The Wealthy Are Still In On Real Estate

Andy Davis

According to a recent report, Tiger 21, a large group of wealthy investors with combined net worth in excess of $75 billion, has been increasing it’s holdings in real estate. During the last quarter the share of their portfolios dedicated to real estate has grown 2%. Also of note, the cash on hand by this group has increased drastically in order to have liquid assets available. As seen in the graphic below, the groups largest piece of the pie, making up over a quarter, is in real estate.

Wait, that’s all I need to buy a home???

Bob Vaughan

Our world is evolving, advancing and surging forward at a rapid pace. Are mortgage loans the same as they used to be? Believe it or not, many buyers today still believe they need 20% down to purchase a home, but as our world evolves so do loans. Today, there is an arsenal of loan programs with down payment options less than 20%! For instance, if you’re serving, or served in the military, it’s possible you can get into a home with 0% down (VA Loan). If you’re a first-time home buyer, it’s possible you can get conventional financing with as low as 3% down (conventional loan) and if you’re a repeat buyer you can buy a home with as little as 3.5% down using an FHA loan or 5% down with a conventional mortgage loan!

There are two main categories which impact how much cash a buyer needs for closing: down payment and closing costs. How much are closing costs? Generally, a good rule of thumb for estimating closing costs is between 3 – 3.5% of the purchase price. If you’re a repeat buyer and are going with a down payment option of 3.5%, you’ll need to add roughly another 3.5% for closing costs bringing the total to 7% of the purchase price.

However, if there is something nice about closing costs, it’s that the buyer doesn’t necessarily have to pay for them. It’s possible for a buyer to negotiate in an offer that the seller will pay for all, or a portion of closing costs. On an FHA loan, the seller can pay for up to 6% of closing costs and on a conventional loan with less than a 10% down payment, the seller can pay up to 3% of closing costs.

So, what is the minimum amount of money you need to purchase a $150,000 home with an FHA Loan? The answer is $5,250. The seller can cover all the closing costs for the buyer, which means the buyer would only have to cover the minimum 3.5% down payment!

What if a buyer doesn’t have money for a down payment, but a family member will give them the money? This would be considered a gift and is potentially an acceptable source of a down payment.

 

Call today for more information on mortgage loan programs with low down payments!!

FHA Lowers Mortgage Insurance Premiums

Bob Vaughan

The United States Department of Housing and Urban Development (HUD) announced Monday that the mortgage insurance premiums on loans insured by the Federal Housing Administration (FHA) will be reduced by 25 basis points for loans closing on or after January 27, 2017. The most popular down payment for an FHA mortgage loan is 3.50%, which currently carries MIP of .85% annually. With the new change, MIP will be reduced to .60%, saving someone with a $200,000 mortgage approximately $500 annually. This will result in huge savings for FHA borrowers and will also help lower debt-to-income ratios, ultimately leading to higher affordability for FHA borrowers.

Good News for Suburban Real Estate

Andy Davis

Millennials deep down may be suburbanites after all. In recent years, economists and demographers have argued that members of Generation Y will have a longer love for city living in smaller living quarter than their predecessors. But a newly released survey by the National Association of Home Builders discounts that, suggesting that what millennials really want is a single-family home outside of the urban center – just like other generations. The survey of more than 1,500 people (born since 1977) found that 66 percent of millennials want to live in the suburbs; 24 percent want to live in rural areas; and only 10 percent prefer to live in a city center. “While you are more likely to attract this generation than other generations to buy a condo or a house downtown, that is a relative term,” says Rose Quint, NAHB’s assistant vice president of survey research. “The majority of them will still want to buy the house out there in the suburbs.” One of their main draws to suburbia? They “want to live in more space than they have now,” Quint says. Eighty-one percent said they want three or more bedrooms in their home. “The preference for the suburbs suggests that future demand will be in the form of single-family homes rather than condominiums more prevalent in cities,” David Berson, chief economist with Nationwide Insurance Co., told The Wall Street Journal. “That’s also good news for future suburban single-family sellers, many of whom are baby boomers.” Source: The Wall Street Journal