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Downsizing Options

Opportunities exist for a subset of homeowners, possibly in their 60's to 70's, who want to downsize to smaller homes for convenience, less maintenance, change of lifestyle, or to save money.   These homeowners are more likely to have large equities and will not feel the same constraints that are keeping younger owners in their homes due to the substantial increase in mortgage rates in the past year. In some cases, there may be enough equity in their relinquished home to pay cash for the replacement.   In other situations, the loan-to-value may be so low that even with higher mortgage rates, it won't be as expensive as purchasing with a minimum down payment. Some downsizers may be moving from a high-cost area to a lower-cost area where they can get more home for the dollar and may even be able to free up cash for investment or special projects. It is more likely that older homeowners are living in a property above the median price.   If a seller has a $750,000
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Concessions Make Your Home More Marketable

Sellers offer concessions as an incentive to encourage buyers to purchase their home.  The concessions, paid for by the seller, benefit the buyer in ways that may be more appealing than possibly, being able to purchase the home for a lower price. In some situations, buyers have good income, credit, and even the down payment to purchase a home but not necessarily enough cash reserves to pay their closing costs.  Another possibility is that there could be a feature in the home that the buyer wants replaced but can't afford to do it themselves.  If the seller agrees to make that improvement, it could cause the buyer to act favorably. Concessions could include paying the buyer's closing costs, buying down the interest rate, or any possible combination of physical improvements or upgrades to the property. Sellers, occasionally, question why they should provide concessions to a buyer.  It should be obvious; it improves the marketability of the home.  With less than the no

Building Your Home Buying Team

There are a lot of professionals involved in the homebuying process.   And when these people can function as a team, the buyer is much more likely to end up where they want to be...in their new home. The lender is an integral part of the team unless you are going to be paying cash.   Trust is very important when selecting this person because they are going to qualify you for the mortgage you need.   The interest rate and fees should be fair based on your credit, income, and the market.   You'll want someone who can close at the rate and terms that were quoted.   In a rising market, you may want to consider locking in the rate so that it doesn't go up before you close. The appraiser is hired indirectly by the lender to determine the value of the home as part of the loan approval process.   During the financial crisis of 2008, a process was created by the Dodd-Frank Wall Street Reform and the Consumer Protection Act to limit direct contact between borrowers, le

Securing Your Retirement

Social Security was established, on August 14, 1935, to take care of the country's elderly in their retirement years.   Today, about 65 million or 1/6 of Americans collect benefits and the average monthly retirement amount received in January 2022 was $1,614 per month or about $19,370 per year. This annual Social Security benefits exceed the 2022 Federal poverty level of $13,590 for individuals and $18, 310 for a family of two but from a practical level, it is nowhere near enough to be comfortable in your "Golden Years." Every adult in the work force, can go to SSA.gov to find out what to expect to receive based on their planned retirement age.   Since it probably won't be the amount you need to retire comfortably, at least you'll know how short you'll be so that you can devise an investment plan. There's a quick formula to estimate the investable assets needed by retirement to generate a certain income.   The target annual income is divided

Homeowners Need Resources

Managing an asset worth hundreds of thousands of dollars is a responsibility that requires attention to details such as timely payment of the mortgage, home repairs and maintenance, upkeep, and oversight on financial issues including taxes, insurance, and other things. Depending on how long you've been a homeowner, you may have faced some of the decisions common to homeownership.   Occasionally, there could be something new that you haven't had to deal with in the past.   This is where having a resource you can rely on becomes valuable. During the buying or selling process, it is natural to turn to your agent for information and advice but during those periods in between where do you go for counsel?   Sure, you can turn to the Internet but that may not be the best place to get advice for your situation. We encourage you to think of us as your "source of real estate information"; someone you're comfortable with asking a question and confident that yo

Waiting for the Mortgage Rates to Come Down?

Waiting for the mortgage rates to come down before you buy a home may not be a good decision. If you are correct, and the rates do come down by two percent, the savings you benefit from a lower rate will most likely be devoured by the appreciated price increase. As of 10/27/22, the 30-year fixed-rate was at 7.08% which is the highest level since April 2002.   If the rate drops to 5% in three years but the price increases by 5% a year, a $400,000 home today, will cost $463,050 three years from now. An increasingly popular option that more buyers are considering is to purchase the home today with an adjustable-rate mortgage that could give them a 5.96% rate for five years.   Then, refinance to a fixed-rate when rates come down. Not only will the buyer have lower payments with the ARM, but the buyer will also own the home, and benefit from the appreciated prices which will build equity in the home and increase their net worth. Mortgage rates have increased over 3% in the f

Finding Funds for a Down Payment

A soft second loan, sometimes called a silent second, is subordinate to the first mortgage, whose payment is deferred or forgiven until a specific date or the resale of the property.   This would mean that buyers would not have to contend with regular payments thereby keeping their debt-to-income ratio lower and more affordable. While normal lending institutions may not be open to such types of financing, family and friends may be.   In some cases, these relatives and friends may be inclined to make a gift to help buyers get into a home.   Instead of an outright gift, if the person makes the loan, they have options to be repaid at some point in the future or in other cases, they could forgive the debt but don't have to make that decision today. There are more than 2,000 down payment assistance programs nationwide.   State, county, and city governments run many of them.   Other programs could be from churches, employers, non-profit organizations, regional Federal Home Lo