Coldwell Banker Relocation Team

In the past few years, falling home prices have sent many would-be buyers to the sidelines. However, record low interest rates and rising rents may soon prompt some of them to take a second look at buying. Much of the decision to buy a house still depends on your personal finances and preferences, your career or family life, or level of financial security. But if you’re comparing just the cost of owning and renting, buying a house may soon be the better choice.

Until recently, home ownership was no bargain compared to renting. However, a 33 percent drop in home prices, a plunge in mortgage rates and 15 percent rise in rents since the housing crash has evened the scales. Today, the median monthly mortgage payment of about $700 has fallen to about the level of a median monthly rent check. If mortgage rates keep falling and rents keep rising, the equation will tip even further toward owning.

But that analysis doesn’t include the total cost of owning versus renting. A full accounting includes closing costs, maintenance, insurance and property taxes, tax savings from mortgage deductions, gains or losses from home equity, among other factors. Renters have to think about broker fees and future rent hikes. Both have to make assumptions about future trends in housing prices and rents.

When you take those factors into account, someone who plans on staying put for seven years would come out ahead by about $9,000 if they bought a median-priced home rather than being a tenant in a median-priced rental. This calculation assumes that rents keep rising by about 3 percent a year and that house prices stay flat in 2012 and 2013 and begin rising in 2014 at about 3 percent a year. If house prices fall further, all bets are off. In that case, the renters come out ahead.

Even if these assumptions are accurate, there won't be a buying stampede. Most first-time buyers or households who lost a home to foreclosure don’t have the down payment. They may also have trouble getting a mortgage without a credit score of 700 or more — a higher bar than the 650 score that was the norm for the past two decades. A large share of the population has dropped out of the pool of potential buyers. Given that the choice between owning and renting a home is a luxury than many Americans simply do not have, the fact that this does appear to be the time to buy will have only a minimal effect on actual sales.

Post a Comment : Author: Tom DeRose

Share: del.icio.us Digg StumbleUpon

Searching for a Home

Posted on February 1, 2012

There are many options for finding a home to buy. The easiest, and most comprehensive, is to go to a real estate website and do a search. You can use mine, or any other realtor's site, or any of the national sites. You can search by city, price range, location in a particular area (map search). Some sites all for more search criteria. This search will privide you with a list of all homes currently listed for sale with a realtor.

Another good way to find a home is to drive around where you think you want to live and look for yard signs. This is a great way to look for homes because you find homes where you want to live, and you see the home, not just pictures of the home, and the context in which the home is situated--what is around it. You can record the address of homes that interest you and search for additional information on the internet. Or you can call a realtor and ask for additional information.

Most homes have open houses, usually Sunday in Bellingham (Saturday in Lynden and Mt Vernon). It's great to tour several open houses in an afternoon. You get a great sense of each home and can compare one to the other. You are free to walk around each home and grounds. Take your time to determine if it fits you.

You can contact a realtor, tell him or her what you are looking for. The realtor will do a comprehensive search and can email the resultant listings to you based on your search criteria.

If you like any of the homes you've seen, call me, or another realtor, to make appointments to see the homes. The realtor can provide you with all sorts of information about the homes you want to see--what has sold like it recently and for how much, what other similar homes are on the market, how long the home has been on the market, and so on.

Post a Comment : Author: Tom DeRose

Share: del.icio.us Digg StumbleUpon

Obtaining Financing to Buy a Home

Posted on January 31, 2012

If you think you want to buy a home, one of the first steps to take is to talk to a mortgage loan officer. You can talk to one at a bank or credit union where you have an account. Or contact me and I'll give you the names of the loan officers that I consider to be the best in town. And when getting a loan these days, you want a good loan officer. To get a mortgage, you need income history, a good credit rating, cash for a down payment and closing costs, and an income to debt ratio that indicates you can afford to have a mortgage and make payments.

Lenders require paperwork that documents every facet of your financial life: taxable income, assets, rent payments and more. Here's a list of items you may need to document income.

All Borrowers:
- Uniform Residential Loan Application (form 1003). This form is completed by the applicant and the lender. It is used to provide information on the type of mortgage, property, borrower, borrower's employment, borrower's income and expenses, borrower's assets and liabilities.
- Last 1 year of your W-2's, 1099's (2 years if 100% financing USDA)
- Last pay stub, indicating year to date earnings (30 consecutive days)
- Last 2 months complete official bank and investment statements.
- Homeowner's insurance agent name and number
- Current mortgage statement(s)

Self Employed:
- Last year's complete business and personal Tax Returns (including all schedules)
- Year-to-date Profit and Loss statement, prepared by CPA and signed by applicant

Home Purchase Information
- Copy of signed Purchase and Sale agreement

Additional Items that May Be Neded:
- If divorced in past 2 years, copy of divorce decree
- Copy of current rental/lease agreements on all rental property owned
- Copy of Social Security card(s)
- Military: Certificate of Eligibility and DD214

The following information provides details for some of the items listed above.

Bank, investment and tax documents
Borrowers generally must supply bank and investment account statements for the last 30 days.

Borrowers also must sign IRS Form 4506-T, which allows the lender to get a transcript of the tax return from the IRS. This practice "has become an industry standard as fraud prevention," says Brad Blackwell, national sales manager at Wells Fargo Home Mortgage. Don't try to amend a prior year's tax returns to show more income. That's now a no-no.

Profit-and-loss statement
Self-employed borrowers may have to submit a current-year profit-and-loss statement, especially if the year is more than half over or they haven't filed their prior year's tax return.

Gift letter, paper trail
Borrowers who receive a cash gift toward their down payment should be prepared to provide a letter from the "giftor" that declares the gift isn't a loan. A copy of the giftor's bank account statement showing the funds, a canceled check and the borrower's own statement showing the funds also may be required.

Other documents, letters
Renters must supply 12 months of canceled rent checks and bank statements showing the rent was paid on time. Renters without that documentation can provide the landlord's name and contact information for payment verification.

Loan documentation tips

Bring in documents early. Doing so can speed up the process. (loan officers tell me that getting docs from buyers slows the process more than any other step). Also, never cross out, white-out or alter any information on a document.
Always provide every page of every document -- even the pages that say "This page is blank."
Remain ready to supply updated documents.
Documents expire after 60 days, So if homebuyers take a long time in their house-hunting effort, they will have to bring the most current paycheck and that type of thing.

Post a Comment : Author: Tom DeRose

Share: del.icio.us Digg StumbleUpon

Where to Live in Bellingham

Posted on January 30, 2012

When you decide to buy your first home, your first decision may be where you'd like to live. (maybe your first thought may be: "what can I afford" or "can I afford to buy a home"--more information on this in a future post).

You may chose to live in Bellingham. If you do, click information on Bellingham. This web page contains information on schools, arts, recreation, and other.

Also, you have a choice of 21 distinct neighborhoods in Bellingham from which to chose. Click information on neighborhoods in Bellingham. The information is on the Bellingham Neighborhoods tab of this website.

You may chose to live in other nearby communities such as Ferndale or Lynden. Do a Google search for any city to obtain information about it.

Or, you may decide that you want some land around you. There are parcels of land--one, two, five or more acres from which to chose. Most of these parcels are outisde of Bellingham. Each parcel tends to be unique. The best way to find a home with land is to look at what's for sale. Contact me if you'd like to receive a list of properties that are currently available.

Post a Comment : Author: Tom DeRose

Share: del.icio.us Digg StumbleUpon

First Time Buyers--What You Need to Know

Posted on January 29, 2012

A series of entries will be posted this week on information useful to first time buyers (and any buyers for that matter):

Choosing where to live
Choosing the kind of home you will want to buy
Seeking financing, becoming qualified for a mortgage
Searching for a home, working with a real estate broker
Making an offer on a home, negotiating price
You have an accepted offer, not what
Inspection
The process to closing and taking possession of your home

Post a Comment : Author: Tom DeRose

Share: del.icio.us Digg StumbleUpon

Distressed Home Sales in 2011

Posted on January 18, 2012

"Distressed" Home Sales in Bellingham 2011

Many home buyers have asked me about buying a short sale home or a bank owned home. These buyers have heard that they can get a great deal by buying a "distressed" home--either short sale or bank owned (foreclosure).

The first graph shows that 804 homes (residential, existing) were sold in Bellingham in 2011. Of this total, 649 were not distressed, 94 were short sales, and 56 were bank owned (foreclosures). Therefore,19% of all homes sales, 150, last year were distressed sales. Distressed home sales account for quite a big percentage of all home sales.

The second graph shows the median sale prices of homes sold in 2011:

median sale price for all homes was $260,000
median sale price for all non-distressed homes was $285,000
median sale price for all short sales was $209,000
median sale price for all bank owned homes was $191,000.

Obviously, the median sale price of distressed homes is considerably below the median sale price of non-distressed homes. Based on experience, the difference in sale price has to do with the following factors:

distressed homes may have differred maintenance or been abused.
distressed homes are sometimes rented and not managed very well leading to rough treatment by tenants
nearly all bank owned homes are vacant for a long time, sometimes an entire year. This can result in mold in the house and other issues (homes don't do well when they are vacant, especially when vacant through the winter).
many distressed homes would be in the lower price ranges even if they were not distressed

In answer to the buyers' question about getting a deal on a distressed home. The answer is a qualified "yes". Generally, when a home is priced below what its market value should be, it's for a reason. And often with distressed homes, the reason is that the home has significant issues such as mold. However, in many cases, the issues are cosmetic and a buyer willing to fix the cosmetic stuff can get a great deal on a home. Even if the house has to be gutted, it still may be a good deal. Drywall is relatively inexpensive. Opening walls and installing new drywall isn't necessarily a reason for not buying a home if it is priced accordingly.

Post a Comment : Author: Tom DeRose

Share: del.icio.us Digg StumbleUpon

More Blog Entries

Condos for Sale in Bellingham, January 2012 - Posted on January 16, 2012

Condo Sales in Bellingham July-December 2011 - Posted on January 15, 2012

Housing Imperils Job Gains - Posted on January 11, 2012

Possible Influences on Housing in 2012 - Posted on January 10, 2012

Good News in Home Sales - Posted on January 6, 2012

First Time Buyers and Investors Lead Home Sales Part 4 - Posted on January 4, 2012

First Time Buyers and Investors Lead Home Sales Part 3 - Posted on January 3, 2012

First Time Buyers and Investors Lead Home Sales Part 2 - Posted on January 2, 2012

First Time Buyers and Investors Lead Home Sales Part 1 - Posted on December 29, 2011