Buying a Home

Homeownership: An Investment In Your Future

January 15, 2023 by khproperties Leave a Comment

There are many people thinking about buying a home, but with everything affecting the economy, some are wondering if it’s a smart decision to buy now or if it makes more sense to wait it out. As Bob Broeksmit, President and CEO of the Mortgage Bankers Association (MBA), explains:

“The desire for homeownership is strong. Many prospective buyers are waiting for the volatility in mortgage rates to subside, as well as for a clearer picture of the economic outlook.”

Homeownership Is An Investment In Your Future

If you’re in that position, remember that it’s important to consider not just what’s happening today but also what benefits you may gain in the long run.

There’s a lot of information out there about how homeownership helps build a homeowner’s net worth over time. But even today, many people think first about things like 401(k)s before they think of owning a home as a wealth-building tool. It’s especially important if you’re a young prospective homebuyer to understand how homeownership is another key way to invest in your future. An article from Bloomberg notes:

“Millennials have higher average 401(k) balances than Generation X did when they were the same age, but they’re not any better off financially. . . . A lot of that has to do with being less likely to own a home.”

To help you understand just how much owning a home can have a positive impact on your life over the years, take a look at what the data shows. The same Bloomberg article helps show the gap in wealth between renters and homeowners who are 65 years and older (see graph below). The difference is substantial, even when incomes are similar.

So, if you want to create wealth to help set you up for success later on, it may be time to prioritize homeownership. That’s because, whether you decide to rent or buy a home, you’ll have a monthly housing expense either way. The question is: are you going to invest in yourself and your future, or will you help someone else (your landlord) increase their wealth?

What You Need To Know If You’re Ready For Homeownership

January 10, 2023 by khproperties Leave a Comment

If you’re a young adult, you may be thinking about your goals and priorities for the months and years ahead. And if homeownership ranks high on your goal sheet, you’re in good company. Many of your peers are also pursuing their dream of owning a home. The 2022 Millennial & Gen Z Borrower Sentiment Report from Maxwell says:

“Many young adults have demonstrated their resolve to embark on the journey toward homeownership soon. More than half of millennials and Gen Zs plan to apply for a mortgage sometime within the next year.”

Let’s take a look at why homeownership makes the top of so many young buyers’ to-do list and what you need to consider to achieve your goals if you’re one of them.

Top Motivators To Buy a Home

Before you start the homebuying process, it’s helpful to know why homeownership is so important to you. The survey mentioned above sheds light on some of the top reasons why younger generations are looking to buy a home. It finds:

95% believe the cost of renting is too high
35% think owing a home is an important wealth building tool
16% seek the sense of security owning a home provides
37% plan to use it as an investment property

No matter which of these resonates the most with you, know there are many financial and non-financial reasons why you may want to buy a home. While your top motivator may be different than that of your friends, they’re all equally valid and worthwhile.

Key Obstacles and How To Overcome Them

Whether your homeownership goals come from the heart or are driven by financial aspirations (or both), it can still be hard to know where to start when you’re looking to buy a home. From understanding the homebuying process, to getting pre-approved, and exploring down payment options, it’s a lot to wrap your head around.

The same Maxwell survey also reveals key challenges for potential buyers. Thankfully, the knowledge and guidance of a trusted real estate professional can help you overcome both. Here’s a look at two of the hurdles potential homebuyers say they face:

The Mortgage Process Can Be Intimidating

In the Maxwell study, 33.37% said one of their obstacles was that the mortgage process is confusing or difficult to understand.

An article by OwnUp helps explain why the mortgage process is so challenging for buyers:

“There is a general lack of knowledge about home financing. Mortgages are a complicated topic with no one-size-fits-all answer. It’s difficult to understand the space, let alone determine what the right course of action is based on your unique financial picture.”

While you may be tempted to do a quick search online to find instant answers to your questions, it may not get you the information you need to understand the full picture. Especially when it comes to financial advice, you want to lean on a true expert. Having trusted professionals on your side can help you to learn what it takes to achieve your dream of homeownership. Not to mention, an expert can give you advice specific to your situation, not generic advice like you’ll find online.

It’s Hard To Know How Much You Need To Save

In the Maxwell study, 45.75% believe they don’t have enough saved to cover their down payment or closing cost expenses.

What you may not realize is that, today, there’s a growing number of down payment assistance programs available nationwide to help relieve this pressure. A report from Down Payment Resource says:

“Our Q3 2022 HPI report revealed a 1.6% uptick in the number of homebuyer assistance programs available to help people finance homes, raising the number of programs to 2,309, a net increase of 36 over the previous quarter.”

Additionally, as the housing market cools, buyers are regaining some negotiation power and more sellers are willing to work with buyers to help with closing costs. Understanding what’s out there and the options available may help you achieve your dream of homeownership faster than you thought possible.

Prioritizing Your Wants And Needs As A Homebuyer

January 5, 2023 by khproperties Leave a Comment

There’s no denying mortgage rates are higher now than they were last year. And if you’re thinking about buying a home, this may be top of mind for you. That’s because those higher rates impact how much it costs to borrow money for your home loan. As you set out to make a purchase this winter, you’ll need to be strategic so you can find a home that meets your needs and budget.

Danielle Hale, Chief Economist at realtor.com, explains:

“The key to making a good decision in this challenging housing market is to be laser focused on what you need now and in the years ahead, . . . Another key point is to avoid stretching your budget, as tempting as it may be given the diminished purchasing power.”

In other words, it’s important to be mindful of what’s a necessity and what’s a nice-to-have when searching for a home. And the best way to understand this is to put together a list of desired features for your home search.

The first step? Get pre-approved for a mortgage. Pre-approval helps you better understand what you can borrow for your home loan, and that plays an important role in how you’ll craft your list. After all, you don’t want to fall in love with a home that’s out of reach. Once you have a good grasp of your budget, you can begin to list (and prioritize) all the features of a home you would like.

Here’s a great way to think about them before you begin:

Must-Haves – If a house doesn’t have these features, it won’t work for you and your lifestyle (examples: distance from work or loved ones, number of bedrooms/bathrooms, etc.).
Nice-To-Haves – These are features that you’d love to have but can live without. Nice-To-Haves aren’t dealbreakers, but if you find a home that hits all the must-haves and some of the these, it’s a contender (examples: a second home office, a garage, etc.).
Dream State – This is where you can really think big. Again, these aren’t features you’ll need, but if you find a home in your budget that has all the must-haves, most of the nice-to-haves, and any of these, it’s a clear winner (examples: farmhouse sink, multiple walk-in closets, etc.).

Finally, once you’ve created your list and categorized it in a way that works for you, discuss it with your real estate advisor. They’ll be able to help you refine the list further, coach you through the best way to stick to it, and find a home in your area that meets your needs.

What To Expect When You Buy A Fixer Upper

January 20, 2022 by khproperties Leave a Comment

It feels like you can’t turn on the TV and flip through the channels without seeing a home improvement show, but don’t be taken in by their simplicity. Remodeling your home is far more complex and usually more expensive than TV pundits lead you to believe. When they even bother to price the items of a project, the labor costs are often conveniently forgotten because they can be 50% of the total expenditure. Contractors don’t appear out of nowhere, and gardeners won’t just magically appear with half a forest for the backyard. You’ll learn an incredible amount about property ownership if you purchase a fixer-upper and set about a major renovation. But if you’re a first-time buyer who’s looking for a bargain to renovate, remember that while it’s a great strategy, you’ll need to be prepared for hard work before you enjoy the incredible satisfaction of creating a wonderful home.

Here’s a quick guide of what to expect to get you started:

Ignore TV shows: Nothing will put you in a world of renovation pain than believing the pricing you see in reality TV shows. Labor costs are a fundamental reality and rarely rate a mention. Budget for the real world.
Create a budget and then some: The most important aspect of remodeling a home is to create a budget that you can afford and then stick to it. But remember most renovations cost more than you think. Experts recommend you keep aside 20% of the project’s cost in case of problems.
Quotes come in writing: Always insist on receiving an estimate in writing rather than believing a verbal estimate that might be contested or ignored later. When the invoice comes in, you may find yourself with a nasty surprise.
Expertise counts: If your budget will stretch, call in the experts. An architect, lighting consultant and interior designer will transform your project. And given you’re investing in your most significant financial asset, consider the dollar value they might add.
Advice vs Opinion: Friends will offer their ideas and opinions, and architects and contractors will provide advice. Be sure to know the difference. Ultimately, the decisions are on you and you’ll need to live with the consequences of your choices.
Focus on you: Unless you want to flip the property, then remodel for your lifestyle and don’t worry about fashions or fads. If you’re flipping, the reverse is true. Make decisions that will maximize the sale price.
Minimize your role: Hire a general contractor who’ll coordinate sub-contractors for the entire project. Avoid the hassle of organizing tradespeople. One bad apple will throw out your timeline and cause friction with the others.
Stop and shop: It can be a good idea to avoid buying materials from multiple suppliers all over town. That quickly gets very confusing, especially when it comes to delivery schedules. Ideally, purchase from only one or two suppliers.
Be tactile: Don’t rely on the internet when you shop. Faucets can look amazing online but turn out to be cheap and nasty when you open the box. Go to each store and literally touch the items you want to buy. Ask for swatches of cloth and colours, buy tester cans of paint, and take your time with all your decisions.

image courtesy of rocinante11

Is An Open Floorplan The Right Style For You?

December 27, 2021 by khproperties Leave a Comment

Open floorplan living is often billed as the perfect floor plan, bringing family together in a single room where cooking, conversation and the screen share the same space. It has been a popular feature of a home for two decades and more. However, a small but noisy school of thought now suggests it’s time to revert to the old formula in which rooms have a specific purpose. As experienced agents, we have seen real estate fashions come and go and come again. Perhaps you’re seeking an open floorplan layout for your dream home, or maybe thinking that smaller rooms are easier to maintain, and heat and cool.

If you’re searching for a home right now, we’ve pulled together a list of benefits and drawbacks to open floorplan living. It might help you consider a broader range of properties if you’re aware of all the pros and cons of various designs and floor plans.

Open Floorplan Benefits

A living area where no boundaries lie between leisure and the kitchen will be a magnet for the entire family at least twice a day. Interaction is essential for a harmonious household – especially if you have teenagers – and open floorplan living helps you achieve this.
Young families will benefit because it is far easier for mom or dad to keep an eye on young children. It also avoids the temptation to pack them off to their bedroom or playroom, where they won’t see you or talk to you.
For anyone who loves entertaining, open floorplan living is essential. You can slave over your stove while not being excluded from your guests or supervise homework while cooking the evening meal.

Open Floorplan Drawbacks

It’s usually the highest maintenance area of the home. With so many activities going on, there’ll inevitably be a mess at the end of the day. For example, folks often use the island bench as a dumping ground for bags and keys. If you love a tidy home, you might find yourself continually cleaning.
It’s a privacy killer. Without a sound barrier, it’s hard to read a book when the TV is on or there’s a conversation in the kitchen. When the phone rings, everyone else in the room is asked to keep quiet, or you’ll need to take the call elsewhere.
Decorating an open floorplan area can be tricky. Furniture needs to match and be of a similar size. The visual balance of an open floorplan area can be ruined if your couch is far larger than your dining table.

8 Tips For First Time Homebuyers

December 1, 2021 by khproperties 1 Comment

If it’s your first time buying, it can be quite intimidating – you’ve got to deal with agents, sellers, rival buyers, banks, and title companies. And it’s not always clear what role each of them plays in the process. We have worked with many first time homebuyers. It’s great to guide them on the journey of property ownership and help set them on the path to building their wealth through real estate.

Any first time homebuyer should appreciate that they always have access to many professionals who can help explain the various tasks and processes required to buy a home. It’s not like you’ll walk through the experience blindfolded.

To help you on your way and find out more, here’s a quick list of tips for first time homebuyers. You’ll find the act of buying property is not as intimidating as you might have feared.

Start saving: That means not only reducing your day-to-day spending but also working to reduce regular payments on debts for items such as a car or personal loan. These obligations will reduce the amount of money a lender will allow you to borrow.
Work out a budget: Investigate how much you might be able to borrow. Factor in the expenses of buying a home, such as closing costs and moving. You should then have an idea of what you can afford. Setting your expectations early on will focus your home hunting efforts and avoid disappointment.
Arrange financing: Spend time exploring your options. Some banks demand a 20% deposit; others are more flexible. Perhaps your parents will co-sign for the loan, or part of it. Consider using a local lender as they will guide you and recommend suitable loan options.
Pre-approval is good: A lender won’t give you a pile of cash based on your salary. They’ll grant “pre-approval,” which means you can make a monetary commitment with confidence. However, the lender will finalize its approval once they’ve valued and approved the property you intend to buy. Do not sign any document that waives your right to pull out of a transaction until you are approved or you risk your lender refusing you.
Get mentally prepared: With your finances lined up, you need to think about the dynamics of buying a home. If you find your dream place, you better believe others will love it, too. So, be prepared to move quickly to beat the competition.
Find a great agent: For a first time homebuyer, a great agent will make the experience smoother and less stressful. When selecting an agent, ask each one to share with you properties they’ve bought for other clients. This will indicate whether they can find what you’re seeking.
Go hunting: House hunting is fun but exhausting. In a hot market, it can get stressful because of buyer competition. Don’t be put off, and keep your focus. You may miss out on a few properties, but there are many more out there.
Be confident: When making an offer for a home, be confident. Don’t ask your agent to make low ball offers just to see if the seller bites. You risk being labelled a time waster and go to the back of the line. You have every right to make any offer, but be realistic if you want the property.