Why Growing Home Equity Is Great News if You Plan To Move [INFOGRAPHIC]

Why Growing Home Equity Is Great News if You Plan To Move [INFOGRAPHIC]

Some Highlights According to the latest data from CoreLogic, the average homeowner gained $64,000 in home equity over the past 12 months. That much equity can be a game-changer when you move. When you sell, it could be some (if not all) of what you need for a down payment on your next home. To find out how much equity you have in your home and how you can use it, let’s connect today. Source: KCM...
Should I Buy a Home Right Now?

Should I Buy a Home Right Now?

If you’ve been thinking about buying a home, you likely have one question on the top of your mind: should I buy right now, or should I wait? While no one can answer that question for you, here’s some information that could help you make your decision. The Future of Home Price Appreciation Each quarter, Pulsenomics surveys a national panel of over 100 economists, real estate experts, and investment and market strategists to compile projections for the future of home price appreciation. The output is the Home Price Expectation Survey. In the latest release, it forecasts home prices will continue appreciating over the next five years (see graph below): As the graph shows, the rate of appreciation will moderate over the next few years as the market shifts away from the unsustainable pace it saw during the pandemic. After this year, experts project home price appreciation will continue, but at levels that are more typical for the market. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:  “People should not anticipate another double-digit price appreciation. Those days are over. . . . We may return to more normal price appreciation of 4%, 5% a year.” For you, that ongoing appreciation should give you peace of mind your investment in homeownership is worthwhile because you’re buying an asset that’s projected to grow in value in the years ahead. What Does That Mean for You? To give you an idea of how this could impact your net worth, here’s how a typical home could grow in value over the next few years using the expert price appreciation projections...
Housing Experts Say This Isn’t a Bubble

Housing Experts Say This Isn’t a Bubble

With so much talk about an economic slowdown, some people are asking if the housing market is heading for a crash like the one in 2008. To really understand what’s happening with real estate today, it’s important to lean on the experts for reliable information. Here’s why economists and industry experts say the housing market is not a bubble ready to pop. Today Is Nothing Like 2008 The 2008 housing crash is still fresh in the minds of many homebuyers and sellers. But today’s market is different. Odeta Kushi, Deputy Chief Economist at First American, says: “This is not the same market of 2008. . . . It’s no secret the housing market played a central role in the Great Recession, but this market is just fundamentally different in so many ways.” Natalie Campisi, Advisor Staff for Forbes, explains how today’s lending standards are different than those during the lead-up to the housing market crash: “Among the differences between today’s housing market and that of the 2008 housing crash is that lending standards are tighter due to lessons learned and new regulations enacted after the last crisis. Essentially, that means those approved for a mortgage nowadays are less likely to default than those who were approved in the pre-crisis lending period.” Another reason today’s housing market is nothing like 2008 is that the number of people looking to buy a home still outweighs the supply of homes for sale. As realtor.com notes: “. . . experts don’t believe the market is in a bubble or a crash is in the cards, like during the Great Recession. The nation is...
Two Reasons Why Today’s Housing Market Isn’t a Bubble

Two Reasons Why Today’s Housing Market Isn’t a Bubble

You may be reading headlines and hearing talk about a potential housing bubble or a crash, but it’s important to understand that the data and expert opinions tell a different story. A recent survey from Pulsenomics asked over one hundred housing market experts and real estate economists if they believe the housing market is in a bubble. The results indicate most experts don’t think that’s the case (see graph below): As the graph shows, a strong majority (60%) said the real estate market is not currently in a bubble. In the same survey, experts give the following reasons why this isn’t like 2008: The recent growth in home prices is because of demographics and low inventory Credit risks are low because underwriting and lending standards are sound If you’re concerned a crash may be coming, here’s a deep dive into those two key factors that should help ease your concerns. 1. Low Housing Inventory Is Causing Home Prices To Rise The supply of homes available for sale needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued price appreciation. As the graph below shows, there were too many homes for sale from 2007 to 2010 (many of which were short sales and foreclosures), and that caused prices to tumble. Today, there’s still a shortage of inventory, which is causing ongoing home price appreciation (see graph below): Inventory is nothing like the last time. Prices are rising because there’s a healthy demand for...
Homeownership Could Be in Reach with Down Payment Assistance Programs

Homeownership Could Be in Reach with Down Payment Assistance Programs

A recent survey from Bankrate asks prospective buyers to identify the biggest obstacles in their homebuying journey. It found that 36% of those polled said saving for a down payment is one of their primary hurdles to buying a home. If you feel the same way, the good news is there are many down payment assistance programs available that can help you achieve your homeownership goals. The key is understanding where to look and learning what options are available. Here’s some information that can help you. You Can Qualify Even if You’ve Purchased a Home Before There are several misconceptions about down payment assistance programs. For starters, many people believe there’s only assistance available for first-time homebuyers. While first-time buyers have many options to explore, repeat buyers have some, too. According to the latest Homeownership Program Index from downpaymentresource.com: “It is a common misconception that homebuyer assistance is only available to first-time homebuyers, however, 38% of homebuyer assistance programs in Q1 2022 did not have a first-time homebuyer requirement.” That means repeat buyers could qualify for over one-third of the assistance programs available. And if you’re a repeat buyer, you may still be able to take advantage of some first-time homebuyer programs, depending on your personal situation. That’s because downpaymentresource.com also notes many of the first-time homebuyer programs use the U.S. Department of Housing and Urban Development’s definition of a first-time homebuyer. Under their definition, you could qualify as a first-time buyer if you’re: Someone who hasn’t owned a primary residence in 3 years. A single parent who’s only ever owned a home with a former spouse. That means no...
What Does an Economic Slowdown Mean for the Housing Market?

What Does an Economic Slowdown Mean for the Housing Market?

According to a recent survey, more and more Americans are concerned about a possible recession. Those concerns were validated when the Federal Reserve met and confirmed they were strongly committed to bringing down inflation. And, in order to do so, they’d use their tools and influence to slow down the economy. All of this brings up many fears and questions around how it might affect our lives, our jobs, and business overall. And one concern many Americans have is: how will this affect the housing market? We know how economic slowdowns have impacted home prices in the past, but how could this next slowdown affect real estate and the cost of financing a home? According to Mortgage Specialists:  “Throughout history, during a recessionary period, interest rates go up at the beginning of the recession. But in order to come out of a recession, interest rates are lowered to stimulate the economy moving forward.” Here’s the data to back that up. If you look back at each recession going all the way to the early 1980s, here’s what happened to mortgage rates during those times (see chart below): As the chart shows, historically, each time the economy slowed down, mortgage rates decreased. Fortune.com helps explain the trend like this: “Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.” And while history doesn’t always repeat itself, we can...
Expert Housing Market Forecasts for the Second Half of the Year

Expert Housing Market Forecasts for the Second Half of the Year

The housing market is at a turning point, and if you’re thinking of buying or selling a home, that may leave you wondering: is it still a good time to buy a home? Should I make a move this year? To help answer those questions, let’s turn to the experts for projections on what the second half of the year holds for residential real estate. Where Mortgage Rates Will Go Depends on Inflation While one of the big questions on all buyers’ minds is where will mortgage rates go in the months ahead, no one has a crystal ball to know exactly what’ll happen in the future. What housing market experts know for sure is that the record-low mortgage rates during the pandemic were an outlier, not the norm. This year, rates have climbed over 2% due to the Federal Reserve’s response to rising inflation. If inflation continues to rise, it’s likely that mortgage rates will respond. Greg McBride, Chief Financial Analyst at Bankrate, explains it well: “Until inflation peaks, mortgage rates won’t either. Without improvement on the inflation front, we don’t know where the interest rate ceiling will be.” Whether you’re buying your first home or selling your current house to make a move, today’s mortgage rate is an important factor to consider. When rates rise, they impact affordability and your purchasing power. That’s why it’s crucial to work with a team of professionals, so you have expert advice to help you make an informed decision about your best move. The Supply of Homes for Sale Projected To Continue Increasing This year, particularly this spring, the number of homes...
Have You Budgeted for Closing Costs?

Have You Budgeted for Closing Costs?

You saved for your down payment, but what about the closing costs? How do you even know how much closing costs will be when you buy a home in southern California? All too often potential home buyers will focus on saving for the down payment, not realizing that they'll also need to figure out how to get the closing costs paid.What Are Closing Costs?According to Trulia,“When you close on a home, a number of fees are due. They typically range from 2% to 5% of the total cost of the home, and can include title insurance, origination fees, underwriting fees, document preparation fees, and more.”For those who buy a $250,000 home, for example, that amount could be between $5,000 and $12,500 in closing fees. Keep in mind, if you’re in the market for a home above this price range, your costs could be significantly greater. Closing Costs range from 1% to 2% of the purchase priceThe amount of money you will need to close on your purchase will be made up of the down payment, closing costs, and prepaid expenses. The combination of closing costs and prepaid expenses will typically range between 2% and 3% of the price for homes purchased in Southern California. There is a difference between Closing Costs and Prepaid expenses. Closing Costs are "Non-Recurring", meaning they are directly connected to this purchase transaction. Prepaid Expenses are "Recurring", meaning once you own the home you will continue to have these expenses. Below is a list of the typical closing costs involved in a purchase transaction.Appraisal (can range from $450 to $600 or more. Type of property, location, value,...
How Do I Cancel My FHA Mortgage Insurance?

How Do I Cancel My FHA Mortgage Insurance?

Canceling FHA mortgage insurance seems the be the first thing Orange County FHA borrowers want to know about after they have bought their home. FHA mortgages offer very attractive interest rates and with less demanding qualification requirements to allow first time home buyers and borrowers with less than perfect credit the opportunity to get into the real estate market. FHA allows Orange County home buyers to get a mortgage with a down payment as low as 3.5% as well as allowing borrowers to refinance without appraisal. The only real caveat to FHA mortgages is that the Mortgage insurance premiums are typically higher than other mortgage programs. Since FHA is essentially an insurance policy to lenders due to the higher risk potential borrowers, the higher insurance premiums are an essential aspect to the program. Types of Mortgage Insurance Premiums FHA has two different types of Mortgage insurance premiums, or MIPs, that are required as a part of an FHA mortgage. The first of these MIPs is the Up Front Mortgage Insurance Premium which is paid at closing. This premium is 1.75% of the loan amount and is financed into the loan amount. The second of these MIPs is the annual mortgage insurance premium. This is paid monthly as a part of your monthly loan payments. Rates for annual MIPs on a 30 year fixed rate term have ranged between .55% and 1.35% since 2008. Currently the annual mortgage insurance rate for 30 year fixed FHA loans is .85% for down payments less than 5%, and .8% for down payments more than 5%. Canceling MIPs With Conventional loan programs it is possible...
Higher FHA Loan Limit for Orange County in 2017

Higher FHA Loan Limit for Orange County in 2017

In December of 2016, FHA released an official statement announcing the increase of the 2017 FHA loan limits. This is the FHA loan limit increase in Orange County, CA since 2006.  What is an “FHA loan limit”? The Federal Housing Administration (FHA) sets a limit, effective each new year, of what a buyer can borrow within each state county. They calculate this limit based on the average price a home is selling for in that area. That means that in places like Orange County the limit will be significantly higher than in a county with lower housing prices like Riverside County. This does not mean that you cannot purchase a home at a higher sales price, just that you as the buyer, will be responsible for coming in with the difference between the loan limit and the purchase price. What does this mean for Orange County Buyers? This is an encouraging change for many prospective Orange County home buyers that have the income, satisfactory credit, appropriate debt-to-income ratios but may not have the savings for a conventional loan program. The FHA loan limit for Orange County is now at $636,150. That is up $10,650 from last years limit of $625,500. As housing prices increase in this popular area it is a welcome opportunity. Let’s take a look at the median house prices in a couple of in demand cities to see how this new limit will be impactful:                                                     (Taken from Zillow 1/12/17) Costa Mesa: $725,200                                                                                  Huntington Beach: $754,500 Santa Ana: $682,600                                                                                    Anaheim: $553,900 Cypress: $624,400                                                                                         Irvine: $776,600 Laguna Niguel: $790,500                                                                             Placentia: $661,300 Garden Grove: $545,200                                                                               Tustin: $670,400 Now look at the highest purchase price for the new loan limit, with the traditional 3.5% down: Purchase Price: $659,222         (<–Anything higher...