How Much Time Do You Need To Save for a Down Payment?

One of the biggest hurdles homebuyers face is saving for a down payment. As you're budgeting and planning for your home purchase, you'll want to understand how much you'll need to put down and how long it will take you to get there. The process may actually move faster than you think.

Using data from the U.S. Department of Housing and Urban Development (HUD) and Apartment List, we can estimate how long it might take someone earning the median income and paying the median rent to save up for a down payment on a median-priced home. Since saving for a down payment can be a great time to practice budgeting for housing costs, this estimate also uses the concept that a household should not pay more than 28% of their total income on monthly housing expenses.

According to the data, the national average for the time it would take to save for a 10% down payment is right around two and a half years (2.53). Residents in Iowa can save for a down payment the fastest, doing so in just over one year (1.31). The map below illustrates this time (in years) for each state:

What if you only need to save 3%?

What if you're able to take advantage of one of the 3% down payment programs available? Its a common misconception that you need a 20% down payment to buy a home, but there are actually more affordable options and down payment assistance programs available, especially for first-time buyers. The reality is, saving for a 3% down payment may not take several years. In fact, it could take less than a year in most states, as shown in the map below:

Bottom Line

Wherever you are in the process of saving for a down payment, you may be closer to your dream home than you think. Lets connect to explore the down payment options available in our area and how they support your plans.

 

82,338 Great Reasons to Buy a Home Today

The financial benefits of buying a home as compared to renting one are always up for debate. However, one element of the equation is often ignored the ability to build wealth as a homeowner.

Most experts are calling for home prices to continue appreciating over the next several years. The most recent Home Price Expectation Survey, a survey of over one hundred economists, real estate experts, and investment and market strategists, expects home appreciation to increase as follows:

• 2021: 6%
• 2022: 4.5%
• 2023: 4%
• 2024: 3.6%
• 2025: 3.5%

Using their annual projections, the graph below shows the equity build-up a purchaser could earn, using a 350,000 home as an example:A homeowner could increase their net worth by over 80,000 in five years. That's an average of 16,000 annually. That number should be in any equation determining the financial benefits of owning a home compared to renting.

Bottom Line

Homeowners are going to make a substantial amount of money in home equity over the next five years. If you're ready to buy a home, lets connect so you can enjoy this great benefit as well.

 

 Whole Home Water Filtration Systems and You

Your home is your castle, but like a lot of castles in the days of yore, the water could probably be better. Unlike in those ancient castles, though, modern technology makes it possible for you to have clean, safe water, no matter what sort of problems plague your fortress’s water supply. Choosing a whole home water filtration system is a big commitment, but depending on your water quality and source, it can make more sense than using filters at specific end points in the house.

Whole House Filters Versus Point of Use Filters

Many homeowners wonder what the advantages are to installing a whole home filtration system versus simply using things like tap filters and refrigerator filters. After all, aren’t those the only places where water quality really matters? Absolutely not.

Hard water, for example, can be very hard on any appliance that has water regularly run through it, from your washing machine to your toilet or dishwasher. Over time, sediment and mineral build-up can shorten the life span of any and all of these often expensive pieces of equipment. Installing a whole home water filtration system automatically removes problematic minerals and particulates from your water before it enters other points in your home, so you won’t have to take your chances on when an appliance will stop working or need repairs.

Water filters on specific appliances can be sufficient if you really just don’t like the taste of your water, or if you’ve placed in-line filters on your most delicate equipment. But remember that spot filters can only protect the items that are being filtered, and won’t cover other parts of your home that you may not have realized need filtering. They can also get expensive to maintain if you have many filters that need to be changed regularly.

What Can You Filter With a Whole House Filter?

A whole house filter can remove many common contaminants that may be present in your water. It’s a good idea to have a water test before you make a final decision on what you’d like your whole house filter to accomplish. A few things the most popular filtration mediums can reduce or eliminate entirely include:

• Sediment
• Chlorine and chloramine
• Hydrogen sulfide
• Heavy metals
• Bacteria and viruses
• Pesticides and herbicides
• VOCs

Most whole home filters consist of sediment filters, carbon filters, and, if you’re on well water, a UV lamp. However, because these are generally cartridge systems, you ultimately have control over what’s being filtered out. If your water tests show significant problems with heavy metals, you may need additional equipment for drinking water. Reverse osmosis systems can also filter out things like heavy metals and produce very pure water, but they use a lot of extra water and can be very slow, so they’re generally only recommended for spot usage. They’re often used only for drinking and cooking water, so you won’t necessarily need a huge add-on to your whole home filter.

Choosing the Right System for Your Home

The right system for your home is the system that both meets your needs for water usage and is able to filter out the contaminants that are in your water. This is why it’s so important to have a water test before you even start to look at whole home filter systems, even if you already have an idea as to what you think would be good for your lifestyle. You may discover that your water simply doesn’t contain the contaminates you’re most concerned about, which would be great news! Since both municipal water and well water can change over time, a system that allows for multiple interchangeable cartridges, from a company that will support your whole home filter over the long term, is always the ideal. The same can be said for a reverse osmosis system, should you need one in addition to a filtration system.

A professional can help you find the exact system that will meet your needs for many years to come. Don’t be shy, look in the HomeKeepr community for a recommendation for a water quality expert. You’ll have cleaner, tastier water in almost no time!

Planning to Move? You Can Still Secure a Low Mortgage Rate on Your Next Home

This year, mortgage rates have started to slowly climb above recent record-breaking lows. Many homeowners planning to move may feel like they've missed the chance to score a great rate on their next mortgage. In reality, there's still time to secure a rate far below the historic norm. Here's why.

After creeping up for seven consecutive weeks, average mortgage rates have dropped more recently (See graph below). With rates taking a slight dip over the past two weeks at the same time the inventory of houses for sale is so low, homeowners today are sitting in the optimal seat to sell. What's the advantage of selling your house now? Securing a low mortgage rate on your next home.To take advantage of todays real estate market, experts are encouraging homeowners to act now before interest rates climb. Danielle Hale, Chief Economist at realtor.com, explains:

mortgage rates slid for a second week … but we don't expect rates to stay at this level for too long.

Hale continues to say:

For sellers, getting in early optimizes odds of a quick sale at a good price before there's too much competition, but that means acting now In this environment, sellers probably really cant go wrong, and that's especially true in the nations hottest housing markets where homes are selling quickly and getting the greatest number of viewers online.

Most experts agree that rates will continue to trend upward. Sam Khater, Chief Economist at Freddie Mac, states:

Despite the pause in mortgage rates recently, we expect them to increase modestly for the remainder of this year.

In addition, Freddie Mac recently released their Quarterly Forecast, which notes:

We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022. (See graph below):

While buyers everywhere want to secure the lowest rate possible, its important to remember that todays rates are still much lower than the historic norm. Odeta Kushi, Deputy Chief Economist at First American, emphasizes:

While mortgage rates have trended up in recent months, they are still historically low, so relative to one year ago, housing actually is still more affordable and that's really thanks to this low mortgage rate environment we find ourselves in.

Bottom Line

If you're thinking of moving, don't miss the opportunity to score a great rate on your next home mortgage. Lets connect today so you can get your house ready to sell and find your dream home while mortgage rates are still low.

 

Don't Be Fooled by Remarkable Real Estate Headlines

Don't be impressed by the headlines reporting year-over-year housing numbers for the next several months (data covering March, April, May, and June). The data will most likely show eye-popping one-year increases.

While the year-over-year jumps will certainly be striking, consumers should take these numbers with a grain of salt, as the situation highlights a short-term quirk in the reporting of this data. Essentially, the increases will reflect a combination of two things: sharply lower housing numbers during last years virus-related market collapse and the subsequent strong rebound. This will result in what will appear to be unbelievable growth.

Lets use single-family home sales as an example:As the graph reveals, last springs buying market was anything but typical. Instead of sales increasing, they fell sharply as a result of stay-at-home orders that virtually shut the real estate industry down.

This springs real estate market will bounce back with more normal seasonal sales increases. The percentage increase in sales will be astronomical not because sales have skyrocketed, but instead because they will be compared to last years low numbers.

Bottom Line

There are likely to be some sensational headlines about real estate over the coming months. However, don't be fooled. The actual story is that the real estate market is finally back to normal.

Spring Home Maintenance Checklist: Top Items to Watch

Spring is here, so that means it’s time to start getting ready for the months ahead. Chances are you’re looking forward to being outdoors, maybe firing up the grill, planting a garden, or spending some quality time in the pool. Before you get down to the business of enjoying the nice weather, though, there are a few things that need to be taken care of first. That’s right: It’s time to knock out some home maintenance tasks to make sure everything is ready for the changing weather.

Home maintenance is important throughout the year, but spring and fall are two of the top times to really hit some of the big points. In the fall you’re prepping for winter and making sure that your home is ready for icy weather, while in the spring you’re checking to make sure everything came through the winter ok and prepping for the heat and rain that comes with spring and summer. If you aren’t sure where to start, here are some of the top items to check off on your spring home maintenance checklist.

Outdoor Maintenance

Cold winter months can really take their toll on the outside of your home. This is one of the reasons that spring maintenance is so important. By performing external maintenance early in the spring, you can identify damage caused by ice and snow and repair it before it turns into leaks and other problems when the spring and summer rains start up. Here are a few key areas that you need to make sure that you check:

• Inspect your roof, looking for cracked or missing shingles or other signs of damage or leaks
• Check around the foundation for cracks or other wear
• Look at the bricks and siding on your home to see if you need repairs or new paint
• Clean the outdoor unit of your HVAC system and inspect it for obvious signs of damage

This is also a good time to check any external fixtures, outdoor electrical outlets, hose faucets, and other objects on or around the outside of your home for signs of damage.

Indoor Maintenance

A lot of people think that the main thing to do indoors is a bit of spring cleaning. While a good deep clean a few times a year is important for keeping your home livable, there are a few specific maintenance areas that you need to be sure to cover. Here are some of the key points to hit:

• Clean the condenser coils on the back of the refrigerator and check the temperature in both the fridge and freezer
• Inspect the ceilings and walls for discolorations or cracks that could indicate water damage
• Test your HVAC system to ensure that it functions properly when switched from heating to cooling
• Lubricate the hinges and tracks on doors, windows, and other areas that will see a lot of motion or traffic in coming months

While you’re already in maintenance mode, this could also be a good time to replace light bulbs (possibly with more energy-efficient bulbs or bulbs with smart connect features), test outlets, and perform other basic maintenance tasks around the house.

Other Maintenance Tasks

There are a number of other maintenance tasks that don’t really fall into these two categories. Little things like lubricating the moving parts in your garage doors, changing the oil in mowers and other outdoor equipment, sharpening tools, prepping garden spaces, and similar tasks will go a long way toward getting you ready for spring and summer. It may also be a good time to do some deep sanitizing or moving around some outdoor fixtures to make it easy to have some friends over while giving everyone their space as well.

This all might sound like a lot of work, but fortunately HomeKeepr is here to help. From cleaning pros to roofers and HVAC specialists, you can use HomeKeepr to connect to professionals in your area that can help with all your spring maintenance and repair tasks. Sign up for a free account today to get started.

4 Major Reasons Households in Forbearance Wont Lose Their Homes to Foreclosure

There has been a lot of discussion as to what will happen once the 2.3 million households currently in forbearance no longer have the protection of the program. Some assume there could potentially be millions of foreclosures ready to hit the market. However, there are four reasons that wont happen.

1. Almost 50% Leave Forbearance Already Caught Up on Payments

According to the Mortgage Bankers Association (MBA), data through March 28 show that 48.9% of homeowners who have already left the program were current on their mortgage payments when they exited.

• 26.6% made their monthly payments during their forbearance period
• 14.7% brought past due payments current
• 7.6% paid off their loan in full

This doesn't mean that the over two million still in the plan will exit exactly the same way. It does, however, give us some insight into the possibilities.

2. The Banks Don't Want the Houses Back

Banks have learned lessons from the crash of 2008. Lending institutions don't want the headaches of managing foreclosed properties. This time, they're working with homeowners to help them stay in their homes.

As an example, about 50% of all mortgages are backed by the Federal Housing Finance Agency (FHFA). In 2008, the FHFA offered 208,000 homeowners some form of Home Retention Action, which are options offered to a borrower who has the financial ability to enter a workout option and wants to stay in their home. Home retention options include temporary forbearances, repayment plans, loan modifications, or partial loan deferrals. These helped delinquent borrowers stay in their homes. Over the past year, the FHFA has offered that same protection to over one million homeowners.

Today, almost all lending institutions are working with their borrowers. The report from the MBA reveals that of those homeowners who have left forbearance,

• 35.5% have worked out a repayment plan with their lender
• 26.5% were granted a loan deferral where a borrower does not have to pay the lender interest or principal on a loan for an agreed-to period of time
• 9% were given a loan modification

3. There Is No Political Will to Foreclose on These Households

The government also seems determined not to let individuals or families lose their homes. Bloomberg recently reported:

Mortgage companies could face penalties if they don't take steps to prevent a deluge of foreclosures that threatens to hit the housing market later this year, a U.S. regulator said. The Consumer Financial Protection Bureau (CFPB) warning is tied to forbearance relief that's allowed millions of borrowers to delay their mortgage payments due to the pandemic mortgage servicers should start reaching out to affected homeowners now to advise them on ways they can modify their loans.

The CFPB is proposing a new set of guidelines to ensure people will be able to retain their homes. Here are the major points in the proposal:

• The proposed rule would provide a special pre-foreclosure review period that would generally prohibit servicers from starting foreclosure until after December 31, 2021.
• The proposed rule would permit servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application.
• The proposal rule wants temporary changes to certain required servicer communications to make sure borrowers receive key information about their options at the appropriate time.

A final decision is yet to be made, and some do question whether the CFPB has the power to delay foreclosures. The entire report can be found here: Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA), Regulation X.

4. If All Else Fails, Homeowners Will Sell Their Homes Before a Foreclosure

Homeowners have record levels of equity today. According to the latest CoreLogic Home Equity Report, the average equity of mortgaged homes is currently 204,000. In addition, 38% of homes do not have a mortgage, so the level of equity available to todays homeowners is significant.

Just like the banks, homeowners learned a lesson from the housing crash too.

In the same way that grandparents and great grandparents were shaped by the Great Depression, much of the public today remembers the 2006 mortgage meltdown and the foreclosures, unemployment, and bank failures it created. No one with any sense wants to repeat that experience…and it may explain why so much real estate equity remains mortgage-free.

What does that mean to the forbearance situation? According to Black Knight:

Just one in ten homeowners in forbearance has less than 10% equity in their home, typically the minimum necessary to be able to sell through traditional real estate channels to avoid foreclosure.

Bottom Line

The reports of massive foreclosures about to come to the market are highly exaggerated. As Ivy Zelman, Chief Executive Officer of Zelman & Associates with roughly 30 years of experience covering housing and housing-related industries, recently proclaimed:

The likelihood of us having a foreclosure crisis again is about zero percent.