Coaching and teaching - many through the mortgage process and others on the field

Category: Housing Market (Page 2 of 33)

Make a Real Estate Purchase Your 2024 Resolution

With 2024 upon us, many of us start thinking about setting resolutions.

Make buying a home or an investment property your New Year’s resolution. It can be a substantial, rewarding, and life changing goal for multiple reasons!

First and foremost, home ownership is a foundation of building the American Dream.

Per Forbes magazine: “Home ownership has long been accepted as a core component of the American dream, as it confers several economic benefits on homeowners, including the ability to accumulate wealth by accessing credit, building equity and reducing housing costs.”

Building Wealth

Instead of spending money on rent (which contributes to the equity of others), purchasing a home allows individuals to build equity over time. This equity can serve as a form of savings and investment, as real estate almost always appreciates in value and providing a secure financial foundation for the future.

Laying Down Roots

The stability that home ownership offers can contribute to a sense of security and well-being for individuals and their families.

Furthermore, owning a home offers stability and a sense of belonging. It provides a place to create lasting memories, build relationships, and establish roots within a community.

Serious Tax Advantages

Additionally, owning a home can offer some nice tax benefits. Deductions for mortgage interest and property taxes can significantly reduce taxable income, providing potential financial advantages for homeowners. These tax benefits can contribute to long-term financial planning and savings…and talk to your financial professional for the specifics.

Financial Independence and Long Term Investment

Moreover, purchasing a home can be a step towards financial independence and building generational wealth. Property ownership can lead to increased net worth over time and serve as a valuable asset to pass down to future generations, providing stability and opportunities for family members.

Finally, buying a house as a New Year resolution signifies a commitment to a long-term investment in oneself and one’s future. It requires planning, discipline, and financial responsibility, instilling valuable habits that can benefit individuals well beyond the purchase of the home.

Contact Tom For More

Please do reach out to me to discuss how you might be able to make home ownership a reality in 2024, as it would be my pleasure to help!

New Podcast to Check Out!

I have something special to share today. 

I was recently invited to do a podcast regarding real estate and lending and I thought you might be interested in checking it out. 

Here’s the link:

I’ve known Mike Nelson since our college days – and we talk about everything from interest rates to investment properties.

Specific Podcast Timestamps:

  • 2:45 – Intro
  • 5:28 – Tom’s Professional Biography
  • 9:20 – Lending Coach Bio/Lending Coach Brand and Clients
  • 12:01 – Types of Clients and Profiles
  • 12:45 – Investment Property Clients and Specifics
  • 15:50 – Big Bear Real Estate and Market
  • 20:55 – Equity Position of Property Owners and Opportunities
  • 21:49 – My Interaction w/Clients – The Why in Today’s Market and Rates
  • 28:09 – The Lending Coach Specifics – Marketing to Agents and Buyers

Do check it out, as I think you will gain a few insights and enjoy it!

The Importance of the Home Inspection in the Buying Process

A home inspection is a critical step in the home buying process that provides invaluable insights into the condition of the property.

Its importance cannot be overstated as it helps potential buyers make informed decisions and avoid potential pitfalls.

A thorough inspection by a qualified professional can reveal issues that might not be apparent during a casual walkthrough, ensuring buyers understand the true condition of the property before making a purchase.

What Does the Inspection Entail?

Several crucial areas need inspection during a home inspection.

The structural integrity of the house is paramount and includes examining the foundation, walls, roof, and overall construction quality. Any structural issues could potentially lead to significant expenses and safety concerns if left unaddressed.

Inspectors also evaluate the plumbing and electrical systems to ensure they are in proper working condition and up to code. Problems in these systems can be costly to repair and might pose safety hazards.

Furthermore, a comprehensive inspection covers the HVAC (heating, ventilation, and air conditioning) systems to ensure they function efficiently.

Poorly maintained or outdated HVAC systems can result in high energy bills and might require costly repairs or replacements.

The inspection should also include an assessment of the property’s exterior, looking for issues such as drainage problems, grading, and potential water damage, which can affect the home’s integrity.

Inspectors thoroughly examine the interior components of the house, including walls, ceilings, floors, doors, and windows. They check for signs of water damage, mold, pests, or other issues that could affect the habitability of the home.

Additionally, an inspection might encompass checking for the presence of hazardous materials like lead-based paint or asbestos, which can pose health risks if not properly addressed.

The Buyer Should Be There

Understanding the importance of a home inspection underscores the need for buyers to be actively involved in the process. Attending the inspection allows potential buyers to gain a firsthand understanding of the property’s condition.

Moreover, it provides an opportunity to ask questions and receive clarification on any concerns raised by the inspector.

Home size is a significant factor that determines home inspection costs.

Approximate Cost

Armed with the inspection report, buyers can negotiate repairs or request concessions from the seller based on the findings, ensuring they are making an informed decision about the investment.

man people woman summer

Professional inspectors often charge based on the square footage of the home because it largely determines the scope of the work and the length of time they will spend on the inspection.

Home inspections cost as little as $200 for an area of less than 1,000 square feet (a tiny home or condo, for example). Costs increase as home size increases, with an inspection of an average 1,500-square-foot single family home costing between $300 and $400 and a larger multi-family home inspection costing upwards of $700.

In Conclusion

In essence, a home inspection serves as a safeguard for buyers, offering a comprehensive evaluation of the property’s condition and helping mitigate risks associated with unforeseen issues.

It empowers buyers to make informed decisions, potentially saving them from costly repairs or future problems.

By thoroughly inspecting various aspects of the property, buyers can enter the home buying process with confidence and peace of mind.

For more about home purchasing, do reach out to me, as it would be my pleasure to help you in any way!

Residential Real Estate | One of the Best Investments Available

Investing in residential real estate and adopting a strategy of buying and holding properties can be a smart and rewarding financial decision for multiple reasons.

Don’t take my word for it…just look at this example:

In 1971, the interest rate for a primary residential mortgage was 7.33%.  If you waited for interest rates to go down, you wouldn’t have purchased a home until 1993.

You would have rented for 22 years waiting for rates to go down.  Over those 22 years, the value of residential real estate essentially quadrupled. Don’t wait to buy real estate…buy it and wait. 

Marry the house, but date the rate, as you can always refinance when rates go down.

Consistent Appreciation

Residential real estate has historically shown the remarkable ability to appreciate in value over time with relatively little risk.  While market fluctuations do occur, long-term trends clearly indicate an increase in property values.  See the chart below:

Only 7 times in the last 80 years has real estate decreased in value!

This appreciation can lead to substantial gains for investors who hold onto their properties for extended periods, building significant wealth through asset appreciation.

Rental Income

Additionally, rental income generated from residential properties offers a consistent cash flow stream. Owning rental properties can provide a steady source of income, helping investors cover mortgage payments, property maintenance costs, and potentially yield profits.

a house for rent placard

Moreover, as rents tend to rise over time, owning residential real estate can provide a hedge against inflation, with rental incomes increasing along with housing demand.

Leverage

Another advantage of buying and holding residential real estate is the ability to leverage. Real estate allows investors to use leverage by financing a portion of the property’s purchase price through a mortgage.

This means investors can control a more substantial asset with a relatively smaller initial investment. As the property appreciates, the equity in the property grows, amplifying the return on the initial investment.

In Conclusion

Buying and holding residential real estate is one of the best wealth related strategies due to the potential for long-term appreciation, consistent rental income, and leveraging future opportunities.

Please do reach out to me for more, as it would be my pleasure to do some long term planning analysis to help you reach (and even exceed) your financial goals!

The Benefits of the FHA Loan – and Why It’s a Popular Choice Right Now

FHA (Federal Housing Administration) loans can be a great choice for many looking to purchase a primary residence, and not just first-time homebuyers. These loans offer several advantages that make home ownership more accessible.

One of the key benefits of the FHA loan is the lower down payment requirement, making it easier for individuals with limited savings to enter the housing market.

Lower Down Payment

One of the standout features of FHA loans is the reduced down payment requirement. While conventional mortgages often demand a larger down payment, sometimes around 20%, FHA loans typically require only 3.5% down.

This lower upfront cost opens doors for prospective buyers who may struggle to come up with a significant down payment, providing a more attainable path to home ownership.

Gifts for Down Payments

Receiving FHA gift funds can make it easier to qualify for an FHA loan…but borrowers must follow a particular process for eligibility. First, the money can’t be a loan – it has to be a gift with no scheduled repayment.  Secondly, it must be a family member, a charitable organization, an employer, or a governmental agency assisting families or first time buyers.

FHA guidelines for gift funds include:

  • Gift funds must be from an acceptable source such as savings accounts, stocks, or savings bonds
  • Gift funds must be verified entering into a borrower’s bank account and leaving the donor’s bank account
  • Documentation showing proof funds are not a collateralized loan such as an FHA gift letter

Borrowers may have to provide additional supporting documentation, as well.

Mortgage Insurance

Mortgage insurance premium (MIP) is a type of mortgage insurance that is required of homeowners who take out loans backed by the FHA.  For most borrowers that bring in a 3.5% down payment, the fee is .55 of the loan amount.

So, if you have a $300,000 FHA loan, your monthly mortgage insurance would cost $137.50 per month.  In many cases, this mortgage insurance is MUCH less expensive than that of conventional loans and private mortgage insurance (PMI).

You can learn more about mortgage insurance here…

Accessible Credit Requirements

FHA loans are also known for being more forgiving when it comes to credit requirements.

Conventional mortgages may be challenging for individuals with less-than-perfect credit scores, but FHA loans are designed to accommodate a broader range of credit profiles.  Most investors will lend with a credit score of 580 or better.

This enables people with lower credit scores to qualify for a home loan, giving greater opportunities for those who may have faced obstacles in the conventional mortgage market.

Flexible Qualification Criteria

FHA loans offer flexibility in qualifying criteria, considering factors beyond traditional income and credit scores.

Lenders can take into account compensating factors, such as a history of timely rent payments or utility bills, making it easier for individuals with unique financial situations to secure a mortgage. This flexibility allows the consideration for a more diverse set of borrowers in the homebuying process.

Government Backing and Stability

FHA loans are backed by the federal government, providing an additional layer of security for both lenders and borrowers.

This backing makes lenders more willing to approve loans for individuals who may not meet the stringent criteria of conventional mortgages. The government support also helps stabilize the housing market by providing a reliable option for financing, even during economic downturns.

In Conclusion

FHA loans provide a range of benefits that contribute to making homeownership more accessible for a diverse group of borrowers. From lower down payment requirements, to the use of gift funds, to flexible credit criteria and government backing, these loans play a crucial role in expanding opportunities for prospective homebuyers.

Do reach out to me for more regarding these FHA programs, as it would be my pleasure to help in any way possible!

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