This was an interesting item that I read on the Trulia Real Estate site.
There are lots of purchases that are highly prone to impulse buying: shoes on sale, puppies at the pound, and carrot cupcakes with cream cheese buttercream frosting come instantly to mind. (But that's just me.)But houses? Not so much. Savvy, regret-free homebuying can take weeks or months of financial and lifestyle research and planning. If you want 2011 to be the year you become a homeowner, here are 5 things you should be doing, as we speak.1. Minimize your holiday spending and save your cash. Instead of using the holiday sales to acquire a new winter wardrobe of cashmere sweaters, hold the discretionary spending down so you can give yourself the gift of homeownership! If you are serious about buying a home next year, don't run up additional credit card debt on gifts this year. Instead, make homemade cards or write holiday letters this year for everyone except the kiddos. And even for the kids, consider scaling back on the stuff, spending more of your time with them than your money, and getting started now saving toward your home purchase. (I don't think too many folks would argue that a less materialistic holiday season would hurt anyone, at any age.) Kickstart your 2011 homebuying resolution by starting a "Home" savings account at an high-interest, online bank (the discipline-boosting goal is a bank that isn't super easy to transfer funds out of when you run low on cash), and set up an automatic deposit into it every payday. To get specific about your savings goal, if you're cash-flush, obviously a 20% down payment will get you top notch interest rates and provide you with the maximum ability to manage your monthly payments. If you're going to be more of a bootstrapping buyer, an FHA loan might be right up your alley - they offer a down payment of 3.5% of the purchase price. All buyers should plan to have at least 3 percent of the purchase price saved up for closing costs, even if you want the seller to chip in. The lower-priced the home you want to buy, the more percentage points you should be willing to chip in for closing costs. It's easy for closing costs on an $150,000 FHA loan to run as high as $4,000 or more, considering transfer taxes, inspections, appraisals and mortgage insurance fees. So, even the scrappiest buyer should have a savings target somewhere around 6.5% of their target home's price. To buy a $200,000 home, for example, that would mean a savings target of $13,000. Local real estate and mortgage pros can help you clarify realistic "cash to close" expectations and savings targets for your area - ask them, on Trulia Voices.2. Research financing, areas homes, prices, agents and online. Smart homebuying takes a lot of research and knowledge-gathering. Since most buyers find it much harder to qualify for a mortgage than it is to find a home you'd love to live in, start with studying up on home financing and what it will take for you to get a home loan (note: FHA loans are preferred by the average homebuyer on today's market who has less than a 10% down payment, so start your research there). If you're considering relocating next year, now's the time to start narrowing down states, cities and even neighborhoods that may or may not work for you. Take into account the job market, housing and other costs of living, and income and property tax rates, as well as the critical lifestyle inputs that vary from state-to-state, like weather and whether the place is a personality fit for you and the life you want to live, be it urban sophisticate or outdoors adventurer. Also, start to develop a feel for home prices in a what-you-get-for-your-money type way, and start narrowing down the home styles and even neighborhoods that might fit your aesthetic preferences and lifestyle. If you're one of those rare buyers-to-be who is not already obsessively house hunting, hop on Trulia and start regularly checking out homes and neighborhoods, making sure to take advantage of the neighborhood ratings and reviews feature, which empowers you to surface what other folks think and say about an area. 3. Rehab your credit, if you need to. Go to AnnualCreditReport.com and check out your credit reports - from all 3 bureaus - for free. (Note - these will not give you your credit score for free - that costs extra, but it will give you the actual detailed credit reports.) Audit them for errors and do the work of disputing inaccuracies to have them corrected. Pay particular attention to: accounts that are not yours/you never opened, derogatory information that should have "aged off" your report by now (i.e., 7 years for late payments, 10 for bankruptcies) and balances or credit limits that are inaccurate (i.e., your credit card balance is listed at $2500, but you actually only owe $250.) These are the errors most likely to foul up your financing, so follow the instructions each bureau provides to correct them, stat. While you're at it, don't close any accounts, even if you are able to pay some down or off - actually, check out these tips for getting the bank to give you the best possible home loan, without unintentionally making your score worse! 4. Run your numbers. In the past, some overextended homeowners complained that they felt pushed into a mortgage they couldn't afford. Pundits blamed that on the real estate and mortgage industry, but I have witnessed firsthand many a homebuyer push themselves or their spouses into buying too expensive of a home. Eliminate this issue entirely by doing this - run your own numbers, before you ever even talk to a salesperson or start looking at homes beyond your means. (I assure you, once you see the million dollar home you think you can afford, the $250,000 home you can actually afford will be underwhelming.) Get your monthly finances in order, and get a clear read on how much your monthly bills are - outside of housing. Decide how much you can afford to spend every month for housing, when you buy your home. Get clear on exactly how much cash you plan to have at hand to put into your transaction up front. When, in the next step, you begin working with a mortgage broker, you'll want to share these numbers with them, early on in your conversation, to empower them to tell you what home price you can afford - not based on their rubrics, but based on what you say you want to spend every month and what you want to put down.5. Talk to a real estate and mortgage broker (1 of each). Trulia is a great place to find an engaged, communicative, tech-savvy real estate broker or agent in your area. You can use our Find a Pro directory or simply start participating in the Trulia Voices Community, asking your questions and tagging them for the town where you plan to buy a home, and paying attention to the agents who give timely, thorough responses to your questions, and communicate in a language you understand. Drop one (or a few) an email, letting them know you'd like to work on putting an action plan together for buying a home next year, and would like to talk with them about what action steps need to go on the list. Ask them to brief you on the timeline of a transaction in your local market, and to point out for you things like when along the process you'll need to bring money in, when you'll need to miss work and come into their office or the closing office, whether they offer conveniences like digital document signing, and generally the local standard practices about which buyers you'll need to know. Depending on your target home purchase timeline, they might even want you to take a spin with them and look at a few properties to reality-check your expectations or narrow down a broad wish list. In addition to chatting with them about timing your purchase vis-à-vis your other life events and plans for the year, make sure to ask for referrals to a local, trustworthy mortgage broker or two - preferably one that has worked with them and closed a number of transactions with their clients. (In fact, many busy real estate pros will want you to talk with their trusty mortgage partner before they get too involved in your planning process. You may think you only need a month to get ready to buy, but once the mortgage folks weigh in, it might turn out that you actually need a few.) When you do get in touch with the mortgage maven, if you're serious about buying, you will want them to actually pull your credit report, check the actual FICO scores that come up on their system and give you their professional recommendations for what final tweaks you can do to your debts to get your credit score where it needs to be.
Wednesday, December 22, 2010
Saturday, December 12, 2009
2010 Real Estate Outlook
When 2009 first started off the Real Estate market had a mess that no one was willing to predict except for saying that there were going to be foreclosures, lots of foreclosures. Even a person that isn’t in the market on a daily basis like myself can predict foreclosures in a declining economic event that the US and world is experiencing.
The Real Estate market within the Phoenix/Scottsdale market during 2009 has, to say without a doubt, been an exciting year. If you want to purchase real estate it is truly a great time to buy. The homes under $150,000 are experiencing multiple offers and a true sellers market. The buyers who are able to buy are those that have cash or strong credit with a large percent to put down (10% to 20%). The Banks who are the typical sellers in this range have Asset Managers overseeing the transactions in hopes to receive the top dollar. They are impossible to be contacted by the Buyer’s representation; their Realtors just upload the offers into a computer system where they determine which offer they will accept. There appears, at times, that there is neither rhyme nor reason to why they accept one offer and reject another. To me it appears the closer to the end of the month if the Asset Manager has a huge number of units still on their table the chances of buying one is a bit better, they just want the units gone.
The $150,000 to $500,000 market is moving also not as active as the lower dollar but moving. Some of these homes are those that sold during the peak upwards to the $1,000,000 range, and have some very nice upgrades. Many of these are still attempting to Short Sell the home but this can be a very time consuming process however the reward if the Banks accept the offer can be tremendous.
The million dollar home market is ripe for good deals right now too. Homes that cost more to build are being marketed and sold for tremendously less. To many on the market to choose from, but if you have the time and the capital you can purchase 5,000 or more square feet for a great buy. There are custom home lots in several plush highend areas available for unheard of prices and, they too are seeing foreclosures.
The Foreclosure market is going to remain strong into 2010 and I really do not see our President Obama actually helping too many of those folks in the process of foreclosing being saved. It isn't to say theat he isn't doing anything for them they just don’t want to be saved, they have seen their homes devalue and all they can see is the loss. I try to remind people that when they buy an automobile they see a 30% devaluation as soon as they drive off the Car lot and that loss will never come back, at least with the home that they live in it does have a greater possibility in 3 to 5 years of gaining back the lost value.
If you don’t need to sell and you can afford the payments then why move? You still have the tax advantages of the home ownership tax deduction and with that alone you will be holding your own. Will you earn back what you claim that you have lost? If you mortgaged the home there shouldn’t be any problems, try to amortize your payments and the potential loss will be much less.
Oh but you say; if I let this one go back to bank I will be able to purchase more house for less money. Well not exactly. Since you will have a deficiency against you now you will be paying a higher interest rate and any savings that you think that you are gaining is going to be lost with the higher interest rate.
The Best bet, stay where you are at if you can afford the house payment. Try to buy another house if you want, but be advised that it will be a second home and you will be expected to have 20% in cash to make the purchase.
It is still a great Buyer’s Market, yes, cash is king but if you have a strong credit background and some Skin in the game (20% capital to put down) you can purchase with mortgaged money and get a great home at a great price.
Call me and we can discuss the market.
602-549-7994 DougFry@douglasfry.net www.DougFry.com
The Real Estate market within the Phoenix/Scottsdale market during 2009 has, to say without a doubt, been an exciting year. If you want to purchase real estate it is truly a great time to buy. The homes under $150,000 are experiencing multiple offers and a true sellers market. The buyers who are able to buy are those that have cash or strong credit with a large percent to put down (10% to 20%). The Banks who are the typical sellers in this range have Asset Managers overseeing the transactions in hopes to receive the top dollar. They are impossible to be contacted by the Buyer’s representation; their Realtors just upload the offers into a computer system where they determine which offer they will accept. There appears, at times, that there is neither rhyme nor reason to why they accept one offer and reject another. To me it appears the closer to the end of the month if the Asset Manager has a huge number of units still on their table the chances of buying one is a bit better, they just want the units gone.
The $150,000 to $500,000 market is moving also not as active as the lower dollar but moving. Some of these homes are those that sold during the peak upwards to the $1,000,000 range, and have some very nice upgrades. Many of these are still attempting to Short Sell the home but this can be a very time consuming process however the reward if the Banks accept the offer can be tremendous.
The million dollar home market is ripe for good deals right now too. Homes that cost more to build are being marketed and sold for tremendously less. To many on the market to choose from, but if you have the time and the capital you can purchase 5,000 or more square feet for a great buy. There are custom home lots in several plush highend areas available for unheard of prices and, they too are seeing foreclosures.
The Foreclosure market is going to remain strong into 2010 and I really do not see our President Obama actually helping too many of those folks in the process of foreclosing being saved. It isn't to say theat he isn't doing anything for them they just don’t want to be saved, they have seen their homes devalue and all they can see is the loss. I try to remind people that when they buy an automobile they see a 30% devaluation as soon as they drive off the Car lot and that loss will never come back, at least with the home that they live in it does have a greater possibility in 3 to 5 years of gaining back the lost value.
If you don’t need to sell and you can afford the payments then why move? You still have the tax advantages of the home ownership tax deduction and with that alone you will be holding your own. Will you earn back what you claim that you have lost? If you mortgaged the home there shouldn’t be any problems, try to amortize your payments and the potential loss will be much less.
Oh but you say; if I let this one go back to bank I will be able to purchase more house for less money. Well not exactly. Since you will have a deficiency against you now you will be paying a higher interest rate and any savings that you think that you are gaining is going to be lost with the higher interest rate.
The Best bet, stay where you are at if you can afford the house payment. Try to buy another house if you want, but be advised that it will be a second home and you will be expected to have 20% in cash to make the purchase.
It is still a great Buyer’s Market, yes, cash is king but if you have a strong credit background and some Skin in the game (20% capital to put down) you can purchase with mortgaged money and get a great home at a great price.
Call me and we can discuss the market.
602-549-7994 DougFry@douglasfry.net www.DougFry.com
Friday, February 13, 2009
Is It Time To Buy A Home?
I read this today and thought that I would pass it on to you.
Why to Buy a Home Now
by Phoebe Chongchua
If you're renting and wondering if you should buy a home, consider what bestselling author, David Bach, says, "The average homeowner is worth 35 times more than the average renter.
"He advises renters to take action immediately and start saving part of their paycheck every month to help accumulate a down payment. He also encourages renters to borrow 10-20 percent less than what the bank is willing to lend; that way they're only buying as much home as they can afford.
The longer you rent, the longer it may take you to eventually get into homeownership.
If the market conditions have scared you, perhaps you're not looking at the other side of the coin. Owning a home becomes part of your investment portfolio, provides tax benefits, allows you to build equity (it still exists), and, if you buy now, you may get an excellent deal.According to a MarketWatch news article, buying a home now can provide some real negotiating power to request improvements, price reductions, help with closing costs, and more. "People can get a lot of what they need and almost all of what they want today," said Jay Papasan, one of the authors of "Your First Home".
***While poor market conditions have created a troubling situation for some homeowners, the downturn has made the buying market ripe for others. The affordability of homes is better than ever. The National Association of Realtors' housing affordability index concluded that homes in December of 2008 were more affordable than at any other point since 1970 (the start of the index). And with numerous foreclosures on the market and prices dropping in many areas, now is a good time to buy.
But in order to make your purchase profitable, here are some things you should consider.
How long will you be in the home? Some experts advise that if you are planning to move within a year, buying may not be the best option because of the expenses associated with moving. However, if you're searching for a place to live for, at least, several years, buying now could be a good choice for you.
How much you can afford. Don't let tighter lending regulations scare you off from making a purchase. Instead, understand what you truly can afford. Don't get caught up in buying too much home. In fact, these days, the trend is moving toward smaller homes -- simpler living.
Mortgage rates drop to historical low. How much home you can afford is affected by mortgage interest rates that, right now, are highly appealing. Good credit, documenting your income, and a substantial down payment will make you a better candidate for the better mortgage rates.
Freedom to choose. Now, unlike several years ago, the market has a large inventory in many areas. The market time to sell a home has increased which creates a large inventory of homes, everything including new, existing, and foreclosures. Buyers can peruse the market and have the freedom to select the home they really want. If you're interest is in a new home, know that many developers are getting more competitive with their pricing because they also have taken a hit by the ailing economy.
Quality of life. Buying a home can create a higher quality of life, giving you pride of homeownership, and something to enjoy improving and developing over the years.
Tax credit benefit. Last summer, the federal government started providing up to a $7,500 tax credit to buyers who have not owned a home in at least three years; the tax credit must be repaid within 15 years. But that figure may increase. The National Home Builders Association and National Association of Realtors are pushing for more significant help for all home buyers -- not just those who are buying for the first time. The Senate, as part of a stimulus package, this month approved a temporary new tax credit to be applied to homebuyers' tax bills. The credit would give buyers 10 percent of the purchase price of any home, up to $15,000. Alan Zibel of the Associated Press writes, "Anyone who buys a home within a year of the bill's signature would qualify. To deter speculators, buyers must occupy the house as their main residence for at least two years." At the time of this writing, the stimulus package had not yet gone to the White House.Published:
February 13, 2009
Why to Buy a Home Now
by Phoebe Chongchua
If you're renting and wondering if you should buy a home, consider what bestselling author, David Bach, says, "The average homeowner is worth 35 times more than the average renter.
"He advises renters to take action immediately and start saving part of their paycheck every month to help accumulate a down payment. He also encourages renters to borrow 10-20 percent less than what the bank is willing to lend; that way they're only buying as much home as they can afford.
The longer you rent, the longer it may take you to eventually get into homeownership.
If the market conditions have scared you, perhaps you're not looking at the other side of the coin. Owning a home becomes part of your investment portfolio, provides tax benefits, allows you to build equity (it still exists), and, if you buy now, you may get an excellent deal.According to a MarketWatch news article, buying a home now can provide some real negotiating power to request improvements, price reductions, help with closing costs, and more. "People can get a lot of what they need and almost all of what they want today," said Jay Papasan, one of the authors of "Your First Home".
***While poor market conditions have created a troubling situation for some homeowners, the downturn has made the buying market ripe for others. The affordability of homes is better than ever. The National Association of Realtors' housing affordability index concluded that homes in December of 2008 were more affordable than at any other point since 1970 (the start of the index). And with numerous foreclosures on the market and prices dropping in many areas, now is a good time to buy.
But in order to make your purchase profitable, here are some things you should consider.
How long will you be in the home? Some experts advise that if you are planning to move within a year, buying may not be the best option because of the expenses associated with moving. However, if you're searching for a place to live for, at least, several years, buying now could be a good choice for you.
How much you can afford. Don't let tighter lending regulations scare you off from making a purchase. Instead, understand what you truly can afford. Don't get caught up in buying too much home. In fact, these days, the trend is moving toward smaller homes -- simpler living.
Mortgage rates drop to historical low. How much home you can afford is affected by mortgage interest rates that, right now, are highly appealing. Good credit, documenting your income, and a substantial down payment will make you a better candidate for the better mortgage rates.
Freedom to choose. Now, unlike several years ago, the market has a large inventory in many areas. The market time to sell a home has increased which creates a large inventory of homes, everything including new, existing, and foreclosures. Buyers can peruse the market and have the freedom to select the home they really want. If you're interest is in a new home, know that many developers are getting more competitive with their pricing because they also have taken a hit by the ailing economy.
Quality of life. Buying a home can create a higher quality of life, giving you pride of homeownership, and something to enjoy improving and developing over the years.
Tax credit benefit. Last summer, the federal government started providing up to a $7,500 tax credit to buyers who have not owned a home in at least three years; the tax credit must be repaid within 15 years. But that figure may increase. The National Home Builders Association and National Association of Realtors are pushing for more significant help for all home buyers -- not just those who are buying for the first time. The Senate, as part of a stimulus package, this month approved a temporary new tax credit to be applied to homebuyers' tax bills. The credit would give buyers 10 percent of the purchase price of any home, up to $15,000. Alan Zibel of the Associated Press writes, "Anyone who buys a home within a year of the bill's signature would qualify. To deter speculators, buyers must occupy the house as their main residence for at least two years." At the time of this writing, the stimulus package had not yet gone to the White House.Published:
February 13, 2009
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