Archive for the ‘Home Ownership’ Category

Owning Makes More Financial Sense than Renting

December 3, 2019

A recent Census Bureau report showed that construction began for 11,000 single-family built-for-rent houses in the second quarter of 2019.  Mind you, these are not apartments, but single-family homes built specifically to rent.  A recent National Association of Home Builders blog post stated that renting by choice is gaining popularity among millennials.   

The CEO of a build-for-rent developer stated, “What we were shocked to find out was it was people that had great credit, they had money for down payments, they had great incomes but they just didn’t want to own a home.”  So their renter clientelle does not consist of people experiencing job loss, credit challenges, etc.  They could buy a home, but they choose to rent instead.  It’s a lifestyle decision.

Here’s a negative consequence of this choice.  William Wheaton, a MIT housing economist, recently made said to NPR, “Owning still makes much more sense.  If prices continue to rise, buying will be a money tree.”  Even home price appreciation occurs at low levels, that growth serves to build personal wealth for the home owner.  So home price appreciation builds homeowner equity.  In addition, the principal component of every mortgage payment also builds homeowner equity.  A tenant’s monthly rent checks are expense only – there’s no wealth building when it comes to paying rent.

From a long-term wealth perspective, owning builds wealth better than renting (especially with today’s low interest rates and strong home affordability).  If you are renting in Georgia now and wonder if owning would benefit you financially, give me a call.  We’ll run some numbers and see if home ownership is better for you financially.

A good time to buy a home!

November 6, 2019

The holiday season is upon us! We are on the other side of Halloween, headed toward Thanksgiving and then the month full of holidays – December. Guess it is time to stop looking at homes…

Not true!

This time of year is a great to both sell a home and purchase a home. Here are some reasons why someone should consider purchasing a home now.

  • There is less competition on the market for sellers during this time of the year. The same is true for buyers as there are fewer people looking to buy a home.
  • This means both buyers and sellers are serious about making a real estate sale – no tire kickers this time of year. Everyone is buys with holiday planning and events.
  • Thinking spring market? Well, a lot of buyers and sellers are thinking the same thought. Meaning, by the time the new year rolls around, there will be plenty of more homes and buyers out – more competition on both sides.
  • Rates are still low. Mortgage rates are lower now than last year and close to their yearly lows of 2019.

On a personal note, I’ve personally purchased a few homes. The time I purchased during the holidays was easier than when I’ve looked and bought homes during the spring/early summer. Less inventory means a more focused search for finding a home. Fewer buyers meant the seller only had a few offers to consider instead of a dozen or more!

While the year is coming to an end, the housing market never really does end. It just keeps going and going. Now is a great time to get out there and find that home. If you are buying in the state of Georgia, contact me today. You can get prequalified in a few minutes, and a pre-approval in just a few more minutes. You’ll be ready to make an offer on a home in no time at all!

Home Affordability at its Highest Point in Years

November 1, 2019

According to a recent report by Black Knight, Inc., home affordability reached its best level in years in August 2019.  This follows a consistent decline in home affordability from late 2016 through late 2018.  Home affordability hit a nine-year low in November 2018, as mortgage rates rose to the 5% range.  At that time, the national home payment to income ratio rose to 23.7%.  According to Black Rock, this led to an extended slow down in home price growth.

Since November 2018, mortgage rate declines plus this slower home appreciation has greatly improved home affordability.  The national payment to income ratio has dropped to 20.7%.  This ratio means that the monthly principal and interest (P&I) payment on an average-priced home now requires only 20.7% of the national median income.

Put another way, interest rate declines between November 2018 and August 2019 has increased home buying power by about $46,000. In August 2019, a home buyer would pay the same P&I amount on a $246,000 home mortgage as she would have paid on a $200,000 home mortgage in November 2018.

On the other hand, I found websites and recent articles showing that Atlanta-area rents have risen around 4% in the preceding 12 months.  In short, owning a home in Atlanta has gotten more affordable while renting has gotten more expensive.

Do you rent your home in Georgia?  Has your rent increased making money tight?  Give me a call and let’s talk about mortgage affordability.  You don’t need perfect credit to buy a home, and you will need only a minimum 3% to 3.5% for your down payment.  (Military veterans can obtain VA loans with a 0% down payment.)  With the current low mortgage rates, you might be able to buy more home than you thought you could, for a lower monthly payment than you thought you would have to make.  And with buying a home, you will get the equity / wealth benefits from potential home appreciation.  It’s a GREAT time to buy a home in Georgia!!

American Homebuying Power Grows

September 26, 2019

Overall economic circumstances keep improving for potential homebuyers.  First American’s Real House Price Index (RHPI) shows that Americans’ homebuying power increased consistently from January through July 2019.  The index tracks single-family home price changes adjusted for mortgage interest rate changes and personal income changes.

Mortgage interest rates trended downward during the first half of 2019, and they are even lower now compared to mid-year.  First American reported mortgage rates in January were 4.5%, and rates moved into the 3’s over the summer.  Average household income increased over the same time period.

Decreasing mortgage rates combined with increasing household incomes provide a double boost to Americans’ home buying power.  The Index’s “house-buying power” for consumers increased roughly 10% from January through July.  According to First American’s Chief Economist, Mark Fleming, “House-buying power is at the highest it’s been since we began tracking it in 1991.”

That means now is a great time to buy a home!  Even though home prices have been increasing, the decrease in mortgage rates coupled with household income growth make right now the best time to buy a home in almost 30 years, based on the RHPI measures.

Do you have a Georgia friend who complains about a landlord who won’t fix problems?  Let them know that their homebuying power is stronger than it has been in decades, and connect them with me.  I’ll help them obtain the best home mortgage for their unique situation as quickly as possible.  I’ll help your friend take advantage of today’s really low mortgage rates before they increase to 2018 levels or even higher.  Together, we will fire their unresponsive landlord!

Planning the move

September 10, 2019

At The Mortgage Blog, we talk often about making a plan for the mortgage. Today, let’s talk about a different type of plan – the move itself!

It makes perfect sense. I mean, we make plans to ensure the home loan goes smoothly. There is a plan for the home we look to buy (area of town, school districts, size of home, size of yard, etc.). I mean, why wouldn’t we tackle moving with the same concepts.

So here’s to planning the move! Where to begin? Let’s begin the same way we begin a home search, with a plan. Just like you’d sort potential homes by number of beds, baths, etc., let’s begin sorting our possessions into categories such as:

  • clothes
  • kitchen items
  • plates
  • glasses
  • decorative items
  • toys
  • important documents
  • toiletries
  • books

Looking at an entire house full of items is overwhelming. Sorting through each category becomes more manageable. With the categories in place, it makes the next step of sorting easier.

Once everything is sorted, it becomes obvious what to do with all of the possessions. Reviewing each category separately, you can begin to see what items you want to keep, what items to sell/donate/give away, and what items simply need to be recycled or thrown away.

The final step is to begin packing as soon as you are able to do so. Planning a summer move? Well, you don’t need winter clothes in the spring. Pack them up! Use the same logic for other items you don’t need access to all of the time. By getting a head start on packing, it will lessen the burden when it comes to packing up the entire house.

Still overwhelmed? Packing and organizing just isn’t your thing? No worries! Lots of people don’t like this stuff. If you want to consult a professional, how about Amber Blandford with Joyful Spaces. Amber owns and operates the professional organizing services provided by Joyful Spaces. When some people run screaming in fear of organizing, Amber feels a rush of joy! She’ll help you get going!

So there are some thoughts on planning a move. Still need to plan on how to pay for the home purchase? I’m always happy to help! Contact me today. If buying in the state of Georgia, I can get you prequalified in a few minutes and have you well on your way to making an offer on your new home!

FHA still looking to revise condo guidelines

June 13, 2019

A post earlier this year on The Mortgage Blog detailed some of the potential changes coming from the Federal Housing Administration for using FHA loans when purchasing condos. As with most things involving the government, they still haven’t finalized the details, but the final product is coming more into focus.

The FHA Commissioner stated the agency is currently working to revise its condominium approval rules and that he expects a final rule to be announced soon. These changes on condos are paramount has he called condos a “mainstay of affordable housing” for seniors citizens and first-time buyers.

With that in mind, here are some of the proposed changes:

  • allow owner-occupancy determinations on a case-by-case basis.
  • allow up to 45% of commercial space in a building without documentation.
  • increase the approval period from two years to five years (this would be amazing since condo complexes are seemingly always in a “get approved with FHA mode” since they only last two years).
  • still the possibility of allowing for spot approvals.

The goal for FHA loans and condos is the become more flexible, less prescriptive and more reflective of the current market than existing guidelines.

While these changes will be welcome, it is hard to get too excited. The FHA issued proposed changes to its condo rules in 2016 that promised to lift a number of restrictions and streamline the certification process, but it has yet to issue a final rule. 

If these can go into effect, it would be perfect for buyers with lower down payments and/or below average credit scores. While one can qualify to buy condo with 3% down using a conventional loan, the rate for someone with below average credit scores is 1% or more higher than doing an FHA loan. This would make condos more affordable to more buyers.

Looking to buy a condo around the Atlanta BeltLine? Maybe a live/work/play area with condos over businesses? Or perhaps just a good old fashioned high rise condo complex? If you are looking to buy a condo in Georgia, contact me today. We’ll get you ready to move into your new home in no time at all!

Buying a Home Earlier Delivers Long Term Wealth Benefits

May 22, 2019


It is common knowledge that many Millennials are delaying “life milestones.”  A recent study by the Urban Institute shows this by documenting the increase in young adults living with their parents.  People often assume that adults living with parents can save more money, better positioning themselves for a home purchase.  But this study reports that although the intentions are positive, the actual economic results tend to be negative.  The study concludes that adults who lived with their parents between ages 25 and 34 were less likely to form independent households and buy homes 10 years later, as compared with young adults who did not live with their parents.  And this result can negatively impact their future wealth.

The study reported that the percent of young adults living with parents almost doubled between 2000 and 2017 – growing from 11.9% to 22%.  This means 5.6 million more young adults live with parents now.  Reasons for this increase include, but are not limited to (1) Student debt – since 2000, student loan debt has more than tripled.  This debt burden makes it harder for young adults to live independently.  (2) Income – adults with lower incomes are more likely to live with parents.  (3) Housing costs – real rents are at historic highs, making it harder for young adults to live independently.  (4) Below average credit – in 2016, the median credit score was 640 for Millennials and 662 for Gen Xers.

So how does this trend affect young adults over time?  Studies show that home ownership is one of the best tools for building wealth.  And UI reports here that the biggest housing investment returns go to adults who bought homes at younger ages.  The study concludes, “our results suggest that living with parents has negative long-term economic consequences.”

As mentioned in a previous blog post, perhaps many of these young adults believe the many untrue myths that stop people from pursuing home ownership.  The fact is, buying a home with a small down payment, below average credit, and other debt can be easier than many people imagine.

Do you have friends in Georgia whose adult children live with them?  Do you know a young co-worker living with his parents?  Perhaps they fear they cannot buy a home because of below average credit scores or limited available cash.  Since the study shows these young adults may wind up better off financially if they buy a home sooner, refer these people to me.  We at Dunwoody Mortgage will do everything we can to help them buy a home and start building their wealth now, positioning them for a better economic future.

Still cheaper to own than rent

May 21, 2019

The trend continues – especially in Atlanta – it is cheaper to own than rent.

With the latest housing push over the past few years, homebuyers have fared better than those who continue to rent. In the recent CoreLogic report:

  • On average, renters tend to be more cost-burdened than homeowners
  • Across the US, monthly rents continue to rise.
  • Home loan payments and associated home ownership costs are lower.

Another stat from the study shows the rental index is up 36% from during the during the housing boom through today, yet home loan payments are down just shy of 5% over the same time period. The study looked at twelve metro areas. On average the rent increases ranged from 20-60% while reporting a drop in the home loan payments anywhere from 3-24%. Lastly, these are sound loans being issued today. With a combination of income growth during the economic recovery, home values appreciating, and sound underwriting guidelines, delinquency rates are lower than they’ve been in decades.

So what is preventing potential buyers from purchasing a home? Often it is misinformation. Too many people feel you must have 20% down to purchase a home (one can buy with as little as 3% down), perfect credit (loan approval can be obtained with a score as low as 620), and no debt (debt to income ratios can be as high as 50% for conventional loans and 55% on FHA loans). This is simply not true. Owing a home with a small down payment, below average credit, and other debt is easier than most imagine.

Contact me today. If the home you are looking to buy a home in the state of Georgia, you can be ready to purchase in as little as a 10 minute phone call. We can also start the process online. It can be that easy!

 

Taking on the spring market

April 16, 2019

It is definitely spring, and the housing market is heating up. It is time to take advantage of new homes on the market. What am I seeing this year that is different from last year:

  1. Mortgage rates are lower this year than they were last year at this time. Right now, they are lower by roughly a half point!
  2. The rise in home values has slowed each month for the past 10 months. The combination of slowing home values and a drop in mortgage rates gives buyers roughly 6% more buying power today than they had this time last year.
  3. I am seeing sellers begin to give money toward closing costs. Don’t read this statement as sellers are paying ALL closing costs again. What I mean is instead of every purchase contract I see where the seller is giving $0 to the buyer for closing costs, now I am seeing contracts with the seller giving a few thousand to the buyer.
  4. Homes sitting on the market for sale for too long are now getting price reductions. Last year, homes weren’t sitting that long and few were getting price reductions.

What to make of all this information? While still a seller’s market, the market is softening and buyers have more purchasing power. Now is the time to act!

I know what you may be thinking…

  • I don’t have enough money to put 20% down…  Not a problem. Did you know a $500,000 home can be purchased with about a 3% down payment. While one’s target may not be $500,000, 3% is all it takes to get into a home.
  • My credit isn’t perfect… Again, not a problem. You don’t need perfect credit to purchase a home. Conventional and FHA loans allow for credit scores down to 620, which is below average credit.
  • I just started a new job, so I can’t buy a home… Not necessarily. A new job doesn’t mean someone lost their chance at buying a home. Being able to qualify for a home depends more on how they are paid (W2, hourly, salary, 1099) versus how much they are paid.

Don’t let what you’ve read on the internet get you down. Just because you read it online, or someone in the office break room told you something doesn’t make it true. It is easier to buy a home than many people think. If you are looking to buy a home in Georgia, contact me  today. Let’s get the process started. In just a few minutes, we’ll be well on our way to getting you into a new home.

Making dreams reality

April 9, 2019

A recent Bankrate.com study showed a majority of Americans still consider owning a home part of the American dream. The survey found close to 80% of respondents chose this as the number one indicator of achieving the American dream. This comes in ahead of other goals such as achieving retirement, having a successful career, and owning a car. If owning a home is still a goal, how do we achieve the goal of home ownership? Here are some steps to consider.

#1. Plan Ahead – whether one is self employed or in a salaried job, planning ahead is key. This way one will know options to consider and obstacles to avoid.

#2. Apply Early – getting prequalified is one option, but being pre-underwritten is a better option. In this seller’s market, being able to make an offer stating the loan is approved pending an appraisal and clear title helps the offer stand out in a crowded playing field.

#3. Know your loan programs – Sure, most of us have heard of conventional loans or FHA loans. Do we know the details of them? For example:

  • One could have below average credit and yet still get a great rate and a small down payment option using an FHA loan.
  • Conventional loans normally require a first time home buyer in order to get a 3% down loan, but that isn’t always the case. The Home Ready and Home Possible programs allow for anyone to use the 3% down payment option.
  • For current home owners, qualifying to buy a new home without selling a current home isn’t as difficult as one may imagine.

With these three items in mind, you can be ready to move quickly when the property you want becomes available. And you better be ready as good homes move fast in this market.

You could check out other posts in this blog where we talk about housing inventory levels (or the lack of inventory), qualifying with student loans, low down payment options, low credit score options, buying without selling, recasting…. OR you could give me a call to discuss further. If you are buying a home in the great state of Georgia, a 15 minute phone call and can you prequalified and well on your way to homeownership.

What are you waiting for? Being able to achieve the dream of home ownership is within your grasp!