Treasure Coast Real Estate News

Articles on Our Housing and Real Estate Markets

March 1, 2021

Note to Sellers Who Are Also Buying: A Closing Date Is a Closing Date

Closing day has arrived but you haven’t found a place to move to? Option to help avert costly legal issues.

Closing Tips

Pitfalls to Avoid When Selling and Buying Houses Simultaneously

By Meredith Caruso

Some homeowners jumped into today’s hot sellers’ market, fielded multiple offers, got top dollar, and signed contracts within 48 hours. At the time, they may have considered their next home selection “a bridge we’ll cross when we come to it.” But sometimes there’s no bridge.

ORLANDO, Fla. – 2020 was a heckuva year. Everyone’s daily routine had to be adjusted thanks to the pandemic. One thing that remained solid, however, was the real estate industry. The market, in a word, is HOT.

While this is a good thing, to be sure, our Legal Hotline has received an uptick in calls regarding sellers who eagerly list their home to get top dollar – but then, come closing day, they haven’t found a place to move. This can only lead to costly legal issues, which we all want to avoid.

So how can you help avoid this problem? I’ve said it before, and I will repeat it: PLAN.

I get it, as an agent, securing a listing is “having a great day.” But in a time when properties are on the market less than 48 hours after several competitive offers come in, it’s important to have a frank discussion with your sellers about their plans. Do they have eyes on another property? What do they intend to do – buy or rent? Are they moving out of state? Do they have an agent they’re actively working with to find a new home? How far along in the process are they?

When should these questions be asked? I’d wager that they should be asked when the listing is taken and not 25 days into a contract.

Unfortunately, some sellers may be so pumped about the hot market and getting the best offer that they aren’t thinking about their long-term plans. As a listing agent, you should be incorporating these types of questions when you are taking the listing, so you are on the same page as the seller.

If you’re representing the buyer, I’d suggest communicating regularly with the listing agent regarding the sellers’ progress on moving out. Schedule your walk-through to occur the day before or the day of closing, and schedule it well in advance.

Sure, some alternatives might work in the event the seller is unable to find a new property to move to – however, those alternatives all involve the parties' cooperation. A seller may get a specialized lease drafted that provides for the seller to rent back the property from the buyer until a new property is located. The parties can also agree to an extension of the closing date – but this may not work with buyers who are financing their purchase if the lender increases any loan costs due to the closing delay.

Of course, both are more viable options if the sellers are already under contract on a new home or need a few more days to move out. The sellers who have no clue where they’re going? They may have a battle ahead.

So, at the risk of beating a dead horse, here is we're taking some time in advance to map out the sellers’ intentions can negate a panicked call to the Legal Hotline when, two days before closing, you realize the sellers don’t intend to leave because they don’t have anywhere to go.

Meredith Caruso is Associate General Counsel for Florida Realtors

© 2021 Florida Realtors®


If you’re considering buying or selling a home before the new year or in early 2021, contact us now to schedule a free consultation. We’ll work with you to develop an actionable plan to meet your goals.

 

Eric Slifkin, Broker Associate

Eric Slifkin, Team Lead

Your local real estate expert

Are you seeking a home that suits your lifestyle, community, and neighborhood needs? With his team, Eric offers home buyers a turn-key approach to finding and purchasing real estate from the Treasure Coast to the Palm Beaches and beyond.

 

Contact us today to schedule a free consultation. Whether buying or selling a home on the Treasure Coast, we are always happy to meet with you to discuss your wants and needs, with no obligation.

 

Feb. 27, 2021

Discover the Basque Vineyard, BC

Develop Your Own Canadian Winery or Cannabis Cultivation Enterprise

Overview

Welcome to the Basque Vineyard BC Inc., a Canadian corporation licensed for the growth and manufacture of Hemp, Cannabis, and wine products in Ashcroft, British Columbia. The Vineyard has been completely upgraded, including a new drip irrigation system and plans for subdividing the 31.01-acre property into three parcels of 10+ acres each. The Basque Vineyard, Inc. is currently offered for sale and an in-hand Canadian license issued for the cultivation of Cannabis. Contact us today for more information about this rare opportunity to live and work in western Canada's beautiful Basque region.

Basque vineyard BC is a stunning 12.23 acres plus 31.01 acres property located on the beautiful sloping hillsides of the Basque region part of the South Caribou overlooking the majestic Thompson river.

Its southern exposure, sunny arid climate, and down gently sloping hills make it a more fertile environment for Grape and grape and hemp cultivation than the wine country in Spain and France. The potential of this area is limitless.

Basque Winery

Located south of Ashcroft, a 20-minute drive from the downtown area, this once-thriving vineyard produced Grapes used by summer lands: Sumac Ridge Estate winery in 1982.  With well-draining sandy loam soil and south-facing windswept slopes, and a newly installed water system for irrigation, plus a distribution center that has a purification system for drinking and domestic consumption, these are the perfect accompaniments to establish a successful vineyard.

The water pump connects to the water distribution center, then up all the way to the highest point of the slope, which is prepared to supply gravity-fed irrigation to the whole property without disturbing the topsoil.

In addition to the magnificent landscape and Thompson river views, there is a 1200 square foot 2 bedroom 1 bath rancher that boasts Italian ceramic tile flooring, open floor plan, laundry room, sunroom, and Jacuzzi bathtub.  As well as a cozy fireplace to warm up to on those crisp autumn evenings where you can sit and enjoy the views.

Developing Your Own Winery, Vineyard, or Cannabis Cultivation

The potential to develop your own winery, vineyard, and/or hemp cultivation business can be effortless as the current owner has had numerous studies completed, from soil suitability, establishing a drip irrigation system, and consulting with experts to determine which strains of grapes would do the best with the properties conditions.

 

Basque Winery

Expansion Opportunities

The ability to expand your vineyard is possible as the adjacent 31.01-acre property could be subdivided to 10+ acres each. Basque Vineyard BC Inc., with a license to grow hemp (the managing company of both properties), is also up for sale if the buyer needs to acquire it for immigration purposes.

Let your imagination run and create the winery, vineyard, and Hemp farm of your dreams!

Note: all drawings in the photos are Architectural concepts, and the buildings shown do not exist at present. Only the 1,200 square feet house and water distribution center exist.

 

Basque Vineyard BC

 Download the Basque Vineyards Site Plan

 

Contact Us to learn more about investment opportunities. Whether buying or selling, we are always happy to discuss your wants and needs with no obligation.

 

Eric Slifkin, a Broker Associate, is the founder of the Slifkin Team at Keller Williams Realty. Eric and his experienced agents serve South Florida and the Treasure Coast, including  Stuart, Port Saint Lucie, and the Palm Beaches.

 

Feb. 22, 2021

A Strong Housing Market Expected in 2021

2021 Real Estate Market

Housing Market Fervor Expected to Continue into 2021

“2020 will be known for a lot of things, and a record-breaking year for real estate will certainly be one of its more unexpected legacies,” prominent economist Daryl Fairweather said. And he’s right: most of us would have expected the housing market to suffer from circumstances like a once-in-a-hundred-years pandemic and historic inventory shortages. 

But, rather than a slowdown, we are continuing to experience a surprisingly robust real estate market across the country. And experts estimate that these conditions are likely to last well into the new year. Fannie Mae Senior VP and Chief Economist, Doug Duncan, predicts that existing-home sales will ultimately “be up a percent or more in 2021.” He believes home prices will continue to rise due to limited inventory. Still, he is confident the Federal Reserve will keep interest rates low into the future, which will be “very good for households.”

Market conditions like fewer available listings, changing criteria for desired homes, and record-low mortgage rates change the way people buy and sell homes, most likely in a lasting way. But this sustained activity, even in the uncertainty that is 2020, proves that our country still views real estate as a sound investment. The only question now is how can you take advantage of the “new normal?” 

Seller's Market

Fewer Listings = A Seller's Market

Inventory, meaning the number of homes for sale, is at a record low across the country. The National Association of Realtors (NAR) reports there are fewer homes on the market today than the association has seen in data going all the way back to 1982. Currently, the total housing inventory is about 1.47 million units, which is a decline of 19.2% from one year ago.

The New Normal for Homebuyers and Homesellers

Industry groups such as MarketWatch had previously anticipated housing starts would occur at a pace of 1.45 million, and building permits would come in at a pace of 1.52 million. But it turns out that the market exceeded expectations: compared with last year, housing starts are up over 11%, and new home permits occurred at a seasonally-adjusted annual rate of 1.55 million, which represents an 8% year-on-year increase.

For now, the fact that there are fewer listings creates an advantageous housing market for sellers. But buyers have to act fast to snap up available homes. As a result, most properties that come on the market stay for an average of around 21 days before they are sold. “That is the fastest ever recorded in our monthly series,” says NAR Chief Economist Lawrence Yun.

Another benefit is that sellers are enjoying higher net returns on their listings. This is thanks to the tough competition for homes, which often results in bidding wars between buyers. Nationwide, the median home price in September rose to $311,800. That translates to about $40,000 (15%) more than just a year ago.

This seller’s market is not simply a product of the pandemic. In fact, in the country’s top 100 metro markets, inventory has been dwindling since the first quarter of 2020. This means that even with increased construction, buyers can’t simply wait for things to go back to normal before reentering the market. Rather, all signs indicate that this is the new normal.

What It Means for Homeowners: 

These higher home prices show that buyers are willing to spend more on a home right now than they did last year. So, if there ever were a time to list for top dollar—and expect to receive the asking price quickly—that time is now. Ask us for a free consultation of your home’s value today.

What It Means for Homebuyers:

Due to low inventory, buyers could easily find themselves in a bidding war. Time is of the essence in a seller’s market, so you’ll need to get your financing in order and be preapproved for a loan before you begin your home search. We can connect you with a trusted mortgage professional to get you started.

Buyers Benefit From Low Mortgage Rates, Bigger Playing Field

Don’t worry, homebuyers. This “new normal” of real estate has benefits for you too. 

For example, people used to base their next home purchase on how far the commute was to work or in which public school district it was. But now, thanks to the pandemic shifting the locus of jobs and work, they are free to consider what they need from home to make it a place they truly want to be in as they work, teach, exercise, cook, and live.

Often, this equates to needing more space in different types of areas. Realtor.com consumer surveys show that people desire quieter neighborhoods, home offices, updated kitchens, and access to the great outdoors.9 The search for these criteria drives residents out of densely populated metropolitan areas and into the suburbs.10 And this exodus from cities is good news for buyers: it opens up more possibilities for an inventory that they could not have considered pre-pandemic. 

Another advantage for buyers is the record-low mortgage rates. The average rate for a 30-year fixed-rate mortgage hit a record low in mid-October when rates fell to 2.81%. That’s the lowest since Freddie Mac began surveying in 1971 and well below last year’s 3.69%. Similarly, a 15-year fixed-rate mortgage can be had for as low as 2.35% compared to 3.15% a year ago.

Thanks to these rates, buyers are allowed to buy nearly $32,000 more home than they could one year ago while keeping their monthly payments the same.12 So even though home prices are high now, it is currently more affordable to buy a home now than last year.

If you want to take advantage of these rock-bottom mortgage rates, you need to act fast. Though rates are projected to stay low, housing economists predict that the window of opportunity to get the best rate could be closing in the coming months. Mike Fratantoni, a chief economist at the Mortgage Bankers Association, said he expects the average rate on a 30-year mortgage to rise to 3.5% by the end of 2021.

What it Means for Homeowners

Record-low mortgage rates offer you the opportunity to lower your monthly payment—or even take out some equity—with a refinance. With those additional funds, you could even choose to invest in a second home in a new desired location. Reach out to us for a referral to a trusted mortgage professional or an agent in those markets. 

What It Means for Homebuyers

The time is now to determine how much home you can comfortably afford and plan to find it. We can set up a search for you to find homes that best meet your new needs, even if they’re in neighborhoods, you wouldn’t have considered before.

A Record-Setting Year for Home Sales is Just the Beginning

2020 US Housing Market Recap

Despite the seemingly adverse buyer conditions, 2020 experienced a 14-year high number of home sales, NAR reports. Existing-home sales, including single-family homes, townhomes, condominiums, and co-ops, rose 9.4% in September to a seasonally adjusted annual rate of 6.54 million.14 That’s a 21% increase from a year ago! 

Every region of the country has seen a surge in sales activity. According to George Ratiu, senior economist for Realtor.com, part of the reason for these continued sales is that the pandemic has created a paradigm shift in real estate patterns.15 For example, housing needs are typically resolved by late summer and early fall to coincide with the new school year's commencement. However, with homeschooling and remote work, buyers have been freed to continue their home search into the traditionally slow winter months.

Another reason for the robust market is that Millennials are finally putting their money into homeownership. According to the U.S. Census Bureau, the homeownership rate for 25-to-34-year-olds rose to 40.7% by the end of last year.16 This is significant because Millennials, the generation of people in their mid-20s to late-30s, currently surpasses Baby Boomers as the nation’s largest living adult generation. As the remaining percentage of this group starts investing in homes soon, demand will persist.

All of these factors indicate that the housing market is poised to remain strong as we head into the new year. And as Jonathan Woloshin, head of U.S. real estate at UBS Global Wealth Management, believes, they could “buoy the housing market for years to come.”

What It Means for Homeowners:

It’s tempting to believe that homes will basically sell themselves in a market like this. But we still see properties that are overpriced and under-marketed sit unsold. We can help you optimize the process of selling your home so you can get the best possible offer.

What It Means for Homebuyers:

Preparation is key to success in a seller’s market like this, but don’t let yourself become paralyzed. We are here to answer your questions and offer sound advice to guide you through all the available options.

Real Estate is a Safe Bet

Your other investments might have been on roller coasters this year, but the real estate market has been steady, competitive, and strong throughout. That makes it a good choice for your financial future.

National real estate numbers can give us a pulse on the market, but real estate happens in our own backyard. As your local market experts, we can help you understand the market's finer points that impact sales and home values in your own neighborhood. 

If you’re considering buying or selling a home before the new year or in early 2021, contact us now to schedule a free consultation. We’ll work with you to develop an actionable plan to meet your goals.

 

Eric Slifkin, Broker Associate

Eric Slifkin, Team Lead

Your local real estate expert

Are you seeking a home that suits your lifestyle, community, and neighborhood needs? With his team, Eric offers home buyers a turn-key approach to finding and purchasing real estate from the Treasure Coast to the Palm Beaches and beyond.

 

Contact us today to schedule a free consultation. Whether buying or selling a home on the Treasure Coast, we are always happy to meet with you to discuss your wants and needs, with no obligation.

Eric Slifkin has authored this post, a Broker Associate at Keller Williams Real Estate and the Slifkin Real Estate Team founder. Eric and his experienced agents serve South Florida and the Treasure Coast, including  Stuart, Hobe Sound, Palm City, Port Saint Lucie, Jupiter, Tequesta, and the Palm Beaches.

 

Feb. 12, 2021

What Is Your Home Worth NOW?

Factors That Can Affect A Home's Fair Market Value

Getting ready to sell? One of the first steps is to know your home's worth or fair market value in today's market. Your home's fair market value is determined by the dollar amount a knowledgeable buyer and seller would agree on within a reasonable amount of time (usually within 90 days).

The fair market value is only an estimate. It also takes into consideration such things as location and home conditions. Fluctuations in the market, interest, and motivation can also affect prices.

Home Values

Factors That Can Affect Your Your Home's Value

 

Get Your Home's Approximate Value With Our Free CMA

Find your home's value with our free CMA (Comparative Market Analysis)

What is a CMA?

A Comparative Market Analysis, or CMA, is a report used to determine the fair market value of a home. Based on local market data, a CMA takes into account recent and pending sales as well as current listings. From this information, we can establish an appropriate listing price for your house. This price may need to be adjusted as the market changes to ensure that your house remains competitively priced.

The fair market value of a home is determined by the dollar amount a knowledgeable buyer and seller would agree on within a reasonable amount of time (usually within 90 days). The fair market value is only an estimate. It also takes into consideration such things as location and home condition. Price adjustments are based on fluctuations in the market, interest, and motivation.

This CMA report includes information on current local listings and other recently sold (or pending sales) in your neighborhood. Although no house is exactly like yours, these are the most similar properties and are often the ones that appraisers use to determine home values. Also factored in are things such as; square footage, location, amenities, property condition, and existing financing. All included data has come from the most reliable sources: local real estate firms, title companies, and the Multiple Listing Service (MLS).

View More
Feb. 11, 2021

Six Essential Homebuyer Tips

We recently surveyed several hundred real estate professionals and industry experts to determine the top home buying tips they would actually recommend to their clients.

Home Buying Tips

More Tips

Get a Home Inspection

91.4 percent of agents say this is a very important tip.

0.54 percent of agents don’t recommend this tip.

The tip: Get a home inspection to evaluate the safety and overall condition of your new home, even if it appears flawless.

Get Preapproved for a Loan

89.0 percent of agents say this is a very important tip.

0.78 percent of agents don’t recommend this tip.

The tip: Before you start house hunting, get preapproved for a mortgage loan.

Communicate Through Your Agent

89.0 percent of agents say this is a very important tip.

0.27 percent of agents don’t recommend this tip.

The tip: When you want to ask or tell the seller something, always go through your real estate agent.

Put the Deal Into Writing

87.5 percent of agents say this is a very important tip.

0.83 percent of agents don’t recommend this tip.

The tip: Get the seller to put every component of the deal and any verbal agreement into writing.

Include Contingencies With Offer

83.0 percent of agents say this is a very important tip.

0.78 percent of agents don’t recommend this tip.

The tip: Include important contingencies, such as financing and property inspections, with your offer.

Develop a Wish List

82.4 percent of agents say this is a very important tip.

0.27 percent of agents don’t recommend this tip.

The tip: Come up with a realistic wish list. Find out what you can afford in terms of house size, neighborhood and amenities.

Know Your Local Market

75.6 percent of agents say this is a very important tip.

1.7 percent of agents don’t recommend this tip.

The tip: Know as much about the local market as you can. Use your agent’s CMA to learn about the selling price of comparable homes and the strength of the local real estate market.

Prioritize!

68.5 percent of agents say this is a very important tip.

1.11 percent of agents don’t recommend this tip.

The tip: Decide what’s most important to you before the negotiation so you know what parts of your offer you’re most comfortable giving up.

Look Into Government Programs

57.7 of agents say this is a very important tip.

1.36 percent of agents don’t recommend this tip.

The tip: Look into programs for first-time homebuyers. See if you qualify for the lower interest rates, low down payment options and down payment assistance programs some banks and governmental organizations offer first-time homebuyers.

Research Real Estate Agents

54.7 percent of agents say this is a very important tip.

7.61 percent of agents don’t recommend this tip.

The tip: Don’t just work with the first real estate agent you come across! Do your homework and find one you’re comfortable with.

Keep Other Houses in Mind

43.9 percent of agents say this is a very important tip.

5.8 percent of agents don’t recommend this tip.

The tip: When you begin negotiating on a specific property, know of other houses you’d be interested in buying. You don’t want to be so desperate to buy a certain house that you give in to whatever the seller wants.

Be Smart With Your Contingencies

40.6 percent of agents say this is a very important tip.

9 percent of agents don’t recommend this tip.

The tip: Avoid including unnecessary contingencies in your offer. Doing so will make it less attractive.

Keep Negotiations Short

39.8 percent of agents say this is a very important tip.

4.8 percent of agents don’t recommend this tip.

The tip: Avoid long, drawn-out negotiations, which can negatively affect the chances of your offer being accepted.

Shop around for Mortgages

37.9 percent of agents say this is a very important tip.

4.7 percent of agents don’t recommend this tip.

The tip: Shop around for at least several mortgage quotes before choosing one.

Ask for More Than You Want

32.1 percent of agents say this is a very important tip.

10.1 percent of agents don’t recommend this tip.

The tip: Ask for more than you want during negotiations, without asking too much. You can “give in” to the seller without actually giving up the things you want!

Scope out Neighborhoods, Neighbors

31.9 percent of agents say this is a very important tip.

7.1 percent of agents don’t recommend this tip.

The tip: Talk to neighbors to get the inside scoop on what it’s like to live in the neighborhoods of homes you are interested in. While doing so, gauge if you would like to live next to these people for the foreseeable future. Bad neighbors can affect your property’s value.

Connect With the Sellers

24.9 percent of agents say this is a very important tip.

27.5 percent of agents don’t recommend this tip.

The tip: Establish a connection with the sellers. You may be able to get a better deal if the sellers see you as a person, not just an opportunity.

Source: Market Leader

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.

 

Feb. 11, 2021

Home Buying in a Seller’s Market

Home Buying

Questions to Consider in a Seller’s Market: Multiple Offers

When home buyers outnumber sellers, the result can be a multiple offer scenario. If you’re searching for homes in a competitive market environment, you’ll want to take time to understand the dynamics of multiple offers and understand how this might impact your negotiating strategy.

Some questions to discuss with your buyer’s representative:

 

  1. Will I know if I’m in a multiple offer situation? Not necessarily. Typically it works to a seller’s advantage if buyers are told they are competing with one another. But a seller must give their agent permission to disclose the existence of other offers before this can be shared with your buyer’s rep.

  2. How will offers be presented to the seller? The seller decides how they want this handled, either individually or as a group presentation. Once presented, a seller can elect to accept (or counter) one offer, reject all offers, or reject all offers in conjunction with a request to resubmit a “highest and best” offer.

  3. Will the details of my offer be kept confi dential from other buyers? The only way to preserve confi dentiality is to ask the sellers to sign a confi dentiality agreement before presenting your offer (which also applies to their agent). However, if the seller decides to have a group presentation of offers, you’ll either have to withdraw your offer or revoke the confi dentiality agreement.

  4. If my offer has the highest price, can I be confi dent that I’ll beat out other buyers? No. Sellers can accept whichever offer they consider “best” and that may be based on other factors, like the certainty of closing (e.g., the buyer is already approved on their mortgage) or fl exibility on closing dates.

  5. What are my options for writing a stronger offer? In addition to firming up your financing (or paying cash) and offering flexibility on timing, there are a number of other things you can do, including eliminating contingencies, increasing your earnest money deposit or paying closing costs, to name a few. Discuss your options with your buyer’s rep.

  6. If I don’t want to compete with other buyers, can I withdraw my offer? Yes, as long as you deliver notifi cation to the seller revoking your offer before they've accepted it.Every home buyer benefi ts from having their interests represented in a real estate transaction, but in a multiple offer scenario, you’ll gain even more if you’re working with an Accredited Buyer’s Representative. Discuss these and other questions with your buyer’s rep so you can anticipate each step in the negotiation process and improve the likelihood of a successful outcome.

Every home buyer benefits from having their interests represented in a real estate transaction, but in a multiple offer scenario, you’ll gain even more if you’re working with an Accredited Buyer’s Representative. Discuss these and other questions with your buyer’s rep so you can anticipate each step in the negotiation process and improve the likelihood of a successful outcome.

Source:  Real Estate Buyer’s Agent Council (REBAC)

This post has been authored by Eric Slifkin, REALTOR® and Accredited Buyer’s Representative* serving Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Website.

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. I will research the property, arrange showings and handle all the details.

*The Accredited Buyer’s Representative (ABR®) designation is awarded by the Real Estate Buyer’s Agent Council (REBAC), a subsidiary of the National Association of REALTORS® (NAR). To learn more about REBAC and access various home buyer resources, please visit REBAC.net.
Feb. 10, 2021

Selling Your Home Without an Agent

Want to sell your home For Sale By Owner?

9 Step Guide to FSBO (For Sale by Owner)

Selling your home is a huge decision. After quite a bit of research on local realtors in your area and how long the selling process, you may feel that it’s better to sell your home yourself. Commonly referred to as FSBO, For Sale By Owner is when you sell your home without the help of a Realtor or licensed professional. By doing FSBO, you can avoid paying commission, working with an agent, and you have complete control over your listing.

If you’re ready to sell your home but unsure where to start, we made a step by step guide on how to FSBO.

Step 1: Price your home accurately

According to NAR, 17% of people who have done FSBO said pricing their homes was the most challenging task. Not only can pricing your home be difficult but accurately pricing your home can be close to impossible. According to Trulia research, homes priced by owners are an average of 2% higher than homes listed by agents. Although that may sound good, it doesn’t necessarily mean they will sell at that price. Inaccurately pricing a residence may cause it to stay on the market longer.

To accurately price your home, here are a few things you should research:

  • Current prices for homes similar to yours in your city and neighborhood. Because you aren’t a Realtor, it’s impossible to pull an accurate list of comparable homes without access to the MLS data, so you may need to rely on Zillow and Trulia aren’t always accurate. However, you can get a free home value report here.
  • Calculate the ROI of any improvements and renovations you’ve made to your home. Depending on how many improvements you’ve made, this can take quite a bit of time and research. You’ll also want to be careful not to over or underprice the ROI since that will directly affect your home value.
  • Prices overtime to find any market trends. Again, it will be more challenging to find accurate data about the market over time without access to MLS data.

Step 2: Prepare your home.

Since you won’t have an agent that offers their knowledge and expertise on home improvements that buyers look for, you will have to decide what should be upgraded or repaired in your home. To determine what should be updated, weigh the costs of the projects you think should be completed against your home's value from step 1. After making any necessary renovations to show buyers you’ve put work into your home, you will need to stage your home.

Staging is the process of strategically arranging the furniture and decor in your home to be show-ready so buyers can imagine living there. According to NAR, 83% of buyers’ agents said buyers could better visualize living in a house if staged. 22% of sellers’ agents saw the dollar value of offers increased 1-5% when they saw a staged home, and 17% saw the dollar value of the home increased 6-10% compared to similar homes. Many agents offer their staging services as part of the selling process, but you can either hire a professional stager for an additional cost or do it yourself since you are on your own. If you decide to stage yourself, the rooms you should prioritize are the kitchen, living room, master bedroom, and dining room.

Not only does the inside of your home need to look perfect, but so does the outside. Curb appeal is how your home looks from the street and is another crucial step you don’t want to overlook. It’s the first impression potential buyers will have of your home, so you’ll want to make sure the exterior is also show-ready. According to NAR, landscape maintenance, overall landscape upgrade, and standard lawn care service rank as the highest projects that should add value to your home when selling.

Home Valuation

Step 3: Photograph your home.

Once your home is prepared and staged, it’s time to photograph your home. Although the newest iPhone has a pretty good camera, hiring a professional who knows everything about lighting and the most appealing angles will be worth the extra cost. According to the Center for REALTOR® Development (CRD), homes with high-quality photos sell 32% faster, and the more photos you have, the faster your home will sell. Homes listed from $200,000 to $1,000,000 with professional photos have sold for $3,000 to $11,000 more.

Most Realtors offer professional photography and 3D tours and videos as part of their services, so if you have the budget, this is something you want to consider.

Step 4: List your home.

After all the preparations you’ve made for your home, you’re finally ready to create your listing. Unfortunately, only real estate agents can create listings on the MLS. After they list on the MLS, the listing is automatically put on sites like Zillow and Trulia, where buyers agents can find the newest listings to show their clients.

You can list your home yourself as FSBO on Zillow or pay a "limited service" broker to list your home on the MLS.

For homeowners who need to sell quickly because of death, disaster, debt, divorce, or other life events, iBuying or instant offer services and agents who offer these options enable home sellers to quickly sell their property to a company rather than to an individual.

Step 5: Know your home disclosure requirements.

If you’re selling your home on your own, you will need to research your state's requirements for what you need to disclose in your home. A seller disclosure includes what sellers must tell buyers about their home. Seller disclosures can include structural problems, past issues such as flooding, and any repairs or upgrades you’ve made on your home. A seller disclosure will save you time from any surprises that may come up in a home inspection. If you do have any shocks or bumps in your home inspection, you could incur expensive and unnecessary repairs or demands from buyers.

Step 6: Market your home.

Now that your home is (hopefully) listed, it’s time to market your home. Although you may think a for sale sign in your yard is good enough, it’s not. In selling your home, we typically start with an email blast to our database of buyer leads we’ve accumulated over the years. You could send an email to friends and family, letting them know your home is now on the market but may find it hard to get results that way.

Next, we usually set up an ad on Facebook and Instagram and target potential buyers in our area. According to NAR, members found social media as the most valuable source to obtain high-quality leads. With more than 1 billion monthly active users on Instagram and 2.41 billion monthly active users on Facebook, marketing your home on social media is one thing you don’t want to neglect. You could post about your home on your page, but exposure and reach will be limited, and the quality of leads may be inadequate.

For some of our listings, we will even put together a video to share on social media. To get a more detailed example of what we do to market our listings, check our marketing page here.

Step 7: Communicate with potential buyers.

Hopefully, by now, you’ve acquired a few leads that have started to show interest in your home. Even though you don’t have an agent, your potential buyer probably does, which means you’ll be responsible for all communication with them throughout the process. You will need to be on top of emails, texts, and phone calls to schedule showings and meetings with your potential buyers and their agents and be responsive to any questions they may have about your home. Just remember to be patient and think about your responses - selling your home (especially on your own) can be emotional and make you say things you didn’t mean.

Step 8: Hire third-party experts

You might want to hire an attorney to help you throughout the selling process, especially when signing legal documents, purchase agreements, and seller disclosures. Some states even require representation from an attorney when you close. Although this can be costly, it’s ultimately for your protection throughout the process.

Step 9: Wait for offers.

And now we wait. Depending on how much effort you’ve put into the preparations, staging, marketing, and listing of your home will determine how long it will take your home to sell. According to Inman, 18% of FSBOs did not sell their home in the timeline they were hoping for, and the average FSBO home was sold for $200,000 while homes sold by agents were $265,500 in 2017. Homes sold through the MLS were sold on average 20 days faster, according to NAR.

 

Are you feeling overwhelmed? If the selling process seems like too much to handle on your own, we're here to help.

Schedule a call to learn more about how we help home sellers on the Treasure Coast.

 

Eric Slifkin, Broker Associate

Eric Slifkin, Team Lead

Your local real estate expert

Are you seeking a home that suits your lifestyle, community, and neighborhood needs? With his team, Eric offers home buyers a turn-key approach to finding and purchasing real estate from the Treasure Coast to the Palm Beaches and beyond.

 

Contact us today to schedule a free consultation. Whether buying or selling a home on the Treasure Coast, we are always happy to meet with you to discuss your wants and needs, with no obligation.

Eric Slifkin has authored this post, a Broker Associate at Keller Williams Real Estate and the Slifkin Real Estate Team founder. Eric and his experienced agents serve South Florida and the Treasure Coast, including  Stuart, Hobe Sound, Palm City, Port Saint Lucie, Jupiter, Tequesta, and the Palm Beaches.

 

 

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Feb. 9, 2021

Is It a Closet? Or Is It an Office?

ClofficeThe ‘Cloffice’: Is It a Closet? Or Is It an Office?

Some people have opened doors in a search for home office space, pushing clothes and boxes aside to turn one of their closets into a small office.

CHICAGO – Pressed for space to work, some remote workers are reimagining closets – the “cloffice.” The latest trend in home design finds its origins in need to work from home during the pandemic. While dining room tables may have provided temporary space for a month or two, some people seeking more private space decided that a closet was their best alternative for privacy – and for many of them, it was their only alternative.

“For so many of us trying to type and Zoom through the chaos, the closet has become the last bastion for something resembling a dedicated office space,” a realtor.com report says about the trend.

Pinterest calls the cloffice one of the hottest design trends for this year, saying, “Pinners are getting creative with closet doors. In 2021, we’ll all learn what a ‘cloffice’ is. Even when doors aren’t available, people will find new ways to create some personal space.”

When occupants decorate a cloffice, Ginger Curtis, owner of Urbanology Designs in Dallas, says good lighting, organization, and comfort are essential. Good overhead lighting is necessary for the absence of natural light. Bring in a desk and use a comfortable desk chair that fits properly.

Also, dress up the closet space with wallpaper or artwork on the walls. Designers also suggest using open shelving above the desk for efficient organization and bookcases on the sides or vertical magazine files to store papers.

“Like many others during the pandemic, I tried to work in transitional spaces – the kitchen, living room, front door area, etc. It wasn’t working,” says Lahari Rao, who designed a cloffice for her at-home office. “I realized I owed much more importance to my workspace – it wasn’t selfish, but rather a self-care gesture to provide my mind and productivity the respect it deserves.”

Source: “The ‘Cloffice’ Is the New Cubicle: Expert Inspiration to Put That Closet to Work, Beautifully,” realtor.com® (Feb. 1, 2021)

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

 

Eric Slifkin, Broker Associate

Eric Slifkin, Team Lead

Your local real estate expert

Are you seeking a home that suits your lifestyle, community, and neighborhood needs? With his team, Eric offers home buyers a turn-key approach to finding and purchasing real estate from the Treasure Coast to the Palm Beaches and beyond.

 

Contact us today to schedule a free consultation. Whether buying or selling a home on the Treasure Coast, we are always happy to meet with you to discuss your wants and needs, with no obligation.

Eric Slifkin has authored this post, a Broker Associate at Keller Williams Real Estate and the Slifkin Real Estate Team founder. Eric and his experienced agents serve South Florida and the Treasure Coast, including  Stuart, Hobe Sound, Palm City, Port Saint Lucie, Jupiter, Tequesta, and the Palm Beaches.

 

 

Jan. 31, 2021

Lowest Mortgage Rates in History: What It Means for Homeowners and Buyers

Lowest Mortgage Rates in History: What It Means for Homeowners and BuyersIn July, the average 30-year fixed-rate mortgage fell below 3% for the first time in history.1 And while many Americans have rushed to take advantage of this unprecedented opportunity, others question the hype. Are today’s rates truly a bargain?

While average mortgage rates have drifted between 4% and 5% in recent years, they haven’t always been so low. Freddie Mac began tracking 30-year mortgage rates in 1971. At that time, the national average was 7.31%.2 As the rate of inflation started to rise in the mid-1970s, mortgage rates surged. It’s hard to imagine now, but the average U.S. mortgage rate reached a high of 18.63% in 1981.3

Fortunately for home buyers, inflation normalized by October 1982, which sent mortgage rates on a downward trajectory that would bring them as low as 3.31% in 2012.3 Since 2012, 30-year fixed rates have risen modestly, with the daily average climbing as high as 4.94% in 2018.4

So what’s causing today’s rates to sink to unprecedented lows? Economic uncertainty.

Mortgage rates generally follow bond yields, because the majority of U.S. mortgages are packaged together and sold as bonds. As the coronavirus pandemic continues to dampen the economy and inject volatility into the stock market, a growing number of investors are shifting their money into low-risk bonds. Increased demand has driven bond yields—and mortgage rates—down.5

However, according to National Association of Realtors Chief Economist Lawrence Yun, “the number one driver of low mortgage rates is the accommodating Federal Reserve stance to keep interest rates low and to buy up mortgage-backed securities.” According to Yun, “we will see mortgage rates stay near this level for the next 18 months because of the significance of the Fed’s stance.”6

HOW DO LOW MORTGAGE RATES BENEFIT CURRENT HOMEOWNERS?

Low mortgage rates increase buyer demand, which is good news for sellers. But what if you don’t have any plans to sell your home? Can current homeowners benefit from falling mortgage rates? Yes, they can!

A growing number of homeowners are capitalizing on today’s rock-bottom rates by refinancing their existing mortgages. In fact, refinance applications have surged over the past few months—and for a good reason.7 Reduced interest rates can save homeowners a bundle on both monthly payments and total payments over the lifetime of a mortgage.

The chart below illustrates the potential savings when you decrease your mortgage rate by just one percentage point. When it comes to refinancing, the bigger the spread, the greater the savings.

Estimated Monthly Payment On a 30-Year Fixed-Rate Mortgage

Loan Amount 4.0% 3.0% Monthly Savings Savings Over 30 Years
$100,000 $477 $422 $55 $20,093
$200,000 $955 $843 $112 $40,184
$300,000 $1,432 $1,265 $167 $60,277
$400,000 $1,910 $1,686 $224 $80,368
$500,000 $2,387 $2,108 $279 $100,461

Be sure to factor in any prepayment penalties on your current mortgage and closing costs for your new mortgage. For a refinance, expect to pay between 2% to 5% of your loan amount.8 You can divide your closing costs by your monthly savings to find out how long it will take to recoup your investment, or use an online refinance calculator. For a more precise calculation of your potential savings, we’d be happy to connect you with a mortgage professional in our network who can help you decide if refinancing is a good option for you.

HOW DO LOW MORTGAGE RATES BENEFIT HOME BUYERS?

We’ve already shown how low rates can save you money on your mortgage payments. But they can also give a boost to your budget by increasing your purchasing power. For example, imagine you have a budget of $1,500 to put toward your monthly mortgage payment. If you take out a 30-year mortgage at 5.0%, you can afford a loan of $279,000.

Now let’s assume the mortgage rate falls to 4.0%. At that rate, you can afford to borrow $314,000 while still keeping the same $1,500 monthly payment. That’s a budget increase of $35,000!

If the rate falls even further to 3.0%, you can afford to borrow $355,000 and still pay the same $1,500 each month. That’s $76,000 over your original budget! All because the interest rate fell by two percentage points. If you’ve been priced out of the market before, today’s low rates may put you in a better position to afford your dream home. 

On the other hand, rising mortgages rates will erode your purchasing power. Wait to buy, and you may have to settle for a smaller home in a less-desirable neighborhood. So if you’re planning to move, don’t miss out on the phenomenal discount you can get with today’s historically-low rates.

HOW LOW COULD MORTGAGE RATES GO?

No one can say with certainty how low mortgage rates will fall or when they will rise again. A lot will depend on the trajectory of the pandemic and subsequent economic impact. 

Forecasters at Freddie Mac and the Mortgage Bankers Association predict 30-year mortgage rates will average 3.2% and 3.5% respectively in 2021.9, 10 However, economists at Fannie Mae expect them to dip even lower to an average of 2.8% next year.11

Still, many experts agree that those who wait to take advantage of these unprecedented rates could miss out on the deal of a lifetime. “With rates now at all-time historic lows, it’s hard to imagine that people may be holding out for something even better,” warns Paul Buege, president and COO of Inlanta Mortgage.12 Positive news about a vaccine or a faster-than-expected economic recovery could send rates back up to pre-pandemic levels.

HOW CAN I SECURE THE BEST AVAILABLE MORTGAGE RATE?

While the average 30-year mortgage rate is hovering around 3%, you can do a quick search online and find advertised rates that are even lower. But these ultra-low mortgages are typically reserved for only prime borrowers. So what steps can you take to secure the lowest possible rate?

1. Consider a 15-Year Mortgage Term

Lock in an even lower rate by opting for a 15-year mortgage. If you can afford the higher monthly payment, a shorter mortgage term can save you a bundle in interest, and you’ll pay off your home in half the time.13

2. Give Your Credit Score a Boost

The economic downturn has made lenders more cautious. These days, you’ll probably need a credit score of at least 740 to secure their lowest rates.14 While there’s no fast fix for bad credit, you can take steps to help your score before you apply for a loan15: 

  • Dispute inaccuracies on your credit report.
  • Pay your bills on time, and catch up on any missed payments.
  • Hold off on applying for new credit.
  • Pay off debt, and keep balances low on your credit cards.
  • Don’t close unused credit cards (unless they’re charging you an annual fee).

3. Make a Large Down Payment

The more equity you have in a home, the less likely you are to default on your mortgage. That’s why lenders offer better rates to borrowers who make a sizable down payment. Plus, if you put down at least 20%, you can avoid paying for private mortgage insurance.

4. Pay for Points

Discount points are fees paid to the mortgage company in exchange for a lower interest rate. At a cost of 1% of the loan amount, they aren’t cheap. But the investment can pay off over the long-term in interest savings.

5. Shop Around

Rates, terms, and fees can vary widely amongst mortgage providers, so be sure to do your homework. Contact several lenders to find out which one is willing to offer you the best overall deal. But be sure to complete the process within 45 days—or else the credit inquiries by various mortgage companies could have a negative impact on your credit score.16


READY TO TAKE ADVANTAGE OF THE LOWEST MORTGAGE RATES IN HISTORY?

Mortgage rates have never been this low. Don’t miss out on your chance to lock in a great rate on a new home or refinance your existing mortgage. Either way, we can help. We’d be happy to connect you with the most trusted mortgage professionals in our network. And if you’re ready to start shopping for a new home, we’d love to assist you with your search—all at no cost to you! Contact us today to schedule a free consultation.

The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.


Sources:

  1. CNN Business –
    https://www.cnn.com/2020/07/16/success/30-year-mortgage-rates-record-low/index.html
  2. Freddie Mac –
    http://www.freddiemac.com/pmms/pmms30.html
  3. Value Penguin –
    https://www.valuepenguin.com/mortgages/historical-mortgage-rates
  4. Federal Reserve Bank of St. Louis –
    https://fred.stlouisfed.org/graph/?g=NUh
  5. Bankrate –
    https://www.bankrate.com/mortgages/how-interest-rates-are-set/
  6. Washington Post –
    https://www.washingtonpost.com/business/2020/06/25/mortgage-rate-remains-historic-low/
  7. Yahoo! Finance –
    https://finance.yahoo.com/news/mortgage-refinancing-makes-big-comeback-151500346.html
  8. Bankrate –
    https://www.bankrate.com/mortgages/is-no-closing-cost-for-you/
  9. Freddie Mac June 2020 Quarterly Forecast –
    http://www.freddiemac.com/fmac-resources/research/pdf/202006-Forecast.pdf
  10. Mortgage Bankers Association Mortgage Market Forecast July 15, 2020 –
    https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary
  11. Fannie Mae July 2020 Housing Forecast –
    https://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_071420.pdf
  12. Washington Post –
    https://www.washingtonpost.com/business/2020/06/25/mortgage-rate-remains-historic-low/
  13. Investopedia –
    https://www.investopedia.com/articles/personal-finance/042015/comparison-30year-vs-15year-mortgage.asp
  14. Money –
    https://money.com/mortgage-rates-below-three-percent/ 
  15. Experian –
    https://www.experian.com/blogs/ask-experian/credit-education/improving-credit/improve-credit-score/
  16. Equifax –
    https://www.equifax.com/personal/education/credit/report/understanding-hard-inquiries-on-your-credit-report/

 

Eric Slifkin, Broker Associate

Eric Slifkin, Team Lead

Your local real estate expert

Are you seeking a home that suits your lifestyle, community, and neighborhood needs? With his team, Eric offers home buyers a turn-key approach to finding and purchasing real estate from the Treasure Coast to the Palm Beaches and beyond.

 

Contact us today to schedule a free consultation. Whether buying or selling a home on the Treasure Coast, we are always happy to meet with you to discuss your wants and needs, with no obligation.

Eric Slifkin has authored this post, a Broker Associate at Keller Williams Real Estate and the Slifkin Real Estate Team founder. Eric and his experienced agents serve South Florida and the Treasure Coast, including  Stuart, Hobe Sound, Palm City, Port Saint Lucie, Jupiter, Tequesta, and the Palm Beaches.

 

Jan. 20, 2021

The Home Buyer’s Guide to Getting Mortgage Ready

Preparing Financially to Buy a Home 

The Home Buyer’s Guide to Getting Mortgage Ready

If you’re like most homebuyers, you will need a mortgage to finance your new home. By preparing in advance, you can avoid the typical delays and roadblocks many buyers face when applying for a mortgage.

This also applies to homeowners looking to buy their next house. As lending requirements have become more stringent in recent years, any changes to your credit history, debt levels, employment, and other factors could impact your approval chances. Preparing in advance for a mortgage ensures you don’t encounter any issues along the way towards closing.

The requirements to secure a mortgage may seem overwhelming, especially if you’re a first-time buyer, so we’ve outlined three simple steps to get you started on your path to homeownership. Follow these three steps to begin laying the foundation for your future home purchase today.

STEP 1: CHECK YOUR CREDIT SCORE

Your credit score is one of the first things a lender will check to see if you qualify for a loan. It’s a good idea to review your credit report and score yourself before you’re ready to apply for a mortgage. If you have a low score, you will need time to raise it. Sometimes, fraudulent activity or erroneous information will appear on your report, which can take months to correct.

The credit score most lenders use is your FICO score, a weighted score developed by the Fair Isaac Corporation that takes into account your payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%).

Base FICO scores range from 300 to 850. A higher FICO score will help you qualify for a lower mortgage interest rate, which will save you money.

By federal law, you are entitled to one free copy of your credit report every 12 months from each of the three major credit bureaus (Equifax, Experian, and Transunion). Request your free credit report.

When Should You Start to Check Credit Scores?

Check credit scores at least six months before applying (or more if you’ve had previous credit issues). Loan options can be limited if you've got a lower credit score. An early check gives you time to fix any problems. Even with excellent credit, you need to maintain your high score until closing to ensure your financing doesn’t fall through.

Lender Minimum Score Requirements

To qualify for the lowest interest rates available, you will usually need a FICO score of 760 or higher. Most lenders require a score of at least 620 to qualify for a conventional mortgage.

If your FICO score is less than 620, you may be able to qualify for a non-conventional mortgage. However, you should expect to pay higher interest rates and fees. For example, you may be able to secure an FHA loan (one issued by a private lender but insured by the Federal Housing Administration) with a credit score as low as 580 if you can make a 3.5 percent down payment. And FHA loans are available to applicants with credit scores as low as 500 with a 10 percent down payment.

Improving Your Credit Score

There’s no quick fix for a low credit score, but the following tips will help you increase it over time.

  1. Make payments on timeAt 35 percent, your payment history accounts for the largest portion of your credit score. Therefore, it’s crucial to get caught up on any late payments and make all of your future payments on time if you have trouble remembering to pay your bills on time, set up payment reminders through your online banking apps, a free money management tool like Mint, or an app like BillMinder.
  2. Avoid applying for new credit you don’t need. New accounts will lower your average account age, which could negatively impact your length of credit history. Also, each time you apply for credit, it can result in a small decrease in your credit score. The exception to this rule? If you don’t have any credit cards—or any credit accounts at all—you should open an account to establish a credit history. Just be sure to use it responsibly and pay it off in full each month. If you need to shop for a new credit account, for example, a car loan, be sure to complete your loan applications within a short period of time. FICO attempts to distinguish between a search for a single loan and applications to open several new credit lines by the window of time during which inquiries occur.
  3. Pay down credit cards. When you pay off your credit cards, you lower your amounts owed or credit utilization ratio (ratio of account balances to credit limits). Some experts recommend starting with your highest-interest debt and paying it off first. Others suggest paying off your lowest balance first and then rolling that payment into your next-lowest balance to create momentum. Whichever method you choose, the first step is to make a list of all of your credit card balances and then start tackling them one by one. Make the minimum payments on all of your cards except one. Pay as much as possible on that card until it’s paid in full, then cross it off your list and move on to the next card.
  4. Avoid closing old accounts. Closing an old account will not remove it from your credit report. In fact, it can hurt your score, as it can raise your credit utilization ratio—since you’ll have less available credit—and decrease your average length of credit history. Similarly, paying off a collection account will not remove it from your report. It remains on your credit report for seven years; however, the negative impact on your score will decrease over time.
  5. Correct errors on your report. Mistakes or fraudulent activity can negatively impact your credit score. That’s why it’s a good idea to check your credit report at least once per year. The Federal Trade Commission has instructions on their website for disputing errors on your report. While it may seem like a lot of effort to raise your credit score, your hard work will pay off in the long run. Not only will it help you qualify for a mortgage, but a high credit score can also help you secure a lower interest rate on car loans and credit cards, as well. You may even qualify for lower rates on insurance premiums.

Home Buying

STEP 2: SAVE UP FOR A DOWN PAYMENT AND CLOSING COSTS

 The next step in preparing for your home purchase is to save up for a down payment and closing costs.

Down Payment

When you purchase a home, you typically pay for a portion of it in cash (down payment) and take out a loan to cover the remaining balance (mortgage).

How much do I need to save for a down payment? Generally speaking, the higher your down payment, the more money you will save on interest and fees. For example, you will qualify for a lower interest rate and avoid paying for mortgage insurance if your down payment is at least 20 percent of the property’s purchase price.

But what if you can’t afford to put down 20 percent? You will be required to purchase private mortgage insurance (PMI) on a conventional loan if your down payment is less than 20 percent. PMI is insurance that compensates your lender if you default on your loan.7

PMI will cost you between 0.3 to 1.5 percent of the overall mortgage amount each year. So, on a $100,000 loan, you can expect to pay between $300 and $1500 per year for PMI until your mortgage balance falls below 80 percent of the appraised value. For a conventional mortgage with PMI, most lenders will accept a minimum down payment of five percent of the purchase price.7

If a five-percent down payment is still too high, an FHA-insured loan may be an option for you. Because the Federal Housing Administration guarantees them, FHA loans only require a 3.5 percent down payment if your credit score is 580 or higher.7

The downside of getting an FHA loan? You’ll be required to pay an upfront mortgage insurance premium (MIP) of 1.75 percent of the total loan amount, as well as an annual MIP of between 0.80 and 1.05 percent of your loan balance on a 30-year note. There are also certain limitations on the types of loans and properties that qualify.

There are a variety of other government-sponsored programs created to assist home buyers, as well. For example, veterans and current Armed Forces members may qualify for a VA-backed loan requiring a $0 down payment.7 Consult a mortgage lender about what options are available to you.

Current Homeowners

If you’re a current homeowner, you may have equity in your home to use toward your down payment on a new home. We can help you estimate your expected return after selling your current home and paying back your existing mortgage. Contact us for a free evaluation!

Closing Costs

Closing costs should also be factored into your savings plan. These may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, and other fees associated with the purchase of your home. Closing costs vary but typically range between two to five percent of the purchase price.

If you don’t have the funds to pay these outright at closing, you can often add them to your mortgage balance and pay them over time. However, this means you’ll have a higher monthly payment and pay more over the long term because you’ll pay interest on the fees.

STEP 3: ESTIMATE YOUR HOME PURCHASING POWER

Once you have the required credit score, savings for a down payment, and a list of all your outstanding debt obligations via your credit report, you can assess whether you are ready and able to purchase a home.

It’s important to have a sense of how much you can reasonably afford—and how much you’ll be able to borrow—to see if homeownership is within reach.

Your debt-to-income (DTI) ratio is one of the main factors mortgage companies use to determine how much they are willing to lend you, and it can help you gauge whether or not your home purchasing goals are realistic given your current financial situation.

Your DTI ratio is essentially a comparison of your housing expenses and other debt versus your income. There are two different DTI ratios that lenders consider:

  1. Front-End Ratio. This is also called the housing ratio, which is the percentage of your income that would go toward housing expenses each month, including your mortgage payment, private mortgage insurance, property taxes, homeowner’s insurance, and association dues.

    To calculate your front-end DTI ratio, a lender will add up your expected housing expenses and divide it by your gross monthly income (income before taxes). The maximum front-end DTI ratio for most mortgages is 28 percent. For an FHA-backed loan, this ratio must not exceed 31 percent.

  2. Back-End Ratio. The back-end ratio considers all of your monthly debt obligations: your expected housing expenses PLUS credit card bills, car payments, child support or alimony, student loans, and any other debt that shows up on your credit report.

    To calculate your back-end ratio, a lender will tabulate your expected housing expenses and other monthly debt payments and divide them by your gross monthly income (income before taxes). The maximum back-end DTI ratio for most mortgages is 36 percent. For an FHA-backed loan, this ratio must not exceed 41 percent.

  3. Home Affordability CalculatorTo get a sense of how much home you can afford, visit the National Association of Realtors’ Home Affordability Calculator, which will help you determine your home purchasing power depending on your location, annual income, monthly debt, and down payment. It also offers a monthly mortgage breakdown that projects what you would pay each month in principal and interest, property taxes, and home insurance.

    The Home Affordability Calculator defaults to a back-end DTI ratio of 36 percent. If the monthly cost estimate at that ratio is significantly higher than what you’re currently paying for housing, you need to consider whether or not you can make up the difference each month in your budget.

    If not, you may want to lower your target purchase price to a more conservative DTI ratio. The tool enables you to scroll through higher and lower price points to see the impact on your monthly payments so you can identify your ideal price point.

    (Note: This tool only provides an estimate of your purchasing power. You will need to secure pre-approval from a mortgage lender to know your true mortgage approval amount and monthly payment projections.)

Can I Afford to Buy My Dream Home?

Once you have a sense of your purchasing power, it’s time to find out which neighborhoods and types of homes you can afford. The best way to determine this is to contact a licensed real estate agent. We help homeowners like you every day and send you a comprehensive list of homes within your budget that meet your specific needs.

Suppose there are homes within your price range and target neighborhoods that meet your criteria—congratulations! It’s time to begin your home search.

If not, you may need to continue saving up for a larger down payment … or adjusting your search parameters to find homes that fit within your budget. We can help you determine the right course for you.

START LAYING YOUR FOUNDATION TODAY

It’s never too early to start preparing financially for a home purchase. These three steps will set you on the path toward homeownership … and a secure financial future!

And if you are ready to buy now but don’t have a perfect credit score or a big down payment, don’t get discouraged. There are resources and options available that might make it possible for you to buy a home sooner than you think. We can help.

Want to find out if you’re ready to buy a house? Give us a call! We’ll help you review your options, connect you with one of our trusted mortgage lenders, and help you determine the ideal time to begin your new home search.

Disclaimer: The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

Sources:

Quicken Loans Blog
myFICO
Bankrate
The Balance
Investopedia
The Lenders Network

 

Eric Slifkin, Broker Associate

Eric Slifkin, Team Lead

Your local real estate expert

Are you seeking a home that suits your lifestyle, community, and neighborhood needs? With his team, Eric offers home buyers a turn-key approach to finding and purchasing real estate from the Treasure Coast to the Palm Beaches and beyond.

 

Contact us today to schedule a free consultation. Whether buying or selling a home on the Treasure Coast, we are always happy to meet with you to discuss your wants and needs, with no obligation.

Eric Slifkin has authored this post, a Broker Associate at Keller Williams Real Estate and the Slifkin Real Estate Team founder. Eric and his experienced agents serve South Florida and the Treasure Coast, including  Stuart, Hobe Sound, Palm City, Port Saint Lucie, Jupiter, Tequesta, and the Palm Beaches.

 

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