Navy Fellas Realty Group

Real Estate, Residential sales and purchase

First-time Home Buyers: Why Splurging for a Larger Home Beats Condo Living

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First-time Home Buyers: Why Splurging for a Larger Home Beats Condo Living Some first-time home buyers are on a tight budget when making their real estate purchase, and there may be an inclination by many to purchase a smaller property, such as a condo, rather than the home they truly want. While there may be some initial financial benefit associated with buying a smaller property, there are a few benefits associated with splurging and buying a larger home as a first purchase. By analyzing these benefits, first-time home buyers can make a more informed decision about how to proceed.

Costs Associated With Upgrading In The Future

Some people will purchase a smaller property initially with the goal of later upgrading to a larger property. This can provide the home buyer with the initial benefits of building equity, taking advantage of tax benefits associated with real estate ownership and more. However, there are costs associated with selling property, including closing costs, real estate fees, make-ready and improvement costs and more that should be considered.

Benefits Of Long-Term Ownership

For many, there will be a need to have a larger property over the years, such as when starting a family or when young children grow into teenagers who need more space. When the first property purchased is large enough for the family to grow into, the homeowner can enjoy long-term appreciation and equity growth. More than that, the higher value of the property may mean that there is more upside for property appreciation over the years.

Getting Established In A Community

In addition to the financial benefits associated with investing in a larger property initially, there are intangible benefits. Moving into a new home in a few years means that there is a need to get re-established in a community. When a home buyer settles down into a larger home that he or she plans to stay in for many long years or even decades, getting established and settled in the community can begin right away.

These are considerable benefits that can be enjoyed when a first-time home buyer makes a purchase that he or she plans to enjoy for many years to come, but there are other factors to consider. Each person needs to make a decision regarding a real estate purchase that is best for their needs, goals and financial situation, so there is not a best-fit solution that is right for everyone. Those who are thinking about buying their first piece of real estate may consider contacting a real estate professional for assistance with their home hunting efforts soon.

What’s Ahead For Mortgage Rates This Week – August 3, 2015

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Whats Ahead For Mortgage Rates This Week August 3 2015Last week’s scheduled economic reports included the Case-Shiller 20 and 20-City Index reports, pending home sales data released by the National Association of Realtors® and the scheduled post-meeting statement of the Federal Reserve’s Federal Open Market Committee.

Case-Shiller: Home Prices Growing at Normal Pace

The Case-Shiller 20-City Home Price index for May reported that year-over-year home prices grew by 4.40 percent year-over-year. S & P Index Committee Chair David M Blitzer said that home prices are increasing gradually by four to five percent a year as compared to double-digit percentages seen in 2013. Mr. Blitzer said that home price growth is expected to slow in the next couple of years as home prices have been growing at approximately twice the rate of wage growth and inflation, a situation that is not seen as sustainable.

Denver, Colorado led the cities included in the 20-City Index with a 10 percent year-over-year growth rate for home prices. San Francisco, California followed closely with a year-over-year gain of 9.70 percent and Dallas Texas posted a year-over-year gain of 8.40 percent.

Fastest month-to-month home price growth in May was tied by Boston, Massachusetts, Cleveland, Ohio and Las Vegas, Nevada with each posting a monthly gain of 1.50 percent. May home prices remain about 13 percent below a 2006 housing bubble peak.

Pending Home Sales Down From Nine-Year Peak

According to the National Association of Realtors®, pending home sales dropped by 1.80 percent in June as compared to May’s reading. The index reading for June home sales was 110.3 as compared to May’s index reading of 112.3. This indicates that upcoming closings could slow; June’s reading represented the first decrease in pending home sales in six months. Lawrence Yun, chief economist for the National Association of Realtors®, cited would-be buyers’ decisions about whether to hold out for more homes available or to buy sooner than later will affect future readings for pending home sales.

Fed Not Ready to Raise Rates, Mortgage Rates Fall

The Fed’s FOMC statement at the conclusion of its meeting on Wednesday clearly indicated that Fed policymakers remain concerned about economic conditions and are not prepared to raise the federal funds rate yet. The FOMC statement did not provide any prospective dates for raising the target federal funds rate, which is currently at 0.00 to 0.25 percent, but the Fed continues to watch employment figures and the inflation rate.

Freddie Mac reported that mortgage rates fell last week, likely on news of the Fed’s decision not to raise rates. Average mortgage rates fell across the board with the rate for a 30-year fixed rate mortgage dropping by six basis points to 3.98 percent; the rate for a 15-year fixed rate mortgage dropped by four basis points to 3.17 percent and the average rate for a 5/1 adjustable rate mortgage fell by two basis points to 2.95 percent. Average discount points remained the same for fixed rate mortgages at 0.60 percent and fell from 0.50 percent to 0.40 percent for 5/1 adjustable rate mortgages.

What’s Ahead

This week’s economic calendar includes reports on consumer spending, core inflation and consumer spending. July readings on Non-Farm Payrolls and the national unemployment rate will also be released along with regularly scheduled weekly reports on new jobless claims and mortgage rates.

 

Dealing with the Emotional Stress of Selling Your Childhood Home

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Dealing with the Emotional Stress of Selling Your Childhood HomeSelling a childhood home can be emotionally stressful and even traumatizing. This is more than a house; it is a home where years and even decades of memories have been made and where lives have been lived. While selling a childhood home may be difficult to do, there are a few steps that can be taken to reduce the emotional turmoil that may be felt during this process.

Create A Final Memory

When a family has lived in a home for many years, it may feel almost as though the home has become a part of the family in a way. One way to deal with the emotional stress of saying goodbye to the home is to create a final memory with family in the home. This may be to host a family dinner that enables everyone to walk through the home one final time and to reminisce together about the past.

Take Pictures Of The Space

Whether a final family get-together is planned for the home or not, taking pictures of the home before vacating it can be beneficial. These pictures can help to preserve the memories of the space itself, and close-up pictures of special features of the home that hold significance can be taken. Creating an album of these pictures may be ideal in some cases.

Preserve Memories Of The Home

With a childhood home, there is a good chance that there are hundreds of pictures that have been taken inside the home and in the yard, and there may also be videos of home movies. While some will want to take new pictures of the home before leaving, another idea is to preserve the images of the home that have been taken over the years. This can celebrate the historical significance that the home played with the family over time.

Bring Traditions Into A New Home

While it is important to make final memories and to preserve memories, it is also important to move on. Letting go of one home means that it is time to start new traditions in a new home, and families can begin doing this with a special get-together. After all, while a home is important for a family, it is the family that truly makes the property a home.

It doesn’t matter if a family lived in the home for a few years or for several decades, saying goodbye to a childhood home is rarely easy to do. Contact a real estate professional to begin the selling process.

Federal Reserve FOMC Announcement

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Federal Reserve FOMC AnnouncementThe stage was set in high suspense for FOMC’s post-meeting announcement on Wednesday. As fall approaches, analysts and the media are looking for any sign of when and how much the Fed will raise its target federal funds rate. According to CNBC, some analysts were projecting two interest rate hikes before year end, but the truth of the matter remains unknown until the Federal Open Market Committee announces its intentions.

Meanwhile, reports of what Fed rate hikes will mean for consumers were released prior to the FOMC statement. Real estate analyst Mark Hanson said that a rate hike would “crush” housing markets, which continue to improve slowly in spite of the current 0.00 to 0.25 percent federal funds rate.

Last Friday’s report on June sales of new homes shows unpredictable progress in housing. Analysts estimated that new home sales would reach 550,000 units based on May’s reading of 517,000 new homes sold. June’s reading came in at 482,000 units sold.

FOMC Statement: Current Federal Funds Rate “Remains Appropriate”

The Federal Open Market Committee of the Federal Reserved announced as part of its post-meeting statement that it would not immediately increase the federal funds rate. The FOMC statement cited concerns over the inflation rate, which remains below the Fed’s goal of 2.00 percent. According to the statement, the FOMC will not move to raise the federal funds rate until the committee is “reasonably confident” that inflation will achieve the committee’s goal of 2.00 percent over the medium term.

No prospective dates for raising the target federal funds rate were given. The FOMC statement repeated language included in previous statements indicating that committee members anticipate that economic events could further postpone increases in the federal funds rate. The FOMC statement asserted that committee members continue to monitor domestic and global financial and economic developments as part of the decision-making process for raising the target federal funds rate.

FOMC members agreed that policy accommodation may be required “for some time” after the committee’s dual mandate of maximum employment and 2.00 percent inflation have been achieved. This suggests that FOMC members are not in a hurry to boost rates when economic uncertainty remains.

In terms of housing markets, the Fed’s decision not to raise rates likely caused a sigh of relief as rate increase would have caused consumer interest rates including mortgage rates to rise.

Assessing Your ‘Debt-to-Income Ratio’ and Why This Number Matters When Getting a Mortgage

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Assessing Your Debt-to-Income Ratio and Why This Number Matters When Getting a MortgageIf you are looking to buy a home, you may want to consider shopping for a loan first. Having your financing squared away ahead of time can make it easier to be taken seriously by buyers and help move along the closing process. For those who are looking to get a mortgage soon, keep in mind that the Debt-to-Income ratio of the borrower plays a huge role in the approval of your mortgage application.

What is a Debt-to-Income Ratio?

A debt-to-income ratio is the percentage of monthly debt payments compared to the amount of gross income that a person earns each month. Your gross monthly income is typically the amount of money you earn before taxes and other deductions are taken out. If a person’s monthly gross income is $2,000 a month and they have a monthly debt payments of $1000 each month, that person would have a DTI of 50 percent. The lower the DTI the better. 43 percent is in most cases the highest DTI that potential borrowers can have and still get approved for a mortgage.

What Debt Do Lenders Look At?

The good news for borrowers is that lenders will disregard some debt when calculating a borrower’s DTI. For example, utilities, cable, phone and health insurance premium would not be considered as part of your DTI. What lenders will look at are any installment loan obligations such as auto loans or student loans as well as any revolving debt payments such as credit cards or a home equity line of credit. In some cases, a lender will disregard an installment loan debt if the loan is projected to be paid off in the next 10-12 months.

What Is Considered Income?

Almost any source of income that can be verified will be counted as income on a mortgage application. Wage income is considered as part of a borrower’s monthly qualifying income. Self-employed individuals can use their net profit as income when applying for a mortgage, however, many lenders will average income in the current year with income from previous years. In addition, those who receive alimony, investment income or money from a pension or social security should make sure and include those figures in their monthly income as well when applying for a loan.

How Much Debt Is Too Much Debt?

Many lenders prefer to only offer loans to those who have a debt-to-income ratio of 43 percent or lower. Talking to a lender prior to starting the mortgage application process may help a borrower determine if his or her chosen lender offers such leeway.

A borrower’s DTI ratio can be the biggest factor when a lender decides whether to approve a mortgage application. Those who wish to increase their odds of loan approval may decide to lower their DTI by either increasing their income or lowering their debt. This may make it easier for the lender and the underwriter to justify making a loan to the borrower.

Last-minute Home Showing? Here’s How to Stage Your Home in Just a Few Minutes

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Last-minute Home Showing? Here's How to Stage Your Home in Just a Few Minutes In an ideal situation, a seller will have ample time to prepare a home to list for sale. This may include time to make necessary repairs, to thoroughly clean the home from top to bottom and to properly stage it. However, in those cases when time is not available to complete all of these steps, there are a few necessary steps that should be followed to get the home in show-ready condition in a very short period of time.

De-Clutter As Much As Possible

De-cluttering the home is an important step in staging, and this is because it can make the home look cleaner and can show off the square footage in the home. When time for staging is limited, it may be necessary to simply hide items away in closets, cabinets and drawers. Ideally, however, these items will be boxed up, and this is because some home buyers will open closet doors and cabinets to view these areas, and it is not ideal to have them appear to be cluttered and chaotic.

Remove All Personal Effects From The Property

A key step in staging a home relates to removing all of the family’s personal items and making the home seem neutral, and the purpose for this is so that a buyer can see himself or herself living in the home. Ideally, all personal effects, including your family pictures, will be removed from the property.   When it is not possible to remove everything from the property, these personal items should be boxed up at the minimum or stored in an out-of-sight location in the home.

Focus On The Kitchen And Bathrooms

When time is truly limited, it may not be possible to thoroughly clean the home as well as de-clutter and de-personalize the home. Therefore, in a crunch, it is best to focus on cleaning the kitchen and bathrooms thoroughly and giving the other areas of the home a once-over cleaning. If more time is available, focusing on cleaning baseboards, ceiling fans and other features that may not be cleaned on a regular basis but that are visible to buyers can be helpful.

Many sellers will have several weeks to stage a home before listing it, but this is not always the case. In a situation with limited time to stage the home, the seller often must make critical decisions about what absolutely must be done and what is less important, and this can vary from homeowner to homeowner. Those who have questions about staging their home can reach out to their trusted real estate professional for assistance.

What’s Ahead For Mortgage Rates This Week – July 27, 2015

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Whats Ahead For Mortgage Rates This Week July 27 2015Last week’s scheduled economic news releases were limited as no news was released on Monday or Tuesday, but good news did arrive in the form of a dip in mortgage rates for fixed rate loans. The National Association of Realtors® reported higher sales of pre-owned homes and FHFA reported that home price growth associated with mortgages held or backed by Fannie Mae and Freddie Mac held steady in May.

Sales of Pre-Owned Homes and FHFA House Prices Rise

According to the National Association of Realtors®, June sales of existing homes reached their highest level since February 2007. Sales of used homes reached a seasonally-adjusted annual rate of 5.47 million previously owned homes sold against expectations of 5.42 million homes and May’s reading of 5.32 million pre-owned homes sold. By comparison, sales of existing homes remain about 24 percent below a pre-recession peak. Lawrence Yun, chief economist for the National Association of Realtors® cited improving labor markets and home buyer concerns over rising mortgage rates as factors contributing to May’s reading for existing home sales.

FHFA, the federal agency that oversees Fannie Mae and Freddie Mac, reported that home prices associated with sales of homes financed with loans owned or backed by Fannie and Freddie rose by 0.40 percent month-over-month in May and held steady with April’s revised reading of 0.40 percent. FHFA home prices rose by 5.70 percent year-over-year in May.

Mortgage Rates Mixed

Freddie Mac reported that average rates for 30 and 15-year mortgages fell while the average rate for a 5/1 adjustable rate mortgage ticked upward by one basis point. The average rate for a 30-year fixed rate mortgage fell by five basis points to 4.04 percent; the average rate for a 15-year fixed rate mortgage fell by four basis points to 3.21 percent. The rate for a 5/1 adjustable rate rose by one basis point to 2.97 percent. Average discount points were unchanged at 0.60 percent, 0.60 percent and 0.50 percent respectively.

Expected reports on weekly jobless claims and new home sales were not released last week.

What’s Ahead

Scheduled economic reports for this week include the usual weekly reports on jobless claims and mortgage rates along with the Case-Shiller Home Price Index reports for May and the Commerce Department’s report on pending home sales. The Federal Open Market Committee of the Federal Reserve has scheduled an announcement on Wednesday, and reports on consumer confidence and consumer sentiment will also be released next week.

Tiny, but Cozy: 3 Ways to Furnish Small Spaces to Make Them Feel Much Larger

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Tiny, but Cozy: 3 Ways to Furnish Small Spaces to Make Them Feel Much LargerWhen decorating a small space, there is a general desire to make the space look and feel larger than it is while also meeting basic functional needs in the room. For example, there may be a need to accommodate seating for a group of people in a living room, but there also may be a desire to provide ample space for foot traffic so the area does not feel cramped. By following a few important tips, it is possible to furnish smaller spaces so that they are functional and do not feel cramped.

Think About Decorative Storage Solutions

One of the most common factors that will make a small space seem cramped and uncomfortable relates to clutter, and because of this, focusing on storage solutions can go a long way toward making the space feel larger than it is. Storage solutions can be decorative, and they can be a true benefit to the décor in the room. Think about functional storage features like an ottoman with hidden storage features, an entertainment center with cabinets and shelves or a tall bookshelf that can hold many of the items that are needed in the room.

Decorate The Space Vertically

For most people, there is a general inclination to decorate a room horizontally and to fill the floor space with furnishings, but this can be detrimental when decorating a smaller room. In a smaller space, decorating the space vertically by using bookshelves, storage cabinets and other features that rise above the ground rather than that sprawl across the ground can be beneficial. The goal should be to decorate the room fully while leaving ample space for foot traffic to maneuver through the room comfortably.

Use Lighter Colors

Darker colors used in a smaller room can make the space feel closed off and cramped. Using lighter colors can brighten the space and make it seem more airy. While using shades of white and beige throughout a space may not be ideal in all rooms, these can be incorporated into various aspects of the décor to improve the spacious feel of the room.

Smaller spaces can be challenging to decorate, but there are different tips and tricks that can be used to make the space look and feel larger than it is. Some tips help improve the functional use of the space, while others simply play tricks and create the illusion of space. All can be used together to create the feeling of a larger, more inviting room.

Good News! Existing Home Sales, FHFA Home Prices Increase

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Good News Existing Home Sales FHFA Home Prices IncreaseHousing markets show continued signs of strengthening according to reports released on Wednesday. The National Association of Realtors® reported that sales of pre-owned homes rose to 5.49 million in June as compared to May’s revised reading of 5.32 million pre-owned homes sold and expected sales estimated at 5.42 million sales. Expectations were based on May’s original reading of 5.35 million sales. June’s reading was the highest since February of 2007. Readings for existing home sales are calculated on a seasonally adjusted annual basis.

Buyers Gain Confidence in Labor Markets, Rush to Beat Rate Hikes

Lawrence Yun, chief economist for the National Association of Realtors® said that buyers may be influenced by rising mortgage rates and encouraged by improving job markets. Analysts expect the Federal Reserve to raise its target federal funds rate this fall, which means that mortgage rates along with consumer lending rates will rise.

The national median home price rose by 6.50 percent annually to $236,400, also a record reading.

While this news paints a rosy picture for housing markets, challenges remain. Strict mortgage standards are an obstacle for first time and moderate income buyers as well as for buyers with less than stellar credit scores. While construction of new homes is increasing, the majority of projects are apartment complexes. 41 percent of housing starts in June were multi-family projects with five or more units. This data falls in line with stricter mortgage standards and a trend for millennials, an expected group of first-time homebuyers, preferring to rent in large cities rather than moving to suburban areas.

FHFA House Prices Rise in May

The Federal Housing Finance Agency (FHFA) reported that home prices associated with mortgage loans owned or backed by Fannie Mae and Freddie Mac was unchanged from April’s revised reading of 0.40 percent month-to-month home price growth. April’s month-to-month reading was originally reported at 0.30 percent. FHFA home prices were up 5.70 percent year-over-year in May.

FHFA reported that year-over-year home price growth was positive in all nine census divisions, with the lowest growth rate of 0.90 percent in the Mid Atlantic division and the highest growth rate of 8.40 percent in the Pacific division.

3 Reasons Why Your Closing Costs Will Vary Depending on the Type of Home You Buy

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3 Reasons Why Your Closing Costs Will Vary Depending on the Type of Home You BuySavvy home buyers who are preparing to make a real estate purchase should do their research and understand that they need to save money for not only the down payment, but the closing costs as well. The closing costs can account for as much as three to five percent of the sales price in some cases, so this can be a rather sizable amount of money. Some home buyers however, may not realize that the amount of closing costs can vary considerably based on the home that is purchased. With a closer look at why this is, home buyers can make a more educated decision when selecting a home to purchase.

Prepaid Taxes And Insurance

One of the most significant closing costs relates to prepaid taxes and insurance, and both of these expenses are directly tied to the location and value of the property. Consider that the property tax rate can vary based on the city, county, and state. Real estate insurance can also vary based on the type of construction of the home, if the home is located in a flood plain, and other factors. These are only a few examples of how the location and property type can impact these fees, and home buyers should consider the costs assoicated with the tax rates and insurance when selecting a property to purchase.

Third Party Reports

There are several third party reports that are commonly paid for at closing, and these include an appraisal, a survey, a pest inspection and a property inspection. The third party reports may vary in cost based on the size of the home, the amount of land that is being purchased, and even the condition of the property. Those who want to keep their closing costs lower may consider learning more about how these fees are calculated up-front before finalizing their plans to buy a specific home.

Title Insurance Fees

Title insurance fees are another typically sizable expense for home buyers, and this insurance offers protection to the lender if the title is not clean. Title insurance can increase based on the size of the property as well as different factors that are revealed with a title search. This information can be difficult to learn with an initial home search, but home buyers should be aware that title defects can increase closing costs.

The location, size, age and construction of a property all impact the closing costs. Those who are shopping for real estate may be inclined to make a decision that keeps closing costs down, and they can reach out to their knowledgeable real estate professional for more assistance with their particular situation.