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Posts by Glen Hagen

No… You Do Not Need 20% Down to Buy NOW!

No… You Do Not Need 20% Down to Buy NOW! | Simplifying The MarketThe Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite the main reason for not currently owning a home, as not being able to afford one.This brings us to two major misconceptions that we want to address today.

1. Down Payment

NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less.Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO® Scores

An Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August.No… You Do Not Need 20% Down to Buy NOW! | Simplifying The Market

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options.

The Truth About Homeowner Equity

The Truth About Homeowner Equity | Simplifying The MarketA recent article from a reputable news source was titled: Here’s why some homeowners still can’t sell. In the opening bullets of the article, the author claimed, “Negative equity is one of the main reasons why there are so few homes for sale.”  The article then goes on to soften that stance but we want to bring better clarity to the equity situation.A recent report from CoreLogic (which was quoted in the article) revealed that over 80% of all homes now have “significant equity,” which means the home has over 20% equity. That level of equity allows the homeowner to sell their home if they so desire. (There was no reference to significant equity in the article.)If eight out of ten homeowners now have significant equity in their homes, it is hard to make the claim that lack of equity is “one of the main reasons why there are so few homes for sale.”Here is a map showing the percentage of homes in each state which currently have significant equity:The Truth About Homeowner Equity | Simplifying The Market

Bottom Line

If you are one of many homeowners who is debating selling your home and are wondering how much equity you have accumulated, let’s get together to determine if now is the time to list.

A Tale of Two Markets: An Update

A Tale of Two Markets: A 6-Month Update | Simplifying The MarketSix months ago, we reported that the mismatch between the type of inventory of homes for sale and the demand of buyers in the US was causing the formation of two markets.In the starter and trade-up home categories, there were significantly more buyers than there were homes for sale, causing a seller’s market. In the premium, or luxury, home categories, the opposite was true as there was a surplus of these homes compared to the buyers that were out searching for their dream homes, which created a buyer’s market.According to the National Association of Realtors latest Existing Home Sales Report, the inventory of existing homes for sale in today’s market is at a 4.2-month supply. Inventory is now 6.5% lower than this time last year, marking the 27th consecutive month of year-over-year decreases.Looking at the latest report from Trulia, we can see that not much has changed, and in fact, recent natural disasters across the country have made inventory conditions even direr.Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”The results of their latest analysis are detailed in the chart below.A Tale of Two Markets: A 6-Month Update | Simplifying The MarketNationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, which is leading to a highly competitive seller’s market in these categories.Premium homebuyers, on the other hand, have the best chance of less competition and more inventory of listings in their price range with a 14.7-point surplus, which is creating more of a buyer’s market.

Bottom Line

Real estate is local. If you are thinking about buying OR selling this fall, let’s get together to discuss the exact market conditions in your area.

Choosing the Right Realtor

You Don't Want to Hear This from Your Listing Agent | Simplifying The Market

Choosing the Right Realtor®

You’ve decided to sell your house. You begin to interview potential real estate agents to help you through the process. You need someone you trust enough to:
  • Set the market value on possibly the largest asset your family owns (your home)
  • Set the time schedule for the successful liquidation of that asset
  • Set the fee for the services required to liquidate that asset

So How Do You Choose The Right Realtor®

An agent must be concerned first and foremost with you and your family to garner that degree of trust. Make sure this is the case.Be careful if the agent you are interviewing begins the interview by:
  • Bragging about their success
  • Bragging about their company’s success
An agent’s success and the success of their company can be important considerations when deciding on the right real estate professional to represent you in the sale of your house. However, you first need to know that they care about what you need and what you expect from the sale. If the agent is not interested in first establishing your needs, how successful they may seem is much less important.Look for someone with the heart of a teacher’ who comes in prepared to explain the current real estate market to you, and is patient enough to take the time to show you how it may impact the sale of your home; not someone only interested in trying to sell you on how great they are.

You have many agents from which to choose. Pick someone who truly cares.

Which Home Values Have Increased the Most?

Which Homes Have Increased in Value the Most? | Simplifying The MarketHome values have risen dramatically over the last twelve months. The latest Existing Home Sales Report from the National Association of Realtors puts the annual increase in the median existing-home price at 5.6%. CoreLogic, in their most recent Home Price Index Report, revealed that national home prices have increased by 6.7% year-over-year.CoreLogic broke appreciation down ever further into four price ranges which gives a more detailed view than simply looking at the year-over-year increases in the national median home price.The chart below shows the four tiers and each one’s growth from July 2016 to July 2017 (the latest data available).Which Homes Have Increased in Value the Most? | Simplifying The MarketIt is important to pay attention to how prices are changing in your local market. The location of your home is not the only factor in determining how much it has appreciated over the course of the last year. Lower priced homes have appreciated at greater rates than homes at the upper ends of the spectrum, due to demand from first-time home buyers and baby boomers looking to downsize.

Bottom Line

If you are planning on listing your home for sale in today’s market, let’s get together to go over exactly what’s going on in your area and your price range.

Should I Buy a Home Now? [INFOGRAPHIC]

Should I Buy a Home Now? Or Wait Until Next Year? [INFOGRAPHIC]| Simplifying The MarketShould I Buy a Home Now? Or Wait Until Next Year? [INFOGRAPHIC]| Simplifying The Market

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 4.4% by next year.
  • CoreLogic predicts home prices to appreciate by 5.0% over the next 12 months.
  • If you are ready and willing to buy your dream home, find out if you are able to!

Thinking of Selling your Home?

Thinking of Selling your Home? Competition is Coming | Simplifying The Market

Are you thinking of selling your home? Competition is coming!

The number of building permits issued for single-family homes is the best indicator of how many newly built homes will rise over the next few months. According to the latest U.S. Census Bureau and U.S. Department of Housing & Urban Development Residential Sales Report, the number of these permits were up 7.7% over last year.

How will this impact buyers?

More inventory means more options. Danielle Hale, Realtor.com’s Chief Economist, explained this is good news for the housing market – especially for those looking to buy:
“It’s not spectacular construction growth, but it’s slow and steady in the right direction. Eventually, the pickup in single-family home construction will mean [buyers] will have more options. Especially with the limited number of sales right now, more options are really needed.”

How will this impact sellers?

More inventory means more competition. Today, because of the tremendous lack of inventory, a seller can expect:
  1. A great price on their home as buyers outbid each other for it.
  2. A quick sale as buyers have so little to choose from.
  3. Fewer hassles as buyers don’t want to “rock the boat” on the deal.
With an increase in competition, the seller may not enjoy these same benefits. As Hale said:
“As new construction continues to increase, home shoppers will eventually have more [choices] and a bit more time to make purchase decisions compared to today’s quick-moving housing market.”

Bottom Line

If you are considering the sale of your home, it might make sense to beat this new construction competition to the market.

Choosing the Right Real Estate Agent

How do you select the right real estate agent who is going to help you make your dream of owning a home a reality? What should you be looking for?  How do you know if you’ve found the right person?
The most important characteristic that you should be looking for in your agent is someone who is going to take the time to really educate you on the choices available to you and your ability to buy in today’s market.As Dave Ramsey, the financial guru, advises:“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”Do your research.  Ask your friends and family for recommendations of professionals whom they have used in the past and have had good experiences with.Look for those who will be honest and trustworthy; after all, you will be trusting them with helping you make one of the biggest financial decisions of your life.Whether this is your first or fifth time buying a home, you want to make sure that you have an agent who is going to have the tough conversations with you, not just the easy ones.  If your offer isn’t accepted by the seller, or they think that there may be something wrong with the home that you’ve fallen in love with, you would rather know what they think than make a costly mistake.According to a Consumer Housing Trends Study, millennials have already started to prefer a more hands-on approach to their real estate experience:“While older generations rely on real estate agents for information and expertise, millennials expect real estate agents to become trusted advisers and strategic partners.”Look for someone to invest in your family’s future with you. You want an agent who isn’t focused on the transaction but is instead focused on helping you understand the process while helping you find your dream home.Bottom LineIn this world of Google searches, where it seems like all the answers are just a mouse-click away, you need an agent who is going to educate you and share the information that you need to know before you even know you need it.

Most Homebuyers Are Surprised by Closing Costs

More Than Half of All Buyers Are Surprised by Closing Costs | Simplifying The MarketAccording to a survey conducted by ClosingCorp, most homebuyers are surprised by closing costs required to obtain their mortgage.After surveying 1,000 first-time and repeat homebuyers, the results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected.
“Homebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”
Bankrate.com gathered closing cost data from lenders in every state and Washington, D.C. in order to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down payment.  Can you find the state in tan?  There's only one!More Than Half of All Buyers Are Surprised by Closing Costs | Simplifying The MarketKeep in mind that if you are in the market for a home above this price range, your costs could be significantly greater. According to Freddie Mac,
“Closing costs are typically between 2 and 5% of your purchase price.”

Bottom Line

Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.