Homeowners: Here's what's in the tax bill for you

Republicans on Friday unveiled the final version of their tax bill, and it has new restrictions for some homeowners.

Senate and House Republicans have reconciled their versions of tax legislation and the final plan shrinks some popular deductions. Lawmakers aim to vote on the bill next week and then send it to President Trump's desk.

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How do I buy a home?

The real estate market is soaring.

But Millennials shouldn't feel pressure to get in on the action, according to financial experts. They're the largest group of homebuyers in the market today.

Buying a home is one of the most -- if not the most -- significant purchases of your adult life. So, you'll want to make sure you're really ready.

Here are three steps that'll help you do that:

Sort your money out

First and foremost, get your finances in order before skipping off to find your dream home. This means understanding your total income and what it can buy.

While there are lots of online calculators out there to give you some quick numbers, approach with caution.

"Calculators online can be deceiving in that they don't consider all expenses," says Brett Spencer, a financial planner with D3 Financial Counselors.

The general rule according to experts is to spend no more than 30 to 38% of your monthly (pre-tax) income on housing costs. This includes all costs involved in homeownership -- from monthly loan payments to insurance. But you may need to err on the conservative side if your expenses are high.

Next you'll need to figure out exactly how much you should have saved.

Sure, you'll need enough to afford a down payment on the house -- typically about 20% of the purchase price. In some cases you might be able to put down significantly less, though you'll probably be required to pay mortgage insurance as well.

But having a down payment isn't enough. You may also need savings to cover a couple months' worth of mortgage payments that the bank will expect to see, plus enough to cover home insurance and possibly mortgage insurance, and also closing costs -- between 2 to 5% of the purchase price -- before you get to the closing table. Plus, you want to make sure you have enough to buy furniture, still pay your monthly expenses, and cover emergencies, too.

While that sounds daunting, a little careful planning can get you there over time. Budgeting is a big part of the process, so allocate what money you'll need by setting up a savings account toward getting your future house.

So where do you find the savings?

If you're living paycheck to paycheck, it's time to get comfortable and take a close look at your budget to figure out where you can cut back. Financial planners recommend sitting down with a professional to look through your finances and form a game plan.

Elizabeth Miller an adviser with Summit Place Financial suggests living in a low-rent apartment to save for the down payment on your future home.

"Save any extra income -- put aside bonuses or incentive payments you earn," says Miller.

Shop around for your mortgage

Since a home is a pretty big purchase, you're probably going to need a loan. But there are a wide variety of mortgage options to choose from. Work with a professional mortgage provider before house shopping to go over the options and figure out what you qualify for.

It's probably a good idea to stick to the basics. The most common mortgage is a fixed interest rate over a number of years -- usually either 15 or 30. The main benefit of a fixed rate is consistency, meaning steady payments over the life of the loan. While 15 years of payments will save you money on interest and allow you to pay off your loan sooner, spreading the loan out over 30 years might make the monthly payments more affordable for you.

The mortgage qualification process is called pre-approval. If you get pre-approved for a mortgage of a certain amount, the lender will give you a letter that you can present to sellers to show you have access to the money for the home you're bidding on.

To move forward with the pre-approval process you're going to need good credit, at least some money to spare, and a steady job.

Keep in mind, mortgage lenders will require protection in case you default on paying your mortgage.

"As a first-time buyer, you usually add insurance to your mortgage," says Miller.

But a higher down payment could spare you the added expense of insurance. According to Miller, most lenders will want a down payment of at least 20% to avoid paying for mortgage insurance.

Find a home

It's finally time to shop for your dream home. When looking at a house, put the time in to get familiar with the place. And know that while you're shopping around, just because you make an offer does not mean you're committed to buying that home.

Pay attention to the layout and structure of the house. Hire a good home inspector, and ask lots of questions about the property. These are your first line defenses against a bad buy, according to experts. Spending a little more money on help in finding the cracks can save you a lot down the road. Knowing the facts before signing a contract can also help you negotiate a lower price on the property or walk away from thousands of dollars in repairs.

If you find problems with your future house, let the seller know and ask for a discount. The last thing you want is a property with a lot of problems that you didn't anticipate.

"Educate yourself on the real estate market and read and understand the terms of the contract" says Sarah L. Carson a financial consultant with Fulcrum Financial Group. "Use your head, not your heart."

Original Article from CNN

Ken Keegan Real Estate Broker
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How to buy your first home

The real estate market is soaring.

But Millennials shouldn't feel pressure to get in on the action, according to financial experts. They're the largest group of homebuyers in the market today.

Buying a home is one of the most -- if not the most -- significant purchases of your adult life. So, you'll want to make sure you're really ready.

Here are three steps that'll help you do that:

Sort your money out

First and foremost, get your finances in order before skipping off to find your dream home. This means understanding your total income and what it can buy.

While there are lots of online calculators out there to give you some quick numbers, approach with caution.

"Calculators online can be deceiving in that they don't consider all expenses," says Brett Spencer, a financial planner with D3 Financial Counselors.

The general rule according to experts is to spend no more than 30 to 38% of your monthly (pre-tax) income on housing costs. This includes all costs involved in homeownership -- from monthly loan payments to insurance. But you may need to err on the conservative side if your expenses are high.

Next you'll need to figure out exactly how much you should have saved.

Sure, you'll need enough to afford a down payment on the house -- typically about 20% of the purchase price. In some cases you might be able to put down significantly less, though you'll probably be required to pay mortgage insurance as well.

But having a down payment isn't enough. You may also need savings to cover a couple months' worth of mortgage payments that the bank will expect to see, plus enough to cover home insurance and possibly mortgage insurance, and also closing costs -- between 2 to 5% of the purchase price -- before you get to the closing table. Plus, you want to make sure you have enough to buy furniture, still pay your monthly expenses, and cover emergencies, too.

While that sounds daunting, a little careful planning can get you there over time. Budgeting is a big part of the process, so allocate what money you'll need by setting up a savings account toward getting your future house.

So where do you find the savings?

If you're living paycheck to paycheck, it's time to get comfortable and take a close look at your budget to figure out where you can cut back. Financial planners recommend sitting down with a professional to look through your finances and form a game plan.

Elizabeth Miller an adviser with Summit Place Financial suggests living in a low-rent apartment to save for the down payment on your future home.

"Save any extra income -- put aside bonuses or incentive payments you earn," says Miller.

Shop around for your mortgage

Since a home is a pretty big purchase, you're probably going to need a loan. But there are a wide variety of mortgage options to choose from. Work with a professional mortgage provider before house shopping to go over the options and figure out what you qualify for.

It's probably a good idea to stick to the basics. The most common mortgage is a fixed interest rate over a number of years -- usually either 15 or 30. The main benefit of a fixed rate is consistency, meaning steady payments over the life of the loan. While 15 years of payments will save you money on interest and allow you to pay off your loan sooner, spreading the loan out over 30 years might make the monthly payments more affordable for you.

The mortgage qualification process is called pre-approval. If you get pre-approved for a mortgage of a certain amount, the lender will give you a letter that you can present to sellers to show you have access to the money for the home you're bidding on.

To move forward with the pre-approval process you're going to need good credit, at least some money to spare, and a steady job.

Keep in mind, mortgage lenders will require protection in case you default on paying your mortgage.

"As a first-time buyer, you usually add insurance to your mortgage," says Miller.

But a higher down payment could spare you the added expense of insurance. According to Miller, most lenders will want a down payment of at least 20% to avoid paying for mortgage insurance.

Find a home

It's finally time to shop for your dream home. When looking at a house, put the time in to get familiar with the place. And know that while you're shopping around, just because you make an offer does not mean you're committed to buying that home.

Pay attention to the layout and structure of the house. Hire a good home inspector, and ask lots of questions about the property. These are your first line defenses against a bad buy, according to experts. Spending a little more money on help in finding the cracks can save you a lot down the road. Knowing the facts before signing a contract can also help you negotiate a lower price on the property or walk away from thousands of dollars in repairs.

If you find problems with your future house, let the seller know and ask for a discount. The last thing you want is a property with a lot of problems that you didn't anticipate.

"Educate yourself on the real estate market and read and understand the terms of the contract" says Sarah L. Carson a financial consultant with Fulcrum Financial Group. "Use your head, not your heart."

Original Article from CNN Real Estate

Ken Keegan Real Estate Broker
(910) 523-0903 mobileEmail Mewww.KenKeegan.com Click here for more information on Brunswick, County Real Estate St. James Plantation

How to save enough money for a down payment on a home

Saving up a down payment to buy your first house can seem a pretty daunting task. If you've never had more than a few thousand dollars in the bank at any given time, then setting aside five figures or more may seem impossible.

However, getting a down payment together is not as difficult as you may think -- if you go about it the right way.

The first step in saving up your down payment is to pin down the amount you can responsibly spend on a house. Lenders will typically limit your mortgage amount so that your monthly housing payments (including property taxes and insurance) will not exceed 28% of your pre-tax monthly income.

But if your income is a bit iffy -- for example, if your pay fluctuates seasonally or you work in an industry with high turnover -- shoot for a lower percentage, perhaps 20% or so. After all, home ownership usually comes with additional expenses beyond that monthly housing payment: repairs, additional utility bills, homeowner's association fees, and so on.

A homebuying calculator can help you figure out just how much home you can afford -- but remember that no calculator can account for every aspect of your financial situation.

Set a savings plan

Once you know how much you need to save, the next step is to figure out how much you can set aside each month. That will also help you determine how long it will be before you'll have the full down payment and can start house-shopping.

For example, if you plan to save $45,000 for a down payment, setting a time frame of five years to save $45,000 means you'll need to save about $9,000 per year, or $750 per month, to make it happen.

Squeezing an extra $750 per month from your monthly budget will likely mean some serious cutting of expenses and/or finding new sources of income, such as a side hustle.

You can play around with a savings calculator to see how different time frames will affect your monthly savings requirements.

Speed up the process

One way to make the saving process go faster is to get better returns on the money you're saving by investing part of it in stocks. It's a riskier course of action than sticking the money in a savings account, but if you have several years before you buy a home, then it could greatly accelerate your savings plan. It would also mean you don't have to save quite as much to reach your goal, because your money would be earning more money for you.

Your best bet is likely to choose a stock index ETF or two, which will instantly diversify your holdings, thereby reducing your risk of losses. Then hang on to the investment and let it grow for as long as possible, bearing in mind that you may have to ride out some ups and downs in the market.

Also, don't put all of your down payment money into stocks; limit yourself to about 25% of the whole. That way, if the market heads in the wrong direction just as you're looking to buy a home, most of your savings will be protected. The rest of the money can go into a savings account -- but don't limit yourself to your local bank's offerings, because many internet banks pay much higher interest rates on their money market accounts than you could get from a standard savings account at your neighborhood branch.

Borrowing from your 401(k)

If you have a well-funded 401(k) account, you can borrow up to half the money (to a maximum of $50,000) and use that money as part or all of your down payment. You will have to pay the money back within five years, including interest, but at least the interest payments will go to you and not to some other creditor (the interest is paid into your 401(k)).

However, there are some potential drawbacks to tapping your retirement accounts for non-retirement purposes. If you don't get the money paid back, not only will your retirement savings suffer a crippling hit, but you will have to pay both income taxes and penalties on the entire amount outstanding.

Plus, if you change jobs during the repayment period, you'll be required to pay back the remaining balance within 60 days. Finally, taking money out means there's less money in the account earning returns for you, which could derail your retirement savings plans.

Bottom line: A 401(k) loan may be an option for getting your down payment, but it's risky -- and don't even consider it if there's a chance you may change jobs in the next five years or if you're within 10 years of retirement.

If 20% down just isn't possible

The traditional 20% down payment is still the best option. For one thing, it lets you skip private mortgage insurance, an annoying expense that can put yet more strain on your budget.

But if 20% down is not in the realm of possibility, there are programs that can get you into a house with a much smaller sum. For example, FHA programs let you pick up a mortgage with as little as 3-1/2% down if your credit score is at least 580.

Assuming that you decide to shoot for a mortgage of $180,000, saving a 20% down payment allows you to set a maximum affordable home value of $225,000 -- and calls for a down payment of $45,000. On the other hand, if you decide to save only 3.5%, then the most house you could afford would be about $190,000 -- that will give you a mortgage of $183,350 and a down payment requirement of $6,650.

Original Article from CNN

Ken Keegan Real Estate Broker
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New Listing: 4132 Winthrop Circle

 

4132 Winthrop Circle

St. James Plantation

Buildable Lot

$24,900

 This is a great homesite in the Georgetown section of St. James Plantation. It is located on a private cul-de-sac and backs up to the Reserve section. Just perfect for building your dream home. House plans are already approved, on hold and available to the buyer. Club membership is inactive. Buyer is required to activate a club membership at closing. St. James Plantation is a gated community with amenities to include 81 holes of golf, tennis, full service marina on the ICW, private oceanfront beach club, over 15 miles of biking/walking trails, indoor and outdoor pools, and athletic facilities.

 

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Estate Broker

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7 first-time homebuyer mistakes to avoid

It's tough being a first-time buyer in today's housing market.

Home prices are hitting record highs in many parts of the country, often selling for more than the asking price, and going from list to contract in a record 37 days, according to Redfin.

"We've never seen a faster or more competitive market," says Redfin spokeswoman Rachel Musiker. "Basically this market isn't for the faint of heart."

Don't make it even harder (or more expensive) for yourself by making these common mistakes:

1. Assuming you won't get approved for a mortgage

Ideally, you'd like to have as little debt as possible, an impeccable credit score, and a 20% down payment before borrowing money for a home. However, even borrowers with less can get loans in today's market, thanks to options like Federal Housing Authority loans, which are meant to help out low-income and first-time buyers.

2. Interviewing only one lender

The fees and rates offered by lenders may vary substantially, and they all offer different service levels and different loan products. Be sure to at least chat with a big bank, a regional bank or credit union, and an online lender.

3. Not getting pre-approved early on

Getting pre-approved for a mortgage serves two important purposes: First, it gives you a realistic understanding of how much you can spend on the house. Second, it shows sellers that you're serious and gives you slightly more standing if you're competing for homes with all-cash buyers.

Make it less stressful by gathering up relevant financial documents like bank statements, tax returns, and pay stubs, and by checking your credit report for errors in advance. "Given the competitive interest rate environment and the competitive housing market, it's a good idea to be prepared and organized before you start the process," says Keith Gumbinger, vice president of HSH.com.

4. Maxing out your mortgage limit

Just because a lender says that you can borrow a certain amount, doesn't mean you should borrow that much. Staying below that limit will give you more financial flexibility to cover the added expenses that come with purchasing a home, as well as long-term changes to your income.

Create a budget that includes how much money you can spend on housing costs each month, and then use those numbers to figure out what your "real" limit should be.

5. Letting your emotions control your decisions

Buying a home can be a long and frustrating process. These days, starter homes go quickly, and it's common for first-time buyers to experience rejection on the first offers they make. In that kind of environment, it's easy to fall in love with a house that's out of your budget, or get caught up in the heat of a bidding war and end up paying more than you expected.

"It's OK to get excited when you think you've found your house, but you don't want to put yourself in a bad spot," says David Tina, President of the Greater Las Vegas Association of Realtors.

6. Waiving contingencies without understanding the risks

In highly competitive markets, it's becoming increasingly common for buyers to make offers that aren't contingent on financing or inspection. While waiving contingencies can make your bid more desirable to a seller, it can make the transaction much more risky for you. Have a conversation with your realtor and a lawyer before opting out of contingencies in your contract. In a worst-case scenario, you may end up losing your deposit.

7. Allowing your credit score to change before the close

A pre-approval letter is not a guarantee of funding, and if your credit score or income levels change drastically between the pre-approval and the closing of the loan, lenders may change their terms or rescind the offer entirely. While you're home shopping, be sure to pay all your bills on time and steer clear of new credit accounts, even if that means you have to wait to pick out your furniture. If possible, try not to switch jobs until after you close, particularly if you're moving into a new industry.

 

Original Article

Ken Keegan Real Estate Broker
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New Listing: 2820 Inverness Circle SE

2820 Inverness Circle SE

St. James Plantation

.36 Acre Lot

$99,900

This homesite is located on a quiet street and is within easy walking distance to the Marina complex. It is wide and may accommodate many different home designs. The new Grove Gate has opened for quick entrance/exit. St. James Plantation is a gated community with amenities to include 81 holes of golf, tennis, full service marina on the ICW, private oceanfront beach club, over 15 miles of biking/walking trails, indoor and outdoor pools, and athletic facilities.

Ken Keegan Real Estate Broker

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www.KenKeegan.com

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New Listing: 2766 Harbormaster Drive SE

2766 Harbormaster Drive SE

St. James Plantation

4 Bedrooms

3 Bathrooms

$534,900

Expansive pond & golf views from this well-maintained custom brick home. The 2nd floor balcony provides more breath-taking views of the pond & golf course. Within walking distance to the Marina. About 15 minutes to the Beach Club & 10 minutes to Lowe’s via the nearby Grove Gate. Natural light flows from the many windows into the open-concept sunroom, kitchen and great room; and the split floor plan has the master bedroom on one side and guest bedroom on the other side. The 2nd floor offers versatility with a full bath and either two bedrooms, or one bedroom & separate office. The home has outstanding storage space: a climate-controlled walk-in storage area; and an expansive unfinished storage room over the garage. This home is move-in ready, including custom designed shelving in all closets. See separate document "Special Features of 2766 Harbormaster Drive," e.g., custom wood window shutters & blinds; ceiling fans; recessed lighting; extensive custom interior trim molding; yard lighting, oversized garage, & utilities' costs. Club Membership is active.

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New Listing: 2751 Ligustrum Court SE

2751 Ligustrum Court SE

St. James Plantation

.33 Acre Lot

$64,900

 This lovely partial wooded homesite is located on a quiet cul-de-sac. It is within easy walking distance to Waterway Park, the Marina complex and the Founders Club. St. James Plantation is a gated community with amenities to include 81 holes of golf, tennis, full service marina on the ICW, private oceanfront beach club, over 15 miles of biking/walking trails, indoor and outdoor pools, and athletic facilities.

Ken Keegan Real Estate Broker

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New Listing: 4398 Harbortown Circle SE

4398 Harbortown Circle SE

St. James Plantation

.3 Acre Lot

$54,900

This lovely wooded corner homesite is located within easy walking distance to the Marina complex. The new Grove Gate is opened for quick exit/entrance. St. James Plantation is a gated community with amenities to include 81 holes of golf, tennis, full service marina on the ICW, private oceanfront beach club, over 15 miles of biking/walking trails, indoor and outdoor pools, and athletic facilities.

Ken Keegan Real Estate Broker

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St. James Plantation

New Listing: 3631 Wingfoot Drive

3631 Wingfoot Drive

St. James Plantation

.33 Acre Lot

$54,900

This wooded homesite is located towards the end of a non-through street so there will be limited traffic. It is near the Seaside Gate for easy entrance and exit. The Members Club, Woodlands Park and Seaside complex are also nearby. Club membership is active and buyer is required to activate a membership at closing. St. James Plantation is a gated community with amenities to include 81 holes of golf, tennis, full service marina on the ICW, private oceanfront beach club, over 15 miles of biking/walking trails, indoor and outdoor pools, and athletic facilities.

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Life is good for U.S. home sellers

It's good to be a home seller right now ... really good.

That's because it's the most profitable time to sell a home in almost 10 years.

Homeowners who sold in the first three months of this year saw an average price gain of $44,000 from purchase, according to a report from Attom Data Solutions released Thursday. That's the highest gain since 2007.

"I am guessing we will see it get even better before it gets worse," said Daren Blomquist, senior vice president at Attom. "If you are considering moving this spring, it could be a really good time to sell."
Cities with robust local economies have seen strong price growth during the housing market's recovery. Low housing supply has helped push up prices to create competitive markets where bidding wars and above-asking price sales are common.

Nationwide, the median home price was $225,000 during the first quarter of 2017, the report stated, up 13% from a year ago.

Homes in more expensive markets have seen the highest average price gains so far this year, the report found. Sellers in San Jose, California, saw an average price gain of $356,500, followed by those in San Francisco with a gain of $276,750.

Even in a seller's market, homeowners aren't necessarily in a hurry to list their homes. Sellers in the first quarter of this year had lived in their home for an average of almost eight years. From 2000-2007, the average homeownership tenure was around 4.26 years.

After the housing crisis, many homeowners were underwater and had to stay put until they could rebuild their equity. Now, tight inventory levels have made some owners hesitant to sell because they fear they won't be able to find a home to move into.

Other homeowners are simply relishing the home price appreciation and expect it to keep going.
"I've talked to agents and brokers in the Bay Area, and one of the mantras there is actually 'never sell,'" said Blomquist. The idea is to leverage the wealth to purchase additional properties or pass the home along to future generations. In fact, San Francisco has a nearly 10-year homeownership tenure, which is among the longest in the country.

While strong price gains are good news for homeowners, it means buyers really have to step up their game in order to compete.

Not only are home prices rising, they're moving fast. On a national level, homes sat on the market for an average of 45 days in the first quarter, down from 84 during the same time period in 2011, according to data from Clear Capital.

In the five fastest-moving markets, homes are on the market for less than 21 days.
But not all homeowners are swimming in equity and have buyers lining up around the block. While home prices have exceeded pre-recession levels in more than half of U.S. housing markets, 46% still haven't returned to their peaks, noted Blomquist.

In Las Vegas, home prices are 26% below their pre-recession high and in Miami and Baltimore, they are 22% below.

"There are many individual homeowners who have been left behind by this housing recovery," Blomquist said.

Here are the markets with the highest average percent return on the previous purchase price, according to Attom:

San Jose: 71%
San Francisco: 65%
Seattle: 56%
Portland, Oregon: 52%
Modesto, California: 51%
Stockton, California: 51%
Los Angeles, California: 50%
Denver: 50%
Vallejo, California: 47%
Salem, Oregon: 46%

Original Article from CNN Real Estate

Ken Keegan Real Estate Broker
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The Struggle is real for Millennial Homebuyers

It's going to be an intense house-hunting season -- especially for young buyers.

After years of many experts lamenting how Millennials weren't interested in becoming homeowners, it turns out many are actually diving in. But they're facing a lot of competition.

Millennials are the largest group of homebuyers, according to Ellie Mae, a software company that analyzes mortgage data. In January, Millennials represented around 45% of all purchase loans, up from 42% the same month in 2016.

And many expect more Millennial house hunters to jump into the market this spring buying season.

But their path to homeownership won't be easy.

"Millennials are mostly first-time buyers and they are competing against repeat buyers who have more buying leverage and experience," said Javier Vivas, manager of economic research for Realtor.com. He added that Millennials recently became the dominant group of users searching for homes on the website.

New buyers this spring will also be up against buyers who started looking last year, but still haven't bought a home.

A shortage of available homes has driven up prices -- particularly among starter homes that tend to fall within first-time buyers' budgets.

There were 3% fewer homes on the market in February compared to a year ago, according to a recent report from Zillow, and home values are up nearly 7%.

That's led to bidding wars and fierce competition, especially in the lower end of the market.

When Andy Greene and his wife Jenna began looking for their first home together near Columbus, Ohio, they found themselves in a super competitive market.

"We would get a notification that a house went on the market. You had to go see it that night ... you had to go the same day it was out," said Greene.

They thought they found their perfect home early in their search and put in an offer. But they weren't the only ones. The seller received 13 bids.

Despite going $10,000 above the asking price, the Greenes were not the winning bidders.

"It was a little defeating," said Greene. "It made us wonder if we were actually going to be able to make it work and second guessing if we could find something we could afford."

Rising home and rent prices can make it difficult for many first-time buyers and young people still establishing their careers to save for a down payment.

The Greenes, who both work full-time, saved $30,000 for a down payment, mainly by living off one income and banking the other.

They were tempted to increase their budget as they continued their search, but they stuck to their pre-determined limit. Finally, after three months of hunting, they found a house and had their bid accepted. They're scheduled to close this month.

"We didn't want to be in a house we couldn't afford," he said. "And we didn't want to have to buy a house and dump money into it."

For first-time buyers looking to become homeowners this year, experts say do your homework: determine your budget, prioritize your requirements and get pre-approved for a loan.

"Be first in line," advised Vivas. "Start your search early, figure out your budget early on."

Millennials are also facing a tighter lending environment compared to a decade ago as banks stiffen up on credit requirements.

But despite the obstacles they face, Millennial buyers do have a major advantage: low interest rates.

"If you compare their access to credit and ability to get into a home, it's far easier for Millennials than previous generations," noted Joe Tyrrell, executive vice president of Ellie Mae. "Back when Millennials' parents were buying homes, they had higher interest rates and there weren't down payment assistance programs."

Original Article

Ken Keegan Real Estate Broker

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