Lee Morof's Real Estate Blog

Entering into the real estate market requires time and monetary commitment. Depending on the purpose for purchasing rental property determines whether one should invest in a single family or multi-family dwelling. In either case, one should prepare short or long term goals, be cognizant of his or her financial health and monetary comfort zone, and conduct a comparative market analysis before considering a real estate investment.

Short Term Versus Long Term Investments

For investment purposes, a multi-family dwelling provides the owner with more potential rental income than a single family dwelling. However, if the purpose is to claim the new location as a future domicile, then investing in a single family dwelling provides the buyer with time for relocating.

One should be aware, however, that rentals are not eligible for homestead exemptions. With the exception of Delaware, Pennsylvania, New Jersey, and Rhode Island, all states offer some type of homestead exemption for primary residences. As a result, if changing one’s domicile is part of the long-term goal, then considering the purchase of a single family for a temporary rental, until one is ready to change domiciles, may prove advantageous.

Investment Considerations

One must be prepared for the initial rental preparation. Plumbing and sewage lines must be in working conditions to avoid impending disasters. Adequate electrical service and outlets, in combination with internet access, attract financially secure tenants. If one depends on registered, licensed, and insured contractors to provide the necessary workmanship, one must also be prepared for delays in the delivery of goods, inspections, and completed work orders. If one’s finances are not be stretched beyond his or her monetary comfort zone, then time may present the only obstacle.

Location Versus Location

Any real estate investor must consider location. One should look at the demographics of an area, the percentage of violent versus non-violent crimes committed in an area, and the future plans for development of any surrounding areas. Usually the rating of the local high school will also provide insight into the stability of the surrounding communities.

Consult A Reputable Agent

Before making an investment, one should consult a licensed and experienced real estate agent familiar with area rentals. The agent should provide information regarding long term versus short term available rentals. In addition, if there are deed restrictions, the agent should provide the prospective buyer with the necessary information.

There are many people who are looking at the housing market wondering if now is the time to make the jump from renting to owning. At the same time, is it more affordable to rent a home? Or, is it a smarter move to buy a home? Even though many people like the comfort of renting because it is someone else’s problem if something goes wrong, waiting too long to purchase a home could be costly. Here are a few of the most important points you need to keep in mind when it comes to renting versus buying a home.

Renters Spend A Higher Percentage Of Their Income On Housing

First, renters usually put a higher percentage of their income toward housing than homeowners. When looking at the numbers, people may believe that the percentage is higher for renters purely because people who own homes make more money; however, this is not necessarily the case. People who rent still spend a greater percentage of their monthly income on housing than people who own a home.

Renters Often Have Trouble Investing In Other Assets

One of the major advantages of owning a home is that it is going to appreciate over time. Not only is a house an investment, but because homeowners spend less of their money on housing, they have money to invest in other assets. For example, someone who spends a lot of money on rent might not be able to invest in retirement accounts, such as a 401k. Homeowners are not only building equity in their homes but also investing money elsewhere.

Rent Goes Up While Mortgages Stay The Same

A lot of homeowners decide to take out a 30-year fixed mortgage, which means that their mortgage payments are going to stay the same throughout the life of the loan. Renters are more vulnerable to cost increases. Whenever someone renews a lease, rent payments usually go up. Therefore, this projects vastly different economic futures for homeowners versus renters. With a home loan, the only expenses that might go up are taxes and insurance. In contrast, renters are subject to the supply and demand laws of the rental market.

Now might be the time to make the jump to homeownership.

There are a few parts of American culture that people believe define this country. One element is the dream of homeownership. There is a strong belief that people need a place to call home. Therefore, since the dawn of this country, the government has tried to incentivize people to purchase a home.

At the same time, there are some people who are looking at the younger generation, wondering if this American Dream is starting to change. Is homeownership still a part of the American Dream?

Americans Still Believe In The Idea Of Homeownership

Hard work and owning a home appear to be inseparable. There is still a belief that as long as people work hard and save money, they can fulfill the American Dream by buying a home. Real estate professionals regularly take surveys that show that people still want to be a homeowner for the sake of owning a home. While it is true that owning a home provides more control and creates investment opportunities, owning a home still has an allure to people that is undeniable.

Millennials Want To Own A Home As Well

Millennials appear to believe most strongly in owning a home, indicating that this is still a part of the American Dream. Even though some people thought that millennials were simply going to rent forever, this is not the case. The reality is that many young adults have not purchased a home because they could not afford one. Student loans and a lack of wage growth compared to housing increases simply made it harder. With interest rates lower than they ever have been in the past, many young adults are ready to make the jump to purchase a home.

Homeownership Is Still A Part Of The American Dream

Ultimately, many millennials simply put off the idea of getting married and having children, so they put off the idea of homeownership as well. Now that this milestone has arrived, there are many young adults who are looking to purchase a home for the first time. This indicates that owning a home is still a key part of the American Dream.

Last week’s scheduled economic reporting included readings from the Fed’s Federal Open Market Committee, news on changing FHA home loan requirements for borrowers with student loans, and reporting on job openings. Weekly reports on mortgage rates and jobless claims were also released.

FOMC Minutes Show Fed’s Reluctance to Raise Target Rate

The Federal Open Market Committee of the Federal Reserve released minutes of its meeting held via teleconferencing on June 15 and 16. The Committee resumed its consideration of creating “domestic and foreign repurchase agencies that would have a backdrop role in fostering implementation and support of monetary policy and smooth functioning of markets,” but no decisions were made.

 FOMC members did not change the current federal funds rate range of  0.00 to 0.25 percent and did not anticipate changing the Fed’s key interest rate range until the end of 2023. Lower jobs growth and higher inflation than expected in the near term influenced the current decision to hold on raising the Fed’s key rate, but the Committee predicted that near-term inflation will subside in the medium term.

FHA Changes Home Loan Policy on Borrowers with Student Loans

The Federal Housing Administration (FHA) announced changes to its home loan lending requirements for borrowers with student loans; the changes become effective by August 16 or sooner if lenders prefer. The changes in calculations used for determining debt-to-income ratios for borrowers with student loans will help more borrowers fall within the maximum debt-to-income ratio of 43 percent currently permitted by FHA regulations.

Mortgage Rates Fall; Jobless Claims Mixed

Freddie Mac reported record low mortgage rates last week as demand for homes continued to outstrip supplies of available homes. Steep increases in home prices continued to create affordability issues for first-time and moderate-income homebuyers.

The average rate for 30-year fixed-rate mortgages fell by eight basis points to 2.90 percent; rates for 15-year fixed-rate mortgages averaged 2.20 percent and were six basis points lower. Rates for 5/1 adjustable rate mortgages averaged 2.52 percent and were two basis points lower. Discount points averaged 0.60 percent for 30-year fixed-rate loans and 0.70 percent for 15-year fixed-rate loans. Discount points for 5/1 adjustable rate mortgages averaged 0.20 percent.

Initial jobless claims rose to 373,000 first-time claims filed as compared to 371,000 initial claims filed in the previous week. Continuing jobless claims fell to 3.34 million ongoing claims filed from the previous week’s reading of 3.48 million ongoing jobless claims filed.

Job openings held steady at 9.20 million job openings; employers continued searching for workers for open positions.

What’s Ahead

This week’s scheduled economic reporting includes readings on inflation, retail sales, and consumer sentiment.  Weekly readings on mortgage rates and jobless claims will also be released.

With all of the rigmarole that goes into packing up your old home and moving into the new one, there are a lot of details that can get lost in the mix. From cleaning up the old house to handing over the keys, there’s no shortage of small tasks that need to be completed. If you’ll soon be prepping for the exciting move into your next home, here are some ways to prepare yourself for this busy time.

Do A Spring Clean, Even When It’s Not Spring!

Spring cleaning may be something that people only do once a year, but it’s actually a great way to prep for the move you’re about to make. Instead of thinking on a smaller-scale though, you’ll want to hit every room in your house so there’s less to pack up come moving time. While no actual cleaning will be necessary until you’re moving out, this pre-clean is the perfect opportunity to discard unwanted items, shred old papers and drop off any old and unworn clothes in the donation bins.

Write And Review Your To-Do List

Whether there are supplies you need to buy before the big moving day or a few minor touch-ups that you’d like to complete on your house, start compiling a list of all the things you need to do before and on the day you’re scheduled to move. While these small details can add up to a lot of work, a list will mean that nothing is left behind or forgotten that can create extra headaches when there’s no time to deal with them.

Keep A Separate Box For Essentials

Many homebuyers get so excited about the premise of packing that they stick a lot of important items in a box and send them along on the moving truck, but a few boxes with the much needed essentials should be brought along with you. Whether its cosmetics or available food items, having the things you’ll need is the only way to ensure a bit of added comfort on your first night in your new home.

Packing up your stuff and moving into your new home is a considerable task, but by being prepared and doing a little cleaning in advance, you can make the process a little bit easier for you and your family. If you’re currently on the market for a home, you may want to contact one of our local real estate professionals for more information.

There’s almost a guarantee that at some point in the future you’re going to face an emergency. Like most things in life, that emergency is going to require money to solve. You can’t assume that you’ll have the funds to face the emergency when it happens. You can’t even assume that you’ll have enough on your credit cards to pay for it. The only safe way to plan is to have an emergency fund.

What Is An Emergency Fund?

An emergency fund is a reserve of cash set aside for emergencies only. It’s not a savings account, because you’re not saving up for anything in particular like a new sofa or a dining set. It’s strictly money on hand to be used in an emergency.

What Constitutes An Emergency

As a homeowner, you could face any number of emergencies regarding your property. An emergency is something unexpected and urgent. In other words, you couldn’t foresee it happening, yet it needs to be taken care of right away. Examples of homeownership emergencies are:

• Basement floods and needs to be drained and contents cleaned
• Tree falls on roof, and you can’t wait for insurance check
• Furnace dies in the middle of winter
• Central air system dies and there’s a high deductible on your insurance policy
• Water tank gives out a week before your big family holiday

How To Manage an Emergency Fund

The key thing about an emergency fund is that it needs to be instantly accessible. Instantly accessible means you should only have to use your debit card or write a check to use it. You shouldn’t have to sell stock or transfer money out of your retirement IRA. It should also be kept separate from other funds, so it doesn’t get confused with the Christmas gift fund or the college fund.

Why Have An Emergency Fund?

Emergencies shouldn’t cause catastrophic damage to your finances. With consistent, small saving habits, you can build up an emergency fund so you can easily and readily take care of maintaining and repairing your home. This is part of good homeownership. When you have an emergency fund, you know that you can always keep your home in tip-top shape.

A mortgage application is typically several pages in length, and it requires you to provide a considerable amount of information about your personal, professional and financial life. Some mortgage applicants may not have access to all of the information when completing the application, and others may simply skim over the form and provide incomplete answers. These are only a few of the reasons why information on the mortgage application may not be accurate, but there are several key reasons why applicants should avoid giving inaccurate information.

Loan Approval is Based on It

The initial loan application will usualy serve as a basis for the pre-qualification of the mortgage request. The applicant may make a decision to move forward with an offer to purchase a home based on this pre-qualification, but the pre-qualification is based on the accuracy of the information that is initially provided to the lender in the loan application. If the information is incorrect then an applicant may not be able to qualify for the loan and the deal could fall through. 

Information Will Be Verified

The majority of the information that is provided by the applicant in the loan application will be verified at various points throughout the loan process. For example, a credit report may be pulled very early on in the loan process, and it may be used to document the accuracy of the debts and monthly payments that the applicant wrote on the loan application. Tax returns, pay stubs and other related documentation may also be required. Essentially, the lender will eventually have access the accurate data, so there is little benefit to provide inaccurate information up-front on the loan application.

It Is Against the Law

A final reason why it is not advisable to provide inaccurate information on the application is because this is illegal. There is a disclaimer on the standard mortgage application that goes into detail about the law regarding providing false information on a loan application. There are also disclosures that are signed before and during closing that relate to this.

Completing a loan application is among the first steps mortgage applicants take when applying for a loan, and it is easy to overlook the importance of providing accurate and detailed information at this stage in the process. It is best to take time complete the loan application as thoroughly and accurately as possible since it is a legal requirement and because of many other negative consequences. Those who have questions about how a loan application works or who would like to begin the loan application process can reach out to their trusted mortgage professional for assistance.

Last week’s economic reports included readings from S&P Case-Shiller Home Price Indices and data on pending home sales. Readings on job growth and und unemployment were also released along with weekly reports on mortgage rates and jobless claims.

S&P Case-Shiller: April Home Price Gains Reach Record Highs

Craig Lazzara, managing director and global head of investment strategy for S&P Dow Jones Indices, said that April’s year-over-year national home price growth rate of 14.60 percent was “ truly extraordinary.” All cities included in the 20-City Home Price Index posted higher home prices;  five cities including Charlotte, North Carolina, Cleveland, Ohio, and Dallas, Texas posted their highest home price gains ever along with Denver, Colorado, and Seattle, Washington.  

Phoenix, Arizona, San Diego, California, and Seattle, Washington continued to hold the top three positions for annual home price growth in the 20-City Home Price Index.

Realtors Report Increase in Pending Home Sales

Pending home sales rose by eight percent in May as compared to April. Analysts expected a one percent decrease in pending sales. Lawrence Yun, the chief economist at the National Association of Realtors®, said “May’s strong increase in transactions, as well as a sudden erosion in home affordability, was indeed a surprise. The housing market is attracting buyers b due to the decline in mortgage rates and an uptick in listings.”

Mortgage Rates, Jobless Claims Show Mixed Results

Freddie Mac reported lower average rates for fixed-rate mortgages. Rates for 30-year fixed-rate mortgages fell by four basis points to 2.98 percent; rates for 15-year fixed-rate mortgages fell by eight basis points to 2.26 percent. The average rate for 5/1 adjustable rate mortgages rose by one basis point to 2.54 percent. Discount points averaged 0.60 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-yar fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged0.30 percent.

First-time jobless claims fell to 364,000 initial claims filed from the prior week’s reading of 415,000 new claims filed. Continuing jobless claims increased with 3.47 million ongoing claims filed. ADP reported 692,000 private-sector jobs added in June; The federal Non-Farm payrolls report posted 850,000 public and private-sector jobs added as compared to 583,000 jobs added in May. The national unemployment rate ticked up to 5.90 percent in June from May’s reading of 5.80 percent unemployed.  

What’s Ahead

This week’s scheduled economic reports include the minutes from the most recent meeting of the Fed’s Federal Open Market Committee and the Labor Department’s report on job openings. Weekly readings on mortgage rates and jobless claims will also be released.

House fires can break out for a wide range of reasons, and these include everything from grease fires while cooking in the kitchen to lightning striking the home. They can cause a significant amount of property damage as well as personal injury or even loss of life, so preventing them and knowing how to properly respond if a fire does break out are important. Whether buying a new home or residing in an existing home, everyone can benefit from learning more about fire safety rules.

Have An Exit Strategy

Fires can break out whether residents are awake in the living room or kitchen, taking a bath or sleeping in the bedrooms. It is important to have a fire exit strategy for every floor of the home and every room of the home. In addition, it is equally important that all residents in the home understand the strategies and know how to get out.

Invest In Fire Safety Ladders

Fire safety ladders are designed to give residents a safe escape route from second story windows, and they should be placed in a convenient location in every second floor room in the home. Residents should know how to attach them securely to the window as well as how to get down the ladder safely.

Purchase A Fire Extinguisher

Generally, it is safer for residents to get out of the home in the event of a fire rather than to attempt to put the fire out, and personal safety should also come before thoughts about saving the property. However, in the event a very small fire has broken out, a fire extinguisher can provide a homeowner with a safe way to put the fire out. It is best to keep a fire extinguisher in a convenient location on each floor of the home.

Place Fire Detectors In Strategic Locations

There are codes regarding the placement of fire detectors in a home, and your trusted real estate agent can provideyou with more information about this. In many cases, homeowners may benefit from having additional fire detectors placed in strategic locations throughout the home in addition to the locations required by code.

Check Fire Safety Equipment Regularly

Fire safety and prevention equipment is only useful if it works, so it is important to test the equipment and supplies regularly. For example, a homeowner may test the batteries in a fire detector monthly and may take extinguishers to the local fire department for testing annually. These steps will help to ensure that residents have access to functional safety equipment regularly.

Residents should also know what to do if a fire breaks out in a home, and in most cases, the answer is to get out of the home quickly and to call the fire department. Attempts to save personal belongings should not be made, and all residents should know where the family will meet outside of the home in the event of a fire. Those who want to learn more about safety features in a home or about the required placement of smoke detectors can contact your trusted real estate professional for further assistance.

When a homeowner makes the decision to upgrade flooring in one area of the home or throughout the entire space, there are numerous materials that may be considered. While each material option has its unique benefits and advantages, many are drawn to hardwood flooring as an option. This is a material that has the potential to boost home value, and a closer look at its benefits will reveal why this is the case.

A Durable, Long-Lasting Material

With many flooring options, homeowners understand that the material will need to be replaced or upgraded over the years. With hardwood flooring, the timeless appeal and incredible durability of the material means that the floor may be an investment to enjoy for many long decades. In fact, with periodic maintenance and regular care of hardwood floors, some hardwood floors may provide the homeowner with 50 years or more of beautiful use in the home.

Numerous Stylish Options

More than that, there are numerous style options for homeowners to consider, and this provides the ability to easily select a material that is ideal for the look of the home. In addition, hardwood floor generally has universal appeal that many desire, and this increases the desirability of the home to future home buyers. This is especially true when a more classic tone of wood is selected rather than a modern or trendy tone.

Improved Indoor Air Quality

Some flooring materials, such as carpet, may have a detrimental impact on indoor air quality, but this is not the case with hardwood flooring. The material is easy to clean, and this means that dust, dander and other allergens can easily be removed from the floor. This will have a direct and beneficial impact on indoor air quality that current owners as well as future home buyers can enjoy.

While hardwood flooring can be desirable and beneficial for current property owners, the appeal of the material will extend to future home buyers. When hardwood flooring is well-maintained by the owner, it is a true investment that will add true value to the home and that may help the owner to sell the property more quickly when the time comes. Those who want to learn more about how hardwood flooring may impact their own home value and the ability to sell their property in the future can request a consultation with a real estate professional.