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Welcome to Diana Walton Home Buyer's Blog, please email me with any questions or concerns you may have regarding the article you just read or any other real estate questions. Thanks for visiting, come back soon!
JAN
5

Expectations are mixed for the housing market in 2016. More Americans are viewing home ownership as part of their personal American Dream than in recent years, and some industry observers believe those elusive millennials will finally start to make an impact next year.

Spurred mostly by new construction, total home sales could top 6 million for the first time in a decade, Jonathan Smoke, chief economist for Realtor.com, predicted recently. But next year may ultimately be more about re calibrating a new normal than rocketing past a pre-downturn benchmark.

Existing home sales are expected to grow moderately, as would-be buyers grapple with rising interest rates and slumping wages. Consumer confidence in income growth remains rocky, while about one in five Americans believe it'll be tougher to land a home loan next year compared to this one, according to a Trulia survey from November. Here's a look at four key trends that could shape home buying in 2016 and beyond.

1. Rising Interest Rates

After a sustained stretch of record-low interest rates, buyers will see borrowing costs rise next year. The Federal Reserve raised a key interest rate in mid-December for the first time in a decade, with as many as four "gradual increases" expected for 2016. To be sure, they're not likely to skyrocket anytime soon. But even gradual increases can eat into your purchasing power. Through November of this year, the average rate on a 30-year fixed mortgage was about 3.84%, according to data from Freddie Mac. 

The Mortgage Bankers Association projects average rates to be 4.8% by the end of 2016. To put that in perspective, let's say you're comfortable spending no more than $1,200 a month for a principal and interest payment. With rates at 3.8%, your buying power taps out around $258,000. Bump the rate to 4.8% and your purchase ceiling falls to about $230,000. First-time buyers and others with finances more toward the margins may struggle to get off the sidelines in a rising rate environment. A way to curb the impact of interest rates on home affordability is to ensure you have a great credit score. The best rates go to home buyers with great credit, so improving yours can make a major impact.

2. Cooling Prices & Inventory

Rising home prices have been great for many homeowners in recent years, less so for those hoping to crack the market. The CoreLogic Home Price Index has increased 6% over the past 12 months. Most estimates for 2016 put price growth in the 3.5% to 5% range. The cool down in home price gains could help open the door to new buyers. 

Homeowners who've benefited from higher home values may decide now's the time to sell. "Because of the price appreciation they have experienced, you will have more sellers put homes on the market next year," Smoke told CNN earlier this month. But other housing insiders aren't so sure. Higher interest rates may push some homeowners to reinvest in their current homes rather than sell and buy new. 

The American Institute of Architects expects spending for home improvement projects in 2016 to eclipse this year's record tally. In addition, housing inventory remains in short supply in many markets, especially in more affordable price ranges. Total housing inventory in October was 4.5% lower than the year prior, according to data from the National Association of Realtors.

3. Buying vs. Renting

Buying a home remains cheaper than renting in nearly all of the major housing markets, and that's still likely to be the case for most communities in 2016, according to Trulia housing economist Ralph McLaughlin. At a national level, average interest rates would need to hit about 6.5% to tip the balance, according to McLaughlin. But rates would need to push into the double-digits for renting to make better financial sense in many metro areas. At the same time, more than two-thirds of property managers surveyed by Rent.com said rental rates will likely jump by 8% next year on average.

4. Will Millennials Enter the Market?

Few topics inspire more breathless coverage in housing circles than the millennial generation. There are countless predictions about when and where they'll start buying houses.

Smoke, the Realtor.com economist, is bullish on millennials and their impact in 2016. He expects them to account for nearly a third of all existing home purchases. But familiar obstacles like student loan debt and consistent employment may force some younger buyers to keep their home buying plans on hold.

Trulia's recent survey shows only 13% of 18- to 34-year-olds who plan to buy a home say they'll do so in the next year. The figure rises above 35% if the time frame stretches to 2018.

"What would make more millennials take the leap from renting to home ownership? More money," McLaughlin, the Trulia economist, wrote in his 2016 forecast. "Jobs and down payments are keys to turning these renters into homeowners within the next 12 months."

 

Diana Walton

Diana Walton Properties

Champion Real Estate Group

This article originally appeared on Credit.com.

SEP
22

You’ve gone to the open house. You’ve had a private showing. You’ve read the disclosures. You’ve decided this is the house for you, and you’re ready to make an offer. Before you take that step, though, you should fully check out the neighborhood. After all, this is where you’re going to live for years. Is there something you don’t know about that could negatively affect the resale value later? Is there a neighbor who comes roaring home late at night on a muffler-free motorcycle? Is the next-door neighbor operating a day care for pre-schoolers?

Given the high stakes of homeownership, it pays to do your homework before making an offer. For example, a potential buyer was ready to sign on the dotted line for a home in San Francisco, a city famous for its microclimates. The buyer had only been to the home during the day, when it was sunny and warm. On his real estate agent’s advice, the buyer returned at night — to find the house blanketed by cold, windy fog. He continued his home search elsewhere, relieved he hadn’t unknowingly bought into the city’s “fog and wind belt.”

Here are five ways to investigate a neighborhood before you buy.

1. Talk to the neighbors

Without being intrusive, look for an opportunity to chat with your potential neighbors. What’s their opinion of the block and the neighborhood? Do they know of any problem neighbors? Are they aware of any recent car or home break-ins? Is anyone planning a big remodel that could impact other homes or their values? Do they know of someone on the block who might be getting ready to sell? An even more desirable home could be coming on the market.

2. Visit day and night, weekday and weekend

As the San Francisco example shows, don’t just visit the house during the day. Check it out at night to get a sense of what’s going on in the neighborhood after hours. Is it noisy or calm? Visit on the weekend and early morning, too. The more times of day you go, the more chances you’ll have to get the feel for the neighborhood.

3. Check out the local newspaper and the neighborhood blog

Some neighborhoods still have their own newspapers. If there’s one published for the neighborhood you’re considering, check it out for local stories. Pay particular attention to the “police blotter,” which typically lists crimes reported in the area. Also, some neighborhoods have blogs where locals ask for tips and advice, or post issues or concerns affecting the neighborhood. A Google search should help you find out whether there’s a blog for the neighborhood you’re considering.

4. Get an app

Some smartphone apps, such as CrimeReports for iPhone, provide information about crime based on your location or address. Among the problems you may see displayed on a map are noise nuisances, sex offenders and vehicle break-ins. The CrimeReports app gives you some specifics, such as when and where each incident occurred.

Zillow’s real estate apps allow you to see estimates of properties on the block. They also allow you to search recent sales or see rentals, a good indication of whether your neighbors are renters or homeowners.

5. Google the street address

If you Google the home’s street address, you might be amazed at what you find. You might, for instance, discover a nearby home-based business with employees (which could reduce street parking spaces). Using Google’s Street View, where photos can be months if not years old, you might discover that the ground-floor bedroom window once had bars on it.

Be a sleuth before the sale

The Internet is an amazing resource of information. Too often, though, potential home buyers don’t fully use it to find out everything they can before entering into a contract on a home. As soon as you’ve identified a home you want to buy, get online and do your homework. You might be pleasantly — or unpleasantly — surprised by what you learn.

source:foxbusiness

SEP
14

 Most of the homes I lease are new home so I do hope you will find this helpful. The process is not different from leasing an existing home.

  1. ‚ÄčFirst you will need to choose the area you want to live in. If you find the perfect house in the wrong location, you may have wasted your time. It is always best to know what is most important to you (school, distance between work and home, shopping, etc) before you begin your search.
  2. Let your agent know up front if you have pets. Some properties will accept pets, but only certain breeds. Others will not accept any pets. Pet deposit amount will vary, so you will want to know how much you will have to pay for your pet deposit. If the owner is asking for $500 per pet and you have 3 pets, you may want to keep looking if you think that amount would be too much.
  3. Choose a home. Keep in mind you may not be the only one looking at the same home, and in some cases, by the time you sleep on it, someone will have submit the application, pay the application fee and possible get an approval, thereby, removing the property from the market.
  4. Submit all your necessary documents and pay the (nonrefundable) application fee once you find the property you like. Most property management companies will not process your application without the application fee.
  5. Requirements will vary based on each property or the property management. All will run credit and do background check. If you have broken lease let your agent know up front. Also, you will want to let your agent if you have any felonies, and if you have been at your place of employment for less than one year. In all cases your income will need to meet or exceed 3 times the monthly rent. For example if the rent is $1500, your monthly income will need to equal $4500. Also, please note, every member of your family or person who will be living in the home over the age of 18 years old and older will need to fill out an application and pay the application fee.
  6. Within 24-48 hours in most cases you will know if you have been approved for the home. You want to make sure you submit all your required documents and fill out the application completely to avoid delays.
  7. Once you get confirmation that you are approved for the home, you will need to pay the security deposit in most cases within 24 hours to remove the property from the market.
  8. Once you pay your security deposit, you choose your move in date. Sign your lease; pay your first month’s rent, pet deposit if apply; provide proof of utilities accounts if apply, proof of rental insurance if apply, and collect your keys.

Please call me at 281.923.1118

SEP
8
  1. Find a good realtor to work with. One that will look out for you best interest, not his or hers.
  2. Don’t jump into a home purchase blindly. Get your Realtor to explain the step by step process. Do your own research.  In addition to the information I provide my clients about the area they want to live in, I always advise them to learn more about the area on their own as well. Like driving the neighborhood different times on different days, and talk to a few of the neighbors.
  3. Buy properties with traditional 30- or 15-year fixed loans – and know what your mortgage payment will be each month for the entire mortgage term. Leave creative financing out of it.
  4. Put 20% down if you can, you will save thousands of dollars, and your mortgage payment will be lower.
  5. Whatever the bank says you can afford, subtract 20%, and you’ll never be house poor.
  6. Remember, you’re not just buying a house, you’re buying a neighborhood.
  7. Be patient with the mortgage process.
  8. Do not overpay for a house you can’t really afford in hopes of market appreciation making up the difference. Not a good Idea!
  9. Less is more. A smaller, practical, easy-to-maintain house is the new, big, rambling mansion.
  10. Stay on top of your credit, excellent score is above 750.
  11. Plan to stay in your home at least 5 years. If you think you’ll need to sell before then, keep renting until you know you can stay put for a while.
  12. Budget for all the ongoing costs of home ownership – not just the monthly mortgage payment. Be sure you have the funds for property taxes, insurance, maintenance, upkeep, and even an emergency repair fund.
  13. If you are questioning your job security and your ability to get a new job quickly in the event of a layoff – don’t buy yet.

To a generation who saw risking everything and buying homes with zero down as the norm, these rules may seem new. But, as they say, everything that’s old eventually becomes new again. In this new era, Millennials simply need to look back to get ahead and buy safely, sanely, and securely in the current housing market.

AUG
27

If you have student loans and want to own a home – whether in the next month, next year or next decade – you need to manage how your student loans affect your debt-to-income ratio and overall credit score to ensure you’ll be approved for a mortgage when the time comes. Here are the main things to keep in mind.

Your Debt-to-Income Ratio

 A debt-to-income ratio is one way lenders measure your ability to manage and meet your monthly loan payments. If you’re applying for a mortgage, a lender will calculate your debt-to-income ratio by adding up all your monthly debt payments, including your expected mortgage amount, and dividing them by your gross monthly income – the amount you earn before taxes and other deductions.

Debt payments include mortgages, auto loans, student debt, credit card debt and any other installment or revolving debt. It does not include other budget expenses such as utilities. Some lenders may not approve you for a mortgage if your debt-to-income ratio exceeds 43 percent.

The Role of Your Student Loans

Let’s say you’re a recent college graduate earning $45,473 annually –  the average for the college class of 2014. Your gross monthly income would be about $3,789. You have a car loan monthly payment of $200 and a credit card payment of another $200. On top of that, let's say you have $30,000 in student loans, about the average amount of debt for graduating college seniors. Assuming this is an unsubsidized Stafford loan at 4.6 percent interest, you may have a monthly payment of $312.

Now, let's say you’re applying for a home loan of $222,261 with a $1,061 monthly payment – the national average. Your total monthly debt payments would total $1,773 and your debt-to-income ratio would be around 46 percent, putting you over the 43 percent threshold and potentially out of luck for buying that particular house. Potentially.

Options to Manage Your Loans

While your car and credit card payments can’t be adjusted without refinancing the auto loan or paying down your credit card balance, any federal student loans have some flexibility. Using the example above, switching your student loan repayment plan from standard to graduated would result in a monthly payment of just $176. That reduces your debt-to-income ratio to 43 percent, potentially increasing your chances of being approved for the mortgage.

It’s important to recognize that the graduated plan assumes your salary will rise in the next few years. Your student loan payments start low with this plan but then accelerate. The last thing you want, is to take on a mortgage that you can’t afford if your student loan payments rise. If you don’t think your salary will increase anytime soon, you may want to check out some other repayment options like income-based plans.

Ways to Elevate Your Credit Score

Student loans can also affect your mortgage approval in that they are an important factor in your credit score. Paying your student loans on time each month is an excellent way to build good credit.  

A lender will use your credit score to not only evaluate whether your mortgage should be approved, but also to determine your mortgage’s interest rate. Borrowers with higher scores are eligible for lower interest rates and more loan choices, while subprime borrowers face higher interest rates, less eligibility for different varieties of loans and possibly even denial of their mortgage request. 

Federal student loans are usually reported to credit bureaus as delinquent after 60 days of no payment; private loans may be classified as delinquent – or even defaulted – after just one missed payment. If late student debt payments are dragging your credit score down, contact your student loan holder to talk about getting your payments back on track. 

You can bring your account current by making all the payments you’ve missed, switching to a different payment plan or temporarily postponing payment and halting any more damage to your credit report. If you’ve defaulted on your student loan, you can rehabilitate your loan back to good standing and remove the default from your credit history – though the delinquency will stay.

If you are planning to take on more student loans and you want to buy a home soon after you leave college, stick to federal student loans and avoid private loans if possible. The flexibility to lower your monthly payments can be crucial to maintaining a healthy debt-to-income ratio and credit score.

Total Deferment

Also keep in mind you can also have your student loan temporarily deferred for about one year. With the deferment, the lender will not factor the amount of the student loan into your debt to income ratio, making it possible for you to purchase more home, providing you can afford to make the payments without stress. 

AUG
21

THE ECONOMY

  • The Consumer Price Index rose slightly in July, but inflation is still not a concern. Inflation leads to higher rates, so no risk of inflation helps rates remain low.
  • The minutes from last month's FOMC meeting showed the Fed is struggling to justify raising policy rates. Expectations of a September rate increase are falling.
  • Problems in China's economy and low oil prices are causing global concern. Mortgage bonds are benefitting from the weakness, supporting lower rates.

HOUSING NEWS

  • The Homebuilder Index rose to its highest level in almost a decade. Homebuilders view market conditions as favorable and are optimistic about future sales.
  • Housing starts rose to a near 8-year high in July, led by construction of single-family homes. A strong housing market indicates an improving economy.
  • Building permits were down slightly in July, but that follows three straight months of hefty increases. Permits are expected to improve again for August.
AUG
14

When you decide to buy a home, in addition to the cost of the home, you will also have costs that fall into two categories. One category is fees associated with the loan and its processing, the work performed by the title company and its attorney, title insurance, first year property insurance payment, and in some cases fees payable to Surveyors or other service..

 The second broad category are Pre-Paid Items. The Lender will generally require an escrow account be established to capture funds for  payment of property taxes and insurance if your downpayment is less than 20%.

HERE ARE THREE REASONS TO SERIOUSLY CONSIDER ROLLING CLOSING COST INTO YOUR LOAN

  • If you are confident that you will not have to move or sell this home within the next five-years (ten-years would be better, but it's really impossible to see the future)
  • if paying the Closing Costs out of pocket will eliminate your cash reserves. 
  • If your current living arrangement will be significantly improved if you move into this home.
AUG
14

THE ECONOMY

  • The Chinese devaluation of their currency, the yuan, created fear of a global currency war. Traders turned to the safety of bonds, which was good for rates.
  • Global economic weakness has experts questioning if the Fed will be able to raise policy rates in September. A Fed rate hike in 2015 still looks likely though.
  • Our economy continues to show momentum while others are weak. Last month's retail sales improved and jobless claims remain low, supporting Fed action.

HOUSING MINUTE

  • Home prices rose year-over-year in nearly every metro area in the second quarter. Home demand continues to be fueled by rent increases and low rates.
  • Fannie Mae's monthly housing survey found consumers expecting home prices to continue to rise. The survey indicates the housing market is continuing to improve.
  • Smart home technology is already starting to impact buyers' purchase decisions. Features like automated lighting and temperature control are gaining popularity. 

INSPIRATIONAL MINUTE

“ In the realm of ideas, everything depends on enthusiasm; in the real world, all rests on perseverance. ”
— Johann Wolfgang von Goethe

 

JUL
27

 There are a number of things that can be done to prepare for a home inspection.  The buyer or real estate agent should work with the seller to ensure that: 

 

  1. The utilities are turned on
  2. Pilot lights are lit for any heating or cooking appliances that will be inspected
  3. Heating units are accessible
  4. Electrical panels are accessible and unlocked
  5. The attic area is accessible and cleared of stored items
  6. Crawl space entrances are accessible and unlocked, and that they are not screwed or nailed shut
  7. Showers and bathtubs are free of stored or personal items
  8. Sinks and dishwashers are cleared of dishes, and the area beneath all sinks should be free of stored items
  9. Any pets are secured for the inspector's safety
  10. All items and areas to be inspected are readily accessible

 
1.  The utilities are turned on.
      
      Electric, gas and all other utilities should be working so that your inspector can properly test and operate all the systems and components in the home. Some home inspectors may charge a fee to return to the home and inspect anything that they could not properly inspect or test the first time, so don't overlook this!

2.  Pilot lights are lit for any heating or cooking appliances that will be inspected.
     
Home inspectors will NOT light pilot lights for stoves or heating units. These units need to be operational at the time of inspection. Put yourself in the inspector's shoes for this one: would you want to walk into an unfamiliar home and ignite an appliance that may not have been properly maintained or repaired? For an inspector, it's an invitation to a disaster or a lawsuit, and a home inspector WILL NOT take that chance. 

3.  Heating units are accessible.

    This means that the area around the furnace, boiler or other heating appliance is free of stored items and clutter. Your home inspector is not required to (and in most cases WILL NOT) move items away from the heating unit in order to do his or her job.   

4.  Electrical panels are accessible and unlocked.

    All electrical panels and sub-panels should be readily accessible so that the inspector can remove the panel cover and inspect the wiring within. Also, be aware that a home inspector may refuse to inspect an electrical panel if part or all of the panel or distribution box is wet, or shows signs of fire damage or short-circuiting.

5.  The attic area is accessible and cleared of stored items.

     The attic of a home is a very important area. By inspecting the attic, a home inspector can diagnose the causes of roof damage or premature roof failure, mold, ice dams, and many other problems with the home. This area should be readily accessible. Your home inspector needs to be able to get into the attic, first of all. Scuttle holes, walk-up accesses and pull-down stairs should be unobstructed and free of stored items so that an adult male can enter freely. If access to the attic is gained through a closet ceiling, then the closet area should be free of clothing and other stored items in order to allow the inspector to place his ladder there and climb into the attic. 

    In the attic area, be sure that all areas of the attic are visible and accessible. Remember - a home inspection is a visible evaluation of the home....if it is not visible, it cannot be properly inspected.  

6.  Crawl space entrances are accessible and unlocked, and that they are not screwed or nailed shut.

     Another important area of the home is the crawl space. Let's face it...nobody likes to go down there. Crawl spaces hold all kinds of unsavory things: rodents, snakes and spiders, not to mention plumbing, electrical and structural components that are rarely seen. So it stands to reason that the crawl space is one of the least maintained areas of a home, but one of the most important.  Be sure that your inspector can gain access to the crawl space to view the floor structure, wall structure and any plumbing or electrical components in that area of the home. If you contact a home inspector and they state that they do not inspect crawl spaces, look for another home inspector. But be aware that your inspector is within his rights to refuse to enter a crawl space if the area presents an obvious health hazard such as standing water, leaking sewage, evidence of rodent activity, evidence of snakes or other life or health-threatening situations. 

7.  Showers and bathtubs are free of stored or personal items.

    One aspect of the plumbing inspection is running water into tubs, showers and sinks in order to look for leaks and obstructions, and to ascertain that the plumbing fixtures are in good working order. Obviously, if the tub is full of clothes or other items, your inspector will not run water into it and will not be able to properly inspect the plumbing components.    

8.  Sinks and dishwashers are cleared of dishes, and the area beneath all sinks should be
     free of stored items.

    A home inspector needs to be able to see and freely inspect the plumbing and drainage components for sinks, dishwashers and garbage disposals. Be sure that the inspector is able to access these areas so that YOU can be sure that everything is in good working order. 

9.  Any pets are secured for the inspector's safety.

     Even chihuahuas can turn into Cujo when a new person shows up in their home. You, or the home seller, may think that the dog is not a threat, but bear in mind that the dog doesn't know the home inspector, and the home inspector doesn't know the dog. Unfamiliarity can sometimes breed contempt: the dog has never seen the inspector and may view him or her as a threat. Your inspector is there to sniff out problems in the home, and may not have an extra half-hour to gain Fido's trust. It is always best to tie or otherwise secure any pets during a home inspection. An important note about cats; cats may not pose a threat to the inspector but cats love running out of the house and getting into the attic. Nobody want to spend hours looking for the lost cat. Please secure them too.

10.  All items and areas to be inspected are readily accessible. 

    This may seem redundant, after discussion about crawl space accessibility, attic accessibility, etc. But it bears repeating. 

    Home inspectors will not normally move items out of the way to inspect systems or components, and most inspectors will take pictures of obstructed areas to document that there were items in the way at the time of inspection in order to absolve themselves from litigation issues. So if an area is not accessible and visible, the home buyer is ultimately the person who is short-changed after paying several hundred dollars for an inspection.  In my experience, home inspectors are very qualified in general...rarely have I encountered

JUN
3

The latest daily real estate market news collected on a single page

CoreLogic’s Home Price Index Report showed:

  • A 2.7 percent increase in home prices month over month in April 2015.
  • A 6.8 percent increase in home prices year over year in April 2015 (from April 2014).
  • A foreof a 1.1 percent increase in home prices month over month from April 2015 to May 2015.
  • A foreof a 5.3 percent increase in home prices year over year from April 2015 to April 2016.

Zillow Mortgages reported:

  • The 30-year fixed mortgage rate is 3.78 percent, down one point from last week.
  • The 30-year fixed mortgage rate was 3.74 percent for most of the week before rising today to its current 3.78 percent rate.
  • The 15-year fixed mortgage rate is 2.93 percent.
  • The 5-1 adjustable-rate mortgage rate is 2.8 percent.

Diana Walton

281.923.1118

 
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