4 creative ways to come up with a down payment

Creative Ways to Source a Down Payment

Creative Ways to Source a Down Payment

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Transforming Your Home With Wallpaper

Transforming Your Home With Wallpaper

Transforming Your Home With Wallpaper

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Top Spot for U.S. Vacation Homes Revealed

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Tips for the Perfect Bedroom Design

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Your Guide for Buying a Second Home

Your Guide for Buying a Second Home

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How to Say Goodbye to Renting and Hello to Home Ownership

How to Say Goodbye to Renting and Hello to Home Ownership

How to Say Goodbye to Renting and Hello to Home Ownership

Becoming a first-time homeowner takes a lot more than a desire to buy a house. It takes a lot of effort on your part to save up a down payment — which is usually a pretty good sized chunk of change — research neighborhoods, get pre-approved for a loan and other steps. Fortunately, it is quite possible to say goodbye to renting and hello to homeownership, especially when homeowners-to-be consider the following tips:

Focus on the Down Payment

In order to leave the land of rent, you are going to need a down payment — plain and simple. While it is common to put down 20 percent, some lenders now allow a much smaller amount, and first-time home buyer programs may go as low as 3 percent. While a smaller down payment may sound enticing, a 5 percent down payment on a $200K home is still $10,000 — not exactly a small sum. If saving money does not come naturally for you, don’t worry. With some relatively minor lifestyle changes you can speed up the down payment savings process. Come up with a savings plan to determine how much you need to set aside every week or month and then find ways to “find” that money in your budget. Using the $10,000 example from before, if you are determined to buy a home in two years, you’ll have to come up with about $415 a month to stash into your down payment account. Take a close look at your monthly bills and determine what you can pare down or eliminate — maybe you are paying $75 a month for a gym membership you rarely use, or you pay $40 extra for premium satellite channels that no one watches. These services can be cancelled and the money can go directly into your savings account. Eat out less, have Starbucks twice a week instead of every day and if you need to, consider a side hustle on the weekends to reach this magical monthly amount of $415.

Avoid Identity Theft

Unfortunately, the chances of becoming a victim of identity theft increase when you are buying and moving into a new home. The stacks of documents that are part of buying a home and that are filled with your personal information may accidentally fall into the wrong hands, and once you move, mail may not be routed correctly and thieves may steal your mail and your identity from your old mailbox. Prevent this situation from happening by purchasing an identity theft protection program; find a trusted company that will help safeguard your personal data. In addition to letting you know when a bank pulls your credit report and asking if you have authorized this inquiry, certain services will monitor your financial activity and alert you if anything is amiss.

Check Your Credit Report

When you start the pre-approval process for a loan and then move on to the Big Kahuna of applying for an actual mortgage, your credit report will be pulled numerous times. Your credit score will then be used to determine if you are approved for a loan, and what type of interest rate you will get. Please do not wait until you have the down payment saved and you are champing at the bit to go look at houses to check your FICO score — check your credit as early in the process as you can. If you have a credit card that has been issued through your bank, give them a call and see if they can run your report for you for free; in the cases of some credit cards, they also offer a free monthly FICO score check. Read through the report and check for any errors; this includes credit lines you never opened and delinquent payments that you know were made on time. Dispute any mistakes that you find and look for ways to boost your credit score, like paying down credit card bills and setting up automatic bill pay so you are never late with your payments.

4 tips to transform your closet

Chris Williams

Coldwell Banker RR Mesquite

888-346-8007

Get Ready for Your Master Closet Reno

Get Ready for Your Master Closet Reno

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What to Ask Before Buying Vacation Rentals

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Want a home that’s for sale by owner?

Want a home that's for sale by owner?

Want a home that’s for sale by owner?

Top 10 Threats to Real Estate in 2019

Top 10 Threats to Real Estate in 2019

June 14, 2018
storm cloud near roofline

Rising interest rates and the economy are the top two current issues to watch in real estate, according to the Counselors of Real Estate’s Top Ten Issues Affecting Real Estate 2018-2019, a list of the biggest threats to the housing market. For the first time, CRE broke its annual list down into current and longer-term issues to watch during the industry’s next year.

Top Current Issues to Watch

1. Interest rates and the economy: As interest rates rise, commercial and residential real estate markets are seeing several changes, such as decreasing demand for commercial property and higher home mortgage rates. Rate increases are making homes less affordable and are also limiting the value appreciation for commercial real estate. “Lack of wage growth for all but the wealthiest population segment is dampening housing demand, and limiting consumer spending that the economy needs for growth,” the report notes.

2. Politics and political uncertainty: Tax reform and policies aimed at balancing trade with other countries will have an impact on jobs, incomes, and both commercial and residential property, according to the report. “Congressional action to relax certain bank lending and asset management regulations was also among developing trends that may improve access to capital,” the report notes.

3. Housing affordability: The lack of affordable homes across income brackets, excluding the most wealthy, is being fueled by low wages, rising mortgage rates, and the underproduction of housing for nearly two decades, according to the report.

4. Generational change/demographics: Four distinct generations are exerting influence on commercial and residential real estate, such as in office design, student and elder housing, amenities, and location preferences.

5. E-commerce and logistics: Volatility in the retail sector, such as from the increase of e-commerce, is leading to a growth in warehouses.

Top Longer-Term Issues

1. Infrastructure: Roads, bridges, airports, water and sewer lines, electricity, and public transit are rapidly deteriorating, the report notes. An estimated $4.5 trillion is needed to improve critical infrastructure by 2025, according to the American Society of Civil Engineers. “The lack of serious effort by the U.S. to address its condition and much-needed revitalization leads the list of broader and emerging issues affecting real estate,” the report notes.

2. Disruptive technology: The report highlights advances in robotic manufacturing and warehousing; driverless cars and trucks; the extensive availability and utilization of personal and transactional data (aimed at enhancing business decisions); “smart” building technology that enables efficiency; global connectivity; automated business processes; and information protection through cybersecurity. “Nearly every aspect of real estate is undergoing dramatic change as these types of technology are adopted,” the report notes.

3. Natural disasters and climate change: The ongoing threat of natural disasters and climate change can result in high-priced property and environmental damage. This includes everything from severe storms, wildfires, and floods to earthquakes, volcanic activity, and rising sea levels.

4. Immigration: “If reduced by law, will have a negative impact on new housing starts and home purchases as well as worsen the current skilled labor shortage in the U.S.,” the report cautions.

5. Energy and water: Natural resources that are vital to property and quality of life are being threatened by environmental damage (manmade and from changing climates) as well as “entangling state and local regulations that are complicating development and lack the standardization that national regulations would provide.”

CRE additionally notes several other issues making its “watch list,” including rising construction costs; urbanization/suburbanization (with suburbs adapting citylike development and amenities); tax cuts (which may positively impact commercial properties; legislation is still developing); and societal leadership (social activism among younger Americans that is fueling business and social reform at many levels).

Portability Initiative Is Designed To Help 55 and Over To Sell Their Homes And Buy Another

Portability Initiative Is Designed To Help 55 and Over To Sell Their Homes And Buy Another

Portability Initiative Is Designed To Help 55 and Over To Sell Their Homes And Buy Another

The California Association of REALTORS® (CAR) is attempting to qualify a ballot initiative, The Property Tax Fairness Initiative, that will restructure the way property taxes are calculated for buyers over the age of 55 (and also the disabled and/or natural disaster victims). In many cases REALTORS® are already circulating petitions asking for ballot-placement of the initiative, and, in short order, professional signature-gathering organizations will be engaged as well.

CAR’s approximately 200,000 members have been assessed $100 each in support of the effort; and there are expectations that the Association’s substantial reserves will also be tapped in efforts to support the initiative’s passage.

What would this accomplish and why is it needed? In what follows I will seek to summarize CAR’s answer to those questions. First: the why?

As is well-known, California is currently experiencing a shrinking inventory of housing available for sale. This lack of supply has driven up prices, which makes it extremely difficult — in many cases, impossible — for first-time buyers to enter the market. In many cases, it also makes it difficult for move-up buyers to find replacement property.

There are, no doubt, multiple causes for this, but, no doubt, a major one is this: nearly 75% of California homeowners 55 years of age and older have not moved since the year 2000!

Why? Because of the way property taxes are calculated under California’s Proposition 13. For tax purposes, properties are valued on the basis of purchase price, not current market conditions. (Example: Suppose I bought my house for $600,000 a few years ago; and that my neighbor bought the same model — as identical as can be — in this heated market for $800,000. My tax will still be calculated on $600,000, whereas his will be based on $800,000.)

CAR says, “A large part of the reason why [55 and overs are not moving] is that, even if they want to downsize or move closer to family, the prospect of a property tax increase of 100, 200, or even 300 percent, effectively locks our parents and grandparents in their homes.” Thus, CAR maintains, “…The Property Tax Initiative…will help these homeowners to sell their current homes and move without being subjected to a what is effectively a massive “moving penalty.”

How will it help? By modifying current law to expand the conditions under which those over 55 would be allowed to transfer their current tax base — based on their original purchase price — to a replacement home that they are purchasing.

Currently there are only limited conditions under which someone over 55 may transfer his or her old tax base to a newly purchased home. The Initiative would expand this. “C.A.R.’s Property Tax Fairness Initiative would allow homeowners 55 years of age or older to transfer their Prop. 13 tax base to a home of any price, located anywhere in the state, any number of times.”

CAR’s talking points offer two examples of what would happen if the Initiative should pass.

Buy Up Example

  • Original Purchase Price: $100k
  • Estimate Property Taxes: $1K/annually
  • Existing Home Sale Price: $300k
  • New Home price: $400k
  • New Property Taxes: $2k/annually

The $100k difference between the $300k sales price and the $400k purchase price is added to the original Prop.13 property tax base of $100k for a new Prop. 13 tax base of $200k. The buyer still pays their fare share of taxes but isn’t blocked from making the move.

Buy Down Example

  • Original Purchase Price: $100k
  • Estimated Property Taxes: $1k/annually
  • Existing Home Sales Price: $300k
  • New Home Price: $200k
  • New Property Taxes: 1/3 of $200k = $67k [value] or $670/year for property taxes

If a homeowner buys a less expensive home, the property taxes will be proportionally the same as for the original home. In other words, if the tax base was one-third of the sale price, the new property tax would be one-third of the new sale price. Buying down reduces the homeowner’s annual property tax bill.

Among the objections raised to the Initiative is that it will reduce revenues to local governments. In response to this, CAR says: “The revenue loss is the result of a ‘static’ analysis — it only looks at the revenue lost, not the revenue gained which a ‘dynamic’ analysis would do. All buyers of homes formally owned by a senior homeowner will have the home reassessed to market value and pay property taxes based on the reassessed value.”

Lots to think about. There’s an election coming.

 

 

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