divider

Archive


Building Wealth: An Unmistakable Benefit of Buying a Home

/ 0 Comments

When deciding to buy a home or rent a home, the lists of pros and cons for buying or renting can be overwhelming.  Depending on the current market conditions, it may seem obvious which choice is more economical.  When rates are low and prices are low, buying a home appears to be the best choice.  However, as mortgage rates and housing prices begin to increase, renting a home is an option that might seem more economical.

However, an important factor should be considered before deciding to rent instead of buy, even as mortgage rates increase and home values begin to rise.  According to an article published by Realtor.com, The Misleading Math Behind the Rent vs. Buy Calculation, “…homeownership is a critical building block of household wealth. Owning a home is a key reason why the median net worth of a homeowner is almost $200,000 while the median net worth of a renting household is just over $5,000.”

A closer look at the comparisons between the cost of buying versus renting reveal some long term advantages to owning a home and uncover some details worth considering.  It is common knowledge that part of each monthly payment go toward the equity a homeowner has in their property with a fixed 30 year mortgage. Additonally, as the home owner gets further into the lifetime of the mortgage, the amount they are paying into their own equity begins to increase. An important detail to note, which may not be a common consideration, is that the payment amounts are actually “frozen” for the lifetime of the mortgage.  It is unlikely that a renter could expect such a guarantee.

Homeowners know what their housing payment will be for the next 360 months, not many landlords are willing to lock their monthly rental rate beyond a year or two.  Further, homeowners are, in essence, locked into a “forced savings plan” where they pay some percentage to their own equity each month. This reason, alone, is the primary factor which makes it more feasible for homeowners to accumulate wealth.

Read the entire article. 

 

 

Photo Credit:  aag.com

Learn More
separator

Single Women Outpace Single Men in Home Ownership Trends

/ 0 Comments

Since 1981, single women have lead single men in the category of home ownership.  Over the past few years, the gap has grown even larger.  According to a data released by the National Association or Realtors, in 2016, single women accounted for 17 percent of the US. homeowners.  Single men lagged behind,  making up only 7 percent of all American homeowners.

According to an article published by Bloomberg.com, “Women earn less than their male counterparts, pay harsher workplace penalties for pursuing parenthood, struggle more with debt, and save less for retirement.”  Nevertheless, the rate at which women purchase homes outpaces single men.  This begs, the question, why?

The most prominent reason, Mary Pilon points out in her article, “Why Single Women Are Buying Homes at Twice the Rate of Single Men”,  is that a woman, as a single mother, places significant value in providing a stable home for her child.  Since women are three times more likely, than a man, to be the single parent, the number of homes purchased by a single parent will most likely be a single mother.FotoFlexer_Photo

Additionally, there are more and more unmarried Americans 25 years old or older; in fact about 20 percent of Americans over the age of 25 are single.  According to Bella DePaulo, a professor at the University of California at Santa Barbara, women seem to embrace their single lifestyles more readily than single men.  Owning their own home is a way many single women choose to enjoy their years as single professionals; they truly revel in the independence and empowerment home ownership represents.

Read the entire article.

 

 

Photo Credit:  Mark Moz

Learn More
separator

Homeowner Tax Breaks: Important Reminders and Potential Changes in 2017

/ 0 Comments

Most homeowners are aware, or at least should be aware, of tax breaks available to them via various homeowner tax laws.   The homeowner tax breaks are designed to make owning a home more appealing and, in many cases, more affordable to the home owner.

FotoFlexer_PhotoIn the article 2017 Mortgage Deduction: What Every Taxpayer Should Know published by FoxBusiness.com, the journalist details the types of tax breaks homeowners can take advantage of when filing their taxes each spring.   The most common, the mortgage interest deduction, journalist Dan Capinger describes by writing, “Homeowners can typically take the mortgage interest they pay for loans on their home and include it in their itemized deductions.” This can apply to the cost of buying or building your home; even major home improvements can qualify. The current restriction is that the principal balance falls below $1 million for tax payers that file jointly.

However, as the United States prepares to inaugurate president-elect Trump, changes to the mortgage interest deductions are anticipated.  During the 2016 presidential campaign, Trump expressed interest in limiting itemized deductions to $200,000 for joint filer; subsequently resulting in a lower cap on mortgage interest deductions.

The potential changes aren’t expected to make any significant impact to most homeowners.  Therefore, homeowners should still look for many of these tax benefits to continue to be available, providing access to helpful tax cuts.

Read the entire article for additional details on tax laws available to homeowners.

 

 

Photo Credit:  Darren Shaw

Learn More
separator

Court Ruling May Affect Business Practices for Dual Agents

/ 0 Comments

A recent ruling by the California Supreme Court might affect some real estate agents and their customers.   Specifically addressed in this court case are “dual agents” and the agent’s responsibility to serve the seller as well as the home buyer equally and ethically.

supreme-court-1-1224507In the case brought to the courts, a home buyer in California purchased a home in 2007.  The buyer’s real estate agent worked for the same real estate firm as the seller’s agent. Therefore, the real estate broker was, in fact, a dual agent in the real estate transaction.   It later came to light that the home’s square footage was actually significantly less than what was quoted on the flyer provided by the seller’s agent.    Based on evidence presented, the justices determined that the buyer’s agent “…breached his fiduciary duty by failing to communicate all of the material information he knew about the square footage.”

In an article published in OCRegister.com, the journalist, Marilyn Kalfus, describes how this ruling could affect both agents and consumers.   Specifically, some view this ruling a win for home buyers.  In essence, it will ensure home owners are provided thorough and detailed information about the home they plan on purchasing.    It doesn’t seem as though the ruling will end dual agent transactions, but it will require brokers to balance the communication they are providing to home buyers while protecting private information that may have been provided by the seller.

Read the entire article.

 

Photo Credit:  David Lat

 

Learn More
separator

Is Renting Really Cheaper Than Buying a Home?

/ 0 Comments

The number of U.S. homeowners is at a 50 year low, many more households have decided to rent a home instead of purchase their own home.  Although the reasons for this decision vary, many might assume renting is a more cost effective choice than making the commitment to purchase a home.balance-1172786

However, in a study performed by Trulia which compared the monthly expenses associated with renting and owning a home, it found that renting can be 37.7 percent more expensive than owning a home.   The study included monthly expenses such as mortgage payments, taxes, home owners insurance and the cost of upkeep and repairs.  The major factor influencing the affordability of buying a home is, of course, the low mortgage rates that are still available to buyers.

Even the possibility of a Federal rate increase won’t have much effect on the affordability of homes.  According to the article written by Kendall Baer, published by DSNews, “…Rates would need to increase drastically in order to push the rent vs. buy decision toward renting.”  In fact, in many areas of the U.S., home prices are increasing and it is that rise in home prices that will truly impact housing affordability.

Nevertheless, a number U.S. real estate markets have reported rental expenses that fall significantly below the monthly expenses of owning a home.  To find out in which areas of the U.S.  it makes more sense to buy a home and in which areas, renting may be a more cost effective option, read the entire article.

Learn More
separator

Expect A Surge of Young, First-Time Home Buyers Into 2020

/ 0 Comments

Over the past fifteen years, the percentage of first-time home buyers that fell between the ages of 20 and 29 has increased from 17 percent to 28 percent of all buyers, according to TransUnion.  Following the same trend, first-time home buyers between the ages of 20 and 39 increased 16 percent in that same 15 year span; ultimately, the age group made up 60 percent of all first-time home buyers by the end of 2015.

An article published by The M Report by Brian Honea indicated that TransUnion anticipates up to 17 million first-time home buyers will enter the real estate market over the next five years.   With this influx of new homeowners comes positive economic news for both local economies as well as the mortgage lending industry.

FotoFlexer_Photo Joe Mellman, VP and Mortgage Business leader for TransUnion, explained  that first-time home buyers help to
improve the local economic activity as a result of increased construction and home improvement demand.  Mellman also describes, from the perspective of mortgage lenders, “First-time home buyers are valuable prospects in the eyes of many mortgage lenders, as that time in a borrower’s life often corresponds to additional financial needs,”.

Read the entire article.

 

Photo Credit:  Renaude Hatsedakis

 

Learn More
separator

Could Autumn Be the Perfect Season to Buy a Home?

/ 0 Comments

Summer has come to an end, but it certainly doesn’t signify the end of home buying opportunities for the year.  In fact, fall is a season that brings many positive home buying possibilities and benefits.  In an article published by Realtor.com, Margaret Heidenry lists several reasons why this time of the year might be the perfect time for buyers to make their move on purchasing a home.

1503877283_7c6a018127_oOne significant reason to buy a home in autumn: home prices are lower.  According to RealtyTrac’s  analysis of home sales over the past 15 years, buyers in October have paid an average of 2.6 below market value.  This compares to buyers making a purchase in April, who will pay an average of 1.2 percent above market value.

The article goes on to list other important advantages of shopping for a home this time of the year.  For example, buyers will not be in competition with as many other home buyers as they would be during peak buying seasons.  Additionally, those homes that are on the market in the fall are generally listed by sellers who are in a situation where they need to sell their home.  This allows the buyer to leverage their buying power and allows for more significant negotiations.  Among some of the other reasons listed in the article, buying in the fall also means less competition for your realtor’s attention and time, the same goes for mortgage brokers and real estate attorneys.  As the article states, “You can take your time to ask all those questions you have about earnest money, due diligence, title transfers, and more without feeling like you’re horning in their busiest season to turn a buck.”

Read the article for additional information about the benefits of purchasing your home after the peak season.

 

 

Photo Credit:  Sharon Mollerus

Learn More
separator

Find Out What You Need to Earn to Live in Some Major U.S. Cities

/ 0 Comments

The real estate market is showing signs of improvement; as a result, more Americans may be entertaining the idea of purchasing a home for the first time or moving to a new area of the U.S.  However, its wise to consider how much money you need to earn in order to afford a home in a specific city.  A recent study released by  HSH.com provides the details about 27 major U.S. cities and what salary is required in order to purchase a home there.

6808984167_891f6b8a30_oAccording to an article published by Realtor.com’s Catey Hill, the study “assumes the buyer has good to excellent credit (and thus would get a mortgage interest rate—depending on location—of around 4%), put down 20% and would be spending no more than 28% of income on principal and interest.”   Even with a significant down payment and a low mortgage rate, one would need to earn an average salary of almost $58,000 per year to afford a home in Chicago, according to the study results.

Topping the list with a salary requirement of almost $148,000 a year, is San Fransiciso, CA. More affordable cities such as Cincinnati, Atlanta and Pittsburgh allow home buyers earning closer to $30,000 to purchase a home.

To find out about other U.S. cities and how much you would need to earn to purchase a home there, read the entire article.

 

 

(more…)

Learn More
separator

The Housing Market is on the Road to Recovery, But Not for All Homeowners

/ 0 Comments

The Chicago-land real estate market has made a notable recovery since the housing crash in 2007. However, a closer look at the types and price point of homes that are in demand among home buyers reveals that smaller, lower priced home8305084971_6dc5966044_bs have made the most significant turnaround.

On the other hand, the large homes that popped up at an explosive rate in the early 2000s, which came to be known as “McMansions”, have not recovered at nearly the same rate.  In fact, many of the home owners looking to sell their homes, once valued at $2.5 million, are preparing to take a $600,000 loss on their investment.  Further, these homes are on the market an average of 155 days before receiving an offer.

According to an article published by the Chicago Tribune by Gail MarksJarvis, the allure of these homes has faded.  Many Generation X home owners lost money on the homes they purchased before the housing market crashed and are not financially able to purchase homes in the luxury price range, or are hesitant to make such a large investment in real estate.   These large suburban, family-oriented homes do not appeal to a significant portion of millennials or baby boomer home buyers either.  To add, home buyers who are in the market for luxury properties prefer to purchase new homes with the most up-to-date decor and amenities.

To read more about the luxury home market in Chicago-land, read the entire article.

 

 

Photo Credit:  Ray Sawhill

Learn More
separator

Time to Close, How Long Should You Expect to Wait?

/ 0 Comments

OLYMPUS DIGITAL CAMERAEarly on in 2016, the average time to close on a home mortgage loan had risen to an average of 50 days.  The delay was a direct result of the Consumer Financial Protection Bureau’s  TILA-RESPA Integrated Disclosure rule which changed the type and complexity of loan information industry professionals had to pass on to borrowers.  Within the next few months, however, the time to close worked its way back down to a 12 month low of only 44 days.

Yet, the this figure has begun creeping back up again.  Ultimately, July 2016 Ellie Mae findings reported an average wait of 46 days.   According to an article published in HousingWire.com by Ben Lane, “…is this year’s increase in days to close just the industry fully settling into the post-TRID world and finally finding some semblance of normalcy, or is it more concerning than that? Only time will tell.”

The article goes on to provide additional figures from the Ellie Mae report.   For example, July 2016 closing rate for all loan rose to 71.6% and the 30-year mortgage rate reached its lowest since March 2015. For more details, read the entire article.

Learn More
separator