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How a ‘Dry January’ Mindset Can Get You Closer to Buying a Home in 2024

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The “dry January” challenge of giving up alcohol for a month got us thinking about kicking some other bad habits that might be holding us back.

We’re not talking about giving up carbs for a month or an afternoon latte, but the not-so-great things you might be doing as a wannabe homebuyer. Not to point fingers here, but many home shoppers fall prey to a faux pas or two when making what’s likely the most significant purchase of their lives, especially in today’s brutal housing market.

To help you get closer to your homebuying dreams, consider taking the month of January to hit the reset button and think about the strategies that aren’t working in your favor. Ready for a homebuying reset? Read on.

Bad habit No. 1: Shopping for a home above your price range

We know how tempting it is to wistfully eye houses above your price range, especially if you’re not finding anything in your budget on the listing pages. Still, wondering how you just might be able to swing a higher homebuying fund is a bad habit that could create a cash flow crisis for your budget.

There are additional upfront costs when buying a home. In addition to the sales price, you will pay for inspections, appraisals, homeowners insurance, utility deposits, and closing costs, which could add thousands to your bottom line.

So kick the habit of browsing homes beyond your budget by challenging yourself to discover hidden gems within your financial comfort zone.

Bad habit No. 2: Taking on new debt while house hunting

Finding a home can be extremely tiresome and stressful. Who can blame you for wanting to treat yourself with a little somethin’ somethin’ to lift your spirits?

Yet splurging on certain things can get homebuyers into hot water. A new pair of kicks? Go for it. A new set of wheels? Not so much.

Stay accountable by sharing your house hunting and financial goals with a trusted friend or family member. They can support and remind you of your commitment to avoid new debt until after closing.

Bad habit No. 3: Nixing a home for minor issues

Fact: Finding a home with no cosmetic issues is extremely rare. Instead of perfection, you’ll likely step into a bedroom with an off-putting mural from the ’70s that makes you cringe, or tour a house with icky carpet. And these gut reactions might make you immediately scratch a property off your list.

Instead, try visualizing what the house would look like with your decorative effort—or grab a friend who can see the potential and upsides of a home needing TLC.

If the home issues are a bit more complex, get a contractor to give you an estimate on fixing what you dislike.

Bad habit No. 4: Buying a home to fit furniture

You keep finding almost perfect houses, with one exception—your beloved soft and roomy sectional where you spent many nights cozied up with your pup watching Netflix doesn’t fit.

But please don’t nix the house and keep looking. You might want to consider a new way to handle this hurdle, as unique or sentimental as the furniture is.

Bad habit No. 5: Insulting the seller

Buying or selling a house can be highly emotional for both parties.

Buyers fall hard and fast for a house and become attached to the house. Meanwhile, sellers might have a hard time parting with their beloved home.

By cultivating an atmosphere of respect and consideration, you improve the chances of successful negotiations and build trust and goodwill with the seller, which can be invaluable when addressing any potential concerns and conducting inspections.

Bad habit No. 6: Using multiple agents

Working with a few agents to scope out as many houses as possible in a competitive market might seem like a genius idea to beat the system.

Yet while working with multiple agents is legal (unless you sign a buyer’s agent agreement), having an agent or three on speed dial doesn’t put you ahead of the curve. All real estate agents have access to the same multiple listing services, meaning you might have different agents showing you the same property.

Instead of creating headaches for yourself, interview a few agents and then choose one.

Read more at Realtor.com

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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As Featured in West + Main Home Magazine: Kitchen Glow Up!

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Annie and Travis, clients of West + Main Agent Kendra Lanterman

“We are super happy with how it turned out. We went from having the world’s tiniest kitchen to SO MUCH COUNTER SPACE we have literally never needed more.”
— Annie + Travis Clark

When West + Main agent Kendra Lanterman and her clients (are we including their names?) first started looking for their next house, they weren't planning on buying a fixer-upper.  It was during COVID, March 2021, the market was going crazy and they were getting outbid by $50-$100k on the nicer homes.  One weekend, they put a bid on a nice house that they really, really wanted…but apparently about 30 other people also really, really wanted that house and they were outbid by a landslide, even after bidding about $60k over the asking price. 

“The next Tuesday we realized that one of the houses we toured over the weekend didn't sell,” explained XX. It didn't actually get any bids over the weekend, while most other houses were getting 20-30 bids. It was dirty, run-down, dark, and definitely a fixer-upper.  The photos and the walk-through were un-appealing.  But we figured this could be our chance to get a house we could actually afford, without competing against 30 other bidders.  So we put an offer in that Tuesday for $5k under the asking price.  The sellers countered for $2.5k more and we took it!”

The homebuyers had a vision for the home that others just couldn't see. The existing kitchen was TINY, so they completely gutted the space, took out walls and extended the room around the corner to fit more cabinets and a microwave, which also allowed the fridge to fit on the wall by the sink, rather than against the old wall.

Before:

“We installed a gas line for a gas range and drilled new holes where we wanted it to be.  Luckily the crawl space with all of the pipes and heating elements was directly below the kitchen for easy access.  We also put in a new floor, tile backsplash, replaced the window, and painted. The only thing we didn't do ourselves was have the quartz counter cut and installed.”

All together the entire kitchen remodel cost about $23k, and A LOT of sweat equity…it likely would have been more than $60k to have it done by professional remodelers.

“It took a long time, but we got it fully done in about 5 months.  We had weeks of cooking on only the outdoor grill and washing dishes in the tub upstairs, as well as Home Depot and Lowe's trips about 4 times a day!”

“We are super happy with how it turned out. We went from having the world's tiniest kitchen to SO MUCH COUNTER SPACE we have literally never needed more.  If I could change one thing, I would have gone with regular stainless steel appliances, rather than the dark stainless - I think it would brighten up the space even more.”

“My favorite thing is definitely the massive quartz countertops and the bar seating area on the back side.  I also love that our wall cabinets go all the way up to the ceiling. There is so much extra storage having that extra row, even if I do have to climb on a chair to get to it!”

 

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Ways Your Home Equity Can Help You Reach Your Goals

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If you’ve owned your house for at least a couple of years, there’s something you’re going to want to know more about – and that’s home equity.

If you’re not familiar with that term, Freddie Mac defines it like this:

“. . . your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.”

That means your equity grows as you pay down your home loan over time and as home values climb. While it’s true home prices dipped slightly last year, they rebounded and have been climbing in many areas since then. Here’s why that price growth is good news for you.

In the latest Equity Insights Report, Selma Hepp, Chief Economist at CoreLogic, explains:

“With price gains continuing to help homeowners build wealth, equity has reached a new high and regained losses that resulted from declines last year. And while the average U.S. homeowner gained over $20,000 in additional equity compared with the third quarter of 2022, some markets are seeing larger increases as price growth catches up.”

And that figure is just for the last year. To help you really understand how that number can add up over time, the report also says the average homeowner with a mortgage has more than $300,000 in equity. That much equity can have a big impact.

Here are a few examples of how you can put your home equity to work for you.

1. Buy a Home That Fits Your Needs

If your current space no longer meets your needs, it might be time to think about moving to a bigger home. And if you’ve got too much space, downsizing to a smaller one could be just right. Either way, you can put your equity toward a down payment on something that fits your changing lifestyle.

2. Reinvest in Your Current Home

And, if you’re not ready to move just yet, you can use the equity you have to improve your current home. But it’s important to consider the long-term benefits certain upgrades can bring to your home’s value. A real estate agent is a great resource on which projects to prioritize to get the greatest return on your investment when you sell later on.

3. Pursue Personal Ambitions

Home equity can also serve as a catalyst for realizing your life-long dreams. That could mean investing in a new business venture, retirement, or funding an education. While you shouldn’t use your equity for unnecessary spending, using it responsibly for something meaningful and impactful can really make a difference in your life.

4. Understand Your Options to Avoid Foreclosure

While the number of foreclosure filings remains below the norm, there are still some homeowners who go into foreclosure each year. If you’re in a tough spot financially, having a clear understanding of your options can help. Equity can act as a cushion if you’re not able to make your mortgage payments on time.

Bottom Line

If you want to know how much equity you have in your home, connect with a local real estate agent. They can do a professional equity assessment report on how much you’ve built up over time and talk you through how you can use it to help you reach your goals.

Read more at KeepingCurrentMatters.com

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Mortgage rate decline pulls buyers back into the housing market

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A sharp drop in mortgage interest rates in December may have kickstarted this year’s spring housing market early.

Rates are about a full percentage point lower than they were in October, and consumers expect they will fall even more.

Optimism about mortgage rates increased sharply in December, according to a monthly consumer survey by Fannie Mae. For the first time since the survey was launched in 2010, more homeowners on net believe rates will go down rather than up, according to Mark Palim, deputy chief economist at Fannie Mae.

“This significant shift in consumer expectations comes on the heels of the recent bond market rally,” said Palim. “Notably, homeowners and higher-income groups reported greater rate optimism than renters.”

The average rate on the 30-year fixed has been on a wild ride since the start of the Covid pandemic. It hit more than a dozen record lows in 2020 and 2021, below 3%, causing a historic run on homebuying and a sharp rise in prices, only to then more than double in 2022. Rates hit a more than 20-year high in October 2023, hovering around 8% before falling back below 7% in December. Rates, however, are still twice what they were three years ago.

Buyers are coming back. Washington, D.C.-area real estate agent Paul Legere hosted two open houses over the weekend — homes in the $1.1 million to $1.2 million price range — and said they were the busiest he’s experienced in the last year.

“Similar report from my co-worker,” he added. “Even on Saturday, during torrential rain, we both had over 10 groups of active shoppers. These were people that had been in the market and had slowed or put their search on hold and are coming back, earnestly looking for a new property.”

Looking for inventory

Legere said he expects to see “an infusion” of inventory in the next week or two. Tight inventory has helped keep prices higher, another hurdle for potential homebuyers.

“Homeowners have told us repeatedly of late that high mortgage rates are the top reason why it’s both a bad time to buy and sell a home, and so a more positive mortgage rate outlook may [incentivize] some to list their homes for sale, helping increase the supply of existing homes in the new year,” said Palim.

A recent report from Redfin, a national real estate brokerage, found demand starting to pick up in December as rates fell. Redfin’s Homebuyer Demand Index — a seasonally adjusted measure of requests for tours and other homebuying services from Redfin agents — was up 10% from a month ago to its highest level since August, according to the report. Pending sales, which measure signed contracts on existing homes, were down 3% from December 2022, but that was the smallest decline in two years.

Much will depend on both interest rates and home prices in the months to come. Prices continue to rise, due to lack of supply, and if rates continue to drop, price gains could accelerate. The lower the rate, the more potential homebuyers can afford.

While mortgage rates are expected to drop further, that will depend on the strength of the economy and inflation.

“The rate momentum is as good as the trajectory of economic data. So if the data continues to do what it has been doing, there’s no reason rates couldn’t go down into the 5′s, possibly even the high 4′s if some of the talking heads are right about recession in 2024,” Matthew Graham, chief operating officer of Mortgage News Daily, said on CNBC’s “The Exchange.”

The average rate on the 30-year fixed mortgage hit a recent low of 6.61% at the end of December, but is up slightly this month to 6.76%, according to Mortgage News Daily.

Read more at CNBC.com

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Why Pre-Approval Is Your Homebuying Game Changer

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If you’re thinking about buying a home, pre-approval is a crucial part of the process you definitely don’t want to skip.

So, before you start picturing yourself in your new living room or dining on your future all-season patio, be sure you’re working with a trusted lender to prioritize this essential step. Here’s why.

While home price growth is moderating and mortgage rates have been coming down in recent weeks, affordability is still tight.  At the same time, there’s a limited number of homes for sale right now, and that means ongoing competition among hopeful buyers. But, if you’re strategic, there are ways to navigate these waters – and pre-approval is the game changer.

What Pre-Approval Does for You

To understand why it’s such an important step, you need to know more about pre-approval. As part of the homebuying process, a lender looks at your finances to determine what they’re willing to loan you. From there, your lender will give you a pre-approval letter to help you understand how much money you can borrow. Freddie Mac explains it like this:

“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”

Getting pre-approved starts to put you in the mindset of seeing the bigger financial picture, one step at a time. And the key is actually more than just getting a pre-approval letter from your lender. The combination of pre-approval and strategic budgeting is your golden ticket to understanding what you can actually afford. It saves you from painful heartaches down the road so you don’t fall in love with a house that might be out of reach.

Pre-Approval Helps Show Sellers You’re a Serious Buyer

But that’s just the beginning. Let’s face it, there are more people looking to buy than there are homes available for sale, and that creates competition among homebuyers. That means you could see yourself in a multiple-offer scenario when you get ready to make your move. But getting pre-approved for a mortgage can help you stand out from other buyers.

In today’s fast-moving housing market, having that pre-approval in your back pocket can be your secret weapon. When sellers see you’re pre-approved, it tells them you’re a strategic and serious buyer. In a world of multiple offers, that’s a big deal. As an article from the Wall Street Journal (WSJ) says:

“If you plan to use a mortgage for your home purchase, preapproval should be among the first steps in your search process. Not only can getting preapproved help you zero in on the right price range, but it can give you a leg up on other buyers, too.”

Pre-approval shows sellers you’re more than just a window shopper. You’re a buyer who’s already undergone a credit and financial check, making it more likely that the sale will move forward without unexpected delays or issues. Sellers love that because they see your offer as a reliable one. A win-win, right?

Bottom Line

So, before you start mentally arranging furniture in your dream home, let’s connect to get your pre-approval set. It’ll save you time, stress, and a lot of headaches that could come up along the way without it. The reality is, the more prepared you are, the more likely you are to land the home you’re longing for.

Read more at KeepingCurrentMatters.com

Related Links

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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