Have a great weekend!
Have a great weekend!
Many of us are guilty of plopping on the sofa and binge-watching reality TV home flipping shows. The allure of buying and selling homes for big profits with no boss looking over our shoulders has major lifestyle appeal.
Shows like “Love it or List it,” “House Hunters,” “Flip or Flop” and others make it look incredibly simple. Even when they face adversity such as rotted wood or bad pipes, the way the reality TV stars overcome adversity is more of an inspiration than a deterrent. And plenty of everyday people do manage to succeed in the house-flipping industry.
But many of the myths these ratings-driven shows perpetuate could use a little busting.
Consider these four common house-flipping myths and the true facts behind them.
1: Three Viewings And A Closing
Reality TV shows tend to show viewers the industry professional looking at no more than three homes before making a flipping decision. That may play into the limited time slot they have but it’s far removed from reality.
True Facts: It’s not uncommon for potential home buyers to fall head over heels for the first property they view. After all, buyers often already like the neighborhood, school system, and home style. But the National Association of Realtors reports that the average person looks at about 10 properties before making a decision. Home flippers are additionally tasked with developing a return on investment plan. Three and done is not reality, it’s just TV.
2: Homes Linger On The Market
TV shows follow home flippers who seem to have all the time in the world before making an offer.
True Facts: Most of the purchase and sale process is simply staged for television. The homes have been pre-purchased before filming. Today, we are experiencing a seller’s market, meaning there are more buyers than inventory. Homes move quickly.
3: Open Houses Are A Sure Thing
On real estate reality TV shows, the fully renovated home is amazingly staged and sells during the first open house. Multiple offers are often floated.
True Facts: Only in a perfect world or on TV does this happen. Matching properties with potential buyers requires hard work from real estate agents. They must align purchase limits, pre-approved house shoppers, family size, school systems, location, and other expectations. Most homes are sold by real estate professionals setting up appointments and making multiple showings.
4: Homeowners Make Fast-Sell Decisions
On real estate reality TV, homeowners seem to take just moments to decide whether to love it or list it. This certainly doesn’t mirror the process of ordinary homeowners.
True Facts: Homeowners sell their properties for a wide range of reasons. These may include downsizing, retirement, relocation or an expanding family among many considerations. The vast majority of people mulling over a sale also take a long look at their next home options. It’s completely unrealistic to think someone made such a major life decision in five minutes or less.
Reality real estate TV shows are wonderfully entertaining to watch. So is science fiction. Enjoy your binge-watching and speak to real-life mortgage and real estate professionals before making any major decisions.
Last week’s economic reports included readings on construction spending and labor reports on public and private-sector job growth. The national unemployment rate was released along with weekly reports on mortgage rates and weekly jobless claims.
Construction Spending dips in September, but Residential Construction Spending Rises
Construction spending rose 0.10 percent in September, but residential construction spending fell 0.70 percent month-to-month. Construction spending was 4.10 percent higher year-over-year. January through August construction spending was 5.30 percent higher than for the same period in 2017.
Analysts estimated a shortage of approximately four million homes; which accentuates demand and drives prices up. In recent years, builders have concentrated on higher-end homes, but analysts said that a shift to building super-affordable homes may be in the works. High home prices and ever-increasing rents are squeezing moderate-income families; providing more affordable housing options could lessen demand and help home price growth to normalize.
Mortgage Rates Little Changed, New Jobless Claims Lower
Freddie Mac reported little change in mortgage rates; 30-year fixed rate mortgages averaged one basis point lower at 4.71 percent. The average rate for a 15-year fixed rate mortgage was also one basis point lower at 4.15 percent. Rates for 5/1 adjustable rate mortgages averaged 4.01 percent and were four basis points higher. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.
First-time jobless claims fell last week to 207,000 new claims filed as compared to expectations of 213,000 new claims filed and the prior week’s reading of 214,000 claims filed. Analysts said that fewer claims were filed as the impact of Hurricane Florence diminished.
Labor Reports: Job Growth Mixed as Unemployment Rate Nears 49 Year Low
Commerce Department readings on public and private-sector job growth showed more private sector jobs, while the government reading for public and private sector jobs dropped/ ADP reported 230,000 more private-sector jobs in September; the government’s Non-Farm Payrolls report showed 134,000 new public and private sector jobs as compared to 270,000 new jobs in the prior month. Analysts expected 168,000 new public ad private sector jobs and said that the shortfall in job growth for September was a consequence of Hurricane Florence.
The National Unemployment Rate fell to 3.70 percent in September, which was the lowest reading in nearly 49 years.
This week’s scheduled economic releases include readings on inflation, core inflation and consumer sentiment. Weekly readings on mortgage rates and new jobless claims will also be released.
The average homeowner feels secure knowing they have insurance in the event of a severe weather calamity. Most people believe that no matter what happens, they have paid for protection against disaster.
Unfortunately, not every homeowners insurance policy provides full reimbursement from severe weather losses. Hurricanes, tornados, earthquakes and other rare catastrophes may not be covered under your current policy.
Consider the impact of these extreme events and whether you are fully insured for the subsequent losses.
1: Hurricane Damage May Not Be Fully Covered
The recent national mobilization to deal with the fallout from Hurricane Florence highlights just how catastrophic severe weather can be to people and property. That being said, homeowners generally anticipate calling their insurance carrier to file a claim after returning home and assessing the damage.
It may come as a surprise, but many policies limit reimbursement to damage attributed to high winds. For example, a tree falls on a garage or vehicle and the insurance outfit writes a check.
But damage attributed to water can be tricky. Many policies do not cover flood insurance. That could mean that water backed up in the street or a stream, lake or pond overflowing into your home might not be covered. That’s why homeowners are advised to clarify water-related coverage.
2: Floods May Not Be Covered
People living near bodies of water may be required to carry flood insurance when applying for a mortgage. Flooding represents a high risk that can result in a total loss. Lenders are often apprehensive about approving mortgages for properties in so-called “floodplains.”
FEMA offers coverage through the National Flood Insurance Program. Homeowners living just outside a flood zone may not be required to buy additional coverage. However, you are taking a significant risk.
If your policy does not cover flooding, you could be on the hook for the full cost of the home’s repair or replacement. Considering the average flood insurance policy runs about $700, it may be worth the expense to protect your investment.
3: Tornado Insurance Coverage Can Be Murky
Although most policies cover damage from tornados, premiums can run higher in regions prone to these severe weather storms. But, like hurricanes, tornados that additionally bring about flooding can pose a problem for homeowners who make a claim. A carrier may conclude that the high wind and impact damage enjoys coverage. Water, however, can be a very gray area.
4: Earthquakes Often Not Covered
Like people who live in flood plains, earthquake riders may be required in certain areas of the country. Without additional coverage, the destruction caused by these catastrophic events may not be reimbursed. It’s imperative that people living in or around regions prone to earthquakes carry specific coverage. Imagine losing your home and still owing a monthly mortgage payment.
The important thing to glean from this overview about severe weather claims is that homeowners are wise to dig deep into their policies and have a clear, concise understanding about coverage. Keep in mind that water damage from flooding, rain and even sewer back-ups pose a significant threat to your home. For a few dollars more, enhanced severe weather insurance may be worth every penny.
Homeowner’s insurance is a requirement for most home loans. It’s important to note that some properties at high risk may not qualify for financing or you may find that insurance for high risk properties adds too much to your bottom line. Consult your trusted home mortgage professional to find out what specific insurance is necessary to finance your new home.
You probably already know that qualifying for a mortgage can be the biggest hurdle — aside from actually finding that dream property — along the path to home ownership.
Rather than agonizing about it, however, there are some positive actions you can take in advance to help you realize your dream.
Take A Close Look At Your Budget
If you don’t currently operate with a comprehensive household budget, get started now to analyze your income and monitor your spending habits. There’s no better way to prepare for home ownership than by being realistic about how you spend your money. If you don’t have a regular savings program, or if you’re constantly short on cash prior to the next payday, take steps to remedy the problem. Plan for the future by getting the present in check.
Gather Employment And Earnings Records
Mortgage lenders want to see stability and commitment. Finding and organize your employment records to show a consistent earnings pattern and, hopefully, a record of growth, both in terms of income and responsibility. Simplify the task of gathering required documents by collecting all records in a binder or notebook that can easily be copies when it’s time to submit them to a lender. It’s a confidence-building step as well.
Organize Your Banking Records
Lenders will not only want to see employment records, but they will require copies of all bank and investment accounts as well. Again, by being organized and getting a handle on your dollar inflow and outflow, you’ll gain insights into your individual spending habits and make the job easier for a mortgage specialist.
Make Copies Of Your Tax Returns
Tax returns confirm and validate all the other financial information that you will be required to supply. Typically, returns for the past two or three years will be required. If you own a small business or have income in addition to that from paid employment, make copies of those records as well.
Put A Halt To Spending
Perhaps the best way to demonstrate your serious intent to purchase — and pay for — a new home is by curtailing your spending on impulse purchases and expensive entertainment. This is not the time to buy a new car, book an exotic vacation, purchase major electronics or even home furnishings, or commit to time payments of any sort. Frugality should become your mantra in the months leading up to loan qualification.
Monitor Your Credit Cards
If your credit rating is within acceptable limits, do what you can to make all payments on time, pay down balances, minimize new purchases and demonstrate your continuing ability to “live within your means.” Do not apply for new credit cards, no matter how tempting the offers, because increased account activity can adversely affect your FICO score. In addition, if you have a blip on your credit report, do what you can to repair it prior to making a mortgage loan application, or be prepared to explain the circumstances, in detail and in writing.
Applying for a loan need not be scary; understanding the financial reality, however, is a great benefit.
Contact your trusted home mortgage professional who will be able to assist you in organizing your documents and aligning you with your best financing options.
Home price growth slowed to its lowest pace in nearly a year according to the Case-Shiller Home Price Indices. National home price growth averaged 6.00 percent year-over-year as compared to 6.20 percent growth in June.
The 20-city home price index rose 0.10 percent in July to a seasonally adjusted rate of 5.90 percent year-over-year. Slowing home price growth was attributed to buyer fatigue and rising inventories of available homes.
Las Vegas Home Price Growth Tops 20-City Home Price Index
Las Vegas, Nevada topped the 20-City Home Price index with a year-over-year home price growth rate of 13.70 percent. Las Vegas home prices crashed during the recession but continued to recover as the economy improved.Seattle, Washington home prices rose 12.70 percent year-over-year in July; San Francisco, California held third place in the 20-city Home Price Index with year-over-year home price growth of 10.80 percent. Five cities posted higher home price growth rates than in June.
Freddie Mac Predicts Further Slowing In Home Price Growth For 2018 And 2019
Prior to the release of July’s Case-Shiller data, Freddie Mac analysts said that home buyer budget limitations coupled with more homes for sale caused home price growth to slow. Freddie Mac projected home price growth of 5.50 percent for 2018 and 4.50 percent growth in 2019.
FHFA, the agency that oversees Fannie Mae and Freddie Mac, released its home price index for July and reported lower home price growth in July. After posting steady year-over-year growth rates of 6.80 percent for April, May and June, July home price growth dipped to 6.40 percent. Data in home price data reported by FHFA includes homes connected with mortgages held or guaranteed by Fannie Mae And Freddie Mac.
While slower growth in home prices are good news for potential home buyers, rising mortgage rates, strict mortgage credit requirements and competition with cash buyers continue to create headwinds for home buyers who depend on mortgage financing to fund their home purchases.
If you are in the market for a new property or interested in refinancing your current property, be sure to contact your trusted mortgage professional who can assist you with custom financing options to meet your specific needs.