12 Jan 2023
By Kevin Gahagan

House Poor: What It Means And How To Avoid It

Mortgage

House Poor: What It Means And How To Avoid ItThere is a good chance you have heard someone described as being house poor. What exactly does it mean? It is important to understand what it means to be house poor and how you can stay away from it.

House Poor Means Spending A Significant Chunk Of Your Income On Housing

Being house-poor means different things for different people. In general, it means spending a significant amount of your monthly income on recurring expenses related to your house. A few examples include your mortgage, the interest on your mortgage, your property taxes, and HOA expenses. Owning a house can be expensive, and it is important for you to budget carefully. In general, you could not spend more than one-third of your monthly pay on your rent or your mortgage. If you are spending significantly more than this recommendation, you might qualify as house-poor. 

How To Avoid Becoming House-Poor

Fortunately, there are several strategies you can follow if you want to avoid becoming house-poor. First, make sure you budget ahead of time. Understand exactly how much money you can spend on your home, and make every effort to stick to that number. Furthermore, before you purchase a house, make sure you get a home inspection completed. There are a lot of people who have their savings wiped out by unforeseen expenses. If you get an inspection before you buy a house, you can plan for those ahead of time. Finally, make sure you reduce your debt-to-income ratio before you buy a house. That way, you can qualify for the best home loan possible.

Do Not Spend More On Housing Than You Can Afford

In the end, it is critical for you to avoid spending more money on your house than you can afford. Remember that you should not spend more than one-third of your monthly pay on housing. If you do, your budget may be stretched thin and other areas, and you might have a difficult time covering other expenses. Do not hesitate to reach out to an expert who can help you find the right house for yourself and your family.

 

10 Jan 2023
By Kevin Gahagan

The Most Commonly Forgotten Item On The Home Budget List

Mortgage

The Most Commonly Forgotten Item On The Home Budget ListIf you are in the process of purchasing a home, it is critical for you to make sure that you budget appropriately. Unfortunately, there are a lot of people who commonly overlook closing expenses. Even though it is important for you to have enough money for your down payment, you need to make sure you cover closing costs as well. What is included in closing costs, and how much money do you need to budget?

The Recommended Amount

Even though it is tempting to focus on the cost of your house, it is also critical to think about closing expenses. Usually, closing expenses are approximately two percent of the value of your home. For example, if you are planning on purchasing a house for $250,000, your closing expenses will probably be about $5,000; however, there is also a chance that your closing costs could be more or less than that. You should work with a professional who can help you estimate your closing expenses. 

Examples Of Items Included In Closing Costs

As you go through the process of buying your house, there are a lot of moving parts that have to come together to complete the transaction. There are several examples of items that could be included in your closing expenses. For example, you may have to pay an origination fee attached to your loan, and you will have to cover attorney’s fees for the closing attorney as well. You will need to purchase title insurance and conduct a title search, and you might also have to pay for the home inspection and home appraisal. If there is an HOA in the area in which you are buying your house, you may have to pay those when you close on your house as well. You should get a breakdown of these expenses ahead of time.

Ensure You Have Money For Closing Costs

You have worked hard to find the perfect house. You must make sure you have enough money to cover not only the down payment but also your closing expenses. If you have questions about how much money you will have to pay for closing costs, reach out to a professional who can help you. 

 

12 Jul 2022
By Kevin Gahagan

Financing Options For Home Improvement Projects: What To Know

Mortgage

Financing Options For Home Improvement Projects: What To KnowAre you planning on updating your house? A home improvement project can be expensive, but you don’t necessarily need to pay for the entire cost upfront. There are several loan options that can make it easier for you to get your home improvement project started right now. What are your options?

A Personal Loan

One of the most common options people use to finance a home improvement project is a personal loan. This could be a great option for you if you don’t want to use your home as collateral or if you don’t have enough equity in your home to use one of the other options available. The downside of this option is that you might have to pay a higher interest rate because a personal loan is not necessarily collateralized.

A Cash-Out Refinance

Another popular option is a cash-out refinance. In this option, you will refinance your mortgage, replacing your current loan with a new loan. Then, you will withdraw some of the equity in your home. You will increase the balance you have to pay back, but you will have a lump sum of cash you can use to cover the cost of your home improvement project. If interest rates have gone down since you took out your first mortgage, you might be able to keep your monthly payment the same. If you can’t get a lower interest rate, you might extend the length of the mortgage to prevent your monthly payment from going up. 

A Home Equity Line Of Credit

Finally, you should also consider a home equity line of credit. As long as you have enough equity in your home, you can withdraw some of the equity and use it to finance the home improvement project. Essentially, it is a second mortgage, but it has a lower interest rate than a personal loan because you use your home as collateral. 

Get Ready For Your Home Improvement Project

You need to think carefully about every financing option available to you. They each have their benefits and drawbacks, and you should get your finances in order before you decide to apply for a loan. Consider reaching out to a professional who can help you.

 

30 Mar 2022
By Kevin Gahagan

Case-Shiller Home Price Indices: Home Prices Grow at a Near-Record Pace

Financial Reports

Case-Shiller Home Price Indices: Home Prices Grow at a Near-Record PaceU.S home prices grew at a near-record pace in January according to the National S&P Case-Shiller Home Price Index; year-over-year home prices rose by 19.20 percent in January as compared to December’s reading of 18.90 percent. Home prices rose 1.80 percent on a month-to-month basis from December to January.

While home prices continued to grow at near-record rates, home price growth slowed in some areas during  December but picked up in January. Craig M. Lazzara, managing director at S&P Dow Jones Indices, said: “Last fall we observed that home prices, although continuing to rise sharply, had begun to decelerate. Even that modest deceleration was on pause in January.”

The top three cities for home price growth held their places in January. Phoenix, Arizona had the highest pace of home price growth with a year-over-year gain of 32.60 percent; Tampa, Florida reported a year-over-year gain of 30.80 percent. Miami, Florida held third place with a year-over-year home price growth rate 0f 28.10 percent.

All 20 cities tracked by Case-Shiller reported record gains in year-over-year home prices while 16 of 20 cities included in the 20-City Index reported higher home price gains in January than in December.

FHFA House Price Report Shows Strong Growth

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reported that home prices rose by 18.20 percent year-over-year in January. December’s year-over-year growth pace was 17.70 percent for homes owned by Fannie Mae and Freddie Mac.  Home prices rose fastest in the Mountain region, which includes Arizona, Colorado, Idaho, Montana, Nevada, New Mexico Utah, and Wyoming. Year-over-year home prices rose by 23 percent or more in the Mountain region.

Will Doerner, a supervisory economist at FHFA, said: “So far, the mortgage rate growth has not dampened upward price pressure from intense buyer demand and limited supply.” Low inventories of available homes continue to drive demand for homes, but some economists expect the pace of home sales to drop by as much as 25 percent in response to rising mortgage rates. Analysts expect that low inventories of available homes will sustain rising home prices. Homebuyers can expect to compete for available homes as buyers rush to lock in lower mortgage rates; cash buyers and bidding wars can cause home prices to rise above market value in high-demand markets.

11 May 2021
By Kevin Gahagan

How to Become a Homeowner: First Time Home Buyer Guide

Mortgage

How to Become a Homeowner: First Time Home Buyer GuideBecoming a homeowner for the first time is exciting. However, for many potential buyers, the process can also be confusing. Below is an overview of the steps you need to complete in order to buy your first home. 

Work Out The Finances

The first step in buying a home is deciding on a price range. This price range will be determined by your income, as well as your own comfort level with home prices and monthly payments. Consider all of these factors to determine the maximum amount you are willing to spend on your new home. 

In most cases, you will be required to pay the downpayment and closing costs upfront, even if you are financing the rest of the home’s purchase price. In general, most lenders will expect a downpayment equal to 20 percent of the home’s purchase price. Otherwise, you may be required to pay mortgage insurance. Before buying a home, set enough money aside to cover these expenses. 

For most homeowners, the next step in the home buying process involves looking into different mortgage options. Unless you have enough money to purchase your home for cash, you will need a mortgage. Be sure to compare quotes from different lenders before making a choice to be sure you are getting the best deal. Once you have chosen a lender and a specific type of mortgage, ask for a preapproval letter that you can attach to any offers you make so that you will be a more reliable and attractive buyer. 

Hire An Agent 

When searching for the perfect first home, hiring a real estate agent to represent you throughout the process is highly recommended. Your real estate agent will act as a buyer’s agent, which means they will have your best interests at heart. When you don’t have a buyer’s agent, you will be dealing only with the seller’s real estate agent instead. Because this individual has been hired to represent the seller, they will always put the seller’s needs above yours. 

Find The Right Home

Once you have a qualified agent to represent you and a preapproval letter from your lender, it is time to start looking for your new home! Your real estate agent will help you comb through listings and choose the properties you want to see. Next, you will walk through each home until you find the one that is right for you. After you have chosen a home, your real estate agent will help you prepare and submit an offer to the seller. 

The process of buying your first home may seem overwhelming at first. However, by following these steps, you can simplify the process and become a homeowner with ease.