though, a decrease in signed contracts on new homes was expected.

Home renovations: the popular solution for those who don’t want to face the homebuying competition or have hesitations with increased home prices. Not to mention, many have secured a very low mortgage interest rate they don’t want to give up by moving. In fact, there’s been about a 30 percent increase in home remodeling projects over the last five years, and unfortunately over 30 percent haven’t set aside the money for such renovations.

Home prices are slowing down and it’s welcomed news. The Case-Shiller Home Price Index, tracking changes in the value of residential Real Estate, showed a 5.5 percent annual gain for the National Index. The Federal Housing Finance Agency (FHFA) Housing Price Index, highlighting home appreciation on single-family housing, rose 0.2 percent in September and showed a 6 percent annual gain. For both these indices, the year over year appreciation rate decreased very slightly (talking .1 or .2 percent). This does not mean home prices overall decreased but rather are rising at a slower rate than they did last year. This is not a negative appreciation but rather a slower positive appreciation. (It’s a good time for cash out refinances before home prices do drop, though; help fund those renovation projects.)

Mortgage Applications for last week were up 5.5 percent, with purchases up 9 percent and refinances up 1 percent.

Over the last 20 years rent prices have more than doubled, going from about $450 in 1998 to over $1000 in the third quarter of 2018; and since 2008, the average rent for a new apartment has increased 28 percent. Over the last 10 years, the average size of a new apartment has decreased 5 percent—paying for less! California apartments have decreased in size by 12 percent. What’s driving this decline in size? Millennials looking to save a penny—they’d rather live in a smaller unit because of rental costs—and construction limitations: cost and space. Building smaller can yield room for more units to be built, increasing profit.

Debt doesn’t love Michigan—or maybe it does? Two Michigan cities, Ann Arbor and Lansing, made the Cities Where Home Buyers Have the Least Debt list with the former ranking at number 2! The median mortgage borrower’s debt-to-income (DTI) ratio is only 33.7 percent for the city. Honolulu held the highest DTI at 45.1 percent.

Older homeowners love Florida, with the state dominating all of the top 5 Metros with the Highest Average Homeowner Age. With the temperatures dropping in Michigan, we can’t blame anyone retiring to Florida.

Purchasing Young, Existing Home Sales, & More.

11.21.2018

Photo Source: Unknown via Pinterest.

Housing Starts for October were up 1.5 percent but Single-family Starts were down 1.8 percent which was disappointing, showing the gain was propelled mostly by multi-family starts. With price growth slowing down and mortgage rates not increasing as fast as some experts had forecasted, mortgages and homeownership is “attractive” right now. If only supply would catch up. That being said, for some homebuyers, the notice of rates and prices both still rising coupled with the limited most in-demand housing (starter homes) have lead some homebuyers to hit pause or hesitate; thus one reason why builder confidence dropped 8 points to a reading of 60 according to the National Association of Home Builders (NAHB) Housing Market Index. Note: any reading above 50 is still considered good, healthy, and strong.

Existing Home Sales showed a different story, highlighting homebuyers taking action with Sales up 1.4 percent in October, beating expectations and the first increase seen in 6 months. The report also showed 80 consecutive months of annual median existing home prices gains, though they have slowed down in growth—this is good for homebuyers. Reminder: deceleration is not a decline.

For the first time in 28 years, since 1994, the Federal Reserve is proposing to increase the threshold of an appraisal requirement from $250K to $400K, allowing certain home sales of $400K and below to no longer require an appraisal. However, this “would not apply to loans wholly or partially insured or guaranteed by, or eligible for sale to, a government agency or government-sponsored agency.” Meaning, home loans sold or guaranteed by the Federal Housing Administration, Department of Housing and Urban Development, Department of Veterans Affairs, Fannie Mae, or Freddie Mac would not be eligible for the appraisal exemption. Why the proposal? The threshold doesn’t hold up against today’s home prices. What do appraisers have to say? This could be significantly dangerous for lending as the expectation is more evaluations will be allowed to replace appraisals. More to come on this in the future.

Those who purchase a home between ages 25 and 35 can accumulate an additional $100K in home equity than those who purchase after the age of 35, leading those who purchase at a younger age to be more financially stable in retirement and have more home wealth than those who purchase later in life. Those who purchase a home before the age of 25 proved to receive more “bang for their buck” as they typically purchased a lower priced home but had less equity than those who purchased between 25 and 35 years old because they, typically, purchased such a lower priced home. Moral of the story: if you can make it work, purchase young.