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Kingwood, Atascocita, and Humble Texas Real Estate Update

Lorna Calder

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How's The Market? What Lies Ahead...

by Lorna Calder

“How’s the Market?”
What’s Ahead for Real Estate

While no one can predict the future with certainty, most experts expect to see modest growth in the U.S. housing market for the remainder of this year and next. Inventory will remain tight, mortgage rates will continue to creep up, and affordability will remain a major issue in many parts of the country.

So what does that mean for home buyers and sellers? To answer that question, we take a closer look at some of the top indicators.

CONTINUED GROWTH IN HOUSING MARKET

There’s good news for homebuyers! In many markets across the country, prices have begun to stabilize after a period of rapid appreciation. Nationwide, home sales experienced a slight decline of 1.6 percent in the second quarter, primarily due to higher mortgage rates and housing prices combined with limited inventory.

However, buyers who have been waiting on the sidelines in anticipation of a big price drop may be disappointed. Demand remains strong across the sector and prices continue to rise. The Case-Shiller U.S. National Home Price Index reported a 6.2 percent annual gain in June, a healthy but sustainable rate of appreciation.1

In its latest Outlook Report, Freddie Mac forecasts continued growth in the housing market due to a strong economy and low unemployment rate, which dropped to 3.9 percent in July.

“The housing market hit some speed bumps this summer, with many prospective homebuyers slowed by not enough moderately-priced homes for sale and higher home prices and mortgage rates,” according to Sam Khater, Chief Economist at Freddie Mac. “The good news is, the economy and labor market are very healthy right now, and mortgage rates, after surging earlier this year, have stabilized in recent months. These factors should continue to create solid buyer demand, and ultimately an uptick in sales, in most parts of the country in the months ahead.”3

INVENTORY TO REMAIN TIGHT, NEW CONSTRUCTION MAY HELP

Experts predict that demand for housing will continue to outpace available supply, especially in the entry-level price range.

“Today, even as mortgage rates begin to increase and home sales decline in some markets, the most significant challenges facing the housing market stem from insufficient inventory accompanying unsustainable home-price increase,” said National Association of Realtors (NAR) Chief Economist Lawrence Yun in a recent release.

"The answer is to encourage builders to increase supply, and there is a good probability for solid home sales growth once the supply issue is addressed,” said Yun. Additional inventory will also help contain rapid home price growth and open up the market to prospective homebuyers who are consequently—and increasingly—being priced out. In the end, slower price growth is healthier price growth."4

With so much demand, why aren’t more builders bringing inventory to the market? According to the National Association of Home Builders, a crackdown on immigration and tariffs on imported lumber have made home construction more difficult and expensive. Those factors—combined with the rising cost of land and increased zoning requirements—have put a damper on the industry overall.5

Still, there’s evidence that a modest rise in the rate of new building projects may be on the way. Freddie Mac predicts new housing construction will increase slightly after a stall last quarter.2 And a recent report by Freedonia Focus Reports forecasts an annual increase in housing starts of 2.4 percent through 2022, led by an uptick in single-family homes.6 The boost in inventory should help drive sales growth and relieve some of the pent-up demand in tight markets.

While the current lack of inventory is generally preferred by sellers because it means less competition, a combination of high prices and rising interest rates has narrowed the pool of potential buyers who can afford to enter the market. Sellers should seek out real estate agents who utilize technologically-advanced marketing tactics to reach qualified buyers in their area.

AFFORDABILITY REACHES LOWEST LEVEL IN A DECADE

According to a recent report by Morgan Stanley, Americans are paying the most in monthly mortgage payments relative to their incomes since 2008.7 And prices aren’t expected to come down any time soon.

"We believe that the current supply and demand environment will continue to push home prices higher, just at a decelerating pace," said John Egan, Morgan Stanley’s Co-Head of U.S. Housing Strategy.

Fortunately, economists aren’t concerned about affordability levels triggering another housing crisis, as lending standards are much higher today than they were during the run-up before the recession. According to credit reporting agency TransUnion, the share of homeowners who made mortgage payments more than 60-days past due fell in the second quarter to 1.7 percent, the lowest level since the market crash.7

NAR Chief Economist Lawrence Yun agreed with this assessment in a recent statement. “Over the past 10 years, prudent policy reforms and consumer protections have strengthened lending standards and eliminated loose credit, as evidenced by the higher than normal credit scores of those who are able to obtain a mortgage and near record-low defaults and foreclosures, which contributed to the last recession.”4

MORTGAGE RATES EXPECTED TO CONTINUE RISING

The Federal Reserve has taken measures to help keep the housing market—and the overall economy—from overheating. It has raised interest rates twice this year so far, causing mortgage rates to surge in the first half of the year.

Economists predict that the rise in mortgage rates will continue at a more gradual rate through this year and next. The U.S. weekly average mortgage rate rose from 3.99 percent in the first week of January to as high as 4.66 percent in May. Freddy Mac forecasts an average rate of 4.6 percent for 2018 and 5.1 percent in 2019.2

The good news is, mortgage rates still remain near historic lows and a whopping 14 points below the recorded high of 18.63 percent in the early 1980s.8 Buyers who have been on the fence may want to act soon to lock in an affordable interest rate ... before rates climb higher.

"Some consumers may be thinking that because mortgage rates are higher than they were a year ago, maybe I should just wait until rates fall down again," said NAR’s Chief Economist Lawrence Yun in a recent speech. "Well, they will be waiting forever."9

WHAT DOES IT ALL MEAN FOR ME?

If you’ve been waiting to buy a home, you may want to act now. A shortage of available homes on the market means prices are likely to keep going up. And a lack of affordable rental inventory means rents are expected to rise, as well.

If you buy now, you will benefit from appreciating property values while locking in an historically-low interest rate on your mortgage. Waiting to buy could mean paying more for your home as prices increase and paying higher interest on your mortgage as rates continue to rise.

And if you’re in the market to sell your home, there’s no need to wait any longer. Prices have begun to stabilize, and rising interest rates could decrease the number of available buyers for your home. Act now to take advantage of this strong seller’s market.

LET’S GET MOVING

While national real estate numbers and predictions can provide a “big picture” outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood.

If you have specific questions or would like more information about where we see real estate headed in our area, let us know! We’re here to help you navigate this changing real estate landscape.

Sources:

  1. S&P Dow Jones Indices Press Release -
    https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/766551_cshomeprice-release-0828.pdf?force_download=true
  2. Freddie Mac Outlook Report -
    http://www.freddiemac.com/research/forecast/20180827_strong_economic_growth.html
  3. DSNews -
    https://dsnews.com/daily-dose/08-28-2018/freddie-weighs-in-on-housing-market
  4. PR Newswire -
    https://www.prnewswire.com/news-releases/realtors-chief-economist-reflects-on-past-recession-whats-ahead-for-housing-300702632.html
  5. CNN Money -
    https://www.keyt.com/lifestyle/where-is-the-us-housing-market-headed-4-things-you-need-to-know/787471572
  6. PR Newswire -
    https://www.prnewswire.com/news-releases/us-housing-starts-to-rise-2-4-yearly-to-2022--300711989.html
  7. Business Insider -
    https://www.businessinsider.com/housing-affordability-slowing-market-sales-2018-8
  8. Value Penguin -
    https://www.valuepenguin.com/mortgages/historical-mortgage-rates
  9. Times Free Press -
    https://www.timesfreepress.com/news/business/aroundregion/story/2018/aug/14/despite-prospects-higher-mortgage-rateshousin/476979/

This is Why I RE/MAX

by Lorna Calder

According to the National Association of Realtors, staging a home prior to listing it can result in a faster and more profitable sale.1 In fact, the Real Estate Staging Association estimates that professionally staged properties spend 73 percent less time on the market, receive more foot traffic, and typically sell for more money.2


The following are 10 tips you can use to get your home “show ready” prior to hitting the market.

These easy and cost-effective ideas will help your house look its best—and help buyers visualize themselves living there. Even if you’re not currently in the market to sell, you can use these tactics to breathe new life into your existing home decor.

To get a plan customized for your particular property, give us a call to schedule a free consultation.

We’d be happy to share our insider knowledge of the buyer preferences in your neighborhood … so you’ll know where to focus your time, money and energy to maximize your results.
 

Source: National Association of Realtors

1. REMOVE CLUTTER

Decluttering is typically the first thing we tell clients to do to prepare their home for sale. And according to the National Association of Realtors, a whopping 93 percent of agents agree.1 Decluttering is the act of removing excess “stuff” from your home to make it appear clean and spacious.

Overflowing closets and cluttered countertops can make your house feel small and cramped. In contrast, sparsely-filled closets and clear countertops will make your home appear larger and assure buyers that there will be plenty of room to store their belongings.

Don’t neglect drawers, cupboards and even your refrigerator in your decluttering efforts. Serious buyers will check out every nook and cranny of your home, so pack up anything you don’t use on a daily basis and store it off site. The same goes for jewelry, sensitive documents, prescription medication, firearms and other items of value. Store them in a locked safe or storage unit before opening your property to buyers.

Make sure any items that remain are clean, tidy and well organized. The good news is, when it comes time to move, a large portion of your packing will be done!

2. DEEP CLEAN AND DEODORIZE

From carpets to bathrooms to appliances, having a clean home is a MUST. If you’ve ever checked into a dirty hotel room, you can imagine how buyers can be turned off by a home that hasn’t been thoroughly cleaned.

If you have a large home, or are short on time, you may want to invest in a professional cleaning service. And if you have carpet, we generally recommend you rent a steam cleaner or hire a company to clean your carpets for you.

In addition to cleaning, it’s equally important to neutralize odors in your home that can be off-putting to buyers, especially pet smells and cigarette smoke. If the weather allows, open your windows and let in fresh air. Empty the trash frequently, and especially before a showing. Avoid cooking any strong-smelling food such as fish or heavy spices. You may need to clean (or remove) drapes and upholstery if odors are particularly strong. Try to keep your home in clean, show-ready condition while it’s on the market. You never know when a potential buyer will want to drop by for a viewing.

3. DEPERSONALIZE Your family photos and personal mementos are often your most treasured possessions. For many of us, they are what make a house a home. However, buyers will have a hard time envisioning themselves living in a place if it feels like YOUR home.

​Pack up any items that are personal to you and your family, such as photos, books, children’s artwork, travel souvenirs and religious items. Collectibles and excessive knickknacks can be distracting to buyers. Instead, keep your decor items minimal and generic to appeal to the largest number of buyers.

4. NEUTRALIZE YOUR COLOR PALETTE Along those same lines, bold color choices may not appeal to all buyers. By incorporating a neutral color palette throughout your home, buyers can better visualize the addition of their own furniture and decor, which may contrast with your current color scheme. But don’t limit yourself to white and beige. Incorporating earth tones and midtone neutrals—like mocha and “greige” (grey-beige)—can add a touch of modern sophistication to your decor.3

One of the quickest and most cost-effective ways to neutralize your home’s decor is with paint. Walls painted in dark, bold or bright colors can turn off buyers. A fresh coat of paint in a neutral color like greige (try Benjamin Moore’s Revere Pewter) or warm white (such as Kelly-Moore’s Rotunda White) offers a clean palette upon which buyers can visualize adding their own personal touches.4

If your sofa is worn, stained or has a bold pattern, consider purchasing a neutral-colored slipcover. Dated or overly busy window coverings should be taken down or replaced. Instead, bring in tasteful pops of color with throw pillows and accessories.
 

5. INCREASE YOUR CURB APPEAL

You only get one chance to make a first impression. According to a 2017 report by the National Association of Realtors, 44 percent of home buyers drove by a property after viewing it online but did NOT go inside for a walkthrough.5 That means if your curb appeal is lacking, buyers may never make it through the door.

Walk around your home and look for any neglected areas that might seem like “red flags” to buyers, such as missing roof shingles or rotted siding. Trim trees and shrubs if needed, and make sure your lawn and flower beds are well maintained. Add some colorful flowers to your front beds and/or flower boxes to brighten up your landscaping.

Make sure the exterior of your home is as clean as the interior. This can often be accomplished with a simple garden hose. But if your siding, walkway, or driveway are stained or dingy, you may want to rent a pressure washer.

Thoroughly wash windows and screens, and remove and store dark solar screens if you have them. Open shutters, curtains and blinds, which will not only make your house look more inviting from the outside, it will brighten the inside.

Consider a fresh coat of paint on your front door, trim and shutters. And small, cosmetic improvements like new house numbers, a colorful wreath and a clean front doormat can have a big impact.6
 

6. FRESHEN KITCHENS AND BATHS

Kitchens and bathrooms will show better and appear larger if all items are cleared from the countertops, except for one or two decorative pieces.7 You should have already packed up non-essentials during your decluttering process, and the remaining items should be neatly stored in pantries and cupboards.

If your cabinets are dingy or outdated, adding a fresh coat of paint and new hardware is an easy and inexpensive way to make them modern and bright. Consider purchasing new shower curtains, bath mats and towels for the bathrooms and new dish towels for the kitchen.

Before each showing, make sure kitchens and baths are spotless and trash cans are empty and out of sight. To add a comforting aroma, try baking cookies, or in the fall, simmer some cinnamon sticks and cloves in a pot of water before you leave the house. In the spring, try a vase of fresh cut lilacs.7

7. SET THE TABLE

Buyers often imagine hosting family gatherings in their new home, and the dining room plays a large role in that vision. If your dining room chairs are stained or outdated, you may want to recover them or use slipcovers. In most cases, an imperfect table can be camouflaged with a neutral and stylish tablecloth.

Be sure the table is centered underneath the chandelier and on the area rug if you’re using one. If your dining room is small, remove all other furniture and leave only four chairs.8

Dress up the table using nice tableware and cloth napkins or a table runner and centerpiece. For a long table, try lining up a series of small vessels down the middle.

8. REARRANGE FURNITURE

Start in your living room and think about what you want to emphasize (and de-emphasize) about the space. For example, do you have a beautiful fireplace or a stunning view? If so, arrange the furniture with that focal point in mind. Use a symmetrical seating arrangement to create a cozy conversation area adjacent to the focal point.

If the room is small, consider removing some of the furniture to make it feel larger, especially oversized pieces. That includes oversized television sets, unless it’s a designated media room. Pulling furniture away from the wall can make the room feel more spacious, and placing your largest furniture piece in the far-left corner (as opposed to near the entry) can create the illusion of a larger space.9

For small bedrooms, remove all the furniture except the bed, bedside tables and a dresser. If it’s a large room, add one or two chairs and a table to create a seating area. Place lamps on the bedside tables and seating area if you have one.10

Make sure each space in your home has a clearly defined purpose. For example, if you’ve been using an extra bedroom as a catch-all storage space, stage it as a guest room or office instead. Turn an awkward alcove into a workstation or a reading corner. Help buyers imagine how they could use the space themselves.3

9. LIGHTEN UP

Lighting can have a drastic impact on the look and feel of a home. Few buyers seek out a dark house; most prefer one that’s light and bright. Make sure windows are clean, and open curtains and blinds to let in the maximum amount of daylight.

Each room should have three types of lighting: ambient (general or overhead), task (such as a reading lamp or under-cabinet light), and accent (such as a floor or table lamp). Aim for a goal of 100 total watts per 50 square feet.11 If your mounted light fixtures are dated, replacing them with something more modern is an easy and inexpensive upgrade that can have a big impact.

Strategically placed landscape lighting can add a dramatic effect to your home’s exterior. Welcome evening visitors with a lighted walkway, or use a spotlight to accentuate trees or other landscaping features. Solar lights require no wiring; simply place them in a sunny spot and they will turn on automatically at dusk.
 

10. HIGHLIGHT YOUR BACKYARD’S BEST FEATURES

While your home’s interior often takes center stage, don’t forget about staging your home’s outdoor areas to help buyers imagine how they could utilize the space.

Even a small patio can become a selling feature with the addition of a cafe table and chairs. Add a tray of plates and coffee cups to help buyers envision a peaceful breakfast on the back porch. Place chairs and wine glasses around an outdoor firepit or hang a hammock with a book in your favorite shady spot.3 These small, simple additions can help buyers visualize the possibilities your backyard has to offer.


BEFORE YOU GET STARTED

If you’re in the market to sell your home, this list provides a great starting point for your preparations. But nothing beats the trained eye and expertise of a real estate agent. Before you do any work, we recommend consulting a professional for advice about your particular property.

We offer free, no-commitment seller consultations and will walk through your home with you to help you assess which projects and upgrades are worth your time and money, and which ones you can skip.

As local market experts, we are intimately familiar with buyer preferences in your area. We’ll run a comparative market analysis to find out how your home compares to others currently on the market, as well as those that have recently sold. Then we’ll tailor a custom plan to suit your particular property, budget and needs.

Please call or email us today with questions or to schedule a free consultation!

Sources:

 

  1. National Association of Realtors –
    https://www.nar.realtor/sites/default/files/migration_files/reports/2017/2017-profile-of-home-staging-07-06-2017.pdf
  2. Real Estate Staging Association –
    http://www.realestatestagingassociation.com/content.aspx?page_id=22&club_id=304550&module_id=164548
  3. Houzz –
    https://www.houzz.com/ideabooks/2661221/list/sell-your-home-fast-21-staging-tips
  4. HGTV –
    https://www.hgtv.com/design/outdoor-design/landscaping-and-hardscaping/10-curb-appeal-tips-from-the-pros-pictures
  5. National Association of Realtors –
    https://www.nar.realtor/sites/default/files/reports/2017/2017-home-buyer-and-seller-generational-trends-03-07-2017.pdf
  6. The Spruce –
    https://www.thespruce.com/must-try-neutral-paint-colors-797983
  7. HouseLogic –
    https://www.houselogic.com/sell/preparing-your-home-to-sell/home-staging-checklist/
  8. StageMyOwnHome.com –
    http://www.stagemyownhome.com/staging-the-dining-room.html
  9. Realtor.com –
    https://www.realtor.com/advice/sell/small-living-room-staging-tricks/
  10. SFGATE –
    http://homeguides.sfgate.com/stage-master-bedroom-34573.html
  11. HGTV –
    https://www.hgtv.com/shows/designed-to-sell/15-secrets-of-home-staging-pictures

Home Maintenance Calendar

by Lorna Calder

Home Maintenance Tips and Calendar

A Seasonal Guide to Maintaining Your Home

From summer vacations to winter holidays, it seems each season offers the perfect excuse to put off our to-do list. But be careful, homeowners: neglecting your home’s maintenance could put your personal safety—and one of your largest financial investments—at serious risk.

In no time at all, small problems can lead to extensive and expensive repairs. And even if you avoid a catastrophe, those minor issues can still have a big impact. Properties that are not well maintained can lose 10 percent (or more) of their appraised value.1

The good news is, by dedicating a few hours each season to properly maintaining your home, you can ensure a safe living environment for you and your family ... and actually increase the value of your home by one percent annually!1 You just need to know where and how to spend your time.

Use the following checklist as a guide to maintaining your home and lawn throughout the year. It's applicable for all climates, so please share it with friends and family members who you think could benefit, no matter where their home is located.

Seasonal Guide to Maintaining Your Home

You Don't Need Luck to Find Your Dream Home

by Lorna Calder

You don't need luck to find your Dream Home! Let The Lorna Calder Team guide you through the process step by step!

Step One:

Give us a call today! 281-361-2280

Step Two:

Our team of professionals can help you with the first steps of getting pre-approved with a reputable mortgage lender.

Step Three:

We can then start the search for your dream home in Kingwood, Humble, Atascocita and and Houston area.

Step Four:

We will handle all the paperwork and use our proven negotiation techniques to help get you the best deal for the perfect home.

Step Five:

You get to move in! Its that easy. We simplify the process so you don't have to sweat the small stuff.

Read our past clients' reviews and see what they had to say about us here.
 

Its Here: The Home Buyer's Guide to Getting Mortgage Ready

by Lorna Calder


Home Buyer's Guide to Getting Mortgage ApprovalDon’t wait until you’re ready to move to start preparing financially to buy a home.

If you’re like the vast majority of home buyers, you will choose to finance your purchase with a mortgage loan. By preparing in advance, you can avoid the common delays and roadblocks many buyers face when applying for a mortgage.

The requirements to secure a mortgage may seem overwhelming, especially if you’re a first-time buyer. But we’ve outlined three simple steps to get you started on your path to homeownership.

Even if you’re a current homeowner, it’s a good idea to prepare in advance so you don’t encounter any surprises along the way. Lending requirements have become more rigorous in recent years, and changes to your credit history, debt levels, job type and other factors could impact your chances of approval.

It’s never too early to start preparing to buy a home. Follow these three steps to begin laying the foundation for your future home purchase today!

STEP 1: CHECK YOUR CREDIT SCORE

Your credit score is one of the first things a lender will check to see if you qualify for a loan. It’s a good idea to review your credit report and score yourself before you’re ready to apply for a mortgage. If you have a low score, you will need time to raise it. And sometimes fraudulent activity or erroneous information will appear on your report, which can take months to correct.

The credit score most lenders use is your FICO score, a weighted score developed by the Fair Isaac Corporation that takes into account your payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%).1

 

FICO Score - source myFico.com

Source: myFico.com

Base FICO scores range from 300 to 850. A higher FICO score will help you qualify for a lower mortgage interest rate, which will save you money.2

By federal law, you are entitled to one free copy of your credit report every 12 months from each of the three major credit bureaus (Equifax, Experian and Transunion). Request your free credit report at https://www.annualcreditreport.com.

Minimum Score Requirements

To qualify for the lowest interest rates available, you will usually need a FICO score of 760 or higher. Most lenders require a score of at least 620 to qualify for a conventional mortgage.3

If your FICO score is less than 620, you may be able to qualify for a non-conventional mortgage. However, you should expect to pay higher interest rates and fees. For example, you may be able to secure an FHA loan (one issued by a private lender but insured by the Federal Housing Administration) with a credit score as low as 580 if you can make a 3.5 percent down payment. And FHA loans are available to applicants with credit scores as low as 500 with a 10 percent down payment.4

Increase Your Credit Score

There’s no quick fix for a low credit score, but the following steps will help you increase it over time.5

1. Make Payments on Time

At 35 percent, your payment history accounts for the largest portion of your credit score. Therefore, it’s crucial to get caught up on any late payments and make all of your future payments on time.

 

If you have trouble remembering to pay your bills on time, set up payment reminders through your online banking platform, a free money management tool like Mint, or an app like BillMinder.

2. Avoid Applying for New Credit You Don’t Need

New accounts will lower your average account age, which could negatively impact your length of credit history. Also, each time you apply for credit, it can result in a small decrease in your credit score.

The exception to this rule? If you don’t have any credit cards—or any credit accounts at all—you should open an account to establish a credit history. Just be sure to use it responsibly and pay it off in full each month.

If you need to shop for a new credit account, for example, a car loan, be sure to complete your loan applications within a short period of time. FICO attempts to distinguish between a search for a single loan and applications to open several new lines of credit by the window of time during which inquiries occur.

3. Pay Down Credit Cards

When you pay off your credit cards and other revolving credit, you lower your amounts owed, or credit utilization ratio (ratio of account balances to credit limits). Some experts recommend starting with your highest-interest debt and paying it off first. Others suggest paying off your lowest balance first and then rolling that payment into your next-lowest balance to create momentum.

Whichever method you choose, the first step is to make a list of all of your credit card balances and then start tackling them one by one. Make the minimum payments on all of your cards except one. Pay as much as possible on that card until it’s paid in full, then cross it off your list and move on to the next card.

Debt

Interest Rate

Total Payoff

Minimum Payment

Credit Card 1

12.5%

$460

$18.40

Credit Card 2

18.9%

$1,012

$40.48

Credit Card 3

3.11%

$6,300

$252

4. Avoid Closing Old Accounts

Closing an old account will not remove it from your credit report. In fact, it can hurt your score, as it can raise your credit utilization ratio—since you’ll have less available credit—and decrease your average length of credit history.

Similarly, paying off a collection account will not remove it from your report. It remains on your credit report for seven years, however, the negative impact on your score will decrease over time.

5. Correct Errors on Your Report

Mistakes or fraudulent activity can negatively impact your credit score. That’s why it’s a good idea to check your credit report at least once per year. The Federal Trade Commission has instructions on their website for disputing errors on your report.

While it may seem like a lot of effort to raise your credit score, your hard work will pay off in the long run. Not only will it help you qualify for a mortgage, a high credit score can help you secure a lower interest rate on car loans and credit cards, as well. You may even qualify for lower rates on insurance premiums.6

STEP 2: SAVE UP FOR A DOWN PAYMENT AND CLOSING COSTS

The next step in preparing for your home purchase is to save up for a down payment and closing costs.

Down Payment

When you purchase a home, you typically pay for a portion of it in cash (down payment) and take out a loan to cover the remaining balance (mortgage). 

Many first-time buyers wonder: How much do I need to save for a down payment? The answer is … it depends.

Generally speaking, the higher your down payment, the more money you will save on interest and fees. For example, you will qualify for a lower interest rate and avoid paying for mortgage insurance if your down payment is at least 20 percent of the property’s purchase price. But what if you can’t afford to put down 20 percent?

On a conventional loan, you will be required to purchase private mortgage insurance (PMI) if your down payment is less than 20 percent. PMI is insurance that compensates your lender if you default on your loan.7

PMI will cost you between 0.3 to 1.5 percent of the overall mortgage amount each year.8 So, on a $100,000 loan, you can expect to pay between $300 and $1500 per year for PMI until your mortgage balance falls below 80 percent of the appraised value.9 For a conventional mortgage with PMI, most lenders will accept a minimum down payment of five percent of the purchase price.7

If a five-percent down payment is still too high, an FHA-insured loan may be an option for you. Because they are guaranteed by the Federal Housing Administration, FHA loans only require a 3.5 percent down payment if your credit score is 580 or higher.7

The downside of getting an FHA loan? You’ll be required to pay an upfront mortgage insurance premium (MIP) of 1.75 percent of the total loan amount, as well as an annual MIP of between 0.80 and 1.05 percent of your loan balance on a 30-year note. There are also certain limitations on the types of loans and properties that qualify.10

There are a variety of other government-sponsored programs created to assist home buyers, as well. For example, veterans and current members of the Armed Forces may qualify for a VA-backed loan requiring a $0 down payment.7 Consult a mortgage lender about what options are available to you.

TYPE

MINIMUM DOWN

ADDITIONAL FEES

Conventional Loan

20%

Qualify for the best rates and no mortgage insurance required

Conventional Loan

5%

Must purchase private mortgage insurance costing 0.3 - 1.5% of mortgage annually

FHA Loan

3.5%

Upfront mortgage insurance premium of 1.75% of loan amount and annual fee of 0.8 - 1.05%

 

Current Homeowners

If you’re a current homeowner, you may have equity in your home that you can use toward your down payment on a new home. We can help you estimate your expected return after you sell your current home and pay back your existing mortgage. Contact us for a free evaluation!

Closing Costs

Closing costs should also be factored into your savings plan. These may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys and other fees associated with the purchase of your home. Closing costs vary but typically range between two to five percent of the purchase price.11

If you don’t have the funds to pay these outright at closing, you can often add them to your mortgage balance and pay them over time. However, this means you’ll have a higher monthly payment and pay more over the long term because you’ll pay interest on the fees.

 

STEP 3: ESTIMATE YOUR HOME PURCHASING POWER

Once you have the required credit score, savings for a down payment and a list of all your outstanding debt obligations via your credit report, you can assess whether you are ready and able to purchase a home.

It’s important to have a sense of how much you can reasonably afford—and how much you’ll be able to borrow—to see if homeownership is within reach.

Your debt-to-income (DTI) ratio is one of the main factors mortgage companies use to determine how much they are willing to lend you, and it can help you gauge whether or not your home purchasing goals are realistic given your current financial situation.

Your DTI ratio is essentially a comparison of your housing expenses and other debt versus your income. There are two different DTI ratios that lenders consider:

Front-End Ratio

Also called the housing ratio, this is the percentage of your income that would go toward housing expenses each month, including your mortgage payment, private mortgage insurance, property taxes, homeowner’s insurance and association dues.12

To calculate your front-end DTI ratio, a lender will add up your expected housing expenses and divide it by your gross monthly income (income before taxes). The maximum front-end DTI ratio for most mortgages is 28 percent. For an FHA-backed loan, this ratio must not exceed 31 percent.13

Back-End Ratio

The back-end ratio takes into account all of your monthly debt obligations: your expected housing expenses PLUS credit card bills, car payments, child support or alimony, student loans and any other debt that shows up on your credit report.12

To calculate your back-end ratio, a lender will tabulate your expected housing expenses and other monthly debt payments and divide it by your gross monthly income (income before taxes). The maximum back-end DTI ratio for most mortgages is 36 percent. For an FHA-backed loan, this ratio must not exceed 41 percent.13

Home Affordability Calculator

To get a sense of how much home you can afford, visit the National Association of Realtors’ free Home Affordability Calculator at https://www.realtor.com/mortgage/tools/affordability-calculator.

This handy tool will help you determine your home purchasing power depending on your location, annual income, monthly debt and down payment. It also offers a monthly mortgage breakdown that projects what you would pay each month in principal and interest, property taxes, and home insurance.

The Home Affordability Calculator defaults to a back-end DTI ratio of 36 percent. If the monthly cost estimate at that ratio is significantly higher than what you’re currently paying for housing, you need to consider whether or not you can make up the difference each month in your budget.

If not, you may want to lower your target purchase price to a more conservative DTI ratio. The tool enables you to scroll through higher and lower price points to see the impact on your monthly payments so you can identify your ideal price point.

(Note: This tool only provides an estimate of your purchasing power. You will need to secure pre-approval from a mortgage lender to know your true mortgage approval amount and monthly payment projections.)

Can I Afford to Buy My Dream Home?

Once you have a sense of your purchasing power, it’s time to find out which neighborhoods and types of homes you can afford. The best way to determine this is to contact a licensed real estate agent. We help homeowners like you every day and can send you a comprehensive list of homes within your budget that meet your specific needs.

If there are homes within your price range and target neighborhoods that meet your criteria—congratulations! It’s time to begin your home search.

If not, you may need to continue saving up for a larger down payment … or adjust your search parameters to find homes that do fit within your budget. We can help you determine the right course for you.

START LAYING YOUR FOUNDATION TODAY

It’s never too early to start preparing financially for a home purchase. These three steps will set you on the path toward homeownership … and a secure financial future!

And if you are ready to buy now but don’t have a perfect credit score or a big down payment, don’t get discouraged. There are resources and options available that might make it possible for you to buy a home sooner than you think. We can help.

Want to find out if you’re ready to buy a house? Give us a call! We’ll help you review your options, connect you with one of our trusted mortgage lenders, and help you determine the ideal time to begin your new home search.

The above references an opinion and is for informational purposes only.  It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

Sources:

  1. Quicken Loans Blog –
    https://www.quickenloans.com/blog/how-does-your-credit-score-affect-your-mortgage-eligibility
  2. myFICO –
    https://www.myfico.com/credit-education/credit-report-credit-score-articles/
  3. Bankrate –
    https://www.bankrate.com/mortgages/what-is-a-good-credit-score-to-buy-a-house/
  4. Bankrate –
    https://www.bankrate.com/finance/mortgages/7-crucial-facts-about-fha-loans-1.aspx
  5. myFICO –
    https://www.myfico.com/credit-education/improve-your-credit-score/
  6. The Balance –
    https://www.thebalance.com/having-good-credit-score-960528
  7. Bankrate –
    https://www.bankrate.com/mortgages/how-much-is-a-down-payment-on-a-house/
  8. Bankrate –
    https://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx
  9. Bankrate –
    https://www.bankrate.com/finance/mortgages/removing-private-mortgage-insurance.aspx
  10. The Balance –
    https://www.thebalance.com/fha-home-loan-pitfalls-315673
  11. Investopedia –
    https://www.investopedia.com/terms/c/closingcosts.asp
  12. Bankrate –
    https://www.bankrate.com/finance/mortgages/why-debt-to-income-matters-in-mortgages-1.aspx
  13. The Lenders Network –
    https://thelendersnetwork.com/fha-debt-to-income-ratio/

5 Reasons Why You Should Call Us TODAY!

by Lorna Calder

Sure we can help you buy and sell a home but did you know we can do so much more? In fact, we offer our amazing clients a variety of services regardless of whether we are working with them on a home sale or purchase.

1. You will be informed on our local market!

The housing market nationally may look similar to our local market but there are many important differences. We can help you decide if now if the best time to buy or sell from giving you the full scoop on what's happening locally in our market. Also, we can product for you a FREE Comparative Market Analysis to let you know how much your home is worth. Give us a call today and we can start the discussion!

 

2. We can answer all of your Real Estate questions!

If we are currently working on a transaction together, we will guide you through the ENTIRE process and answer any question you have. We are also here to answer any questions you may have even after the transaction is closed, no matter how long ago it closed. We can provide you tips on your list of improvements or your home's curb appeal that will help to save you money, find the correct professional to do the job and help to make it even more sell-able in the future. 

 

3. We are delighted to share our professional network!

Because of the social nature of the Real Estate business, we are in contact with a wide array or reputable tradesmen, service providers and anything in between for our local area. It doesn't matter if you need a handyman for a simple job or a contractor for a remodel, we can help you find the right person for the job. We can even help you find landscapers, pool service companies and roofers!We assure you that if you call us today, we can help you find the right person for the job!

 

4. We are your "Community Connection"

We are very involved in our community! It doesn't matter if you are new in town or have lived here for many many years, we can provide you with updates on what's happening in our neighborhood. Shannon and Lorna live in Kingwood and Christina lives in Atascocita, so we are very familiar with the areas!

 

5. Will you be moving out of the area?

If you have decided to move away from the area, allow us to connect you with a TRUE professional that can give you the level of service we would provide. Moving can be a stressful event but we know many top-notch Real Estate professionals in Texas and many other states that will make the experience a breeze! And while we will be saddened by your departure, we will make sure that you are in good hands.

 

So remember, give us a call TODAY whether you are relocating, want to buy or sell a home, need a professional tradesman, want the neighborhood scoop or would like the update on the Local Market; we are here for YOU! Call us today, 281-361-2280!

 

 

© 2018 Buffini & Company. All Rights Reserved. Used by Permission. RMMK JANUARY EREPORT S

 

2018 Market Insight

by Lorna Calder

 

What’s in store for the market in 2018? While it’s impossible to know  for sure, experts analyze current trends to predict what may happen.

 

Home prices and values are expected  to rise modestly 

Home prices have been increasing around the country, with cities such as Dallas, Portland and Seattle experiencing the  largest year-over-year price gains.1 In fact, Washington has  experienced the fastest rise in housing prices in the United States over the past few years.2 While the National Association of Realtors anticipates 2018 home prices will rise by 3.5  percent, Freddie Mac predicts they’ll increase 4.9 percent.3  This percentage may seem modest, but for cities such as Detroit, Las Vegas, Phoenix and San Diego, rising home prices may continue the 2017 trend of creating more pressure in the market.1 The good news is home values in 28 states have risen to above pre-crisis peaks and are at an all-time high.2 


Rental prices are no longer increasing at the rate of home prices in most areas.4 Although the leveling off of rental  prices may take some financial pressure off renters, for  those thinking of buying, it’s a good time to turn their  dream of homeownership into reality.

 

 

Existing home sales have leveled off for now

Experts predict 2018 will spell more of the same for home sales. Many believe this is due to the increase in interest rates in 2017, which may have reduced the purchasing power of many homebuyers. Home purchases are expected to rise a modest 2.8 percent (5.8 million) in 2018.3  


However, patience may pay off for potential buyers. While  the combination of economic recovery, comparatively low mortgage interest rates and job growth may have brought more interested buyers to the market, inventory has been tight over the last few years. In response, homebuilding has been up and new homes are expected to hit the market this year, increasing inventory for potential buyers.5,6 Many experts are predicting 2019 will be a buyers’ market in many areas. 

 

Will 2018 be a banner year for new homes?

Many experts predict that new home sales will drive the  market in 2018.3 A total of 1.33 million housing starts are  expected for 2018, an increase from 1.22 million in 2017.3  While total home sales are expected to increase over two  percent, new home sales are expected to increase eight  percent, reaching 670,000 sales.
 

 

 

 

Sources:  1. Kiplinger 2. Home Buying Institute 3. NAR, Realtor.com 4. CNBC  5. First Tuesday Journal  6. Business Insider  7. Freddie Mac 8. Fannie Mae

© 2018 Buffini & Company. All Rights Reserved. Used by Permission. RMMK JANUARY MF S

 

Tips For Holiday Travel if You’re Driving 🚗

by Lorna Calder

 

IF YOU’RE DRIVING

 

Make sure your car is ready. If you plan on going for an extended drive, then it may be best to take your car to the local mechanic for a tune up! They will check things like your tires and fluid levels to make sure you won’t have a blunder on the side of the road in the middle of nowhere!

 

You should plan your route ahead of time. It helps to know the route you will be taking whether you plan to drive a few hours or a few days. If you do plan to do a trip that takes a day or two, call and book your hotel stays ahead of time to ensure you get a room. Also, look up fun things to do along the route like restaurants and sightseeing activities.

 

Keep your insurance or roadside assistance information handy. Having this information at the ready will help if you are to get in a predicament, this will make it a bit easier instead of having to search for the paperwork when the incident happens.

 

Plug in your cell phone. Always keep your cell phone plugged into the charger in the car. Things like listening to music or using a navigation app will quickly drain your battery.

 

Purchase a safety kit. It will include things like jumper cables, flashlights, flares and caution cones. You can also buy ones specifically for winter travel that will have things like ice scrapers, tire chains, tow rope, snow shovels, blanket and first aid kit.

 

Have safe travels this Holiday Season!

 

With Love,

The Lorna Calder Team 

Tips for Holiday Travel if You’re Flying ✈️

by Lorna Calder


 

Many people use the Holidays as a time to get together and go visit family, making it one of the busiest times for Travel. If you plan to travel by plane, here are some very helpful tips to make it a bit less stressful!

 

TIPS FOR FLYING

Research, Research, Research! It helps to do your research, regardless if it’s a last minute trip or one planned weeks or months in advance. If you can, you may want to consider choosing flexible travel dates to help you nab the best prices. If your airport is a busy hub, consider flying out of an airport nearby, you may save time and money!

 

Plan Carefully. There are factors that can delay your flights like inclement weather with flying in the winter or holidays like Spring Break and Thanksgiving. Unless you have some quick feet, you may want to avoid short layovers so you don’t miss your next flight.

 

Pack Light. This is a hard one for some, especially us ladies, or if you are packing gifts to bring to your destination or back but most airlines are now charging for checked bags. You can save money by sending those gifts ahead of time or generally packing lighter and dong laundry at your destination.

 

LEAVE EARLY. This goes for flying AND driving! Leaving early will allow a buffer for things like traffic, security and parking. If you can take a light rail system, public transportation or something like Uber/Lyft, that can help save time and money.

 

Stay on Top of Flight Changes. You can download your Airline’s app and stay up to date on changes to your flight like delays, cancellations or early arrivals.

 

STAY HEALTHY WHILE YOU TRAVEL

Not only is it the Holiday Season but it’s also Cold and Flu Season! With the close proximity of other travelers to you in the airports and on the plane, it’s important to consider these tips to keep the germs at bay.

 

Stay Hydrated. Bring an empty plastic or reusable water bottle to the airport to refill after you get through security. The cabin pressure tends to dry out eyes and nose and staying hydrated will prevent this from happening and keep germs at bay. It may also help to prevent blood clots from sitting too long.

 

Bring You Own Pillow and Blanket. Some airlines still may provide these for you but you cant be sure that no one else has touched them. Be safe and bring your own to reduce the risk of coming in contact with germs or viruses. Those handy little neck pillows are also SO MUCH MORE comfortable than the flat limp pillows they provide.

 

Bring Some Healthy Snacks. Make it easy to tote items like nuts or dried fruits!

 

Move Around to Prevent Blood Clots. When flying, blood clots can be a major concern especially if you have a long flight overseas or cross country! Get up and walk around the cabin as much as you can, when it’s safe. Or when you are sitting down tap your feet or move your legs in a small bicycle motion to get that blood flowing. 

 

Enjoy your Holiday Season! 

With Love, 

The Lorna Calder Team

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