Two Questions To Ask Yourself if You’re Considering Buying a Home

 

If you’re thinking of buying a home, chances are you’re paying attention to just about everything you hear about the housing market. And you’re getting your information from a variety of channels: the news, social media, your real estate agent, conversations with friends and loved ones, overhearing someone chatting at the local supermarket, the list goes on and on. Most likely, home prices and mortgage rates are coming up a lot. 

To help cut through the noise and give you the information you need most, take a look at what the data says. Here are the top two questions you need to ask yourself about home prices and mortgage rates as you make your decision: 

1. Where Do I Think Home Prices Are Heading?

One reliable place you can turn to for that information is the Home Price Expectation Survey from Pulsenomics – a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists. 

According to the latest release, the experts surveyed are projecting slight depreciation this year (see the red in the graph below). But here’s the context you need most. The worst home price declines are already behind us, and prices are actually appreciating again in many markets. Not to mention, the small 0.37% depreciation HPES is showing for 2023 is far from the crash some people originally said would happen.

Now, let’s look to the future. The green in the graph below shows prices have turned a corner and are expected to appreciate in 2024 and beyond. After this year, the HPES is forecasting home price appreciation returning to more normal levels for the next several years.

So, why does this matter to you? It means your home will likely grow in value and you should gain home equity in the years ahead, but only if you buy now. If you wait, based on these forecasts, the home will only cost you more later on.  

2. Where Do I Think Mortgage Rates Are Heading?

Over the past year, mortgage rates have risen in response to economic uncertainty, inflation, and more. We know based on the latest reports that inflation, while still high, has moderated from its peak. This is an encouraging sign for the market and for mortgage rates. Here’s why.

When inflation cools, mortgage rates generally fall in response. This may be why some experts are saying mortgage rateswill pull back slightly over the next few quarters and settle somewhere around roughly 5.5 and 6% on average.

But, not even the experts can say with absolute certainty where mortgage rates will be next year, or even next month. That’s because there are so many factors that can impact what happens. So, to give you a lens into the various possible outcomes, here’s what you should consider:

• If you buy now and mortgage rates don’t change: You made a good move since home prices are projected to grow with time, so at least you beat rising prices.
• If you buy now and mortgage rates fall (as projected): You probably still made a good decision because you got the house before home prices appreciated more. And, you can always refinance your home later on if rates are lower.
• If you buy now and mortgage rates rise: If this happens, you made a great decision because you bought before both the price of the home and the mortgage rate went up.

Bottom Line

If you’re thinking about buying a home, you need to know the facts on what’s happening with home prices and mortgage rates. While no one can say for certain where they’ll go, expert projections can give you powerful information to keep you informed. Let’s connect so you have a professional to add in an expert opinion on our local market.

 

Are you thinking of buying a Massachusetts Condominium?  

By Attorney Richard Carter

A condominium is defined as “a building or complex of buildings containing a number of individually owned apartments or houses”.

There are several advantages in purchasing a condominium.  First it may be a more affordable option than purchasing a single family home. Second, by purchasing a condominium all the condominium unit owners will share in the expenses and upkeep of the property. But when purchasing a condominium, you will need to remember that you are not only buying your own particular unit but you will also be buying into your percentage of the “common areas” that you share with the other unit owners.

So when purchasing a condominium  you will not only want to make sure there are no issues with your own particular unit but you should also ascertain whether there are any issues with the condominium itself.

Here are 10 things you should consider before buying a Massachusetts Condominium

1. Make sure your review all of the condominium documents, including the monthly condominium “meeting minutes”. The meeting minutes should describe any upcoming events that might affect the condominium which may not be necessarily stated in the Master Deed or Condominium Trust.
2. Make sure you review the Rules and Regulations of the condominium.
3. immediately become familiar with the condominium management company. They will have important information for you including where your condominium fees are to be sent. 
4. Review the condominium budget and condominium capital reserves to see how solid the condominium is financially. A capital reserve is a pool of money that may be needed for unforeseen capital repairs and/or operating costs, such as an increase in snow removal costs or leaky roofs. If you are buying the condominium through bank financing the lender may be requiring a minimum amount in the capital reserve. Some banks may require a capital reserve of up to 10 to 20% of the annual budget. Check with your lender on the amount they will be looking for.
5. Check to see how much is the monthly condominium fee and see exactly what that condo fee covers. Condominium fees are used to pay for the operating costs such as insurance, snow removal, landscaping etc. Make sure you understand what is notincluded in the condominium fees. For example, does the condominium fee include water usage or is there a separate water meter?  
6. Check to see if there are there are any upcoming assessments on the condominium unit.   
7. Check to see if there are any current lawsuits or any anticipated future lawsuits against the condominium or the developer of the condominium. This may affect your financing.
8. Check to see if the condominium is in a flood zone. If so, check with the condominium association to see whether their master insurance covers any required flood insurance. 
9. If applicable, make sure any designated parking space and/or storage area is identified in 

the offer, the purchase and sale agreement, and ultimately on the deed of the unit. 

10. Determine what the condominium master insurance policy covers. Anything that the master insurance policy does not cover, such as the person’s personal contents, should be covered through a supplemental policy or a “HO-6 insurance policy”. A HO-6 policy is commonly known as “studs in” coverage. This coverage would cover the interior of the unit and the personal property in the unit. But again, you want to make sure that through both policies you are covered for everything. 

 

Attorney Richard Carter can be reached at

Phone: (781)944-9222  | Cell: (781)944-7000  |  rcarter@carterclosings.com  |  carterrealestatelaw.com

 

The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite the main reason for not currently owning a home, as not being able to afford one.

This brings us to two major misconceptions that we want to address today.

1. Down Payment

NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less.

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO® Scores

An Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.

The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August.

 

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options.

Every three years, the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a Forbes article, the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that by the end of 2016, the net worth gap will widen even further to 45 times greater.

The graph below demonstrates the results of the last two Federal Reserve studies and Yun’s prediction:

 

Put Your Housing Cost to Work for You

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.

The latest National Housing Pulse Survey from NAR reveals that 85% of consumers believe that purchasing a home is a good financial decision. Yun comments:

“Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.”

Bottom Line

If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, let’s get together and evaluate your ability to buy today!