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5 Reasons Millennials Choose to Buy

  • “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
  • The top reason millennials choose to buy is to have control over their living space, at 93%.
  • Many millennials who rent a home or apartment prior to buying their own homes dream of the day when they will be able to paint the walls whatever color they’d like, or renovate an outdated part of their living space.
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Why Getting Pre-Approved Should Be Your First Step

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” 

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.

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Real Estate Industry News: Tax Reform Plan Affects Housing

Housing experts point out the irrelevancy of mortgage deduction risks due to a tax reform plan that encourages homeowners to take a standard deduction instead of itemizing. At the same time, landlords and investment property owners continue to receive a property tax and mortgage interest deduction.

If predictions come true that more people will rent instead of buying a home, it’s a better time than ever to buy an investment property. The latest real estate industry news points out the mortgage interest deduction has often spurred home buying, particularly with people who reduce their tax liability by itemizing deductions. According to an article by therealdeal.com, homes throughout the United States are selling at the fastest clip in the last three decades.

However, the latest tax reform measures would likely shake up the housing market.

Reducing the inventory of homes

The inventory of homes is already at a low, but tax reform will likely cause an even greater inventory crisis. Experts point out the new tax rules would say people don’t have to pay capital gains on home sales if they’ve resided in a home for 5 of the last 8 years. A person may only sell once every five years in order to reap the capital gains exclusion.

Currently, homeowners simply need to live in a home 2 years in the past 5 year period immediately preceding the sale. Home flippers who waited the full 2 years will have to come up with a new plan for overcoming the capital gains taxes.

Catering to the rental market

While wealthy people grabbed a lot of the inexpensive homes for sale during the housing decline, a number of everyday investors got into the landlord business in recent years. People who own rental properties continue to deduct mortgage interest and property taxes as part of their expenses. Landlords that provide their tenants with utilities also deduct electric, water, and other utilities.

With tax reform protecting landlords, it’s a great time to hunt for an investment property. Some of the most lucrative rentals are starter homes with three or four bedrooms, at least two bathrooms, and between 1,000 and 2,000 square feet of living space. When buying a rental, look for fenced backyards and laundry rooms.

While tax reform will likely impact the housing market, experts point out that it’s still better to own than to rent. Homeowners continue to build equity which creates greater wealth. Although most middle-class people will take the standard deduction instead of itemizing, tax reform is not likely to derail the American dream of home-ownership.

At Sunbelt Real Estate, we show aspiring homeowners the steps on the “housing ladder” so they can build wealth. For more of the latest real estate industry news, please contact us.

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An Indispensable Tip: Review Your Inspection Report

Signing off on your new home is exciting. But it’s also a bit daunting. Much responsibility awaits and there are many repairs, improvements, and potential time bombs to keep track of. A comprehensive list of all your home’s needs and features is invaluable. Fortunately, if you were on top of things during the buying process, you have a home inspection report. You’ll do well to keep it handy and review it after you move in.

Having your prospective home inspected before you buy is critical. If you skipped it before you bought, having it done ASAP is still essential. The inspector will compile a report and provide you with a copy, usually as an electronic document. As you get unpacked and settled it’s easy to forget about the issues highlighted in the report. This is why it is important to keep it readily accessible. Printing out a copy and hanging it on the refrigerator is a good way keep track of it and serves as a daily reminder. It will serve as your master reference list of maintenance issues.

The report usually contains notes on which issues are the most pressing. Looking it over with pen or highlighter in hand is a good idea. That way you can rank maintenance issues and take notes as you go. Take a break from arranging furniture and unpacking boxes and review your report shortly after moving in. This way you won’t overlook the most urgent problems and you can make arrangements for a professional to tackle work you can’t do yourself. With most maintenance issues, patience is not a virtue. The longer you wait, the worse (and the more expensive) the problem will get.

A home inspection usually covers appliances. If your report shows some of them are reaching the end of their typical life expectancy, you’ll be prepared. You can carry out research on brands, models, and features as well as ask around to find out what others have used and been happy with. This should help you get a head start on shopping and be better able to hold out for a good deal on exactly what you want. This sure beats getting caught off guard when an appliance quits unexpectedly.

Your home inspection report is an invaluable tool throughout your time as a homeowner. In many ways, it is like an owner’s manual tailored for your specific home. Reviewing it thoroughly and periodically in the first few months of home ownership will get you on solid footing for any maintenance issues that may come up.