The Right Home for Right Now

Finding a New Home for Your Next Stage of Life Imagine the first place you lived as a young adult. Now imagine trying to fit your life today into that space. Not pretty, right? For most of us, our housing needs are cyclical.1 A newly independent adult can find freedom and flexibility in even a tiny apartment. That same space, to a growing family, would feel stifling. For empty nesters, a large home with several unused bedrooms can become impractical to heat and clean. It’s no surprise that life transitions often trigger a home purchase. While your home-buying journey may not look like your neighbor’s or friend’s, broad trends can help you understand what to keep in mind as you house hunt. No one wants to regret their home purchase, and taking the time now to think about exactly what you need can save a lot of heartache later. The Newly Married or Partnered Couple The financial and legal commitment of marriage has provided a springboard to homeownership for centuries, though these days more couples are buying homes without exchanging rings. In the last few decades, changing demographics have shifted the median age of first marriage and buying a first home into the late 20s and early 30s, planting most newly married or partnered buyers firmly in the millennial generation.2,3 But no matter your age, there are some key factors that you should consider as you enter into your first home purchase together. Affordability is Key There’s no doubt about it—with high student loan debt and two recessions in the rearview mirror, many millennials feel that the deck is stacked against them when it comes to homeownership. And it’s not just millennials—Americans of all ages are facing both financial challenges and a tough housing market. But stepping onto the property ladder can be more doable than many realize, especially in today’s low mortgage rate environment. While many buyers are holding out for their dream home, embracing the concept of a starter home can open a lot of doors.4 In fact, that’s the route that most first-time homebuyers take—the average home purchase for a 20-something is about 1,600 square feet. While the average size increases to around 1,900 square feet for buyers in their 30s, it’s not until buyers reach their 40s that the average size passes 2,000 square feet.5 Chosen carefully, a starter home can be a great investment as well as a launchpad for your life together. If you focus on buying a home you can afford now with strong potential for appreciation, you can build equity alongside your savings, positioning you to trade up to a larger home in the future if your needs change.6 Taking Advantage of Low Mortgage Rates Mortgage rates are historically low, making now the perfect time to purchase your first home together. A lower interest rate can save you tens of thousands of dollars over the life of your loan, which can significantly increase the quality of home you can get for your money. But what if both halves of a couple don’t have good credit? You may still have options. First, boosting a credit score can be easier than you think—simply paying your credit cards down below 30% of your limit can go a long way. But if that’s not enough to boost your score, you might consider taking out the mortgage in only the better-scoring partner’s name. The downside is that applying for a mortgage with only one income will reduce your qualification amount. And if you take that route, make sure you understand the legal and financial implications for both parties should the relationship end. Commute and Lifestyle Considerations Whether you’ve lived in a rental together for years or are sharing a home for the first time, you know that living together involves some compromises. But there are certain home features that can make life easier in the future if you identify them now. The number of bathrooms, availability of closet space, and even things like kitchen layout can make a big difference in your day-to-day life and relationship. Your home’s location will also have a significant impact on your quality of life, so consider it carefully. What will commuting look like for each of you? And if you have different interests or hobbies—say, museums vs. hiking—you’ll need to find a community that meets both your needs. Need some help identifying the ideal location that fits within your budget? We can match you with some great neighborhoods that offer the perfect mix of amenities and affordability. The Growing Family Having kids changes things—fast. With a couple of rowdy preteens and maybe some pets in the mix, that 1,600 square foot home that felt palatial to two adults suddenly becomes a lot more cramped. Whether you’ve just had your first child or are getting to the point where your kids can’t comfortably share a bedroom any longer, there’s plenty to consider when you’re ready to size up to a home that will fit your growing family. The Importance of School Districts For many parents, the desire to give their kids the best education—especially once they are in middle and high school— surpasses even their desire for more breathing room. In fact, 53% of buyers with children under 18 say that school districts are a major factor in their home buying decisions.7 Of course, better funded (and often higher ranking) schools correspond to higher home prices. However, when push comes to shove, many buyers with kids prefer to sacrifice a bit of space to find a home in their desired location. But when you’re moving to a new community, it can be tough to figure out what the local schools are actually like—and online ratings leave a lot to be desired. That’s why talking to a local real estate agent can be a gamechanger. We don’t just work in this community; we know it inside and out. We’ll be happy to share our first-hand knowledge of the local schools and which neighborhoods are most welcoming to families. Lifestyle Considerations For many families, living space is a key priority. Once you have teenagers who want space to hang out with their friends, a finished basement or a rec room can be a huge bonus (and can help you protect some quieter living space for yourself). A good layout can also make family life a lot easier. For example, an open plan is invaluable if you want to cook dinner while keeping an eye on your young kids playing in the living room. And if you think that you might expand your family further in the future, be sure that the home you purchase has enough bedrooms and bathrooms to accommodate that comfortably. Functionality Try to think about how each room will fit into your day-to-day. Are you anticipating keeping the house stocked to feed hungry teenagers? A pantry might rise to the top of the list. Dreading the loads of laundry that come with both infants and older kids (especially if they play sports)? The task can be much more bearable in a well-designed laundry room. Imagine a typical day or week of chores in the house to identify which features will have the biggest impact. Chances are, you won’t find every nice-to-have in one home, which is why identifying the must-haves can be such a boon to the decision-making process. We can help you assess your options and give you a sense of what is realistic within your budget. The Empty Nesters When we talk about empty nesters, we usually think about downsizing. With kids out of the house, extra bedrooms and living space can quickly become more trouble than they’re worth. While the average buyer under 55 trades up to a larger home, buyers over 55 are more likely to purchase a smaller or similarly sized but less expensive home. Even in the highest age groups, the majority of home purchases fall in the single-family category. According to research by the National Association of Realtors, by the time buyers reach their 70s, the median home size drops to 1,750 square feet.5 But there’s plenty for empty nesters to think about besides square footage. Maintenance and Livability What factors are driving your decision to move? Identifying those early in the process can help you narrow down your search. For example, do you want to have space for a garden, or would you prefer to avoid dealing with lawn care altogether? What about home maintenance? In many cases, a newer home will require less maintenance than an older one and a smaller one will take less time to clean. You may also want to consider townhomes, condos, or other living situations that don’t require quite as much upkeep. Lifestyle Considerations Many empty nesters have retired or are nearing retirement age. This could be your chance to finally pursue hobbies and passions that were just too hard to squeeze into a 9-5. If you’re ready to move, consider how you’d like to spend your days and seek out a home that will help make that dream a reality. For some, that might mean living near a golf course or a beach. For others, being able to walk downtown for a nice dinner out is the priority. And with more time to spend as you wish, proximity to a supportive community of friends and family is priceless. Ability to Age in Place Let’s face it—we can’t escape aging. If you’re looking for a home to retire in, accessibility should be front-of-mind.8 This may mean a single-story home or simply having adequate spaces on the first floor to rearrange as needed. While buying a home that you plan to renovate from the start is a viable option, being forced into renovations (because of the realities of aging) a few years down the road could seriously dig into your nest egg. Location matters, too—if your family will be providing support, are they close by? Can you easily reach necessities like grocery stores and healthcare? While it’s tempting to put it out of our minds, a few careful considerations now can make staying in your home long-term much more feasible. Finding the Right Home for Right Now One thing is for sure—life never stands still. And your housing needs won’t, either. In the United States, the median duration of homeownership hovers around 13 years.9 That means many of us will cycle through a few very different homes as we move through different life stages. At each milestone, a careful assessment of your housing options will ensure that you are well-positioned to embrace all the changes to come. Whatever stage you’re embarking on next, we’re here to help. Our insight into local neighborhoods, prices, and housing stock will help you hone in on exactly where you want to live and what kind of home is right for you. We’ve worked with home buyers in every stage of life, so we know exactly what questions you need to ask. Buying a home—whether it’s your first or your fifth—is a big decision, but we’re here to support you every step of the way. Sources: 1. Freddie Mac - http://www.freddiemac.com/blog/homeownership/20190104_homebuying_lifecycle.page 2. PRB - https://www.prb.org/usdata/indicator/marriage-age-women/snapshot/ 3. Experian - https://www.experian.com/blogs/ask-experian/research/average-age-to-buy-a-house/#:~:text=Buying%20a%20first%20home%20will,by%20real%20estate%20marketplace%20Zillow 4. Nerdwallet - https://www.nerdwallet.com/article/mortgages/starter-home-forever-home 5. NAR 2020 Home Buyers and Sellers Generational Trends Report - https://cdn.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf 6. Investopedia - https://www.investopedia.com/personal-finance/what-look-starter-home/ 7. NAR 2019 Moving With Kids https://www.nar.realtor/research-and-statistics/research-reports/moving-with-kids 8. Kaiser Health News - https://khn.org/news/baby-boomers-aging-aging-in-place-retrofit-homes/ 9. National Association of Realtors - https://www.nar.realtor/blogs/economists-outlook/how-long-do-homeowners-stay-in-their-homes#:~:text=As%20of%202018%2C%20the%20median,varies%20from%20area%20to%20area

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When most people think about buying a home, they think about neighborhoods, paint colors, and wish lists, not paycheck stubs and closing costs. However, in reality you’ll probably find that mortgage application and approval is one of the more time and energy-consuming aspects of the purchase process. Do a little work upfront & save a lot of time & trouble later on. Check (and Repair) Your Credit When you first start thinking about buying a home, you’ll want to do a deep dive into your credit. Check with each of the big three reporting agencies (TransUnion, Experian, and Equifax) since each may have different information. If there are errors on your reports, reach out with corrections and required information. If your credit is just not great, there are ways to improve it. Here’s are a few suggestions: • If you don’t have much credit, look for ways to build your credit record. Seek out a starter credit card, make regular, small charges and pay them off immediately. Look for programs that report your current rent and utility payments to the credit bureaus so that you can use your on-time payment record to build your credit score. • If you have damaged credit, work on paying down existing debt and making on-time payments going forward. If you pay your rent and utilities on time, seek out reporting programs to allow you to use your positive payment history to rebuild your credit score. • As you pay off credit cards and loans, don’t close out the accounts. Leave them open and at a zero balance, or use them for occasional, small purchases that you then pay off immediately. Part of your credit score comes from the length of time that you have had your accounts, so closing out an older account can have a negative impact.

Organize Your Financial Records One of the biggest things you’ll have to do during the process of applying for your home loan is obtaining and providing a wide variety of financial records to submit to underwriting. Start gathering these now. When you apply, you’ll need the following: • Tax returns (generally two-year’s worth) • Pay stubs, 1099s, W-2s or other proof of income • Bank statements and other asset statements • Photo ID If you are using gift funds from a family member to finance your down payment, closing costs, or reserves, you will need to present a letter from that donor. The lender may request additional documentation, as well. Be sure to find out what donors and uses are acceptable for your particular situation. Find a Lender You will need to find a lender to work with on your mortgage application. I have some excellent mortgage lenders who will help you with every step of the way. If you prefer to go it aloe, you may find someone at your local bank or credit union, through an online lending platform, through a referral from a friend, or through your real estate professional. Make sure that you feel comfortable working with and communicating with your chosen lender so that you will feel confident throughout the process. Consider a Variety of Loan Options Don’t feel locked into a conventional, 30-year loan with a 20 percent down payment. While that scenario works for some buyers, it doesn’t work for everyone. Work with your lender to determine what types of financing options you qualify for and what types of financing will help you fulfill your goals. For example, if you are open to a larger monthly payment, you may find that a 15-year loan makes more sense than a 30-year loan. Just remember, there is no one-size-fits-all solution.

Get Pre-Approved It will be important for you to work with your lender to obtain pre-approval before you begin looking for your home. This will allow you to better determine your budget and timeline. In addition, pre-approval helps you to make a stronger offer once you find the right home for you. Determine Your Budget Once you know how much you’ll potentially be approved for and what your interest rate will be, you can create a budget based on your down payment and your desired monthly payment amount. Remember, just because you qualify for a large amount doesn’t mean that you will want to spend that much. Let your comfort level determine your budget. ** ASK ME FOR MY EXCLUSIVE BUYER ESTIMATE SHEET TO GET AN IDEA OF WHAT YOUR COSTS WILL BE** Don’t Forget the Extras Remember, you don’t just pay the monthly mortgage and required down payment. There is an earnest money deposit (EMD) that you will need to have available as well as reserve funds that you will need to show. You’ll have closing costs, insurance costs, and other expenses associated with moving and setting yourself up in your new home. Try to keep an eye on the big picture when making your decisions during this time. Avoid Major Purchases and Changes to Your Credit You may want a brand new car to park in your new driveway or a houseful of new furniture and decorative items. While it would be fun to have those things in place on moving day, you’ll probably need to hold off until after the closing. That’s because changes to your credit report or to the amount of debt you carry can have major negative consequences on your mortgage underwriting and approval process.

Expect the Unexpected A lot of things can happen on the journey to homeownership. You may find that your budget is different than you thought or that you have to make some compromises along the way. You may also find that some parts of the process you dreaded turn out to be easier than those things you thought were no-brainers. Stay open and let's chat. I'll help you make the Smart Decision.