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Residential rents in the United States grew 4% year on year in April, overtaking home values growth which was at an annual rate of 3%, the latest data shows.
It means that rents grew at their fastest pace in two years in April, and surpassed home value growth in 20 of the 35 largest US housing markets, according to the data from real estate market report firm Zillow.
Rents reached $1,364 and home values reached an average of $178,400 and growth in home values is expected to slow further in the second half of the year as the for sale housing market stabilizes.
The switch comes after years of rapid home value increases and has been boosted by the improving economy. The Zillow report points out that US home values peaked in 2007, and then crashed during the recession between 2008 and 2010. Since then, they have risen rapidly, returning to their peak levels in many markets.
Home values have both risen and fallen over the past decade, but rents have been steadily rising. Indeed, rental growth has been outpacing home value growth for several months in some of the nation's hottest markets.
In San Francisco, rents started rising faster than home values in July 2014, and have been growing faster ever since on an annual basis. In Boston, annual rental growth has outpaced home value appreciation since August 2014.
The report points out that low mortgage rates have helped make buying a home much more affordable than renting. On average, US home buyers can expect to spend about 15.3% of their income each month on a typical house payment. Renters can expect to spend about 30% on a monthly rent payment.
‘There are tremendous incentives to get into home ownership these days: mortgage access is improving, interest rates are low, and home values remain below prior peaks,’ said Zillow chief economist Stan Humphries.
‘But it will be increasingly difficult for many renters to realize these benefits as this country's growing rental affordability crisis continues to worsen. More income going to rent means less going to savings for a down payment and other costs, keeping renters renting longer and feeding into the high demand that is contributing to rising rents in the first place,’ he explained.
‘This cycle will be difficult to break, and is a symptom of the imbalances that still exist in the housing market as we struggle to get back to normal. New construction and rising wages will help, but neither is coming very quickly,’ he added.
Over the next year, home value growth is expected to slow even further, to 2% annually, according to the Zillow home value forecast. In 2014, home values rose 4.9%.
Many prospective homeowners want to know, what is an FHA loan? What are the advantages over other types of loans? For many potential home buyers, an FHA loan presents you with several advantages over a traditional mortgage. The FHA is a government-backed program that attempts to give home buyers a leg up on the mortgage market. Here are a few aspects of an FHA loan.
The most important aspect of an FHA loan is that they insure the loan against default. This means that if you cannot pay off the loan, the FHA will repay the lender. Therefore, it represents a very low risk opportunity for the lender. With this type of guarantee, mortgage lenders can provide mortgages to many people that they otherwise would not. It helps people with lower credit scores and those who do not have enough income to qualify for the mortgage that they need. It opens the door for almost anyone to own a house.
Unlike many other loan programs out there, there are no restrictions on who can get an FHA loan. You still have to display a certain level of creditworthiness, but you do not have to be a part of a certain group to qualify. For example, you do not have to be a veteran in order to get an FHA loan. You simply walk into your local mortgage lender and ask to apply for an FHA loan. Most lenders work with the FHA to provide loans in every market. Therefore, the access to this type of loan is unparalleled in the industry.
Low Down Payment
Another way that FHA loans help buyers is with a reduced down payment. With this type of loan, you can realistically expect to put about 3.5 percent down on the house. With a regular loan, you might be required to put down as much as 10 to 20 percent. This can add up to a substantial amount of money and eliminate many potential buyers. If you think you do not have enough money saved up for a down payment to buy a house, an FHA loan is definitely something that you should consider.
With FHA loans, they will charge you an upfront fee to cover mortgage insurance. Their closing costs can be lumped into the loan, so you have to be careful to see what you are paying. In some cases, this fee can actually add up to more than PMI with a normal mortgage would. The upfront mortgage insurance premium usually works out to about 2.25% of the loan amount. On a $100,000 loan that works out to $2250 in mortgage insurance.
In addition to the upfront mortgage insurance premium, you will also have to pay a monthly amount for mortgage insurance. In most cases, this is about 0.55% of the loan amount. Therefore, you have to consider your options carefully with this type of mortgage. You will save in some areas and pay more in others. Compare your options and decide if an FHA loan is right for you.
Summer is hot, and if your home isn’t prepared for the warmer weather, your utility bills can increase significantly. Rather than spending a fortune over the next few months, why not take steps to prepare your home and make it more efficient? Here are some steps to help:
1 Find and fix air leak
To prevent your air conditioning bill from skyrocketing this summer, find the leaks in your home and plug them up. Look around your windows and doors and in the attic for any air leaks. You might need to add more weather stripping around your doors and windows. In your attic or basement, there’s a chance that holes have formed in your insulation, allowing air to leak out. In such cases, you’ll need to call a professional to insulate the areas that need it. This project needs to be handled by an insulation pro because certain types -- especially loose fill and blown-in insulation -- are hazardous to your health if ingested.
2 Upgrade your thermostat
Another way to keep your air conditioning bills down this summer is to upgrade your thermostat. If you live in an older home, there’s a good chance your thermostat is outdated and wasting energy. Now is the time to upgrade to a programmable thermostat. These devices save at least 10 percent every month on your bill, and they also help cool your home efficiently. Set it as high as possible when you leave your home during the day to cut costs. Then, when you come home, you can turn it down to cool things off. There are some types of programmable thermostats that adapt to your patterns and can adjust as needed as well.
3 Repair or replace windows
Windows are one of the greatest sources of air leaks and heat, which can dramatically increase your utility bill during the summer. Make any necessary repairs to your windows. And, because hollow metal allows air to get through easily, replace outdated aluminum frames with wood alternatives whenever possible. You should also think about replacing single-pane windows with their double-pane alternatives. This makes your windows more energy efficient because double-pane windows reflect sunlight better and insulate your home. There are even Energy Star-certified windows that are known to cut down energy costs by almost 15 percent.
4 Change air filters
Summertime is the best time to think about changing your air filters. HVAC air filters build up a lot of dust and grime over the winter when your heater is running. When spring and summer roll around, you need to change them out so the HVAC system runs more efficiently and keeps your air conditioning costs down. Clean air filters help your air conditioner work smoothly; a dirty air filter keeps cold air from getting out, which makes your A/C work harder to push the air out. So save some money and do this easy task in half an hour or less.
5 Clean air vents
Along that same vein, your air conditioning will work harder if the vents are dirty and musty. Vents cool every room in the house when the cold air pushes through the filter and into the vents, releasing cold air in a room. If the vents are covered in dust and grime, less air comes out, and there’s a chance the dust and dirt comes with it. So don’t let your room get covered in dirt or make your A/C unit work overtime. Hire a professional to clean your ducts and vents for between $250 and $450. It can significantly lower your cooling bills during the summer and prevent extra cleaning.
6 Add ceiling fans
Another way to cut down on cooling costs this summer is to find an alternative. Rather than keeping the A/C on all day, why not turning on the ceiling fan? If you don’t have a ceiling fan in a room, you can always have one installed. The cost to install a ceiling fan averages between $150 and $300, but adding one could add up to a lot of savings over the summer. Ceiling fans push down cool air while pulling up hot air into the ceiling. They use a lot less power than air conditioning units and will pay back their initial cost quickly in what you save on the utility bill every month. You’ll be able to turn the thermostat up without feeling a real change in temperature. Fans create a chilly effect in the room that will leave you feeling cool and comfortable on a warm day.
7 Update light fixtures
One other way to keep your costs down is to replace all of your hot incandescent and fluorescent bulbs with their CFL and LED alternatives. Incandescent and fluorescent bulbs give off a lot of heat, which contributes to the internal temperature of the house. Rather than spending extra money to cool your home, why not spend some money on bulbs that give off no heat? CFL and LED bulbs are just as bright, and they are energy efficient and emit no heat when they’re on in a room. This means the internal temperature of your house won’t be affected when they’re on and you can turn more on. Although they cost more upfront, they’ll pay back quickly in how much you’ll save every month on both the electric bill and cooling costs.
Let’s not pretend that living in America’s hottest real estate market is a burden; still, the volatility can be maddening. Where else can you find yourself first in line at an open house, only to discover that the place already has three offers from an invitation-only open house the previous day? No place, that’s where. In what other city do they issue 27,000 permits for single-family construction in a single year? No other city.
The fact is, knowing what and where to buy has never been trickier in Houston, which is why we polled dozens of real estate professionals for their expert opinions on the matter. Et voilà, the Houstonia guide to the 20 hottest areas of town, along with 5 up-and-coming neighborhoods whose pre-hot days are clearly numbered.Sugar Land where you will find all the glories of Houston, absent big-city grit.
The Woodlands - where self sufficiency is the master plan
Garden Oaks/Oak Forest - where inner loop cool landed after bounding over 610
Spring Branch - Where residents enjoy suuperior schools and superior kimchi, both at bargin prices
Galleria/Uptown- A neighborhood as well, Uptown, dominated by the 400-store Galleria and myriad other shopping opportunities, is many things: a crystal garden of glassy office towers, a magnet for international business, a place where you can drive a neon-green Hummer without arousing contempt
Montrose- was born in 1911, a streetcar suburb for wealthy Houstonians, but just 50 years later it became the white-hot center of pretty much every alternative lifestyle Houston has known: beatniks, hippies, gays and lesbians, punks, slackers, and hipsters.
The Heights -For those who call this neighborhood home, nowhere else will do. Heights life isn’t just about architecture; it’s a unique subculture, an artsy little neighborhood that feels like a small town tucked within sprawling Houston. And it seems everyone wants a piece of it.
Washington Corridor- where the road goes on forever and the party never ends.
Pearland- where suburban Uber-diversity meets a relatively quick commute. Pearland is a mighty array of subdivisions and big box retail, quartered by Highway 288 and FM 518. East of 288, a rural feel lingers, while west Pearland is the essence of modern suburbia. Both are diverse: 62 languages are spoken in the school district, and not every Pearlander is upper-middle-class or wealthy.
The Museum District -a new wave of homebuyers who’ve found themselves moving back into the Museum District as the city’s real estate market has heated up. Lured by its parks, jogging trails, and always-interesting, pedestrian-friendly streets, there is never have a dull evening, what with a steady stream of lectures, exhibits, and cultural offerings at 19 nearby museums.
Westbury - the average three-bedroom rancher comes in at around $146,000, one of the best bargains around. Meanwhile, two of the neighborhood’s elementary schools, Kolter and Parker, are among the best in the city, completing Westbury’s trajectory as one of Houston’s most impressive comebacks.
East End - In which an industrial revolution is swiftly on its way
Downtown- As of now, only about 3,500 people call downtown home, but this number is expected to double in five years, with the construction of large residential properties on Main Street, in the old Texaco building, and across from Minute Maid Park. Two new downtown hotels and a new building for the High School for the Performing and Visual Arts are also underway.
River Oaks- River Oaks, a place where it can feel like lawnmowers outnumber actual residents, still Houston’s most prestigious neighborhood.
Braes Heights- Everyone seems to applaud the active neighborhood association, the nice mix of parks, and the new public library. Parents, in particular, praise the area’s schools, such as newly rebuilt Mark Twain Elementary and Pershing Middle.
Bellaire- known for its City of Homes moniker and rebounding ability, is neither flashy nor exclusive, unlike its Inner Loop rivals, but its mix of location, price, schools, and recreation opportunities make us think it’s still underrated.
Cinco Ranch- was the No. 4 top-selling community in the United States last year, right behind The Woodlands. Maybe that’s because Cinco’s a relatively short commute to the energy corridor, making it popular with those in the industry. Maybe it’s the prices, which can go beyond the $1 million mark but start at the $180,000s, or maybe it’s the variety in housing stock, running the gamut from one-story patio homes to estates.
Sugar Land-with its ethnic diversity—35 percent of its population is Chinese, Indian or Pakistani, while another 18 percent are African American or Latino— Sugar Land is like a mini-Houston, albeit one with less crime, much better schools, and many, many more man-made lakes.
Memorial City- Serving as the area anchor is CityCentre, something of a kid brother to the Galleria—an upscale, mixed-use development with office buildings, apartments, a hotel, and movie theaters.
Timbergrove/Lazybrook/Shady Acres- these three post-war ranch-house neighborhoods tucked in the northwestern corner of the Inner Loop are enjoying their own scaled-down versions of booms in adjacent neighborhoods like the Heights, Garden Oaks, and the Washington Corridor.
Cypress - In 2000, just under 350,000 people lived in the Cypress area’s ten zip codes. By 2010, 587,000 called the area home, in part because it offers more bang for the buck than comparable neighborhoods such as Katy. Currently available three-bedroom homes start at $269,000, while mansions top $1,000,000.
Just like a top football, basketball, or hockey player is drafted based on their stats, your credit score is used to determine your financial fitness. Because it measures your ability to repay loans, creditors use it to decide how much interest you’ll pay when you borrow money. Improving your credit score may help you get approved for a mortgage, lower the interest rate you’re offered on a refinance, and reduce your insurance premiums.
Try these four tips from BMO Harris Bank to improve your credit score:
Pay on time. Paying on time every time may boost your score if you have missed payments in the past. If you need help paying on time, enroll in automatic bill payment programs.
Reduce your debt-to-credit ratio. Pay down your credit cards until you are using only 50% of your available credit. That will improve your debt-to-credit ratio, which can boost your credit score.
Use more than one type of credit. In addition to your mortgage, open credit card accounts. Having both types of credit in your credit history can improve your credit score.
Stick with the accounts you already have. Opening new accounts just to increase available credit means new inquiries on your credit report, which may lower your score. Avoid closing accounts you already have, which can negatively affect your debt-to-credit ratio and credit history — both of which rating agencies use to calculate your score.
For most buyers who intend to live in a home for at least three years, buying is a better financial decision than renting, according to a new analysis by Zillow.
Zillow analyzed the “breakeven horizon” in more than 200 metros and 7,500 U.S. cities to determine how many years it would take before owning a home becomes more financially advantageous than renting the same home. In more than three-quarters (75%) of metros analyzed, a home owner would break even after three years or less of owning a home.
All possible costs associated with buying and renting were incorporated into the analysis, including down payment, mortgage and rental payments, transaction costs, property taxes, utilities, maintenance costs, tax deductions, and opportunity costs, while adjusting for inflation and forecasted home value and rental price appreciation.
In some metro areas where home values fell dramatically during the housing recession, home buyers break even after less than two years of owning a home. The Miami-Ft. Lauderdale metro is among the most favorable for buying, with home owners breaking even after only 1.6 years of living in the home. However, in the San Jose metro, where home values are among the highest in the nation, a buyer must commit to living in their home for 8.3 years before they will break even.
However, within metros, there is often a sizeable variance from one community to the next. For example, in Mill Valley, Calif., just north of San Francisco, a home owner can break even after 8.8 years, while in similarly-priced Menlo Park, south of the city, they must live in the home for 14.1 years.
“Across most of the country, historic levels of affordability make buying a home a better decision than ever, especially considering rents have risen more than 5% over the past year,” said Stan Humphries, Zillow chief economist.
Metros where it takes more than five years to reach the breakeven point accounted for 7% of the 224 metros covered by the report. The metros with the longest breakeven horizons are San Jose, Calif. (8.3 years), Oak Harbor, Wash. (7.2 years), Santa Cruz, Calif. (7.1 years), San Luis Obispo, Calif. (6.3 years), and Salinas, Calif. (6.3 years). The metros with the shortest breakeven horizon are Memphis, Tenn., Miami-Ft. Lauderdale, Fla., Salisbury, Md., Red Bluff, Calif., Mobile, Ala., Tampa, Fla., and Fernley, Nev. (all tied at 1.6 years).
The document requirements for mortgage preapproval vary by lender and your individual circumstances, but typically, you'll need to provide documents which show your income, your assets and any regular commitments against your income. These will include, but may not be limited to:
1. Tax Returns (at least two year, if self-employed or commission typically 2 years)
2. Pay Stubs 30 days )
4. Bank Statements (last 1-2 months)
5. 60 days or quaterly Investment Account Statements (eg. 401K)
6. Credit Report
If you are one of the more than 500,000 Americans who lost their homes during the foreclosure crisis, you are now poised to become a homeowner again and I can help you. You can recover from foreclosure in as little as one years and be ready to buy a home again depending on the type of loan you had at the time of the foreclosure.
In 2013, the year to date foreclosure rate read, Harris County - 1 in every 1,947 homes was foreclosed. While the overall rate for Texas was 1 in every 2,331 homes. If you had a conventional loan, while the normal waiting period required is seven years, exceptions are allowed. This means you only have to wait 3 years if you have extenuating circumstances to be able to purchase another home.
Extenuating Circumstances are nonrecurring events that are beyond the borrower's control that result in a sudden, significant, and prolonged reduction in income or catastrophic increase in financial obligations. Anyone wanting to use extenuating circumstances, will be required to provide proof of the event, in addition to supporting documentation, that support the occurrence of the extenuating circumstance. Example of extenuating circumstances are, death of a wage earner, serious illness, loss of job, and or identity theft.
Example of supporting documents would include, notice of job layoff, medical reports or bills, job severance papers, police report, and insurance or legal papers. Other third party legal documentation which proves your claims will also be accepted. You will also need to illustrate that you had no other reasonable options than to default on your financial obligations
For government loans which includes FHA and VA, exceptions can be made if extenuating circumstance occurred. For FHA, the waiting period is 3 years from the date of completion and less time with extenuating circumstance. For VA, its 2 years from date of completion and 1 year if extenuating circumstance occurred.
So if you are interesting in purchasing a home and had a foreclosure but not sure what you should do, please call or email me and I will be able to help, and or guide you in the right direction.