If you're a current homeowner, the key to affording your dream home may be in your hand right now. Rising home prices are giving current home owners equity in the home they have now. That equity can be used to purchase your new home. Coupled with low interest rates, you may actually be able to afford MORE of what you want and pay LESS than you are paying now. If you own a home in the price range UNDER $ 200,000 in north Tarrant County areas like Fort Worth north of Interstate 820, Keller, Saginaw, Haslet, Roanoke, Watauga, Hurst, Euless, Bedford or North Richland Hills, the demand for these homes has never been greater. Is it time to think about moving up to your next home?
So you are considering buying!
Congratulations. The decision to buy a home is the first step in building lont-term wealth. Even if you are renting, you are already paying the costs of home ownership. You are paying taxes. You are paying for insurance. You are paying the costs of a loan. It's all built into your rent or lease amount. On top of that, you are paying a "margin" that yields the profit for your landlord's investment. But you are not receiving any long term benefit in terms of individual wealth.
The myths about homebuying
I've heard it countless times: "I want to buy a house, but I don't have the 20% down I need to buy a home!" Needing 20% down is the myth. The most common form of financing for most first-time homebuyers is an FHA loan. These loans require as little as 3.5% down. It makes a BIG difference. If you are shopping for a home that costs $ 200,000 dollars an FHA loan will require a down payment of $7,000. It's true that the traditional, conventional mortgage that was used for centuries in the United States required a 20% down payment. That's $40,000 for the same house, and those loans are still a good deal for someone with the means to afford that down payment. But FHA loans mean you can own a home much sooner and pay LESS each month than you would pay for a similar house for lease.
FHA doesn't' make loans. Lenders (banks and mortgage companies) make the loan following guidelines set forth by FHA. FHA then backs the loan, insuring the lender against possible losses if the borrower defaults on the mortgage. The borrower pays a Morgage Insurance Premium. This is a fee that lets FHA pay the lenders if they have to foreclose and FHA then markets the foreclosed property. The amount of the premium you pay depends on the amount borrowed.
Special First Time Buyers Assistance
There are also programs that will help with closing costs and down payments, if you qualify. Many of the programs have income limits, or restrict where the house is located. Most areas of the state of Texas qualify under the My First Texas Home program. There is also infomation on a tax credit program that will save you money on taxes each year, provided you apply before you clost on a home. Check out the information at https://www.tdhca.state.tx.us/homeownership/fthb/index.htm
Look For Community Based Programs, Too!
One excellent program for first-time buyers of homes with addresses in Fort Wort is the Fort Worth Homeowner's Assitance Program. This program can provide up to $14,999 for down payment and closing costs, if you qualify. You can get information at their website: http://fortworthtexas.gov/neighborhoods/hap/ This program has a feature that can even ELIMINATE any need to pay back the funds, if you reside in the home for just five years!
I've Owned A Home In The Past So I'm Not a First-Time Buyer
If you have not owned a home in the last three years, you may be considered a first-time buyer for many programs! That's right! First-Time buyers MAY have owned a home in the past, but if there is a three-year gap in ownership, you may still qualify as a first-time buyer.
I'll Have Expenses for Taxes and Insurance I've Never Had Before
It's true that you will have these expenses in you name for the first time as a homeowner; but you have been paying them all along. The property owner leasing you the house has built them into your rent. After you purchase the home, you will probably have a mortgage. The mortage company will most likely require you set up an escrow account. This is nothing more than a savings account that accumulates money with each payment you make and pays these items when they are due. You will have to pay your first year's homeowner's insurance at closing. But as long as you make your mortgage payments, the future amounts needed will be included, since you will pay principal, interest and the escrow amount to cover these obligations.
My Friend Tells Me...
Nothing I can think of has cost more people more money than the advice of well meaning friends or relatives. There have been such DRASTIC changes in the home buying landscape in recent years that the information from even the most experienced homeowner may be out of date. The key to a successful buying experience is to put together a team of reliable professionals. You will need people you trust like your REALTOR®, loan office, and title company escrow officer. Your real estate agent can be invaluable in putting together that team and making sure the flow of information gets to the right people on time. I'm not suggesting you ignore the advice of others, but ask the professional in the area involved, if you have a question. But keep one thing in mind. YOU ARE THE BOSS. I work with other pros that have this concept firmly in mind. Our job is to serve the needs of you, the client. It's not just the right way to do business, it's the law.
I Should Put Down As Much As I Possibly Can
It's true that the more money you put down, the lower your future payments will be, but how much to put down is based on much more than that! You have other expenses and obligation. Finding right balance between the outlay now and keeping a reserve that allows you to meet your ongoing and unexpected expenses is important. Talk openly with your lender and REALTOR®.
The cost of borrowing (primarily interest rate) is relative. If you have 50,000, you may be better off only using 15,000 for your total costs down payment and closing and investing the remainin 35,000, If you are paying 4% interest for a mortgage but earning 8% on your 401k, it makes sense to keep your investment growing. You will maintain a cushion, help build future weath both from your retirement acount and your equity in your home at the same time.
Buying a home doesn't have to be stressful, time consuming or frustrating. It's simply a matter of preparing for the purchase and getting the help of professionals who can help make it happen. Did you know that as a Buyer's Agent you REALTOR® is paid from the commission already built into the listing price of the home, if it is listed with an agent? That's right. You are paying for the service of an agent, even if you don't have one. This link describes the role of Brokers and Agents. Texas Real Estate Commission Information About Brokerage Services. I encourage you to take advantage of having an agent that represents YOU in the transaction.
Good luck with your decision to buy a home. If you have any questions, please contact me. I'll be glad to answer them and guide you down the road to home ownership. After all, there's no place like home.
Home is where the heart it. And a high percentage of home ownership makes for stronger communities.
The Impact of Homeownership on Civic Involvement
“Owning a home embodies the promise of individual autonomy and is the aspiration of most American households. Homeownership allows households to accumulate wealth and social status, and is the basis for a number of positive social, economic, family and civic outcomes.”
Today, we want to cover the section of the report that quoted several studies concentrating on the impact homeownership has on the civic participation of family members. Here are some of the major findings on this issue revealed in the report:
- Homeowners have a much greater financial stake in their neighborhoods than renters. With the median national home price in 2015 at $223,900, even a 5% decline in home values will translate into a loss of more than $11,195 for a typical homeowner.
- Because owners tend to remain in their homes longer, they add a degree of stability to their neighborhood.
- Homeowners also reap the financial gains of any appreciation in the value of their home, so they also tend to spend more time and money maintaining their residence, which also contributes to the overall quality of the surrounding community.
- Homeowners were found to be more politically active than renters with 77% of homeowners saying they had at some point voted in local elections compared with 52% of renters.
- There seems to be a greater awareness of the political process among homeowners. About 38% of homeowners knew the name of their local school board representative, compared with only 20% of renters.
- There is a higher incidence of membership in voluntary organizations and church attendance among homeowners.
- Homeownership does create social capital and provide residents with a platform from which to connect and interact with neighbors.
- Owning a home means owning part of a neighborhood, and a homeowner’s feelings of commitment to the home can arouse feelings of commitment to the neighborhood, which, in turn, can produce interactions with neighbors.
People often talk about the financial benefits of homeownership. As we can see, there are also social benefits of owning your own home.
Thursday February 16th, 2017 Related Topics: First Time Home Buyers, For Buyers, Move-Up Buyers
"If you want it done right, do it yourself." We've all heard it a thousand times. But it's not always true. Here are some things you shouldn't do yourself:
- Self Dentisty
- Do-It-Yourself Heart Surgery
- Fashion Critic for Spouse's Wardrobe
- Selling Your Home For Sale By Owner.
And more people discover that last one every year. Even with low inventories, the percentage of homes that are successfully sold as For Sale By Owner (FSBO) has been on a steady decline for the last 25 years. See this chart:
FSBO is not for the faint of heart. There are showings to coordinate. You have to be available when potential buyers can see the home. Can you take off work for the buyer who is from out of town and only avaialble TODAY? Are you prepared to drop everything and show the house in the evening? Do you have a plan for how to screen people who will be visiting your home? Have you consulted an attorney on how to structure the contract and how much he will charge for the service? Ready to spend your weekend listening to strangers detail every flaw of the home trying to get the best price?
I'm always surprised to hear FSBO sellers complain about how buyeres "try to haggle down the price" when their own motivation was to sell it themselves to "save" a commission. But did they?
It's a fact. Homes sold by an agent bring more money TO THE SELLER, even after the commission is paid. While commissions are always negotiable between the agent and seller, 6% is a very common number for total commissions. From that both the buyer's and seller's agents are paid. If we take the chart above, after deducting a 6% commission from the typical $ 245,000 house the after commission amount to the seller is $230,300 compared to the $185,000 for All FSBOs. (I admit I'm ignoring the low figure for deals where the buyer and seller knew each other. Since many of these may be deals between family members, they can tend to fall outside real market values.)
Why is there such a big difference?
- They have wide access to information to set an accurate market price for the home. Pricing the home accurately attracts buyers. Overpriced homes do not.
- REALTORS® have lists of clients looking for homes now and can immediately begin marketing the home to that network.
- You hire EVERY REALTOR IN THE AREA when you list with a REALTOR®. Your agent will work with buyer's agents who have their own clients, increasing the number of qualified buyers who see your home.
- Agents are familiar with a variety of financing options and can guide the buyer through the process.
- They qualify buyers, steering only buyers who have the means and motivation to buy the home.
- They have full-time availability to show the home. They are available to show it when you are not.
- They are experienced in effective showing proceedures.
- Successful agents are effective negotiators.
- REALTORS® advertise the home to the widest range of buyers. (My own listing are distributed world wide on over 300 websites.)
- More "millenial buyers" (the single biggest group of buyers today) find the home they buy through an agent than any other way!
Think carefully before you decide to "Try selling it myself." Remember that your home is most likely to sell for the best price in the first fourteen days on the market. And if you advertise a house on the internet yourself, that clock doesn't reset if later you decide to use an agent. Buyers have seen it and question the home's condition or the accuracy of descriptions without ever looking at the house.