62% of Buyers Are Wrong About Down Payment Needs

62% of Buyers Are Wrong About Down Payment Needs

62% of Buyers Are Wrong About Down Payment Needs | MyKCM

According to the ‘2019 Home Buyer Report conducted by Nerdwallet, many first-time buyers still believe they need a 20% down payment to buy a home in today’s market:

“More than 6 in 10 (62%) Americans believe you must put at least 20% down in order to purchase a home.”

When potential homebuyers think they need a 20% down payment to enter the market, they also tend to think they’ll have to wait several years (in some markets) to come up with the necessary funds to buy their dream homes. The report continues to say,

“The truth: 32% of current U.S. homeowners put 5% or less down on their home, according to census data.” (as shown below):

62% of Buyers Are Wrong About Down Payment Needs | MyKCMThe lack of knowledge about the home-buying process is unfortunately keeping many motivated buyers on the sidelines.

Bottom Line

Don’t let a lack of understanding keep you and your family out of the housing market. Let’s get together to discuss your options today.

Top 5 Reasons You Should NOT FSBO

Top 5 Reasons You Should NOT FSBO

Top 5 Reasons You Should NOT FSBO | MyKCM

Rising home prices coupled with a lack of inventory in today’s market may cause some homeowners to consider selling their home on their own (known in the industry as a For Sale By Owner). However, a FSBO might not be a good idea for the vast majority of sellers.

The top 5 reasons are listed below:

1. Online Strategy for Prospective Purchasers

Recent studies have shown that 95% of buyers search online for a home. In comparison, only 13% use 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 home they actually purchased?

  • 50% on the Internet
  • 7% from a yard sign
  • 28% from a Real Estate Agent
  • 1% from newspapers

The days of selling your house by putting up a sign and listing it 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 interest 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 Increasingly Difficult

The paperwork involved in the process 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 will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

A study by Collateral Analytics revealed that FSBOs don’t actually save anything by forgoing the help of an agent. In some cases, they may actually cost themselves more. One of the main reasons for the price difference at the time of sale is:

“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.”

The more buyers that view a home, the greater the chance of a bidding war for the property. The study found the difference in price between comparable homes of size and location is currently at an average of 6%.

Listing on your own leaves you to manage the entire transaction yourself. Why do that when you can hire an agent without additional cost?

Bottom Line

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

Starting the Search for Your Dream Home? Here Are 5 Tips!

Starting the Search for Your Dream Home? Here Are 5 Tips!

Starting the Search for Your Dream Home? Here Are 5 Tips! | MyKCM

In today’s real estate market, low inventory dominates the conversation in many areas of the country. It can often be frustrating to be a first-time homebuyer if you aren’t prepared.

In a realtor.com article entitled, “How to Find Your Dream Home—Without Losing Your Mind,” the author highlights some steps that first-time homebuyers can take to help carry their excitement of buying a home throughout the whole process.

1. Get Pre-Approved for a Mortgage Before You Start Your Search

One way to show 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 in a market that is not as competitive, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach.

This step will also help you narrow your search based on your budget and won’t leave you disappointed if the home you tour, and love, ends up being outside your budget!

2. Know the Difference Between Your ‘Must-Haves’ and ‘Would-Like-To-Haves’

Do you really need that farmhouse sink in the kitchen to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Could the ‘man cave’ of your dreams be a future renovation project instead of a make-or-break right now?

Before you start your search, list all the features of a home you would like and then qualify them as ‘must-haves’‘should-haves’, or ‘absolute-wish list’ items. This will help keep you focused on what’s most important.

3. Research and Choose a Neighborhood You Want to Live In

Every neighborhood has its own charm. Before you commit to a home based solely on the house itself, the article suggests test-driving the area. Make sure that the area meets your needs for “amenities, commute, school district, etc. and then spend a weekend exploring before you commit.”

4. Pick a House Style You Love and Stick to It

Evaluate your family’s needs and settle on a style of home that would best serve those needs. Just because you’ve narrowed your search to a zip code, doesn’t mean that you need to tour every listing in that zip code.

An example from the article says, “if you have several younger kids and don’t want your bedroom on a different level, steer clear of Cape Cod–style homes, which typically feature two or more bedrooms on the upper level and the master on the main.”

5. Document Your Home Visits

Once you start touring homes, the features of each individual home will start to blur together. The article suggests keeping your camera handy to document what you love and don’t love about each property you visit.

Making notes on the listing sheet as you tour the property will also help you remember what the photos mean, or what you were feeling while touring the home.

Bottom Line

In a high-paced, competitive environment, any advantage you can give yourself will help you on your path to buying your dream home.

The home buying process.

imagesI realized when I was young that there are stages of freedom in our lives. You just don’t realize them until you experience them. The first one is when we get our first bicycle. No training wheels and the freedom to ride to your friends house or the park on your own. The second is when you move out and get your own place. Apartment or dorm room it doesn’t matter its your own. The third is when you get your own washer and dryer. I’m talking about under the same roof. The forth is when you own Real Estate. You are the king of your castle. My Goal is to lay out the steps involved in buying a house, and for you to have a better understanding of what takes place and why.

  • The first step in the home buying process is to speak with a mortgage lender . You want to be pre-approved before you start to look. I always recommend talking with a few lenders. You will find a difference in closing cost and interest rates. You also may find that you feel more comfortable working with one lender over the other. The lender will give you a pre-approval letter. The pre-approval process will give you the price range that you need to stay within when searching for your next home. It will also be submitted with an offer on a house.
  • Let the home search began. You have access to plenty of sites like msgulfcoasthomes.com, Zillow, Realtor.com or gulfcoastpowersearch.com/youngs/  where you can search for homes on your own. These sites all have the same information, there is no need to jump from site to site. The best advice I can give you is to talk with your Realtor. (list of great Realtors) Face to face is best. Tell them the specifics of what you are looking for, be detailed. It will make the home search go much smother for you. Remember your Realtor is on your side. They are not going to try and sell you something you don’t want or cant afford. Communication is key hereimages (1)
  • So you have found your dream home. Get insurance quotes. Your insurance agent will give a quote and let you know if flood insurance is required. I will provide you with the property tax information. Now you meet back with the lender with the insurance quote and tax information on the home you have found. Your lender will go over what your down payment will be (if any, need a loan with 0 down?), what the expected closing costs and pre-pays (taxes and insurance) will be needed at the closing.
  • Now we write the offer. The seller can accept the offer as is, counter your offer or reject the offer. If the offer is countered then we negotiate with the seller until we reach an agreement.
  • When the offer is accepted, you are under contract. The earnest deposit (normally 1% of the sales price) has to be turned in with in 24 hours of the accepted offer. It is usually held with the closing attorney’s office.  I send a copy of the contract to your lender and the closing attorney so they can began working on the loan and title work. Ones you are in a contract you cannot back out unless there is a contingency to protect you. Some contingency are built into the contract. The ability to get the loan, a home inspection that meets your satisfaction and the home appraising. We can add special contingencies if needed to the contract. I want to protect the buyer as needed for any special circumstances.
  • Home Inspection needs to be completed with in the first 10 days of an accepted contract. We can recommend Home inspectors, but it is up to you to chose, schedule and pay for the home inspecimages (2)tor. They normally cost between 350 and 550 depending on the size of the house. I always recommend to clients to try and be there for at least the last hour of the home inspection. You should get a detailed report from the inspection, but it is always best to have first hand knowledge of any issues there may be with the home.
  • Inspection contingency If you are satisfied with the inspection results then we release the home inspection contingency and move on. If there are repairs that we are requesting then we document those items with photos asking for the seller to repair or replace those items. If the seller does not agree to do the repairs then you have the option to walk away and get your earnest money back or agree to move forward with the house the way it is. If they agree to fix the items then you are still bound to the contract.
  • The appraisal is the next step in the home buying process.
  • What is an appraisal? It is an unbiased estimate of the true value of what the home is worth. Lenders order an appraisal during the mortgage process. It is an objective way to assess the home’s market value. The bank must make sure that the amount of money you are borrowing is not more than the house is worth. Your lender will order the appraisal, it normally cost around $450 your lender can give you an exact cost. This is normally and up front cost, but sometimes it is added to the loan. If the house appraises at the contract price or above then all is good and we keep moving on. If the appraisal is lower than the contract price then we ask the seller to lower the price to the appraised value. If the seller does not agree to lower the price you can pay the difference out of pocket, or walk away from the contract.
  • The termite inspection (Wood Destroying Inspect Report) WDIR is done at this point. This can be a buyer or sellers expense. It is written in the offer who pays for it. If the report shows no active termites or other wood destroying insects and there is no wood damage you will receive a clear report. If there are issues the house will have to be treated and repaired at the sellers expense. You have the opportunity to back out of the contract if active insects are found.download
  • Your loan will move to Underwriting you are almost done. The Underwriters will make sure everything is correct. (income, debt, appraisal, required repairs, WDIR). They may ask for more documents from you at this point. You will want to get them to your lender quickly. It is also very important that when you go under contract to purchase a home you don’t make any changes to your income or debt during this time. Don’t change or quite your job, buy a new car or add debt to your credit cards. They will check for these things.
  • Closing Disclosure 3 day rule. You will receive Closing Documents from your lender 72 hours before closing. They contain details of the mortgag fees and other costs to get your mortgage. You sign these and send them back.e loan you are getting, the loan terms, your projected monthly payments, and how much you will pay in
  • Final walk through (normally 24 hours before closing) I will schedule a time for us to walk through the house. We are checking to make sure the property is in the same condition it was when we entered the contract, any repairs requested have been completed and the property meets the terms of the contract.
  • The closing day is normally scheduled at this point, all people on the loan will need to be there to sign. If you are bringing money to the closing it needs to be certified funds made out to the attorney or title company. You will also need your I.D.
  • Congratulations you are done! You are a new home owner. There is a lot of steps to buying a house but it reallyimages (3) is not difficult. There are a lot of moving parts going on that your Realtor, Mortgage lender and closing attorney are taking care of or guiding you through. I would say its time to relax, but you have furniture to move.

More information for First Time Home Buyers 

Morgan Young and Kristy Young are both licensed Realtors with NextHome E-Realty on the Mississippi Gulf Coast. If you are still reading at this point you must be in the market for a new home. Give                                                                                     them a call, they will be glad to help. 228-239-0371