The Big Down Payment Myth

different-types-of-home-loansHaving the spare capital to put 20 percent down on a home purchase is great, but it’s certainly not the norm. Still, many people think it is and that belief may be holding some would-be home buyers back, particularly young adults.

Indeed, 39 percent of non-owners say they believe they need more than 20 percent for a down payment on a home purchase. Twenty-six percent believe they need to put down 15 to 20 percent, and 22 percent say they need a down payment of 10 percent to 14 percent to buy, according to the National Association of REALTORS®’ 2017 Aspiring Home Buyers Profile report.

But now for the reality: The average down payment on a purchase mortgage was just 11 percent in 2016. And that’s just the average; often times down ppuzzleayments are much lower. For borrowers under the age of 35, the average down payment was just under 8 percent, according to NAR’s survey.

As such, “aspiring first-time buyers think it takes twice as much to buy a home than it really does,” writes Jonathan Smoke, realtor.com®’s chief economist, in his latest column.

How much a person truly needs for a down payment depends on their situation. Their financial circumstances, home location, and the price of the home are important factors.

But there are many mortgage options that offer the opportunity to make low or even no down payments. For example, the Department of Veterans Affairs and the U.S. Department of Agriculture offer no-money down loans to those who are eligible. In 2016, 16 percent of buyers under the age of 35 put no money down on their home purchase.

Further, the largest share of loans for buyers under age 35 last year were for people putting down less than 5 percent on a home purchase (or about $3,500). The 3 percent down payment programs backed by Fannie Mae and Freddie Mac, and the 3.5 percent FHA mortgage that primarily targets first-time buyers, are both helpful programs to consider. These loan programs don’t require unblemished credit either. The average FICO score was 713, but realtor.com® notes borrowers with a 639 were still getting approved.fico by loan

As such, Smoke says the millennial dreaming about homeownership needs to get this message: They need a FICO score of at least 639 and enough for a 5 percent down payment (that is, if they don’t qualify for the other programs with lower payment options). In that case, they’ll need to save about $3,500 to buy in the typical American town.

Source: “Attention First-Time Buyers: Here’s the Key Stuff You Don’t Know About Mortgages,” realtor.com® (Feb. 9, 2017)

5 Reasons to Sell BEFORE Spring

 

No Matter What the Groundhog Says, Here are 5 Reasons to Sell Before Spring

Is spring closer than we think? Depending on which groundhog you listen to today, you may have less time than you think to get your home on the market before the busy spring season.

Many sellers feel that the spring is the best time to place their homes on the market as buyer demand traditionally increases at that time of year. However, the next six weeks before spring hits also have their own advantages.

Here are five reasons to sell now.

1. Demand is Strong February2015-27.jpg

Foot traffic refers to the number of people who are out, physically looking at homes right now. The latest foot traffic numbers from the National Association of Realtors (NAR) show that the number of buyers out looking for their dream homes in December reached the highest mark since February 2016.

These buyers are ready, willing and able to buy…and are in the market right now! Take advantage of the strong buyer activity currently in the market.

2. There Is Less Competition Now 

Housing inventory just dropped to a 3.6-month supply, which is well under the 6-month supply needed for a normal housing market. This means, in many areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices; however, additional inventory is about to come to market.

There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last four years. Many of these homes will be coming to market soon.happysold

Also, new construction of single-family homes is again beginning to increase. A study by Harris Poll revealed that 41% of buyers would prefer to buy a new home, while only 21% prefer an existing home (38% had no preference).

The choices buyers have will increase in the spring. Don’t wait for this other inventory to come to market before you sell.

3. The Process Will Be Quicker

One of the biggest challenges of the housing market has been the length of time it takes from contract to closing. Banks are requiring more and more paperwork before approving a mortgage. There is less overall business done in the winter. Therefore, the process will be less onerous than it will be in the spring. Getting your house sold and closed before the spring delays begin will lend to a smoother transaction.

4. There Will Never Be a Better Time to Move-Updifferent-types-of-home-loans

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by 4.7% over the next 12 months according to CoreLogic. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30-year housing expense with an interest rate around 4% right now. Rates are projected to rise by half a percentage point by the end of 2017.

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

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market. Perhaps, the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

Got Questions?? I’ve got answers – Let’s talk! 413.301.4614

Great Tips -Preparing Your House For Sale

Here are some handy tips for preparing your house for sale. And every little bit helps when it comes to the proper presentation of your home.

                                – Best advice… De-clutter

 

Tips for Preparing Your House For Sale [INFOGRAPHIC] | MyKCM

Click here for your FREE print copy of this checklist!

Think about it:

  • 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!
  • During your pre-listing campaign I will give you a list of specific suggestions for getting your house ready for market. This graphic is a great resource for getting a jump on things!
  • Got questions? I’ve got answers! Contact me today at 413.301.4614 or tedenton109@gmail.com

Tori Denton, PSA, Realtor®

Helping you make the right MOVE – every time!

 

 

Who knew? Student Loans = Higher Credit Scores! Wow!

Student Loans = Higher Credit Scores | MyKCM

According to a recent analysis by CoreLogic, Millennial renters (aged 20-34) who have student loan debt also have higher credit scores than those who do not have student loans.

This may come as a surprise, as there is so much talk about student loans burdening Millennials and holding them back from many milestones that previous generations have been able to achieve (i.e. homeownership, investing for retirement).

CoreLogic used the information provided on rental applications and the applicants’ credit history from credit bureaus to determine if there was a correlation between student loan debt and credit scores.

The analysis concluded that:

“Student loan debt did not prevent millennials from access to credit even though it may delay their homebuying decisions.”

In fact, those with a higher amount of debt actually had higher credit scores.

“Renters with student loan debt have higher average credit scores than those without; and those with higher debt amounts have higher average credit scores than those with lower student loan debt amounts.”

In a Nutshell

Millennials are on pace to become the most educated generation in our nation’s history, with that comes a pretty big bill for education. But there is a light at the end of the tunnel:

“Despite the fact that student loan debt has grown into the nation’s second largest consumer debt, following mortgage, and has created a significant financial burden for millennials, it does not appear to prevent millennials from accessing credit.”

Contact me today to get on the road to home ownership! 413.301.4614 tedenton109@gmail.com

Home Prices: Where Will They Be in 5 Years?

My clients make good decisions because they are well-educated… the transaction is well-executed, and the CLOSING is well-delivered! Here’s a sample of the information I provide to my clients (short & sweet, just the meat – no fillers):
Home Prices: Where Will They Be in 5 Years? | MyKCM

Today, many real estate conversations center on housing prices and where they may be headed. That is why I like the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts, and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey:

Home values will appreciate by 4.0% over the course of 2017, 3.2% in 2018 and 3.0% the next three years (as shown below). That means the average annual appreciation will be 3.24% over the next 5 years.

Home Prices: Where Will They Be in 5 Years? | MyKCM

The prediction for cumulative appreciation ticked up from 18.7% to 21.4% by 2021. The experts making up the most bearish quartile of the survey are projecting a cumulative appreciation of 10.2%.

Home Prices: Where Will They Be in 5 Years? | MyKCM

In A Nutshell

Individual opinions make headlines but I believe this survey is a fairer depiction of future values. Who wouldn’t want to make an average of 21% on a 5 year investment?

The market is still appreciating. That means it’s good to be a buyer OR a seller at this time… If you are a seller your house has appreciated and you have significant equity in your house allowing you to MOVE UP to your dream home. If you are a buyer, you still have plenty of appreciation left in a new home and if purchasing your first home (at historically LOW interest rates) you are STILL making a great INVESTMENT!

Got questions?? I’ve got answers – let me add some value to your financial knowledge database! My clients make good decisions because they are well-educated, the transaction is well-executed, and the CLOSING is well-delivered!

Contact me today to learn more! 413.301.4614 OR tedenton109@gmail.com

Rethinking Your Christmas List This Year

This article comes courtesy of Realtor.com

Getting a Down Payment as a Gift? Why NOT??

Why not give a gift that will KEEP on giving for years to come?!?

The first time I talked with a mortgage broker about buying a home, he suggested I just ask my parents for help coming up with the down payment.

“It’ll be easy,” he assured me. “You just get it as a gift. Lots of first-time buyers do it.”

In some ways, he was right. Many people do get help from their parents—after all, many of us are dealing with crippling student debt or other financial burdens that make it difficult to amass the cash needed for a down payment.

But he was wrong about one big thing: It ain’t easy.

Getting down payment help from the parents (or anyone else) isn’t as simple as just asking and then receiving when the money rolls in. If you’re going to do it, you’d better do it right. Avoid some of the big mistakes I made with an eye toward these tips.

1. The down payment must be a gift

What my mortgage broker should have told me is that the money has to be a gift. If a lender suspects the money might be a loan, repaying said loan will be factored into your mortgage approval amount and you’ll qualify for less than you might have wanted.

In order to prove it’s a gift, you’ll have to get a gift letter from the person who gave it to you—your parents (or the gifters) will need to swear on paper they don’t plan on asking for the money back. Thankfully, my wise parents had already put up a down payment for my sister and they knew this drill. But if yours don’t, get them up to speed quickly.

“The gift letter is very serious,” says Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage.”

“While it is doubtful that a lender would ever audit a file after the fact to see if the recipient is paying the donor back, if the transaction goes bad, you might very well find yourself with a subpoena in your hand.” (True story—it’s a felony to lie on a mortgage application.)

2. You’ll want the down payment in advance

When you’re getting help, you have two options: 1) Take the money from Mom and Dad now, during the early planning stages, and save yourself some headache (and paperwork) later on, or 2) wait until you’re ready to buy and have your parents send the money just before you walk into your mortgage broker’s office.

Both will work, but if you have any say in the matter, get the money as early as possible.

“If the funds are ‘seasoned’—meaning that they’ve been in the account long enough so that the last two bank statements don’t show the deposit—the gift does not have to be addressed,” Fleming says.

My parents opted for a last-minute donation, and I was more than happy to have the help however they chose to give it. But it was tricky getting a lender to take it on faith that I’m going to get a big influx of cash once I find a home to buy.

3. There’s a limit to what can be gifted (tax-free)

The timing isn’t the only thing that’s tricky. There’s also a limit to how much someone can fork over to you—tax-free, at least. Under the current rules, any gift of $14,000 and up will incur a tax bill. So your parents will have to gift you less than that, or pay a tax penalty at the end of the year.

Of course, there is a (perfectly legal) loophole of sorts.

“It is $14,000 per year per donor, so a couple could give $28,000 ($14,000 from each) to their child,” Fleming says.

4. Gifted down payment funds will have to be verified

So you did your due diligence and you got a gift letter. Good for you! But guess what? That gift letter might not be enough for your lender to verify the funds. To do that, your parents are going to have to provide a paper trail.

Bank statements should do it, Fleming says, but be ready for this to feel a little … invasive.

Most lenders will require two months of statements from the gifter’s account, including all pages from each statement. Those bank statements will need to include all relevant information, meaning your lender is going to see your parents’ bank account number and personal information.

That felt weird to my parents, who worried about the security risk of faxing that information to a virtual stranger. But really—it happens all the time, so don’t let them freak out over it.

5. Your parents can’t go broke trying to help you

We both know your parents aren’t going to give away all of their money for the sake of your down payment, but your lender has to know that, too. That’s why your folks will have to prove with bank statements that they can comfortably afford the gifted down payment—and have sufficient funds left over.

If your parents are going to use a separate account for the down payment, or they split their money over several accounts, make sure your lender knows what’s going on and have your parents provide extra proof that they can afford to help you.

Just be sure to also provide your parents with extra proof of your gratitude. And invite them over for dinner once in a while, eh?

—————

| Nov 28, 2016
Angela Colley lives in New Orleans, where she writes about buying, selling, and renting news for realtor.com. Her passions include animal rescue, photography, historic homes, and Southern architecture..

Thoughts on Multi-generational Living…

Multi-generational homes are coming back in a big way!

In the 1950s, about 21%, or 32.2 million Americans shared a roof with their grown children or parents. According to a recent Pew Research Center report, the number of multi-generational homes dropped to as low as 12% in 1980 but has shot back up to 19%, roughly 60.6 million people, as recently as 2014.

Multi-generational households typically occur when adult children (over the age of 25) either choose to, or need to, remain living in their parent’s home, and then have children of their own. These households also occur when grandparents join their adult children and grandchildren in their home.

img_1101

Large Farmhouse – Westfield (Wyben), MA

12 beautifully updated rooms!

6 bedrooms, eat-in country kitchen, formal dining room, living room, heated 4-season room, sitting room, 1st floor laundry, garage, mountain views – on just over 1 acre!

According to the National Association of Realtors’ (NAR) 2016 Profile of Home Buyers and Sellers, 11% of home buyers purchased multi-generational homes last year. The top 3 reasons for purchasing this type of home were:

  • To take care of aging parents (19%)
  • Cost savings (18%, up from 15% last year)
  • Children over the age of 18 moving back home (14%, up from 11% last year)

water-st-marketing-picture

Multi-family Home in Historic District – Granville, MA

3 Bedrooms, 2 livingrooms, 2 kitchens… private or interior entrance, decks, porches, balcony.

Walk to town green, on over 3 acres!

Donna Butts, Executive Director of Generations United, points out that,

“As the face of America is changing, so are family structures. It shouldn’t be a taboo or looked down upon if grown children are living with their families or older adults are living with their grown children.”

For a long time, nuclear families (a couple and their dependent children) became the accepted norm, but John Graham, co-author of “Together Again: A Creative Guide to Successful Multi-generational Living,” says, “We’re getting back to the way human beings have always lived in – extended families.”

ONE good reason is basic economics… you can buy more house with more people, split the utilities and food… and if it’s going to take a village to raise your children, why not have your village all under one roof!

Carmen Multhauf, co-author of the book “Generational Housing: Myth or Mastery for Real Estate,” brings to light the fact that rents and home prices have been skyrocketing in recent years. She says that, “The younger generations have not been able to save,” and often struggle to get good-paying jobs.

In light of this – it makes really good sense for some family units to explore the multi-generational alternative!

The two homes pictured in this blog are for sale and offer the convenience  of location, space and personal areas as well as shared areas! Contact me today to discuss this article, tour these houses, or learn more about the multi-generational living option!

cell/text: 413.301.4614 or tedenton109@gmail.com

Bottom Line

Multi-generational households are making a comeback. While it is a shift from the more common nuclear home, these households might be the answer that many families are looking for as home prices continue to rise in response to a lack of housing inventory.

Fall, Thanksgiving, Remodeling Tips!

Visit houselogic.com for more articles like this.

Copyright 2016 NATIONAL ASSOCIATION OF REALTORS®

Budget Friendly Projects With Big ROI

Not all home improvement projects are created equal. Some renovations may cost a lot but not add significant value to your home. This list goes in the opposite direction: Here are some inexpensive home improvement projects that will not only increase your enjoyment of your home, but will also increase the home’s value.

  1. High quality ceiling fans: In a recent National Association of Home Builders survey, ceiling fans ranked No. 1 as the most-wanted decorative item. If your ceiling fans are outdated, replace them with something in the $400 range—it’ll make a big difference when it’s time to sell.
  2. Trees: Mature trees can be worth as much as $10,000 toward the value of your home. Trees also protect your home from the elements and prevent erosion.
  3. Energy efficiency: Buyers are increasingly interested in saving energy, so any efficiency update is worthwhile. Switching from a wood to gas fireplace is a great start.
  4. Outdoor lighting: Exterior lighting is great for highlighting the accents of your home, and you can typically expect a 50 percent return on investment.
  5. Molding: You can finish a room with crown molding or railing for as little as $1.50 per foot if you take a DIY approach, and it’s extremely desirable among prospective buyers.

As with any home improvement project you should consult your personal qualified Realtor®. As a professional I can help you determine what is popular in the local, regional, and national market. I can also tell you what buyers are looking for when purchasing a home. I can give you options for minor and major remodeling projects and offer you choices that will have the highest and best return on investment for your geographical area.

Consult with an experienced professional –  Contact me today! 413-301-4614

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