Should I Wait to Put Down a Bigger Down Payment?

Some experts are advising that first time and move-up buyers wait until they save up 20% before they move forward with their decision to purchase a home. One of the main reasons they suggest waiting is that a buyer must purchase private mortgage insurance if they have less than the 20%. That increases the monthly payment the buyer will be responsible for. In a recent article, Freddie Mac explained what this would mean for a $200,000 house:

mortgage virginia beach

However, we must look at other aspects of the purchase to see if it truly makes sense to wait.

Are you actually saving money by waiting?

CoreLogic has recently projected that home values will increase by 4.3% over the next 12 months. Let’s compare the extra cost of PMI against the projected appreciation:

home appreciation

If you decide to wait until you have saved up a 20% down payment, the money you would have saved by avoiding the PMI payment could be surpassed by the additional price you eventually pay for the home. Prices are expected to increase by more than 3% each of the next five years. Saving will also be more difficult if you are renting, as rents are also projected to increase over the next several years. Zillow Chief Economist Dr. Svenja Gudell explained in a recent report:

“Our research found that unaffordable rents are making it hard for people to save for a down payment … There are good reasons to rent temporarily – when you move to a new city, for example – but from an affordability perspective, rents are crazy right now. If you can possibly come up with a down payment, then it’s a good time to buy a home and start putting your money toward a mortgage.”

Laura Kusisto of the Wall Street Journal recently agreed with Dr. Gudell:

“For some renters there may be a way out: Buy a house. Mortgages remain very affordable.”

Mortgage rates are expected to rise…

Freddie Mac is projecting that mortgage interest rates will increase by almost a full percentage point over the next 12 months. That will also impact your mortgage payment if you wait.


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Weekly Marketing Tip

Why Digital Marketing is a Must in Real Estate

  • Consumers want something different. Being knowledgeable is no longer enough because everything it out there on the internet. You need to tell clients what you can offer that sets you apart from the competition.
  • Digital marketing is only growing in engagement and users. Almost half the process however is based on how you execute your marketing strategies.
  • 90% of prospects find custome content useful and would trust real estate professionals who provide it.

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How Much Are Millennials Putting Down?

Digital Risk recently polled Millennials about the housing market. Among their findings was the fact that nearly two-thirds of the generation who have recently purchased a home, have done so with less than 20% down; with 36% putting down less than 5%!

Here is a graph detailing the results:

Virginia Beach Down Payment

This means that more and more American’s between the ages of 18 and 34 stopped paying their landlord’s mortgage and started building their own family’s wealth.

Millennials aren’t the only ones taking advantage of lower down payments.

The Federal Reserve Bank of New York found that if the down payment required to purchase a home went from 20% to 5%, a renter’s Willingness To Pay (WTP) increased by 40%.

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Weekly Marketing Tip

Share Valuable Information

  • One great way to reach out to past clients is to send them information they will find useful.
  • This can be real estate related, but also if you run across an article that has to do with something personal they told you they are interested in.
  • This shows that you listen, stay informed, and take the time to interact with people you have done business with.

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4 Expenses You Avoid When Working With a Seller’s Agent in Virginia Beach

Hampton Roads REMAX

Selling your Virginia Beach home yourself may be tempting. Hold a few open houses, trudge through some paperwork, and save by not paying an agent’s fee, right?

Think again. Statistics show Virginia Beach sellers tend to make more money when they hire a professional Realtor. According to the National Association of Realtors®, the typical agent-assisted home sale typically has a 13 percent higher sales price than the typical “For Sale By Owner,” or FSBO, sale.1

Here are a just a few ways you save with an agent.

1. The price is right
Pricing your property can be the most challenging part of selling your home. Starting too high may mean your home languishes on the market. Once you start dropping the price, buyers may assume you are desperate and will submit even lower offers. On the flipside, starting too low means you’ll leave money on the table. A Realtor can help you price your home correctly to avoid these pitfalls.

2. Marketing
Paying up front for online listings, mailers and signs to market your home can be expensive. Not only do many agents have connections that can get you a great deal, they can also help to make the process much less stressful.

3. Negotiations
Even when your home is priced appropriately, you’re still likely to find yourself at the negotiating table. Agents are well practiced in the art of debate, and will go to bat to make sure you get a fair price.

4. Time is money
Creating marketing materials, arranging showings and finding contractors to make necessary updates costs you both time and money. Handing off duties to a Realtor not only opens up your schedule, but can also help you sell your home faster than you would on your own.

Reconsidering your FSBO status? Consult a RE/MAX Alliance agent here