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March 2017 - Hoeting Realtors

Economic Confidence May Be Housing’s Buoy

Consumers are getting more confident about the economy and their finances, and that could bode well for the real estate market, according to the National Association of REALTORS®’ latest Housing Opportunities and Market Experience survey.

Read more: Consumers Are Super Confident About Housing

Indeed, the share of households who say the economy is improving surged to its highest share in the survey’s five-quarter history, reaching 62 percent (up from 48 percent a year ago).

The majority of positive sentiment about the economy is coming from respondents living in the Midwest and rural areas, according to the survey. Last March, 49 percent of Midwesterners and 35 percent of Americans living in rural areas thought the economy was improving. Today, 67 percent of Midwesterns and 63 percent of rural residents report an improvement to the economy.

“Confidence levels generally rise after a presidential election as the nation hopes for the best,” says Lawrence Yun, NAR’s chief economist. “Even though it is a highly polarized country, consumers for the most part have upbeat feelings about the economy right now. Stronger business and consumer morale typically lead to even more hiring and spending, which in turn encourages more households to make big decisions like buying a home. These positive developments would be especially good news for prospective homebuyers in the more affordable Midwest region.”

Households are also feeling more confident about their finances. Respondents in the HOME survey reported confidence that their financial outlook will improve over the next six months. Financial confidence is at the highest levels in the survey’s history (reaching 62.6 on the index in March, up from a 58.1 reading a year ago).

Renters, however, may not be as confident. Fifty-six percent of renters say now is a good time to buy, down from 62 percent a year ago. Younger households, renters, and Americans living in more pricey areas, like the western region, are the least optimistic about buying. Meanwhile, 80 percent of homeowners say now is a good time to buy a home.

“Inventory conditions are even worse than a year ago and home prices and mortgage rates are on an uphill climb,” says Yun. “These factors are giving many renter households a pause about it being a good time to buy, even as their job prospects improve and wages grow. Unless there’s a significant boost in supply levels this spring, these constraints will unfortunately slow or delay some prospective buyers’ pursuit of purchasing a home.”

Source: “2017 Q1 HOME Survey,” National Association of REALTORS® (March 2017)

7 Steps to Take Before You Buy a Home

By: G. M. Filisko

By doing your homework before you buy, you’ll feel more content about your new home.

Most potential home buyers are a smidge daunted by the fact that they’re about to agree to a hefty mortgage that they’ll be paying for the next few decades. The best way to relieve that anxiety is to be confident you’re purchasing the best home at a price you can afford with the most favorable financing. These seven steps will help you make smart decisions about your biggest purchase.

1. Decide How Much Home You Can Afford

Generally, you can afford a home priced two to three times your gross income. Remember to consider costs every homeowner must cover: property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care if you plan to have children.

2. Develop Your Home Wish List

Be honest about which features you must have and which you’d like to have. Handicap accessibility for an aging parent or special needs child is a must. Granite countertops and stainless steel appliances are in the bonus category. Come up with your top five must-haves and top five wants to help you focus your search and make a logical, rather than emotional, choice when home shopping.

3. Select Where You Want to Live

Make a list of your top five community priorities, such as commute time, schools, and recreational facilities. Ask a REALTOR® to help you identify three to four target neighborhoods based on your priorities.

4. Start Saving

Have you saved enough money to qualify for a mortgage and cover your down payment? Ideally, you should have 20% of the purchase price set aside for a down payment, but some lenders allow as little as 5% down. A small down payment preserves your savings for emergencies.

However, the lower your down payment, the higher the loan amount you’ll need to qualify for, and if you still qualify, the higher your monthly payment. Your down payment size can also influence your interest rate and the type of loan you can get.

Finally, if your down payment is less than 20%, you’ll be required to purchase private mortgage insurance. Depending on the size of your loan, PMI can add hundreds to your monthly payment. Check with your state and local government for mortgage and down payment assistance programs for first-time buyers.

5. Ask About All the Costs Before You Sign

A down payment is just one home buying cost. A REALTOR® can tell you what other costs buyers commonly pay in your area — including home inspections, attorneys’ fees, and transfer fees of 2% to 7% of the home price. Tally up the extras you’ll also want to buy after you move-in, such as window coverings and patio furniture for your new yard.

6. Get Your Credit in Order

A credit report details your borrowing history, including any late payments and bad debts, and typically includes a credit score. Lenders lean heavily on your credit report and credit score in determining whether, how much, and at what interest rate to lend for a home. The minimum credit score you can have to qualify for a loan depends on many factors, including the size of your down payment. Talk to a REALTOR® or lender about your particular circumstance.

You’re entitled to free copies of your credit reports annually from the major credit bureaus: Equifax, Experian, and TransUnion. Order and then pore over them to ensure the information is accurate, and try to correct any errors before you buy. If your credit score isn’t up to snuff, the easiest ways to improve it are to pay every bill on time and pay down high credit card debt.

7. Get Prequalified

Meet with a lender to get a prequalification letter that says how much house you’re qualified to buy. Start gathering the paperwork your lender says it needs. Most want to see W-2 forms verifying your employment and income, copies of pay stubs, and two to four months of banking statements.

If you’re self-employed, you’ll need your current profit and loss statement, a current balance sheet, and personal and business income tax returns for the previous two years.

Consider your financing options. The longer the loan, the smaller your monthly payment. Fixed-rate mortgages offer payment certainty; an adjustable-rate mortgage (ARM) offers a lower monthly payment. However, an adjustable-rate mortgage may adjust dramatically. Be sure to calculate your affordability at both the lowest and highest possible ARM rate.

Related:

  • 4 Tips to Determine How Much Mortgage You Can Afford
  • How to Assess the Real Cost of a Fixer-Upper House

Help Clients Cozy Up Their Space

Home owners don’t need to take on a major overhaul to make their homes feel warmer this winter. Design Sponge blogger Grace Bonney says adding soft fabrics, warm lighting, and textures can help. Imagine how potential buyers will feel as they step in from the cold.

Add floor lighting. Keep lamps low and glowing during the winter months to help a space feel cozier and warmer.

Use throws. Try a throw or blanket draped along the sofa, chair, or on the edge of a bed.

Add texture. You can add texture with blankets and throws or even on the walls. Plaster finishes or exposed lathe can add warmth to a space.

Try upholstery. Tufted headboards and cozy upholstered benches can add color and patterns to warm up the room.

Get more pointers on how to use pillows in staging from our Styled, Staged & Sold blog.

Layer pillows. Add more pillows to couches and beds. Try to mix in pillows with soft textures too, like cable knitting or faux fur.

Add curtains and bedskirts. Bonney notes that voluminous curtains and bedskirts can make a space feel warmer. Use soft, natural fabrics like linen or even velvet to cozy up a space.

Source: “10 Ways to Make Any Room Feel Cozier,” Design Sponge (Feb. 10, 2017)