The numbers: An ongoing and persistent lack of homes in the resale market is pushing more home buyers into new construction, which caused sales to surge for the second month in a row.
The strength in new home sales was also driven by a massive jump in sales in the south. Overall, new home sales are trending higher as buyers grapple with a low level of home listings in the existing home sales market.
U.S. new home sales rose 4.1% to an annual rate of 683,000 in April, from a revised 656,000 in the prior month, the Commerce Department reported Tuesday.
The number is seasonally adjusted, and refers to how many homes would be built over an entire year if builders continue at the same pace every month.
The jump exceeded expectations on Wall Street. Economists had forecast new home sales to fall to 669,000 in April.
Home builders are constructing new homes at the highest level since March 2022.
The data from February was revised significantly. New home sales rose to a revised 656,000 in March, compared with the initial estimate of a 9.6% increase to 683,000.
The new home sales data are volatile month-on-month and are often revised.
Key details: The median sales price of a new home sold in April fell to $420,800 from the month before. Prices have fallen from a peak of $496,800 in October last year. It’s also the first time prices dropped on a year-over-year basis since 2020.
The supply of new homes for sale fell 3.8% between March and April, equating to a 7.6-month supply.
Regionally, the south led new home sales by 17.8%, but was recovering from a sharp drop the previous month.
Overall, sales of new homes are up nearly 12% compared to last year.
Big picture: Move over, high mortgage rates — low inventory is strangling the housing market, as buyers have few options. Builder confidence is high as homeowners feel compelled to wait and hold on to ultra-low mortgage rates they refinanced into during the pandemic.
Builders have gotten an edge over existing homeowners who are selling by offering incentives from mortgage rate buydowns to other freebies, but it’s unclear how long that will last. The builders’ industry group reported earlier this month that the share of builders reducing home prices fell to 27% in May, from 30% in April.
Plus, the 30-year is inches shy of hitting 7%, which could weigh on the potential buyer’s calculus.
What are they saying? “The broader story is that despite a sharp increase in mortgage rates over the last year, new home sales are up roughly 12%,” Neil Dutta, head of economics at Renaissance Macro Research, wrote in a note.
“Builders continue to benefit from the lack of inventory in the resale market and the room to buy down prospective buyers to lower rates,” he added.
“This spring, new home sales are a more important part of the market than they would be in a more typical year,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement.
While sales of new single-family homes typically form less than 10% of national home sales, this April, the share increased to about 14%, she added.
Market reaction: Stocks were up in early trading on Tuesday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.700%
rose above 3.7%.
Setpoint, a real estate funding platform, acquired Resolute Diligence Solutions to support proptech and single-family rental re-engagement in the market, the firm said.
Resolute Diligence Solutions is a due diligence provider that partners with banks, lenders and originators to ensure each deed, title or lease is verified and reported accurately against financial statements.
“We are seeing a lot of traction with single-family rental and proptech companies that are prioritizing capital and operational efficiency,” Ben Rubenstein, president and co-founder of Setpoint, said about the timing of the acquisition.
While transactions are down, Setpoint is more bullish than ever on the proptech and single-family rental categories because the models it supports – from PowerBuying to HomeEquity to single-family rentals – create consumer value in all markets, Rubenstein noted.
“Setpoint is helping these firms improve operational and capital efficiency. When the market returns to normal levels, these companies can scale with fewer resources and less capital,” he said.
Founded by Stuart Wall, Ben Rubenstein and Michael Lam in 2021, the company enables proptech companies to offer home buying and selling options, including contingent-free, all-cash offers to customers, which it says enables these businesses to accelerate funding and closing on properties.
Setpoint aims to build fast and accurate infrastructure that will make credit more widely available and the underlying assets more liquid, which in turn will drive down costs for lenders and borrowers.
Operating as a SaaS, Setpoint’s backend platform provides streamlined workflow tools including document collection and verification, automates manual closing processes and boosts transaction throughput.
In December, Setpoint raised $43 million in a Series A round led by Andreessen Horowitz (a16z). About six months prior to the funding, the tech firm closed a $5.5 million seed round and $150 million in securitization.
While cautiously optimistic about the housing market for the rest of 2023, Setpoint expects to scale more than five times this year, the firm said.
Despite the slowdown, Setpoint grew rapidly driven by client additions, focusing on countercyclical originators and adding products and services, Rubenstein added.
In a world where virtual investments like crypto increasingly receive media attention for their volatility and uncertain futures, people desire to put their money into something stable and tangible.
Real estate has historically been one of those investments, but the barriers to entry have always been steep—until the emergence of real estate crowdfunding platforms.
What is Real Estate Crowdfunding?
With real estate crowdfunding, individuals can pool their money to fund a property investment. Crowdfunding platforms benefit investors by allowing individuals to combine a relatively small amount of money with others so they can collectively fund a real estate investment they otherwise wouldn’t be able to.
The entity owning the property benefits from crowdfunding by receiving funds they otherwise wouldn’t through traditional investing.
Real estate crowdfunding gives all investors exclusive access to investments typically reserved for the ultra-wealthy.
Real estate crowdfunding can include debt or equity investments. Equity investing occurs when an investor owns a property and receives income through things like rent and profits from selling the property for more than what they paid.
Debt investing involves loaning money to real estate buyers. Those who loaned their money receive their investment in fixed increments, depending on the loan terms.
What Type of Investors is Real Estate Crowdfunding Best For?
Real estate investing was historically reserved for accredited investors, who, according to the SEC, must fulfill one of the following requirements to be considered accredited.
You have an individual income of more than $200,000 per year in the last two years and expect to maintain the same income level in the current year.
You and your spouse jointly have an income of $300,000 per year in the last two years and expect to maintain the same income level in the current year.
You have a net worth exceeding $1 million, excluding your primary residence, either individually or jointly with your spouse.
You invest on behalf of an entity with at least $5 million in assets or a business in which all the equity owners are accredited investors.
In addition to being accredited, investors need the time, effort, and knowledge available to find a property, conduct all activities related to property management, and take on all the risks of a single property.
While some real estate crowdfunding platforms do require individuals to be accredited investors, several do not. With these platforms, all investors, accredited or not, can invest in the relatively stable real estate market without the time, effort, and patience previously required.
You might be interested in investing in real estate via crowdfunding, but where do you begin? We’ve rounded up the top seven best real estate crowdfunding platforms in 2023, with some extra honorable mentions. We’ve found something for everyone’s specific financial needs, so read on to get started with your real estate investing journey.
Table of Contents
Best Real Estate Crowdfunding Platforms for 2023
Fundrise is an ideal platform for those just getting started in the real estate crowdfunding space. It’s also ideal for people who want a platform to provide increasingly larger investment opportunities as they grow as investors.
What You Need to Know:
Minimum investment: Depends on the chosen account level
Property types: Check out their assets page to learn about available property types, including apartment buildings, residential and commercial properties.
Pros
Variety of account levels offers something for everyone.
Relatively stable investing options through private real estate, as opposed to REITs or stocks
Diversified portfolio strategy via the soon-to-be-released Innovation Fund
Cons
Minimum iPO investment is $1,000
Limited customer support services
Lack of complete fee transparency
Fundrise prides itself on being an easy-to-use and low-cost option for those looking to break into real estate crowdfunding. Fundrise uses its commercial software to find and advertise properties to its investors. Utilizing its own software enables Fundrise to charge lower fees, leading to more money in investors’ pockets.
Fundrise currently has 330,000 investors using its site, a total asset transaction value of $7 billion, and $194 million in net dividends already earned by its investors. The company’s investments are all tangible, private real estate investments, typically more stable than REITs and stocks tied to the stock market’s performance. Also, because the company is investor-owned, Fundrise allows its users to invest in its iPO, or internet public offering.
While the platform offers something for the beginner up to the seasoned investor, it leaves much of the troubleshooting up to users, as Fundrise has limited customer service assistance. There’s no way to directly speak with a representative if you have an issue—only an email address and troubleshooting articles are on the website. Fundrise’s total fees for individual investments aren’t clearly stated on its website either.
If you’re a green investor looking to break into the real estate crowdfunding space, Fundrise may be an excellent option. Check out our Good Financial Cents Fundrise Review for more information.
RealtyMogul: Best for Single Property
If you’re an accredited investor looking to focus on finding and investing in the best single piece of property, RealtyMogul may be for you.
What You Need to Know:
Minimum investment:
$5,000 for individual property investments
$5,000 for REITs
Recurring management fee: Usually 1.0%–1.25% annual fees
Accredited investors only?: Yes for single properties, no for REITS
Property types: Office, residential, single-family, and others
Pros
Two REIT options to invest in focused on income and growth
Options for accredited and non-accredited investors
Trustworthy platform, evident by its A+ ranking with the BBB
Cons
Requires a high minimum investment.
High management fees and limited fee transparency
No secondary market for investments, making them illiquid
RealtyMogul’s beginning was inspired by a realization from its founder, Jilliene Helman. While working in wealth management, Jilliene’s experience with her clients showed her three things:
Real estate investors were her wealthiest clients.
There was no connection between her clients’ level of income and the amount of time they worked.
Her clients prioritized real estate investing for its ability to earn them passive income.
Thus, RealtyMogul was created to allow investors access to the real estate market and gain wealth through passive income strategies.
RealtyMogul currently has over 245,000 investors, over $950 million in investments, and $5.5 billion worth of potential deals currently listed on its site.
RealityMogul offers various investment options, including several property types and REITs available to accredited and non-accredited investors. Additionally, the platform’s Better Business Bureau’s A+ ranking provides the assurance investors need to know they are utilizing a trustworthy site.
RealtyMogul’s initial investment costs are steep—investors will need $5,000 to join the platform. Additionally, the company’s fee structure isn’t easy to navigate and depends widely on the investment. RealityMogul’s investments are also relatively illiquid, meaning investors won’t see a return on their investments until maturity, which could take upwards of three to five years.
Investors wanting to utilize a trustworthy platform to find their ideal single piece of real estate should look to RealtyMogul for assistance. Check out our review of RealityMogul to learn more.
DiversyFund: Best for Building a Portfolio Over Time
If you’re a non-accredited investor looking to grow your real estate investment portfolio gradually, DiversyFund may be right for you.
What You Need to Know:
Minimum investment: $500
Recurring management fee: Not available on website
Accredited investors only?: No
Property types: REITs (multi-family properties)
Pros
Relatively low minimum investment compared to other crowdfunding platforms.
Good option for non-accredited investors
Completely automated, making investing simpler
Cons
Few investment choices
Long investment timeline of at least five years
Lack of information on its website
DiversyFund offers a wealth-building, diverse portfolio to average investors. With DiversyFund, you don’t have to be an accredited investor or have thousands of dollars to invest in real estate. With a minimum of $500, you can invest in a multi-family REIT using DiversyFund.
The platform is completely automated, taking the guesswork out of investing in real estate. DiversyFund is great for everyday investors, especially those who aren’t accredited or don’t want to spend a lot of time learning the ins and outs of real estate investing.
DiversyFund does have a limited amount of investment options—it only offers multi-family property REITs. Additionally, investments take at least five years to see returns, which means those investing with DiversyFund should anticipate sitting tight for a while before realizing any gains from their investments. DiversyFund’s website also doesn’t include much information about how the company works.
If you’re a non-accredited investor looking for a simpler way to access the real estate market and gradually grow your portfolio, DiversyFund may be for you.
Roofstock: Best for Single Family Homes
Roofstock is an ideal investment platform for accredited investors who want to invest in single-family properties.
What You Need to Know:
Minimum investment: $5,000
Recurring management fee: Marketplace fee to buyers ($500 or 0.5% of the purchase price, whichever is greater)
Accredited investors only?: Yes
Property types: Single-family rentals
Pros
Variety of ownership structures to invest in
Investments monitored by property managers
IRA investment option
Cons
Minimum investment timeline of five years
Only accredited investors
No mobile app
Roofstock was founded to simplify single-family rental investing by making it as easy as possible for investors to enter the market.
Roofstock offers its accredited investors a variety of ownership structures to invest in, including individual accounts, joint accounts, limited liability companies, corporations, revocable trusts, irrevocable trusts, and limited partnerships. All Roofstock’s assets are managed by an asset manager and a property manager, taking these burdens off the investor and saving time. Roofstock boasts its ability to allow investors the benefits of passively investing in real estate without the headache of property management.
Roofstock enables investors to use an IRA as the title holder to their investment, a unique retirement investing strategy not offered by many other crowdfunding platforms. It also supports a 1031 exchange program, enabling investors to substitute one property for another while putting off paying capital gains taxes on the investment.
Some downsides of Roofstock include the patience required to see any returns, which may take at least five years. The platform is also limited to accredited investors and doesn’t currently offer a mobile app.
If you’re an accredited investor looking to break into the single-family home market, but you don’t want the headache of actually managing the property yourself, Roofstock can be a great option for you.
Cadre: Best for Multiple Investment Styles
Cadre seeks to be a one-stop shop for all things real estate investing.
What You Need to Know:
Minimum investment: $25,000
Recurring management fee: Yes, but the amount varies by investment
Accredited investors only?: Yes
Property types: Apartment, hotel, industrial, and other properties
Pros
Data-driven approach to finding investments
Wide variety of properties to invest in
Greater liquidity than other platforms
Cons
High minimum investment
No 1031 exchanges
Three to eight-year waiting period for investments
Founded by Ryan Williams to offer investors greater access to commercial real estate investing, Cadre’s data-driven approach enables its platform to source the most attractive real estate investment options in the most sought-after markets in the United States.
Cadre allows its investors to realize returns through a wide variety of investments. These include property deals, Cadre Funds (a portfolio diversification strategy), and the Cadre Secondary Market (which enables participants to buy and sell real estate shares).
Cadre currently has over $5 billion in total transactions, a rate of return of over 27%, and over $338 million in gross distributions to investors.
Cadre’s downsides include its high barrier to entry—accredited investors will need at least $25,000 to get started. There are also no 1031 exchange options, and property deals can take anywhere from three to eight years to see returns.
If you’re an accredited investor with a lot of money to invest and want to see quicker returns than traditional real estate investing, Cadre may be the best option.
AcreTrader: Best for Farmland
Folks looking to invest in farmland should check out AcreTrader.
AcreTrader’s mission is to provide direct access to farmland investments. AcreTrader chooses its farmland through an extensive underwriting process, enabling users to invest in the most sought-after farmland possible.
Historically, farmland was a problematic asset to invest in due to extensive research, administrative tasks, and property management. AcreTrader’s tool eliminates those burdens, enabling investors to yield passive income returns with farmland.
Using AcreTrader, investors purchase shares equal to 1/10 of an acre in the enterprise that owns the farm. That piece of land is chosen in a highly selective process to ensure that the investment will realize the 7.0%–9.0% returns AcreTrader boasts. AcreTrader also has self-directed IRA investment options for accredited investors looking to utilize AcreTrader’s platform.
AcreTrader’s downsides include the inherent risks associated with investing in farmland, including the land’s subjectivity to adverse weather conditions, the seasonable nature of crops, and government policies that could affect land’s market value.
Additionally, farmland investments may take anywhere from five to 10 years to see returns, so investors in AcreTrader need to ensure they are committed to this platform for the long haul. Farmland is also a highly illiquid investment, so AcreTrader’s platform users won’t be able to opt for an early return.
If you’re an accredited investor looking to invest in farmland but need someone to research which farmland to choose, AcreTrader may be a great platform for you.
Fund That Flip: Best for Fix-and-Flip Investments
Fund That Flip is a unique platform for individuals looking to invest in residential house flipping.
What You Need to Know:
Minimum investment: $5,000
Recurring management fee: 1.0%–3.0%
Accredited investors only?: Accredited investors only
Property types: Single or multi-family residential real estate
Pros
Up to 11% investment returns
Very rigorous underwriting process
Offer bridge loans, allowing borrowers to get funding as quickly as five to seven days
Cons
House flipping is inherently risky
Minimum investment is a bit high
Must be accredited
Fund That Flip utilizes extremely highly selective underwriting, only accepted 6.0%–8.0% of all potential real estate investments. The chosen projects are managed by a seasoned team of redevelopers, so investors know that their projects have the highest chance of seeing a return. Fund That Flip boasts up to 11% returns for its investors.
Additionally, Fund That Flip offers bridge loans to its borrowers to help further fund redevelopment efforts.
House flipping is inherently risky, but Fund that Flip reduces some of that risk by doing the underwriting and sourcing work itself. All investors must be accredited, and only 8.0% of loan applicants to this platform are approved, making it difficult for just anyone to join.
If you’re a real estate investor looking to break into the house flipping market but don’t want to deal with the headaches of finding a redeveloper and a property to flip yourself, Fund That Flip may be a great option.
Other Real Estate Crowdfunding Platforms to Consider
While we’ve mentioned our favorite real estate crowdfunding platforms, there are many other worthy sites to choose from. Here are a few of our honorable mentions:
HappyNest
HappyNest prides itself on enabling everyone who wants to join the real estate market to do so. HappyNest’s investments are unique because they involve investing in net lease (triple-net) agreements. With these agreements, renters pay some or all expenses associated with using the property, including maintenance, insurance, and taxes.
HappyNest can keep costs down and provide access to all investors. All it takes is $10 and a 0.04% monthly asset management fee—plus a willingness to wait at least three years—to see investment returns.
CrowdStreet
Crowdstreet offers a variety of debt and equity investments in various property types, including multifamily, retail, office, industrial, and land. The minimum investment is a steep $25,000, and fees may be required depending on the opportunity. However, Crowdstreet prides itself on the ability to grant investors access to previously inaccessible real estate markets.
PeerStreet
PeerStreet is a crowdfunding platform for real estate debt investing. Investors provide capital to borrowers in real estate, who pay interest every month on their loans. PeerStreet investors then receive a part of the monthly interest on the loan payments. There is a $100 minimum investment, with management fees around 1.0% of loan fees, but you must be accredited to participate with the platform.
EquityMultiple
EquityMultiple’s unique value proposition lies in its team of experts, who have over $75 billion in transactions under their belt and provide asset management through the entire investment process. Their technology is also easy to use.
This platform, reserved for accredited investing in commercial real estate, requires a minimum investment of $5,000. Fees for common equity investing are 0.5%–1.5%, and debt and preferred equity fees are 1.0%.
Jamestown Invest
Jamestown Invest has over 80,000 investors and $13.2 billion in assets under management. A platform for accredited and nonaccredited investors, Jamestown Invest requires a minimum of $2,500 to begin investing in its commercial real estate offerings, including office, retail, and mixed-use spaces in the United States.
Bottom Line – Choosing the Best Real Estate Crowdfunding Site
There are a host of real estate crowdfunding options for all investors, investment types, investment amounts, and accreditation statuses. Your personal investor profile and desired real estate investing outcomes determine the best real estate crowdfunding option.
While each platform is different, they all create a more accessible real estate market. While investing always comes with a certain amount of risk, real estate investing has traditionally been considered more stable.
Historically, its barriers to entry were high due to relatively high property costs and the time and effort needed to find and manage a property. With crowdfunding platforms, those barriers are reduced, making the real estate market more accessible for investors.
Best Real Estate Crowdfunding Companies
Company
Property Types
Minimum Investment
Annual Management Fees
Accredited Investors Only
AcreTrader
Farmland
$15,000
0.75%
Yes
Cadre
Apartments, hotels, industrial properties
$25,000
Varies
Yes
CrowdStreet
Multifamily, retail, office, industrial, and land
$25,000
Varies
Yes
DiversyFund
REITs
$500
Not available
No
EquityMultiple
Commercial
$5,000
0.5%–1.5%
Yes
Fundrise
Apartment, residential, commercial
$10
1.0%
No
FundThatFlip
Single or multi-family residential
$5,000
1.0%–3.0%
Yes
HappyNest
Pandemic and internet resistant businesses
$10
0.04% (monthly)
No
Jamestown Invest
Office, retail, and mixed-use spaces
$2,500
Varies
No
PeerStreet
Real estate debt
$100
1.0%
Yes
RealtyMogul
Office, residential, single-family
$5,000
Varies
Yes for single properties; No for REITs
Roofstock
Single-family rental
$5,000
$500 or 0.5% of purchase price
Yes
Have you invested in any real estate crowdfunding platforms? If so, what has been your experience?
Best Real Estate Crowdfunding Platforms FAQ
How should I pick a real estate crowdfunding platform?
First, determine if you are an accredited or nonaccredited investor. Next, decide how much money you’re willing to invest and how long you’d like it tied up. Using the above chart as a guide, choose a platform based on your specific criteria.
What are the common costs and fees for real estate crowdfunding?
Real estate crowdfunding has several associated costs, including but not limited to the initial investment cost, account-opening fees, and asset management fees. Initial investments can range from $10 to tens of thousands or more.
Account opening fees usually fall within 0.25%–1.0%, and management fees can have a fixed rate of anywhere from 0.5% to 2.0%.
What are the risks of real estate crowdfunding platforms?
Ultimately, crowdfunding platforms are tied to real estate assets with inherent risks. While platforms make it easier to search through properties, good investments are still challenging to find. Like anything online, there is a necessary amount of due diligence on the investor’s part to ensure that the platform is legitimate.
What is the minimum amount needed to invest in real estate?
With crowdfunding platforms, individuals can invest in real estate for as little as $10, although most of these platforms require at least $500–$1,000 to get started. Check out our resource for ideas on investing in real estate with any budget.
How can I invest in real estate with less than $5,000?
Some crowdfunding platforms allow you to invest less than $5,000 in real estate, including Fundrise, DiversyFund, and Jamestown Invests. In addition, you can use self-directed IRA funds or REITs to invest. Both options often enable you to invest less than $5,000.
Check out other counties: Colorado VA Loan Information
How to Apply for a VA Home Loan in Hinsdale?
This is a quick look at how to apply for a VA home loan in Hinsdale county. For a more detailed overview of the VA home loan process, check out our complete guide on how to apply for a VA mortgage loan. Here, we’ll go over the general steps to getting a VA home loan and point out some things to pay attention to in Hinsdale County. If you have any questions, you can call us at VA HLC and we’ll help you get started.
Get your Certificate of Eligibility (COE)
Give us a call at (877) 432-5626 and we’ll get your COE for you.
Are you applying for a refinance loan? Check out our complete guide to VA Refinancing.
Get pre-approved, to get pre-approved for a loan, you’ll need:
Previous two years of W2s
Most recent 30 days paystubs or LES (active duty)
Most recent 60 days bank statements
Landlord and HR/Payroll Department contact info
Find a home
We can help you check whether the home is in one of the Hinsdale County flood zones
Get the necessary inspections
Termite inspection: required
Well or septic inspections needed, if applicable
Get the home appraised
We can help you find a VA-Certified appraiser in Hinsdale County and schedule the process
Construction loan note: Construction permit/appraisal info
Building permit
Elevation certificate
Lock in your interest rates
Pro tip: Wait until the appraisal lock in your loan rates. If it turns out you need to make repairs, it can push your closing back. Then you can get stuck paying rate extension fees.
Close the deal and get packing!
You’re ready to go.
As of April 31, 2021, the median home value for Hinsdale County is $341,490. In addition, the median household income for residents of the county is $56,339.
How much are the VA Appraisal Fees in Hinsdale?
Single-Family: $800.
Individual Condo: $825.
Manufactured Homes: $850.
2-4 Unit Multi-Family: $1000.
Appraisal Turnaround Times: 7 days.
Do I need Flood Insurance in Hinsdale?
The VA and lenders require properties to have flood insurance if they are in a Special Flood Hazard Area.
There is currently no digital data for Hinsdale County in the FEMA Flood Map Service Center. The only significant flood hazards are located around Lake Fork, which includes Lake City.
How do I learn about Property Taxes for Hinsdale?
Luke de la Parra is the current Hinsdale County Tax Assessor. His office can be reached at 317 Henson Street, PO Box 28, Lake City, Colorado 81235.
Colorado’s state offers Coloradoans the opportunity to be eligible for the Property Tax, Rent, Heat Credit Rebate (PTC Rebate). Some basic requirements are that applicants live in Colorado for at least one year, be 65 years or older, or the surviving spouse of 58 years of age, or a disabled person. Income and expenses will guide how much is given in the rebate.
What is the Population in Hinsdale?
The county’s population of 820 is 88% White, 5.7% Hispanic, and 3% Mixed Race.
Most county residents are between 18 and 65 years old, with 15% under 18 years old and 31% older than 65.
In total, the county has about 377 households, with an average of 2.2 people per household.
What are the major cities in Hinsdale?
The County has one town, the town of Lake City, which also serves as the county seat.
About Hinsdale County
Most of Hinsdale County is made up of parts of several different national forests and the Weminuche Wilderness Area. The national forests that makeup Hinsdale are the Gunnison National Forest, the Rio Grande National Forest, the San Juan National Forest, and the Uncompahgre National Forest.
Hinsdale County is also the location of several hiking trails where visitors can enjoy the sites of nature that Colorado has to offer. The Continental Divide Trail is a 3,100-mile-long trail that runs between Mexico and Canada. In Hinsdale, the Continental Divide Trail passes through many of the highest regions of the San Juan Mountains.
The County’s economy depends on its largest employment industries: Construction, Public Administration, and Accommodation. As a result, the most common types of jobs are in the Construction, Management, and Office Administration occupations.
Furthermore, when it comes to education, the County’s small size only allows for one school district currently in existence. The one school district in the County is the Hinsdale County School District No. RE-1, which administers one school with about eighty students in total. Thankfully neighboring counties have more educational opportunities for residents.
Veteran Information
The county is currently home to 68 veterans.
County Veteran Assistance Information
VA Home Loan Information
If you meet the VA’s eligibility requirements, you will be able to enjoy some of the best government-guaranteed home loans available.
VA loans can finance the construction of a property. However, the property must be owned and prepared for construction as the VA cannot ensure vacant land loans.
VA Approved Condos
Currently, there are no VA-approved condos available in Hinsdale County. However, if you’re interested in getting a condo through the condo approval process, call us at (877) 432-5626. Our team will assist you through the process.
Boston is one of the hottest real estate and housing markets in the United States. However, even Boston experienced a slowdown in 2022 after the housing market faced several headwinds, making it more challenging for potential homebuyers to afford an increased down payment and mortgage.
As a result, price growth has been weak while homebuyers and sellers alike have often remained sidelined. According to CoreLogic’s deputy chief economist, Selma Hepp, home value growth rates in Boston declined to 10% annually compared to 13-14% with expectations for a steeper drop by year-end.
Rising interest rates, high inflation, and a looming economic recession heavily affected Boston’s housing market in 2022, and many want to believe that the worst is over. The outlook for the Boston real estate market in 2023 is looking up, with a potential recovery in sight, though it isn’t expected to unfold overnight.
The Current State of Boston’s Housing Market
Even Boston’s white-hot housing market has cooled down, along with most of the U.S. real estate market.
In the state of Massachusetts, just over 3,800 single-family homes were sold in November, down nearly 30% compared to last year’s levels, a report by The Warren Group reveals. Condo sales fell slightly more than 20% compared to last year’s 1,663 units per month. In the face of these market dynamics, prices still managed to increase.
We see
New listings in the state of Massachusetts dropped close to 19% in the period
Closed sales for single-family homes fell almost 17% in the same period.
It was a similar scenario in the greater Boston area. The Greater Boston Association of Realtors reveals that Eastern Massachusetts has followed a similar trend as the state, suffering a decline in home sales. GBAR President Melvin A. Vieira Jr. blames soaring inflation and rising interest rates, both of which have weakened consumers’ buying power and resulted in weakened demand.
In November 2022, Eastern Massachusetts experienced a 30% decline in sales across single-family homes and condominium units, while multi-family homes suffered a steeper 33% sales decline vs. year-ago levels.
For the most part, Boston’s average home price is trending lower, too. Values in the following neighborhoods have fallen accordingly:
Peabody: down 2.4%
North Reading: down 2.2%
However, there are some towns bucking the downward trend. Prices in the following Boston neighborhoods have risen accordingly:
Needham: Up 3.1%
Dover: Up over 1%
Wellesley: Up over 1%
Why Is Boston’s Real Estate Market One of the Hottest in the Country?
The Northeastern United States in general is a white-hot real estate market. The Boston real estate market, in particular, is one of the hottest around. For one, it is the capital of Massachusetts, making it home to many universities, government buildings, and thriving businesses.
The city is an extremely popular destination for both homebuyers and renters, resulting in some of the highest-priced properties in the industry. Boston attracts professionals and high-net-worth individuals looking to make the northeast home.
Let’s explore why Boston is one of the hottest housing markets in the country in more detail!
Average Salaries
The average salary in the city of Boston is $84,000 annually. In addition, the cost of living is over 50% higher than average in the United States. Therefore the city attracts professionals who can afford to live in this high-priced city, such as software engineers, data analysts, and more.
Professionals Moving to Boston Suburbs
However, there is also a trend of professionals flocking to the suburbs, which has benefited homebuyers in the city of Boston. This trend has resulted in higher housing inventory levels, more stable prices, and fewer irrational bidding wars for homes.
Millennials Flocking to Boston
Millennials are also making their way to Boston, representing the largest cohort of homebuyers in the city. Younger home buyers prefer the action that the city has to offer compared to the suburbs and therefore are increasingly choosing to make Boston their home.
Forecast for Boston’s Real Estate Market: What to Expect
If 2023 is anything like 2022, the Boston real estate market should follow in the direction of the broader Massachusetts and U.S. housing markets. If there is a recovery ahead for the economy in 2023, that bodes well for Boston’s real estate market.
Let’s explore some of the Boston housing market predictions to get an idea of what to expect in the new year.
Home Sales
According to Realtor.com, Boston home sales are expected to decline in 2023, but only slightly. The company expects that sales will fall fractionally, not even by half a percent, in the new year. So home sales should remain relatively stable.
Housing prices
Home prices are a different story. House prices for Boston are expected to rebound and rise by 9.5% in 2023 vs. 2022 levels, also according to Realtor.com.
Price Negotiations
According to real estate agent Livia Monteforte with Compass Real Estate, price negotiations are returning to Boston’s real estate market, which bodes well for buyers in 2023. By the same token, Monteforte says that “irrational” bargaining tactics in the local market are fading.
Should You Invest Now?
Based on the latest Boston real estate forecasts, home prices are likely to increase in the new year while sales should stay almost flat. As a result, you might want to jump in now while housing prices are generally lower.
Once the economy begins to show signs of recovery, and the Fed has taken its foot off the interest rate gas pedal, demand is likely to return, which would probably send home prices in one direction — higher. If the Fed decides to remain on its interest rate increase trajectory, then you might want to lock in your rate sooner than later in case they go higher.
While there are Boston housing market predictions available, there is no telling with 100% certainty the condition of the market one year from now.
Total Mortgage is Ready to Help
If you are in the market for a new house in the Boston area, Total Mortgage has offices and loan experts available to help you navigate the unique Boston housing market.
Our mortgage bankers can help find the loan that is best suited to your needs. Find a mortgage expert in your neck of the woods today and move closer to your goal of home ownership in the Boston housing market.
An investment property is real estate purchased with the intention of earning returns through rental income or profit at resale. Just over 70 percent of single-family rental properties are owned by individual investors, according to the latest Census data. If you’re looking to take the plunge and buy an investment property, here are some initial considerations to make.
Considerations when investing in rental property
Here are a few considerations to think through before you get serious about an investment or rental property.
Location matters
Remember, it’s easier to look in on a property across town rather than one that’s two or more hours away. True, you can always hire a local property manager to keep the home in tip-top shape, but that’ll eat into the passive income you hope to gain.
It’s also important to consider the location with an investor’s eye for what’ll net you the most return. When evaluating locations, it’s often best to avoid areas with lots of vacancies and instead look to neighborhoods close to amenities such as parks and shopping, as well as transit, says Trent Ellingford, an investor and co-founder of the Real Estate Knowledge Institute.
After researching promising neighborhoods, connect with a real estate agent experienced in the local rental property market.
“Don’t use just a real estate agent,” says Kathy Fettke, CEO of Real Wealth Network, host of “The Real Wealth Show” and “Real Estate News for Investors” podcasts and author of “Retire Rich with Rentals.” “It’s best to look for an agent who specializes in real estate investments. Ideally, look for someone who owns them nearby. Oftentimes, property managers have brokers in-office to help.”
Types of rental properties
The kind of property you buy is equally important. The three main types are:
Single-family homes: These are one-unit properties, typically for either long-term tenants or on a short-term basis through platforms like Airbnb or VRBO. If it appreciates in value, you might be able to make additional profit down the line when you sell. With a single-family home, your cash return will be lower than if you had purchased a rental property that can house multiple tenants. Compared to a condo, you’ll also be responsible for all the maintenance.
Condos: Condos are generally more affordable upfront than single-family homes, and you could be spared many maintenance hassles thanks to the presence of an HOA. Keep in mind, however, some condo associations significantly restrict what you can do with the property, including renting it out, and mortgage lenders will factor in the monthly HOA fee when determining what size loan to extend to you.
Multifamily homes: Multifamily homes include duplexes (two units), triplexes (three units) and properties with four units or more. These allow you to rent to more tenants, generating more income, but also cost more than a single-family home or condo. You might have many more responsibilities as far as being a landlord, as well.
“Single-family homes are the most popular,” says Bruce Ailion, an attorney and Realtor with RE/MAX Town and Country in Georgia. “Some areas have a tradition of two- to four-family homes, while others do not. Multifamily properties of less than 100 units tend to be owned by individual owners or owner groups. Apartments over 100 units tend to be owned by institutions and professional real estate investors, and retail office and warehouse spaces tend to attract higher-income and more sophisticated investors.”
Consider the full financial commitment
How much money do you have on hand to make a down payment, or potentially pay for the home in full? Calculate your approximate return on investment (ROI) before you purchase a property. Estimate how much income you’ll get from the property and what your expenses will be. Subtract your expenses from your income to find your net operating income. A rental property’s expenses generally include:
Rental property insurance: Varies based on location; about 25 percent higher than standard homeowners insurance
Rental property taxes: Varies based on location; the average nationally for a single-family home was $3,785 in 2021, according to ATTOM
Utilities: Includes electric, gas, heating and water, some of which tenants might pay, but you’ll be on the hook for during vacant periods
Home maintenance and repairs: Varies; the average nationally was $3,018 for maintenance and $2,321 for “emergency spending” in 2021, according to Angi
Advertising costs: Includes real estate agent commission, typically 5 percent to 6 percent of the property’s purchase price; or vacation rental site service fees, typically 3 percent to 5 percent based on rent amount
Property management and other fees: Includes property management setup, management and maintenance fees, as well as tenant screening, eviction or other expenses; property managers typically charge between 6 percent and 10 percent of the rent for ongoing service, says Ailion
HOA fees (if applicable): Averages several hundred dollars
Rental income taxes: “Income taxes must be paid for all money made on the property,” says Ellingford. “Of course, everyone thinks of the monthly rent; however, income also includes any other money you collect, such as late fees, pet fees or even work by the tenant in lieu of rent.”
Keep in mind, while you’ll need to report all of your rental income to the IRS, you can typically deduct most or all of your expenses, along with depreciation and mortgage interest. Review IRS Publication 527 or consult with a trusted tax professional for more specifics pertaining to your rental property situation.
Understand differences between investment properties and second homes
A second or vacation home is different in many ways from an investment or rental property, and not just because of how it’s used. For one, your mortgage interest rate will likely be higher for a rental property because it’s not your primary residence, meaning the lender is taking on more risk. With mortgage rates going up, it’ll cost even more than it would have say last year.
Know the laws
Do you know what to do when your tenants won’t pay up? For example, certain states require a grace period when your tenant is behind on rent. In other words, you can’t evict a tenant until the grace period is over, but you can still charge late fees. Know the laws in your state before you rent out your property, including what constitutes a compliant lease agreement (including security deposit requirements), discriminatory practices and tenants’ right to privacy.
Determine your vacancy plan
You’re not always going to be able to rent out your property. You might have trouble finding renters, have to rip up carpet and patch drywall or provide a rent-free place for a family member to temporarily stay. There could be any number of reasons why income from your rental property might dry up. How will that impact your financial situation, and how will you cope?
Financing your rental property
A mortgage for a rental property isn’t the same as a home loan for a primary residence, or even a second or vacation home. Keep the following in mind:
Make a sizable down payment: You’ll typically need to put down at least 20 percent for a rental property, but if you want to look more attractive to a mortgage lender, you might want to put down more than that.
Be a strong borrower: You’ll also need a credit score of at least 640 and a debt-to-income (DTI) ratio of no more than 45 percent, based on Fannie Mae standards. The DTI ratio is your monthly debt payments divided by gross monthly income. (Need to improve your credit score? Learn some tips.)
Go outside of big banks: Big banks might not readily loan to you compared to a small bank, or offer you as desirable of loan terms. Compare options from both big and small banks, including community lenders, to find the best combination of rate, fees and customer service. It might help if you already have a relationship with the bank or lender.
Ask for owner financing: Owner financing means that the seller agrees to accept payments directly from you instead of requiring you to get a mortgage. This can benefit both you and the seller, but there are risks involved, so tread carefully; this arrangement isn’t for everyone.
Bottom line
A rental property could be a sound investment, particularly if the rent you collect offers you some extra income. Weigh all the aspects of purchasing a rental home, including financial implications, taxes you’ll have to pay, laws involved and how much extra time you have on your hands.
Tuesday’s new home sales report missed expectations and had negative revisions, which isn’t surprising given this sector of our economy simply can’t handle higher mortgage rates. The housing market is in a recession, something that the homebuilders and the National Association of Realtors now agree with me on, as this recent CNBC clip shows.
This means that the builders are done building new single-family homes until they make sure they can get rid of their 10.9 months of supply in an orderly manner. That could happen if lower rates spur more demand, but today the 10-year yield is still at 3%. So for now, the builders will take their time with the homes under construction and make sure they offer enough incentives to unload the new home supply they’re dealing with.
From Census: Sales of new single‐family houses in July 2022 were at a seasonally adjusted annual rate of 511,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 12.6 percent (±16.9 percent)* below the revised June rate of 585,000 and 29.6 percent (±10.9 percent) below the July 2021 estimate of 726,000.
Over the years, I have tried to emphasize that the housing market in the U.S. can’t have a credit sales boom like we saw from 2002-2005. This means we won’t be working from record-breaking demand of high sales like we did at the peak of 2005. After all, sales levels are already low historically for new homes. Tuesday’s new home sales report shows only 511,000 new homes sold. This is below the recession levels of 2000 and back to 1996 levels.
The builders are in a better position to manage their inventory glut than when they were working from a credit boom in 2005 that took new home sales up to 1.4 million, with a significant overproduction of single-family homes in relationship to the natural demand curve of new home sales.
After the peak in 2005, new home sales fell by 82% from peak to bottom and then had the weakest housing recovery in the next expansion. We had missed sales estimates in 2013, 2014 and 2015. Also, we had a supply spike in 2018, which caused builders to pause construction — and that was with rates only getting toward 5%. Today, rates near 6% are simply too high for the product they sell to the public.
From Census:The seasonally‐adjusted estimate of new houses for sale at the end of July was 464,000. This represents a supply of 10.9 months at the current sales rate.
You read that right: 10.9 months! We are almost back to the monthly supply level at the peak of the housing bubble crash! Does this mean massive supply will be coming to the market any second now?
Nope, it’s a different story this time around. First, we haven’t had the same housing supply production as the run-up in the housing bubble years, primarily driven by single-family housing. This time, we have less production of homes and more multifamily construction.
Also, because housing completion data has been so bad in the past few years, it’s taking forever to finish these homes. This means we have a lot of homes under construction or that have not even started. The numbers are historic.
1.06months of supply are finished products
7.33months of supply are under construction
2.51 months of supply hasn’t even been started yet
My rule of thumb for anticipating builder behavior is based on the three-month average of supply:
When supply is 4.3 months and below, this is an excellent market for the builders.
When supply is 4.4 to 6.4 months, this is just an OK market for the builders. They will build as long as new home sales are growing.
The builders will pull back on construction when the supply is 6.5 months and above.
The housing construction cycle is over, but the builders will finish their homes under contract and hope rates will fall soon to lock up buyers. Then they will deal with building more single-family homes, and if rates stay high, it will be interesting to see what occurs. If rates fall back toward 4%, the housing landscape will change.
From Census: The median sales price of new houses sold in July 2022 was $439,400. The average sales price was $546,800.
With housing post-2020, home sellers and homebuilders had a lot of pricing power and pushed it on the consumer because they could. This was much different from the previous expansion.
Now the trick for the builders is figuring out how much they need to discount to get buyers to buy the homes under construction. It’s more complicated with mortgage rates near 6% than with mortgage rates near 4%. However, this is on them — they had pricing power, and just like home sellers in America, they pushed it to make a lot of money in the short run.
The aftermath of higher rates is that homebuilder confidence in selling homes to make money has collapsed. When I raised my fifth recession red flag in June tied to housing, it was before the big collapse in the home builder sentiment.
As you can see below, this confidence index took a waterfall dive recently, which shouldn’t be too surprising considering how fast rates rose on the builders.
All in all, not a shocking report. This year, the housing market entered a recession tied to more traditional recessionary realities. Home sales are falling, production is falling and incomes in the sector are falling. We have seen job losses in the mortgage and real estate sector, but not in the construction labor sector yet, as they need to finish up many homes in construction and those they haven’t started.
This is much different than the credit leverage boom and bust of housing in 2005, but it’s still a housing recession.
We’re covering this important topic at our HousingWire Annual event Oct. 3-5 where Logan is a featured speaker. Register here to join us in Scottsdale, Arizona.
Save more, spend smarter, and make your money go further
So far in our home buying series, we’ve covered some of the basics that you need to know if you want to buy a home. In Chapter 2, we went over important resources for first time home buyers. In this third chapter, we’ll go over the basics of how to save for a house.
Buying a home can be a long and arduous journey, but having a stable place to live that’s all yours will make it all worth it. But before you can make an offer on a house, you need to learn how to start saving for a house.
When you buy a home, you’re making an investment in yourself and your future. You’re building financial stability, equity, and experience. You have a place to call your own and you can customize the space just how you want. Yet, you might be wondering how to get to that point
This is why saving up is so important.
There are some upfront costs to owning a home—primarily making a down payment. Find out how much you should budget using a home loan affordability calculator and figure out how to save the amount you need. After all, the best way to save for a house is to formulate a budget that helps you work towards your saving goals step by step. Soon enough, you’ll be turning the key and stepping into a home you love.
Step 1: Calculate Your Down Payment and Timeline
When figuring out how to save for a house, you may already have a savings goal and deadline in mind. For instance, you may want to save 20 percent of your home jumbo loan cost by the end of the year. If you haven’t given this much thought, sit down and crunch the numbers. Ask yourself the following questions:
What is your ideal home cost?
What percentage would you like to contribute as a down payment?
What are your ideal monthly payments?
When would you like to purchase your home?
How long would you like your mortgage term to be?
Asking yourself these questions will reveal a realistic budget, timeline, and savings goal to work towards. For instance, say you want to buy a $250,000 house with a 20 percent down payment at a 30-year loan term length. You would need to save $50,000 as a down payment and, at a 3.5 percent interest rate, your monthly payments would come out to be $898.
How much you need to save also depends on the type of loan that you use to purchase your home. For example, conventional loans and FHA loans require you to make a down payment, but some government sponsored loans do not. Before you can buy a house, it’s important to educate yourself on the differences between FHA vs. conventional loans. FHA loan requirements are different from conventional loan requirements, so you need to figure out which is a better option for you.
Step 2: Budget for the Extra Expenses
Just like a new rental, your home will have fees, taxes, and utilities that need to be budgeted for. Homeowners insurance, closing costs, and property taxes are a few examples of cash expenses. Not to mention the cost of utilities, repairs, renovation work, and furniture. Here are a few more expenses you may have to save for:
Appraisal costs: Appraisals assess the home’s value and are usually ordered by your mortgage lender. They can cost anywhere from $312 to $405 for a single-family home.
Home inspection: A home inspection typically costs $279 to $399 for a single-family home. Prices vary depending on what you need inspected and how thorough you want the report to be. For instance, if you want an expert to look at your foundation, there will likely be an additional cost.
Realtor fees: In some states, the realtor fee is 5.45 percent of the home’s purchase price. Depending on the market, the seller might pay for your realtor fee. In other places, it might be more common to contract a lawyer to look over your purchase agreement, which is usually cheaper than a realtor.
Closing costs: Closing costs are typically about 3% to 6% of the house’s price. Some closing costs may be negotiable with the seller but others will fall solely on your shoulders as the buyer.
Step 3: Maximize Your Savings Contributions
Saving for a new home is easier said than done. To stay on track, consider creating a savings account that has a high yield if possible. Then, check in on your monthly savings goal to set up automatic contributions. By setting up automatic savings payments, you may treat this payment as a regular monthly expense.
In addition to saving more, spend less. Evaluate your budget to see what areas you could cut down or live without. For instance, creating your own workout studio at home could save you $200 a month on a gym class membership.
Step 4: Work Hard for a Raise
One of the simplest ways to boost your savings is to increase your earnings. If you already have a job you love, put in the extra time and effort to earn a raise. Learning new skills by attending in-person or virtual training seminars or learning a new language could increase your earning potential. Not only could you land a raise, but you could add these skills to your resume.
Sometimes, putting in the extra effort doesn’t always land you a raise, and that’s okay! When getting a raise is out of the question, consider looking at other opportunities. Figure out which industry suits you and your skillset and start applying. You may end up finding your dream job, along with your desired pay.
Step 5: Create More Streams of Income
Establishing different income streams could help your house savings budget. If one source of income unexpectedly goes dry, having other sources to cut the slack is helpful. You won’t have to worry about the sudden income change when paying your monthly mortgage.
For example, creating an online course as a passive income project may earn you only $5 this month. As traffic picks up, your monthly earnings from this project could surpass your regular monthly income. To create an abundant financial portfolio, there are a few different steps you can take:
Create an online course: Write about something you’re passionate about and share your skills online. Sell your digital products on Etsy or Shopify to earn supplemental income.
Grow a YouTube channel: Start a YouTube channel and share your skills to help others within your industry of expertise. For instance, “How to start a YouTube channel” could be its own hit.
Explore low-risk investments: From CD’s to money market funds, there are a few types of investments that could grow your cash with minimal risk.
Step 6: Pay Off Your Biggest Debts
Another way that you can start saving for a home is by paying off your debts. Before taking on more debt like a mortgage, it’s important to free up your credit usage. Credit utilization is the percentage of available credit you have open compared to what you have used. If you have $200 in debt, but $1,000 available on your credit card, you’re only using 20 percent of your credit utilization.
A higher credit utilization could potentially hinder your credit score over time. Not only can paying off debt feel satisfying, but it could also increase your credit score and prepare you for this next big purchase.
To pay off your debts, create an action plan. Write out all your debt accounts, how much you still owe, and their payment due dates. From there, consider increasing your payments on your smallest debt. Once you pay off your smallest debt in full, you may feel more motivated to pay off your next debt account.
Keep up with these good habits as you take on your mortgage account.
Another factor that mortgage lenders will look at when determining your eligibility for a loan is your debt-to-income ratio. Your debt-to-income ratio measures your gross monthly income compared to your total monthly debt payments. This number will affect how lenders determine how much house you can afford because it will tell them whether you have enough income to cover your new mortgage payments and any existing debts.
So before you consider buying a home, make sure you calculate your debt-to-income ratio.
In addition to your debt-to-income ratio, lenders will also look at your residential mortgage credit report, which is a comprehensive study of all your credit reports. You should look at your credit report before you apply for a mortgage so you can figure out if you need to increase your credit score.
Step 7: Don’t Be Afraid to Ask for Help
Whether you’re touring homes or want help adjusting your budget, don’t hesitate to ask for help. If you’re trying to figure out what your budget should look like, research budgeting apps like Mint to build a successful financial plan.
If you’re curious about additional mortgage expenses, your budget, or investment opportunities, reach out to a trusted professional or utilize government resources. Not only are they able to help you prepare for your next big step, but they could also help you and your finances in the long term.
Getting help, whether it’s from a realtor or a financial professional, can help you secure your dream home at a price you’re comfortable with. Realtors can help with everything from finding you a home to negotiating the price of the home, so don’t be afraid to ask for help. You probably need it more than you think.
Saving for a house can be an intimidating process, so you also shouldn’t be afraid to ask questions. There are many important questions to ask your mortgage lender, like the difference between pre-qualified and pre-approved or the credit score you need to buy a house. Asking the right questions could end up saving you thousands of dollars with your mortgage, so go ahead and ask away.
Step 8: Store Your Savings in a High Yield Saving Account
While you may have a perfect budget and a home savings goal, it’s time to make every dollar count. Before you add to your account, research different savings accounts and their monthly yields. The higher the yield, the more your savings could grow as long as your account is open.
Also consider the effects of inflation on home prices, home appreciation, and interest rates. As inflation rises, so do home prices. This means it’s even more important to have a sufficient amount of money saved up so you can manage a bigger down payment and pay less in interest over time.
In Summary: Set Your Goals and Get Started
When saving for a house, you may want to consider having a plan in place. By following the above tips for saving for a house, you can be more prepared to buy your dream home. To summarize, here are some of the key elements to remember when it comes to saving for a home:
First, set a savings goal to match your estimated down payment and mortgage monthly payments. Then consider adding your contributions to a high yield savings account to grow your money over time.
Don’t forget to budget for extra mortgage expenses like appraisal costs, home inspections, realtor fees, or closing costs. Keep in mind, your monthly utilities and fees may also be more expensive than your current living situation.
Prepare for the additional costs by increasing your earning potential and optimizing additional income stream opportunities.
Free up your credit utilization by paying off as much debt as possible before buying a house. Keep up these good habits throughout the length of your mortgage term.
When you purchase a home, you’re building a piggy bank for your future. Every month you pay your mortgage, you pay part of it to yourself because you own the home. Instead of paying rent to someone else, you reap your own investment when you sell. Most importantly, though, you’ll have a place that’s truly your own.
So now that we’ve covered various tips for saving for a house, you hopefully feel more prepared going into your home buying journey. In this series, we’ll be going over first time home buying resources, steps to buying a house, and more. If you’re interested in learning more about the home buying process, continue reading on to Chapter 4 in the series, which covers what credit score is needed to buy a house.
Save more, spend smarter, and make your money go further
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Those new mortgage fees you’ve probably heard about are causing quite a stir.
So much so that Pennsylvania State Treasurer Stacy Garrity sent a letter to the FHFA and President Joe Biden today pleading for their elimination.
And the letter is backed by another 32 fiscal officers from 26 other states, all of whom oppose the new mortgage pricing.
In a nutshell, they believe it’s unfair that high-FICO score borrowers are essentially subsidizing low-FICO score borrowers by having to pay more than they used to.
It’s a big deal because the new pricing applies to mortgages backed by Fannie Mae and Freddie Mac, which account for about 60% of the residential mortgage market.
First Some Background on Fannie, Freddie, and the FHFA
As noted, Fannie Mae and Freddie Mac back the majority of mortgages that exist today. They are easily the most common type of home loan available.
Such loans are known as conforming mortgages because they adhere to the underwriting guidelines of Fannie or Freddie.
They are overseen by the Federal Housing Finance Agency (FHFA), which only came into existence in 2008.
Since then, the pair have been in conservatorship (thanks to the massive housing crisis) and are essentially quasi-government entities.
One of the FHFA’s jobs is to set a single-family pricing framework for mortgages backed by Fannie and Freddie.
All conforming mortgages, other than some low-income options like HomeReady, are subject to loan-level price adjustments, known as LLPAs.
These fees are charged for things like credit score, loan-to-value ratio, occupancy type, property type, and so on.
In short, the FHFA applies risk-based pricing to the loans it purchases and securitizes.
These fees allow it to operate soundly and serve its mission of promoting homeownership, by among other things, providing low interest rates to American home buyers.
At issue is the new pricing structure, which seems to punish those with higher FICO scores while providing a discount to those with lower FICO scores.
And the updated fees are essentially already in effect because they apply to deliveries and acquisitions beginning May 1st, 2023.
FHFA Director Thompson Defends the New Pricing
Last week, FHFA Director Sandra L. Thompson released a statement defending the changes, noting that the agency “is first and foremost a safety and soundness regulator.”
And that “the updated pricing framework will further the safety and soundness of the Enterprises, which will help them better achieve their mission.”
That mission is to support affordable housing for all Americans and “provide reliable liquidity to the market,” including borrowers who are limited by income or wealth.
Thompson added that their new pricing framework “is more accurately aligned to the expected financial performance and risks of the loans they back.”
And it hadn’t been updated in many years prior to a comprehensive review that began in 2021.
That led to “targeted fee increases” for loans on second homes and for high-balance loans, and eventually to cash out refinances.
These types of loans aren’t geared toward the underserved, so the idea was to eliminate any unnecessary pricing incentives.
No one was thrilled about that, but seemed to take it in stride. The bigger problem now is that the latest pricing changes affect virtually all homeowners.
Why Opponents Don’t Like the New Mortgage Fees
Simply put, the new pricing matrix charges some high-FICO score borrowers more than it used to. And charges some low-FICO score borrowers less than it used to.
For example, an applicant with a 740 FICO and 20% down payment used to get hit with a fee of 0.50%.
Going forward, they are being charged 0.875%. This is a difference of 0.375%, or $1,875 on a $500,000 loan amount.
That could result in higher closing costs or a slightly higher mortgage rate, say .125% higher.
So 6.625% instead of 6.50% on a 30-year fixed, or perhaps more money due at closing.
Meanwhile, a 660 FICO score borrower used to be charged 2.75% when putting down 20%.
Now, they’ll only be charged 1.875%, a 0.875% discount relative to the old pricing.
That has led to a lot of anger and finger pointing, and the argument that irresponsible borrowers are getting a break, a “handout” even, while those who have traditionally good credit get punished.
But Thompson argued that folks “mistakenly assume that the prior pricing framework was somehow perfectly calibrated to risk – despite many years passing since that framework was reviewed comprehensively.”
She added that the new “fees associated with a borrower’s credit score and down payment will now be better aligned with the expected long-term financial performance of those mortgages relative to their risks.”
Put another way, it’s possible that high-FICO score borrowers weren’t being charged enough, while the mid-tier FICO score borrowers were being charged too much.
Whether true or not, it seems this is the new pricing structure and everyone will have to live with it.
For the record, pricing actually improved for those with 780+ FICO scores. So if you want to avoid getting punished, and actually save money, you’ll need excellent credit.
And there’s no incentive for having a lower credit score – the new pricing merely shrinks the gap between high and low credit scores.
In other words, you’ll still pay more for a 640 FICO score than a 740 score, just not as much.
I doubt this letter will change anything, especially since they didn’t offer a clear alternative or solution, instead simply referring to the new policy as a “disaster.”
Many people have dreams of living in a high-rise apartment in a bustling city, while others want a quiet life, unbothered by anything besides nature. But big city living and secluded country towns aren’t our only options. There’s a happy medium that’s quieter than the city, but more developed than the rural countryside — that’s where suburban neighborhoods come in.
The suburbs are often thought of as quiet, boring areas full of families with small children. While these areas are often filled with families, they aren’t always as uneventful and bland as you might think. Here’s what you should know about suburban neighborhoods and the life suburban residents live.
Suburban defined: What exactly is a suburb?
A suburban area is a cluster of properties, primarily residential, that are not densely compacted, yet located very near an urban area that is. Also referred to as “suburbs,” these areas are often located just outside of larger metro areas but can span even further, according to Pew Research Center.
Suburbs are not urban but still do not have any of the defining characteristics of a rural area like agriculture or open space. Suburban areas portrayed in popular culture often are familial and slow-paced.
The suburbs can suit everyone
Suburban areas are commonly associated with families, and not single people or young couples. However, this common association is really a misconception.
Especially with recent events leading to remote work environments, many young, single professionals are working from home. This has made living in a more mellow area in a spacious home more attractive since there’s room for a separate home office space —much more comfortable than working in a cramped, expensive apartment in the city.
Furthermore, as housing prices in urban areas skyrocket, younger folks are becoming unwilling or unable to pay rent. As a result, they’re moving out of the city and into more suburban areas.
What’s the difference between a suburban and an urban neighborhood?
It sometimes is difficult to distinguish what is a suburban neighborhood vs. an urban one or a rural area. In fact, depending on which definition you choose, the lines can blur. Suburban and urban neighborhoods differ in several key aspects.
Suburban neighborhoods are typically characterized by lower population density and a more spread-out layout. They often offer a quieter and more relaxed atmosphere with a focus on privacy and spaciousness. Suburbs tend to have more green spaces, parks and recreational areas.
On the other hand, urban neighborhoods are known for their high population density and compact living spaces. They offer a vibrant and bustling environment with close proximity to amenities, such as restaurants, theaters and museums.
Suburban neighborhoods
Suburban neighborhoods are typically located within a reasonable commute of an urban area. While they aren’t as densely populated as urban neighborhoods, they do have a fairly large population, although it’s more spread out over areas of single-family homes, rather than stacked-up apartment buildings.
Suburbs are primarily residential areas, although expect some commercial properties and businesses present. Housing is more affordable than in the main city centers and you’ll find larger homes with their own private yards, rather than smaller apartments or condos.
There aren’t as many amenities, such as restaurants or large shopping centers. However, there are grocery stores and usually a few restaurants and additional stores to provide for residents’ needs.
Urban neighborhoods
Urban neighborhoods are in the middle of all the action. They’re in the busy, downtown areas of a larger metro. With the location typically comes apartments and condos, rather than homes with their own yards.
Urban city centers are full of office buildings and commercial businesses. They also have lots of restaurants, shopping and entertainment options within close distance.
But being at the center of it all comes with a price — the cost of living is higher overall, with everything from rent to groceries costing more. Urban areas provide easy access to ample public transportation, which is almost necessary as owning a car is expensive since parking is often paid and spots often are far and few between.
Pros of living in a suburban neighborhood
Living in the suburbs has its benefits and many families choose to reside in such areas for various reasons.
Lower cost of living than in urban areas
Larger homes with bigger yards
Less crowded
Quieter and slower-paced environment
Many suburban areas cater to families specifically and will even have many parks and hiking trails surrounding them. Even if you don’t have a larger family with children, but you enjoy the outdoors or have a dog that likes to play outside, the suburbs better provide the amenities you’ll want.
Cons of living in a suburban neighborhood
While there are many pros to living in a suburban neighborhood, it does lack in some areas.
Less robust public transportation
A little uneventful at times
Fewer jobs available in the area (higher job competition)
Need to travel further for work and entertainment (restaurants, shopping, etc.)
With recent technology, some of these cons aren’t as applicable as they once were. Commuting to work is a major pain point for many living in the suburbs, but with so many companies becoming remote-first, it has eliminated that con for some.
Is suburban living right for you?
Living in the ‘burbs isn’t for everyone — but it is perfect for many folks who crave comfort and convenience. If you enjoy peace and quiet, want to live in a house instead of an apartment and don’t mind commuting to the office (which isn’t an issue if you work remotely), then a suburban neighborhood is a place for you. Find the right place for you today!