Two Reasons Why Waiting To Buy a Home Will Cost You

If you’re a homeowner who’s decided your current house no longer fits your needs, or a renter with a strong desire to become a homeowner, you may be hoping that waiting until next year could mean better market conditions to purchase a home.

To determine whether you should buy now or wait another year, you can ask yourself two simple questions:

  1. Where will home prices be a year from now?
  2. Where will mortgage rates be a year from now?

Let’s shed some light on the answers to both of these questions.

Where Will Home Prices Be a Year from Now?

Three major housing industry entities are projecting ongoing home price appreciation in 2022. Here are their forecasts:

According to the National Association of Realtors (NAR), the median price of a home today is $353,900. Using an average of the three price projections above (6.53%), a home that sold for $353,900 today would be valued at $377,010 at the end of next year. As a prospective buyer, you would therefore pay an additional $23,110 by waiting.

Where Will Mortgage Rates Be a Year from Now?

Today, Freddie Mac estimates the average 30-year fixed mortgage rate in the fourth quarter of this year will be 2.8%. However, most experts believe mortgage rates will rise as the economy recovers. Here are the forecasts for the fourth quarter of 2022 by the three major entities mentioned above:

That averages out to 3.73% if you include all three forecasts. Any increase in mortgage rates will increase your costs.

What Does It Mean for You if Home Values and Mortgage Rates Increase?

If both variables increase, you’ll pay a lot more in mortgage payments each month. Let’s assume you purchase a $353,900 home in the fourth quarter of this year with a 30-year fixed-rate loan at 2.8% after making a 10% down payment. According to mortgagecalculator.net, your monthly mortgage payment would be approximately $1,309 (this does not include insurance, taxes, and other fees because those vary by location).

That same home one year from now could cost $377,010, and the mortgage rate could be 3.73% (based on the industry forecasts mentioned above). Your monthly mortgage payment after putting down 10%, would be approximately $1,568.

The difference in your monthly mortgage payment would be $259. That’s $3,108 more per year and $93,240 over the life of the loan.

Add to that the approximately $23,110 a house with a similar value would build in home equity this year due to home price appreciation, and the total net worth increase you could gain by buying this year is over $115,000 (the $93,240 mortgage savings plus the $23,110 potential gain in equity if you buy now).

Bottom Line

When asking if you should buy a home, you may think of the non-financial benefits of homeownership. When asking when to buy, the financial benefits make it clear that doing so now is much more advantageous than waiting until next year.

 

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

 

 

How To Prepare To Make a Down Payment on a House

One of the biggest hurdles in buying a home is coming up with a down payment—the large chunk of cash that’s typically required to secure a mortgage for a house.

Fortunately, most lenders today offer a wide range of down payment options for 5%, 10%, 15%, or 20% of the price of the house. For many first-time home buyers, a government-backed FHA loan can be obtained for as little as 3.5% down. If you are a military member or veteran, there are even more budget-friendly options available to you.

If you have your eye on a home and want to see what a mortgage will look like based on different down payments, you can crunch your numbers with an online mortgage calculator or a home affordability calculator. And if you have the down payment you need, you can go straight to applying for mortgage pre-approval.

However, if you need to come up with a bit more cash, setting up a savings plan now will help you get the down payment you need. Here’s what you need to know when it comes to making a down payment.

Why big down payments are better

Sound financial planning can help you amass a large down payment. Here’s why that’s usually a good idea:

Smaller monthly payments: Homeowners with small down payments will find themselves with larger monthly mortgage payments.

Less risk for the lender: While low down-payment loans are available, lenders prefer to write loans with larger down payments. So you’ll have a larger choice of lenders to choose from.

Competitive interest rates: A bigger down payment increases your chances of getting a loan with a lower mortgage interest rate.

No mortgage insurance: If you choose a loan that requires less than a 20% down payment, your lender may require you to pay private mortgage insurance (PMI).

The PMI is usually tacked on to your monthly payment until you’ve built 20% equity.

Down payment strategies

Many home buyers tap their savings to procure the funds for a down payment, and often postpone large outlays in order to save money. But here are some other ways to come up with a chunk of money.

Gifts from family or friends: Some types of loans allow “gift” funds—money that is given to you—for a down payment. The person who gives the money must have no financial interest in the property and the funds must be a true gift, backed up by a letter. Banks won’t allow “gift” funds if the gift is actually a loan that has to be repaid.

Down payment assistance: Many local and state government programs offer down payment assistance for borrowers in need, so check with your lender or state housing commission for more information.

No-PMI home loans: There are a few loan options that allow you to put down less than 20% without the added PMI cost. Check with your lender to see if it offers a low-down-payment, no-PMI product if a 20% down payment seems too challenging

Make saving a habit

The surefire way to make your down payment is to start a fund for it now. Sure, saving for a down payment is tough, and building up a nest egg one paycheck at a time can be frustrating. To help you get you to a down payment faster, here are some strategies you can use to make saving money a habit—not a chore.

Review your budget. If you don’t know where your money’s going, you won’t know where you can cut back.

Curb nonessential spending. Once you know where your hard-earned pennies are going, ask yourself if you really need that Starbucks, name-brand item, or subscriptions to every streaming service. Trim the fat from your budget—and the savings could be substantial.

Direct deposit: Set up a payroll deposit into your savings account or an automatic checking-to-savings transfer on payday, to make savings a no-brainer
Low-risk investments: Consider certificates of deposit, money market funds, and other low- to no-risk savings or investment vehicles to help your savings accumulate interest.

Nix credit cards: Reduce your credit card debt by only using a card for emergencies.

Adjust your tax withholding: It may feel good to get a tax refund in the spring, but that’s essentially a free loan to the government. The money you get back is cash that could have been earning interest for a year. The IRS website has a calculator to learn how much in taxes you should have withheld from your income.
Looking for other ways to make your mortgage process easier? Check out our Guide to Getting a Mortgage.

By Craig Donofrio
Apr 27, 2021
Updated from an earlier version by Broderick Perkins

Why 2021 Is Still the Year To Sell Your House

Why 2021 Is Still the Year To Sell Your House

Why 2021 Is Still the Year To Sell Your House | MyKCM

If you’re trying to decide whether or not to sell your house, this is the time to think seriously about making a move. Fannie Mae’s recent Home Purchase Sentiment Index (HPSI) reveals the number of respondents who say it’s a good time to sell is higher now than it was over the past few summers (see graph below). Today, the majority of consumers, 75 percent, say it’s a good time to sell a house.Why 2021 Is Still the Year To Sell Your House | MyKCM

Why is sellers sentiment up year-over-year?

The higher good time to sell sentiment has to do with today’s market conditions, specifically low housing supply and high buyer demand. In the simplest terms, we don’t have enough houses available for sale to meet buyer demand.

According to the latest data from the National Association of Realtors (NAR), we’re still firmly in a sellers’ market because housing supply is well below a balanced norm (shown in the graph below).Why 2021 Is Still the Year To Sell Your House | MyKCMClearly, the scales are tipped in a seller’s favor today. But while housing supply is undeniably low, the right side of the graph shows how the inventory situation is improving little by little each month as more sellers list their homes for sale.

As a seller, that means each month, buyers have more options to pick from. By extension, that means your house may get less buyer attention with time. Danielle Hale, Chief Economist for realtor.com, explains it like this:

“More homeowners continue to list homes for sale compared to a year ago… Notably, while new listings continue to lag behind a more ‘normal’ 2019 pace, the gap is shrinking. Even though homes continue to sell quickly thanks to high demand and limited supply, new listings are subtly shifting the balance of market conditions in favor of buyers.” 

So, what’s that mean for you?

If you’ve been waiting for the perfect time to sell, there may not be a better chance than right now. Inventory is gradually increasing each month, so selling sooner rather than later will help you maximize your home’s potential.

Bottom Line

If you’re planning to sell your house, 2021 is still the year to do it. The unique mix of low supply and high demand won’t last forever. Let’s connect to discuss what you need to do now to sell your house and take advantage of this sellers’ market.

Source: www.zillow.com

Maine home prices make biggest jump so far this year

Maine home prices make biggest jump so far this year

https://www.mainebiz.biz/article/maine-home-prices-make-biggest-jump-so-far-this-year 

Prices for single-family homes in Maine jumped 28.21% during May, compared to a year ago, and the number of sales was up by roughly the same percentage.

The price increase was the biggest climb so far in 2021, which has already seen double-digit increases.

The statewide median sales price for May 2021 was $305,000, according to the Maine Association of Realtors. That price compares with $255,300 in January, $244,900 in February, $268,500 in March, and $276,000 in April.

The median sales price indicates that half of the homes were sold for more and half sold for less.

Sales volume also continues to soar. Statistics show 1,613 homes changed hands across the state in May — a 28.32% increase over May 2020.

“May 2020 was the low point for Maine’s residential real estate market due to the COVID shutdown,” Aaron Bolster, broker/owner of Allied Realty in Skowhegan and 2021 president of the Maine Association of Realtors, said in a news release.

“Since then, the numbers have rebounded and continue to show strength. These reported numbers reflect a comparison to the May 2020 COVID shutdown statistics. May 2021 sales volume was comparable to pre-pandemic sales volume levels, about one percent above the May 2019 figures.”

Buyer demand remains strong.

“We continue to see swift market conditions with most transactions navigating multiple offers,” added Bolster. “Statewide, the days on market for May 2021 was six days, compared to 17 days a year ago, and 20 days in 2019. The month of May brought additional for-sales homes onto the market, with active single-family listings up 21 percent at month’s end. Additional for-sale supply will help meet this pent-up demand.”

County results

For the rolling quarter from March 1 through May 31, Washington and Aroostook counties saw the steepest increases in sales volume at 72.2% and 67.8% respectively. Waldo County was up 64.5% , followed by Hancock County at 60.2%.

The smallest change, at 3%, was in Sagadahoc County.

National, regional data

According to the National Association of Realtors, single-family existing home sales across the country rose 39.2% in May 2021 compared to May 2020. The national median sales price of $356,600 represents a 24.4% increase from May of 2020.

Regionally, sales across the Northeast increased 46.9% and the regional median sales price increased 17.1% to $384,300, compared to May 2020.

Portland sales

May also saw another big jump in Portland’s single-family prices.

After a drop from $452,000 in March to $404,500 in April, the median sales price for Portland single-family homes increased to $479,250 in May, according to Benchmark Real Estate using data from Maine Listings.

In comparison, for all of 2020 the median sales price was $362,500.

The number of single-family listings stayed steady over the past few months, but the number of sales almost doubled from 32 in April to 58 in May.

In contrast, after several record-setting months, the median price and sales numbers for condos and multi-family buildings slightly declined.

“I think what we’re seeing is listings starting to better match demand,” said Benchmark Real Estate owner Tom Landry. “It’s too early to call anything a trend, but now into June, there does seem to be a slight increase in supply.”

Landry said high sales prices have motivated more property owners to list, increasing supply. Some buyers are putting their home search on hold after losing out on home after home, he added.

Source: Mainebiz.com