Mortgage Rates Drop Slightly as Home Sales Heat Up

By: Chrystal Caruthers 

  

All of the housing news this week has been good—home sales are up for both resales and new construction—and now interest rates have moved lower.

As the spring housing market gets started, home buyers are taking advantage of what industry insiders believe to be the last days of low mortgage rates.

The 30-year fixed-rate mortgage averaged 3.69% this week, down from 3.78% last week. It was 4.4% a year ago this time, according to the Primary Mortgage Market Survey.

“Low mortgage rates are a welcome sign for those in the market to buy a home this spring season and will help to support home buyer affordability,” said Len Kiefer, deputy chief economist at Freddie Mac.

Rates first moved below the 4% mark the week of Nov. 10, 2011, according to Freddie Mac, thanks to intervention by the Federal Reserve. Since then, rates have fluttered up and down marginally, but home buyers have grown accustomed to these artificially low rates. However, the Fed has indicated it will not long continue to hold down interest rates. Indeed, experts are expecting a rate increase this summer.

Home buyers pushed existing-home sales slightly higher in February to a seasonally adjusted annual rate of 4.88 million units, slightly below economist expectations but still higher than last year. Meanwhile, new construction has finally entered the equation, outperforming industry expectations with a 7.8% increase in February new-home sales.

The 15-year FRM also trended down to 2.97% this week, on average, vs. 3.06% last week. It was 3.42% last year this time. Likewise, the 5-year Treasury-indexed hybrid adjustable-rate mortgage dipped to 2.92% this week from 2.97% last week. It averaged 3.1% a year ago this time.

Only the 1-year Treasury-indexed ARM was unchanged at 2.46%. However, it is higher than where it stood last year this time when it averaged 2.44%.

Need to talk with a Lender? I can connect you with an experienced, and friendly lender that can get you pre-approved at a low interest rate! 

Heidi Buchberger RE/MAX Realty Center

262-443-2672

www.heidibuchberger.com

heidi.buchberger03@gmail.com

VA Appraisal vs. Home Inspection

By: Veterans United (Sponsored Content) 

  

The VA appraisal is a crucial part of the home-buying process for qualified veterans and service members. VA appraisals focus on valuation and a more broad-based check of property conditions that could affect health, safety, or marketability.

Every VA buyer needs to clear the appraisal hurdle. But understand that an appraisal is not a home inspection. To be sure, you’re required to get only the former. But buyers should invest in peace of mind and also spring for a home inspection—in many cases before moving forward with the mandatory appraisal.

Home inspection

A home inspection might set you back $300 or $500, but it’s well worth the money. The VA appraisal is more like a 100-foot view of the property. Home inspectors will dig into the nooks and crannies and take a much more exhaustive approach.

If problems arise, buyers can typically use the inspection findings to renegotiate with the seller or even walk away from the deal with their earnest money.

Once you’re under contract, your lending team will move toward ordering the VA appraisal. But many buyers start with a home inspection before deciding whether to spend an additional $400 or so on the appraisal.

The VA appraisal

VA appraisals can get a bad rap. But they’re meant to safeguard VA buyers and their investment. The Veterans Affairs’ independent appraisal process has helped make these $0 down loans some of the safest on the market.

The first purpose of the VA appraisal is to assess a home’s fair market value. Appraisers will look at recent comparable home sales, or comps. After submitting at least one good comp with valuation and supporting documentation, the lender’s staff appraisal reviewer will essentially double-check the assessment and issue a formal notice of value for the property.

The appraiser will also look to see if the home meets the VA’s minimum property requirements. MPRs ensure a property is up to par with health and safety standards and can vary by location. Broadly, the VA wants to make sure buyers are getting homes that are safe, sanitary, and structurally sound.

Lenders can have their own property-related requirements in addition to the VA’s standards. Properties with income-producing attributes, for example, can be a tough sell for some VA lenders.

When it comes time to evaluate a potential purchase, both a home inspection and VA appraisal are key to ensure the property in question is a good fit for you and your family.

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Are you or someone you know a Veteran interested in purchasing a home in Waukesha County?! 

I can guide them with the best customer service! 

Call/Text/Email and I will get back to you RIGHT AWAY!!

Heidi Buchberger RE/MAX Realty Center

262-443-2672 www.heidibuchberger.com

heidi.buchberger03@gmail.com

The Earnest Money Deposit: What You Should Know

 

By: Angela Colley 

  

The earnest money deposit is an important part of the home buying process. It tells the seller you’re a committed buyer, and it helps fund your down payment.

Without earnest money, you could make offers on many homes, essentially taking them off the market until you decided which one you liked best. Sellers rarely accept offers without deposits.

Assuming that all goes well and your offer is accepted by the seller, the earnest money will go toward the down payment and closing costs. In many circumstances, you can get most of your deposit back if you discover something that you don’t like about the home.

How Much Should You Put Down in the Earnest Money Deposit?

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

In some real estate markets you may end up putting down more or less than the average amount. In a real estate market where homes aren’t selling quickly, the seller may only require 1% or less for the earnest money deposit. In markets where demand is high, the seller may ask for a higher deposit, perhaps as much as 2-3%. You can sometimes win a bid if you give the seller a large deposit. In fact, the seller may be willing to come down in price a little if you make a bigger deposit.

However, you may wind up having to do some paperwork for your mortgage lender, and the bank may want to verify the source of the funds for larger deposits. It won’t be a problem if you can show that you’ve had the money for at least 60 days.

When Do You Pay the Earnest Money, and Who Holds It?

In most cases, after your offer is accepted and you sign the purchase agreement, you give your earnest money deposit to the title company. In some states, the real estate broker holds the deposit.

Always check the credentials of the firm or broker taking the deposit and verify that the funds will be held in escrow. Never give the earnest money to the seller; it could be difficult or impossible to get it back if something goes wrong.

After turning over the deposit, the funds are held in an escrow account until the home sale is in the final stages. Once everything is ready, the funds are released from escrow and applied to your down payment.

Can You Get Your Earnest Money Back?

If the deal falls through, a small cancellation fee is usually taken out of the deposit, but the remainder remains in escrow. Whoever holds the deposit determines whether you should get the money back under the terms of the purchase agreement. Make sure that the purchase agreement covers how a refund is handled.

To be on the safe side, make sure the purchase agreement covers how a refund would be handled. Keep in mind that even if you are pre-approved for a mortgage loan, you can be declined when you apply for one. In such cases, standard contracts allow you to recover your earnest money deposit. You can also usually get your money back if you find problems with the property.

Do you have questions about the home buying process? I can help, just call/text/email and I will get back to you RIGHT AWAY!! 

Heidi Buchberger RE/MAX Realty Center

262-443-2672

www.heidibuchberger.com

Millennials Still Want A Home In The Suburbs

A Suburban Place to Call Their Own

Members of the millennial generation still want a home in the suburbs.

They don't want the city life forever!

By Robert Dietz

A common misconception in the wake of the Great Recession is that Americans, particularly millennials, hold different preferences regarding homeownership and a desire to live in the suburbs. This stylized argument claims that the declining homeownership rates of recent years is a reflection of an increased desire to rent, particularly in more urban locations. However, this assertion is at odds with recent survey data that indicate that preferences for homeownership and suburban living remain strong.

The goal of homeownership, alongside education and owning your own business, remains a key feature of the American Dream. The homeownership rate, for those under age 35 has fallen from 43.1 percent to 35.8 percent from 2004 to 2014, according to Census data. However, this change reflects constraints on housing opportunity rather than a sea change in preferences.

A 2014 survey by Fannie Mae found that 90 percent of young renters were likely to buy a home at some point in the future. Only 7 percent of younger renters reported that they were likely to always rent a home. Among current renters, the survey found that the top primary reason for renting (22 percent) was flexibility, but 21 percent were renting to prepare financially for homeownership.

And the reason for this ongoing, strong preference for homeownership was the belief that owning a home was the sensible long-run financial choice, protecting against rent increases as well as yielding financial benefits (wealth building). Indeed, 76 percent of younger renters in the Fannie Mae surveyheld this belief, with only 24 percent holding that renting made more financial sense over the long-run. Among homeowners, the view of homeownership as the better financial choice was even more widely held, with 90 percent of young homeowners agreeing.

Other survey data are consistent with these results. For example, a 2013 report from the Demand Institute surveyed 18- to 29-year-olds and found that 75 percent of the respondents held that homeownership is an important long-term goal and 73 percent thought it was an excellent investment.

When it comes to the type of housing, consider data from the National Association of Home Builders most recent "What Home Buyers Really Want" consumer preference survey. Among millennial prospective home buyers, 75 percent reported a desire for a single-family detached home, while 11 percent indicated a preference for a townhome. Only 4 percent wanted to own a multifamily unit.

The data also indicate an ongoing goal of living in the suburbs. Two-thirds of prospective buyers in the survey wanted to reside in a suburban neighborhood, compared to 10 percent wanting to own a home in a central city. Nearly a quarter of residents wanted to be outside large metropolitan areas entirely, preferring rural housing. The 2013 Demand Institute report, examining a slightly younger cohort of both prospective owners and renters, found similar preferences, with 48 percent preferring the suburbs and 38 percent wanting more urban locations.

The question as to why these housing preferences persist is linked, in great part, to those major milestones of marriage and children. Clearly, children require more space, both indoors and outdoors. With respect to millennials, the Demand Institute survey found that 64 percent expected to marry in the next five years and 55 percent expected to have children.

And accounting for children is one reason why homes in the suburbs tend to be larger: They hold more people. Using data from the American Housing Survey, I previously demonstrated that, no surprise, homes in the inner suburbs and exurbs were larger compared to homes in central cities. However, homes in the suburbs tended to have more people living in them (i.e. children) so that on a per capita basis, the amount of square footage of housing was approximately the same – about 800 square feet per person for the suburbs and a similar 767 square feet per person average in central cities.

The need to add space is reflected in preferences regarding must-have items within homes. For instance, the National Association of Home Builders survey data indicate that the most important elements for prospective millennial homebuyers are connected to space (walk-in closets and separate laundry rooms, scoring 4.9 and 4.8 respectively on a 5 point scale). Open first floors more amenable to socializing also scored highly (presence of a great room at 4.7 on the scale). Overall, almost half of prospective millennial homebuyers wanted more space, having a current average home size of 1,728 square feet and wanting to move to a home with on an average 2,475 square feet.

Energy-efficiency is also an element that younger homebuyers want, and are willing to pay for within reason. The same survey shows younger homebuyers’ second most important set of preferences dealt with energy features. The survey data also found that most prospective younger home-buyers (84 percent) were willing to pay 2 to 3 percent more for an energy-efficient home.

These findings are consistent with remodeling-focused data from the American Institute of Architects.Fourth quarter 2014 survey data illustrated that for remodeling of existing homes, making kitchen space more usable as a focal point of homes is a primary goal of homeowners. As the survey noted, with more homeowners residing for longer periods of time in their homes, there is a growing demand to reshape housing to meet current needs. Energy-efficiency and water conservation were also reported as areas of growing popularity.

Neighborhood matters as well, a key reason that the suburbs retain their popularity among home-buyers. The National Association of Home Builders data indicated that a majority of home-buyers wanted easy access to parks, walking trails, playgrounds and outdoor swimming pools.

So while there most likely has been some change among younger home-buyers in favor of reduced work-related commutes and walkable neighborhoods, the ongoing preferences for owner-occupied housing outside central cities suggests the dominance of single-family homes will continue, along with growth for townhouses. And as first-time buyers re-engage in the housing market going into 2016, builders will respond by building more energy-efficient homes suitable for entry-level housing.

And to be clear, there’s a time to rent and a time to own. Home ownership works best when attained after a household has achieved financial stability and expects to remain in an area for at least a few years. For this reason, allowing developers to provide new rental housing and maintain the existing housing stock is a key priority for ensuring access to affordable housing.

If you are looking to purchase a home in the Lake Country area, I would love to help you find the perfect home! 

Heidi Buchberger RE/MAX Realty Center of Oconomowoc

262-443-2672

www.heidibuchberger.com

Selling Your House? Price it Right Up Front

by The KCM Crew 

In today’s market, where demand is outpacing supply in many regions of the country, pricing a house is one of the biggest challenges real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, the best agents realize that telling the homeowner the truth is more important than getting the seller to like them.

There is no “later.”

Sellers sometimes think, “If the home doesn’t sell for this price, I can always lower it later.” However, research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes.

John Knight, recipient of the University Distinguished Faculty Award from the Eberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a seller who priced high at the beginning and then lowered the their price. In his article, Listing Price, Time on Market and Ultimate Selling Price published in Real Estate Economics revealed:

“Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price.”

Additionally, the “I’ll lower the price later” approach can paint a negative image in buyers’ minds. Each time a price reduction occurs, buyers can naturally think, “Something must be wrong with that house.” Then when a buyer does make an offer, they low-ball the price because they see the seller as “highly motivated.” Pricing it right from the start eliminates these challenges.

Don’t build “negotiation room” into the price.

Many sellers say that they want to price their home high in order to have “negotiation room.” But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house.

Not sure about this? Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If your seller is looking to sell their house for $400,000, but lists it at $425,000 to build in “negotiation room,” any potential buyers that search in the $350k-$400k range won’t even know your listing is available, let alone come see it!

A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the “right” to purchase your house.

Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation?

The Price is Right

Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Look for an agent that will take the time to simply and effectively explain what is happening in the housing market and how it applies to your home. You need an agent that will tell you what you need to know rather than what you want to hear. This will put you in the best possible position.

If you are thinking about selling your home, contact me to get a FREE market analysis, to know the current value of your home! 

Heidi Buchberger RE/MAX Realty Center

262-443-2672

www.heidibuchberger.com

New Study: Homeownership Creates Family Wealth

by The KCM Crew

Matthew Rognlie, from the Department of Economics at MIT, recently released a paper: Deciphering the Fall and Rise in the Net Capital Share. One of the major findings of the report is that homeownership is and has been for the last fifty years a major component to family wealth.

An article on the study in The Economist notes one of the findings of the study:

“The return on non-housing wealth, in fact, has been remarkably stable since 1970. Instead, surging house prices are almost entirely responsible for growing returns on capital.”

This came as no surprise to us as the Federal Reserve previously reported that the net worth of families that own their own home is 36 times greater than that of families that rent.

Bottom Line

HousingWire’s Senior Financial Reporter, Trey Garrison, summed it up well in his reporting on Rognlie’s study:

“Homeownership has consistently created generational wealth more reliably, and more ‘democratically’, than any other asset class. And it does so in a manner entirely ancillary to its primary purpose of giving you a place to lay your head and keep your stuff.”

Call me to build your wealth through home ownership! 
 Heidi Buchberger RE/MAX Realty Center 

262-443-2672

www.heidibuchberger.com

How Much Water is Your Home Wasting?

How Much Water is Your Home Wasting?

Need an expert to install these water saving fixtures? Call me, I have a network of preferred contractors that would love to help you save $$$$!!!!

Heidi Buchberger RE/MAX Realty Center 262-443-2672

Home Inspection Checklist

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10 Ways to Come Up with Down Payment Money for a House

10 Ways to Come Up with Down Payment Money for a House

If you've been thinking that a home purchase may be in your future, now’s the time to start saving for the down payment. Why get going now? Because it could take a while:

• “By some estimates, it could take two decades to come up with a respectable 10 percent,” writes The New York Times.
• The National Association of Realtors quotes research by RealtyTrac in reporting that, at the rate Americans currently are saving (5.6 percent), it’ll take 12.5 years, on average, for first-time buyers to amass a 20 percent down payment.

 From our Solutions Center: Find a better mortgage in seconds

Do you really need 20 percent?

You can buy a home with less than 20 percent down. The FHA (Federal Housing Administration) recently lowered down-payment requirements for mortgages it insures to as low as 3.5 percent to make it easier for buyers to get into the market.

Buying a $250,000 home with 3.5 percent down would mean you’d need to bring just $8,750 to the deal. That’s probably less – maybe a lot less – than you spent on your car.

Why, then, do we hear so much about saving up 20 percent of the purchase price – $50,000 cash for that $250,000 home – for a down payment? Why not a down payment of 3.5 percent? Or 5 percent? Or, if you want more of your own money (equity) invested in the home, why not put 10 percent down?

Good question. Here’s the reason: If you contribute less than 20 percent down to a home purchase, you’ll be required to buy mortgage insurance. It protects the lender, not the buyer, from the chance you’ll fail to make your payments.

“It’s your lender who makes you buy it, tells you who to buy it from and collects all the benefits if something goes wrong,” Money Talks News’ Kentin Waits writes, in Mortgage Insurance: Why You Have to Pay and When You Can Stop.

Conventional mortgages require private mortgage insurance (PMI). Explains Investopedia:

Private mortgage insurance typically costs between 0.5 percent to 1 percent of the entire loan amount on an annual basis. On a $100,000 loan this means the homeowner could be paying as much as $1,000 a year, or $83.33 per month — assuming a 1 percent PMI fee.

With an FHA mortgage, the insurance is called a mortgage insurance premium (MIP) and you must keep paying the premiums as long as you own the loan. You must refinance or sell the home to get out of the FHA insurance.Click here to see the FHA’s costs and requirements.

 Find help for common financial problems in our Solutions Center!

With mortgage insurance in mind, you can understand the reasons to save up 20 percent, or as much as possible, before taking out a mortgage. While it’s a big job, many buyers manage it. It takes focus, discipline and, often, outside help. Here are 10 sources of down payment money:

1. Down-payment assistance programs

You might be surprised how many programs exist to help buyers – especially first-time homebuyers. RealtyTrac counts 2,290 down-payment-assistance programs across the country. See its map of the markets where most help is available.

One way to find them is through Down Payment Resource, which calls itself “a Web-based software company with a mission to connect people with hard-to-find financial resources.”

The site takes your address or city, estimated annual income and number of people in your household. It asks if you are an armed services veteran or Native American. It delivers a list of programs for which you may be eligible, links to details and contact information for participating lenders in your area.

Or, look for programs near you by typing “down payment assistance programs” and your city’s name into a search engine. Income requirements typically apply, but check to learn if you are eligible.

If you are a veteran, you may be able to buy a home with no down payment.

2. Set up a dedicated account

Get going by setting up an account that pays the most interest possible while letting you access your savings. If you’ll be tempted to divert the money to other needs, set up an account solely for the down payment. Comparison shop for rates at Money Talks News and elsewhere.

3. Put savings on auto pilot

Saving is painless and virtually unnoticeable when you establish an automatic draw that pulls money monthly, twice monthly or weekly from your checking account.

4. Dedicate windfalls and pay bumps

Pledge to put every single tax refund, gift of cash, purchase refund and work bonus into your down-payment account.

5. Stash every raise

When you earn a raise at work, carry on as if it never happened. Have the difference between your old and new paychecks funneled automatically into your down-payment savings.

6. Sell your stuff

Sell your possessions for cash to fatten your account. Money Talks News is full of inspiration and tips about how and where to make the most money selling your things. Here’s where to start:

• Where to Sell Your Stuff for Top Dollar
• 10 Tips for Having a Killer Garage Sale

7. Sell your car

Pump up your savings fast by disposing of assets that have real value, like a car, boat, motorcycle or expensive sports equipment. Do without or replace the car with a cheap beater.

 From our Solutions Center: Find a better checking account in seconds

8. Sell taxable investments

If you are going to sell investments to raise money for your down payment, cash in stocks, bonds, mutual funds and other taxable investments before touching money held in tax-deferred retirement accounts like IRAs and 401(k)s. Those carry stiff penalties for selling before retirement age.

Dip into retirement savings with your eyes wide open: Read What You Need to Know Before Raiding Your Retirement Plan.

9. Get help from family 

Rules differ by lenders on whether and how much help you can get from gifts for your down payment.

One example: The FHA lets borrowers apply gifts from immediate family members toward a down payment. You’ll be required to produce a “gift letter” from the giver, verifying that the money is not actually a loan. You’ll probably also need to show copies of checks or wire transfers so your lender can verify the origin of the gift.

The Washington Post discusses the complexities of family gifts.

10. Ask your employer

Some companies, colleges, universities and state or local governments have programs to help employees with down payments. Ask your human-resources department about possibilities where you work.

Employees can get a second mortgage at 2 percent interest for between $600 and $6,000 to cover their closing costs and down payments. Firefighters, law enforcement personnel and teachers often are eligible for down-payment help.

And don’t forget, when negotiating for a job, you may be able to ask your new employer to include down-payment assistance as part of your compensation package — as a signing bonus or relocation assistance.

Need more information?? Contact me for more details about local Milwaukee/Waukesha housing programs that will help you with your down payment!! 

Heidi Buchberger RE/MAX Realty Center 

262-443-2672