trends
Here Are the States That Americans Are Fleeing the Fastestâand Why
The pandemic hasn’t stopped fed-up Americans from fleeing colder, more expensive parts of the country and moving to warmer, cheaper locales.
The post Here Are the States That Americans Are Fleeing the Fastestâand Why appeared first on Real Estate News & Insights | realtor.com®.
Buying Your First House? 7 Tips for Millennials and Other Generations
Buying your first house is a big decision. Not only is it a major financial investment, but the location of your home determines your community, neighbors, and perhaps where your children go to school. Becoming a homeowner isn’t for everyone—but if it is one of your financial goals, I recommend that you begin preparing as far in advance as possible.
In this post, you’ll learn 7 key home-buying tips to get prepared, save money, and become a happy homeowner. Plus, I’ll cover some generational trends and challenges that Millennials, Gen Xers, Baby Boomers, and the Silent Gen may face when buying a home.
7 Tips for Buying Your First House
- Know when to stop renting.
- Focus on building credit.
- Check into first-time home buyer programs.
- Estimate how much down payment money you’ll need.
- Save your down payment in the right place.
- Get preapproved for a mortgage.
- Be a savvy negotiator.
Generational Trends for Buying a Home
According to a National Association of Realtors study, 36% of home buyers are Millennials or Gen Y, who are age 37 or younger. And 65% of these buyers are first-timers who are also married couples. They’re increasingly buying single-family homes in the suburbs.
Gen X buyers, who range in age from 38 to 52, make up 26% of home buyers. The NAR report shows they are ethnically diverse, in their peak earning years, and purchase more expensive homes compared to other generations. They’re the most likely to choose homes based on convenience to work and the quality of school districts.
Younger Boomers from age 53 to 62 make up 18% of home buyers. They typically move for a job or to downsize after their kids leave home. Older Boomers in the 63 to 71 age range make up 14% of home buyers. They’re more likely to move the longest distances for retirement, to downsize, or to be closer to family and friends.
Those age 72 to 92 are part of The Silent Generation and make up just 6% of home buyers. Most have already retired and have the lowest income compared to other age groups. They’re more likely to purchase a residence in a senior-care facility than a detached home.
The process of buying a home is largely the same no matter your age. But keep reading for tips to overcome some generational challenges you may face and how to get the best home deal possible.
Tip #1: Know When to Stop Renting
Most of us start out renting because it doesn’t require a big upfront financial investment. But the downside to renting is that your monthly payments are a pure expense. In other words, once you pay rent, that money is gone forever.
When you own a home, it comes with some nice financial perks, including:
- Amortization, which slowly reduces your outstanding loan balance with every mortgage payment you make (if you have a fixed-rate mortgage) and helps build equity in your home.
- Appreciation, which allows you to build equity as the market value of your home rises over time.
- Tax deductions for mortgage interest and property taxes. You can deduct interest on up to $750,000 of mortgage debt on a primary or secondary home. Plus, you can claim a maximum of $10,000 per year for state and local taxes (SALT), which includes property taxes.
Additionally, when you own a home, you can have the lifestyle you want, spread out, and express your personal style.
But depending on where you live, renting may be more affordable than owning a comparable home. This is usually the case in big cities, such as New York and San Francisco.
Renting also comes with a convenient lifestyle, especially if you don’t like dealing with maintenance, doing yard work, or you travel frequently. So, no matter your age, knowing if you should buy a home really depends on:
- Where you want to live.
- The lifestyle you prefer.
- How stable your future income is likely to be.
Tip #2: Focus on Building Credit
For the vast majority of home buyers, you’ll need to qualify for a home mortgage to purchase property. Building credit is always important, but it’s critical before buying a home. Whether you’re a first-timer or a seasoned homeowner, your credit is a primary factor that mortgage lenders consider when evaluating you.
Not only does repairing and building credit help you get approved for a mortgage in the first place, it’s the key to locking in a low interest rate that saves huge amounts of money over the life of your loan.
For example, if you get a $200,000 fixed-rate mortgage with excellent credit, you’ll pay about $145,000 in interest with a 30-year loan. But if you have average credit, you’ll pay close to $190,000 in interest for the same loan.
Having less-than-stellar credit costs you $45,000 just in interest. Even if you sell your home before paying off the mortgage, having excellent credit translates into a monthly payment that’s $125 less than if you have average credit.
If you invested $125 per month for retirement, instead of paying it to a mortgage lender, it could easily grow into a nest egg worth over $200,000 within 30 years. Small financial habits, like how you handle credit, really add up. Read 6 Steps to Build or Repair Your Credit Before Buying a Home for key strategies to follow ahead of your home loan application.
Building credit takes time, and Millennial home buyers may have a short credit history or more student loan debt, compared to Gen X and Baby Boomers. That means Millennials should review their credit reports and make financial adjustments earlier in the home-buying process than older buyers.
Tip #3: Check Out First-Time Homebuyer Programs
There are many great programs for first-time homebuyers that may include mortgage interest subsidies or down payment assistance. But did you know that even if you owned a home in the past, you may still be eligible?
Many first-time homebuyer programs define a first-timer as someone who has not owned real estate in the past three years.
Many first-time homebuyer programs define a first-timer as someone who has not owned real estate in the past three years. So be sure to investigate and ask your mortgage lender how these programs could save you money, no matter your age or even if you owned a home in the past.
The U.S. Department of Housing and Urban Development (HUD) and one of its agencies, called the Federal Housing Administration (FHA), have helped more than 30 million people become homeowners since 1934.
These agencies don’t make loans, but they insure loans. That means lenders that give them will get paid even if the borrowers don’t make loan payments. This encourages lenders to give mortgages to hopeful homebuyers who might not qualify otherwise.
With an FHA loan, you don’t need excellent credit or a high down payment to qualify. The loan limits for a single-family home vary throughout the country but typically range from the low $100,000s to just over $200,000.
Ask your lender for details about FHA programs for first-time buyers. Or contact a HUD housing counselor for free or low-cost advice about your options.
Tip #4: Estimate How Much Down Payment Money You’ll Need
Before you can qualify for a mortgage, you’ll need to prove to a potential lender that you have enough in savings to fund a down payment. It’s a one-time cash payment you pay at the home's closing.
You must make a down payment because home lenders generally won’t finance 100% of the purchase price. The bigger the down payment you can make, the less risky the loan is for the lender.
When you make a purchase offer on a home you can request that the seller pay some or all of your closing costs.
Plus, there are closing costs in addition to a home’s purchase price. These costs vary depending on where you buy a home. But remember that in real estate, everything is negotiable.
When you make an offer on a home, you can request that the seller pay some or all of your closing costs. You can also haggle with your mortgage lender not to charge certain upfront fees.
If you do negotiate with a lender to avoid fees, just make sure that it doesn’t cost you more in the long run. They can make up for fees by charging you a higher interest rate or including fees in the total amount of the loan, which means you’d end up paying interest on your closing costs.
The money for a down payment can come from your savings or gifts from family. If you’re already a homeowner, your down payment can come from the money you make when you sell your current home.
If you can make a 20% down payment on a home, you’ll avoid paying private mortgage insurance or PMI. PMI is s a special kind of insurance that lenders typically require you to pay when you borrow more than 80% of the value of a property, even if you have excellent credit.
So, exactly how much down payment you’ll need is difficult to pin down. It depends on the price of the home, the type of mortgage you get, and customary closing costs in the market. In general, you need enough cash to cover these main costs:
- Earnest money is the good faith deposit you make on a home when you submit an offer. The customary amount varies by market but might range from 1% to 3% of the offer price. If your offer is accepted, the funds are applied toward your closing costs. If not, your earnest money is returned to you.â¨
- A down payment is the percentage of the home price that you must pay at closing. The more you put down, the lower your mortgage payments will be. Some loans require you pay 10% to 20% of the purchase price. Other loans designed for first-time home buyers, such as an FHA loan, may only require 3% down.â¨
- Closing costs are fees you must pay at the settlement or closing. They typically include the loan origination fee, appraisal, survey, inspections, attorney fees, taxes, title insurance, and any other processing expenses. You should receive an estimate of your total closing costs from your lender, so you aren’t caught by surprise.
Tip #5: Save Your Down Payment in the Right Place
Once you begin saving money for a house down payment, you’ll probably get a little anxious about where to keep it. You might be tempted to invest it with the hope of turbocharging its growth.
But financial markets are volatile in the short term, which means you could lose all or a significant portion of your money right before you need it. Instead, tuck your down payment savings in a high-yield, FDIC-insured savings account.
That ensures your money will be completely safe, give you flexibility, and earn some interest to boot. Online banks typically offer the highest interest rates because they don’t have as much overhead as institutions with local branches. However, local credit unions can be competitive—if you qualify for membership.
Tip #6: Get Pre-Approved for a Mortgage
Once you’re ready to become a homeowner, have good credit, and plenty of down payment funds, the next step is to get preapproved for a mortgage. Not only does a pre-approval tell you how much you can afford, it indicates that you’re a serious buyer who could close the deal quickly.
Depending on the seller’s circumstances, being able to close quickly could give you a huge leg up. They may accept your offer instead of a higher one that would take longer to close.
But remember that just because you’re pre-approved for a certain amount doesn’t mean you should borrow it. You’ll have other costs every month, in addition to the mortgage payment. These are called the PITI, which stands for principal, interest, taxes, and insurance:
- Principal is the repayment of the amount you borrowed.
- Mortgage interest is the payment to the lender for the use of the money you borrowed.
- Home insurance protects you and the lender against damage from many (but not all) natural disasters, theft, vandalism, and legal hazards.
- Property taxes are annual city and county assessments.
Taxes and insurance can be rolled into your mortgage payment and then paid by your lender on your behalf. Additionally, you’ll have to pay utilities, maintenance, and perhaps homeowner association dues.
Don’t make the mistake of stretching your finances too far to buy a home. It may leave you house-rich but cash-poor and unable to save for other goals, such as retirement.
Tip #7: Be a Savvy Negotiator
When you make an offer on a home, use your poker face with the seller or real estate agents. As I’ve mentioned, in real estate everything is negotiable. So, be interested, but not too eager.
Most sellers expect you to negotiate on one or more factors of the deal such as purchase price, potential repairs, and closing costs. Always make a purchase offer contingent on the results of a professional home inspection, a C.L.U.E. home insurance claim report, and additional evaluations customary in your area, such as a termite report. Do your due diligence carefully.
Before the closing, you should receive the Settlement Statement, Form HUD-1 from the real estate agent, closing attorney, or title company. Review it carefully, ask questions about charges you don’t understand, and make any necessary changes.
The closing agent will have a stack of documents for you and the seller to sign. You can handle it in person or remotely through the mail. The mortgage and deed will be recorded in the county records registry and you’ll receive a copy of everything. And finally, you can celebrate becoming a homeowner.
It’s easy to get swept up in the beauty of a home, its décor, its neighborhood, or the new lifestyle that you envision there. But take a step back and view every real estate purchase as an investment, even if it’s going to be your home sweet home.
Get More Money Girl!
To connect on social media, you’ll find Money Girl on Facebook, Twitter, and Google+. Also, if you’re not already subscribed to the Money Girl podcast on Apple Podcasts or the Stitcher app, both are free and make sure that you’ll get each new weekly episode as soon as it’s published on the web. The show is also on the Spotify mobile app! Click here to sign up for the free Money Girl Newsletter!
Key house image courtesy of Shutterstock.
How much does it cost to drive? Driving cost calculators and tools
My girlfriend recently bought a new car. After 23 years, she sold her 1997 Honda Accord to a guy who’s more mechanically inclined than we are. Kim upgraded to a 2016 Toyota RAV4, and she loves it.
One of her primary considerations when searching for a new car was the cost to drive it. In her ideal world, she would have purchased a fully-electric vehicle but it just wasn’t in her budget. The RAV4 hybrid was a compromise. According to fueleconomy.gov, it gets an estimated 32 miles per gallon. (And actual users report 34.7 miles per gallon.)
Kim’s quest for a fuel-efficient car prompted me to revisit apps and online tools that help users track their driving and fuel habits. I’ve written about these in the past — and, in fact, this is an updated article from 2008! — but haven’t looked into them recently.
Here’s a quick look at some of my favorite driving cost calculators, tools, and apps.
5 Key Property Features When House Hunting
When shopping for a home, many of us know our basic focal points, such as identifying the right neighborhood or finding a house with the ideal number of bedrooms and bathrooms. These factors are important, but there are other home features (some very large and some very small) that can greatly contribute to the enjoyment of your new home. Let’s make sure you don’t miss any of them. Here are five opportunities to maximize the benefits of your purchase that go beyond just the house and why each one deserves your consideration. Home Buying Consideration #1: The Garage Garages are a very important feature for many homebuyers, and can even end up being a dealbreaker for some buyers. More than a parking spot, garages provide valuable storage and project space, as well as a way to protect your vehicles from all types of damage. When you are first shopping for a home, you may know that you want a garage, but you may not have considered all of the variables that go into the garage design, and which choice is right for you. Garage Design: Why it Matters When evaluating garage design, it’s important to start by considering what you may want to use the space for, and what external factors (such as weather) might impact your use. Here are several major garage design aspects to keep in mind as you house hunt. Rental space: Depending on the size and layout of your garage, is there space that could be rented out full time, or used as a short-term rental to generate additional income? That extra income could be directed towards your mortgage payment. Storage opportunities: Does the garage have room to store what you need to reduce in-home clutter? Is there space for shelves, or even room in the rafters? Potential property value increase: According to the sales comparison approach (SCA), one of the most recognizable forms of valuing residential real estate, a “finished” garage that feels like an extension of the home’s indoor living space is one of several features that can increase overall home value. You may also want to consider the possibilities of eventually remodeling a bland garage in an otherwise perfect home. Attached vs. Detached Garages: Pros vs. Cons One of the biggest distinctions in garage design is whether a garage is attached or detached. Often influenced by lot shape (narrow lots on an alley often have detached garages, wider lots with a driveway often have attached garages) or the age of a home, having a detached or attached garage has both advantages and disadvantages. Attached Garages: Pros Convenient access to your cars, storage, and other items, particularly if you live in an area with an extreme climate Attached garages are often less expensive to build, and can be climate controlled by accessing the electrical and HVAC systems that are part of the home As attached garages are the most popular type of garage, having one typically increases the value of your home Attached Garages: Cons If you’re thinking of adding one, it may not be possible to fit on a narrow, urban lot Since they offer direct access to the home, they can be a security and fire risk They can be hard to add onto or expand, and any additions or changes might require more expensive permits and extensive inspections Adding an attached garage, particularly to a vintage home, may look strange or otherwise detract from the exterior look of the home Noisy garage activities may be heard more inside the home Detached Garages: Pros More flexibility in size, layout and location, lot size and shape permitting It’s easier to add room for cars, storage, and projects, and to add onto if needed Less fire and security risk to your home Less of an impact to the look or curb appeal of your home Can increase the resale value of your home Detached Garages: Cons Particularly in bad weather, less convenient in terms of access Will require separate utilities, HVAC, and more May not be allowed by your HOA or city permitting office Now that we’ve examined the garage, let’s take a look at another key feature — what’s going on with the front and backyard? Home Buying Consideration #2: The Yard No longer limited to just a lawn, yards have now become an extension of the home. A convenient, well-designed outdoor living space is something that many homeowners desire. Yards can be great spaces for entertaining and are often much less expensive to create than comparable indoor entertaining spaces. Here are some important yard elements to consider. Trees and landscaping: Important for both aesthetic and practical reasons, trees and landscaping can increase your yard’s appeal. A mature, well-designed landscape is valuable, as it represents an investment of both time and money. Outdoor kitchen: Whether you are grilling for two or entertaining 200, an outdoor kitchen makes cooking fun and convenient. Fireplace or fire pit: This stylish focal point makes it easy to keep enjoying your yard, even after dark or in cooler weather. Automatic sprinklers, drip system, and misting system: Automatic sprinklers and drip systems can keep your yard looking lush for a low cost, and are particularly valuable in dry climates. Misting systems can also keep you cool on hot days. Deck or Patio: A stylish outdoor surface makes it easy to enjoy your yard, and many new construction materials require little to no maintenance. Shed: Well-designed sheds can go beyond storage, offering everything from a private workspace to extra space for guests to sleep. So, you’re considering the finer points of a yard. But what about adding a body of water to that yard for cooling off on hot days? Here’s the pros and cons of investing in a water element for your next home. Just starting your home search? Here’s the best time to begin. Home Buying Consideration #3: The Pool Pools and hot tubs are perhaps the most controversial of all outdoor home features. Some homebuyers totally avoid them, and some won’t look at a house without them. Which side are you on? Here are some factors to consider. Backyard Pool and Hot Tub: Pros Pools and hot tubs can be aesthetically pleasing Both are also useful for entertaining In warmer climates, pools can provide a way to enjoy the outdoors comfortably If you like to swim, engage in other aquatic exercises regularly for fitness, or use a hot tub for muscle and joint pain, having your own can be convenient In hot climates where pools are common (i.e., Arizona, California, Florida), having a pool can significantly increase the resale value of your home Backyard Pool and Hot Tub: Cons Both pools and hot tubs require regular maintenance that includes chemicals, cleaning, and repair Many families with small children do not want a pool at home due to safety concerns Your insurance cost may be higher, and your utility bills may go up as well, particularly for heating a pool When it is time to sell your home, there are many buyers who will not want a house with a pool A pool is a big decision that comes with both maintenance and benefits alike. You can always opt for a different kind of water feature, like a backyard stream. But if you’re looking to streamline your life, investing in home tech devices is almost a no-brainer. Home Buying Consideration #4: The Appliances and Tech Gadgets As technology improves and designs continually evolve, having up-to-date appliances and other devices in your home has become increasingly important. For example, while attractive kitchens are near the top of many house-hunters’ wish lists, there are items within those kitchens that can help — and items that can hurt — when it comes to increasing a home’s value. Appliances That Can Help Property Value Commercial-grade appliances: Particularly in high-end properties, many buyers expect to see appliances from luxury or professional brands. Smart devices: Thermostats, fire detectors, carbon monoxide detectors, security cameras, door locks, and doorbells are just a few of the relatively new smart home devices that homebuyers are now beginning to appreciate and even expect. Appliances That Can Hurt Property Value Old and energy inefficient: These power-sucking products will cost you in both your utility bill, and the resale value of your home. Homes totally lacking certain appliances: Is your property missing a dishwasher, indoor laundry, or other key features? This can be a major turn-off for buyers who don’t want to have to complete a complicated remodeling and installation project. Mismatched appliances: Appliances from different eras or in different colors can make your kitchen look unfinished and low-quality, even if your other finishes are fantastic. Looking to stock up on home amenities? We’ve targeted the seasonal best deals for doing so. Now that you’ve considered the key interior and exterior components of your dream home, there’s one last important element to contemplate: the driveway. Home Buying Consideration #5: The Driveway Walkways and driveways connect your home to the outside world and play a crucial role in the curb appeal of your residence. Although often overlooked, they are important home features that can be messy and expensive to replace or update. If you are evaluating the driveway at a potential home, or considering an update at your current home, the first choice you will need to make is whether you want asphalt or concrete. Both have benefits and drawbacks that may vary depending on your climate, landscape, and usage needs. Today, many homeowners and buyers are also looking for something beyond the basics, with driveway design trends including elaborate paving materials, irregular shapes, and additional features like extra parking for guests. Know the Tricks, Now Land the House Although these five features may not be your first considerations in the house-hunting process, they are important elements that you will use or interact with nearly every day. Add them to your consideration list, and you will be sure to end up in a customized home that you enjoy and treasure. If you’ve found your ideal home with all the right features, reach out to a PennyMac Loan Officer today or apply online to get pre-approved for the loan that’s right for you.
Mortgage and refinance rates today, January 19, 2021
Today’s mortgage and refinance rates Average mortgage rates had a good week last week with another small fall on Friday. They’re now 10 or 11 basis points (a basis point […]
MBS Day Ahead: Waiting On Stimulus Details, Shrugging Off Early Reports of $2 Trillion
Posted To: MBS Commentary
A few hours after markets closed yesterday, news began coming out regarding a Biden aide mentioning tonight's stimulus proposal would be in the $2 trillion neighborhood. That's quite a bit more than the $1.3 trillion that had been making the rounds a few hours prior (the same number was thrown around more than a month ago as well). Treasuries reacted to this overnight with a whopping sell-off of 3bps. This reflects the fact that markets have largely priced in some sort of $1.3+ trillion in additional spending/relief. We won't get a chance to any additional reaction until tomorrow's trading session, as Biden won't be speaking until after 7pm ET. It's another light day in terms of economic data, with Jobless Claims already out at 965k vs 795k forecast and 784k previously…(read more)
Rising Rents, Stagnant Wages, and the Burden of Unstable Housing
With rents rising and wages stagnant, affording rent can be an insurmountable burden.
Terrazzo flooring has stood the test of time, enduring for centuries as a durable and versatile surface.
To arrive in Venice for the first time is to be transported into a completely unique worldâa city of gothic buildings floating on water, where…
The post Terrazzo flooring has stood the test of time, enduring for centuries as a durable and versatile surface. first appeared on Century 21®.
Design Trends that Add Extra Flair to Your Fancy Home
After Celebrity Snoop Dogs launched on Channel 4 on June 26, our collective obsession with celebrity homes became even bigger. Thanks to a GoPro camera strapped to a celebâs beloved pooch, viewers are afforded a glimpse inside an A-Listerâs house. While some celebrity homes may be described in some circles as âunderstatedâ, others are unashamedly extravagant. […] More
The post Design Trends that Add Extra Flair to Your Fancy Home appeared first on Fancy Pants Homes.