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      Blog :: 09-2015

      3 Graphs That Scream List Your Home Today!

      In school we all learned the Theory of Supply and Demand. When the demand for an item is greater than the supply of that item, the price will surely rise.

      SUPPLY

      The National Association of Realtors (NAR) recently reported that the inventory of homes for sale stands at a 4.8-month supply. This is significantly lower than the 6 months inventory necessary for a normal market.

      Inventory | Keeping Current Matters

      DEMAND

      Every month NAR reports on the amount of buyers that are actually out in the market looking for homes, or foot traffic. As seen in the graph below, buyer demand this year has significantly surpassed the levels reached in 2014.

      Foot Traffic | Keeping Current Matters

      Many buyers are being confronted with a very competitive market in which they must compete with other buyers for their dream home (if they even are able to find a home they wish to purchase).

      Listing your house for sale now will allow you to capitalize on the shortage of homes for sale in the market, which will translate into a better pricing situation.

      HOME EQUITY

      Many homeowners underestimate the amount of equity they currently have in their home. According to a recent Fannie Mae study, 37% of homeowners believe that they have more than 20% equity in their home. In reality 69% of homeowners actually do!

      Equity | Keeping Current Matters

      Many homeowners who are undervaluing their home equity may feel trapped in their current home, which may be contributing to the lack of inventory in the market.

      Bottom Line

      If you are debating selling your home this year, meet with a local real estate professional that can evaluate the equity you have in your home and the opportunities available in your market.

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      Why You Should Stop Renting & Buy Today!

      There are many young people debating whether they should renew the lease on their apartment or sign a contract to purchase their first home.

      Housing Cost & Net Worth

      Whether you rent or buy, you have a monthly housing cost.

      As a buyer, you are paying YOUR mortgage.

      Every mortgage payment is a form of what Harvard University’s Joint Center for Housing Studies calls “forced savings.”

      “Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

      The principal portion of your mortgage payment helps build your net worth through building the equity you have in your home.

      As a renter, you are paying YOUR LANDLORD’S mortgage.

      Below is an example of the home equity that would be accrued over the course of the next four years if you were to buy a home by the end of this year; based on the resultsof the Home Price Expectation Survey.

      Home Equity Over The Next 4 Years | Keeping Current Matters

      In this example, simply by paying your mortgage, you have just increased your net worth by over $34,000!

      Bottom Line

      Use your monthly housing cost to your advantage! Meet with a local real estate professional who can explain the opportunities available in your market.

       

      5 Financial Reasons to Buy a Home

      5 Financial Reasons to Buy A Home | Keeping Current Matters

      We have reported many times that the American Dream of homeownership is alive and well. The personal reasons to own differ for each buyer, with many basic similarities.

      Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University expanded on the top 5 financial benefits of homeownership in his paper -The Dream Lives On: the Future of Homeownership in America.

      Here are the five reasons, each followed by an excerpt from the study: 

      1.) Housing is typically the one leveraged investment available.

      "Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more."

      2.) You're paying for housing whether you own or rent.

      "Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord."

      3.) Owning is usually a form of "forced savings".

      "Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people's tendency to defer savings to another day."

      4.) There are substantial tax benefits to owning.

      "Homeowners are able to deduct mortgage interest and property taxes from income...On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain."

      5.) Owning is a hedge against inflation.

      "Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition."

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      What Do You Really Need to Qualify for a Mortgage?

      A recent survey by Ipsos found that the American public is still somewhat confused about what is actually necessary to qualify for a home mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today.

      1. Down Payment

      The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 36% think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less.

      Here are the results from a Digital Risk survey done on Millennials:

      Millennials Down Payments | Keeping Current Matters

      2. FICO Scores

      The Ipsos survey also reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. In actuality, the average FICO scores of approved conventional and FHA mortgages are much lower.

      Here are the numbers from a recent Ellie Mae report:

      FICO Score Of Approved Loans | Keeping Current Matters

      Bottom Line

      If you are a prospective purchaser who is ‘ready’ and ‘willing’ to buy but not sure if you are also ‘able’, sit down with someone who can help you understand your true options

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