According to a survey conducted by ClosingCorp, over half of all homebuyers are surprised by the closing costs required to obtain their mortgage.
After surveying 1,000 first-time and repeat homebuyers, the results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected.
“Homebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”
Bankrate.comgathered closing cost data from lenders in every state and Washington, D.C. in order to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down payment.
Keep in mind that if you are in the market for a home above this price range, your costs could be significantly greater. According to Freddie Mac,
“Closing costs are typically between 2 and 5% of your purchase price.”
You need to speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. I have always wondered – Why do buyers wait till they are under contract to find out how much they need. In many discussions I have found that most Realtors do not understand how closing costs work and also how much they really are. With these two statements above it is no surprise why many buyers have challenges with the home buying process.
We have created a process called the Home Express Mortgage Plan that haelps our clients to know there numbers prior to contract thus helping them navigate the contract negotiation process and make the transition that much easier.
Unfortunatly it is not uncommon – Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.
Freddie Mac, Fannie Mae, andThe Mortgage Bankers Association are all projecting that home sales will increase in 2018. Here is a chart showing what each entity is projecting in sales for the remainder of this year and the next.
As we can see, each entity is projecting sizable increases in home sales next year. If you have considered selling your house recently, now may be the time to put it on the market.
Over the next five years, home prices are expected to appreciate 3.64% per year on average and to grow by 18.4% cumulatively, according to Pulsenomics’ most recent Home Price Expectation Survey.
So, what does this mean for homeowners and their equity position?
As an example, let’s assume a young couple purchased and closed on a $250,000 home in January. If we look at only the projected increase in the price of that home, how much equity will they earn over the next 5 years?
Since the experts predict that home prices will increase by 5.0% this year alone, the young homeowners will have gained $12,500 in equity in just one year.
Over a five-year period, their equity will increase by nearly $49,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth.
Not only is homeownership something to be proud of, but it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, find out if you are able to today!
Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).
The latest survey data, covering 2014-2016 will be released later this year. In the meantime, Lawrence Yun, the National Association of Realtors’ Chief Economistestimates that the gap has widened even further, to 45 times greater ($225,000 vs. $5,000)!
Put Your Housing Cost to Work for You
As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.
The latestNational Housing Pulse Survey from NAR reveals that 84% of consumers believe that purchasing a home is a good financial decision. William E. Brown comments:
“Despite the growing concern over affordable housing, this survey makes it clear that a strong majority still believe in homeownership and aspire to own a home of their own.Building equity, wanting a stable and safe environment, and having the freedom to choose their neighborhood remain the top reasons to own a home.”
If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, let’s get together and evaluate your ability to buy today!
Recently, HousingWire analyzed data from the US Bankruptcy Courts and revealed that 6 million Americans will have their bankruptcies disappear off their credit reports over the next five years and that this could “possibly send a flood of more homebuyers into the housing market.”
The chart below shows the total number of bankruptcies filed by year in the US over the last 10 years. The light blue bars represent over 3.3 million people who have already waited the 7 years necessary for their reports to no longer include their bankruptcies.
How would this “send a flood of more homebuyers into the housing market”?
As the article mentioned, in 2010 the number of chapter 7 bankruptcies increased to nearly 1.14 million. Now, 7 years later, they will begin to fade from credit histories, enabling prospective buyers to become homeowners again once their credit scores improve.
As we can see from both reports, the homeownership rate has the opportunity to increase drastically over the next few years with all of these boomerang buyers returning to the market.
If your family was negatively impacted by the housing bust, here is the light at the end of the tunnel! You may be able to purchase your dream home faster than you think!
The National Association of Realtors (NAR) recently released their latest Existing Home Sales Report, which revealed that homes were on the market for an average of 28 days in June. This is a slight increase from the 27 days reported in May, but down from 34 days reported a year ago.
54% of homes across the country were on the market for less than a month in June!
Among the 27 states with homes selling in 30 days or less are Washington, Utah, California, and Colorado. The map below was created using results from NAR’s Monthly Realtors Confidence Index Survey.
Buyer demand is increasing as the inventory of homes available for sale remains low. If you are thinking about listing your home for sale this year, let’s meet up so I can help you take advantage of current market conditions!