Buying

Mortgage Rate Projections – Buy Sooner Rather than Later

In a recent video update on the housing market, Frank Nothaft, Freddie Mac’s chief economist, stated that with both mortgage interest rates and home prices projected to increase in 2015 buying now makes sense.

If you are planning to buy a home in the next year, it’s better to do it sooner rather than later.

Here are the latest mortgage interest rate projections from four major housing entities:Fannie Mae, Freddie Mac, the Mortgage Bankers Association (MBA) and the National Association of Realtors (NAR):

Thinking of Selling & Moving Up?

This advice isn’t limited to just the first-time buyer. If you are considering moving up to the home your family has always wanted, waiting also makes no sense.

Buying a Home Guide – Fall Edition 2014

Download our fall edition of “Things To Consider When Buying a Home (PDF)”

The Truth About Buying a Home: You DON’T Need 20% Down

In a recent survey, How America Views Homeownership, it was revealed that 68% of Americans feel that now is a good time to buy a home and 95% said they want to own a home if they don’t already. Franklin Codel, head of Wells Fargo home mortgage production, explains:

“Although the home buying process has changed in many ways in recent years, our survey found Americans still view homeownership as an achievement to be proud of and many believe that now is a good time to buy a home.”

Confusion Creates Paralysis

However, the survey also reported that many are afraid to purchase a home because of uncertainty about “qualifying for a mortgage or navigating the home buying process”. Though 74% said they “know and understand” the financial process involved in buying a home, they also gave answers that suggest otherwise. For example:

30% of respondents believe that only individuals with high incomes can obtain a mortgage
64% of respondents believe they must have a “very good” credit score to buy a home
44% believe that a 20% down payment is required

In actuality many of these beliefs are unfounded. Let’s look at the question of down payment: Freddie Mac, in a recent blog post addressing the issue, confirmed that there is misinformation regarding the amount necessary when determining the down payment for a home purchase:

“Did you know 40 percent of today’s homebuyers using mortgage financing are making down payments that are less than 10 percent? And how about this: since 2010, the number of people putting down less than 10 percent for conventional loans has grown three fold. So, not only are low down payment options real, they represent a significant portion of today’s purchases.”

Christina Boyle, Freddie Mac’s VP and Head of Single-Family Sales & Relationship Management explained further:

A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.
Qualified borrowers can further reduce the down payment coming out of their own pockets to 3 percent by lining up gifts from family, grants or loans from non-profits or public agencies.

Education is the Key

Boyle talked about the importance of educating potential buyers:

“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines. Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 or 10 percent.”

Codel agreed:

“It is important for prospective homebuyers to feel empowered to ask lenders and real estate agents questions about available options, such as down payment assistance or FHA loan programs or VA loans for veterans.”

Bottom Line

If you are saving for either your first home or that perfect move-up dream house, make sure you know all your options. You may be pleasantly surprised. For more information about qualifying for a mortgage or buying a home, contact us today at 775-432-6300.

Should I sell my home first or wait until I have bought another home?

Q: Should I sell my home first or wait until I have bought another home?

This is a tough decision, but the answer will depend on your personal situation as well as the condition of the local housing market.

If you put your home on the market first, you may have to scramble to find another one before closing, which could cause you to buy a home that does not meet all your requirements. If you are unable to find another home, you may need to move twice, temporarily staying with relatives or in a hotel.

On the other hand, if you make an offer to buy first, you may be tempted to sell your existing home quickly, even at a lower price.

The advantage of buying first is you can shop carefully for the right home and feel comfortable with your decision before putting the existing home on the market.

On the flip side, the advantage of selling your existing home first is that it maximizes your negotiating position because you are under no pressure to sell quickly. It also eliminates the need to carry two mortgages at once.

Feel free to call to discuss the pros and of each, what might work best for you and the contingencies we can write into the contract to ease some of the pressures.

Buying a Home from a Family Member

One question that we are often asked is: “can I and should I buy a home from a family member?” The answer to this question is yes if you do it correctly and get help from professionals such as Realtors, lawyers and mortgage brokers as needed.

If the relative owns the home outright and has no mortgages or loans on the property you can simply purchase the property for whatever amount is agreeable to both parties. This can be done through a quit claim deed. If you do this it would be a good idea to contact us or consult an attorney with experience in local real estate law to make sure everything is done correctly.

If the home is mortgaged then this kind of purchase can be a little more challenging. First you will have to make sure the mortgage and home equity loan payments are current. You might want to call the mortgage holder and ask if it is possible to transfer the mortgage to the new owner as sometimes the loan maybe an assumable loan. If it is not you might want to contact us or a mortgage broker about other options.

Tips for Making a Home Purchase from a Family Member Easier

It is generally a good idea to work with a Realtor and/or a mortgage broker. A mortgage broker might be able to work with the mortgage company or arrange financing. We can certainly advise you on the paperwork and help you locate other professionals whose help you will need including title companies, mortgage brokers and potentially assessors, home inspectors and attorneys.We understand the local laws and the Northern Nevada housing market and can also alert you to problems you may not be aware of.

Before making the purchase you should run a title search on the property to make sure there are no outstanding liens against it. If there are liens you can still go through with the transaction once they are paid off or settled.

Have the home professionally inspected, and learn its condition before signing off on the purchase. This way you can make sure there are no major defects such as leaking roofs or major unseen termite damage.

You’ll need to determine the home’s value and a good way to do this is to ask a local Realtor such as ourselves who knows the market well. We can give you an informal estimate that can help you with negotiations. You also hire a professional real estate assessor to give an opinion of market value. We can help certainly help you locate a local appraiser.

Ensure all the necessary Nevada paperwork is completed to protect both buyer and seller and to ensure the sale is legal and that you will have clear title to the property.

Make sure you understand all the costs of ownership before getting into the sale. We’d recommend that you know what your closing costs are going to be as well as determining utility bills, what repairs and maintenance might need to be done, what the taxes are and what homeowners’ association fees you might need to pay, if any.

Do not buy a home from a relative that is in foreclosure or short sale. This can lead to a lot of legal entanglements and other problems that could cost you a lot of money.

Take your time and carefully discuss the sale before committing yourself to it. This way you can avoid conflicts and potential problems. It is also a good idea to talk over the sale with a real estate professional before you take any action. We can tell you what you are getting yourself into and advise you how to do it correctly.