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SURVEY: A Third of Homebuyers Would Exceed Budget for the Right Home

online-surveysThe majority (61 percent) of Americans who say they’re likely to buy a house in the next five years have put a home buying budget in place, but a third (36 percent) would go over the planned purchase price if they wanted the house enough, according to a recent survey by BMO Harris Bank. Among current homeowners, 49 percent stuck to their budget when buying, but 19 percent went over and 20 percent didn’t have a budget for their current home.

On average, American homeowners who went over budget exceeded it by $31,587. Those who came in under budget (13 percent) went lower by an average of $25,083. Half (49 percent) set a maximum amount they could spend and stuck to it.

“A budget is an essential piece to the home buying process. Putting one in place takes time, and has to consider a variety of factors including savings, income and interest and mortgage rates,” said Kevin Christopher, Head of Mortgage Sales, BMO Harris Bank. “What we’re seeing from our survey is that homebuyers don’t always leave themselves that cushion. Implementing and stress-testing a budget is key, not only during the pre-approval process but to ensure that when interest rates go up, homeowners are prepared.”

Taking First Steps

First-time buyers are less likely to have a fixed budget that they will stick to (54 percent), and are more likely than those who have owned to say they are willing to go over budget (44 percent). A third (32 percent) say they expect their parents will help pay for the cost.

While only 13 percent of first-time buyers are currently pre-approved for a mortgage, 83 percent plan to go through the process before they purchase a home. There is some worry about the process, with 64 percent concerned they might not be pre-approved.

Putting Money Down

The survey of American homeowners also found:

  • The vast majority (89 percent) of homeowners had a mortgage at some point and half (52 percent) have had a home equity line of credit (HELOC) at some point.
  • A third (35 percent) are paying their original mortgage, while a similar percentage (30 percent) have refinanced, and 35 percent have paid off their mortgage.
  • Americans expect to have their mortgage fully paid off by age 59.
  • While not surprising that older homeowners are more likely to have paid off their homes, 40 percent of those over 65 are still paying off their mortgage.

The average down payment that Americans planning to buy in the next five years will make is 25 percent, and 87 percent feel confident they will have the down payment they’re hoping for to buy their next house.

“Household balance sheets are now relatively healthy, helped by rising asset prices, moderate income growth and, most importantly, lower debt levels. According to the Federal Reserve Bank of New York, from early 2008 to mid-2013, household debt was reduced by $1.5 trillion, as both borrowers and lenders came to terms with the housing and credit bubbles whose subsequent bursting is held to blame for the Great Recession,” said Michael Gregory, Head of U.S. Economics, BMO Capital Markets. “Household credit is starting to flow again — nearly $480 billion in the past year — led by mortgages, student loans and auto financing. However, both borrowers and lenders are approaching HELOCs more conservatively, a sign that greater prudence might be the ultimate — welcome — legacy of the recent recession. Borrowing within one’s means is critically important to maintaining a healthy state of household finances.”

Survey results cited in this report are from a Pollara survey commissioned by BMO Harris Bank using interviews with an online sample of 2,500 Americans conducted between April 1st and 7th, 2014. The margin of error for a probability sample of 2,500 is ± 1.96%.

Source: BMO Harris Bank

Reprinted with permission from RISMedia. ©2014. All rights reserved.

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10 Signs You Are Ready to Invest in Real Estate

invest_in_real_estate

When it comes to property investment, timing is everything. Ultimately, choosing the right time to enter the market will have a significant impact on the long-term success of your investment.

But how can you, as an investor, know whether the timing is right? Here are 10 tell-tale signs that now is the time to start building your investment portfolio.

1. You are financially ready. You have saved enough for the down payment and you have also established your emergency fund. You have taken into account home maintenance expenses. Your credit history is good and you are able to meet all the financial obligations.

2. You have set your long-term goals. You have a clear picture in your mind of your investment’s purpose and you are flexible enough to adjust to changing circumstances. You are not hesitant.  When the timing is right, you are able to adapt to the market needs and the development of technologies.

3. You have done your research. You know the neighborhood of your future property well enough to foresee the coming trends and the possible changes in the community. You have researched all the schools in the area as well as the best commuting means.

4. You have chosen a stable economy. The area is financially stable, economic trends are promising and equities are surging. No demographic fluctuation or no irregular variation of population have been recorded in the area.

5. You understand the country’s policies regarding real estate. The policies of the region promote and encourage a positive, innovative environment as well as drive further economic growth. The tax policy in the country is positive for homeowners. Global innovation index is rising in the area.

6. Infrastructure projects are underway and likely to lead to an increase in property values. The infrastructure of the area is being developed with a focus on: transport, energy, solid waste and water management developments.

7. The region is moving toward sustainable development. The region’s awareness of global and local environmental issues is increasing, the demand for eco-friendly homes as well as for sustainable rural and urban development is rising. As more and more people head toward sustainable living, investing in sustainable property will increase its value in the future.

8. The location draws a lot of interest. Whether it is the best travel destination or the hot jobs spot, the location is always on the top of the search engine. It has become a successful startup hub already or is planning to do so in the coming years, driving a lot of job seekers into the area. The number of enrolled students is increasing every year and the area draws interest of international students.

9. You have found a reliable real estate agent.  It’s particularly crucial to have a reliable representative. Your real estate agent is trustworthy, knowledgable, and knows the local market well enough to be able to help you make the right choice.

10. You have researched local differences in the property market. Whether you plan to invest in a residential property and turn it into a rental or an office space, you are fully aware of all cultural differences that might occur when you deal with a property seller.

Source: Lamudi

Reprinted with permission from RISMedia. ©2014. All rights reserved.

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Real Estate Agents Find New Ways to Give Back to Their Communities

volunteerBy Zoe Eisenberg

As a real estate agent, you already know you have an important place within the community. However, selling homes isn’t the only way you can help out. Below are a handful ways you can give back—and make invaluable connections—within your community.

Donate your fees. Many agents give back by donating a percentage of their fees to a local charity. Not only are you giving back to the community, but clients like to see that their money is going to great places. You may even want to consider allowing your client to choose the charity that a percentage of your agent or brokerage fee goes to.

Donate your time. Set aside time every week, month, or year to volunteer at a local charity organization. If you want to become more involved, consider heading up the board. Jane B. Locke, an agent in Mt. Pleasant, S.C. has spent the last 27 years on the board of Carolina Children’s Charity, an organization that helps families pay for medical costs arising from children’s birth defects. Moving up the board ranks to president, Locke runs the charity’s annual telethon and attends every fundraiser. This year she helped the charity raise $433,000, and was a recipient of NAR’s 2014 Good Neighbor Award.

Donate a home. Want to do more than donate time or money? How about building a home? Giveback Homes, a California-based company that has teamed up with Habitat for Humanity, brings agents together several times a year to help built a home for a family in need. The organization has built homes all around the United States and in Nicaragua. In late August 2014, the company held an event in Lynwood, Calif., where more than 20 REALTOR® volunteers gathered together to build an entire complex for families to live in. The project was financed by donations made from Giveback Homes members, professionals spanning an array of home-centric industries—from agents to home builders, mortgage brokers and interior designers.

Start your own foundation.
Can’t find a local charity that inspires you? Create your own. Gail Doxie, an agent in Fort Myers, Fla. founded the Miles of Smiles Foundation in 2007, which offers equine-assisted therapy for veterans suffering from post-traumatic stress disorder. Doxie also received the 2014 Good Neighbor Award for her good work.

Whether you donate time, money, or brain-power, giving back can be fulfilling, fun, and a great way to connect with your community.

Reprinted with permission from RISMedia. ©2014. All rights reserved.

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