Don't Get Caught in the 'Renter's Trap'

Don’t Get Caught in the ‘Renter’s Trap’

In a recent press release, Zillow stated that the affordability of the nation’s rental inventory is currently much worse than affordability of the country’s home sale inventory. The release revealed two things:

1. Nationally, renters signing a lease at the end of the second quarter paid 29.5% of their income to rent
2. U.S. home buyers at the end of the second quarter could expect to pay 15.3% of their incomes to a mortgage on the typical home

Furthermore, renters pay more than the average of 24.9% that was paid in the pre-bubble period while buyers actually pay far less than the 22.1% share homeowners devoted to mortgages in the pre-bubble days.

Don’t Become Trapped

If you are currently renting you could get caught up in a cycle where increasing rents continue to make it impossible for you to save for a necessary down payment. Zillow Chief Economist Dr. Stan Humphries explains:

"The affordability of for-sale homes remains strong, which is encouraging for those buyers that can save for a down payment and capitalize on low mortgage interest rates… As rents keep rising, along with interest rates and home values, saving for a down payment and attaining homeownership becomes that much more difficult for millions of current renters.”

Know Your Options

Perhaps you already have saved enough to buy your first home. HousingWire recently reported that analysts at Nomura believe:

“It’s not that Millennials and other potential homebuyers are not qualified in terms of their credit scores or in how much they have saved for their down payment.

It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

Freddie Mac came out with comments on this exact issue:

1. A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.
2. Freddie Mac's purchase of mortgages with down payments under 10 percent more than quadrupled between 2009 and 2013.
3. More than one in five borrowers who took out conforming, conventional mortgages in 2014 put down 10 percent or less.

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible to get a mortgage.

The Complete List of Important Questions to Ask A Contractor Before Hiring Them

If you are thinking of doing some work to your property - consult a licensed REALTOR® to make sure you are putting your money to best use.  Contact Liz for a free consultation today!

218-310-3350 text/cell

612-548-4549 office

Licensed in Minnesota

ECSandwick@CBBurnet.com

LizSandwick.com

From Coldwell Banker Blue Matter's Blog

Thinking about hiring a contractor? These questions will help to find the right fit for the job.

LINDSAY LISTANSKIYESTERDAY

When you set out to do a remodel, addition or other major home renovation, you will need a general contractor to oversee the work that needs to be done. Hiring a general contractor means getting the best person, and while there are many general contractors in your area, you will need to screen them.

Part of that screening process is asking the right questions and getting a sense of their work history and ethics. There are a lot of questions you could ask, but here are some of the essential ones:

What’s your business history?

Asking a contractor’s business history is one of most important steps to finding out more about the work they’ve done, how well they did it and if their past clients were satisfied. If they are unwilling to give you references or talk about their history, it’s a good indication you might look elsewhere.

Some follow-up questions to ask around this question include:

• How many years have you been doing contractor work?
• How many projects have you completed like mine in the last year?
• Do you have a list of references I could call?
• What kind of insurance do you have?
• Are you licensed?
• Do you carry worker’s compensation for your employees?
• Do you have insurance in case something in my home is broken during the remodel or addition?
• Will you sign a “time and materials” contract?
• Do you often finish a project within the allotted time frame?

Who will be at the site and how will it be supervised?

Knowing who will be at your house every day during the renovation is important. You should know who they are, if the contractor will be there and any details about the team working on your home. For example, there might be a construction manager hired, which can cost between $3,200 and $4,400. It will depend on the extent of the project, and if the general contractor isn’t going to be the manager.

Some additional questions to ask:

• Can I meet the job foreman or project manager, if there will be one for my project?
• Will you be using any subcontractors on this project?
• Who will be on the site every day during the project?
• Will you be onsite every day or stopping by, and if the latter, how often?

Can you give me a timeline?

There should be a timeline for the project, so you know what to expect and when. Having a timeline will keep you aware of whether they’re behind or ahead of schedule. It will also let you know when you might need to be out of the house or specific rooms during the renovation.

You should ask the contractor:

• What is our schedule?
• Will this require a permit and who needs to pull them?
• When will you start and finish?
• What will be the start time and finish time every day?
• Will you work seven days a week?
• How will you communicate with me after hours?
• How will I know when I need to make decisions?
• What documents will I receive when the project is complete?

What guarantees can you give me?

Guarantees may or may not be part of the contract you sign with the general contractor. You want to have everything worked out before signing anything, so questions you might ask include:

• Is there any part of my project that worries you? If so, what is it and how do we work it out?
• Will you provide me with updates on a daily basis?
• Do you offer a guarantee on your work, and if so, what is it?
• Do you have any legal disputes pending from previous work that I need to be aware of?

Can I get that in writing?

Once you get everything worked out, it’s time put it all down in writing. What you need to have in the contract will depend on the project, so some questions you might ask include:

• Would you itemize the bid?
• Is the bid just an estimate or your fixed price for the project?
• Will you agree to a termination clause?
• Will your contract include the job details, timeframe, materials, cost, “time and materials” and termination clause?

If you think you need to ask any additional questions not covered here, you might want to consult friends and neighbors who have done similar renovations. Some other questions to consider asking when you decide whether to hire a general contractor include:

• What do I have to put down?
• What’s the bottom line?
• What’s your work routine like?
• Who are your main suppliers?

Remember, you want the right man or woman for the job and don’t want to go back for extensive repairs later.

Andrea Davis is the editor at HomeAdvisor, which connects homeowners with home improvement professionals in their area for free. Connect with Andrea on Google+

College Students Swapping Homes with Mom & Dad

College Students Swapping Homes with Mom & Dad - Below you can check out: College Students Swapping Dorms for Homes Purchased by Mom and Dad by blogger Lindsay Litanski.

But before you dive in - think about the college towns in Minnesota:  Twin Cites, Duluth, Bemidji, Mankato, Rochester, Mora, Moorehead among others.  If you would like more information about properties in these areas- contact me today!  Now on to Lindsay's blog:

Home away from home is getting even sweeter for college students. (As if college wasn’t already the best four years ever)

In a recent informal survey of its sales associates, Coldwell Banker found that more than one-third of agents across the country are seeing more buyers looking to purchase properties for their children now than in previous years. The reasons for the investment are varied – some are taking advantage of low prices and interest rates, while others are anticipating inventory may be scarce when their child enters school.Do you ever secretly wish you could head back to college and re-live the good old days, maybe for just one semester? If it seems like college life is only getting sweeter, you may be right. On more and more college campuses, a few lucky students are ditching the crammed dorm life and tiny off-campus apartments for bigger digs – courtesy of mom and dad of course.

Ed Feijo, a sales associate with Coldwell Banker Residential Brokerage in Cambridge, Mass., has seen international buyers purchase homes for children as young as 14! No, these child prodigies are not yet at Harvard or MIT. But their parents certainly have high hopes, so they are determined to snatch up a desirable property while they can.

Whether you’re a parent looking to make an investment, or a student who wants to persuade mom and dad, here are some listings within a two mile radius of a few iconic college towns:

• Madison, Wis.
• State College, Pa.
• Athens, Ga.
• Chapel Hill, N.C.
• Ann Arbor, Mich.

Still a Great Time to Buy a Home…but HURRY!!

Kevin Kelly, Chairman of the National Association of Home Builders (NAHB), recently explained that:

“With interest rates near historically low levels and strengthening job growth, now continues to be a great opportunity to buy a home.”

We couldn't 
 agree more. However, we must realize that, with prices and interest rates both projected to increase, waiting could cost us.

There are two organizations that look at the affordability of purchasing and actually measure it over time. The National Association of Home Builders has their Housing Opportunity Index (HOI) and the National Association of Realtors’ has the Housing Affordability Index .

Both indexes are reporting the same thing. The cost of buying a home is beginning to increase leading the affordability indexes to dip.

Both indexes say we passed the bottom of the housing market

According to NAHB’s HOI housing affordability dipped slightly in the second quarter of 2014. NAHB’s Chief Economist David Crowe explains:

“The second quarter HOI reflects the slow but steady march toward the historic levels of price appreciation and interest rates that result in affordability levels we experienced before the mid-2000s boom.”

According to NAR in a recent Economists’ Outlook post, home affordability is down from both one month ago and one year ago in all regions.

Michael Hyman, Research Assistant at NAR said:

“At the national level, housing affordability is down for the month of June due to higher prices and qualifying income levels despite the lowest mortgage rates of the year.”

In a recent article, the Wall Street Journal also revealed that the cost of home ownership is higher than any time in over five years:

“Housing affordability hit its lowest level in nearly six years in June as home prices continued to climb."

Bottom Line

If you were waiting for the bottom of the market, you missed it. Yet, with prices below values of seven years ago in most parts of the country and interest rates near historic lows, it is still a great time to buy a home…but hurry!