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2 Myths Holding Back Home Buyers

2 Myths Holding Back Home Buyers

In a recent article, First American shared how millennials are not really any different from previous generations when it comes to the goal of homeownership; it is still a huge part of their American Dream. The piece, however, also reveals,

 “Saving for a down payment is one of the biggest obstacles faced by first-time home buyers. Dispelling the 20 percent down payment myth could open the path to homeownership for many more.”

 Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate how much they need to qualify for a home loan. According to the same article:

“Americans still overestimate the qualifications needed to get a mortgage, resulting in qualified potential buyers not even considering homeownership. Indeed, the Urban Institute report revealed that 16 percent of consumers believed that the minimum down payment required by lenders is 20 percent or more, and another 40 percent didn’t know at all.”

While many potential buyers still think they need to put at least 20% down for the home of their dreams, they often don’t realize how many assistance programs are available with as little as 3% down. With a little research, many renters may actually be able to enter the housing market sooner than they ever imagined.

Myth #2: “I Need a 780 FICO® Score or Higher”

In addition to down payments, buyers are also often confused about the FICO® score it takes to qualify for a mortgage, believing a ‘good’ credit score is 780 or higher.

To debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.2 Myths Holding Back Home Buyers | Simplifying The MarketAs indicated in the chart above, 50.23% of approved mortgages had a credit score of 500-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Believe it or not – your dream home may already be within your reach.

4 Reasons Why Summer Is a Great Time to Buy a Home!

4 Reasons Why Summer Is a Great Time to Buy a Home!

Here are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Insights reports that home prices have appreciated by 7% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.2% over the next year.

Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have increased by half a percentage point already in 2018 to around 4.5%. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase by nearly a full percentage point by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You Are Paying a Mortgage

There are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move on with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Did Tax Reform Kill the Luxury Market? NOT SO FAR!

Did Tax Reform Kill the Luxury Market? NOT SO FAR!

The new tax code limits the deduction of state and local property taxes, as well as income or sales taxes, to a total of $10,000. When the tax reform legislation was put into law at the beginning of the year, some experts felt that it could have a negative impact on the luxury housing market.

Capital Economics:

“The impact on expensive homes could be detrimental, with a limit on the MID raising taxes for those that itemize.”

Mark Zandi of Moody’s Analytics:

“The impact on house prices is much greater for higher-priced homes, especially in parts of the country where incomes are higher and there are thus a disproportionate number of itemizers, and where homeowners have big mortgages and property tax bills.”

The National Association of Realtors (NAR) predicted price declines in “high cost, higher tax areas” because of the tax changes. They forecasted a depreciation of 6.2% in New Jersey and 4.8% in Washington D.C. and New York.

What has actually happened?

Here are a few metrics to consider before we write-off the luxury market:

1. According to NAR’s latest Existing Home Sales Report, here is the percent change in sales from last year:

  • Homes sales between $500,000 – $750,000 are up 11.9%
  • Homes sales between $750,000 – $1M are up 16.8%
  • Homes sales over $1,000,000 are up 26.7%

2. In a report from Trulia, it was revealed that searches for “premium” homes as a percentage of all searches increased from 38.4% in the fourth quarter of 2017 to 41.4% in the first quarter of 2018.

3. According to an article from Bloomberg:

“Median home values nationally rose 8 percent in March compared with a year earlier, while neighborhoods of San Francisco and San Jose, California, have increased more than 25 percent.

Prices in affluent areas in Delaware and New York, such as the Hamptons, also surged more than 20 percent.”

Bottom Line

Aaron Terrazas, Zillow’s Senior Economist, probably summed up real estate’s luxury market the best:

“We are seeing the opposite of what was expected. We have certainly not seen the doomsday predictions play out.”

The COST of Your Next Home Will Be LESS Than Your Parents’ Home Was

The COST of Your Next Home Will Be LESS Than Your Parents’ Home Was

There is no doubt that the price of a home in most regions of the country is greater now than at any time in history. However, when we look at the cost of a home, it is cheaper to own today than it has been historically.

The Difference Between PRICE and COST

The price of a home is the dollar amount you and the seller agree to at the time of purchase. The cost of a home is the monthly expense you pay for your mortgage payment.

To accurately compare costs in different time periods, we must look at home prices, mortgage rates, and wages during each period. Home prices were less expensive years ago, but paychecks were also smaller and mortgage rates were much higher (the average mortgage interest rate in 1988 was 10.34%).

The best way to measure the COST of a home is to determine what percentage of income is necessary to buy a home at the time. That would take into account the price of the home, the mortgage interest rate and wages at the time.

Zillow just released research that examined home costs using this formula. The research compares the historic percentage of income necessary to afford a mortgage to the percentage needed today. It also revealed the cost if mortgage rates continue to rise as experts are predicting. Here is a graph of their findings:

Rates would need to jump to 7% in order for the percentage of necessary income to be greater than historic norms.

Bottom Line

Whether you are a homeowner considering selling your current house and moving up to the home of your dreams, or a first-time buyer trying to purchase your first home, it’s a great time to move forward.

*Assumptions in the Zillow report: Buyer puts 20% down, takes out a conforming, 30-year fixed-rate mortgage at rates prevailing at the time, earns the median household income, and is buying a median-valued home.

 

Why You Need a Professional on Your Team When Buying a Home

Many people wonder whether they should hire a real estate professional to assist them in buying their dream homes or if they should first try to go through the buying process on their own. In today’s market: you need an experienced professional!

You Need an Expert Guide If You Are Traveling a Dangerous Path

The field of real estate is loaded with landmines; you need a true expert to guide you through the dangerous pitfalls that currently exist. Finding a home that is priced appropriately and is ready for you to move into can be tricky. An agent listens to your wants and needs, and can sift through the homes that do not fit within the parameters of your “dream home.”

A great agent will also have relationships with mortgage professionals and other experts that you will need in order to secure your dream home. 

You Need a Skilled Negotiator

In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands, of dollars. Each step of the way – from the original offer to the possible renegotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.

Realize that when an agent is negotiating his or her commission with you, they are negotiating their own salary; the salary that keeps a roof over their family’s head; the salary that puts food on their family’s table. If they are quick to take less when negotiating for themselves and their families, what makes you think they will not act the same way when negotiating for you and your family?

If they were Clark Kent when negotiating with you, they will not turn into Superman when negotiating with the buyer or seller in your deal. 

Bottom Line

Famous sayings become famous because they are true. You get what you pay for. Just like a good accountant or a good attorney, a good agent will save you money…not cost you money.

7 Pricing Myths You Need to Get Past If You Want to Sell Your Home

When homeowners are preparing to put their properties on the market, one aspect is usually foremost in their minds: money. Setting the asking price accurately can mean the difference between getting an offer quickly and having a house languish for months, drawing little interest.

With that in mind, it’s important that potential sellers block out a lot of the noise that often surrounds the intricate art and science of pricing. There are plenty of myths that may cause sellers to lose sleep at night as they attempt to separate fact from fiction.

The following are statements that can stand in the way of a successful sale.

1. ‘If we keep waiting, a better offer will come along!’

When sellers receive an offer from the first showing, they may be skeptical or hesitant to accept it, wondering if other prospective buyers would be inclined to pay more. Thoughts of potential bidding wars could cause sellers to want to wait and see who else falls for their place. But, remember the old adage, “A bird in the hand is worth two in the bush?” There’s no guarantee other would-be buyers are waiting around the corner. If the offer is a fair one, entertain it and count your blessings.

2. ‘Getting an offer right away, means the agent priced it too low!’

When sellers receive an offer early in the process, as excited as they might be, many can’t help but wonder, “Should we have asked for more money? Did our agent price it too cheaply?” While it’s natural to be skeptical (and even a little greedy), receiving an offer on the early end of the spectrum most likely means your home was priced accurately and attractively. If you trust your agent, you know he or she didn’t pick a number out of the sky, but rather based it on extensive market research. So, be glad your sale is moving in the right direction.

3. ‘We should price it so there’s room to negotiate!’

Let’s be honest: Most sellers would love to get top dollar for their homes. But overpricing it with the intention of being willing to accept a lower offer may just leave you empty handed in the long run. Plus, if you have to drop your ask multiple times, buyers may begin to wonder what’s wrong with the place — other than the price, that is.

4. ‘That’s not what my Zestimate says it’s worth!’

Have you ever noticed how homeowners are eager to believe Zestimates or other automated valuation models when that price exceeds their expectations? Yet, when the opposite happens, they assume it’s outdated or erroneous information? The point we’re making is, these numbers can be inaccurate, so again, trust your agent over the Internet. Enough said.

5. ‘We can add all renovation costs to the asking price!’

Sellers may adore the improvements and renovations they’ve made and want to add in those costs to the asking price. But remember, not every change is going to land a huge return on investment. If you’re curious about what you can expect on those fixes, check out Remodeling Magazine‘s annual ‘Cost Versus Value’ report to get an idea of which upgrades yield the biggest bang for your buck. Also, as you’re making changes, bear in mind that the infinity pool you view as an asset may just seem like a huge liability to a buyer.

6. ‘My Realtor® overpriced my house to make a larger commission.’

Agents are paid a percentage of the selling price of the home. However, even if they were to raise the ask by $25,000, in most cases that would yield an additional $1,500 in commission, which would then be divvied up between the broker the agent is working for and the buyer’s agent, leaving your agent with less than $750 more in his or her pocket. It’s hard to imagine an agent would blow a potential quick sale — and take on weeks or months of additional showings and marketing expenses — for a few hundred dollars.

7. ‘Reducing the price is a sign of weakness!’

While no homeowner is eager to drop the listing price, if time is passing and there’s been little interest, it could be time to consider lowering the ask. Remember, time is money. While you’re waiting for someone to meet your price, you’re still paying the mortgage, taxes, utilities, and insurance etc. Plus, sometimes, lowering the price can put your home in front of a group of new buyers, which could generate a lot more interest and, ultimately, get the price back up closer to where it was in the first place.

9 Ways To Make Your Open House Stand Out

Especially when there are multiple open houses taking place in the same neighborhood simultaneously, you’re going to want to find a way to make your property the most memorable one in town.

Aside from keeping the home immaculately clean and staged to perfection, there are other, decidedly more interesting strategies that some Realtors® use to leave a lasting impression in the minds of would-be buyers.

Take a look at these innovative ideas that’ll take your showing from “so-so” to “sold.”

1. Strike up the band.

Music creates a unique vibe and works as an easy ice-breaker in almost any setting, which explains why some Realtors® choose to turn up the volume on an otherwise-quiet open house by bringing in a band.

Let the style of the home, time of the year, and area of the country dictate which kind of music you select. From a string quartet to a bluegrass band, potential buyers will remember a house with an unforgettable soundtrack.

2. Host a raffle.

Who doesn’t want in on an opportunity to win something? Hosting a raffle, in which visitors enter by leaving their pertinent info, is a fun way to collect leads and generate a positive feeling toward the property. From a flat screen TV to a gift card to a local garden center, a giveaway can go a long way toward getting people excited about a home.

3. Sell more than just the house.

Few things cause drivers pull over to the curb and get out of their cars faster than garage sales. Chances are sellers have plenty of items they don’t wish to drag along to their next dwelling, so hosting a garage sale on the same day as the open house kills two birds with one stone while generating massive foot traffic.

4. Provide snacks & drinks.

Let’s be honest: Shopping makes you hungry. Offering out-of-the-ordinary treats for potential buyers leaves a nice taste in their mouths — literally. Fixins such as fresh fruit and finger foods may just make peckish visitors linger and take a longer look at the home. Embrace the season by featuring items like warm apple cider in the fall or hot cocoa in the winter.

5. Stage an art exhibition.

Artwork adds instant sophistication to any space. Partnering with local artists and galleries and showing off some original masterpieces is a mutually beneficial arrangement that will definitely get visitors talking about the home. Sculptures in the garden are an equally nice and unique touch.

6. Time it just right.

Who says your open house needs to take place between 2 and 4 p.m. on a Sunday? If your favorite part of the home is the view of the spectacular skyline or stunning sunset, your buyers will probably feel the same way.

Instead of hosting an open house during a time that doesn’t show off that eye-catching feature, schedule it for the ideal period that showcases its most appealing aspect and really dazzle your prospects.

7. Celebrate the season.

If you’re selling during a holiday season, have some fun by dressing up the house to really get into the spirit. Halloween decorations, a backyard Easter egg hunt, or Christmas carolers add a bit of intrigue and separate one home from another in the minds of buyers.

8. Turn it into a party.

Really show off the home’s full potential by creating a fun and unforgettable scene. If the backyard is the place to be, fire up the barbecue. If the home theater is the spot that get the deal done, throw on a classic film and rent an old-fashioned popcorn machine. Does the gourmet kitchen garner the most interest? Host a cooking demo and watch buyers salivate!

9. Keep the kids entertained.

Kids running amuck at an open house is every Realtor® and seller’s nightmare. Eliminate this issue by providing activities that will entertain small but curious visitors so their parents can turn their full attention toward the home. Outdoor arts and crafts, a backyard karate class, or even a magician prevent little wanderers from locking themselves in the bathroom while allowing Mom and Dad to focus on their potential new address.

Think Owning A Home Is Out Of Your Reach? Think Again

In the current economic climate, a lot of renters thinking homeownership is out of their reach. But if you think buying a home is out of reach, you might want to think again.

According to the National Association of Realtors’ Realtors Confidence® Index, first-time buyers accounted for 29% of all home sales from late 2016 to late 2017. That’s nearly one-third of all home sales! And there’s a reason so many people are making the transition from renting to owning…

Rents are rising. According to a recent Zillow study, the median US rent is taking up 29.1% of household income, and costing tenants a whopping $2,000 more per year.

As renting becomes less economical, more and more tenants are exploring homeownership. And thanks to low down payment mortgage options (61% of first-time buyers made a down payment between 0 and 6%, according to the National Association of Realtors’ Realtors Confidence® Index), homeownership is more accessible for first-time buyers than ever, making it the ideal time to make a move.

The Takeaway

If you’re currently throwing a large chunk of your paycheck towards your rent, now’s the time to make a move and buy your first home. Not only is homeownership one of the best investments you can make in your future, but thanks to rising rents, you may also find yourself saving money in the short-term.

Three Happening Neighborhoods of Harrisburg

While some may just think “Capitol of Pennsylvania” or “Gateway to Hershey Park” when they think of Harrisburg, most locals and residents alike will be quick to point out the rich diversity of Harrisburg and its surrounding areas.

With a population of nearly 50,000, Harrisburg is a bustling metropolis with many great neighborhoods and suburbs to boot. We decided to take a closer look at three popular parts of the city (especially the food) for you to explore next time you want to play tourist without the car or plane rides!

Midtown

Midtown Harrisburg was once a bit of an overlooked neighborhood in the city but in recent years, has been creating some artistic and trendy buzz. Their Midtown Scholar Bookstore will have book lovers’ nerding out over their vast selection, including a generous children’s section. If checking out some art is your kind of jam, the Susquehanna Art Museum has both temporary and permanent exhibits with a modern flare.

Want to have a craft beer and take in some comedy at the theatre? Zeroday Brewing Company is a fantastic choice with a great selection of beers for the connoisseur and those just looking for a nice cold one. After Zeroday, check out Harrisburg Improv Theatre for some laughs or, sign up for one of their classes so you can find your funny bone.

Olde Uptown

One of the most historic neighborhoods of Harrisburg also has some of the best restaurants. Old Uptown has several landmarks of the city including Alvaro Bread and Pastry Shop which many residents say has the best pastries in the entire city. Serving breakfast, lunch and dinner, Alvaro is a family-owned Italian café that even those on a low-carb diet will go nuts for.

When lunch hour hits and you are craving a delicious sub sandwich or Philly cheese steak, head on over to Jackson House on North 6th Street. In a state where nearly every other shop boasts “the best” Philly cheese steak, Jackson House lovers are quick to say that they are the real deal. Be warned, they get busy. But, are worth the wait.

Shipoke

While Shipoke is an excellent neighborhood of Harrisburg that consists mostly of residential streets, they have some best kept foodie secrets, too. Take Los Tres Cubanos for example. With a cocktail list that’s in the top 5 for Harrisburg, Los Tres Cubanos is famous for their traditional Cuban sandwich and their many pork dishes. Try the pulled pork shoulder plate and you won’t be disappointed.

Also nearby you will find Passage of India. A superb family friendly casual dining spot perfect for hose Indian dish cravings like chicken and lamb biryani as well as traditional Pakistani dishes you may not be a fan of (yet) like chicken jalfrezi. Passage of India also has a popular lunch buffet and boasts a terrific view of the Susquehanna River.

While this is just a glimpse to keep your stomach content for a bit, we also have an honorable mention for those of you who love your coffee and Frappuccino’s: head on over to the Anna Rose Bakery and Coffee Shop in Downtown Harrisburg for a fantastic latte and a unique breakfast treat like their pineapple bar.

Happy eating and exploring Harrisburg!

The #1 Reason to List Your House Today!

Many people believe that selling their house during “the spring buyers’ market” is the best thing to do. Their reasoning is that there will be more buyers than there are during the winter months and, therefore, their house will sell quicker and for a higher price.

Historically, this made sense. However, today’s real estate market is not following the rules of the past.

The National Association of Realtors (NAR) measures buyer “foot traffic” each month. It receives data on the number of properties shown to a prospective purchaser by a Realtor® (based on the number of lockboxes used). The data reveals the number of buyers out actively looking for a home, not just window shopping on the internet. NAR explains:

“Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future.”

According to the latest Foot Traffic Report, buyer traffic is greater now than it was during this year’s spring market and there are more buyers out now than at any other time in the last five years (March of 2012).

The chart below shows that buyer activity over the last three months (blue bars) was greater than it was during this past spring market (green bars).

Bottom Line

If you are waiting for next spring to list your home because you think that’s when the buyers will be out in force, perhaps you should reconsider. Buyers are out right now!