New Opportunities Open Up for First-Time Homebuyers

In the coming year, more than 1.5 million consumers will purchase their first home. How do they do it — and how can you be one of them?

“First-timers now represent nearly 30 percent of all existing home purchasers,” said Ray Brousseau, executive vice president of a nationwide lender. “That’s a big percentage, but it could be a lot higher because there are many ways first-time purchasers can finance with little down and little hassle.”

Many of these buyers are able to afford a new home because they know that the mortgage marketplace has two separate ways to help them: First, there are traditional loan options. Second, there are more than 1,500 mortgage assistance plans for buyers purchasing a first home.

No Need For 20 Percent Down

The big barrier for many first-time buyers is cash. It takes cash for a down payment, and it takes cash to close. Lenders are generally looking for buyers with 20 percent down, but given that the typical home sells for more than $200,000, there are a lot of first-time homebuyers who have not accumulated the $40,000 or more that lenders prefer.

The good news: There are many ways around the 20 percent requirement with traditional loan options.

“It doesn’t take a lot of up-front cash to buy a home today,” said Brousseau. “FHA and conventional financing are all available with little down, while VA borrowers can qualify for mortgages that require no down payment.”

The way such programs work is that they substitute insurance for the 20 percent down that lenders would otherwise want:

• Conventional loans are available with as little as 3 percent down plus what is called “private mortgage insurance” or PMI.

• FHA mortgages require an up-front mortgage insurance premium (MIP), plus an annual MIP based on the outstanding loan balance. Mortgages backed by the FHA are available nationwide and typically require just 3.5 percent down.

• VA financing is available for those with qualifying service, such as military personnel, as well as officers in the Public Health Service and the National Oceanic and Atmospheric Administration (NOAA). VA loans are available with nothing down. There is an up-front “guarantee” fee, but no annual insurance cost.

“Instead of $40,000 for a down payment, many borrowers can get a $200,000 loan with $6,000 or $7,000 down, or even nothing down if VA-qualified,” Brousseau said. “That means qualified first-time homebuyers can buy a house today instead of waiting years to save 20 percent down.”

Mortgage Assistance Plans

According to DownPaymentResource.com, there are more than 1,500 assistance plans administered by more than 1,000 agencies nationwide for would-be buyers, many aimed specifically at first-time purchasers.

In looking at these programs it’s important to understand what the term “first-time buyer” means. It typically does not mean someone who has never owned a home; instead the usual definition for program qualification purposes is someone who has not had title to a home during the past three years.

This definition is important because it provides a way for people to re-enter the housing marketplace. For instance, suppose the Smiths owned a home and sold it to move to a job in a new community. Three years later they are “first-time” purchasers under the guidelines used by most assistance plans.

“Another important point about mortgage assistance programs is that many are specifically designed to encourage local home purchases by public-sector employees such as teachers, police, firefighters, nurses, and corrections workers,” said Brousseau. “There are millions of people who qualify for such assistance.”

The benefits available through mortgage assistance plans vary. For instance, borrowers may be able to get financing at below-market interest rates. Down payment grants may be available, essentially meaning that little or nothing down will be required. Another approach includes programs that offer tax credits.

Mortgage interest is generally deductible, but a “tax credit” is arguably more valuable. With what are called “mortgage credit certificates” or MCCs, borrowers can deduct directly from their actual tax bill. For instance, if you have $8,000 in mortgage interest you might be able to directly reduce your taxes by $1,600 while the remaining $6,400 can be treated as an itemized deduction.

“Given low interest rates and a firming housing sector, this is a terrific time to consider entering the real estate market,” said Brousseau. “With today’s financing choices, many buyers can own their own home a lot quicker than they might have thought.”

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2013. All rights reserved.

Real Estate 101: Get Comfortable with Real Estate Terms

A Quick Reference Real Estate Glossary

Are you new to home buying or home selling (or getting back in the market after a really long time)? Get comfortable with real estate terms with our real estate glossary.

Below we’ve provided some simplified definitions for some commonly used (and commonly misunderstood) real estate terms.

Common Real Estate Terms & Their Definitions

Appraisal – The process of estimating or setting the market value of a piece of property, partially based on an analysis of comparable sales of similar homes in the area. An appraisal usually takes the form of a written report. Appraisals are usually required during the mortgage loan approval process.

Closing Costs – For buyers, closing costs consist of expenses that must be paid in addition to the purchase price of the home, like… For sellers, closing costs include expenses that will be deducted from the proceeds of the sale, like…

Commission – Compensation paid to real estate professionals for services rendered in connection with the sale or exchange of real property.

Comparative Market Analysis (CMA) – An in-depth analysis of nearby comparable home sales done by a real estate agent to estimate a home’s market value, usually performed to help select the most appropriate sale price.

Contingencies – Conditions written into a real estate contract that specify that the contract will cease to exist in the event of certain conditions. Contingencies, like requiring an acceptable property inspection report within a certain time period, must be met for a contract to be legally binding and carried out as written.

Contract – An oral or written agreement between competent parties who agree to perform or refrain from performing a certain thing. In real estate there are many different types of contracts, including listings, contracts of sale, options, mortgages, assignments, leases, deeds, escrow agreements, and loan commitments, among others.

Deed – A written, legal document that conveys or transfers property.

Escrow – The process in which an item of value, money or documents is deposited with and held by a trusted third party to be delivered upon the fulfilment of a condition. For example, the earnest money deposit is put into escrow the transaction is closed, at which time it is delivered to the seller.

Foreclosure – The process of taking possession of a mortgaged property as a result of a failure to keep up with timely mortgage payments. This can involve a forced sale of the property at public auction after which the proceeds of the sale are applied to the mortgage debt.

Home Inspection – A thorough inspection by a qualified professional who evaluates the structural and mechanical condition of a home. A home inspector may assess the condition of a property’s roof, foundation, heating and cooling systems, plumbing, electrical work, water and sewage and some fire and safety issues. In addition, the home inspector will look for evidence of issues that may affect the value of the property.

Homeowner’s Insurance – An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents, often required by mortgage lenders.

Lien – A legal claim against the property as a result of a debt that must be paid off when the property is sold.

Mortgage – A legal document that specifies a temporary, conditional pledge of a property to the lender/creditor as security for the repayment of a debt, in this case a home loan.

Pre-approval – Pre-approval is a loosely used lending term that usually implies that a buyer has already talked to a lender. The lender has, in turn, checked the buyer’s credit history and income to determine that they will be able to get a loan up to a certain amount. The pre-approval helps a buyer find a home within their price range and submit a strong offer.

Short Sale – A short sale occurs when a property is sold at a moderate loss, as an alternative to foreclosure. The home is listed at a price lower than the amount owed on the mortgage. Buying a short sale home can require approvals from multiple lenders.

Title – A legal document evidencing a person’s right to or ownership of a property. A title report, often done by a title insurance company after an offer has been accepted, will show the history of the title as well as applicable encumbrances such as easements or liens.

 

As always, I am here to answer questions or help with your real estate transaction. Why not give me a call at 772-288-1765?

 

Authored by Eric Slifkin

Keller Williams Realty

772-288-1765

Tips to Ease First Time Homebuyer Jitters

Traditionally, spring marks a busy period of time for housing market activity. With the heat of summer seemingly only weeks away, BMO Harris Bank offers first-time homebuyers strategies for finding their ideal home while keeping financial priorities in check.

Buying a home can be the largest and most important financial decision one can make, so it is important to be aware of all the factors that go into making a responsible purchasing decision.

“The first step is figuring out how much you can afford to spend on homeownership, which means an honest assessment of the household balance sheet,” says Kevin Christopher, Head of Mortgages Sales, BMO Harris Bank. “Once you have a clear idea of where you stand financially, you can then make a responsible decision of what you can afford, including your down payment, monthly mortgage costs and other expenses like utility costs, property insurance and taxes.”

Here are tips for first timers:

Making an affordability assessment
Christopher noted that there are two rules of thumb first time homebuyers can use to determine what they can afford.

“First of all, housing costs, including mortgage payments, property insurance and taxes, should not take up more than one-third of your income. In addition to this, servicing your overall debt, including loans, utilities, credit card payments and lines of credit, should not account for more than 40 percent. If you can land safely within these parameters, then homeownership is an affordable and realistic option.”

Many banks offer free online tools to help you wade through the home lending process.

Coming up with the down payment
In general, the bigger the down payment you come up with, the less interest you’ll pay over the life of your mortgage. Financial institutions may offer special accounts designed to help you save for that first home. Consider opening a savings account specifically to fund your down payment. One easy way to save is to set up an automatic monthly deposit from your checking account to your savings account, allowing you to build the balance over time.

Choosing the right mortgage for you
Your mortgage needs to fit in with the rest of your financial priorities — which could mean increased flexibility or security. Consider the following when choosing your mortgage:

  • Choose a shorter amortization period – In general, the shorter the life of the mortgage, the lower the overall interest cost. Consider choosing a 20-year amortization rather than a 30-year amortization to save you money on interest costs and help you become debt-free sooner.
  • Fixed vs. variable – Variable-rate mortgages have been a winning strategy over the long term, but fixed rate mortgages (currently at historic lows) provide cost certainty and peace of mind.
  • Stress-test your mortgage payments – Use a mortgage payment based on a higher rate to stress-test your budget; total housing costs (mortgage payments, property taxes and insurance, etc.) should not consume more than one-third of household income.

Applying for pre-approval
A pre-approval establishes the amount you can reasonably afford to borrow towards the purchase of your first home. Consider the following benefits to getting pre-approved:

  • Have a good idea of your finances – You will receive a better idea of how much you are qualified to borrow, saving time looking at homes that meet your affordability range. Your term and amortization, as well as estimated monthly payments, are provided at approval so you can use these figures when planning your overall budget.
  • Moving quickly – If you are pre-approved for a mortgage, you’ll be able to move quickly to make an offer when you finally find the perfect home for you.

Source: BMO Harris Bank

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2013. All rights reserved.

Young Americans Display Interest in Buying a Home This Year

Among Americans ages 18 to 34, a total of 41 percent (46 percent men and 36 percent women in that age group) display an interest in buying a home this year. Of those in this age group who display an interest, 17 percent of men and about 6 percent of women see their finances as shaky but still think they can swing buying a home this year.

Among all Americans displaying an interest in buying a home this year, 10 percent of men and 4 percent of women said their finances were shaky but still think they can swing buying a home.

Leading market research firm Harris Interactive conducted a survey online among 2,064 U.S. adults ages 18 and older from April 18-22, 2013. The survey was conducted after the federal tax filing deadline, when Americans generally have a clearer picture of their financial health. Overall, across age groups, 30 percent of Americans display an interest in buying a home during the next year.

Other interesting findings of the survey are:

• Only 20 percent of those tax filers who are separated, divorced or widowed have or had an interest in buying a home this year, which is significantly less than those who are married (31 percent) or single and never married (38 percent).

• Of those displaying an interest in buying a home this year, those in households with children under 18 years old are significantly more likely than households without to indicate they can’t afford a home this year (24 percent versus 14 percent, respectively). However, they are also twice as likely as those without to indicate that, after seeing their taxes, they know their finances are stressed but still believe they can manage buying a home this year (11 percent and 5 percent, respectively).

Source: www.dhltd.com

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2013. All rights reserved.

Young Americans Display Interest in Buying a Home This Year

Among Americans ages 18 to 34, a total of 41 percent (46 percent men and 36 percent women in that age group) display an interest in buying a home this year. Of those in this age group who display an interest, 17 percent of men and about 6 percent of women see their finances as shaky but still think they can swing buying a home this year.

Among all Americans displaying an interest in buying a home this year, 10 percent of men and 4 percent of women said their finances were shaky but still think they can swing buying a home.

Leading market research firm Harris Interactive conducted a survey online among 2,064 U.S. adults ages 18 and older from April 18-22, 2013. The survey was conducted after the federal tax filing deadline, when Americans generally have a clearer picture of their financial health. Overall, across age groups, 30 percent of Americans display an interest in buying a home during the next year.

Other interesting findings of the survey are:

• Only 20 percent of those tax filers who are separated, divorced or widowed have or had an interest in buying a home this year, which is significantly less than those who are married (31 percent) or single and never married (38 percent).

• Of those displaying an interest in buying a home this year, those in households with children under 18 years old are significantly more likely than households without to indicate they can’t afford a home this year (24 percent versus 14 percent, respectively). However, they are also twice as likely as those without to indicate that, after seeing their taxes, they know their finances are stressed but still believe they can manage buying a home this year (11 percent and 5 percent, respectively).

Source: www.dhltd.com

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2013. All rights reserved.

Mortgage Rates Continue Upward Trend

Freddie Mac recently released the results of its Primary Mortgage Market Survey(R) (PMMS®), showing fixed mortgage rates trending higher for the third consecutive week and putting pressure on refinance momentum. Regardless, mortgage rates remain low helping to keep home-buyer affordability high, which should further aid home sales and construction in coming weeks.

The survey showed that the 30-year fixed-rate mortgage (FRM) averaged 3.59 percent with an average 0.7 point for the week ending May 23, 2013, up from last week when it averaged 3.51 percent. Last year at this time, the 30-year FRM averaged 3.78 percent.

Additionally, the 15-year FRM this week averaged 2.77 percent with an average 0.7 point, up from last week when it averaged 2.69 percent. A year ago at this time, the 15-year FRM averaged 3.04 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.63 percent this week with an average 0.5 point, up from last week when it averaged 2.62 percent. A year ago, the 5-year ARM averaged 2.83 percent.

The 1-year Treasury-indexed ARM averaged 2.55 percent this week with an average 0.4 point, the same as last week. At this time last year, the 1-year ARM averaged 2.75 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following links for the Regional and National Mortgage Rate Details and Definitions. Borrowers may still pay closing costs which are not included in the survey.

“Fixed-rates moved up for the third consecutive week, with the average 30-year fixed-rate mortgage about a quarter-percentage point higher than three weeks ago,” says Frank Nothaft, vice president and chief economist, Freddie Mac. “While this may slow some of the refinance momentum, rates are nonetheless low and home-buyer affordability high, which should further aid home sales and construction in coming weeks. For instance, in April, single family housing permits rose to the strongest pace since May 2008 while existing home sales for the same month grew the most since November 2009. Moreover, the National Association of REALTORS® reported that the median number of days on the market for these sales fell from 62 to 46 days, the fewest since it began collecting the data in May 2011.”

For more information, visit www.FreddieMac.com.

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2013. All rights reserved.

Choosing Your Most Sustainable Mortgage Option

By John Voket

Your RIS Consumer Confidant recently ran across some good advice from Scott Sheldon (bayarearealestatetrends.com) who blogs about how the shrinking inventory of available housing is taking some home buyers’ focus off the bottom line.

Sheldon says pre-approved buyers typically focus on purchase price, when in most cases, it’s the monthly payment over time relative to the purchase price that dictates whether or not that particular property can be identified as an opportunity.

He says consumers are beginning to place more emphasis on sustainable payment over time considering they could be paying more for the property than anticipated. And today’s real estate market conditions are causing many buyers to switch mortgage loan programs during the pre-approval phase and well into after they’ve gotten they have gotten into contract.

While qualifying for the mortgage is the end result, to perform on a purchase contract, Sheldon says the appropriate loan program promoting long-term payments sustainability becomes next critically important piece of the puzzle.

In his blog, Sheldon details the following borrowing options:

  • Conventional loans represent the lowest cost combination of rate and payment over time. This type of financing represents the cream of the crop, available in the market today. 20 percent down to avoid monthly mortgage insurance, with the lowest possible payment being 3 percent is common.
  • FHA Loans/Including first-time home buyer options are typically geared towards consumers entering the real estate market for the first time. This type of financing however, is eligible for anyone and is not solely a first-time home buyer program.
  • Fannie Mae’s Homepath.com program offers two main advantages, those being no appraisal requirement and no monthly mortgage insurance requirement. The cost of these two advantages comes in the form of a higher risk based pricing, an inherently higher cost loan.
  • VA Loans for military families through the US Department of Veterans Affairs guarantees loans for veterans looking to purchase real estate. The program allows for 100 percent financing and no money down and does not contain any monthly mortgage insurance.

Source: www.bayarearealestatetrends.com

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Reprinted with permission from RISMedia. ©2013. All rights reserved.

Tips to Simplify Your New Home Purchase

Buying a home is a huge step. Learning to maintain and improve it is a long series of baby steps, sometimes painful and sometimes rewarding.

 

To help get new homeowners off on the right foot, the editors at The Family Handyman –some of the sharpest DIY Veterans around—offer their best tips for choosing, maintaining and improving a home.

 

These hints include:

1. Scout the neighborhood: Ask questions. When you are checking out your future home, try going on separate occasions and different times of the day. Ask neighbors about the area, schools, etc. This will give you a real indication of what the people and place is really like. You’ll feel more confident with your decision to move in once you have done all the proper research.

 

2. Check crime stats: Before buying, get a report of police calls in the neighborhood. A bargain price may be due to the crime rate in the area.

 

3. Verify everything: Get the house historyand insist on full written disclosure from the seller about remodeling, repairs, old damage, leaks, mold, etc. Check with the city or county, and get—in writing—the property’s permit history, zoning, prior uses, homeowners’ association restrictions and anything else you can find out. Forget “location, location, location” and think “verify, verify, verify!”

 

4. Get a licensed home inspection: This is extremely important. Don’t let your real estate agent choose the inspector. Hire someone who works for you without any conflict of interest. Inspect the inspector before you hire. Ask to see a sample home inspection report. Comprehensive reports run 20 to 50 pages and include color photos showing defects or concerns. Also ask about the length of the inspection. A thorough inspection takes a minimum of three to four hours. You should walk through with the inspector, you’ll learn a lot about your house. You may pay more for a certified inspector, but in the long run, it’s worth it. For a list of certified inspectors by the American Society of Home Inspectors, visit ashi.org.

 

5. Get a home warranty: Piece of mind is important. A home warranty can save you from faulty appliances and you can get the brand new items you need.

 

6. Make a homeowner’s journal: Buy a ring binder and keep insurance papers, repair receipts and all other paperwork pertaining to the house in it. Storing all your house information in one handy place makes life easier for the homeowner and can be a sales “plus” when selling the house later.

 

7. Get to know your house before making big changes: Live in your home for 12 to 18 months before undertaking any major renovations such as additions or knocking down walls. What you initially think you want may change after you’ve lived there for a while.

 

8. Tackle one project at a time: It’s important to take it easy, one project at a time. If you tear right into the porch, kitchen remodel, and outdoor fence replacement at the same time – you’ll have the whole house and yard torn up at the same time. It might come together, but having everything going on at once will just add a lot of stress.

 

9. Check the furnace filter: Look for clueswhen it comes to the furnace.This can give you some insight into whether the previous owner took care of regular maintenance.

 

10. Don’t be afraid to DIY: Ninety percent of a DIY project is having the guts to try. Worst case—you mess up and then bring in the professional. Best case—you save money, learn something new and feel a great sense of accomplishment. 

 

11. Finish projects . . . now: Don’t learn to live with incomplete projects. If you do, the last couple of pieces of trim can linger for years!

 

12. Budget for trouble: The worst will happen sooner or later. As long as you’re prepared, it will just be an expense rather than a financial shock.

 

13. Ask neighbors about pros they trust: If you’re looking for plumbers, electricians or other pros, ask your neighbors. You tend to get decent advice if you get it from people who live near you.

 

14. Offer to buy the tools too: You can always use more tools. If you buy from a couple that’s downsizing, you might get a great deal if you purchase their garden tools, tractors, snow blowers and tools in general.

 

Source: www.familyhandyman.com


This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

First-Time Home Buyer? Tips for a Smooth Sale

 

Attention to detail and proper preparation can alleviate much of the stress and save time for first-time home buyers.

 

 

Coby Crump, President of the Lubbock Association of REALTORS®, says to keep in mind personal finances, the bigger picture, and professional assistance to make for a smooth sale.

 

Before even beginning to look at the first house, Crump said, it would behoove buyers to sit down and consider their financial situation.

 

“You can waste a lot of time if you view homes without knowing what you can really afford,” Crump says.

 

In addition to monthly payments and a down payment, it is important to consider property taxes and insurance. A REALTOR® can be beneficial in assessing one’s finances.

 

“When considering finances, ensure to get pre-approved for any loans,” he says. “This allows the comfort to search for homes in a buyer’s price range. It can also show a seller that he or she is interested and serious, and can allow for an offer to be made quickly.”

 

Crump adds to keep in mind the bigger picture and ultimate goal when faced with annoyances or hiccups in the process. Be realistic and be prepared to make minor concessions.

 

“You don’t have to set low expectations about your home purchase,” he says. “Just know that you may need to give a little on one of your search criteria.”

 

With all hiccups or potential problems, it is helpful to have professional assistance; and this includes a professional inspector and a REALTOR®.

 

A professional inspector can determine what needs to be repaired or replaced. A REALTOR® will prove to be an invaluable partner for the duration of your buying experience. A REALTOR® belonging to the National Association of REALTORS® is held to a high standard of ethics.


This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.