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How to Avoid Common Mortgage Pitfalls

(Published on - 9/7/2024 5:25:14 PM)

Navigating the mortgage process can be challenging, whether you are buying your first home, refinancing, or planning to sell. Missteps along the way can lead to long-term financial stress or — in the worst-case scenario — pre-foreclosure. Explore the common mortgage pitfalls and learn how to avoid them, ensuring a smoother and less stressful experience.

Overextending Your Budget

One of the most common pitfalls is taking on a mortgage that stretches your budget too thin. Lenders may approve you for a higher loan than what is truly comfortable for your financial situation. Just because you are approved for a certain amount does not mean you should borrow it all.

How to Avoid It

Create a detailed budget including all your monthly expenses — utilities, groceries, transportation, and entertainment. Use a mortgage affordability calculator to determine a comfortable loan payment, factoring in taxes, insurance, and potential interest rate increases. Experts recommend that your housing expenses not exceed 28% of your gross monthly income.

Ignoring the True Cost of Homeownership

Many first-time buyers focus solely on mortgage payments, forgetting about additional costs such as property taxes, homeowners insurance, maintenance, and repairs. These expenses can quickly add up, turning what seemed like an affordable loan into a financial burden.

How to Avoid It

Before committing to a mortgage, research the area’s property taxes and get quotes for homeowners insurance. Set aside funds for ongoing maintenance and unexpected repairs. A good rule of thumb is to budget 1%-4% of your home’s purchase price annually for maintenance.

Choosing the Wrong Mortgage Type

Fixed-rate and adjustable-rate mortgages (ARMs) are two of the most popular in the U.S., and each has its own benefits and drawbacks. However, selecting the wrong type based on your financial situation or future plans can lead to unexpected costs. For example, ARMs typically offer lower initial rates but can skyrocket after the fixed period, leading to higher payments.

How to Avoid It

Consider your long-term plans. A fixed-rate mortgage provides stability and predictability if you plan to stay in your home for many years. If you might move within a few years, an ARM might be more appropriate. Always review the loan terms carefully and consult a financial advisor to ensure they align with your financial goals.

Failing to Shop Around for the Best Rates

Many buyers settle for the first mortgage offer they receive, potentially missing better rates or terms. Even a slight difference in interest rates can lead to significant savings or costs over the life of the loan.

How to Avoid It

Shop around and compare rates from different lenders, including banks, credit unions, and online lenders. Do not be afraid to negotiate terms. Be sure to consider more than the interest rate, such as fees, points, and other loan terms.

Skipping Pre-Approval

House hunting without a mortgage pre-approval can lead to disappointment and wasted time. You might find your dream home, only to realize later that you cannot secure the necessary financing.

How to Avoid It

Get pre-approved before you start looking at homes. This step helps you understand how much you can afford and shows sellers you are a serious buyer. Pre-approval requires a credit check and verification of income and assets, so be prepared to provide documentation.

Overlooking the Importance of a Good Credit Score

Your credit score plays a significant role in determining your mortgage rate. A lower credit score can lead to higher interest rates, which can cost you thousands over the life of the loan.

How to Avoid It

Regularly check and monitor your credit score and take steps to improve it if necessary. Pay down debt, avoid opening new lines of credit, and ensure all bills are paid on time. If your credit score is not where it needs to be, consider delaying your home purchase until it improves.

Falling Behind on Payments

Failing to keep up with mortgage payments can lead to late fees, a damaged credit score, and — in severe cases — pre-foreclosure or foreclosure. In fact, foreclosure activity has increased annually in recent years, indicating homeowners must be vigilant.

Pre-foreclosure occurs when a homeowner falls around three to six months behind on mortgage payments, and the lender begins reclaiming the property by filing a notice of default. This situation can be both financially and emotionally devastating. However, it is essential to know pre-foreclosure is not the end — there are steps you can take to avoid this entirely.

How to Avoid It

As soon as you know you are in trouble, reach out to your lender. Many offer programs to help you catch up or temporarily reduce your payments. Refinancing might also be an option if your interest rate is too high or your payment is unmanageable.

This strategy can reduce your monthly payment and make it easier to stay current. Lastly, if keeping the home is not feasible, selling it before foreclosure can help you avoid the long-term impact on your credit.

Take Control of Your Mortgage Journey

Avoiding common mortgage pitfalls is crucial to maintaining your financial health and achieving long-term homeownership success. Understanding the risks and taking proactive steps ensures your housing loan works for you, not against you. Whether you are buying, refinancing, or managing your current mortgage, staying informed and prepared will help you navigate the process smoothly.

Source: Keeping Current Matters

Realty Executives Midwest

1310 Plainfield Rd. Ste 2 | Darien, IL 60561

Office: 630-969-8880
E-Mail: experts@realtyexecutives.com


2025 Housing Market Forecasts: What To Expect

(Published on - 8/30/2024 7:28:52 PM)

Looking ahead to 2025, it’s important to know what experts are projecting for the housing market. And whether you’re thinking of buying or selling a home next year, having a clear picture of what they’re calling for can help you make the best possible decision for your homeownership plans.

Here’s an early look at the most recent projections on mortgage rates, home sales, and prices for 2025.

Mortgage Rates Are Projected To Come Down Slightly

Mortgage rates play a significant role in the housing market. The forecasts for 2025 from Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo show an expected gradual decline in mortgage rates over the course of the next year (see chart below):

No Caption Received

Mortgage rates are projected to come down because continued easing of inflation and a slight rise in unemployment rates are key signs of a strong but slowing economy. And many experts believe these signs will encourage the Federal Reserve to lower the Federal Funds Rate, which tends to lead to lower mortgage rates. As Morgan Stanley says:

“With the U.S. Federal Reserve widely expected to begin cutting its benchmark interest rate in 2024, mortgage rates could drop as well—at least slightly.”

Expect More Homes To Sell

The market will see an increase in both the supply of available homes on the market, as well as a rise in demand, as more buyers and sellers who have been sitting on the sidelines because of higher rates choose to make a move. That’s one big reason why experts are projecting an increase in home sales next year.

According to Fannie Mae, MBA, and NAR, total home sales are forecast to climb slightly, with an average of about 5.4 million homes expected to sell in 2025 (see graph below):

No Caption Received

That would represent a modest uptick from the lower sales numbers in 2023 and 2024. For reference, about 4.8 million total homes were sold in 2023, and expectations are for around 4.5 million homes to sell this year.

While slightly lower mortgage rates are not expected to bring a flood of buyers and sellers back to the market, they certainly will get more people moving. That means more homes available for sale – and competition among buyers who want to purchase them.

Home Prices Will Go Up Moderately

More buyers ready to jump into the market will put continued upward pressure on prices. Take a look at the latest price forecasts from 10 of the most trusted sources in real estate (see graph below):

No Caption Received

On average, experts forecast home prices will rise nationally by about 2.6% next year. But as you can see, there’s a range of opinions on how much prices will climb. Experts agree, however, that home prices will continue to increase moderately next year at a slower, more normal rate. But keep in mind, prices will always vary by local market.

Bottom Line

Understanding 2025 housing market forecasts can help you plan your next move. Whether you're buying or selling, staying informed about these trends will ensure you make the best decision possible. Reach out to a trusted real estate agent to discuss how these forecasts could impact your plans.

Source: https://www.keepingcurrentmatters.com/2024/08/28/2025-housing-market-forecasts-what-to-expect/


Today’s Biggest Housing Market Myths

(Published on - 8/24/2024 5:50:42 PM)

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, connect with a real estate agent. You deserve to have someone you can trust to get the facts.

Source: Keeping Current Matters

Realty Executives Midwest

1310 Plainfield Rd. Ste 2 | Darien, IL 60561

Office: 630-969-8880
E-Mail: experts@realtyexecutives.com


Home Inspections For Sellers: How To Prepare

(Published on - 8/17/2024 6:35:31 PM)

Some Highlights

  • If you’re thinking about selling your house, it’s important to know what the home inspection is and what inspectors look for.
  • As supply grows and buyers regain negotiation power, you may find you want to do some select repairs with a good return on investment before listing to get ahead of things a buyer may ask you to fix.
  • To decide what's worth tackling, you need expert advice. Reach out to a local real estate agent so you know what to prioritize.

Source: Keeping Current Matters

Realty Executives Midwest

1310 Plainfield Rd. Ste 2 | Darien, IL 60561

Office: 630-969-8880
E-Mail: experts@realtyexecutives.com


Before You Box: How to Host a Profitable Pre-Move Garage Sale

(Published on - 8/10/2024 6:29:44 PM)

There is nothing quite like a big move to spur a reassessment of everything you own. As you begin preparing to pack, you’ll likely discover a myriad of items you no longer need or want. Don’t just toss the things you won’t be bringing to your new home. Instead, it is time to plan a mega garage sale. A pre-moving garage sale is an excellent way to declutter, reduce moving costs, and even earn extra cash to help with your moving expenses.

A garage sale featuring several items that need to be rehomed before moving.

Planning Your Pre-Move Garage Sale

Pulling off a successful garage sale takes time, effort, and good planning. To start, choose the right day or time for your event. If your community or neighborhood already hosts a yearly garage sale event or swap meet, hitch your garage sale wagon to that train if the dates work for you. Otherwise, Saturdays are usually the most popular day to host a garage sale.

Start your sale early, around 7 or 8 AM, to attract early bird shoppers and make the most of the day. Most garage sales wrap up around noon or 1 PM. As the day gets closer, double-check the weather. If it looks like rain, storms, or extreme weather is coming your way, consider moving your garage sale to a different weekend. Poor weather keeps potential shoppers at home and can drag down your sales.

Finally, if you live in an HOA, check the rules to make sure you are allowed to host a garage sale. You may need to request a permit or adhere to specific rules and guidelines.

Preparing Your Items for Sale

Now that you have a date for your pre-moving garage sale, it is time to decide what you want to sell. This can also be a great opportunity to start organizing items for your move and deciding what (if anything) you want to move into self-storage (learn about common storage FAQs).

Choose What You Want to Sell

Go room by room and sort every item into one of several categories. Your categories may vary, but we suggest:

  • Keep and move
  • Keep and store
  • Sell
  • Give to friends or family
  • Donate
  • Toss

Be ruthless in your decision-making. If you have not used an item in a year or two or if it no longer serves you, put it in the “sell” pile. Remember, the more items you sell at your garage sale, the fewer things you will have to pack and haul to your new home.

As you sort through your belongings, set aside and dispose of any items that are broken, damaged, or heavily worn. Once you decide what to sell, check, clean, and repair each item as needed. Make sure all electronics work, games include all their pieces, and clothes do not have holes or stains.

Pricing Your Possessions

Be realistic and price your items to sell. People who visit garage sales are looking for good deals. If you are not sure what to price your items, a good rule of thumb is to price at least 50% below what you originally paid for them. You can also check Facebook Marketplace, OfferUp, eBay, and Craigslist to see what comparable items are selling for.

Place clear, easy-to-read price tags or stickers on every item. Be prepared to negotiate, as many garage sale shoppers love to haggle, but always keep a firm minimum price in mind for every item.

Displaying Your Items

On the day of your garage sale, get up extra early and spend time setting out and displaying your items. Presentation matters. Your tables should look neat, not cluttered. Avoid piling or stacking items, like books, clothes, and games. If you can, display clothes on a clothing rack, set out shoes in pairs, and line up books, games, and puzzles.

Group like items together and use clear signage to indicate prices and categories. Consider eye-catching displays, such as showcasing a unique item on a decorative table. Get creative and help your garage sale stand apart.

Promoting Your Pre-Move Garage Sale

It would be sad if you put in all the work and effort to host a pre-move garage sale only to have no one show up. If you happen to be participating in a neighborhood garage sale event or local swap meet, the event’s organizer should manage most of the promotion. Otherwise, it is up to you to get the word out.

Online Promotion

Begin by promoting your garage sale online. Places to list your sale include:

  • Online classifieds
  • Craigslist
  • Facebook Marketplace
  • Nextdoor
  • Facebook groups for your city or community
  • Neighborhood text chains

When promoting your sale, highlight that it is a moving sale, which often implies a bigger sale with a wider array of items. Include your address, the time of your garage sale, and any notable items you will be selling. Post pictures if possible. Reach out to local friends and family members and encourage them to share the news with their networks.

Signs

Creating eye-catching signs is one of the most effective ways to promote your garage sale. Make your signs big, colorful, and easy to read. Write in large, thick letters so your signs will be readable to people driving down the road. Include a big headline announcing your moving sale, address, and the time of your sale.

Put your signs at the front of your neighborhood and along nearby intersections and busy roads. Use signs with arrows to guide drivers to your home, especially if you live out of the way or in a large subdivision.

Finally, put your signs up a few days before your garage sale so people have time to plan a visit.

Running a Successful Garage Sale

The big day is here. You have already done all your marketing, gotten up early to set out your items, and made sure your things are well-organized and clearly priced. Now, it is time to focus on running a smooth and successful garage sale.

Cashier’s Table

Set up a cashier’s table in a central location where you can greet visitors, answer questions, and handle transactions. Keep plenty of change on hand, including small bills and coins. Price items in increments that are easy to make change for, like $0.25, $0.50, $1, $5, $10, etc.

Many younger shoppers prefer using payment apps like Venmo and Zelle instead of carrying cash. Savvy garage sale hosts can cater to these shoppers by opening accounts and displaying printed sheets with payment app QR codes at the cashier stand.

Interacting with Shoppers

Greet visitors to your garage sale and let them know you are happy to answer any questions about the condition, origin, and age of your items. Remember, many garage sale shoppers are hunting for a good deal, so be prepared to negotiate and haggle. Always be friendly. It is okay to politely decline a lowball offer and suggest a higher price. Toward the end of your garage sale, consider offering bigger discounts to get rid of the things that are not selling.

Wrapping Up and Moving Forward

Congratulations! You have made it through your pre-move garage sale. Hopefully, you were able to successfully rehome your unwanted possessions and make a little extra cash in the process. Now you can move forward with deciding what to do with any unsold items.

If you still think you can sell the items, consider posting them on Facebook Marketplace, OfferUp, or other online sales platforms. Price them to sell quickly, especially if your moving date is quickly approaching.

For everything else, a great option is to donate to a local charity or thrift store. Many organizations will arrange to pick up donations from your home. If you have anything you cannot donate or sell, your final option is to dispose of the items responsibly.

With your garage sale complete and remaining items taken care of, it is time to focus your attention on preparing for your big move. Hopefully, your home is a little less cluttered, and you have extra cash in your pocket to help cover your moving expenses.

Good luck with your move!

Source: Realty Executives

Realty Executives Midwest

1310 Plainfield Rd. Ste 2 | Darien, IL 60561

Office: 630-969-8880
E-Mail: experts@realtyexecutives.com


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