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Tips for Single Homebuyers: How To Make Your Dream a Reality

Author: Jeannine Lemmon
Categories: Buying Myths,Down Payments,First Time Home Buyers,For Buyers

If you’re living on your own and looking to buy a home, know that you can make your dream a reality with thoughtful planning and the right team of experts. Research from Freddie Mac shows 28% of all households (36.1 million) are sole-person, and that number is growing. Over the past 40 years, the number of sole-person households has nearly doubled, and that’s a trend that’s expected to continue. According to Freddie Mac:

“Our calculation suggests that there will be an additional 5 million sole-person households in the United States by the next decade. This means 42% of the household growth will be contributed by sole-person households, . . .”

If you fall into this category, here are three tips to help you achieve your homeownership goals.

1. Know Your Credit Score

When you buy a home on your own, you have to qualify for your loan based solely on your own finances and credit history. Investopedia says:

“. . . lenders will be looking at just one credit profile: yours. Needless to say, it has to be in great shape. It is always a good idea to review your credit report beforehand, and this is especially true of solo buyers.”

It’s important to find out your score so you know where it falls. If you’re not sure if it’s strong enough or where to focus your energy to improve it, meet with a professional for expert advice on your individual situation.

2. Explore Down Payment Options

Next, look into down payment programs so you can get a feel for what you’ll need to save to buy a home. Rob Chrane, CEO of Down Payment Resource, explains:

“Buyers should discuss their program options with their loan officer and real estate agent to make sure they choose the program best suited to their personal needs.”

In this step, lean on the pros to determine what you’re eligible for and what’s right for you.

3. Think About Your Future Home and Your Needs

You should also spend time thinking about what you want. What type of home do you picture yourself in? To answer that question, Quicken Loans shares this advice:

“Think about your lifestyle, what you want out of your home and your needs. Is being close to work important? Do you need a lot of yard space? Do you want an extra bedroom that you can transform into a home office? Condo or detached home? Lots of space for entertaining? It’s all up to you (and your budget).”

Again, a professional can help you balance what you want and how much you should spend on your monthly housing costs to determine what type of home is right for you.

While buying a home solo can feel like a big challenge, it doesn’t have to be. If you lean on the professionals, they can help you navigate these waters and make sure you’re able to take advantage of the great opportunities in today’s housing market (like low mortgage rates) to buy your dream home.

Bottom Line

The share of sole-person households is growing. If you’re looking to buy a home on your own, be confident that the dream is achievable. When you’re ready to begin your search, let’s connect so you have expert advice each step of the way.

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How To Think Strategically as a Buyer in Today’s Market

Author: Jeannine Lemmon
Categories: Buying Myths,First Time Home Buyers,For Buyers,Move-Up Buyers

The game of chess can provide incredible lessons to apply to all aspects of life, including the homebuying process. Chess requires you to plan and think about your strategy from the very beginning of the game.

The homebuying process, like chess, requires strategy and planning. Here are a few things to keep in mind to ensure your plan is as strong as possible when you begin your home search.

Pre-Approval: the Best Opening Play To Make as a Homebuyer

It’s important to have a great opening play when you’re buying a home. And the best move you can make when you begin your home search is getting pre-approved by a lender. You’ve probably already heard this is an important step, but what exactly is pre-approval and what benefits does it provide you?

As Freddie Mac puts it:

“The pre-approval letter from your lender tells you the maximum amount you are qualified to borrow. Getting a pre-approval letter is not a loan guarantee, it simply states how much your lender is willing to lend you. . . .”

And while determining how much you can afford at the start of your search is critical, the pre-approval letter also serves another important purpose. Freddie Mac also notes:

“This pre-approval allows you to look for a home with greater confidence and demonstrates to the seller that you are a serious buyer.”

In the game of chess, a strong opening move signals to your opponent that you’re a serious competitor. As a homebuyer, your pre-approval letter signals to the seller that you’re a serious, interested buyer.

Homebuying: It’s a Team Game, Not a Single-Player Experience

Every step you take to create your strategy as a buyer is important in today’s market. Why? Mortgage rates are still low, but increasing. Prices are going up. There’s a limited supply of homes for sale. These are just a few key variables in today’s market you need to be prepared for.

That means leaning on expert guidance as you plan every move is more important than ever. Have a team of professionals – like your trusted real estate agent and a loan officer – every step of the way to make sure you make the right moves.

Bottom Line

Getting a pre-approval letter isn’t just good strategy, it can be game-changing. It allows you to get a full understanding of what you can afford, and it signals to sellers that you’re serious. Let’s connect today to ensure you’re playing chess and being strategic during the home buying process.

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How Smart Buyers Are Approaching Rising Mortgage Rates

Author: Jeannine Lemmon
Categories: Buying Myths,First Time Home Buyers,For Buyers,Interest Rates,Move-Up Buyers

Last week, the average 30-year fixed mortgage rate from Freddie Mac inched up to 3.1%, and experts project rates will continue rising through 2022:

“The 30-year fixed-rate mortgage was 2.9% in the third quarter of 2021. We forecast mortgage rates to increase slightly through the remainder of the year and reach 3.0%, rising to 3.5% for full year 2022.”

If you’re thinking of buying a home, here are a few things to keep in mind so you can succeed even as mortgage rates rise.

Taking Time Off Can Be Costly

Mortgage rates play a significant role in your home search. As rates go up, your monthly mortgage payment increases if you’re buying a home, directly affecting how much you can afford. And even the smallest increase can have a large impact on your monthly payment (see chart below):How Smart Buyers Are Approaching Rising Mortgage Rates | Simplifying The MarketWith mortgage rates on the rise, you’ve likely seen your purchasing power impacted already. Instead of waiting and hoping rates will fall, today’s rates should motivate you to purchase now before rates increase more.

Smart Buyers Can Succeed by Planning Ahead

You can use your newfound motivation to energize your search and plan your next steps accordingly so you’re prepared to act no matter what happens with mortgage rates. One way to do that: take rising rates into consideration as part of your budget.

Danielle Hale, Chief Economist at realtor.com, puts it best, saying:

“Smart buyers should consider calculating a monthly payment not only at today’s rates, but also at rates that are a bit higher so that they won’t be derailed by a sudden upward move. . . .”

You should also be ready to act when you find the home that meets your needs. That means getting pre-approved with a lender so there won’t be any delays when the time arrives.

The best way to prepare is to work with a trusted real estate advisor now. An agent can connect you with a lender, help you adjust your search based on your budget, and be ready to act quickly when it’s time to make an offer.

Bottom Line

Serious buyers should approach rising rates as a motivating factor to buy sooner, not a reason to wait. Waiting will cost you more in the long run. Let’s connect today so you can better understand your budget and be prepared to buy your home even before rates climb higher.

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VA Loans: Helping Veterans Achieve Their Homeownership Dreams

Author: Jeannine Lemmon
Categories: Buying Myths,Down Payments,For Buyers,Time-sensitive

The purpose of Veterans Affairs (VA) home loans is to provide a pathway to homeownership for those who have sacrificed so much by serving our nation. As the Veterans Administration says of the program:

“The objective of the VA Home Loan Guaranty program is to help eligible Veterans, active-duty personnel, surviving spouses, and members of the Reserves and National Guard purchase, retain, and adapt homes in recognition of their service. . . .”

For over 75 years, VA home loans have provided millions of veterans and their families the opportunity to purchase their own homes.

2020 Data on VA Home Loans

  • 1,246,817 home loans are guaranteed by the Veterans Administration
  • The average VA loan amount totals $301,044
  • 178,171 of those using a VA Loan are first-time homebuyers

Top Benefits of the VA Home Loan Program

As we reflect on their sacrifice and honor our nation’s veterans, it’s important to ensure all veterans know the full extent of benefits VA home loans offer. As Jeff London, Director of the VA Home Loan Program, says:

“VA loans offer an extraordinary opportunity for veterans because of lower interest rates, lower monthly payments, no or low-down payments, and no private mortgage insurance.”

Those who qualify for a VA home loan are eligible for the following:

  • Borrowers can often purchase a home with no down payment. In 2020, 350,094 individuals using a VA Loan were able to purchase their homes without putting money down.
  • Many other loans with down payments under 20% require Private Mortgage Insurance (PMI). VA Loans do not require PMI, which means veterans can save on their monthly housing costs.
  • Finally, VA-Backed Loans often offer the most competitive terms and interest rates.

Bottom Line

One way we can honor and thank our veterans this year is to ensure they have the best information about the benefits of VA home loans. Homeownership is the American Dream. Our veterans sacrifice so much in service to our nation and deserve to achieve their homeownership goals. Thank you for your service.

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The Mortgage Process Doesn’t Have To Be Scary [INFOGRAPHIC]

Author: Jeannine Lemmon
Categories: Buying Myths,First Time Home Buyers,For Buyers,Infographics,Move-Up Buyers

The Mortgage Process Doesn’t Have To Be Scary [INFOGRAPHIC] | Simplifying The Market

Some Highlights

  • Applying for a mortgage is a big step towards homeownership, but it doesn’t need to be one you fear. Here are some tips to help you prepare.
  • Know your credit score and work to build strong credit. When you’re ready, lean on your agent to connect you with a lender so you can get pre-approved and begin your home search.
  • Any major life change can be scary, and buying a home is no different. Let’s connect so you have an advisor by your side to take the fear out of the equation.
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Knowledge Is Power When It Comes to Appraisals and Inspections

Author: Jeannine Lemmon
Categories: Buying Myths,First Time Home Buyers,For Buyers,Move-Up Buyers

Buyers in today’s market often have questions about the importance of getting a home appraisal and an inspection. That’s because high buyer demand and low housing supply are driving intense competition and leading some buyers to consider waiving those contingencies to stand out in the crowded market.

But is that the best move? Buying a home is one of the most important transactions in your lifetime, and it’s critical to keep your best interests in mind. Here’s a breakdown of what to expect from the appraisal and the inspection, and why each one can potentially save you a lot of time, money, and headaches down the road.

Home Appraisal

The home appraisal is a critical step for securing a mortgage on your home. As Home Light explains:

“. . . lenders typically require an appraisal to ensure that your loan-to-value ratio falls within their underwriting guidelines. Mortgages are secured loans where the lender uses your home as collateral in case you default on the agreed-upon payments.”

Put simply: when you apply for a mortgage, an unbiased appraisal – typically required by your lender – is the best way to verify the value of the home. That appraisal ensures the lender doesn’t loan you more than what the home is worth.

When buyers are competing like they are today, bidding wars and market conditions can push prices up. A buyer’s contract price may end up higher than the value of the home – this is known as an appraisal gap. In today’s market, it’s common for the seller to ask the buyer to make up the difference when an appraisal gap occurs. That means, as a buyer, you may need to be prepared to bring extra money to the table if you really want the home.

Home Inspection

Like the appraisal, the inspection is important because it gives an impartial evaluation of the home. While the appraisal determines the current value of the home, the inspection determines the current condition of the home. As the American Society of Home Inspectors puts it:

“Home inspections are the opportunity to discover major defects that were not apparent at a buyer’s showing. . . . Your home inspection is to help you make an informed decision about the house, including its condition.”

If there are any concerns during the inspection – an aging roof, a malfunctioning HVAC system, or any other questionable items – you have the option to discuss and negotiate any potential issues with the seller. Your real estate advisor can help you navigate this process and negotiate what, if any, repairs need to be made before the sale is finalized.

Keep in mind – home inspections are critical because they can shed light on challenges you may face as the new homeowner. Without an inspection, serious, sometimes costly issues could come as a surprise later on.

Bottom Line

Both the appraisal and the inspection are important steps in the homebuying process. They protect your best interests as a buyer by providing unbiased information about the home’s value and condition. Let’s connect so you have an expert guiding you throughout the entire process.

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Important Distinction: Homes Are Less Affordable, Not Unaffordable

Author: Jeannine Lemmon
Categories: Buying Myths,First Time Home Buyers,For Buyers,Housing Market Updates

It’s impossible to research the subject of buying a home without coming across a headline declaring that the fall in home affordability is a crisis. However, when we add context to the most recent affordability statistics, we soon realize that, though homes are less affordable than they have been over the last few years, they are more affordable than they historically have been.

Black Knight, a premier provider of data and analytics for the mortgage industry, just released their latest Monthly Mortgage Monitor which includes a new analysis of the affordability situation. Here’s what the report reveals:

“The monthly payment required to purchase the average priced home with a 20% down 30-year fixed rate mortgage increased by nearly 20% (+$210) over the first nine months of 2021, . . . It now requires 21.6% of the median household income to make the monthly mortgage payment on the average home purchase, the least affordable housing has been since 30-year rates rose to nearly 5% back in late 2018.”

Basically, the report shows that homes are less affordable today than at any other time in the last three years. However, in a previous report earlier this year, Black Knight calculated that the percentage of the median household income to make the monthly mortgage payment on the average home purchase over the last 25 years was 23.6% (see graph below):Important Distinction: Homes Are Less Affordable, Not Unaffordable | Simplifying The MarketToday’s payment-to-income ratio is more affordable than the average over the last 25 years. Given that context, we can see that American households still have the same ability to be homeowners as their parents did 20 years ago.

This confirms the recent analysis of ATTOM Data resources where Todd Teta, Chief Product and Technology Officer, explains:

“The typical median-priced home around the U.S. remains affordable to workers earning an average wage, despite prices that keep going through the roof. Super-low interests and rising pay continue to be the main reasons why.”

Bottom Line

It’s true that it’s less affordable to buy a home today than it has been the last few years. However, it’s more affordable to buy today than the average over the last 25 years. In other words, homes are less affordable, but they’re not unaffordable. That’s an important distinction.

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What Does the Future Hold for Home Prices?

Author: Jeannine Lemmon
Categories: Buying Myths,For Buyers,For Sellers,Housing Market Updates,Pricing,Selling Myths

If you’re looking to buy or sell a house, chances are you’ve heard talk about today’s rising home prices. And while this increase in home values is great news for sellers, you may be wondering what the future holds. Will prices continue to rise with time, or should you expect them to fall?

To answer that question, let’s first understand a few terms you may be hearing right now.

It’s important to note home prices have increased, or appreciated, for 114 straight months. To find out if that trend may continue, look to the experts. Pulsenomics surveyed over 100 economists, investment strategists, and housing market analysts asking for their five-year projections. In terms of what lies ahead, experts say the market may see some slight deceleration, but not depreciation.

Here’s the forecast for the next few years:What Does the Future Hold for Home Prices? | Simplifying The MarketAs the graph above shows, prices are expected to continue to rise, just not at the same pace we’ve seen over the last year. Over 100 experts agree, there is no expectation for price depreciation. As the arrows indicate, each number is an increase, which means prices will rise each year.

Bill McBride, author of the blog Calculated Risk, also expects deceleration, but not depreciation:

“My sense is the Case-Shiller National annual growth rate of 19.7% is probably close to a peak, and that year-over-year price increases will slow later this year.”

Ivy Zelman of Zelman & Associates agrees, saying:

“. . . home price appreciation is on the cusp of flipping to a decelerating trend.”

A recent article from realtor.com indicates you should expect:

“. . . annual price increases will slow to a more normal level, . . .”

What Does This Deceleration Mean for You?

What experts are projecting for the years ahead is more in line with the historical norm for appreciation. According to data from Black Knight, the average annual appreciation from 1995-2020 is 4.1%. As you can see from the chart above, the expert forecasts are closer to that pace, which means you should see appreciation at a level that’s aligned with a more normal year.

If you’re a buyer, don’t expect a sudden or drastic drop in home prices – experts say it won’t happen. Instead, think about your homeownership goals and consider purchasing a home before prices rise further.

If you’re a seller, the continued home price appreciation is good news for the value of your house. Work with an agent to list your house for the right price based on market conditions.

Bottom Line

Experts expect price deceleration, not price depreciation over the coming years. Let’s connect to talk through what’s happening in the housing market today, where things are headed, and what it means for you.

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Don’t Wait for a Lower Mortgage Rate – It Could Cost You

Author: Jeannine Lemmon
Categories: Buying Myths,First Time Home Buyers,For Buyers,Housing Market Updates,Interest Rates,Move-Up Buyers

Today’s housing market is truly one for the record books. Over the past year, we’ve seen the lowest mortgage rates in history. And while those rates seemed to bottom out in January of this year, the golden window of opportunity for buyers isn’t over just yet. If you’re one of the buyers who worry they’ve missed out, rest assured today’s mortgage rates are still worth taking advantage of.

Even today, our mortgage rates are below what they’ve been in recent decades. So, while you may not be able to lock in the rate your friend got recently, you’re still in a great position to secure a rate well below what your parents and even grandparents got in years past. The key will be acting sooner rather than later.

In late September, mortgage rates ticked above 3% for the first time in months. And according to experts throughout the industry, mortgage rates are projected to continue rising in the months ahead. Here’s where experts say rates are headed:Don’t Wait for a Lower Mortgage Rate – It Could Cost You | Simplifying The MarketWhile a projected half percentage point increase may not seem substantial, it does have an impact when you’re buying a home. When rates rise even slightly, it affects how much you’ll pay month-to-month on your home loan. The chart below shows how it works:Don’t Wait for a Lower Mortgage Rate – It Could Cost You | Simplifying The MarketIn this example, if rates rise to 3.55%, you’ll pay an extra $100 each month on your monthly mortgage payment if you purchase a home around this time next year. That extra money can really add up over the life of a 15 or 30-year loan.

Clearly, today’s mortgage rates are worth taking advantage of before they climb further. The rates we’re seeing right now give you a unique opportunity to afford more home for your money while keeping your monthly payment down.

Bottom Line

Waiting for a lower mortgage rate could cost you. Experts project rates will continue to rise in the months ahead. Let’s connect so you can seize this opportunity before they increase further.

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If You’re a Buyer, Is Offering Asking Price Enough?

Author: Jeannine Lemmon
Categories: Buying Myths,First Time Home Buyers,For Buyers,Housing Market Updates,Move-Up Buyers

In today’s real estate market, buyers shouldn’t shop for a home with the expectation they’ll be able to negotiate a lower sales price. In a typical housing market, buyers try to determine how much less than the asking price they can offer and still get the home. From there, the buyer and seller typically negotiate and agree on a revised price somewhere in the middle.

Things Are Different Today

Today’s housing market is anything but normal. According to the National Association of Realtors (NAR), homes today are:

  • Receiving an average of  3.8 offers
  • Selling in just 17 days

Homes selling quickly and receiving multiple offers highlights how competitive the housing market is right now. This is due, in large part, to the low supply of homes for sale. Low supply and high demand mean homes often sell for more than the asking price. In some cases, they sell for a lot more. Selma Hepp, Deputy Chief Economist at CoreLogic, explains how these stats can impact buyers:

“The imbalance between robust demand and dismal availability of for-sale homes has led to a continual bidding over asking prices, which reached record levels in recent months. Now, almost 6 in 10 homes listed are selling over the asking price.”

You May Need To Rethink How You Look at a Home’s Asking Price

What does that mean for you? If you’ve found your dream home, you need to be realistic about today’s housing market and how that impacts the offer you’ll make. Offering below or even at a home’s asking price may not cut it. In today’s market, the highest bidder often wins the home, much like at an auction.

Currently, the asking price is often the floor of the negotiation rather than the ceiling. If you really love a home, it may ultimately sell for more than the sellers are asking. That’s important to keep in mind as you work with your agent to craft an offer.

Understand An Appraisal Gap Can Happen

Because of today’s home price appreciation and the auction-like atmosphere in the selling process, appraisal gaps – the gap between the price of your contract and the appraisal for the house – are more frequent.

According to data from CoreLogic:

“Beginning in January 2020, nationally, 7% of purchase transactions had a contract price above the appraisal, but by May 2021, the frequency had increased to 19% of purchase transactions.”

When this happens, your lender won’t loan you more than the home’s appraised value, and the seller may ask you to make up the difference out of pocket. Buyers in today’s market need to be prepared for this possibility. Know your budget, know what you can afford, and work with a trusted advisor who can offer expert advice along the way.

Bottom Line

Bidding wars and today’s auction-like atmosphere mean buyers need to rethink how they look at the asking price of a home. Let’s connect so you have a trusted real estate professional who can advise you on the current market and help determine what the market value is on your dream home.

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