Before Buying a Home in Sacramento

8 Things to Do Before Buying a Home in Sacramento

Buying a home is an intense process, especially so for first-timers. In some areas of Sacramento County there is competition for homes on the market. They can get snatched up quickly, so being prepared is prudent. In the El Dorado County areas, homes tend to take a little longer to sell, again, depending on the area. Being prepared in any market environment is a great strategy. The fall and winter Real Estate Market can be a great time to buy or sell. So, I’ve compiled a list of 8 things to do before buying a home.

  1. Make a List of What You Want – What are your “must haves” in a home, now and for the future? A wish list will get it straight in your mind, but also help an agent find homes best suited to your needs. Plus, it forces you to plan for your family’s future needs as well.
  2. Get Your Documents Together – Here are a few of the documents you will need to provide your Lender:
  • Check stubs
  • W2’s for the last two years and tax returns.
  • Bank statements, usually about two months’ worth.
  • And more…

If you are planning to buy a home and don’t know where these are, I suggest you locate them immediately. Then put them where you can access them quickly.

  1. Maximize Your Credit Score – Your credit score will weigh heavily on your ability to get a loan and get the best rates. Check it and make sure you have done everything possible to get it as high as you can. You can opt to have a credit company such as Blue Water Credit in Roseville, CA, take a look to see if there are ways to improve your score quickly.
  2. Get Your Mortgage Preapproval – A preapproval will let you know how much home you can afford. Depending upon your finances and credit score, you may also qualify for an FHA loan at 3.5% or Down Payment Assistance programs. In high demand markets, such as the Folsom Real Estate market, it will give you a strong advantage to have a preapproval when you make an offer.
  3. Do Neighborhood Research – Before you make an appointment to start seeing homes, make sure you research the neighborhoods you are interested in. Park in the neighborhood and just listen at different times of the day. And perhaps on different days as well! You may not hear that freeway noise on a Saturday afternoon, but at 5pm on a Tuesday, it is noticeable.
  4. Budget for Not-So-Hidden Fees – Ask your lender what fees and expenses you will encounter during the process, such as paying for an appraisal, home inspection, etc… and budget for those expenses.
  5. Stay Organized – You will need to have quick access to your documents and files. The quicker you respond to your Lender requests, the quicker you can be in your home.
  6. Hire a Realtor – Your lender may have agents they can refer, but make sure you really take some time in finding the right realtor that will represent you and understand your needs.

I hope these tips will help ease the process for your home buying experience. Buying a home doesn’t have to be stressful. It should be so, so worth it. Stay organized. Stay calm. If things don’t go your way, just remember why you wanted to buy a home in the first place. We get it. Give us a call, we can help. Thanks for joining me this week. Have a great day.

Donald Trump Presidency and the Housing Market?

What Does a Trump Presidency Mean to the Housing Market?

Well, we, the people have spoken and Donald J. Trump was elected as the 45th president of the United States

Change was demanded from the rural areas and that is what we will have. It was unexpected by even his campaign team! But it was a bit of a shock for many, especially on the West Coast. In our area, we have not actually experienced much in the way of job losses in US manufacturing. Nor have we had a lack of wage growth. So, what all does this mean for the housing market? Should you hurry up to buy before interest rates start rising? Or wait to see if the home values decline, if they do? What should we do?

First, we should all take a deep breath

The US equity markets are starting to calm down as the meaning of a Trump presidency unfolds. As for what this means to the housing market, it’s too early to make any predictions. But, Trump ran on a platform of deregulation, which could be good for real estate. Banks may have the freedom to offer more loan products, which in turn, could further energize the market as more buyers may qualify for home loans. As for the interest rates… well, the concerns over rising interest rates may be overstated, but we are already seeing them rise. Watching the bond market closely will be prudent. Although, the experts are still hopeful that the increases will cap at less than 5% by the end of 2017.

Trump proposed more infrastructure spending, which if it comes to light, this could boost employment and wages

Another positive for the housing markets. The proposed easing of land use regulations, may begin addressing the problem of housing affordability, which is a huge issue in California housing markets. The new construction industry is reporting only 40% staffed with tradesmen. When the recession hit, many of those workers went on to new careers, leaving a huge gap in available skilled workers. This new construction is critical to the Sacramento Real Estate Market, to relieve the low inventory issues and support a normal home value increase.

In the near-term we may see some temporary upheaval, including in the housing market, as the Trump presidency takes shape

But, for right now, there isn’t any need for panic in the housing sector. The Sacramento Housing Market should continue to be in good shape for the near future. FHA Home Loans are continuing to provide low down payment options, as are the VA Home Loans.

Extra Credit Teacher Home Purchase Program (ECTP)

Extra Credit Teacher Home Purchase Program (ECTP)

On November 3rd, CalHFA announced changes to its Extra Credit Teacher Home Purchase Program (ECTP). The changes allow more K-12 public school employees—including administrators and support staff such as aides, bus drivers, food services workers and janitors—to receive as much as $15,000 in down payment assistance. The program includes educators at public charter schools, school district offices and county continuation schools.

The Extra Credit Teacher Home Purchase Program helps with the down payment and opens the door for more teachers to become homeowners. Under this program, public school employees in California’s 35 high-cost counties —including Sacramento, Placer and El Dorado—could qualify for a maximum of $15,000 or 3.5 percent of the sales price or appraised value, whichever is greater. The maximum home price is buying homes for less than $430,000 in those counties.

Educators must meet county-by-county income limits for the program, which are based on the number of people living in the home. For example, the income limits for a family of four using a CalHFA FHA first mortgage are $90,700 in Los Angeles County, $150,750 in San Mateo County, and $106,500 in Sacramento County.

The down payment assistance is in the form of a junior loan. Homeowners are not required to pay back the loan until the home is refinanced or sold, or the mortgage is paid off.  CalHFA offers additional programs that help with closing costs and can be combined with the Extra Credit Teacher Program, making home-ownership even more attainable. If you know of teachers that would like to purchase, this is a great program to help them get into their first home. Combined with other Down Payment Assistance Programs, home ownership is a possibility.

Give us a call if you want more information, or click here for the CalHFA Extra Credit Teacher Program.

Are You Terrified to Buy a House?

Are You Terrified to Buy a House? Of the Mortgage Process?

Are you waking up at 3am because you can’t shut your mind off? You may be feeling anxious and can’t fall back asleep… but what is it that keeps tiptoeing around in your brain? Ah ha!… it’s the local real estate listings! It’s that house in your dream neighborhood you keep thinking about!

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You’d love to feel the freedom of owning your own home, but the whole process seems daunting and unattainable. You are afraid to even try. Well, we get it. It is work to get all your paperwork together and then you get your hopes up. And then… rejection. The purchase of a home is a life-changing event, and you’re scared of failure.

You know, your fears are common among first time homebuyers. But they just may be figments of your imagination. You’ll never know unless you try. So, take this journey with me and let’s tackle some of the most common fears that paralyze first time homebuyers.

Fear No. 1

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‘I’m afraid I can’t afford the home of my dreams’- you start with the curiosity as to what kind of homes are selling in the price you think you can afford in your dream neighborhood. So, you start going through the Folsom real estate listings… and you get discouraged. So, you up your price range and search again. It’s easy to think, “what’s another $25,000! STOP! Before you even start looking, do yourself a favor and call a lender. Just rip off the Band-Aid and get started on the home loan preapproval process. It’s more painless than you think. And the result is worth it and the peace of mind you will achieve. You will know exactly how much you can afford, if you can qualify. With the FHA Home Loan 3.5% down program, and the Down Payment Assistant programs such as the Sapphire Grant, CalHFA programs, GSFA Platinum, you just may be surprised at how little cash on hand you need to get into a home without going broke.

Fear No. 2

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‘What if I buy a money pit?’ – Your life isn’t a Tom Hanks movie… most houses aren’t money pits. There are safeguards built into the system, because, guess what? The bank doesn’t want to lend money on a home below value either! That’s why they require home inspections, pest inspections, home warranty insurance and appraisals. A home inspector will advise you on potential repair costs and, whether, the home is up to the building codes. If there are repairs, or the appraisal comes in lower, this can provide leverage for you to go back to the sellers and either get a lower purchase price or negotiate the work be done by the sellers.

Fear No. 3

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‘I’m worried I’ll overspend’ – This is a common theme, as first time homebuyers want all the bells and whistles in their first home and are not willing to compromise. But, most good agents know the price points of the areas you’re interested in living, know how much you are approved for, know what your personal budget is, and will show you homes in that range. If you find a home that you just love and it has a higher asking price, your agent should be able to advise you as to what the market value is, and if it can be negotiated down. They have access to what the current home value is and if it is lower than the asking price, they can back that up with historical data and comps. The bottom line is, if you are looking at El Dorado Hills real estate but your budget is below the median home value, you may have to be willing to compromise. The Cameron Park real estate and surrounding areas may be more affordable. If you are set on looking only at Folsom real estate to be close to work, you may need to look at the Fair Oaks housing market that is more affordable.

Fear No. 4

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‘It’s just safer to rent’ – Well, sure, we’ve all heard that excuse, that if something breaks I can just call my landlord, and it will be fixed. Right. In the meantime, they raise your rent every year, you are committed to a lease, they can tell you if you can paint a room or not, and you are making their mortgage payment for them. Not to mention, you aren’t building wealth, just making someone else richer. If in doubt, use a rent vs. buy calculator to crunch the numbers and see whether it’s renting or buying that wins out in your area. Also, ask your lender or agent for the “break even” numbers for the areas you are interested in. Some areas such as the Folsom Housing Market, when you add up your closing costs, down payment, and monthly mortgage, you break even in 2 years. Which means it can be “cheaper” to buy then to rent.

If you are truly dreaming of owning your own home, get out of your head and take the plunge. We get it. And we’ll help you navigate the process. It’s a journey that can have great rewards. Give us a call to get the preapproval process started today!

2017 Housing Market Forecast

The California Association of Realtors has released their 2017 Housing Market Forecast. Why is that important? Well, if you plan to sell your current home to buy that forever home, to downsize, or even get into the market for your first home, knowing what the housing market is forecast to do over the next year is important. Instead of having you read the whole forecast, I went through the informative 133 pages and broke it down into factors affecting the forecast, what that forecast means for us locally and what the experts are saying.

Why is the Housing Forcast Important to Understand?

Important Factors Affecting the Forecast

Now, the first big news is that the Sacramento area is still 15.7% under the peak median home price of $394,450 in August of ’05 at today’s median price of $332,580. Secondly, rates remain attractive. A 30-year fixed is still in the low to mid 3’s. The economic outlook is good despite some uncertainty such as:

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  • the effect of Brexit
  • the Presidential election
  • the weak global production and exports
  • and the unexpected decline in oil

Here are a few more important takeaways:

  • California jobs are back, losing 1.3M during the recession but gaining 2.2M since January ‘08
  • Unemployment rates at an 8 year low of 5.5%
  • Consumer spending has been robust in 2016
  • Consumer confidence at a 9-year high

So, where is the inventory? Supply is remaining tight, or at least below the norm. Statewide we are at 3.4 months, and 2.9 months locally. Also, long-time homeowners are not moving, staying an average of 10 years, up from 5 years in 2009 citing the main reasons:

  • Low rate on current mortgage
  • Low property taxes
  • Capital gains hit
  • Where can I afford to go?
  • Could not qualify for a mortgage today

The last little statistic I thought was notable is, when asked what super power would you like to have…

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  • the #1 answer at 29% was to make traffic disappear,
  • #2 at 26% was the ability to fly,
  • but the third top answer at 21% was to have Instant Mortgage Approval!

That’s a great sign that consumers are seeing the value in homeownership.

Demographics at Play in the Housing Market

First, 64% of the baby boomers say they do not plan to sell their home when they retire, yet, 92% have equity in their home. This makes a huge difference in the inventory level, as they contribute inventory when they sell and buy. So why are they not moving?

  • 44% say Their $1M+ in equity isn’t enough to retire in style.
  • 13% say They plan to be buried in the back yard and leave their home to their kids
  • 2% say They want to see all their children living under the same roof again.
  • 41% say All the above!

Maybe if they knew about props 60 and 90, they’d take the plunge! So, let’s check in with the Millennials now

  • When asked how important is the American Dream: 90% of Millennials say it is Moderately to Very Important to them.
  • When asked what part of the American Dream is most important:
    • 18% said owning a home
    • 18% cited a fulfilling job
    • 16% thought a family is most important
    • 14% put education as number 1 and so on.
  • When asked if they thought buying a home was a good investment, 82% agreed.
  • When asked if they knew they could qualify for a mortgage with a lower down payment would they purchase a home:
    • 69% said they would start looking today
    • Only 19% knew about the FHA program, meaning 81% are unaware they can put down as little as 3.5%!

The last demographic I found compelling was Renters. Nearly half of the renters’ plan to purchase a home within the next 5 years. 55% of them have already prepared to buy a home by either speaking to a realtor, searched for homes, gotten preapproved, etc.

These demographics are positioned to impact the market in 2017. Baby boomers are staying put, which can keep the inventory low, millennials will jump in as they learn about their options, and renters are tired of paying higher and higher rents.

What the Experts are Telling Us

Nationally:

  • The GDP will increase 2.1%, compared to 1.5% in 2016
  • Unemployment should drop to 4.7%
  • The Consumer Price Index should increase 2.1%, compared to the 1.4% for 2016
  • The 30 Year Fixed Rate may increase to the 4% range

In California, unemployment should drop to 5.3%, with a 1% population growth, and real disposable income is expected to increase from 2.9% in 2016 to 3.5% in 2017. Now, 62% of the expert economics say that the housing market will increase in volume and price in 2017.

  • Volume in sales will increase 1.4%
  • Median home price will increase slightly at 4/3%
  • Affordability statewide will decrease to 29%
  • And the 30 Year Fixed Rate will go up to 4%

The lack of affordability will be our biggest challenge. Although locally, we are positioned well with affordability around 47%. The low affordability in the coastal regions should drive more homebuyers inland. So, the 2017 Forecast is positive for our area as volume is expected to increase and values up slightly.

Your 2017 opportunities are to:

  • Educate first-time home buyers – talk to their parents
  • Become well versed on down payment assistance programs, debt management and improving credit to turn renters into buyers.
  • Don’t give up on international buyers

The big message in this forecast is to stay involved & stay current as the housing market should be better in 2017 than it was in 2016.

The bottom line is that 2017 promises to be a great housing market environment. Sellers will continue to have a slight advantage with fewer than the normal number of homes on the market. Buyers can take advantage of the continuing low rates, as well as the low down payment options such as the FHA program. And as rents continue to rise faster than home values, there isn’t any reason to delay buying your own home.