5 Things Renters Should Know About Owning

moving can already be one of the most stressful times in a person’s life…”

For renters who aspire to be home owners, transitioning from an apartment to a house requires a shift in their thinking that they may not be prepared to make. The financial changes that come with owning, the need to consider planting longer-term roots in a neighborhood, and new neighborhood rules are things renters may not be thinking about enough.

Moving can already be one of the most stressful times in a person’s life, but it may be doubly so for a new home owner.

Renters need to understand how their financial investment is changing. Renters may see an increase in their monthly rent every lease term, but they don’t see exactly where it goes — toward property taxes and insurance, even “luxuries” such as trash pickup. As home owners, they don’t have a landlord who handles all those details, so they need to be ready to juggle the financial responsibilities of home ownership.

Renters need to be happy with their location for the long-term. As a renter, you can bounce around from home to home every year if you want. But when you own a home, you have to stay put — unless you plan on renting it out, which most home owners don’t.

Renters may need to abide by new rules. Renters don’t think about possible homeowner association rules they may be governed by, such as trash pickup rules or any curfews or rules pertaining to animals. Make sure to get all the information on neighborhood rules and associations.

Renters need to get into the mindset of an owner. Life as you know it is about to change. Once you purchase a new home, you will no longer have a landlord to tend to your many needs, including lawn care and plumbing.

Renters should know their neighbors can affect their value. Renters don’t care who their neighbors are as long as they’re quiet (enough). But they are now going to want to know whether their new neighbors are renters or home owners. This knowledge can help you gauge current and future home values in the neighborhood. If the neighborhood consists mostly of rental properties, it is likely a home owner will lose money on their house in the future. Renters do not always feel responsible for maintaining their properties the way home owners do. Property value comes down to curb appeal. Less-appealing neighborhoods often have more-appealing prices, which is not always good for buyers and home owners.
References: EverSafe Moving Co.

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Donald Horne, Team Success Listing
Associate Broker-Coldwell Banker Shooltz Realty
Lapeer Office   810-338-0628
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Many Renters Can Afford To Buy A Home, They Just Don’t Realize It Yet …

Many Renters Can Afford To Buy A Home, They Just Don’t Realize It Yet …

Do I need a lot of cash to buy a home?  No, there are low cash required options available.

Won’t my monthly payment be more than I can afford?  There are loan choices that offer lower payments and qualifying for a mortgage is easier than ever.

Isn’t today’s housing market the wrong time to buy?  No, today’s housing market has made available many opportunities for first time buyers and interest rates are still low giving you more buying power.

What’s Your Average Rent?

Did you know that if you spend $825.00 a month in rent, after 3 years you have spent $29,700.00 in someone else’s property? After 10 years you have spent $99,000.00 paying off someone else’s mortgage!

Stop making your landlord rich, learn how easy it is to become a homeowner. Let us help you locate the financing, obtain the down payment and find you a new place to call home!

Donald Horne, Broker / Owner
Team Success Listing LLC
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If You Buy a House Now, You Will Save About $217,000.00!

Buying a home costs money. Lots of money. There’s the down payment and the monthly mortgage payment and the maintenance and taxes and the insurance and… Are you overwhelmed yet?

It might seem like so much that you just want to put off the house hunt and sign that yearlong lease with your landlord (even though he upped your rent 25% and will likely do the same next year).

But this is going to blow your mind: Even with all of those costs, you still stand to save more than $200,000 over the next 30 years if you buy right now.

“But that’s over the course of 30 years!” you say. “I’m thinking about my money right now!” you say.

Well, get this: Wait just one year, and you throw nearly $19,000 in savings down the drain. The penalties are so high because mortgage rates are forecast to increase and because home prices are rising quickly, according to our chief economist, Jonathan Smoke.

Yep, that’s right. There’s a financial benefit—and, similarly, a financial penalty—for every single day you pay your landlord instead of your mortgage company. At a national level, the 30-year financial benefit of owning today is $217,726, according to our economic data analysts, who crunched the numbers to determine the relative merits of buying vs. renting. (Their work doesn’t capture qualitative advantages such as more control over your living situation, flexibility with pets, and, generally, more options—all things many potential home buyers would argue are equally, if not more, important when deciding whether to take the plunge.)

Postpone for one year, and you’re losing out on an estimated $18,672 in savings. Delay for three years, and that figure jumps to $54,879.

“We’re at a critical juncture: Rents, home prices, and mortgage rates are all expected to rise significantly over the next several years,” Smoke says. “That means the cost of delaying homeownership will go up even more sharply, if you wait three years or even one. It’s much like the decision to start contributing to a 401(k). Delay contributing, and you lose out on the compounding returns.”

‘Financial calculus’ confirms it’s wise to buy ASAP

its wise to buy nowSmoke and his team used a lot of factors to come up with these estimates, and they made quite a few assumptions as well.* For instance, they assumed that any money saved by renters would be invested, and that the investment would enjoy a compound annual growth rate of 5% (that’s consistent with conservative long-term expected market returns).

We know—these are some pretty big assumptions. How many renters are actually saving and investing? But we’re telling you about these assumptions, because the bottom line is this: Our data team stacked the deck against owning and still came out with eye-popping figures in favor of buying.

“The financial calculus confirms it’s wise to buy—and buy as soon as possible,” Smoke says.

That’s because no matter how you slice it, you can’t deny a few key facts that make the case for buying: Nationally, it’s cheaper right now to buy than to rent, home prices are expected to appreciate, and, while renting is subject to inflation, homeownership costs are locked.

In some markets, financial ‘penalty’ is over $1M

But, as always, it depends on where you go.

For example, in Bismarck, ND, the financial benefit of buying is actually negative. That means you’d spend $12,350 more over the next 30 years to buy instead of rent. That’s because in places such as Bismarck, rents are low, and while home prices have risen dramatically over the past few years, they aren’t expected to rise much in the future. That seems like an incentive to buy, right? Not necessarily. Think about this in terms of home appreciation. Because home prices may have peaked for the foreseeable future, you don’t stand to gain much from owning a house here.

travel west to californiaBut travel west to California and you’ll see an entirely different picture. In Santa Cruz, for instance, you stand to save more than $1 million over the next 30 years if you buy today. That’s because both rent and home prices are skyrocketing, thanks to strong economic drivers such as job growth, population growth, and household growth.

But it’s still hard to get a foot in the door: A median-income household in Santa Cruz could afford less than 10% of the homes available for sale there.

In order to realize a positive financial benefit from buying a house, owners have to wait for “break-even time periods”—when the transaction costs of buying and selling cancel out. Nationally, that wait time is just over three years. In markets that have higher home price to rent ratios, such as San Jose, CA, and New York City, owners normally need to wait longer—as long as six to seven years.

“From a pure financial perspective, you have to be committed to staying longer term,” Smoke says about those high-cost markets. “That’s one of the reasons why rents are also high and getting higher.”

So, in some places you win, in other places you lose. That kind of means it all balances out, right?

Nope, Smoke says: Nearly 90% of the markets (335 of ‘em) produce a financial benefit of at least $100,000 from owning over 30 years. In addition, almost a quarter of the nation’s markets reap a financial return greater than the national average.

We’re not exactly math majors, but we’re picking up what Smoke is putting down. It might feel challenging to come up with a down payment, but we never saw the savings spelled out in such plain language.
rachel stults oversees buying, selling and finance news at realtor.com. a nashville native and former newspaper reporter, rachel loves cooking, stand-up comedy, beaches and karaoke.


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Toughest Markets For Renters to Become Homeowners

This article from RealtorMag shows the 7 worst markets for renters to become homeowners


become homeownersFirst-time home buyers are facing tougher mortgage underwriting standards and tight inventories in the lower-priced home market, says National Association of REALTORS® President Steve Brown. It’s preventing some renters from purchasing homes, housing experts say. In some markets, renters are facing even more hurdles to reaching home ownership.

According to a recent analysis of 25 metro areas by SNL Real Estate, the following markets are proving to be the toughest markets for renters to break into home ownership.

  1. San Diego-Carlsbad-San Marcos, Calif.
    Median home price: $476,790
    Renters eligible to buy out of every 100 housing units: 5.49
  2. San Francisco-Oakland-Fremont, Calif.
    Median home price: $682,410
    Renters eligible to buy out of every 100 housing units: 5.7
  3. Boston-Cambridge-Quincy, Mass.-N.H.
    Median home price: $371,300
    Renters eligible to buy out of every 100 housing units: 8.4
  4. Miami-Fort Lauderdale-Pompano Beach, Fla.
    Median home price: $254,900
    Renters eligible to buy out of every 100 housing units: 10.21
  5. Riverside-San Bernardino-Ontario, Calif.
    Median home price: $263,600
    Renters eligible to buy out of every 100 housing units: 10.23
  6. Denver-Aurora-Broomfield, Colo.
    Median home price: $279,300
    Renters eligible to buy out of every 100 housing units: 10.39
  7. Washington, D.C.-Arlington-Alexandria, Va.-Md.-W.Va.
    Median home price: $368,000
    Renters eligible to buy out of every 100 housing units: 10.79
    source: realtor magazine, daily real estate news, the wall street journal

Donald Horne, Team Success Listing <<<
Associate Broker for Coldwell Banker Shooltz Realty
810-338-0628 or 248-969-8065

Renters Getting Squeezed

American renters getting squeezed. This article from 07/05/12 in the Realtor Magazine talks about how landlords are increasing their rents and making it difficult on renters who would like to buy but can’t get qualified…

Rents continue to inch upwards and many renters say they know it would be cheaper to buy a home than rent, but they can’t qualify for a mortgage, Reuters News reports. 

With rising demand for rentals, landlords are increasing their rents and some cities are even posting double-digit percentage rental increases annually. Apartment rents have risen at their highest rate since 2007, with costs soaring over the last three quarters, according to the research firm Reis Inc. 

Landlords feel they can charge more since vacancies have reached at a 10-year low at the same time that demand has surged. Asking rents have jumped nationally to $1,091 during the second quarter, the largest increase since the third quarter of 2007, Reis reports. The average effective rent is $1,041 for the second quarter, increasing 1.3 percent over the previous quarter. 

“The improvement in rents is pretty pervasive,” says Ryan Severino, a Reis senior economist. “Even in places like Providence and Knoxville, which you don’t think of as hotbeds for apartment activity, landlords felt the market was strong enough to raise rents on their tenants.”

New York remains the market with the lowest number of vacancies and also the priciest place to rent by far. The monthly rent there averages $2,935, which is more than $1,000 higher than the second-priciest place to rent in the U.S., San Francisco. 

Many finance experts recommend budgeting no more than 30 percent of household income to pay for housing costs. Yet nearly 40 percent of Americans are now paying more than a third, according to a U.S. Census Bureau survey. In New York, one-third of households spend more than half their pay on rent.

“We have falling incomes, rising rents, and nothing but substantial upward pressure on those rents,” says Chris Herbert, director of Harvard University’s Joint Center for Housing Studies. “And nothing in the cards suggests it will turn around anytime soon.”

Meanwhile, for those who are able, purchasing a home has never been more affordable. It’s cheaper to purchase a home than rent in basically every major U.S. city, according to John Burns Real Estate Consulting.

But securing financing remains a renter’s biggest obstacle to buying a home. Banks are pickier in what they require to qualify for a mortgage. Loans for home purchases reached a 12-year low last year as lenders tightened their credit standards, according to Inside Mortgage Finance. Now, potential borrowers often need an average credit score of 762 to get a mortgage backed by mortgage giants Freddie Mac or Fannie Mae, according to Morgan Stanley research. 
references: realtor magazine, daily real estate news, reuters news

Renters Want to Buy

Americans still believe in home ownership, but they’re spooked about the mortgage process, a survey finds…Article I found in the March 28th issue of RealtorMag talking about how renters still want to purchase homes in spite of the housing crisis…

Two-thirds of renters — across educational and demographic levels — say they want to purchase a home in the future, according to a quarterly national housing survey of 3,000 Americans conducted by Fannie Mae.

“In spite of the impact of the housing crisis on home values and home ownership rates across the country, Americans by and large still hope to become home owners,” says Doug Duncan, Fannie Mae’s chief economist. “Some may not be financially positioned to own a home in the near future, but Americans may begin to revisit that aspiration as employment and household balance sheets improve over the coming years.”

However, Duncan says many renters are expressing caution about the home buying process when it comes to qualifying for a mortgage and navigating the mortgage process.

“If potential home owners avoid the process because they believe it to be too complex, we will likely see a continued impact on home ownership rates,” Duncan says.

Source: “Fannie Mae Finds Americans Remain Committed to Homeownership,” HousingWire
references: realtor magazine, daily real estate news, NAR

Owners And Renters Agree

Owners, renters agree, owning a home is a smart decision

A substantial majority of both home owners and current renters agree that owning a home is a smart decision over the long term. That’s according to the results of a National Association of Realtors survey of 3,793 adults conducted online by Harris Interactive.

The American Attitudes About Home Ownership survey found that in today’s challenging economy, 95% of owners and 72% of renters believe that over a period of several years, it makes more sense to own a home. In addition, an overwhelming majority of home owners are happy with their decision to own a home, 93% of owners surveyed would buy again.

The survey uncovered some differences between home owners and renters, as well. While more than half of owners are very or extremely satisfied with the overall quality of their family life, only one-third of renters report the same levels of satisfaction. Similarly, 43% of home owners are very or extremely satisfied with their community life, compared with 30% of renters.

One point of agreement between renters and home owners was support of the mortgage interest deduction (MID). 74% of owners and 62% of renters say it’s extremely or very important that the MID remain in place.
references: nar, efrogpond, donsrealty.net