I help people buy, sell and rent homes all the time. It's my job. But to be honest, sometimes I forget how many emotions go into a home transition. This past week I had a very personal real estate experience that reminded me that moving brings many different emotions- Scared, stressed, relief, anxiety, and excitement- whether you lived there for a year or 15 years.
I had the honor to list and sell my parents home this Spring. In 1999, I came house hunting with my mom a few different times and was there the day they selected the model they wanted (I believe I had an influence in that decision too :) ) and signed the contract. Fourteen years later, my parents are transitioning with careers and life, so it was the ideal time to sell.
I didn't live in the home for the entire time they had it, not even really that much if you consider only summers for my college years. But it was still home. It was the only home that we lived in for over 10 years so that constitutes MANY memories with friends and family. Even my siblings that never lived there considered it home and are a little saddened by the sale.
I always tell my clients when they are moving that you need to look at the fun and exciting things that will happen in your new space. Remember that memories don't go away, just the property.
I'm excited for my parents and their new adventures. And I know they are too!
Today's real estate market is ideal for the 'Move Up' buyers. These buyers have lived in their current home, most likely their first home, for a few years and are now ready to buy something a little bigger, maybe in a different town or school district.
With interest rates so low and the limited inventory/competition, it's a great time to put your home on the market and buy your next one.
People often get nervous about this process. They aren't sure how the process works and how to make it work perfectly. Truth is, it's not guaranteed that you'll sell your current house first, find your dream home and submit an offer within X days, and have both settlements on the same day so you can move out then move in all on one weekend. But it can happen, as long as you have the right people helping and guiding you!
Below is an article outlining 3 different options
1. Seller first, then buy
2. Buy first, then sell
3. Buy and sell simultaneously
My personal recommendation is #1. This typically doesn't call for second mortgage and often I can negotiate a favorable settlement date on the current home to give my clients a good amount of time to find their new home. It may require a week or 2 in temporary housing if timing doesn't work perfectly, but hey, you sold your home (which is often people's biggest fear) and you're getting into a new one- a few uncomfortable days/weeks should be OK if you look at the big picture.
Maybe it's because it's an important part of my job, but I am fully aware that home buyers do not need 20% down to finance a home. I understand it's common to think you need 20% saved, but it's not necessary and I want to express that to potential buyers out there. With conventional financing in our area, you can go as low as 5% down. Then there are other mortgage programs such as FHA and USDA financing that allows you to go even lower.
Putting more down (20%+) eliminates private mortgage insurance (PMI) fees every month, but you can refinance down the road and get rid of that if you originally only put less than 20% down.
I bring this up because I recently read an article on Yahoo! written by a woman that wasn't educated on the different loan programs. She spoke to lenders and they calculated that buying now with less down may actually save you money in the long run! Taking into account homes appreciating and interest rates continuing to rise, if you wait a few more years to save, you would have missed the current benefits.
Here is an example:
"Saving for 20 percent could cost thousands
Our lenders assured us we could get a loan with 10 percent down or, in some rare cases, even less. But I was still nervous. How could less equity equal more savings?
It's actually fairly simple: While we're busy saving, interest rates and home prices are going up. By the time we reach 20 percent down, that money won't buy us as much house as it will today.
So we decided to play hypothetical math and run some numbers. If we put 10 percent down on a house for $200,000 now and secure a 4 percent interest rate, we'll pay $384,365.11 over the life of the loan.
But if we wait a few years and put 20 percent down on the same house -- which we project might sell for $225,000 -- and secure a 7 percent interest rate, we'll wind up paying $455,613.79 over the life of the loan. That's $200 more every single month for 30 years, for a total of $70,000 more."
Pretty interesting huh? Makes complete sense though. I like her final remarks
"But if, like us, you don't have 20 percent saved up yet, you should still check out your options now. Don't wait; don't be afraid to start the process. Talk to lenders, talk to banks, talk to mortgage brokers and real estate agents.
My biggest mistake was not talking to lenders earlier and hearing about the kind of loans and homes we could actually get. Find out what you can afford and realize that you may well be closer to your dream home than you think."
