One Homebuying Step You Don’t Want To Skip in Phoenix, Arizona: Pre-Approval

One Homebuying Step You Don’t Want To Skip: Pre-Approval

There’s one essential step in the homebuying process you may not know a whole lot about and that’s pre-approval. Here’s a rundown of what it is and why it’s so important right now.

What Is Pre-Approval?

Pre-approval is like getting a green light from a lender. It lets you know how much they’re willing to let you borrow for a home. To determine that number, a lender looks at your financial history. According to Realtor.com, these are some of the documents a lender may ask you for during this process:

  • W-2s from the last two years
  • Tax returns from the last two years
  • Pay stubs from the last 30 days
  • Bank statements from the last 60 days
  • Investment account statements (if applicable)
  • Two years of history of where you’ve lived

The result? You’ll get a pre-approval letter showing what you can borrow. Keep in mind, that any changes in your finances can affect your pre-approval status. So, after you receive your letter, avoid switching jobs, applying for new credit cards or other loans, or taking out large sums of money from your savings.

How It Helps You Determine Your Borrowing Power

This year, home prices are expected to rise in most places and mortgage rates are still showing some volatility. So, since affordability is still tight, it’s a good idea to talk to a lender about your home loan options and how today’s changing mortgage rates will impact your future monthly payment.

The pre-approval process is the perfect time for that. Because it determines the maximum amount you can borrow, pre-approval also helps you figure out your budget. You should use this information to tailor your home search to what you’re actually comfortable with as far as a monthly mortgage payment. That way, you don’t fall in love with a house that’s out of your comfort zone.

How It Helps You Stand Out

Once you find a home you want to put an offer on, pre-approval has another big perk. It not only makes your offer stronger, it shows sellers you’ve already undergone a credit and financial check.

When a seller sees you as a serious buyer, they may be more attracted to your offer because it seems more likely to go through. As Greg McBride, Chief Financial Analyst at Bankrate, says:

“Preapproval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements. A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”

Bottom Line

If you’re planning on buying a home, getting pre-approved for a mortgage should be one of the first things on your to-do list. Not only will it give you a better understanding of your borrowing power, it can put you in the best position possible to make a strong offer when you find a home you love. Connect with a trusted lender to learn more.

The Latest Builder Trend in Prescott Valley, Arizona: Smaller, Less Expensive Homes

The Latest Builder Trend: Smaller, Less Expensive Homes

Even though affordability is improving, buying a home can still feel tough right now. But here’s some good news: builders are focusing their efforts on building smaller homes, and they’re offering key incentives to buyers. And both of these things can be a big help if you’re worried about finding a home that’s right for your budget.

Builders Are Building Smaller Homes 

During the pandemic, homebuyers were looking for larger homes—and many could afford them. Builders responded to that demand and created bigger spaces to help people with things like working from home, setting up home gyms, and having extra rooms for virtual school.

Now, with affordability as tight as it is, builders are turning their focus to smaller single-family homes. Data from the Census shows how significant this trend toward smaller new homes has been over the last couple of years (see graph below):

No Caption ReceivedBut why would builders want to build smaller homes right now? At the end of the day, builders are going to focus on building homes that meet current market demand – because they want to build what they know will sell. And the number one thing homebuyers are looking for right now is better affordability. Since smaller homes typically come with smaller price tags, both buyers and builders have shifted their focus to homes with less square footage. The National Association of Home Builders (NAHB) reports:

 “. . . home buyers are looking for homes around 2,070 square feet, compared to 2,260 20 years ago.” 

And according to Orphe Divounguy, Senior Economist at Zillow:

“Not only are cash-strapped buyers continually seeking out lower-cost options, but developers are changing what type and size of home they’re producing to try and meet that need.”

How a Newly Built Home Can Help You Achieve Your Homebuying Goals

So, if you’re having a hard time finding something in your budget, it may be time to look at brand-new homes that have a smaller footprint. When you do, you may get a few other fringe benefits that can help on the affordability front – like price reductions or mortgage rate buy-downs.

According to the most recent data from Zonda, more than half of builders are offering incentives, some of which are mortgage rate buydowns. And those perks could help lower your future monthly housing payment too. John Burns, CEO of John Burns Research & Consulting, shares:

“The monthly payment matters more than anything else and builders have responded with smaller, more efficient homes.”

Not to mention, with new home construction, you’ll also get brand new everything, have fewer maintenance needs, and get some of the latest features available. That’s worth looking into, right?

Bottom Line

With builders focusing on smaller homes, you may have more budget-friendly options when it matters most. If you’re thinking about buying a home soon, let’s connect and see what’s available where you want to live.

Why Pre-Approval Should Be at the Top of Your Homebuying To-Do List in Camarillo, California

Why Pre-Approval Should Be at the Top of Your Homebuying To-Do List

Since the supply of homes for sale is growing and mortgage rates are coming down, you may be thinking it’s finally your moment to jump into the market. To make sure you’re ready, you need to get pre-approved for a mortgage.

That’s when a lender looks at your finances, including things like your W-2, tax returns, credit score, and bank statements, to figure out what they’re willing to loan you. After that process, you’ll get a pre-approval letter to show what you can borrow. Here are two reasons why this is essential in today’s market.

Pre-Approval Helps You Know Your Numbers

While home affordability is finally starting to show signs of improving, it’s still tight. So, it’s a good idea to talk to a lender about your loan options and how today’s changing mortgage rates will impact your monthly payment. The pre-approval process is the perfect time for that. In addition to determining the maximum amount you can borrow, pre-approval also helps you understand this piece of the puzzle. As Investopedia says:

“Consulting with a lender and obtaining a pre-approval letter allows you to discuss loan options and budgeting with the lender; this step can clarify your total house-hunting budget and the monthly mortgage payment you can afford.”

You should use this information to tailor your home search to what you’re actually comfortable with budget-wise. Since mortgage rates have inched down some lately, you may find you’re able to afford a bit more than you’d expect for your monthly payment, but you still want to avoid overextending. As CNET explains:

“In many cases, a lender may preapprove you for more than you need to spend on a home. And while it can be tempting to look at houses outside your budget, it won’t help you in the long run. Before you start touring homes, figure out how much you can realistically afford and stick to your budget.”

Pre-Approval Makes Your Offer More Appealing

And once you do find a home you want in your budget, pre-approval has another big perk. It not only makes your offer stronger, it also shows sellers you’ve already undergone a credit and financial check. When a seller sees you as a serious buyer, they may be more attracted to your offer because it seems more likely to go through. As Greg McBride, Chief Financial Analyst at Bankrate, says:

“Preapproval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements. A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”

As mortgage rates trend down, more buyers are going to be ready to jump back into the market. And while demand is still limited right now, there’s the potential for competition to pick back up, especially in hot markets. So, why not stack the deck in your favor and make sure you’re putting yourself in the best position possible when you find a home you love?

Bottom Line

If you’re planning on buying a home, don’t forget to get pre-approved early in the process. It can help you get a more in-depth understanding of what you can borrow and shows sellers you mean business.

Could a 55+ Community in Scottsdale, Arizona Be Right for You?

Could a 55+ Community Be Right for You?

If you’re thinking about downsizing, you may be hearing about 55+ communities and wondering if they’d be a good fit for you. Here’s some information that could help you make your decision.

What Is a 55+ Community?

It’s important to note that these communities aren’t just for people who need extra support – they can be pretty vibrant, too. Many people who are downsizing opt for this type of home because they’re looking to be surrounded by people in a similar season of life. U.S. News explains:

“The terms ‘55-plus community,’ ‘active adult community,’ ‘lifestyle communities’ and ‘planned communities’ refer to a setting that caters to the needs and preferences of adults over the age of 55. These communities are designed for seniors who are able to care for themselves but may be looking to downsize to a community with others their same age and with similar interests.”

Why It’s Worth Considering This Type of Home

If that sounds like something that may interest you, here’s one thing to consider. You may find you’ve got a growing list of options if you look at this type of community. According to 55places.com, the number of listings tailored for homebuyers in this age group has increased by over 50% compared to last year.

And a bigger pool of options could make your move much less stressful because it’s easier to find something that’s specifically designed to meet your needs.

Other Benefits of 55+ Communities

On top of that, there are other benefits to seeking out this type of home. An article from 55places.com, highlights just a few:

  • Lower-Maintenance Living: Tired of mowing the lawn or pulling weeds? Many of these communities take care of this for you. So, you can spend more time doing fun things, and less time on maintenance.
  • On-Site Amenities: Some feature lifestyle amenities like a clubhouse, fitness center, and more, so it’s easy to stay active. Plus, others offer media rooms, libraries, spas, arts and craft studios, and more.
  • Like-Minded Neighbors: Additionally, these types of homes usually offer clubs, outings, meet-ups, and more to foster a close-knit community.
  • Accessible Floor Plans: Not to mention, many have first-floor living options, ample storage spaces, and modern floor plans so you can have a home tailored to this phase in your life.

Bottom Line

If this sounds appealing to you, let’s talk about what’s available in our area, and the unique amenities for each community. You may find a 55+ home is exactly what you’ve been searching for.

Today’s Biggest Housing Market Myths in Camarillo, California

Today’s Biggest Housing Market Myths

Have you ever heard the phrase: don’t believe everything you hear? That’s especially true if you’re thinking about buying or selling a home in today’s housing market. There’s a lot of misinformation out there. And right now, making sure you have someone you can go to for trustworthy information is extra important.

If you partner with a real estate agent, they can clear up some common misconceptions and reassure you by backing them up with research-driven facts. Here are just a few misconceptions they can help disprove.

1. I’ll Get a Better Deal Once Prices Crash

If you’ve heard home prices are going to come crashing down, it’s time to look at what’s actually happening. While prices vary by local market, there’s a lot of data out there from numerous sources that shows a crash is not going to happen. Back in 2008, there was a dramatic oversupply of homes that led to prices crashing. Across the board, there’s an undersupply of homes for sale today. That makes this market a whole different scenario (see chart below):

No Caption ReceivedSo, if you think waiting will score you a deal, know that data shows there’s not a crash on the horizon, and waiting isn’t going to pay off the way you’d hoped.

2. I Won’t Be Able To Find Anything To Buy

If this nagging fear about finding the right home if you move is still holding you back, you probably haven’t talked with an expert real estate agent lately. Throughout the year, the supply of homes for sale has grown. Data from Realtor.com helps put this into context. While there are still fewer homes on the market than in a more normal year like 2019, inventory is still above where it was at this time last year (see graph below):

No Caption ReceivedSo, if you’re remembering all that media coverage about record-low supply during the pandemic, you can rest a bit easier. While the market isn’t back to normal just yet, inventory is moving in a healthier direction. And that means as your options improve, you can let go of this now outdated myth because finding a home to buy won’t feel quite so impossible anymore.

3. I Have To Wait Until I Have Enough for a 20% Down Payment

Many people still believe you need a 20% down payment to buy a home. To show just how widespread this myth is, Fannie Mae says:

“Approximately 90% of consumers overstate or don’t know the minimum required down payment for a typical mortgage.”

And if you look at the data from the National Association of Realtors (NAR), you can see the typical homeowner isn’t putting down as much as you might expect (see graph below):

First-time homebuyers are typically only putting down 6%. That’s far less than the 20% so many people think they need. And if you’re looking at that graph and you’re more focused on how the number for repeat buyers is closer to 20%, here’s what you need to realize. That’s only because they have so much equity built up in their current house that can be used to make a larger down payment for their next move.

This goes to show you don’t have to put 20% down, unless it’s specified by your loan type or lender. Many people put down a lot less. Not to mention, depending on the type of home loan you get, you may only need to put 3.5% or even 0% down. So, if you’re buying your first home, you likely don’t need nearly as much for your down payment as you may think.

An Agent’s Role in Fighting Misconceptions

If you put your move on pause because you heard one or more of these myths yourself, it’s time to talk to a trusted agent. An expert agent has more data and the facts, just like this, to reassure you and help break through any misconceptions that may be holding you back.

Bottom Line

If you have questions about what you’re hearing or reading, let’s connect. You deserve to have someone you can trust to get the facts.

Top 5 Reasons To Hire An Agent When Buying A Home In Prescott, Arizona. [INFOGRAPHIC]

Top 5 Reasons To Hire an Agent When Buying a Home [INFOGRAPHIC]

a poster of a company's process

Some Highlights

  • Hiring an agent when buying a home helps you understand the buying process and the local market.
  • They’ll also go over contracts and fine print with you, so you understand what you’re agreeing to. Plus, they’re good at negotiating, making sure you get the best deal.
  • Expert advice from a trusted real estate professional is priceless. Let’s connect today.

Your Home Is a Powerful Investment in Ventura, California

Your Home Is a Powerful Investment

Going into 2023, there was a lot of talk about a possible recession that would cause the housing market to crash. Some in the media were even forecasting home prices would drop by as much as 10-20%—and that might have made you feel a bit unsure about buying a home.

But here’s what actually happened: home prices went up more than usual. Brian D. Luke, Head of Commodities at S&P Dow Jones Indices, explains:

“Looking back at the year, 2023 appears to have exceeded average annual home price gains over the past 35 years.”

To put last year’s growth into context, the graph below uses data from Freddie Mac on how home prices have changed each year going back to 1980. The dotted line shows the long-term average for appreciation:

a graph showing the average of a home appreciation

The big takeaway? Home prices almost always go up.

As an article from Forbes says:

“. . . the U.S. real estate market has a long and reliable history of increasing in value over time.”

In fact, since 1980, the only time home prices dropped was during the housing market crash (shown in red in the graph above). Fortunately, the market today isn’t like it was in 2008. For starters, there aren’t enough available homes to meet buyer demand right now. On top of that, homeowners have a tremendous amount of equity, so they’re on much stronger footing than they were back then. That means there won’t be a wave of foreclosures that causes prices to fall.

The fact that home values went up every single year except those four in red is why owning a home can be one of the smartest moves you can make. When you’re a homeowner, you own something that typically becomes more valuable over time. And as your home’s value appreciates, your net worth grows.

So, if you’re financially stable and prepared for the costs and expenses of homeownership, buying a home might make a lot of sense for you.

Bottom Line

Home prices almost always go up over time. That makes buying a home a smart move, if you’re ready and able. Let’s connect to talk about your goals and what’s available in our area.

Worried About Home Maintenance Costs in Prescott, Arizona? Consider This.

Worried About Home Maintenance Costs? Consider This

If one of the main reasons you’re hesitant to buy a home is because you’re worried about the upkeep, here’s some information you may find interesting on both new home construction and existing homes (a home that’s been lived in by a previous owner).

Newly Built Homes Need Less Upfront Maintenance

If you can afford it, you may find a newly built home could help ease your worries about maintenance costs. Think about it, if everything in the house is brand new, it won’t have the wear and tear you may see in an existing home – and that means it’s less likely to need repairs. As LendingTree says:

“Since the systems, appliances, roof and foundation are new, you’re less likely to pay for major or minor repairs within the first few years of homeownership. That can make a big difference for first-time homebuyers who are adjusting to owning rather than renting.”

Plus, many builders also have warranties on their homes that would cover some of the more major expenses that could pop up. As First American explains:

“The new systems in your home, like plumbing, electrical, and HVAC, are typically covered for one to two years by your builder’s warranty. When something happens to these systems, you contact the builder or their warranty company.”

Existing Homes Can Still Have Great Perks

But it’s worth mentioning, that it’s not just newly built homes that can have warranties. It’s an option for existing homes too.

Your agent may be able to help you negotiate with the seller to add one as a concession on your contract. But you should know that not all sellers will be willing to do that. If they won’t, you could purchase one yourself, if you’d like to. An article from Forbes explains:

“During a real estate transaction, a home warranty policy can be purchased by the buyer or the seller.”

And there are benefits for both parties when it comes to a home warranty. According to MarketWatch:

“A buyer’s home warranty benefits both buyers and sellers, as it helps the seller close the deal while providing the future homeowner with peace of mind that they’ll be covered if a system or appliance breaks down . . . Sometimes, a seller will pay for the first year of the home buyer’s warranty to sweeten the deal, but it depends on the real estate market.”

If you’re interested in a home warranty for peace of mind, lean on your agent. They’ll negotiate on your behalf to see if a seller would be willing to cover one for you. Just remember, the likelihood of a seller throwing one in depends on conditions in your local market.

So, Should I Buy New or Existing?

While the need for less upfront maintenance is a great perk for new construction, there are some things a newly built home can’t provide that an existing home can.

For example, existing homes have a lot of character and charm that’s difficult to reproduce. The quirks that come with an older home may make it feel more homey. And, existing homes usually have more developed landscaping and a well-established sense of community. So, it can feel more inviting than something that’s a blank slate, like new construction often is. Not to mention, if you go with new construction, you may have to wait for the home to finish being built based on where it is in the process. It all depends on what’s most important to you.

Bottom Line

Whether you choose a newly built or an existing home, you may be able to ease some of your concerns over maintenance with a home warranty. To weigh your options and go over what’s the top priority for you, talk to the professionals.

Savings Strategies Every First-Time Homebuyer Needs To Know in Camarillo, California

Savings Strategies Every First-Time Homebuyer Needs To Know

If homeownership is on your goal sheet for your future, you’re probably working on your savings. And a big priority is making sure you’ve got a plan in place for things like your closing costs, down payment, and more.

Here are a few strategies that can help speed up that process.

Budget and Track Your Expenses: To start, create a detailed budget that tracks the money you’ve got coming in and the money going out. This’ll give you a better look at your finances as a whole.

Cut Down on Unnecessary Spending: Now that you have your budget sheet done and you know how you’re spending your money, look for any line items that aren’t absolutely essential. If you cut down on those, you can re-allocate that cash toward buying a home. Even the little things can add up. As the National Association of Realtors (NAR) says:

“The majority of first-time buyers did make financial sacrifices to purchase a home. For those who did, the most common sacrifices buyers reported were cutting spending on luxury goods, entertainment, and clothes.”

Automate Your Savings: Once you know how much you want to set aside for your homebuying budget, look for ways to make it easy. If you have to transfer money manually, you may forget to do it. But getting some automatic transfers set up helps drive consistency and removes the temptation to spend it elsewhere. Realtor.com explains:

“If you’re struggling to put enough money away because of the constant temptations to blow your paycheck, consider automating the process. Ask your employer if you can have your paycheck deposited into multiple accounts—if so, instruct it to send a certain percentage of your salary directly into your savings account. Or go through your bank . . .”

Lean into Any Side Hustles You Have: Do you have a gig you do (or have done before) to net some extra cash? Taking on part-time work, freelance jobs, or picking up a side hustle can help give your savings a boost.

Put any Unexpected Cash To Good Use: If you get any sudden windfalls, like a tax refund, bonus, inheritance, or cash gift from family, put it toward your house fund.

By using these strategies and focusing on your savings over time, you can make sure you’re well on the path to having what you need to buy your first home. As Ramsey Solutions says:

“Budgeting shows your money who’s in charge (that’s you). It gives you the power to tell your money where to go instead of having to wonder where it went. It’s how you make any money goals happen—like saving for a down payment.”

Bottom Line

If you need more strategies for getting ready to buy, let’s connect.

How To Determine if You’re Ready To Buy a Home in Camarillo, California

How To Determine if You’re Ready To Buy a Home

If you’re trying to decide if you’re ready to buy a home, there’s probably a lot on your mind. You’re thinking about your finances, today’s mortgage rates and home prices, the limited supply of homes for sale, and more. And, you’re juggling how all of those things will impact the choice you’ll make.

While housing market conditions are definitely a factor in your decision, your own personal situation and your finances matter too. As an article from NerdWallet says:

“Housing market trends give important context. But whether this is a good time to buy a house also depends on your financial situation, life goals and readiness to become a homeowner.”

Instead of trying to time the market, focus on what you can control. Here are a few questions that can give you clarity on whether you’re ready to make your move.

1. Do You Have a Stable Job?

One thing to consider is how stable you feel your employment is. Buying a home is a big purchase, and you’re going to sign a home loan stating you’ll pay that loan back. That’s a big commitment. Knowing you have a reliable job and a steady stream of income coming in can help put your mind at ease when making such a large purchase.

2. Have You Figured Out What You Can Afford?

If you have reliable paychecks coming in, the next thing to figure out is what you can afford. That’ll depend on your spending habits, debt, and more. To be sure you have a good idea of what to expect from a number’s perspective, start by talking to a trusted lender.

They’ll be able to tell you about the pre-approval process and what you’re qualified to borrow, current mortgage rates and your approximate monthly payment, closing costs to anticipate, and other expenses you’ll want to budget for. That way you can make an informed decision about whether you’re ready to buy.

3. Do You Have an Emergency Fund?

Another key factor is whether you’ll have enough cash left over in case of an emergency. While that’s not fun to think about, it’s an important thing to consider. You don’t want to overextend on the house, and then not be able to weather a storm if one comes along. As CNET says:

“You’ll want to have a financial cushion that can cover several months of living expenses, including mortgage payments, in case of unforeseen circumstances, such as job loss or medical emergencies.”

4. How Long Do You Plan To Live There?

It was mentioned above, but buying a home involves some upfront expenses. And while you’ll get that money back (and more) as you gain equity, that process takes time. If you plan to move too soon, you may not recoup your investment. For example, if you’re looking to sell and move again in a year, it might not make sense to buy right now. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:

“Five years is a good, comfortable mark. If the price of your home appreciates considerably, then even three years would be fine.”

So, think about your future. If you plan to transfer to a new city with the upcoming promotion you’re working toward or you anticipate your loved ones will need you to move closer to take care of them, that’s something to factor in.

5. Above all else, the most important question to answer is: do you have a team of real estate professionals in place? 

If not, finding a trusted local agent and a lender is a good first step. The pros can talk you through your options and help you decide if you’re ready to take the plunge or if you have a few more things to get in order first.

Bottom Line

If you want to have a conversation about all the things you need to consider to determine if you’re ready to buy, let’s connect.