Home Buyer Blunders

1.If I could give one piece of advice to homebuyers it would be to stick to your price range and the best way to do this is to be pre approved for a loan. By obtaining a pre approval letter you will know the exact amount that your lender is willing to loan you. This makes it pretty easy to create a price range that you are wanting to spend on your home. The issue buyers face is when they start to throw caution to the wind regarding their price range since things tend to start to spiral out of control if you do not have a real estate agent that will put you back in line. When buyers start to look outside of their price range they tend to fall in love with a home over budget and so every home that they look at after this dream home in their price range will not seem as wonderful as this other home.

Curious as to the difference between pre qualification and pre approval? The difference is that a pre-qualification is an approximation on what your loan can be compared to a pre-approval which is stating that based on an underwriter’s review of your financial information your loan is only contingent on the appraisal of the property (unless something changes with your financials before closing).

2.No matter if we are in a buyers or sellers market, submitting a lowball offer is something to really think about before submitting. When you submit a lowball offer, you are taking a risk that you might come across a seller that is offended by your lowball offer and will not come back with a counteroffer. On the other hand though you could have a seller come back with a counteroffer and due to your lowball offer you’re in a great position. But, are you ready to loose out on the home you want because you are trying to play hard ball? If you can safely say that you are fine with not getting the home then go for the lowball offer. I do recommend that before submitting a lowball offer that you speak with your real estate agent to go over the different outcomes that could come from the offer.

3. Earlier I talked about how a pre-approval is only contingent upon the appraisal of the property unless your finances change, well I will explain this buyer blunder a little more in-depth. During the pre-approval process underwriters are going to review all of your financial information to include your bank statements, salary, assets, pay stubs, credit report and obligations. This is how they decide on the loan amount that you are approved for; so if you decide to go out and make a big purchase, let’s say a new car, you might be risking the purchase of your home. Lenders can run a last minute credit check and if they notice that you just spent a large amount on something, you might just have jeopardized your mortgage approval.

4. When purchasing a home, buyers sometimes forget that you need more than just your down payment to close; you also will need at the close of escrow money for closing costs. You can expect to pay between 2%-7% of the purchase price in closing costs. To get a better ballpark of what your closing costs will be speak with lender.

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Source: https://www.realtor.com

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What Makes an American Dream Home?

Being a Realtor I am always hearing clients talk about their dream home, but what really makes up a dream home? A recent survey conducted by Digital Third Coast asked current and prospective homebuyers from across the United States about what their dream home would include.Dream_Home_low_res.jpg

Dream Home Criteria

  • Location- The location of where a dream home would be located varied by generation. For Millennials their dream home is located in the suburbs while Baby Boomers are picturing their perfect place near the beach and Generation Xers are ready to settle into their ideal home in the countryside. The variance in location is not much of a surprise based off of each generations age and subsequent needs. For instance, 15% of the surveyed group stated that being close to good schools was a key factor in a dream home. This percentage of individuals are most likely the Millennials and not the Generation Xers who are past their years of worrying about good schools.
  • Size- The ideal size of a dream home is 2,195 square feet. This is interesting to note due to the fact that the average sized home in America in 2017 was 2,422 square feet. So, this means that a bigger home does not necessarily equal a dream home. Gone are the years of people envisioning themselves in a mansion but rather a more manageable home.
  • Age of Home- 60% of people in the survey saw their dream home being a brand new build. This makes sense because if it is a dream home you want to make certain that it is exactly the fit and finish that you want and not an older home that someone else built.
  • Price- What is the most surprising to me about the study was what individuals were willing to spend to obtain their dream home. The study states that the the average price that participants were stating they would spend on their dream home is $1.3 million dollars. What makes this interesting is the average home sale price in June 2018 was $363,300; so this means that in the surveyed group they are willing to spend a million more dollars on a home for it to be their dream home. And 64% of the group surveyed believed that at some point in their life they would be renting or owning their dream home.

 

 

Source: Digital Third Coast

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What’s in a Home Value?

As a homebuyer have you ever been curious as to why two seemingly identical homes can have a variance in price? Well, read on to get a more in-depth breakdown of what makes up a homes value.

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Source: House Canary

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Homebuying Mistakes by Generation

With real estate, your age does not determine if you will make a mistake or not during the home buying process. The determining factor is if you are prepared with a good real estate agent that will ensure that you do not make these too common mistakes.

Curious as to the what each generation’s mistake is? Read below to find out so that you will not make the same mistake.

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20’s: Picking the Wrong Type of Mortgage

Being younger typically means that you do not have the same amount of money saved up as someone a little bit older; this is not something to be too concerned about though because there are great options available for first-time homebuyers. Because you might not have lots saved, this might lead you to believe that an adjustable-rate mortgage is the only mortgage option for you; but there are other mortgage options out there for you that you should at least take a look at.  Many young homebuyers are tempted by an adjustable-rate mortgage, a mortgage that has interest rates that change over time, due to the low introductory rates but as a homebuyer it is a great idea to look at all available mortgages. The federal government has programs such as FHA loans and VA loans and HUD has the Good Neighbor Next Door program which offers home buying assistance for those in law enforcement and teachers. Then there are state-sponsored homebuyer grants, so check with your state to see what your individual state has to offer.

 

30’s: Not Thinking About the Future

With the average age for an American to get married these days being 27 for women and 29 for men, as a country we are not necessarily considering a future family at the beginning of our 30’s. So while you may be young and single, or newly married, and looking at a one bedroom condo in a high-rise you might want to be thinking about getting something a bit more practical for your future. So, if you are planning on having a family or even a dog, it might be a wise idea to think about if the one-bedroom will fit with your lifestyle in a few years. By thinking about your future when you are making a purchase it will allow you to not have to be forced to sell when you decide to get a dog that needs a yard or have a family. This is not only an issue that young buyers face but an issue that all ages need to think about; what does your future hold and does the home you are looking at cover any and all changes that might happen in your life.

 

40’s-50’s: Overestimating your Budget

This is another mistake that all generations make, but tends to be an issue with these two age groups the most. Normally, at this age you have more money and this is the problem; you might be thinking just because you are bringing in a larger income currently that you can afford much more but have you made a budget for yourself lately? Creating a budget every few years is very important for your financial clarity; having a budget is not just something that you should have when you are more strapped for cash but a budget is a great tool for your entire life.

 

60’s: Falling in Love with that Vacation Home

Let’s say that you have lived your entire life in Michigan enduring those cold winters and now that you are retired you take a vacation down to Florida and fall in love with that quintessential beachside community. You decide that you cannot handle one more winter in Michigan and so you decide to buy a two bedroom condo and sell your home back in Michigan. You are on cloud nine until you start to think about the large life changing decision you just made. Homebuyers sometimes forget to think about the whole picture of falling in love with a location that they might not be too familiar with; did you think about the weather year round or the location well? While you might be getting ride of the cold winters you might just be gaining hurricanes and a rowdy Spring Break every year. Before you make any real estate decision make certain you know exactly what you are getting yourself into which is where having a location real estate agent will benefit you since they will know everything that will aid in your decision to buy or not.

Have you made any of these mistakes over the years of home buying?

 

Source: Bankrate

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Interest Rate Impact

Last May 22nd the interest rate on a 30 year fixed mortgage was 4.05%; now a year later we are facing 4.61% interest rates. With this over half a percent increase in interest rates there is substantial increases in not only what your mortgage payment will be but also the minimum qualifying income necessary to obtain the property. Look at the graphic below to see just how the rising interests rate will be impacting you if you are planning on buying.

So what do all of these numbers mean to you the homebuyer? Well, with rising interest rates it simply means that you will not be able to afford as much house as you would have been a year ago due to your debt-to-income ratio and you will be paying more in your mortgage payments. You may be asking yourself if rates are going to come back down or are they going to continue to rise? Based off of what experts are predicting, rates are only going to be increasing throughout 2018 and into 2019.

If you are interested in seeing what 30 year fixed mortgage interest rates are doing; follow the link to Y Charts.

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Source: California Association of Realtors

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24th Annual Balboa Island Artwalk

It is that time of year again for the Annual Balboa Island Artwalk. This year’s show will feature 85 artists presenting all sorts of finery from paintings to blown glass. To compliment the artwork there will be six groups of live musicians spaced out on South Bayfront to make the day an even finer experience. Also, there will be limited edition 24th Annual Artwalk posters and t-shirts for sale at Diamond and South Bayfront.Balboa Artwalk Poster 2018.png

 

Date: Sunday May 20th

Time: 9am-5pm

Cost: Free

Location: All along South Bayfront, Balboa Island

For more information visit: Balboa Island Artwalk

Source: Visit Newport Beach

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Millennial Money Habits

As a fellow millennial I will be the first one to admit that I think this generation is slacking when it comes to money smarts; but I do always like to be proven wrong and I now have been. According to Bank of America’s Better Money Habits Millennial Report this generation is doing just fine; maybe even better than previous generations when it comes to managing money.

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Comparisons with Millennials (23-37 years old), Gen-X (39-53) and Baby Boomers (54-72 years old)

  • While 63% of Millennials are saving money, within the Gen-X theres only 1% more people saving and Baby Boomers are saving 12% more. This is great for Millennials to acknowledge that as a whole, the generation is doing almost as well as their parents with saving money.
  • Budgeting might be what many people say that Millennials downfall is, where in reality we are tied with Gen-X on the percentage of people budgeting and Baby Boomers are 3% better. Budgeting is the key to success in my opinion; if you do not know how to budget you will never be financially wise.
  • What about having financial goals? Goals are vital for success financially and guess what 57% of Millennials have goals compared with Gen-X and Baby Boomers are tied at 42%. You would think that these other two generations would all have financial goals since at some point do they not want to retire or maybe send their children to college? Without a goal it will be more difficult to come to fruition.
  • 59% of all Millennials feel financially secure; which personally I feel is not necessarily a good thing since sometimes this feeling is a false positive. As for Gen-X 54% feel financially secure and 63% of Baby Boomers do. This is interesting information since what does this really mean? Are Millennials actually financially more secure compared to Gen-X or are Millennials heads in the clouds about their security?

 

Where you just as surprised as I was about Millennials and their money habits? If you would like to read the full report on Bank of America’s site, follow the link  here.

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