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9 Trends for Fall 2019

by Dawn & Peter Balzano

The first half of 2019 surprised housing markets across the country: Mortgage rates fell. That’s the opposite of what the experts had predicted at the beginning of the year, and it’s welcome news for home buyers, sellers and homeowners. Millions of owners could benefit from refinancing at these unexpectedly lower rates.

 

In other ways, housing forecasters’ predictions for 2019 were correct. Buyers are still competing for a short supply of homes, but the market isn’t quite as tilted in favor of sellers as it seemed six months ago. Home prices continue to rise, but not as fast as they have over the past few years. Many would-be buyers struggle with affordability.

NerdWallet has identified these nine housing and mortgage trends to watch in the second half of 2019.

1. Wanted: More homes for sale

In real estate, it’s been a seller’s market since August 2012. More would-be buyers exist than homes for sale, giving sellers a stronger negotiating position. While the market still favors the seller in most places, the balance of power is moving in the buyer’s direction.

More homes are available for sale now, so buyers have greater choice. In April, there were 1.83 million pre-owned homes for sale, an increase of 30,000 from the same month last year. Meanwhile, 327,000 new single-family houses were for sale, an increase of 33,000.

Even with thousands more homes on the market, there’s still a shortage of homes for sale. Freddie Mac estimates that in 2017, 370,000 fewer homes were built than needed to satisfy demand resulting from population growth. “Until construction ramps up, housing costs will likely continue rising above income, constricting household formation and preventing homeownership for millions of potential households,” Freddie Mac concludes.

2. Home prices will keep going up

Toward the end of last year, many forecasters predicted that home prices would continue to rise in 2019, but at a slower pace. They were right.

In the first four months of 2019 (the latest numbers available), buyers were paying more for resold homes than a year before — but the year-over-year price increases each month were less than 4%. For the same period in 2018, year-over-year prices were more than 4.5% higher.

“Home price appreciation will slow down — the days of easy price gains are coming to an end — but prices will continue to rise,” says Lawrence Yun, chief economist for the National Association of Realtors. The NAR predicts that home prices will continue hitting the brakes and that year-end prices will be 2.2% higher than at the end of 2018.

Not everyone believes the pace of home prices will slow much in 2019. Fannie Mae has revised its price forecast, but it still predicts that prices for existing homes will rise 4.3% this year.

3. Mortgage rates will remain low

Fannie Mae, Freddie Mac and the National Association of Realtors all predicted that mortgage rates would rise through 2019. Instead, mortgage rates have tumbled.

After peaking at 5.09% in November 2018, the average APR for a 30-year fixed-rate mortgage fell to 4.09% by June 2019, a decline of a full percentage point, according to NerdWallet’s daily mortgage rates survey.

The forecasters now predict that the 30-year fixed will remain relatively steady through year’s end, not changing by more than a couple of tenths of a percentage point.

The unexpected drop in fixed mortgage rates means fewer people are getting adjustable-rate mortgages. At the end of 2018, experts thought rising rates would cause a surge in ARMs this year. With fixed rates dropping back to enticing levels, that surge never happened.

Interest rates have been falling based on the perception that the economy is cooling off, and because of trade tensions between the United States and China. The Federal Reserve, which typically cuts short-term interest rates in response to economic weakness, is expected to reduce rates at least once by the end of 2019, which could ease upward pressure on long-term mortgage rates.

4. Affordability continues to be a concern

Even as home price growth slows and mortgage rates fall, home buyers still have difficulty affording homes — especially first-timers toward the less expensive end of the market.

“While affordability is much better than we expected it to be, rising prices have offset much of the benefit of lower mortgage rates,” says Danielle Hale, chief economist for Realtor.com. “What that means for the individual buyer is that their monthly payments might be roughly the same as if you had bought a year ago.”

Mark Boud, chief economist for Metrostudy, calls the national housing market “top-heavy.” He means that there are plenty of homes available for buyers who can afford to pay $800,000 or more. But buyers outnumber sellers of homes priced $400,000 or less. “We’re still very short of supply in this lower price range,” he says.

The share of newly built homes under $400,000 has gone down. In April 2018, 67% of new homes sold for less than that price; this April, 64% did.

5. More people could save by refinancing

While the drop in mortgage rates benefits home buyers, it’s good for homeowners, too — specifically, homeowners who would snag lower monthly payments by refinancing into a mortgage with a lower interest rate. Every time rates fall, there’s an increase in the number of homeowners who could save money by refinancing.

Black Knight, a technology provider for the mortgage industry, estimates that 5.9 million homeowners could cut 0.75% or more from their mortgage interest rate by refinancing.

Does a lower mortgage interest rate automatically mean that you should refinance? No. You might benefit from a smaller rate decrease, or you might have to wait for a bigger rate drop. A mortgage refinance calculator can help you figure out the ideal time to refinance, which can depend on the rate difference, your loan size, how long you’ve had your mortgage, the loan fees you’ll have to pay and how long you plan to have the refinanced loan.

Even if you bought your home recently, it’s worth checking whether you should refinance. Black Knight estimates that 953,000 homeowners who got mortgages in 2018 could save an average of $162 each month by refinancing.

6. New homes get bigger

From a home buyer’s perspective, most markets need more houses for sale, and they need to be on the affordable end of the price scale. After all, many first-timers buy starter homes instead of forever homes, with prices below the area’s median. Sizes of new homes trended mostly downward in 2018, but the median home size went up in the first quarter of 2019.

Builders construct larger homes during economic recoveries “as high-end homebuyers … return to the housing market in relatively greater proportions,” wrote Robert Dietz, chief economist for the National Association of Home Builders, in a May blog post.

Year-over-year median prices for new homes followed the increase in size, going up sharply in April to $342,200 — an 8.8% increase over the median price 12 months earlier of $314,400.

7. Attention is on first-time buyers

The mortgage and real estate industries are focused on serving first-time home buyers, and for good reason: There’s a lot of pent-up demand.

Tian Liu, chief economist for Genworth Mortgage Insurance, says roughly 3 million first-timers delayed buying homes between 2007 and 2015.

Those buyers are “reaching that age when they can no longer delay,” Liu says. “Their housing needs are really catching up with them. It doesn’t feel right to be raising a family in a rental apartment. They want to own their place. So I think those drivers will be very significant for the next few years.”

From the early 1990s to around 2005, first-timers accounted for roughly 40% of home sales, according to NAR research. That share soared to 50% in 2009, then fell; it was 33% in 2018. With millions of millennials reaching their 30s, market forces could cause the first-timer share to rise again in the coming years.

8. Lending standards ease a little

After the housing crisis, lawmakers required mortgage lenders to assess borrowers’ ability to repay. The regulatory changes made it harder to get a home loan.

The Urban Institute’s Housing Finance Policy Center has argued that lenders overcorrected after lending too freely in the two or three years preceding the financial crisis of 2008.

There is evidence that lenders agree. Gradually, they have been relaxing lending standards, says Matt Hackett, operations manager for Equity Now, a mortgage lender in New York City.

He says he has observed that the relaxed standards come in the form of reduced documentation requirements, lower credit scores and bigger loan-to-value ratios (smaller down payments, basically).

Mortgage data provider Ellie Mae shows that credit standards for lending were about the same in April (the latest data available) compared to 12 months earlier. The average credit score for a conventional purchase loan was 753 in April, compared to 752 a year earlier. Debt-to-income ratios, which measure borrowers’ debt loads, remained the same.

9. Overconfident sellers could struggle

The inadequate pace of home construction, along with rising prices, mean 2019 will remain a seller’s market where there are more buyers than affordable homes for sale. But home sellers shouldn’t count on bidding wars breaking out among desperate buyers.

That’s especially the case with people who are selling homes that are relatively expensive for their local market, Realtor.com economist Hale says. Pricey homes appeal more to move-up buyers than to first-timers — and one-third of buyers are first-timers.

As a seller, Hale says, “If you’re in that above-median price point, you’re going to have to price competitively and offer incentives for buyers.”

Prices vary by neighborhood and region, and the differences from place to place are stark. In the western United States, the median home resale price this spring was $395,100, according to the NAR. In the Midwest, it was $210,500.


The article 9 Housing and Mortgage Trends for the Rest of 2019 originally appeared on NerdWallet.

Consider a Mortgage Refi

by Dawn & Peter Balzano


Mortgage rates have fallen so much lately that millions of homeowners might benefit by refinancing — even if they bought a home just last year. A typical refinancer could save more than $150 a month.

Some homeowners have gotten the message: Refinance applications have almost doubled compared to a year ago, according to the Mortgage Bankers Association. But many homeowners might be unaware that mortgage rates have declined so dramatically that they could save money by refinancing.

Many potential refinancers

One rule of thumb says to consider refinancing if you can cut the mortgage rate by three-quarters of a percentage point. By that measure, 5.9 million homeowners could benefit by refinancing into today’s mortgage rates, according to Black Knight, a technology, data and analytics provider for the mortgage industry. About 953,000 of those potential refinancers got their mortgages in 2018, the company says.

This refinancing opportunity has arrived because mortgage rates have been falling for about seven months. Not a lot of press attention has been paid to the decline, so it might catch some homeowners by surprise. The 30-year fixed rate recently reached its lowest levels since September 2017.

The downward movement has resulted in a dramatic difference in mortgage rates compared to late 2018. The 30-year fixed-rate mortgage averaged 3.82% in mid-June this year, according to Freddie Mac. The week before this past Christmas, it averaged 4.62%. That’s a decline of a little more than three-quarters of a percentage point — enough of a difference to make it worthwhile to look into refinancing.

People who bought homes from late summer to late fall 2018 might be in a position to refinance. Each week from Sept. 13 to Dec. 20, 2018, the 30-year fixed rate averaged 4.6% or higher.

You can save a lot

The average size of a refinanced mortgage was $386,800 in the first week of June, according to the Mortgage Bankers Association. On a loan of that amount, the difference between a 4.75% rate and a 4% rate is $171 a month ($2,053 a year) in principal and interest, rounded to the nearest dollar.

To find out how much you could save:

  • Look at your loan paperwork to see what interest rate you’re paying, and then check out today’s refinance mortgage rates to see the difference.
  • Get an estimate of the fees you’ll pay for your refinance using a closing costs calculator.
  • Finally, calculate your potential savings using NerdWallet’s refinance calculator.

If the numbers look promising, you’ll want to estimate your break-even period: the time it takes for the accumulated monthly savings to exceed the loan fees. For example, if you pay $4,500 in fees to save $150 a month, it will take 30 months to break even ($4,500 divided by $150 equals 30). If you believe you’ll stay in the house beyond the break-even period, it might be worthwhile to refinance.

Tips for the best refinance

In most cases, you can refinance whenever you want, although some lenders require “seasoning” between mortgages, requiring a certain period to pass between appraisals.

You don’t have to start all over again and refinance for 30 years, but you may want to if you’d like to lower your monthly payment.

You can refinance to the same payoff date as your current loan, which can be useful when you want to pay off the mortgage before retirement or the kids go off to college. For example, if your 30-year mortgage is exactly 5 years old when you refinance, you can request to pay off the new loan in 25 years. Tell the lender to amortize the mortgage for 25 years (or whatever term you wish).

When they can afford it, many people refinance from a 30-year to a 15-year loan. The shorter loan usually has higher monthly payments, but the interest paid over the life of the loan is much less.


 

The article Consider a Mortgage Refinance, Even If You Bought Recently originally appeared on NerdWallet.

Are you prepared for Hurricane Season?

by Dawn & Peter Balzano

We found this check list and thought it would be handy to share. It came directly from FEMA and something that should be reviewed by you and your family prior to the arrival of any storm. If you are new to Florida, this is something not to take lightly. We hope you find it useful. 

 

Consider a Refinance Even if you Just Bought a Home

by Dawn & Peter Balzano

 

Consider a Mortgage Refinance, Even If You Bought Recently

Mortgage rates have fallen so much lately that millions of homeowners might benefit by refinancing — even if they bought a home just last year. A typical refinancer could save more than $150 a month.

Some homeowners have gotten the message: Refinance applications have almost doubled compared to a year ago, according to the Mortgage Bankers Association. But many homeowners might be unaware that mortgage rates have declined so dramatically that they could save money by refinancing.

Many potential refinancers

One rule of thumb says to consider refinancing if you can cut the mortgage rate by three-quarters of a percentage point. By that measure, 5.9 million homeowners could benefit by refinancing into today’s mortgage rates, according to Black Knight, a technology, data and analytics provider for the mortgage industry. About 953,000 of those potential refinancers got their mortgages in 2018, the company says.

This refinancing opportunity has arrived because mortgage rates have been falling for about seven months. Not a lot of press attention has been paid to the decline, so it might catch some homeowners by surprise. The 30-year fixed rate recently reached its lowest levels since September 2017.

The downward movement has resulted in a dramatic difference in mortgage rates compared to late 2018. The 30-year fixed-rate mortgage averaged 3.82% in mid-June this year, according to Freddie Mac. The week before this past Christmas, it averaged 4.62%. That’s a decline of a little more than three-quarters of a percentage point — enough of a difference to make it worthwhile to look into refinancing.

People who bought homes from late summer to late fall 2018 might be in a position to refinance. Each week from Sept. 13 to Dec. 20, 2018, the 30-year fixed rate averaged 4.6% or higher.

You can save a lot

The average size of a refinanced mortgage was $386,800 in the first week of June, according to the Mortgage Bankers Association. On a loan of that amount, the difference between a 4.75% rate and a 4% rate is $171 a month ($2,053 a year) in principal and interest, rounded to the nearest dollar.

To find out how much you could save:

  • Look at your loan paperwork to see what interest rate you’re paying, and then check out today’s refinance mortgage rates to see the difference.
  • Get an estimate of the fees you’ll pay for your refinance using a closing costs calculator.
  • Finally, calculate your potential savings using NerdWallet’s refinance calculator.

If the numbers look promising, you’ll want to estimate your break-even period: the time it takes for the accumulated monthly savings to exceed the loan fees. For example, if you pay $4,500 in fees to save $150 a month, it will take 30 months to break even ($4,500 divided by $150 equals 30). If you believe you’ll stay in the house beyond the break-even period, it might be worthwhile to refinance.

Tips for the best refinance

In most cases, you can refinance whenever you want, although some lenders require “seasoning” between mortgages, requiring a certain period to pass between appraisals.

You don’t have to start all over again and refinance for 30 years, but you may want to if you’d like to lower your monthly payment.

You can refinance to the same payoff date as your current loan, which can be useful when you want to pay off the mortgage before retirement or the kids go off to college. For example, if your 30-year mortgage is exactly 5 years old when you refinance, you can request to pay off the new loan in 25 years. Tell the lender to amortize the mortgage for 25 years (or whatever term you wish).

When they can afford it, many people refinance from a 30-year to a 15-year loan. The shorter loan usually has higher monthly payments, but the interest paid over the life of the loan is much less.


 

The article Consider a Mortgage Refinance, Even If You Bought Recently originally appeared on NerdWallet.

Fixer- Uppers FYI's

by Dawn & Peter Balzano

What First-Time Home Buyers Should Know About Fixer-Uppers

A perfect home can be hard to find these days, especially if you’re a first-time home buyer on a budget.

That could be why nearly 60% of home shoppers age 18-34, many of whom may be buying for the first time, say they’re open to a house that needs renovations, according to a 2019 survey from Realtor.com.

Fixer-uppers — existing homes in need of updates or repairs — usually sell for less per square foot than homes that are in good shape, says Dan Bawden, president and CEO of Legal Eagle Contractors in Houston, Texas.

But before you start bargain hunting, you may want to practice your deep cleansing breaths. Simple projects can become complicated once the demolition starts, and if costs end up higher than estimated, finishing your to-do list can take longer than you think.

Use these pointers to help decide if buying a fixer-upper is right for you.

1. Buying a fixer-upper can be a shortcut to homeownership

High prices, limited inventory, weak credit scores and saving a down payment: These challenges often stand between new buyers and their first home. Buying a fixer-upper is one way you may be able to overcome them.

Because they need improvements, fixer-uppers are typically priced at a discount and may get passed over by buyers who can pay for move-in-ready homes. Also, homes that need work are still eligible for loans with relaxed requirements, like 3% minimum down payments or the ability to qualify with a credit score in the 500s.

2. It matters which mortgage you choose

Renovation loans let you finance a house and improvements at the same time. With a renovation loan, you can pay off improvements over a longer period of time and at a lower interest rate than other types of financing. Options include:

  • FHA 203(k): Offered through the Federal Housing Administration, FHA 203(k) loans allow lower income and credit scores than conventional mortgages. They can be used for most improvement projects.
  • VA renovation loan: The Department of Veterans Affairs recently updated its VA loan guidelines to include the purchase and renovation of a home. A VA-approved contractor is required, eligible projects are somewhat limited and your lender may charge a construction fee.
  • HomeStyle: Guaranteed by Fannie Mae, HomeStyle mortgages require higher credit scores than FHA 203(k) loans. But almost any improvements are eligible, including “luxuries” like a pool or landscaping.
  • CHOICERenovation loan: Guaranteed by Freddie Mac, this mortgage allows improvements that help homes withstand natural disasters, among other upgrades. And borrowers can make repairs themselves to earn a down payment credit.

A renovation loan may help cover your mortgage payments if you have to live elsewhere while improvements are in progress and may include extra funds in case projects exceed the estimated cost.

3. Match the house to your skills and budget

“There’s less-than-perfect shape and then there’s total disrepair,” says Carolyn Morganbesser, senior manager of mortgage originations at Affinity Federal Credit Union in New Jersey. Hire a professional contractor to estimate the cost of all the work that’s needed before you make an offer. The house that’s right for you depends on your skills, schedule and the way you plan to finance the improvements.

If you get a traditional mortgage, you’ll have to pay for upgrades with cash, a credit card or a personal loan. These boot-strapped financing options might put a low ceiling on your budget and limit you to one project at a time, so a home that needs simpler repairs may be right for you.

A renovation loan can expand your budget and allow you to tackle larger projects simultaneously, which may make it more reasonable to buy a house that needs a lot of work.

And whether you DIY or hire a pro, don’t be surprised if there are roadblocks along the way. “It always takes longer than you thought it was going to take because that’s the nature of remodeling,” Bawden says.

If your fixer-upper is a foreclosure, brace for delays during the mortgage offer process as well, Morganbesser adds. You’ll be negotiating with the bank that owns the property, and they may reject your offer more than once, she says. That makes for a slow start to a project that could take months.

4. Your lender will be watching

Renovation loans often require extra consultations, inspections and appraisals designed to protect your lender’s investment.

A standard FHA 203(k) loan, for example, requires you to hire a HUD consultant who’ll approve your plans, manage contractor payments and inspect the property after each phase of work is complete.

Using the CHOICERenovation loan’s sweat equity provision means you’ll go through two appraisals — before and after improvements. The appraiser will confirm that workmanship and materials match what’s promised in the contract, and that the newly renovated home lives up to its estimated value.

Don’t be frustrated by these additional hurdles; they help to ensure the work is on-time, on-budget and up to snuff.

5. You’ll create a home that’s uniquely yours

There’s no doubt that buying a fixer-upper is more work than a move-in ready house, but the reward most likely will match the effort.

When the dust clears and the paint dries, your first home will be full of personal touches rather than the remnants of someone else’s life.

A house that’s just how you want it without the premium price tag of new construction? Now that’s a first-time home buyer’s dream.


The article What First-Time Home Buyers Should Know About Fixer-Uppers originally appeared on NerdWallet.

Buying an Energy-Efficient Home: A Financially Bright Idea

by Dawn & Peter Balzano

Whether you give a hoot about the environment or not, it could pay to think about energy efficiency when shopping for a home.

Newer houses certified by Energy Star — the federal government’s energy-efficiency rating program — use an average of 20% less energy than homes built to the 2009 International Energy Conservation Code, according to the U.S. Environmental Protection Agency, which oversees the system.But using less energy is just the beginning. Green certification programs like the National Green Building Standard (NGBS) or Leadership in Energy & Environmental Design (LEED) go even further, with strict standards for indoor air quality, greenhouse gas emissions and water conservation, among other things.

Although energy conservation might not sound as exciting as a luxury bathroom or backyard patio, improving health and comfort while reducing energy bills could help turn your house into a true dream home.

Benefits of an energy-efficient home

Thirty percent of homeowners say their monthly housing costs, including utilities, are expensive, according to a 2018 NerdWallet study. The cost to heat, cool and illuminate an entire house can be especially shocking for first-time home buyers who may be more accustomed to fewer square feet.

Buying a home that’s built to conserve resources can help you avoid those breathtaking bills, but it may require a slightly bigger mortgage.

Energy Star homes cost around $2,500 more to build on average, the EPA told NerdWallet in an email. And LEED certification can add an extra 2.4% to the total cost of building a home, on average.

Home buyers can recoup the added investment in several ways, however. In addition to lowering utility bills, energy-efficient homes often sell faster and at a higher price than noncertified homes, studies have shown.

If you buy a certified efficient house, it could give you an advantage should you ever sell. Energy-efficient homes bring in around $5,000 more than standard homes, a 2019 National Association of Home Builders study concluded.

What makes an energy-efficient home different?

Certification rules vary, but in general, you can expect region-specific design, high-efficiency features and appliances, and rigorous performance evaluations. But the house isn’t the only thing held to a higher standard.

For a home to qualify for Energy Star certification, for example, the builder, HVAC contractor and energy rater must have proper credentials, and in some cases, EPA training.

NGBS or LEED certification involves close inspection of the home’s location and lot design, sustainability of building materials, and even access to alternative transportation to meet minimum standards.

How to find an energy-efficient home

Demand for energy-efficient homes helps explain why millions have been built in the U.S. since 1995, with more being added each year. Use these tips to help you find one.

1. Look for ‘green’ keywords in listings

Building codes address safety and structural integrity, but they generally don’t deal with energy efficiency, comfort or indoor air quality, says Jeff Bogard, president of R.E.A Homes LLC, a custom home building company in St. Louis, Missouri.

For clues to high performance in those areas, watch for listings that mention a third-party green certification, a recent energy audit or energy-efficient upgrades.

But not all certifications will appear in listings, because not all sellers think to include them, says James W. Mitchell, founder of Renewablue, a home energy consulting firm in Fort Collins, Colorado. If energy efficiency is on your wish list, always ask the seller or listing agent about a particular house.

2. Consider an eco-savvy agent

When hiring an agent, ask if he or she has experience with energy-efficient homes or relevant credentials. The EcoBroker designation or the National Association of Realtors (NAR) Green Designation are two options.

NAR Green designees are educated about what makes a home healthier and more efficient. This allows them to “provide opportunities, guidance and hopefully vendors that understand green-building science,” says Melisa Camp, a member of NAR’s Green Resource Council Advisory Board.

3. Request past utility bills from the seller

You can ask for utility data during the shopping stage or as a provision in the sales contract. Past bills will help you understand the actual cost of ownership.

4. Consider an energy-efficient mortgage

Some homes are less efficient simply because today’s energy standards didn’t exist when they were built. If the house you fall in love with is an energy hog, an energy-efficient mortgage, or EEM, can help.

Available as a conventional, FHA or VA loan, an EEM “wraps the expense of energy-efficient improvements into the homeowner’s mortgage payment,” Mitchell says. It’s probably the only time borrowing more saves you money, he says. In time, the energy savings could completely offset the extra cost. Not all lenders offer EEMs, so ask about availability when shopping for a mortgage.

If you are interested in speaking with an experienced Realtor in Palm Beach County that can help you buy or sell a home, give me a call! 

Make a Home Down Payment Without Wrecking Your Finances

by Dawn & Peter Balzano

Maximizing a home down payment can make sense: The bigger the down payment, the lower the monthly mortgage bill and the better the chance of building equity more quickly.

But putting too much down could leave you without enough cash for home maintenance — or anything else.

Pinpointing the right amount involves balancing the advantages of boosting the down payment against the need to hold back money for urgent upgrades, life’s emergencies, and having some fun with your new home.

“There’s really no one-size-fits-all solution,” says Jason Speciner, a certified financial planner in Fort Collins, Colorado.

Effect of a higher down payment

Calculating how different down payments would affect a monthly mortgage payment is eye-opening. Some lenders require only 3% down for conventional home loans, which makes getting in the door easier but means assuming more debt than with higher down payments.

Many borrowers ask if they should scrape together a little more, such as 5% versus 3%, says Rick Bechtel, head of U.S. residential lending at TD Bank. But that probably wouldn’t make enough difference in the monthly mortgage payment to justify doing so if it left you strapped, he says.

“The need for post-closing cash is always greater, and sometimes significantly so, than people expect,” he says.

But a higher down payment can make a significant difference if it means lowering or avoiding mortgage insurance. The insurance, which can involve upfront and monthly fees, protects the lender if the borrower defaults. Depending on the type of loan, making a higher down payment may eliminate some of that expense, if not all of it.
 

Kristin Phillips, a Tampa, Florida, psychologist and author of The Debt Shrink blog, says she and her husband, Brandon, couldn’t put down the traditional 20%, but they wanted to put down more than the minimum when they bought a home in 2013.

“Ten percent was a good compromise,” she says. That kept the monthly mortgage under 25% of their income so they could live comfortably. Eventually they made extra mortgage payments to build enough equity to eliminate private mortgage insurance.

Borrow with care

When deciding on down payment size, consider its effect on other aspects of your financial plan.

Twenty-nine percent of homeowners ages 21 to 34 borrowed from retirement accounts to help fund down payments, according to the Bank of the West’s 2018 Millennial Study.

But the decision to do so shouldn’t be taken lightly. Borrowing from a 401(k) is particularly risky. After a job loss, the loan must be repaid by the next tax filing deadline or it’s taxed as ordinary income, with a 10% penalty if the withdrawal is taken before age 59½.

Using a Roth IRA to boost a down payment is a better option, says Aaron Clarke, a certified financial planner and wealth adviser at Halpern Financial in Ashburn, Virginia. There are no taxes or penalties on withdrawals of contributions. First-time home buyers who have contributed to a Roth for at least five years can withdraw up to $10,000 of earnings on the contributions, tax- and penalty-free.
 

But Linda Rogers, a certified financial planner and owner of Planning Within Reach in Memphis, Tennessee, says she doesn’t recommend borrowing from retirement savings. Many people are behind on saving anyway, she says, and borrowing from an IRA means losing tax-free growth.

Expect the unexpected

Thirty-four percent of recent first-time buyers say they no longer felt financially secure after buying their current home, according to NerdWallet’s 2019 Home Buyer Report, based in part on a survey of 2,029 adults by The Harris Poll for NerdWallet.

To maintain security, resist draining your savings for the down payment and closing costs. Leave some for emergencies, such as a car breakdown.
“Emergency reserves are for ‘Oh, shoot’ moments,” Speciner says.

And homeownership includes plenty of those. To minimize surprises, review the home inspector’s report and negotiate repairs with the seller before purchasing. Budget for immediate upgrades, such as fencing the yard for your dog. Include some cushion.

Alexandra Geneser, a neuropsychologist, used a portion of her savings for a 7% down payment and reserved the rest to remodel a fixer-upper in Charlottesville, Virginia, in 2018. The money for upgrades included a 20% cushion in case the project cost more than expected. The approach left her with enough to create the home she wanted without derailing her financially. “I am so overjoyed with my house,” she says.

Finally, leave some cash for fun stuff, like furniture.

“You just achieved a dream,” Bechtel says. “You’re going to spend money because you’ll have rooms you didn’t have before.”

When you are ready to start looking for a home, please give me a call. 

A home has tons of amenities – which do you list first?

by The Kiplinger Washington Editors, Andrea Browne Ta

I found this article very interesting and thought that I would share it... 

NEW YORK – May 20, 2019 – Homeowners are sometimes hesitant to upgrade when it's time to sell. After all, you won't be living there much longer, and most home remodeling efforts only increase home values by 50%-80% of the average project's costs, according to Remodeling magazine's 2019 Cost vs. Value report. For example, the average cost of a mid-range bathroom remodel is $20,420. You'd recoup about $13,717 (67.2%) of that amount during a resale.

While you may not want to spend the extra cash, the cost of inaction can be far greater than the small loss you'll incur on any home-improvement projects.

"Making small upgrades over time serves a seller immensely," says Brian Lewis, a real estate broker with New York City-based realty firm Compass. These don't have to be break-the-bank alterations, either. Even merely keeping the color palette up-to-date will go a long way.

"Getting stuck in time with your home isn't a smart move and is rarely rewarded financially at sale time," he adds. In fact, it may cause your house to linger on the market longer. As a result, you'll likely have to pay ongoing mortgage, maintenance and staging costs.

To make the most of your remodeling budget, focus on features that most homebuyers really want to see.

Home features most coveted by today's buyers

Laundry room
Percentage of buyers who want this feature: 91%
Cost to install: $1,000 to $5,000 for a small-scale project

More than anything else, homeowners want a room other than the guest bedroom to stack all the clean laundry in until it finally gets put away. A separate laundry room tops the National Association of Home Builders' (NAHB) list of most-wanted home features by buyers.

"Having a separate room [to use for things such as folding or ironing clothes] helps to keep the mess out of your living space … Potential buyers will see it as a huge benefit," says Paul Sullivan, founder and president of the Sullivan Company, a Newton, Mass., remodeling and custom-building firm.

If you don't have an existing laundry room and want to add one, the basement is usually the easiest (and cheapest) place to put it, Sullivan advises. The utility lines are already there, and in many cases the basement is unfinished, so you won't have to demolish anything first. Adding a laundry room in the basement can cost as little as $1,000, he says.

However, homeowners who prefer a laundry room or laundry closet (which fits just a washer and dryer) closer to the bedroom can expect installation to cost around $5,000, Sullivan notes. The cost of a full laundry room complete with a sink and storage cabinets could easily surpass $10,000, he says.

Energy efficiencies (appliances and windows)
Percentage of buyers who want this feature: 89%
Cost to install: Varies by appliance

Would-be buyers looking to limit utility bills will likely be drawn to properties with energy efficiencies, such as Energy Star-qualified windows and appliances. "Buyers are most impressed with smart, energy-efficient choices that in no way limit their comfort, but in every way save them money in the long run," Compass's Lewis says. Sellers should be sure to play up these features in their home listings.

Energy-efficient windows can trim heating and cooling costs by 12%, while individual appliances, such as an Energy Star-certified washing machine ($528 to $1,800 at Home Depot), can save homeowners $45 a year or more on their utility bills. Replacing an existing clothes dryer with an energy-efficient version could save as much as $245 over the appliance's lifetime.

Energy Star-qualified windows have an invisible glass coating, vacuum-sealed spaces filled with inert gas between panes, sturdier weather stripping than regular windows and improved framing materials – all of which reduce undesirable heat gain and loss in the home. An Energy Star-certified dishwasher (ranging in price from $230 to $1,709 at Home Depot) uses soil sensors to assess how dirty your dishes are to minimize water use.

Patio
Percentage of buyers who want this feature: 87%
Cost to install: $963 per 120 square feet for a concrete patio

It's important for homeowners not to neglect the backyard area when prepping for resale, says Mike McGrew, former treasurer of the National Association of Realtors and CEO of McGrew Real Estate, a Lawrence, Kansas-based realty firm. In today's housing market, outdoor living spaces have become the most coveted outdoor home feature.

"When most buyers see a house with a really nice backyard, they start to envision themselves sitting outdoors with friends having drinks," McGrew adds. Outdoor areas offer more living space without the cost of a large-scale home addition.

Thanks to the popularity of backyard renovation TV shows, such as HGTV's Going Yard, DIY Network's Yard Attack! And Bravo's Backyard Envy, buyers now envision everything from a traditional ground-level patio to an elevated deck to a backyard kitchen area.

Ceiling fan
Percentage of buyers who want this feature: 85%
Cost to install: $466 per fixture with light kit and remote control

In addition to improving a home's aesthetic, energy-efficient ceiling fans (ranging in price from $69 to $1,300 at Lowe's) can also help lower cooling costs when used in conjunction with an air conditioner during the warmer months.

Ceiling fans create a wind-chill effect that helps cool the people sitting in the room. Homeowners should be able to raise the thermostat level by four degrees without a reduction in comfort while the fan is in use, according to Energy.gov.

Energy.gov recommends that ceiling fans only be used in rooms with a ceiling height of at least eight feet. The fans work best at that height and when they're hanging 10 to 12 inches below the ceiling.

Garage storage space
Percentage of buyers who want this feature: 85%
Cost to install: $2,025 - $2,363 for 380 square feet

Buyers with growing families need lots of storage space. Sellers should keep in mind that "streamlined living equates to more dollars in your pocket at sale time," Compass's Lewis says. Carving out some space in your garage to help keep clutter out of the main living area could help your bottom line. "Make sure the bonus space is easily accessible and wonderfully organized," he adds.

Unlike an attic or a backyard shed, the garage is accessible – generally, just a few steps away from the rest of the house – making it easier to transport items such as tools, patio chairs or boxes to and from other parts of the house.

The installation cost includes adding cabinetry and shelving, peg wall boards for tool storage, overhead lighting and additional electrical circuits.

Exterior lighting
Percentage of buyers who want this feature: 85%
Cost to install: $65 per fixture

Illuminating a well-manicured lawn with exterior lighting can help grab potential buyers' attention before they even set foot in the front door. In fact, exterior lighting is the second most-wanted outdoor feature (patio was first), according to the NAHB. Options include spotlights, walkway lights and pendant lights.

Aesthetics aside, exterior lighting also serves as an added safety feature for your home, says Daniel Hurst, owner and general manager of Hurst Design-Build-Remodel, a Middleburg Heights, Ohio-based home remodeling company. Motion-sensor lights, for example, turn on automatically whenever there is movement outside your house.

Walk-in pantry
Percentage of buyers who want this feature: 83%
Cost to install: Varies based on design

Home buyers with families know that the kitchen can quickly become overcrowded when there's not enough space to store the essentials (think: canned goods, condiments and food storage containers). That's why many are including a walk-in pantry on their must-have list for potential homes. In fact, it was the most-wanted kitchen feature among buyers polled in the NAHB's report.

Unlike reach-in closet pantries with sliding doors that offer limited space, walk-in versions allow homeowners to store larger quantities of non-perishable food items and other kitchen essentials just steps away from the food prep area, suggests Neil Parsons, project designer for Move or Improve, a Matawan, N.J.-based home design firm. This can be especially helpful for those who like to shop in bulk at warehouse clubs.

Walk-in pantries are typically 5 x 5 feet and have U-shaped open shelves or cabinets with a countertop. Make sure the pantry is situated somewhere that is cool and dry.

Hardwood floors
Percentage of buyers who want this feature: 83%
Cost to install: $999 per 120 square feet of red oak flooring

Hardwood flooring offers a cleaner look, is easier to maintain and is more durable than carpet, which needs to be replaced every eight to 10 years. "Hardwood can be refinished periodically and lasts a lifetime," Sullivan says.

Sellers on a budget may want to buy engineered wood flooring (which is a hardwood veneer wrapped around several layers of plywood, fiberboard and hardwood). The cost to install 120 square feet of engineered wood flooring is $858 – nearly 15% cheaper than pure hardwood flooring.

Walk-in closet (master bedroom)
Cost to install: Varies based on design

While walk-in closets aren't among the top demands of all homebuyers, they're quickly gaining in popularity among first- and second-time homebuyers, according to a 2018 NAHB survey that focused on new buyers. A walk-in closet in the master bedroom ranked among their top five features.

If you live in an older dwelling with a reach-in closet, you may want to consider revamping it, suggests Maria Zamora, a realtor associate with Realty Consultants Network in Addison, Tex. Couples generally want a closet with more space because they'll be sharing it. Singles desire the flexibility of being able to store their personal belongings – from clothes and shoes to jewelry and other accessories – in one place, while keeping them organized.

"Homes without a walk-in-closet in the master bedroom are more of a challenge to sell and will attract less buyers," Zamora adds.

If you live in an older home with less space, a full closet renovation in the master bedroom may not be practical. However, you still have options that will help make your property more appealing. Update an existing reach-in closet by installing an organization system complete with shelving units and hanging rods for clothes. You can purchase a prefabricated system from Ikea, which range in price from $155 to $2,077. Go the DIY route or have an Ikea professional install the unit for an additional fee.

You can also hire a consultant from a custom closet design firm, such as The Closet Factory, to come to your home and design an organization system that fits your space. The cost will vary based on your requirements.

If you're an empty-nester, you could even turn a nearby smaller room into a custom walk-in closet. Depending on the quality of the materials used (for example, solid wood shelving vs. wooden veneer shelving), this type of project could range in price from $1,000 to $6,500, according to HomeAdvisor.com.

Eat-in kitchen
Cost to install: $1,000 - $10,000

Eat-in kitchens are also a must-have among first- and second-time home buyers. They're especially attractive to families with children. It's a space where they can congregate in the morning for breakfast before the kids head off to school and parents to work, or in the evening for dinner so everyone can share highlights from their day.

Removing a non-load-bearing wall to create space for a small table and chairs in your kitchen is relatively inexpensive (as little as $1,000), but that price can quickly escalate if your demolition reveals plumbing, duct work and electrical wiring that needs to be removed, Move or Improve's Parsons says.

If you're on a tight budget and can't afford to knock out a wall to create more space for a table and chairs, consider adding a center island with room for bar stools, he suggests. You can purchase prefabricated kitchen islands with space for seating at Home Depot (starting at $540) and Lowe's (starting at $464).

Dining room
Cost to install: $1,000 - $6,000 to add ceiling fixtures or structural columns to open floor plan

In recent years, formal dining rooms (and closed floor plans) have taken a backseat to open floor concepts in today's home models. While open floor concepts help maximize space when entertaining, there are still home buyers who desire a separate dining area distinct from the kitchen. In fact, a separate dining room is among the top 10 essentials for first- and second-time home buyers in the NAHB survey.

"A meal in the dining room creates a sense of importance … It makes people feel special, whether it's for holiday gatherings or a quiet sit-down dinner with your family," says Shannon Lynch, a Realtor with Savvy + Co. Real Estate, a Charlotte, N.C.-based realty firm.

If your home has an open floor plan, there are still ways to create a dining space that's distinct and will attract buyers who desire such a feature. You can add an over-the-table lighting fixture or incorporate a tray ceiling to help define a particular area of the main living level – perhaps just off the kitchen. Another option: Install decorative columns instead of a solid wall. Adding the tray ceiling or decorative columns would skew on the higher end of installation costs and includes materials and labor, Parsons notes.

For those with older homes that have a closed floor plan, it may be time to reexamine your dining room. The cost of a small-scale remodel to a 190-square-foot space ranges in price from $5,832 to $6,804, according to HomeWyse.com. This includes installing new flooring, doors, switch plates, decorative hardware and recessed lighting.

Copyright © 2019 The Kiplinger Washington Editors, Andrea Browne Taylor, online editor

 

Exterior Projects That Can Net You Cash

by D Balzano and NAR

This was a great way to review the cost of projects. Keep in mind this is a national average... If you want advice on how any of these exterior projects could affect the sale of your home, call me!

Features that Help You Sell Your Home Faster

by Dawn & Peter Balzano

This was an interesting and very informative that I found on Florida Realtor Magazine. I thought I would pass this along.    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

If you are interested in selling your home, call or text me today. I specialize in preparing homes to sell. I not only sell in Palm Beach County, I live here. 

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