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Buying a house next year

Buying a house next year? Here's how to prepare:

The years seem to be flying by with increasing speed, and it's safe to say that 2019 was no different. Did you get everything done you wanted? What do you plan on doing in the new year? If buying a house is on your 2020 to-do list, now's the time to prepare.

Years may be measured in months, hours, minutes and seconds, but they're also measured in moments, and 2019 was a rather momentous one within the housing market. While home prices continued to rise on a year-over-year basis - for more than 90 straight months now, according to the National Association of Realtors - builders made some solid gains in improving supply levels throughout much of the country. This results in price increases slowing down, which allows buyers - many of whom are earning appreciably more thanks to steadily rising incomes - a chance to catch up.

Plus, with housing starts jumping nearly 14% in October, based on estimates from the National Association of Builders, remarkable growth in inventory could make 2020 the first year in quite some time that asking prices slide. In short, if you're on a budget, next year just may be the perfect time to start seriously looking for a house, whether it's your very first or likely the last.

How do you prepare now so you're ready later? Here are a few suggestions:

Attend open houses

Even though actually making an offer on a home may not happen for several more months, think about attending open houses you see advertised. Pictures and descriptions in online listings are great, but they don't give you the full story on what a house looks and feels like. Take some time to go to as many as possible so you can get a sense of what homes or condominiums are selling for. These visits can also provide added context on the exterior and interior housing features you'd like in your soon-to-be home and those that are turn-offs.

Get your finances in order

If you do anything in the next several months to prepare, make it this one. Once you gain pre-approval for a mortgage, you'll have the flexibility and understanding of how much you can afford to spend, which can help you narrow down your search. But in order to obtain such a letter, your lender will need to assess how you're doing financially. Depending on how imminently you plan on entering the market, try to avoid any major purchases if you can. Also, see if you can raise your credit score by paying off bills prior to their due date and keeping any credit card balances low.

Write your representative or senator

As the NAHB points out, there's no silver bullet to housing affordability. Lowering asking prices will take a united effort, from the consumer public, the business community as well as the government. One way of going about this is by lawmakers reducing red tape. Did you know that 25% of the cost for housing construction is attributable to regulatory requirements? To make it cheaper for builders to develop, Congress will need to act. Send a letter to your representative, urging them to support legislation that helps to lower the cost of development. The savings may be passed on to you.

Write a persuasive letter

Bidding wars can be stressful and they typically end in favor of the one who offers the most money. That's not always the case, though. You may want to think about writing a letter that explains why you're the right person for a house. Sellers do take more into account than dollar signs when evaluating offers. Your letter just may win them over.

Happy New Year and best of luck in all your homeownership endeavors in the days and months ahead!


Understanding Mortgages

Busting the biggest conventional loan myths

Busting the biggest myths about conventional loans

When it comes to buying a home in today's real estate environment, certain facts and falsities have proven the test of time. Chief among these truisms is the direction of asking prices. They seem to be going up with each passing month. In fact, they've continuously risen for the last 91 consecutive months, according to the National Association of Realtors.

In contrast, mortgage rates seems to be staying low. While it's true that rates can go up and down due to market fluctuations, they've remained in historically affordable territory for the last several years, as detailed weekly by Freddie Mac. This has led to a surge in applicant activity for various mortgage products, especially for conventional loans. These offer a tremendous amount of flexibility to buyers, but because they're not backed by a government entity - such as the Federal Housing Administration or Veterans Administration - the eligibility standards tend to be a bit more rigorous, particularly in terms of credit score requirements and a few other aspects.

20% down payments are not mandatory

20%
DOWN
PAYMENT

This raised standard may explain what's given legs to one of the oldest myths in the mortgage world: that a conventional loan requires a down payment of 20% or more.

It's time we put this fallacy to rest once and for all. And here's the truth: Down payments come in all sizes. The numbers speak for themselves. In 2019, the median down payment in the U.S. was 12% among all buyers, according to the most recent statistics available from the NAR. For those who were in the market to buy for the first time, the median was 6%.

Meanwhile, for families who had purchased a house previously but were looking to purchase again, their median down payment in 2019 was 16%.

Here's an example that can provide added context, based on the real estate market as it currently exists. Nationally, a median-priced house in September 2019 cost the average family approximately $272,100, according to NAR. With a down payment of 6% - which was the typical percentage among first-time buyers - that equals out to $16,320.

This may seem like a lot, but it's considerably lower than the 20% many people wrongly assumed they need to come up with to be approved for a conventional loan. Using the previous example, a 20% down payment would be around $54,420.

Here's the cool part about conventional loans, though: The down payment can be even lower than 6% - even 3%. This means you could put down as little as $8,163 and still be approved after your other qualifications are examined.

While polls show that most people actually prefer saving to buying, the cost of living makes putting money aside a bit of a struggle. Indeed, according to a recent survey analysis conducted by Gallup, Americans are spending higher dollar amounts on various common expenses today than they have since 2009. Over one-third of respondents said as much, up from 30% in a similar poll last year and double that of 2009, when 17% indicated their costs were higher than normal.

Down payment can come from gifts

The fact that you can reasonably afford a down payment should hopefully provide some sense of assurance that a conventional loan isn't as restrictive as you might have been led to believe. But here's another myth-buster: Down payments don't necessarily have to come from you. In other words, if you were given a large sum of money as a gift from a friend or family member, you can use that as a down payment if you'd like. In 2019, 1 in every 3 first-time homebuyers received help from friends, siblings or parents in order to pay for the down payment on their home loan. This included those for conventional mortgages.

None of this is to say that you shouldn't go with 20% or more as a down payment. If this amount is something you can reasonably afford, by all means go for it. In doing so, it allows you to pay off your mortgage in a potentially quicker time period and also spend less per month over the life of the loan. A 20% down payment may also enable you to avoid purchasing mortgage insurance, which is typically a prerequisite for down payment sizes below this threshold.

Debt-to-income (DTI) ratio standard is 43% or lower

Here's another encouraging aspect of conventional loans: As with most other loan products, the debt-to-income ratio cut-off is 43%. Some believe that since private lenders take on more risk because conventional loans aren't backed by the government, lenders will require you to have a smaller DTI ratio. Not necessarily. Every applicant is different so your qualifications will be considered in their entirety.

There are a lot of myths floating around out there about down payments and how hard it can be to be approved for a mortgage. Hopefully this has helped set the record straight and shown that you have what it takes to be approved. Find out for sure and contact RMS today. We'll guide you home.


Understanding Mortgages

Planning for the New Year

It is the time of the year to start planning for 2020. If buying your dream home is your New Year’s resolution, you can start taking the steps you need to reach your goal now. Saving, Consumer Credit Opt-Out, and Pre-Approval are things that you can do before you start shopping for a new home.

Start Saving:

If you are planning on purchasing a home in the new year, it is important to start saving. There are more upfront costs than just the down-payment on your home.

You should also be prepared to pay for closing costs, which occur when the title of property is transferred from the seller to the buyer.

There could be extra expenses for household items that you may need to purchase like tools, new locks and keys, and things to take care of your yard. Keep that in mind as you start saving for your new home.

Consumer Credit Opt-Out:

When a mortgage inquiry is logged on your credit report, your personal information is then automatically added to lists that are being sold by Experian, Trans Union and Equifax to certain kinds of mortgage lenders.

Predatory lending is a serious issue, especially in times of economic downturn, when unscrupulous mortgage lending companies become more aggressive in luring in home-buyers with bait-and-switch tactics. Additionally, the more companies that have your personal credit data, the greater the risk that you will become the victim of identity theft.

Consumer Credit Opt-Out is a preventative measure that you can take to protect yourself from predatory lending, hassling telemarketers and lower potential risk for identity theft.

Call 1-888-567-8688 or go to www.OptOutPrescreen.com to complete the process.

Pre-approval:

Once you have mapped out your saving strategy and done the credit opt-out, it is time to get pre-approved. A pre-approval saves everyone involved time and money. It is a review of your financial situation and of available loan programs in order to arrive at preliminary determination that you qualify for a loan under the specified criteria. A pre-approval will give you many benefits:

  • You will learn how much you can confidently offer when you find the right home.

  • You’ll be considered a more serious homebuyer by sellers’ agents.

  • You can prepare how much you’ll need for down payment and closing costs.

  • Discover any credit issues to clear up before you become formally involved in the loan process.

Click here to get started on your pre-approval today!

Meet with a real estate agent:

After the pre-approval, you are ready to meet with a real estate agent to help you find that dream home!

Remember, at RMS we're ready to guide you home every step of the way.


Helpful Tips

4 easy ways to make your home look and feel more wintry

It only comes around once a year but it truly is the most wonderful time when it does: the holiday season. Whether it's the delicious food, the camaraderie of friends and family or giving and receiving gifts, the activities that define the season are unlike any other. And a great way to get into the spirit is by decking the halls with some of the signature symbols of glad tidings, such as tinsel, wreaths, twinkle lights and miniature villages.

Once the holidays are over and the aftermath of presents and parties are cleaned away, you may take the holiday-themed ornaments and lights down, but you don't have to let go of the wintry revelry. When the weather is frigid and frightful, here are a few simple ways you can make your home look and feel warm and delightful.

1. Craft an outdoorsy vase

The key to adding winter festivity is keeping the cold air out but letting in the look that this time of year is known for, which can be found just outside your window. As detailed by lifestyle blogger Julie Blanner, a birch vase may be just the thing to use as a centerpiece for a post-holiday dinner or merely to place on end table for decoration. To put the piece together, you'll need a small log, tri-flute drill bit, saw and sandpaper. You can use it to go over a thin glass vase or as a vase all on its own, filled with holly branches or winter-themed flowers such as snowdrops, pansies or winter honeysuckle.

2. Design a hot cocoa "bar"

A pot of freshly brewed coffee is often the first thing people fire up on a frosty morning, but an ideal replacement is hot chocolate or cocoa. To make each cup extra special and welcoming for yourself or your family, you may want to design a space that can enhance the sweet and delicious ambience. Pen + Paper Flowers has a mockup version you can use as a template, which features a painted wooden sign, wooden bases for placing creamers and containers and a rack with accompanying mugs. You can make it as extravagant or as simple as you'd like.

3. Set up a scenic winter tablescape

One of the more popular ways to celebrate the holiday season is with those villages that arts and crafts stores sell, many of which have certain themes like Charles Dickens or Charlie Brown. But you don't need to go to extravagant lengths to make a table look wintry. All you need is some evergreen garland or tree scraps (most tree lots are more than happy to let you rummage through the tree trimmings and scraps), battery-powered twinkle lights and evergreen tree ornaments. Given that you may see these snow-covered evergreens just outside your window, they make for eye-catching kitchen and end table settings that can be used in the months after November and December.

4. Make a DIY snowflake

Perhaps nothing is more synonymous with winter than the white stuff that can come in flurries or sheets - snowflakes. It's fitting that no two snowflakes are the same, because the same can be said for how you create them or from what you make them. The Crafted Sparrow offers some suggestions for where to begin. After you collect the necessary supplies, putting it together should take between 45 and 60 minutes. All you'll need is some wooden blocks, white acrylic (or chalky finish paint) a foam brush pre-crafted wooden snowflakes (typically available at arts and crafts stores or through Amazon) and hot glue gun with accompanying glue sticks.

With a little elbow grease and inventiveness, you can create a winter wonderland that can help make the season more enjoyable - without the cold. 


 


Helpful Tips

Thanksgiving leftovers

Turning Your Thanksgiving Leftovers into Delicious Meals

Thanksgiving is one of the most anticipated meals of the year, and you can easily make it the dinner that keeps on giving. Impress your family with these creative and easy ways to repurpose your Thanksgiving leftovers into delicious comfort food for the rest of the long weekend!

Savory waffles:

Pull out that waffle iron that has been taking up space in the back of your cabinet and make a stuffing-based batter. Top your waffles with your favorite Thanksgiving leftovers like turkey, mashed potatoes and gravy and you will have yourself a quick dinner that is the definition of comfort food. See the full recipe here.

Turkey Pot Pie:

Shred turkey and throw in leftover gravy and veggies into a casserole pan and top with a pie crust. Toss it into the oven and get ready for a cozy meal that requires minimal prep time.

Thanksgiving in a Sandwich:

Pull out the wonder bread, cheese slices, leftover turkey, stuffing, gravy, and cranberry sauce. Have your family line up and make their sandwiches to their taste. It’s a meal that caters to picky eaters without lifting a finger.

Turkey Salad:

Pull out the turkey, leftover celery, grapes and apples. Chop everything up and toss it all in a little mayo. Serve on bread as a sandwich or scoop it over a bed of greens and enjoy!

Shepard’s Pie:

Did you end up making too many mashed potatoes? Turn them into a delightful shepherd’s pie with stuffing, turkey, cranberry sauce, gravy and veggies underneath. See Martha Stewart’s full recipe here.

Take a break after making your Thanksgiving meal with easy and quick recipes to use up those leftovers. That way you can spend the rest of your week relaxing with your family!


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