Buyer

2016: Homeowner’s Net Worth Will Be 45x Greater Than a Renter

2016: Homeowner’s Net Worth Will Be 45x Greater Than a Renter | Simplifying The Market

Every three years the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a recent Forbes article the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that in 2016 the net worth gap will widen even further to 45 times greater.

The graph below demonstrates the results of the last two Federal Reserve studies and Yun’s prediction:

Increasing Gap in Family Wealth | Simplifying The Market

Put Your Housing Cost to Work For You

Simply put, homeownership is a form of ‘forced savings’. Every time you pay your mortgage you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.

The latest National Housing Pulse Survey from NAR reveals that 80% of consumers believe that purchasing a home is a good financial decision. Yun comments:

“Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.”

Bottom Line

If you are interested in finding out if you could put your housing cost to work for you through homeownership, let’s get together and discuss your options.

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Applying For A Mortgage: Why So Much Paperwork?

Applying For A Mortgage: Why So Much Paperwork? | Simplifying The Market

We are often asked why there is so much paperwork mandated by the bank for a mortgage loan application when buying a home today. It seems that the bank needs to know everything about us and requires three separate sources to validate each and every entry on the application form.

Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.

There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.

  1. The government has set new guidelines that now demand that the bank prove beyond any doubt that you are indeed capable of affording the mortgage. During the run-up in the housing market, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again
  2. The banks don’t want to be in the real estate business. Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.

However, there is some good news in the situation. The housing crash that mandated that banks be extremely strict on paperwork requirements also allowed you to get a mortgage interest rate probably at or below 4%.

The friends and family who bought homes ten or twenty ago experienced a simpler mortgage application process but also paid a higher interest rate (the average 30 year fixed rate mortgage was 8.12% in the 1990’s and 6.29% in the 2000’s). If you went to the bank and offered to pay 7% instead of <4%, they would probably bend over backwards to make the process much easier.

Bottom Line

Instead of concentrating on the additional paperwork required, let’s be thankful that we are able to buy a home at historically low rates.

VOTE…Make Your Voice Heard

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Don’t forget to vote early to avoid the long lines and the risk of not voting on time!  Early voting began this week and you can vote early at any polling place through Friday, Oct. 30th.  On Nov. 3rd, you must vote at your precinct.  Stand up for home owners by voting YES to Prop 1 and Prop 7.
What Is Proposition 1?

Proposition 1 empowers you to vote to cut your property taxes and protect your home from additional taxes.  On November 3, voters will vote on Prop 1 and decide whether to amend the Texas Constitution to increase the homestead exemption by $10,000 (bringing the total exemption up to $25,000) and ban real estate transfer taxes – or taxes on home sales – permanently.

TexansForProp1

Prop 1 helps make home ownership more affordable for seniors, people with disabilities, and low-income families. On November 3rd, support more savings for Texas homeowners by voting YES on Proposition 1 -the Homeowner Tax Relief Proposition!

What Specifically Will Prop 1 Do?

Prop 1 will save you money by increasing your homestead exemption from $15,000 to $25,000. This is great news for Texas homeowners because it lets you keep more of your hard-earned money.

Prop 1 also helps seniors and people with disabilities by giving them much-needed tax relief, and providing them a lower property tax cap, which helps keep their property tax burden low.

Prop 1 will also constitutionally ban real estate transfer taxes, which target home sales as another taxing source. This means that Texans won’t ever be double-taxed on their property.

Make sure to vote YES on Prop 1!

Click here to see the official ballot language

Proposition 7

Increase funding for transportation infrastructure without new taxes or debt

Proposition 7 on the statewide ballot creates a dedicated funding source to fix our current roads, construct new highway projects, and make all our roads safer to drive on.

Proposition 7 returns Texas to the pay-as-you-go system of paying for roads, which has served this state so well for generations. Most important, the proposal redirects existing state funds and does not call for any new taxes, new debt, or new toll roads.   You are urged to vote for Proposition 7 on the statewide ballot.

Make your voice heard in this important election.

Click Here To Find Your Polling Location:  http://votetexas.gov/voting/where

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First-Time Homebuyers Lead the Way in May

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First-Time Homebuyers Lead the Way in May | Simplifying The Market

The National Association of Realtors’ (NAR) latest Existing Home Sales Report revealed that first time homebuyers made up 32% of all sales in the month of May; marking the highest share since September 2012 and up from 27% the same time last year.

NAR’s Chief Economist, Lawrence Yun, cited “strong job gains among young adults, less expensive mortgage insurance and lenders offering low down payment programs,” as contributing factors to the increase in first-time buyers.

Existing-home sales rose 5.1% to a seasonally adjusted rate of 5.35 million. Total housing inventory for sale remains under the 6.0 months needed for a historically normal market at a 5.1 month supply.

Homes sold quickly in May, as 45% of homes sold in less than a month. May also marked the 39thconsecutive month of year-over-year price gains as the median existing home price rose 7.9% above May 2014 to $228,700.

Below is a chart showing the breakdown of price increases by region:

Existing Home Prices by Region | Simplifying The Market

Yun went on to say,

“Solid sales gains were seen throughout the country in May as more homeowners listed their home for sale and therefore provided greater choices for buyers.” 

“However, overall supply still remains tight, homes are selling fast and price growth in many markets continues to teeter at or near double-digit appreciation. Without solid gains in new home construction, prices will likely stay elevated — even with higher mortgage rates above 4 percent.”

Bottom Line

“More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise.”

If you are a homeowner considering a move this year, meet with a local real estate agent who can show you the opportunities available right now! Don’t miss out on the influx of new buyers entering the market every day.

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Do I Need Perfect Credit to Buy a Home?

Do I Need Perfect Credit to Buy a Home? [INFOGRAPHIC] | Simplifying The Market

 June 19, 2015  Down PaymentsFirst Time Home BuyersFor Buyers

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Some Highlights:

  • The average FICO score of Approved Conventional Loans was 757 in May
  • The average FICO score of Approved FHA Loans was 688 in May
  • Since April 2013, the ability of Americans to obtain a mortgage has increased substantially!

Get In Touch with Us …For All Your Real Estate Needs!

FOLLOW or CONNECT with US

Simply click the Follow button in the column on the left:

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FREE SEARCH INFO :

 AREA HOMES     REALTORS      HOME VALUE        A  LENDER

THE HOME BUYERS GUIDE      Use Code: H B G

THE HOME SELLERS GUIDE     Use Code: H S G

MARKET SNAPSHOT                     Use Code: M S S                                               (To Find Out What Your Neighborhood Is Doing)

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Ask for: Joi or Guy McKinney, REALTORS® at 214-699-6788

Attaining the American Dream: The 5 Financial Reasons to Buy

5-11-15 American-Dream

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We have reported many times that the American Dream of homeownership is alive and well. The personal reasons to own differ for each buyer, with many basic similarities.

Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University expanded on the top 5 financial benefits of homeownership his paper – The Dream Lives On: the Future of Homeownership in America.

Here are the five reasons, each followed by an excerpt from the study:

1.) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) You’re paying for housing whether you own or rent.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

3.) Owning is usually a form of “forced savings”.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income…On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. If you are considering a purchase this year, let’s get together to evaluate your ability to do so.

FOLLOW or CONNECT with US

Simply click the Follow button in the column on the left:

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FREE SEARCH INFO :

 AREA HOMES     REALTORS      HOME VALUE        A  LENDER

THE HOME BUYERS GUIDE      Use Code: H B G

THE HOME SELLERS GUIDE     Use Code: H S G

MARKET SNAPSHOT                     Use Code: M S S                                               (To Find Out What Your Neighborhood Is Doing)

WEBSITE

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Ask for: Joi or Guy McKinney, REALTORS® at 214-699-6788