The Cost Of NOT Paying PMI

Saving for a down payment is often the biggest hurdle for a first-time homebuyer as median incomes, rents, and home prices all vary depending on where you live.

There is a common misconception among homebuyers that a 20% down payment is required, and it is this limiting belief that often adds months, and sometimes even years, to the home-buying process.

So, if you can purchase a home with less than a 20% down payment… why aren’t more people doing just that?

One Possible Answer: Private Mortgage Insurance (PMI)

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. The monthly cost of your PMI depends on the home’s value, the amount of your down payment, and your credit score.

Below is a table showing the difference in monthly mortgage payment for a $250,000 home with a 3% down payment and PMI vs. a 20% down payment without PMI:

The first thing you see when looking at the table above is no doubt the added $320 a month that you would be spending on your monthly mortgage cost. The second thing that should stand out is that a 20% down payment is $50,000!

If you are buying your first home, $50,000 is a large sum of money that takes discipline and sacrifice to save. Many first-time buyers save for 5-10 years before buying their homes.

To save $50,000 in 10 years, you would need to save about $420 a month. On the other hand, if you save that same $420 a month, you could afford a 3% down payment in less than a year and a half.

In a recent article by My Mortgage Insider, they explain what could happen in the market while you are waiting to save for a higher down payment:

“The time it takes to save a (larger) down payment could mean higher home prices and tougher qualifying down the road. For many buyers, it could prove much cheaper and quicker to opt for the 3% down mortgage immediately.”

The article went on to say,

“Since renters typically devote a higher percentage of their income to housing than homeowners, providing flexible down payment options can help renters with solid earnings purchase a home – and gain a fixed-rate mortgage with principal and interest payments that will not increase over the life of the loan.”

If the prospect of having to pay PMI is holding you back from buying a home today, Freddie Mac has this advice,

“It’s no doubt an added cost, but it’s enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

Based on results of the most recent Home Price Expectation Survey, a homeowner who purchased a $250,000 home in January would gain $50,000 in equity over the next five years based on home price appreciation alone (shown below).

Bottom Line

If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, meet with a professional in your area who can explain your market’s conditions and help you make the best decision for you and your family.

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The Sarasota Native Group® is made up of full-time agents; this is not our retirement career nor is this a second job while also waiting tables. Collectively we have been full-time real estate agents going on 15 years. Being born and raised in Sarasota we know the area and the market very well.

On average The Sarasota Native Group® has helped customers save 3% off the list price (or $3,000 for every $100,000) using our years of negotiating experience and knowledge of the local real estate market. (This does not include helping buyers save money by recommending trusted service providers in the area. Our contacts become your contacts.) 

Are you not seeing your dream home on the market? Contact us to discuss the possibility of having our team target off-market homes that have high selling potential that match your specific criteria. We only provide this service to committed customers because of the time and effort we put into finding the home of their dreams.

The Sarasota Native Group® will negotiate to get you the best deal possible and we would be delighted to work with you and anyone you know who is currently looking to purchase a home.

Contact us today!

  

The Sarasota Native Group® | www.TheSarasotaNativeGroup.com | 2000 Webber St. Sarasota, FL 34239 | 941-822-1519

Where Are Mortgage Interest Rates Headed In 2019?

The interest rate you pay on your home mortgage has a direct impact on your monthly payment; the higher the rate, the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.

Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily over the course of the next year.

How Will This Impact Your Mortgage Payment?

Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.

According to CoreLogic’s latest Home Price Index, national home prices have appreciated 6.2% from this time last year and are predicted to be 5.1% higher next year.

If both the predictions of home price and interest rate increases become a reality, families would wind up paying considerably more for their next homes.

Bottom Line

Even a small increase in interest rate can impact your family’s wealth, so don’t wait until next year! Meet with a local real estate professional to evaluate your ability to purchase your dream home now.

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The Sarasota Native Group® is made up of full-time agents; this is not our retirement career nor is this a second job while also waiting tables. Collectively we have been full-time real estate agents going on 15 years. Being born and raised in Sarasota we know the area and the market very well.

On average The Sarasota Native Group® has helped customers save 3% off the list price (or $3,000 for every $100,000) using our years of negotiating experience and knowledge of the local real estate market. (This does not include helping buyers save money by recommending trusted service providers in the area. Our contacts become your contacts.) 

Are you not seeing your dream home on the market? Contact us to discuss the possibility of having our team target off-market homes that have high selling potential that match your specific criteria. We only provide this service to committed customers because of the time and effort we put into finding the home of their dreams.

The Sarasota Native Group® will negotiate to get you the best deal possible and we would be delighted to work with you and anyone you know who is currently looking to purchase a home.

Contact us today!

  

The Sarasota Native Group® | www.TheSarasotaNativeGroup.com | 2000 Webber St. Sarasota, FL 34239 | 941-822-1519

How to Lose a House in 10 Days

Home buying is arguably one of the most stressful purchasing experiences in adult life. Why is the process so draining? Unfortunately, there are myriad of issues that can make a deal fall through – especially if you aren’t working with a professional agent. RE/MAX has 10 ways you might lose out on your dream home and how working with an experienced RE/MAX agent can help you avoid them:

1. You don’t have enough saved up for the down payment
Surprise! Homes are expensive. In addition to closing costs, there can also be unexpected fees around every corner. Make sure that you have significant cushion savings in addition to whatever you plan on putting down for your house-you never know how these things will play out.

2. You don’t have your ducks in a row
Staying organized is essential when you’re house hunting. Are you serious about the bid you’re putting down? Make sure that you’re fully aware of all deadlines, contingencies and paperwork involved in moving forward with your home purchase.

3. You’re shopping way out of your budget
As Andie Anderson puts it in How to Lose a Guy in 10 Days, “You can’t lose something you never had.” Looking for houses that are priced outside of your budget is the first way to “lose a house” – you’ll lose out on a home that you never had a chance of buying. Pre-plan for the strong possibility of putting in an offer above the asking price. This may mean looking at homes listed a few thousand below your budget to create padding in your budget to make a higher offer.

4. You lose a bidding war
Quick, decisive, assertive-these are all necessary traits to win a bidding war. Working with an experienced RE/MAX agent who can negotiate on your behalf is a great way to ensure you play your cards right. Remember, all is fair in love and [a bidding] war.

5. You come down with a bad case of buyer’s remorse
What’s the most obvious symptom of buyer’s remorse? Cold feet. Sales contracts fall through all the time because buyers back out at the last second, succumbing to the fear of such a life-altering decision. Keep your wits about you and trust your gut.

6. You close too slowly
Sellers are trying to get sales contracts through as swiftly as possible. In this climate of high demand and limited inventory, residential real estate is a hot market. There will almost always be someone behind you, vying for your potential future home – if you really want it, work hard to satisfy the seller and make things official as soon as possible.

7. Your inspections aren’t timely
Speaking of closing quickly-inspections are sure to take some time. If you’re lucky, all you’ll need is one inspection. If an inspector discovers any problems, you’ll have to start making appointments with specialists to look further into the house’s issues. This is a race against the clock, limited by the timeframe set out in the sales contract. Don’t waste any time getting the inspections going or you might find yourself without a house to inspect.

8. Your seller isn’t happy with their appraisal
An appraisal that comes in lower than anticipated is always taken by the seller as a personal blow. This proves to be an issue for the buyer, too. Either the seller will become difficult or, even worse, you’ll have to pay the difference between the appraisal and the sales price out of pocket. Make sure to keep communication with the seller open and diplomatic when frustrations are running high.

9. You can’t secure a mortgage
You’re so close to the finish line-and then your mortgage application is declined. Apply for pre-approval so the seller knows that you’ll be able to buy their home. If you are proactive throughout the buying process the odds of you losing the home are significantly slimmed.

10. You don’t have an agent on your side
None of the above issues are simple. Having someone on your side that knows the ropes of the home buying process is the most valuable tool in your home-buying box. Don’t go it alone-let a professional help you with the most important purchase of your life.

Going agentless can leave you more vulnerable to losing a house you have your eye on. Without an agent you’ll find yourself drowning in the details. Don’t make a bet or pick someone random-hire a RE/MAX agent.

Source: RE/MAX

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The Sarasota Native Group® is made up of full-time agents; this is not our retirement career nor is this a second job while also waiting tables. Collectively we have been full-time real estate agents going on 15 years. Being born and raised in Sarasota we know the area and the market very well.

On average The Sarasota Native Group® has helped customers save 3% off the list price (or $3,000 for every $100,000) using our years of negotiating experience and knowledge of the local real estate market. (This does not include helping buyers save money by recommending trusted service providers in the area. Our contacts become your contacts.) 

Are you not seeing your dream home on the market? Contact us to discuss the possibility of having our team target off-market homes that have high selling potential that match your specific criteria. We only provide this service to committed customers because of the time and effort we put into finding the home of their dreams.

The Sarasota Native Group® will negotiate to get you the best deal possible and we would be delighted to work with you and anyone you know who is currently looking to purchase a home.

Contact us today!

  

The Sarasota Native Group® | www.TheSarasotaNativeGroup.com | 2000 Webber St. Sarasota, FL 34239 | 941-822-1519

4 Essential Tips for Hurricane Prep

By Lexi Rhein

It’s no secret that an impending hurricane is a daunting piece of news. But when you prepare properly, you can rest easier knowing you’ve taken the necessary precautions to weather the storm. Take it from someone who has been through a hurricane, these are four essential tips I wish I would have known before Hurricane Irma hit us in Florida in 2017. If you’re not in mandatory evacuation locations, use these four tips to get hurricane ready!

1. Gas up your car

If the hurricane becomes stronger before it touches down, have a full tank of gas in your vehicle. Being stuck is no fun and can add to an already stressful time and. I suggest going to the gas station as soon as the weatherman says the words, “A hurricane is approaching.” Gas is a fundamental resource to have for a vehicle, but it can also be useful after the hurricane hits to fuel any non-electric tools you may need. Stock up and take a few extra cans too!

2. Reinforce your toolkit

Take the time to check on the resources in your toolkit and make sure they are up to date. First and foremost, a functioning flashlight with extra batteries MUST be in your kit. A flashlight will be the saving grace if the power goes out. Next up on the list: a working whistle. A whistle is a loud and effective way to communicate if power goes out or you need extra help. Did I mention extra batteries yet? Also make sure your wrench and pliers are functional if you need to turn off any utilities. Give your whole toolkit a detailed inspection to be completely prepared.

3. H2O and food

This one is a biggie. Water is not only paramount for drinking, but for those of us who have lost power and gone through a hurricane, we know extra water is a luxury! Experts recommend having one gallon of water per person for a minimum of three days. But if you want to use the restroom and maybe rinse your body, grab more! Food is another key part of preparedness. You want to make sure you have at least three days of non-perishable food to get you through the potential loss of power.

4. The item normally you don’t see on prep lists

It may sound silly, but if you are going to be without power either waiting for the storm to hit or after, you might be bored – or maybe you just need to take your mind off things! Load up on some games that require no power and can be played inside. Whether it’s playing cards, board games, or charades with a flashlight, you’re going to want to have something to pass the time.

Lexi Rhein is the PR and Social Media Coordinator for RE/MAX LLC and made it safely through one of Florida’s most aggressive hurricanes in 2017.

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The Sarasota Native Group® is made up of full-time agents; this is not our retirement career nor is this a second job while also waiting tables. Collectively we have been full-time real estate agents going on 15 years. Being born and raised in Sarasota we know the area and the market very well.

On average The Sarasota Native Group® has helped customers save 3% off the list price (or $3,000 for every $100,000) using our years of negotiating experience and knowledge of the local real estate market. (This does not include helping buyers save money by recommending trusted service providers in the area. Our contacts become your contacts.) 

Are you not seeing your dream home on the market? Contact us to discuss the possibility of having our team target off-market homes that have high selling potential that match your specific criteria. We only provide this service to committed customers because of the time and effort we put into finding the home of their dreams.

The Sarasota Native Group® will negotiate to get you the best deal possible and we would be delighted to work with you and anyone you know who is currently looking to purchase a home.

Contact us today!

  

The Sarasota Native Group® | www.TheSarasotaNativeGroup.com | 2000 Webber St. Sarasota, FL 34239 | 941-822-1519