Don’t Forget to Budget for Closing Costs

When buying a home, it’s important to have a budget and make sure you plan ahead for certain homebuying expenses. Saving for a down payment is the main cost that comes to mind for many, but budgeting for the closing costs required to get a mortgage is just as important.

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 example, for someone buying a $300,000 home, they could potentially have between $6,000 and $15,000 in closing fees. If you’re in the market for a home above this price range, your closing costs could be greater. As mentioned above, closing costs are typically between 2% and 5% of your purchase price.

Trulia gives more great advice, explaining:

“There will be lots of paperwork in front of you on closing day, and not enough time to read them all. Work closely with your real estate agent, lender, and attorney, if you have one, to get all the documents you need ahead of time.

The most important thing to read is the closing disclosure, which shows your loan terms, final closing costs, and any outstanding fees. You’ll get this form about three days before closing since, once you (the borrower) sign it, there’s a three-day waiting period before you can sign the mortgage loan docs. If you have any questions about the numbers or what any of the mortgage terms mean, this is the time to ask—your real estate agent is a great resource for getting you all the answers you need.”

Bottom Line

As home prices are rising and more buyers are finding themselves competing in bidding wars, it’s more important than ever to make sure your plan includes budgeting for closing costs. Let’s connect to be sure you have everything you need to land your dream home.

« When It Comes To Selling a House, Your Time Is Money [INFOGRAPHIC]

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

When It Comes To Selling a House, Your Time Is Money

When It Comes To Selling a House, Your Time Is Money [INFOGRAPHIC]

Friday May 14th, 2021 For Sellers, FSBOs, Infographics, Selling Myths

Some Highlights

Selling a house is no small task. If you decide to try to do it on your own, keep in mind you’ll be responsible for all the expert-level work of a real estate professional.
The vital tasks an agent manages for you include listing and marketing your house, handling legal documentation, negotiating with all parties, and navigating local laws and regulations.
If you’re ready to sell while the market is in your favor, let’s connect to make sure you have the professional expertise you need every step of the way.

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Experts Say Home Prices Will Continue to Appreciate

Tuesday May 11th, 2021 For Buyers, For Sellers, Housing Market Updates, Pricing

It’s clear that consumers are concerned about how quickly home values are rising. Many people fear the speed of appreciation may lead to a crash in prices later this year. In fact, Google reports that the search for “When is the housing market going to crash?” has actually spiked 2450% over the past month.

In addition, Jim Dalrymple II of Inman News notes:

“One of the most noteworthy things that came up in Inman’s conversations with agents was that every single one said they’ve had conversations with clients about whether or not the market is heading into a bubble.”

To alleviate some of these concerns, let’s look at what several financial analysts are saying about the current residential real estate market. Within the last thirty days, four of the major financial services giants came to the same conclusion: the housing market is strong, and price appreciation will continue. Here are their statements on the issue:

Goldman Sachs’ Research Note on Housing:

“Strong demand for housing looks sustainable. Even before the pandemic, demographic tailwinds and historically-low mortgage rates had pushed demand to high levels. … consumer surveys indicate that household buying intentions are now the highest in 20 years. … As a result, the model projects double-digit price gains both this year and next.”

Joe Seydl, Senior Markets Economist, J.P.Morgan:

“Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”

Morgan Stanley, Thoughts on the Market Podcast:

“Unlike 15 years ago, the euphoria in today’s home prices comes down to the simple logic of supply and demand. And we at Morgan Stanley conclude that this time the sector is on a sustainably, sturdy foundation . . . . This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course.”

Merrill Lynch’s Capital Market Outlook:

“There are reasons to believe that this is likely to be an unusually long and strong housing expansion. Demand is very strong because the biggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle. Coronavirus-related preference changes have also sharply boosted home buying demand. At the same time, supply is unusually tight, with available homes for sale at record-low levels. Double-digit price gains are rationing the supply.”

Bottom Line

If you’re concerned about making the decision to buy or sell right now, let’s connect to discuss what’s happening in our local market.

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3 Graphs Showing Why You Should Sell Your House Now

Monday May 10th, 2021 For Sellers, Housing Market Updates, Move-Up Buyers, Selling Myths

There’s no doubt that 2021 is the year of the seller when it comes to the housing market. If you’re a homeowner thinking of moving to better suit your changing needs, now is the perfect time to do so. Low mortgage rates are in your favor when you’re ready to purchase your dream home, and high buyer demand may give you the leverage you need to negotiate the best contract terms on the sale of your house. Here’s a look at what’s driving this sellers’ advantage and why there’s so much opportunity for homeowners who are ready to move this season.

1. Historically Low Inventory

The National Association of Realtors (NAR) explains:

“Total housing inventory at the end of March amounted to 1.07 million units, up 3.9% from February’s inventory . . . Unsold inventory sits at a 2.1-month supply at the current sales pace, marginally up from February’s 2.0-month supply and down from the 3.3-month supply recorded in March 2020.”

Even with a slight rise in the number of houses for sale this spring, inventory remains near an all-time low (See graph below):High buyer interest is creating a major imbalance between supply and demand, but as the small uptick in inventory shows, sellers are beginning to reenter the market. Selling your house now enables you to take advantage of buyer demand and get the most attention for your house – before more listings come to the market later this year.

2. Frequent Bidding Wars

As a result of the supply and demand imbalance, homebuyers are entering bidding wars at an accelerating rate. NAR reports the average number of bids received on the most recently closed sales is 4.8 offers. This number has doubled since the first quarter of 2020 (See graph below):As buyers face increasingly tough competition while searching for homes to purchase, they’re more likely to be flexible and generous in their negotiations. This gives a seller the opportunity to choose the best buyer for their needs and be selective about things like time to close, contingencies, renovations, and more. Working with your trusted agent is the best way to determine how to navigate the negotiation process when selling your house.

3. Days on the Market

In today’s market, sellers aren’t waiting very long to find a buyer for their house, either. NAR reports:

“Properties typically remained on the market for 18 days in March, down from 20 days in February and from 29 days in March 2020. 83% of the homes sold in March 2021 were on the market for less than a month.” (See graph below):

NAR Chief Economist Lawrence Yun explains:

“The sales for March would have been measurably higher, had there been more inventory…Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.”

Bottom Line

If you’re thinking about moving, these three graphs clearly show that it’s a great time to sell your house. Let’s connect today so you can learn more about the opportunities in our local area.

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How Your Credit Score Affects Your Mortgage Rates

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Today’s Mortgage Interest Rates: May 6, 2021—Rate Drops Continue

Natalie Campisi

Forbes Advisor Staff

Updated: May 6, 2021, 2:33pm

Editorial Note: Forbes may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations.

Today’s Mortgage Interest Rates: May 6, 2021—Rate Drops Continue

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The cost of getting a loan seems to be the one inexpensive attraction in today’s hot housing market as mortgage rates remain below 3% for the third week in a row. The average rate on a 30-year, fixed-rate mortgage stumbled two basis points to 2.96%, giving borrowers another shot at a sub-3% loan.

As this year moves onward into the most active time for real estate (spring and summer), the gridlock of low inventory, rising prices and high demand is expected to loosen, making it a slightly better time for homebuyers.

That’s partly because new sellers are emerging, with 18% more new homes for sales listed the first week in May compared to the same time last year. This is much-needed relief in a market facing a tremendous shortage of some 4 million homes.

Plus, more houses might be coming online soon, according to a recent survey of almost 4,000 people by Realtor.com. The data showed that 10% of respondents plan on selling this year, while 16% said they are going to sell in the next two to three years.

Along with more supply, the supersonic rise of home prices has slowed—the weekly median listing price rose 15.4% year-over-year compared to 17.2% in mid-April.

More Remote Workers Plan to Move Next Year

Ultra-low mortgage rates have been a driving force in the hot housing market, but an increase in work-from-home capabilities are not too far from the spotlight.

The pandemic has provided many workers with the opportunity to work remotely, which means they’re no longer tied to the area where their job is based. And 42% of remote workers say they intend to move in the coming year, according to a recent survey by Apartment List.

Even more compelling: 35% of work-from-home adults plan to move to a more affordable area, over twice the rate of on-site workers.

Although higher prices triggered by low inventory can scare buyers into going over their budget (perception of scarcity raises the value), many real estate experts urge buyers to avoid stretching their dollars.

“You should always stay within your budget unless you expect an imminent change to your financial situation,” says Kevin Parker, vice president of Field Mortgage at Navy Federal Credit Union.

A Flourish chart

30-year Fixed-rate Mortgages

The average rate for the benchmark 30-year fixed mortgage fell 2 basis points to 2.96%, according to Freddie Mac’s Primary Mortgage Market Survey. This time last year, the 30-year fixed was 3.26%.

Borrowers with a 30-year fixed-rate mortgage of $350,000 with today’s interest rate of 2.96% would pay $1,468.07 per month in principal and interest (taxes and fees not included), the Forbes Advisor mortgage calculator shows. The total interest paid over the life of the loan would be $178,506.75.

That same mortgage taken out a year ago would cost an additional $20,544.98 in interest over the life of the loan.

15-year Fixed-rate Mortgages

The average interest rate on the 15-year fixed mortgage stepped down 1 basis point this week to 2.3%. This time last year, the 15-year fixed-rate mortgage was at 2.73%.

Borrowers with a 15-year fixed-rate mortgage of $350,000 with today’s interest rate of 2.3% would pay $2,300.95 per month in principal and interest (taxes and fees not included). The total interest paid over the life of the loan would be $64,171.70.

5/1 ARMs

The average rate on a 5/1 adjustable-rate mortgage rose 6 basis points to 2.7%. Last year, the 5/1 ARM was 3.17%.

ARM are home loans that have an interest rate that fluctuates with the market. In the case of 5/1 ARMs, the first five years have a fixed rate and then switch to a variable rate after that. That means when the average rate rises or falls, so will your rate.

Traditionally, ARMs have lower interest rates than fixed-rate options, making them an attractive choice for borrowers who plan to sell before the fixed period expires.

What Low Rates Mean for Borrowers

Mortgage rates are at record lows, so this could be an opportune time for many folks who want to save money on a new home loan or refinance their existing mortgage.

Borrowers who want to get the lowest rate should make sure they have a credit score of at least 760. Lenders reserve their ultra-low rates for those with a strong credit profile, as this is a major indicator that borrowers are at low risk for late payments or default. In fact, borrowers with lower credit scores can be charged one percentage point or more than borrowers with very good or excellent scores.

Before you apply for a mortgage, check your credit score. Many banks and credit cards allow you to do this for free. One way you can improve your score relatively quickly is to pay down debt. You also can request credit for paying monthly bills on time, such as your internet or utility bills.

In addition to your credit score, lenders will look at your debt-to-income ratio, or DTI. This is your total monthly debt divided by your gross monthly income. It’s basically a snapshot of how much you owe versus how much you earn. The lower your DTI, the better chances you have of getting a lower interest rate. Most lenders require a minimum DTI of 43% just to qualify for a mortgage or refinance.

Finally, studies have shown that people who shop around tend to get lower rates than those who get a mortgage from the first lender they talk to. Know what the current average interest rate is as well as what your credit score, income, debt and expenses are before you start applying. If lenders offer you a rate that’s higher than you expected, be sure to ask them why so you can begin improving those areas to qualify for a lower rate.

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