3 Things No One Tells You About Buying a House

This past November, my boyfriend and I were lucky enough to buy our first home — even with student loans and an ongoing pandemic. 

Not even COVID-19 could dull the thrill of buying a home, though it did make it an incredibly sterile process (pun intended). Even though I write about mortgages and buying a home for a living, the process still came with many learnings. Now, this might seem obvious for seasoned home buyers, but for my first-time home buyers, this one’s for you. 

1. Be prepared to feel financial anxiety

Millennials grow up thinking that they’ll never be able to afford anything — or at least I did. Because of that, I thought my days of buying a house were years away. But after a frank conversation about just how much we were paying in rent, we realized that buying a house was a much better investment of our money.

[ Read: How Do You Know You’re Ready to Buy Your First Home? ]

That said, your mortgage isn’t the only number that you need to think about when you’re deciding to buy. Don’t forget about things like closing costs or your down payment.

So, when the full-blown “no way I can afford this” panic set in, we sat down and evaluated our finances — and not just how much money we each had in the bank. We took into account our bills, student loan payments and potential monthly mortgage payments in a simple excel spreadsheet. Seeing it all laid out in front of us made things doable. 

It’s important to compare your financial obligations to how much you make and consider how much you could afford if you lost your job. 

2. With purchasing power, comes great responsibility

I chose where I went to college and what I do for a living, but I’ve never felt more in control of things in my life. Which admittedly was pretty terrifying because I had no idea what I was doing.

Our realtor was helpful, but when it came down to it, he could only suggest things. Ultimately every decision landed on us. Not all choices were complicated  — deciding on which house to pick was easy enough. After we shopped around for rates and compared who was going to give us the best terms, we chose our lender. But everything after putting an offer in was where things got tricky. 

[ Read: Best Mortgage Rates for February 2021 ]

From what inspections you want to which lawyer you want to use, you have to decide, even when you have no idea if you made the right choice. 

You also have to decide how much house you should buy, not just how much you can “afford.” I can’t explain the flurry of utter shock when we were pre-approved for a $600,000 mortgage. There was no chance we could actually afford that price. Even if a pre-approval doesn’t guarantee a mortgage, don’t let a high number like that lead you to take on more than your finances truly allow. 

3. The lessons will never end

There is no such thing as perfection when it comes to purchasing a home. There will be repairs to be made, and budgets to reevaluate. But with an open mindset, the inconveniences can become learnings. Here are my top three.

Everyone may know the word appraisal, but not what it really means

I happened to be buying a home at the same time as a friend, and it was interesting to see the noticeable differences between our journeys. They ran into trouble with their appraisal, which at the time I thought was a very obvious process. However, their experience makes me realize that knowing something topically doesn’t mean you understand the implications. 

A home appraisal is required and will be coordinated by your lender. But if the offer accepted by the seller was for $300,000 and the appraisal values the home at only $290,000, your lender is only going to give you what the home is worth.

If you don’t have an extra $10,000 lying around to cover that gap, you’ll have to check if the seller will come down. Thankfully it all worked out for my friend, however, had it not, they would have lost money when they would have been forced to walk. 

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Really think about what to spend money on

Given that the coronavirus is still very much around, we thought it best to forgo movers or painters to keep our bubble as small as possible. Not to mention the added benefit of saving a significant amount of money. 

[ Read: 7 Crucial Steps to Buying a Home in 2021 ]

If I could go back, I would pay for one, if not both. It was a ton of added stress and time that could’ve been saved. That said, the money saved cannot be ignored. The thing about buying a house is that you need a million things right from the start, especially if you’re moving out from an apartment, as I did. 

Most people likely cannot afford to pay painters, movers and all the things you need right from the start at the same time. Think about what your priorities are. For me, it was painting. If you’re fine with the walls’ colors, save that expense for later and focus on movers or the work your house needs. 

COVID-19 made for a memorable experience

In response to the pandemic, lenders have added extra employment verification steps to the process. If you lose your job, you may have to stop the process and reapply later. Yet, the pandemic’s reach went beyond just the underwriting process. 

If I saw my realtor on the street post-pandemic, I would not recognize him. We wore masks for the entire process, and even the official closing was done outside in the cold, with two pairs of sterile gloves and masks. It was not an exciting event like many people describe. The most exciting part of closing was getting to keep the pen at the end. 

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Image credit: Bibadash / Shutterstock

Source: thesimpledollar.com

22 Cities Where Home Appreciation Is Spiking

Couple looking at their old home
Photo by Hurst Photo / Shutterstock.com

Extreme demand for homes is pushing home values up at a rate not seen since before the Great Recession, a new Zillow report finds.

Several trends — including new millennial homebuyers, record-low interest rates, trends related to the coronavirus pandemic and the relatively small pool of homes for sale — have converged to heat up the market. The hot sellers’ market is a contrast to flat growth in rental prices nationally, as we reported in “Rent Prices Have Dropped in These 9 Formerly Hot Markets.”

The Zillow Home Value Index rose 9.1% from January 2020 to January 2021, the report says. Year-over-year home value growth hasn’t been this high since June 2006.

That rate may even pick up a bit: Zillow economists expect values to rise 10.1% from January 2021 to January 2022.

The demand has shortened the length of time that homes stay on the market, to a median of just 18 days as of mid-January. Compare that to 46 days at the same time last year and the year before.

A demographic bomb is a factor in the hot market. Millennials — defined by Zillow as Americans ages 25-34 — are entering their peak homebuying years. The number of these millennials increased by 12% — or, about 4.9 million people — between 2010 and 2020.

The generation’s size adds to the housing demand. Also, younger buyers are less likely than older ones to sell a previous home when they buy, which is expected to help keep the pool of homes for sale tight.

Government-stoked low mortgage rates — averaging 2.74% for a fixed-rate 30-year mortgage in January — are driving demand as buyers try to seize the opportunity to either pay less for a home or buy a more expensive one than they otherwise could.

Says Zillow:

“An extraordinary number of home buyers, with budgets supercharged by rock-bottom mortgage interest rates, are competing over a limited supply of homes for sale.”

The pandemic is a final factor. Many workers are now clocking in virtually instead of at the office, driving some to seek larger homes and others to move to smaller, more-affordable markets, Zillow says.

While home values increased in all of the 50 largest metro areas in the U.S. from January 2020 to January 2021, some have seen steeper growth rates than others.

Here are the 22 major markets where home values grew 10% or more, along with their typical home price and their home price growth rate:

  • Phoenix: $335,975 (up 17.1% from January 2020 to January 2021)
  • San Jose, California: $1,314,799 (up 14.2%)
  • Austin, Texas: $384,446 (up 13.7%)
  • Salt Lake City: $436,390 (up 13.7%)
  • San Diego: $689,361 (up 13.5%)
  • Seattle: $594,223 (up 12.8%)
  • Tampa, Florida: $257,499 (up 12.8%)
  • Milwaukee: $219,381 (up 12.1%)
  • Cincinnati: $208,352 (up 12%)
  • Providence, Rhode Island: $357,761 (up 12%)
  • Riverside, California: $433,226 (up 11.7%)
  • Buffalo, New York: $193,583 (up 11.4%)
  • Sacramento, California: $478,817 (up 11.3%)
  • Indianapolis: $204,141 (up 11.3%)
  • Memphis, Tennessee: $174,063 (up 11.3%)
  • Cleveland: $176,069 (up 11.1%)
  • Charlotte, North Carolina: $265,397 (up 10.9%)
  • Columbus, Ohio: $234,276 (up 10.8%)
  • Philadelphia: $277,775 (up 10.6%)
  • Kansas City, Missouri: $227,059 (up 10.6%)
  • Pittsburgh: $178,282 (up 10.4%)
  • Detroit: $198,979 (up 10.3%)

If you’re in the market for a new home or refinancing for your existing home, check out the mortgage rate comparison tools in Money Talks News’ Solutions Center.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

The 10 Worst States for Millennials

worst-states-for-millennials

Millennials are struggling. With rising student debt, stagnant wages, and avocado toast, many are working hard to hardly get by.

It is no surprise millennials are struggling financially. As a group, 24-39 years old earn less and have less assets than their parents did a generation ago. However, just like the job market and cost of living, where you live matters. We analyzed all 50 states and the District of Columbia to uncover where it is hardest for millennials to thrive.

Below we detail the criteria we used to rank the states and have the full ranked list. But first, let’s see the 10 states where millennials have it the roughest.

The south dominates this list with 5 of the top 10 being southern states. The other 5? Include some areas notorious for high costs of living or in economic distress.

Keep reading to see why these states have the least to offer millennials and to see the full list.

How We Determined The Worst States For Millennials

Each state and DC were ranked 1 to 51 in four categories:

  • Millennial Unemployment Rate
  • Average Student Loan Debt
  • Millennial Home Ownership
  • Percent Of Millennials Living In Poverty

All four categories were then averaged together, each weighted equally. The lower score in each category, the lower the rank. For example, DC’s $55,400 was the highest average student loan debt, earning it a rank of #1 for student loan debt.

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We used the most recent American Community Survey 2014-2018 data from the U.S. Census Bureau to get unemployment rate by state for those 25-34. The ACS data also provided the poverty rate by state for the 25-34 age demographic.

To analyze millennial home ownership, we once again used the ACS data to find the percentage of homeowners under 35 in each state.

To gather average student loan debt by millennial borrower, we used the most recent report from Educationdata.org.

If your state isn’t among the top 10, jump down to the bottom of the post to see where it lands on the full list. Otherwise, learn more about why these states are the worst place to be a millennial.

1. Mississippi

mississippi class=

Unemployment: 10%
Poverty Rate: 29%
Homeownership: 10%

It is no surprise to see Mississippi top the list of worst places to be a millennial. Mississippi often comes in dead last in education and quality of life metrics. Why is it so hard being a millennial in
the Magnolia state?

More than 1-in-4 Mississippi millennials live in poverty, in addition to facing the worst unemployment in the nation. While housing in Mississippi is relatively affordable, it’s simply not enough to help the millennials struggling just to get by.

2. Florida

florida class=

Unemployment: 7%
Poverty Rate: 22%
Homeownership: 7%

Florida may be a beloved destination for vacationers, but millennial residents may find themselves experiencing hardship. Not only do Floridian millennials stand a 22% chance of living in poverty, the state also the 3rd worst Millennial homeownership rate in the nation.

The beautiful surroundings can only provide so much comfort to adults striving to make a living.

3. Alabama

alabama class=

Unemployment: 8%
Poverty Rate: 27%
Homeownership: 10%

Alabama comes in at #3 for the worst place to be a millennial. While unemployment for millennials is 2% lower than Mississippi, it’s still not great. 27% of Alabama millennials are below the federal poverty rate.

4. South Carolina

south carolina class=

Unemployment: 7%
Poverty Rate: 22%
Homeownership: 10%

Just graduating college in South Carolina sets you up for an average $38,300 in student loan debt. Considering 7% of millennials are unemployed, it can’t be easy paying off those hefty student loan payments.

5. Georgia

georgia class=

Unemployment: 7%
Poverty Rate: 21%
Homeownership: 10%

Georgia tells a similar story to other southern states that top the list– a high poverty rate, paired with less than stellar unemployment. Toss in the high average student debt and it’s easy to see it isn’t all peaches for millennials in the peach state.

6. North Carolina

north carolina class=

Unemployment: 7%
Poverty Rate: 22%
Homeownership: 10%

North Carolina has similar stats to its neighbor, South Carolina- paired with worst homeownership and slightly less crippling debt.

7. West Virginia

west virginia class=

Unemployment: 9%
Poverty Rate: 32%
Homeownership: 9%

West Virginia is one of the states with a shrinking population. Every year residents are packing up and moving in hopes of a brighter future. Millennials in West Virginia have the highest poverty rate in the nation, with a depressing 1-3 live below the poverty level).

Pair that with sky high unemployment, and chances are pretty good wherever they move, the grass is greener.

8. New Mexico

new mexico class=

Unemployment: 8%
Poverty Rate: 27%
Homeownership: 10%

Why is it so rough being a millennial in New Mexico? A terrible 8% unemployment rate. Since jobs make creature comforts affordable, like food and shelter, this doesn’t bode well for millennials who call New Mexico home.

9. Oregon

oregon class=

Unemployment: 6%
Poverty Rate: 23%
Homeownership: 9%

In Oregon, more millennials are working than most other states. However judging from dismal homeownership rate and a surprisingly high poverty rate, folks are working just to get by in Oregon.

10. California

california class=

Unemployment: 7%
Poverty Rate: 20%
Homeownership: 8%

California may be the golden state, but for millennials living there may not look so shiny. High home costs mean home ownership is out of reach for many millennials. When paired with high unemployment and an unpleasantly high poverty rate, it earns California its spot at #10.

Some states offer Millennials worst opportunities than others

There you have it, the 10 states where millennials have the hardest time thriving.

At the end of the day, millennials are struggling nationwide. However, some states have less job opportunities, higher costs of living, and other blockers to achieving the American Dream– or even just not living in desperate poverty.

Where should millennials go for the best opportunities? Out west! Western states dominate the top 10 best states for millennials.

Best States For Millennials

  1. North Dakota
  2. Nebraska
  3. Iowa
  4. South Dakota
  5. Wyoming
  6. Minnesota
  7. Utah
  8. Wisconsin
  9. Kansas
  10. Colorado

If your state wasn’t in the top 10, you can see where it landed below.

See Where Your State Fell On The List:

Rank Geographic Area Name Unemployment(%) Poverty Rate(%) Homeownership(%) Student Debt
1 Mississippi 9 28 10 $36,700
1 Florida 6 21 7 $39,700
3 Alabama 8 26 10 $37,100
4 South Carolina 7 21 9 $38,300
5 Georgia 7 20 9 $41,500
6 North Carolina 6 21 9 $37,500
7 West Virginia 8 32 9 $31,800
8 New Mexico 8 27 10 $33,600
9 Oregon 6 22 9 $36,900
10 California 6 20 8 $36,400
11 New York 6 18 7 $37,800
12 Michigan 7 22 10 $35,900
13 Louisiana 7 26 11 $34,400
13 Tennessee 6 22 10 $36,200
15 Delaware 6 17 9 $37,000
15 Connecticut 7 17 7 $34,900
15 Hawaii 4 20 6 $36,500
18 Arizona 6 22 9 $34,100
19 New Jersey 6 17 7 $35,100
20 Illinois 6 18 10 $37,600
21 Maryland 6 15 9 $42,700
22 Pennsylvania 6 19 9 $35,400
23 Kentucky 6 24 11 $32,500
23 Ohio 6 21 10 $34,600
25 Nevada 6 20 10 $33,600
26 Maine 5 22 9 $32,500
26 Arkansas 6 24 11 $33,300
26 Virginia 5 16 9 $39,000
29 Rhode Island 6 18 8 $31,800
30 Vermont 4 15 8 $36,700
31 Missouri 5 20 11 $35,400
32 Massachusetts 5 16 8 $34,100
33 New Hampshire 3 15 8 $36,700
34 Washington 5 17 10 $35,000
35 Indiana 5 21 11 $32,800
36 Alaska 7 15 12 $33,600
37 Idaho 4 23 12 $32,600
37 District of Columbia 5 10 12 $55,400
39 Montana 4 21 10 $33,300
40 Oklahoma 5 23 12 $31,500
41 Texas 5 18 11 $32,800
42 Colorado 4 15 11 $35,800
43 Kansas 4 20 12 $32,500
44 Wisconsin 4 16 10 $31,800
45 Utah 3 20 15 $32,200
46 Minnesota 3 14 12 $33,400
47 Wyoming 5 17 13 $31,000
48 Iowa 3 19 13 $30,500
48 South Dakota 3 19 14 $31,100
50 Nebraska 3 17 13 $32,100
51 North Dakota 2 13 16 $29,200

Want the latest research and most engaging stories first? Email Kathy Morris at kmorris@zippia.com to be added to our weekly newsletter.

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Source: zippia.com

5 Ways to Win a Real Estate Bidding War without the Highest Bid

You may shortly find yourself in a real estate bidding war if you’re one of the many first-time homebuyers looking to buy in competitive markets like Austin, TX or Denver, CO. You may also think the only way to win the house is by putting in the highest offer. While this sounds like the right and possibly only strategy, you might be surprised when a homeowner selects a lower bid. 

Winning a real estate bidding war doesn’t always come down to price – there are actually many other tactics that are extremely effective. All-cash offers, pre-approval letters, and flexible timelines are all strategies that can beat out the highest offer. When you’re planning your bidding strategy, consider the following tactics to help make your offer stand out amongst the competition.

1. Get pre-approved for a mortgage

One of the first steps you should take towards purchasing a house is obtaining a pre-approval letter. A pre-approval letter states that a lender is willing to lend money up to a certain amount. These are typically acquired from a mortgage company or a bank. 

Getting pre-approved is almost always beneficial when buying a house, but especially if another buyer puts in a large offer during a real estate bidding war, but isn’t pre-approved. By having this letter, you can show the seller that you’re a qualified and serious buyer, even if you don’t have the highest bid. Pre-approval letters typically have an expiration date of 30 to 60 days, however, they can be updated with reverification of your information.

2. Go in with an all-cash offer

We’ve all heard the term “cash is king,” and when it comes to real estate bidding wars it’s no different. Having cash on hand means that mortgage companies don’t need to get involved, escrow closes faster, and you don’t have to worry about appraisals. All-cash offers show the seller you mean business and are ready to buy the house today.

3. Provide a flexible timeline

Flexibility around specific details in real estate transactions is nearly as good as offering the highest bid. Sometimes sellers need more or less time in the home than the typical 30-day closing period. If you are not in a rush to move, be flexible with your closing timeline and let the seller decide when works best for them. This can go a long way in a real estate bidding war especially if competing offers come in with hard deadlines. 

4. Eliminate contingencies during a real estate bidding war

Of course, there will always be contingencies when buying a house. Home inspections, financing, and appraisals are all important, however, you want to make sure that you aren’t overwhelming the seller by asking for too much. If you want to be the victor in a bidding war without the highest offer, you should remove as many contingencies as possible. However, it’s important to note that as you eliminate contingencies, you’re effectively taking risk off the home seller (which is why it’s a winning strategy) and putting it instead on yourself. 

5. Write a personal letter about why you are the perfect homeowners

Almost all sellers want to make sure their home is going to people that will take care of it and love it as much as they do. Including a personal offer letter, complimenting recent renovations, stating why you would be the perfect caretakers, and sharing what you love about the home, will help you stand out. It won’t always make a major difference, but this personal touch can help compliment an offer even if it’s not the highest bid. 

Real estate bidding wars can be extremely competitive, but implementing these five strategies can help your offer stand out. You should also consult with your real estate agent, as they may have additional insight on how to make your offer more attractive. In the end, the sellers are going to choose the offer that’s most attractive to them, so do whatever you can to make your offer the best on the table.

Source: redfin.com

Should You Buy a New Home or an Old Home?

It’s time for another match-up, this time we’ll compare buying a new home versus purchasing an old one.

For the record, some home builders refer to existing homes as “used,” which sounds kind of silly considering we’re talking about a house and not a car.

Ultimately, it’s a marketing gimmick to sway you toward buying new as opposed to old, but let’s continue on to determine the pros and cons.

Millennials and Gen X Are Big on New Homes

types of home buyers

A recent report from the National Association of Home Builders found that interest in newly-built homes has surged.

They noted that during the fourth quarter of 2020, 41% of prospective buyers were searching for a newly-built home, double the 19% share a year earlier.

At the same time, the share interested in an existing home fell from 40% to 30%.

It’s even more pronounced when we break it down by generation, with 50% of Millennial and 48% of Gen X buyers looking to buy a new home.

Meanwhile, just 13% of Boomers indicated that they were looking for a new home vs. existing.

Interestingly, Gen Z is a little more into existing homes than Boomers with a 38% share, but still below that of Millennials and Gen X.

New Homes Are Untouched and Clean

  • The number one reason to buy a new home is probably the fact that it’s never been lived in
  • Some people may not like the idea of living somewhere that was previously occupied
  • It also might feature the newest amenities such as improved insulation and solar panels
  • And in theory you shouldn’t have to repair or renovate anything right away

The most obvious benefit to buying a new home as opposed to an old, existing, or used one is the fact that it’s brand spanking new.

It’s untouched, it’s clean, everything is in good working order and nothing needs to be repaired. At least that’s the hope.

That’s a pretty huge incentive to buy new. You won’t have to worry about the typical costs of homeownership for the first several years, right?

Another benefit to buying new is that the home (or townhouse or condo) should have all the latest amenities.

Remember when it was all the rage to have stainless steel appliances and granite countertops?

Well, today’s new homes come with solar panels, energy-saving windows, smart appliances, USB outlets, electric vehicle charging stations, thermostats and door locks you can control with your phone, and other features that might make your used home look really old, especially a few years down the line.

Aesthetics aside, these upgrades could actually save you a lot of money each year on utility costs because they’re designed to be cost-efficient, not just handy.  You might even get a tax break!

Not only that, but many of these new homes use low-VOC paints and flooring, which are supposedly better for your health. Who knows what lurks in some of the older homes?

Additionally, new home buyers often get the opportunity to fine-tune the home they buy by selecting certain features, colors, styles, etc., and even financing any add-ons into the mortgage loan amount.

It Can Be Easier to Buy a New Home

  • It might be easier to finance a new home with a mortgage
  • Home builders often have their own home loan divisions
  • So they’ll be motivated to work with you to get the deal done
  • But still take the time to shop around and negotiate since you don’t need to use their preferred company

And speaking of mortgages, most home builders have their own financing departments that make it easy to get a mortgage.

Whether it’s the best deal is another question, but if you simply want in, your odds are probably better with a new home.  After all, the builder has a vested interest to get you financing.

There’s probably also a lot less competition for a new home, seeing that you’re probably checking out a brand new neighborhood full of vacant homes to choose from.

This can be a huge advantage in a seller’s market, which we’re experiencing at the moment. Instead of a bidding war, you might be able to pick and choose from a selection of available properties.

You can even pick among different sizes and floor plans to get just the right amount of space, as opposed to having to conform to what’s available in the existing market.

You might be thinking, hey, this sounds great, sign me up now! Why on earth would I want a used home with dodgy popcorn ceilings and laminate countertops?

But wait, there’s more to homes than their shiny exteriors and what’s inside.

Don’t Forget About Location…

  • Location is and will always be the biggest property value driver
  • And new construction homes are often in less desirable areas
  • Or in the outskirts of urban areas because that’s where new land is available
  • Be sure to take that into consideration as a major tradeoff to buying a new home

Let’s face it; the old adage that location is everything in real estate is true. It’s always been true, and always will be true. That is, if you want to see your property actually go up in value.

And guess what. Brand new homes often ren’t being built in the best locations. When it comes down to it, there’s no space for a new development in an established or central location.

Sure, you might see a new condo development, but new homes most likely won’t be that central. They’ll be on the outskirts of town, or in a “trendy” or “up-and-coming” area.

In other words, there’s going to be a commute if you buy new, and the location might be questionable at best in terms of value.

There might even be multiple new developments surrounding yours, with tractors and hammering construction workers doing what they do all day long.

That being said, it is possible to buy a new home in an area that flourishes. One hint it’s the right area might be the stores that are built nearby, such as a Whole Food’s or Trader Joe’s.

Of course, with an existing or used home, you can buy in the heart of the city, or in an area you know well that is insulated by a lack of available space and construction.

That buffer means the property should hold up well in terms of value, even during a downturn, assuming the area isn’t subject to obsolescence.

A used home might also give you the ability to walk to work, or to popular restaurants, bars, shops, and so on.

At the same time, a used home doesn’t necessarily have to be old inside. If you shop around, you might be able to find an old home that has already been remodeled to your liking.

And even if it hasn’t, that shouldn’t stop you from buying it and making renovations if it’s got good bones.

New Homes Are 20% More Expensive

  • Ultimately you pay a premium for a new home (just like a brand new car)
  • Apparently the cost is 20% more on average per a study from Trulia
  • So while a new home might be cheaper with regard to maintenance and renovation
  • You still need to consider the upfront cost to get an apples-to-apples comparison

A while back, Trulia determined that new homes (built in 2013-2014) cost roughly 20% more than similar existing homes.

They also found that two in five Americans would prefer to buy a new home, compared to just 21% opting for an existing home and 38% declaring no preference.

But when it came to that 20% markup, only 17% would actually pay the premium to get the new house.

So to get this straight, you might have to pay 20% for a new home AND you won’t be in a central location.

You’ll be in an untested location that might wind up being a ghost neighborhood in a decade if things don’t work out as planned.

During the most recent housing crisis, a lot of new home communities were hit the hardest, whereas existing homes saw their values decline but prop back up over time.

Of course, if you opt for new you’ll probably have all the latest technology and no major issues.

And if you go with an older home, you might have major bills on your hands when the roof gives out, or you discover serious plumbing issues.

So you’ll need to do your due diligence when buying an old home to ensure the property is in adequate shape. This means paying for a quality inspection (or two).

Then again, I’ve heard really negative stuff about new homes too, with many claiming workmanship has gone to you know what these days.

In other words, you’re not out of woods if you buy new either, though there might be some kind of warranty in place for a while.

At the end of the day, it’s probably okay to consider both new and used homes when looking for a property, and including both types should increase your odds of finding a winner.

As long as you take the time to inspect the property and the neighborhood, negotiate the right place, and make sure you can afford the place, you should be okay.

Lastly, you should make sure you actually want to own as opposed to rent because owning comes with many more responsibilities, whether you buy new or used.

Advantages to Buying a New Home

  • Brand new, clean, no major issues
  • Move-in ready (no wait or work to be done)
  • Cool new technology
  • Green features could reduce utility costs and/or provide tax incentives
  • Trendy design
  • Ability to customize
  • Can finance additions into mortgage
  • Possibly easier to get financing with home builder
  • Less competition, more choices on floor plans

Disadvantages to Buying a New Home

  • More expensive than buying used
  • Location probably isn’t ideal
  • Despite being new, workmanship might be questionable
  • Could be subject to costly HOAs, even if it’s a house
  • Neighborhood dynamic is unknown
  • Property values might be more volatile
  • Construction nearby (eyesore and noisy)
  • More cookie-cutter, less unique

Advantages to Buying an Existing Home

  • Possibly cheaper
  • Better, more central location
  • Can buy in an established school district
  • Can own in a more reputable and recognized neighborhood
  • Old house might have new upgrades
  • You can always renovate if need be
  • Older houses tend to have more character, custom design
  • Could actually be built better than a new home

Disadvantages to Buying an Existing Home

  • Harder to find an existing home (less inventory)
  • Might have major problems you don’t initially notice
  • Financing could be tricky (if unpermitted work, etc.)
  • Could still be more expensive than buying new
  • Fewer amenities, especially as homes get more tech-integrated
  • The neighborhood might be in decline
  • More competition to get your offer accepted
  • Might have to settle for a smaller, less ideal home to get right location

Source: thetruthaboutmortgage.com

IT Jobs; VOE, CRM, Non-QM Products; Conventional Conforming News; CPI: No Inflation Worries

IT Jobs; VOE, CRM, Non-QM Products; Conventional Conforming News; CPI: No Inflation Worries

Here we are in the seemingly 58th week of 2020. What’s new? The podcast of today’s commentary features thoughts from the Millennial host on how lenders can address that market, and it can be heard via Apple, Spotify, or Google: subscribe and download. In terms of news, the FHFA extended forbearance protection past March. (More below on that.) And rating agency Moody’s view is that the CFPB’s recent changes to the QM rules would “allow lenders to qualify more types of loans as QM, resulting in a non-QM market with loans of lower credit quality, since most of today’s higher-quality non-QM loans would qualify as QM under the new rules, making future non-QM more synonymous with non-prime… the rule, if implemented could incentivize some lenders to price riskier loans lower than their true risk in an effort to fall within the new QM rule’s APR threshold. QM status conveys potential benefits to lenders and securitization issuers, such as protection against legal challenges and exemption from securitization risk retention.” More on this below as well, remember, the mandatory compliance date for the revised general QM and seasoned QM definitions is July 1.

Lender and Broker Services and Products

As the rush of mortgages and refis continues to flood the industry, it’s no secret that everyone’s feeling the deluge and leaving valuable loans on the table. At Truework, we know you’re feeling overwhelmed. Here are three things you can do to stop leaving valuable loans on the table, and take advantage of the market so you can come out on top. Truework is a US-based company with an expansive and ever-growing network and a dedicated team of mortgage professionals that are committed to tackling and completing any and all VOE/VOI requests. Additionally, we are the market leader for coverage for small and mid-sized companies. Start a verification on Truework now. Furthermore, with Truework, you can reverify employment for any request within 90 days of the original, receive up-to-date statuses on all verification reports, and get fast turnaround times. And for a limited time, Rob Chrisman readers get 6 free Verifications ($240 value). Let us do the heavy lifting so you can focus on what matters. Reach out to Zackary Green now for questions and to claim this offer.

Attention ClosingCorp and Reggora customers! If you use either of these platforms, you can now order appraisals and check the status of reports directly from within these systems – no need for yet another login. Triserv is fully integrated with both ClosingCorp and Reggora, as well as many other LOS and other technology providers. Triserv is a 50-state AMC that has client-specific, dedicated teams on both coasts offering high-touch, personalized service. To find out more, contact Triserv Appraisal Management Solutions.

Mortgage demand among self-employed and credit-challenged borrowers is still growing, according to Verus Mortgage Capital, the industry’s largest purchaser of Non-QM loan products. Largely ignored by lenders since COVID struck, the consumers demand has not changed. Fortunately, Non-QM guidelines are back to pre-COVID levels and some pricing is actually better, attracting more originators to this business. It’s time to help borrowers who don’t fit into the GSE credit box and who need the flexibility offered by the leading Non-QM investor. For more information about adding Non-QM products to your menu contact Jeff Schaefer, EVP of Correspondent Sales (202-534-1821).

One month into 2021 and Stearns Wholesale is already kicking the new year into high gear with exciting new tech developments! This week, Stearns has reduced its minimum lock duration from 60 to 45 days, reduced the minimum credit score to 620 now allowing up to 90% LTV on its Accelerator program, and removed the COVID cash out adjustment of .375. Stearns has also enhanced its Jumbo Loan Guidelines, which now allows 2nd homes, a max loan amount of $2 million and a minimum credit score down to 700. If you want to learn more about these exciting new product updates or partner with Stearns, click here to be contacted.

It’s a well-known fact that 2020 was a banner year for the mortgage industry. As you look over your 2020 numbers, ask yourself, “is this the best we could have done?” If you’re not working with Sales Boomerang to maximize borrower retention, the answer to that question is, “Nope. You definitely could have done better.” Sales Boomerang notifies lenders when someone in their database is ready for a loan. And the numbers speak for themselves: up to 65% borrower retention and 20-40% average lift to loan volume, all for around $299 per acquired loan — an average 20x ROI. Want more proof? With a loan loss report, Sales Boomerang can show you which competitor took your deal, the loan amount, type of loan, the term and much more. Request yours from Sales Boomerang today to learn how you can keep more of your borrowers.

As industry experts, TMS anticipates 2021 should see a steady rise in mortgage rates, and consequently, the refi faucet slowly turning off (eventually). The purchase market will once again be lenders’ bread and butter, although with slightly modified, post-COVID conditions. TMS CAREspondent has compiled some great tips in its new blog to help lenders prepare for this impending shift. Partner with TMS today.

While there’s no crystal ball capable of showing the industry’s future, MBA Chief Economist Dr. Mike Fratantoni is the next best thing. Join LBA Ware for the first of its quarterly webinar series More Insights, Better Decisions: Michael Fratantoni’s 2021 Mortgage Industry Outlook for a data-packed discussion on the state of the mortgage industry. Drawing on the latest stats, Mike will help you take a data-driven approach to your business decisions this year. Register for the free webinar, which takes place tomorrow, Thursday, February 11, from 1-2 pm ET.

“When people and robotic processes work together, loans get completed faster, error free.” If Elon Musk chose the mortgage industry, that’s how he’d do it. It’s how modern assembly lines achieve maximum efficiency. Yet many loan teams still handle loan files the old-fashioned way with tedious data entry, error-prone, time-consuming communications, and no way to get visibility into what may be at risk of missing critical deadlines. Now imagine an online, ultra-productive, “loan assembly line” that coordinates every step for every loan, actively prioritizes everyone’s tasks and eliminates tedious, routine work in your CRM+POS+LOS. That’s what TeamworkIQ does for $24/user/mo. It makes sure things get done right and get done on time while tracking each loan’s details, documents, deadlines and turn times. Loans get done faster and error free. What if you could 4x your efficiency in under 30 days? See how American Pacific Mortgage did and test-drive TeamworkIQ for free.

Leverage your existing technology ecosystem… it’s paid for!  Service 1st is integrated with multiple LOS and point of sale systems for TRV, SSV, VOE and credit reporting, with more added each year. Keep your team safely engaged and instantly cascade through S1 solutions within your IT environment. Additionally, many originators and lenders experienced significant VOE and credit reporting cost increases as we entered 2021. Have you contacted S1? S1 creates significant value via loan manufacturing efficiencies: Results (verifications and tradeline updates delivered 50% faster than industry benchmarks) without the hefty price tag. No signup fees or minimums.  Get started today with a no obligation price proposal at srv1st.com.

There’s still time to register for XINNIX’s upcoming quarterly Leadership Lessons Webinar: “Beyond the Daily Commentary 2021: A Live Q&A with Rob Chrisman” happening today at 1 PM ET. XINNIX Founder & CEO, Casey Cunningham, will be hosting this live Q&A session likely on topics focusing on exactly what is important to you. Reserve your seat today!

FHFA, Freddie, Fannie News Impacting Borrowers Everywhere

Huh? Freddie and Fannie operated like utilities? Let’s see how that is working out for PG&E and California. Seriously, what if the Administration left the two of them under conservatorship? It would certainly leave industry pundits less to talk about, right?

The Federal Housing Finance Agency (FHFA) extended the forbearance period to 15 months for GSE borrowers. This is an additional three months beyond the previous 12-month limit. Black Knight had reported that nearly 25% of all (not just GSE) active forbearance plans were scheduled to reach their 12-month expiration in March, and another nearly 15% in April. This extension should provide support for troubled borrowers through the difficult winter and early spring months. We view this announcement positively for mortgage credit broadly. In our coverage universe this primarily benefits mortgage insurers and mortgage REITs.

Fannie Mae issued Selling Guide Announcement SEL-2021-01 which includes update information on the verification requirements related to seasonal and secondary income, the seller/servicer post-purchase adjustment (PPA) process to require the use of the PPA form, and the removal of references to lenders authorizing release of MI data.

A recent Compliance Update from First American Docutech discussed Freddie Mac’s announcements in Bulletin 2021-4  regarding CMT-indexed ARM, IRS Form 4506-C, and

authorized change for the uniform Oklahoma Mortgage (Form 3037). And Fannie Mae is retiring CMT Arm Products per FNMA LL-2021-05; more information in Compliance News.

loanDepot’s Weekly Announcement includes the Fannie Mae Appraisal Risk Management Policy Reminders and Resources and updates on FHA Loan Limits 2021. loanDepot has new programs available, smart Term Conforming and High Balance. Information on these programs and updates to its Conventional Lending Guide are discussed in this Announcement.

PRMG announced the expiration of QM Points and Fees Cure Provision on covered transactions with consummation dates after January 10. Impacted loan programs include Conventional (Fannie Mae and Freddie Mac), FHA and USDA. Lenders or assignees will no longer be allowed the option to cure the transaction and bring it into QM compliance when the total points and fees exceed the applicable limits.

Plaza Home Mortgage offers Fannie Mae HomeStyle® and Freddie Mac CHOICERenovation® loan programs. Download Plaza’s flyer for more information. In alignment with Freddie Mac Bulletin 2020-45, Plaza has updated the Home Possible® program guidelines, effective for all loans purchased on or after March 1, 2021. Specifically, this update reduces the maximum LTV from 95% to 85% for certain Home Possible Mortgages secured by 2-4-unit properties.

COVID tolerances have been extended on Flagstar Bank Conventional Products. Read Memo 21011 for details.

MQMR addressed how internal audit policies and procedures can meet federal and agency requirements. It discussed Fannie Mae’s release of several checklists as part of their Seller/Servicer Risk Self-Assessments, including the Internal Audit checklist. Internal audits are an important risk mitigation tool that uncover operational inefficiencies and potential areas of risk within a lender’s organization. For that reason, it is important for sellers/servicers to know that their Internal Audit policies and procedures satisfy federal and agency requirements and are effective for identifying risk. The article provides a list of requirements for an internal audit self-assessment checklist.

MQMR also spoke to the best practice of requiring outsourced service providers, such as contract underwriters and processors, to be checked against exclusionary lists. While the practice may not always be feasible to do, particularly if the lender is not made aware of the individual contract underwriter’s/processor’s name by the third party service provider that employs them, the article provided a summary of Agency guidelines on this issue from Fannie Mae Selling Guide Chapter A3-3, HUD Handbook 4000.1, Chapter II, A, 1, iii, and Freddie Mac Seller/Servicer Guide Chapter 3101.

Capital Markets

Our economy is driven by jobs and housing, and it is worthwhile to take another look at the employment numbers last week to keep things in perspective. After falling 227,000 in December, nonfarm payrolls increased a mere 49,000 in January disappointing many analysts who were expecting a more robust number. But thanks in part to a drop in the labor force, the unemployment rate fell from 6.7 to 6.3 percent. The U-6 unemployment rate, which includes those marginally attached to the labor force as well as those who are working part-time but prefer to be working full-time, declined. And initial claims for unemployment have been slowly declining and February’s outlook remains positive. Claims are still well above pre-recession levels and still largely affecting those in their prime working years. On top of that, U.S. manufacturing continues to improve according to the latest ISM Manufacturing Index. Inflation? Commodity prices rose nearly across the board for the month. Services also continued to expand but arts/entertainment/recreation, education services, and retail trade continue to struggle in the face of the ongoing pandemic.

Looking at rates Tuesday, Treasuries yields rose marginally across longer durations and the MBS basis ended Tuesday tighter, particularly on higher coupons as investors weighed the latest on stimulus, earnings, and vaccination efforts, trying to determine whether letting the economy run hot will spark destabilizing inflation. The day’s $58 billion 3-year note auction was met with solid demand ahead of today’s $41 billion 10-year Treasury note auction results.

Today’s economic calendar is already underway. Mortgage applications decreased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 5. 30-year mortgage rates remained near their cycles lows during the reporting period (2 7/8). We’ve also had January Consumer Price Index (+.3 percent, as forecast, much of the gain due to gasoline, the core rate was unchanged). Coming up are December wholesale inventories and sales, remarks from Fed Chairman Powell on the “State of the US Labor Market” before the Economics Club of New York, and the January budget deficit from the Congressional Budget Office. Today’s Desk purchase schedule is the largest of the week at $8.8 billion over three operations, including over $7.3 billion in UMBS30s. We begin the day with Agency MBS prices unchanged and the 10-year yielding 1.15 after closing yesterday at 1.16 percent after the CPI data reminded us that inflation is currently not an issue.

 

Employment

“OpenClose continues to experience record setting growth while bank, credit union, and mortgage lender demand for our award-winning digital lending ecosystem is booming. This success makes available exciting opportunities for experienced mortgage banking and innovative software professionals to join the OpenClose family. We are seeking qualified and energetic professionals to join our implementation team as a Mortgage Software Implementation Specialist. The specialist will be responsible for the implementation of new customers and work with existing customers providing business + channel + user analysis, workflow evaluation, application setup and optimization of installations of our Web-based, enterprise-level mortgage software platform. Notable is that OpenClose is a 100% browser-based platform and can largely be implemented remotely. Minimal travel, if any, is involved in this position. Come see why OpenClose has received the Top Mortgage Employer award four years running. This and other opportunities can be accessed at Join the OpenClose Family!”

STRATMOR Group is anticipating a significant uptick in Merger and Acquisition activity in 2021. As a follow up to its recent open-position post, STRATMOR is seeking a professional with at least two years of hands-on M&A or Private Equity experience. This is a junior level position that will benefit from STRATMOR’s extensive experience in this industry. Employees of STRATMOR enjoy working at a company that has successfully managed remote work for decades and continues to grow in importance in the market. Specifically, this new hire will assist the STRATMOR team with tracking the M&A deal pipeline, generating interest with new M&A candidates, and creating Confidential Information Memorandums (CIMs), and financial models. If you are looking for an exciting new position with a highly respected mortgage consulting firm, then drop STRATMOR a note.

 

Source: mortgagenewsdaily.com