Category Archives: For Buyers

Study Shows “Millennials Deserve More Credit”

Study Shows "Millennials Deserve More Credit" | Simplifying The Market

When it comes to talking about millennials, there are many stereotypes out there that have influenced the way the public feels about the generation. Whether it’s the assumption that millennials are irresponsible with money and would rather buy avocado toast than save for a down payment, or that millennials jump from job to job, the majority of these stereotypes paint the generation in a negative light.

A new study by Bank of America entitled Better Money Habits Millennial Report recently came to the defense of the generation when it reported that:

“Millennials deserve more credit – both from themselves and from others – for their mindfulness when it comes to money and their lives.”

Here are some key takeaways from the study proving that millennials deserve more credit for what they are already doing:

  • 63% are saving – (47% have $15,000 or more in savings)
  • 54% are budgeting – (73% who have a budget stick to it every month)
  • 57% have a savings goal – (67% who have a goal stick to it every month)
  • 46% have asked for a raise in the past 2 years – (80% who asked for a raise got one)
  • 59% feel financially secure – (16% have $100,000 or more in savings)

Many have wondered if millennials even want to own their own homes or if they would choose to rent instead. Well, not only do they want to own their own homes, but many already do and are looking to trade up! A recent study by shows that 49% of Americans who plan to sell their home in the next 12 months are millennials!

Danielle Hale,’s Chief Economist, gave some insight into why millennials are looking to sell,

“The housing shortage forced many first-time homebuyers to consider smaller homes and condos as a way to literally get their foot in the door. Our survey data reveals that we may see more of these homes hitting the market in the next year.”

Bottom Line

Not every millennial fits into the stereotypes that are so prominent in our society. Those who have risen above the stereotype are ready and willing to buy a home of their own, and many others already have!

2 Major Myths Holding Back Home Buyers

2 Major Myths Holding Back Home Buyers | Simplifying The Market

Urban Institute recently released a report entitled, “Barriers to Accessing Homeownership,” which revealed that eighty percent of consumers either are unaware of how much lenders require for a down payment or believe all lenders require a down payment above 5 percent.”

Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate the down payment funds needed to qualify for a home loan. According to the same report:

Consumers are often unaware of the option to take out low-down-payment mortgages. Only 19% of consumers believe lenders would make loans with a down payment of 5% or less… While 15% believe lenders require a 20% down payment, and 30% believe lenders expect a 20% down payment.”

These numbers do not differ much between non-owners and homeowners; 39% of non-owners believe they need more than 20% for a down payment and 30% of homeowners believe they need more than 20% for a down payment.

While many believe that they need at least 20% down to buy their dream home, they do not realize that programs are available that allow them to put down as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined with programs that have emerged allowing less cash out of pocket.

Myth #2: “I Need a 780 FICO® Score or Higher to Buy”

Similar to the down payment, many either don’t know or are misinformed about what FICO® score is necessary to qualify.

Many Americans believe a ‘good’ credit score is 780 or higher.

To help debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.

2 Major Myths Holding Back Home Buyers | Simplifying The Market

As you can see in the chart above, 53.5% of approved mortgages had a credit score of 600-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Your dream home may already be within your reach.

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5 Reasons Millennials Choose to Buy [INFOGRAPHIC]

5 Reasons Millennials Choose to Buy [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
  • The top reason millennials choose to buy is to have control over their living space, at 93%.
  • Many millennials who rent a home or apartment prior to buying their own homes dream of the day when they will be able to paint the walls whatever color they’d like, or renovate an outdated part of their living space.

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Understanding Closing Costs

Home loan closing costs explained

Most homebuyers know there are more expenses than just the mortgage – like mortgage insurance, homeowners insurance, taxes, and remodeling costs, but one vital expense that often gets overlooked is the cost of closing a mortgage loan.

Closing costs are the various charges associated with the mortgage transaction that are above and beyond the purchase price of the property or loan amount. Sellers have to pay some closing costs too – they usually pay a commission to the real estate agent, which is a percentage of the total sale price.

Buyers’ closing costs, on the other hand, can involve a variety of different fees including:

  • Title work – This means a title company will do a bit of research on the title – making sure there are no liens, claims, etc. Once the title company confirms there are no encumbrances, they will issue a title policy.
  • Appraisal – An appraisal is a written estimate of a property’s market value and is based upon what other properties are selling for in an area, the property’s condition and features such as the size, number of rooms, and architectural features.
  • Home inspections – A home inspector visually inspects a home for immediate or potential problems. The inspector will provide a report detailing any issues with the property and recommendations for further evaluation.
  • Credit reports – This is a detailed report of an individual’s credit history.
  • Recording fees – These are fees charged by a government agency for recording or registering a real estate transaction, so the sell/purchase becomes a matter of public record.
  • Origination fees and points – No one works for free. As a mortgage lender, we charge to cover the cost of processing the loan.
  • Title insurance – There are two types of title insurance policies – owner and lender. Just as lenders require fire insurance and other types of insurance to protect their investments, nearly all institutional lenders also require title insurance [a loan policy] to protect their interests.
  • Reserves for taxes and homeowners insurance – Reserves are extra money lenders require a homebuyer to have in the bank at closing. For example, if a lender says a buyer needs three months’ reserves, they are usually saying they need three months of mortgage payments in the bank.

That said, the total closing costs for your home loan will vary depending on your situation and your state or municipality. You won’t know exactly what these costs will be right away, but within three business days of application you’ll receive a Loan Estimate, which includes an estimated amount of closing costs.

The total amount of closing costs will be provided by your lender at least three business days before your closing. This information will be included in your Closing Disclosure, which is similar to the Loan Estimate but contains additional details on the costs associated with your mortgage.

During this three-day window before your closing, you’ll have time to ask your lender any questions you may have about your mortgage and closing costs. Typically, a buyer pays all of the closing costs associated with a transaction. Depending on your state laws, however, the seller may end up paying a portion of the buyer’s closing costs.

If you are looking to save on closing costs, or don’t want to or cannot pay closing costs out of pocket, you may have a few other options:

  • You could negotiate a “credit” with the seller, stipulating the seller pay some of the buyer’s closing costs.
  • You may qualify for a credit through the lender. In this case, the lender will help cover your closing costs, but this may result in a higher interest rate.
  • You may qualify for Down Payment Assistance (DPA), which is a down payment and closing cost assistance program that helps qualified homebuyers close on their mortgage loans. Both the buyer and home being purchased must be eligible.
  • You may be able to utilize a Mortgage Credit Certificate (MCC) designed to help first-time homebuyers offset a portion of their mortgage interest on a new mortgage as a way to help qualify for a loan. As a tax credit, not a tax deduction, a MCC helps you reduce your annual taxes dollar for dollar. The mortgage credit allowed varies depending on the state or local government issuing the certificates, but is capped at a maximum of $2,000 per year by the IRS. MCCs can often be used alongside another down payment program.
  • If you’re a first-time homebuyer, your lender may offer you a first-time homebuyer credit.

So, long story short, you can either pay the closing costs up front, or pay them as part of your mortgage. In many cases, it’s best to speak to a loan professional to discover which option is best for your unique situation and loan type.

Also, it’s important to keep in mind you will need to pay closing costs when refinancing your mortgage. Many homeowners overlook this cost when planning for their refinance.

In total, your closing costs typically range from 2 to 4% of your mortgage loan amount. But while closing costs are a necessary step to achieving homeownership, you can rest assured your money will be invested wisely – because you will begin building equity that will benefit you and your family in the future.

Why You Need a Professional on Your Team When Buying a Home

Why You Need a Professional on Your Team When Buying a Home | Simplifying The Market

Many people wonder whether they should hire a real estate professional to assist them in buying their dream homes or if they should first try to go through the buying process on their own. In today’s market: you need an experienced professional!

You Need an Expert Guide If You Are Traveling a Dangerous Path

The field of real estate is loaded with landmines; you need a true expert to guide you through the dangerous pitfalls that currently exist. Finding a home that is priced appropriately and is ready for you to move into can be tricky. An agent listens to your wants and needs, and can sift through the homes that do not fit within the parameters of your “dream home.”

A great agent will also have relationships with mortgage professionals and other experts that you will need in order to secure your dream home. 

You Need a Skilled Negotiator

In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands, of dollars. Each step of the way – from the original offer to the possible renegotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.

Realize that when an agent is negotiating his or her commission with you, they are negotiating their own salary; the salary that keeps a roof over their family’s head; the salary that puts food on their family’s table. If they are quick to take less when negotiating for themselves and their families, what makes you think they will not act the same way when negotiating for you and your family?

If they were Clark Kent when negotiating with you, they will not turn into Superman when negotiating with the buyer or seller in your deal. 

Bottom Line

Famous sayings become famous because they are true. You get what you pay for. Just like a good accountant or a good attorney, a good agent will save you money…not cost you money.

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