Hope Leitner, Realtor®, CRS

Borrowing from a 401k, 403b or the cash value of life insurance policy is a common financial strategy.   While taxpayers are not allowed borrow from either a traditional or Roth IRA, they can withdraw funds before age 59 ½ for specific purposes like a first home purchase, qualified higher education expenses or permanent disability without incurring a 10% penalty. First-time home buyers can make a penalty-free withdrawal of up to $10,000 if they haven't owned a home in the previous two years.   This would allow a married couple who each have an IRA to withdraw a lifetime maximum of $10,000 each, penalty-free for a home purchase. In many cases, the money would be used for a down payment or closing costs.   However, some buyers might consider this source to increase their down payment so they could qualify for a loan without mortgage insurance. There is another condition where a taxpayer can withdraw money from their IRA without triggering the tax or penalty if ...

2020 Forecast Shows Continued Home Price Appreciation Questions continue to rise around where home prices will head in 2020. The latest forecast from CoreLogic shows continued appreciation at 5.4% over the next year: Additionally, ARCH Mortgage Insurance Company in their current Housing and Mortgage Market Review revealed their latest ARCH Risk Index , which estimates the probability of home prices being lower in two years. Based on the most recent results, 32 of the 50 U.S. states (plus D.C.) had a minimal probability of lowering by 2021. Bottom Line Experts forecast home price appreciation to continue at a moderate rate as we move through 2020 and beyond. With appreciation growing, let’s get together and plan for your next move.

The largest expenditure a buyer has when purchasing a home is the down payment which can range from zero for veterans or 3.5%, 5%, 10% and 20%.   With mortgages come closing costs which can be another 2-4% and must be paid at settlement in cash. Most mortgages require an escrow account to pay the property taxes and insurance when they are due.   Generally, the lender will require one to three months of taxes and one month of insurance so they can be paid before the actual due date. First-time buyers should be aware that they'll need this amount of funds available to purchase a home.   U nlike tenants who are not responsible for repairs, homeowners are, and it is necessary to be able to pay for them when they're needed. Newer homes will need less repairs and older homes probably, more.   At some point, components like the furnace, air-conditioner and appliances will need to be replaced which could crush a homeowner's budget if they are not expecting them. Home...

December 2019: The Buyer Stakes Are High Because Inventory Is Low The reality of what we’re seeing this month is that homes are selling fast. In today’s strong seller’s market, bidding wars are common and expected with starter or entry-level homes. In most areas of the country, first-time buyers have been met with fierce competition throughout their homebuying experience. Some have been out-bid multiple times before finally going into contract on a home to call their own. Right now, inventory is the big challenge. Here’s what we know today: According to the latest  Existing Home Sales Report  from the  National Association of Realtors  (NAR), there is currently a 3.9-month supply of homes for sale, which can drive this kind of hefty buyer competition. Remember, anything less than 6 months of inventory is a seller’s market . Even though the month’s supply of inventory is not increasing, ironically, the number of homes for sale is. This...

Even if Benjamin Franklin never actually used the expression "a penny saved is a penny earned", the reality is that it has been a sentiment for frugality for centuries.   He did say: "Beware of little expenses; a small leak will sink a great ship."   At the end of the day, it is not about how much you make as much as it is about how much you keep. The first step in a personal finance review is to discover where you are spending your money. It can be very eye-opening to have a detailed accounting of all the money you spend.   Coffee breaks, lunches, entertainment, happy hour, groceries and the myriad of subscription services you have contribute to your spending. This revelation can lead you to obvious areas where savings can be accomplished.   The next step is to dig a little deeper to see if there are possible savings on essential services. Get comparative quotes on car, home, other insurance. Review and compare utility providers. Review plan...

Holiday Gifts Are Not the Only Hot Things Right Now Black Friday is behind us and holiday gifts are flying off the shelves in stores and online. Unlike last year, however, there’s another type of buyer that is very active this winter – the homebuyer. Each month, ShowingTime releases their Showing Index , which tracks the average number of appointments received on active U.S. house listings. The latest index revealed: “Traffic was more active once again compared to 2018, as the nation saw its third straight month of higher year-over-year showing activity…The 5.5% increase in showings nationwide was the largest jump in activity during the now three-month streak of year-over-year increases vs. 2018.” The same report indicates showings increased in every region of the country: The South increased by 10.8% The West increased by 8.6% The Northeast increased by 3.8% The Midwest increased by 1.5% Why is the traffic more active? One of the main reasons buye...

A 365 Day Difference in Homeownership Over the past year, mortgage rates have fallen more than a full percentage point. This is a great driver for homeownership, as today’s low rates provide consumers with some significant benefits. Here’s a look at three of them: Refinance: If you already own a home, you may want to decide if you’re going to refinance. It’s one way to lock in a lower monthly payment and save substantially over time, but it also means paying upfront closing costs too. You have to answer the question: Should I refinance my home? Move-up or Downsize: Another option is to consider moving into a new home, putting the equity you’ve likely gained in your current house toward a down payment on a new one that better meets your needs – something that’s truly a perfect fit for your family. Become a First-Time Homebuyer: There are many financial and non-financial benefits to owning a home, and the most important thing is to first decide when the...

Looking for an investment that will turn $10,000 into $80,000 in seven years?   Sound too good to be true?   What if I told you that you could live in it every day during that seven years?   Would that sound even better? A $300,000 home purchased today on an FHA loan would have a $10,500 down payment.   If it appreciated at 2% annually, which is less than  the U.S. average, the future value of the home would be $344,606 in seven years.   The unpaid balance on the loan would be $256,350 based on normal amortization which would make the equity in the home $88,256. The annual compound rate of return on the down payment would be 35%.   This number sounds so large, that you might start doubting the credibility of this example. Looking at some alternative investments, a ten-year Treasury note is currently paying 1.73%.   You can earn 2.1% on a ten-year certificate of deposit.   If you could handle the volatility of the stock market and pick t...

What is the Best Investment for Americans? Some are reporting that there is trepidation regarding the real estate market in the United States. Apparently, the American people are quite comfortable. Porch.com , a major network helping homeowners with their renovation projects, recently conducted a survey which asked Americans: “What do you believe is the safest investment over the next 10 years?” U.S. housing came in at number one, beating out other investments such as gold, stocks, bonds, and savings. Here is a graph showing the top five investments Americans selected: The findings of the Porch.com survey also coincide with two previous surveys done earlier this year: The Federal Reserve Bank ’s 2019 Consumer Expectations Housing Survey reported that 65% of Americans believe homeownership is a good financial investment, and that the percentage has increased in each of the last four years. The Gallup survey showed that Americans have picked real esta...

Is A Bigger House Within Your Budget? At this time of year, many families come together to celebrate the season. It’s also the time when many realize their homes are just not quite big enough to host all of their guests and loved ones. Are you one of those homeowners dreaming for a larger space to call home? You may have enough equity in your current home to move up. According to the Q3 2019 U.S. Home Equity & Underwater Report by ATTOM Data Solutions , “14.4 million residential properties in the United States were considered equity rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value.” This means that one in four of the 54 million mortgaged homes in the U.S. have at least 50% equity. If these homeowners decide to sell, they can use their equity to put toward the purchase of a new home. Maybe you’ll be one of them. NAR recently released their 2019 Profile of H...

5 Reasons to Sell This Winter Below are five compelling reasons to list your house this winter. 1. Demand Is Strong The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing, and able to purchase, and are in the market right now. More often than not, in many areas of the country, multiple buyers are competing with each other to buy the same home. Take advantage of the buyer activity currently in the market. 2. T here Is Less Competition Now Inventory is still under the 6-month supply needed for a normal housing market. This means in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. Historically, a homeowner would stay an average of six years in his or her home. Since 2011, that number has hovered between nine and ten years. There is a pent-up desire ...

Tips to Sell Your Home Faster When selling your house, there are a few key things you can prioritize to have the greatest impact for a faster sale: 1. Make Buyers Feel at Home Declutter your home! Pack away all personal items like pictures, awards, and sentimental belongings. Make buyers feel like they belong in the house. According to the  2019 Profile of Home Staging by the  National Association of Realtors , “83% of buyers’ agents said staging a home made it easier for a buyer to visualize the property as a future home.” Not only will your house spend less time on the market, but the same report mentioned that, “One-quarter of buyers’ agents said that staging a home increased the dollar value offered between 1 – 5%, compared to other similar homes on the market that were not staged.” 2. Keep It Organized Since you took the time to declutter, keep it organized. Before buyers arrive, pick up toys, make the bed, and put away clean dishes. Acc...

Mortgage interest paid on your principal residence is deductible today as it was in 1913 when 16 th amendment allowed personal income tax.   The 2017 Tax Cut and Jobs Act reduced the maximum amount of acquisition debt from $1,000,000 to $750,000. Acquisition debt is the amount of debt used to buy, build or improve a principal residence, up to the maximum amount.   A common misunderstanding among taxpayers is that you are entitled to that much debt even if you refinance a home during your ownership years. Acquisition debt is a dynamic number that changes over time.   It decreases with normal amortization as the principal amount of debt is reduced.   The only way to increase acquisition debt after a home is purchased is to borrow additional funds that are used for capital improvements. Assume a person buys a home with a new mortgage and after the home has enjoyed significant appreciation, refinances the home for much more than is currently owed.   Let's als...

Most people who have car, home and health insurance have probably made claims and wouldn't consider being without it.   However, it might be difficult to find a homeowner who has made a claim on their title insurance which could lead a person to think that it may not be necessary.   Title insurance covers the largest investment most people have and if there was a loss, it could be devastating.   Title insurance indemnifies the policy holder from financial loss sustained from defects in the title to the property.   The policy holder is determined by their interest in the property.   An owner's title policy protects the owner of the property from title issues that may arise other than the mortgages that are being placed on the property at the time of purchase.   The title of the property goes back in time to check that clear title (no unsatisfied liens or levies and poses no question to legal ownership) was passed from owner to owner up to the current sel...

Some people don't need a reason to buy a home, they just want it.   That can be enough justification by itself.   Other people need some solid logic before they're ready to make the commitment.   The following reasons might help you to make a decision. Pride of ownership ... among the most popular reasons given by homebuyers is that they want a place they can call their own and decorate and improve it the way they want.   It is a place to feel safe and secure and a place for their family.   They can share it with their friends and enjoy living in it. Good investment ... Homeowners have a 80 times greater net worth than renters.   By investing in a home that appreciates over time, it contributes to an increasing equity.   The high loan to value mortgages that are available combined with the low mortgage rates also contribute to the investment through leverage which has been described as "using other people's money" to control an investment...

Homeownership Rate Remains on the Rise In the third quarter of 2019, the U.S. homeownership rate rose again, signaling another strong indicator of the current housing market. The U.S. Census Bureau announced , “The homeownership rate of 64.8 percent was not statistically different from the rate in the third quarter 2018 (64.4 percent), but was 0.7 percentage points higher than the rate in the second quarter 2019 (64.1 percent).” Today there is still a lack of inventory , particularly at the entry and middle-level segments of the market, but that is not stopping buyers from making every effort to pursue homeownership. The many financial and non-financial benefits continue to drive the American Dream and will likely do so for generations to come. Bottom Line If you’re thinking of buying a home, let’s get together to make your dream a reality.

75 Years of VA Home Loan Benefits Today, on Veterans Day, we salute those who have served our country in war or peace, and we thank them for their sacrifice. This year marks the 75 th anniversary of VA Home Loan Benefit offerings through the Servicemen’s Readjustment Act , also known as the GI Bill . Since 1944, this law has created opportunities for those who have served our country, ranging from vocational training to home loans. Facts About VA Home Loans: Nearly 24 million home loans have been guaranteed by the Veterans Administration. Nearly 82% of VA home loans are made with no down payment . The VA also provides grants to help seriously disabled Veterans purchase, modify, or construct a home to meet their needs. Last year the VA provided 2,000 grants totaling $104 million. Benefits of a VA Home Loan: No down payment No Private Mortgage Insurance* Lower credit score requirements Limitation on closing costs Lower average interest rates * Mo...

Before looking for a home, you need to know how much you can afford. While you may have a number in your head, the lender has the final say. Securing a pre-approval from a lender helps make the home buying process easier and helps to avoid delays. Many buyers confuse the terms pre-qualification and pre-approval. They mean two different things. In simple terms, a pre-qualification is an estimate of what you can afford. A pre-approval is a conditional approval based on the proof you provide. The pre-qualification is a preliminary step some borrowers take to get a feel for what price home they can afford. Based on your income, assets, and estimated credit score, lenders can estimate what you can afford. It's important to know, there's nothing binding about a pre-qualification. It's simply a starting point.    When you are serious about buying a home, though, you want a pre-approval. Before you shop for a home, meet with a recommended lender to get a pre-approval ...

Forget the Price of the Home. The Cost is What Matters. Home buying activity (demand) is up, and the number of available listings (supply) is down. When demand outpaces supply, prices appreciate. That’s why firms are beginning to increase their projections for home price appreciation going forward. As an example, CoreLogic increased their 12-month projection for home values from 4.5% to 5.6% over the last few months. The reacceleration of home values will cause some to again voice concerns about affordability. Just last week, however, First American came out with a data analysis that explains how price is not the only market factor that impacts affordability. They studied prices, mortgage rates, and wages from January through August of this year. Here are their findings: Home Prices “In January 2019, a family with the median household income in the U.S. could afford to buy a $373,900 house. By August, that home had appreciated to $395,000, an increase ...

Millennials: Here’s Why the Process is Well Worth It. Millennials have waited longer than any other generation to become homeowners, but the wait for this cohort is just about over. According to National Mortgage News ,   “Millennials, those young adults now aged 23 to 38, are now entering their peak household formation and homebuying years. ” If you’re a Millennial, you’re already well aware that you’re among a generation of those who favor fast-paced, real-time answers – and results . When you’re ready to make a decision, it’s go-time, and you probably want the latest technology at your fingertips to make it happen. National Mortgage News agrees, stating, “Millennials are different than previous generations—not only in their delayed homebuying but also in how they approach interactions with financial institutions, including mortgage lenders. Taking a picture of a check on their phone and depositing it without visiting a branch is not novel, it’s ...

The #1 Reason to List Your House in the Winter Many sellers believe spring is the best time to put their homes on the market because buyer demand traditionally increases at that time of year. What they don’t realize is if every homeowner believes the same thing, then that’s when they’ll have the most competition. So, what’s the #1 reason to list your house in the winter? Less competition. Housing supply traditionally shrinks at this time of year, so the choices buyers have will be limited. The chart below was created using the  months supply  of listings from the  National Association of Realtors. As you can see, the  ‘sweet spot’  to list your house for the most exposure naturally occurs in the late fall and winter months (November – January).   Temperatures aren’t the only thing that heats up in the spring –  so do listings! In 2018, listings increased from December to May. Don’t wait for these listings and the competition that comes with ...

Planning on Buying a Home? Be Sure You Know Your Options. When you’re ready to buy, you’ll need to determine if you prefer the charm of an existing home or the look and feel of a newer build. With limited  existing home inventory  available today, especially in the starter and middle-level markets, many buyers are considering a new home that’s recently been constructed, or they’re building the home of their dreams. According to Robert Dietz,  Chief Economist  at the  National Association of Home Builders  (NAHB) , “The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months.” This is great news for homebuyers because it means there is additional  inventory  coming to the market, giving buyers more choices. The most recent data from NAHB shows, “The inventory of new homes for sale was 321,000 in September, representing a 5.5 mon...

Maybe you're not ready to move into it but that doesn't mean that you shouldn't take advantage of the present opportunities to acquire the home you want to live in during retirement. The combination of the low mortgage rates, high rental rates, positive cash flows and tax advantages can help you get it paid for by the time you're ready to move into it. Your tenant could literally buy your retirement home for you.  One idea would be to finance it with a 15-year loan that will have a lower rate than a 30-year loan and it will obviously be paid for in half the time. With every monthly rental check from your tenant, you make the payment on the mortgage which includes a portion that reduces debt and builds equity. Even if you don't have the home paid for by the time you retire, your equity will be larger.  Consider you sell your current home which could be paid for by then  when you are ready to move into this retirement home .  Taxpayers can exclude up to $500,000 o...

Taking the Fear Out of the Mortgage Process A considerable number of potential buyers shy away from the real estate market because they’re uncertain about the buying process – particularly when it comes to qualifying for a mortgage. For many, the mortgage process can be scary, but it doesn’t have to be!   In order to qualify in today’s market, you’ll need a down payment  (the average down payment on all loans last year was 5%, with many buyers putting down 3% or less) , a stable income, and a good credit history. Once you’re ready to apply, here are 5 easy steps  Freddie Mac   suggests  to follow: Find out your current credit history and credit score – Even if you don’t have perfect credit, you may already qualify for a loan. The average FICO Score® for all closed loans in September was 737, according to  Ellie Mae. Start gathering all of your documentation – This includes income verification (such as W-2 forms or tax returns...

You may have noticed that REALTORS® seem to always think now is a good time to buy and they can usually justify it with solid reasoning.   While it can be true in general, a good time to buy has more to do with the individual than anything else.   There are four things to consider. It is a good time to buy a home when you have good credit.   Since the Great Recession and the housing crisis, lenders have been required to be sure that the borrowers have good credit.   This actually benefits not only the lenders but the borrowers because no one wants to buy something that they cannot afford and run the risk of losing it to foreclosure.   FHA has the most lenient FICO credit score of 580+.   VA requires a little higher at 620 while Fannie Mae guidelines on conventional mortgages require a 700 score. It is a good time to buy a home when you have a good job that gives you the income to qualify for the mortgage and the likelihood that you'll continue to be...