If you're planning to buy your first home, then you're probably focused on saving for all the costs involved in such a big purchase. One of the expenses that may be at the top of your mind is your down payment. If you’re intimidated by how much you need to save for that, it may be because you believe you must put 20% down. That doesn’t necessarily have to be the case. As the National Association of Realtors (NAR) notes:

“One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership.”

And a recent Freddie Mac survey finds:

“. . . nearly a third of prospective homebuyers think they need a down payment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving homeownership.”

Here’s the good news. Unless specified by your loan type or lender, it’s typically not required to put 20% down. This means you could be closer to your homebuying dream than you realize.

According to NAR, the median down payment hasn’t been over 20% since 2005. In fact, the median down payment for all homebuyers today is only 14%. And it’s even lower for first-time homebuyers at just 6% (see graph below):

What does this mean for you? It means you may not need to save as much as you originally thought.

Learn About Options That Can Help You Toward Your Goal

And it’s not just how much you need for your down payment that isn’t clear. There are also misconceptions about down payment assistance programs. For starters, many people believe there’s only assistance available for first-time homebuyers. While first-time buyers have many options to explore, repeat buyers have some, too.

According to Down Payment Resource, there are over 2,000 homebuyer assistance programs in the U.S., and the majority are intended to help with down payments. That same resource goes on to say:

“You don’t have to be a first-time buyer. Over 38% of all programs are for repeat homebuyers who have owned a home in the last 3 years.”

Plus, there are even loan types, like FHA loans with down payments as low as 3.5% as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants.

If you’re interested in learning more about down payment assistance programs, information is available through sites like Down Payment Resource. Then, partner with a trusted lender to learn what you qualify for on your homebuying journey.

Bottom Line: A 20% down payment isn’t always required. If you want to purchase a home this year, let’s connect to start the conversation about your homebuying goals.

 

There’s been a lot of focus on higher mortgage rates and how they’re creating affordability challenges for today’s homebuyers. It’s true that rates climbed dramatically since the record-low we saw during the pandemic. But home affordability is based on more than just mortgage rates – it’s determined by a combination of mortgage rates, home prices, and wages.

Considering how each one of these factors is changing gives you the full picture of home affordability today. Here’s the latest.

1. Mortgage Rates

While mortgage rates are higher than they were a year ago, they’ve hovered primarily between 6% and 7% for nearly eight months now (see graph below):

As the graph shows, mortgage rates have experienced some volatility during that time. And even a small change in mortgage rates impacts your purchasing power. That’s why it’s so important to lean on your team of real estate professionals for expert advice to stay up to date on what’s happening in the market. While it’s hard to project where mortgage rates will go from here, many experts agree they’ll likely continue to remain around 6%-7% in the immediate future. 

2. Home Prices

Over the past few years, home prices appreciated rapidly as the record-low mortgage rates we saw during the pandemic led to a surge in buyer demand. The heightened buyer demand happened while the supply of homes for sale was at record lows, and that imbalance put upward pressure on home prices. However, today’s higher mortgage rates have slowed down price appreciation.

And, the truth is, home price appreciation varies by market. Some areas are seeing slight declines while others have prices that are climbing. As Selma Hepp, Chief Economist at CoreLogic, explains:

“The divergence in home price changes across the U.S. reflects a tale of two housing markets. Declines in the West are due to the tech industry slowdown and a severe lack of affordability after decades of undersupply. The consistent gains in the Southeast and South reflect strong job markets, in-migration patterns and relative affordability due to new home construction.”

To find out what’s happening with prices in your local market, reach out to a trusted real estate agent.

3. Wages

The most positive factor in affordability right now is rising income. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have grown over time: 

Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage since you don’t have to put as much of your paycheck toward your monthly housing cost.

Home affordability comes down to a combination of rates, prices, and wages. If you have questions or want to learn more, reach out to a real estate professional who can explain what’s happening locally and how these factors work together.

Bottom Line

If you’re planning to buy a home, knowing the key factors that impact affordability is important so you can make an informed decision. To stay up to date on the latest on each, let’s connect today.

According to a recent Harris Poll survey, 8 in 10 Americans say buying a home is a priority, and 28 million Americans actually plan to buy within the next 12 months. Homeownership provides many financial and nonfinancial benefits, so that interest is understandable.

However, it’s unlikely all 28 million Americans will accomplish that goal in the coming year. Experts project a total of around five million homes will be sold in 2023. Why is there such a big difference? It’s partly because there can be challenges to buying a home.

In the same survey, when asked, “Which of the following are preventing you from pursuing homeownership at this time?”:

• 34% answered, “I don’t have enough saved for a down payment”
• 30% answered, “My credit score”

If you’re aiming to buy a home, here’s what you need to know to accomplish that goal.

Save for Your Down Payment

Your down payment is a big chunk of what you pay up front for your home. For most home purchases, buyers put down some amount of cash up front (a down payment) and then take out a loan (a mortgage) to pay for the rest.

It’s a longstanding myth that you need to pay 20% of the purchase price for your down payment. In reality, 20% down isn’t always required. In fact, according to the National Association of Realtors (NAR), today’s median down payment is 14% for the average buyer and just 6% for a first-time buyer.

Regardless of how much money you can save for your down payment, know there’s help available. A local lender can show you options to help you get closer to your down payment goal. Plus, there are even loan types, like FHA loans, with down payments as low as 3.5% for some buyers, as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants.

Beyond assistance programs and different loan types, here are a few other tips to help you as you save for your down payment:

• Remember to factor in closing costs. In addition to your down payment, closing costs are usually 2-5% of the home's purchase price.
• Maintain your savings. Your down payment shouldn’t deplete all your savings. It’s important to still have some money set aside for homeownership expenses after you move in.
• Explore your options and lean on your trusted advisor for expert guidance. Do your research, ask questions, and look into the resources available for buyers like you.

Improve Your Credit Score

Your credit score is a number that indicates how financially reliable you are to lenders. A higher credit score usually means you’ll be able to borrow more money at a better interest rate. If your credit score is preventing you from getting an affordable mortgage, there are steps you can take to improve it. Here are two:

• Pay your bills on time. When you pay your bills on time, your credit score improves. When you’re late, it takes a hit. One way to make paying your bills on time easier? Set up automatic payments when and where you can.
• Mix it up. From auto loans, to credit cards, to mortgages – there are several different types of credit. And having a mix of them improves your credit score.

Bottom Line

If you want to purchase a home this year, let’s connect so we can start preparing.

 

 

Home equity has been a hot topic in real estate news lately. And if you’ve been following along, you may have heard there’s a growing number of homeowners with negative equity. But don’t let those headlines scare you.

In truth, the headlines don’t give you all the information you really need to understand what’s happening and at what scale. Let’s break down one of the big equity stories you may be seeing in the news, and what’s actually taking place. That way, you’ll have the context you need to understand the big picture.

Headlines Focus on Short-Term Equity Numbers and Fail To Convey the Long-Term View

One piece of news circulating focuses on the percentage of homes purchased in 2022 that are currently underwater. The term underwater refers to a scenario where the homeowner owes more on the loan than the house is worth. This was a huge issue when the housing market crashed in 2008, but it's much less significant today.

Media coverage right now is based loosely on a report from Black Knight, Inc. The actual report from that source says this:

“Of all homes purchased with a mortgage in 2022, 8% are now at least marginally underwater and nearly 40% have less than 10% equity stakes in their home, . . .”

Let’s unpack that for a moment and provide the bigger picture. The data-bound report from Black Knight is talking specifically about homes purchased in 2022, but media headlines don’t always mention that timeframe or provide the surrounding context about how unusual of a year 2022 was for the housing market. In 2022, home price appreciation soared, and it reached its max around March-April. Since then, the rate of appreciation has been slowing down.

Homeowners who bought their house last year right at the peak or those who paid more than market value in the months that followed are more likely to fall into the category of being marginally underwater. The qualifier marginally is another key piece of the puzzle the media isn’t necessarily including in their coverage.

So, what does that mean for those who purchased a home in 2022? It’s important to remember, owning a home is a long-term investment, not a short-term play. When headlines focus on the short-term view, they’re not necessarily providing the full context.

Typically speaking, the longer you stay in your home, the more equity you gain as you pay down your loan and as home prices appreciate. With recent market conditions, you may not have gained significant equity right away if you owned the home for just a few months. But it’s also true that many homeowners who recently bought their house are unlikely to be looking to sell quite yet.

Bottom Line

As with everything, knowing the context is important. If you have questions about real estate headlines or about how much equity you have in your home, let’s connect.

 

While it’s exciting to start thinking about moving in and decorating after you’ve applied for your mortgage, there are some key things to keep in mind before you close. Here’s a list of things you may not realize you need to avoid after applying for your home loan.

Don’t Deposit Large Sums of Cash

Lenders need to source your money, and cash isn’t easily traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.

Don’t Make Any Large Purchases

It’s not just home-related purchases that could disqualify you from your loan. Any large purchases can be red flags for lenders. People with new debt have higher debt-to-income ratios (how much debt you have compared to your monthly income). Since higher ratios make for riskier loans, borrowers may no longer qualify for their mortgage. Resist the temptation to make any large purchases, even for furniture or appliances.

Don’t Cosign Loans for Anyone

When you cosign for a loan, you’re making yourself accountable for that loan’s success and repayment. With that obligation comes higher debt-to-income ratios as well. Even if you promise you won’t be the one making the payments, your lender will have to count the payments against you.

Don’t Switch Bank Accounts

Lenders need to source and track your assets. That task is much easier when there’s consistency among your accounts. Before you transfer any money, speak with your loan officer.

Don’t Apply for New Credit

It doesn’t matter whether it’s a new credit card or a new car, when you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), it will have an impact on your FICO® score. Lower credit scores can determine your interest rate and possibly even your eligibility for approval.

Don’t Close Any Accounts

Many buyers believe having less available credit makes them less risky and more likely to be approved. This isn’t true. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both of those aspects of your score.

Do Discuss Changes with Your Lender

Be upfront about any changes that occur or you’re expecting to occur when talking with your lender. Blips in income, assets or credit should be reviewed and executed in a way that ensures your home loan can still be approved. If your job or employment status has changed recently, share that with your lender as well. Ultimately, it’s best to fully disclose and discuss your intentions with your loan officer before you do anything financial in nature.

Bottom Line

You want your home purchase to go as smoothly as possible. Remember, before you make any large purchases, move your money around, or make major life changes, be sure to consult your lender – someone who’s qualified to explain how your financial decisions may impact your home loan.

 

 

Mortgage rates have been a hot topic in the housing market over the past 12 months. Compared to the beginning of 2022, rates have risen dramatically. Now they’re dropping, and that has to do with everything happening in the economy.

Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), explains it well by saying:

“Mortgage rates dropped even further this week as two main factors affecting today's mortgage market became more favorable. Inflation continued to ease while the Federal Reserve switched to a smaller interest rate hike. As a result, according to Freddie Mac, the 30-year fixed mortgage rate fell to 6.31% from 6.33% the previous week.”

So, what does that mean for your homeownership plans? As mortgage rates fluctuate, they impact your purchasing power by influencing the cost of buying a home. Even a small dip can help boost your purchasing power. Here’s how it works.

The median-priced home according to the National Association of Realtors (NAR) is $379,100. So, let’s assume you want to buy a $400,000 home. If you’re trying to shop at that price point and keep your monthly payment about $2,500-2,600 or below, here’s how your purchasing power can change as mortgage rates move up or down (see chart below). The red shows payments above that threshold and the green indicates a payment within your target range.

This goes to show, even a small quarter-point change in mortgage rates can impact your monthly mortgage payment. That’s why it’s important to work with a trusted real estate professional who follows what the experts are projecting for mortgage rates for the days, months, and year ahead.

Bottom Line

Mortgage rates are likely to fluctuate depending on what happens with inflation moving forward, but they have dropped slightly in recent weeks. If a 7% rate was too high for you, it may be time to contact a lender to see if the current rate is more in line with your goal for a monthly housing expense.

It's springtime! The crocuses are popping up, the weather is warming up, and the Boston real estate market is on fire.

If you've been thinking of selling your property, this is a great time to do it. We are entering the busiest period of the year, in the busiest year we've seen in a while.

So I know you've been thinking, "Aren't all Realtors the same?" and maybe even, "What, exactly, am I paying this guy for?" Don't deny it. I know you have.

So what do I do, exactly? This is what I do.

And here are a bunch of endorsements. People like me! They really do!

I have 29+ years of success and hundreds of transactions and happy clients. The great majority of my listings in the last five years have gone under agreement in under a week, at or above asking price. Please get in touch!

Has Match Day 2021 got you headed to Boston? Welcome to our fair city!

Having been a Boston realtor for over 29 years, Ive helped many incoming medical residents as well as new or transferring doctors and medical students in locating and transacting a new home.

Heres how I can help you:

Ill help get you oriented to the city and neighborhoods. I know the neighborhoods around and accessible to the medical facilities and can help you manage the intricacies of searching for and visiting appropriate properties.

Im a certified DRS-Agent. What does that mean? The DRS-Agent organization has been endorsed by the AMA, AOA, AMSA, and SOMA. When relocating, finding a highly qualified and trustworthy REALTOR on your own can be difficult and time-consuming, especially if you are moving to a new city. DRS Agents are vetted agents who will provide you with the very highest level of experienced service. It is the quickest, easiest way to find a trusted professional real estate agent for the purchase or sale of your home.

Ill also help you oriented to our real estate buying process here in Boston. As with most things, our real estate purchasing process is somewhat different than just about everywhere. I will help you manage your transaction to a successful conclusion with as little stress as possible and as little drain upon your time as possible.

Ill also connect you with helpful buyer resources such as mortgage programs for residents, doctors, and medical students. Heres more about special mortgage programs for residents, doctors, and medical students.

I can also connect you with recommended attorneys, home inspectors, contractors, and more.

Here are some Boston real estate transactions basics.

Let me make your experience getting to know Boston and buying your home as stress-free as possible. Please reach out to me at 617-584-9790 or joe.wolvek@gibson.sir.com.

Each year around this time, I like to share the City of Bostons fire safety rules for rooftops, patios, and balconies. This year I think many of us are really longing for more outdoor pleasures after a long isolating spring. Dinner and drinks on your condo deck, balcony, or patio is one of the pleasures of summer in the city neighborhoods!Boston has fire safety rules that you'll first need to be aware of if you're planning to cook in your outdoor space.While there are plenty of good reasons to be aware of the rules, the most important reason is the safety of you and your neighbors. Being knowledgable about the rules, and following them, also helps to safeguard your legal and financial liability. Stay safe and stay legal.Below is a simplified list of the rules.Plumbed gas grills:Theseare permittedon the exterior of any building level. The gas line must be installed by a licensed plumber who has procured the required permits.Electric grillsare permittedon the exterior of any building level. As with the gas grills, the line you are using has to be installed by a licensed electrician, and has to have a permit and be up to code.Charcoal grillsare NOT permitted at all on or within a building structure, or on roof or rear decks. Regulations do not specify whether they are permissible on an outside patio, but the regulations highly discourage them, and you may be legally and financially liable for any damage or injury you cause from flying sparks, fumes, etc.. *Read the regulations in full for charcoal grill safety recommendations.Liquid propane (LP) grills:Permitted by the City of Bostonexcept:

• are not permittedinside the building.
• are not permitted onbalconies above the first floor of any building or structure used for habitation.
• are not permittedon balconies or deckson any levelthat are covered or enclosed. This includes a first floor deck with a deck above it.

Or you can see the regulations in full.Remember Im here to help if you have any questions about Boston real estate matters. You can call me at 617-584-9790, or email me by clicking the blue button below. If youd like to find a beautiful new home in Boston with a deck upon which to grill (legally, of course), you should definitely get in touch!  

Boston Real Estate Headlines:

• 12 Homes You Can Tour From Your Couch
• Deferred Amid Pandemic, Property Taxes are Due June 1
• Buying and Selling in a Virtual World

Featured Boston Real Estate:

• 170 W. Broadway, #211, South Boston $1,350,000
• 10 Farnsworth, #5B, Seaport District $2,995,000
• 700 Harrison Avenue, #315, South End $1,100,000

 

Last November, WaterMark Development Inc. tore down a single-story garage at 65 Green Street in Jamaica Plain. They were making way for a new three-story condo building with eight modern units.

The plan was for two and three bedroom floor plans, open concept living, and garage parking.Pricing per unit is listed between $650,000 and $1,095,000. Reservations are being taken for these units now.

The project was designed by Embarc Architecture + Design. You can read more about this project, due for completion this fall, here.

Less than a mile from scenic Jamaica Pond, this location offers great convenience. Just steps from the Southwest Corridor bike trail, it makes a bike ride into Boston a breeze. It's also near to the restaurants and bars of Centre Street, the Green Street T stop which provides easy access to the Longwood Medical area and downtown Boston.Interested in learning more? Please get in touch. I would be happy to assist you. Please call me at617-584-9790, orsend me an email via the linkbelow.  

Boston Real Estate Headlines:

• The Eight Most Significant Boston Developments Under Construction Right Now
• Slice of Heaven: More Golfers Installing At-home Simulators
• You Can Officially Move into Lovejoy WharfJust Leave Your Car

Featured Boston Real Estate:

• 462 Shawmut Avenue, #2, South End $1,475,000
• 580 Washington Street, #703, Midtown $1,439,000
• 8 Whittier Place, #2E, West End $739,000
• 25 Brighton Street, #2, Charlestown $699,000