5 ROOKIE MISTAKES BY FIRST TIME BUYERS

rookie-mistakes-coverThis is it: The big one.

You’ve scoped out the neighborhood, saved for your down payment and found your custom kitchen and perfect bathroom tile.

You’re trading the world of rental apartments, condos and townhomes for one of the biggest financial commitments of your life: Your first home.

But you’re new to this and quickly find yourself overwhelmed and confused. As the process unfolds, you realize you didn’t account for all your closing costs; buying a new car last week spooked your credit report; and that home inspection you passed on — that was a really bad idea.

Soon enough, your idyllic dream for a first home turns into a burdensome nightmare.

This scenario could have been avoided if you were aware of some of the most common mistakes committed by first-time homebuyers.

We spoke with loan officers, real estate agents and other home-buying experts to give you a rundown of some of the biggies and tips that might help you avoid headaches and heartache before you sign the dotted line.

Via Movement Mortgage

Maybe you thought the biggest check you’d write for your lovely new house would be your first monthly mortgage payment.

Nope.

“First-time homebuyers are notorious for…constantly overestimating or underestimating what they can afford,” says Jason Hecht, a Movement sales manager in Glendale, Calif.

Apparently so: A study from PricewaterhouseCoopers shows that 61 percent of misunderstandings between borrowers and lenders stem from confusion over fees, terms and ownership costs.

Experts say first-timers should save months in advance and budget for the money they’re sure to spend. Those expenses include:

Closing costs and fees: Hecht tells his California clients to be ready to spend about $5,000 in closing costs alone. That’s because, as a buyer, you’ll have to pay attorney’s fees, lender fees, appraisal fees, title fees and a recording fee just to put your home’s deed on file with the state.

Property taxes and homeowners insurance: You’ll likely want to set up an escrow account where your loan servicer can pay your insurance premiums and tax payments for the life of your loan. All lenders require buyers to pay up to a year of insurance at closing.

Private mortgage insurance (PMI): This monthly fee is for buyers who pay less than 20 percent of a down payment on their home. It reimburses the lender in case you default on your loan.

Inspections: Most industry experts recommend buyers foot the bill for a home inspection. Depending on what your state requires, you could need a general, chimney, geological and/or sewer inspection (that’s about a $1,000 tab, Hecht says). Plus, not all repairs recommended by the inspector are always covered by the seller. You could end up paying some out of your own pocket.

HOA fees: If you’re moving into a subdivision or gated community, find out how much you’ll have to pay in annual/yearly homeowners association fees for neighborhood upkeep.

Via Movement Mortgage

Hold off on that new furniture set or American Express card until you’ve actually moved in.

Why? Because lenders are going to check your debt load before closing and if you’re on the hook for a massive last-minute purchase, it could “kill a deal,” says Shari Saba, a Movement senior loan officer in Franklin, Tenn.

Many loans are approved based on a specific debt-to-income ratio and minimum credit score. If you go purchase a Hummer (or just a Honda) a few days before closing, and the dealership pulls your credit, your score could be affected, your ratio thrown off balance and “you’ve just blown yourself out of qualifying” for your mortgage,” Saba says.

“Keep everything status quo,” she says. “Don’t change your job. Keep your money tight. Pay your bills on time and buy yourself some groceries. I just don’t want to see any new credit cards.”

Via Movement Mortgage

Time is money, right? So maybe you’ve decided to save on both by looking for and buying a home yourself. After all, who needs an experienced real estate agent or reputable lender when you have your mouse and keyboard at your side?

A lot of people.

Local agents have the know-how and experience to navigate the oft-stressful home-buying process, says Meg Casper, vice president of the National Association of Realtors.

They know the market and can provide buyers with information about their neighborhood, such as average utility rates, schools and crime.

As for lenders, Casper suggests buyers consult with them face-to-face, rather that just an online search.

“When you sit down with a lender, you need to provide a lot of documentation,” Casper says. “It’s a whole lot better when you sit one-on-one with someone who knows” what they’re doing.

Via Movement Mortgage

An enclosed deck in the backyard. A game room in the den. A sun room with bay windows.

In a perfect world, you’d have it all in your inaugural home. But chances are, you won’t. And as your search continues, you may want to compromise on those must-haves that you thought were deal breakers.

Buyers should understand that their first home is “not going to be perfect,” says Matt Brurs, a Movement loan officer in Las Vegas.

So talk with your agent or loan officer about amenities that are important to you, such as how many bedrooms you need or what kind of lawn you want.

“You don’t want to ruin anybody’s dreams but it’s all about setting expectations,” says Brurs, adding that good agents and loan officers can help balance the buyer’s wants with what’s attainable.

Via Movement Mortgage

When facing closing and moving costs, one might be tempted to skip out on paying for a detailed home inspection.

Bad idea.

You may think it doesn’t matter when you first move in but a quality inspector can identify what’s causing that crack in the basement, or trace the source of those damaged roof shingles. Unlike someone who is just a roofer or just an electrician, good inspectors will climb the roof, traverse the attic and go under the crawl space to find the things the buyer won’t see on the surface.

“Because we see the house as a system, we may find that mold may not be caused by a roof leak…it’s caused by moisture at the lower level,” says Frank Lesh, executive director of the American Society of Home Inspectors. “The shingles might look fine but there could be a leak you can’t see.”

He adds: “A house doesn’t have a check engine light. You might think it looks OK because there are no telltale signs but there could be a problem you’re unaware of and the inspector has to look at everything.”

Want more info?

So there you have it, a not-too-exhaustive list of the kind of mistakes you don’t want to make if you’re in the market for your first house. If you’re ready to get your house hunt started or just need more information, talk to a mortgage loan officer and begin the conversation.

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THE HOUSTON HOUSING MARKET HOLDS STEADY IN FEBRUARY

Multiple Listing Service of the Houston Association of REALTORS® includes residential properties and new homes listed by 32,000 REALTORS®
MLS Report for February 2016
THE HOUSTON HOUSING MARKET HOLDS STEADY IN FEBRUARY

Homes priced between $150K and $500K performed best

HOUSTON (March 9, 2016) The Houston real estate market managed to resist most of the effects of the energy downturn in February, with home sales up over two percent compared to the same month last year. Single-family homes priced between $150,000 and $500,000 recorded positive sales volume while the luxury home segment experienced the biggest decline.

According to the latest monthly report compiled by the Houston Association of Realtors (HAR), February single-family home sales rose 2.2 percent versus February 2015, with a total of 4,602 sales compared to 4,505 a year earlier. New listings helped inventory grow from a 2.7-months supply to 3.4 months.

“So far in 2016, the Houston housing market has remained healthy despite the ongoing strains facing the energy industry,” said HAR Chairman Mario Arriaga with First Group. “Sales are still down in the luxury home market, but, just as we saw in January, mid-range housing performed well and inventory levels grew. There was also a lot of activity among rental properties.”

Last week, the Greater Houston Partnership (GHP) reported revised Texas Workforce Commission data showing that the Houston metropolitan area gained 15,200 jobs in 2015, not the 23,200 jobs previously estimated. The GHP report also stated that nearly 51,000 jobs were lost in January, a 1.7 percent decline and slightly above what is considered average for that time of year.

The single-family home average price squeezed out a fractional 0.5 percent year-over-year increase, reaching $260,872, the highest figure ever for a February. The median price—the figure at which half of the homes sold for more and half sold for less—was unchanged at $200,000.

February sales of all property types in Houston totaled 5,548, statistically flat compared to the same month last year. Total dollar volume for properties sold in February rose 1.2 percent to $1.4 billion.

February Monthly Market Comparison

Houston’s monthly housing market measurements were largely positive in February compared to those from a year earlier. On a year-over-year basis, single-family homes sales, average price, total dollar volume and inventory levels rose while median sales price was flat.

Month-end pending sales for single-family homes totaled 6,801. That is up 1.3 percent compared to last year. Total active listings, or the total number of available properties, at the end of February rose 17.6 percent from February 2015 to 32,914.

An increase in new listings in February gave single-family homes inventory a boost, with levels climbing from a 2.7-months supply to 3.4 months. For perspective, the national supply of homes reported by the National Association of Realtors (NAR) currently stands at 4.0 months.

CATEGORIES FEBRUARY 2015 FEBRUARY 2016 CHANGE
Total property sales 5,538 5,548 0.2%
Total dollar volume $1,364,211,035 $1,380,586,269 1.2%
Total active listings 27,990 32,914 17.6%
Single-family home sales 4,505 4,602 2.2%
Single-family average sales price $259,676 $260,872 0.5%
Single-family median sales price $200,000 $200,000 0.0%
Single-family months inventory* 2.7 3.4 30.5%
Single-family pending sales** 6,717 6,801 1.3%

* Months inventory estimates the number of months it will take to deplete current active inventory based on the prior 12 months sales activity. This figure is representative of the single-family homes market.
** Effective May 2015, in an effort to be consistent with industry standards, the Houston MLS is now including all categories of pending sales in its reporting. Previously, the Houston MLS did not include “option pending” and “pending continue to show” listings in its reporting of pending sales. The new methodology is now all-inclusive for listings that went under contract during the month.

Single-Family Homes Update
Single Family

Single-family home sales totaled 4,602 in February, up 2.2 percent from February 2015. That marks the first increase in sales volume since last September.

The average price increased a fractional 0.5 percent to $260,872, a record high for a February in Houston, while the median price remained unchanged at $200,000. Days on Market (DOM), or the number of days it took the average home to sell, edged up to 62 days versus 61 in 2015.

Broken out by housing segment, February sales performed as follows:

  • $1 – $79,999: decreased 1.1 percent
  • $80,000 – $149,999: decreased 7.3 percent
  • $150,000 – $249,999: increased 9.5 percent
  • $250,000 – $499,999: increased 4.4 percent
  • $500,000 and above: decreased 12.0 percent
Single Family Average Home Price

HAR also breaks out the sales figures for existing single-family homes. Existing home sales totaled 3,869 in February, up 4.6 percent versus the same month last year. The average sales price rose 1.0 percent year-over-year to $238,961 while the median sales price climbed 2.6 percent to $185,000.

Townhouse/Condominium Update

Sales of townhouses and condominiums dropped 17.8 percent in February. A total of 398 units sold compared to 484 properties in February 2015. The average price declined 1.3 percent to $199,205 while the median price rose 2.8 percent to $150,000. Inventory grew from a 2.6-months supply to 3.3 months.

Townhouse/Condominium Sales
Lease Property Update

Demand for single-family lease homes shot up 14.6 percent in February while townhomes/condominiums saw demand increase 10.3 percent. The average rent for single-family homes edged up 0.6 percent to $1,688 while the average rent for townhomes/condominiums rose 2.5 percent to $1,545.

Houston Real Estate Highlights in February
  • Single-family home sales rose 2.2 percent compared to last February, marking the first increase since September 2015;
  • Total property sales were unchanged at 5,548 units;
  • Total dollar volume increased 1.2 percent to $1.4 billion;
  • At 260,872, the single-family home average price reached its highest level ever for a February;
  • The single-family home median price was unchanged from a year earlier at $200,000;
  • Single-family homes months of inventory climbed to a 3.4-months supply versus 2.7 months a year earlier;
  • Townhomes/condominium sales fell 17.8 percent with the average price down 1.3 percent at $199,205 and the median price up 2.8 percent to $150,000;
  • Leases of single-family homes soared 14.6 percent with rents up a fractional 0.6 percent at $1,688;
  • Leases of townhomes/condominiums climbed 10.3 percent with rents up 2.5 percent to $1,545.
The computerized Multiple Listing Service of the Houston Association of REALTORS® includes residential properties and new homes listed by 32,000 REALTORS® throughout Harris, Fort Bend and Montgomery counties, as well as parts of Brazoria, Galveston, Waller and Wharton counties. Residential home sales statistics as well as listing information for more than 50,000 properties may be found on the Internet at http://www.har.com.

The information published and disseminated to the HAR Multiple Listing Services is communicated verbatim, without change by Multiple Listing Services, as filed by MLS participants.

The MLS does not verify the information provided and disclaims any responsibility for its accuracy. All data is preliminary and subject to change. Monthly sales figures reported since November 1998 includes a statistical estimation to account for late entries. Twelve-month totals may vary from actual end-of-year figures. (Single-family detached homes were broken out separately in monthly figures beginning February 1988.)

Founded in 1918, the Houston Association of REALTORS® (HAR) is a 32,000-member organization of real estate professionals engaged in every aspect of the industry, including residential and commercial sales and leasing, appraisal, property management and counseling. It is the largest individual dues-paying membership trade association in Houston as well as the second largest local association/board of REALTORS® in the United States.

The 4 Challenges First-Time Buyers Face in 2016

The 4 Challenges First-Time Buyers Face in 2016

by James Bellandi February 29, 2016

The housing market is improving, but first-time homebuyers still face challenges

 

First-time homebuyers have dropped to their lowest share since 1987, and based on numerous reports and analyses by news organizations and industry groups, there are a number of barriers that remain in their way now in 2016.

We’ve taken a look at four key obstacles currently facing first-time homebuyers:

1. Cash Investors Complicate the Process – Even with the easy pickings of foreclosures and short sales gone, cash investors are still competing with first-time homebuyers for the already limited inventory of homes. According to a Wall Street Journal report, 25 percent of home sales nationwide went to investors in October. That’s down from 32 percent in 2012 but still up 8 percentage points from 2000. Cash and investor buying remains far above historical levels in some cities, leaving fewer low-priced homes for first-time buyers.

2. Housing Inventory Below Par – The housing supply was at 1.82 million in January according to the National Association of Realtors. That supply would last four months, below the six-month supply considered normal for the housing market. Additionally, on account of the aforementioned demand from investors, inventory of homes for sale priced below $100,000 fell 11.1 percent between Dec. 2014 and 2015. NAR Chief economist Lawrence Yun noted the small inventory in his report.

“The spring buying season is right around the corner, and current supply levels aren’t even close to what’s needed to accommodate the subsequent growth in housing demand,” Yun said. “Home prices ascending near or above double-digit appreciation aren’t healthy – especially considering the fact that household income and wages are barely rising.”

3. Financial Anchors on Buyers – While home prices have been rising at a staggering rate (up 60.6 since the early 1970s), the median income for first-time buyers has stagnated over the same period, rising 2.9 percent since the early ’70s. Paired with the stagnant wages is an alarming amount of student loan debt, which 41 percent of first-time buyers had in 2015. According to NAR, 31 percent had over $50,000 in debt, and 58 percent delayed a home purchase because of student loans. Student debt creates a significant barrier to entry not seen with previous generations, and has clearly depressed first-time homebuying.

4. Waiting Longer to Buy – According to a NeighborWorks America survey, 43 percent of first-time homebuyers want to wait until they’re married with children to make the jump to homeownership. Right now, only 20 percent of young adults are married with children, which means that first-time homebuyers are waiting longer than previous generations to make their first home purchase. This mindset is becoming more of a stable trend for Millennials, thanks to different expectations – both of themselves and the housing market.

– See more at: http://houstonagentmagazine.com/2016/02/29/4-challenges-first-time-buyers-face-in-2016/#sthash.aBZPgCT8.dpuf

Is January’s Price Bump a New Direction for Houston?

by James McClister March 2, 2016

 

The pace of home price appreciation in Houston rose substantially (i.e. more than 0.25 percent) month-over-month in January for the first time since 2014, according to a report from CoreLogic, which begs the question: has the city overcome the hurdle of low oil prices?

The easy answer is “probably not,” but it is worth a moment’s consideration.

In Oct. 2014, when the price of crude was still upwards of $80 per barrel, home prices in Houston increased just over 10 percent. That was the last time appreciation broke double digits. Since then, prices in the city have still risen steadily, but the pace has continuously regressed.

By Aug. 2015, home prices were rising by less than 6 percent while the price of oil was down below $50 per barrel. And as the year came to a close, home price appreciation continued following the trajectory of crude values, falling to 4.2 percent as price per barrel fell to nearly $30.

 

The positive movement for the city’s price appreciation came in January (the latest data available) when the pace shifted above 5 percent (5.74 percent, exactly). However, it wasn’t a reflection of oil price at the time, which had dropped to $27 per barrel – its lowest level since Nov. 2003.

A Welcome Slowdown

An explanation for January’s increase, which ran counter to oil price depreciation, may simply be a matter of seasonality, CoreLogic Chief Executive and President Anand Nallathambi said in a statement accompanying the report.

“Heading into the spring buying season, home prices continue to rise across much of the country,” he explained. “With rates staying low for now and continued solid job and income growth, the spring buying season is shaping up to be a good one.”

But as we’ve reported on multiple occasions, Houston’s housing market is invariably tied to the fate of oil – not a revelation, considering that the city is known widely as the nation’s primary energy hub. And as forecasting the notoriously fickle price of oil is all but a crapshoot (current predictions for the year’s-end price range from $20 to $100 per barrel), how the city’s market will move in 2016 is still up in the air.

With low inventory and steady demand, price appreciation will likely remain in the positive single digits throughout the year. But a slowed pace is hardly a bad direction for Houston, which has long been labeled an overvalued market. At the very least, the city’s slow pace of home price appreciation will give the market a chance to gain better footing for more long-term sustainability.

– See more at: http://houstonagentmagazine.com/2016/03/02/januarys-price-bump-a-new-direction-for-houston/#sthash.Nkq8I6BM.AOJifd42.dpuf