Buying a home is a big life decision and knowing the facts before you buy can be priceless. Many buyers are shocked when they see how much money they need upfront to purchase a home. According to Unison’s 2019 Home Affordability Report, it takes buyers across the country an average of around 14 years to save for a home downpayment.

“As a general rule of thumb, experts say you should not be spending more than 30% of your income on housing expenses,” says USA TODAY Housing and Economy reporter Swapna Venugopal. “Aside from the mortgage payment, this includes costs like mortgage interest, property taxes and maintenance.”

The price of an existing single-family home rose 18.4% to $334,500 in March 2021. Here are some things you can do to achieve your goal of saving for a downpayment.

Start with savings, income, good credit

Before you even start your home search, you need to look at your finances and understand where you stand with your financial obligations. A good thing, to begin with, is how much house can you afford with your current income, how much you have saved for a downpayment, the mortgage you can qualify for, and what the local real estate market is currently doing. There are other living expenses and costs that come with owning a home. You will have annual taxes and home maintenance to pay for.

“You should have secure employment, some savings set aside, and be able to secure a good mortgage with an excellent credit score,” says Omer Reiner, a licensed Realtor and President of FL Cash Home Buyers LLC in Florida.

In order to get good rates on a mortgage, you will need good credit. It is best to check your credit score by obtaining your credit report before you start your home search. The rule of thumb says a good score is around 670 – 739. It depends on the lender, but a score closer to 700 is ideal if you’re thinking about getting preapproved for a mortgage,” Venugopal says.

The down payment

The down payment is a big part of the deal when it comes to owning a home. The down payment is a percent of cash that you pay at the closing. Usually, you need to put at least 20% of the purchase price down upfront.

If a downpayment is a concern, some government-backed loans from FHA or USDA will allow as little as 3.5% down or no down payment. If you have to put less than 20% down, then you will also have to have private mortgage insurance (PMI). Most lenders require PMI which does increase your monthly expenses.

Mortgage terms

Just like anything else, lenders are in competition and want your business. When shopping for a mortgage, ask what the rate and closing costs are. You will want to get preapproved by a lender who will verify your income and credit. A seller is more prone to choose a buyer with a pre-approval than one without.

Get a quote from several lenders for a mortgage. Have your credit reviewed for the quotes. It would be a disappointment to be told you could get a certain rate and then be given a higher rate because of your credit score.

Closing costs

The down payment is only one part of the finances you need to bring to the table at closing. Homebuyers will have to also pay closing costs which include expenses on title insurance, attorney fees, appraisals and taxes.

A homebuyer should be prepared to pay 1% to 5% of the sale price. Remember when buying a house you should also have money set aside to cover home maintenance, repairs and upgrades.

If you are in the market for a new home, call a local Realtor who can help you through the home buying process.

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Realtor.com asks home shoppers what they would like to know about homeowners insurance and their questions were answered by Allstate insurance experts. If you are in the market for a home, you should become familiar with homeowners insurance. It is important to get good homeowners insurance and understand your policy. Here are some questions and answers below.

1. I’m a first-time home buyer. What should I consider when choosing insurance? – Cynda from Florida

Just like the home you choose, your insurance policy will fit you and your needs. A musician will be interested in protecting their musical instruments while other homeowners might want protection on their garage because of their car collections.

An insurance expert can help you set up your policy with your unique coverage. You can get a personalized quote and make sure all your needs are covered.

“Your home is one of your most valuable assets,” say the experts at Allstate. “Make sure your homeowners insurance protects you and your family in many kinds of situations involving not only your home itself but also the things you own.”

2. What are the most common types of claims? What is the claims process like? – Emily from Colorado

Prepare for the unexpected, that is why homeowners insurance is so important. Many homes get damaged from wind, hail, plumbing failures, theft, and fire. When you do have to put a claim in for damage to your home, your insurance company will work with you and answer all your questions and concerns. Your agent will help you with the process by assessing the damage and helping you recover your losses.

3. How is condo insurance different from home insurance? How can I make sure my condo insurance has the coverage I need? – Maria from Virginia

Condo insurance is different because it only covers your unit and the belongings in the unit. Usually, the condo building is insured under your condo association’s insurance policy which covers things like the boiler room, the roof, hallways and other shared spaces. Make sure to get your agent to explain what is covered. Some policies will cover the wall and floor in your specific unit.

4. Are there any surprising things that aren’t covered by a typical homeowners insurance policy? – Emily from Colorado

Surprisingly a flood and earthquake damage are not covered in a regular insurance policy. Both require a separate additional policy on top of your regular homeowners insurance. Make sure you have a clear understanding of what is covered. Things such as an outside sewer or drain might need additional coverage.

5. Does my homeowners insurance cover small damages, like a stolen bike? – Maria from Virginia

This would be under personal property coverage which usually covers theft. Make sure the stolen items are worth more than your deductible before you claim it on your insurance. If your deductible is not met your insurance will not pay for the claim. Make sure to review coverage limits with your agent who will customize your coverage to fit your needs. An agent can help you choose any additional coverage if you take note of the possessions such as sports equipment and riding lawn mowers that might need to be part of your policy.

6. What are some things homeowners can do to help lower the cost of their homeowners insurance? – Emily from Colorado

There are several things you can do to help reduce your rates. Increasing your deductible can reduce your premium payments. Bundling policies such as home and auto will give you a discount. Other ways you might get a discount are if you are a new homeowner, switch insurance providers without having a recent claim,
set up automatic payments to pay your insurance premium or are age 55+ and retired.

Remember when looking for homeowners insurance always seek a professional’s advice. Even though a policy is cheaper than another, it might not cover everything you need. Shop around and talk to a couple of insurance agents in your area for the best fit and price for you.

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According to a survey done by Fannie Mae, homeownership is highly rated by consumers. In fact, they continue to see homes as a safe, high potential investment.  The Fannie Mae Q4 2020 National Housing Survey reported that consumers believe it is just as safe to invest in a home as savings and money market accounts.

The survey found that consumers relayed that the top four financial benefits of homeownership were a better chance of saving for retirement, the best investment plan, the chance to be better off financially and the chance to build up wealth. Of these four benefits, 88% of consumers felt it gave a better chance of saving for retirement, 87% felt it was the best investment plan, 85% felt it gave them a chance to be better off financially and 85% believe homeownership presented them a chance to build up wealth.

Consumers’ opinions are right on the money so to speak. The Federal Reserve’s Survey of Consumer Finances revealed that owning a home is a “clear financial benefit.” In the survey, it was reported that those who owned a home vs renting had a forty times higher net worth. As the housing market grows stronger, the gap between renters’ and homeowners’ net worth grows farther apart. Corelogic reported that the equity in homeownership grew by $26,300 over the last year which widened this gap even further.

Keeping Current Matters released data showing the gap in the net worth in every income category between homeowners and renters. For a homeowner making under $26,000 their net worth is $103,000 but a renter’s net worth is only reported at 1,000, homeowner’s making $26,000 – $46,000 their net worth is $140,000 and a renter making the same income net worth is $6,000, homeowners making $46,000 – $74,000 have a net worth of $190,000 while renters only have $11,000, homeowners making $74,000 – $127,000 have a net worth of $261,000 and renters only $34,000, homeowners making $127,000 – $192,000 have a net worth of $433,000 while renters making the same income have a net worth of $117,000 and homeowners making over $192,000 have a net worth of $1.66M while renters only $705,000.

Homeownership is a solid financial investment opportunity but should you choose to purchase a home, the best thing to do is use a local real estate professional. A Realtor can help you take the next steps towards homeownership.

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The recent Quarterly Sales by Price and Financing, published by the U.S. Census Bureau, was analyzed by the National Association of Home Builders and found that conventional loans financed the largest share of new home sales since 2018.

Conventional loans in Q1 2021 were reported at 71.6%, FHA came in at 19.3%, VA loans at 5.3% and cash new home sales were 4.1%. As far as the percentage points increase from Q1 2020, conventional loans rose 2.1 percentage points and FHA-backed sales were up 1.6 percentage points. Unfortunately, VA loans decreased 2.1 percentage points and cash sales dipped 0.9 percentage points.

The four-quarter moving average (MA) of the share of new home sales backed by FHA has increased over the past two and a half years from 12.2% to 18.9%. Conventional loans however have seen a 4.4 percentage points decrease during the same period.

Even with a small increase, interest rates are still at historically low levels. The stock market returns topping 20% from Q1 2020 to Q1 2021 have played important roles in the large increase in the number conventional loan and cash purchases relative to sales financed through the FHA and VA.

Now is a great time to purchase a home with low-interest rates and in turn a great time to also sell. The national median sales price for a new home reported was $347,500 and those homes sold back by financing were $386,600.

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Spring brings new flowers, animals, and warm sun. Many say that spring is the time for changes. The housing market also sees a rise in home sales during this time. Here are five reasons why springtime is the best time to sell.

1. There’s high demand from homebuyers.

Showingtime, an app that tracks showings on homes, reported that buyer showings are up 51.5% from this time last year. The housing market is hot and buyer demand is strong.

“As anticipated, demand for real estate remains elevated and continues to be affected by low levels of inventory…On average, each home is getting 50 percent or more requests this year compared to January of last year. As we head into the busy season, it’s likely we’ll push into even more extreme territory until the supply starts catching up with demand,” says Daniil Cherkasskiy, Chief Analytics Officer at ShowingTime.

2. There aren’t enough houses for sale.

Inventory is on a record low, and buyers are high on demand. “Nationally, the inventory of homes for sale in February decreased by 48.6% over the past year, a higher rate of decline compared to the 42.6% drop in January. This amounted to 496,000 fewer homes for sale compared to February of last year,” reported Realtor.com.

According to the National Association of Realtors (NAR) “sales are skyrocketing” and the existing inventory is “continuing to drop dramatically”. The average house is only staying on the market for only 21 days.

3. You have a lot of leverage in today’s market.

Low inventory and tons of buyers make this a seller’s market. The seller currently has the upper hand in the market and can negotiate the best deals. NAR reports that bidding wars have increased on average by 3.7 offers per house.

4. It’s a great way to use your home equity.

CoreLogic reported that the average homeowner gained $17,000 in equity over the past year, and that number continues to grow as home values appreciate, in the third quarter of 2020. During this market, homeowners will find that they have a lot of equity in their homes. Equity is a type of forced savings that grow during your time as a homeowner and can be put toward bigger goals like buying your next dream home.

“As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity. In today’s housing market, fast-rising demand against the limited supply of homes for sale has resulted in continued house price appreciation,” says Mark Fleming, Chief Economist at First American.

5. It’s a chance to find a home that meets your needs.

The COVID-19 pandemic has changed the way homeowners see and live in their homes. The stay-at-home orders meant spending a lot of time at home. This extra time at home caused homeowners to re-evaluate the top desires they want in a home.

The home office, outdoor spaces and flex rooms became a must in the 2021 home search. With so many people working from home, or virtual schooling flex rooms and home offices are in high demand.

If you are in the market to sell your home, contact your local Realtor. A Realtor will not only help you navigate the market, getting you the best price and deal for your home, but will also take most of the pressure off of you from this fast pace market.

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A home’s resale value is always important to a homeowner. Home renovations if done right and smart can make a huge impact on a home’s worth. Some homeowners are ready for a big project such as a kitchen or bathroom overhaul, but others do not have the time, resources, or energy to tackle these. If you are in the market to sell your home, some small projects can boost the value and time it takes to sell your home.

“People buying may not have the greatest imagination, and they want to walk into something that’s turnkey,” says Sandy Scheinman, a real estate salesperson at Douglas Elliman Real Estate in New York City. “In a competitive market, offering a home that looks renovated and new is really what you need to do to compete.”

According to Scheinman, renovations can increase a home’s price by 10% to 12%. In order for these changes to not only add monetary value but also gain a buyer’s interest, you must make smart choices in your projects. Here are some great tips to follow to make your projects a success.

Design with buyers in mind

“If you are doing the renovations for resale, choose the types of fixtures and styles that will appeal to your target audience,” says Michele Morrison, a real estate agent with the Sereno Group in Los Altos, CA. “Don’t build your dream home if it’s not for you.”

What you may love, another person may hate. The key to renovations is to opt for designs that are universally flattering.

Paint a room

Painting a room can cost around $200 – $400 and only take about a day but the impact is huge. Updating the walls in a warm gray or white will give the room a fresh look in a neutral color.

It is always important to use a color that is neutral and not polarizing. Some buyers will walk into a home hate the eggplant walls and leave.

Add crown molding

Crown molding gives a room a finished and improved look. This wood can be added to the top edge of walls, door frames, or cabinets. This project typically costs between $300 to $500 per room and only takes a few days to paint, prep and install. Crown molding is not only a lovely touch but can also cover problem areas on walls or around windows and doors.

“This renovation increases value by setting the home apart from other comparable homes in the area,” says Richard McMurray, owner of DFW Crown Moulding in Fort Worth, TX.

Bathroom makeover

In the past, a bathroom in a home served only basic needs and was more simple in design. Today, the bathroom is a major part of a home’s grand showcase. Today’s buyers want a nice large bathroom with a soaking tub and natural light.

“We’re seeing a trend where people are expanding the size of the bathrooms and having his-and-her showers. It’s more of a room than what it was in the past,” Nematnejad says.

A bathroom renovation can be costly, $35,000 to $65,000-plus, but there are simple updates you can do to please a buyer’s eye. Some buyer-pleasing ideas include replacing a linoleum floor with tiles, painting the vanity, installing a new sink and faucet, and putting in new lights.

Kitchen renovation

Another project that can cost anywhere from $65,000 to over $100,000 but can recoup the cost of about 65% of the project when you sell your home is renovating the kitchen. Kitchens are not just a place to cook anymore, today’s homeowners use the kitchen as a living space.

“The more you put into [a kitchen renovation], the higher the resale cost recouped percentage is going to be,” says Robert LaFleur, owner of Building Professionals, Inc. in Westford, MA.

Follow these tips and you are sure to be please with the outcome of the sale of your home. If you are in the market to sell, contact a local Realtor who can help you through the process.

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Mortgage Rates are low and now is a great time to purchase a home. A big stumbling block for many is a downpayment. There are ways to borrow money through government-backed loans that give a borrower a chance to purchase a home with a smaller downpayment or no money down at all.

Lenders are protected when they lend borrowers the money for a home from the three government agencies which are the Federal Housing Administration, the US Department of Agriculture and the US Department of Veterans Affairs. These agencies ensure loans allowing lenders to reduce the risk of lending a loan to those who offer a low or no down payment.

“The goal across all these programs is helping people get into a home, knowing that homeownership is a key driver for removing the wealth divide,” said Ed Barry, chief executive of Capital Bank, a bank headquartered in Rockville, Maryland, which operates Capital Bank Home Loans. “These programs are out there, but many people don’t even know that they qualify.”

An FHA loan allows a buyer to obtain a mortgage with a lower credit score, higher debt-to-income ratio and smaller down payments. In fact, it is easier for a home buyer to qualify for an FHA loan vs a conventional mortgage.

There is however a limit to the amount you can borrow on an FHA loan. This year the caps range between $356,362 and $822,375 and also depend on the location of the property. In order to find out the cap for your area, you can visit the Department of Housing and Urban Development website.

If you are a veteran or a surviving spouse of a veteran, then you will be eligible for a VA loan. VA loans offer 100% financing and better terms than a conventional loan.

“The advantage of the VA loan is the option to make no down payment,” said Jordan Nietzel, a certified financial planner and founder of Trek Wealth Planning in Kansas City. “The thing that people need to watch out for is the debt-to-income ratio, which can go higher on a VA loan than a conventional loan. It can qualify you for a higher loan than you may be prepared to handle.”

One catch is the VA funding fee. For a home purchased at $200,000 with a 5% down payment of $10,000, the VA funding fee will cost $3,135 or 1.65% of the $190,000 loan amount. The lower interest rate on a VA loan will be worth the VA funding fee.

In a rural area, there is a loan program called the USDA loan which allows for 100% financing with no down payment. These are great for low and moderate-income households. The buyer’s household income cannot exceed 115% of the median income of the area around the home.

There are also property requirements for a USDA loan. The loan eligibility is based on the population density of the community. A potential buyer can search for USDA-eligible areas on the USDA website.

“People tend to think a USDA loan is for farmers,” said Barry. “That isn’t the case. It is designed for rural purchases. But that is defined by population density, not agricultural use. So you have eligible areas even 30 miles out of Washington DC.”

“The challenge is finding someone who is knowledgeable in this space,” said Barry. Not only about the type of loan, but about the areas where you are looking. “Usually this is more than just a transaction. It can be a super complicated process. A little hand holding is helpful.”

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The Zillow Consumer Housing Trends Report for 2020 had big changes from the data reported in 2019. New construction (NC) buyers that were surveyed for the 2020 report revealed that they spent less time looking for a home because they focused only on a new construction home. The report showed that 23% more NC buyers found their home in less than four weeks. In fact, the average new construction buyer spends only two months searching for a newly built home.

More and more home buyers are desiring a new construction home now more than ever. Builders are marketing off this change by adding incentives such as free builder upgrades. In 2019 9% of NC buyers said free builder upgrades was one of the top three of their reasons for buying new construction while in 2020 14% cited this as one of their motivators.

The top reasons for purchasing a certain home are still location and home features but following close behind now is the desire to purchase a new home that has never been lived in or used. Buyers want to be able to customize their home features and choose their own floor plan. Thirty-percent of NC buyers cited one of their top reasons for purchasing a newly built house was because it was the best value for their money.

New construction buyers are now focusing on less square footage. More NC buyers (9%) in 2020 purchased small homes which were 6 percentage points higher than in 2019. Small homes are homes that are less than 1,000 square feet. The data also informed that 19% of NC buyers paid less than $100,000 for their home in 2020 while only 9% were reported in 2019. Zillow feels that the shift might be because more new construction is being built in urban areas or that home builders are offering more options in smaller homes.

There was also a shift in home feature preferences in NC buyers in 2020. These include rental income, smart technology and space for cars. It became important to 32% of new construction buyers that they could generate rental income by renting out the whole home compared to 23% who said this was important in 2019. Smart home technologies are also becoming the norm. More and more people are becoming comfortable with devices that control things such as security or temperature control. Forty-three percent of NC buyers say that smart home capabilities are very important. Cars are also important to Americans, in fact so important, that 74% of NC buyers have to have off-street parking or a garage and 67% have to have an assigned parking space. Zillow says this probably stems from the higher rate of new construction in urban areas.

The new construction housing market is starved for inventory so if you are in the market, choosing a Realtor is a must. A Realtor can help you find the best home for you and your needs.

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Zillow Consumer Housing Trends Report 2020 data shows some changes from what buyers want in a new construction home. More buyers are purchasing new construction homes now more than last year. The survey revealed that 40% of new construction buyers that were surveyed only were interested in new construction homes. Here is what has changed in a new construction buyer’s mindset in 2020.

Smaller, less expensive options gaining appeal

Those new construction buyers surveyed showed that they are choosing smaller homes. A small home is considered a home with less than 1,000 square feet. In 2020, 9% of new construction buyers purchased a small home which is 6 percentage points higher than in 2019.

This change might have stemmed from more houses being built in urban areas or home builders swapping size for more upgraded options. One definite catalyst is the price buyers want to pay for a home. In 2019 9% of new construction buyers paid less than $100,000 for a new construction home and in 2020 this jumped to 19%. The growth in households buying less expensive new construction homes coincides with a 10-point drop in the share of buyers who pay between $200,000 and $299,000 — 21% of NC home purchases fell in that range in the 2020 survey, compared to 31% in 2019.

A shift in home feature preferences

In 2020 many homebuyers are still looking for many of the same top features as in 2019 such as air conditioning, the preferred number of bedrooms and bathrooms and preferred floor plans. There were some changes to new construction buyers’ preferences in 2020. Buyers were looking for rental income, smart technology and space for cars.

Close to 32% of new construction buyers are looking for a home that will generate rental income. Those that only wanted to rent a portion of their home (home-sharing) grew to 27% in 2020.

Nowadays smart technology is a big part of society in many aspects. New construction home buyers have placed importance on smart technology in their homes. In fact, 45% of new construction home buyers felt that having smart home capabilities was extremely important. Homebuyers want devices that provide everything from security to temperature control.

Having a place for a car has become a must in 2020. Seventy-four percent of new construction buyers say that off-street parking or a garage is one of the top must-haves and 67% said a parking space is also on the list. These items came in 6 points higher in 2020 than reflected in 2019’s data. As mentioned before, urban new construction is on the rise and there is always a scarcity of parking in the city.

Top reason for buying new construction

In 2020 new construction home buyers place the top reason for purchasing a new construction home is for the free builder upgrades. In the survey, 14% of new construction buyers said free builder upgrades swayed their decision to purchase new construction. Still in the top reasons were desirable location at 39%, appealing home features at 38% and everything new and never used at 37%. Buyers want to have the ability to customize features on their new home.

If you are in the market for a home, consider a new construction home. Always use a Realtor who can help you with the building process as well as the purchasing of your new home.

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The ICC 700-2020 National Green Building Standard® (NGBS), had important updates to a couple of key sections regarding land use and housing development. According to the National Association of Home Builders, it is important for builders to take notice of these changes. Although there is continuity from the 2015 NGBS in many areas, understanding the changes and new offerings will enable developers and builders to determine the compliance path that works best for their project.

In Section 4 of the 2020 National Green Building Standard site design and development are defined. This section will give points for sustainable land development that is ultimately planned for residential construction. This section was created to help reduce detrimental environmental impacts by enhancing the natural features and improving the quality of the site.

A builder can earn between one to four stars for the number of points earned by the certification defined in Section 4. In the spring 2020 edition, changes were made to Subsection 403.6 Landscape Plan, Subsection 403.7 Wildlife Habitat and Subsection 405.11 Insect Mitigation.

Subsection 403.6 Landscape Plan allows up to an additional 28 points. The new categories in the 2020 update include points for spray irrigation and third-party qualified water-efficient grasses. An example is Turfgrass Water Conservation Alliance (TWCA) which limits water and energy use anywhere turf is planted.

Subsection 403.7 Wildlife Habitat allows up to an additional 6 points. Points are awarded on the design of sites abutting wildlife corridors, fish and game parks, or preserved areas. An example of this would be the outdoor lighting that would be close to the wildlife habitat.

Subsection 405.11 Insect Mitigation is a new category that has been added to the 2020 NGBS. A builder can receive up to 19 points for landscaping that helps reduce insect-borne disease.

Section 5 includes lot design, preparation and development. The points earned in this section have increased in the 2020 NGBS in subsection 503.1 Natural Resources, 503.4 Stormwater Management and 503.5 Landscape Plan to 19 points. Also, the following subsections have been added in 2020, 505.7 Multi-Unit Residential Compressed Natural Gas (CNG) Vehicle Fueling which allows 4 points, 505.8 Street Network gives an additional 5 points and 505.10 Exercise and Recreational Space gives up to 9 points.

Other notable changes made between 2020 and 2015 NGBS are that 2020 verifies practices via the Environmental Protection Agency, the International Wildland Urban Interface Code and the Turfgrass Water Conservation Alliance (TWCA). The 2020 National Green Building Standard® is a great tool for builders to work with and helps improvements on the development of land and lots. The standards give builders and land developers the flexibility needed to develop land and lots that are sustainable, cost effective and appropriate for their geographic location.

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