Where First-Time Buyers Need the Most Guidance –According to real estate mogul, Barbara Corcoran, home buyers who are navigating a purchase for the first time face several points in the transaction process that are unfamiliar to them and can leave them with regrets if they don’t receive proper guidance. “The faster you buy your first home, in my opinion, the better,” Corcoran told CNBC’s. The process can be difficult, confusing, and expensive, she notes. Corcoran says these are some of the biggest mistakes she sees from first-time home buyers.
- Failing to factor in closing costs. “The biggest mistake that first-time home buyers make is they forget that they need closing costs, not just the down payment of, say, 10 or 20 percent,” Corcoran told CNBC. Closing costs can add up, typically an extra 2 percent to 5 percent of the total cost of the home. On a median-priced home, that could be more than $13,000.
- Not getting pre-approved for a mortgage. The most important thing to do before shopping for a home is to get qualified from a lender for a mortgage, Corcoran says. Pre-qualification is an estimate of how much you can borrow from your lender, but pre-approval is the extra step. Lenders analyze your creditworthiness to determine whether you qualify for financing and for exactly how much. Those who are pre-approved can essentially “walk in and say, ‘My bid is an all-cash bid,’” Corcoran says. “What ‘all-cash’ really means is your bid’s not contingent on you getting financing from a bank. You’ve already cleared that with the bank, so you’ve got all cash to close on the property.”
Mortgage Rates Are Easing – Based on Freddie Mac reports, home buyers may be finding a window of opportunity to lock in lower rates. “Mortgage rates declined this week amid a steep sell-off in U.S. stocks,” says Sam Khater, Freddie Mac’s chief economist. “This week’s rate reaction to the volatile stock market is a welcome relief to prospective home buyers who have recently experienced rising rates and rising home prices.”
Average Homeowner Equity Gain in Third Quarter: $12K – Based on CoreLogic’s latest Home Equity Report, homeowners are still finding plenty of equity in their homes, but the gains are slowing. Homeowners with a mortgage saw their equity rise by 9.4 percent over the past year, the average homeowner gained $12,400 in home equity between the third quarter of 2017 and the third quarter of 2018. That is lower than the $16,000 year-over-year gain in equity reported in the second quarter, CoreLogic notes. “On average homeowners saw their equity increase again this quarter, but not nearly as much as in previous quarters,” says Frank Nothaft, CoreLogic’s chief economist. “The lower year-over-year gain reflects the slowing in appreciation.” Still, nearly every state posted an increase in equity among homeowners in the third quarter.
Why 90% of Millennial Renters Want to Own But Can’t – According to a new survey by rental website Apartment List, nine out of 10 millennial renters say they want to purchase a home, but few are planning to do so in the near term. The chief reasons keeping them from homeownership are affordability (72 percent) and lack of savings for a down payment (62 percent), the survey of 6,400 young adult renters shows. Nearly 50 percent of respondents say they have zero savings, while only 11 percent have saved $10,000 or more. Student debt is a main culprit, the survey finds. Twenty-three percent of college graduates without student debt could save enough for a down payment within the next five years compared to 12 percent of college graduates who do have student debt, according to the survey. However, down payment aid from family members is helping to make homeownership more attainable. Such help usually occurs among the highest millennial earners, the survey finds. Millennial renters who expect to receive assistance with a down payment tended to have incomes over $100,000 per year. They expect to receive $51,172 in financial aid from family toward a down payment. That is 10 times more than the average expected assistance of $4,358 from millennials who earn less than $25,000.