3 Crucial Questions Most Home Buyers Don't Know the Answer To. DO YOU?

Whether you are considering the purchase of your first home or trading up to the home your family frequently fantasizes about, there are three crucial questions you must know the answer to:

1.      What is the minimum down payment required to purchase a home?

2.      What is the minimum FICO score required to qualify for a mortgage?

3.      What is the maximum Back-End DTI Ratio allowed?

A survey conducted by Fannie Mae revealed startling information: most Americans don't know the answer to these three crucially important questions. Here is a graphic showing the results of the survey: 

The percentages are quite disturbing but can explain why so many people believe they are not eligible to purchase a home whether it is a first home or a trade-up home. Here are the actually requirements as per Fannie Mae: 

Bottom Line
If you are considering purchasing a home, make sure you are aware of all your options before moving forward. 

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Americans Believe Real Estate is Best Long-Term Investment

According to Bankrate's latest Financial Security Index Poll, Americans who have money to set aside for the next 10 years would rather invest in real estate than any other type of investment. Bankrate asked Americans to answer the following question:

"Which would be the best way to invest money you did not need for more than 10 years?"

Real Estate came in as the top choice with 25% of all respondents, while cash investments (such as savings accounts and CD's) came in second with 23%. The chart below shows the full results

: 

Sterling White, co-founder of Holdfolio, gave one reason as to why real estate may have ranked so high. "Houses are tangible. You can physically see and feel the product. So you know where your money is going." July's poll also found that for the "26th consecutive month, Americans' sense of financial well-being improved when taking into account debt, savings, net worth, job security, and overall financial situation."

Bottom Line

We have often written about the financial and non-financial reason homeownership makes sense. It is nice to see that Americans have returned to a belief in homeownership as the best investment. 

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

3 Questions Every Buyer Should Ask Themselves

If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.

Answering the following 3 questions will help you determine if now is actually a good time for you to buy in today’s market.

1. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.

For example, a recent survey by Braun showed that over 75% of parents say “their child’s education is an important part of the search for a new home.”

This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the four major reasons why people buy a home have nothing to do with money. They are:
A good place to raise children and for them to get a good education
A place where you and your family feel safe
More space for you and your family
Control of that space

What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not. 

2. Where are home values headed?

According to the latest Home Price Index from CoreLogic, home values are projected to increase by 5.3% over the next 12 months.
What does that mean to you?

Simply put, if you are planning on buying a home that costs $250,000 today, that same home will cost you an additional $13,250 if you wait till next year. Your down payment will need to be higher as well to account for the higher home price.

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates.

The Mortgage Bankers Association (MBA), the National Association of Realtors, Fannie Mae and Freddie Mac have all projected that mortgage interest rates will increase over the next twelve months as you can see in the chart below:


Bottom Line
Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Would You Qualify for a Mortgage Now?

The widespread myth that perfect credit and large down payments are necessary to buy a home are holding many potential home buyers on the sidelines. According to Ellie Mae's latest Origination Report, the average FICO score for all closed loans in May was 724, far lower than the 750 or 800 that many buyers believe to be true. Below is a graph of the distribution of FICO scores of approved loans in May (the latest available data): 

Looking at the chart above, it becomes obvious that not only do you not need a 750+ credit score, but 54.9% of approved loans actually had a score between 600 and 749. More and more experts are speaking up about the fact that if potential buyers realized they could be approved for a mortgage with a credit score at, or above, 600, the distribution in the chart above would shift further to the left. Ellie Mae's Vice President, Jonas Moe encouraged buyers to know their options before assuming that they do not qualify for a mortgage:

"The high median credit score is due to many millennials believing they won't qualify with the score they have - and are therefore waiting to apply for a mortgage until they have the score they think they need." CoreLogic's latest MarketPulse Report agrees that the median FICO score does not always tell the whole story:

"The observed decline in originations could be a result of potential applicants being either too cautious or discouraged from applying, more so than tight underwriting as the culprit in lower mortgage activity."

It's not just millennials who believe high credit scores and large down payments are needed. Many current homeowners are delaying moving on to a home that better fits their current needs due to a belief that they would not qualify for a mortgage today.

So what does this all mean?

Moe put it this way:

"Many potential home buyers are 'disqualifying' themselves. You don't need a 750 FICO Score and a 20% down payment to buy."

Bottom Line

If you are one of the many Americans who has always thought homeownership was out of their reach, meet with a local real estate professional who can help you start the process of being pre-qualified to see if you are able to buy now! 

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Should I Wait Until Next Year? Or Buy Now?

Some Highlights:

• The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.
• Freddie Mac predicts interest rates to rise to 4.6% by next year.
• CoreLogic predicts home prices to appreciate by 5.3% over the next 12 months.
• If you are ready and willing to buy your dream home, find out if you are able to!

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Is Now the Right Time to Put Your House on the Market, or Not?

Last week, the National Association of Realtors (NAR) released their Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings. The report revealed that this May’s numbers weren’t quite as good as the year before:

“With last month’s decline, the index reading is still the third highest in the past year, but declined year-over-year for the first time since August 2014.”

The mainstream media ran headlines highlighting that the index had dropped for the first time in two years. Many read this as an indication that the housing market must be slowing down.

If you were thinking that now may be the perfect time to put your house on the market, these reports may have caused you some concern. We want to alleviate that concern today.

Though it is true that the index dropped in last month’s report, let’s take a closer look at the numbers. Below is a graph of the index since January 2014. We can see that the index has increased every month over the last eighteen months, leading up to this past May.

Lawrence Yun, Chief Economist at NAR, explained that it wasn’t a slowing of the market that caused the index to slip, but instead a lack of housing inventory:

“Total housing inventory at the end of each month has remarkably decreased year-over-year now for an entire year. There are simply not enough homes coming onto the market to catch up with demand.”

Bottom Line
Did the latest numbers from the Pending Home Sales Index cause you to question if now is a good time to put your house on the market? If anything, it indicated the exact opposite: that this may be the perfect time to sell!!

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Testimonial "David is the Best Real Estate Agent I Have Ever Worked With"

We love and appreciate when clients leave such powerful testimonials! 
Looking to Buy, Sell, or Invest in San Diego Real Estate? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!

Harvard: 5 Reasons Why Owning A Home Makes Sense Financially

We have reported many times that the American Dream of homeownership is alive and well. The personal reasons to own a home differ for each buyer, but there are many basic similarities. Eric Belsky is the Managing Director of the Joint Center of Housing Studies (JCHS) at Harvard University. He authored a paper on homeownership titled - The Dream Lives On: The Future of Homeownership in America. In his paper, Belsky reveals five financial reasons why people should consider buying a home. Here are the five reasons, each followed by an excerpt from the study:

1) Housing is typically the one leveraged investment available.

"Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more."

2) You're paying for housing whether you own or rent.

"Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord."

3) Owning is usually a form of "forced savings."

"Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people's tendency to defer savings to another day."

4) There are substantial tax benefits to owning.

"Homeowners are able to deduct mortgage interest and property taxes from income...On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain."

5) Owning is a hedge against inflation.

"Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.

Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. If you are considering a purchase this year, contact a local professional who can help evaluate your ability to do so. 

Looking to Buy, Sell, or Invest? Contact:

David Demangos

858.232.8410

Locally Known, Globally Connected

Luxury Home Marketing Specialist

Global Property Specialist

David@AwesomeSanDiegoRealEstate.com

www.AwesomeSanDiegoRealEstate.com

Our Team Goes to Extremes to Fulfill Your Real Estate Dreams!