Live, Love & Experience Iconic Living In AtlantaRecently posted or modified blog posts in the category - Buying a Homehttps://www.premieratlantahomesearch.com/blog/Copyright PremierAtlantaHomeSearch.com2024-02-19T09:05:09-07:00tag:premieratlantahomesearch.com,2012-09-20:6223Everything You Need to Know about Prepayment Penalties<img loading="lazy" src="https://iclivecdn.lightersideofrealestate.com/uploads/2024/02/everything-know-prepayment-penalties-cover.jpg" alt="" width="700" height="auto" class="margin_bottom_5" />
Real estate has its own language, and unless you’ve bought a home before — perhaps even if you have — there are probably certain terms that feel like one big question mark.
And one of those terms is prepayment penalties.
Prepayment penalties are a type of fee associated with certain mortgages, and before you apply for a loan and buy a home, it’s important to understand it.
A <a href="https://www.realtor.com/advice/finance/what-is-a-mortgage-prepayment-penalty-fee/" rel="noopener noreferrer" target="_blank">recent article from realtor.com</a> outlined common questions about prepayment penalties, including:
What is a prepayment penalty? A prepayment penalty is a fee that some lenders charge when you pay off the entirety, or a large portion of your mortgage, before the final due date. This fee is to discourage borrowers from paying their homes off early, since the earlier you pay off your mortgage, the less interest you pay to the bank.
Do all loans have prepayment penalties? No! While some loans have prepayment penalties, there are plenty that don’t, including conventional loans and government-backed loans like FHA or VA loans.
How much are prepayment penalties? Prepayment penalties vary by lender and loan program, but in many cases, they fall around six months of interest or six months of the monthly payment.
2024-02-19T06:23:35-07:002024-02-19T09:05:09-07:00Carol LeRosetag:premieratlantahomesearch.com,2012-09-20:6105“House Hacking” Your Ticket to Buying a Home in This Market (As Long as You Keep These Things in Mind)Renting or buying a house is always one of life’s biggest expenses, but lately it’s been even more difficult than usual for many people to afford, which has led to a lot of young adults (and even some older ones) to move back in with their parents.
In the past, once you graduated from high school or college, it was common to get your own place to live and move out of your parents’ home. It was a natural sequence of events, and living at home beyond a certain age was often seen as “wrong” in some way. But according to <a href="https://finance.yahoo.com/news/moving-back-parents-common-now-120000981.html" title="this Yahoo Finance article">this Yahoo Finance article</a>, living at home — or moving back in after being on your own for a while — has become so common that it’s lost its stigma.
While it’s good that people who need to live with family for financial reasons aren’t being judged harshly, that doesn’t mean it’s ideal, or that most people don’t want a place of their own… if only they could afford to do so.
Which is probably why “house hacking” is so appealing to Millennials and Gen Z.
What Is “House Hacking,” and How Popular Is It?
<a href="https://www.cnbc.com/2023/11/26/how-house-hacking-is-helping-gen-z-millennials-become-homeowners.html" rel="noopener noreferrer" target="_blank">CNBC recently reported</a> that “house hacking” has become a strategy many Millennials and Gen Z use to become homeowners. Simply put, they rent out a portion of their home in order to generate some money to help make owning their home more affordable.
But it’s not just the younger generation who sees this as a useful strategy. While 51% of Gen Z, and 55% of Millennial buyers think it’s a good idea, 39% of recent buyers in allage groups thought it was a “very” or “extremely” important tactic.
Things to Keep In Mind if You’re Planning to Use the Strategy
With nearly half of all buyers considering this as a way to make homeownership more affordable and buy a house, there’s a good chance you may be considering doing it as well. If you are, here are a few things to keep in mind:
You can’t rely on the potential rent to qualify for a mortgage. In order to have a portion of your house to rent out to somebody, you need to first own a house. And in order to own a house, you probably need a mortgage. Lenders won’t consider the potential rent you may be planning on receiving each month for renting out a bedroom or section of your house. You’ll need to be able to qualify for a mortgage, and afford it on a monthly basis, without that anticipated rent coming in.
Try and line up a tenant ahead of time. Even though a lender may not consider the rent you’ll be bringing in, it still helps to know you have someone willing to rent, and how much they’re willing to pay you before you purchase a house, if you’re relying on that income to make ends meet.
Be careful who you allow to live in your home. This probably sounds obvious, but it’s something you may be less careful about if you’re desperate or anxious to generate some extra money each month. Ideally you can find someone you know and trust to live in your home, but that’s not always possible. If you advertise your space for rent and are considering people you don’t know, make sure to do some research into the person. Ask for references, and truly get a feel for who they are before taking the leap into living with them. Make sure they’re not just someone you can trust and feel comfortable around, but also someone you’ll enjoy living with.
Put things in writing. Create a lease with terms that delineate what they can and can’t use in the house. Perhaps create a schedule if there will be shared areas you may want some privacy in at certain times. Include rules that need to be followed, and remedies for any disagreements. To be on the safe (and legal) side, have a lawyer create a that protects both of your rights within the parameters of the local landlord / tenant laws.
Make sure it’s allowed before you do it. Look into the local rules and ordinances before buying a place. For instance, if the house is part of a homeowners association (HOA), there may be rules that forbid you from having tenants. Or city and town zoning may not permit such usage in the area your house is located.
Also Consider Buying a Proper Multifamily Instead…
Many people are looking at “house hacking” as renting out a portion of a single-family home they live in, but the term has been used by investors for quite some time as a way to buy real estate and build equity and a portfolio of properties over time.
Investors use the tactic by buying a multi-unit property to live in one unit, and rent out the other units to defray the cost, or even live for free if the other rents can cover the entire mortgage. They use the money they are saving per month to build up another down payment to buy another property, and then either sell the first investment, or keep it as a rental property, and buy another one.
While you may not envision yourself as an “investor,” or living in an investment property as opposed to a single-family home, buying a multifamily property would make it easier to have your own space, while also benefiting from rent that helps make the monthly mortgage more manageable. It will also make the landlord / tenant relationship a bit more formal, and as long as the property is legally zoned for multifamily usage, there shouldn’t be any concerns like you may run into renting out a portion of a single-family home.
In addition, lenders will consider any rents that are on record or anticipated for a multifamily property, which will help you qualify for a mortgage. And if you plan on living in it, there’s a good chance you can qualify for a low down payment program!
The Takeaway:
Because housing costs have gone up, buying or renting a home has become difficult for many people, especially in the younger generations. This has made “house hacking” — which is basically renting out a portion of a home in order to generate some money to help make owning their home more affordable — an appealing way for nearly half of recent home buyers to buy a house.
If you’re considering this tactic as away to buy a home, make sure you:
Can afford the home without the rental income you anticipate.
Try and line up a tenant ahead of time.
Only rent to someone you have vetted and feel comfortable with.
Put all terms and conditions in writing, and consider having a lawyer draft a legal document for you.
Make sure renting out a portion of your home is allowed in your area.
Also consider buying a proper multi-unit investment property. It will help you achieve the same benefits of incoming rent, while allowing you a separate place to call home by living in one unit and renting out the rest.<br /><br />Ready to explore new possibilities for homeownership? Whether you're considering 'House Hacking' or exploring real estate investment, our team is here to guide you. Connect with us to discover smart strategies and turn your dream home into a reality.
2024-01-22T05:30:00-07:002024-01-13T17:38:35-07:00Carol LeRosetag:premieratlantahomesearch.com,2012-09-20:2042Will Increasing Mortgage Rates Impact Home Prices?<img src="https://assets.site-static.com/userfiles/1682/image/mortgage-rate-projections.jpg" alt="Will Increasing Mortgage Rates Impact Home Prices? " title="Will Increasing Mortgage Rates Impact Home Prices? " height="410" width="750" />
There has been some discussion recently on home prices in relation to mortgage rates. Some believe if there is a rapid rise of mortgage rates, home prices should decrease. Logically it makes the most sense for the price of the house to drop when interest rates are rising, but this is not always the case.
This theory of home prices decreasing is typically discussed by future home buyers. As a buyer you would like to think if you are paying higher rates on your mortgage, you should be able to see a decrease in cost somewhere else. Unfortunately, these rates are rising because the economy is in better shape. As the economy succeeds, incomes rise, rates go up, as well as the price of the home.
A recent study by the John Burns Real Estate Consulting found mortgage rates have very little impact on the cost of the home. The housing market and price increases are affected by things like job growth in the area and rising wages. Coincidentally, these same factors are causing the rise in the mortgage rates since people can afford to take out more.
Bottom Line
As the economy progresses and strengthens, mortgage rates and home prices will fluctuate. It is a misconception as rates increase, home prices will decrease. Advances in the economy have shown that rates and home prices are more likely to increase together.2019-10-30T13:36:00-07:002019-10-30T13:38:12-07:00Emmett Carrtag:premieratlantahomesearch.com,2012-09-20:2043Common Things to Look Out for Before Buying Your Dream Home<img src="https://assets.site-static.com/userfiles/1682/image/3-questions-to-ask-before-buying-your-dream-home.jpg" alt="Common Things to Look Out for Before Buying Your Dream Home" title="Common Things to Look Out for Before Buying Your Dream Home" height="410" width="750" />
It is easy to become overwhelmed when you enter the home buying market. Friends, family, colleagues, and even acquaintances will give you their opinions if you are a first time home buyer. While most of them are looking out for your best interest, they are not fully aware of what is happening in the housing market.
It is important for you to be prepared and have your own questions ready. No matter what other opinions you are getting, you are the one buying the home and your comfort level will help make your final decision. Here are three important questions to ask before you purchase a home.
1. Why am I Buying a Home?
Regardless of the finances, it is important to think about what made you want to buy a home in the first place. Usually the reasons don’t have to do with money. Instead, home buyers are focused on how the house will impact their family in the future. A study done by the Joint Center for House Studies at Harvard found there are four reasons people buy a home. Those reasons include schools for your children, a safe environment, more room for your family to grow, and control of your own space.
These factors are the most common reasons people look to buy a new home. When you ask yourself why you are looking to purchase a home, do any of those factors come up? Spend time with your spouse or family members who are involved in this decision and determine why you want a home in the first place. Creating this list will help when searching for a home and can help your real estate agent find the best home for your needs.
2. What is the Trend with Home Values?
Our current economy and housing market is strong. That means home values and mortgage rates are increasing. If you are looking to purchase a home but want to stay within a budget, it may be in your best interest to move quickly. It is forecasted for these trends to continue in an upward motion, causing home values to continue to increase.
3. What About Current Mortgage Rates?
The ticket price is not the only thing you should be concerned with when purchasing a home. Mortgage rates are always changing and can have a huge impact on your monthly payments. Current trends show mortgage rates are rising. This is something to consider if you are debating the right time to purchase a home, since the rates may be even higher down the road.
Bottom Line
You and your family are the only ones who can determine the right time to purchase your dream home. It is important to decide exactly why you want a new home for your family and decide on a budget that will be comfortable moving forward. This budget may affect the amount of time you have to search for a home, since home prices and mortgage rates are increasing. 2019-10-30T13:36:00-07:002019-10-30T13:38:17-07:00Emmett Carrtag:premieratlantahomesearch.com,2012-09-20:2045Is Getting a Home Mortgage Still Too Difficult?<img src="https://assets.site-static.com/userfiles/1682/image/getting-a-home-mortgage.jpg" alt="Is Getting a Home Mortgage Still Too Difficult?" title="Is Getting a Home Mortgage Still Too Difficult?" height="410" width="750" />
Potential homebuyers are always cautioned to be aware of mortgage lending standards and the difficulty they might face when trying to obtain a mortgage. Credit availability is expanding, making it easier to get a mortgage now than it was a year ago. The market is still tight however, and homebuyers should be prepared to shop around until they find a lender who is offering something that will meet the needs of their family.
Mortgage lending companies have high standards so it is important to make sure you and anyone else who will be included on the mortgage have their credit in check. The mortgage market is strict because lenders do not want to be put in a situation where they are forced to repurchase loans that are not paid on. They also do not want to end up in a litigation situation due to loan issues.
What Has Happened to the Number of Mortgages?
Due to the strict nature and requirements of the lending companies, the number of mortgages given out has significantly dropped. A report by the Housing Financial Policy Center at the Urban Institute showed that about 6.3 million fewer mortgages were given out between 2009 and 2015. The reasons behind this statistic are strict regulations and policies. These mortgages would have been granted if the lending standards where more reasonable.
Mortgage companies rely on calculations to determine if a home buyer will become delinquent on their payment. They will not give you a loan if you are too much of a risk for them. Credit history has a huge impact on this decision since lenders can see how often you pay back your debts. The history they receive is extensive. This view into your financial past causes lenders to take less risk when lending to you for your mortgage.
The Effect on the Economy
The housing market is recovering at a slower pace than it should since less potential homebuyers are being offered loans. While the market is still recovering with positive trends, fewer buyers can create a strain on other economic factors like home goods or construction jobs. Bottom Line
After the housing market boom and bust, mortgage lenders became stricter in their lending standards. It is not impossible to get a mortgage loan, but it can still be difficult for potential home buyers. Stay on top of your credit and make sure you and anyone else who is applying are in a good financial position so you can be approved for a loan. It is important to research different companies and their requirements to ensure success in getting a mortgage.2019-10-30T13:36:00-07:002019-10-30T13:38:08-07:00Emmett Carr