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No… You Do Not Need 20% Down to Buy NOW!

No… You Do Not Need 20% Down to Buy NOW! | Simplifying The Market

The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite the main reason for not currently owning a home, as not being able to afford one.

This brings us to two major misconceptions that we want to address today.

1. Down Payment

NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less.

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO® Scores

An Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.

The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August.

No… You Do Not Need 20% Down to Buy NOW! | Simplifying The Market

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options.


Thinking about buying or selling in NELA or the Hi-Desert?

Let's get coffee and talk about your plans!


Curious what you home is WORTH?

See more: Buyer 101, News

The Mortgage Process: What You Need to Know [INFOGRAPHIC]

The Mortgage Process: What You Need to Know [INFOGRAPHIC] | Simplifying The Market

The Mortgage Process: What You Need to Know [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Many buyers are purchasing a home with a down payment as little as 10% or even 3%.
  • You may already qualify for a loan, even if you don’t have perfect credit.
  • Take advantage of the knowledge of your local professionals who are there to help you determine how much you can afford.

Thinking about buying or selling in NELA or the Hi-Desert?

Let's get coffee and talk about your plans!


Curious what you home is WORTH?

See more: Buyer 101, Diary, News

Harvard: 5 Reasons Why Owning A Home Makes Sense Financially

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

Eric Belsky is the Managing Director of the Joint Center of Housing Studies (JCHS) at Harvard University.He authored a paper on homeownership titled – The Dream Lives On: The Future of Homeownership in America. In his paper, Belsky reveals five financial reasons why people should consider buying a home.

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, contact a local professional who can help evaluate your ability to do so.


Source: KCM

See more: Buyer 101, Market Updates, News

Billionaire: Buy A Home… And If You Can, Buy A Second Home!

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Three years ago, John Paulson gave a keynote address at the CNBC/Institutional Investor Conference. In his speech, he told those in attendance that he believes housing will continue its strong recovery for the next 4 to 7 years, saying that:

“The housing market has bottomed. It’s not too late to get involved. I still think buying a home is the best investment any individual can make. Affordability is still at an all-time high.”

When asked how the average person could take advantage of the current real estate market at the time, Paulson said:

“Buy a home and, if you can, buy a second home.”

Two years ago, Paulson reiterated his statement, saying:

“I still think, from an individual perspective, the best deal investment you can make is to buy a primary residence that you’re the owner-occupier of.”

Who is John Paulson and why should you listen to him?

Paulson is the person who, back in 2005 & 2006, made a fortune betting that the subprime mortgage mess would cause the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell.

What do others think of Paulson?

According to Forbes, John Paulson is:

“A multibillionaire hedge fund operator and the investment genius.”

According to the Wall Street Journal, Paulson is:

“A hedge fund tycoon who made his name, and a fortune, betting against subprime mortgages when no one else even knew what they were.” 

So… Is what he said still true?

The core reasons behind Paulson’s statements still ring true today, but why does he believe homeownership is such a great investment?

Paulson broke down the math of homeownership as an investment:

1. “Today financing costs are extraordinarily low.”

The latest numbers from Freddie Mac show us that you can still get a 30-year mortgage at historically low rates of under 4%.

2. “And if you put down, let’s say, 10 percent and the house is up 5 percent,” as many experts predict, “then you would be up 50 percent on your investment.”

How many are seeing a 50% return on a cash investment right now?

Paulson goes on to compare the long term financial benefits of owning versus renting:

3. “And you’ve locked in the cost over the next 30 years. And today the cost of owning is somewhat less than the cost of renting. And if you rent, the rent goes up every year. But if you buy a 30-year mortgage, the cost is fixed.”

Bottom Line

Whenever a billionaire gives investment advice, people usually clamor to hear it. This billionaire gave simple advice – if you don’t yet live in your own home, go buy one.


Source: KCM

See more: Buyer 101, Market Updates, News

Pssss — Thinking about buying a house in Los Angeles?

1st time home buyer event!


Hey Guys!

Is 2017 the year you finally pull the trigger and buy a little piece of LA?  Not sure if you should keep renting or buy a house? We have had historically low interest rates for a while now, but the are starting to creep up. Now would be a great time to start moving in the direction of home ownership.

Join me for my next 1st Time Home Buyer Q + A on March 5th, at 6pm. Bring your partner, friends and join us for drinks, middle eastern food and a ton of great info!

Highlights

  • We will look at the LOCAL MARKET CONDITIONS and why things are so damn expensive.
  • We will talk about INTEREST RATES and why the historically low rates are starting to go up.
  • Natalie Salins from Movement Mortgage will be here to answer all your FINANCIAL QUESTIONS: Types of loans, interest rates, pre-qualification, taxes, etc.  She will also give some great tips on raising your credit scores and discuss ways to get people with non-traditional (freelance) income approved. She is a-mazing!
  • I’ll going to talk about the home buying PROCESS and answer your questions about what to expect. 
  • I’ll explain some common real estate TERMINOLOGY that can be confusing.
  • I’ll show you how to decide if RENTING or BUYING make more sense for you.
  • We will talk about FIXERS and deciding how much you can take on in a REMODEL.
  • I’ll share some tips on how to write a really great BUYER’s LETTER.
  • I’ll show you how to weigh if it is better for you to RENT or BUY.
  • We will talk about the EMOTIONAL part of buying a house.
  • We can talk about up and coming NEIGHBORHOODS, particularly on the east side.
  • Plus, any other QUESTIONS!

Come hungry, we are getting middle eastern food from Carousel — it will be delish.

Please RSVP via email to pattyhume@kw.com. Space is limited to 12 people since it is at my house. + Feel free to invite friends, but just make sure they RSVP! This will fill up quickly.

XOXO,

See more: Buyer 101, Events

How Property Taxes are Determined

HOW PROPERTY TAXES ARE DETERMINED

Property taxes are governed by California State law and collected by the county. The County Assessor must first assess the value of your property to determine the amount of property tax based on the assessed value (cash or market value) at the time of purchase. This value increases not more that 2% per year until the property is sold or new construction is completed. The appropriate tax rates, including the general tax levy, locally voted special taxes and any city or district assessments, are applied by the Auditor-Controller. Based on the Auditor-Controller’s calculations, the tax collector prepares and distributes tax bills and collects the taxes.

TAX CALENDAR

On January 1, taxes become a lien at 12:01 a.m. not yet due and payable for the Fiscal Tax Year starting July 1. Thereafter, title evidence must show taxes as a lien for the coming Fiscal Tax Year.

To be eligible for applicable exemptions, you must own and occupy property on March 1.

On December 10, a 10% penalty is added to taxes due. If December 10th  falls on a weekend or holiday, taxes are not delinquent until 5 p.m. the next business day.

On April 10, a 10% penalty plus administrative charge attaches. If April 10 falls on a weekend or holiday, taxes are not delinquent until 5 p.m. the next business day.

On June 30, if you fail to pay either or both installments by 5 p.m., property tax becomes defaulted and additional costs and penalties accrue.

If June 30 falls on a weekend or holiday, taxes must be paid by 5 p.m. of the preceding business day.

Property may be sold at public auction after five years of delinquency.

(from Title360 Home Seller’s Guide)


Thinking of selling? 
Download a FREE 26 page Home Guide for Seller’s – Click Here to Download


See more: Buyer 101, Seller 101

DATE CHANGE — Home Buyer Q + A — Oct. 23nd

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Home Buyer Q + A on Sunday, Oct. 23rd

We changed the date!  I’m hosting another Home Buyer’s Q + A on Sunday, October 23rd at 6pm. It’s going to be at my house in Echo Park. Bring your partner, friends and join us for drinks, thai food and a ton of great info!

Highlights

  • Natalie Salins from Movement Mortgage will be here to answer all your FINANCIAL QUESTIONS: Types of loans, interest rates, pre-qualification, taxes, etc.  She will also give some great tips on raising your credit scores and discuss ways to get people with non-traditional (freelance) income approved. She is a-mazing!
  • I’ll going to talk about the home buying PROCESS and answer your questions about what to expect. 
  • I’ll explain some common real estate TERMINOLOGY that can be confusing.
  • We will talk about FIXERS and deciding how much you can take on in a REMODEL.
  • We will look at the LOCAL MARKET CONDITIONS and why things are so damn expensive.
  • I’ll share some tips on how to write a really great BUYER’s LETTER.
  • I’ll show you how to weigh if it is better for you to RENT or BUY.
  • We will talk about the EMOTIONAL part of buying a house.
  • We can talk about up and coming NEIGHBORHOODS, particularly on the east side.
  • Plus, any other QUESTIONS!

Come hungry — we will have lots of food and drinks!

Please RSVP via email to pattyhume@kw.com. Space is limited since it is at my house.
+ Feel free to invite friends, but just make sure they RSVP!

XOXO,

See more: Buyer 101, Events

Home Buyer Q + A on April 10th

YOu're invited
Hi Everyone!

It’s that time again. I’m hosting another Home Buyer’s Q + A on April 10th, 6pm. It’s going to be at my house in Echo Park. Bring your partner, friends and join us for cocktails, snacks and a ton of great info!

Highlights

  • Natalie Salins from Movement Mortgage will be here to answer all your FINANCIAL QUESTIONS. She will also give some tips on raising credit scores and discuss ways to get people with non-traditional (freelance) income approved. She is a-mazing!
  • I’ll going to talk about the home buying PROCESS and answer your questions about what to expect. 
  • I’ll explain some common real estate TERMINOLOGY that can be confusing.
  • We will talk about FIXERS and deciding how much you can take on in a REMODEL.
  • We will look at the LOCAL MARKET CONDITIONS and why things are so damn expensive.
  • I’ll share some tips on how to write a really great BUYER’s LETTER.
  • I’ll show you how to weigh if it is better for you to RENT or BUY.
  • We can talk about up and coming NEIGHBORHOODS.
  • Plus, any other QUESTIONS!

Come hungry — we will have lots of snacks, drinks & cocktails.

Please RSVP via email to pattyhume@kw.com. Space is limited since it is at my house.
+ Feel free to invite friends, but just make sure they RSVP!

XOXO,

See more: Buyer 101, Diary, Events, News

Join me — My next 1st Time Home Buyer Event is on April 10th

1st time home buyer event! copy

Thinking about buying a house or condo in the next couple of years?

Join us for cocktails, snacks and a ton of great information!

Natalie Salins (who is awesome by the way…) from Movement Mortgage will join us to answer all your questions regarding pre-qualification and loans. We will cover FHA, conventional, renovation loans, etc. Interest rates, points and all those confusing real estate terms. She will give times on improving your credit score. Natalie is also a wiz at getting people with non-traditional income funded. So if you are a freelancer you will really want to talk with her.

After Natalie talks, I’ll share my process and what to expect from the home buying experience. And we can talk a bit about up and coming neighborhoods in Los Angeles and what is going on with the market overall!


The event is at my house in Echo Park so space is limited. 
Please RSVP to pattyhume@kw.com


See more: Buyer 101, News

Buyers and Sellers: Who Pays for What?

(On real estate purchases in Southern California)

The SELLER can generally be expected to pay for:

  • Real Estate Broker’s commission
  • Due and payable property taxes, bonds, assessment
  • Prorated taxes, interest, rent HOA dues (could be credit or debit)
  • Payoff of all loans, other liens and judgments of record against the property (except those to be assumed by Buyer) including, but not limited to: accrued interest, demand/statement fee, re-conveyance fee, forwarding fee, late fees/prepayment penalty, if any
  • Loan fees required by the Buyer’s Lender (specifically on FHA & VA loans)
  • Homeowner’s Association transfer fee, document fee and demand fee
  • Pest control inspection reports and cost for repairs
  • Home warranty plan
  • Title insurance premium for Owner’s Policy
  • Escrow fee (Seller’s portion)
  • Document preparation fee for Grand deed and other recordable
  • Document(s) prepared for Seller’s benefit
  • Demand processing fees
  • Notary Public fees ($10.00 per signature to be notarized)
  • Document signing service, if requested
  • Documents recording charges

The BUYER can generally be expected to pay for:

  • County Transfer Tax ($1.10 per $1,000 of sales price)
  • City Transfer Tax (varies by city)
  • Prorated taxes, interest, rent HOA dues (could be credit or debit)
  • Payable taxes (not yet delinquent) required to be paid in advance by Lender
  • Inspection fees (physical, roofing, geological, etc.)
  • New financing costs, fees, pre-paid interest and impounds, if any (except those costs to be paid by Seller, as required by Lender or as negotiated in Purchase Agreement) or Assumption costs if existing financing is to be assumed by Buyer
  • Hazard insurance premium – year paid in advance
  • Title insurance premium for Lender’s Policy
  • Escrow fee (Buyer’s portion)
  • Document preparation fee for documents prepared for Buyer’s benefit
  • Notary Public fees ($10.00 per signature to be notarized)
  • Document signing service, if requested
  • Special delivery/courier fees/wire transfer, if utilized
  • Document recording charges

(From Title360 Home Seller’s Guide)


Thinking of selling? 
Download a FREE 26 page Home Guide for Seller’s – Click Here to Download


See more: Buyer 101, Seller 101