Monthly Archives: January 2017

Buying Your First Home

As newlyweds, buying and settling into your first home is an exciting and nerve-racking experience. Knowing what to expect can help the process go smoothly. From budgeting to renovations, here’s your step-by-step guide to first-time home ownership.

Determine How Much You Can Afford

Before you start your search for the home of your dreams, it’s important to establish how much you can afford to spend.

Examine Your Credit

Like it or not, your credit score has a significant impact on whether you get approved for a mortgage, and it influences your interest rate. Get a copy of your credit report and scour it for errors. Do what you can to improve your score and resolve discrepancies now so when it comes time to get preapproved for a loan, your credit is in tip-top shape.

Scrutinize Your Budget

As a rule of thumb, buyers are advised to spend no more than 25-30% of their household income on housing expenses. Take a close look at your household earnings, as well as your financial obligations, like student loans, car payments and credit card bills. Then, talk with your partner and come to an agreement about how much you can spend on your new residence.

Determine How Much You Can AffordFind A Home & Make An Offer

Once you have a solid idea how much you can afford, it’s time to find a home that meets your needs, your budget and then make an offer.

Get Preapproved for A Loan

You can search online for a loan or go to the institution where you bank and ask about your mortgage options. Either way, having a preapproval letter in hand will help you negotiate from a position of strength when making an offer. Be aware that you may get preapproved for a larger loan than you expected. Stick to your budget and resist the temptation to spend more than you can realistically afford.

Find a Real Estate Agent

The National Association of Realtors (NAR) is a great resource for finding a professional real estate agent in your area. As a first-time homebuyer, you’ll benefit from an experienced agent who can guide you through the home-buying process.

Check the Price of Homes that Appeal to You

Sit down with your spouse and make a list of what you want and need from your new home. Search an online real estate database for homes that match your criteria, then use a mortgage calculator to estimate your monthly payments.

Review Your Lease

If you’re currently renting, take a look at your lease and find out when it expires. Determine what the penalties and procedures are for breaking the lease or extending it as needed.

Make An Offer

Once you find a home that you want, it’s time to make an offer. You don’t want to overpay, but a stingy offer can insult the seller and make negotiations difficult. Consult with your real estate agent, who is likely to have an idea about what price the seller is apt to accept, and then make an offer you can afford. Before you submit your offer, discuss with your spouse what you’ll do if the seller rejects or counters it.

Make Upgrades

Now that you have keys in hand, you’re probably eager to turn your house into a home. Here are a few upgrades to consider tackling sooner than later.

Install A Home Security System

A monitored home security system can make your home three times less likely to be burglarized and save you up to 20% on your homeowners insurance premium. Plus, many systems offer home automation features that can help reduce your utility bills.

Replace the Front Door

Whether your entry door is weak or just downright ugly, replacing it with an attractive steel door is a smart move. A steel door is difficult to penetrate and is energy efficient. Also, if you sell your home, you’ll probably recoup its cost.

Improve the Kitchen

The kitchen is often considered the heart of a home, so it’s only natural to want it to look attractive and feel comfortable. If the cost of a professional renovation is out of reach, DIY projects and tasteful decorating can transform your kitchen in a weekend.

Trump Presidency Might Affect The Housing Market

Very few experts could have ever predicted that the man who once directed young Kevin McCallister to a hotel lobby would one day ascend to the highest office of the U.S. Federal Government. Defying the odds, the former host of The Celebrity Apprentice, Donald Trump, was elected President on November 8th.

To find a similar momentous political shake-up, you’d have to go all the way back to…2016. In June, the United Kingdom voted to exit the European Union causing world markets to briefly drop. Trump’s election is the United States’ “Brexit moment,” and will have similar influence on the economy and housing market. Here’s a brief outlook on how the Trump administration could affect U.S. real estate.

Already have a post-election renovation project in mind? Contact a remodeling pro today for up to four free quotes.

What Could Be Good For The Housing Market

While on the campaign trail, Trump proposed a trillion-dollar spending bill to repair and update the country’s infrastructure. With the creation of new construction jobs across the nation, the demand for housing should also rise with newly relocated workers. Also, the investment in infrastructure should boost the national economy which should help new construction projects overall.

Trump has also emphasized that he would roll back government regulations to spur economic growth. Being a real estate mogul himself, housing regulations will definitely be loosened over the next four years. Trump claimed that 25% of new housing construction costs are attributed to regulations and he would aim to lower them to 2%. Lower costs overall should help increase the buyer pool nationwide.

Banking regulations are also on Trump’s proposed chopping block. President-elect Trump has suggested he would like to scale back or remove the Dodd-Frank financial regulations. Doing so would alleviate regulatory costs to smaller banks and lenders, so they could afford to provide more mortgages to more potential buyers.

Many of Trump’s proposals would benefit the economy and housing market in the near future. If you were considering selling your home, you might find an opportune moment in the next few years. However, this opportunity might be tied to how your state voted in the election. Consumer confidence ties in with party lines, so red states may see improvements in home sales while blue states could see a slowdown. In the meantime, it never hurts to add equity to your home.

However, the long-term effects such as an increased budget deficit and resulting higher interest rates could slow the growth of the real estate marketing. We’ll look into some other potential negative effects of a Trump presidency next.

What Could Be Bad For The Housing Market

One of Donald Trump’s most polarizing stances was his proposal for mass deportations and a stricter national immigration policy. While a massive overhaul to immigration policy wouldn’t appear to affect real estate prices on the surface, it could have some unintended consequences.

A more isolationist and nationalistic approach to immigration might turn away foreign buyers and investors from purchasing American real estate. Between early 2015 and early 2016, foreign investors purchased over $102 billion in residential property. If it were harder to get into the country, that overseas revenue could dry up.

Trump has called to deport as many as 11.6 million undocumented workers living in the United States during his administration. Since the construction labor pool is already strained with nearly 2 million jobs lost since the 2008 housing collapse, potentially removing more laborers from the country could drive up construction costs and slow project growth.

While Trump’s deregulation of Dodd-Frank has some upsides, it could act as a double-edged sword towards the housing market. Cutting regulatory costs should help out smaller banks and lenders who are hit hardest, but it would also allow large banks to revert to the risky lending and financial practices that caused the 2008 sub-prime mortgage collapse. This might be overly pessimistic thinking, but large banks still have a “too big to fail” mindset (e.g. Wells Fargo’s recent false account opening scandal) and expect to be bailed out if they cause another housing bubble. This, however, is dependent on how far Dodd-Frank is rolled back.

Finally, Trump has been critical of government entities Fannie Mae and Freddie Mac for their handling of the 2008 housing collapse. If Trump and a GOP-controlled Congress were to move to these organizations to be owned privately, it might make it harder for more people to be approved for mortgages as these mortgages would now no longer be immune from default—similar to FDIC insured bank accounts. More risk on loans means fewer loans approved and at higher interest rates.

Know A Bathroom Remodel Return on Investment Guide

Homeowners need to ask themselves a few fundamental questions before deciding if remodeling the home is a good idea. The most important question is whether you are going to get your money back if you decide to sell the home in the future. When remodeling a bathroom, it’s important for homeowners to have a good idea of what your improvements are worth. This helps you invest your money wisely.

Bathroom Projects Pay Dividends

Most homeowners can’t afford to waste money on pet projects that put a strain on your finances, so homeowners must choose carefully when deciding on a remodeling project. Most professionals in the real estate field recommend choosing a project that yields a hefty return. Bathrooms are a great remodeling choice. When home buyers look at a home, they always ask about the bathrooms. For homeowners, a bathroom remodel is pricey, but it’s a safe bet that is very likely to be profitable. On average, bathroom remodeling projects yield a 60% return on investment. If the homeowner is smart about their remodeling project, they increase the profitability of the remodel even more. A homeowner might consider the following upgrades for their bathroom:

  • Multiple sinks
  • Glass showers
  • Good lighting
  • Shower seating
  • Extra storage
  • Floating vanities

An upgraded bathroom is welcoming and warm, which is appealing to home buyers who look for comfort and style when searching for a new home. It’s important for homeowners to pick upgrades that make use of neutral colors and finishes without following ultra-trendy designs. This ensures that the bathroom doesn’t look old and used in a couple of years. Homeowners should always consider increasing the size of the bathroom if possible; most home buyers prefer a home that has big bathrooms. It’s easy to expand the size of a bathroom during a remodel or change certain features to make the bathroom feel bigger. For example, you might replace an over-sized, rarely used tub with a sleek glass shower to create more space in the room.

Styles That Last

Many homeowners make the mistake of choosing bathroom styles that aren’t appealing to the public. When they do, they don’t add much value to their home. It’s always important to consider what a buyer is looking for in a bathroom to be sure of coming up with functional and stylish remodeling ideas. When remodeling a bathroom, homeowners need to keep the design in harmony with the rest of the home. If a bathroom sticks out like a sore thumb, it spoils the appearance of the home, especially for potential buyers who may only take a quick tour of the house before deciding whether or not to make an offer. When a homeowner is considering an upgrade that’s going to be hard to sell in the future, you need to realize that home buyers won’t be willing to pay for their eccentric designs. If they plan on staying in the home for a very long time, however, then it’s acceptable to design according to your own preferences.

Brexit & The U.S. Housing Market

Not since the royal wedding has the U.S. been so captivated with an event in the United Kingdom. This time, the event was known as Brexit. The difference between the two is that Brexit seems to have affected quite a few more worldwide markets other than makers of commemorative plates.

If you were curious or concerned on whether this decision could affect your ability to buy or sell a house, fear not. We’ll cover as many aspects as we can. But first, a quick overview.

What Was Brexit Again?

Unless you were away on vacation in a very remote location out of reach of any sort of mass media over the past few weeks, you’ve probably heard of Brexit. If not, welcome back! Hope you had fun on your trip to the Tibetan countryside. Regardless, here’s a quick recap of Brexit:

On June 23rd, the United Kingdom voted to leave the European Union. This decision affected world markets, currency values and Treasury bond rates due to the uncertainty facing the EU and the fifth largest economy in the world.

Across the pond, the U.S. stock market saw an immediate effect with the Dow Jones dropping nearly 900 points within days of the vote. However, a few days later, the markets corrected and returned to their previous levels! So, to summarize the world’s reaction to Brexit in one word would be simply, “panic.”

So Brexit is A Bad Thing for the US Housing Market?

Not necessarily! Remember when I mentioned that Treasury bonds were affected by Brexit? Well, this in turn affected Freddie Mac’s stance on mortgage rates. Earlier this year, there were rumors that the Fed would raise interest rates and mortgage rates would naturally follow. However, after the vote, Freddie Mac stated, “With the U.K.’s decision to exit from the European Union, global risks increased substantially leading us to revise our views for the remainder of 2016 and all of 2017.”

So, due to the global economic uncertainty, Freddie Mac’s outlook for mortgage rates dropped. With near all-time low rates, home ownership becomes more affordable for more people, creating potential new buyers.

Prior to the vote, the U.S. Housing Market had been improving, albeit slowly. The average median home value had increased by 5.4% since 2015. However, the amount of houses for sale had decreased nationwide by 4.5%. This market trend combined with the new Brexit influenced lower mortgage rates and could influence more sales in the near future. So, if you were considering selling and wanted to maximize your home’s value, you might want to consider making a few renovations in the meantime.

Not only does Brexit affect mortgage rates, but it might influence British businesses to invest in US real estate by moving headquarters to our more global business-friendly country. So the commercial real estate market could see a boost along with the residential market.

That Means Brexit is All Good for Us, Right?

Not necessarily, again! While the short-term effects of Brexit haven’t hurt the housing market, there’s still concerns about the long-term consequences. Some wonder if the UK’s exit will cause a dissolution of the EU altogether which could trigger a worldwide economic recession. The EU and Britain represent our fifth and seventh largest trading partners respectively with hundreds of billions of dollars traded each year. Major changes in trade can affect financial markets, which in turn affect real estate and interest rates.

The long-term effects of Brexit can be summed by Socrates’ teaching, “I know one thing: that I know nothing.” While Socrates probably meant something a little more philosophical by that, it still summarizes our current outlook. We’re just not sure what exactly will happen as a result of Brexit and we’ll just have to wait and see.

What Are We Supposed To Do Now?

Keep on keepin’ on, really. If you were thinking about selling, you probably now have a larger buyer audience along with already higher property values to influence your decision to put your home on the market. If you weren’t planning on selling right now, you should look to refinance your current mortgage and use your newfound savings towards adding equity to your home.