Home Equity Can Be a Game Changer When You Sell in Camarillo, California

Home Equity Can Be a Game Changer When You Sell

Are you on the fence about selling your house? While affordability is improving this year, it’s still tight. And that may be on your mind. But understanding your home equity could be the key to making your decision easier. An article from Bankrate explains:

“Home equity is the difference between your home’s value and the amount you still owe on your mortgage. It represents the paid-off portion of your home.

You’ll start off with a certain level of equity when you make your down payment to buy the home, then continue to build equity as you pay down your mortgage. You’ll also build equity over time as your home’s value increases.”

Think of equity as a simple math equation. It’s the value of your home now minus what you owe on your mortgage. And guess what? Recently, your equity has probably grown more than you think.

In the past few years, home prices skyrocketed, which means your home’s value – and your equity – likely shot up, too. So, you may have more equity than you realize.

How To Make the Most of Your Home Equity Right Now

If you’re thinking about moving, the equity you have in your home could be a big help. According to CoreLogic:

“. . . the average U.S. homeowner with a mortgage still has more than $300,000 in equity . . .”

Clearly, homeowners have a lot of equity right now. And the latest data from the Census and ATTOM shows over two-thirds of homeowners have either completely paid off their mortgages (shown in green in the chart below) or have at least 50% equity (shown in blue in the chart below):

That means roughly 70% have a tremendous amount of equity right now.

After you sell your house, you can use your equity to help you buy your next home. Here’s how:

  • Be an all-cash buyer: If you’ve been living in your current home for a long time, you might have enough equity to buy your next home without having to take out a loan. If that’s the case, you won’t need to borrow any money or worry about mortgage rates. Investopedia states:

“You may want to pay cash for your home if you’re shopping in a competitive housing market, or if you’d like to save money on mortgage interest. It could help you close a deal and beat out other buyers.”

  • Make a larger down payment: Your equity could also be used toward your next down payment. It might even be enough to let you put a larger amount down, so you won’t have to borrow as much money. The Mortgage Reports explains:

“Borrowers who put down more money typically receive better interest rates from lenders. This is due to the fact that a larger down payment lowers the lender’s risk because the borrower has more equity in the home from the beginning.”

The Easy Way To Find Out How Much Equity You Have

To find out how much equity you have in your home, ask a real estate agent you trust for a Professional Equity Assessment Report (PEAR).

Bottom Line

Planning a move? Your home equity can really help you out. Let’s connect to see how much equity you have and how it can help with your next home.

Why Pre-Approval Is Even More Important This Year in Ventura, California

Why Pre-Approval Is Even More Important This Year

On the road to becoming a homeowner? If so, you may have heard the term pre-approval get tossed around. Let’s break down what it is and why it’s important if you’re looking to buy a home in 2024.

What Pre-Approval Is

As part of the homebuying process, your lender will look at your finances to figure out what they’re willing to loan you. According to Investopedia, this includes things like your W-2, tax returns, credit score, bank statements, and more.

From there, they’ll give you a pre-approval letter to help you understand how much money you can borrow. Freddie Mac explains it like this:

“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”

Now, that last piece is especially important. While home affordability is getting better, it’s still tight. So, getting a good idea of what you can borrow can help you really wrap your head around the financial side of things. It doesn’t mean you should borrow the full amount. It just tells you what you can borrow from that lender.

This sets you up to make an informed decision about your numbers. That way you’re able to tailor your home search to what you’re actually comfortable with budget-wise and can act fast when you find a home you love.

Why Pre-Approval Is So Important in 2024

If you want to buy a home this year, there’s another reason you’re going to want to be sure you’re working with a trusted lender to make this a priority.

While more homes are being listed for sale, the overall number of available homes is still below the norm. At the same time, the recent downward trend in mortgage rates compared to last year is bringing more buyers back into the market. That imbalance of more demand than supply creates a bit of a tug-of-war for you.

It means you’ll likely find you have more competition from other buyers as more and more people who were sitting on the sidelines when mortgage rates were higher decide to jump back in. But pre-approval can help with that too.

Pre-approval shows sellers you mean business because you’ve already undergone a credit and financial check. 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.”

Sellers love that because that makes it more likely the sale will move forward without unexpected delays or issues. And if you may be competing with another buyer to land your dream home, why wouldn’t you do this to help stack the deck in your favor?

Bottom Line

If you’re looking to buy a home in 2024, know that getting pre-approved is going to be a key piece of the puzzle. With lower mortgage rates bringing more buyers back into the market, this can help you make a strong offer that stands out from the crowd.

Foreclosure Activity Is Still Lower than the Norm in Southern California

Foreclosure Activity Is Still Lower than the Norm

Have you seen headlines talking about the increase in foreclosures in today’s housing market? If so, they may leave you feeling a bit uneasy about what’s ahead. But remember, these clickbait titles don’t always give you the full story.

The truth is, if you compare the current numbers with what usually happens in the market, you’ll see there’s no need to worry.

Putting the Headlines into Perspective

The increase the media is calling attention to is misleading. That’s because they’re only comparing the most recent numbers to a time where foreclosures were at historic lows. And that’s making it sound like a bigger deal than it is.

In 2020 and 2021, the moratorium and forbearance program helped millions of homeowners stay in their homes, allowing them to get back on their feet during a very challenging period.

When the moratorium came to an end, there was an expected rise in foreclosures. But just because foreclosures are up doesn’t mean the housing market is in trouble.

Historical Data Shows There Isn’t a Wave of Foreclosures

Instead of comparing today’s numbers with the last few abnormal years, it’s better to compare to long-term trends – specifically to the housing crash – since that’s what people worry may happen again.

Take a look at the graph below. It uses foreclosure data from ATTOM, a property data provider, to show foreclosure activity has been consistently lower (shown in orange) since the crash in 2008 (shown in red):

So, while foreclosure filings are up in the latest report, it’s clear this is nothing like it was back then.

In fact, we’re not even back at the levels we’d see in more normal years, like 2019. As Rick Sharga, Founder and CEO of the CJ Patrick Company, explains:

“Foreclosure activity is still only at about 60% of pre-pandemic levels. . .”

That’s largely because buyers today are more qualified and less likely to default on their loans. Delinquency rates are still low and most homeowners have enough equity to keep them from going into foreclosure. As Molly Boesel, Principal Economist at CoreLogic, says:

“U.S. mortgage delinquency rates remained healthy in October, with the overall delinquency rate unchanged from a year earlier and the serious delinquency rate remaining at a historic low… borrowers in later stages of delinquencies are finding alternatives to defaulting on their home loans.”

The reality is, while increasing, the data shows a foreclosure crisis is not where the market is today, or where it’s headed.

Bottom Line

Even though the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst. If you have questions about what you’re hearing or reading about the housing market, let’s connect.

Why Having Your Own Agent Matters When Buying a New Construction Home in Simi Valley

Why Having Your Own Agent Matters When Buying a New Construction Home

Finding the right home is one of the biggest challenges for potential buyers today. Right now, the supply of homes for sale is still low. But there is a bright spot. Newly built homes make up a larger percent of the total homes available for sale than normal. That’s why, if you’re craving more options, it makes sense to see if a newly built home is right for you.

But it’s important to remember the process of working with a builder is different than buying from a homeowner. And, while builders typically have sales agents on-site, having your own agent helps make sure you have proper representation throughout your homebuying journey. As Realtor.com says:

“Keep in mind that the on-site agent you meet at a new-construction office works for the builder. So, as the homebuyer, it’s a smart idea to bring in your own agent, as well, to help you negotiate and stay protected in the transaction.”

Here’s how having your own agent is key when you build or buy a new construction home.

Agents Know the Local Area and Market

It’s important to consider how the neighborhood and surrounding area may evolve before making your home purchase. Your agent is well-versed in the upcoming communities and developments that could influence your decision. One way a real estate agent can help is by reviewing the builder’s site plan. For example, you’ll want to know if there are any plans to construct a highway or add a drainage ditch behind your prospective backyard.

Knowledge of Construction Quality and Builder Reputation

An agent also has expertise in the construction quality and reputation of different builders. They can give you insights into each one’s track record, customer satisfaction, and construction practices. Armed with this information, you can choose a builder known for consistently delivering top-notch homes.

Assistance with Customization and Upgrades

The most obvious benefit of opting for new home construction is the opportunity to customize your home. Your agent will guide you through that process and share advice on the upgrades that are most likely to add long-term value to your home. Their expertise helps make sure you focus your budget on areas that will give you the greatest return on your investment later.

Understanding Builder Negotiations and Contracts

When it comes to working with builders, having a skilled negotiator on your side can make all the difference. Builder contracts can be complex. Your agent can help you navigate these contracts to make sure you fully understand the terms and conditions. Plus, agents are skilled negotiators who can advocate for you, potentially securing better deals, upgrades, or incentives throughout the process. As Realtor.com says:

“A good buyer’s agent will be able to review any contracts before you sign on the dotted line, ensuring you aren’t unwittingly agreeing to terms that only benefit the builder.” 

Bottom Line

If you are interested in buying or building a new construction home, having a trusted agent by your side can make a big difference. If you’d like to start that conversation, let’s connect.

2 of the Factors That Impact Mortgage Rates in Simi Valley, California

2 of the Factors That Impact Mortgage Rates

If you’re looking to buy a home, you’ve probably been paying close attention to mortgage rates. Over the last couple of years, they hit record lows, rose dramatically, and are now dropping back down a bit. Ever wonder why?

The answer is complicated because there’s a lot that can influence mortgage rates. Here are just a few of the most impactful factors at play.

Inflation and the Federal Reserve

The Federal Reserve (Fed) doesn’t directly determine mortgage rates. But the Fed does move the Federal Funds Rate up or down in response to what’s happening with inflation, the economy, employment rates, and more. As that happens, mortgage rates tend to respond. Business Insider explains:

“The Federal Reserve slows inflation by raising the federal funds rate, which can indirectly impact mortgages. High inflation and investor expectations of more Fed rate hikes can push mortgage rates up. If investors believe the Fed may cut rates and inflation is decelerating, mortgage rates will typically trend down.”

Over the last couple of years, the Fed raised the Federal Fund Rate to try to fight inflation and, as that happened, mortgage rates jumped up, too. Fortunately, the expert outlook for inflation and mortgage rates is that both should become more favorable over the course of the year. As Danielle Hale, Chief Economist at Realtor.com, says:

“[M]ortgage rates will continue to ease in 2024 as inflation improves . . .”

There’s even talk the Fed may actually cut the Fed Funds Rate this year because inflation is cooling, even though it’s not yet back to their ideal target.

The 10-Year Treasury Yield

Additionally, mortgage companies look at the 10-Year Treasury Yield to decide how much interest to charge on home loans. If the yield goes up, mortgage rates usually go up, too. The opposite is also true. According to Investopedia:

“One frequently used government bond benchmark to which mortgage lenders often peg their interest rates is the 10-year Treasury bond yield.”

Historically, the spread between the 10-Year Treasury Yield and the 30-year fixed mortgage rate has been fairly consistent, but that’s not the case recently. That means, there’s room for mortgage rates to come down. So, keeping an eye on which way the treasury yield is trending can give experts an idea of where mortgage rates may head next.

Bottom Line

With the Fed meeting later this week, experts in the industry will be keeping a close watch to see what they decide and what impact it’ll have on the economy. To navigate any mortgage rate changes and their impact on your moving plans, it’s best to have a team of professionals on your side.

Avoid These Common Mistakes After Applying for a Mortgage in Oxnard, California

Avoid These Common Mistakes After Applying for a Mortgage

If you’re getting ready to buy a home, it’s exciting to jump a few steps ahead and think about moving in and making it your own. But before you get too far down the emotional path, there are some key things to keep in mind after you apply for your mortgage and before you close. Here’s a list of things to remember when you apply for your home loan.

Don’t Deposit Large Sums of Cash

Lenders need to source your money, and cash isn’t easily traceable. Before you deposit any cash into your accounts, discuss the proper way to document your transactions with your loan officer.

Don’t Make Any Large Purchases

It’s not just home-related purchases that could disqualify you from your loan. Any large purchases can be red flags for lenders. People with new debt have higher debt-to-income ratios (how much debt you have compared to your monthly income). Since higher ratios make for riskier loans, borrowers may no longer qualify for their mortgage. Resist the temptation to make any large purchases, even for furniture or appliances.

Don’t Cosign Loans for Anyone

When you cosign for a loan, you’re making yourself accountable for that loan’s success and repayment. With that obligation comes higher debt-to-income ratios as well. Even if you promise you won’t be the one making the payments, your lender will have to count them against you.

Don’t Switch Bank Accounts

Lenders need to source and track your assets. That task is much easier when there’s consistency among your accounts. Before you transfer any money, speak with your loan officer.

Don’t Apply for New Credit

It doesn’t matter whether it’s a new credit card or a new car. When your credit report is run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), it will have an impact on your FICO® score. Lower credit scores can determine your interest rate and possibly even your eligibility for approval.

Don’t Close Any Accounts

Many buyers believe having less available credit makes them less risky and more likely to be approved. This isn’t true. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both of those parts of your score.

Do Discuss Changes with Your Lender

Be upfront about any changes that occur or you’re expecting to occur when talking with your lender. Blips in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. If your job or employment status has changed recently, share that with your lender as well. Ultimately, it’s best to fully disclose and discuss your intentions with your loan officer before you do anything financial in nature.

Bottom Line

You want your home purchase to go as smoothly as possible. Remember, before you make any large purchases, move your money around, or make major life changes, be sure to consult your lender – someone who’s qualified to explain how your financial decisions may impact your home loan.

Why It’s More Affordable To Buy a Home in Phoenix, Arizona This Year [INFOGRAPHIC]

Why It’s More Affordable To Buy a Home This Year [INFOGRAPHIC]

Some Highlights

The Top Benefits of Buying a Multi-Generational Home in Prescott, Arizona

The Top Benefits of Buying a Multi-Generational Home

Has the idea of sharing a home with loved ones like your grandparents, parents, or other relatives crossed your mind? If so, you’re not alone. More buyers are choosing to go this route and buy a multi-generational home. Here’s a look at some of the top reasons why, to see if a home like this may be right for you too.

Why Buyers Are Opting for Multi-Generational Living

According to the National Association of Realtors (NAR), two of the top reasons buyers are opting for multi-generational homes today have to do with affordability (see graph below):

First-time buyers are focused most on cost savings – with 28% saying this was a key reason for them. By pooling their resources with others, they can share financial responsibilities like mortgage payments, utilities, and more to make homeownership more affordable. This is especially helpful for those first-time homebuyers who may be finding it tough to afford a home on their own in today’s market.

Buyers are also turning to multi-generational homes so they can more easily afford their dream home. Both first-time (28%) and repeat buyers (18%) chose to live with others so they could buy a larger home. When everyone chips in and combines their incomes, that big dream home with more space could be more within reach.

But multi-generational living isn’t just about the financial side of things. According to the same study from NAR, 23% of repeat buyers chose to buy a multi-generational home to make it easier to care for an aging parent. Many older adults want to age in place and a multi-generational home can help make that possible. For those older adults, it gives them an opportunity to maintain their quality of life while being surrounded by their loved ones. As Axios explains:

“Financial concerns and caregiving needs are two of the major reasons people live with their parents (and parents’ parents).”

Lean on an Expert

Finding the perfect multi-generational home isn’t as simple as shopping for a regular house. That’s because there are more people with even more opinions and needs to be considered. It’s like solving a puzzle, and the pieces need to fit just right.

So if you’re interested in the many benefits multi-generational living offers, partner with a local real estate agent who has the expertise to help.

Bottom Line

Whether your motives are financial or focused on the people you’ll share your home with, buying a multi-generational home may make sense for you. If you’re interested in learning more, let’s connect.

Are More Homeowners in Prescott Valley, Arizona Selling as Mortgage Rates Come Down?

Are More Homeowners Selling as Mortgage Rates Come Down?

If you’re looking to buy a home, the recent downward trend in mortgage rates is good news because it helps with affordability. But there’s another way this benefits you – it may inspire more homeowners to put their houses up for sale.

The Mortgage Rate Lock-In Effect

Over the past year, one factor that’s really limited the options for your move is how few homes were on the market. That’s because many homeowners chose to delay their plans to sell once mortgage rates went up. An article from Freddie Mac explains:

“The lack of housing supply was partly driven by the rate lock-in effect. . . . With higher rates, the incentive for existing homeowners to list their property and move to a new house has greatly diminished, leaving them rate locked.”

These homeowners decided to stay put and keep their current lower mortgage rate, rather than move and take on a higher one on their next home.

Early Signs Show Those Homeowners Are Ready To Move Again

According to the latest data from Realtor.com, there were more homeowners putting their houses up for sale, known in the industry as new listings, in December 2023 compared to December 2022 (see graph below):

Here’s why this is so significant. Typically, activity in the housing market cools down in the later months of the year as some sellers choose to delay their moves until January rolls around.

This is the first time since 2020 that we’ve seen an uptick in new listings this time of year. This could be a signal that the rate lock-in effect is easing a bit in response to lower rates.

What This Means for You

While there isn’t going to suddenly be an influx of options for your home search, it does mean more sellers may be deciding to list. According to a recent article from the Joint Center for Housing Studies (JCHS):

“A reduction in interest rates could alleviate the lock-in effect and help lift homeowner mobility. Indeed, interest rates have recently declined, falling by a full percentage point from October to November 2023 . . . Further decreases would reduce the barrier to moving and give homeowners looking to sell a newfound sense of urgency . . .”

And that means you may see more homes come onto the market to give you more fresh options to choose from.

Bottom Line

As mortgage rates come down, more sellers may re-enter the market – that gives you an opportunity to find the home you’re looking for. Let’s connect so you’ve got a local expert on your side who’ll help you stay on top of the latest listings in our area.

Experts Project Home Prices in Ventura, California Will Increase in 2024

Experts Project Home Prices Will Increase in 2024

Even though home prices are going up nationally, some people are still worried they might come down. In fact, a recent survey from Fannie Mae found that 24% of people think home prices will actually decline over the next 12 months. That means almost one out of every four people are dealing with that fear, and you might be, too.

To help ease that concern, here’s what experts forecast will happen with prices this year.

Experts Project a Modest Increase

Check out the latest home price forecasts from eight different sources (see graph below):

The blue bar on the left means, on average, experts think home prices will go up over 2% by the end of this year – not down.

Prices aren’t likely to depreciate in 2024 because inventory is still tight and lower mortgage rates are leading to strong buyer demand. Those two factors will keep pushing prices up as the year goes on. As Selma Hepp, Chief Economist at CoreLogic, explains:

“With mortgage rates dropping, demand for homes in early 2024 is likely to be strong and will again put pressure on prices, similar to trends observed in early 2023 . . . Most markets will continue to reach new home price highs over the course of 2024.”

What Does This Mean for You?

Experts are saying home prices will go up this year, and that’s good news if you’re thinking about buying a home. When you become a homeowner, you want the value of your house to go up. That appreciation is what builds equity and makes homeownership such a good investment over time.

Beyond that, expected home price appreciation also means if you’re ready, willing, and able to buy, waiting just means it will cost more later.

Bottom Line

If you’re worried home prices will come down, don’t be. Many experts believe they’ll actually go up this year. If you have questions or worries about what’s happening with prices in our area, let’s connect.