How Are Mortgage Rates Determined?

Mortgage Rates

Mortgage rates are determined by credit score, loan-to-value ratio, inflation, and more.

What factors determine mortgage rates?

Your mortgage rate is determined by many factors. Some are within your control and some aren’t. With awareness of these factors, you can feel more confident about getting a competitive interest rate when you choose a mortgage lender.

Mortgage rate factors that you control

Lenders adjust mortgage rates depending on how risky they judge the loan to be. A riskier loan has a higher interest rate.

When judging risk, the lender considers how likely you are to fall behind on payments (or stop making payments altogether), and how much money the lender could lose if the loan goes bad. The major factors are credit score and the loan-to-value ratio.

Credit score

The lowest mortgage rates go to borrowers with credit scores of 740 or higher. These borrowers have the broadest choice of loan products.

Interest rates tend to be a little higher for borrowers with credit scores of 700 to 739. For borrowers with credit scores from 620 to 699, mortgage rates are even higher. These borrowers might find it difficult or impossible to get high-amount jumbo loans.

With a credit score below 620, the interest rates are even higher, and options are fewer. Most of the loans available at this level are insured or guaranteed by the government.

The loan-to-value ratio measures the mortgage amount compared with the home’s price or value. Let’s say you make a $20,000 down payment on a $100,000 house. The mortgage will be $80,000. You’re borrowing 80% of the home’s value, so your loan-to-value ratio is 80%.

A bigger down payment gives you a smaller loan-to-value ratio, and a smaller down payment gives you a bigger loan-to-value ratio.

If your loan-to-value ratio is greater than 80%, it’s considered high, and it puts the lender at greater risk. This may result in a higher mortgage rate, especially when combined with a lower credit score. The loan will usually require mortgage insurance, too.

Other factors

Lenders may charge more for cash-out refinances, adjustable-rate mortgages and loans on manufactured homes, condominiums, second homes, and investment properties because those loans are deemed riskier.

Mortgage rate factors beyond your control

The overall level of mortgage rates is set by market forces. Mortgage rates move up and down daily, based on the current and expected rates of inflation, unemployment and other economic indicators.

Overall economy

Mortgage rates tend to rise when the outlook is for fast economic growth, higher inflation and a low unemployment rate. Mortgage rates tend to fall when the economy is slowing down, inflation is falling and the unemployment rate is rising.

Inflation

Rising inflation is often accompanied by rising interest rates because when prices go up, the dollar loses buying power. Lenders demand higher interest rates as compensation.

Ten years of low inflation contributed to low mortgage rates. But as inflation accelerated in early 2022, mortgage rates rose dramatically.

Job growth

When the COVID-19 pandemic led to stay-at-home orders in the spring of 2020, the resulting layoffs and furloughs caused a recession. Mortgage rates already were low, and they fell even further — just as one would expect to happen in a recession.

Other economic indicators

Mortgage investors pay attention to many economic trends besides inflation and employment — including retail sales, home sales, housing starts, corporate earnings, and stock prices.

Federal Reserve

The Federal Reserve doesn’t set mortgage rates. The Fed raises and cuts short-term interest rates in reaction to broad movements in the economy. Mortgage rates rise and fall according to those same economic forces. Mortgage rates and Fed rates move independently of each other, but usually in the same direction.

Are mortgage rates the same for all lenders?

Mortgage rates vary from lender to lender because lenders have different appetites for risk and different overhead costs.

When a lender reaches its capacity of loan applications its employees can process, it might keep rates slightly higher than necessary to keep from being overwhelmed; when business is slow, the lender might charge slightly lower rates to drum up business.

Shop with confidence

Because lenders’ mortgage rates vary, it’s smart to shop for a mortgage from several lenders because you could save thousands of dollars over the life of the loan.

And now that you understand how mortgage rates are determined, you’re more equipped to ask smart mortgage questions when shopping for lenders.

Source: nerdwallet.com ~ By: Holden Lewis ~ Image: Canva Pro

Tips for Selling Your Home in the Fall and Winter

I’m not going to sugarcoat it — buying and selling spikes in spring and summer.
 
However, it isn’t impossible to sell your home during fall and winter. You can do a lot to help your home feel welcoming and bright to a potential buyer. What’s important to remember when you’re looking to sell during the cold weather months? Keep on reading to get a list of tips, including pro recommendations that’ll put a new perspective on the buyer experience.

Show Buyers What It Looks Like During the Spring and Summer

Showcase what your home has to offer by giving potential buyers the opportunity to see the home during other months of the year. Michelle Caracci Corsi from Howard Hanna Real Estate Services suggests you “include a photo album or digital slideshow of the exterior in the summer, spring, and fall. Highlight garden beds, and patios or decks with furniture so the buyer can envision the home year-round.”
She also adds, “Consider using a realtor who can provide a digital 3-D tour that shows the home in the daylight. Folks who work during the day usually tour homes in the evening when it’s dark. Less natural light makes the home feel smaller, and it’s hard to picture the outdoor space.”

Get 5-Star Curb Appeal to Enhance the Outdoor Experience

Leaf- and snow-covered sidewalks can make a perfectly nice home look sloppy and poorly maintained. Use a leaf blower daily to keep leaves, branches, and outdoor dirt off the walkways, and do your best to keep the yard clear of leaves, too.
Add fresh mulch to garden beds so they look their best.
Rinse loose dirt from your home’s siding one last time before the temperature drops.
“Another challenge for buyers in the fall and winter is that everything usually looks dull and drab,” adds Michelle. The lot lines are not as visible covered with snow and leaves, so it’s difficult to get a sense of the outdoor space unless it is clearly defined. Define property boundaries with brightly-colored flags tied to stakes, and place them at the four corners of your property.
If it’s snowy, keep the deck shoveled and salted so buyers can walk outside to experience the space. If the climate allows, keep outdoor furniture on your patio so they can get a better feel for the outdoor living space.

Let There Be Light

Retract blinds, and widen curtains, so there’s minimal window coverage. The windows will look bigger, and it’ll encourage daylight to flow into your space.
Experiment with your lightbulbs to find the most flattering hues for your space. A bathroom looks great with daylight bulbs (5,000-6,500K) and living spaces, such as bedrooms and living rooms, look best with soft white bulbs (2,700K). In general, your home’s design and color palette will play a part in what looks most appealing. Go for cozy and bright. If you’re upgrading bulbs in hard-wired fixtures, consider going all LED. Let the buyers know you’re leaving the bulbs for them.
Use hardwoods to your advantage. In my experience, nothing shows off a home better than daylight bouncing off beautiful hardwood floors. Remove unnecessary area rugs to maximize the effect.
Bring in extra floor lamps. Add them to rooms with dark corners to create a warmer setting.
Consider investing in landscape lighting, since visitors touring during the late afternoon or evening will have a much different experience than visitors who tour a home earlier in the day. Outdoor lighting accessories will amplify your home’s appeal, so consider solar lights lining a walkway, motion-activated spotlights, and landscape spotlights.
Remove screens from the windows to allow more natural light to flow into your home, and clean the windows. Be sure to let potential buyers know you will replace the screens.

Spend Time on Basic Home Maintenance

Check window seals and doors for drafts. A drafty window is most noticeable on a cold day, so take extra effort to weather seal and insulate around windows and doors.
Have the furnace or boiler maintained prior to putting your house on the market On a cold day, buyers will make sure the systems are in good shape. Be a step ahead by having your maintenance team leave a sticker or magnet marking the date of the last inspection to add peace of mind for buyers.
Swap out the HVAC filter to help reduce any odors or fall allergens in the home.
Check for spiderwebs – everywhere.

Deep Clean: A Few Places You Might Forget About

Clean inside the cabinet beneath your sink. It’s likely they’ll glance at the plumbing, and they’ll notice if the plumbing and inside of the cabinet are dirty. Clean it well, consider adding a new piece of shelf liner on the bottom, and install slide-out drawers or extra utility that’ll be appealing.
Make shower heads look like new.
Dust ceiling fan blades and the inside of your dishwasher and washing machine. Don’t forget all the nooks and crannies in the kitchen.

Paint? Maybe.

Contrary to many pro recommendations, I’m not a huge fan of painting walls neutral colors to make a home more salable. A light-colored interior will reflect more light than a dark one, and that may make all the difference on a gloomy, cool day.
If the walls look dingy or dated, refresh the look of a room with a $25 can of satin or eggshell.

Embrace Hygge

That’s to say, make your home as cozy and inviting as possible, so potential buyers can easily envision it as a friendly, welcoming space for family and friends.
Accessorize the main living area with neutral-but-coordinated throws and pillows and unscented candles for ambiance.
Make an impression with your gas or electric fireplace. Leave a note with the remote, prompting the potential buyers to turn it on, so they can enjoy the ambiance. Include a reference sheet that cites the maintenance schedule you followed and the increased utility costs you experience in running the fireplace.
Remove the TV in the living room if you can live without it. Yep, big black screens are an eyesore, especially if they’re blocking light or detracting from a beautiful mantel.
Take another look at how the furniture is positioned now that the TV isn’t there. Consider rearranging to maximize the functionality of the space. It might not be how your family used the room, but it’ll present really well.

Be Sensitive to Seasonal Decor

Both in your listing photos and in real life during showings, keep the seasonal decor at bay while you’re trying to sell. No one expects a home to completely lack holiday decorations during these months, but simplicity is appealing. Opt for modest, neutral accessories — think white string lights or a Christmas tree that truly flatters the space.
Do you have vaulted ceilings? You’re green-lighted to get a big tree, so buyers can appreciate the spectacular height of the ceilings.
One snowy weather accessory that wins us over? A classic snowman in the front yard.
Resist the urge to add too many scents to your home – it’ll look like you’re hiding something. An unlit pine candle in a bathroom will appeal to the senses.
Have holiday music playing low on the radio during December. During an open house, offer freshly-baked cookies, pumpkin muffins, or hot cocoa for visitors.

Maintain Cleanliness Between Showings

Dry mop to remove dust and dirt that you track every evening. Vacuum area rugs and entryway mats daily, and keep toys at bay.
Keep a focus on curb appeal. Continue to sweep or snowplow sidewalks, driveways, decks, and patio spaces.

Source: hgtv.com ~ By:  Emily Fazio ~ Image: Canva Pro

When Will Interest Rates Go Down?

Mortgage rates have been consistently on the rise as the Fed struggles to battle inflation.

With a recession looming in the distance, you might ask yourself: “Is now the right time to buy a house?”

It’s an understandable question considering how inflation has soared, house prices are high, and mortgage rates keep rising in response. No one wants to make a wrong financial decision.

But it might not be a bad financial decision to buy a house right now. Let’s talk through mortgage rates, how they work, and whether or not today is the right time to buy a home, given the state of the market.

Forecasting mortgage interest rates explained

Mortgage interest rates are changing daily.

It used to be that banks would set the mortgage rates for the day, and then change them the next day, or week, or month, depending on the climate at the time.

Unfortunately, it doesn’t work like that anymore. Wall Street is heavily involved in setting mortgage rates because people buy and sell mortgage-backed securities.

When these securities go up, the mortgage rates go down, and conversely, when the securities go down, mortgage rates go up.

The Fed steps in to help regulate this by buying a portion of the securities and helping to set the rates.

What are the experts saying about mortgage rates now?

According to both Morningstar and Kiplinger, mortgage rates are nearing their peak.

While the rates are still increasing steeply, both reporting agencies believe that since the feds are selling their mortgage-backed securities, they will begin to come down.

Not every expert is sure, however.

Len Kiefer, the deputy chief economist at Freddie Mac, said with the market as volatile as it is, “It is difficult to foresee how future expectations may shift in response to events, so the direction and magnitude of impact are impossible to predict.”

He doesn’t want us to get our hopes up about changing rates.

No one indeed expected the pandemic, and it drastically changed everyone’s financial situation—primarily where the housing market is concerned. Experts are now hesitant to make any sort of a prediction in response.

Are rates expected to go down before the end of the year?

Unfortunately, rates are not likely to go down by the end of the year.

The Fed’s main priority right now is curbing inflation. They do this by hiking reserves. With three more meetings this year, it’s likely that the feds will hike the reserves more steeply again.

These hikes negatively impact low-interest rates. We’re likely to see mortgage rates trend upwards throughout the end of 2022.

Will interest rates go down in 2023?

The Feds are now focusing on lowering the mortgage rate to two percent. They’re expected to hit that number sometime in 2023.

After that, we’ll likely see mortgage rates decrease and continue to fall in 2024 and 2025 as we reach economic stability.

Should I buy a home now or wait?

While interest rates might be high, the real estate market is slowing down.

House-bidding wars are becoming less common than they were, even a few months ago, and houses are staying on the market longer. When the real estate market slows down, it’s usually a better time to buy.

Experts suggest continuing to look for a home but only bidding on the asking price and locking into a reasonable mortgage rate.

You can always refinance down the line if mortgage rates drop to historical lows again. But you’re locked into a better rate if they continue to rise.

If you wait to see if the mortgage rates fall, you might find yourself looking at higher home prices than we currently have. It’s a tradeoff, but there are never going to be perfect market conditions in which to buy a home.

What do these rates mean for refinancing?

This answer will vary by the homeowner and depend on how high your current mortgage is.

Experts often say it’s best to refinance your home when you can reduce interest by at least .75 points to make the refinance worth it. If you can’t, you may find that you’ll pay more in fees than you would save with a new rate.

If mortgage rates are around 5.50% and your mortgage is above 6.25%, refinance is a good idea. If it’s lower than that, you should hold off and see if interest rates will go down in 2023.

Don’t just consider 30-year mortgages. Look into 15-year mortgages as well. These tend to have lower interest rates. The tradeoff is that you might end up with a higher payment. But the money saved could be worth it in the long term.

Home.com can help you navigate the market

Buying a home might be the right decision for you and your family.

Sometimes it’s about finding the right property to fit your needs, instead of looking around at the optimal financial decisions.

The bottom line is that it’s not a bad time to purchase or refinance.

Keep an eye on Home.com’s mortgage rates page to help you decide if it’s the right time to make a move. We also have excellent calculators to help you determine your mortgage costs or calculate a refinance.

When you’re ready to take the next step in purchasing or refinancing, reach out to the experienced loan officers at Homefinity. They’ve been through every market condition and can help guide you to the right decisions for your financial situation.

Source: home.com ~ By:

How to Build Out Your Smart Home

smart home

The possibilities are endless when it comes to building out a smart home, which can make decisions overwhelming. Tech expert Brandon Doyle breaks down how to get started.

I’ve tested hundreds of smart-home products over the years and provided written and video comparisons in each product category. Along the way, I’ve learned a lot about what’s needed and what’s not, what the top brands are, and where to get started.

(And big thanks to my wife for her unending patience as I tinkered with, traded, installed, and uninstalled, and upgraded our various smart-home features.)

Opt for Quality Over Price

The options are endless when it comes to smart-home features, but that doesn’t necessarily mean a cheaper product will be better. In many cases, the cheaper off-brand products you might find may not perform as well and can lead to headaches down the line. I recommend watching for package deals and deep discounts from trusted brands on popular sale days like Prime Day and Black Friday.

Pick Your Ecosystem

You’ve probably heard of Amazon’s Alexa, Google’s Home, Nest and Assistant, and Samsung’s SmartThings. These ecosystems act as the brain that ties all of your products together and creates automation. There are a lot of other options out there, from advanced do-it-yourself platforms that are perfect for the tinkering types to professionally installed systems that are typically found in luxury homes.

Great content that focuses on DIY systems such as the Home Assistant control system is abundant on YouTube. However, proceed with caution. I’ve found that unless smart-home tech is your hobby, DIY isn’t always the best choice if you’re looking to save time. And while systems like Crestron, Control4, Savant and Elan have incredible capabilities, setup does require a professional, which can start at around $20,000.

Most people opt to build a system themselves using an already established system like Alexa, Assistant or Apple’s HomeKit. The good news is that no matter the platform you choose, they’re all great. I invested in the Amazon ecosystem and tend to purchase devices that work well with that platform; however, I do have experience using Google’s, including its Nest products—in fact, I use a Samsung phone, so I had to borrow my wife’s iPhone anytime we tested products that use HomeKit.

The key to a synced ecosystem is to ensure you choose products that work well with the brand. Some products, such as Lutron’s Caseta dimmer switches, will work well across all platforms. Other product categories, however—particularly security cameras and doorbells—won’t integrate properly or will lack features if used across platforms.

I love that video from my Ring doorbell automatically displays on my Amazon Echo Show devices and Fire TVs, but unfortunately, it doesn’t do so on a Google Home Hub, Chromecast or Apple TV. Those who are all-in on Google or Apple use a single app to access all the features of a product, whereas, with my Amazon setup, I control some products through the Alexa app but require additional apps for lighting and shades and for the thermostat, doorbell, security system and locks.

Once you’ve determined which platform you’re going to use, it is best to try to work within that ecosystem.

Choose a Robust Home Network

When I first got into smart-home technology, I mainly purchased devices that connected directly to my Wi-Fi network, but I quickly realized that my router couldn’t handle that many devices at once. I routinely had problems like light switches dropping off the network. I ended up spending more money to upgrade the router, and when my wife and I moved, I decided to add a hub and bridge for certain devices such as switches, lightbulbs, and sensors.

If you’re just getting set up in your home or you’re planning to add several devices, it is important to start with a strong network. If you’re still using a router provided by your internet service provider, consider replacing it. I recommend using a mesh system router such as Eero or Google Wi-Fi. You might spend a few hundred dollars upfront, but you’ll save by not having to rent a similar system from your ISP.

Start Small to Avoid Being Overwhelmed

I’m often messaged by new-home buyers who are super excited to add smart features to their homes, but they don’t know where to start or lack the funds to buy everything they want. I advise them that building a smart home doesn’t have to break the bank. Homeowners can get started for around $200, which could get you a smart speaker with a voice assistant and a switch, lightbulb, thermostat or smart lock.

I recommend starting small and then adding room by room as the budget allows. Smart thermostats will pay for themselves with reduced energy costs, while smart locks and doorbells add security and peace of mind. An average smart home can cost around $2,000. That price point buys hubs, voice assistants, security, lighting, comfort, convenience and entertainment products. Companies like Wyze and Eufy often offer affordable systems. You might also opt to focus on a specific aspect of your home—safety features or lighting, for instance—to invest in first.

Security Features

One of the biggest reasons homeowners purchase smart-home products is to monitor their homes remotely, using devices such as smart locks, video doorbells, security cameras and systems. With interconnected devices and an internet connection, you can view and control your home from anywhere in the world on your smartphone.

Smart Lighting

My favorite category of smart-home technology is lighting. The variety is vast. Smart switches, bulbs and light strips can be controlled remotely, by voice, or in automation. The average smart switch costs around $50, and bulbs range from $10 to $60 each, so this is an area that can add up if you decide to do your entire home, but I find it’s well worth the cost.

Robot Vacuums

Robot vacuums have come a long way since the original Roomba was introduced in 2002. They can now intelligently map your home, mop as they go, and even empty their own bins. I’m a big fan of the Roborock lineup; we’ve got a Corgi at home that sheds quite a bit, so it’s nice having the vacuum run on a schedule. Wyze offers a robot vacuum with lidar, which uses a sensor to avoid collisions, for only $250, and Roborock’s Q5+ starts at $700.

Smart Speakers

I love having smart speakers all around our house. We use them to control the lights, check the weather, settle debates by asking them questions, and, of course, listen to ’80s rock, the greatest music of all time. When I’m in my office or watching TV and the doorbell rings, I can see who it is and decide if I need to sign for a package or hide from a door-to-door salesperson—that is, unless they’ve got Girl Scout cookies.

Without my smart speakers, I’d be forced to pull out my phone (that wasn’t already in my hand) and look at the doorbell app, or—God forbid—get up and answer the door without knowing who it is first.

Overall, building out a smart home takes a little research, some time, and a bit of money, but the upgrades, safety, and convenience make it all worthwhile, as I’ve found through my years of testing. I hope you’ve found these experiences helpful, and if you want to learn more, be sure to check out the rest of the Ultimate Smart Home series.

Source: magazine.realtor ~ by Brandon Doyle ~ Image: Canva Pro

Buying An Old House Vs. A New House: The Pros And Cons

old vs new home

When you decide to buy a home, there are many questions you must ask yourself regarding the size, location and amenities you’re looking for. Detailing what you want and need from a home is an important step in the home buying process, as it will aid you in choosing the right house for you.

On top of any must-haves, there are also probably some nice-to-haves on your list. Balancing these wishes is no easy feat – but analyzing all the potential pros and cons of a property can help you protect your investment and ensure there are no costly surprises down the road.

The age of the home is just one factor to consider, but it can be a rather important one, as there are a few distinct differences between old and new homes when it comes to their cost, safety and upkeep.

Defining New Homes Vs. Old Homes

The quality of home construction has evolved and improved over the years, partly due to the ever-changing availability of building materials and partly due to updated building codes. For example, in 1978, the federal government banned the use of lead-based paint, which was previously used regularly during construction. Further developments in the form of updated technology, modern insulation and more affordable materials have permanently altered the way homes are built today as compared to 100 or even 50 years ago.

At the extreme end of the scale are historical homes, which are recognized and monitored by the National Park Service. Buying a historic home comes with its own unique advantages and disadvantages – but just because the home was built a long time ago doesn’t necessarily mean its historic. For a property to be considered a historic home, it must meet specific criteria relating to its connection to historical people or events. This means there are many older homes available that provide a sense of old-world comfort without the strings attached to owning historical property.

On the opposite side of the spectrum, there are newly built houses. These new homes are typically larger and provide all the benefits of modern convenience. But with such a wide range of homes available – what defines an old house vs. a new house? In this article, we consider homes to be old when they are at least 50 years but no more than 100 years of age, while new homes have been constructed within the last few years.

Pros Of Buying An Old House

Despite the progress in home construction over the last few decades, there are many homeowners who continue to prefer old houses for their charm and personality. But there are several other advantages to homes that were built 50-100 years ago, including the following:

Architecture

With cookie-cutter homes popping up across the nation, old houses stand out for their commitment to architectural individuality. Victorians, Colonials and Tudors are just three of the many architectural styles that are not often replicated today. The craftsmanship and attention to detail that went into building these structures can be hard to find in modern homes, so if architectural character is near the top of your list, an older home might be a good fit.

Mature Landscaping

Because land used to be more affordable, older homes frequently come with larger yards. This land was often filled with extravagant landscaping, including trees and bushes that have now been cared for over several generations. This type of mature landscaping has been proven to raise the value of a home and can make its homeowners more comfortable due to the emotional benefits of being in a home with more surrounding greenery.

Long Purchase History

There’s also great power in knowing your home’s purchase history, which can indicate the property’s appreciation value over time. Although the past doesn’t guarantee the future, this paper trail can indicate whether the home you’re purchasing is a good long-term investment. With newer homes, there is little to no information to use to make an educated decision.

Established Neighborhood

Looking beyond the home itself, buying property also involves considering the surrounding neighborhood. Older homes tend to be more centrally located, closer to downtown and in stronger communities, making them less likely to undergo zoning changes.

Lower Cost

Although you may pay for their charm and individuality, these old homes still cost significantly less upfront than their newer counterparts. The price of a newly built home is often higher than that of an older home by a staggering 30% or more.

Cons Of Buying An Old House

Buying any property, old or new, is a big decision. With every benefit, there’s also a potential drawback that must be considered. This means when you’re analyzing your home options, it’s important to remember that there’s no right answer – only what is right for you. If you think an old house might be a good fit, be sure to consider the following downsides.

Maintenance Costs

Older homes are made of older materials, so it follows that the aging construction in these homes would come with a need for frequent maintenance. From faulty plumbing to sloping floors, there’s no shortage of projects to do in existing homes – and these projects don’t come cheap.

But smart home buyers can capitalize on the lower upfront costs of these homes to supplement future maintenance costs. With less money needed for a down payment, staggering savings can help you to cover many of these costs down the road.

Smaller Floor Plan

Modern society supersizes everything. This means modern homes will often come with larger, open floor plans, while older homes feature smaller, separate spaces.

It’s important to remember the differences in day-to-day life between now and when these homes were constructed. In earlier times, people didn’t have nearly as many physical possessions as they do now – so you can expect smaller closets, lower ceilings and less room for appliances in old homes.

Utility Costs

As building codes have improved, so have the materials used during home construction. Newer homes benefit from these changes, as increased insulation has allowed the homes to better retain heat or air depending on the season.

The same cannot be said with older homes. According to the U.S. Census Bureau’s American Housing Survey, homeowners in old homes spend 17% more on electricity and 38% more on gas per year.

Fewer Safety Regulations

Construction standards have changed over time, which means older homes may not be built to code to withstand natural disasters, prioritize electrical safety and protect from the dangers of plumbing failures. The lack of inherent safety in these homes makes the home inspection that much more important.

Pros Of Buying A New House

Fresh paint, modern floor plans and updated appliances: These are just a few of the benefits of buying a new house. But there’s also something to be said for the emotional perks of stepping into a brand-new home. When you’re the first person to live in a residence, the home is what you make it – so let’s take a look at some of the advantages of new construction.

Delayed Major Maintenance Costs

New homes are built to last, so homeowners who purchase newly built properties often face lower monthly maintenance costs. Based on the American Housing Survey, 26% of homeowners spent $100 or more per month on maintenance costs. But that number is significantly lower in homeowners who purchased homes built within the last 4 years. In fact, 73% of these homeowners spent less than $25 per month on these costs. This lower need for upkeep also makes it easier for new homeowners to get a home warranty.

Energy Efficiency

Energy efficiency has become increasingly important over the years, so in most cases, the newer the home, the easier it is on the environment. New homes better retain heat in the winter and air in the summer due to their thicker, dual-pane windows and insulated walls, ceilings and floors.

Depending on the home design, there’s also potential for an even stronger focus on efficiency, as some modern homes come with built-in home solar panel system and other renewable energy sources.

Safety Stamp Of Approval

Homes that are up to code come with many benefits on top of the physical safety of your family. Because new construction requires compliance with stricter safety regulations, newer homes require less maintenance and receive the safety stamp of approval – which typically results in lower insurance costs and higher resale value.

Larger Living Spaces

New homes aren’t always larger than old homes – but as flowing, open floor plans have grown in popularity, we’ve seen these trends reflected in newer home construction. This has led to a greater average square footage, more storage space and plenty of open spaces for entertaining.

Cons Of Buying A New House

Unwrapping a brand-new house is exciting for many reasons, but compared to existing homes, there are also a few drawbacks. Whether the home is new within the last few years or a freshly constructed residence, you must remember that nothing stays brand new for very long. With that in mind, consider the following disadvantages to buying new property.

Likely Less Centralized

City centers tend to be filled with older properties, so newer homes are often less centralized and frequently located in the suburbs. This distance from the downtown area often means longer commutes for both work and play and may be less than ideal for some prospective home buyers.

Smaller Outdoor Spaces

As land grows scarce, home builders have learned to sacrifice yard space to maximize the square footage of the house, which has led to close quarter living.

These smaller outdoor spaces also feature less mature vegetation. While the landscaping surrounding older homes has had decades to grow, the vegetation near newer homes has had significantly less time, which means new homes often feature basic landscaping. Immature landscaping can ultimately lead to less curb appeal, which may make it more difficult to sell the property in the future.

Higher Upfront Costs

As previously mentioned, newly built homes cost on average 30% more than existing homes. Paying more upfront may be worth it for the lower maintenance and utility costs these homes incur over time – but if high upfront costs won’t work in your financial situation, you may be better suited for an older house, as they usually require less money upfront and will allow you to stagger home maintenance costs throughout the life of the property.

The Bottom Line: Age Is Just A Number

Deciding which home is right for you is a long process of give and take. Home buyers must have a clear understanding of what they want and need out of a home – and the age of the property is just one variable to consider.

For homeowners who put heavy stock in individuality – and are willing to put forth the necessary time, energy and money to maintain and protect that uniqueness – older homes may be a great fit. With the right care, these old houses can age gracefully and remind their owners of a simpler time. But if modern convenience is your top priority, you may be better suited for a newer home.

If you’re ready to pursue your dream home, a good starting point is finding out how much to spend on a house. Compile a list of your hopes and dreams and don’t compromise on your deal breakers – because rest assured, there is a home out there for every buyer.

Source: rocketmortgage.com ~ By: Katie Ziraldo ~ Image: Canva Pro

How Sustainability Design Can Make a Difference

Small efforts in sustainability in your home create ripples that impact the entire world as climate change accelerates…

Sustainable home design is a goal that’s long been sought by builders and homeowners alike. Not only does the sustainable design make a house less expensive to operate, it can also help reduce carbon emissions and other environmental impacts. It’s not trendy, and evolution can be slow, but sustainability is important to help homes continue to be useful and comfortable as climate change accelerates.

Although most people think of sustainable options as only available for new homes, older homes can also be retrofitted with some level of sustainability in mind. They may never reach the level of efficiency and waste reduction that ground-up builds can, but don’t count out older homes when it comes to sustainable design.

What Is Sustainable Design?

There are many different definitions of sustainable design, but they all share similar characteristics. When it comes to real estate, sustainable design means creating efficiencies that persist for the long term on a property.

“At the highest level, sustainable design touches every part of how we, as a species, inhabit our planet. While true, this can be a daunting mental model,” says Tim Gorter, founder and principal architect of Tim Gorter Architect in Santa Barbara, California. “Architects and homeowners will benefit from thinking about sustainability in categorical terms that provide the greatest impact: site strategies, water conservation, energy efficiency, indoor environmental quality, and material resource preservation.”

This means considering how different systems and items around a home can be designed to reduce their negative environmental impact, but sustainability isn’t just about improvements of efficiency on paper.

“Sustainable design choices can also improve the aesthetics and functionality of living spaces,” says Boyd Rudy, associate broker at Dwellings Michigan in Plymouth, Michigan. “For example, choosing materials that are locally sourced and recycled can add beauty and character to a home. Practical considerations such as passive solar orientation can also lead to improved heating and cooling performance, reduced energy costs, and increased comfort. In short, sustainable design is not only good for the environment – it’s also good for the people who live in these spaces.”

Sustainable Design in Small Steps

It can seem like a huge undertaking to create an optimally sustainable home, but sometimes the goal is just doing less harm. That can be a good step in the right direction, and one that’s attainable for many homeowners. This generally doesn’t mean drastic changes that cost tens of thousands of dollars, but smaller steps in the right direction.

“Energy efficiency upgrades like better insulation and sealing your windows and doors are a good way to decrease the operating costs of your home,” says John Oppermann, real estate broker and sustainable home consultant with Avenue 8, based in New York City, New York. “If you can take a holistic approach to create an energy-efficient home by designing the entire home so that it seals in hot air in the winter and cold air in the summer and uses passive elements like the sun to warm the home, then you can go a long way to reduce your heating and cooling costs. Going with what is called a ‘high-performance design’ can sometimes reduce your energy usage for heating and cooling by up to 90 percent.”

Other options, like improving your hot water efficiency and covering your windows during the hottest or coldest part of the day can also make a big impact on a tight budget, especially in an older home.

“Low-flow water faucets and shower heads would be excellent examples of cost-effective methods of improving a home both in water consumption and energy efficiency,” says Greg Wolfson, chief technology officer at EcoSmart Solution in Austin, Texas. “Reducing hot water flow means conserving the supply of the hot water tank – which guzzles more energy than most people think. Window treatments can range widely in terms of pricing and to various degrees of impact, but even low-cost window treatments are worthy of notice for any homeowner.”

Does Sustainability Improve Property Values?

Making sustainable choices for your home can run the gamut from very inexpensive, like when you’re using salvaged materials as part of a sustainable remodel, or exceptionally expensive, like fitting your whole home with a solar system. For many homeowners, the question often becomes “at what point is this upgrade not going to pay for itself?”

Although that answer will vary widely based on your local real estate market and the buyer pool your home appeals to most, experts agree that improving efficiency can improve your bottom line when it comes time to sell.

“Studies have shown that homes with energy-efficient features tend to sell for more than similar homes without these features,” says Rudy. “Solar panels can also add value to a home, as they can reduce or eliminate a homeowner’s electric bill. And while some sustainable choices, such as rain barrels, may not have a direct impact on property values, they can still make a home more attractive to potential buyers.”

But it’s also important to remain grounded and put yourself at the center of each sustainability decision you make. Changing out incandescent light bulbs for LEDs, for example, is an easy choice because it’s virtually painless and saves so much money. Switching a home over to be powered entirely with electricity if you live in an area that experiences a lot of difficult winters with a high chance of power outages might not be as obvious of a win for you or future buyers.

“Not everyone is willing to martyr themselves on the cross of sustainability,” says Gorter. “If a sustainable design decision makes the life of the homeowner more burdensome, many people will not value that choice. To positively impact property values, focus on sustainable design features that put money in the pocket of the homeowner every month and make their life simpler, easier, and more comfortable.”

Sustainability Is a Long-Term Trend

There are never likely to be hot trends in sustainability because changing out light bulbs and insulating an attic aren’t sexy or fun, but they do create huge ripples that impact the entire world. Starting small with sustainable choices like recycled furniture, reclaimed remodeling materials, and low-water gardens in place of lawns can be great ways to think about sustainability that grows from your own home.

“The effort to lower carbon emissions shouldn’t be left to corporations,” says Wolfson. “It can be done as a collective when individuals make single efforts to help by making sustainable choices to improve their homes and properties.”

Source: realestate.usnews.com ~ By Kristi Waterworth ~ Image: 

Buyers May Face Less Competition as Bidding Wars Ease

But here’s the news you’ve been waiting for: data shows clear signs bidding wars are easing this year.

According to the National Association of Realtors (NAR), the average number of offers on recently sold homes has declined considerably over the past few months (see graph below):

Buyers: You May Face Less Competition as Bidding Wars Ease | Keeping Current Matters

The graph shows homes were seeing a high of around five offers earlier this year. But the latest data shows that average was down to just shy of three offers per recently sold home. This shift is happening largely because rising mortgage rates moderated buyer demand and slowed home sales, resulting in a growing supply of homes on the market. Essentially, more choices for buyers.

What This Means for You

If you put your home search on pause because you were outbid last year or because you didn’t want to deal with the peak intensity of bidding wars, you can breathe a welcome sigh of relief. While it’s still a sellers’ market, an uptick in inventory gives you a window of opportunity to jump back in. You may still be competing with some buyers, but it likely won’t be anything like it was just a few short months ago.

Bottom Line

If you put your plans on pause because of intense bidding wars in recent years, it may be time to kick off your home search. Today, bidding wars are easing and that may mean less competition for you as a buyer. If you’re serious about buying a home or making a move, partner with a trusted real estate professional to get started today.

Source: keepingcurrentmatters.com ~ By:  ~ Image: Canva Pro

Is the Shifting Market a Challenge or an Opportunity for Homebuyers?

If you tried to buy a home during the pandemic, you know the limited supply of homes for sale was a considerable challenge. It created intense bidding wars which drove home prices up as buyers competed with one another to be the winning offer.

But what was once your greatest challenge may now be your greatest opportunity. Today, data shows buyer demand is moderating in the wake of higher mortgage rates. Here are a few reasons why this shift in the housing market is good news for your homebuying plans.

The Challenge

There were many reasons for the limited number of homes on the market during the pandemic, including a history of underbuilding new homes since the market crash in 2008. As the graph below shows, housing supply is well below what the market has seen for most of the past 10 years (see graph below):

Is the Shifting Market a Challenge or an Opportunity for Homebuyers? | Keeping Current Matters

The Opportunity

But that graph also shows a trend back up in the right direction this year. That’s because moderating demand is slowing the pace of home sales and that’s one of the reasons housing supply is finally able to grow. For you, that means you’ll have more options to choose from, so it shouldn’t be as difficult to find your next home as it has been recently.

And having more options may also lead to less intense bidding wars. Data from the Realtors Confidence Index from the National Association of Realtors (NAR) shows this trend has already begun. In their recent reports, bidding wars are easing month-over-month (see graph below):

Is the Shifting Market a Challenge or an Opportunity for Homebuyers? | Keeping Current Matters

If you’ve been outbid before or you’ve struggled to find a home that meets your needs, breathe a welcome sigh of relief. The big takeaway here is you have more options and less competition today.

Just remember, while easing, data shows multiple-offer scenarios are still happening – they’re just not as intense as they were over the past year. You should still lean on an agent to guide you through the process and help you make your strongest offer upfront.

Bottom Line

If you’re still looking to make a move, it may be time to pick your home search back up today. Partner with a real estate professional to kick off the homebuying process.

Source: keepingcurrentmatters.com ~  Image: keepingcurrentmatters.com

5 financial tips for homebuyers in 2022

With the busy homebuying season, here are 5 financial tips to remember when looking out for a new home.

Buying a house is tougher than ever this year, thanks to the rising costs of materials and labor as well as disruptions in the global supply chain. The increased price of lumber alone has added $18,600 to the cost of the average new home since last August.

With prices on the rise, and interest rates going up too, more and more Americans are getting squeezed out. If you’ve looked at the market at all in the past 12 months, you’ve probably had some sticker shock, and if you’ve tried to buy, you’ve probably faced fierce competition.

Here’s what experts have to say about the real estate market in 2022

If you’re planning on buying or selling in 2022, rising prices and mortgages are pretty much baked in, but beyond that, experts can only offer mixed predictions:

  • Kerry Melcher, head of real estate at Opendoor, predicts that the housing market will continue to be strong in 2022, but it will be less competitive than the overheated conditions seen in 2021. The rise in mortgage interest rates will have a significant impact on purchasing power too, resulting in more buyers looking at lower-priced homes.
  • The Mortgage Bankers Association expects mortgages to vary through the year, claiming “mortgage rates will have their ups and downs in 2022” and will likely end the year at 4.5% or higher.
  • Fannie Mae predicts home prices will climb 11.2% throughout the rest of 2022, followed by a more modest increase in 2023. But The National Association of Realtors refutes that number. In their survey of economists and housing experts, they predict housing prices to climb only 5.7%  through the end of 2022. Advisors at Realtor.com go even lower, predicting a more modest increase of 2.9% in 2022.
  • While more buyers look down the market, pricier homes will enter the market. At the high end, with homes priced at $500,000 or more, supply is expected to go up, according to the National Association of Realtors.

One of the factors that could boost the market is the increasing number of people working from home. More people are looking for home office space, adding demand among homebuyers. More of us can also live farther from the offices we used to work in, prompting more of us to up and move to more desirable locales.

With the busy homebuying season, here are 5 financial tips to remember when looking out for a new home:

1. Rethink why you want to buy a house

Getting into the real estate market is a major decision that should be taken with careful consideration. Before you make a decision, you must understand the reasons why you want to buy a home.

A good example: what kind of home would you like to live in and how long would it take to save for a down payment? This can help you visualize what you can afford within your current financial situation and needs. From the start, establish clear reasoning and realistic goals.

2. Know your credit score

Your credit score is one of the most important factors that lenders use to determine if you’re a good candidate for a mortgage and to set their loan pricing. Having a good credit score can help you get the best rates and terms.

Your credit score can affect various aspects of homeownership, including your monthly payments and the total amount you’ll pay in interest over the years to come. If you have a lower credit score, you’ll like to get a mortgage with a higher interest rate.

You can get a free copy of your credit score and report from all three credit bureaus: Equifax, Experian, and TransUnion, once every year.

3. Set a clear budget

Before you start looking for a home, you must have a realistic budget. This will help you determine how much you can afford.

You’ll learn how much you can set aside for a down payment and, ultimately, the loan amount you can qualify for. You’ll need to prioritize your saving for a down payment – and your potential mortgage payments – against other priorities, from everyday spending to other financial and personal goals.

4. Look for a real estate agent

Having a good real estate agent can help you find the perfect home you can afford. A real estate agent can negotiate on your behalf and save you time and money.

Before you work with a real estate agent, it’s important that you thoroughly research their track record and their knowledge of the area you’re looking for. An agent can also refer you to other professionals, like home inspectors and contractors.

5. View as many houses as possible

Shop around. Learn about your local market. The more houses you look at, the more you can learn about market values and pricing. You might find a hidden gem, but you’ll also learn what you can get for your money. So you can negotiate a better deal when you find the right home.

Use online services and search for listings that meet your criteria. Your agent can also create a list of homes that meet your specific needs and preferences, then together you can inspect those properties in person.

Conclusion

These 5 tips will help you navigate the home buying process, which can be complex and time-consuming. Aside from the expertise of your mortgage lender and real estate agent, having the necessary knowledge and resources will allow you to make an informed decision when deciding to buy a home this season.

Source: brightmoney.co ~ Image: Canva Pro

Should I wait for real estate prices to crash before I buy a house?

Here are 3 simple reasons why this housing downturn is nothing like 2008

Two years in, this decade has already brought a global pandemic, record-setting inflation, rising interest rates and a country more divided than ever before.

So why not a housing crash too?

Americans who lived through the 2008 crisis may be watching the red-hot market starting to cool and getting flashbacks. And for prospective homeowners, it might be appealing to put your plans on pause until the market bottoms out so you can snag a house at a great price.

But experts say there are good reasons to believe that however this shakes out, it won’t be a return to 2008 — which will no doubt be a relief to anyone whose apple bottom jeans and boots with the fur have been long put away in storage.

1. Lenders stopped being so lax

Blame it on the banks. A huge contributor to the housing crisis in 2008 was dicey lending practices within the financial industry. Years of deregulation made it easier — and more profitable — to hand out risky loans.

The Dodd-Frank Act, which was signed into law in 2010 aimed to prevent that by increasing oversight in the industry.

While the act’s effectiveness has been called into question over the years, it has undoubtedly forced lenders to be stricter about their lending practices, which means far fewer borrowers are likely to land in hot water.

The median credit score of newly originated mortgages was 773 in the second quarter of the year, according to the Federal Reserve Bank of New York. But 65% of new mortgage holders had a credit score of 760 or more.

The New York Fed added in its quarterly analysis that, “credit scores on newly originated mortgages remain very high and reflect continuing high lending standards.”

2. Homeowners are doing fine

The onset of the pandemic could have been catastrophic for the housing market if millions of homeowners had no choice but to default on their loans.

Fortunately, mortgage forbearance programs allowed struggling borrowers to pause their payments until they could get back on their feet. And it worked: by the end of June, the share of mortgage balances 90-plus days past due remained at 0.5% — a historic low.

And compared to 2010, when delinquencies on single-family homes hit a 30-year high of 11.36%, the rate was just 2.13% in the first quarter of 2022.

On top of that, rising home prices has translated into increased equity for homeowners. In total, mortgage holders now have $2.8 trillion more in tappable equity compared to a year before, according to Black Knight, a mortgage technology and data provider. That’s a 34% increase and more than $207,000 in additional available equity per borrower.

3. There’s still plenty of supply

“It’s not always as simple as supply and demand — but it almost always is,” host Dave Ramsey said on The Ramsey Show last month.

Ramsey says the major issue in 2008 was there was a “tremendous oversupply because foreclosures went everywhere and the market just froze.” The crisis wasn’t down to the economy or interest rates, it was “a real estate panic.”

In comparison, now, there’s a huge demand and a shortage of supply. But the Federal Reserve’s efforts to dampen demand by raising interest rates is starting to work. And new housing is starting to slowly come on the market as well.

What Ramsey says we’re seeing now is a softening in the rate of increase of prices, but he doesn’t anticipate they’ll go down like they did in 2008.

Source: yahoo.com ~ By: Sigrid Forberg ~ Image: Canva Pro