Category: Real Estate

Down Payment on a House | Withdraw from IRA | CD Laddering

You’ve done your research. Interest rates are low, and you know the exact area you want to buy your future home in and the details you desire down to the type of flooring in the kitchen. Now the only thing standing between you and a seat at the offer table is figuring out how you’re going to come up with a reasonable down payment.

Aside from going the traditional route of saving slowly and consistently over time to reach your savings goal, consider these other creative options for funding your down payment:

1. Negotiate a Pay Raise

If you’re not comfortable asking for what you want, now’s the time to learn. Research comparable pay for your position, create a list of your accomplishments and the value you’ve added to your company, and schedule a sit down with your boss to discuss compensation. 

Tack on an extra $5,000 to the pay you’d be comfortable with in order to give yourself room to negotiate down if necessary. Anything extra you get in your paycheck should be earmarked for your down payment fund.

2. Tap Your IRA (But Be Aware of the Consequences)

A traditional IRA allows you to contribute pre-tax income to an investment account, which can grow tax-deferred, meaning you pay no taxes on principal (contributions) and earnings until funds are withdrawn from the account. For 2017, tax-deductible contributions may be made up to $5,500 to an IRA account. Translation: You’re saving money on your taxes at today’s rates, but you’ll be paying a future (possibly higher) rate upon withdrawal.

A Roth IRA is similar to the above traditional IRA except that contributions are made with after-tax income and therefore aren’t tax-deductible. For 2017, non-tax deductible contributions may be made up to $5,500. Translation: You’re paying taxes upfront at today’s rates, instead of paying the (possibly higher) rates in place when you begin withdrawals. 

As a first-time buyer, or if you haven’t owned a house for at least the past two years, you can withdraw $10,000 penalty-free from your traditional or Roth IRA to fund a down payment. Keep in mind, however, that you’ll still have to pay income taxes (state and federal) on the distribution you take from your traditional IRA. (That money did go in tax-deferred, after all). Also the $10,000 is a lifetime withdrawal limit.

Remember that if you’re tapping into your retirement account and withdrawing funds, you’re not only setting yourself back on retirement savings, but you’re also losing the opportunity to let time and compound interest work on (and grow) those funds for you. Given the pros and cons, which will depend on your particular circumstances, research and decide if borrowing from your retirement is right for you.

3. Borrow From Your 401(k) (With Eyes Wide Open)

While not an ideal situation for the reasons listed above (you’re losing out on time and compound interest growing your money), borrowing money from your 401(k) could be an option if your company savings plan allows it. 

Keep in mind that this isn’t a withdrawal, but is a loan that you’ll have to pay back with interest. The  monthly payments you need to make repaying the loan may impact the amount of mortgage you qualify for. The plus side is that the interest you’re paying will be going into your account.

4. Leverage Certificates of Deposit (CDs) or High-Yield Savings Accounts

While you don’t want to take risks with the money you plan to use in the next few years to purchase a home, you also don’t want it sitting stagnant either. Look into your bank’s high-yield saving accounts and CD rates to determine if you can get a better rate on your money.  

Consider laddering CDs to maximize your earning power by purchasing different certificates with a variety of maturity dates, such as 6, 12, or 24 months. This provides you flexibility to reinvest the money as the CDs mature and take advantage as interest rates change (increase or decrease) to earn a higher return on your money.  

5. Hang On to Extra Money

Whether it’s a bonus, tax refund, holiday gift, or cash from items you’ve sold, set a plan to stash all extra cash in your home down payment fund. If that feels to stringent, give yourself a little wiggle room with an allocation of 85% to savings and 15% towards a personal splurge.

6. Start a Side Hustle

If your current pay is already stretched as far as it can go with expenses, consider starting a side gig where you can leverage your talents in web design, tutoring, pet sitting, writing, or whatever interests you have. 

Free up a few hours a week in your calendar to dedicate towards building this second income stream and put all funds earned in your separate “home down payment” savings account.

Existing-Home Sales Gains Strongest in Decade | Realtor Magazine

For the third consecutive month, existing-home sales were on the rise, with all major regions of the country except the West posting a “significant hike in sales activity” last month, the National Association of REALTORS® reported Wednesday.

Total existing-home sales—which includes completed transactions for single-family homes, townhomes, condos, and co-ops—increased 5.6 percent in November to a seasonally adjusted annual rate of 5.81 million. Sales are now 3.8 percent higher than a year ago and are at the strongest pace since December 2006.

“Faster economic growth in recent quarters, the booming stock market, and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end,” says Lawrence Yun, NAR’s chief economist. “As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.”

Here’s a closer look at November’s numbers:

Home prices: The median existing-home price for all housing types in November was $248,000, increasing 5.8 percent from a year ago.

Supply: Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale. Inventories are now 9.7 percent lower than a year ago. Unsold inventory is at a 3.4-month supply at the current sales pace. “The anticipated rise in mortgage rates next year could further cut into affordability if these staggeringly low supply levels persist,” Yun says. “Price appreciation is too fast in a lot of markets right now. The increase in home builder optimism must translate to significantly more new construction in 2018 to help ease these acute inventory shortages.”

Cash purchases: All-cash sales comprised 22 percent of transactions in November, up from 21 percent a year ago. That makes up the highest share of all-cash sales since May. Individual investors are the biggest source of cash sales. They purchased 14 percent of homes in November, unchanged from a year ago. “The elevated presence of investors paying in cash continues to add a layer of frustration to the supply and affordability headwinds aspiring first-time buyers are experiencing,” Yun says. “The healthy labor market and higher wage gains are expected to further strengthen buyer demand from young adults next year. Their prospects for becoming homeowners will only improve if more lower-priced and smaller-sized homes come onto the market.” 

First-time home buyers: This group accounted for 29 percent of sales in November, down from 32 percent a year ago.

Days on market: Properties remained on the market for an average of 40 days in November, down from 43 days a year ago. Forty-four percent of homes sold in November were on the market for less than a month.

Distressed properties: Foreclosures and short sales made up 4 percent of sales, down from 6 percent a year ago. Broken out, 3 percent of sales in November were foreclosures while 1 percent were short sales.

4 Reasons December Is Favorable for Buyers | Realtor Magazine

Many home shoppers don’t think about purchasing a house during the holiday months—many even put their home search on hold. But Desare Kohn-Laski, broker-owner of Skye Louis Realty in Coconut Creek, Fla., offers some points to pass on to your clients, letting them know this is one of the best times of the year to shop for a house.

Less Competition, Better Prices.

Let your clients know that the holiday months work in their favor. “Instead of competing with hungry buyers, eager to move in before the school year begins, the dip in demand actually drives prices down, and can create a mini buyers’ market,” Kohn-Laski says. In her experience, buyers often fare better in the negotiation process during the winter months.

More Time to (Home) Shop.

Time off around the holidays gives many buyers the opportunity to do some careful house hunting. Instead of giving up an entire weekend to open houses and showings, buyers can more leisurely tour homes during the week, Kohn-Laski suggests.

Tax Benefits.

We still don’t know how the House and Senate tax reform bills will shake out in conference committee; however, if your clients purchase in 2017, they can still deduct property taxes, mortgage interest, and other costs. Learn more about how you can influence tax reform.

Move-In Ready Weather.

For a large part of the country, winter is a favorable season to move. The heavy lifting of furniture and home improvement projects are easier to perform without the heat of the summer months, Kohn-Laski says.

“There are numerous benefits and added perks to buying a house during the holiday season that make December arguably the best time to buy,” Kohn-Laski says.

No Chill on Showing Traffic in November | Realtor Magazine

Counter to seasonal trends, demand for home showings posted a strong increase in November amid steady consumer confidence and low unemployment, according to the ShowingTime Showing Index, which measures buyer demand based on showing appointments. The index showed an 8 percent year-over-year rise in November.

“Although the residential real estate industry has entered its regular seasonal slowdown period, demand continues to be strong relative to the supply of homes,” says Daniil Cherkasskiy, ShowingTime chief analytics officer. “This trend should continue across the board throughout the holiday season with more buyers looking at listed properties compared to last year.”

ShowingTime’s index tracks demand for active listings throughout the country by tracking ShowingTime products, which facilitate more than 4 million showings each month. The index tracks the average number of appointments received on an active listing during the month.

The Midwest saw the highest year-over-year increase in showings at 9 percent, followed by the Northeast (8.6 percent increase). The South posted a 7.3 percent increase and the West saw a 5.5 percent uptick in showing in November compared to a year ago.

Existing-Home Sales Gains Strongest in Decade | Realtor Magazine

For the third consecutive month, existing-home sales were on the rise, with all major regions of the country except the West posting a “significant hike in sales activity” last month, the National Association of REALTORS® reported Wednesday.

Total existing-home sales—which includes completed transactions for single-family homes, townhomes, condos, and co-ops—increased 5.6 percent in November to a seasonally adjusted annual rate of 5.81 million. Sales are now 3.8 percent higher than a year ago and are at the strongest pace since December 2006.

“Faster economic growth in recent quarters, the booming stock market, and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end,” says Lawrence Yun, NAR’s chief economist. “As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.”

Here’s a closer look at November’s numbers:

Home prices: The median existing-home price for all housing types in November was $248,000, increasing 5.8 percent from a year ago.

Supply: Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale. Inventories are now 9.7 percent lower than a year ago. Unsold inventory is at a 3.4-month supply at the current sales pace. “The anticipated rise in mortgage rates next year could further cut into affordability if these staggeringly low supply levels persist,” Yun says. “Price appreciation is too fast in a lot of markets right now. The increase in home builder optimism must translate to significantly more new construction in 2018 to help ease these acute inventory shortages.”

Cash purchases: All-cash sales comprised 22 percent of transactions in November, up from 21 percent a year ago. That makes up the highest share of all-cash sales since May. Individual investors are the biggest source of cash sales. They purchased 14 percent of homes in November, unchanged from a year ago. “The elevated presence of investors paying in cash continues to add a layer of frustration to the supply and affordability headwinds aspiring first-time buyers are experiencing,” Yun says. “The healthy labor market and higher wage gains are expected to further strengthen buyer demand from young adults next year. Their prospects for becoming homeowners will only improve if more lower-priced and smaller-sized homes come onto the market.” 

First-time home buyers: This group accounted for 29 percent of sales in November, down from 32 percent a year ago.

Days on market: Properties remained on the market for an average of 40 days in November, down from 43 days a year ago. Forty-four percent of homes sold in November were on the market for less than a month.

Distressed properties: Foreclosures and short sales made up 4 percent of sales, down from 6 percent a year ago. Broken out, 3 percent of sales in November were foreclosures while 1 percent were short sales.

 

 

7 Tips for Brightening a Home This Winter | Realtor Magazine

The winter may bring colder and cloudier days ahead, but you can still make your listing look inviting, bright, and cheerful. HouseLogic recently featured several ideas, including: 

Take the screens off your windows. 

HouseLogic notes that you’ll get 30 percent more sunlight shining indoors without the screens on your window. Store your screens where they won’t get damaged so you can put them back on in the spring. 

Change your bulbs. 

Replace incandescent bulbs with LEDs for a whiter light. Note: The higher the K rating on the bulb, the cooler and whiter its light, HouseLogic notes. 

Hang mirrors. 

Mirrors reflect light. Try a large, convex mirror—or a fish-eye mirror—which can amplify light better than a flat one. Consider hanging a gallery wall of small mirrors. 

Replace heavy curtains with blinds or roman shades. 

Fabric curtains block light and can make a room look smaller. Instead, try Roman shades or a valance with blinds to let in the maximum amount of natural light. 

Swap out the front door for one with glass inserts. 

A solid front door can make a home feel dark. But one that contains glass sidelights and a glass transom, for example, will brighten up the entryway. As a bonus, a new door will add curb appeal, too. 

Trim branches and bushes that block light. 

Take a look out the windows. If you see tops of bushes, it’s time to start pruning. Don’t let bushes or trees block sunlight from getting in if you want to brighten up your interiors. 

Clean windows. 

This can make a big difference. Dirty windows block natural light. Clean the glass inside at least once a month and the glass outside once a year, HouseLogic recommends. 

Mortgage Rates Up Slightly This Week | Realtor Magazine

 

 

Average mortgage rates inched up, but the 30-year fixed-rate mortgage remains below 4 percent and continues to offer home buyers and refinancers historically low rates.

“Thirty-year fixed mortgage rates have been bouncing around in a narrow 10 basis points range since October,” says Len Kiefer, Freddie Mac’s chief economist. “The U.S. average 30-year fixed mortgage rate increased 1 basis point to 3.94 percent in this week’s survey. The majority of our survey was completed prior to the surge in long-term interest rates that followed the passage of the tax bill. If those rate increases stick, we’ll likely see higher mortgage rates in next week’s survey. But even with yesterday’s increase, the 10-year Treasury yield is down from a year ago, and 30-year fixed mortgage rates are 36 basis points below the level we saw in our survey last year at this time. Mortgage rates are low.”

Freddie Mac reports the following national averages for the week ending Dec. 21:

• 30-year fixed-rate mortgages: averaged 3.94 percent, with an average 0.5 point, rising from last week’s 3.93 percent average. Last year at this time, 30-year-rates averaged 4.30 percent.
• 15-year fixed-rate mortgages: averaged 3.38 percent, with an average 0.5 point, increasing from last week’s 3.36 percent average. A year ago, 15-year rates averaged 3.52 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.39 percent, with an average 0.3 point, increasing from last week’s 3.36 percent average. A year ago, 5-year ARMs averaged 3.32 percent.

3 Ways to Prevent Costly Wear and Tear | Realtor Magazine

The winter season brings more foot traffic, which can be risky on a home—holiday parties, family gatherings and even open houses in the winter can bring tears and marks on the floors. How do you prevent scratches and stains that result in costly floor repairs?

After all, refinishing hardwood floors could cost more than $1,000. A carpet repair could cost about $200, according to HomeAdvisor, which provides average cost estimates of repair and remodeling projects nationwide.

Here are a few tips from a recent article at realtor.com®:

Take note of the front door.

Set a “No shoes in the house” rule to reduce scratches or stains to your flooring. The front door likely will see the most mix of dirt, snow, and mud as people enter. Add a mat near the front and back doors to the house to catch some of the grime. “Rock salt can leave white residue that, over time, can dull the finish of your floors,” Dave Murphy, director of training at N-Hance Wood Renewal and Refinishing in Nashville, told realtor.com®. “When it’s tracked into your house, it gets dragged across the floors, creating deep scratches in the wood.”

Protect the floor from the Christmas tree.

Watch the water if you have a real tree. Water can damage not only hardwood flooring but also carpeting and laminate flooring. “Place a plastic bag underneath the tree stand to catch any spilled water,” suggests Debra Johnson, a home cleaning expert with Merry Maids. “Don’t fret about the look: Your tree skirt will hide it.” A tree skirt can also catch fallen tree needles, which can scratch flooring.

Turn down the heat.

When the weather turns cold, try to avoid turning the heat up too high—it can damage your floors, particularly your hardwoods. “Heaters in your home can really dry out hardwood, leading to problems like shrinkage and cracked floorboards,” Murphy cautions. Murphy suggests running a humidifier in your home to keep moisture in the air.

15 Features That Help Listings Sell Faster | Realtor Magazine

“Renovating a home with the right features can not only recoup the cost—it can help you sell your place much faster,” advises Jessica Lautz, managing director of survey research at the National Association of REALTORS®. “That means a quick transition into your dream home.” But which amenities are in highest demand?

Hardwood flooring remains the biggest draw among buyers of all generations, according to a new realtor.com® analysis of popular home features. Listings with hardwood floors have appreciated 14.8 percent since 2015, the analysis shows. “The first thing buyers look at are the floors … and when they take in beautiful hardwood, their eyes light up,” says Zelda Sheldon, a sales associate with Village Real Estate Services in Nashville, Tenn.

Realtor.com® looked at 40 of the most common home features and analyzed applicable listings to find which homes sold in the fewest number of days. For this study, researchers used days on market as an indication of demand for a home feature. The following were the top features uncovered in the survey:

1. Smart-home features (smart thermostats, refrigerators, and locking systems)
2. Finished basements
3. Patios
4. Walk-in closets
5. Granite countertops
6. Eat-in kitchens
7. Hardwood floors
8. Laundry rooms
9. Open kitchens
10. Front porches
11. Dining rooms
12. Energy Star appliances
13. Two-car garages
14. Fireplaces
15. Security systems

Lending Scam Targets California Consumers | Realtor Magazine

The California Department of Business Oversight issued a warning to consumers to beware of email scams purporting to be from representatives of Impac Mortgage Co.

The emails originate from a fake email address, impacmortgagecorp@gmail.com, and appear legit, using Impac Mortgage’s logo and invoking the name of CEO Joseph Tomkinson. The scammers are sending unsolicited emails to recipients, offering them loans and requesting that the recipient pay money before the loan is provided.

Consumers should “exercise extreme caution before responding to any solicitation promoting loans or other offers,” the California Department of Business Oversight said in a recent bulletin. The real Impac Mortgage Corp. was founded in 1995 in Irvine, Calif., and has originated and purchased more than $90 billion in residential and commercial loans.