Archive for July 31, 2012

What Are Down Payment Assistance Programs?

Down payment assistance programs are set up to help First Time Home Buyers purchase their first home.  These programs are set up to loan an amount of money to the home buyer that will be paid back with interest over a period of time.  The interest and monthly repayment amounts for these programs tend to be fairly low.

This will have an effect on what your total mortgage payment will be.  In most cases the mortgage payment will consist of: your first loan (principal and interest), your second Down payment assistance loan (principal and interest), property taxes, homeowners insurance and your monthly mortgage insurance premium.

Down payment assistance programs can be a great fit for many would be First Time Home Buyers, who wouldn’t otherwise be able to purchase a home on their own.  After educating yourself on how different down payment assistance programs function, you may well discover that it is the perfect way to turn you from a renter into a homeowner.

There are many different types of down payment assistance programs available.  We have programs fit for different geographic regions as well as different personal situations.  There are general programs offering $1,000 to $10,000 in assistance, as well as more specific programs offering up to $45,000!

The amount of down payment assistance a person is eligible for will depend on their financial situation.  A needs assessment form will take several factors into consideration to determine the amount of assistance alloted.  The amount will depend on such things as a person’s income, liquid assets (not including retirement accounts or 401Ks) and the purchase price of the home.

You must attend one of our First Time Home Buyer workshops to be eligible for our programs.  The Washington State Housing Finance Commission requires that you attend one of our workshops in order to apply for down payment assistance.  The workshop is FREE, and there is no obligation to move forward in the process if you decide the programs are not a good fit for you.  If you would like to  learn more about the programs, or gather more information on the home buying process in general, go to our Calendar/Reservations page and sign up for one of our free First Time Home Buyer workshops.


Home prices up 10-20% across King County

Median home prices are up 10-20% across King County.  Out of the 29 areas tracked in King County, 23 saw price increases year-over-year.  Of those 23 areas, 13 saw increases in the double digits, and areas like Auburn, Shoreline and Redmond went up as much as 20%.

Why are prices going up?  One of the reasons is an increase in demand.  Many first time home buyers have been sitting on the fence for the last few years, and now that they feel that they missed the bottom 12 months ago, they’re diving in head first.

Where’s all the inventory?  Another reason prices may be going up is a lack of decent inventory (supply).  Foreclosed homes were a very large segment of last years inventory, but these homes have continued to decline as an overall percentage of the market.  As a result, there are less homes for first time home buyers to choose from.

As prices go up, more people will sell, right?  In theory yes, but maybe not in practice.  Many home owners that bought at the peak, would have to see much more appreciation before they would be in a position to sell.  So these underwater home owners may not come to market for several more years.

Is it even worth trying?  They are still many opportunities in the market place for first time home buyers, but to be successful in purchasing a home you have to be informed on where the market is at, and where it may be heading.  We are seeing many more multiple offer situations and bidding wars, so to be successful you have to write a strong offer.

Don’t get discouraged, get educated!  If you’d like to learn more about the King County real estate market, or the home buying process in general, go to our Calendar/Reservations page and sign up for one of our Free First Time Home Buyer workshops.


Unemployment is too High to Buy a House!

Isn’t unemployment too high right now to even consider buying a house?  Unemployment levels are definitely something to consider when evaluating a home purchase.  If unemployment rates are high, home buyers may be concerned that there’s a chance they could lose their job.  And if that happens, they won’t be able to afford their mortgage anymore.

What are unemployment levels in your area?  The media generally reports on NATIONAL unemployment rates, but as with everything in real estate, local numbers are more relevant than national ones.  The Washington Post reported levels of unemployment in King County to be 6.9%, which aren’t fantastic but are definitely better than a lot of other areas in the country.

How replaceable are you?  Even if you lived in Lewis County where they’ve been seeing unemployment rates of about 13%, it may not be as relevant to you if you’re in a very niche or specialized position or field.  However, if you work in a position where you could be easily replaced, then you may want to think twice.

Do you have savings to fall back on?  Regardless of what unemployment rates are or what type of position you hold, EVERYONE should have a safety net.  General rule of thumb is 3-6 months of expenses in your savings, depending on how affected you are by the afformentioned situations.

There’s a lot to consider when purchasing a home.  Don’t make a decision without getting educated first!  Go to our Calendar/Reservations page and sign up for one of our free First Time Home Buyer workshops.


How Long Do I Have to Live Here?!?!

How long do I have to live here?!?!  When buying your first home, one of the first things you should consider is how long you plan to live there.  This could affect what type of property you buy, what your overall strategy is, or if you even end up buying at all.

Why does it matter?  When you sell a home in Washington State it will generally cost you about 8.5% of the overall sales price.  This amount should cover realtor commissions, excise tax, etc.  In most cases (not including the last several years), the longer you stay in the home the more likely you will gain enough appreciation to cover these costs…and hopefully a bit more to turn a profit.

Is 12 months long enough?  Usually 12 months is not long enough to realize enough appreciation to cover your liquidation costs.  However, it might be if you are planning to put A LOT of work into the home.  Doing improvements like flooring, paint, kitchen/bath remodels, additions, etc, could easily improve the value by 10%, 20%, 30% or beyond.  So in this situation 12 months might be long enough.

How about 5 years?  Ok, so you don’t plan on doing any major renovations?  Five years is probably a better target hold time than say 12 months.  This extended period of time would hopefully allow for more than enough appreciation to cover your costs AND let you walk away with a profit as well.

There’s no magic number.  EVERY scenario is going to be DIFFERENT depending on price, property type, location, etc.  There are a lot of variables that come into play and they should all be considered equally.

Don’t make a decision before getting educated!  If you would like to find out more about hold time strategies, or about the first time home buyer process in general, go to our Calendar/Reservations page and register for one of our free First Time Home Buyer workshops.


To Pre-inspect or Not, That is the Question

Should I conduct a pre-inspection when writing an offer?  Conducting a pre-inspection prior to submitting your offer to the seller can be a good strategy if you think there are other buyers interested in writing offers on the same home.  If you’ve done your inspection prior, it can help set you apart from the competition.

Submitting an offer WITH an inspection contingency allows you to back out of the contract.  This is not good for the seller because there’s more of a risk that the transaction won’t close.  So if you do your inspection BEFORE hand it may make your offer more attractive to the seller.

Are there any down sides to pre-inspections?  Inspections can run around $400.  Just because you do a pre-inspection, it doesn’t guarantee your offer will be accepted.  So you could potentially be out the $400.

Can I just waive my inspection all together?  There’s no law that says you have to conduct an inspection.  Contractors waive inspection all the time when buying properties because they have a very good understanding of construction and many times feel that they can conduct their own inspection without having to pay someone else.  BUT if you don’t have an intimate knowledge of construction, waiving your inspection all together could be VERY risky.

There are many different strategies involved with an inspection contigency.  To find out more about this topic or the first time home buyer process in general, please go to our Calendar/Reservations page and register for one of our FREE First Time Home Buyer workshops.  Don’t put yourself at risk due to lack of information!