Don’t Let a Big Down Payment Stop You From Owning Your Dream Home

Do you want to buy a house, but aren’t sure you can cover the down payment? Let’s talk about
some down-payment assistance programs that may be able to help.

Down payment assistance can be the difference between saying “yes”
or “no” to a first home. If you are interested in buying a home but don’t
have cash on hand for a down payment, or if you have a son, daughter
or any other friend or family member who would like to purchase a home
but doesn’t have cash for a down payment in the state of Illinois, there
are several government programs that can assist you in securing a
down payment for your new dream home.

The First Home Illinois Program This program offers a forgivable
loan of $7,500 to buyers who will live in their new home for at least 5
years. This program will discontinue in December 2018, so to take
advantage of this down-payment assistance opportunity, your home
loan must be originated by December 15, 2018.

Even though this program will be discontinued for much of Illinois past 
2018, there are other down-payment assistance programs that will be 
available moving forward into 2019 and beyond:

- A forgivable loan of up to $6,000, with the amount based on the total
price of the home, forgivable after 5 years. 

- A $7,500 deferred program. This loan is repaid through a second
mortgage the buyer doesn’t make payments on, but is reimbursed when 
you sell your home.

- A $10,000 no-interest loan repaid through a monthly payment of
$83 for 120 months.

If you’d like to find out more about these programs, check out this flier!

If you have anything other questions regarding down-payment 
assistance in the purchase of your new home, please feel free to
give me a call or send me an email today. I’d love to hear from you.

What’s Your Home’s Value in Summer 2018?

This summer might be the last opportunity for you to take advantage of rising
home prices and high demand. Here’s why.

Summer is here, which means the high season for real estate. If you've been
thinking of selling your home, you might be in for a golden moment.

However, it might not last long. Let me explain why, with a few details of the
current real estate market.

Right now, homes are selling in record time. This May, it took just 34 days
on average for a home to go under contract, which broke last year's record of
36 days.

Home prices also continue to rise. In fact, they've been rising for six straight
years. For the past two years, this growth has been accelerating. As a
consequence, 27.6% of the homes sold in May sold above their list price.

All of this is due to a woefully short supply of homes on the market. In fact,
the total supply of homes is 5.4% lower this year than it was at the same time
last year.

However, the real estate market might be on the cusp of change.
Mortgage rates have been rising, and now stand near their highest
levels in seven years. As a result, pending home sales were down as of April.
A recent Redfin survey also found a drop in customers touring homes for
the first time in 27 months.

What's going on? The home price surge might be nearing its end. Overall,
home affordability is dropping: Over the past 6 years, there has been a
48% increase in average home prices, while wages increased only 14%.

While some sellers are still managing to sell at higher prices than listed, nearly
a quarter of sellers actually had to lower their prices this April.

If you do decide to sell right now, you would have an easy time of it,
and you could get top dollar for your home. That's because demand and prices
are both still high.

If you decide to wait, things might go south quickly. That’s because the market
may be reaching the limits of price growth and may be stalled by higher
mortgage rates.

If you want to take advantage of current conditions by buying or selling a
home any time in the near future, don’t hesitate to reach out and give me a call
or send me an email today. I look forward to hearing from you soon.

Starter and Trade-Up Homes are in High Demand

The real estate market remains red-hot. In fact, Zillow estimates that homes sold more quickly in 2017 than ever before. And 2018 seems on-pace to beat 2017. However, one segment of the real estate market seems to be lagging.

I’m talking about luxury homes.

Prices in the top 5% of the real estate market increased just 5.1% in 2017, almost 2% lower than the rest of the market. What's going on?

Affordability does not seem to be an issue: more Americans can afford a top-level home than ever before. Instead, it might come down to two other factors.

Demand and supply are more evenly matched at the top of the market.

First, uncertainty surrounding the new tax bill could be affecting luxury homes more strongly, and this might be the reason why some potential buyers are choosing to sit and wait until the details of the tax plan become more clear. Second, there is simply a greater supply of luxury homes compared to other types of homes.

In other words, demand and supply are more evenly matched at the top of the market, while in other segments, demand far outstrips supply.

If you've been thinking about trading up to a luxury home, now might be the perfect time to do so. The red-hot demand for starter and trade-up homes means you could sell your home for top dollar and at record speed. The limited price growth and greater inventory at the luxury end means you could have your pick, and find a special, unique, and customized home that perfectly suits your preferences.

If you have any questions about the current Central Illinois real estate market, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

How Will the Fed’s New Move Impact Real Estate?

The Fed’s announcement to cut back its balance sheet means the longer you wait to buy or sell a home, the harder it might be for you. 

The Federal Reserve just announced a move that will have a big impact on both home buyers and sellers.

At the latest Fed meeting on September 20th, Fed Chair Janet Yellen announced that the Fed would start to cut back its balance sheet. While that might sound boring compared to the usual announcements of Fed rate hikes, it's actually a very big deal. 

You see, when the financial crisis hit 10 years ago, the Fed needed to take emergency measures, so it injected a huge amount of money into the economy. The Fed did this by buying up various financial assets totaling $3.5 trillion, an enormous sum that made up almost 25% of the entire U.S. economy at the time.

This money helped stabilize various markets and get the economy back on track. However, the Fed is confident that the economy is now doing well enough for it to slowly start taking some of that money back. And that's exactly what this announcement was all about.

As you can imagine, this is going to have a massive impact throughout the economy, including on real estate. According to experts, it will inevitably put upward pressure on consumer borrowing costs, such as mortgage rates, which have stayed fairly low in spite of the Fed's actions so far.

In other words, if you are thinking of buying a home, the Fed's most recent move will eventually make it more expensive for you to do so because you will be paying more in interest. If you are looking to sell your home, this might mean there will be fewer interested buyers, which might drive prices down and might make it harder to sell.

Now, this won't happen immediately, because the Fed's balance sheet rollback will be gradual. As a matter of fact, the Fed is only reducing its balance sheet by a mere $10 billion a month to start with.

But make no mistake, while the Fed's moves will take time to bear fruit, they will drive up interest rates, particularly as the Fed ramps this process up in the coming months.

That's why if you've been thinking of getting into the real estate market, now is such a crucial time.

If you have any questions, whether about buying or selling your home, or about the details of the Fed's announcement and what they mean for you, give me a call. I'm here to help.

5 Ways to Invest in Real Estate

Real estate investing is on the rise. Here are five different ways you can get involved.

Investing in real estate is no longer restricted to the super wealthy. According to a recent survey, real estate investors now make up 15% of the population. That translates to almost 50 million individuals who invest in at least one property other than their primary residence. 

In fact, 89% of U.S. investors are interested in putting their money in real estate because of benefits such as cash flow, tax incentives, leverage, and value appreciation that come with investing in multiple properties.

Real estate investing is on the rise. Here are five different ways you can get involved.

Are you curious about investing in real estate? If so, here are five different ways you can get started:

1. Buy and rent
This is probably the most traditional way to invest in real estate. It simply involves buying a property and renting it out. Now is a good time for this kind of investing because rental rates are on the rise (8% since last year) but the downside of this investing approach is the time and effort needed to manage and maintain your investment.

2. Buy and sell
Also known as home flipping, this involves buying a property and reselling it soon after for a profit. Home flipping has offered a record-breaking 49% return in 2016. 

3. Real estate investment groups
Real estate investment groups are organizations that buy a set of properties and then sell them to individual investors.The main benefit of this approach is that you typically do not need to act as the landlord because the investment group handles property management for you (for a fee of course).

4. Crowdfunding sites
Recently, there's been an explosion of sites such as Prosper and Lending Club, which allow individuals to invest in various real estate development projects. Through crowdfunding sites, you can be a part of a large-scale property investment while investing only a moderate amount of money. On the other hand, crowdfunding sites act as a middleman and charge fees which can eat into your profits. 

5. REITs
Real estate investment trusts (REITs) are like mutual funds for real estate.They typically pay high dividends. However, they also do not offer all of the typical benefits of investing in real estate, such as increased leverage and tax benefits. 

Each of these investing approaches offers a tradeoff between possible profits, risks, and costs. The one constant is that you can minimize your risks with due diligence and by consulting with an experienced real estate professional.

If you have any questions for us or you’re interested in investing in real estate yourself, don’t hesitate to give me a call or send me an email. I look forward to hearing from you.

How Do Fannie Mae’s Recent Changes Affect Those With Student Debt?

Today I want to inform you about how Fannie Mae, the nation's largest underwriter of mortgages, recently introduced three new rules that will affect those with student debt.

If you have a student loan or you are a cosigner on one, I have some good news for you. 

Fannie Mae, the nation's largest underwriter of mortgages, recently introduced three new rules that will affect those with student debt.

These new rules can make it easier to get a mortgage, and they can make it easier to pay off your (or your kids’) student loans.

The first change is for those on income-based repayment plans, where having a high debt-to-income ratio is the No. 1 reason for not being approved for a mortgage. 

Fannie Mae previously used a very conservative 1% of the total loan instead of the actual monthly payment. This can drastically lower your debt-to-income ratio and give you a much better chance of qualifying for a mortgage.

Some folks are lucky enough to have their student debt paid by their parents or even by their employer. The thing is, Fannie Mae didn't take this into account when calculating the debt-to-income ratio. That's the second new change.

If your employer or your parents have been paying off your student debt and you can show evidence of this for the past 12 months, then this debt won’t be counted in your debt-to-income ratio. This makes it more likely you will qualify for a mortgage.

If you can qualify for a mortgage right now, you definitely should.

If you can qualify for a mortgage right now, you definitely should. Rates are still at a historical low, and lots of great houses have recently come on the Libertyville market.

Fannie Mae also makes it possible to refinance your mortgage for more than the value of your home. Normally, there is a 0.25% fee that applies to any cash you take out in this way.The third big change is that Fannie Mae will now waive that fee when you use this cash to pay off a student loan. 

This applies whether the loan is yours, or you're a cosigner. If the mortgage rate is significantly lower than the student loan rate, it can make sense to refinance in this way, and the new rule makes it cheaper to do so. 

If you need help understanding these new guidelines to see whether they’re right for you, or you have questions about putting them into practice, get in touch with me. I’ll be glad to help. 

I hope to hear from you soon!

You Don’t Need a Down Payment

Today, I want to share with you all the options you have for an affordable down payment as a homebuyer.

What's the biggest obstacle to homeownership?

According to a recent survey, "saving enough for a down payment" comes at the top of the list. A whopping 55% of prospective homebuyers cited this as their main stumbling block.

And with the continuing growth of home prices, things aren't getting any easier. In fact, homeownership rates reached a 20-year low last November.

It wasn't always like this. 

A decade ago, many lenders were offering easy, no-money-down mortgages. 

However, after the financial crisis, mortgage standards have become more restrictive. A typical mortgage now requires a 20% down payment. 

"55% cited the lack of a down payment as their main stumbling block."

Here's the good news. 

If you have decent credit and a steady income, you might be qualified for a number of specialized programs that require no or very little down payment. Here are a few of the top options.

First, there's the USDA loan, which is valid for homes in certain regions, such as rural and suburban areas. 

With zero money down and lenient credit requirements, the USDA loan can be a great choice for many homeowners. 

Second, there’s the VA loan, which you can apply for if you or your spouse served in a branch of the military.

It's possibly the most generous zero-money-down mortgage because of low interest rates and low closing costs.

Third, there's the FHA loan. It does require a 3.5% down payment — still drastically more achievable than the 20% required for a conventional mortgage. 

Finally, there are a number credit unions and first-time homebuyer programs that might apply to your particular situation.

There’s one important thing you should know.  

If you get one of these no-money-down mortgages, chances are good you will be required to pay private mortgage insurance, which can drive up your monthly payments.

Fortunately, private mortgage insurance will disappear after your mortgage balance is under 80%. Also, the money you do pay will be tax deductible in most cases.

In short, there are lots of options to make owning a home a reality for you, even if you haven't saved up tens of thousands of dollars.

If you're considering buying a home, give me a call and we can discuss your options.

Buying a Libertyville Home? Click here to complete your loan application.

And if you need more advice on getting a no-money-down loan, give us a call at (847) 362-1335.