Is Now a Good Time to Refinance My Home?

Is Now a Good Time to Refinance My Home? | MyKCM

With interest rates hitting all-time lows over the past few weeks, many homeowners are opting to refinance. To decide if refinancing your home is the best option for you and your family, start by asking yourself these questions:

Why do you want to refinance?

There are many reasons to refinance, but here are three of the most common ones:

1. Lower Your Interest Rate and Payment: This is the most popular reason. Is your current interest rate higher than what’s available today? If so, it might be worth seeing if you can take advantage of the current lower rates.

2. Shorten the Term of Your Loan: If you have a 30-year loan, it may be advantageous to change it to a 15 or 20-year loan to pay off your mortgage sooner rather than later.

3. Cash-Out Refinance: You might have enough equity to cash out and invest in something else, like your children’s education, a business venture, an investment property, or simply to increase your cash reserve.

Once you know why you might want to refinance, ask yourself the next question:

How much is it going to cost?

There are fees and closing costs involved in refinancing, and The Lenders Network explains:

As an example, let’s say your mortgage has a balance of $200,000. If you were to refinance that loan into a new loan, total closing costs would run between 2%-4% of the loan amount. You can expect to pay between $4,000 to $8,000 to refinance this loan.”

They also explain that there are options for no-cost refinance loans, but be on the lookout:

“A no-cost refinance loan is when the lender pays the closing costs for the borrower. However, you should be aware that the lender makes up this money from other aspects of the mortgage. Usually charging a slightly higher interest rate so they can make the money back.”

Keep in mind that, given the current market conditions and how favorable they are for refinancing, it can take a little longer to execute the process today. This is because many other homeowners are going this route as well. As Todd Teta, Chief Officer at ATTOM Data Solutions notes about recent mortgage activity 

“Refinancing largely drove the trend, with more than twice as many homeowners trading in higher-interest mortgages for cheaper ones than in the same period of 2018.”

Clearly, refinancing has been on the rise lately. If you’re comfortable with the up-front cost and a potential waiting period due to the high volume of requests, then ask yourself one more question:

Is it worth it? 

To answer this one, do the math. Will it help you save money? How much longer do you need to own your home to break even? Will your current home meet your needs down the road? If you plan to stay for a few years, then maybe refinancing is your best move.

If, however, your current home doesn’t fulfill your needs for the next few years, you might want to consider using your equity for a down payment on a new home instead. You’ll still get a lower interest rate than the one you have on your current house, and with the equity you’ve already built, you can finally purchase the home you’ve been waiting for.

Bottom Line

Today, more than ever, it’s important to start working with a trusted real estate advisor. Whether you connect by phone or video chat, a real estate professional can help you understand how to safely navigate the housing market so that you can prioritize the health of your family without having to bring your plans to a standstill. Whether you’re looking to refinance, buy, or sell, a trusted advisor knows the best protocol as well as the optimal resources and lenders to help you through the process in this fast-paced world that’s changing every day.

How Your Tax Refund Can Move You Toward Homeownership This Year

How Your Tax Refund Can Move You Toward Homeownership This Year | MyKCM

If you’re looking to buy a home in 2020, have you thought about putting your tax refund toward a down payment? Homeownership may be one step closer than you think if you spend your dollars wisely this year.

Based on data released by the Internal Revenue Service (IRS), Americans can expect an estimated average refund of $2,962 when filing their taxes this year.

The map below shows the average tax refund Americans received last year by state:How Your Tax Refund Can Move You Toward Homeownership This Year | MyKCMAccording 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. Truth be told, a 20% down payment is not always required to buy a home, even though that’s a common misconception about homebuying. Veterans Affairs Loans allow many veterans to purchase a home with 0% down.

How can my tax refund help?

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

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 tax refund:How Your Tax Refund Can Move You Toward Homeownership This Year | MyKCMThe darker the blue, the closer your tax refund gets you to homeownership in one of these programs. Maybe this is the year to plan ahead and put your tax refund toward a down payment on a home.

Bottom Line

Saving for a down payment can seem like a daunting task, but the more you know about what’s required, the more prepared you’ll be to make the best decision for you and your family. This tax season, your refund could be your key to homeownership.

Thinking of Selling? Now May Be the Time.

Thinking of Selling? Now May Be the Time. | MyKCM

The housing market has started off much stronger this year than it did last year. Lower mortgage interest rates have been a driving factor in that change. The average 30-year rate in 2019, according to Freddie Mac, was 3.94%. Today that rate is closer to 3.5%.

The Census Bureau also just reported the highest homeownership rate since 2014 for people under 35. This is evidence that owning their own home is becoming more important to Millennials as they reach the age where marriage and children are part of their lives.

According to the latest Realtors Confidence Index Survey from the National Association of Realtors (NAR), buyer demand across the country is strong. That’s not the case, however, with seller demand, which remains weak throughout most of the nation. Here’s a breakdown by state:Thinking of Selling? Now May Be the Time. | MyKCMDemand for housing is high, but supply is extremely low. NAR also just reported that the actual number of homes currently for sale stands at 1.42 million, which is one of the lowest totals in almost three decades. Additionally, the ratio of homes for sale to the number purchased currently stands at 3.1 months of inventory. In a normal market, that number would be nearly double that at 6.0 months of inventory.

What does this mean for buyers and sellers?

Buyers need to remain patient in the search process. At the same time, buyers must be ready to act immediately once they find the right home.

Sellers may not want to wait until spring to put their houses on the market. With demand so high and supply so low, now is the perfect time to sell your house for the greatest dollar value and the least hassle.

Bottom Line

The real estate market is entering the year like a lion. There’s no indication it will lose that roar, assuming inventory continues to come to market.

Great News for Renters Who Want to Buy a Home

Great News for Renters Who Want to Buy a Home | MyKCM

Rents in the United States have been skyrocketing since 2012. This has caused many renters to face a tremendous burden when juggling their housing expenses and the desire to save for a down payment at the same time. The recent stabilization of rental prices provides a great opportunity for renters to save more of their current income to put toward the purchase of a home.

Just last week the Joint Center of Housing Studies of Harvard University released the America’s Rental Housing 2020 Report. The results explain the financial challenges renters are experiencing today,

“Despite slowing demand and the continued strength of new construction, rental markets in the U.S. remain extremely tight. Vacancy rates are at decades-long lows, pushing up rents far faster than incomes. Both the number and share of cost-burdened renters are again on the rise, especially among middle-income households.”

According to the most recent Zillow Rent Index, which measures the estimated market-rate rent for all homes and apartments, the typical U.S. rent now stands at $1,600 per month. Here is a graph of how the index’s median rent values have climbed over the last eight years:Great News for Renters Who Want to Buy a Home | MyKCM

Is Good News Coming?

There seems, however, to be some good news on the horizon. Four of the major rent indices are all reporting that rents are finally beginning to stabilize in all rental categories:

1. The Zillow Rent Index, linked above, only rose 2.6% over the last year.

2. RENTCafé’s research team also analyzes rent data across the 260 largest cities in the United States. The data on average rents comes directly from competitively rented, large-scale, multi-family properties (50+ units in size). Their 2019 Year-End Rent Report shows only a 3% increase in rents from last year, the slowest annual rise over the past 17 months.

3. The CoreLogic Single Family Rent Index reports on single-family only rental listing data in the Multiple Listing Service. Their latest index shows how overall year-over-year rent price increases have slowed since February 2016, when they peaked at 4.2%. They have stabilized around 3% since early 2019.

4. The Apartment List National Rent Report uses median rent statistics for recent movers taken from the Census Bureau American Community Survey. The 2020 report reveals that the year-over-year growth rate of 1.6% matches the rate at this time last year; it is just ahead of the 1.5% rate from January 2016. They also explain how “the past five years also saw stretches of notably faster rent growth. Year-over-year rent growth stood at 2.6% in January 2018, and in January 2016 it was 3.3%, more than double the current rate.”

It seems tenants are getting a breather from the rapid rent increases that have plagued them for almost a decade.

Bottom Line

Rental expenses are beginning to moderate, and at the same time, average wages are increasing. That power combination may allow renters who dream of buying a home of their own an opportunity to save more money to put toward a down payment. That’s sensational news!

The Cost Across Time [INFOGRAPHIC]

The Cost Across Time [INFOGRAPHIC] | MyKCM

Some Highlights:

  • With interest rates around 3.66%, now is a great time to look back at where they’ve been over the past few decades. Comparatively, they’re pretty low!
  • According to Freddie Macrates are projected to increase to 3.9% by this time next year.
  • The impact your interest rate has on your monthly mortgage payment is significant. An increase of just $20 dollars in your monthly payment can add up to $240 per year and $7,200 over the life of your loan.
  • Maybe it’s time to lock in now, while rates are still historically low.

2 Myths Holding Back Home Buyers

2 Myths Holding Back Home Buyers | MyKCM

In a recent article, First American shared how millennials are not really any different from previous generations when it comes to the goal of homeownership; it is still a huge part of their American Dream. The piece, however, also reveals,

 “Saving for a down payment is one of the biggest obstacles faced by first-time home buyers. Dispelling the 20 percent down payment myth could open the path to homeownership for many more.”

 Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate how much they need to qualify for a home loan. According to the same article:

“Americans still overestimate the qualifications needed to get a mortgage, resulting in qualified potential buyers not even considering homeownership. Indeed, the Urban Institute report revealed that 16 percent of consumers believed that the minimum down payment required by lenders is 20 percent or more, and another 40 percent didn’t know at all.”

While many potential buyers still think they need to put at least 20% down for the home of their dreams, they often don’t realize how many assistance programs are available with as little as 3% down. With a little research, many renters may actually be able to enter the housing market sooner than they ever imagined.

Myth #2: “I Need a 780 FICO® Score or Higher”

In addition to down payments, buyers are also often confused about the FICO® score it takes to qualify for a mortgage, believing a ‘good’ credit score is 780 or higher.

To debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.2 Myths Holding Back Home Buyers | MyKCMAs indicated in the chart above, 50.23% of approved mortgages had a credit score of 500-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier. Believe it or not – your dream home may already be within your reach.