What Credit Score Do You Need for a Mortgage?

According to data from the most recent Origination Insight Report by Ellie Mae, the average FICO score on closed loans reached 753 in February. As lending standards have tightened recently, many are concerned over whether or not their credit score is strong enough to qualify for a mortgage. While stricter lending standards could be a challenge for some, many buyers may be surprised by the options that are still available for borrowers with lower credit scores.

The fact that the average American has seen their credit score go up in recent years is a great sign of financial health. As someone's score rises, they're building toward a stronger financial future. As more Americans with strong credit enter the housing market, we see a natural increase in the FICO score distribution of closed loans, as shown in the graph below:If your credit score is below 750, its easy to see this data and fear that you may not be able to qualify for a mortgage. However, that's not always the case. While the majority of borrowers right now do have a score above 750, there's more to qualifying for a mortgage than just the credit score, and there are still options that allow people with lower credit scores to buy their dream home. Here's what Experian, a global leader in consumer and business credit reporting, says:

• Federal Housing Administration (FHA) loans: With a 3.5% down payment, homebuyers may be able to get an FHA loan with a 580 credit score or higher. If you can manage a 10% down payment, though, that minimum goes as low as 500.
• Conventional loans: The most popular loan type typically comes with a 620 minimum credit score.
• S. Department of Agriculture (USDA) loans: In general, lenders require a minimum credit score of 640 for a USDA loan, though some may go as low as 580.
• S. Department of Veterans Affairs (VA) loans: VA loans don’t technically have a minimum credit score, but lenders will typically require between 580 and 620.

There's no doubt a higher credit score will give you more options and better terms when applying for a mortgage, especially when lending is tight like it is right now. When planning to buy a home, speaking to an expert about steps you can take to improve your credit score is essential so you're in the best position possible. However, don't rule yourself out if your score is less than perfect todays market is still full of opportunity.

Bottom Line

Don't let assumptions about whether your credit score is strong enough put a premature end to your homeownership goals. Lets connect today to discuss the options that are best for you.

Should We Fear the Surge in Cash-Out Refinances?

Freddie Mac recently released their Quarterly Refinance Statistics report which covers refinances through 2020. The report explains that the dollar amount of cash-out refinances was greater in 2020 than in recent years. A cash-out refinance, as defined by Investopia, is:

a mortgage refinancing option in which an old mortgage is replaced for a new one with a larger amount than owed on the previously existing loan, helping borrowers use their home mortgage to get some cash.

The Freddie Mac report led to articles like the one published by The Real Deal titled, House or ATM? Cash-Out Refinances Spiked in 2020, which reports:

Americans treated their homes like ATMs last year, withdrawing $152.7 billion amid a cash-out refinancing spree not seen since before the 2008 financial crisis.

Whenever you combine the terms spiked, homes like ATMs, and financial crisis, it conjures up memories of the housing crash we experienced in 2008.

However, that comparison is invalid for three reasons:

1. Americans are sitting on much more home equity today.

Mortgage data giant Black Knight just issued information on the amount of tappable equity U.S. homeowners with a mortgage have. Tappable equity is the amount of equity available for homeowners to use and still have 20% equity in their home. Here's a graph showing the findings from their report:In 2006, directly before the crash, tappable home equity in the U.S. topped out at $4.6 trillion. Today, that number is $7.3 trillion.

As Black Knight explains:

At years end, some 46 million homeowners held a total $7.3 trillion in tappable equity, the largest amount ever recorded…That's an increase of more than $1.1 trillion (+18%) since the end of 2019, the largest percentage gain since 2013 and you guessed it the largest dollar value gain in history, to boot. All in all, it works out to roughly $158,000 on average per homeowner with tappable equity, up nearly $19,000 from the end of 2019.

2. Homeowners cashed-out a much smaller amount this time.

In 2006, Americans cashed-out a total of $321 billion. In 2020, that number was less than half, totaling $153 billion. The $321 billion made up 7% of the total tappable equity in the country in 2006. On the other hand, the $153 billion made up only 2% of the total tappable equity last year.

3. Fewer homeowners tapped their equity in 2020 than in 2006.

Freddie Mac reports that 89% of refinances in 2006 were cash-out refinances. Last year, that number was less than half at 33%. As a percentage of those who refinanced, many more Americans lowered their equity position fifteen years ago as compared to last year.

Bottom Line

Its true that many Americans liquidated a portion of the equity in their homes last year for various reasons. However, less than half of them tapped their equity compared to 2006, and they cashed-out less than one-third of that available equity. Todays cash-out refinance situation bears no resemblance to the situation that preceded the housing crash.

 

Why You Should Think About Listing Prices Like an Auctions Reserve Price

For generations, the homebuying process never really changed. The seller would try to estimate the market value of the home and tack on a little extra to give themselves some negotiating room. That figure would become the listing price of the house. Buyers would then try to determine how much less than the full price they could offer and still get the home. The asking price was generally the ceiling of the negotiation. The actual sales price would almost always be somewhat lower than the list price. It was unthinkable to pay more than what the seller was asking.

Today is different.

The record-low supply of homes for sale coupled with very strong buyer demand is leading to a rise in bidding wars on many homes. Because of this, homes today often sell for more than the list price. In some cases, they sell for a lot more.

According to the Home Buyers and Sellers Generational Trends report just released by the National Association of Realtors (NAR), 45% of buyers paid full price or more.

You may need to change the way you look at the asking price of a home.

In this market, you likely cant shop for a home with the old-school mentality of refusing to pay full price or more for a house.

Because of the shortage of inventory of houses for sale, many homes are actually being offered in an auction-like atmosphere in which the highest bidder wins the home. In an actual auction, the seller of an item agrees to take the highest bid, and many sellers set a reserve price on the item they're selling. A reserve price is the minimum amount a seller will accept as the winning bid.

When navigating a competitive housing market, think of the list price of the house as the reserve price at an auction. Its the minimum the seller will accept in many cases. Today, the asking price is often becoming the floor of the negotiation rather than the ceiling. Therefore, if you really love a home, know that it may ultimately sell for more than the sellers are asking. So, as you're navigating the homebuying process, make sure you know your budget, know what you can afford, and work with a trusted advisor who can help you make all the right moves as you buy a home.

Bottom Line

Someone whos more familiar with the housing market of the past than that of today may think offering more for a home than the listing price is foolish. However, frequent and competitive bidding wars are creating an auction-like atmosphere in many real estate transactions. Lets connect so you have the best advice on how to make a competitive offer on a home in our local market.

 

 

Top Video Doorbells for 2021

It’s a new year and a new article about doorbells. What can we say? Video doorbells have added a much-needed component to a range of systems, from home security to smart homes. Who doesn’t want to know who’s at the door before they so much as bother to get up and look out the peephole? No one. That’s who.

Choosing a video doorbell can be a challenging process. There are a lot of technical differences between many different models that look alarmingly similar, as well as various considerations like subscription fees and installation requirements to be aware of.

What You Need to Get Started

Video doorbells require various methods of installation and have different means of powering the sensitive electronics within. Before you choose a doorbell, it’s important to determine if the doorbell will require an existing doorbell transformer, and if so, in what voltage. Older systems could produce as little as six volts, while newer systems could produce as much as 16 volts.

Systems that don’t require an existing transformer usually run on a battery pack that’s removable and rechargeable, which makes them far more flexible options for homes that might otherwise not be able to power a video doorbell. With a self-install, it’s important that you monitor the power usage for the first few weeks to ensure that your doorbell is getting adequate power.

What About Subscriptions?

Many video doorbells will require a monthly subscription fee in order to maintain your video feeds on their cloud storage. You can usually choose from a few different packages that will allow you to retrieve data for a set amount of time and in a specific resolution. It might seem silly to pay extra for HD video of your front door now, but if that video feed helps catch a porch pirate because the images were so crystal clear that the perp was unmistakable, you’ll appreciate it.

Top Video Doorbells for 2021

This is not meant to be an exhaustive list of video doorbells for 2021, but these are some of the better ones on the market as of the writing of this blog, as determined by independent reviewers.

• Ring Video Doorbell Pro 2. It’s on the upper end pricewise for video doorbells, but that’s because this doorbell has all the whistles and… er… bells. Using a radar sensor, the Ring Video Doorbell Pro 2 can actually tell where people are on your property in order to provide the best view of both visitors and intruders. It also has one of the highest resolution cameras currently available, at 1536p HD, as well as Alexa greetings.
• Nest Hello. With a mid-to-upper price point, you should expect a lot from the Nest Hello. Fortunately, it really delivers. Although it requires a hardwired connection, the Nest Hello can recognize individual visitors using facial recognition software, as well as announce them via Google Assistant or Alexa. It also continuously records video, unlike Ring products which require a triggering event to start recording. That’s a pretty nice feature for people who need more intense monitoring, as well as those who want to keep an eye on the wildlife scampering around their yard at night.
• Maximus Answer DualCam. Although the Maximus Answer DualCam won’t be able to communicate with Alexa or Google Assistant, it can do something no other video doorbell currently does: look straight down. This may seem like a small thing, but if you have limited porch space or simply struggle with neighborhood box thieves, being able to see that your package is still safe and sound on the porch is kind of a huge benefit. The doorbell is a dual cam, however, meaning that it also will look straight out at visitors like all other doorbells do. Reviewers have complained that the speaker can be very quiet, but if you’re only using it to watch packages, that may be a smaller concern considering the smaller price point.

Ready for Help Installing That New Doorbell?

There’s no shame in calling in some help to install your video doorbell, especially as a part of a wider smart home system. But who do you call? Just pop into your HomeKeepr community to find a recommendation for smart home experts or electricians in your area with experience. They can help you choose the right doorbell for your home, as well as upgrade any transformers before installing your brand new eye on the world.

Buyer & Seller Perks in Todays Housing Market

Right now, the housing market is full of outstanding opportunities for both buyers and sellers. Whether you're thinking of buying your first home, moving up to a bigger one, or selling so you can downsize this spring, there are perks today that are powering big moves for people across the country. Here are the top two to keep on the radar this season.

The Biggest Perk for Buyers: Low Mortgage Rates

Todays most compelling buyer incentive is low mortgage interest rates. The 30-year fixed-rate is now averaging just over 3%. While that's slightly higher than the record-lows from 2020 and earlier this year, its still way lower than historic norms, making purchasing a home an ongoing perk for hopeful buyers (See graph below):This is a huge advantage for buyers and helps to make owning a home attainable for more households and there's good reason to strive for homeownership. The latest Homeowner Equity Report from CoreLogic shows how homeowners saw major gains in their net worth last year, all thanks to owning a home. Frank Martell, President and CEO of CoreLogic, explains:

Positive factors like record-low interest rates and a booming housing market encouraged many families to enter homeownership. This growing bank of personal wealth that homeownership affords was noticed by many but in particular for first-time buyers who want a piece of the cake. As a result, we may see more of those currently renting start to enter the market in the near future.

Low mortgage rates are a plus for buyers right now, but experts forecast well see them continue to rise as the year goes on. If you're ready to purchase a home, its wise to get started on the process soon so you can secure todays comparatively low rate.

The Biggest Perk for Sellers: Low Inventory

Today, there are simply not enough houses on the market for the number of buyers looking to purchase them, and its creating a serious sellers market. According to Danielle Hale, Chief Economist at realtor.com:

Total active inventory continues to decline, dropping 50 percent. With buyers active in the market and sellers still slow to put homes up for sale, homes are selling quickly and the total number actively available for sale at any point in time continues to decline. (See map below):

The lack of houses for sale continues to challenge the market, and with low mortgage rates fueling buyer demand, homes are hard for buyers to find today. According to the latest Realtors Confidence Index Survey by the National Association of Realtors (NAR), the average house is now receiving 4.1 offers and is on the market for only 20 days.

Buyers are clearly eager to purchase, and because of the shortage of inventory available, they're often entering bidding wars. This is one of the factors keeping home prices strong and giving sellers leverage in the negotiation process.

Homeowners who are in a position to sell shouldn't wait to make their move. There's a light at the end of the tunnel for todays inventory shortage, so listing this spring will get your house on the market when conditions are most favorable. With low inventory and high buyer demand, homeowners can potentially earn a greater profit on their houses and sell them quickly in the fast-paced spring market.

Bottom Line

Whether you're thinking about buying or selling a home, there are major perks available in todays housing market. Lets connect today to discuss how these favorable conditions play to your advantage in our local area.

 

How to Make a Winning Offer on a Home

Todays homebuyers are faced with a strong sellers market, which means there are a lot of active buyers competing for a relatively low number of available homes. As a result, its essential to understand how to make a confident and competitive offer on your dream home. Here are five tips for success in this critical stage of the homebuying process.

1. Listen to Your Real Estate Advisor

An article from Freddie Macgives direction on making an offer on a home. From the start, it emphasizes how trusted professionals can help you stay focused on the most important things, especially at times when this process can get emotional for buyers:

Remember to let your homebuying team guide you on your journey, not your emotions. Their support and expertise will keep you from compromising on your must-haves and future financial stability.

A real estate professional should be the expert guide you lean on for advice when you're ready to make an offer.

2. Understand Your Finances

Having a complete understanding of your budget and how much house you can afford is essential. The best way to know this is to get pre-approved for a loan early in the homebuying process. Only 44% of todays prospective homebuyers are planning to apply for pre-approval, so be sure to take this step so you stand out from the crowd. Doing so make it clear to sellers you're a serious and qualified buyer, and it can give you a competitive edge in a bidding war.

3. Be Prepared to Move Quickly

According to the latest Realtors Confidence Index from the National Association of Realtors (NAR), the average property sold today receives 3.7 offers and is on the market for just 21 days. These are both results of todays competitive market, showing how important it is to stay agile and alert in your search. As soon as you find the right home for your needs, be prepared to submit an offer as quickly as possible.

4. Make a Fair Offer

Its only natural to want the best deal you can get on a home. However, Freddie Mac also warns that submitting an offer that's too low can lead sellers to doubt how serious you are as a buyer. Don't make an offer that will be tossed out as soon as its received. The expertise your agent brings to this part of the process will help you stay competitive:

Your agent will work with you to make an informed offer based on the market value of the home, the condition of the home and recent home sale prices in the area.

5. Stay Flexible in Negotiations

After submitting an offer, the seller may accept it, reject it, or counter it with their own changes. In a competitive market, its important to stay nimble throughout the negotiation process. You can strengthen your position with an offer that includes flexible move-in dates, a higher price, or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). Freddie Mac explains that there are, however, certain contingencies you don't want to forego:

Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold as-is, which means the seller wont pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you cant afford to fix.

Bottom Line

Todays competitive market makes it more important than ever to make a strong offer on a home. Lets connect to make sure you rise to the top along the way.

 

Add More Kitchen Storage With Cabinet Pull-Outs!

It’s wonderful to walk into a home that has lots of counter space, just stretching out like barren land ready for you to populate it with your favorite kitchen gadgets. But even a kitchen with limited counter space can be made so much more useful by better utilizing the thing that’s just below those counters: your lower cabinets. Lower cabinets are some of the most poorly utilized spaces in kitchens absolutely everywhere. No one wants to bend over to sort through dark and poorly organized cabinets, so eventually those spots just get kind of forgotten and ignored. This is where pull-out cabinet units can massively transform your space.

What are Pull-Out Cabinet Storage Units?

If you’re not familiar with pull-out cabinet storage units, well, welcome to a world of storage options you may have never even imagined. Pull-out cabinet storage basically turns the inside of your cabinet into pull-out bins, often resembling drawers or racks. So instead of getting down on your knees to dig around until you finally find that one pot lid you desperately need, you need only slide the drawer open, select it from the proper spot, and go on your merry way. These are a great way to increase the usability of your kitchen cabinets, improve your kitchen organization, and generally make you feel like you’ve got some cool stuff going on behind those very average closed doors. There are several different types out there, here are the main ones:

• Trash bins. Some of the original pull-out units were designed with stashing a trash can in mind. They’re still a popular choice for cabinets with no internal drawers or plumbing in the way, since many people don’t like to leave their trash exposed. Some units will hold just one can, but others have space for an additional trash can, which can be used for things like recycling.
• Internal drawers. Internal drawers are exactly what they sound like they should be. When you open the cabinet, you’re immediately confronted with drawers hidden just inside the door. This can be handy for small items, or if you’re not entirely sure what you want to stash inside your cabinet. The enclosed construction is pretty flexible and allows you to add things like dividers, should you want to toss your entire spatula collection in one, for example.
• Pull-out racks. Metal racks are often less expensive than full-on drawers, but they are really better suited for larger items like pan lids, baking pans, pots, and the like. Closely resembling dishwasher racks, pull-out racks come in a range of designs, some with more flexibility in organization than others. They’re a great option for all those awkward things that generally get tossed in the lower cabinets, but watch the height on the bins. Some are very short, which would be bad news for top-heavy items or things you intend to stack.

Sizing Cabinet Pull-Outs

Choosing the right size of pull-out can feel a little counter-intuitive. There are several inches lost to clearance and hardware when you install a unit, so there’s a lot of temptation to choose one that’s too large and try to make it fit in order to maximize your space. This is the worst possible thing you can do. It may seem like you’re losing space, but remember that you’re adding tiers and levels of organization you could have only dreamed about in the past, so really, unless your cabinet is highly unusual, it’s a net gain.

Start by measuring the clear cabinet opening, which is the space between where the opening to your cabinet starts and where the door to the cabinet swings. If your door will move completely out of the way when opened, measure to the hinges. If it won’t, angle it so it intrudes as little as possible and measure from the open side to the door. Your final cabinet insert should be about an inch more narrow than the clear cabinet opening to allow for hardware. You’ll also want to measure the depth of the cabinet from the inside of the cabinet face to the back side of the unit. The goal is for the final depth to allow for the door to shut over your pull-out unit, concealing it completely.

Need a Hand With Your Cabinets?

If you’re not ready to take the plunge into DIY cabinetry, but you’d really love some more space, you can turn to your HomeKeepr family for some help. Just ask the community for a recommendation for a handyman, cabinetry specialist, or general contractor near you. You’ll be amazed at how much more you can do in your kitchen when it’s done!