Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year

Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year | MyKCM

If you’re planning to buy a home this year, saving for a down payment is one of the most important steps in the process. One of the best ways to jumpstart your savings is by starting with the help of your tax refund.

Using data from the Internal Revenue Service (IRS), it’s estimated that Americans can expect an average refund of $2,925 when filing their taxes this year. The map below shows the average anticipated tax refund by state:Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year | MyKCMThanks to programs from the Federal Housing Authority, Freddie Mac, and Fannie Mae, many first-time buyers can purchase a home with as little as 3% down. In addition, Veterans Affairs Loans allow many veterans to put 0% down. You may have heard the common myth that you need to put 20% down when you buy a home, but thankfully for most homebuyers, a 20% down payment isn’t actually required. It’s important to work with your real estate professional and your lender to understand all of your options.

How can your tax refund help?

If you’re a first-time buyer, your tax refund may cover more of a down payment than you realize.

If you take into account the median home sale price by state, the map below shows the percentage of a 3% down payment that’s covered by the average anticipated tax refund:Your Tax Refund and Stimulus Savings May Help You Achieve Homeownership This Year | MyKCMThe darker the blue, the closer your tax refund gets you to homeownership when you qualify for one of the low down payment programs. Maybe this is the year to plan ahead and put your tax refund toward the down payment on a home.

Not enough money from your tax return? 

A recent paper from the National Bureau of Economic Research found that, of the households that received a stimulus check last year, “One third report that they primarily saved the stimulus money.” If you had the opportunity to save your Economic Impact Payments, you may consider putting that money toward your down payment or closing costs as well. Your trusted real estate professional can also advise you on the down payment assistance programs available in your area.

Bottom Line

Saving for a down payment can seem like a daunting task, but it doesn’t have to be. This year, your tax refund and your stimulus savings could add up big when it comes to reaching your homeownership goals.

How to Be a Competitive Buyer in Today’s Housing Market [INFOGRAPHIC]

How to Be a Competitive Buyer in Today’s Housing Market [INFOGRAPHIC] | MyKCM

Some Highlights

  • With so few houses for sale today, it’s important to be prepared when you’re ready to buy a home.
  • Meeting with your lender early, knowing your must-haves and nice-to-haves, preparing for a bidding war, and keeping your emotions in check are all ways to gain confidence in the homebuying process.
  • If you’re looking for an expert guide to help you navigate today’s lightning-fast housing market, let’s connect today.

Will the Housing Market Bloom This Spring?

Will the Housing Market Bloom This Spring? | MyKCM

Spring is almost here, and many are wondering what it will bring for the housing market. Even though the pandemic continues on, it’s certain to be very different from the spring we experienced at this time last year. Here’s what a few industry experts have to say about the housing market and how it will bloom this season.

Danielle Hale, Chief Economistrealtor.com:

“Despite early weakness, we expect to see new listings grow in March and April as they traditionally do heading into spring, and last year’s extraordinarily low new listings comparison point will mean year over year gains. One other potential bright spot for would-be homebuyers, new construction, which has risen at a year over year pace of 20% or more for the last few months, will provide additional for-sale inventory relief.”

Ali Wolf, Chief Economist, Zonda:

“Some people will feel comfortable listing their home during the first half of 2021. Others will want to wait until the vaccines are widely distributed. This suggests more inventory will be for sale in late 2021 and into the spring selling season in 2022.”

Freddie Mac:

“Since reaching a low point in January, mortgage rates have risen by more than 30 basis points… However, the rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”

Mark Fleming, Chief Economist, First American:

“As the housing market heads into the spring home buying season, the ongoing supply and demand imbalance all but assures more house price growth…Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”

Bottom Line

The experts are very optimistic about the housing market right now. If you pressed pause on your real estate plans over the winter, let’s chat to determine how you can re-engage in the homebuying process this spring.

How Upset Should You Be about 3% Mortgage Rates?

How Upset Should You Be about 3% Mortgage Rates? | MyKCM

Last Thursday, Freddie Mac announced that their 30-year fixed mortgage rate was over 3% (3.02%) for the first time since last July. That news dominated real estate headlines that day and the next. Articles talked about the “negative impact” it may have on the housing market. However, we should realize two things:

1. The bump-up in rate should not have surprised anyone. Many had already projected that rates would rise slightly as we proceeded through the year.

2. Freddie Mac’s comments about the rate increase were not alarming:

“The rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”

A “muted” rise in rates will not sink the real estate market, and most experts agree that it will be a strong spring sales season.”

What does this mean for you?

Obviously, any buyer would rather mortgage rates not rise at all, as any upward movement increases their monthly mortgage payment. However, let’s put a 3.02% rate into perspective. Here are the Freddie Mac annual mortgage rates for the last five years:

  • 2016: 3.65%
  • 2017: 3.99%
  • 2018: 4.54%
  • 2019: 3.94%
  • 2020: 3.11%

Though 3.02% is not as great as the sub-3% rates we saw over the previous seven weeks, it’s still very close to the all-time low (2.66% in December 2020).

And, if we expand our look at mortgage rates to consider the last 50 years, we can see that today’s rate is truly outstanding. Here are the rates over the last five decades:

  • 1970s: 8.86%
  • 1980s: 12.7%
  • 1990s: 8.12%
  • 2000s: 6.29%
  • 2010s: 4.09%

Being upset that you missed the “best mortgage rate ever” is understandable. However, don’t throw the baby out with the bathwater. Buying now still makes more sense than waiting, especially if rates continue to bump up this year.

Bottom Line

It’s true that you may not get the same rate you would have five weeks ago. However, you will get a better rate than what was possible at almost any other point in history. Let’s connect today so you can lock in a great rate while they stay this low.

Is It a Good Time to Sell My House?

Is It a Good Time to Sell My House? | MyKCM

Last year, many homeowners thought twice about selling their houses due to the onset of the health crisis. This year, however, homeowners are beginning to regain their confidence when it comes to selling safely. The latest Home Purchase Sentiment Index (HPSI) by Fannie Mae shows that 57% of consumers believe now is a good time to sell.

Doug Duncan, Vice President and Chief Economist at Fannie Mae, explains:

“Overall, the index’s monthly increase was driven largely by a substantial jump in the share of consumers reporting that it’s a good time to sell a home, with many citing favorable mortgage rates, high home prices, and low housing inventory as their primary rationale.”

Normally, spring is the busiest season in the housing market – the time when many homeowners decide to list their houses. While this is obviously not a normal year since the pandemic is still very much upon us, experts are optimistic that consumer positivity around selling will lead to more homeowners making moves this year. Duncan continues to say:

“We will pay close attention to see if this newfound optimism develops into a trend.”

What does this mean if you’re thinking of selling your house?

The fact that there are so few houses available for sale today is one driver that’s encouraging consumers to think more positively about selling. The National Association of Realtors (NAR) states:

“Total housing inventory at the end of January amounted to 1.04 million units, down 1.9% from December and down 25.7% from one year ago (1.40 million).”

With so few homes available to buy, your house will be more likely to rise to the top of an eager purchaser’s wish list in this competitive market. Today’s high buyer activity is creating upward pressure on home prices and more multiple-offer scenarios. According to the Realtors Confidence Index Survey from NAR, the average home for sale is receiving 3.7 offers today, up from 2.3 offers just one year ago. This makes selling even more enticing.

In this kind of sellers’ market, you have a huge advantage in the process. And here’s another win – you can also use your equity toward a down payment on a new home when you move.

Wondering where you’ll go if you try to move while it’s so challenging to find a home to buy? Well, in many areas, there are more homes available at the higher end of the market, so finding a move-up home may be less of an issue if you’re ready to search for your dream home this spring.

Bottom Line

If you pressed pause on selling your house last year, now may be the best time to put your plans back into motion while inventory is so low. Let’s connect today to get the process started.