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May 2019

 

Whether you are looking to buy or sell, I can offer the highest levels in real estate expertise and professionalism. Don’t hesitate to contact me and allow me to help guide you through that process!

Pam French
Broker
PamFrenchRealtor@gmail.com   |   574-849-3037
http://www.pamfrench.bhhsni.com

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HOMEBUYERS’ ADVICE

Spring-Summer Outlook Says Buy A Home Now

Over the last two years, homeowners accrued about $21,300 in home equity, $8,700 of which occurred over the past 12 months, according to the National Association of REALTORS (NAR). That’s an average of $10,650 per year, enough to pay back their closing costs and put them almost halfway to eliminating private mortgage insurance they may have.

Equity is only one reason people buy homes, partially explaining why home sales continue to be brisk. NAR Chief Economist Lawrence Yun said that a combination of lower mortgage rates, more inventory, rising income and higher consumer confidence are driving sales.

Meanwhile, prices are rising. In February 2019, the median existing (pre-owned) home price was $249,500, up nearly 4% year-over-year.

However, rising prices aren’t discouraging homebuyers. According to a recent quarterly NAR survey, more Americans believe that now is a good time to purchase a home, citing the improved economy as an incentive. Yun explained that other factors are spurring buyer optimism, including more available homes for sale and stabilizing home price trends. Data gleaned from electronic lockboxes report increased foot traffic at open houses.   

Yun also notes that mortgage affordability in 2019's first quarter was favorable to homebuyers, because the Federal Reserve isn’t going to raise overnight borrowing rates to banks, which contributed to mortgage rate declines and making homeownership slightly more affordable for homebuyers. Mortgage rates remain at historically low levels.

Whatever your reasons for wanting to buy a home, the outlook appears promising, especially if more sellers decide to put their homes on the market.

HOMEBUYERS’ ADVICE

Do You Need Flood Insurance?

Take a look at your homeowner’s insurance policy, and you may be surprised to learn you’re covered for water damage, but not flooding. Flood’s water, isn’t it? Yes, but there’s a difference for insurers.

According to the National Association of REALTORS, approximately half of all flood disaster declarations since 1990 occurred in land-locked states, and flash floods have been reported in all fifty states. Yet only 12% of U.S. homeowners have flood insurance, says the Insurance Information Institute.  

Homeowner’s insurance covers most losses due to storms, hail, pipe freezing, and the weigh of snow or sleet, according to StateFarm.com, but it won’t cover water damage due to these events, advises TheSimpleDollar.com. It also won’t cover flooding due to leaking appliances, stopped up sinks, broken toilets, etc. 

So why isn’t water damage from catastrophic events like flooding, earthquakes and hurricanes included? “Adverse Selection” is an industry term that simply means that the insurer can’t collect enough in premiums to cover the risk. Some insurers offer private flood insurance to high-end homeowners in limited groups, or they may offer limited coverage to policyholders that are part of the National Flood Insurance Program (NFIP), a federal program designed to help homeowners coverage for up to $250,000 for the structure of the home and up to $100,000 for personal possessions.

Most homeowners don’t need flood insurance, but to be certain, doublecheck with your insurer what water damage is covered by your policy and if you need additional insurance. 

HOMEBUYERS’ ADVICE

The Home Sizes and Clutter Relationship

In a way, the trend toward larger homes is the result of Americans’ fondness for clutter.

  1. The world’s tiniest house is in Germany. It’s one square meter, made of wood and glass, and it’s portable, if you don’t mind carrying it on your back. By day, you set the little house upright, where you can work at a little desk, and to relax or sleep. Of course, that means there’s no room for any belongings.
  2. If that’s too little space for you, you’re not alone. The typical home purchased in 2018 was 1,900 square feet in size, had three bedrooms and two bathrooms, and cost $249,500, according to the National Association of REALTORS.
  3. According to GarageWorks, a quarter of the households that have two-car garages store so much stuff they don’t have enough room to park any cars. The average American woman owns 30 different outfits, compared to women in the 1930s who owned only nine. The U.S. is home to 3.1% of the world’s children, yet consumes 40% of the world’s toys.
  4. That’s a lot of stuff, which has helped the self-storage industry grow into a $38 billion powerhouse. One in 11 Americans pays $91.14 per month to store stuff in approximately 48,500 storage facilities in the U.S. - more locations than McDonalds and Starbucks combined.

The National Association of Productivity and Organizing Professionals says Americans don’t use 80% of the things they keep. They cope by hiring professionals to organize their stuff.

FINANCIAL ADVICE

Your Loan Application Checklist

When you apply for a loan, the lender will require the answers to certain questions and for you to provide specific documents. This is to make certain you’re put into the correct loan product, FHA, VA, Conventional, or other.

  1. What is the selling price and address of the home you’ve chosen? Provide a copy of the signed purchase agreement, if applicable.
  2. How much money are you planning to use as a down-payment?
  3. Where does the down-payment originate? Is it from savings, a gift or a loan?
  4. How long do you plan to occupy your new home? The lender will show you appropriate loan products between fixed rates, adjustable rates or a hybrid of the two.
  5. What is your anticipated closing date?

In addition, all lenders will require the following documentation:

  • Your Social Security number, to run your credit scores
  • Your address and contact information for your employer of the past two years
  • W-2s for the past two years and current paycheck stubs
  • Bank and savings information, including printed bank statements for the past six months
  • Revolving debt and loan accounts, and monthly obligations such as child support.
  • Personal assets such as a stock portfolio, CDs, other property, and 401ks.
  • Certificate of Eligibility and DD-214 (for veterans only)
  • Tax returns with 1099s for the past two years and current balance sheet for self-employed applicants

If you haven’t chosen a home yet, getting preapproved in advance will save you a lot of time and guesswork.

 
 
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