Freddie Mac: Equity Matters (a Lot)

KCM Crew July 23rd, 2015

According to a Merrill Lynch survey, over 80% of the people in this country believe that homeownership is still “an important part of the American Dream”. There are many financial and non-financial reasons people feel this way.

One of the biggest reasons is because it helps build family wealth. Last week, Freddie Mac posted about the power of home equity. They explained:

“In the simplest terms, equity is the difference between how much your home is worth and how much you owe on your mortgage. You build equity by paying down your mortgage over time and through your home's appreciation. In a nutshell, your money is working for you and contributing toward your financial future.

They went on to show an example where a person bought a home for $150,000 with a down payment of 10%, resulting in a loan amount of $135,000. The buyer secured a 30-year fixed-rate mortgage at 4.5% with a monthly mortgage payment of $684.03 (not including taxes and insurance). They then illustrated what would happen after seven years of making a mortgage payment, assuming 3% per year home appreciation (the historic national average):

And that number continues to build as you continue to own the home. Merrill Lynch published a report earlier this year that showed the average equity homeowners have acquired at certain ages.

Bottom Line

Home equity is important to building wealth as a family. Referring to the first scenario above, Freddie Macexplained:

“Now, if you continued to rent, and made the same payment of $684.03 per month, you'd have zero equity and no means to build it.

Building equity is a critical part of homeownership and can help you create financial stability.”

Looking to Buy or Sell, contact us and let's get you moving.

Noemi Cardoso 
RE/MAX Terrasol
Licensed in CA
714-698-9555

Real Estate: This Spring Will Be Different.

The KCM Crew. - Posted: 17 Apr 2014.

Just like May flowers, every spring the housing market blossoms as buyers come out ready to purchase their dream house. This spring, we believe we are going to see the strongest purchasing market we have seen in a decade.

Why are we so bullish on the housing market this spring?

Here are a few reasons:

MILLENNIALS

Contrary to many reports, this age demographic is READY, WILLING and ABLE to become homeowners. As a matter of fact, the latest National Association of Realtors’ gender study revealed that the Millennial generation has recently accounted for a greater percentage of all buyers than any other generation.

BABY BOOMERS

As prices have risen, so has the equity in many homes across American. Homeowners, having been shackled to their house because of low or negative equity for the last several years, are again free to make a move without worrying about bringing cash to a closing table in order to sell. We believe this new-found freedom will release a pent-up demand of sellers who want to move-up to the home they’ve always dreamed of or want to downsize their primary residence and also purchase a second home they can use for vacation, retirement or both.

BOTH PRICES and MORTGAGE RATES are on the RISE

As the economy improves, more and more Americans are regaining faith that their own personal finances are headed in a positive direction. With this new confidence, they want to take advantage of the opportunity that presents itself with real estate still undervalued in most parts of the country and mortgage rates being well below historic numbers.

Different Generations See the Value in Homeownership

by Steve Harney on April 18, 2013 

Our founder, Steve Harney, occasionally asks to do a personal post on what he sees as important to our industry. Today is one of those days. – The KCM Crew

During an online chat with other real estate professionals last week, the question of the true value of homeownership was raised. My son, Bill, and I each chimed in unaware of the other’s response. It was interesting how the different generations valued homeownership for slightly different reasons. Below, are both responses.

Bill’s Response:

 

I want to weigh in as a 20-something who recently purchased a home for the first time.

While the financial reasons (wealth-building, not wanting to throw away rent payments every month, that owning is actually cheaper than renting in many markets right now) certainly had an impact on our decision, I think there are too many that are quick to dismiss the non-financial reasons that my peers and I discuss more often than people think.

There’s a very good reason why my wife and I host more parties than my friends who live in apartments (space). There’s a reason why we get more compliments about our house than our renting friends (freedom to choose our own stuff). We have the greatest dog in the world, while I hear “I can’t wait to get a house because I’ve always wanted my own puppy but I can’t right now”.

As a “young” buyer, do I want to make a smart decision? Of course. Do I want to understand the numbers and feel confident with the purchase? Sure. But that’s not what I woke up dreaming about 2 years ago. I woke up dreaming about the house that my wife and I can raise a family in; the house where we’re going to have barbecues with all our neighbors.

We woke up talking about the house that finally allowed my wife to get the dog she’s wanted since she was a kid (and that I fell in love with). We started picking out bedroom colors for our future babies.

You want advice for helping more young buyers? Ask them what their dreams are. What are their goals? What do they wake up talking to their partner about? Help them realize this and you only have to show them that the financials make sense (we’re not looking to make a quick buck on the house we’re living in).

Isn’t this what real estate is about anyway? Helping people realize their dreams? That’s what it was always about in my house growing up (thanks Steve). That’s what my wife grew up thinking. That’s what my friends (all in the first time home buyer range) think. Why not talk to them about this?
Sorry for the rant everyone. Figured I had a spot for the voice of the young buyer to be heard by the industry’s elite and I couldn’t pass that up. Thanks for reading.

My Response:

 

Do I think that homeownership is right for everyone? No, I don’t.

Do I think people who can’t afford a house should buy one anyway? No, I don’t.

However, I do believe for the majority of families that homeownership is important. Instead of giving you the links to the numerous studies I have that delineate the benefits of homeownership, I’ll give you one anecdotal story – my own.


Guess where I got the seed money to start my real estate company? My home.

Guess where I got the money for Bill’s college education? My home.

Guess where my younger son, Steven, moved to when he couldn’t find gainful employment after college? My home.

Guess where my older son, Bill, and his wife (and cat & dog) moved to when Sandy ravaged their house? My home.

Guess where I got the down payment for a winter getaway in South Beach for my wife and me? My home.

The home I struggled to buy over 20 years ago has financed my business, put two sons through college and enabled me to buy a winter escape in Florida. And during that whole time, it also allowed me to provide my family shelter during their times of need.

Do I firmly believe in the value of homeownership? Yes, I do!!

Ready to start your own Real Estate adventure? If so let's chat and get you on the right path.

Noemi Cardoso
William Raveis Real Estate
911 Main Rd - Westport MA 02790
Cell: 508-558-1945
www.DistinctiveHomes-NE.com
Noemi.Cardoso@raveis.com
Serving Ma & RI
Fluent in Portuguese and English


 

Stop Paying Your Landlord's Mortgage!

It's   staggering when you think about the cost of living, especially if you're a renter and not a home owner. If you are currently paying $1,000 a month for rented housing, then over the next three years, your property management company will effectively have reaped   $36,000 of your hard earned cash! You're paying their mortgage when you could be building equity in your own property. What if I don't have the money to buy a home right now? There are loan programs available that offer low and no down payment options. Some programs permit gift money as a down payment, and often sellers are willing to make a contribution to your purchase if they want to sell the home quickly. There are many benefits of home ownership to consider, most of all, tax deductions. Let's take a look at how advantageous this can be as a homeowner: How much is tax deductible? Tax deductions vary, but the IRS has laid out solid rules. They also have several tax publications full of helpful information worth taking the time to read. Publication 530,  Tax Information for First-Time Homeowners,  is very thorough, as is Publication 936, Home Mortgage Interest Deduction. For quick reference, you can refer to Tax Topics 505,  Interest Expense, and 504,  Home Mortgage Points.   These publications often refer to local and state guidelines, so you may want to consult a CPA to answer all the questions that arise from reading these materials. Here are a few tips you should know up front: Real Estate taxes are deductible on a primary residence. Real Estate taxes are paid at settlement or closing, or through an escrow account. Mortgage interest is deductible on a loan to purchase, build or improve your home. Your lender will provide you with a Mortgage Interest Statement (Form 1098) to list the total interest paid during the year. This   should include any deductible points paid for that year. Pre-paid interest is deductible in the year it is paid. At the close of a real estate transaction, borrowers usually pay for the interest on their loan that falls between the closing period and the first of the next   month. Mortgage payments are made "in arrears" so when a loan is closed mid-month, there is interest due to the new lender which must be paid in advance. If you are building a home, the interest on the construction loan is deductible. The construction period cannot exceed 24 months prior to the date that you move in if you claim this as your primary residence. (*) If you are thinking of buying a home in Westport or surrounding areas please visit www.DistinctiveHomes-NE.com for a free list of homes for sale in Westport and Bristol County MA and RI. If you are thinking of selling your home contact me for a FREE Current Market Analysis and to learn about our Market Plan to get your home SOLD! We work with one going in mind, YOURS!

Noemi Cardoso
Local Office. Local Agents. Local Knowledge.
William Raveis Real Estate
911 Main Rd - Westport MA 02790
Cell: 508-558-1945
www.DistinctiveHomes-NE.com
noemi@DistinctiveHomes-NE.com 


(*) © 2013 Mortgage Success Source, LLC. All rights reserved. Courtesy of Bobby Kayrouz - Sr. Mortgage Consultant
Sales Manager  at Envoy Mortgage Ltd - Phone 401.465.3628








Sr. Mortgage Consultant - Sales Manager
Envoy Mortgage, Ltd.