Northern Virginia Real Estate and Community News

Oct. 12, 2017

The Importance of Home Equity in Retirement Planning

The Importance of Home Equity in Retirement Planning | MyKCM

We often discuss the difference in family wealth between homeowner households and renter households. Much of that difference is the result of the equity buildup that Northern Virginia homeowners experience over the time that they own their home. In a report recently released by the nonpartisan Employee Benefit Research Institute (EBRI), they reveal how valuable equity can be in retirement planning.

Craig Copeland, Senior Research Associate at EBRI, recently authored a report, Importance of Individual Account Retirement Plans and Home Equity in Family Total Wealth, in which he reveals:

“Individual account retirement plan assets, plus home equity, represent almost all of what families have to use for retirement expenses outside of Social Security and traditional pensions. Those families without individual account assets typically have very low overall assets, so they have almost nothing to draw from for retirement expenses.”

The report echoed the findings of a working paper, Home Equity Patterns among Older American Households, authored by Barbara Butrica and Stipica Mudrazija of Urban Institute. Fannie Mae highlighted these findings for their blog The Home Story this past winter, quoting Butrica and Mudrazija:

 “For most adults near traditional retirement age, a home is their most valuable asset — dwarfing retirement accounts, other financial assets, and other nonfinancial assets. Although relatively few retirees tap into their home equity, having it provides financial security… In fact, many retirement security experts argue that the conventional three-legged stool of retirement resources — Social Security, pensions, and savings — is incomplete because it ignores the home.”

USAToday interviewed two area experts to comment on the EBRI report. Randy Bruns, a private wealth adviser with HighPoint Planning Partners, agreed with the findings:

“Social Security and home equity are major pieces of the retirement puzzle.”

Wade Pfau, Professor of Retirement Income at The American College of Financial Services and author of Reverse Mortgages: How to use Reverse Mortgages to Secure Your Retirement, said having the equity without a plan to use it won’t help:

“Home equity is a very important asset for American retirees, and so it is important to think about how to make best use of home equity in retirement planning.”

Bottom Line

Whether you use the equity in your home through a reverse mortgage or by selling and downsizing to a less expensive home, it should be a crucial piece of your retirement planning. Not sure what this means for you and your family? Give me a call and we can hash it out. 

Posted in Real Estate News
Oct. 5, 2017

Empty Nesters: Best to Remodel or Time to Sell?

 

Empty Nesters: Best to Remodel or Time to Sell? | MyKCM

Your children have finally moved out and you and your spouse now live alone in a four-bedroom colonial (or a similar type of house). You have two choices to make:

  1. Remodel your house to fit your current lifestyle and needs
  2. Sell your house and purchase the perfect home

Based on the record of dollars spent on remodeling and renovations, it appears that many homeowners are deciding on number one. But, is that the best long-term solution?

If you currently live in a 3-4-bedroom Northern Virginia home, you probably bought it at a time when your children were the major consideration in determining family housing needs. Along with a large home, you more than likely also considered school district, the size of the property and the makeup of other families living in the neighborhood (example: you wanted a block with other kids your children could play with and a backyard large enough to accommodate that).

Remodeling your home to meet your current needs might mean combining two bedrooms to make one beautiful master suite and changing another bedroom into the massive walk-in closet you always wanted. However, if you live in a neighborhood that historically attracts young families, you may be dramatically undermining the value of your house by cutting down the number of bedrooms and making it less desirable to the typical family moving onto your block.

And, according to a recent study, you will recoup only 64.4% of a remodeling project’s investment dollars if you sell in the future.

Your home is probably at its highest value as it stands right now. Instead of remodeling your house, it may make better financial sense to sell your current home and purchase a home that was built specifically to meet your current lifestyle and desires.

In many cases, this well-designed home will give you exactly what you want in less square footage (read less real estate taxes!) than your current home.

Bottom Line

If you are living in a house that no longer fits your needs, at least consider checking out other homes in your area that would meet your lifestyle needs before taking on the cost and hassle of remodeling your current house.

 

If you're having a tough time deciding, or if you already know you want to move, give me a call and we'll talk it through. As a certified senior real estate specialist, I am specially trained to help with your needs.

Posted in Selling Your Home
Sept. 28, 2017

It’s Not Personal!


My job as a realtor is to help you to present your house in the best possible light in order to sell it quickly and at the highest possible price. In doing that, sometimes, I have to give you a “to-do” list that might have the tendency to hurt your feelings. Don’t let it! Please don’t take your realtor’s advice as any sort of personal insult. I promise we only have your best interests at heart. Here are some of the things we might tell you that have the ability to give you the wrong impression:

 

De-clutter as much as possible. Remove as many photos and personal effects as you can.

It’s not that we think your family is ugly or that Grandma Edna’s photo over the mantle is going to be offensive to anyone. Research has proven that people looking at your home are trying to picture themselves and THEIR family living there. If your family photos and tchotchkes are all on display, that makes it tougher for the home buyer to picture your home as their own.

 

Light some candles (if someone is going to be present, of course) bake a pie, or plug in an air freshener.

Every home has a certain smell that is just a product of your living style. Whether it’s got a hint of coffee, recent baking or…. Gah…. cat pee, the aroma of your home is giving off a vibe. Most people enjoy the smell of candles or baking or, the best yet, fresh air. By presenting a welcoming aroma, you can start the home tour off on a good note.

 

Consider painting in neutral colors.

We’re not trying to hinder your creativity or personal style. We ARE trying to sell your home and that’s much easier to do if a buyer is able to look at your house and think they can move in and not have to instantly do all sorts of painting and redecorating to get closer to their own style. Neutral colors help give them that feeling.

 

We need to get rid of all the kid (or dog) toys everywhere.

No, we don’t hate children or dogs. We have them too. But, the buyer may not have children or may have dog allergies or an aversion to animals. By having their things strewn around the house, you are not only creating a possible trip hazard, but you are making it tougher for a buyer to picture your home as their own as we discussed in the beginning.

 

Remember, the goal of the home showing is to enable the buyer to see all the wonderful features of your home and to be able to visualize themselves living there. We want them to see it so clearly in their mind’s eye that they will make you a fabulous offer.  If we give you advice and you are feeling a little hurt by it, please ask us to explain. We certainly don’t want to hurt your feelings. It’s not personal, it’s just good business.

 

If I can ever be of assistance in your home purchase or sale, feel free to give me a ring.



Posted in Selling Your Home
Sept. 14, 2017

How Your Home’s Value Grows Your Family’s Wealth

How Your Home’s Value Grows Your Family’s Wealth | MyKCM

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 Northern Virginia 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?

How Your Home’s Value Grows Your Family’s Wealth | MyKCM

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.

Bottom Line

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!

Sept. 7, 2017

Number of Buyers Putting Down Less Than 10% Hits 7-Year High

Number of Buyers Putting Down Less Than 10% Hits 7-Year High | MyKCM

 

According to Black Knight Financial Service’s Mortgage Monitor Report, 1.5 million Americans have purchased a home with down payments under than 10% over the last 12 months. This is great news for buyers as this marks a 7-year high.

Many mortgage programs offered by agencies like Freddie Mac and Fannie Mae allow buyers to put down as low as 3% to purchase their dream homes. The strength of the housing market has aided buyers who used low-down-payment programs to buy. As a recent CNBC article points out,

“Defaults on recent low down payment loans, so far, are slow, but that is as much a factor of the good credit quality as it is the strength of the housing market. Home prices are rising incredibly fast, meaning those borrowers are gaining equity in their homes quickly.”

Low down payments aren’t just great for first-time homebuyers. These programs have allowed homeowners who want to capitalize on the equity they have in their homes to use the profit from their sale to pay off high-interest credit cards, fund education or even start a business.

According to a new Census Report, the Annual Survey of Entrepreneurs, home equity was used to start 7.3% of all businesses in the United States, which equates to over 284,000! The industries that saw the most growth from home equity are accommodation & food services, manufacturing and, retail trade.

Bottom Line

Gone are the days of ‘20% down or no mortgage.’ What could you build with the equity in your house? Let’s get together today to evaluate your ability to achieve your dreams today!

Aug. 31, 2017

I learned a Few Things This Week

When going to close on a home this week, I learned a few things I thought I'd share with you. 

 

 

 

robin from Robin Butler on Vimeo.

Posted in Buying a Home
Aug. 24, 2017

Major Changes for Mortgage Qualifications Made in July 2017 Could Help You!

Mortgage changes help buyers 

Fannie Mae has automated underwriting software (DU) that looks at the combination of property, credit, income, and liquid assets to assign an overall Risk Assessment Score to each transaction. There are major changes that happened in July to the way this Risk Assessment is performed that will potentially help you qualify to purchase a home, or qualify to purchase a more expensive home in Northern Virginia.

1. Fannie Mae & Freddie Mac are increasing Max Debt to Income Ratio (DTI) from 45% to 50%

This may help you qualify for a larger, slightly more expensive home purchase.

2. Self-Employed Loan Changes

There are many self-employed people these days and that income has always been tough to use in a loan.  Self-employed borrowers may now be able to buy based on their most recent year’s tax return – with higher income than on income averaged over 2 years. This means you may be able to buy sooner or buy a more expensive home if your business is fairly new.

3. The Credit Bureaus will no longer include Judgements and Tax Liens on the Credit Report

This will happen UNLESS there are 3 matching data points (Full name, address, and either SSN or Date of Birth) for these judgements. This means about 6% of people with credit scores will see them increase. And, for people who are wrongly matched to a Judgement or Tax Lien – their scores will improve – possibly up to 40 points. That’s HUGE for buyers.

4. Fannie Mae and Freddie Mac will be aligning maximum loan to value (LTV) rates for Adjustable Rate Mortgages (ARMs) with Fixed Rate Mortgages up to a maximum of 95% LTV.

These lower ARM rates may allow you to qualify for a more expensive home.

5. Less Hassle with Disputed Trade lines (When a client disputes the information reported by a creditor)

In the past,  when a client has disputed the information reported by a creditor – that trade line is ignored by the Credit Bureaus in assigning a credit score and it is ignored by DU in determining its Risk Assessment score. All disputes had to be resolved prior to settlement so that DU could provide a more accurate Risk Assessment. Now, the computer assessment program (DU) will include Disputed Trade lines in its initial Risk Assessment. This means qualified borrowers may not have to resolve a dispute prior to settlement.

This is all good news in helping you to be able to buy sooner and buy more than ever before. If you’d like to discuss how this might affect your personal situation, feel free to contact me and we’ll take a look at where you stand.

Aug. 17, 2017

Be Careful Not to Get Caught in The Rental Trap!

Be Careful Not to Get Caught in The Rental Trap! | MyKCM

There are many benefits to Northern Virgina homeownership. One of the top benefits is being able to protect yourself from rising rents by locking in your housing cost for the life of your mortgage.

Don’t Become Trapped 

A recent article by ConsumerAffairs addressed the continuous rise in rents, stating:

“The cost of putting a roof over your head continues to go up. Not only are home prices still rising, but the cost of rent rose 0.5% in June.”

Additionally, in the Joint Center for Housing Studies at Harvard University’s 2017 State of the Nation’s Housing Report, it was revealed that,

“Despite a slight improvement from 2014, fully one-third of US households paid more than 30 percent of their incomes for housing in 2015. Renters continue to be more likely to face cost burdens…the number of cost-burdened renters (21 million) considerably outstrips the number of cost-burdened owners (18 million) even though nearly two-thirds of US households own their homes.”

These households struggle to save for a rainy day and pay other bills, including groceries and healthcare.

It’s Cheaper to Buy Than Rent 

As we have previously mentioned, the results of the latest Rent vs. Buy Report from Trulia shows that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.

The updated numbers show that the range is an average of 3.5% less expensive in San Jose (CA), all the way up to 50.1% less expensive in Baton Rouge (LA), and 33.1% nationwide!

Know Your Options

Perhaps you have already saved enough to buy your first home. A nationwide survey of about 24,000 renters found that 80% of millennial renters plan to eventually buy a house, but 72% cite affordability as their primary obstacle. Aside from affordability, one in three millennial renters have concerns about their credit scores, and another 53% said that a down payment is an obstacle.

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream homes. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap that so many renters are currently in. If you are ready and willing to buy a home in Northern Virginia, find out if you are able. Let’s get together to determine if you can qualify for a mortgage now!

Posted in Buying a Home
Aug. 10, 2017

Top 7 Must Read Blogs for Back To School

School is getting ready to start all around the Northern Virginia area. Do you and your family have everything set and ready to go? Here are some of our favorite blogs and websites for gearing up. 

101 Back to School Tips for Kids and Parents

This comprehensive list covers all sorts of "family" tips and rules. Pack lunch before bed. Lay your clothes out the night before.......... the things that will make life easier when the big day comes.

VA School Supply lists

If your students are headed back to Northern Virginia schools, here is a link to the requested school supplies. Don't forget the tissues!

8 Back to School Tips Every Student Should Know

Contrary to your teen's popular belief, it's NOT all about what to wear the first day. The reason for the season is actually to learn. Here are some great tips to getting organized and ready for a great year. My favorite tip is #6 Get Involved. So many kids just go to school, do their work and leave. By getting involved in something on campus, not only are they increasing their learning potential but they are learning to deal with other people in PERSON and not just via their phones.

12 Study Tips for Back To School

And, speaking of learning, this blog will help set your student up for academic success with some great study tips. I found #1, Don't just have one study space, interesting. I had always thought that your space was your space and that it was sacrilegious to change. But, the article makes the good point that changing scenery now and then can be inspiring.

Tips for Happy Lunch Boxes

We scoured the web for some of the best back to school lunch recipes ever. Be sure to check them out on my "Favorite Recipes" Pinterest board.

Back to School Outfits for teen girls

If you're like me, when growing up, I couldn't wait until that back to school issue of Seventeen magazine came out. Girls everywhere still seem to rejoice but now they read it online and can click right there to buy their first-day outfit. Me, I had folded tabs, sticky notes, and lists galore. Do kids today even know what sticky notes are?

Back to school must have gadgets 

In my school days, our "gadgets" consisted of a calculator or, if you were REALLY cool, a calculator watch. Now, there are things like note taking pens, the Echo Dot and wireless everything. This list will give you a start on what the kids might be pushing for.

 

Have you seen any good blogs or tips for back to school? If so, please share in the comments below.

Posted in Community Events
Aug. 3, 2017

Don't Get Scammed by a Wire Fraud Scheme

Today we have a guest blog from our friend Keith Barrettat Vesta Settlements regarding Wire Fraud. This post originally appears on their blog. 

 

wire fraud

 

Several attempts have been made recently in the real estate industry to divert funds from both Buyers and Sellers during the closing process. The fraudulent schemes typically involve the hacking of public domain email accounts (e.g. Gmail, Hotmail, Yahoo, AOL etc.) and/or the creation of a similarly named account through which the perpetrator creates a separate thread of communication. In these cases, hackers monitor the emails of agents, buyers, and sellers in an effort to gain information regarding transaction details. They then use this information and the hacked email account to direct transaction funds to their own bank accounts. Once the funds are wired pursuant to the fraudulent instructions, there is little or no chance of those funds being recovered.

These emails can appear genuine and can even contain the logos or branding of the title company, agents or lender. In most cases, the emails are written with a sense of urgency that the wire must be made as soon as possible, prior to the closing date. These emails often contain poor sentence structure, grammar mistakes, and the use of different fonts but this is not always the case.

Vesta Settlements takes necessary measures to protect personal, non-public information through appropriate information security and privacy management policies and procedures.

However, despite these efforts, cyber crime will continue and evolve – vigilance and consistent attention from all parties to a transaction are crucial.

Steps you can take to prevent Wire Fraud on your own transactions:

  • Don’t use public domain email accounts for business purposes
  • Use encrypted email for emails that contain sensitive information
  • Sellers should bring wire instructions to closing instead of emailing them to the title company prior to closing
  • Buyers should confirm all wire instructions directly with the title company on the phone ahead of closing or before making a wire transfer
  • Be Cautious. Scrutinize all emails pertaining to transaction funds. If you think something seems slightly “off”, pick up the phone and speak directly with the parties involved in your transaction.
  • If you are a real estate agent, provide a copy of this alert to all of your clients

To download a PDF copy of this blog post, please click here.

 

 

 

 

 

 

Posted in Real Estate News