Which Downpayment Strategy is Right for You?

Downpayment
What downpayment strategy is for you?

You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a home. The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders among other benefits.

But there can actually be financial benefits to putting down a small down payment—as low as three percent and sometimes no-money down—rather than parting with so much cash up front, even if you have the money available.

THE DOWNSIDE

The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search.

THE UPSIDE

The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same.  You may find that even with low or no money down, the interest rate and mortgage insurance, you are paying less than or about the same as you are currently paying for rent.  It could make sense for you to jump into the market and at least start to build equity.    If you’re looking at your home as an investment, putting down a smaller amount of downpayment can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE HAPPY MEDIUM

Of course, your home payment options aren’t binary. Most borrowers can find some common ground between the security and advantages of a traditional 20 percent and an investment-focused, small down payment.

(Keep in mind that besides downpayment, buyers typically must also pay closing costs in addition to whatever minimum downpayment may be required.  Depending on the market and your loan product, sellers may contribute none, some or all of your closing costs.)

To learn more about what is involved in purchasing a home, don’t hesitate to contact me for a complimentary home buyer consultation.

 

Alabama First-Time Homebuyer Savings Account!

Becoming a homeowner is a big step with big rewards. However, it can also be a challenge, especially when it comes to saving for a down payment. Thanks to a new law that goes into effect in 2019, Alabamians will be able to save for a down payment with the First-Time Homebuyer Savings Account Program, an Alabama state tax-free savings account dedicated to the purchase of your first home. It also applies to those re-entering the housing market if you haven’t owned a home in the last 10 years.

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Individuals or couples can open one of these tax-free savings accounts at any local bank, credit union or other financial institution in Alabama.

 

 

The principal deposits and earnings will be deductible on your state income taxes. Savings from the account can be used to pay for the down payment and/or closing costs for the purchase of a single family dwelling.

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Mythbuster: Many people believe that they need to put 20% down to purchase a home.

 

 

The average down payment is actually closer to 11%. In many cases, the down payment can be even lower than that.  In our area, there are often low money down options–and your savings may be used for closing costs!

If you want to own a home, opening a tax-free savings account through the First-Time Homebuyer Savings Account Program is an important first step in making your dream a reality. To learn more about this program contact me, your local bank or credit union, and view the Infographic.

Information courtesy of Alabama Association of Realtors.

Wetumpka Area Market Trends–3rd Quarter 2018 Update

Gold Star ParkA few weeks ago, we looked at the Montgomery market as a whole and found just short of a 5 month supply of homes and a average sold price of $171,272 for the month of September.   Visit: Central Alabama Market Update–Fall 2018. We all know that real estate can vary considerably by neighbornood and  area, so  earlier this year we looked at market trends for the Wetumpka area including downtown and surrounding areas (zip code 36092). Visit: Wetumpka Area Market Trends–Year to Date (through May 2018). It’s time for an update to see how the more current information on the Wetumpka market compares with earlier this year and with the overall Montgomery area.

It looks like the Wetumpka Area continues to be more toward a sellers market than the Montgomery Market as a whole.  Wetumpka has less than a 4 month inventory of single family residential homes and and is averaging  about 90 days on the market from lisiting to closing  Also, although the average sold price of home is Wetumpka is below the average sold price in the overall Montgomery area market, prices are moving upward!

What does this mean?

If you’re a Wetumpka homeowner looking to sell, now looks like a great time to get that home on the market!   If you are thinking about buying a home in Wetumpka, you may want to consider stepping up your plans to get on board!

If you are interested in a more detailed breakdown of market trends by a particular zip code or neighborhood of interest , let me know and I’ll send you a free report:  Free Market Report for Your Neighborhood! 

Wetumpka Area Real Estate-QTR 3 2018

Data pulled from the Montgomery Area Association of Realtors on 10-15-2018  based on the period 1-1-2018 through 9-30-2018.  Data  Information deemed reliable but not guaranteed.  Data focused on zip code 36092 which includes downtown Wetumpka and surrounding areas.  If you are interested in Wetumpka 36093 or any other area zip code or neighborhood, let me know and I’ll send you a free report:  Free Market Report for Your Neighborhood! 

Central Alabama Market Update–Fall 2018

The Central Alabama real estate market continues among the most affordable and generally stable markets in the US.  The average home  in our Central Alabama area sold for $171,272 in September.¹     It appears that sold prices may be on the rise, about 3.3% more in September compared to just last month (August 2018), BUT they are still under 1% higher than September last year 2017.

While many other parts of the country continue to experience major price increases along with lack of inventory, the Central Alabama market overall is more in balance with  realatively stable prices adjusting for seasonal variation and a hint of a sellers market–maintaining  close to a 5 month supply of homes.  Average days on the market in the Central Alabama region had been hoovering around 90 days for quite some time, but this past month, it edged up to 102 days.   Over half (57%) of the homes sold in under 90 days, but nearly 18% of homes that closed in September were on the market over six months.¹  It is possible that as inventories are lower, additional properties that have been on the market longer periods are selling and causing the average days on market calculation to increase.

Central Alabama Real Estate-September 2018 Market UpdateData from Montgomery Area Association of Realtors, MAAR MLS only, September 2018 as of October 1, 2018.

When looking at market trends it’s important to look at year to date information and to compare the same time periods in previous years.  We are all familiar with the impact of seasonal and even monthly variations on both housing supply and buyers in the marketplace.  In our area, our home sale activity varies seasonally, but not as dramatically as many areas of the country.  According to the data through August, the actual Montgomery area home sales are closely aligning with the Alabama Center for Real Estate (ACRE), Culverhouse College of Business at the University of Alabama monthly projections for homes sold in the Montgomery area, suggesting a relatively stable and predictible market²:

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ACRE data shows that January and February are expected to have the fewest home sales in our area.  While this year started out slightly below the monthly projections, several of the following months exceeded the projections.    You can also see from the monthly data and projections that the lowest number of sold homes occurs early in the year, with the increase in spring market activity in 2018 beginning as early as March and peaking in June. By the end of August, 3226 residential units were actually sold, slightly over the projected year to date of 3192 by 34 units. Projections from September through December 2018 reveal an expected seasonal decline in homes to be sold, with a projected 1445 additional homes sold before the end of the year.  As we close out 2018, we will keep an eye on how the market actually performs and update on expectations for 2019.

What does this mean?

Although our area real estate market is relatively stable, there is a tendency toward a seller’s market and relatively low inventories with slightly increasing prices in the Montgomery area.  Regardless of the time of year, there is an active real estate market with buyers looking to purchase a home year round.  If you are thinking about selling in our area, the best time to sell is when you are ready!

For buyers,  this is a great time to make a move to buy a home.  Prices here are relatively steady and there has not been the pricing frenzy and multi-offer competitive buying situation that have been experienced in many areas of the country causing prices to go incredibly high.  This means that you can place an offer to purchase a home with more confidence that a reasonable offer will be accepted and be in a position to build equity for the future.  While no one can guarantee which direction the market will actually go, the Central Alabama area market is relatively stable and affordable.

Keep in mind that markets vary by neighborhood.   If you are interested in a more detailed breakdown of market trends by a particular zip code or neighborhood of interest , let me know and I’ll send you a free report:  Free Market Report for Your Neighborhood! 

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¹Montgomery Area Association of Realtors, Multiple Listing Service, September 2018 residential sales data (pulled October 1, 2018).

²The University of Alabama, Culverhouse College of Commerce, Alabama Center for Real Estate, Montgomery Area Real Estate Sales Forecast, August 2018 update.

Secrets to a Stress Free Purchase!

Are you in the market for a new home or  thinking about it?

Either way these tips can help you prepare and better understand the process once you make the decision to move forward!

STEP 1:  Lay the groundwork. 

These are things you can (and should) be doing right now even if your home purchase is months or even years ahead!  It is especially important to assess your financial situation, including your credit status, money for downpayment and closing, and how much you can and want to spend on your home.  The sooner you sort this out, the sooner you can set your timetable to get your new home.  Check out the infographic below for more details!

STEP 2:  Work with an agent.

Even if you are just getting started in the process, you can still work with a Realtor®.  A Realtor® can help you understand the steps in the process, what to expect and how to prepare,  and will coach you on navigating the real estate market place.

STEP 3:  Communicate effectively.

The team involved in your home purchase consists of your Realtor®, lender/banker, inspector, any other agent involved in the property listing, and others who have a role in making the home purchase come together.  Your Realtor® serves as a coordinator to ensure the transaction goes smoothly with all involved.  It is essential that you communicate effectively with the team, but in particular with your Realtor® who can help facilitate communications with everyone else on the team.

STEP 4:  Be patient, persistent and decisive.

This is another really important area where your Realtor® can be invaluable.  There are times in the process where you need to be patient and wait for the process to move forward, but there are also times when some action needs to be taken.  Your Realtor® can help you through these steps and help you through the decision process so your transaction goes as smoothly as possible with the least amount of stress!

Step 5:  Be flexible.

Keep in mind that it may take some home improvements or even multiple moves to reach your goal of the totally perfect home of your dreams.  It’s important to dream, but also to be flexible with the process as you take the steps to move closer to living your dreams.

Check out the infographic for more details:

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Secrets for a Stress Free Home Purchase

Thinking of buying a home now or in the future?  It’s not too early to contact me to help you understand the process and get familiar with the market.  Contact Me to arrange a complimentary consultation.

Are You Living Your Dreams?

Are you stuck in a hamster wheel or are you on the  path to live your dreams?Which path_

Do you feel like you are working hard but not getting ahead?  Have you thought about goals, but don’t think you’ll be able to reach them?  It can be tempting to just give up or to work even harder on the hamster wheel.  The problem with either choice is that you will just get even more tired and disheartened and are not likely to get where you really want to be.

We’ve all heard it–the definition of insanity:  “Doing the same thing over and over and expecting a different result”.

I meet so many people all the time who feel like they are in a rut or running the preverbial hamster wheel.  They may be in a job that is not fulfilling or that they even hate, they may be in financial stress but don’t know if anything can be done.  In real estate I meet alot of people who have a dream of home ownership but do not think they are financially able to buy a home today or ever.   People often feel incredibly frustrated or feel that the challenge to reach their dreams is overpowering.  These negative feelings and helplessness can take away from the energy you need to reprogram your attitude, your priorities and change your life.  The real challenge is setting goals, getting out of your comfort zone to make a plan,  and facing your fears and using your energies to do something purposeful to move forward and take action on your plan.  No excuses.

The best time to get started purposefully working toward your goals is right now.  You can’t change the past, but you can change today and your future.    As you make progress you will begin to feel satisfaction knowing that you are on a path to lead you where YOU want to go–whether it’s getting the facts about how to progress toward your goal, taking a class to move to a new career, setting relationship goals, saving money for a downpayment to buy a home, paying down debt and improving your financial picture,  relocating to live the life of your dreams, or whatever may be in your plan to live your dreams.  Moving outside the hamster wheel can be a bit scary for some people at first, but to be on the right path and enjoying your accomplishments along the way is an irreplaceable and awesome feeling!  And YOU CAN DO IT!

Here are a few inspirational quotes to help you think through your dreams and motivate you to set and stay the course to reach your goals.

“If you don’t make the time to work on creating the life that you want, you’re going to spend a lot of time dealing with a life you don’t want.” — Kevin Ngo

“You can conquer almost any fear if you will make up your mind to do so. For remember, fear doesn’t exist anywhere except in the mind.” — Dale Carnegie

“I have discovered in life that there are ways of getting almost anywhere you want to go, if you really want to go.”
Langston Hughes

“It doesn’t matter where you are coming from. All that matters is where you are going.” — Brian Tracy

“Dream as if you will live forever; Live as if you will die today.”
James Dean

Interested in life or financial coaching to help you set your goals and work your plans?  Are you thinking of buying or selling a home now or in the future?  Feel free to Contact Us  for more information.

Central Alabama Market Update–August 2018

adult-attractive-beautiful-935743The Central Alabama real estate market is among the most affordable and generally stable markets in the US.  The average home sold in August 2018 in our Central Alabama area was $165,727.¹ Most recent published data from HUD indicates national average price of existing homes is upwards of $243,833 with average new home prices considerably higher at $328,000.² While many other parts of the country are experiencing major price increases and lack of inventory, the Central Alabama market overall is more in balance with a hint of a sellers market–just under a 5 month supply of homes.  July data does show that demand is up and supply is down in our area, but prices have gone up only a modest 2% comparing year over year data. ³ Average days on the market in the Central Alabama region has been hoovering around 90 days for quite some time with nearly half (48%) of the homes selling in under 60 days, but over 11% selling after over a year.¹

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Data and chart above obtained from The University of Alabama, Culverhouse College of Commerce, Alabama Center for Real Estate, July 2018 update.³

Central Alabama Real Estate-August 2018 Market Update (1)

Data obtained from Montgomery Area Association of Realtors (MAAR) for August 2018 Residential Sales¹

 

Keep in mind that markets vary by neighboorhood.   If you are interested in a more detailed breakdown of market trends by your particular zip code or neighborhood, let me know and I’ll send you a free report:  Free Market Report for Your Neighborhood! 

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¹Montgomery Area Association of Realtors, Multiple Listing Service, August 2018 residential sales data.

²Office of Policy Development and Research (PD&R), U.S. Department of Housing and Urban Development, QTR 1 FY 2018 data.

³The University of Alabama, Culverhouse College of Commerce, Alabama Center for Real Estate, Montgomery area market report, July 2018 update.

 

 

 

5 MAJOR FACTORS IN PRICING A HOME

adult-advice-american-1050297When you put your home up for sale, one of the best ways to determine the asking price is to look at comparable sales. There’s rarely a perfect apples-to-apples comparison, so a pricing decision often relies on comparisons to several recent sales in the area. Here are five criteria to look for in a sales comparison.

 

  1. Location: Homes in the same neighborhood typically follow the same market trends. Comparing your home to another in the same neighborhood is a good start, but comparing it to homes on the same street or block is even better.  When dealing wih unique properties and rural properties, setting a value can get complicated.  Home valuation models typically vary greatly on these homes,
  2. Date of sale: It varies by location, but housing markets can see a ton of fluctuation in a short time period. It‘s best to use the most recent sales data available.
  3. Home build: Look for homes with similar architectural styles, numbers of bathrooms and bedrooms, square footage, and other basics.
  4. Features and upgrades: Remodeled bathrooms and kitchens can raise a home’s price, and so can less flashy upgrades like a new roof or HVAC system. Be sure to look for similar bells and whistles and home condition.
  5. Sale types: Homes that are sold as short sales or foreclosures are often in distress or sold at a lower price than they’d receive from a more typical sale. These homes are not as useful for comparisons.  The same may apply to sales between family members.

Let us help you price your home right the first time around ! You might be surprised at what your home is worth!  For a general idea of your home’s value, hop on over to my automated home valuation and see what it says:  Instant home value estimate