Author name: Pierre Esperience

Buying a home is a major financial decision, and one of the key questions homeowners ask is: how much of your income should go to a mortgage? Historically, financial experts recommend spending no more than 30% of your monthly income on housing costs. However, with rising home prices and mortgage rates, this rule has become increasingly difficult to follow. In this blog, we’ll break down how to determine a comfortable mortgage budget, the factors lenders consider when assessing affordability, and strategies to help you manage your monthly mortgage payments. What’s Included in a Mortgage Payment? To better understand how much you can afford, let’s look at what makes up a mortgage payment. Lenders refer to it as PITI: If you make a down payment of less than 20%, you’ll likely also pay mortgage insurance, which protects lenders in case of default. Taxes and insurance can often be included in monthly mortgage payments via an escrow account managed by your lender. How Much of Your Income Should Go to a Mortgage? While the general rule of thumb is 30% of your gross income, experts now recognize that a range of 25-35% is more realistic, depending on personal circumstances. Here are a few common methods to calculate affordability: 1. Debt-to-Income (DTI) Ratio Lenders use the DTI ratio to determine how much of your income is spent on debts, including your mortgage payment. Ideally: DTI Example:If your gross monthly income is $10,000, and you spend $3,600 on a mortgage, plus $550 on other debts (car loans, credit cards): 2. The 28%/36% Rule This rule suggests: Example:For a $10,000 monthly income: 3. The 35%/45% Rule This rule adjusts for today’s higher costs: Example:Gross income: $10,000 | Net income: $9,000 4. 25% Post-Tax Rule For a more conservative approach, aim to spend 25% of your after-tax income on housing. Example:If your net income is $7,500: What Lenders Look At When Determining Affordability To decide how much you can borrow, lenders assess: Tips to Lower Your Monthly Mortgage Payments Buying a home doesn’t mean stretching your budget to the limit. Here are strategies to make homeownership more affordable: Managing an Existing Mortgage: Lower Your Payments If you already own a home, here’s how you can reduce your mortgage burden: Final Thoughts Determining how much of your income should go to a mortgage requires balancing affordability with your homeownership goals. Stick to a budget that aligns with your financial comfort, and remember: just because you’re approved for a certain loan amount doesn’t mean you should spend it all. By carefully assessing your income, debts, and long-term goals, you can confidently find a mortgage payment that fits your lifestyle without compromising your financial health. Ready to take the next step? Start by calculating your mortgage budget and getting pre-qualified to see how much home you can afford!

Selling a house is a significant decision that often requires careful planning, strategic timing, and patience. If you’re thinking about putting your home on the market, understanding the average timeline—from listing to closing—can help you navigate the process more effectively. Here’s an in-depth look at how long it takes to sell a home and the factors that can impact this timeline. 1. Average Time on the Market: The Big Picture In recent years, U.S. homes have been selling faster than before. In 2020, houses stayed on the market for an average of just 25 days before an offer was accepted, down from 30 days in 2019. Following the accepted offer, it typically takes another 30 to 45 days to close, bringing the total average time to 55-70 days from listing to sale completion. However, these numbers can vary widely based on market conditions, location, and the home’s appeal to buyers. Even though demand, market, and seasonal trends can fluctuate, homes in 2021 continued to sell quickly, with nearly 47% of homes going under contract in a week or less during the spring season. The overall trend over the past decade shows homes selling faster, a contrast to 2010, when the average time on the market was about 140 days. 2. Local Market Differences: Rural, Suburban, and Urban Trends Real estate markets vary widely, and the average days on market can be very different depending on where your home is located: For instance, homes in markets like Columbus, OH and Denver, CO may sell within 8-10 days, while in Virginia Beach, VA, New York, NY, and Fort Myers, FL, homes can stay on the market for around 50-58 days. Your local real estate agent can give you more specific insights into the average days on market for your area. 3. Characteristics of the Typical Home Sold in the U.S. The “average” home sold in the U.S. has its own set of characteristics: 4. The Steps of Selling and Their Timelines Beyond just listing your home, there are several key steps in the selling process. Here’s a breakdown: a. Listing and Waiting for Offers Most homes go under contract in less than a month. Homes in fast-moving markets might even get offers within a week. During this period, the first impression your home makes is critical. Keep an eye on your listing, ensure it’s well-presented, and review feedback from any showings. b. Offer Acceptance and Inspection Once you receive an offer, it’s courteous to respond quickly. Buyers often include an expiration, like 24-72 hours after submission. If the offer is accepted, buyers typically have 5-10 days for a home inspection. Some buyers in competitive markets may waive the inspection altogether, but if the inspection occurs, you might need to negotiate repairs or make concessions. This negotiation period usually takes another 24-48 hours. c. Closing Process The closing period, once all conditions are met, generally takes 30-45 days. During this time, the buyer’s lender, title company, and local county records department complete the paperwork, and funds are exchanged. After everything is processed, ownership is transferred to the buyer. 5. Factors That Can Speed Up or Slow Down a Sale While averages can give you a general idea, the actual time it takes to sell your home can be influenced by a few key factors: 6. Quick-Sell Options and Tips If you’re on a tight timeline, here are some strategies that can help speed up the process:

The Cohen-Roach family’s experience with multigenerational living reveals both the challenges and rewards of sharing a home across generations. When Dominique’s family moved in with her father, Sal, their lives transformed: family dinners, lively mornings, and new routines became the norm. While the arrangement helped save on living costs and provided built-in support, it also highlighted the need for boundaries and communication. Experts suggest that a flexible home layout and clear family agreements can make this setup work smoothly. The Cohen-Roaches’ story shows that with the right approach, multigenerational living can strengthen family bonds and enrich daily life.

Finding a new rental home can be exciting, but it’s also a time to be extra cautious. Scams, poor living conditions, or hidden fees can lead to a major financial headache or even an unsafe situation. Whether you’re moving under a tight deadline or searching long-distance, it’s important to stay vigilant and recognize potential red flags. Here are seven warning signs to help you avoid rental pitfalls. 1. Below-Market Rent If you find a rental listing with a rent that seems too good to be true, it probably is. Scammers often use below-market prices to lure potential renters, especially those who are conducting long-distance searches and can’t see the property in person. Always compare the asking price with similar properties in the area. If it’s significantly cheaper, proceed with caution. 2. Exceptionally Large Deposits Upfront Most rentals require a security deposit, but if the amount being asked for is significantly larger than average, it’s a red flag. According to Zillow, the typical security deposit for a single-family home is around $1,000, with multifamily rentals averaging about $530. Be aware of local laws as well, as many states have caps on how much landlords can charge for security deposits. Anything beyond the norm could signal predatory behavior or an attempt to take advantage of renters. 3. Signs of Neglect Before signing a lease, take a close look at the property. Check for any signs of damage or neglect, such as broken windows, leaky roofs, or mold. Inspect key components like plumbing, electrical fixtures, and appliances to ensure they’re in good working order. If the landlord avoids addressing issues you point out, it’s a clear sign to walk away. Renting a neglected property can result in ongoing maintenance issues that will affect your quality of life. 4. Unreachable Landlord Communication is key in any rental agreement. If the landlord or property manager is difficult to contact or seems evasive, it could be a sign that they will be unresponsive when you need help later. Before signing, ask current tenants about their experience with the property management, and ensure that the lease includes clear contact information for the landlord. 5. High Tenant Turnover If a building has frequent vacancies or you see the same units being relisted multiple times, it might be a sign that tenants aren’t happy. High turnover can indicate issues with management, poor living conditions, or hidden problems with the property. Research reviews online, if available, and consider asking other tenants about their experience. 6. Renting Sight-Unseen Renting a home without seeing it in person is risky. Scammers often prey on long-distance renters by advertising fake properties or failing to disclose major issues with the home. If you’re unable to visit the property before signing the lease, use online resources like Zillow 3D Tours to get a better feel for it, but always insist on seeing the place in person before committing if possible. 7. Lease Red Flags A proper lease should include essential information such as the rent amount, payment terms, security deposit details, and maintenance responsibilities. If the lease is vague, missing important details, or the landlord refuses to put agreements in writing, it’s a red flag. Always read through the lease carefully and make sure all verbal agreements are documented. A lack of a formal lease is a major red flag and can leave you vulnerable to unfair treatment.

Buying a home is a monumental milestone, but the costs involved can catch many by surprise. Whether you’re making an all-cash offer or financing your purchase with a mortgage, it’s essential to understand all the expenses associated with becoming a homeowner. From down payments to closing costs, here’s a breakdown of what you need to budget for when purchasing your dream home. Common Costs When Buying a Home On average, home-buying expenses can add up to 25% of the property’s purchase price. While this may seem high, there are many factors that contribute to the total cost. Here’s a closer look at the key expenses: 1. Earnest Money Deposit The earnest money deposit is usually 1% to 3% of the home’s purchase price and is used to show the seller that you’re serious about your offer. This amount is held in an escrow account and goes towards your down payment when the sale closes. 2. Down Payment The down payment is a significant chunk of your home-buying costs and is typically between 3% and 20% of the home’s price. While putting down 20% or more can give you better loan terms and eliminate the need for private mortgage insurance (PMI), many buyers opt for a smaller down payment. In fact, nearly half of homebuyers in a 2024 Zillow survey reported putting down less than 20%. 3. Closing Costs Closing costs usually range between 2% and 5% of the home’s purchase price. These are one-time fees that cover everything from home inspections to attorney fees and are paid on the day you close on the house. According to Zillow, loan origination fees were the most commonly reported unexpected cost, so it’s vital to budget a bit more than anticipated for closing. 4. Prepaid Costs Prepaid costs are often wrapped into your closing costs and include recurring payments, such as property taxes and homeowners insurance. Typically, lenders require a couple of months’ worth of these payments to be paid upfront and held in escrow. 5. Moving Costs Once you’ve closed on your home, you’ll need to consider moving expenses. The national average moving cost is around $1,713, but local moves can range from $100 to $120 per hour, while long-distance moves may be anywhere from $799 to $5,377. 6. Cash Reserves While not mandatory, having between two to six months’ worth of cash reserves can provide a cushion for unexpected expenses once you’ve bought the home. Cash reserves are recommended in case of emergencies or financial changes, such as a job loss. How Much Should You Spend on a House? The amount you spend on a home should fit comfortably within your budget. Before starting your home search, consider the following steps: What’s Included in Your Monthly Mortgage Payment? Your monthly mortgage payment typically includes: If your home is part of a Homeowners Association (HOA), you’ll also need to account for monthly HOA fees, which cover maintenance of shared spaces and community amenities. How Much Should You Save to Buy a Home? It’s recommended to save at least 5% of the home’s purchase price to cover your down payment, moving expenses, and closing costs. For example, if you’re purchasing a $300,000 home, you’ll want to save at least $15,000. Some buyers use gift money or tap into retirement funds to cover these costs. Here are a few tips to help you build up your savings:

Buying a home for the first time can be both exhilarating and daunting. From finding the perfect property to understanding your financing options, the journey is filled with challenges. Fortunately, if you’re a first-time home buyer, you’re not alone! Many resources can help you navigate the process and alleviate some financial burdens. Here’s an in-depth look at the types of first-time home buyer programs available to ease your path to homeownership. Understanding Your Financing Options One of the most significant hurdles for first-time home buyers is saving for a down payment. According to the Zillow Consumer Housing Trends Report, only about half of first-time buyers managed to save most of their down payment themselves. The good news is that there are numerous programs designed to assist you in securing the funds necessary for your dream home. Pre-Qualification: Before diving into the home-buying process, consider getting pre-qualified for a mortgage. This process gives you a clearer picture of what you can afford without affecting your credit score. You can work with a mortgage professional or conduct your own research to understand specific first-time home buyer programs and grants available in your area. Types of First-Time Home Buyer Programs While many programs target buyers who haven’t owned a home in the past three years, even those who have may find options available to them. Here’s a comprehensive overview of various programs: 1. Down Payment Assistance Down payment assistance programs are typically reserved for first-time buyers acquiring a loan for their primary residence. These programs often work in conjunction with loan programs from FHA, VA, USDA, and others. Assistance may come in the form of a second mortgage, often interest-free, or a lump-sum grant that doesn’t need to be repaid. 2. Grants First-time home buyer grants provide lump-sum payments that don’t need to be repaid. You can apply these grants toward closing fees or your down payment to reduce your overall costs. 3. Penalty-Free IRA Withdrawals First-time home buyers can make penalty-free withdrawals from their IRA or Roth IRA to help with a down payment. To qualify, you must not have owned a primary residence in the last two years. 4. Closing Cost Assistance Some programs help first-time buyers reduce their closing costs, which can include a range of fees associated with the purchase. 5. Discounts Various discount programs, such as those from HUD, offer significant savings on properties. Programs like the Good Neighbor Next Door provide 50% discounts for eligible professionals such as teachers, firefighters, and law enforcement in designated revitalization areas. Loan Programs for First-Time Home Buyers There are several loan options tailored for first-time buyers, allowing for lower down payments and flexible qualifying criteria: 1. FHA Loan Federal Housing Administration (FHA) loans are designed for borrowers with lower credit scores and down payment options as low as 3.5%. 2. USDA Loan USDA loans are perfect for buyers in approved rural areas and are ideal for those with limited income. 3. VA Loan VA loans are available for veterans and active military members, offering lower interest rates and no down payment. 4. Conventional Loan While not government-backed, conventional loans are available through private lenders. Typically requiring a minimum credit score of 620 and a down payment of at least 3%, they might be less favorable for first-time buyers seeking financial assistance.

When purchasing a home, securing a mortgage with favorable terms is essential for managing monthly payments. One way to make your mortgage more affordable is through a mortgage rate buydown, which allows you to lower your interest rate by paying upfront fees. This strategy can reduce your monthly payments and even help you qualify for a larger loan. However, it’s important to understand how it works and whether it’s the right fit for your financial situation. In this blog, we’ll break down the concept of mortgage rate buydowns, the types available, and the pros and cons to help you make an informed decision. What Is a Mortgage Rate Buydown? A mortgage rate buydown is an arrangement where the borrower pays a fee to the lender to reduce the mortgage interest rate. This can be done either temporarily or permanently, depending on the type of buydown you choose. The benefit of a lower interest rate is smaller monthly payments, which can improve affordability, especially in the early years of the loan. Types of Mortgage Rate Buydowns There are two main types of mortgage rate buydowns: temporary and permanent. 1. Temporary Buydowns A temporary buydown lowers your interest rate for a set period, typically 1 to 3 years. One common option is the 2-1 buydown, where the interest rate is reduced by 2% in the first year and 1% in the second year before reverting to the original rate for the remainder of the loan. For example, if your mortgage interest rate is 6%, a 2-1 buydown would mean paying 4% in the first year, 5% in the second year, and then 6% from the third year onward. Temporary buydowns are often used by borrowers who expect their income to increase over time or anticipate selling the home within a few years. They can ease the financial burden during the early years of homeownership, making the mortgage more manageable. 2. Permanent Buydowns (Discount Points) A permanent buydown involves purchasing discount points to lower the interest rate for the life of the loan. One discount point typically costs 1% of the total loan amount and generally reduces the interest rate by 0.25%. For example, if you take out a $300,000 loan at a 6.5% interest rate, paying $3,000 (one discount point) could lower the rate to 6.25%. This reduction would apply for the entire duration of your mortgage, resulting in long-term savings on interest. Who Can Benefit from Mortgage Rate Buydowns? Mortgage rate buydowns can be a great tool for certain types of buyers and homeowners, but they’re not for everyone. Here’s who might benefit: However, if you’re planning to sell or refinance within a few years, the upfront cost of a buydown may not be worth it, as you may not recoup the investment. Costs and the Break-even Point The cost of a buydown varies depending on the loan amount and the interest rate structure. For instance, a 2-1 buydown on a $400,000 loan might cost around $8,990. For permanent buydowns, one point generally costs 1% of the loan amount. One important calculation when considering a buydown is the break-even point. This is the point at which the savings from lower monthly payments equal the upfront cost of the buydown. For example, if you pay $3,000 upfront to save $39 per month on your mortgage, it would take 6.4 years to break even ($3,000 ÷ $39). After that point, you’ll continue to save on interest, making the buydown more cost-effective. If you sell or refinance before reaching the break-even point, you could lose money. Pros and Cons of Mortgage Rate Buydowns Pros: Cons:

A Home Equity Line of Credit (HELOC) is a flexible form of credit that allows you to borrow against the equity in your home. Here’s a breakdown of how it works: What is a HELOC? A HELOC is a revolving credit line based on the value of your home, minus any outstanding mortgage. You can typically borrow up to 85% of your home’s appraised value, and withdraw money as needed during the draw period (usually around 10 years). During this phase, you only pay interest on the money you use. Once the draw period ends, you enter the repayment phase (typically 20 years), where you repay both the principal and interest. How Does a HELOC Work? A HELOC functions like a credit card secured by your home equity. You can access funds using various methods, such as a credit card or digital transfers. You only pay interest on the amount you use during the draw period. After the draw period, you start repaying the principal and interest over time, and you can no longer borrow additional funds. HELOC vs. Home Equity Loan A key difference between the two is flexibility. A HELOC has adjustable interest rates and allows for ongoing borrowing during the draw period. A home equity loan, on the other hand, gives you a lump sum with fixed interest rates and monthly payments, making it better for specific, one-time expenses. Qualifications and Costs To qualify for a HELOC, you typically need a decent credit score (around 680 or higher), a low debt-to-income ratio, and 15%-20% equity in your home. While closing costs for a HELOC are generally lower than a mortgage, there are still costs like application, appraisal, and processing fees. It’s essential to check for any penalties for early closure or non-usage. Disadvantages and Considerations A HELOC offers flexibility but also carries risks. It reduces your home equity, which could lower your profits if you sell the home. Interest rates are adjustable, which can increase your costs, and fewer lenders offer HELOCs today. Always weigh the costs and benefits carefully.

The real estate market in the USA has experienced significant fluctuations in home sales and prices, especially in recent years. As of mid-2024, the market shows signs of stabilization after a period of rapid price increases and heightened demand driven by historically low mortgage rates and the COVID-19 pandemic. According to the National Association of Realtors (NAR), existing-home sales in May 2024 were at a seasonally adjusted annual rate of 5.8 million, reflecting a modest decline from the previous month but a 1.5% increase compared to the same period last year. This slight dip can be attributed to the recent uptick in mortgage rates, which have risen to an average of 6.25% for a 30-year fixed-rate mortgage, impacting buyers’ purchasing power. Despite the cooling in sales volume, home prices continue to rise, albeit at a slower pace. The median existing-home price for all housing types in May 2024 was $386,000, up 3.5% from May 2023. The persistent shortage of available homes for sale, combined with strong demand, particularly in suburban and rural areas, has kept prices elevated. Regions such as the Midwest and South have seen the most substantial price increases, with median prices rising by 5% and 4.7%, respectively, year-over-year. As the market adjusts to changing economic conditions, experts predict a gradual normalization in both sales and pricing, offering a more balanced environment for buyers and sellers alike. Source : Realtor.com