Can I Buy a Home and Sell My Current One at the Same Time?

Posted on by Andrea T. Fowler

Question of the day right. The simple answer to this question is “yes”. You are able to sell your current home and purchase your next one at the same time. One of the main reasons of moving up is the equity that may be in your home. The chart below notes what homeowners think is their equity value compared to what is their equity value. February2016-29

So are you wondering what you need to do to buy your next home and sell your current home? Well I have you covered in this week’s Tuesday Tip.

 

 

Your new avenue awaits you……Let’s Find it!

Find your new home at NewAvenueRealty.com or move-updallas.com.

 

 

Do’s and Don’ts…..Do YOU know?

Posted on by Andrea T. Fowler

do and dont

Today I am combining my blog post with my Tuesday tip because these tips needed to be in one place. The topic for today is the “do’s and don’ts” of home buying.

Every one has heard that you can do this and you can do that but before you do something in particular, talk to the lender. There are so many interesting stories that I can tell you about when it comes to real estate and why things happen. Here are a few do’s:

DO pay your bills on time. You are asking a lender to loan you thousands of dollars guaranteeing that you will pay them back. They only thing that is attesting to your payment history is your credit report. 

DO know where you stand financially. Do you know you budget and how much you can really afford? Yes your total income may be $100K but when you include all debts, is it financially reasonably to purchase the home with a $2500 mortgage. Better yet, does your credit help those claims? Home buying is there for you to struggle to make the payment just to have an asset. Lenders look at the overall credit picture and you must look at your whole financial picture too. Do you have bills that you pay that doesn’t show on the credit report like cell phone bill, daycare costs, tithes, charitable contributions, etc? 

Now on to the don’ts.

DON’T QUIT YOUR JOB. I know you really dislike Susie and the rest of the staff. Which one do you want more? The house or a new job? Just put a time limit on how long you can deal with Susie and the rest of the staff until you make your home purchase. 

DON’T DEPOSIT YOUR MATTRESS MONEY. Yes, Grandma Jane still hides her savings under the mattress so you developed that habit. Now you have maybe $1,000 or 2 under the mattress. You need it for your down payment or closing costs. When purchasing a home, you need a paper trail. You won’t be able to be use these funds because there is no paper trail on where it came from. I’ve actually had a client do this. Thankfully we were able to get the seller to pay the closing costs he needed. But that’s an FYI. Start “seasoning” your money into an account months before purchasing your home. Plus, it may be safe to have it in an account instead of your home. That’s just my opinion though. 

One of my trusted lender partners do a great job discussing the do’s and don’ts of buying a home. Check out the video below from Mortgage Express.

 

Now that you know what to do to get started, you can contact the lender to get started and be crowned a homeowner in your new home!

 

 

Your new avenue awaits you….let’s find it here. #CrowningHomeowners

9 Ways to Fund Your Down Payment

Posted on by Andrea T. Fowler

9 Ways to Fund

You’ve come to the realization that you are done renting. You hate driving through the broken gate into your apartment complex and you aren’t feeling the property management anymore? Okay that may have been my own personal struggle but I know plenty of people thinking the same.

Example: You pay $1400 a month in rent. That is yearly amount of $16,800 (yes in reality that is what you are paying). Guess what? When it is tax time, you cannot write any of that off and that is just $16,800 out of your pocket for a place that you don’t own and have to ask permission to paint the wall. How fun is that?

Now you’re at the point of “I want to own my home and live my life on the edge.” The scenario may not play out like that but you’re at the point where you want to own your own home. You want the granite countertops, stones on the outside of the home, inviting entry-way, and my beloved favorite: media room.

You know you can get approved for a mortgage. You know you have excellent credit and a stable job. The fear is the down payment. How do I purchase my home without having the funds to do so? Don’t I need 20%? Well I am here to break down what you need and how to gain those down payment funds.

How much will the downpayment be?

This answer really depends on what type of mortgage loan works best for you. For a FHA loan, you will be required to put down 3.5% of the sales price. For a conventional loan, that amount would be 5%. 

Example: If a home is $250,000, for a FHA loan you will need a downpayment of $8,750. On that same home with a conventional loan, that the downpayment would be $12,500.

Does that make you feel a little better?

I don’t have that amount saved. What do I do now? 

Did you know that there are numerous resources to help with the downpayment. Here are 8 ways to fund your downpayment.

    1. Check Your Savings Account
      • Now you may have checked here first and realized that was the obvious first option for the downpayment but that is mostly the first start and lenders are going to want to see some savings in your account.

2. Tap your IRA

      • If you’re looking to buy your first home, let the Internal Revenue Service help. Tax laws allow you to use up to $10,000 in IRA funds as a down payment if you’ve never owned a house. If you’re married and you both are first-time buyers, you each can pull from your retirement accounts, meaning a potential $20,000 down payment. Even better is the IRS definition of first-time home buyer. Technically, you don’t have to be purchasing your very first abode. You qualify under the tax rules as long as you (or your spouse) did not own a principal residence at any time during the two years prior to the purchase of the new home. In these instances, Uncle Sam waives the penalty for early withdrawal, but you may owe tax on the money depending on the type of IRA. Many cash-strapped home buyers, however, find the long-term return of investing in residential real estate is worth the short-term tax bill. (Bankrate)

3. Borrow from your 401K

      • Do you have more retirement money in a company savings plan? Consider borrowing against your 401(k) for the down payment. There are downsides to this strategy: Unlike an IRA home-related withdrawal, you’ll have to pay back any money you take out of your company plan. The repayment will cost you a bit more since the account contributions were made with pretax money, but your payback will be made with after-tax dollars. At least the interest payments on this loan will be going back into your 401(k). (Bankrate)

4. CDs, Stocks, Bonds

      • Do you have money stashed in CDs, stocks, and bonds? These assets would help would it comes to your down payment.

5. Down Payment Assistance Programs

    • Majority of the major cities in the metroplex have down payment programs. The state of Texas does as well. These programs are based on your household size and income. The amount of money from these programs range from 5% of the loan price to $20,000. The city programs are based for low to moderate income families. The chart below is widely used in the Dallas, Collin, and Denton County areas. FYI – The income cannot exceed the number based on your household size. These are local income limits. The state limits are higher.
      • Dallas, TX HUD Metro FMR Area
        Income Limit 1-person 2-person 3-person 4-person 5-person 6-person 7-person 8-person
        FY2018 Low-Income Limits $43,250 $49,400 $55,600 $61,750 $66,700 $71,650 $76,600 $81,550

6. Ask a Relative

      • Do you have a rich uncle or parents? Aunt Sue and Uncle James love you right? Butter up that loving to ask relatives for a gift fund. Your down-payment can be funded by relatives who are willing to give you funds to purchase your home with no strings attached. It has to feel good to come from such a loving family right? Go ahead and give Uncle James a call right now.

7. USDA/VA Loan

    • If you have served our country, you are due to a special treat when it comes to homebuying. You will be able to qualify for a 100% financing loan. This means no down payment and low interest rates.
    • You may not be a veteran but you don’t mind living in a rural area to have 100% financing. Then you may be eligible for a USDA loan. This loan has income restrictions too. USDA loans are restricted to rural areas BUT areas such as Little Elm, Aubrey, Cross Roads, Oak Point, Prosper, and Celina are eligible for 100% financing. These areas are quickly growing in the metroplex.
    • Below is the income limit for USDA Loans in the metroplex. The limits are based on household size in each column. Column one is for a one person household and so on until an 8 person household size.
      • USDA Limits

8. Get A Second Job

  • You can also get a part time job to help secure your down payment. We could all use some extra income to satisfy our needs so why not apply for a job to help secure those extra funds Uncle James couldn’t give.

9. Sell Your Assets

  • With new sites and apps, you’re able to sell things quickly and shortly to secure some cash. Sites like OfferUp, Ebay, and Craiglist are all valuable to sell things that you could give up to secure a few more dollars.

These are just the steps to fund your down payment to becoming a homeowner. As always, I’m #CrowningHomeowners and this is my Tuesday Tip.

How Long Does it Take to Save A Down Payment?

Posted on by Andrea T. Fowler

How Long Does It Take To Save A Down Payment? | Keeping Current Matters

In a recent study conducted by Builder.com, researchers determined that nationwide it would take “nearly eight years” for a first-time buyer to save enough for a down payment on their dream home.

Depending on where you live, median rents, incomes and home prices all vary. By determining the percentage a renter spends on housing in each state and the amount needed for a 10% down payment, they were able to establish how long (in years) it would take for an average resident to save.

According to the study, residents in South Dakota are able to save for a down payment the quickest in just under 3.5 years. Below is a map created using the data for each state:

Years Needed to Save 10% Down | Keeping Current Matters

What if you only needed to save 3%?

What if you were able to take advantage of one of the Freddie Mac or Fannie Mae 3% down programs? Suddenly saving for a down payment no longer takes 5 or 10 years, but becomes attainable in under two years in many states as shown in the map below.

Years Needed to Save 3% Down | Keeping Current Matters

Bottom Line

Whether you have just started to save for a down payment, or have been for years, you may be closer to your dream home than you think! Let’s get you matched with one of my preferred mortgage professionals who can help you evaluate your ability to buy today.

I Want to Buy A Home…What Do I Do?

Posted on by Andrea T. Fowler

I want to buy a home…what do I need to do? I get this question often. Most buyers are browsing online and see the ohhs and ahhs of home but don’t take the time to find out what is needed to purchase the shiny home until today. I am going to layout what you need to do to purchase a home.

Signing document for new home.

  1. 1. Look at Your Finances
  3. Do you know where you are financially? Of course, you may be able to afford the rent but affording a mortgage is a different ball game. It is more of a holistic view of your finances. Check your finances beforehand: Have at least 2-3 months of a mortgage payment in savings in addition to any down payment and/or closing costs in the bank, check your credit report (annualcreditreport.com), and pay down any debt. If you need any credit tips, check out my blog post about Rebuilding Credit.

2. Get Pre-Approved

I say this often…..very often….

Looking at properties online is great. It is a start but until you take the initiative the see what you can afford you are still dreaming about purchasing a home without putting any action to it. This is the time to put action to it. Now if you aren’t qualified that doesn’t mean you cannot purchase a home. You just cannot do it at this moment. That is the reason why you need to start early on getting your foot into movement. This is the starting point. Most agents will not take you out to view homes without one. It is important to know how much of a home you can afford BEFORE house shopping.

3. Determine Your 5 Must Haves

This step is important. Once you know the five must haves in your home, you easily find the home that meets those qualities. It helps eliminate those that won’t hold your interest.

4. Location

The Dallas-Fort Worth metroplex is HUGE. Narrow your areas down to a select vicinity. As you are browsing online, check and see how much homes costs in that area. If it is slim to none in your price range, that means that area would not suffice. Check areas outside of it. Example: If you are pre-approved for $200K and want to live in Frisco, you should probably look outside of the area to McKinney, Little Elm, The Colony, and Plano.

5. Start Shopping

Meet with a Realtor and discuss your 5 must-haves, budget, and location. These steps will help speed up the process of homebuying and take the stress of it away. Homebuying should be fun but as a buyer you must do the homework initially to make it less of a stress.

What Do You Really Need to Qualify for a Mortgage?

Posted on by Andrea T. Fowler

What Do You Really Need to Qualify for a Mortgage? | Keeping Current Matters

A recent survey by Ipsos found that the American public is still somewhat confused about what is actually necessary to qualify for a home mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today.

1. Down Payment

The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 36% think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less.

Here are the results from a Digital Risk survey done on Millennials:

Millennials Down Payments | Keeping Current Matters

2. FICO Scores

The Ipsos survey also reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. In actuality, the average FICO scores of approved conventional and FHA mortgages are much lower.

Here are the numbers from a recent Ellie Mae report:

FICO Score Of Approved Loans | Keeping Current Matters

Bottom Line

If you are a prospective purchaser who is ‘ready’ and ‘willing’ to buy but not sure if you are also ‘able’, schedule to meet with me so that you understand your true options.

 

Homeownership: The Real Story Behind The Headlines

Posted on by Andrea Fowler
Homeownership: The Real Story Behind The Headlines | Keeping Current Matters
The big housing news this week is that the homeownership rate has dropped to 63.4% which represents the lowest rate in 48 years. That news definitely is making headlines. Yet, to fully understand what this means we have to look at the story that created these headlines.
There is no doubt the homeownership rate has declined since the housing crisis. Here is a graph showing the homeownership rate over the last twenty years. It skyrocketed during the housing boom and has steadily fallen since the bust:
HomeownershipRates | Keeping Current Matters

The story behind the headline…

The dramatic fall in the rate over the past year must be looked at very closely. The rate is determined by the “number of households” who rent versus those who own. Let’s assume you have nine friends that live on their own (thus forming a household); six of them own and three of them rent. That would mean that 66.6% (6 out of 9) of your friends that live on their own are homeowners.
Now, let’s assume you have another friend who has been living with his parents. He would not be considered a separate household because he lives within his parents’ household. Once that friend moves out of his parents’ home and gets a place of his own, he will become part of the household count. Let’s assume, since he is just starting out, that he moves into a rental.
When he does, you now have ten friends that live on their own. If six still own their home and four of your friends now rent, the homeownership rate of your friends drops to 60% (6 out of 10). The number who own didn’t decrease; but the percentage decreased.
With the economy improving and job numbers looking better, more and more young adults are beginning to move out and get a place of their own. However, most will start in a rental situation thus driving the “percentage” of homeownership down. Auction.comexplained the most recent drop in homeownership rate this way:
“This occurred as household formations popped, implying millennials are riding an improved labor market out of mom and dad’s house. Roughly a third of millennials live at home according to Census data, an elevated figure. Continued gains in the labor market will coax increased numbers out into their own places, a majority of which will be apartments, as this age cohort lacks the financial wherewithal to buy.”

What does this mean to the future of homeownership?

The great news is that study after study has shown that Millennials aspire to homeownership as they still see it as a major part of the American Dream. As they get more comfortable with their financial situation, many of the Millennials who finally made it out of their parents’ homes this year will become homeowners over the next several years. An increase in homeownership rates will follow.

Freddie Mac: Equity Matters (A LOT!)

Posted on by Andrea Fowler
Freddie Mac: Equity Matters (a Lot!) | Keeping Current Matters
According to a Merrill Lynch survey, over 80% of the people in this country believe that homeownership is still “an important part of the American Dream”. There are many financial and non-financial reasons people feel this way.
One of the biggest reasons is because it helps build family wealth. Last week, Freddie Mac posted about the power of home equity. They explained:
“In the simplest terms, equity is the difference between how much your home is worth and how much you owe on your mortgage. You build equity by paying down your mortgage over time and through your home’s appreciation. In a nutshell, your money is working for you and contributing toward your financial future.”
They went on to show an example where a person bought a home for $150,000 with a down payment of 10%, resulting in a loan amount of $135,000. The buyer secured a 30-year fixed-rate mortgage at 4.5% with a monthly mortgage payment of $684.03 (not including taxes and insurance). They then illustrated what would happen after seven years of making a mortgage payment, assuming 3% per year home appreciation (the historic national average):
Home Equity Calculation | Keeping Current Matters
And that number continues to build as you continue to own the home. Merrill Lynchpublished a report earlier this year that showed the average equity homeowners have acquired at certain ages.
Average Home Equity by Age | Keeping Current Matters

Bottom Line

Home equity is important to building wealth as a family. Referring to the first scenario above, Freddie Mac explained:
“Now, if you continued to rent, and made the same payment of $684.03 per month, you’d have zero equity and no means to build it.
Building equity is a critical part of homeownership and can help you create financial stability.”

What If I Wait Next Year to Buy?

Posted on by Andrea Fowler
What If I Wait Until Next Year to Buy? | Keeping Current Matters
First-time homebuyers are flocking to the housing market in greater numbers than any time in the last few years. Renters who are ready and willing to buy are now realizing that they are also able to as well. Many first-time buyers are Millennials (born between 1981 – 1997).
If you are one of the many in this generation who sees your friends and family diving head first into the real estate market, and wonder if now is the time for you to do the same, keep reading!
The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices and interest rates were to increase over a period of time.
Let’s look at an example of what the experts are predicting for the upcoming year, and what that really would mean for you. Let’s say you’re 30 and your dream house costs $250,000 today. Right now mortgage interest rates are at or about 4%.

Your monthly mortgage payment (principal & interest only) would be $1,193.54.

But you’re busy, you like your apartment, and moving is such a hassle. You decide to wait until next year to buy. CoreLogic predicts that home prices will appreciate by 5.1% in the next 12 months; this means that same house you loved now costs, $262,750.
Freddie Mac predicts that over this same period of time, interest rates will be a full point higher at 5.0%. Your new payment per month is now $1,410.50.

The difference in payment is $216.96 PER MONTH!

That’s basically like taking $8 and tossing it out the window EVERY DAY!
Or you could look at it this way:
  • That’s your morning coffee everyday on the way to work (average $2) with $10 left for lunch!
  • There goes Friday Sushi Night! ($50 x 4)
  • Stressed Out? How about a few deep tissue massages with tip!
  • Need a new car? You could get a brand new car for $217 a month.
Let’s look at that number annually! Over the course of your new mortgage at 5.0%, your annual additional cost would be $2,603.52!
Had your eye on a vacation in the Caribbean? How about a 2-week trip through Europe? Or maybe your new house could really use a deck for entertaining. We could come up with 100’s of ways to spend $2,603, and we’re sure you could too!
Over the course of your 30 year loan, now at age 61, hopefully you are ready to retire soon, you would have spent an additional $78,105.60, all because when you were 30 you thought moving in 2015 was such a hassle or loved your apartment too much to leave yet.
Or maybe there wasn’t an agent out there who educated you on the true cost of waiting a year. Maybe they thought you wouldn’t be ready. But if they showed you that you could save $78,000 you’d at least listen to what they had to say.
They say hindsight is 20/20, we’d like to think that 30 years from now when you are 60, looking back, you would say to buy now…

The Main Reason You Should Not Wait to Buy…

Posted on by Andrea Fowler
The Main Reason You Should Not Wait to Buy | Keeping Current Matters
The Joint Center for Housing Studies at Harvard University recently released their 2015State of the Nation’s Housing report. The report concentrated on the challenges renters in this country are facing because of the diminishing supply of quality rental units and dramatically escalating rents.
However, there was also information buried within the report that revealed that now is definitely the time to buy your first home or move-up to the home of your family’s dreams. With home prices still below peak values and mortgage rates still near historic lows, the monthly mortgage payment on a median priced home is less than at almost any time in the last 25 years.
Here is a graph which helps visualize the data from the report:
Median Mortgage Payment | Keeping Current Matters

Bottom Line

With home prices increasing and mortgage rates projected to increase, now is the time to buy.