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4 Questions You Should Ask Yourself Before Purchasing a Home

by The Jamey Kramer Group

4 Questions

What do you really need to know before you make one of the biggest purchases of your life?

Home ownership remains part of the American dream. Now that prices are still low, you may be rightfully thinking that it is time to purchase a home. Home values are starting to rise. Truthfully, right now is a great time to buy a home before prices and interest rates start to climb.

Before you head out looking though, we have put together some questions to ask yourself. These questions can help guide and direct you towards the perfect home for your family.

4 Questions You Should Ask Yourself Before Buying a Home

1.  What Can You Actually Afford?

It is easy to dream of mansions, but it is even better to know you can afford one. This is a great opportunity to take stock of all your financial information including your income, assets, debts, etc. Then you can see how much money you have to work with on a monthly basis. 

With the interest rates continuing to stay low, it might be helpful to know that the lower the interest rate, the more home you get. Would you like to know how much a 1% interest rate actually affects your money? You can find this out by visiting our article, Low Mortgage Interest Rate Stats You Want to Know.

2. Are There Any Unanticipated Charges?

Unanticipated fees and charges can be very frustrating especially if you have never purchased a house before. Here is a list of fees associated with purchasing a home to keep in the back of your mind:

  • Home Owner’s Insurance
  • Property Taxes
  • Closing Costs
  • Upcoming Anticipated Maintenance of the Home

These unanticipated fees can turn your just affordable mortgage payment into an unaffordable one if you are not prepared.

3. How Much Should You Put Down?

One of the biggest reasons why financial experts everywhere recommend putting a 20% down payment is because of PMI.

PMI stands for private mortgage insurance and is added onto mortgage payments when the buyer does not put 20% down. We are only talking about an extra $50 a month for every $100,000 you borrow. However, you can save that extra payment by putting 20% down on your home.

If 20% down is just not an option, you may consider a Federal Housing Administration Loan or FHA loan. FHA loans only require a 3.5% down payment, are really easy to apply for, and you don’t necessarily have to have great credit.

For more information on FHA Loans and how to qualify for them, please check out our article, FHA Loans and Qualifications for First-Time Home Buyers.

4. Where Do You Want to Settle Down?

Where is the right place for you and your family or potential family to settle down? Do you want to live in a small town, a big city or a city like Northville, Michigan which has both? Do you want to have community events happening every weekend, like Novi, Michigan? How important are good schools and low crime?

All of these questions can help you decide where to start looking for a house.

Summary

Now that you know what you can truly afford, what the unanticipated costs might be and where you want to start looking, you are almost there. With the help of an experienced real estate agent, it won’t be long until you are enjoying the perfect home for you and your family.

Do You Have Any Questions?

If you have any questions please contact my office. We would be honored to show you the available homes for sale in Northville and Novi, Michigan that are perfect for raising a family. Please call our office to schedule an appointment today.

248-348-7200

 

What Determines if You Qualify for a Mortgage?

by The Jamey Kramer Group

What Determines if You Qualify for a Mortgage?

Would you like to purchase a home this year?

Not sure what it takes these days to qualify for a mortgage?

The housing market is coming back especially in the Metro Detroit area. It is now a prime time to purchase a home in Southwest Michigan. If you are interested in purchasing a home in the near future, you will want to be aware of the stricter rules that are being put in place for mortgage lenders.

Qualified Mortgages

The new Qualified Mortgages rules are the federal government’s response to preventing another housing crisis. According to Forbes.com

“The Qualified Mortgage rules are intended to ensure that lenders issue loans only to those who can afford to repay them.”

Lenders are now legally responsible for loans they issue according to the Qualified Mortgage Standards Under the Truth in Lending Act. However, if the mortgage meets the Qualified Mortgage requirements, the mortgage loan will be protected from lawsuits if the borrower is unable to repay.

8 Factors That Determine Qualified Mortgages

It is easy to draw the conclusion that as mortgage rules become stricter, it is likely it might get harder and harder to qualify for a mortgage loan. While some banks are still issuing non-qualified mortgages, you can bet those loans will be under strict rules as well since they are not protected. With that in mind, today we wanted to share 8 factors that go into determining a Qualified Mortgage.

  1. Employment Status
    It should come as no surprise that the banks will want you to be employed if they are going to issue you a mortgage loan. The mortgage lenders will most likely want to see at least 2 years of employment.

     
  2. Income
    Make sure to have on hand the past 2 years of W2s or income tax returns. If you have any assets, make sure to provide that information as well.

     
  3. Monthly Mortgage Loan Payment
    The banks are going to want to see how much per month your mortgage will cost you.

     
  4. Other Property Loans
    Some equity loans will fall under this category and the lenders will want to know about them.

     
  5. Other Monthly Housing Costs
    Costs like HOA dues, property taxes and even mortgage insurance will also be included when determining a Qualified Mortgage.

     
  6. Other Financial Commitments
    Banks will be taking into account credit cards, student loans, alimony and even child support.

     
  7. Debt-to-Income Ratio
    The debt-to-income ratio will be looked at on a monthly basis and it means that your monthly debt cannot be more than 43% of your monthly income.

     
  8. Your Credit History Your credit score will help to determine whether or not you as the borrower are eligible for a Qualified Mortgage.

You may learn more about the Qualified Mortgage features by checking out our article, What A Qualified Mortgage Is and How New Mortgage Rules Will Affect You

Summary

The new requirements of the Qualified Mortgage Standards Under the Truth in Lending Act have been put in place by the federal government to ensure that another housing crisis does not take place in the United States. Lenders will be held accountable and will be collecting documents and analyzing numbers.

If you or someone you know is interested in purchasing a new house, please call our office. We will be happy to help untangle the web of mortgage terms and requirements to help get you the house of your dreams.

248-348-7200

Property Values Rise in Metro Detroit

by The Jamey Kramer Group

Property Values Rise in Metro Detroit Has your home’s value risen?

Are you ready to move out of your current home and into your dream home?

There is more good news for Metro Detroit residents. Property values are on the rise! This means that if you are living in the Detroit metropolitan area, your home is now worth more than it was a year, 2 years, maybe even 5 years ago. The last time we have seen home prices like this was in the mid-1990s.

Home values are up 52% since the end of 2009 according to an article published by the Detroit News. Would you like to hear even more good news? Kurt Rankin, a bank economist from PNC, is forecasting more growth. He stated, “While it’s slowing, growth will remain in positive territory.”

Metro Detroit Cites Seeing Growth

Here are a few specific examples of Metro Detroit cities that are seeing a growth in property values in the last year:

  • Northville and Northville Township: In the city, there has been a 12% rise and in the township, an 8.7% rise in property values.
  • Novi and Novi Township: The city saw an 8.62% rise and the township saw an 8.84% rise in property values.

Shortage of Available Properties for Sale

With the value of homes rising, another interesting thing has happened. We are noticing a shortage in available properties for sale. It is a simple case of supply and demand. In this case, the supply of available houses on the market for sale is low, and it is driving home values up.

While many Michiganders are still unsure about the latest news reporting that home values are up, those who are putting their homes on the market are seeing a quick turnaround.

Why the Comeback?

In our article, 4 Reasons Why 2013 Had the Highest Home Sales Since 2006, we shared that all across America people are selling and purchasing homes. We talked about the 5 million previously owned homes that were sold last year alone.

One of the biggest reasons why homes are selling is that home prices have increased and homeowners that want to sell are no longer underwater in their mortgages. Other reasons include lower mortgage rates, less foreclosures and more employers hiring.

Is Your Once Perfect Home No Longer Suitable?

One of the most frustrating parts of the housing crisis is when people started to feel stuck in a house that no longer fit their family’s needs. They may have bought that house thinking it would be perfect, but then life happened and their once perfect home was no longer suitable.

If you live in the Metro Detroit area and have been dreaming about selling your current home and purchasing your dream home, please give our office a call. We would love to help you sell your home and find that perfect home that you have been dreaming of.

248-348-7200

 

4 Reasons Why 2013 Had the Highest Home Sales Since 2006

by The Jamey Kramer Group

4 Reasons Why 2013 Had the Highest Home Sales Since 2006

Is the housing crisis really over?

Why was 2013 such a great year for home sales?

2013 turned out to be a good year if you were hoping to sell your home. We haven’t seen numbers like this since the housing boom of 2006. There are a few reasons why the housing market made a rebound last year.

If you were wondering what some of those numbers were, the following will give us the answers:

  • 5 million previously owned homes were sold last year.
  • 9.2% more previously owned homes were sold in 2013 than in 2012.
  • 20% more previously owned homes were sold in 2013 than in 2011.

According to CNN Money,

The median price of a home sold in the year was $197,100, up 11.4% from the previous year.”

With so much good news, it may have you wondering why. Why was last year such a great year for the housing market? Today, we would like to share with you 4 reasons why 2013 had the highest home sales since 2006.

  1. Employment Is Up
    In November of last year, the U.S economy had already added 2.1 million jobs, according to CNN Money. Now, the recession isn’t quite over and the unemployment numbers are still too high. However, with more Americans being employed, more Americans felt comfortable enough to purchase a home.
     
  2. Mortgage Rates
    Towards the end of the year, we saw mortgage rates rise from the all time low that it had been at. This rise enticed many Americans to take the plunge, purchase their home, and take advantage of the low rates before they disappeared altogether.
     
  3. Home Prices Are Up
    One of the biggest obstacles that many Americans have faced over the last few years was that they owed more on their home than the home was worth. This is called being underwater with your mortgage.

    All over the country people are seeing the value of their home rise.

    In our article, Michigan Home Prices Are on the Rise, we shared the great news that home prices were making a comeback, and in fact many in the Detroit area had risen to where they were at in 2008.

    Not only that, but from October 2012 and October 2013 median home sale prices rose 42%.
     
  4. Foreclosure Crisis Coming To An End
    In Michigan, we saw foreclosures rates drop 37%. That was the lowest we have seen since December of 2005. In our article, Foreclosure Crisis Comes to an End, we covered if the crisis had really come to an end and why.

All of the above reasons make up the best year in home sales since 2006. Be encouraged, especially if you are looking to sell or purchase a home.

Why do you think 2013 was such a great year? Do you have a reason we didn’t list?

FHA Loans and Qualifications for First-Time Home Buyers

by The Jamey Kramer Group

FHA Loans and Qualifications

Are you a first time home buyer?

Is your credit score a little less than perfect?

If you have answered yes to any of the above questions, then this is an article you will want to read. FHA loans can be a great option for first-time home buyers because they don’t require a huge down payment. Today, we are going to share with you what a FHA loan is and how to qualify.

What is a FHA Loan?

FHA stands for Federal Housing Administration and is a mortgage loan that is insured by the federal government. This type of insurance allows the lender to have a lower risk if the borrower defaults on their payments because the loan is insured by the government.

FHA loans have been around since the 1930s. Here is what Zillow said about the history of the FHA program:

“The FHA program was created in response to the rash of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making loans accessible and affordable. Nowadays, FHA loans are very popular, especially with first-time home buyers.”

First, let’s take a look at some advantages and disadvantages to getting a FHA loan instead of a traditional loan.

Advantages of FHA Loans

The advantages of FHA loans are easy to see and include:

  • FHA loans are often the easiest loan to qualify for.
  • FHA loans require only a 3.5% down payment.
  • You do not have to have stellar credit to qualify for FHA loans.
  • If you decide to sell the home, the buyer has the ability to assume your loan.

Disadvantages of FHA Loans

There are a few disadvantages to this type of loan. FHA loans require that you to have 2 different mortgage insurance premiums.

  • The upfront mortgage premium or MIP: Regardless of your credit score, you are required to buy 1.75% of your loan either upfront when you purchase the home or this can be rolled into your monthly payments.
  • Annual MIP: This is not a yearly charge, but rather a monthly charge that is figured into your mortgage payment. This charge is based on the loan-to-value ratios.

Qualifying Requirements of FHA Loans

Here is a list of a few of the qualifying requirements for an FHA Loan:

  • A two year history of steady employment.
  • A down payment of 3.5%.
  • The property must be approved by an FHA-approved appraiser.
  • The cost to own the home including the mortgage, HOA fees, property taxes and mortgage insurance must be below 31% of your gross income.
  • All of your debt including your mortgage, your credit card payments and your student loans must be below 43% of your gross income.

If a FHA loan sounds like a good option for you and you are interested in starting the home purchasing process, please make sure to give our office a call. We would be honored to help you find your new house.

 248-348-7200

Supply and Demand: The Inescapable Conundrum of Doing Business

by The Jamey Kramer Group

A central tenet of business looms large over the housing market in Michigan: supply and demand. Across America -- and in parts of Michigan -- as the U.S. economy slowly continues to improve, it is providing people with comparatively more money than they've had for several years. One noticeable result is that, in a growing number of places, there are more people who want to buy a home (a.k.a demand) against the supply of homes available to buy (a.k.a supply). This tends to drive home prices upwards. But each specific housing market is unique, and this is certainly true in Michigan. Fortunately, things are looking up in the  Metro Detroit area

Supply and Demand In a Nutshell… and What It Means in Michigan

When broken down to its bare essentials, the economic concept of supply and demand is an easy one: When demand goes up, prices rise, and if supplies are scarce, items are more expensive. Of course, this is the laboratory version of things, and things like housing markets are highly complex.

In product manufacturing, for suppliers of goods, creating goods is fairly straightforward. For example, if you are a manufacturer, you agree with suppliers on prices for the raw materials or components you need, you build the product and then attach a price to finished goods.

But demand is tricky to gauge. Sellers try to determine the number of buyers they expect for their product. They must make educated guesses because the variables on the buyer’s side are numerous and buyers can be fickle. When it comes to real estate there are simply many factors beyond the seller’s control, from tax policies to interest rates to the ever-fluctuating American economy as a whole. It's a moving target, and a lot of factors have to be considered. What's more, the past may not be the key to setting home price points -- after all, we live in challenging times.

When there is strong demand for housing, there is a tendency for the most attractive, move-in-ready properties to receive a disproportionately large number of bids compared to properties that are considered less attractive. This potentially drives up the prices of these high-demand homes, while the homes in lower demand often remain in indefinite limbo. According to data released by Realcomp, a Farmington Hills MLS and quoted in the Detroit Free Press, The inventory of homes for sale in metro Detroit dropped 16.7% in June to 19,433, contrasted with 23,315 in June 2011. Nearly half, or 45%, of sales in July were cash sales, and homes sold on average nine days faster, with 81 days on the market.

It appears that the upward trend is due to several interconnected factors including low interest rates, relatively lower prices on homes and American consumers' gradually increasing confidence in their local economy.
 
For evidence of the upturn in Michigan's real estate market, consider information from Farmington Hills multiple listing service, Realcomp. They reported that home sales rose more than 5 percent in metro Detroit compared to the same time frame a year ago. In fact, each of the counties in the Detroit metropolitan area – Macomb, Livingston, Oakland and Wayne – reported increased home sales in June 2012:
 
Macomb: 12.6% 
Livingston: 11%
Oakland: 0.8%
Wayne: 0.5%
 
This is good news and while the economy and the housing market face challenges, the data are showing improvement.
 
Still, in some parts of Michigan those with property for sale are still feeling the pinch even while demand creeps upwards. This is because, overall, home prices in the state have taken a big hit since 2000. For some sellers, home prices are still low enough that selling property without incurring a major financial loss is incredibly difficult. In short, supply and demand are exerting their influence, but the market is still recovering from a decade of tough times.

Overall, if the economy continues to improve, increasing demand will drive prices higher. Total recovery won’t come overnight, but the housing market continues to strengthen.

Displaying blog entries 11-16 of 16

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