Hope Leitner, Realtor®, CRS

Chances are if you are renting you are spending too much of your income on your monthly housing expense. There is a long-standing ‘rule’ that a household should not pay more than 28% of their income on their rent or mortgage payment. This percentage allows the household to save money for the future while comfortably covering other expenses. According to new data released from ApartmentList.com , 49.5 million renters in the United States were cost-burdened in 2017, meaning they spent more than 30% of their monthly incomes on rent. This accounts for nearly half of all renter households in the country and is up 3.1 million from 2007. When a household is cost-burdened by their monthly housing expense, they are not as easily able to save money for the future. This is a big factor for many renters who dream of owning their own homes someday. But there is hope for those who are able to save at least a 3% down payment! The percentage of income needed in the US to buy a home is significa...

With home prices on the rise and buyer demand still strong, some sellers may be tempted to try and sell their homes on their own without using the services of a real estate professional. Real estate agents are trained and experienced in negotiation and, in most cases, the seller is not. Sellers must realize that their ability to negotiate will determine whether or not they get the best deal for themselves and their families. Here is a list of just some of the people with whom the seller must be prepared to negotiate with if they decide to For Sale by Owner (FSBO): •The buyer who wants the best deal possible •The buyer’s agent who solely represents the best interests of the buyer •The buyer’s attorney (in some parts of the country) •The home inspection companies, which work for the buyer and will almost always find some problems with the house •The termite company if there are challenges •The buyer’s lender if the structure of the mortgage requires the sellers’ participation ...

As storybooks go, the character is introduced, they meet their love interest, a villain thwarts their intentions, true love overcomes, they marry and live happily ever-after.   It's a very familiar formula. Similarly, there is a formula that couples follow in real life.   They go to college, get a good job, rent a home, fall in love, get married and buy a starter home.   They start a family, move into a larger home, save for their children's education, start planning for their retirement and if they live within their means, they invest their surplus funds. An alternative to this might be to start investing in rental homes early in their adult life before their standard of living becomes so expensive that they don't feel like they have the money to purchase rentals.   There are infinite possibilities but let's say a single person, after getting a good job, buys a small three or four-bedroom home with an owner-occupied, minimum down payment.   They move into...

There are many questions about where home prices will be next year as well as where they may be headed over the next several years to come. We have gathered the most reliable sources to help answer these questions: The Home Price Expectation Survey – A survey of over 100 market analysts, real estate experts, and economists conducted by Pulsenomics each quarter. Zelman & Associates – The firm leverages unparalleled housing market expertise, extensive surveys of industry executives, and rigorous financial analysis to deliver proprietary research and advice to leading global institutional investors and senior-level company executives. Mortgage Bankers Association (MBA) – As the leading advocate for the real estate finance industry, the MBA enables members to successfully deliver fair, sustainable, and responsible real estate financing within ever-changing business environments. Freddie Mac – An organization whose mission is to provide liquidity, stability, and affordability ...

According to a new study from Urban Institute , there are over 19 million millennials in 31 cities who are not only ready and willing to become homeowners, but are able to as well! Now that the largest generation since baby boomers has aged into prime homebuying age, there will no doubt be an uptick in the national homeownership rate. The study from Urban Institute revealed that nearly a quarter of this generation has the credit and income needed to purchase a home. Surprisingly, the largest share of mortgage-ready millennials lives in expensive coastal cities. These cities often attract highly skilled workers who demand higher salaries for their expertise. So, what’s holding these mortgage-ready millennials back from buying? Myths About Down Payment Requirements! Most of the millennials surveyed for the study believe that they need at least a 15% down payment in order to buy a home when, in reality, the median down payment in the US in 2017 was just 5%, and many programs are a...

There are many unsubstantiated theories about what is happening with home prices. From those who are worried that prices are falling (data shows this is untrue) , to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion. However, the increase in prices is easily explained by the theory of supply & demand . Whenever there is a limited supply of an item that is in high demand, prices increase. It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything greater than seven months will cause prices to depreciate (see chart below) . According to the Existing Home Sales Report from the National Association of Realtors (NAR), the mont...

When the standard deduction for married couples filing jointly was increased from $12,700 to $24,000 for 2018, there was some speculation that the bloom was off the rose of homeownership.   The thought was that if the tax benefits from being able to deduct the property taxes and interest was less than the standard deduction, that maybe, the buyer would be better off continuing to rent. With mortgage rates as low as they have been for the past eight years, payments have been lower and so has the amount interest that was paid.   This and the fact that sales and local taxes, which include property taxes, are limited to $10,000 a year on the Itemized Deduction form have made it harder to reach the increased standard deduction. The reality of the situation is tax benefits are only one of the components that make a home an excellent investment and it probably contributes the least of the top three benefits.   Principal reduction and appreciation build an owner's equity in a...

Some Highlights: •When listing your house for sale, your top goal will be to get the home sold for the best price possible! •There are many small projects that you can do to ensure this happens! •Your real estate agent will have a list of specific suggestions for getting your house ready for market and is a great resource for finding local contractors who can help!

In today’s real estate market, with low inventory dominating the conversation in many areas of the country, it can often be frustrating to be a first-time homebuyer if you aren’t prepared. In a recent realtor.com article entitled, “How to Find Your Dream Home—Without Losing Your Mind,” the author highlights some steps that first-time homebuyers can take to help carry their excitement of buying a home throughout the whole process. 1. Get Pre-Approved for a Mortgage Before You Start Your Search One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. Even if you are in a market that is not as competitive, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach. This step will also help you narrow your search based on your budget and won’t leave you disappointed if the home you tour, and love, ends up being outside your budget! 2. Kn...

For a while now baby boomers have been blamed for a portion of the housing market’s current lack of housing inventory, but should they really be getting the blame? Here’s what some of the experts have to say on the subject: Aaron Terrazas, Senior Economist at Zillow, says that “Boomers are healthier and working longer than previous generations, which means they aren’t yet ready to sell their homes.” According to a study by Realtor.com, 85% of baby boomers indicated they were not planning to sell their homes. It is true that baby boomers are healthier and are thus working and living longer, but are they also refusing to sell their homes? Last month, Trulia looked at the housing situation of seniors (aged 65+) today compared to that of a decade ago. Trulia’s study revealed that: “Although seniors appear to be delaying downsizing until later in life, as a group, households 65 and over are still downsizing at roughly the same rate as in years past.” Trulia also explains that, ...

  In September, the Federal Reserve raised interest rates for the third time in 2018 and they're expected to go up one more time this year and three times next year.   If you have a Home Equity Line of Credit, HELOC, you're paying more to use that money and it is going to become more expensive. It may make sense to refinance your home and consolidate the balance of your HELOC to lock in a lower mortgage rate.   Most lenders require that the combination of these loans should not exceed 80% of the home's fair market value and that you have good credit and adequate income to support the payment. A HELOC is a first or second mortgage that allows the borrower to withdraw money as needed, up to the line of credit provided by the lender.   A draw period is established where the borrower is only required to pay interest.   Since all HELOC loans are variable rate mortgages, during periods of rising rates, the cost of the funds increase.   However, unlike adju...

Some Highlights: •Buying a home can be intimidating if you are not familiar with the terms used during the process. •To start you on your path with confidence, we have compiled a list of some of the most common terms used when buying a home. •The best way to ensure that your home-buying process is a confident one is to find a real estate professional who not only puts your family’s needs first, but will guide you through every aspect of the transaction with ‘the heart of a teacher.’

According to CoreLogic’s latest Home Price Insights Report, national home prices in August were up 5.5% from August 2017. This marks the first time since June 2016 that home prices did not appreciate by at least 6.0% year-over-year. CoreLogic’s Chief Economist Frank Nothaft gave some insight into this change, “The rise in mortgage rates this summer to their highest level in seven years has made it more difficult for potential buyers to afford a home. The slackening in demand is reflected in the slowing of national appreciation, as illustrated in the CoreLogic Home Price Index. National appreciation in August was the slowest in nearly two years, and we expect appreciation to slow further in the coming year.” One of the major factors that has driven prices to accelerate at a pace of between 6-7% over the past two years was the lack of inventory available for sale in many areas of the country. This made houses a prized commodity which forced many buyers into bidding wars and dro...

FHA allows owner-occupants to purchase up to a four-unit property with a minimum 3.5% down payment.   The rent collected on three units could be used to make the payment and the owners' pro-rata share would be less than ¼ of the payment itself. The owner-occupied unit would be considered their principal residence.   The other three units are treated as rental property and eligible for cost recovery, a non-cash deduction plus all the normal business expenses.   The rental income of the three remaining units is calculated as income and assists the buyer in qualifying. A homeowner could buy a four-unit, live in one for two years, buy another four-unit with a minimum down payment, move into one unit, rent the other three as well as the previous unit in the first property.   Then, after another two years, repeat the same process over again. The fifth year, the homeowner/investor would have a total of 11 rental units plus the one that they are occupying. ...

When it comes to buying or selling a home there are many factors you should consider. Where you want to live, why you want to buy or sell, and who will help you along your journey are just some of those factors. When it comes to today’s real estate market, though, the top two factors to consider are what’s happening with interest rates & inventory. Interest Rates Mortgage interest rates have been on the rise and are now over three-quarters of a percentage point higher than they were at the beginning of the year. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates climbed to 4.72% for a 30-year fixed rate mortgage last week. The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power. Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease ...

Mortgage interest rates, as reported by Freddie Mac , have increased by close to a quarter of a percent over the last several weeks. Freddie Mac, Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors are all calling for mortgage rates to rise another quarter of a percent by next year. In addition to the predictions from the four major reporting agencies mentioned above, the Federal Open Market Committee recently voted “unanimously to approve a 1/4 percentage point increase in the primary credit rate to 2.75 percent.” Historically, an increase in the primary credit rate has translated to an overall jump in mortgage interest rates as well. This has caused some purchasers to lament the fact that they may no longer be able to get a rate below 4%. However, we must realize that current rates are still at historic lows. Here is a chart showing the average mortgage interest rate over the last several decades: Bottom Line Though you may have missed t...

It may be an all too common belief that a person will have a house payment and a car payment for the rest of their lives.   However, with a plan and some determination, you can be mortgage free. Planning for retirement is obviously important and many times, an activity plagued by procrastination.   Some homeowners' goal is to have their home paid for by retirement, so they won't have payments.   It makes sense to eliminate a sizable recurring expense before they quit working. By making regular principal contributions in addition to the payments, the debt can be eliminated by the target retirement date. Assume a homeowner refinanced their $300,000 mortgage at 4% last year for 30 years with the first payment due on May 1, 2017.   With normal amortization, the home will be paid for at the end of the term.   Additional principal contributions with each payment will save interest, build equity and of course, accelerate the payoff on the home.   An extra ...