From Tenant to Homeowner: A Guide for Young Renters

Slightly more than 35% of Americans are tenants, paying $1,937 (median) in rent each month, according to The total monthly housing cost for these folks is $1,301, while the housing cost for homeowners is $1,510, only $209.00 more, according to the US Census Bureau.

Of course, we are looking at median costs here so your situation may be different. In the main, however, owning a home is not prohibitively more expensive than renting.

It’s the actual purchase that has many tenants, especially those in the younger generations, feeling as if they are locked out of homeownership.

From the perpetuation of the myth that a 20% down payment is the law of the land to the notion that a house payment would be significantly higher than a rent payment, many Americans remain in the cycle of paying someone else’s mortgage payment.

Today, we’ll dive into the various ways you can get on the path to homeownership: to make a move from “No, you can’t paint the living room” to the complete freedom to decorate how you want, to plant what you desire and to have a dog, finally.

Step one in the journey to homeownership

Before embarking on the path to homeownership, it’s crucial to be mentally prepared and financially ready. Consider the following questions:

  • Do you have a solid support system in place to help you through the process?
  • Have you thought about what type of real estate agent you need? Many new homebuyers require a bit of hand-holding and a substantial amount of tutoring on the ins and outs of the process. Some agents are adept at “real estate therapy,” so if you feel you might need that type of support, you’ll want to make a note to choose your real estate agent carefully.
  • Are you ready to begin letting go of emotions and thinking like an investor during the purchase process? For example, your dream might be a suburban home with the quintessential white picket fence. Your financial reality, on the other hand, may dictate that you purchase a condo to keep home maintenance costs low enough to be affordable. Are you ready for that? For doing whatever is necessary to start building equity?

Get clear on your credit and finances

Becoming a homeowner requires financial stability and planning. Start by assessing your current financial situation. Take a close look at your income, expenses, and savings. To make this easier, use a worksheet like these from the folks at and this one from the Consumer Financial Protection Bureau.

Then, check your credit report and score. Every American is entitled to a free credit report each year from, the only company authorized to provide these reports by Federal law.

Here is a list of which aspects of your credit report lenders will scrutinize the most:

  • Have you recently applied for credit?
  • Do you pay your bills on time?
  • Are your credit limits maxed out? Lenders want to see balances no higher than 30% of the limit.
  • Have you declared bankruptcy?
  • Are you an authorized user of someone else’s credit card?

Work on getting your credit balances where they should be, paying bills on time, and avoiding opening new credit accounts.

Consult a mortgage broker

Implement some changes once you have a clear idea about your budget and credit. If you don’t make enough money to buy a home, consider taking on a side gig.

Fix your credit, if necessary. Then, visit with a mortgage broker to determine how much you can borrow and how much you’ll need to put down.

Ask the broker about state, local, and federal down payment assistance programs and whether or not you qualify.

Finally, ask for a ballpark figure on what you can expect to pay in closing costs.

Save up some money for the down payment and closing costs

Now that you know how much money you’ll need for the down payment and closing costs, have you figured out how to come up with it? Here are a few tips from mortgage professionals:

  • Create a dedicated homebuying savings account and direct your employer to auto-deposit a portion of each paycheck.
  • Take on another job. This can be a part-time job or a side gig, such as driving for Uber or one of the other similar companies. Or, check out freelance, work-from-home opportunities at
  • Look into the down payment assistance programs recommended by the mortgage broker.
  • Find ways to cut expenses. Many young people are moving back in with Mom and Dad to speed up the savings process. As of February 2023, the median rent nationwide was $1,937. By moving back home, you can save $23,244 in just one year.

Transitioning from being a tenant to a homeowner is an exciting and fulfilling journey, but it requires careful preparation and planning. You can confidently navigate the homebuying process by getting clear on your goals, assessing your financial situation, saving diligently, and seeking professional advice.

Let us know how we can help. Advice is always free.

We are not mortgage professionals. This blog post’s legal and financial information is provided for general informational and educational purposes only and is not a substitute for professional advice.

Smart Strategies to Save for a Down Payment on Your Dream Home

Dreaming of buying a home? One of the biggest challenges of the process is coming up with a down payment, a percentage of the home’s purchase price that you must pay at closing.

But don’t worry; with the right strategies, accumulating a cash down payment can become more achievable than you might think.

Let’s explore several simple and practical strategies to help you reach your goal of homeownership.

Set a savings goal

Start by determining how much you need for a down payment. Despite what many Americans assume, 20% down payments are not mandatory. In fact, the average down payment is 6%, according to the experts at Reliance State Bank. Several government-backed mortgage products require much less, depending on your circumstances.

Then, there are down payment assistance programs. Talk to a mortgage professional to understand the specific amount you should aim for.

Then, determine a realistic savings goal based on this amount and break it down into monthly or weekly savings targets. This way, you’ll have a clear roadmap to follow and stay motivated.

Then, make saving that money a no-brainer

Make saving easier by automating your savings process. One of the easiest ways is to dedicate a certain amount of each paycheck and automatically transfer it to your savings account.

This way, a portion of your income is saved before you even have a chance to spend it. Over time, your savings will grow without requiring constant effort or discipline.

Put together a budget

Developing a budget is key to managing your finances effectively. Track your income and expenses to determine what you’re spending on and which categories you can eliminate or reduce your spending.

Trim unnecessary expenses like eating out or subscription services. Consider cooking at home, packing lunches, or exploring free entertainment options. Redirect the money you save towards your down payment fund.

Check out these free budget templates:

Research down payment assistance

Look into down payment assistance programs. These programs, offered by government agencies or non-profit organizations, provide financial assistance to eligible homebuyers.

Depending on the program, they offer low- to no-interest loans, grants, or other assistance to help bridge the gap for your down payment. Consult with your lender for local sources and research, and contact local housing authorities or community organizations to explore these opportunities.

Check out for an informative breakdown of a number of down payment assistance programs.

Boost your income

Consider ways that you can make more money. Look for opportunities to earn extra money, such as freelancing, gig work, or a part-time job. Use the additional income solely for your down payment savings.

Every little bit counts and can bring you closer to reaching your goal faster. Here are some additional ways to pump up your savings account:

  1. Downsize or rent cheaper accommodations

If you’re currently renting a larger or more expensive place, downsizing to a smaller or more affordable accommodation can free up extra funds for your down payment. Look for other ways to reduce your housing costs, whether by finding a roommate, negotiating a lower rent, or exploring more affordable neighborhoods. Temporary sacrifices can lead to long-term gains.

  1. Tap into gift funds

Sometimes, family members may be willing to gift you funds toward your down payment. If you’re fortunate enough to have supportive relatives, discuss the possibility of receiving financial assistance as a gift. Remember that lenders may have specific requirements regarding gift funds, so understand and comply with any regulations.

  1. Save windfalls and bonuses

Whenever you receive unexpected windfalls like tax refunds, bonuses, or inheritances, resist the temptation to splurge and instead direct those funds toward your down payment savings. These unexpected financial boosts can provide a significant jumpstart to your savings goal.

Saving for a down payment requires discipline, but homeownership can become an attainable goal with these strategies. You may be surprised how quickly you’ve accumulated the money needed to purchase your dream home.

Remember, patience and perseverance are key.


How schools impact property values


Take a look at your new home wish list. You’ve undoubtedly included the number of bedrooms and bathrooms you need, listed the amenities you hope to find, and perhaps even the type of neighborhood you hope to live in.

One aspect of the home purchase that few buyers consider is the house’s future resale value. Sure, you don’t have a crystal ball with which to read the future, but housing market experts and economists have studied home values for decades and understand the issues that impact value, both positively and negatively.

Since your home is also a hefty investment, jot down the words “resale value” on your wish list and read on to learn why, whether you have children or don’t, purchasing in a good school district is a wise decision.

The studies

The multitudes of studies on the influence of nearby schools on property values all agree that a good school district positively impacts value.

One study, with results published at, claims that homes near schools with a 4 or 5-star rating at held their value better during the Great Recession than those near schools with fewer stars.

David Figlio, a professor at Northwestern University, noticed that in Florida, homes near schools that had been awarded an A rating by the state realized an additional $50,000 in value versus homes near those schools with a B rating (Wall Street Journal).

“A study done by the National Bureau of Economic Research found that home values increased $20 for every dollar spent on public schools in a community,” according to a report from the National Association of REALTORS®.

Buyers agree

When the National Association of REALTORS® interviewed homebuyers for their “Profile of Home Buyers and Sellers, ” 25 percent of them wanted to live in a “quality” school district.

More significantly, for home sellers, 53.3 percent of those interviewed expressed a willingness to exceed their budget for such a home. The NAR broke that number down further:

  • 6 percent of buyers are willing to pay one to five percent above their home purchasing budget.
  • 7 percent will pay six to 10 percent above budget.
  • Almost nine percent would pay 11 to 20 percent above budget.

What makes a school district “good?”

One of the most common determinants of school quality is test scores. For instance, bases its ratings primarily on test scores.

U.S. News’ annual “Best High Schools” rankings are based on three criteria:

  • State-mandated test scores.
  • How effectively the school educates its minority and disadvantaged students.
  • Participation in and performance on International Baccalaureate (IB) and Advanced Placement (AP) exams.

Interestingly, a recent study sponsored by the Andrew W. Mellon Foundation suggests that “mean test scores are significantly related to property values.”

How much more is a good school district worth?

Determining a dollar value on the additional home values in high-performing school districts seems to be the only area the experts disagree on. One study claims that homes in school districts with high test scores are worth $16,000 more than similar homes in poor-performing districts. (Refs 6)

A Brookings report claims that, on average, homes in high-scoring school districts are worth $205,000 or more than those in low-scoring districts. (Refs 7)

Figlio says homes in top districts net a 23 percent premium over homes in other districts. The best news, at least from the professor, is that no matter the fortune of the housing market – whether it is rising or falling – the premium remains consistent. (Refs 8)


Proceed with caution

Doing your research is the key to shopping for a home with a quality school district as your top criterion. Two game changers to watch out for are the deterioration of quality schools and rezoning.

Check recent elections for how residents voted on school bond issues. A well-financed school is a good sign.

Inquire as to the teacher turnover rate. When many teachers leave a district for greener pastures, it may be a sign that the quality of the schools is going downhill.

Rezoning a school district typically occurs due to overcrowding. A few years back, Las Vegas parents with children in the Clark County Schools District discovered that 17 schools would be rezoned because of overcrowding and a lack of funds to build new schools.

Some schools subject to rezoning are located in the pricey Summerlin area of Las Vegas, where many folks paid a premium for their homes because of the area’s outstanding schools.

Although current Givens Elementary School students aren’t affected, homeowners who recently moved to the area hoping to enroll their child in the highly rated school will now be directed to one of two other schools with substantially lower scores.

Determining whether a school district will decide to rezone is challenging. Check the school board’s cap on enrollment, and if your school of choice seems to be approaching or exceeding it, proceed with caution.

Although the size and price of a home are always key components when considering the purchase of a home, choosing a home in the best school district you can afford is also an important factor.

When considering the home’s future value, the quality of the school district sometimes trumps all other considerations.

Feeling anxious about buying a home? There’s a cure for that

I think most of us remember buying our first home. Such a mix of emotions involved! Elation, fear, anxiety, and excitement all rolled together.

It’s perfectly normal to feel all of these things, but it is also necessary to try to curb the more negative feelings during the process.

There are numerous ways to deal with emotions without them becoming destructive or disruptive. Let’s take a look at a few of those.

Someone to lean on

Although a step we’ll explore later on will help you learn more about the home-buying process, nobody expects you to be an expert in the beginning.

In fact, most folks who have bought homes will tell you to hire an expert. That would be an experienced real estate agent.

Choose your agent carefully. If you need periodic check-ins by telephone, ensure the person you choose is responsive. If you crave knowledge about the process, choose an agent with patience who can put complicated financial terms into plain English. Finally, ensure your agent is someone you feel comfortable with and can build rapport with.

Visit with a lender early in the process

You’ve probably heard this “tip” before. Most of the advice you’ll find online claims that the reason for the early visit is to become pre-approved for a loan. Sellers, they say, are more comfortable with pre-approved buyers.

While that is largely true, a more important reason to see a lender early in the process is to determine how much you can spend on a home. This allows you to shop smart for a home that won’t break the bank when all is said and done.

Stick to a monthly payment figure (including principle, interest, taxes, insurance, and HOA fees, if any) that you know you can comfortably cover and refuse to go beyond that.

Once you know the maximum amount you will spend on a home, you can ask your agent to not show you homes over that figure. This will go a long way in helping get rid of anxiety.

Get educated

Most savvy homebuyer’s real estate agents understand there is much to know about buying a home that the average American can’t possibly know. Because of this, they provide lots of educational materials on their websites.

This is great for buyers who do best when teaching themselves.

Not all of us can learn that way; however, knowledge, as they say, is power. Consider attending a first-time homebuyer course.

Fannie Mae offers one you can take online; it is free of charge, it’s taught in English or Spanish, and you will receive a certificate at the end of the course.

Knowing the process and what to expect along the way is empowering and will build your confidence. No anxiety for you!

The Savvy Homebuyer’s Guide: Performing a DIY Home Inspection (in Addition to Hiring a Pro)

So, you’ve finally found “the one” – your dream home. The excitement is real, but before you dive headfirst into making an offer, it’s crucial to thoroughly understand the property’s condition.

That’s where a home inspection comes into play. While hiring a professional home inspector is highly recommended, there are a few things you, as a savvy homebuyer, can do to perform your own DIY home inspection. Today, we’ll walk you through the process, giving you peace of mind and helping you perform your due diligence.

First, we need to be very clear

A DIY home inspection does not replace the need for a professional inspection. A qualified home inspector has the experience, knowledge, and equipment to identify potential issues you might overlook.

However, conducting a preliminary inspection yourself can help you spot any obvious red flags and provide a foundation for meaningful discussions with the professional inspector. So, let’s roll up our sleeves and get started.

Start with a visual assessment

Take a good look at the exterior of the house. Look for any signs of damage, such as cracks in the foundation, peeling paint, or sagging gutters. Walk around the property, checking the condition of the roof, windows, siding, and doors. Take note of any visible issues that might require further investigation.

Inspect the electrical system

Begin by checking the condition of the electrical panel. Look for signs of rust, burn marks, or loose connections.

Test the light switches and outlets in different rooms to ensure they are functional. Pay attention to any flickering lights or buzzing sounds which might indicate electrical problems.

Feel the outlet plates. “Electric current may make a switch plate slightly warm to the touch, but if the outlet is uncomfortably hot, turn off whatever is plugged in and try it in another outlet.”

“If the outlet grows hot even without anything plugged in, it may be wired incorrectly,” according to the professionals with Underwriters Laboratory, a non-profit organization that performs testing for public safety.

They also recommend that you check the outlets in the kitchen and bathrooms. “… both require special shock-resistant outlets called ground fault circuit interrupters (GFCIs).” These are the outlets with two buttons on the face, often one red and one black.

Examine the plumbing

Check for leaks under sinks, around toilets, and in the basement or crawlspace. Run faucets in all sinks and showers to test water pressure and drainage.

Flush toilets to ensure they are in proper working order. Don’t forget to inspect the water heater and look for any signs of corrosion or water damage.

Assess the HVAC system

Test the heating and cooling systems to ensure they are working properly. Adjust the thermostat and listen for any unusual noises coming from the furnace or air conditioning unit.

Investigate the home’s structural integrity

Look for any cracks or unevenness in the walls, floors, or ceilings. These could be signs of foundation issues or settling. Rockford Mutual Insurance Company offers a list of additional things to look for that may indicate foundation problems.

Open and close doors and windows to ensure they operate smoothly. If possible, access the attic or crawl space to check for any signs of pests, water damage, or insulation problems.

Check for water intrusion

Inspect the basement or crawl space for signs of water intrusion, such as dampness, mold, or mildew. Look for moisture stains on walls or ceilings throughout the house, which could indicate leaks or previous water damage.

Evaluate the exterior

Walk around the property and assess the condition of the siding, roof, and gutters. Look for any signs of damage, missing shingles, or loose gutters that could potentially lead to water infiltration.

Don’t forget the yards

Stroll through the yard, paying attention to the grading and drainage. Ensure that water flows away from the foundation to prevent water-related issues. Look for overgrown trees or branches that threaten the house or power lines.

Remember, while a DIY home inspection can provide valuable insights, hiring a professional home inspector to comprehensively examine the property is essential.

A professional will thoroughly assess the structural elements, electrical and plumbing systems, and more, using specialized tools and expertise. Their unbiased evaluation will give you a comprehensive understanding of the property’s condition, helping you make an informed decision about your purchase.

When hiring a professional home inspector, do your due diligence. Seek recommendations, read reviews, and ensure they are licensed and certified.

Accompany the inspector during the inspection, ask questions, and take notes. This will further enhance your understanding of the property and any potential issues.

Combining your initial assessment with a thorough professional inspection gives you the confidence to make an informed decision about one of the most significant investments in your life – your new home.

What is due diligence when buying a home and why it’s so important

Buying a home is an exciting and significant milestone in one’s life. In fact, it can be so exciting that many homebuyers are solely attracted to the cosmetics of a home or another hot button on their wish list and neglect performing due diligence.

Due diligence, by the way, refers to the process of conducting thorough research, inspections, and assessments to verify the property’s condition and evaluate any associated risks.

Today we dive into what due diligence entails when purchasing a home, providing you with valuable insights to make informed decisions and avoid potential pitfalls.

Understanding due diligence

You’ll have several opportunities along the way to closing to gather information and assess whether the home meets your expectations and aligns with your financial goals.

Due diligence typically occurs after the seller accepts your offer but before closing the sale. Some duties are routine, such as the professional home inspection, seller disclosures, HOA documents, appraisal, and title search.

You must learn all you can about the home before closing. Anything that pops up after that will be your responsibility to remedy.

The importance of inspections

One vital component of due diligence is conducting a professional home inspection. A qualified inspector to thoroughly evaluate the property can uncover potential issues that may not be visible to the untrained eye.

The inspection may cover the structure, electrical systems, plumbing, HVAC, etc. The findings from the inspection can help you make an informed decision about whether to proceed with the purchase, negotiate repairs or price adjustments, or even walk away if the issues are significant.

Keep in mind that a whole-home inspection is a visual inspection. The inspector can’t look behind walls, pipes, or floorboards. If you suspect a problem after the inspection, hire a professional specific to that problem to check it out. This might include a plumber, electrician, roofing contractor, or HVAC specialist.

Research the neighborhood

Another crucial aspect of due diligence is researching the neighborhood in which the home is located. Explore factors such as proximity to schools, parks, shopping centers, transportation, and other amenities important to you.

Additionally, research the area’s crime rates, future development plans, and any potential nuisances or restrictions that may affect your lifestyle. By understanding the neighborhood, you can determine if it aligns with your needs and preferences, ensuring your long-term satisfaction with the home.

Financial considerations

Due diligence also extends to financial aspects. This includes thoroughly reviewing the terms of the purchase agreement, understanding any contingencies, and ensuring that the property’s title is clear.

You may also want to consult a financial advisor to navigate complex financial aspects like loan terms, mortgage options, and tax implications. By conducting a comprehensive financial analysis, you can ensure that the home is a sound investment and fits within your budget.

Additional considerations

While inspections, neighborhood research, and financial analysis are crucial, due diligence can also encompass other aspects, such as:

  • Reviewing homeowners association (HOA) rules and fees, if applicable.
  • Assessing potential environmental concerns or hazards in the area.
  • Obtaining insurance quotes and understanding coverage options.
  • Checking for any pending or past litigation involving the property.
  • Reviewing permits and renovations to ensure they comply with local building codes.

Due diligence is critical when buying a home, allowing you to make informed decisions and protect your investment. You gain valuable insights into the property’s condition, neighborhood, and financial considerations involved by conducting thorough research, inspections, and assessments.

Remember, while the process may involve some extra time and effort, it is a worthwhile investment in ensuring your future happiness and peace of mi

3 things you can do this week to get closer to buying a home

Many Americans are putting their home purchases on hold over the uncertainty about the housing market. While we don’t recommend trying to time the market, it’s certainly understandable that some folks are a bit trepid right now.

Even though you may not be actively looking at homes to purchase right now, there are things you can be doing so that if the opportunity arises you can jump right into the market. Let’s take a look at three of those.

1. Talk to a lender

Sure, we hear a lot about cash buyers but most need a mortgage to buy a home. Get the process started by calling or visiting a lender. Family and friends, colleagues and real estate agents are good go-to sources for names of trusted lenders.

Although the initial consultation is typically quick and involves some number crunching and a list of paperwork you may need to submit, you’ll hopefully find a lender who will take some time to walk you through the process. Check out “The Smart Way to Shop for a Mortgage Lender.”

Some lenders can also counsel you on improving (or maintaining) your credit score over the next couple of months until you’re ready to buy. If not, read up on the process at

Requesting loan preapproval offers real benefits, including saving time by not wasting it looking at homes you can’t afford.

In addition, “Sellers are looking for pre-approved buyers. Many prefer to entertain offers only from pre-approved buyers,” according to the pros at Capital Bank Home Loans, and we agree.

Finding out where your finances stack up in home loans is always a good idea, so this is an important step.

Preapproval from a lender is imperative, especially if you are close to being ready to buy.

When you call or visit a lender, ask all your questions, regardless of how basic you may consider them. This includes:

  • Current interest rates
  • Is a government-backed loan or a traditional loan the best choice for you?
  • Should you go with a fixed or adjustable-rate mortgage? If you don’t understand the difference between the two, ask.
  • Which down payment assistance programs are available to you?

2. Talk to a real estate agent

Retaining a real estate agent to help you buy a home is never too early. We are happy to offer you counsel on what to do right now to make you market-ready should the occasion arise sooner than you’d thought.

Sitting down with us briefly may give you insight into the current market, expectations for the future market, and other real estate-related topics you may not have considered.

Then, be sure to regularly visit our social media platforms and blog. We post a lot of educational content that you may not find elsewhere.

Some questions you may need the answer to when we get together:

  • Which banks or lenders are best for the homebuyer
  • Can you set up your home search criteria on the website so that you can regularly search for homes for sale?

3. Internet search

Speaking of searching, the sooner you start, the more familiar you’ll become with the process.

Internet searches can help you narrow down your choice of neighborhoods, the prices there, and the types of homes.

Doing drive-throughs of neighborhoods will also help you narrow down the choices. Then, when the time is right, you will have several neighborhoods on which to focus and won’t waste your precious time on those you don’t like.

Three small steps with huge rewards when the time comes to buy your home.

Reach out if you’d like to set up a meeting. We love to talk about houses!


The Pitfalls of Automated Home Values: Why They Often Get it Wrong

In today’s digital age, homeowners and prospective buyers have easy access to a wealth of information regarding real estate. Automated home valuation tools like Zillow’s Zestimate have become increasingly popular for estimating property values. However, these tools are far from infallible and often generate inaccurate estimates.

Sadly, most real estate consumers don’t understand this, leading to overpricing of homes.

In this blog post, we will explore why automated home values are frequently wrong and shed light on the factors on which websites like Zillow base their Zestimates.

Lack of human oversight

One of the primary reasons why automated home values often miss the mark is the absence of human oversight. These valuation tools rely on algorithms and data-driven models to estimate property values, disregarding the subjective factors that can significantly impact a home’s worth.

Automated systems often overlook the home’s unique features, renovations, neighborhood dynamics, and local market conditions. Consequently, this leads to inaccurate estimates, as algorithms fail to capture the full complexity of the housing market.

Insufficient data accuracy and completeness

Automated home valuation tools rely on vast amounts of data to generate estimates. Websites like Zillow aggregate data from various sources, including public records, tax assessments, and previous sales data. However, the accuracy and completeness of this data are not always guaranteed.

The most reliable information comes from an area’s Multiple Listing Service, to which Zillow doesn’t subscribe. Instead, the company relies on information submitted by real estate agents across the country, but not all real estate agents advertise on Zillow. Therefore, the important stuff doesn’t make it into the automated home value.

Then, there are real estate agents (who are required by their MLS to update their listings on that platform within a certain time period) who aren’t held to the same stringent rules.

They often neglect to update listing information on automated home value websites, causing information to become outdated. There’s nothing more frustrating than finding your dream home for sale on Zillow only to learn that it sold a week ago.

Inability to account for unique features and upgrades

Automated valuation tools struggle to account for the unique features and upgrades that differentiate one property from another. This is something a professional appraiser will not miss, by the way.

They often rely on general characteristics of similar homes in the area, failing to consider specific details that can significantly impact a property’s value. Features like a remodeled kitchen, a swimming pool, or a picturesque view can dramatically affect a home’s worth but are challenging for automated systems to accurately assess. Consequently, these tools may undervalue or overvalue a property, leading to misleading estimates.

Ignoring local market dynamics

Real estate markets are dynamic and can vary significantly from one location to another. Automated valuation tools, however, often fail to consider the intricacies of local markets.

They rely on broader market trends and regional averages, which may not accurately reflect the nuances of a specific neighborhood or city. Factors like school district quality, nearby amenities, transportation infrastructure, and local economic conditions can all influence property values, but they are difficult for automated systems to incorporate.

Consequently, estimates may not align with the reality of the local market, leading to erroneous valuations.

Lack of contextual understanding

Another inherent limitation of automated home valuation tools is their inability to accurately comprehend a property’s context. They fail to consider subjective factors such as curb appeal, architectural style, and overall condition.

The emotional appeal of a property, which can significantly impact its value, is challenging for algorithms to gauge. On the other hand, human appraisers can and do, recognize and factor in these nuanced elements when determining a property’s worth, providing a more comprehensive and accurate assessment.

While automated home valuation tools offer convenience and quick estimates, they are prone to significant inaccuracies.

It is crucial for homeowners and prospective buyers to approach automated home values with caution and rely on them as a starting point rather than a definitive measure of a property’s worth. For a more accurate appraisal, engaging the services of a local real estate agent is important if you hope to obtain the most money possible for your home.

The Pros and Cons of Adjustable-rate Mortgages

When it comes to purchasing a home, one of the most critical decisions you’ll face is choosing a mortgage that suits your needs. One that might be worth your consideration is the adjustable-rate mortgage (ARM). Yes, they received a bad rap during the housing implosion of 2008.

They’re making a comeback, however, largely due to escalating mortgage rates and high homebuyer demand.

These loans can be a boon for the buyer on a budget, but only if you’re familiar with both the pros and cons.

Let’s unpack both to help you make an informed decision.

Advantages of adjustable-rate mortgages

One of the reasons that so many homebuyers have dropped out of the real estate market is rising mortgage rates. Every tick up in interest makes a home less affordable to those on tight budgets.

One reason that ARMs are appealing to these homebuyers is that they offer a lower initial  interest rate compared to fixed-rate mortgages. This is known as the initial rate, “… ranging from just 1 month to 5 years,” according to The Federal Reserve Board’s “Consumer Handbook: Adjustable-Rate Mortgages.”

This initial lower rate can make homeownership more affordable, especially for those planning to sell or refinance before the rate adjusts.

Once this initial rate expires, your rate is tied to a specific index, such as the London Interbank Offered Rate (LIBOR) or the U.S. Treasury Index.

As the index fluctuates, so does the interest rate on your ARM. The potential benefit of this is that if the index decreases, your interest rate and monthly payments could go down as well, leading to savings over the long term.

If you anticipate a change in income, plan to relocate, or expect to refinance in the near future, an adjustable-rate mortgage can provide the flexibility you need.

Disadvantages of adjustable-rate mortgages

The most significant drawback of adjustable-rate mortgages is the uncertainty and risk associated with interest rate fluctuations.

If interest rates rise, your monthly payments may increase significantly, making it challenging to budget and potentially causing financial strain.

Some adjustable-rate mortgages come with caps or limits on how much the interest rate can increase during an adjustment period or over the life of the loan.

That sounds like an advantage, and it is. But there’s a “but.” The caps may not provide enough protection if interest rates rise significantly, leaving homeowners exposed to potentially unaffordable payments.

Adjustable-rate mortgages can make long-term financial planning challenging. With the uncertainty of future interest rate changes, it’s difficult to determine precisely how much you’ll pay for your mortgage in the years ahead.

This lack of predictability can make it difficult to budget and plan for other financial goals, such as retirement or education expenses.

With typically lower initial rates, adjustable-rate mortgages may be the only way for some Americans to enter the market. However, it’s crucial to consider your financial goals, risk tolerance, and the potential impact of interest rate fluctuations.

We aren’t financial experts or mortgage specialists and urge you to contact either before deciding the type of mortgage that’s right for you.

What happens if your offer on a home is rejected?

What a thrill it is to finally find the house! Waiting for a response to the offer, however, is stressful. Will you win the home, or will the seller reject it?

The truth is the seller is more likely to either accept it or accept it with conditions. This means you will receive a counteroffer.

After all, they want to sell their home, so, at least in this scenario, they’re willing to negotiate.

Then, there are those situations when a seller outright rejects an offer.

This can happen for a number of reasons:

  • The seller accepted another offer.
  • The seller is unwilling to entertain any of your requests, such as paying closing costs or paying for expensive repairs or upgrades.
  • Your offer was far below what he or she will accept.

Those are just a few reasons an offer to purchase might be rejected.

Still want the home?

If so, it’s time to come up with a strategy. Again, we’ll need to discuss your goals and find out precisely what it is about this house that made you want to submit an offer.

Other issues we’ll need to discuss include the following:

Don’t take the rejection personally

Buying a home is a business transaction, yet both the seller and the buyer often have emotional “stuff” going on in the background.

Some sellers are emotionally attached to the home, while others are strictly business. Falling into the trap of over-analyzing the possible reasons behind the rejection is crazy-making.

Naturally, we will speak with the seller’s agent to get an answer to your “why?”  But you have options, so let’s move forward with one or more.

Can you go higher?

The most common reason an offer is rejected is the price offered is lower than what the seller wants. The only move you can make to combat this is to sweeten the deal by offering more for the home, if at all possible. Resubmit the offer at a higher price.

The terms may be unacceptable

There are certain contingencies that many sellers find unacceptable. The most common of these is the home sale contingency – when you make the purchase contingent on selling your current home.

Depending on the market, many sellers will reject an offer because of this. It’s too big of a gamble, and they may have other offers that don’t contain this clause.

Your offer may be rejected if the closing date is unacceptable. Although not common, it does happen. Whether the seller needs to close sooner or later than your stated closing date, they may have another offer that meets their goals.

If nothing seems to be working

It’s easy to become discouraged when your offer on a home is rejected, especially if you become emotionally attached during the process.

Make a note of the home’s features that attracted you the most so that we can keep an eye out for similar homes as they come on the market.

Your dream home is obtainable, and it’s out there. We won’t stop until we find it for you.