Buying a Home When You’re Younger Increases Your Odds of Building Wealth

Homeowners who purchase their homes before the age of 35 are better prepared for retirement at age 60, according to a new Urban Institute study. The organization surveyed adults who turned 60 or 61 between 2003 and 2015 for their data set.

“Today’s older adults became homeowners at a younger age than today’s young adults. Half the older adults in our sample bought their first house when they were between 25 and 34 years old, and 27 percent bought their first home before age 25.”

The full breakdown is in the chart below:

Buying a Home Young is the Key to Building Wealth | MyKCM

The study goes on to show the impact of purchasing a home at an early age. Those who purchased their first homes when they were younger than 25 had an average of $10,000 left on their mortgage at age 60. The 50% of buyers who purchased in their mid-twenties and early-30s had close to $50,000 left, but traditionally had purchased more expensive homes.

Buying a Home Young is the Key to Building Wealth | MyKCM

Many housing experts are concerned that the homeownership rate amongst millennials, those 18-34, is much lower than previous generations in the same age range. The study results gave a great reason why this generation should consider buying instead of signing a renewal on their lease:

“As people age into retirement, they rely more heavily on their wealth rather than their income to support their lifestyles. Today’s young adults are failing to build housing wealth, the largest single source of wealth, at the same rate as previous generations.

While people make the choice to own or rent that suits them at a given point, maybe more young adults should take into account the long-term consequences of renting when homeownership is an option.”

Bottom Line

If you are one of the many young people debating whether buying a home this year is right for you, let’s get together to discuss your options!

Thanks for reading!

Ed Stojancevich

The Absolute First Step When Buying a Home.

Buying a House This Year? This Should Be Your 1st Step!

Buying a House This Year? This Should Be Your 1st Step! | MyKCM

In many markets across the country, the number of buyers searching for their dream homes outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show that you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are not in an incredibly competitive market, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you through this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential homebuyers overestimate the down payment and credit scores necessary to qualify for a mortgage. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so today.

Make sure you are prepared when obtaining a pre-approval. Here is a checklist of items that a typical lender will need when you go through the mortgage process. Always make sure to be ahead of the game. Good luck on your home search!

Thanks for stopping by, subscribe to my blog to get updated on new blog posts

Ed Stojancevich

Thinking of Selling Your Home Yourself? Think Again.

In today’s market, as home prices rise and a lack of inventory continues, some homeowners may consider trying to sell their homes on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for most sellers.

Here are the top five reasons:

1. Exposure to Prospective Buyers

According to NAR’s 2018 Profile of Home Buyers and Sellers, 95% of buyers searched online for a home last year. That is in comparison to only 13% of buyers looking at print newspaper ads. Most real estate agents have an Internet strategy to promote the sale of your home, do you?

2. Results Come from the Internet

Where did buyers find the homes they actually purchased?

  • 50% on the Internet
  • 28% from a real estate agent
  • 7% from a yard sign
  • 1% from newspapers

The days of selling your house by putting out a lawn sign or putting an ad in the paper are long gone. Having a strong Internet strategy is crucial.

3. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale by Owner:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interests of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find some problems with the house
  • The appraiser if there is a question of value

4. FSBOing Has Become More And More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 7% over the last 20+ years.

5. You Net More Money When Using an Agent

Many homeowners believe that they can save on the real estate commission by selling on their own, but they don’t realize that the main reason buyers look at FSBOs is because they also believe that they can save on the real estate agent’s commission. The seller and buyer can’t both save the commission.

study by Collateral Analytics revealed that FSBOs don’t actually save anything, and in some cases may be costing themselves more, by not listing with an agent. One of the main reasons for the price difference at the time of sale is that,

“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”

If more buyers see a home, the greater the chances are that there could be a bidding war for the property. The study showed that the difference in price between comparable homes of size and location is currently at an average of 6% this year.

Why would you choose to list on your own and manage the entire transaction when you can hire an agent and not have to pay anything more?

Bottom Line

Before you decide to take on the challenges of selling your house on your own, let’s get together to discuss your needs.

If you’re not sure about who to hire to sell your home, reach out to me anytime. I can put you in contact with some of the area’s top Realtors.

-Ed Stojancevich

www.ESHomeLoans.com

I hate paying interest on my mortgage. Let me show you how to save some money..

One of the most common loans you can get to buy a home is a 30-year fixed rate mortgage. If the thought of paying for your home over the course of 30-years seems daunting, here are some easy ways to shorten that term which will actually end up saving you money over the life of your loan.

Any additional payments to the principal amount (the original sum of money borrowed in a loan), helps to cut down the amount of interest that you will pay over the life of your loan and can also help to shave years off the loan as well.

Save some money on your mortgage. Refinance to a shorter term and/or a lower interest rate!

When you make ‘extra’ payments toward your loan, the key is to let your lender/bank know that you want the extra funds to go toward your principal balance as they will not automatically do this for you.

You don’t have to double your mortgage payment to make a big difference either!

If you have a 30-year mortgage on a median-priced home ($250,000) with a 5% interest rate, you’ll be responsible for a $1,342.05 monthly principal and interest payment. Over the course of the loan, if you pay your exact monthly payment, you will have paid $233,133.89 in interest alone!

Paying a Little Extra Can Pay Off Big

1. Pay an additional 1/12th of your mortgage payment every month

Benefit: In the example above, adding $111.84 to your monthly mortgage payment might not seem like a lot, but each year you will have paid one extra month’s worth of payments which will shorten the term of your loan by 4 years and 8 months, all while saving you $42,000 in interest!

2. Pay an additional $50 per month towards your mortgage

Benefit: Fifty dollars might not seem like enough to make a difference on the term of your loan, but that small amount will save you over $21,000 in interest and will take over 2 years off the end of your loan. Twenty-eight years from now, you’ll be happy to pay off your loan that much sooner!

3. Make one-time lump sum payments when you can

Benefit: If you find yourself with a little extra money after a yearly bonus, a tax return, or from investment dividends, paying that money towards the principal can cut your costs. This option, however, is less predictable than the extra monthly payments.

If you have higher interest debts, like credit cards, consider using any extra funds you have to pay those debts down before applying that money towards your mortgage. Also, if you do not plan on staying in your home for more than 10 years, paying extra toward your mortgage might not make sense.

Bottom Line

If you’re wondering what strategies would work best for you to shorten the term of your loan, let’s get together to answer your questions.

-Ed Stojancevich

My Credit is a Little Rough. What Should I Do? 

Tips for Raising Your Credit Score

good credit scores just ahead

Welcome back to my blog everyone! The topic I want to dig into this week is credit. Why do you need it? Why is it important? Does it really have an impact on getting approved for a loan or not? Want to see what your credit is currently at for that new home loan? Click here!  I did something a little different with this blog post. I co-wrote this blog with my guy Sam Parker. Let me give you a little insight about my boy Sam. He is the Founder and CEO of MyCreditGuy.com and this guy knows the “ins and outs” of credit. He is my go to guy for a reason and the bottom line is that I only work with the best, and I assure you that is what Sam is. Now, let’s dig into this blog!

b24b8f258b7a59e85250f426c6ab5489a72cdc6d4f77abb05d4101ed65cfd2ec Just like anything in life, if you want to get better at it, you have to practice. If you want that promotion at work, then you have to put in the time and effort. If you want to become a better writer, then you have to practice writing. Same goes with your credit score. If you want to have a credit score that is out of this world good, then you have to put in effort to build and maintain it. Improving your credit score can save you hundreds or thousands of dollars on big purchases throughout your life. The best part about it is that it really isn’t that hard to accomplish. You just have to make sure that you are willing to put in the effort. A word to the wise, get to know the credit scoring model. Each person’s credit profile might be a little different, but there are five basic things that you can do for a little “Spring Cleaning” of your credit report.
Be responsible — Pay all your bills on-time each month. Late pays, collections and bankruptcies all have negative effects on your credit. Be smart, be responsible and make sure all your debts are paid on-time.

Check your credit regularly and monitor it for inaccuracies — Don’t let your credit suffer because of inaccurate information. If there is information on the report that is wrong, contact the creditor or original creditor and have them fix it. If you have a hard time with that, get the credit bureaus involved. Use a monitoring service, such as Credit Karma. Is it the most accurate? No, but it gives you some insight on your credit report without having a negative impact on your score.

ct-credit-scores-0602-biz-20150601Don’t over extend yourself — Just because Capital One gave you a $1,000 credit limit doesn’t mean you should go rack that thing up. Keep your credit card balances below 30% of the limit. For example: $1,000 credit limit = Don’t use more than $300

Time is valuable — The length of time that you have credit impacts your scores. So the longer you have a positive reporting account, with no late payments and a responsible balance, the better your score will be.

Stop having everyone and their mother check your credit — Talk about a red flag. Applying for numerous things in a short period of time can be disastrous for your credit. This is a sign to the credit reporting agencies that you may be experiencing financial difficulties. Too many hard inquiries = knockout punch to your credit scores.

Now, I want to let Sam takeover and blow your mind with these credit tips. Here is a video with some tips on what NOT to do when trying to build or maintain a great credit score.

Sam Parker here, great information Ed. It’s tough to beat the tips you’ve already given but I have just a few more and I’ll expand on a few that you’ve already made!

Don’t Pay Off Collections or Other Negative Item – I know, that just doesn’t make sense. However, the credit scoring algorithm is a bit flawed. See, when you pay off an older negative item it will update that account and bring the activity date current. When that happens, the credit scoring algorithm views this collection as new/current because of the date. In turn your scores will drop BECAUSE you paid your bill. So unless either Ed, one of his staff, or one of our staff instruct you to pay a collection, just hang onto your money for now.

No New Purchases – It’s so tempting to start buying the new furniture and electronics that will make your new home complete. However, too many times people will either use their credit cards to make these purchases OR open a new, in-store, credit card. When you use a credit card it impacts your balance to limit ratios which are a huge factor in your credit scores, you don’t want to use credit cards at all during the home loan process and if anything, get them paid down as much as possible. Also, when you open a new account the credit scoring algorithm sees it as a risk. You will most certainly see a drop in your credit scores not only because of the new debt load but because you just introduced a new account to the mix. This should go without saying but do not buy a new vehicle during the mortgage process either.

Don’t Close Accounts – As many people are getting their financial house in order they think it’s time to pay off and close out as many accounts as possible. While we advocate paying accounts down, closing them will be eliminate ALL of the pay history that you’ve accumulated and you’ll definitely see a drop in credit scores.

 

I appreciate everyone checking out the new blog, and Sam I appreciate you taking the time to co-write this with me. As always if you have any questions feel free to reach out to me. I am also including Sam’s contact information below. If you have any credit questions, he is the guy to contact. Thanks again and don’t forget to SHARE this with your friends and family, give us some FACEBOOK love!!!

Hustle. Succeed. Repeat.

-Ed Stojancevich

screen-shot-2016-10-06-at-5-46-03-pm  Download Ed’s Mortgage App, Click Here!

-Sam Parker

MyCreditGuy  Download Sam’s FREE Credit App, Click Here

This information is for educational purposes only and does not constitute legal or financial advice. You should always seek the advice of a legal or financial professional before making any legal or financial decisions.

I can afford the home, but I can’t afford the entire down payment. What should I do?

 

CME_Logo-01

CME LENDING GROUP LLC NMLS ID 1248883

Little down payment does not mean they are an unqualified buyer

Welcome back everyone! This week I want to discuss something that comes up quite frequently in my line of work. I hear it constantly from 1st time home buyers. They have a good job, they pay their bills on time, but with the cost of living it is becoming hard for them to save up money for the down payment on a home. Another huge misconception is that buyers think that they need to put down 20% for a down payment, this is far from true. Most programs require anywhere from a 3%-5% down payment in order to obtain a home, but what if you don’t have that? I have some solutions for that very problem, there are options available to assist you with down payment. Some  people I talk to have some money saved up, but not the full amount needed for the down payment. Now, this doesn’t mean you cannot get financed for a mortgage. There are some options that can help you out with down payment, let’s go over a few of those below.

VA Financing (Current & Active U.S. Military)

This program is strictly for United States military, both current and former, and surviving spouses of US veterans. This programs allows the veteran to finance up to 100% of the purchase price of the home. This is a program that veterans have earned, yet many veterans are unaware of this program. This is a great program for them and a great program for the sellers. Veterans are able to take advantage of low-interest rates and avoid mortgage insurance on their new mortgage. Click here to see if you qualify for a VA Home Loan.

IHCDA (This is for Indiana only)

HELPING TO OWN (H2O)

  • First-time homebuyers only, unless purchasing in a Targeted area
  • FHA 30-Year fixed loans only
  • 100% financing
  • Down Payment Assistance (DPA) grant of 3.5%, does not have to be re-paid
  • Program Income limits Apply (Click here to see if you qualify)
  • Minimum credit score of 660
  • Reservation fee $100

MORTGAGE CREDIT CERTIFICATE (MCC)

  • First time home buyer unless purchasing in a targeted area (see Program Guide for targeted areas)
  • Income and Acquisition limits apply
  • 30 year fixed rate (lender sets rate)
  • Federal Tax benefit
  • FHA, Conv, VA or USDA Rural Housing financing eligible
  • Reservation fee $500

NEXT HOME (NH)

  • Does not have to be a first time home buyer
  • Income limits apply
  • 30 year fixed rate (set by IHCDA)
  • Minimum credit score of 660 for FHA or minimum of 680 for Conv
  • FHA or Conv financing eligible
  • 2 year affordability period
  • DPA – 3.5% of purchase price or appraised value, whichever is less for FHA or 3% of purchase price or appraised value, whichever is less for Conventional
  • No cash back at closing except for what the Mortgagor paid into the loan
  • Reservation fee $100

NEXT HOME WITH MORTGAGE CREDIT CERTIFICATE (NH/MCC)

  • First time home buyer unless purchasing in a targeted area (see Program Guide for targeted areas)
  • Income and Acquisition limits apply
  • 30 year fixed rate (set by IHCDA)
  • Minimum credit score of 660 for FHA or minimum of 680 for Conventional
  • Federal Tax benefit
  • FHA or Conventional financing eligible
  • 2 year affordability period
  • DPA – 3.5% of purchase price or appraised value, whichever is less for FHA or 3% of purchase price or appraised value, whichever is less for Conv
  • No cash back at closing except for what the Mortgagor paid into the loan
  • Reservation fee $100

AFFORDABLE HOME (AH)

  • First time home buyer unless purchasing in a targeted area (see Program Guide for targeted areas)
  • Income limits apply
  • 30 year fixed rate (set by IHCDA)
  • Minimum credit score 660
  • FHA financing eligible
  • Reservation fee $100

MY HOME (MH)

  • Does not have to be a first time home buyer
  • Income limits apply
  • 30 year fixed rate (set by IHCDA)
  • Minimum credit score 660 for loans having LTVs equal to or less than 95%. LTVs greater than 95% the credit score that is required may vary 
  • Conv financing eligible
  • Master Servicer must underwrite all loans having LTVs greater than 95%
  • Reservation fee $100

MY HOME WITH MORTGAGE CREDIT CERTIFICATE (MH/MCC)

  • First time home buyer unless purchasing in a targeted area (see Program Guide for targeted areas)
  • Income and Acquisition limits apply
  • 30 year fixed rate (set by IHCDA)
  • Minimum credit score 660 for loans having LTVs equal to or less than 95%. LTVs greater than 95% the credit score that is required may vary 
  • Federal Tax benefit
  • Conv financing eligible
  • Master Servicer must underwrite all loans having LTVs greater than 95%
  • Reservation fee $100

These programs do have income limitations, click here to see if you qualify for these programs.

IHDA (This is Illinois only)

1ST HOME ILLINOIS

  • If you are interested in buying a home in Boone, Cook, DeKalb, Fulton, Kane, Marion, McHenry, St. Clair, Will or Winnebago counties, 1ST Home Illinois is the product for you.  It combines a 30-year fixed rate mortgage with a $7,500 down payment assistance grant. 1ST Home Illinois  is tailored for first-time homebuyers, veterans, or anyone who hasn’t owned a home in the last three years.

@HOMEILLINOIS FIRST-TIME BUYER

The @HomeIllinois mortgage is a safe, 30-year, fixed rate mortgage. That means your interest rate will never change. Are you concerned about saving for the down payment? With @HomeIllinois, the buyer contribution is $1,000 or 1 percent of the purchase price, whichever is greater. So for as little as $1,000 out-of-pocket, you can get into your first home. @HomeIllinois is a 30-year fixed rate mortgage with a variety of options to choose from. The options you choose will determine the interest rate for your loan.

Options:

  • $5,000 down payment or closing cost assistance
  • Federal tax credit certificate
  • Lender paid mortgage insurance
  • Choice of FHA, VA, USDA or Conventional loan type

Requirements:

  • Contribute $1,000 or 1 percent of the purchase price, whichever is greater
  • Meet the income and purchase price limits
  • Meet the credit requirements
  • Live in the home as your primary residence
  • Complete homeownership counseling (online and in-person options available)

@HOMEILLINOIS REPEAT BUYER

Are you looking to upgrade, downsize or simply change zip codes? The @HomeIllinois mortgage is the mortgage for you. For the first time ever, IHDA is offering $5,000 in down payment or closing cost assistance to repeat buyers. With interest rates at historical lows, there’s no better time to buy your next home than now.The @HomeIllinois mortgage is a safe, 30-year, fixed rate mortgage. That means your interest rate will never change. Are you concerned about saving for the down payment? With @HomeIllinois, the buyer contribution is $1,000 or 1 percent of the purchase price, whichever is greater. So for as little as $1,000 out-of-pocket, you can get into your next home.

@HomeIllinois is a 30-year fixed rate mortgage with a variety of options to choose from. The options you choose will determine the interest rate for your loan.

Options:

  • $5,000 down payment or closing cost assistance
  • Lender paid mortgage insurance
  • Choice of FHA, VA, USDA or Conventional loan type

Requirements:

  • Contribute $1,000 or 1 percent of the purchase price, whichever is greater
  • Meet the income and purchase price limits
  • Meet the credit requirements
  • Live in the home as your primary residence
  • Complete homeownership counseling (online and in-person options available)

USDA Financing

USDA Mortgages are a great option for people who are looking to buy in rural areas. Buyers need to be able to meet certain income qualification and they also need to meet certain credit score qualifications as well. USDA is an option which allows for 100% financing on a property. Properties also have to be in eligible USDA areas in order to obtain a USDA mortgage. Click here to see if you or a property qualifies for USDA financing.

HUD (U.S. Department of Housing & Urban Development) Homes

When someone who has an FHA Mortgage on their property and they foreclose on that property, it then becomes a HUD Home. You can get a solid deal on these homes when  they are available, but be aware sometimes they will need some work. The benefit of buying a HUD Home is that you can typically get a great deal on your home and you can buy the home with as little as $100 down. That’s right, $100 down payment. The great thing about HUD Homes is that they give people who plan to buy this as their primary residence first dibs at bidding on them. This means that investors have to wait until primary residence homebuyers get an opportunity to make an offer on the property. Good deals get picked up quick, so if you find a nice HUD Home, make an offer quickly. Click here and I can put you in contact with someone who is experienced in HUD Homes.

Local County and City Down Payment Programs

There are local counties and cities across the state that offer incentives for buyers to move to their areas. Typically there are offered through their economic development departments. These grants can help you with down payment assistance and also help you with closing costs. There are entirely too many to list, so to see if you qualify for any of these programs, click here. 

I put some extra useful information into this week’s post. This will help you and possibly save you some money while buying your home. Don’t forget to subscribe to my blog, and I also left you with something that is absolutely FREE. It will help you with your home buying process and answer all of the initial questions that you have. All you have to do is click the image below, it’s that simple. You’ll get immediate access to my free home buyer’s guide.

 

Thanks again everyone!

-Ed

 

 

Closing Costs? Why Pay Them? Who Pays Them? I Don’t Like It

wasting-moneySome of the most common phrases that I hear when talking with buyers are, “What are closing costs? Who pays them? Why are there closing costs?” A very common misconception is that closing costs are the fees that lenders make on the purchase or refinance of a property. Many clients believe this as fact, that is until I enlighten them and let them know exactly where those costs go to and why they are required. So, what do you know about closing costs? Is this something that you believed as well?

Closing costs are a mixture of different fees associated with closing on a mortgage. These can include, but are not limited to, appraisal, application, underwriting, title, escrow, insurance, and other items within the loan process. The reason that there are fees associated with the loan is because there are costs associated with obtaining a mortgage. These costs are here to help you out. For example; an appraisal is necessary because you and the lender need to know the value of the new home. At the bare minimum, the appraisal should appraise at what you are buying it for, or more. If not, then you have the opportunity to renegotiate the purchase price. Title fees are to make sure that you are buying a home with no liens and you are getting it with a clean title.

How-To-Get-a-Seller-to-Pay-Your-Closing-Costs-in-Today’s-Housing-Market-1024x683

Now, there are lenders out there with some high closing costs, such as origination points, discount points or broker fees. I actually spoke with a client about a month ago, and they knew a lender and planned on going through with them. After speaking with them, I was half percent lower in rate and about $3,000 lower in closing costs. I couldn’t believe how much they were charging for their services. I guess that is the downside of doing business with companies that have astronomical marketing costs, those costs get carried over directly to the consumer and you’ll notice that with the rate and costs associated with the loan. Check out this article from Money Magazine on what closing costs average.

Now there are ways to offset some or all of the closing costs. A simple way to do this is to negotiate the closing costs to be paid for by the seller. Most cases, the sellers will pick up the cost of obtaining the financing. You can also choose to have your costs paid for by the lender, in order for this to happen, you will receive a interest rate that is higher than the current market rate. Basically, you are financing the costs into the loan for however long the term of the loan is.  Another way to do so is to pay them yourself, this is the most ideal if you have the funds to do so. Paying your closing costs upfront is the most simplistic and cost effective way to pay for these. If you pay them upfront, you don’t have to worry about financing them into the loan by taking a higher than market interest rate.

So here is what I recommend. Talk to a pro, such as myself (you like that marketing plug right?) and figure out what is going to be the best path for your financial situation. You want to speak with someone who is going to achieve both your short term and long term goals. I recommend you download my FREE mortgage app for your cell phone and stay up to date on all market trends and interest rate trends. You can do so by clicking here. You can contact me anytime via my website at www.TheRockstarCloser.com or you can always call/text me at 219-973-6644. I will make sure to help you and give you the options that you deserve in order to make the best decision for you and your family.

Please fill out this form below, I’d like to know more about my readers. As always thank you for reading my blog, be on the lookout for next week’s blog post!

-Ed

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