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The Louisville Real Estate Blog

Buying a Home

Put Your Housing Cost To Work For You!

Put Your Housing Cost To Work For You! | Simplifying The Market

Put Your Housing Cost To Work For You!

Home Is Where The Heart Is

Home Is Where The Heart Is | Simplifying The Market

Home Is Where The Heart Is

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Yesterday, we discussed the reasons why homeownership makes sense, financially. Today we wanted to touch on the emotional or ‘real’ reasons that many Americans strive to become homeowners. ...

One More Time, Real Estate is a Great Investment

One More Time, Real Estate is a Great Investment | Simplifying The Market

One More Time, Real Estate is a Great Investment

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In a recent blog post on Marginal Revolution, economist Alex Tabarrok discussed homeownership as an...

Thinking of Buying A Home? What Are You Waiting For?

Thinking of Buying A Home? What Are You Waiting For? | Simplifying The Market

Thinking of Buying A Home? What Are You Waiting For?

How To Create Real Family Wealth [INFOGRAPHIC]

How To Create Real Family Wealth [INFOGRAPHIC]

How To Create Real Family Wealth | Simplifying The Market

Some Highlights:...

Homeownership Finally Makes Political Debate

Homeownership Finally Makes Political Debate | Simplifying The Market

Homeownership Finally Makes Political Debate

This is not a political post!

Finally, the issue of homeownership has become a platform talking point in this year’s presidential debate. Yesterday, one of the candidates running for President spoke out about the importance of homeownership in America.

Hillary Clinton ...

Harvard: Why Owning A Home Makes Sense Financially

Harvard: Why Owning A Home Makes Sense Financially | Simplifying The Market

Harvard: Why Owning A Home Makes Sense Financially

We have reported many times that the American Dream of homeownership is alive and well. The ...

Buying A Home? Do You Know The Difference Between Cost & Price?

Buying A Home? Do You Know The Difference Between Cost & Price? | Keeping Current Matters

As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As a buyer, you must be concerned not about price but instead about the ‘long term cost’ of the home.

The Mortgage Bankers Association (MBA), the National Association of RealtorsFannie Mae and Freddie Mac all projected that mortgage interest rates will increase by about three-quarters of a percentage point over the next twelve months.

According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 5.2% over the next 12 months.

What Does This Mean as a Buyer?

Here is a simple demonstration of what impact an interest rate increase would have on the mortgage payment of a home selling for approximately $250,000 today if home prices appreciate by the 5.2% predicted by CoreLogic over the next twelve months:

Cost of Waiting | Keeping Current Matters

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Homeownership Builds Wealth and Offers Stability

Homeownership Builds Wealth and Offers Stability | Simplifying The Market

Homeownership Builds Wealth and Offers Stability

Why You Should Hire A Professional When Buying A Home!

Why You Should Hire A Professional When Buying A Home! | Keeping Current Matters

Many people wonder whether they should hire a real estate professional to assist them in buying their dream home or if they should first try to go it on their own. In today’s market: you need an experienced professional!

You Need an Expert Guide if you are Traveling a Dangerous Path

The field of real estate is loaded with land mines. You need a true expert to guide you through the dangerous pitfalls that currently exist. Finding a home that is priced appropriately and ready for you to move in to can be tricky. An agent listens to your wants and needs, and can sift out the homes that do not fit within the parameters of your “dream home”.

A great agent will also have relationships with mortgage professionals and other experts that you will need in securing your dream home.

You Need a Skilled Negotiator

In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step of the way – from the original offer, to the possible renegotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.

Realize that when an agent is negotiating their commission with you, they are negotiating their own salary; the salary that keeps a roof over their family’s head; the salary that puts food on their family’s table. If they are quick to take less when negotiating for themselves and their families, what makes you think they will not act the same way when negotiating for you and your family?

If they were Clark Kent when negotiating with you,...

2016: Homeowner’s Net Worth Will Be 45x Greater Than a Renter

2016: Homeowner’s Net Worth Will Be 45x Greater Than a Renter | Keeping Current Matters

Every three years the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a recent Forbes article the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that in 2016 the net worth gap will widen even further to 45 times greater.

The graph below demonstrates the results of the last two Federal Reserve studies and Yun’s prediction:

Increasing Gap in Family Wealth | Keeping Current Matters

Put Your Housing Cost to Work For You

Simply put, homeownership is a form of ‘forced savings’. Every time you pay your mortgage...

Buying A Home Can Be SCARY… Until You Know The FACTS! [INFOGRAPHIC]

Buying A Home Can Be Scary... Until You Know the FACTS! [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • 36% of Americans think they need a 20% down payment to buy a home. 44% of Millennials who purchased a home this year have put down less than 10%.
  • 71% of loan applications were approved last month
  • The average credit score of approved loans was 723 in September (the lowest recorded score since Ellie Mae began tracking in August 2011).
...

Applying For A Mortgage: Why So Much Paperwork?

Applying For A Mortgage: Why So Much Paperwork? | Keeping Current Matters

We are often asked why there is so much paperwork mandated by the bank for a mortgage loan application when buying a home today. It seems that the bank needs to know everything about us and requires three separate sources to validate each and every entry on the application form.

Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.

There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.

  1. The government has set new guidelines that now demand that the bank prove beyond any doubt that you are indeed capable of affording the mortgage. During the run-up in the housing market, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again
  2. The banks don’t want to be in the real estate business. Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.

However, there is some good news in the situation. The housing crash that mandated that banks be extremely strict on paperwork requirements also allowed you to get a mortgage interest rate probably at or below 4%.

The friends and family who bought homes ten or twenty ago experienced a simpler mortgage application process...

Buying a Home Remains 35% Less Expensive than Renting!

Buying a Home Remains 35% Less Expensive than Renting! | Keeping Current Matters

In the latest Rent vs. Buy Report from Trulia, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage throughout the 100 largest metro areas in the United States.

The updated numbers actually show that the range is from an average of 16% in Honolulu (HI), all the way to 55% in Sarasota (FL), and 35% Nationwide!

The other interesting findings in the report include:

  • Interest rates have remained low and even though home prices have appreciated around the country, they haven’t greatly outpaced rental appreciation. “In the past year, these two trends have made homeownership even more affordable compared with renting.”
  • Some markets might tip in favor of renting if home prices increase at a greater rate than rents and if – as most economists expect – mortgage rates rise, due to the strengthening economy.
  • Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989.  

Bottom Line

Buying a home makes sense socially and financially. Rents are predicted to increase ...

Do You Really Think Your Landlord Pays for Repairs?

Do You Really Think Your Landlord Pays for Repairs? | Keeping Current Matters

A recent article that appeared on Nasdaq.com addressed the issue of whether it is best to buy or rent in today’s real estate environment. The article was very fair in discussing both options.

However, there was one portion of the article that we questioned. One of the experts was quoted as saying:

“For some people, the choice is very clear: Buying a home can be more costly, given the cost of the purchase itself, plus taxes and insurance, plus maintenance and repairs.”

This argument is often made in defense of renting. However, we don’t believe it makes logical sense. They claim that, as a renter, you won’t have the expenses of “taxes and insurance, plus maintenance and repairs”. Do they really believe that the landlord pays all those expenses for their tenants?

The vast majority of landlords own rentable real estate as a form of investment. As any other investor would, they expect to make a return on that investment (ROI) - otherwise known as profit. In order to make a profit, the landlord needs to include EVERY expense they incur into the rent…AND THEN ADD A PROFIT MARGIN!!

We think it is incorrect to advise a prospective renter that they won’t have the same expenses that a homeowner would have. They just pay those expenses to a landlord with a “premium” built in.

...

4 Reasons to Buy BEFORE Winter Hits

4 Reasons to Buy BEFORE Winter Hits | Keeping Current Matters

It's that time of year; the seasons are changing and with them bring thoughts of the upcoming holidays, family get-togethers, and planning for a new year. Those who are on the fence about whether now is the right time to buy don't have to look much farther to find four great reasons to consider buying a home now, instead of waiting.

1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report released recently projects appreciation in home values over the next five years to be between 10.5% (most pessimistic) and 25.5% (most optimistic).

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise later this year. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of next year.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You are Paying a Mortgage

As a recent paper from the Joint Center for Housing Studies at Harvard University explains:

“Households...

New Home Sales Surge By 5.7%! [INFOGRAPHIC]

New Home Sales Surge By 5.7%! [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • The median price of a newly constructed home is currently $292,700.
  • Sales are up 5.7% month-over-month and 21.6% year-over-year.
  • Many buyers are looking to new homes as an option due to the lack of inventory of existing homes for sale.
...

Don’t Wait To Buy Your Dream Home

Don’t Wait to Buy Your Dream Home | Keeping Current Matters

As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first-time or repeat buyer, you must not be concerned only about price but also about the ‘long term cost’ of the home.

Let us explain.

There are many factors that influence the ‘cost’ of a home. Two of the major ones are the home’s appreciation over time, and the interest rate at which a buyer can borrow the funds necessary to purchase their home. The rate at which these two factors can change is often referred to as “The Cost of Waiting”.

What will happen over the next 12 months?

According to CoreLogic’s latest Home Price Index, prices are expected to rise by 4.7% by this time next year.

Additionally, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30-year fixed mortgage rate will appreciate to 4.7% in that same time.

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact these projected changes would have on the mortgage...

Buying A Home Is Better Way to Produce Wealth Than Renting

Buying A Home Is Better Way to Produce Wealth Than Renting | Keeping Current Matters

According to the latest Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index homeownership is a better way to produce greater wealth, on average, than renting.

The BH&J Index is a quarterly report that attempts to answer the question:

Is it better to rent or buy a home in today’s housing market?

The index examines that entire US housing market and then isolates 23 major markets for comparison. The researchers at use a “’horse race’ comparison between an individual that is buying a home and an individual that rents a similar quality home and reinvests all monies otherwise invested in homeownership.”

Ken Johnson, Real Estate Economist & Professor at Florida Atlantic University, and one of the index’s authors states: "The U.S. as a whole is still in clear buy territory. The cities of Cincinnati, Chicago, Cleveland, and New York City are deep into buy territory."

Miami and Portland had been inching closer toward renting being the better option but have "pulled back from the edge." Johnson goes on to say, “that's a good sign for home pricing as it suggests prices are going to level off in these metro areas."

Bottom Line

Buying a home makes sense socially and financially. Rents are predicted to increase substantially in the next year, so lock in your housing cost with a mortgage payment now.

...

Credit Score Requirements LOWER As Interest Rates CREEP UP! [INFOGRAPHIC]

Credit Score Requirements LOWER As Interest Rates CREEP UP! [INFOGRAPHIC] | Keeping Current Matters

Some Highlights:

  • The average 30-year rate for all loans closed in August eclipsed 4.3% for the first time since October 2014.
  • The average FICO score for all closed loans in August reached a new yearly low at 724 (the lowest since February 2014!)
  • The average down payment of FHA loans closed was just 4%!
...