Buying A Fixer-Upper Home For Your First Home

For many people who have been sitting on the fence waiting and wondering if the housing market is rebounding, the signs are showing an improved chance to get into real estate while prices and loan rates are still low.
However, many of the homes on the market need some work and some need a lot of care. How do you know what to look for in a fixer-upper? If you're a first-time home buyer, purchasing a fixer-upper can be a good option because the price will be lower. But fixer-upper homes come with flaws and some can be huge.
Why a fixer-upper? In some areas, the housing market is very low on inventory, especially new and/or homes in top shape. Foreclosures and short sales, though, can offer better prices if you can deal with the home's maintenance needs.
Many first-time home buyers don't take into consideration the extra expenses needed to maintain a home. They carefully calculate the mortgage, downpayment, homeowners' association dues, property taxes, and other hard costs but they neglect to factor in the everyday repairs and maintenance for the property. Things like a new water heater, stove, microwave, central heating/air conditioning systems, washer/dryer and dishwasher repairs and even plumbing and roof repairs. These items might be new or relatively new when you move in but, in the not-too-distant future, they'll need repairing or replacing. When they do, the added costs can put a strain on homeowners' monthly budget.
With this in mind, buying a fixer-upper for your first home can be a great way to get into the real estate market at a good price. However, it's essential that you completely understand the home's necessary repairs before you buy. Things to consider include how much you'll save by buying a fixer-upper versus what you'll need to spend to make it livable, how old the home is, who will do the repairs, and how much patience you have for this project.
Real estate is also always about location for obvious reasons. You can have a fabulous home in a horrible location and then later nobody wants it. Or you can have an okay or fixer-upper home in an ideal location, and suddenly it's worth millions - easier to fix up a home than it is to change the entire surrounding location. So, when shopping for a fixer-upper, be very careful to survey the neighborhood and make sure it's in a location that is worth spending your time and money to fix it up.
You need to carefully study the cost and savings by buying a fixer-upper. People buy these types of home to save money but if you end up under-estimating the home's cost to renovate it, you'll be either short on cash or very upset. Get a home inspection to ensure you understand the basic repairs and maintenance needs. If there are problems with the home, make sure you consult with experts to give you an idea about how much the repairs will likely cost. Also, be sure to consider the age of the home. If a home is very old, it can certainly have some charm t but it also can have a lot of nightmare issues that aren't always easy to spot. This can be things like plumbing or electric wiring issues, lack of insulation, structural or foundation problems... the list goes on. You don't have to steer clear of an older home but do your homework before you buy.
Part of doing your homework is finding an expert team to help with the repairs. If you're a handyman, that's fine, but there will likely be times when you'll need to turn to other experts for help and advice. Start gathering these resource contacts now before you buy so that you can have them available to look at the fixer-upper homes you're considering buying.
Finally, be short on expecting super fast progress and long on patience. Remodeling and even just making minor repairs can take longer than you think. Don't get impatient. Remember you chose a fixer-upper to save money. Taking the time to properly care for it will ensure that you have a comfortable home.

Written by Phoebe Chongchua
January 4, 2013 

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Is Home Buying a Safe 2013 Investment?

Q: I was wondering what your thoughts were in regards to buying a home today. What is your outlook for the housing market? We have seen prices jump recently and I was wondering if you think this will be a trend in 2013. Do you really think it is safe to buy a home as a good investment? - Ana, Morgan Hill, CA A: Ana, no one knows exactly what will happen in the future, but with some solid research, you can make a fairly sound prediction. For several years, after the housing crisis began, I announced numerous times, in my radio programs and articles, that buying a home was not a sound investment. At the time, there was no end in sight for declining property values. However, I also predicted that in late 2011 and 2012 the market would settle down and possibly hit bottom and become a good time to consider buying again. What we have at this moment is the “basketball effect.” Take a basketball and hold it up high, then drop it. That first bounce is the basketball's fastest upward bounce. During that first bounce, it begins to travel slower the higher it rises. The real estate market has reached the bottom and you are seeing the initial bounce in property values. I see this upward trend in values continuing, but the market cannot sustain such rapid appreciation acceleration. Just as the basketball begins to slow after that initial bounce, so will appreciation. Right now, there should be a rapid push upward in prices through late spring and maybe even into mid- to late summer of 2013. Once the ball's bounce begins to slow, expect a healthy 2 percent to 3 percent annual home value appreciation rate over the next few years in most areas. Real estate is local. Some areas will do better than others, some not so much. Also, housing markets in some areas have yet to hit bottom. To determine how your market will fare, you need to consider what your area offers in terms of jobs, rents and other economic factors. Rent vs. buy If you buy a $400,000 home with a Federal Housing Administration (FHA), 30-year, fixed rate mortgage (FRM) with a 3.5 percent interest rate and put $14,000 down, it will cost you approximately $1,733 a month in principal and interest. In California, add about $416 a month in property taxes, $90 for homeowner's insurance and $402 for plus FHA mortgage insurance for a total payment of about $2,640 per month. Your monthly homeownership payment would be about $150 to $200 more than the cost of renting. For the purpose of this analysis, let's assume that you could rent the property for $2,400, which would mean renting the same property would be about $240 less than your monthly mortgage. However, homeownership also comes with a tax deduction for the mortgage interest and property tax. Tax shelter On this property, you would be able to deduct about $5,000 for property taxes and another $13,500 or so for interest for a total of $18,500 in tax deductions. Tax deductions reduce the income against which your tax is figured, not the tax owed. Depending on your tax bracket, the tax deductions could save about $300 every month, which makes the buy-vs-rent cost a wash with both being nearly equal. A certified public accountant, enrolled agent or other tax professional can pinpoint your tax savings to the dollar. However, you must also consider that your fixed mortgage payment for the next 30 years will actually drop once your home equity reaches a point where you can drop the mortgage insurance. That's a $400-a-month savings. If you rent, unless you are renting from your parents or some other benevolent landlord, your rent will rise virtually every year and before long you'll be paying much more to rent than you'll pay to own your home. If property values rise by 2.5 percent a year, you'll gain about $10,000 each year in home equity. Consider your equity growth a nest egg for retirement, your kids' education or as a piggy bank of savings to offset your mortgage payment. Your expected equity growth will offset your mortgage payment to the tune of about $800 a month. Do the math So let's take your mortgage payment of $2,640, minus the tax break of approximately $300, minus the $800 in monthly appreciation and you have an effective payment that's little more than about $1,500. Just try to rent the same house for that amount. Now skip ahead 10 years. At a conservative 2.5 percent annual rate of appreciation, the home you purchased for $400,000 will be worth more than $512,000. If you've made all your mortgage payments on time, your loan balance will be about $298,000 and you will have $213,000 in equity. Rent the same home at $2,400 per month with a conservative annual 5 percent increase in rent and you'll be paying more than $3,700 by year 10. Understand that you should consider real estate a long-term investment. Go to Las Vegas if you want to gamble by the minute. Buying a home comes with closing costs. Selling a home comes with selling costs. If you buy a home now that you plan to sell in two to five years, those costs can offset your gains. Unless you are a speculator, a Young Turk planning frequent career moves or someone who, for some reason, prefers to gamble don't buy real estate for the short term. Give the goose 10 to 15 years or more to lay the golden egg.


Written by Robert AldanaDecember 31, 2012

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Homeownership On The Minds Of The Millennials

It's expected that in 2013, the millennials will be helping grow the housing market. Those between the ages of 18-34 may be a large part of buyers purchasing homes. Experts point to a study by Trulia.com which found that of this age group, 43 percent are already homeowners.
The study also shows that 93 percent of the millennials currently renting plan to buy a home and 72 percent view owning a home as part of their personal American Dream.
However, some are still sitting on the fence, waiting for lower home prices and even lower mortgage rates. But experts caution that today's very low mortgage rates won't last forever and home prices in some areas are already increasing.
Whether you're a millennial or not, if you're planning to buy a home soon, here are a few tips to help you sail through your home sale.

Understand your mortgage options.A large part of why a home sale falls through has to do with the financing. Even if you have received pre-approval, that doesn't necessarily mean that the deal will close. Closing could be delayed or even rejected if you're not able to produce your required paper work in a timely fashion. Stay focused and on top of what you need by working very closely with mortgage experts. Make sure you know exactly how much cash you will need to have at the time of closing. This often is underestimated by the buyer.

Choose your home carefully.This sounds obvious but is particularly important. The way the housing market has been, many people will stay in their homes longer. So the home you buy today shouldn't be seen as an investment tool to flip quickly and make another move. Buying a home today may be the home you retire in one day. Or, at the very least, it may be a home you live in for many years. Therefore, you might consider housing that can grow with you. Never before have we seen developers offering homes that really encourage multi-generational living situations.
Today, in 21 markets throughout the country, the builder, Lennar, is offering NextGen designs to answer the demand for homes that can house more than one generation of adults. These types of properties are being marketed as a “home within a home” and they're designed to give everyone enjoyable together as well as private space.
Some of the plans that have about 3,500 square feet are already sold out in certain developments. The plans have separate front doors and mini kitchens, stackable washer and dryers, backyards that can be split or con-joined, plus a door that accesses the main home. The concept is becoming increasingly popular and for some multi-generational home buyers, it's a wonderful solution that allows them to get a larger home at an affordable price.

Know the markets.Some markets that were hit the hardest are now making a comeback. If you're not committed to a specific area and you have flexibility, then study various markets and understand that in certain areas you may be competing not only with other buyers seeking homes to live in but also investors. Investor interest is driving some markets more than others. Markets such as California, Nevada, Washington, and Washington D.C. are experiencing increased interest from investors seeking to buy and rent the properties. This is causing a decrease in inventory, (especially for the inexpensive houses) which drives up housing prices.The best advice when buying a home is to do your homework. Start early. Study the market. Get as much help as possible. Be flexible. Know all of your financial limitations. Finally, know what you must have and what you can live without.

Written by Phoebe Chongchua
December 21, 2012 

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Homeownership On The Minds Of The Millennials

It's expected that in 2013, the millennials will be helping grow the housing market. Those between the ages of 18-34 may be a large part of buyers purchasing homes. Experts point to a study by Trulia.com which found that of this age group, 43 percent are already homeowners. The study also shows that 93 percent of the millennials currently renting plan to buy a home and 72 percent view owning a home as part of their personal American Dream. However, some are still sitting on the fence, waiting for lower home prices and even lower mortgage rates. But experts caution that today's very low mortgage rates won't last forever and home prices in some areas are already increasing. Whether you're a millennial or not, if you're planning to buy a home soon, here are a few tips to help you sail through your home sale.

Understand your mortgage options. A large part of why a home sale falls through has to do with the financing. Even if you have received pre-approval, that doesn't necessarily mean that the deal will close. Closing could be delayed or even rejected if you're not able to produce your required paper work in a timely fashion. Stay focused and on top of what you need by working very closely with mortgage experts. Make sure you know exactly how much cash you will need to have at the time of closing. This often is underestimated by the buyer.

Choose your home carefully. This sounds obvious but is particularly important. The way the housing market has been, many people will stay in their homes longer. So the home you buy today shouldn't be seen as an investment tool to flip quickly and make another move. Buying a home today may be the home you retire in one day. Or, at the very least, it may be a home you live in for many years. Therefore, you might consider housing that can grow with you. Never before have we seen developers offering homes that really encourage multi-generational living situations. Today, in 21 markets throughout the country, the builder, Lennar, is offering NextGen designs to answer the demand for homes that can house more than one generation of adults. These types of properties are being marketed as a “home within a home” and they're designed to give everyone enjoyable together as well as private space. Some of the plans that have about 3,500 square feet are already sold out in certain developments. The plans have separate front doors and mini kitchens, stackable washer and dryers, backyards that can be split or con-joined, plus a door that accesses the main home. The concept is becoming increasingly popular and for some multi-generational home buyers, it's a wonderful solution that allows them to get a larger home at an affordable price.

Know the markets. Some markets that were hit the hardest are now making a comeback. If you're not committed to a specific area and you have flexibility, then study various markets and understand that in certain areas you may be competing not only with other buyers seeking homes to live in but also investors. Investor interest is driving some markets more than others. Markets such as California, Nevada, Washington, and Washington D.C. are experiencing increased interest from investors seeking to buy and rent the properties. This is causing a decrease in inventory, (especially for the inexpensive houses) which drives up housing prices. The best advice when buying a home is to do your homework. Start early. Study the market. Get as much help as possible. Be flexible. Know all of your financial limitations. Finally, know what you must have and what you can live without.

Written by Phoebe Chongchua
December 21, 2012
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Real Estate Outlook: The Fiscal Cliff

The strongest housing market since the peak of the housing boom is expected to pick up steam, but the so-called "fiscal cliff" could cause problems. Fiserv Case-Shiller's Home Price Index projects home prices nationwide will increase by an average of only 0.3 percent from the second quarter in 2012 to the second quarter of 2013. However, by the second quarter of 2017, home prices will be moving up at an annualized rate of 3.3 percent. Home prices in 37 of the 384 metro areas are projected to increase at more than twice the nationwide annualized rate of 3.3 percent over the next five years. More than half these markets are in three states: California, Florida and Oregon. The lackluster 0.3 percent home price growth is based on Congress failing to prevent the nation from falling off a fiscal cliff. The so-called fiscal cliff is a reference to recession-like economic conditions expected without the extension of tax cuts and Congressional action on other economic stimuli. If Congress can't come to an agreement, households stand to pay, on average, an additional $2,200 a year in extra taxes. Taxpayers will feel the squeeze in their first 2013 paycheck. With more money going to taxes, Americans will have less money to spend on housing and that could stall the housing recovery. Meanwhile, Fiserv's analysis of home price trends in more than 380 markets found that the average home price rose 1.2 percent for the year ending in the second quarter 2012. That increase marked the first year-over-year increase in home prices nationwide since 2006, excluding 2010. The 2010 market enjoyed the benefits of the federal home buyer's, tax credit. Prices were up in the majority of the metro areas tracked. Leading the way were home prices in Phoenix, Arizona, up 14.5 percent; Detroit, Michigan, up 11.6 percent; San Jose, California, up 9 percent and Miami, Florida, where prices rose 6.9 percent. Even if the nation avoids falling off a fiscal cliff, Fiserv expects a small "hiccup" to slow the housing recovery. David Stiff, Fiserv's chief economist said, "In some markets, investor demand for housing will start to fade before first-time and trade-up buyer demand has ramped up enough to take its place. This will be most evident in markets with large foreclosure inventories." "In some markets, investor demand for housing will start to fade before first-time and trade-up buyer demand has ramped up enough to take its place. This will be most evident in markets with large foreclosure inventories," Stiff also said. Fiserv also reported, of the 29 markets where home prices remain more than 50 percent below peak prices, 15 are in California and 11 in Florida. However, over the next five years, home prices in 24 of these 29 markets should increase at higher rate than the projected annualized rate for the nation as a whole.


Written by Broderick Perkins
December 10, 2012
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Mortgage Rates Calm, Near Record Lows

In Freddie Mac's results of its Primary Mortgage Market Survey®, fixed mortgage rates showed little change and remained near their record lows helping to keep homebuyer affordability high and attractive to those looking to refinance.

30-year fixed-rate mortgage (FRM) averaged 3.34 percent with an average 0.7 point for the week ending December 6, 2012, up from last week when it averaged 3.32 percent. Last year at this time, the 30-year FRM averaged 3.99 percent.

15-year FRM this week averaged 2.67 percent with an average 0.6 point, up from last week when it averaged 2.64 percent. A year ago at this time, the 15-year FRM averaged 3.27 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.69 percent this week with an average 0.6 point, down from last week when it averaged 2.72 percent. A year ago, the 5-year ARM averaged 2.93 percent.

1-year Treasury-indexed ARM averaged 2.55 percent this week with an average 0.4 point, down from last week when it averaged 2.56. At this time last year, the 1-year ARM averaged 2.80 percent. According to Frank Nothaft, vice president and chief economist, Freddie Mac:

"Mortgage rates were little changed and near record lows this week amid indicators of stronger economic growth and signs of tame inflation. Third quarter real GDP growth was revised from an initial report of 2.0 percent to 2.7 percent, nearly matching the market consensus forecast. Meanwhile, the 12-month growth rate of the core price index of consumer expenditures remained at 1.7 percent in October which is on the low end of the Federal Reserve's projection range for this year." "The housing market is aiding in this recovery. For instance, fixed residential investment added positive growth over the past six consecutive quarters and in the third quarter alone contributed 0.3 percentage points to real GDP growth. In addition, residential construction spending was up 3 percent between September and October. And, pending home sales saw a 5.2 percent increase in October to its highest reading since March 2007."

December 7, 2012, Published by Realty Times

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Mortgage Rates Low, Tips To Qualify

Mortgage rates continue to remain low despite a recent slight increase. The 30-year fixed rate increased just a bit at the end of November but that comes on the heels of setting a record low of 3.31 percent. The 30-year fixed rate is still lower than it was this time last year, when it was at 4 percent. While many people are taking advantage of the low rates and either refinancing or shopping for a home, some are finding it difficult to qualify. The tightening of credit and the increased lending restrictions have made the effort to get a new mortgage a headache for some. The good news is there are tips to help you qualify for a mortgage. Here are a few that you should consider before you head to the bank or a mortgage company. Get your finances in order. Know your financial situation. That means not only your income, spending, debt, but also your credit status. In a downturned economy many crooks are looking for ways to make a buck and they're coming up with more scams that can negatively affect your credit. Debit and credit card skimming is one way that thieves are stealing credit card numbers and then charging up expenses on the stolen account. Even if you never lost your credit/debit card, that doesn't mean you're safe. It can happen when you use the card at a store, restaurant, or other retail outlet. If your bank is on the ball, it will alert you, maybe even before you realize your card has been compromised. This is why credit reports can offer valuable information before you apply for a mortgage. Getting your credit report and reviewing it carefully provides you with the opportunity to see if there are errors or problems that need correcting. Reduce your debt. This is a tough one. A lot of people are refinancing because they're hoping to get funds back to help them do this very thing, lower their expenses and reduce what they owe. However, if you carry a high debt, you'll have trouble refinancing or getting a mortgage to buy a home. The optimal thing to do is to start conserving and looking for ways to save. It's not about how much you make, but how much you save that can help you find ways to reduce your debt. Look for expenses to cut. Many people are opting to no longer use phone landlines or even cable. If you're working a lot and you don't watch much TV, cut the line. News and other features you watch on TV can also be accessed online on your computer. Keep only what's necessary. Sustainable living and conservation are becoming very popular. Check with your local utility company to see how you can reduce power usage in your home. Start by unplugging electrical appliances that aren't in use. These appliances, when plugged into an electrical outlet and even though not in use, use electricity which translates to you having to pay more on your utility bill for energy you're not even using. Get educated. The loan terms and restrictions change all the time. Meet with qualified expert professionals to help you through the process. Just because you don't qualify today doesn't mean it will always be that way. Find out what you need and can do and start moving toward your goal. Sometimes the best thing you can do is gain knowledge. The information that you get from real estate professionals will allow you to develop a plan to achieve success. Don't give up. The difficult economy has been discouraging but situations change and more opportunity will come. Be patient. Seek advice. Stay informed. Follow your plan, even if at first it seems like a long-shot before you'll get your goal.



Written by Phoebe Chongchua
December 7, 2012
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