Folks are now looking at buying homes with inventory shrinking and interest rates still low. Follow these 4 steps to keep from being “house poor” with a too large house payment. (1) RUN YOU OWN NUMBERS. Figure monthly payment, including taxes and insurance + maintenance. Then figure how much of your monthly income can go toward all these expenses. Ask your mortgage lender for the same information and compare. (2) START YOUR HOUSE HUNT LOWER THAN YOUR TOP DOLLAR. In some markets houses are going for over asking price and you need to know where to stop. (3) HAVE YOUR MORTGAGE PRO DO A LAST-MINUTE BUDGET CHECK BEFORE YOU WRITE AN OFFER. Ask your mortgage pro to run a last minute budget check as it may have months ago when he/she did the last one. Not a good idea to buy a boat while trying to get a mortgage loan or any other large purchase. (4) THINK OF YOUR HOUSE AS THE LAUNCH PAD FOR THE REST OF YOUR LIFE. Your home is not the cornerstone of your value as a human being – no possession is. It should be the backdrop for the rest of your life to enjoy with your family. Again don’t get “house poor”!
For borrowers of loans to buy a home the ABILITY – to – REPAY rule’s key requirements are: (1) FINANCIAL INFORMATION MUST BE SUPPLIED AND VERIFIED. Lenders must document borrowers’ employment, income, debt obligations, credit history, etc. Lenders can no longer offer “low-doc” or “no-doc” loans. (2) A BORROWERS MUST HAVE SUFFICIENT ASSETS OR INCOME TO PAY BACK THE LOAN. Lenders must evaluate a consumer’s debt-to-income ratio to determine if he or she can afford the loan. (3) TEASER RATES CAN NO LONGER HIDE A MORTGAGE’S TRUE COST. Lenders must base their evaluation on a consumer’s ability to repay the principal and interest over the long term – not just during an introductory teaser rate. BEFORE CLOSING lenders need to show no excess upfront points and fees, no toxic loan features and a cap on how much income can go to debt. All of this from the Consumer Financial Protection Bureau’s (CFPB’s) Ability-to-Repay rule, which will go into effect January 2014
The number of people who changed residences in 2012 increased by 12% since 2011, up from a record low of 11.6% in 2011, according to recent U. S. Census Bureau estimates. Mobility is still at low levels, even for the most mobile age group, 18-29 year olds. The most common state-to-state moved were regional in nature. Some 59,288 residents moved from N. Y. to Florida in 2012, while 58,992 moved from California to Texas and 49,635 moved from California to Arizona. More people moved out of metropolitan areas and into the suburbs. Between 2005 and 2010, 15.5 million people moved out of principal cities while 11.0 million moved in – a decrease of 4.4 million movers.
U. S. population of every state, county and city is determined by: (1) total number of births, (2) total number of deaths, (3) total number of immigrants from other countries and (4) NET DOMESTIC MIGRATION. The Census Bureau defines migration as a move that crosses juridictional boundaries, even one county to another is domestic migration. This information from Dr. Mark Dotzour at the TX A&M Real Estate Center. In my opinion, states that have positive net domestic migration are states that are creating jobs and have a brighter outlook for economic growth. These are areas that more people move into that out of. 2012 numbers show: (1) Texas with 140,888, (2) Florida, (3) Arizona, (4) Colorado, (5) Georgia and (6) Nevada. All have lesser numbers than TX. States with negative net domestic migration in 2012 are (1) New York with -115,754, (2) Illinois, (3) California, (4) Ohio, (5) Michigan and (6) Connecticut. The Real Estate Center’s website gives more at http://blog.recenter.tamu.edu/2013/04/states-love-migration/
(1) You’re buying your 1st home. OLD RULE: mortgage rates are so low you need only a small payment. NEW RULE: put down as much as you can like 20%. The biggest barrier today is 1st time home buyers NOT saving enough for a down payment. (2) You’re buying a bigger home. OLD RULE: don’t sell a home for less than you bought it for – period. NEW RULE: do your math. Your $100,000 home is now worth $75,000. You want to buy a $200,000 house that is now $150,000. That means taking a $25,000 hit on the sale of our present house, but a $50,000 gain on the 2nd home. With interest rates LOW, you will come out better in years to come. (3) You’re selling a home. OLD RULE: once the market bottoms, hold out as long as you can to net the most price appreciation. NEW RULE: put your home on the market in the spring. If you really want to sell, spring is the season. Sale prices begin to drop as the season wears on and in the fall and winter you may get less money, even if prices go up. Article written by Kate Rockwood and in the Sunday, April 14, 2013 PARADE in the Tyler Paper. Many more details in the 5 page article.
Although 55% of home buyers in the “What Home Buyers Really Want” report prefer a new home, only 8% of homes purchased between 2009 and 2001 were new, but fewer new homes built during that period. The new homes were bigger and more expensive than other homes on the market. The new home buyer, although the same age as all buyers, is earning about 25 more money. About 2/3 of new home buyers are married & 2.79 people in their household. About 1/2 of them pay for their down payment with their savings. New home buyers are more concerned about how the home & neighborhood look. The share of home buyers purchasing a home for the 1st time is 46% – highest since before 2001. First -time home buyers earn about 8% less than all home buyers & pay about 25% more for a house. The first- time homebuyers’ home is about 400 square feet smaller than the median size of the trade-up buyer’s home. Price is definitely a factor in first-time homebuyers decision + schools. More in this report from American Home Shield survey. AHS is a home warranty provider as are other companies. Just let us know what other information you need at our e-mail address: RealEstate@theBains.com
If purchasing a home or need to make your present home to handle special needs, particularly as you get older, the principle of UNIVERSAL DESIGN simplifies life for you and those around you. Universal Design actually benefits all ages and abilities. A home with a ground-level entry provides easy access in and out and wide enough to accomodate a wheel chair. Also check width & slopes of sidewalks around your home to ensure that they, too, have easy wheelchair access. Single-story homes give better maneuverability if you become physically impaired. If you must use steps be sure they are covered with a non-slip surface and are well-lighted. On the ground floor is there a bedroom or bath to use if you cannot climb the stairs, even for a short period of time. Kitchens have become FAMILY ROOMS. Again ability to get around in a wheelchair or walker. Push-pull lever faucet handles are better than standard knobs. Need easy access to drawers and cabinets. In bathrooms have handrails and grab bars, but be sure walls will hold these when installed. A chair or bench could be used in a tub or shower and handheld shower heads are good if you cannot stand to shower. Keep UNIVERSAL DESIGN when you buy a new home or remodel your present one.
The Realtors Land Institute is composed of men and women who sell dirt, which is a good investment these days. There are 3 investment categories of land: agricultural, recreational and transitional. Transitional land is land on the suburban outskirts of cities that will converted from ag use to new homes in the near future. During the great collapse of 2008 to 2011, there were NO bidders, so prices plummeted. Could not get loans to develop. Americans are buying houses again, so DEMAND IS UP. Lot prices could increase to meet this demand. Recreational land are toys for both boys & girls & a pretty lake, stream or mountains adds value. During the great collapse, bidders for these properties disappeared. Prices didn’t fall hard, but few buyers. Recreational land is awakening, as thousands of families started receiving massive payments for the minerals under their properties, the economy has recovered & business profits have improved so the recreation market is reawakening. Farmland is on fire? Corn ground in Iowa that was $7,500 per acre a few years ago is now selling for $17,000 per acre. Other states similiar & cropland prices in the Texas Panhandle have skyrocketed as well. The land market in America is COMING BACK STRONG. Where do you put your money, but into land? This is why foreign investors are buying U. S. dirt, according to Dr. Mark Dotzour, Chief economist & Director of Research at TX A&M Real Estate Center.
The last 4 years have been full of dour news about the slow growth of employment in America. The unemployment rate remains high & labor participation rate is low. There are a lot of “long-term unemployed” workers in the country, but true. The Bureau of Labor Statistics (BLS) publishes their J.O.L.T.S. report each month. It’s call the Job Openings and Labor Turnover Survey. BLS reports job openings, hires, quits, layoffs, discharges & other separations each MONTH. As of January 10, 2013 there are 3.7 MILLION JOBS open in America looking for a worker. They are (1) construction – 93,000 openings, (2) manufacturing – 276,000, (3) trade, transportation, utilities – 720,000, (4) professional & business services – 584,000, (5) health care – 643,000, (6) leisure & hosopitality – 479,000 and (7) government – 355,000. Listening to the news would give you the idea that the future of our country is bleak, but according Dr. Mark Dotzour, Texas A&M Real Estate Center the economy is growing, inspite of the incompetent governance in Washington. There are JOBS FOR THOSE WILLING TO WORK!
LEVERAGING is when a household or a business borrow money to spend or invest and there has been an increase in household credit debt from the 1950s until 2008. It means you are spending more than you bring in. DELEVERAGING is the opposite. It occurs when you pay off debt rather than take on more and that means you are spending less. When the entire country deleverages, it means economic growth is going to be slow. Economic growth will continue to be slow as long as the outstanding debt continues to shrink. Deleveraging does not happen often and when it does it is painful for the national economy. The good news is that the deleveraging cycle appears to be ending. As Americans spend then the economic output comes from consumption. Almost 65% comes from economic output. All this from Dr. Mark Dotzour, Chief Economist and Director of Research at the TX A&M Research Center.