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Both Buyer and Seller Confidence Is Up: Now is a Great Time to Make That Home Purchase

December 11, 2017 / Tom Bonetto

Are you thinking of buying a home, but not sure if now is the right time to become a homeowner? It’s easy to dream about owning that new place….but it’s not always easy to know if your timing is on the mark.

The Data

New data shows rising confidence from buyers and sellers alike.

More players on either side of the residential real estate market feel that the time to act is now.

Knowing that many want to pull the trigger on a home purchase or sale can inspire others to do the same.

The link below is from Harvard University’s estimates for home prices in 2018 – I’d invite you to check it out…

Harvard University research: the future of home prices in 2018

Right now, it’s important to learn the facts about what you can afford and the mortgages available to you.

Find out more here from The Mortgage Reports and Erik Martin

Now IS the time, say 77 percent of Americans

Per Martin’s article, a recent survey by the National Association of Realtors (NAR) yielded some very interesting trends:

77 percent of people feel that right now is a good time to buy a home; 48 percent believe this strongly
62 percent of renters believe that now is a good time to purchase a home. That’s up from 52 percent tallied last quarter and 60 percent one year ago
80 percent of respondents who currently own a home, those older than age 55, those with incomes in excess of $100,000, those who live in rural areas, and those in the South and Midwest think that now is a good time to buy a home
78 percent think it’s currently a good time to sell a home. That’s up from 63 percent measured one year ago
Those owning in the West (83 percent) are most likely to believe that now is a good time to sell a home

Other reasons why confidence is up

The Mortgage Reports’ Martin also states that Robert Johnson, president/CEO of The American College of Financial Services, points out that there’s another reason people feel more confident about buying or selling today.

Image source: NAR and The Mortgage Reports

“They feel wealthier because the stock market has gone up over the past 10 years,” he says. “This gives them confidence that makes them believe now is a good time to buy or sell.”

Martin states that another factor is at play, too.

“Perhaps most significant for buyers is that interest rates have been near historically low levels for an extended period of time,” Johnson notes. “Many buyers fear that rates are likely to rise in the future. Thus, they believe that now is a good time to buy. They want to make a purchase before rates rise.”

A Call To Action

The news that more owners think now is a good time to sell should be music to the ears of would-be buyers.

“This could help loosen up inventory. It’s another reason to be optimistic, as housing supply continues to be tight in many markets,” says Jessica Lautz, the National Association of Realtors’ Managing Director.

She notes that many sellers will need to become buyers themselves after unloading their home. The fact that buyer confidence is up can make them feel more secure about selling and then purchasing.

Next Steps

To improve your chances of buying a home sooner, Lautz suggests a few tips.

“You want to get your DTI — debt to income ratio — down,” she says. DTI is a your total amount of recurring monthly debt payments, including credit cards, student loans, auto loans and mortgages, versus your gross monthly income.

“Many lenders prefer a DTI lower than 43 percent. You can lower your DTI by increasing your income and reducing outstanding debt.

“Also, check your credit report and make sure there are no surprises there. Correct any errors you see,” says Lautz.

“Be sure to consult with experts you can trust. Ask your Realtor and mortgage professional about affordable loan programs in your local community you may be able to qualify for,” she adds.

Final to-dos

In addition, be patient and realistic.

“Don’t rush into any decision you’re not sure of,” cautions Lautz. “Buying a home takes time. Make sure you look at prospective neighborhoods carefully and expect to have competition for that perfect home.”

Lastly, be prepared to make sacrifices and compromises.

“We often find that recent successful home buyers have to compromise on one or more things, including location, price or size of the home,” she says.

Mental Toughness For Pitchers

December 10, 2017 / Tom Bonetto

“The pitcher with a winning mental approach will appear to rise to the occasion in big games, when in reality he is the one who successfully keeps his head while others around him are distracted by the moment.”

“Mental toughness allows the pitcher to remain focused on these things regardless of all the chaos going on around him.”

“The mentally tough pitcher can focus on the things he can control and not let the things out of his control distract him.”

So says legendary college baseball coach Joe “Spanky” McFarland. McFarland coached 38 years at the college level – 18 at James Madison University. Equally impressive, he coached 55 players on their way to the big leagues (including Kevin Brown of the Los Angeles Dodgers).

His book, Coaching Pitchers, is a great read – and I’d encourage you to purchase it here.

The following is an excerpt from that book…

Many say that mental toughness is an ability that is born into a pitcher, but with some work and effort all pitchers can create a winning mental approach. In this chapter we will look at identifying problems and then offer advice, drills, and practice ideas to help pitchers create a winning mental approach.

Factors the Pitcher Can’t Control

The first step to becoming mentally tough is to figure out the factors you can control as a pitcher and those things that are out of your control. The list of things out of your control is much longer than the list of things within your control. First you determine those factors out of your control and then you learn to deal with them.

Weather conditions – these include wind, rain, sun, cold, and heat. You can dress appropriately, but you cannot do anything to control the weather.
Field conditions – these include wet field, dry field, poor field, dimensions of the field, poor lighting, and the height and condition of the mound.
Teammates – a pitcher cannot control his teammates and their play. They may score 0 runs when you pitch; they may score 10 runs. This is true of errors too. Your team may field great when you pitch or they may make several errors. You can’t do anything about errors or run support.
Umpires – as umpires determine their own strike zone, the pitcher will need to adjust to that zone for the day. A pitcher can’t control whether or not the umpire makes all the correct calls during a ball game.
Unruly fans and bench talk – fans or opponents will try to disrupt a pitcher by verbally abusing him. You can’t control fans; when you acknowledge their remarks, it gets even worse. Sometimes opposing teams will try to get a pitcher out of his game by bench talk.
The batter – once the baseball leaves a pitcher’s hand, the batter has the control. The batter decides to swing or take. The batter will determine whether to hit the ball hard by his swing.

The pitcher may affect some of the factors with his performance, but he cannot control them. So he should not worry about them. A pitcher cannot focus on or spend time and energy on things out of his control.

Factors the Pitcher Can Control

A pitcher with a winning mental approach knows that there is only one thing a pitcher has complete control over, and that is himself. Mental toughness starts with the realization of this concept.

Be concerned with those things and only those things that a pitcher can control: himself and his actions. A pitcher must first learn to be responsible for himself and his actions.

A pitcher cannot control the weather, but he can pitch accordingly and give himself a better opportunity to be successful.
A pitcher cannot control the condition of the field, but he can pitch accordingly and give himself a better opportunity to be successful.
A pitcher cannot control the play of his teammates, but he can help himself by playing good defense and being positive in the dugout; he can pitch accordingly to ensure his own success.
A pitcher cannot control umpire decisions; but he can make adjustments to different strike zones, affect umpiring decisions by his actions, and pitch accordingly to ensure his own success.
A pitcher cannot control what is being said about him or to him from opposing teams or fans, but he can choose whether to let them affect his game.
A pitcher cannot dictate what the batter will do with a certain pitch; but by studying hitters and learning weaknesses, he can pitch accordingly and ensure his own success.

Instead of focusing on things out of his control, a pitcher must take each set of circumstances and pitch or act accordingly to make himself succeed.

Each pitch and each situation involve a new set of circumstances. How he reacts to each new set of circumstances or situations is within his control, and this is where he can start to make a difference.

Assess the situation, make the appropriate decisions, make the appropriate pitch or play accordingly, and then accept responsibility for the result. Understand that the pitcher starts and affects the action of the game with each pitch more than any other single event in the game; this is crucial for a winning mental approach.

The pitcher is the only player on the field who has the power to act. All other players on both teams only have the power to react. Use this power and act accordingly to each new set of circumstances and each new situation to help ensure your own success.

The key to a winning mental approach is not to focus on the things a pitcher cannot control but to be consumed by the things a pitcher can control.

Telling a pitcher not to worry about the fan in the fourth row who is riding him hard or not to worry about the umpire whose strike zone appears to be on wheels and is moving around is as effective as telling someone not to think about an elephant that’s standing in the room.

Instead, create a pitcher who is consumed with the next pitch and is focused on what he can do in the next set of circumstances, no matter the current situation.

The Top 7 First-Time Homebuyer Mistakes

November 27, 2017 / Tom Bonetto

Not Knowing Your Credit Score

The importance of your credit score in the mortgage process is super important. In most cases, this distinction will draw the line between owning a house and renting one.

Even if you have a near perfect sense of financial responsibility today, your credit past can come back to bite you. You will have a hard time getting a home loan if your recent record shows problems with on-time payments, or if there’s an error in your credit report.

It’s truly best to perform a credit check with your chosen lender before you move forward.

If you go ahead and apply for a mortgage without checking your credit score, you could end up doing a lot of searching for nothing and/or paying a lot more than you expected.

Not Obtaining Mortgage Pre-Qualification

Some people are anxious to shop for a house and want to do it quickly, before they are financially able to afford it.

If you have already started talking to sellers before sitting down with your mortgage lender, you are making a mistake. In fact, not many sellers will want to work with you if you promise them a certain amount and then can’t fulfill that promise.

To avoid any disappointments, it’s wise to have your home loan pre-approved first, then go ahead and look for a house to buy.

Failing to Budget for a Home Loan

As most people know, home ownership is almost always a cheaper alternative to renting in the long run. There are just so many benefits of owning a home, from historical appreciation to the tax benefits. With that said, in the beginning, it can be a bit pricier.

Therefore, it is important to budget for a home loan, beforehand. You need to determine whether your income can accommodate this expense or not.

If you find yourself unable to afford making monthly payments on your home loan, it would be a mistake to try to own a house at this time.

Overlooking the Home Resale Value

Remember, this home you are purchasing is considered an asset, and real estate has historically appreciated over time.

You should never overlook the resale value of the home you intend to purchase.

What you need to do is to ask yourself several questions such as: Will it be easy to sell this house? Might I be able to keep it and rent it if I want to upgrade later? Will this house appreciate over time if I decide to buy another one? Is it situated in a preferred neighborhood?

Settling on a Verbal Agreement

Many first time buyers can be a little too trusting. Just because you met the sellers and/or their agent and came to a verbal understanding does not mean a deal is in place. Misunderstandings are guaranteed to happen when agreements are made verbally.

With that said, make sure that you and the seller get everything down in writing to avoid future miscommunications and utilize a standard contract.

This way, you will have the legal high-ground should the seller fail to keep their word.

Indecision

As much as it is unwise to rush into making a purchase, it is equally imprudent to take too long to decide if a particular property is right for you.

If you take too long to make a decision, another homebuyer will take advantage of your indecisiveness and buy that home that you’ve had your eye on, but didn’t make an offer.

Since market trends change from time to time, you could also find out that the house you took too long to buy has a new (and higher) price tag attached to it.

Forgetting the Costs Associated with Owning a Home

Remember, a home requires money to maintain. Its important to know that upkeep and maintenance costs don’t end on the day you finish your last mortgage payment.

It’s important that you prepare for other costs for maintaining a safe, comfortable, and secure home.

Also, there are other ancillary costs to plan for – such as association fees, insurance, taxes, utilities, maintenance and major/minor repairs, etc.

So, If you can avoid these pitfalls commonly made by first-time buyers, the home buying journey will be much, much easier and enjoyable. Don’t hesitate to reach out to me for help, as I’ve helped countless first time buyers navigate this process!

Photo Credit: Cafe Credit via Flickr, under the Creative Commons License

Key Factors Lenders Consider When Evaluating Applicants

November 19, 2017 / Tom Bonetto

Mortgage approval can be a lengthy, detailed process.

As you can imagine in today’s environment, lenders scrutinize their mortgage applications, along with a myriad of other documents, in order to determine if borrowers are low-risk and able to repay the loan.

With that said, here are some key factors that all lenders will consider….and make sure to reach out to your chosen mortgage lender to have them walk you though this process:

Income

In order for any lender to make sure that the borrower will be able to repay the loan, they will check the applicant’s income to determine loan eligibility. Essentially, this will help determine if the applicant can afford a home loan and budget for monthly payments.

If the applicant is self-employed or commission based, lenders will evaluate them differently than standard W-2 buyers. Their income may be considered “unstable” and a more detailed earnings history may be required.

More often than not, the last 2 years of tax returns will tell the income story for these types of borrowers.

Credit Score

An applicant’s good credit score can demonstrate to the lender that they are financially responsible and can qualify for a mortgage, sometimes with significantly lower interest rates.

While a good credit score is a good indication that an applicant can pay off their loan, liens and civil judgments on credit reports can impact scores. Lenders will check with public records to determine if they have any liens or judgments against them that could affect their ability to qualify for a mortgage.

Financial Assets

An applicant must have sufficient assets and collateral they can use for a down payment, if they are purchasing a home. For example, liquid assets like stocks and a savings account can be used to secure higher lines of credit.

Since the property that an applicant purchases will often be used as collateral if they end up foreclosing, the value of the property must match the applied-for loan.

Essentially, lenders are trying to identify these 3 key criteria when it comes to lending to a particular borrower. Today’s rules are determined, for the most part, by the underwriting guidelines of Fannie Mae and Freddie Mac, as the majority of today’s mortgages a sold through these enterprises.

Right Now Is A Bad Time To Be A Renter

November 13, 2017 / Tom Bonetto

I know this isn’t great news if you are not a homeowner, but this might be the worst time to be renting in the last 40 years.

The average monthly cost of rent nationwide takes up over 35% percent of American income, the highest cost burden recorded since the late 1970s.

As a matter of fact, the number of renters dedicating at least half of their income toward housing hit a record high of 11 million people in 2014, according to the annual State of the Nation’s Housing Report from the Joint Center for Housing Studies of Harvard University.

2015 and 2016 saw the biggest surge in new renters in history, according to the report, bringing the number of people living in rental units to around 110 million people — or about 36% of households.

Unfortunately, there’s still more bad news. Apartment vacancy rates have dropped so low that forecasters are predicting that rents could rise, on average, 4 to 6 percent this year. Interestingly, rents are rising faster than that in many metro areas even as overall inflation is running at little less than 2% annually.

The nationwide problem threatens to get worse before it gets better. Apartment builders are building more units, potentially creating supply that is beginning to crest. With that said, demand still exceeds the supply, especially for affordable housing.

The Solution

One of the great underlying opportunities here is that buying a home is considerably cheaper than renting. Renters interested in reducing expenses and collecting tax benefits should absolutely talk to a mortgage lender prior to signing that rental contract.

Mortgage underwriting guidelines have been slowly loosening and those that were denied for a mortgage last year may qualify this year.

At the very least, your mortgage lender can provide the guidance needed to make this your last year as a tenant. Whether your issue be credit score, how your income is calculated, student loan debt or other debt-to-income ratio issues, your lender can layout a roadmap for you to follow.

Here is a link for Advice for First Time Home Buyers. Read it over when you have a minute and see what’s in store!

Stick to the plan, the road-map, they provide and chances are you will be a homeowner by 2018. Your actions and commitment right now might just save you thousands every year.

The Lending Coach