What Does a Home Truly Cost in Northern Virginia?

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Today we are excited to talk about both the perceptions, and realities, of homeownership in Northern Virginia. The National Association of Realtors recently released a report saying Americans at every age and income level agree that homeownership is both a smart financial decision, and part of the American dream. We've talked about some obstacles to homeownership in the past, but as studies like this have shown, many obstacles are perceived. They aren't real. 
A recent study by Fannie Mae revealed that many consumers are either unsure or misinformed regarding the minimum requirements to obtain a mortgage. We are going to break down three such challenges today. 

1. Down payment perceptions
Many renters have mentioned that the lack of an adequate down payment is the thing that  most prevents them from buying. According to the Fannie Mae report mentioned above, 40% of all renters don't know what kind of down payment is required, while 15% think you need at least 20% down and 4% believe at least 10% down is required. The reality is, there are tons of programs out there from Fannie Mae, Freddie Mac, and FHA that offer 3% down programs. VA and USDA loans offer 0% down programs. The average down payment for a first-time buyer is 6%.

2. Credit score perceptions
Many renters have also mentioned that the lack of a good credit score is the thing preventing them from buying. According to the same Fannie Mae report, 54% of all renters don't know what credit score is required, and 5% think you need at least a score of 740. Actually, many mortgages are granted to purchasers with a score below 700. The average credit score for FHA loans is 687, and the average score on all loans is 722.

3. Debt-to-income ratio perceptions
Many renters say they carry too much debt, but 59% of renters surveyed by Fannie Mae don't even know what ratio is acceptable. Lenders like to see a back-end ratio that does not exceed 36% of the buyer's stable monthly income. 

All of this leads us to the bottom line: Don't let a lack of knowledge or misinformation keep you from buying this year. If you don't know where to start, or have any other questions about the market, we would be glad to help. Give us a call or send us an email. We look forward to being in touch!

The First Step in the Home Buying Process: Getting Pre-Qualified

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Have you ever wondered what the first step in the home buying process is? Today, Tim Curtin from Americorp Mortgage Services is here to help answer that question.

Before you even start looking at homes, the first thing you need to do is get pre-qualified. You simply call your lender, talk to them about what you want to do, and then they will take your personal information, income, and assets to figure out what kind of loan you will qualify for.

A pre-qualification is different from a pre-approval. The pre-qualification is more of a preliminary step. A pre-approval is when the lender goes through and verifies the information you provided during the pre-qualification.

The documents you need to provide to the lender include 30 days worth of paystubs, your W-2s from the last two years, two years of tax returns if you have investment income or are self-employed, bank statements from the last two months, and a photo ID.
 

 
The whole process lasts about 30 days from getting approved to taking the loan to closing. You may even qualify for more than what you can afford. The lender allows you to borrow as much as their guidelines will allow, but that might be more than you can afford. Budget out your monthly mortgage payments in order to know what you can actually afford to spend on a home.

If you have any questions for Tim, you can call him at 703.930.1765 or email him at T.Curtin@Americorp-HomeMortgage.com. As always, if you have any real estate questions, please don't hesitate to reach out to me. I look forward to hearing from you!

Three Important Questions to Ask Yourself Before You Buy

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If you're thinking of buying a home in the next three months or so, I'm going to give you three questions you need to ask yourself before you dive into the home search.

1. Why am I buying in the first place? This is the most important question. For most people, the reason has nothing to do with finances whatsoever. People want a safe place to raise their kids. They want more space for their family, and they want control of the space that they have.
2. Where are home values headed? When looking at future values, the Home Prices Expectation Survey provides a fair assessment. Every quarter, a nationwide panel of economists and real estate experts make projections for the next five years. Home values will appreciate by 4% through 2015. Even the more conservative experts project an accumulative appreciation of 15.1% by 2019.
3. Where are mortgage rates headed? A buyer must be concerned about more than just home price. The long-term cost of a home could be dramatically impacted by an increase in mortgage rates. Mortgage rates will increase by one percentage point over the next twelve months, so keep that in mind.

The bottom line is that only you and your family can determine the best time to buy a home. These three questions will guide you with that decision. If you have any questions for me, give me a call or send me an email. I'd be happy to help you.

Remodeling vs. Building New Homes: Which Is Better for You?

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People often debate whether to remodel their current homes or simply sell their current property and build a new one. Some things to consider before committing to such a process are the costs, if it will add value down the road, and what might be best for you and your loved ones. In my own experience, I think it's easier to remodel than to build new, but your case may not be the same as my own.

Will you be able to finance the home improvement yourself? Or will you have to take out a loan? If you need to finance your project, you will need to consider how much equity you have in the home. If you have a solid amount of equity, you'll be able to get a line of credit or a home equity loan.

What you'll also need to think about is whether it's feasible to remodel your home. How much will this new addition add to the value of your home when you finally go to sell it? Most additions that include bedrooms and bathrooms will be a solid investment into your home. This can make your home more marketable when you go to sell, which is an important aspect of remodeling.

You'll also need to consider your local zoning codes, because these will dictate whether you can actually build the way that you want to. If you are part of a Homeowner's Association, you will need to submit your plans to the HOA for approval before you start to build. 

One of the last things you might want to consider is whether or not there are any affordable properties in your area that would fit your needs. Sometimes it might be too cumbersome to move, but it's worth checking the MLS to see if you can simply move into a new home instead of living in a construction zone for a while.

Please contact me and I would be happy to speak with you about whether or not an addition to your home would be beneficial. Of course, it's always your decision at the end of the day, but I'd rather not have you pour money into something that will not benefit you down the road. 

I'm always available to speak with you!

Is Now the Time to Buy a Home in Northern Virginia?

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 The question of whether to rent or buy is a difficult one, and has persisted with consumers for a long time. What you should know is that the price of both buying and renting is rising, and the 2014 national median home price was $208,500, which is an increase of 5% from 2013 (according to the National Association of Realtors). The average rent payment has also increased by 12% from January 2013 to December 2014. 

Buying is currently a very attractive option because interest rates are incredibly low (below 4%) and loan products from Fannie Mae and Freddie Mac only require a 3% down payment. But potential home buyers should remember that owning a home is not a liquid asset, even though it's a good thing to add to a portfolio. 

Of course, buying is only a good option if you have a stable job that doesn't require you to move around a lot. Also, if you're only expecting to stay somewhere for 3-5 years, it's probably better if you rent. 

Even people with enough money for a down payment on a home are choosing to rent. If you're living a lifestyle where you're constantly moving around and relocating, then I would not suggest that you purchase a home. It will be more trouble than it's really worth. 

It's important to consider all of your options before making a decision, and I would be extremely happy to help you come to a decision. Whatever you decide, I know professionals that I can refer you to in order for you to find housing that matches your needs. Please refer to me with all of your Northern Virginia real estate needs.