Is a 20% Down Payment Really Necessary To Purchase a Home?

There's a common misconception that, as a homebuyer, you need to come up with 20% of the total sale price for your down payment. In fact, a recent survey by Lending Tree asks what is keeping consumers from purchasing a home. For over half of those surveyed, the ability to afford a down payment is the biggest hurdle.

That may be because those individuals assume a 20% down payment is necessary. While putting more money down if you're able can benefit buyers, putting 20% down is not mandatory. As Freddie Mac puts it:

The most damaging down payment myth since it stops the homebuying process before it can start is the belief that 20% is necessary.

If saving that much money sounds overwhelming, you might be ready to give up on the dream of homeownership before you even begin but you don't have to. According to the Profile of Home Buyers and Sellers from the National Association of Realtors (NAR), the median down payment hasn't been over 20% since 2005. It may sound surprising, but todays average down payment is only 12%. That number is even lower for first-time homebuyers, whose average down payment is only 7%.

Based on the Home Buyers and Sellers Generational Trends Report from NAR, the graph below shows an even closer look at the down payment percentage various age groups pay:As the graph shows, the only groups who put 20% or more down on average are older homebuyers who likely can use the sale of an existing home to fuel a larger down payment on their next home.

What does this mean for you?

If you're a prospective homebuyer, its important to know you don't have to put the full 20% down. And while saving for any down payment amount may feel like a challenge, keep in mind there are programs for qualified buyers that allow them to purchase a home with a down payment as low as 3.5%. There are also options like VA loans and USDA loans with no down payment requirements for qualified applicants.

To understand your options, you do need to do your homework. If you're interested in learning more about down payment assistance programs, information is available through sites like downpaymentresource.com. Be sure to also work with a real estate advisor from the start to learn what you may qualify for in the homebuying process.

Bottom Line

Don't let the myth of the 20% down payment halt your homebuying process before it begins. If you want to purchase a home this year, lets connect to start the conversation and explore your options.

Two Reasons Why Waiting a Year To Buy Could Cost You

If you're a renter with a desire to become a homeowner, or a homeowner whos decided your current house no longer fits your needs, you may be hoping that waiting a year might mean better market conditions to purchase a home.

To determine if you should buy now or wait, you need to ask yourself two simple questions:

1. What will home prices be like in 2022?
2. Where will mortgage rates be by the end of 2022?

Lets shed some light on the answers to both of these questions.

What will home prices be like in 2022?

Three major housing industry entities project continued home price appreciation for 2022. Here are their forecasts:

• Freddie Mac: 5.3%
• Fannie Mae: 5.1%
• Mortgage Bankers Association: 8.4%

Using the average of the three projections (6.27%), a home that sells for 350,000 today would be valued at 371,945 by the end of next year. That means, if you delay, it could cost you more. As a prospective buyer, you could pay an additional 21,945 if you wait.

Where will mortgage rates be by the end of 2022?

Today, the 30-year fixed mortgage rate is hovering near historic lows. However, most experts believe rates will rise as the economy continues to recover. Here are the forecasts for the fourth quarter of 2022 by the three major entities mentioned above:

• Freddie Mac: 3.8%
• Fannie Mae: 3.2%
• Mortgage Bankers Association: 4.2%

That averages out to 3.7% if you include all three forecasts, and its nearly a full percentage point higher than todays rates. Any increase in mortgage rates will increase your cost.

What does it mean for you if both home values and mortgage rates rise?

You'll pay more in mortgage payments each month if both variables increase. Lets assume you purchase a 350,000 home this year with a 30-year fixed-rate loan at 2.86% after making a 10% down payment. According to the mortgage calculator from Smart Asset, your monthly mortgage payment (including principal and interest payments, and estimated home insurance, taxes in your area, and other fees) would be approximately 1,899.

That same home could cost 371,945 by the end of 2022, and the mortgage rate could be 3.7% (based on the industry forecasts mentioned above). Your monthly mortgage payment, after putting down 10%, would increase to 2,166.

The difference in your monthly mortgage payment would be 267. That's 3,204 more per year and 96,120 over the life of the loan.

If you consider that purchasing now will also let you take advantage of the equity you'll build up over the next calendar year, which is approximately 22,000 for a house with a similar value, then the total net worth increase you could gain from buying this year is over 118,000.

Bottom Line

When asking if you should buy a home, you probably think of the non-financial benefits of owning a home as a driving motivator. When asking when to buy, the financial benefits make it clear that doing so now is much more advantageous than waiting until next year.

 Why Its Still Safe To Sell Your Home

If you're on the fence about whether or not you want to sell your house this year, there's good news. Real estate professionals are highly experienced in how to sell houses safely during the pandemic. Over the last year, agents have adopted new technologies and safety measures designed to keep you safe. And experts say these practices are here to stay. As Bob Goldberg, CEO of the National Association of Realtors (NAR), puts it:

The pandemic has confirmed to all of us in the industry that technology will continue to transform real estate.

Below is a closer look at some of the new tools real estate professionals are using to better serve sellers.

New and Existing Technology Are Impacting the Process

In the 2021 Realtor Technology Survey, NAR asks real estate professionals their opinions on the most valuable pieces of technology for their business over the past 12 months. The graph below highlights the top five tools those agents said are true game-changers:Tools that allow agents to serve clients at a distance and limit exposure to others, including eSignature, lockboxes, and video conferencing, became increasingly important during the last year. Those same tools are just as essential today. Restricting the number of people a seller must interact with during the process is the best way to keep all parties involved in a sale safe.

Trusted Advisors Stay Up to Date on Guidelines for In-Person Showings

As things change in our day-to-day lives, the guidance on how to stay safe changes as well. NAR regularly updates the resources available to real estate professionals to ensure the latest recommendations and best practices are readily available. This includes suggestions on how to continue to conduct safe in-person showings.

Agents also follow guidance from the Centers for Disease Control (CDC) to make sure homes are safe. The CDCs advice includes information on how to clean high-touch surfaces like doorknobs, tables, and countertops so they're disinfected for all.

This past year changed the way agents do things for the better. Real estate professionals use new technology, tools, cleaning procedures, and the latest guidance to meet your changing needs. The goal is to keep you safe and build your confidence throughout the sales process.

Bottom Line

Its important to know that your safety is still a top priority when it comes to selling this year. Lets connect today so you can have the best tools available to help you take advantage of todays sellers market.

 

Choosing New Shingles

Modern shingles have been in use on homes for over 100 years, and it’s no wonder that they have become more or less a default for roofing choices. Shingles tend to be more budget-friendly than some other options such as metal roofing and tile, and they’re also available in a wide range of colors and styles. The main downside to shingles is that they can suffer wear over time or be damaged during inclement weather, necessitating repairs and occasional replacements. While you might not have to replace your shingles right away, the longer you put off these needed repairs then the more likely it is that your roof will develop some problems.

When the time comes to install a new shingle roof, you may find yourself facing kind of a big decision as you consider your options. If you aren’t sure what type of shingles to get, you’re not alone; many homeowners struggle with this same decision. Here are a few things to consider to make the decision easier and to help you find the perfect shingles for your home.

Choosing the Right Look

Obviously, there are a lot of color options available when it comes to shingles. This isn’t the only way that shingle manufacturers can customize the look of shingles, however. Different shingles may feature different shapes, creating a unique look that sets your home apart from other properties in your area. Granule shading can also play a big part in the look of shingles, creating an intentional emphasis on the cuts and overlaps of the shingles to really play up their 3D look. Some shingles may take this even farther, creating an alternating design of light and dark shingles that really makes your roof pop.

Depending on your budget, other shingle options may appeal to you as well. Some shingles are highly reflective, giving them a sheen while also helping to reduce your heating and cooling costs. Shingle patterns may also alter between larger and smaller tabs, creating a patterned effect on your roof that will really catch the eye. Other options may be available as well, allowing you to create a look that few other homes will be able to replicate.

Types of Shingles Available

In addition to a wide range of looks, there are also different types of shingles that offer their own unique benefits. These shingles may offer increased algae and mildew resistance, increased stain resistance, and even increased flexibility to make them more resilient against things like hail and other harsh storms. Shingles designed for use in high-wind zones are also available, significantly decreasing the likelihood of shingle damage during wind storms.
Other types of shingles may be available as well, helping you to both achieve a desired level of roof protection and creating some unique aesthetics. You can even choose from a few types of wooden shingles to complement your home’s aesthetic or so-called “solar shingles” that are made up of interlocking solar panels which provide roof coverage instead of a standard shingle roof. Depending on your unique needs, there may be other types of shingles available to you as well.

Getting Some Help

While installing shingles can be a DIY project, many homeowners choose to call in a pro to make sure that the shingles are installed correctly. If you’re considering bringing in a roofer anyway, feel free to ask for their recommendations if you’re unsure of what type of shingles you want or which shingle features would best benefit your home. These pros have plenty of experience and can help you find the shingles that are the best fit for your home.

 

Considering Seamless Gutters?

Gutters play a very important role on your home, and it’s one that not everyone realizes. Sure, they divert water so that you’re not flooded with runoff every time it rains, but that isn’t what makes them so important. Because gutters divert rainwater as it flows down the roof, they also help to prevent that water from seeping into the eaves and causing leaks or other damage. A good set of gutters can improve the life of your roof and home exterior while also adding to the look of your home and keeping the worst of the runoff at bay.

One problem with gutters is that they can start to wear out over time. This is especially evident around gutter seams, where rust, debris, and just the weight of water over time can cause damage. This damage can result in leaks, letting water get out of the gutter right at the roofline and potentially causing the very sort of damage that the gutters are supposed to prevent. This is big part of the reason that so many homeowners are turning to seamless gutters; if there aren’t any seams, then the seams can’t leak.

Understanding Gutter Seams

Gutter seams aren’t inherently a bad thing; by producing gutter in sections and joining them at seams, installers can better fit the gutter to the unique size and shape of your home while still preparing gutter sections beforehand. Most gutter seams aren’t overly obvious, so it seems like an understandable concession to make in order to get the best fit for premanufactured gutters.

The problem with gutter seams is that gutters end up being under a lot of stress throughout the year. Water is heavy, leaves and other debris can get wedged in seams, and pods or seeds can actually end up in backed-up gutters and start putting down roots. This stress adds up over time, and the seams become one of the most likely points of damage aside from mounting points. Gutter screens and regular cleaning can help, but this won’t eliminate gutter stress entirely.

How Seamless Gutters Work

Unlike traditional gutters that are made as smaller pieces and then assembled to match the sides of your home, seamless gutters are custom-built to match your home exactly. Roll-forming machines are brought to the jobsite and are fed sheet metal from a coiled roll, bending the metal to the exact shape of the gutters until the seamless gutter section matches the length of one of your roof sections. This single piece of gutter is capped on the ends and has supports attached as it comes out of the machine, ensuring that the final gutter section is a single piece of strong and structurally-sound gutter. It can then be mounted to your home with no seams that could rust or otherwise become damaged.

Installers take precise measurements to make sure that gutter sections match your home exactly, and mark the location of downspouts and supports precisely to make sure that everything is right where it needs to be for the most efficient gutter you can have on your home. The gutters are sealed and mounted securely to help ensure the longest possible life without leaks, though they will still need periodic cleaning and maintenance to make sure that they remain in good working condition. With that said, the lack of seams for leaves and other debris to snag on results in some seamless gutters clogging less often than their seamed counterparts.

Considering Going Seamless?

While seamless gutters may be more expensive due to the custom manufacturing involved, a lot of gutter installers are trending toward largely seamless installs. There are advantages to going seamless, and if you’re in need of new gutters it could be a great choice to make for your home. 

 The Truth About Todays Buyer Demand

When it comes to the latest news in real estate, there are a lot of sensational headlines in the media. In times like this, when it can be hard to know what to believe, put your trust in the experts. Those of us in the housing market respect that buying or selling a home is a major life decision, and we offer advice based on what the data shows.

Despite what you may have read, the housing market is still undeniably strong. Here's a look at what leading experts have to say about buyer demand today and how it continues to shape the industry:

Michael Lane, President at ShowingTime:

In general, there are definite signs of cooling demand. However, buyer traffic is still at historically high levels compared to pre-pandemic showings.

Odeta Kushi, Deputy Chief Economist at First American:

Seasonally adjusted purchase applications tick up slightly to the highest level since July. Demand for homes remains strong and steady. Excluding 2020 (not a good benchmark) purchase applications are the strongest in a decade.

Selma Hepp, Deputy Chief Economist at CoreLogic:

Home buyer demand pushed price growth to a new record high in June, with S&P CoreLogic national Case-Shiller Index clocking in an 18.6% year-over-year growth rate. The month-to-month index jumped 2.18%, making it another strong monthly growth, and the fastest May-to-June increase since the data series began.

What It Means for You

As a seller, buyer demand is an important factor that helps influence how fast your house will sell and how many buyers may be competing for it. When buyers have to compete against each other for a limited supply of available homes, bidding wars can drive prices up. While things have cooled slightly since the peak of the pandemic housing rush, buyer demand is still far surpassing historical norms. That's why were still in a sellers market.

Bottom Line

If you're torn on whether or not you want to sell your home this year, rest assured its still a great time to make a move. Lets connect to discuss how you can sell now and do it on your best terms thanks to todays buyer demand.

 

 

 

Investigating Disaster Insurance

Homeowner’s insurance plays an important role in protecting your home and everything within it. With any luck you’ll never actually need it, but it provides a nice safety net in case the worst comes to pass. But did you know that there are some things that can happen to your home that aren’t covered by homeowner’s insurance?

If your home is damaged by a natural disaster such as a flood, earthquake, or tornado, you may find that your existing insurance policy doesn’t cover these natural events. In some cases, even man-made disasters may not be covered if the damage was caused by something like an explosion or a riot. Regardless of the cause, recovering after a disaster can be very expensive. To help protect against these costs in the event of a disaster, you usually have the option to purchase additional disaster insurance that gives you additional coverage beyond what your standard homeowner’s policy provides.

The Limits of Homeowner’s Coverage

Some homeowners believe that their existing policies cover everything that could happen to their homes, only to find out at the worst possible time that they aren’t actually covered. This usually is the result of an exceedingly rare occurrence such as flood damage, earthquake, or wildfire. Even insurance policies that claim to cover “all” damage typically make exclusions for a few types of disasters since those disasters aren’t localized to one specific property or home.

If you aren’t sure what sort of disaster coverage your existing insurance has, take a moment to review your policy or contact your insurance agent. Within your policy you should find the specifics of your coverage, as well as any exceptions that the policy doesn’t cover. If you want protection from those uncovered instances, you’ll need to pick up additional coverage.

How Disaster Coverage Works

Depending on your insurer and the type of disaster coverage you want to get, there are a few different ways that you could get this additional coverage. You may be able to buy blanket disaster coverage that covers multiple disaster types, though even it may have a few exceptions built in. If this isn’t available or if you want coverage for specific types of disasters, you may be able to buy single-disaster policies that only cover individual disaster types. Depending on your insurer and policy availability, your disaster coverage may be available as separate policies, or it may simply be an addition to your existing homeowner’s insurance.

Once you’ve taken out your disaster coverage, it will function similarly to your existing insurance. Should a disaster occur, your claim will be filed against your disaster policy or any disaster add-ons you’ve purchased instead of your standard homeowner’s insurance. Depending on the type of disaster and any other damage that may have occurred, there may also be claims made against your health insurance, vehicle insurance, or other insurance types; disaster insurance won’t replace or supersede any applicable insurance, it just helps to close gaps that previously didn’t have coverage.

Do You Need Disaster Insurance?

Whether you want to pay the additional costs of disaster insurance largely comes down to personal preference. By their nature most disasters are pretty rare, though some areas are more prone to disaster than others. The more likely it is that you could wind up in a disaster, the more beneficial disaster insurance would be to you, but keep in mind that disasters can still strike in locations where they aren’t common. It is also worth noting that if you live in an area where occasional disasters are likely (such as a flood plain that has a track record of heavy flooding during certain seasons) then you may not be able to get some types of disaster insurance or may have to pay higher premiums.