The #1 Reason to Sell Now Before Spring

The #1 Reason to Sell Now Before Spring | Simplifying The Market

The price of any item (including residential real estate) is determined by ‘supply and demand.’ If many people are looking to buy an item and the supply of that item is limited, the price of that item increases.

According to the National Association of Realtors (NAR), the supply of homes for sale dramatically increases every spring. As an example, here is what happened to housing inventory at the beginning of 2017:

The #1 Reason to Sell Now Before Spring | Simplifying The Market

Putting your home on the market now instead of waiting for increased competition in the spring might make a lot of sense.

Bottom Line

Buyers in the market during the winter months are truly motivated purchasers. They want to buy now. With limited inventory currently available in most markets, sellers are in a great position to negotiate.

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5 Reasons to Love Using A Real Estate Pro [INFOGRAPHIC]

5 Reasons to Love Using A RE Pro [INFOGRAPHIC] | Simplifying The Market

Highlights:

  • Hiring a real estate professional to guide you through the process of buying a home or selling your house can be one of the best decisions you make!
  • They are there for you to help with paperwork, understanding the process, negotiations, and helping you with pricing (both when making an offer or setting the right price for your home).
  • One of the top reasons to hire a real estate professional is their understanding of your local market and how the conditions in your neighborhood will impact your experience.

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Homeownership: “The Reports of My Death Have Been Greatly Exaggerated”

Homeownership: "The Reports of My Death Have Been Greatly Exaggerated" | Simplifying The Market

The famous quote by Mark Twain in the title of this article can be used to describe homeownership in America today. Last week, the Census revealed that the percentage of homeowners in the country increased for the first time in thirteen years.

Homeownership: "The Reports of My Death Have Been Greatly Exaggerated" | Simplifying The Market

A story in the Wall Street Journal gave these new homeownership numbers some context:

“The annual increase marks a crucial turning point because it comes after the federal government reined in bubble-era policies that encouraged banks to ease lending standards to boost homeownership. This time, what’s driving the market is a shift in favor of owning rather than renting.

‘This is market, market and market…There’s no government incentive program in sight that is having this effect,’ said Susan Wachter, a professor of real estate and finance at the Wharton School at the University of Pennsylvania, ‘This is back to basics.’”

In a separate report comparing the rental population in America to the homeowner population, RentCafé also concluded that the gap is now shrinking.

“Undoubtedly, the recession had a great impact on homeownership…However, it looks like it takes more to discourage Americans from buying a house than that.

As the years go by, it seems more and more certain that the fact that renting has seen a sudden gain in popularity is more a reaction to the economic crisis than a paradigm shift in the Americans’ attitude toward housing.”

America’s belief in homeownership was also evidenced in a recent survey by Pew Research. They asked consumers “How important is homeownership to achieving the American Dream?”

The results:

  • 43% said homeownership was essential to the American Dream
  • 48% said homeownership was important to the American Dream
  • Only 9% said it was not important

Bottom Line

Homeownership has been, is and will always be a crucial element of the American Dream.

*Pictured Above – Mark Twain’s home in Hartford, Connecticut.

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Where Are Mortgage Interest Rates Headed in 2018?

Where Are Mortgage Interest Rates Headed in 2018? | Simplifying The Market

The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.

Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily over the course of the next 12 months.

Where Are Mortgage Interest Rates Headed in 2018? | Simplifying The Market

How Will This Impact Your Mortgage Payment?

Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.

According to CoreLogic’s latest Home Price Index, national home prices have appreciated 7.0% from this time last year and are predicted to be 4.2% higher next year.

If both the predictions of home price and interest rate increases become reality, families would wind up paying considerably more for their next home.

Bottom Line 

Even a small increase in interest rate can impact your family’s wealth. Let’s get together to evaluate your ability to purchase your dream home.

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How Much Does PMI Cost and How Do I Pay It?

Paying Private Mortgage Insurance

If you’re thinking of taking out a conventional mortgage, but don’t have a 20% down payment, there’s good news for you: you can get a mortgage with less than 20% down.

It’s important to know, though, that private mortgage insurance (PMI) is often a requirement for homebuyers who are paying less than 20% down on a conventional loan.

For many people, the cost of PMI is worth the benefits of owning a home. Understanding the costs associated with PMI will help homebuyers be prepared for their upcoming mortgage expenses.

So, how much does PMI cost? Fees vary, depending on the down payment amount and the homebuyer’s credit score. If you have a 15% down payment and an excellent credit score, for instance, your PMI costs will most likely be less than a homebuyer who has only a 5% down payment and an average credit score.

Typically, PMI fees range from 0.3 to 1.5% of the original loan amount, per year. So, for example, if you take out a $300,000 mortgage, your PMI costs may range from $900 to $4,500 per year (or roughly $75 to $375 per month). Most PMI is paid monthly by the borrower, but there are other options.

You may be thinking, “Why would I want to pay that?”

Because interest rates are low, historically speaking, it may be financially beneficial to obtain a mortgage now, while you can lock in a lower rate. Even with the additional cost of PMI each month, this could still be more affordable than waiting several years to save for a 20% down payment and ending up with a higher mortgage interest rate.

As far as the actual act of paying for your PMI, you won’t have to worry about doing any of the work. In most cases, you will pay for PMI as part of your total loan payment, which also includes the mortgage principal, interest, and taxes. Your lender will take care of getting the money to the private mortgage insurer.

At the end of the day, it’s all about weighing the pros and cons of PMI. Speaking with an experienced loan professional will help you learn more about your options. Regardless of your decision, it’s never too early to begin planning for homeownership.