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For Buyers

Expert Advice: 3 Benefits to Owning a Home

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Expert Advice: 3 Benefits to Owning a Home | Simplifying The Market

Success is something often worth repeating, and Brent Sutherland, a Certified Financial Planner and Real Estate Investor, has certainly made his way in a momentum-driving direction. Here are 3 tips he shares from a recent piece in Business Insider on the benefits of owning real estate:

1. Real estate diversifies your income

“While it is certainly important to be properly diversified with your investments, it is even more important to be diversified with your income. This is because the largest financial risk for most of you is the loss of your primary source of income, which is typically in the form of a day job.”

The article highlights how having multiple sources of income, such as those derived from real estate investments, can eventually lead to relying less and less on a day job. Sound dreamy? It can be. When done well, real estate investments may eventually open up your time and the financial freedom to explore other things, like travel and other aspirations you may have for the future, particularly in the golden years of retirement.

2. Real estate produces near-immediate results

“You can achieve and feel the results almost immediately. Property improvements are visible and tangible. You can cash, spend, and invest rent payments. Today! Not 30 years in the future.”

Currently, home prices are appreciating in all price ranges, and just last week CoreLogic announced their 12-month home value projection at 5.6%, an increase from 4.5% noted earlier this summer. With that in mind, real estate today is definitely driving immediate results!

3. Passive income can help you become financially independent sooner

“If you need $40,000 a year to live, you could alternatively invest in assets that generate an 8% cash-on-cash return. This is a very reasonable assumption. And it means you would only need to save a total of $500,000 (instead of $1 million). Yet, your investments would still meet your annual household living needs.

While returns, taxes, and inflation can, of course, affect your timeline, cash-flowing real-estate is a clear asset.”

Homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you’re contributing to your net worth by increasing the equity in your home, bringing you one step closer to true financial independence.

Bottom Line

If you want to increase your savings and overall net worth, real estate is a great way to go. To learn how you can make it happen, let’s get together to discuss the process.

Who is Brent Sutherland?

Sutherland was 35 when he bought his first single home to rent out for income, less than five years later, he owns eight additional properties and part of a commercial real estate project.

14 STEPS TO BUYING A HOME

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1. Get Pre-approved for a Loan
Before you start house hunting and making offers, you’ll need to begin the process of getting pre-approved for
a mortgage or loan. Pre-approval means you won’t waste time considering homes you cannot afford, and
ultimately makes your purchase offer competitive. You’ll need: copies of recent pay stubs, statements, and
copies of your past two W-2’s. We can recommend several excellent lenders.

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2. Decide on Your Budget
Calculate your down payment, your ability to qualify for a mortgage, and the closing costs associated with your
transaction to figure out a number you’re comfortable with — and how much home you can afford. Most loans

today require a down payment between 3.5-25% depending on the type and terms of the loan. There are zero-
money-down programs that you may qualify for, however, you will need to consult with your preferred lender to

determine which best suits your needs. Your mortgage payment to the lender can include the following items:
a. Principal and interest on the loan
b. Property taxes
c. Homeownerʼs insurance
d. Private Mortgage Insurance (PMI) if you put less than 20% down

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3. Explore Potential Neighborhoods
Exploring neighborhoods at different times of day (morning/mid-day/evening/weekdays vs. weekends) and
visiting local shops, restaurants, and parks can help you get a great feel for a neighborhood. Yelp reviews,
Google Reviews, and Google Maps are helpful tools for investigating everything from local school ratings to
average commute times.

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4. Start House Hunting
After loan pre-approval, you’ll be ready to kick-start the search. Be prepared to discuss with your REALTOR®
what you’re looking for in a future home. You’ll also need a list of your preferred neighborhoods or
communities. Think about your must-haves, like-to-haves, and deal breakers.

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5. Submit the Offer
Once the Paras Team help you find a home you love, you’ll work with us to create an offer. You’ll need: a pre-
approval letter from your lender; a personalized offer letter detailing what you love about the home (these are

particularly helpful in multi-offer situations); to decide on an Earnest Money deposit amount; to strategize
contract deadlines; and a list of comparable sales or Comparative Market Analysis report (your Paras Agent will
provide this for you).

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6. You’re Under Contract!
The offer has been submitted, negotiated, and accepted: you’re under contract! The process from here to the
finish line is generally around 30 days. Remember: within the first 4 days of acceptance, you’ll need to deposit
your Earnest Money check or wire at the Title Company.

Jessie Anderson
REALTOR®
Licensed Personal Assistant
801-673-8240
Jessie@ParasRealEstate.com

Kierstin Pierce
REALTOR®
801-809-6610
Kierstin@ParasRealEstate.com

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7. Lock in Your Interest Rate
Now that the home-buying process is off to a good start, be sure to call your mortgage lender to lock in your
interest rate. This will help prepare you for potential surprises at the closing table. Remember: do not make
any large purchases or open any lines of credit during the next 30 days! This could affect your credit and your
ability to obtain the loan.

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8. Home Inspection
You’ll have about 14 days to inspect the house during your Due Diligence Period. Find a home inspector you
trust to examine the home from top to bottom; we can provide a list of recommended inspectors. Consider
testing for radon gas, meth, mold, lead, or structural issues. You’ll want to be present during the home
inspection so you can ask questions and see potential problems for yourself before deciding which repairs to
request. Home inspections typically range from $300-$700 and are paid for by the buyer.

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9. Ask for Repairs
Once home inspections are complete, you’re ready to ask the seller for repairs. Consult with the Paras Team
to make sure you negotiate for the essentials — and skip the small stuff that could put your purchase at risk.

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10. Appraisal
Next, your lender will request an appraisal. As a buyer, you can’t do anything to influence this process, but it’s
a good idea to confirm that an appraisal has been requested. Appraisals range from $400-$600 and are paid
for by the buyer. When appraisal is complete — assuming the value is in line with the agreed-upon price —
the mortgage will continue. If not, you may be headed back to the negotiation table. Appraisals are part of the
Financing and Appraisal Deadline.

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11. Homeowner Insurance
As you approach Settlement, you’ll want to comparison shop to secure homeowner insurance on your new
home. Don’t skip this important step.

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12. Paperwork Prior to Settlement
A few days before Settlement, your paperwork — including the appraisal, income statements, and assets —
will be shared with your loan underwriter for final review. Two days before your Settlement date, your loan will
receive final approval and the loan documents will be ordered. The day prior to Settlement, an escrow officer
or closing attorney will calculate final costs and credits for both the buyer and seller.

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13. Settlement
Be prepared to hand over your closing costs (which range between 2-5% of your mortgage loan amount) and
down payment, and be ready to spend at least an hour signing documents. Remember: you will not get your
keys at the Settlement meeting. You’ll get your keys when possession terms from the contract are met (usually
1-3 business days after Settlement).

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14. It’s Official! You’re a Homeowner!!!
Once everything is signed and processed, the loan closes, property transfer is recorded, and possession terms
are met, the keys — and the home — are yours!

Remember: The buying process is intense, but with the right tools, preparation, and a stellar agent in your corner, it can also be fun!

2 Myths Holding Back Home Buyers

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2 Myths Holding Back Home Buyers | Simplifying The Market

In a recent article, First American shared how millennials are not really any different from previous generations when it comes to the goal of homeownership; it is still a huge part of their American Dream. The piece, however, also reveals,

 “Saving for a down payment is one of the biggest obstacles faced by first-time home buyers. Dispelling the 20 percent down payment myth could open the path to homeownership for many more.”

 Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate how much they need to qualify for a home loan. According to the same article:

“Americans still overestimate the qualifications needed to get a mortgage, resulting in qualified potential buyers not even considering homeownership. Indeed, the Urban Institute report revealed that 16 percent of consumers believed that the minimum down payment required by lenders is 20 percent or more, and another 40 percent didn’t know at all.”

While many potential buyers still think they need to put at least 20% down for the home of their dreams, they often don’t realize how many assistance programs are available with as little as 3% down. With a little research, many renters may actually be able to enter the housing market sooner than they ever imagined.

Myth #2: “I Need a 780 FICO® Score or Higher”

In addition to down payments, buyers are also often confused about the FICO® score it takes to qualify for a mortgage, believing a ‘good’ credit score is 780 or higher.

To debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.2 Myths Holding Back Home Buyers | Simplifying The MarketAs indicated in the chart above, 50.23% of approved mortgages had a credit score of 500-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Believe it or not – your dream home may already be within your reach.

The Cost of Renting vs. Buying a Home [INFOGRAPHIC]

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The Cost of Renting vs. Buying a Home [INFOGRAPHIC] | Simplifying The Market

The Cost of Renting vs. Buying a Home [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Historically, the choice between renting and buying a home has been a tough decision.
  • Looking at the percentage of income needed to rent a median-priced home today (27.7%) vs. the percentage needed to buy a median-priced home (17.5%), the choice is clear.
  • Every market is different. Before you renew your lease, find out if you can put your housing costs to work by buying a home this year.

This is Not 2008 All Over Again: The Mortgage Lending Factor

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This is Not 2008 All Over Again: The Mortgage Lending Factor | Simplifying The Market

Some are afraid the real estate market may be looking a lot like it did prior to the housing crash in 2008. One of the factors they’re pointing at is the availability of mortgage money.

Recent articles about the availability of low-down payment loans and down payment assistance programs are causing concern that we’re returning to the bad habits of a decade ago. Let’s alleviate the fears about the current mortgage market.

The Mortgage Bankers’ Association releases an index several times a year titled: The Mortgage Credit Availability Index (MCAI). According to their website:

“The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is…a summary measure which indicates the availability of mortgage credit at a point in time.”

Basically, the index determines how easy it is to get a mortgage. The higher the index, the more available the mortgage credit.

Here is a graph of the MCAI dating back to 2004, when the data first became available:This is Not 2008 All Over Again: The Mortgage Lending Factor | Simplifying The Market As we can see, the index stood at about 400 in 2004. Mortgage credit became more available as the housing market heated up, and then the index passed 850 in 2006. When the real estate market crashed, so did the MCAI (to below 100), as mortgage money became almost impossible to secure.

Thankfully, lending standards have eased since. The index, however, is still below 200, which is half of what it was before things got out of control.

Bottom Line

It is easier to get a mortgage today than it was immediately after the market crash, but it is still difficult. The difference in 2006? At that time, it was difficult not to get a mortgage.

Buyer Demand Growing in Every Region

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Buyer Demand Growing in Every Region | Simplifying The Market

Buyers are out in full force this fall, increasing the demand for homebuying in all four regions of the country.

According to the latest ShowingTime Showing Index,

“Home showing activity was up again nationwide with a 4.6 percent rise in traffic, as the traditionally slow fall season began with a marked boost in buyer interest.”

Buyers clearly have the right idea, as mortgage rates have dropped over a full percentage point since the fall of 2018. They’ve hovered in a historically low range since this summer, making the overall cost of homeownership significantly more attractive and affordable.

Here’s the breakdown of how ShowingTime reports current buyer traffic patterns across the country:

“The West Region, which until August had experienced 18 consecutive months of flagging home buyer traffic, lead the four regions in year-over-year improvement with an 8.9 percent increase in buyer activity.

The South followed with a 6.4 percent increase, the largest such improvement in the region since April 2018, with the Northeast Region’s 5.6 percent increase the next largest among the four regions.

The Midwest’s more modest 0.8 percent year-over-year growth rounded out the nation’s promising month.”

Buyer Demand Growing in Every Region | Simplifying The MarketWith ShowingTime reporting “nationwide growth for the second consecutive month, a first since December 2017 – January 2018”, it’s one more reason why selling your house this winter is the way to go. List while buyers are on the market, before competition with other sellers pops up in your neighborhood.

Bottom Line

If you’re thinking of waiting until spring to sell, think again! Let’s get together to discuss listing your house now while buyer traffic is actively surging throughout the country.

Buyer Demand Growing in Every Region

by

Buyer Demand Growing in Every Region | Simplifying The Market

Buyers are out in full force this fall, increasing the demand for homebuying in all four regions of the country.

According to the latest ShowingTime Showing Index,

“Home showing activity was up again nationwide with a 4.6 percent rise in traffic, as the traditionally slow fall season began with a marked boost in buyer interest.”

Buyers clearly have the right idea, as mortgage rates have dropped over a full percentage point since the fall of 2018. They’ve hovered in a historically low range since this summer, making the overall cost of homeownership significantly more attractive and affordable.

Here’s the breakdown of how ShowingTime reports current buyer traffic patterns across the country:

“The West Region, which until August had experienced 18 consecutive months of flagging home buyer traffic, lead the four regions in year-over-year improvement with an 8.9 percent increase in buyer activity.

The South followed with a 6.4 percent increase, the largest such improvement in the region since April 2018, with the Northeast Region’s 5.6 percent increase the next largest among the four regions.

The Midwest’s more modest 0.8 percent year-over-year growth rounded out the nation’s promising month.”

Buyer Demand Growing in Every Region | Simplifying The MarketWith ShowingTime reporting “nationwide growth for the second consecutive month, a first since December 2017 – January 2018”, it’s one more reason why selling your house this winter is the way to go. List while buyers are on the market, before competition with other sellers pops up in your neighborhood.

Bottom Line

If you’re thinking of waiting until spring to sell, think again! Let’s get together to discuss listing your house now while buyer traffic is actively surging throughout the country.

Homeownership Rate Remains on the Rise

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Homeownership Rate Remains on the Rise | Simplifying The Market

In the third quarter of 2019, the U.S. homeownership rate rose again, signaling another strong indicator of the current housing market.

The U.S. Census Bureau announced,

“The homeownership rate of 64.8 percent was not statistically different from the rate in the third quarter 2018 (64.4 percent), but was 0.7 percentage points higher than the rate in the second quarter 2019 (64.1 percent).”

Homeownership Rate Remains on the Rise | Simplifying The MarketToday there is still a lack of inventory, particularly at the entry and middle-level segments of the market, but that is not stopping buyers from making every effort to pursue homeownership. The many financial and non-financial benefits continue to drive the American Dream and will likely do so for generations to come.

Bottom Line

If you’re thinking of buying a home, let’s get together to make your dream a reality.

Homeownership Rate Remains on the Rise

by

Homeownership Rate Remains on the Rise | Simplifying The Market

In the third quarter of 2019, the U.S. homeownership rate rose again, signaling another strong indicator of the current housing market.

The U.S. Census Bureau announced,

“The homeownership rate of 64.8 percent was not statistically different from the rate in the third quarter 2018 (64.4 percent), but was 0.7 percentage points higher than the rate in the second quarter 2019 (64.1 percent).”

Homeownership Rate Remains on the Rise | Simplifying The MarketToday there is still a lack of inventory, particularly at the entry and middle-level segments of the market, but that is not stopping buyers from making every effort to pursue homeownership. The many financial and non-financial benefits continue to drive the American Dream and will likely do so for generations to come.

Bottom Line

If you’re thinking of buying a home, let’s get together to make your dream a reality.

75 Years of VA Home Loan Benefits

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75 Years of VA Home Loan Benefits | Simplifying The Market

Today, on Veterans Day, we salute those who have served our country in war or peace, and we thank them for their sacrifice.

This year marks the 75th anniversary of VA Home Loan Benefit offerings through the Servicemen’s Readjustment Act, also known as the GI Bill. Since 1944, this law has created opportunities for those who have served our country, ranging from vocational training to home loans.

Facts About VA Home Loans:

  • Nearly 24 million home loans have been guaranteed by the Veterans Administration.
  • Nearly 82% of VA home loans are made with no down payment.
  • The VA also provides grants to help seriously disabled Veterans purchase, modify, or construct a home to meet their needs. Last year the VA provided 2,000 grants totaling $104 million.

Benefits of a VA Home Loan:

  1. No down payment
  2. No Private Mortgage Insurance*
  3. Lower credit score requirements
  4. Limitation on closing costs
  5. Lower average interest rates

*More information on VA Home Loan Fees

 Bottom Line

The best thing you can do today to celebrate Veterans Day is to share this information with those who can benefit from these opportunities. For more information, or to find out how to qualify to use a VA Home Loan Benefit, let’s get together to navigate through the process. Thank you for your service!