A Homeowner’s Net Worth is 36x Greater Than A Renter!

A Homeowner’s Net Worth is 36x Greater Than A Renter!Over the last six years, homeownership has lost some of its allure as a financial investment. As homeowners suffered through the housing bust, more and more began to question whether owning a home was truly a good way to build wealth.

The Federal Reserve conducts a Survey of Consumer Finances, every three years, and just released their latest edition this past week.

Some of the findings revealed in their report:

  • The average American family has a net worth of $81,200
  • Of that net worth, 61.4% ($49,856) of it is in home equity
  • A homeowner’s net worth is over 36 times greater than that of a renter
  • The average homeowner has a net worth of $194,500 while the average net worth of a renter is $5,400

Bottom Line

The Fed study found that homeownership is still a great way for a family to build wealth in America.

 

A Homeowner’s Net Worth is 36x Greater Than A Renter!

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A Homeowner’s Net Worth is 36x Greater Than A Renter!

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What You Don’t Want to Hear From Your Listing Agent

What You Dont Want to Hear From Your Listing AgentYou’ve decided to sell your house. You begin to interview potential real estate agents to help you through the process.

You need someone you trust enough to:

  1. Set the market value on possibly the largest asset your family owns (your home)
  2. Set the time schedule for the successful liquidation of that asset
  3. Set the fee for the services required to liquidate that asset

An agent must be concerned first and foremost about you and your family in order to garner that degree of trust.  Make sure this is the case.

Be careful if the agent you are interviewing begins the interview by:

  1. Bragging about their success
  2. Bragging about their company’s success

An agent’s success and the success of their company can be important considerations when deciding on the right real estate professional to represent you in the sale of the house. However, you first need to know they care about what you need and what you expect from the sale. If the agent is not interested in first establishing your needs, how successful they may seem is much less important.

Look for someone with the ‘heart of a teacher’ who comes in prepared well enough to explain the current real estate market and patient enough to take the time to show how it may impact the sale of your home. Not someone only interested in trying to sell you on how great they are.

You have many agents from which to choose. Pick someone who truly cares… call the Arizona Home Group.

Find Out What Your Home is Worth in Today’s Housing Market.

 

 

How Interest Rates Impact Family Wealth.

How Interest Rates Impact Family Wealth.With interest rates still in the low 4%’s, many buyers may be on the fence as to whether to act now and purchase a new home, or wait until next year.

If you look at what the experts are predicting for 2015, it may make the decision for you.

Predictions for 2015 3Q:

Even an increase of half a percentage point can put a dent in your family’s net worth.

Let’s look at it this way…

The monthly payment (principal & interest only) on a $250,000 home today, with the current 4.1% interest rate would be $1,208.

If we take that same home a year later, the Home Price Expectation Survey projects that prices will rise about 4% making that home cost $10,000 more at $260,000.

If we take Freddie Mac’s rate projection of 4.8%, the monthly mortgage payment climbs to $1,364.
Some buyers might not think that an extra $156 a month is that bad. But over the course of 30-year mortgage you have spent an additional $56,160 by waiting a year.

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Why is There So Much Paperwork When Getting a Mortgage?

Why is There So Much Paperwork When Getting a Mortgage?Let us try to answer a question we are often asked  “why there is so much paperwork mandated by the bank for a mortgage loan application when buying a home toda?”y. It seems that the bank needs to know everything about us and requires three separate sources to validate each and every entry on the application form. Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.

There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any time in history.

  1. The government has set new guidelines that now demand that the bank prove beyond any doubt that you are indeed capable of affording the mortgage. During the run-up in the housing market, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again
  2. The banks don’t want to be in the real estate business. Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.

However, there is some good news in the situation. The housing crash that mandated that banks be extremely strict on paperwork requirements also allowed you to get a mortgage interest rate probably below 5%.

The friends and family who bought homes ten or twenty ago experienced a simpler mortgage application process but also paid a higher interest rate (the average 30 year fixed rate mortgage was 8.12% in the 1990’s and 6.29% in the 2000’s). If you went to the bank and offered to pay 7% instead of <5%, they would probably bend over backwards to make the process much easier.

Bottom Line

Instead of concentrating on the additional paperwork required, let’s be thankful that we are able to buy a home at historically low rates.

Begin Your Home Search Today

 

4 Reasons to Buy a Home Before Winter

4 Reasons to Buy a Home Before Winter If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings

It’s that time of year, the seasons are changing and with them bring thoughts of the upcoming holidays, family get togethers, and planning for a new year. Those who are on the fence about whether now is the right time to buy don’t have to look much farther to find four great reasons to consider buying a home now, instead of waiting.

1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report released recently projects appreciation in home values over the next five years to be between 11.2% (most pessimistic) and 27.8% (most optimistic).

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise later this year. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of next year.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You are Paying a Mortgage

As a recent paper from the Joint Center for Housing Studies at Harvard University explains: “Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren’t? Would you wait? Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

 
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What is The Most Important Report in Real Estate?

What is The Most Important Report in Real Estate?If you are in the Market to buy or sell a home you no doubt are receiving lots of monthly market reports to help you make the best decision.  Each of the reports have value, however,  the National Association of Realtors’ (NAR) Pending Home Sales Report  may be the most important report as it reveals the current Pending Home Sales Index.

According to NAR, the Pending Home Sales Index (PHSI) is

“a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.”

The PHSI generally leads Existing Home Sales by a month or two and therefore is a more current pulse on home sales.

How is the PHSI calculated?

According to NAR:

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population”.

What does the PHSI look like right now?

The most recent report showed that the PHSI climbed 3.3 percent to 105.9 in July from 102.5 in June. The index is at its highest level since August 2013 (107.1) and is above 100 – considered an average level of contract activity – for the third consecutive month.

Looking at the PHSI at a regional level, we can see the comparative strength of each market.

What is The Most Important Report in Real Estate?NORTHEAST

This region includes the states of Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.

The PHSI in the Northeast jumped 6.2 percent to 89.2 in July, and is 8.3 percent above a year ago.

What is The Most Important Report in Real Estate?MIDWEST

This region includes the states of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Ohio, North Dakota, Nebraska, South Dakota, and Wisconsin.

The PHSI in the Midwest fell 0.4 percent to 104.6 in July, and is 6.4 percent below a year ago.
What is The Most Important Report in Real Estate?

SOUTH

This region includes the states of Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

The PHSI in the South increased 4.2 percent to 119.0 in July, and is 1.0 percent below a year ago.

What is The Most Important Report in Real Estate?WEST

This region includes the states of Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

The PHSI in the West increased 4.0 percent to 99.5 in July, and is 6.0 percent below a year ago.

Bottom Line

There can be an argument made that the Pending Home Sales Report is actually the most important report released each month because of its timeliness and its measurement of an historically healthy market.
 
SEARCH FOR HOMES ANYWHERE IN THE VALLEY
FIND OUT WHAT YOUR HOME IS WORTH