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Millionaire to Millennials: Buy Now!

by KCM Blog

Self-made millionaire David Bach was quoted in a CNBC article explaining that "the single biggest mistake millennials are making" is not purchasing a home because buying real estate is "an escalator to wealth.”

Bach went on to explain:

"If millennials don't buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter."

In his bestselling book, “The Automatic Millionaire,” Bach does the math:

"As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!"

Who is David Bach?

Bach is a self-made millionaire who has written nine consecutive New York Times bestsellers. His book, “The Automatic Millionaire,” spent 31 weeks on the New York Times bestseller list. He is one of the only business authors in history to have four books simultaneously on the New York Times, Wall Street Journal, BusinessWeek and USA Today bestseller lists.

He has been a contributor to NBC’s Today Show appearing more than 100 times, has been a regular on ABC, CBS, Fox, CNBC, CNN, Yahoo, The View, and PBS, and has been profiled in many major publications, including The New York Times, BusinessWeek, USA Today, People, Reader’s Digest, Time, Financial Times, The Washington Post, The Wall Street Journal, Working Woman, Glamour, Family Circle, Redbook, Huffington Post, Business Insider, Investors’ Business Daily, and Forbes.

Bottom Line

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

It's a Seller's Market! Should I Downsize Now?

by KCM Blog

A study by Edelman Berland reveals that 33% of homeowners who are contemplating selling their houses in the near future are planning to scale down. Let’s look at a few reasons why this might make sense for many homeowners, as the majority of the country is currently experiencing a seller’s market.

In a blog, Dave Ramsey, the financial guru, highlighted the advantages of selling your current house and downsizing into a smaller home that better serves your current needs. Ramsey explains three potential financial advantages to downsizing:

A smaller home means less space, but it also means less time, stress and money spent on upkeep.
Let’s assume you save $500 a month on your mortgage payment. In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.
Use the proceeds from selling your current home to pay cash for a smaller one. Just imagine what you could do with no mortgage holding you down! If you can’t pay cash, aim for a 15-year fixed rate mortgage and put at least 10–20% down on your new home. Apply the $500 you saved from downsizing to your new monthly payment. At 3% interest, you could pay off a $200,000 mortgage in less than 10.5 years, saving almost $16,000 in the process.

Realtor.com also addressed downsizing in an article. They suggest that you ask yourself some questions before deciding if downsizing is right for you and your family. Here are two of their questions followed by their answers (in italics) and some additional information that could help.

Q: What kind of lifestyle do I want after I downsize?

A: “For some folks, it’s a matter of living a simpler life focused on family. Some might want to cross off travel destinations on their bucket lists. Some might want a low-maintenance community with high-end upgrades and social events. Decide what you want to achieve from your move first, and you’ll be able to better narrow down your housing options.”

Comments: Many homeowners are taking the profits from the sales of their current homes and splitting it in order to put down payments on smaller homes in their current locations, as well as on vacation/retirement homes where they plan to live when they retire.

This allows them to lock in the home price and mortgage interest rate at today’s values which makes sense financially as both home prices and interest rates are projected to rise.

Q: Have I built up enough equity in my current home to make a profit?

A: “For most homeowners, the answer is yes. This is if they’ve held on to their properties long enough to have positive equity that will be sizable enough to put a large down payment on their next home.”

Comments: A study by Fannie Mae revealed that only 37% of Americans believe that they have significant equity (> 20%) in their current home. In actuality, CoreLogic’s latest Equity Report revealed that 78.9% have greater than 20% equity. That equity could enable you to build the life you’ve always dreamt about.

Bottom Line

If you are debating downsizing your home and want to evaluate the options you currently have, let's meet up to help guide you through the process.

4 Great Reasons to Buy This Spring!

by Allison Simson

Here are four great reasons to consider buying a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.9% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.8% over the next year.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained around 4% over the last couple months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison, projecting that rates will increase by at least a half a percentage point this time next year.

An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You are Paying a Mortgage

There are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent-free, you are paying a mortgage - either yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move on with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Which Homes Have Appreciated the Most?

by KCM Blog

Home values have risen dramatically over the last twelve months. The latest Existing Home Sales Report from the National Association of Realtors puts the annual increase in the median existing-home price at 7.1%. CoreLogic, in their most recent Home Price Insights Report, reveals that national home prices have increased by 6.9% year-over-year.

The CoreLogic report broke down appreciation even further into four different price categories:

  1. Lower Priced Homes: priced at 75% or less of the median
  2. Low-to-Middle Priced Homes: priced between 75-100% of the median
  3. Middle-to-Moderate Priced Homes: priced between 100-125% of the median
  4. High Price Homes: priced greater than 125% of the median

Here is how each category did in 2016:

Which Homes Have Appreciated the Most? | MyKCM

Bottom Line

The lower priced homes (which are more in demand) appreciated at greater rates than the homes at the upper ends of the spectrum.

The Early Bird's Guide to Buying a Home

by Daniel Bortz-Realtor.com

The Early Bird's Guide to Buying a Home

By Daniel Bortz | Feb 15, 2017

Planning to buy a home this spring? Then right now—yes, during these last days of winter—is the time to get rolling.

“Spring is peak home-buying season, which means you’re going to have a ton of competition from other buyers,” says Peggy Yee, supervising broker at Frankly Realtors in Vienna, VA. Hence, winter is the ideal time to get ahead of the curve, but how? Follow these steps and you’ll be way ahead of the pack once the spring home-buying season heats up.

Step No. 1: Find a buyer’s agent

Teaming up with a buyer’s agent during the winter offers several advantages. For starters, because business is slow, an agent can take the time to help you identify what type of home you want and educate you on the local market so that you’ll have realistic expectations of what you’ll be able to find in a few months.

Also, “your agent may hear of properties that are going to come on the market in the spring, which could enable you to get a sneak peek at homes before other buyers,” Yee says.

“If you’re laser-focused on a specific neighborhood, you’ll want to work with a neighborhood specialist—someone who knows the community like the back of their hand,” Yee advises.

Step No. 2: Get your financing squared away

Before you even lay eyes on a house, you should be looking at lenders. Why? Because lenders will help you get real about how much house you can afford. They will determine how much money they’re willing to lend you by checking out your financial details, from your income to your credit score and more. Plus, if your finances are less than perfect, you’ll be able to find out in plenty of time to make amends.

“Depending on what shape your credit is in, it may take a couple of months to raise your score,” says Richard Redmond, mortgage broker at All California Mortgage in Larkspur and author of “Mortgages: The Insider’s Guide.”

There’s no magic spell to banish poor credit; the strategy will depend on your financial situation.

“For some people, it might make sense to pay off their credit card balances over the next couple of months, but that might not be the right move if you’re going to need the money for closing costs,” Redmond explains. Thus, it’s beneficial to get credit advice from a mortgage professional at least two to three months before you plan to buy.

If your credit score is strong (760 and above will qualify you for the best interest rates), getting pre-approved for a home loan now makes sense.

“Pre-approval is usually only good for 90 days,” says Redmond, “but it’s easy to renew it if the borrower’s financial picture doesn’t change. And when interest rates are trending upward, which they currently are, it’s better to lock in your rate sooner rather than later.”

Step No. 3: Start previewing homes

You’ll probably do an initial consultation with your agent to identify what type of home you want to buy. However, you won’t really know what type of home you’re looking for until you actually step inside some homes, says Lisa Cahill, co-owner of Evolve Real Estate in St. Petersburg, FL.

“Your criteria can change when you start to look at properties,” says Cahill. For example, you might think you need a home with 2,500 square feet of living space, but that number could change when you start seeing homes in person. Your real estate agent can alert you to open houses to attend during the winter months.

Step No. 4: Scrutinize prospective neighborhoods

Have your sights set on a particular neighborhood? Winter is a good time to see whether the community is going to be a good fit.

“You can tell whether an area has good schools on paper, but there are a lot of things you can’t judge unless you go there in person,” says Cahill.

For instance, online research won’t show you what the noise level is during rush hour or what the neighbors are like (e.g., is it more for young families or older residents?). Those are things that you need to assess with your own eyes. Concerned about traffic? “Go and test-drive your commute,” says Yee.

Step No. 5: Don’t rule out buying early

Even if you had originally planned to buy later in the spring, what if you find a home you absolutely love earlier? If you’re willing and able to move earlier, then keep an open mind with respect to buying a home during the winter. Granted, there are fewer homes to choose from, but there’s also less competition.

“You’re less likely to encounter a multiple offer situation,” says Yee. Translation: Don’t hesitate to make an offer in February or March if you find the perfect house.

Planning to sell the home you’re currently in this spring as well? Tune in tomorrow for the early bird’s guide to selling your home.

Housing Market Expected to "Spring Forward"

by KCM Blog

Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right.

Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.

That hasn’t happened this year.

Demand for housing has remained strong as mortgage rates have remained near historic lows.

The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2016 all fell in April, May or June.

Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.

Bottom Line

If you are planning on selling your home in 2017, let’s get together to evaluate the opportunities in our market.

Displaying blog entries 1-6 of 6

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Photo of Summit Real Estate Real Estate
Summit Real Estate
The Bright Choice
330 Dillon Ridge Way, Suite 10
Dillon CO 80435
970-468-6800
800-262-8442
Fax: 970-468-2195

Allison Simson, Owner/Broker, is a licensed Colorado Real Estate Broker