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Tag Archives: Buying a Home

Saving for a Down Payment? Here’s What You Should Know.

12 Wednesday Oct 2022

Posted by Make your Home your Haven! in Timely Advise

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Baton Rouge Real Estate, Baton Rouge Real Estate Trends, Buying a Home, down payment, first time home buyers, home buyer, home financing, home ownership, Home Ownership Tax Benefits, homebuying, Housing Market Trend, Mortgages, News you can USE!, Real Estate, Relavent Real Estate News

Saving for a Down Payment? Here’s What You Should Know. | MyKCM

As you set out to buy a home, saving for a down payment is likely top of mind. But you may still have questions about the process, including how much to save and where to start.

If that sounds like you, your down payment could be more in reach than you originally thought. Here’s why.

The 20% Down Payment Myth

If you believe you have to put 20% down on a home, you may have based your goal on a common misconception. Freddie Mac explains:

“. . . nearly a third of prospective homebuyers think they need a down payment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving homeownership.”

Unless it’s specified by your loan type or lender, it’s typically not required to put 20% down. According to the latest Profile of Home Buyers and Sellers from the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. There are even loan types, like FHA loans, with down payments as low as 3.5%, as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants.

This is good news for you because it means you could be closer to your homebuying dream than you realize. For more information, turn to a trusted lender.

Down Payment Assistance Programs Can Be a Game Changer

A professional will be able to show you other options that could help you get closer to your down payment goal. According to latest Homeownership Program Index from downpaymentresource.com, there are over 2,000 homebuyer assistance programs in the U.S., and the majority are intended to help with down payments.

A recent article explains why programs like these are helpful:

“These resources can immediately build your home buying power and help you take action sooner than you thought possible.”

And if you’re wondering if you have to be a first-time buyer to qualify for these programs, that’s not always the case. According to an article from downpaymentresource.com:

“It is a common misconception that homebuyer assistance is only available to first-time homebuyers, however, 38% of homebuyer assistance programs in Q1 2022 did not have a first-time homebuyer requirement.”

There are also location and profession-based programs you could qualify for as well.

Bottom Line

Saving for your down payment is an important first step on your homebuying journey. Let’s connect today and make sure you have a trusted lender to help explore your options.

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Should I Buy a Home Right Now?

20 Wednesday Jul 2022

Posted by Make your Home your Haven! in News you can USE!, Timely Advise

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Baton Rouge Real Estate, Baton Rouge Real Estate Trends, Buying a Home, current housing market, equity, home buyer, home financing, home investment, home ownership, Home Ownership Tax Benefits, home price appreciation, home price forecasts, home prices, Housing Market Trend, market shift, Mortgages, net worth, News you can USE!, Real Estate, Relavent Real Estate News

Should I Buy a Home Right Now? | MyKCM

If you’ve been thinking about buying a home, you likely have one question on the top of your mind: should I buy right now, or should I wait? While no one can answer that question for you, here’s some information that could help you make your decision.

The Future of Home Price Appreciation

Each quarter, Pulsenomics surveys a national panel of over 100 economists, real estate experts, and investment and market strategists to compile projections for the future of home price appreciation. The output is the Home Price Expectation Survey. In the latest release, it forecasts home prices will continue appreciating over the next five years (see graph below):

Should I Buy a Home Right Now? | MyKCM

As the graph shows, the rate of appreciation will moderate over the next few years as the market shifts away from the unsustainable pace it saw during the pandemic. After this year, experts project home price appreciation will continue, but at levels that are more typical for the market. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: 

“People should not anticipate another double-digit price appreciation. Those days are over. . . . We may return to more normal price appreciation of 4%, 5% a year.”

For you, that ongoing appreciation should give you peace of mind your investment in homeownership is worthwhile because you’re buying an asset that’s projected to grow in value in the years ahead.

What Does That Mean for You?

To give you an idea of how this could impact your net worth, here’s how a typical home could grow in value over the next few years using the expert price appreciation projections from the Pulsenomics survey mentioned above (see graph below):

Should I Buy a Home Right Now? | MyKCM

As the graph conveys, even at a more typical pace of appreciation, you still stand to make significant equity gains as your home grows in value. That’s what’s at stake if you delay your plans.

Bottom Line

If you’re ready to become a homeowner, know that buying today can set you up for long-term success as your asset’s value (and your own net worth) is projected to grow with the ongoing home price appreciation. Let’s connect to begin your homebuying process today.

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What You Need To Budget for When Buying a Home

06 Wednesday Apr 2022

Posted by Make your Home your Haven! in Timely Advise

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Baton Rouge Real Estate, Baton Rouge Real Estate Trends, budgeting, Buying a Home, closing costs, deposit, down payment, highly competitive market, home financing, home ownership, Home Ownership Tax Benefits, Housing Market Trend, Mortgages, News you can USE!, Real Estate, Relavent Real Estate News

What You Need To Budget for When Buying a Home | MyKCM

When it comes to buying a home, it can feel a bit intimidating to know how much you need to save and where to find that information. But you should know, you’re not expected to have all the answers yourself. There are many trusted professionals who can help you understand your finances and what you’ll need to budget for throughout the process.

To get you started, here are a few things experts say you should plan for along the way.

1. Down Payment

As you set your savings goal for your purchase, your down payment is likely already top of mind. And, like many other people, you may believe you need to set aside 20% of the home’s purchase price for that down payment – but that’s not always the case. The National Association of Realtors (NAR) says:

“One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership. Having this knowledge is critical to know what to save . . .”

The good news is, you may be able to put as little as 3.5% (or even 0%) down in some situations. To understand your options, partner with a trusted professional who can go over the various loan types, down payment assistance programs, and what each one requires.

2. Earnest Money Deposit

Another item you may want to plan for is an earnest money deposit. While it isn’t required, it’s common in today’s highly competitive market because it can help your offer stand out in a bidding war.

So, what is it? It’s money you pay as a show of good faith when you make an offer on a house. This deposit works like a credit. You’re using some of the money you already saved for your purchase to show the seller you’re committed and serious about their house. It’s not an added expense, it’s just paying some of that up front. First American explains what it is and how it works:

“The deposit made from the buyer to the seller when submitting an offer. This deposit is typically held in trust by a third party and is intended to show the seller you are serious about purchasing their home. Upon closing the money will generally be applied to your down payment or closing costs.”

In other words, an earnest money deposit could be the very first check you’ll write toward your purchase. The amount varies by state and situation. Realtor.com elaborates:

“The amount you’ll deposit as earnest money will depend on factors such as policies and limitations in your state, the current market, what your real estate agent recommends, and what the seller requires. On average, however, you can expect to hand over 1% to 2% of the total home purchase price.”

Work with a real estate advisor to understand any requirements in your local area and what they’ve recommended for other buyers in your market. They’ll help you determine if it’s something that could be a useful option for you.

3. Closing Costs

The next thing to plan for is your closing costs. The Federal Trade Commission (FTC) defines closing costs as:

“The upfront fees charged in connection with a mortgage loan transaction. …generally including, but not limited to a loan origination fee, title examination and insurance, survey, attorney’s fee, and prepaid items, such as escrow deposits for taxes and insurance.”

Basically, your closing costs cover the fees for various people and services involved in your transaction. NAR has this to say about how much to budget for:

“A home costs more than just the sale price. For example, closing costs—which make up about 2% to 5% of the home’s purchase price—are a major added expense…Lenders provide a Closing Disclosure at least three business days prior to closing on a mortgage. But buyers will need to budget for these added costs ahead of time to avoid sticker shock days before closing.”

The key takeaway is savvy buyers plan ahead for these expenses so they can come into the process prepared. Freddie Mac sums it up like this:

“If you’re in the market to buy a home, your down payment is probably top of mind. And rightly so – it’s likely the biggest cost of homebuying. However, it is not the only cost and it’s critical you understand all your expenses before diving in. The more prepared you are for your down payment, closing and other costs, the smoother your homebuying journey will be.”

Bottom Line

Knowing what to budget for in the homebuying process is essential. To make sure you understand these and any other expenses that may come up, let’s connect so you have reliable expertise on what to expect when you buy a home.

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Indecision is Not a Decision

17 Tuesday Oct 2017

Posted by Make your Home your Haven! in Finding a Realtor, Helpful Information, News you can USE!, Timely Advise

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Buying a Home, Buying vs Renting, Mortgages, Real Estate, Rent vs Buy, Rent Vs Own, renting vs buying, renting vs buying a home, Savings on buying a home, steps to buying a home, taxes

There could be some legitimate reasons for not buying a home but indecision is not one of them. Indecision is rooted in not having enough information to move forward to own a home or continue renting.

18443593-250.jpg

If you keep renting, at the end of the year, you have had a place to live and a pile of receipts that helped the landlord pay for his house. Deciding to buy a home will give you a place to live that is yours and all the things that come with that.

When you consider principal reduction, appreciation and tax savings, your monthly cost of housing could be much less than the rent you’re paying. The principal reduction included in each payment is like a forced savings account that increases as your mortgage balance decreases. Your equity in the property will also grow due to appreciation as the home goes up in value. The equity is part of your net worth and an investment in your family’s future.

The income tax savings can be an additional financial consideration if the combined interest and property taxes are greater than the allowable standard deduction.

Trends are showing that both tenants and homeowners are staying in their homes longer. It’s been said that whether you rent or own, you’re paying for the home. Do you really want to buy the home for your landlord? Check out your numbers on a Rent vs. Own and then, call us to help make it happen.

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Your Best Investment

12 Monday Oct 2015

Posted by Make your Home your Haven! in News you can USE!

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Baton Rouge Real Estate, Baton Rouge Real Estate Trends, Buying a Home, conventional mortgage, FHA loans, FHA mortgage

According to a Federal Reserve report on Consumer Finances, homeowners’ net worth is 36 times greater than that of renters. Building on that study, the National Association of REALTORS® believes that by the end of 2015, the factor will grow to 41 times greater.

36x.png

There can be several factors that contribute to this disparity but an important one is the forced savings that is achieved due to an amortized mortgage. A portion of the payment goes to the reduction of the principal balance of the mortgage which increases equity in the home.

Appreciation is also a major contributor to homeowners’ equity. Homes, in most areas, have consistently increased in value over the long term and during the past four years have experienced solid growth. Many economists expect home prices to increase in the next five years.

Let’s look at a scenario where a qualified buyer considers three different options to see what their investment would be in five years: purchase a certificate of deposit, invest in the stock market or buy a home. The following assumptions are made: a $250,000 home with an $8,750 down payment with a 4.5% mortgage for 30 years and 3% annual appreciation; CD rate at 2% and a 5% return in the stock market.

The $8,750 would grow to $9,661 in the certificate of deposit, to $11,167 in the stock market and to $69,900 in equity with a home purchase. That is over a six times growth in the same period of time due to the amortization of the loan and the appreciation.

Check out Your Best Investment to compare possible differences in your price range.

Your best investment.png

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Build Equity Faster

13 Monday Jul 2015

Posted by Make your Home your Haven! in News you can USE!

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Baton Rouge Real Estate, Build Equity, Building Equity, Buying a Home, conventional mortgage, FHA mortgage, Mortgages, RDloans

Equity is an asset and an appreciating home is an investment. While some people have resolved themselves that a mortgage payment is a normal part of life, others have set goals to get their home paid for as soon as possible. There are several strategies that will work but they all require persistent vigilance.

44969574_250.jpg

A shorter term mortgage such as 20, 15 or even 10 years will not only pay off sooner, it will generally have a lower interest rate. A recent comparison at Freddie Mac’s Primary Mortgage Market Survey showed a 30 year fixed-rate mortgage at 4.04% compared to a 15 year fixed-rate at 3.20%. The fees for the shorter term were even .1% less. The shorter term with the lower rate would have a higher payment but some people consider it forced savings.

Additional principal contributions to any length fixed-rate mortgage will save interest, build equity and shorten the term of the loan. Some homeowners may apply lump sums at various times during the year such as when bonuses are paid or a tax refund is received.

Other owners might increase their payment by $100, $200 or more each month. Setting the increased payment through electronic banking would insure that you consistently make the extra amount.

Bi-weekly payments make 26 half-payments in a year which equals 13 full-payments. Because of the frequency, it reduces the interest that is due. This might work well for borrowers who are paid every two weeks but could present cash flow problems for those who are paid on schedules that don’t coincide.

Making one extra payment a year will have almost the same effect as a bi-weekly payment. The 13th payment would be completely applied to principal.

Before embarking on one of these strategies, it would be wise to verify with your lender that it complies with their policies. Check out the Equity Accelerator to see how it could affect your loan.

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SO.. you want to buy a HOME.. check this out!

26 Thursday Feb 2015

Posted by Make your Home your Haven! in News you can USE!

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Baton Rouge Real Estate, Baton Rouge Real Estate Trends, Buying a Home, Home Ownership Tax Benefits, how to buy a home, Relavent Real Estate News, steps to buying a home

Home is Worth the Sacrifice 

house orange.jpgThere are many reasons people want a home with the most frequent responses being a place of their own, to raise their family, share with their friends and feel safe and secure.  These are all strong motivations fueling the American Dream of owning your own home.

The motivation is so dominant that buyers are willing to make sacrifices to have their dream come true.  According to the 2014 National Association of REALTORS® Home Buyers and Sellers Survey, 72% of first-time buyers cut spending on luxury or non-essential items.  They also cut spending on entertainment, clothes and even cancelled vacation plans.

The value of getting their own home is more important than the immediate gratification of things that are considered less important.  While qualifying guidelines were increased last year, there are still more buyers purchasing homes at near record-low mortgage rates.

Sacrifices.png

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Realize Tax Savings Sooner

11 Tuesday Nov 2014

Posted by Make your Home your Haven! in News you can USE!

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Baton Rouge Real Estate, Buying a Home, Home Ownership Tax Benefits, TAX SAVINGS

A homeowner’s tax saving benefit is generally realized when they file their federal income tax return after the money has been spent for the interest and property taxes.  Some people look forward to the refund as a means of forced savings but some people need to realize the savings during the year.

It is possible to adjust the deductions being withheld from the homeowner’s salary so they realize the benefit of the savings prior to filing their tax returns in the form of more money in their pay checks.  Employees would talk to their employers about increasing their deductions stated on their W-4 form.

By increasing the exemptions or deductions, less is taken out of the check and the employee will receive more in each pay check.  If a person over-estimates their exemptions and therefore, underpays their income tax, they might incur interest and would have additional tax to pay when they filed their tax return.

Buyers considering this strategy should seek tax advice and discuss it with their human relations department at work.   Additional information is available on the Internal Revenue Service website about Completing Form w-4 and Worksheets.

Increase Allowances.png.

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TAKE A TOUR OF HOMES MARKETED BY..SISTERS TAK’N CARE OF BUSINESS!

10 Friday Feb 2012

Posted by Make your Home your Haven! in Real Estate For Sale

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Baton Rouge Real Estate, Baton Rouge Real Estate Trends, Buying a Home, denham springs building, downsizing, Home Ownership Tax Benefits, homes in rural areas, Housing Market Trend, Relavent Real Estate News, walker homes for sale

 

Call to confirm which Homes included in tour inventory are still available!  This tour represents homes marketed by..

“The Carol Cotten Team”

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Rates are Ripe for the Picking!!! Don’t Wait… or Your Best Deal Could Be Spoiled..

16 Thursday Jun 2011

Posted by Make your Home your Haven! in News you can USE!

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Baton Rouge Real Estate, Buying a Home, Interest Rates 2011

30-Year Conventional Mortgage Rate (MORTG)

Graph of 30-Year Conventional Mortgage Rate

Type:Line

Size:Medium

Range:Max

Recession Bars:On

Units:Levels

Notes: Growth Rate Calculations | US recession dates

Series ID:
MORTGSource(s):
Board of Governors of the Federal Reserve SystemRelease:
H.15 Selected Interest Rates

Units:
Percent

Frequency:
Monthly

Seasonal Adjustment:
Not Applicable

Observation Range:
1971-04 to 2011-05

Last Updated:
2011-06-07 8:46 AM CDT

Notes:
Contract interest rates on commitments for fixed-rate first mortgages. Source: Primary Mortgage Market Survey data provided by Freddie Mac.
Copyright 2011, Freddie Mac. Reprinted with permission.

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