10 Simple Tips to Take the Stress Out of Home Buying Process - Focus on the Positives!

Tip 7: Family & Friends Opinions

 

It's natural to want to get opinions from those you trust before you make your final choice, but too much input will ultimately make the decision process much harder.

You may be getting down payment assistance from family. For that reason, it's good for them to know why you are choosing a particular home. It's an investment on their part as well, but remember you will be the one making monthly mortgage payments. You may be needing approval or an extra set of eyes in the beginning stages of looking at homes if you are a first time home buyer. Once you get an idea of what to be looking for, you should be ready to step out and make those decisions on your own.

If you have friends come along, their taste may be completely different from yours, and you may miss the house you like because you were only focusing on their opinion. You may end up looking at more homes than are needed because you were distracted.

Your home is yours because it fits your family, your lifestyle, your needs, and your location of choice.

Remember to focus on what your immediate wants and needs are so that YOU will be happy with the final decision. 

Next...Tip 8: Buy It because You Love It!

Real Estate, Mortgages, and Finances - A Decade in Review

10 years that shook America's finances

2001: Economy endures 9/11 attacks

·      A mild, eight-month recession begins. In March, a recession emerges that the National Bureau of Economic Research later declares lasted eight months. The start of the recession follows a decade of expansion.

The unemployment rate, considered a lagging indicator of the overall economy, reaches a four-year high of 4.9 percent in August.

·      A major tax reform law passes. On June 7, President George W. Bush signs a $1.35 trillion tax package into law. Among the changes, the law will cut the top tax rate from 39.6 percent to 35 percent and create a new bottom tax rate of 10 percent. The law will eventually double the child tax credit from $500 to $1,000. In addition, the new rules will gradually reduce the estate tax and eliminate it in 2010.

·      Terrorists attack the U.S. on Sept. 11. They hijack four commercial airliners, crashing two of them into the World Trade Center and another into the Pentagon. The fourth crashes in a field in Pennsylvania. Almost 3,000 die.

The tragic event does not cripple the U.S. economy, although the airline and the insurance industries struggle in the wake of 9/11. A year later, a report by the Congressional Research Service says, "The direct effects of the attacks were too small and too geographically concentrated to make a significant dent in the nation's economic output."

·      In October, the Federal Reserve reduces its benchmark federal funds rate to 2.5 percent, bringing the overnight bank lending rate to the lowest level in 39 years. It's the ninth consecutive cut to the federal funds rate in the Fed's attempt to pump up the economy.

-- Leslie McFadden

2002: Corporate scandals spur reforms

·         In January, the Federal Reserve ends its streak of cuts to the target federal funds rate, after 11 consecutive reductions in 2001. The Fed leaves the federal funds rate at 1.75 percent and the discount rate at 1.25 percent, the lowest level for the latter since 1948. The economy begins to show signs of improvement.

·      In June, the U.S. Senate votes down a bill that would have made the repeal of the estate tax permanent. A massive tax cut bill passed in 2001 under President George W. Bush would gradually reduce estate taxes and repeal them in 2010. Without passage of additional legislation, a "sunset provision" would cause the estate tax and other tax cuts to expire on Dec. 31, 2010. However, an extension of the Bush-era tax cuts was approved before the deadline.

·      Reacting to several corporate scandals involving Enron Corp., WorldCom Inc. and others, Congress passes into law the Sarbanes-Oxley Act in July. The law requires immediate disclosure of stock sales by company officials and sets stiff penalties for executives who commit corporate fraud. It also creates an oversight board to monitor the accounting industry.

·      In October, President George W. Bush announces a federal budget deficit of $159 billion for the fiscal year 2002, the first deficit since 1997.

-- Leslie McFadden

2003: Mortgage rates fall, housing prices climb

·         At the beginning of the year, the 30-year, fixed-rate mortgage falls below 6 percent for the first time in 37 years. It remains at 6 percent or below until the end of July. And in mid-June, the average rate on a 30-year, fixed-rate mortgage falls to a record low of 5.28 percent.

·      Low rates provoke the biggest mortgage refinancing boom in history. Homeowners take out $2.5 trillion in refis in 2003 compared to $1.7 trillion the year before (and $234 billion in 2000). Toward the end of the year, house price appreciation accelerates.

·      The Federal Reserve moves short-term interest rates just once in 2003, but it's significant. The central bank cuts the federal funds rate to 1 percent from 1.25 percent. It's the lowest federal funds rate in 45 years.

With inflationary expectations low, the Fed judged that "a slightly more expansive monetary policy would add further support for an economy, which it expects to improve over time." What follows is a housing boom, then a bust. Later, some observers partly blame the Fed for keeping the federal funds rate at 1 percent for a year.

·      In October, the $20 bill gets a facelift. Andrew Jackson's portrait is enlarged and removed from an oval frame, a background image of an eagle is added to the front and the bill is given an overall cleaner look. Most noticeably, the redesigned bill is colorful, with pastel hues of peach, green and blue.

-- Holden Lewis

2004: Facebook and Google: Recognize them?

·         Seeking to reduce the chance of inflation, the Fed chooses to hike the federal funds rate in June for the first time in four years from 1 percent to 1.25 percent. The move marks the beginning of a rate-hiking spree by the Fed that would last until Aug. 17, 2007.

·      Facebook and Google begin to define the contemporary Internet landscape.

On Feb. 4, Mark Zuckerberg and three friends launch Facebook in a Harvard dorm room. By the end of the year, the site would have more than 1 million users, and by 2010, it will balloon to more than 400 million.

On Aug. 18, Google launches an initial public stock offering at $85 per share. The stock will eventually reach $747 in November 2007.

·      Costs associated with military action in Afghanistan and Iraq and newly enacted tax cuts drive the U.S. deficit to 3.48 percent of the U.S. gross national product, the highest percentage since 1994.

·      Due in part to rising demand from China and India and political instability in the Middle East, crude oil prices begin a sustained climb, breaking $40 per barrel for the first time in history during the week ending Oct. 1.

·      In December, the euro reaches a high against the U.S. dollar, rising to $1.36, and provoking fears the dollar would be supplanted as the world's reserve currency.

-- Claes Bell

2005: Subprime mortgages peak

·         The subprime mortgage boom peaks. Lenders hand out $625 billion in subprime loans, compared to $540 billion the year before. On top of that, lenders give $380 billion in Alt-A mortgages. Most of the Alt-A loans are low-documentation mortgages, otherwise know as "liar loans" because borrowers exaggerate their incomes with a wink and nod from their lenders.

·      An adage gains currency: Mortgage lenders are willing to give a loan to anyone who can fog a mirror. Urban legends tell of gardeners buying $500,000 McMansions. More than three-quarters of the 2005 subprime and Alt-A loans are sold on the secondary market. The market would explode in 2007 and 2008, igniting the worst recession since the Great Depression.

·      Congress reforms bankruptcy law to make it more difficult for consumers to file bankruptcy. The law prioritizes credit card debt higher than unpaid child support.

·      The Federal Reserve raises short-term interest rates eight times. The federal funds rate begins the year at 2.25 percent and ends it at 4.25 percent.

·      Nationally, home values rise more than 11 percent, according to the federal government's House Price Index. The National Association of Realtors distributes a "Housing Bubble Prospects Q&A" that assures consumers, "There is virtually no risk of a national housing price bubble based on the fundamental demand for housing and predictable economic factors."

                             -- Holden Lewis

2006: Growing home prices create "bubble"

·         The year 2006 sees the peak of the housing bubble, with the median existing home price climbing to $221,900, more than four times the U.S. median household income at the time, according to the National Association of Realtors. The value of a typical American home climbs 50.4 percent since the beginning of the decade, with some markets such as Miami-Fort Lauderdale, Fla., Las Vegas-Paradise, Nev., and Riverside-San Bernadino, Calif., more than doubling.

·      Homeowners respond to the run-up in housing prices by drawing record amounts of equity out of their homes through cash-out refinancing, home equity loans and home equity lines of credit. All in all, Americans liquidate $318.3 billion in equity through cash-out refinances in 2006, according to Freddie Mac.

·      The rising federal funds rate contributes to rising yields on certificates of deposit, benefiting savers. In September, the average yield for a one-year CD hits 3.89 percent, a multiyear high that's a far cry from today's paltry average yield for one-year CDs of below 1 percent.

·      Alan Greenspan, the man largely credited with engineering the housing boom, retires on Jan. 31, ending a reign of more than 18 years as chairman of the Federal Reserve. He is replaced by Ben Bernanke.

-- Claes Bell

2007: Foreclosure tsunami begins

·        The stock market hits an all-time high. Usually a leading indicator of the economy's health, it proves to be anything but as the stock market peaks on Oct. 9. The Standard & Poor's 500 reaches 1,565 and the Dow Jones Industrial Average hits 14,164 just months before the start of one the worst recessions in American history.

·      After years of sustained growth, the real estate bubble begins to deflate. Real estate values begin a plunge in the fourth quarter of 2007 that will last into 2010 and cost U.S. mortgage holders trillions in home equity. Baby boomers would be hit particularly hard between 2007 and 2009. Even when you factor in future Social Security earnings, households headed by individuals aged 50 or older would see their real wealth decline by 18 percent, due in part to the loss of home equity.

·      The credit crunch begins in August 2007 as lenders deal with a trifecta of bad news -- declining real estate values, the spread of toxic subprime mortgages and the slowing economy. The so-called TED spread, or the spread between the three-month Treasury yield and the three-month Libor, rises from 0.39 percent to 1.81 percent between July and August 2007. When the spread increases, it's a sign that lenders believe the risk of default on interbank loans is increasing.

·      The foreclosure tsunami begins. Homeowners looking for refuge from resetting variable-rate mortgages are unable to refinance because falling real estate values put them "underwater." Mortgage delinquency rates for residential real estate tracked by the Mortgage Bankers Association begin a sustained rise, starting in September 2007.

-- Claes Bell

 2008: The Great Recession cripples the nation

·         The greatest financial crisis since the Great Depression hits full force in 2008, spurred by the failure or emergency sale of some of the nation's biggest financial firms, starting with Bear Sterns on March 16, 2008. Wachovia, Lehman Brothers, Washington Mutual and Merrill Lynch later toppled or came to the brink of bankruptcy. The main culprit was toxic subprime mortgages.

·      The Fed and Treasury take unprecedented action to prevent the wholesale collapse of the financial system. When dropping the federal funds rate from 5.25 percent to 1 percent fails to stem the crisis, Fed Chairman Bernanke and Treasury Secretary Henry Paulson turn to more radical methods.

They encourage healthier institutions to buy failing banks, making massive amounts of liquidity available through hastily created government lending programs and arranging takeovers of founding firms. For example, global insurance firm AIG is bailed out with $182 billion.

·      A global panic set off by the failure of Lehman Brothers on Sept. 15 pushes an already slowing economy into the Great Recession. By the fourth quarter 2008, the U.S. economy is shrinking at an annual rate of 6.8 percent. Global gross domestic product growth falls from 3.9 percent a year in 2007 to 1.7 percent a year in 2008.

·      On Dec. 11, former Nasdaq Chairman Bernard Madoff is indicted on charges his multibillion-dollar investment firm is nothing more than a giant Ponzi scheme. In the weeks following, high-profile investors and charities admit to being bilked of billions by Madoff. He is eventually sentenced to 150 years in federal prison.

·      Revolving consumer credit, which includes credit cards and other forms of flexible debt, peaks at nearly $974 billion in August.

-- Claes Bell

2009: Unemployment spikes, stimulus approved

·         Newly elected President Barack Obama signs the massive American Recovery and Reinvestment Act on Feb. 13. It commits $787 billion to tax cuts, infrastructure projects, job training programs and aid to families.

·      On March 9, the Dow Jones Industrial Average sinks to 6,547, less than half the all-time high set in October 2007 and the lowest close since April 15, 1997. On this day, many former blue chip stocks, especially in the embattled financial sector, are trading at or near multiyear lows. Giant Citigroup hits an intraday low of 99 cents.

·      In February, the Treasury Department begins a series of "stress tests" to determine which banks are healthy enough to survive further deterioration of the global economy. It finds big banks must raise an additional $74.6 billion to remain solvent should the economy slide further.

·      After four straight quarters of declining GDP, the U.S. economy begins to grow again in the third quarter 2009 at an annualized rate of 1.6 percent. Later, the National Bureau of Economic Research's Business Cycle Dating Committee, the group of economists tasked with following recessions, pegs June as the official end of the recession.

·      Unemployment peaks at 10.1 percent in October, the highest level since June 1983.

·      In May, the Credit Credit CARD Act passes. The measure contains consumer protections, including restrictions on interest rate hikes and double-cycle billing of credit cards. Many credit card providers respond by raising rates and fees dramatically before the law takes effect.

-- Claes Bell

2010: Reforms to financial industry approved

·         Amid fierce lobbying from the financial industry and consumer advocates, the Dodd-Frank Wall Street Reform and Consumer Protection Act is signed into law by Obama on July 21. The new law creates a new Consumer Financial Protection Bureau to police mortgages and other financial products. It also forms a new office to monitor risks to the financial system and streamlines oversight of the financial industry.

·      Thanks to rising corporate profits, the stock market continues a rapid recovery throughout 2010, with the Dow Jones Industrial Average hitting a 52-week high of 11,519 on Dec. 15. In just over 22 months, the Dow rises 175 percent.

·      Despite government stimulus and steady if unspectacular GDP growth, high unemployment persists, hovering between 9.5 percent and 9.9 percent throughout the year. More troubling still is the length of unemployment for many Americans. As of November 2010, more than 6.3 million are out of a job for 27 weeks or more, and the average length of unemployment is 33.8 weeks.

·      Three years into the housing crisis, the flood of residential foreclosures shows little sign of abating. At the end of the third quarter 2010, a survey by the Mortgage Bankers Association finds 4.39 percent of residential mortgages are in foreclosure and 9.13 percent of all home loans are in some form of delinquency.

·      On Aug. 15, a new Federal Reserve rule goes into effect requiring banks to get consumers' permission before enrolling them in overdraft protection. In response, many banks begin imposing maintenance fees and balance requirements to recover lost revenue, reducing free checking options for consumers.

-- Claes Bell

Courtsey of Gina Starr, Loan Officer

Red Rock Mortgage & Lending

Phone: 405-210-3900

Email: gstarr@redrocklend.com

Don't worry...the next Tip will be coming soon...

HAPPY NEW YEAR 2011!

The start of a new decade!



10 Simple Tips to Take the Stress Out of Home Buying Process - Focus on the Positives!

Tip 6: When is the Right Time to Buy...

When is the Right Time to Sell?

Every home buyer and seller is in a different situation, so it is important you don't compare your timeline and decisions to anyone else's.

Time to Buy?

Given all of the drops in the housing market in the last few years, many people are wondering whether now is the right time to buy a new house. Should you snatch up the good deals before prices start to rise or should you wait it out a little bit longer to see if the prices will drop even more? It can be somewhat of a gamble, so it is important to make sure that you know a few facts about the current market so that you can make the best possible decision.

One of the most important facts you should consider when determining whether now is the right time to buy a new house relates not to the market but your own situation. Consider how long you plan to live in the home. While you might not be able to look into a crystal ball and see the future, consider what you know at the moment.You also must consider how comfortable you are with taking risk as well. If you feel comfortable with a possible 10% or even more drop in a home price if you need to re-sell within the next few years then now might be a fine time to make a purchase. If you are not comfortable with risk, then it is probably better to wait and see how the market settles before you make a home purchase.

The reality of the current market is that the fluctuations have not yet stopped. During the year, prices are most likely not going to appreciate at the rate they used to. It is also important to keep in mind that you should not get swept up in the hype that is often presented in media advertisements. While there may be some truth in the media, consumers should be wary about taking this and running with it.

Lending restrictions remain tight throughout much of the country as well. Loans are available for the purchase of a home, but restrictions are much tighter than they were in the past. Make sure you know exactly what is on your credit and how much you will be able to offer for a down payment before you consider purchasing a home in the current market.

Also, if you plan to buy a new house in the current market, you should be fully aware that there is the potential for the value of your home to drop over the next few years rather than appreciate. You should not assume that your home will steadily gain value the longer that you own it. This is a gamble that you should be fully aware of before you begin shopping around with the intention of making a home purchase.

While now could very well be an excellent time for you to buy a new home, it is important to consider your own situation as well as how comfortable you are with taking possible risks over such a large purchase in the next few years. The current market certainly is offering good deals in many markets, but before you rush out to grab one, make sure that you are fully informed.

      Time to Sell?

Everything has a season – including selling your house. Listing at the right moment could mean more money in your pocket.

Traditionally, spring is the hottest season for real estate. Sales peak in April and May and stay strong in June and July. It’s a good season for families to move, between school terms and while the weather is warm. People have just received their tax refunds, which they can use to help finance a down payment. And the nice weather and beautiful flowers in spring and early summer make it a great time to show your home.

In fact, 60 percent of America's moves take place in the summer. But closing a sale can take weeks, so it’s a good idea to list your home early in the season.

August brings a lag in sales, as people go away on vacation and start to think about the new school year. Then sales surge briefly in the fall before dropping in winter as buyers and sellers focus on the holidays. But by January, buyers are out again, and sales steadily increase into spring.

If you can’t sell in the peak season, consider listing your home in the winter. It may sound counterintuitive, but you probably already have the house decorated and cleaned for holiday entertaining, so it shouldn’t be hard to get it in shape for showing. Moreover, you will have less competition and may get a better price. Another plus: buyers in winter are less likely to waste your time or draw out the closing. They may want to close before the New Year so they can claim the mortgage deduction on their tax return, which you could turn to your advantage in pressing for a quick deal.

Of course, selling in the hot season isn’t the whole story. You should pay attention to your local housing market and try to list during a seller’s market, when there will be more competition among buyers for your home – which could mean a better price, a quicker closing and fewer conditions on the offer.

Find a Realtor who you like and trust, one with the knowledge and experience in your local housing market. If you have questions or comments, please let me know...

Next...Tip 7: Family & Friends Opinions

10 Simple Tips to Take the Stress Out of Home Buying Process - Focus on the Positives!

Tip 5: Physical Aspects of Your Home

Now that we've figured out what type of home fits your lifestyle, we need to think about some important issues and not get caught up in the physical aspects of the home. It's easy to walk into a home, fall in love, and completely forget that this was not an area you wanted to live in. Keeping an open mind and not being rigid is a welcome thing, but here are some things to keep in mind.

Noise Level

It could be the home sits right next to a busy interstate or main street through town. The home might be next to a train track, or even in a flight path. Maybe the neighbors have dogs that bark just because they hear the wind. Inside the home you don't hear anything, but unless you go outside to the backyard, or sit on the front porch, you never realize how loud things could be. Not paying attention to these things could end up frustrating you, and instead of loving the house, you begin to hate it.

Distance

Maybe it fits what you are looking for, but it's too far away from all the amenities and activities your family enjoys. Driving to the home you really like during different times of the day or week will definitely help you see what traffic is like, how long it may take you to get to work or outside activities. Remember distance could mean less time maintaining the home you love because you spend it on the road instead. If you need the time to wind down after work, the distance may be what you need to shut your brain off so you are ready for the family that waits for you.

Neighborhoods

It may be that you see the house during the week when people are at work, kids are at school, and you don't know what goes on at different times of the day or on the weekends. It may be you don't like cars parked up and down the street, kids riding their bikes in your driveway, the loud hot rod or motorcycles engines being warmed up. Pay attention to the houses next door, what their landscaping looks like, and how the neighbors keep things. This will definitely have an impact on this home when and if you ever would decide to sell...if you ended up buying this home.

Hopefully these are things you have thought about and shared with your Realtor. As a professional, with this kind of financial investment, your Realtor has been hired to keep you on track, reminding you of what you have shared, listened to you and taken notes. You will be grateful you bought what you were looking for and not talked into making a purchase just because. Hire the Realtor that cares about you and your needs and not their paycheck.

Next...Tip 6: When is the Right Time to Buy...When is the Right Time to Sell?

10 Simple Tips to Take the Stress Out of Home Buying Process - Focus on the Positives!

Tip 4: Find the Home that Fits Your Lifestyle

You’d think the easiest thing in the world would be deciding what house to buy. After all, who knows you better than you? You know exactly what you want, right? Well...sometimes. The truth is most people only have an idea of what they want – the number of bedrooms and bathrooms, size of the kitchen and garage, and maybe the yard. Things tend to get a little murkier when you mix in neighborhoods and schools, commutes to work and distance to ball fields and retail shops.  


Finding a home that fits your lifestyle can be a big challenge. There are so many options when it comes to choosing, and you probably aren't going to find a home that is 100% perfect, so the best way to narrow down your options is to take a look at your lifestyle and priorities. Chances are there is an option that will work best for you.


The Social Butterfly

A condo can be a great option for anyone who loves to socialize or wants to live right in the heart of the city, close to the action, or within walking distance to work. If you’re new in town, it can be a good way to meet new friends and neighbors. Many large complexes have community features like a pool, gym or clubroom. This will give you the opportunity to meet the people with which you share a building. Remember though, you will be sharing walls, floors and ceilings with many other people. If a little bit of noise will break the deal for you, a high-rise might not be for you.


Gated Communities

Gated communities provide a lot of benefits to the residents that live within them. The number one reason people choose to live in gated communities is likely the security element. They are private and more difficult to access than a standard community. Criminal activity is reduced in gated communities, and solicitors will have a more difficult time bothering residents.


Traffic and speeding cars are also reduced behind the gates, making it quieter and safer for children to play and ride bicycles within these neighborhoods. You likely won’t have the morning commute using your street as a shortcut either!


Another positive aspect of gated communities is a higher standard of home quality, and stricter building codes that promote uniformity in design. That means more sale comparables and better value for all the homeowners within the community. Homeowners in these neighborhoods also generally have a higher pride of ownership, and keep their homes in good condition. Along with that, gated communities create a scarcity effect, with few homes within these neighborhoods typically available for sale at the same time, adding more bite to the value.

There may also be social benefits, such as a community center, pool, park, or events that promote group activities for families to get to know each other.


Wide Open Spaces

If you value privacy and want a lot of space to call your own, buying a home on an acreage may be an option. Keep in mind that with a lot of land comes a lot of responsibility. If family time and outside activities take up a lot of your time, the maintenance of land can consume a weekend. Also remember that if you work in the city, you could be in store for a longer commute, which results in less family time as well.


Somewhere in Between

Maybe you want a place to call your own, but without all the responsibilities of a yard. A great alternative that gives you the best of both worlds is a town home. Townhouses usually consist of several single-family homes grouped together. In many cases, you can rent or own the inside of the home, while a separate organization owns and cares for the exterior of the building and the yard. This allows you the luxury of having a small yard without having to maintain it. Keep in mind that there are usually home ownership association fees that cover the land maintenance.


Buying a home is like finding the right pair of jeans. It's all about what fits. Your home should fit your lifestyle, and like fashion, that changes with time. Choose a Realtor to help you gauge your stage in life, one who knows the questions to ask you, and can pull it all together...so you can find a home that's the perfect fit!

Next...Tip 5: Physical Aspects of Your Home

10 Simple Tips to Take the Stress Out of Home Buying Process - Focus on the Positives!

Tip 3: Keeping Emotions in Check

Buying a home is one of the biggest financial decisions you will make in your lifetime, and along with the finances come emotions. It is important to keep your emotions in check during the process. Being organized and in control will contribute significantly to getting the best home deal possible with the least amount of stress. 

Once you find a home you like, you become emotionally attached to it. Emotional attachment can cause you to make unwise decisions when making an offer, handling negotiations, and so forth. Once you’ve fallen in love with a house and visualized it being your home, you’ll start to do WHATEVER it takes to make sure it becomes your home.

This is about the worst possible way to buy a home, but this may also be the best possible home for you. You do want to fall in love with your new home, but you also want to be careful. You can literally cost yourself thousands of dollars, if not tens of thousands of dollars, by being too emotionally attached. Instead of letting emotions rule the game, try to include some common sense in the buying process. Real estate investors have a saying, “Don’t fall in love with the house, fall in love with the deal.”

Having said that, realize that you will always have some emotional attachment to your home. You need to like it. Your goal is to strike a balance between liking the house and using common sense to tell you whether you are sacrificing too much to try to get the house. If you find you have to make a lot of compromises to get a house, stop yourself and ask, “Is this really worth it?”

It's important that you choose an experienced Realtor who is willing to work through these emotions with you. Someone you know you can trust when choosing your most valuable asset. Someone you like and work well with, someone who makes the experience fun and exciting...gets excited for you! Someone you trust to know your wishes, desires, and goals...not just your list of likes and dislikes in purchasing your dream home.

So, remember to strike a balance between emotions and common sense. Find a Realtor that fits your personality, is patient and understanding of your emotions, and will work to keep you on track. You'll be grateful, and it will help you enjoy your home that much more once you actually move in!

Next...Tip 4: Find the Home that Fits Your Lifestyle