My GenZ Child is still at home!!!!!

 If you are like me, you are still housing at least one of your children who has graduated high school, perhaps even College or beyond.  We are certainly not alone. National statistics indicate that more than 60%  f Generation Z still lives with one or more parents.  

The reasons for this certainly make sense.  College loans are saddling young adults with substantial monthly payments, buying a house requires money in savings for a down-payment, and rentals are hard to find and more expensive than ever.  Life in general seems to cost more in many areas.

This is not a failure on our part as parents. In fact it I believe it is an indication of a couple of positives for each of us.  First, we are able to provide a place for them.  I know my children would have preferred more privacy, but the roof over the head is a reasonable substitute.  Secondly, they are willing to stay with us in spite of the discomfort of perceived interference in their lives.  Third, we are providing them with the opportunity to pay down debt, and save for the future.

Even if our children leave the nest, but feel compelled to return, I believe we are the generation that has been prepared to handle the financial burden and the crowding.  We understand sacrifice, having that modeled by our Greatest Generation ancestors.  And we have been taught to love unconditionally, something that the current culture is trying to stifle if not outright destroy.  What a great time to model both of these for their future benefit.

I encourage you to be open to this possibility.  Sure, it may push out your plans to downsize or travel more, for example, but it does so much to benefit your offspring that I hope you see it as worth the cost.

In the meantime, if this means you might be staying put for a while, consider looking into refinancing to a lower rate or shorter term.  Use this time to pay down your own debt or close in on paying off your house while rates remain low.

As in our own house, grace is needed, so I wish the same for you.

Seven Important People in the Home Buying Process

 I really like this info from Better.com, which is an on-line lender:

If you've just started your homebuying journey, you may be wondering how much of the process you’ll have to navigate on your own. The truth is that buying a home is very much a team effort, and you’ll have an expert to help guide you at every step. Let's walk through 7 people you can expect to work with during the homebuying process, and clear up any confusion regarding what they do and when they'll do it.

Real estate agent

While you technically don’t need a real estate agent to buy a home, enlisting their services can spare you a lot of headaches. And for what it’s worth, the seller of the home you eventually purchase will most likely be working with an agent, so you might as well have someone advocating on your behalf. A real estate agent can help you find properties specific to your wants and needs, warn you about red flags you may not notice, negotiate with sellers on your behalf, assist you with compiling necessary documents, and more. Essentially, a real estate agent can be your expert guide through the homebuying process.

In your search for the ideal real estate agent, look for someone who knows the market you’re looking in and clicks with your personality. If you’d like some help, Better Real Estate can match you with a qualified real estate agent who will walk you through the entire process and work to meet all of your needs.

The seller

If you’re working with a real estate agent, you may not need to interact with the property’s seller, but there are some instances in which you may end up communicating with them directly. These instances can range from negotiating a price to asking about the property’s condition, getting a feel for the neighborhood, and so on. Remember to request a seller’s disclosure, which is a legally obligated document that lists any problems that the seller is aware of with the property.

Loan consultant

Unless you can afford to buy your home with cash, you will likely need to borrow money from a mortgage lender. Throughout this process, your primary point of contact will be your loan consultant. These individuals go by a few other names, such as loan officer and mortgage expert, but the role is essentially the same.

Loan consultants will do a lot of things for you: They’ll help you determine how much home you can afford, inform you what documentation is necessary for a loan approval, walk you through your mortgage options, and answer any questions you have about the financial aspects of purchasing your new home. To perform their job, loan consultants must have a mortgage loan originator license.

Processing expert

Your processing expert’s job is to review all the documentation you submit in your mortgage application. Then, if there are any discrepancies, they’ll work with you to make sure you have everything in order before your application reaches the underwriting stage.

Processing experts work hand in hand with the underwriter, whose role it is to determine the financial risk you present as a borrower and whether you’re approved for a loan or not. Unlike your processing expert, with whom you’ll be in frequent contact, it’s unlikely you’ll ever communicate with your underwriter directly.

Processing experts at Better Mortgage are also responsible for organizing your home appraisal and title search.

Home inspector

Once you make an offer and sign a purchase contract, you'll want to have a home inspector thoroughly examine the property for any damage. That way you can have confidence in what you’re paying for the home—and you can negotiate any necessary repairs with the seller before you move to the closing stage of the real estate transaction. A good home inspector will look for issues in the foundation, walls, roof, electrical circuits, HVAC, plumbing system, and other components that may require expensive repairs.

Most states require home inspectors to be licensed (some states, like California, Colorado, and Wyoming, do not), but all inspectors must undergo professional training.

Home appraiser

Appraisals are a required part of the mortgage approval process to determine the true market value of the home. Unlike a home inspector, an appraiser will assess the property on the lender’s behalf—not yours—to ensure that the lender doesn't lend out more money than the home is worth.

Every state requires home appraisers to be licensed or certified, and they will base their decision on the home’s structural integrity, the surrounding area, the prices of nearby homes, and the results of the home inspection. Your appraiser will not evaluate the property if the inspector decides there is too much damage.

Closing agent

A closing agent (also referred to as an escrow officer or settlement agent) is an important person at the end of the mortgage process. Their role is to review your contract and ensure each party has fulfilled their promises. They will also provide third parties (such as real estate agents) with escrow instructions and ensure all money goes where it needs to go. Closing agents are responsible for legally transferring ownership of the property. Once everything is in order, the property is officially yours.

Rounding out your homebuying team

We’ve covered the 7 individuals that are likely to play the biggest role in your homebuying journey, but this is by no means a definitive list. Depending on your circumstances—and where you live—you may work with an insurance agent, a title abstractor, and an attorney, among others.

Take some time to review your credit score and report - big impact potential on future home purchase

While you are thinking about a future home sale or purchase, you should also spend some time reviewing your credit score.  Your score can make a huge difference in the interest rates available to you, which then affects how much house you can afford to buy.  Now is the time to review your credit report and see where you can do some improvement. If you are concerned about your current score, there are credible companies in the market to help with credit improvement.

Everyone is entitled by law to get a copy of both their credit score and credit report annually.  The score is valuable in knowing what lenders are looking at, and your report is great to help you see details on payment history, utilization etc.  

 According to Stacey Smith at Experian.com, your credit score is determined by five different categories of information in your credit report.

1. Payment history is by far the most important factor of your credit report. It's essential to pay your bills on time, every single time. Any late payment is going to have a significant effect on credit scores. Your payment history accounts for about 35% of a credit score.
2. Utilization, which is the balance-to-limit ratio on your credit cards, is the second most important criteria. You never want a balance to be higher than 30 % of the credit limit on a single credit card or in total. To determine your utilization rate, add up all of your balances and all of your credit limits and divide the total of your balances by the total of your limits. That percentage should not be more than 30% as a maximum. The lower the percentages, the better. It's ideal to pay your balances in full each month. It has been found that the people with the best credit scores have zero late payments and utilization rates of less than 10%. Your utilization rate accounts for about 30% of your credit score.
3. Length of credit history, which is based on the length of time each account has been open and your credit mix, which is the different kinds of accounts you have including mortgage, credit cards, auto loans, etc. Having a variety of credit types can increase your score slightly, but you should not apply for a number of accounts all at once to try to improve this element. Doing so will do more harm than good because of the next element.
4. Recent activity looks at how much credit you've received or applied for in recent months. Specifically, it will look at if you have applied for new credit in the past 3-6 months, new inquiries, and whether you are paying off accounts or taking on more debt.
5. Overall capacity, such as how much installment debt is outstanding.

If you get a credit score, it will list the risk factors that are most affecting that number. You should focus on those factors and address those issues on the credit report and your scores will take care of themselves.

What have you done to improve the value of your home?

 When Kelly and I moved into our current home, we didn't even have a kitchen sink.  We had bought a fixer upper, and spent a couple of years getting it to the level it is today - happy to live in, still a ways to go to be perfect.  In doing the work, we have spent thousands of dollars, from new siding to flooring and a new kitchen.  She has kept a running list of all that we have done so when we finally take a break and look at it all, we can see all that we have done that is new to us.

You should consider making a similar list as you go along while living in your current home.  When you make a change or improvement it can have a positive impact on the price you are able to get for your home when you sell.  On the other hand, things you do to increase your enjoyment of your home may not make it sell any higher, but still provide you great joy while you live there.

For example - a kitchen renovation, changing countertops, appliances and cabinets will most likely have a plus effect on your selling price - provided of course you make changes that are consistent with the styles and needs of future buyers.  Finishing a walkout basement for fun and play can bring you a great deal of pleasure while you live there, and depending on the quality of effort, can bring a future payday as well.  

There are other improvements you may want to do to increase your enjoyment of your home, that may not affect the price.  These are changes you make for your current benefit.  There is nothing wrong with these, but you need to understand that not every change puts future cash in your pocket.  Changing the color of the walls to your preferred shades may or may not please future buyers, but if it helps you like your home better, why not?  You can always paint again later.  Replacing carpet with hardwoods, retiling a bathroom, or changing out bathroom fixtures are also things that you should just plan to enjoy! Replacing worn out HVAC, roof or siding are all desirable features for a buyer but these are parts of a house that are expected to be there and be functional.

If you think that you are going to need to improve the kitchen, change colors or replace appliances in order to maximize your opportunity to sell, the temptation is to wait until close to selling to make the buyers happy.  The question you need to ask is: if the change is good for the next owner, is it good for me?  Don't miss out on the enjoyment of improvements while you are living in your house.  You may end up liking them so much you stay.

There are many great on-line sources of trends in home renovations and home decor that you can check out any time.  Most big box stores, paint stores and real estate sites will feature this info. These show you the trends in colors, countertops, appliances, etc., that future buyers may prefer.  They may also give you some ideas for your own enjoyment, whether you pay someone to make the change or you take time to do it yourself.

Keep track, though, of what you invest in improvements, so you can review with your Realtor prior to listing,  It will help with valuation, as well as telling the story to potential buyers.  In the meantime, enjoy!

My Commitment to Fair Housing

 As you visit this blog, you will see that what I am writing about has applicability to everyone.  I subscribe fully to the National Association of Realtors Fair Housing declaration.  Everything I do in my profession strives to follow these important statements.  My personal walk is no less committed. 

If you have any questions about anything on my site related to fair housing, or questions about the declaration below please ask me immediately.

Here is a link to the Fair Housing brochure of HUD for your benefit.

As a Realtor I agree to:

• Provide equal professional service without regard to the race, color, religion, gender (sex), disability (handicap), familial status, national origin, sexual orientation or gender identity of any prospective client, customer, or of the residents of any community.
• Keep informed about fair housing law and practices, improving my clients’ and customers’ opportunities and my business.
• Develop advertising that indicates that everyone is welcome and no one is excluded;, expanding my client’s and customer’s opportunities to see, buy, or lease property.
• Inform my clients and customers about their rights and responsibilities under the fair housing laws by providing brochures and other information.
• Document my efforts to provide professional service, which will assist me in becoming a more responsive and successful REALTOR®.
• Refuse to tolerate non-compliance.
• Learn about those who are different from me, and celebrate those differences.
• Take a positive approach to fair housing practices and aspire to follow the spirit as well as the letter of the law.
• Develop and implement fair housing practices for my firm to carry out the spirit of this declaration.

How much will I owe on my house when I sell it?

This is great information to know.  When you take the amount you owe, the value of your house, and selling expenses, you will have a good idea of what funds you will have to work with on another house, or what you would have available for a line of credit, refinance, etc.  The difference between the estimated value of your house and the payoff of your mortgage is your equity and is considered part of your net worth.

To determine what you owe on your mortgage is a fairly straightforward calculation. Depending on the interest rate you obtained from your lender, and the length of your mortgage life, you will pay down your mortgage at a rate established by the two.  Each month you pay approximately 1/12 of the interest on the balance, with the rest of the payment made of principle - paying down what you owe.  While there may be taxes and insurance of various kinds, the part of the payment that matters is the principle.  You can see how as you pay down the balance of the loan, the 1/12 interest is charged to a lower and lower balance.  That is why so little of the principle is paid in the first few years and so much near the end of the loan.

I remember when Kelly and I closed on our house.  Among all the paperwork were several pages of the amortization of our mortgage.  In other words, we received a statement of the balance of our mortgage each month for the entire 30 years of our loan.  We could look at a particular date and see what the approximate payoff of our mortgage would be.

Now, you may be like me, and have no idea where that document is, but if you do, it is nice to know what you are going to owe in a couple of years so may want to put it in a place you can easily reference.

As an alternative to this paperwork, there are several on-line calculators designed just for answering this question.  I use Karl's mortgage calculator but there are many others, including lender websites and apps.  These are designed so you can enter in your interest rate, term and start date, then you are able to find out how much your principle will be at any given date.

What is your house going to be worth in a few years?

This is one of the great mysteries of the universe.  Home values generally tend to increase over time, but the rate of increase is tied to a wide range of factors.  We have seen rates of increase from 1 to 15% a year in the Upstate. Here are a few of those factors influencing rate for you to think about - some you can control, some you cannot.  

House prices tend to rise more quickly when there is a shortage of homes for sale, and interest rates are low.  The lower interest rates will draw more buyers into the market, where they compete for the smaller number of available houses.  This competition will bid up house prices more quickly.  As long as appraisers keep increasing their values accordingly, your house will benefit from this general market rise.  This has been happening throughout 2020 in the Upstate, as the demand for housing on all price levels and almost all locations has been well above the available supply.  I have had several houses for sale that quickly had multiple buyers competing for the contract, which influenced them to sometimes offer above asking price.

House pricing increases at a slower rate when there is ample inventory and the buyers in the market have choices,  When I first became a Realtor, the market was more like this.  Houses could stay on the market for six months or more, and sellers often had to make pricing concessions in order to obtain a buyer.

The price of a house is also tied to the value of its features.  We have all heard location, location, location as a prime value for real estate.  This has not changed, and certain communities have seen above average increases, but of course, you can't move your house, so your increases from location are not in your control.

Another way you can increase the value of your home is by making upgrades.  This can be as simple as the color of the front door, to entire roof replacement or a kitchen makeover.  There are two reasons to make these changes.  The first is because you want to for your own benefit.  The second is as an investment for the future value of the home.  You might want to check with a Realtor, or investigate some of the real estate websites in order to get a better idea of what really increases value before you make the decision, if it is for investment purposes.

Finally, one way most of us can do at no real cost, is maintenance.  The value of a well kept yard, clean and tidy garages or carports, and well maintained features such as clean roof, windows, etc. should not be overestimated.  

Regardless of the market or your actions, your home should certainly be worth more in two years that it is worth today.  Be encouraged by that, whether you intend to sell or not.