THINGSTOCONSIDERWHEN

BUYINGAHOME

SPRING2018EDITION

MichaelM.Adams202-656-2891

LicensedBrokerVA,MD&DC

TABLEOFCONTENTSWHAT'SHAPPENINGINTHEHOUSINGMARKET?

WHATYOUNEEDTOKNOWBEFOREYOUBUY

WHATTOEXPECTWHENBUYINGAHOME

4ReasonsToBuyAHomeThisSpring!3

HomePricesOverTheLastYear5BuyingRemainsCheaperThanRentingIn39States!6IsYourFirstHomeWithinYourGrasp?[INFOGRAPHIC]7BuyingAHome?ConsiderCost,NotJustPrice8

10 BeThankfulYouDon'tHaveToPayMomAndDad'sInterestRate

5ReasonsHomeownershipMakes'Cents'11StartingToLookForAHome?KnowWhatYouWantVs.WhatYouNeed132MythsThatMayBeHoldingYouBackFromBuying1461%OfFirst-TimeBuyersPutDownLessThan6%15HowLowInterestRatesIncreaseYourPurchasingPower16WhyPre-ApprovalShouldBeYourFirstStep17

HaveYouPutAsideEnoughForClosingCosts?18GettingAMortgage:WhySoMuchPaperwork?20WhyWorkingWithALocalRealEstateProfessionalMakesAllTheDifference21

ReadyToMakeAnOffer?4TipsForSuccess22

MortgageRatesRising...WillHomePricesFollow?9

Herearefourgreatreasonstoconsiderbuyingahometodayinsteadofwaiting.

1. PricesWillContinuetoRise

CoreLogic’s latestHomePriceIndexreportsthathomepriceshaveappreciatedby6.6%overthelast12months.Thesamereportpredictsthatpriceswillcontinuetoincreaseatarateof4.3%overthenextyear.

Thebottominhomepriceshascomeandgone.Homevalueswillcontinuetoappreciateforyears.Waitingnolongermakessense.

2.MortgageInterestRatesAreProjectedtoIncrease

FreddieMac’sPrimaryMortgageMarketSurveyshowsthatinterestratesfora30-yearmortgagehoveredcloseto4.0%in2017.Mostexpertspredictthatrateswillriseoverthenext12months.TheMortgageBankersAssociation,FannieMae,FreddieMac, and the NationalAssociationofRealtors areinunison,projectingthatrateswillincreasebynearlyafullpercentagepointbythistimenextyear.

AnincreaseinrateswillimpactYOURmonthlymortgagepayment.Ayearfromnow,yourhousingexpensewillincreaseifamortgageisnecessarytobuyyournexthome.

4ReasonsToBuyAHomeThisSpring!

3

3. EitherWay,YouArePayingaMortgage

Therearesomerenterswhohavenotyetpurchasedahomebecausetheyareuncomfortabletakingontheobligationofamortgage.Everyoneshouldrealizethatunlessyouarelivingwithyourparentsrent-free,youarepayingamortgage- eitheryoursoryourlandlord’s.

Asanowner,yourmortgagepaymentisaformof‘forcedsavings’thatallowsyoutohaveequityinyourhomethatyoucantapintolaterinlife.Asarenter,youguaranteeyourlandlordisthepersonwiththatequity.

Areyoureadytoputyourhousingcosttoworkforyou?

4. It’sTimetoMoveonwithYourLife

The‘cost’ofahomeisdeterminedbytwomajorcomponents:thepriceofthehomeandthecurrentmortgagerate.Itappearsthatbothareontherise.

Butwhatiftheyweren’t?Wouldyouwait?

Lookattheactualreasonyouarebuyinganddecideifitisworthwaiting.Whetheryouwanttohaveagreatplaceforyourchildrentogrowup,youwantyourfamilytobesafer,oryoujustwanttohavecontroloverrenovations,maybenowisthetimetobuy.

Iftherightthingforyouandyourfamilyistopurchaseahomethisyear,buyingsoonerratherthanlatercouldleadtosubstantialsavings.

4

Everyquarter,theFederalHousingFinanceAgency(FHFA)reportsontheyear-over-yearchangesinhomeprices.Below,youwillseethatpricesareupyear-over-yearineveryregion.

HomePricesOverTheLastYear

5

Year-over-YearPricesRegionally

Year-over-YearByState

Lookingatthebreakdownbystate,youcanseethateachstateisappreciatingatadifferentrate.Thisisimportanttoknowifyouareplanningonrelocatingtoadifferentareaofthecountry.Waitingtomovemayendupcostingyoumore!

InthelatestRentvs.BuyReportfrom Trulia, theyexplainedthathomeownershipremainscheaperthanrentingwithatraditional30-yearfixedratemortgageinthe100largestmetroareasintheUnitedStates.

Theupdatednumbersshowthattherangeisanaverageof6.5%lessexpensiveinSanJose(CA),allthewayupto50.1%lessexpensiveinDetroit(MI),and37.4%nationwide!

AstudybyGoBankingRates lookedatthecostofrentingvs.owningahomeatthestatelevelandconcludedthatin39states,itisactually ‘alittle’or‘alot’cheapertoown(representedbythetwoshadesofblueinthemapbelow).

Oneofthemainreasonsowningahomehasremainedsignificantlycheaperthanrentingisthefactthatinterestrateshaveremainedatornearhistoriclows.FreddieMacreportsthatinterestratesfora30-yearfixedratemortgagehavehoveredaround4%.

Nationally,rateswouldhavetoreach9.1%,a122%increaseovertoday’saverageof4.1%, forrentingtobecheaperthanbuying.Rateshaven’tbeenthathighsinceJanuaryof1995,accordingtoFreddieMac.

BottomLine

Buyingahomemakessensefinancially.Ifyouareoneofthemanyrenterswhowouldliketoevaluateyourabilitytobuythisyear,let’sgettogetherandfindyouyourdreamhome.

Rent vs.Own

6

A lot cheaper to own

A little cheaper to own

A little cheaper to rent

A lot cheaper to rent

WA

OR

MT

ID

CA

NVUT

AZ

AK

CO WV

NM

WY

ND

SD

NE

KS

OK

TX

AR

MO

IA

MN

WI

IL

KY

TNNC

SC

HI

OH

MI

VA

LA

MS AL GA

FL

PA

NY

ME

DC

MD

DE

NJ

CT

RI

NH

MA

VT

BuyingRemainsCheaperThanRentingIn39States!

IsYourFirstHome

Forthelongesttime,manyexpertsdoubtedwhethermillennials(ages18-36)valuedhomeownershipasapartoftheirAmericanDream.

LookingatthelateststatisticsfromtheNationalAssociationofRealtors, wecanseethat‘oldmillennials’(ages25-36) aredominatingthefirst-timehomebuyercategory.

7

WithinYourGrasp?

%ofBuyers MedianAge

2%offirst-timehomebuyersdonotfitintothecategoriesaboveandrepresentan“Other”category.Themedianageofthisgroupis37yearsold.

32100%AllFirst-TimeHomebuyers

3257%MarriedCouples

3518%SingleFemales

3016%UnmarriedCouples

317%SingleMales

Mortgage InterestRate* Payment (P&I)**

Today $250,000 4.3% $1,237.18

2019 $260,750 5.1% $1,415.74

$178.56DifferenceinMonthlyPayment

Monthly Annually Over30Years

$178.56 $2,142.72 $64,282

Asaseller,youwillbemostconcernedabout‘short-termprice’– wherehomevaluesareheadedoverthenextsixmonths.Asabuyer,however,youmustnotbeconcernedaboutprice,butinsteadaboutthe‘long-termcost’ofthehome.

TheMortgageBankersAssociation(MBA),FreddieMac,and FannieMaeallprojectthatmortgageinterest rates willincreasebyclosetoafullpercentagepointbythistimenextyear.AccordingtoCoreLogic’smostrecentHomePriceIndexReport,homepriceswillappreciateby4.3%overthenext12months.

WhatDoesThisMeanasaBuyer?

Ifhomepricesappreciatebythe4.3%predictedbyCoreLogic overthenexttwelvemonths,hereisasimpledemonstrationoftheimpactanincreaseininterestratewouldhaveonthemortgagepaymentofahomesellingforapproximately$250,000today:

*RatesbasedonFreddieMac’spredictionattimeofprint

8

BuyingAHome?ConsiderCost,NotJustPrice

Mortgageinterestrateshavealreadyrisenbyoveraquarterofapercentagepointin2018.Manyareprojectingthatratescouldincreaseto5%bytheendoftheyear.

Whatimpactwillrisingrateshaveonhousevalues?

Manyquicklyjumptotheconclusionthatanincreaseinmortgagerateswillhaveadetrimentalimpactonrealestatepricesasfewerbuyerswillbeabletoqualifyforaloan.Thisseemslogical;ifthereislessdemandforhousingthenpriceswilldrop.

However,inagoodeconomy,risingmortgageratesincreasedemandasmanyprospectivepurchasersimmediatelyjumpoffthefencetoguaranteetheygetthelowerrate.

Let’slookathomepricesthelastfourtimesmortgageratesincreaseddramatically.

9

MortgageRatesRising...WillHomePricesFollow?

Ineachcase,homepricesAPPRECIATEDanddidnotdepreciate.Nooneisprojectingasdramaticanincreaseinratesastheexamplesabove.Mostareprojectinganincreaseofapproximately1%bytheendoftheyear.

Thelasttimemortgageratesincreasedby1%overatwelve-monthperiodwasJanuary2013(3.41%)toJanuary2014(4.43%).Whathappenedtohousepricesduringthatspan?Theyappreciatedby9.8%.

Recently,RickPalaciosJr.,DirectorofResearchat JohnBurnsRealEstateConsultingexplained:

“Mortgagerateshaverisen1%ormoretentimesinthelast43years,withlittleimpactonhomesalesandpriceswhentheeconomywasalsostrong…Historically,risingconfidence,solidjobgrowth,andhigherwageshavemorethanoffsetreduceddemandforhousingresultingfromhighermortgagerates.”

BottomLine

Whenmortgageratesincrease,historyhasshownthatpricesappreciate(anddonotdepreciate)duringthatsametimespan.

Interestrateshoveredaround4%forthemajorityof2017,whichgavemanybuyersrelieffromrisinghomepricesandhelpedwithaffordability.Expertspredictthatrateswillincreasebytheendof2018andwillbeafullpercentagepointhigher,at4.9%,bytheendof2019.

Therateyousecuregreatlyimpactsyourmonthlymortgagepaymentandtheamountyouwillultimatelypayforyourhome.Don'tletthepredictionthatrateswillriseto4.9%stopyoufrombuyingyourdreamhomethisyear!

Let’stakealookatahistoricalviewofinterestratesoverthelast45years.

BottomLine

Bethankfulthatyoucanstillgetabetterinterestratethanyourolderbrotherorsisterdidtenyearsago,alowerratethanyourparentsdidtwentyyearsago,andabetterratethanyourgrandparentsdidfortyyearsago.

BeThankfulYouDon'tHaveToPayMom&Dad'sInterestRate

10

TheAmericanDreamofhomeownershipisaliveandwell.RecentreportsshowthattheU.S.homeownershipratehasreboundedfromrecentlowsandisheadedintherightdirection.Thepersonalreasonstoowndifferforeachbuyer,buttherearemanybasicsimilarities.

Todaywewanttotalkaboutthetop5financialreasonsyoushouldownyourownhome.

1. HomeownershipisaFormofForcedSavings

Payingyourmortgageeachmonthallowsyoutobuildequityinyourhomethatyoucantapintolaterinlifeforrenovations,topayoffhigh-interestcreditcarddebt,orevensendachildtocollege.Asarenter,youguaranteethatyourlandlordisthepersonwiththatequity.

2. HomeownershipProvidesTaxSavings

Onewaytosaveontaxesistoownyourownhome.Youmaybeabletodeductyourmortgageinterest,propertytaxes,andprofitsfromsellingyourhome,butmakesuretoalwayscheckwithyouraccountantfirsttofindoutwhichtaxadvantagesapplytoyouinyourarea.

3. HomeownershipAllowsYoutoLockinYourMonthlyHousingCost

Whenyoupurchaseyourhomewithafixed-ratemortgage,youlockinyourmonthlyhousingcostforthenext5,15,or30years.Interestratesremainedaround4%alllastyear,

5ReasonsHomeownershipMakes'Cents'

11

markingsomeofthelowestratesinhistory.Thevalueofyourhomewillcontinuetorisewithinflation,butyourmonthlycostswillnot.

4. BuyingaHomeIsCheaperThanRenting

AccordingtothelatestreportfromTrulia, itisnow37.4%lessexpensivetobuyahomeofyourownthantorentintheU.S.Thatnumbervariesthroughoutthecountrybutrangesfrom6.5%cheaperinSanJose,CAto50.1%cheaperinDetroit,MI.

5. NoOtherInvestmentLetsYouLiveInsideofIt

Youcanchoosetoinvestyourmoneyingoldorthestockmarket,butyouwillstillneedsomewheretolive.Inahomethatyouown,youcanwakeupeverymorningknowingthatyourinvestmentisgainingvaluewhileprovidingyouasafeplacetolive.

BottomLine

Beforeyousignanotherlease,let’sgettogethertohelpyoubetterunderstandallyouroptions.

12

Inthisdayandageofbeingabletoshopforanythinganywhere,itisreallyimportanttoknowwhatyou’relookingforwhenyoustartyourhomesearch.

Ifyou’vebeenthinkingaboutbuyingahomeofyourownforsometimenow,you’veprobablycomeupwithalistofthingsthatyou’dLOVEtohaveinyournewhome.ManynewhomebuyersfantasizeabouttheamenitiesthattheyseeontelevisionorPinterest, andstartlookingatthecountlesshomeslistedforsalewithrose-coloredglasses.

Doyoureallyneedthatfarmhousesinkinthekitcheninordertobehappywithyourhomechoice?Wouldatwo-cargaragebeaconvenienceoranecessity?Couldthemancaveofyourdreamsbeafuturerenovationprojectinsteadofamakeorbreaknow?

Thefirststepinyourhomebuyingprocessshouldbetogetpre-approvedforyourmortgage.Thisallowsyoutoknowyourbudgetbeforeyoufallinlovewithahomethatiswayoutsideofit.

Thenextstepistolistallthefeaturesofahomethatyouwouldlike,andtoqualifythemasfollows:

• ‘Must-Haves’– ifthispropertydoesnothavetheseitems,thenitshouldn’tevenbeconsidered.(ex:distancefromworkorfamily,numberofbedrooms/bathrooms)

• ‘Should-Haves’– ifthepropertyhitsallofthe'must-haves'andsomeofthe'should-haves,'itstaysincontention,butdoesnotneedtohaveallofthesefeatures.

• ‘Absolute-WishList’ – ifwefindapropertyinourbudgetthathasallofthe‘must-haves,’mostofthe‘should-haves,’andANYofthese,it’sthewinner!

BottomLine

Havingthislistfleshedoutbeforestartingyoursearchwillsaveyoutimeandfrustration,whilealsolettingyouragentknowwhatfeaturesaremostimportanttoyoubeforeheorshebeginstoshowyouhousesinyourdesiredarea.

StartingToLookForAHome?KnowWhatYouWantvs.WhatYouNeed

13

Whetherbuyingyourfirsthomeormovinguptoyourdreamhome,knowingyouroptionswillmakethemortgageprocesseasier.Yourdreamhomemayalreadybewithinyourreach.

Tohelpdebunkthismyth,let’stakealookatEllieMae’slatestOriginationInsightReport,whichfocusesonrecentlyclosed(approved)loans.

Asyoucanseeontheright,53.5%ofapprovedmortgageshadacreditscoreof600-749.

UrbanInstituterecentlyreleasedareportentitled,“BarrierstoAccessingHomeownership,”whichrevealedthat“eightypercentofconsumerseitherareunawareofhowmuchlendersrequireforadownpaymentorbelievealllendersrequireadownpaymentabove5percent.”

Myth#1:“INeeda20%DownPayment”Buyersoftenoverestimatethedownpaymentfundsneededtoqualifyforahomeloan.AccordingtothesameUrbanInstitutereport:

“Consumersareoftenunawareoftheoptiontotakeoutlow-down-paymentmortgages.Only19%ofconsumersbelievelenderswouldmakeloanswithadownpaymentof5%orless…While15%believelendersrequirea20%downpayment,and30%believelendersexpecta20%downpayment.”

Thesenumbersdonotdiffermuchbetweennon-ownersandhomeowners;39%ofnon-ownersbelievetheyneedmorethan20%foradownpaymentand30%ofhomeownersbelievetheyneedmorethan20%foradownpayment.

Whilemanybelievethattheyneedatleast20%downtobuytheirdreamhome,theydonotrealizethatprogramsareavailablethatallowthemtoputdownaslittleas3%.Manyrentersmayactuallybeabletoenterthehousingmarketsoonerthantheyeverimaginedwithprogramsthathaveemergedallowinglesscashoutofpocket.

Myth#2:“Ineeda780FICO®ScoreorHighertoBuy”Similartothedownpayment,manyeitherdon’tknoworaremisinformedaboutwhatFICO®scoreisnecessarytoqualify.

ManyAmericansbelievea‘good’creditscoreis780orhigher.

2MythsThatMayBeHoldingYouBackFromBuying

14

BottomLine

AccordingtotheRealtorsConfidenceIndexfromthe NationalAssociationofRealtors,61%offirst-timehomebuyerspurchasedtheirhomeswithdownpaymentsbelow6%.

Many potential homebuyers believe that a 20% down payment is necessary to buy a home and have disqualified themselves without even trying. The median down payment for all buyers in 2017 was just 10% and that percentage drops to 6% for first-time buyers.

Zillow’s SeniorEconomistAaronTerrazas recently shedlightonwhybuyerdemandhasremainedstrong,

“Lookinginto2018,rentisexpectedtocontinuegaining.Morewidespreadrentgrowthcouldmeanhomebuyingdemandsstayhigh,asrenterswhocanafforditmoveawayfromtheunpredictabilityofrisingrentstowardtherelativestabilityofamonthlymortgagepaymentinstead.”

It’snosurprisethatwithrentsrising,moreandmorefirst-timebuyersaretakingadvantageoflow-down-paymentmortgageoptionstosecuretheirmonthlyhousingcostsandfinallyattaintheirdreamhomes.

BottomLine

Ifyouareoneofthemanyfirst-timebuyerswhoisnotsureifyouwouldqualifyforalow-downpaymentmortgage,let’sgettogetherandsetyouonyourpathtohomeownership!

61%OfFirst-TimeBuyersPutDownLessThan6%

15

AccordingtoFreddieMac’sPrimaryMortgageMarketSurvey, interestratesfora30-yearfixedratemortgagehoveredaround4%in2017andarestillnearrecordlows.

Theinterestrateyousecurewhenbuyingahomenotonlygreatlyimpactsyourmonthlyhousingcosts,butalsoimpactsyourpurchasingpower.

Purchasingpower,simplyput,istheamountofhomeyoucanaffordtobuyforthebudgetyouhaveavailabletospend.Asratesincrease,thepriceofthehouseyoucanaffordwilldecreaseifyouplantostaywithinacertainmonthlyhousingbudget.

Thecharttotherightshowstheimpactrisinginterestrateswouldhaveifyouplannedtopurchaseahomewithinthenationalmedianpricerange,andplannedtokeepyourprincipalandinterestpaymentsbetween $1,850-$1,900amonth.

Witheachquarterofapercentincreaseininterestrate,thevalueofthehomeyoucanafforddecreasesby2.5%(inthisexample,$10,000).Expertspredictthatmortgagerateswillbecloserto 5%bythistimenextyear.

HowLowInterestRatesIncreaseYourPurchasingPower

Actnowtogetthemosthouseforyourhard-earnedmoney.

16

Inmanymarketsacrossthecountry,thenumberofbuyerssearchingfortheirdreamhomesgreatlyexceedsthenumberofhomesforsale.Thishasledtoacompetitivemarketplacewherebuyersoftenneedtostandout.Onewaytoshowyouareseriousaboutbuyingyourdreamhomeistogetpre-qualifiedorpre-approvedforamortgagebeforestartingyoursearch.

Butevenifyouareinamarketthatisnotascompetitive,knowingyourbudgetwillgiveyoutheconfidencetoknowifyourdreamhomeiswithinyourreach.

FreddieMaclaysouttheadvantagesofpre-approvalinthe'MyHome'sectionoftheirwebsite.

“It’shighlyrecommendedthatyouworkwithyourlendertogetpre-approvedbeforeyoubeginhousehunting.Pre-approvalwilltellyouhowmuchhomeyoucanaffordandcanhelpyoumovefaster,andwithgreaterconfidence,incompetitivemarkets.”

Oneofthemanyadvantagesofworkingwithalocalrealestateprofessionalisthatmanyhaverelationshipswithlenderswhowillbeabletohelpyouwiththisprocess.Onceyouhaveselectedalender,youwillneedtofillouttheirloanapplicationandprovidethemwithimportantinformationregarding“yourcredit,debt,workhistory,downpaymentandresidentialhistory.”

FreddieMacdescribesthe'4Cs'thathelpdeterminetheamountyouwillbequalifiedtoborrow:

• Capacity:Yourcurrentandfutureabilitytomakeyourpayments• CapitalorCashReserves:Themoney,savings,andinvestmentsyouhavethatcanbesold

quicklyforcash• Collateral:Thehome,ortypeofhome,thatyouwouldliketopurchase• Credit:Yourhistoryofpayingbillsandotherdebtsontime

Gettingpre-approvedisoneofmanystepsthatwillshowhomesellersthatyouareseriousaboutbuyinganditoftenhelpsspeeduptheprocessonceyourofferhasbeenaccepted.

BottomLine

Manypotentialhomebuyersoverestimatethedownpaymentandcreditscoresneededtoqualifyforamortgagetoday.Ifyouarereadyandwillingtobuy,youmaybesurprisedatyourabilitytodosoaswell.

17

WhyPre-ApprovalShouldBeYourFirstStep

Therearemanypotentialhomebuyers,andevensellers,whobelievethatyouneedatleasta20%downpaymentinordertobuyahomeormoveontotheirnexthome.Timeaftertime,wehavedispelledthismythbyshowingthattherearemanyloanprogramsthatallowyoutoputdownaslittleas3%(or0%withaVAloan).

Ifyouhavesavedupyourdownpaymentandarereadytostartyourhomesearch,oneotherpieceofthepuzzleistomakesurethatyouhavesavedenoughforyourclosingcosts.

FreddieMacdefinesclosingcostsasfollows:

“Closingcosts,alsocalledsettlementfees,willneedtobepaidwhenyouobtainamortgage.Thesearefeeschargedbypeoplerepresentingyourpurchase,includingyourlender,realestateagent,andotherthirdpartiesinvolvedinthetransaction.

Closingcostsaretypicallybetween2&5%ofyourpurchaseprice.”

We’verecentlyheardfrommanyfirst-timehomebuyersthattheywishedthatsomeonehadletthemknowthatclosingcostscouldbesohigh.Ifyouthinkaboutit,withalowdownpaymentprogram,yourclosingcostscouldequaltheamountthatyousavedforyourdownpayment.

Hereisalistofjustsomeofthefees/coststhatmaybeincludedinyourclosingcosts,dependingonwherethehomeyouwishtopurchaseislocated:

HaveYouPutAsideEnoughForClosingCosts?

18

• Governmentrecordingcosts• Appraisalfees• Creditreportfees• Lenderoriginationfees• Titleservices(insurance,searchfees)

• Taxservicefees• Surveyfees• Attorneyfees• Underwritingfees

Isthereanywaytoavoidpayingclosingcosts?

Workwithyourlenderandrealestateagenttoseeifthereareanywaystodecreaseordeferyourclosingcosts.Thereareno-closingmortgagesavailable,buttheyendupcostingyoumoreintheendwithahigherinterestrate,orbywrappingtheclosingcostsintothetotalcostofthemortgage(meaningyou’llenduppayinginterestonyourclosingcosts).

Homebuyerscanalsonegotiatewiththeselleroverwhopaysthesefees.Sometimesthesellerwillagreetoassumethebuyer’sclosingfeesinordertogetthedealfinalized.

BottomLine

Speakwithyourlenderandagentearlyandoftentodeterminehowmuchyou’llberesponsibleforatclosing.Findingoutyou’llneedtocomeupwiththousandsofdollarsrightbeforeclosingisnotasurpriseanyoneiseverlookingforwardto.

19

Whyistheresomuchpaperworkmandatedbylendersforamortgageloanapplicationwhenbuyingahometoday?Itseemsthattheyneedtoknoweverythingaboutyouandrequirethreeseparatesourcestovalidateeachandeveryentryontheapplicationform.

Manybuyersarebeingtoldbyfriendsandfamilythattheprocesswasahundredtimeseasierwhentheyboughttheirhometentotwentyyearsago.

Therearetwoverygoodreasonsthattheloanprocessismuchmoreonerousontoday’sbuyerthanperhapsanytimeinhistory.

1.Thegovernmenthassetnewguidelinesthatnowdemandthatthebankprovebeyondanydoubtthatyouareindeedcapableofpayingthemortgage.

Duringtherun-uptothehousingcrisis,manypeople‘qualified’formortgagesthattheycouldneverpayback.Thisledtomillionsoffamilieslosingtheirhomes.Thegovernmentwantstomakesurethiscan’thappenagain.

2.Thebanksdon’twanttobeintherealestatebusiness.

Overthelastsevenyears,bankswereforcedtotakeontheresponsibilityofliquidatingmillionsofforeclosuresandalsonegotiatinganothermillion+shortsales.Justlikethegovernment,theydon’twantmoreforeclosures.Forthatreason,theyneedtodouble(maybeeventriple)checkeverythingontheapplication.

However,thereissomegoodnewsaboutthissituation.

Thehousingcrashthatmandatedthatbanksbeextremelystrictonpaperworkrequirementsalsoallowedyoutogetamortgageinterestratearound4%.

Thefriendsandfamilywhoboughthomestenortwentyyearsagoexperiencedasimplermortgageapplicationprocess,butalsopaidahigherinterestrate(theaverage30-yearfixedratemortgagewas8.12%inthe1990sand6.29%inthe2000s).

Ifyouwenttothebankandofferedtopay7%insteadofaround4%,theywouldprobablybendoverbackwardtomaketheprocessmucheasier.

BottomLine

Insteadofconcentratingontheadditionalpaperworkrequired,let’sbethankfulthatweareabletobuyahomeathistoricallylowrates.

GettingAMortgage:WhySoMuchPaperwork?

20

Ifyou’veenteredtherealestatemarket,asabuyeroraseller,you’veinevitablyheardtherealestatemantra,“location,location,location” inreferencetohowidenticalhomescanincreaseordecreaseinvalueduetowherethey’relocated.Well,arecentsurveyshowsthatwhenitcomestochoosingarealestateagent,themillennialgeneration’smantrais,“local,local,local.”

CentSai,afinancialwellnessonlinecommunity,surveyedover2,000millennials(ages18-34)andfoundthat75%ofrespondentswouldusealocalrealestateagentoveranonlineagent,and71%wouldchoosealocallender.

Surveyrespondentscitedmanyreasonsfortheirchoicetogolocal,“includingpersonaltouch&handholding,longstandingrelationships,localknowledge,andamountofhassle.”

Doria Lavagnino,Cofounder&Presidentof CentSai, hadthistosay:

“Weweresurprisedtolearnthatonlineprovidersarenotyetasbigadisrupterinthissectoraswefirstthought,despitepurportedcostsavings.Wefoundthatmillennialsplaceahighvalueonthepersonaltouchandknowledgeofalocalagent.Buyingahomeforthefirsttimeisdaunting,andworkingwithalocalagent—particularlyanagentreferredbyaparentorfriend—couldprovidepeaceofmind.”

ThefindingsoftheCentSai surveyareconsistentwiththeConsumerHousingTrendsStudy,whichfoundthatmillennialspreferamorehands-onapproachtotheirrealestateexperience:

“Whileoldergenerationsrelyonrealestateagentsforinformationandexpertise,Millennialsexpectrealestateagentstobecometrustedadvisersandstrategicpartners.”

Whenitcomestochoosinganagent,millennialsandothergenerationssharetheirtoppriority:thesensethatanagentistrustworthyandresponsivetotheirneeds.

Thatsaid,technologystillplaysahugeroleintherealestateprocess.AccordingtotheNationalAssociationofRealtors,94%ofhomebuyerslookforprospectivehomesandneighborhoodsonline,and74%alsosaidtheywoulduseanonlinesiteormobileapptoresearchhomestheymightconsiderpurchasing.

BottomLine

Manywonderedifthistech-savvygenerationwouldprefertoworkwithanonlineagentorlender,butmoreandmorestudiesshowthatwhenitcomestorealestate,millennialswantsomeonetheycantrust,someonewhoknowstheneighborhoodtheywanttomoveinto,leadingthemthroughtheentireexperience.

WhyWorkingWithALocalRealEstateProfessionalMakesAllTheDifference

21

Soyou’vebeensearchingforthatperfecthousetocall‘home’andyou'vefinallyfoundit!Thepriceisrightand,insuchacompetitivemarket,youwanttomakesureyoumakeagoodoffersothatyoucanguaranteethatyourdreamofmakingthishouseyourscomestrue!

FreddieMaccovered “4TipsforMakinganOffer”intheirlatestExecutivePerspective.Herearethe4tipstheycoveredalongwithsomeadditionalinformationforyourconsideration:

1. UnderstandHowMuchYouCanAfford

“Whileit'snotnearlyasfunashousehunting,fullyunderstandingyourfinancesiscriticalinmakinganoffer.”

This‘tip’or‘step’reallyshouldtakeplacebeforeyoustartyourhomesearchprocess.

Gettingpre-approvedisoneofmanystepsthatwillshowhomesellersthatyouareseriousaboutbuying,andwillallowyoutomakeyourofferwiththeconfidenceofknowingthatyouhavealreadybeenapprovedforamortgageforthatamount.Youwillalsoneedtoknowifyouarepreparedtomakeanyrepairsthatmayneedtobemadetothehouse(ex:newroof,newfurnace).

2. ActFast

“Eventhoughtherearefewerinvestors,theinventoryofhomesforsaleisalsolowandcompetitionforhousingcontinuestoheatupinmanypartsofthecountry.”

Theinventoryofhomeslistedforsalehasremainedwellbelowthe6-monthsupplythatisneededfora‘normal’market.Buyerdemandhascontinuedtooutpacethesupplyofhomesforsale,causingbuyerstocompetewitheachotherfortheirdreamhome.

Makesurethatassoonasyoudecidethatyouwanttomakeanoffer,youworkwithyouragenttopresentitassoonaspossible.

ReadyToMakeAnOffer?4TipsForSuccess

22

3.MakeaSolidOffer

FreddieMacoffersthisadvicetohelpmakeyourofferthestrongestitcanbe:

“Yourstrongestofferwillbecomparablewithothersalesandlistingsintheneighborhood.Alicensedrealestateagentactiveintheneighborhoodsyouareconsideringwillbeinstrumentalinhelpingyouputinasolidofferbasedontheirexperienceandotherkeyconsiderationssuchasrecentsalesofsimilarhomes,theconditionofthehouseandwhatyoucanafford.”

Talkwithyouragenttofindoutifthereareanywaysthatyoucanmakeyourofferstandoutinthiscompetitivemarket!

4. BePreparedtoNegotiate

“It'slikelythatyou'llgetatleastonecounterofferfromthesellerssobeprepared.Thetwothingsmostlikelytobenegotiatedarethesellingpriceandclosingdate.Giventhat,you'llbegladyoudidyourhomeworkfirsttounderstandhowmuchyoucanafford.

Youragentwillalsobekeyinthenegotiationprocess,givingyouguidanceonthecounterofferandmakingsurethattheagreed-tocontracttermsaremet.”

Ifyourofferisapproved,FreddieMacurgesyouto"alwaysgetanindependenthomeinspection,soyouknowthetrueconditionofthehome."Iftheinspectionuncoversundisclosedproblemsorissues,you candiscussanyrepairsthatmayneedtobemadewiththeseller,orcancelthecontract.

BottomLine

Whetherbuyingyourfirsthomeoryourfifth,havingalocalrealestateprofessionalwhoisanexpertintheirmarketonyoursideisyourbestbettomakesuretheprocessgoessmoothly.Let’stalkabouthowwecanmakeyourdreamsofhomeownershipareality!

23

CONTACTMETOTALKMOREI’msureyouhavequestionsandconcerns…

Iwouldlovetotalkwithyoumoreaboutwhatyoureadhere,andhelpyouonthepathtobuyingyournewhome.Mycontactinformationisbelow.Ilookforwardtohearingfromyou…

EqualHousingOpportunity

Michael M. AdamsLicensed Broker VA, MD & DC202-656-2891 | Direct

Michael@Michael-Adams.com