The Impact of Homeownership on Educational Achievement

The Impact of Homeownership on Educational Achievement | Simplifying The Market

The National Association of Realtors recently released a study titled ‘Social Benefits of Homeownership and Stable Housing.’ The study confirmed a long-standing belief of most Americans:

“Owning a home embodies the promise of individual autonomy and is the aspiration of most American households. Homeownership allows households to accumulate wealth and social status, and is the basis for a number of positive social, economic, family and civic outcomes.”

Today, we want to cover the section of the report that quoted several studies concentrating on the impact homeownership has on educational achievement. Here are some of the major findings on this issue revealed in the report:

  • The decision to stay in school by teenage students is higher for those raised by home-owning parents compared to those in renter households.
  • Parental homeownership in low-income neighborhoods has a positive impact on high school graduation.
  • Though homeownership raises educational outcomes for children, neighborhood stability may have further enhanced the positive outcome.
  • Children of homeowners tend to have higher levels of achievement in math and reading and fewer behavioral problems.
  • Educational opportunities are more prevalent in neighborhoods with high rates of homeownership and community involvement.
  • The average child of homeowners is significantly more likely to achieve a higher level of education and, thereby, a higher level of earnings.

Bottom Line

People often talk about the financial benefits of homeownership. As we can see, there are also social benefits of owning your own home.

*The next two Thursdays, we will report the study’s findings on the impact homeownership has on civic participation and a family’s health.

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Homeownership Offers Stability & Wealth Creation

Homeownership Offers Stability & Wealth Creation | Simplifying The Market

The most recent Housing Pulse Survey released by the National Association of Realtors revealed that the two major reasons Americans prefer owning their own home instead of renting are:

  1. They want the opportunity to build equity.
  2. They want a stable and safe environment.

Building Equity

In a recent article by The Mortgage Reports, they report that “buying and owning a home is the essence of ‘The American Dream.’ Each month, your housing payments go toward owning your home instead of renting it; building your personal wealth and assets instead of someone else’s.

History has shown that homeownership is a clear path to wealth-building, with homeowners boasting a net worth [that is] multiples higher than the net worth of renters.”  

Family Stability 

Does owning your home really create a more stable environment for your family?

survey of property managers conducted by rent.com disclosed two reasons tenants should feel less stable with their housing situation:

  • 68% of property managers predict that rental rates will continue to rise in the next year by an average of 8%.
  • 53% of property managers said that they were more likely to bring in a new tenant at a higher rate than to negotiate and renew a lease with a current tenant they already know.

We can see from these survey results that renting will provide anything but a stable environment in the near future.

Bottom Line

Homeowners enjoy a more stable environment, and at the same time are given the opportunity to build their family’s net worth.

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Daydreaming About Your Perfect Home? Know What You WANT vs. What You NEED

Daydreaming About Your Perfect Home? Know What You WANT vs. What You NEED | Simplifying The Market

In this day and age of being able to shop for anything anywhere, it is really important to know what you’re looking for when you start your home search.

If you’ve been thinking about buying a home of your own for some time now, you’ve probably come up with a list of things that you’d LOVE to have in your new home. Many new homebuyers fantasize about the amenities that they see on television or Pinterest, and start looking at the countless homes listed for sale through rose-colored glasses.

Do you really need that farmhouse sink in the kitchen in order to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Could the ‘man cave’ of your dreams be a future renovation project instead of a make-or-break right now?

The first step in your home buying process should be to get pre-approved for your mortgage. This allows you to know your budget before you fall in love with a home that is way outside of it.

The next step is to list all the features of a home that you would like, and to qualify them as follows:

  • ‘Must Haves’ – if this property does not have these items, then it shouldn’t even be considered. (ex: distance from work or family, number of bedrooms/bathrooms)
  • ‘Should Haves’ – if the property hits all of the ‘must haves’ and some of the ‘should haves,’ it stays in contention but does not need to have all of these features.
  • ‘Absolute Wish List’ – if we find a property in our budget that has all of the ‘must haves,’ most of the ‘should haves,’ and ANY of these, it’s the winner!

Bottom Line

Having this list flushed out before starting your search will save you time and frustration, while also letting your agent know what features are most important to you before starting to show you houses in your desired area.

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5 Reasons Homeowners Throw Better Super Bowl Parties! [INFOGRAPHIC]

5 Reasons Homeowners Throw Better Super Bowl Parties! [INFOGRAPHIC] | Simplifying The Market

Highlights:

  • Watching the Big Game at home with your friends & family offers many advantages.
  • There’s more room to entertain a large crowd, and you don’t have to worry about complaints to your landlord if you cheer too loudly!
  • The kitchen is big enough to make as many appetizers as you want, and if some of your guests are only there to watch the commercials, they can do so on a different TV in another room!

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Thinking of Making an Offer? 4 Tips for Success

Thinking of Making an Offer? 4 Tips for Success | Simplifying The Market

So you’ve been searching for that perfect house to call a ‘home,’ and you finally found one! The price is right, and in such a competitive market that you want to make sure you make a good offer so that you can guarantee your dream of making this house yours comes true!

Freddie Mac covered “4 Tips for Making an Offer” in their latest Executive Perspective. Here are the 4 Tips they covered along with some additional information for your consideration:

1. Understand How Much You Can Afford

“While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”

This ‘tip’ or ‘step’ really should take place before you start your home search process.

As we’ve mentioned before, getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).

2. Act Fast

“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.”

According to the latest Existing Home Sales Report, the inventory of homes for sale is currently at a 3.6-month supply; This is well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream homes.

Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.

3. Make a Solid Offer

Freddie Mac offers this advice to help make your offer the strongest it can be:

“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.”

Consider ways of making your offer stand out! Many buyers write a personal letter to the seller letting them know how much they would love to be the new homeowners. Your agent will be able to help you figure out if there are any other ways your offer could stand out above the rest.

4. Be Prepared to Negotiate

“It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford.

Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”

If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home. If the inspection uncovers undisclosed problems or issues, you can typically re-negotiate the terms or cancel the contract.”

Bottom Line 

Whether buying your first home or your fifth, having a local professional on your side who is an expert in their market is your best bet to make sure the process goes smoothly. Happy House Hunting!

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2 Myths That May Be Holding Back Buyers

2 Myths That May Be Holding Back Buyers | Simplifying The Market

Fannie Mae’s article, “What Consumers (Don’t) Know About Mortgage Qualification Criteria, revealed that “only 5 to 16 percent of respondents know the correct ranges for key mortgage qualification criteria.

Myth #1: “I Need a 20% Down Payment”

Fannie Mae’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 76% of Americans either don’t know (40%) or are misinformed (36%) about the minimum down payment required.

Many believe that they need at least 20% down to buy their dream home, but many programs actually let buyers put down as little as 3%.

Below are the results of a Digital Risk survey of Millennials who recently purchased a home.

2 Myths That May Be Holding Back Buyers | Simplifying The Market

As you can see, 64.2% were able to purchase their home by putting down less than 20%, with 43.8% putting down less than 10%!

Myth #2: “I need a 780 FICO Score or Higher to Buy”

The survey revealed that 59% of Americans either don’t know (54%) or are misinformed (5%) about what FICO score is necessary to qualify.

Many Americans believe a ‘good’ credit score is 780 or higher.

To help debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans. As you can see below, 54.7% of approved mortgages had a credit score of 600-749.

2 Myths That May Be Holding Back Buyers | Simplifying The Market

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Your dream home may already be within your reach.

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What to Expect From Your Home Inspection

What to Expect From Your Home Inspection | Simplifying The Market

So you made an offer, it was accepted, and now your next task is to have the home inspected prior to closing. More often than not, your agent may have made your offer contingent on a clean home inspection.

This contingency allows you to renegotiate the price paid for the home, ask the sellers to cover repairs, or even, in some cases, walk away. Your agent can advise you on the best course of action once the report is filed.

How to Choose an Inspector

Your agent will most likely have a short list of inspectors that they have worked with in the past that they can recommend to you. Realtor.com suggests that you consider the following 5 areas when choosing the right home inspector for you:

  1. Qualifications – find out what’s included in your inspection & if the age or location of your home may warrant specific certifications or specialties.
  2. Sample Reports – ask for a sample inspection report so you can review how thoroughly they will be inspecting your dream home. The more detailed the report, the better in most cases.
  3. References – do your homework – ask for phone numbers and names of past clients that you can call to ask about their experience.
  4. Memberships – Not all inspectors belong to a national or state association of home inspectors, and membership in one of these groups should not be the only way to evaluate your choice. Membership in one of these organizations often means that there is continued training and education provided.
  5. Errors & Omission Insurance – Find out what the liability of the inspector or inspection company is once the inspection is over. The inspector is only human after all, and it is possible that they might miss something they should have seen.

Ask your inspector if it’s ok for you to tag along during the inspection, that way they can point out anything that should be addressed or fixed.

Don’t be surprised to see your inspector climbing on the roof, crawling around in the attic, and on the floors. The job of the inspector is to protect your investment and find any issues with the home, including but not limited to: the roof, plumbing, electrical components, appliances, heating & air conditioning systems, ventilation, windows, the fireplace & chimney, the foundation and so much more!

Bottom Line

They say ‘ignorance is bliss,’ but not when investing your hard-earned money in a home of your own. Work with a professional you can trust to give you the most information possible about your new home so that you can make the most educated decision about your purchase.

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Sales at Highest Pace in 10 Years! [INFOGRAPHIC]

Sales at Highest Pace in 10 Years! [INFOGRAPHIC] | Simplifying The Market

Highlights:

  • 45 million existing homes were sold in 2016! This is the highest mark set since 2006.
  • Inventory of existing homes for sale dropped to a 3.6-month supply, the lowest level since NAR began tracking in 1999.
  • The median price of homes sold in December was $232,200. This is the 58th consecutive month of year-over-year price gains.

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Buying a Home is More Affordable Than Renting in 66% of US Counties

Buying a Home is More Affordable Than Renting in 66% of US Counties | Simplifying The Market

According to ATTOM Data Solutions’ 2017 Rental Affordability Report, buying a home is more affordable than renting in 354 of the 540 U.S. counties they analyzed.

The report found that “making monthly house payments on a median-priced home — including mortgage, property taxes and insurance — is more affordable than the fair market rent on a three-bedroom property in 354 of the 540 counties analyzed in the report (66 percent).”

For the report, ATTOM Data Solutions compared recently released fair market rent data from the Department of Housing and Urban Development with reported income amounts from the Department of Labor and Statistics to determine the percentage of income that a family would have to spend on their monthly housing cost (rent or mortgage payments).

Rents have been surging faster than home prices in about 37% of the markets measured. Daren Blomquist, Senior Vice President of ATTOM Data Solutions warns that rising interest rates could be the tipping point of affordability:

“While buying continues to be more affordable than renting in the majority of U.S. markets, that equation could change quickly if mortgage rates keep rising in 2017. In that scenario, renters who have not yet made the leap to homeownership will find it even more difficult to make that leap this year.”

Bottom Line

Rents will continue to rise and mortgage interest rates are still at historic lows. Before you sign or renew your next lease, meet with a local professional who can help you determine if you are able to buy a home of your own and lock in your monthly housing expense.

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How Low Interest Rates Increase Your Purchasing Power

How Low Interest Rates Increase Your Purchasing Power | Simplifying The Market

According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 4.09%, which is still very low in comparison to recent history!

The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range, and planned to keep your principal and interest payments at or about $1,100 a month.

How Low Interest Rates Increase Your Purchasing Power | Simplifying The Market

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5%, (in this example, $6,250). Experts predict that mortgage rates will be closer to 5% by this time next year.

Act now to get the most house for your hard-earned money.

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