Condo, House or Townhouse: Which Is Best for You?

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The decision to buy a home can be complicated whether you are a first-time homebuyer or are looking for a second home, especially if you are shopping for property in an urban area. What kind of residence can you afford? Should you buy a house in a suburb or a historic downtown? What about a condo within walking distance of a train station? Or a townhouse in a new urban infill community?

Choosing between a townhouse, condominium or house involves questions of location, maintenance, lifestyle and price. These housing styles also have a lot of overlap, so choosing one over the others may involve less sacrifice than you might expect.

What is a condominium?

A condominium, called a “condo” for short, is actually a kind of ownership, while the terms “townhouse” and “house” (a standalone structure most people would think of as a traditional single-family home) refer to physical structure styles.

As such, condos can come in a variety of shapes in sizes, though they are often similar in size and appearance to an apartment. At the same time, some condos can be quite expansive. Condos typically are private residences that are part of a building or multiple-unit communities, although some detached condominiums are available. They are privately owned and occupied by an individual or a family.

Condos comes in many configurations beyond apartment-style buildings, said Mark Swets, executive director of the Association of Condominium, Townhouse, and Homeowners Associations. “Condos have less restrictions,” he said. “They can be converted from old office buildings or loft space.”

Regardless of their location or size, condo owners all share in the ownership of common areas and facilities that are maintained by a board that is comprised of members elected from the condo community. The board collects dues from the community’s condo owners and uses the money to maintain and operate common areas and amenities such a community pool, gym, and landscaping.

Condos often are found in urban areas where land for construction is scarce.

What is a townhouse?

A townhouse typically is a vertical, single-family structure that has at least two floors and shares at least one ground-to-roof wall with a residence next door.

Townhouses, which are individually owned, can be lined up on a row or arranged in a different configuration. Owners buy both the structure, including its interior and exterior, and the piece of land that the townhome is built on, which may include a small yard.

“A townhome is not a kind of ownership, but refers more to the physical structure,” Swets said, referring to the vertical design. “From an ownership perspective, some townhomes are classified as condos while others aren’t. It all depends upon what’s listed in the declaration and bylaws for each association.”

Should I buy a house, townhouse or condo?

Here are some factors to consider when deciding what kind of residence to buy:

Maintenance

Are you good at home repairs, or do you prefer to have a handyman on speed dial? While a single-family house gives you freedom to fix up or renovate as you please, you also are responsible for all repairs and maintenance. The monthly fee you pay to a board or association if you own a condo may take care of maintenance such as mowing, exterior repairs and snow shoveling. Townhouse homeowners association fees may care of maintenance of the community’s common areas, such as a shared backyard or playground, but it’s not guaranteed.

“If I were to look at a condo, it would be because I didn’t want to worry about the maintenance outside,” said Lori Doerfler, the 2018 president of the Arizona Association of Realtors. “If I wanted to have a piece of land but not a lot of yard, a townhome would be a good choice.”

Location and lifestyle

Condos, townhomes and standalone houses can offer a wide range of lifestyles and locations. Homebuyers should think through whether they’re interested in an urban, walkable lifestyle, a suburban neighborhood, or something in between. Where you live also will determine your commute to work and proximity to family and friends.

Restrictions on ownership

While condos can offer convenience and amenities, they also come with monthly dues, occasional assessment fees for special community projects and property rules, which can be strict. Single-family homes, especially those in neighborhoods without a homeowners association, have few or no restrictions.

Buyers should always check the community’s bylaws to understand the rules.

“I always want to get the covenants, conditions and restrictions to the buyer,” Doerfler said. “They describe the requirements and limitations of what you can do with your home as well as the grounds.”

Monthly fees

Any type of dwelling may come with a monthly fee to help pay for upkeep of the community’s amenities. Owners of a standalone single-family house in a neighborhood with a homeowners association will pay monthly or annual HOA fees, and condo and townhouse owners will pay fees every month to the community board or association.

When factoring your monthly mortgage payment, be sure to add in the HOA or condo association fees to determine how much you’ll pay to live in the dwelling. Fees could significantly increase your cost, putting a seemingly affordable dwelling out of reach.

Lending and price

Where you live will determine the price that you’ll pay for your home. Homes in desirable areas, such as downtowns and good school districts, can cost significantly more that homes with a long commute to a city.

Interest rates also vary by state and by lender, so it’s important to research loan terms from several lenders before making a decision.

Condo vs. townhouse

Benefits: Again, condos and townhouses aren’t mutually exclusive, but their potentially different physical attributes and homeownership structures make them worth comparing in some ways. Both offer less maintenance than a house, the opportunity to get to know neighbors and build a strong community, and walkable amenities such as a pool or community gathering space. Condos may offer a variety of amenities, and with new developments providing over-the-top extras such as rooftop bars, doormen and catering kitchens.

Risks: Condo and HOA fees can be expensive, and you are trusting the HOA or condo association to provide satisfactory upkeep to the property. Condo fees tend to be higher than townhouse HOA fees because condo associations typically provide more maintenance and amenities, and condo associations can enact special assessments to pay for one-time facilities expenses.

House vs. condo

Benefits: While condos offer a range of amenities and maintenance for exterior property, owning a single-family home provides owners with freedom from the rules and restrictions of condominium ownership. Buyers looking for privacy, a rural or suburban lifestyle or a larger property also will have more options with a single-family house.

Risks: Owning a single-family home means that the homeowner must pay for damage and upkeep to the interior and exterior property that isn’t covered by insurance. Condo associations are liable for exterior property and, if stated in the bylaws, “common elements” such as the roof and windows.

Townhouse vs. house

Benefits: Single-family house and townhouse owners both own their entire units, giving them freedom to renovate and change them as they see fit within any guidelines for exterior changes set by HOAs.

Risks: Single-family homeowners assume responsibility for the entirety of their property, which townhome owners may not be liable for repairs, upkeep, or incidents that occur outside of their unit and the land it sits on, depending on their homeowner’s association.

Which is best for you?

Your decision in buying a home vs. a condo vs. a townhouse should depend on what you can afford, how much maintenance you want to do, where you want to live and the type of community you want to live in. Young families, for example, may want a yard and a house near a good school, while a single professional may be more interested in a downtown condo that is within walking distance to nightlife and the office.

As you consider what kind of dwelling to buy, be sure to include the costs of condo or HOA fees into your budget to be sure that your new home fits your lifestyle and your budget.

The post Condo, House or Townhouse: Which Is Best for You? appeared first on MagnifyMoney.

4 Reasons to Buy Your First Home in Your 30s

There are a few ways to expedite that down payment.

There was a time in my life when I thought I’d never own a home. As someone who had preferred life in big cities and prioritized travel above homeownership, the idea of settling somewhere permanently never really appealed to me.

Then I got married, then I got pregnant, and suddenly the idea of living in an actual home to call my own (with a little more space, to boot) became very appealing. By the time my husband and I closed on our first-ever home, I was 32 years old, and I’m so glad I waited until then to buy. Here’s why.

1. I Had Saved Enough for a 20% Down Payment

My husband and I were married almost three years before we bought our first house, which gave us plenty of time to start putting cash aside in a separate savings account—specifically for a down payment. That meant that we were able to put down 20% of our home’s overall value (the recommended amount), putting us in a good position for a low-interest mortgage loan.

You may not be able to sock away that much in cash by the time you’re ready to buy, but at least when you’re solidly in your 30s, you’re likely making much more than you were in your mid-20s. So you should be able to put down more than you could when you were younger. It should also be easier to refill your savings after spending that money.

2. I Knew Where I Wanted to Settle Down

Places I’ve called home include New York, New Jersey, Pennsylvania, Virginia, Florida, and Colorado, along with a few others. In other words, I had been around the block enough to know what I was looking for in a long-term home and a place to raise my family. As it turned out, Colorado was that place, and so far, it’s all I could have wanted and more.

3. I Was Secure Enough in My Career to Make Big Financial Moves

Because I’ve been freelancing successfully for the past few years, I’ve built up enough of a steady client base to feel financially safe as I took the plunge into homeownership. Buying a house is a lot more than forking over a down payment and paying a mortgage—utilities, homeowners association fees and insurance, and general maintenance and upkeep all add more weight on the monthly budget. By waiting until we were more settled in our careers, though, my husband and I felt more prepared for whatever our new house might throw our way.

4. I Could Afford a House that Didn’t Need Much Work

While I can certainly tackle the occasional DIY project, I’m never going to be someone who wants to place hardwood or redo a bathroom. As such, waiting until I was in my 30s to buy my first house meant that I had the money to buy a home that didn’t need a lot of work. It was essentially move-in ready, which was exactly what I was looking for.

When’s the Right Time to Buy a Home?

Buying a home before you’re in your 30s certainly isn’t a bad thing, as long as you’re financially prepared to put down a sizeable down payment and to pay for the added expense that comes with it. For me, though, waiting just a couple more years until I was in my 30s proved to be invaluable, since I now feel as prepared as possible for whatever new financial responsibilities head my way.

Also, no matter how old you are, make sure you’ve had a chance to build your credit before you buy. Credit plays a big role in buying a home, so make sure yours is as good as possible before you start shopping for a loan and check it frequently.

Image: monkeybusinessimages 

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Where Are Millennials Moving? The Answer May Surprise You

Young Couple Moving In To New Home Together

It’s no secret that young people are getting married and starting families later in life than their parents did. It is, however, a bit of a secret where they are choosing to settle down.

Big cities and their big employers have always attracted young workers, and that’s still true. But a combination of factors—sky-high home prices chief among them—have sent millennials across the country looking for alternatives. Unlikely places like Ohio and North Dakota have benefitted.

The Millennial Effect on the Market

Older millennials (aged 25 to 34) make up 13.6% of the US population but 30% of the current population of existing-home buyers, according to Realtor.com. Where they move matters to the real estate market.

Ellie Mae, a mortgage data firm, has a Millennial Tracker that highlights which towns have high percentages of mortgages closed by millennials. That data, in turn, can help future homebuyers and real estate professionals alike identify new, accessible housing markets.

Top 11 Cities for Millennial Home Buyers

In six US cities, millennials actually make up more than half of home buyers. Some of these places are so small they aren’t even served by an interstate highway. Here are the top 11 cities that millennials are moving to, according to Ellie Mae.

  1. Athens, Ohio: 59%

A little more than an hour away from Columbus, Athens is home to Ohio University—which helps explain why it’s among the most millennial-dense counties in the state.

  1. Aberdeen, South Dakota: 56%

Aberdeen is a three-hour drive away from the nearest large cities: Sioux Falls to the south and Fargo to the north. Aberdeen is home to Northern State University, and Ag Processing just opened a new soybean plant there.

  1. Williston, North Dakota: 55%

Williston’s population grew from 12,000 in 2007 to over 30,000 today, but unemployment there is well below the national average, and the household median income is more than $83,000. North Dakota boom towns are threatened by stubbornly low oil prices, however, which reduces demand for shale oil.

  1. Lima, Ohio: 55%

Lima hosts both the University of Northwest Ohio and an Ohio State University branch. The town brags that it’s a good place for large commercial development (it attracted 10 such projects in 2015), ranking sixth among small metropolitan areas, according to Site Selection magazine.

  1. Dickinson, North Dakota: 54%

Dickinson was actually the poster child for North Dakota’s oil boom and bust. As one example of the area’s frenetic rise, Dunn County, just north of Dickinson, saw its road construction budget jump from $1.5 million to $25 million in three years. Single family housing construction permits jumped 330% in one year.

  1. Odessa, Texas: 51%

Odessa, Texas, is also an oil town, located in the oil-rich West Texas Permian Basin. The oil bust hurt Odessa, too: it lost 12,200 jobs or about 15% of its employment when oil prices fell. More recently, though, the run-up in prices added 53,000 jobs and the economy is in recovery.

  1. Quincy, Illinois: 49%

Located directly across the Mississippi River from Mark Twain’s Hannibal, Missouri, Quincy has thrived thanks to smart planning dating back to the 1980s, when the city built a successful industrial park to attract employers. With its low unemployment and high graduation rates, Quincy made the Forbes list of top 15 small places to raise a family in 2010.

  1. El Paso, Texas: 49%

El Paso’s economy is boosted by a heavy presence of federal government employees. The US Citizenship and Immigration Services, the Drug Enforcement Agency, and the US Customs and Border Protection all have operations there, and Fort Bliss is nearby.

  1. Oshkosh-Neenah, Wisconsin: 49%

Many Americans know this town, about an hour from Green Bay, as the home of OshKosh B’gosh.  Military contracts also fuel the local economy. Oshkosh Defense, formerly Oshkosh Truck, builds specialty heavy rigs for government agencies, especially the military. The firm recently won a $6.7 billion contract to build a new Joint Light Tactical Vehicle for the US Army. Oshkosh is also home to the University of Wisconsin–Oshkosh, the third largest university in the state, with 14,000 students.

  1. Pottsville, Pennsylvania: 48%

An hour outside Harrisburg, Pottsville is home to Yuengling, now the largest locally owned brewery in America. Like many rural Pennsylvania towns, Pottsville is struggling and slowly losing population—it’s down from almost 17,000 in 1990 to just under 14,000 now, but with young buyers taking up residence here, that could change in the near future.

  1. Owensboro, Kentucky: 48%

Nestled along the banks of the Ohio River, Owensboro doesn’t have an interstate highway, but it is within a few hours’ drive of Louisville, Nashville, and St. Louis. The town counts US Bank among its largest employers—the firm’s national mortgaging service center is located there. A downtown makeover has also made this river city a nice place to live and work.

Why Millennials Are Moving

Understanding where millennials are buying homes is important both to the housing industry and to young people looking for alternatives to oppressive monthly mortgage payments.

“As millennials continue to enter the housing market, we are seeing great activity in the middle of the US, where inventory is generally more affordable than on the coasts,” says Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae.

Tyrrell offered the example of top city for millennial homebuyers—Athens, Ohio. The the average home loan in Athens was nearly one-third the average home loan in Boston, Massachusetts.

Using the traditional 30%-of-income affordability standard, about one-third of households have unaffordable mortgage payments, according to a recent report from Harvard University. What’s more, the number of severely cost-burdened homeowners—those who spend 50% or more of their income on their mortgage—has skyrocketed from 1.1 million in 2001 to 7.6 million in 2015.

Numbers like that have young people considering homes in smaller places.

In Athens, Ohio, the average listed home price is $189,000, far less than the national median listing price of $259,000, according to Zillow.com. But home price isn’t the only factor. The ability to save up for a down payment matters, too.

“The main thing that jumps out to me is that those are all relatively affordable cities. Lower rents allow millennials to save for a down payment,” says Andrew Woo of ApartmentList.com. Indeed, according to Zillow, one-bedroom apartments in Athens cost $750 a month. “Generally, pricey urban areas such as San Francisco and New York have a large share of renters, as homeownership is out of reach for most, and many millennials plan to settle down and purchase a home in a different metro,” notes Woo.

Other Millennial Moving Lists

The Ellie Mae list reveals only cities where a high percentage of millennials are buyers—not necessarily places that are popular with younger adults. More mundane explanations, like demographics, play a role in statistics like this, too. The younger a population, the higher the percentage of millennial buyers.

There are plenty of other “where are millennials moving” lists. Different methodologies reach different results, but the overall narrative is the same.

The Urban Land Institute, calculating relative growth of the millennial population, said earlier this year  that Virginia Beach, Richmond, and Pittsburgh were among the hottest destinations for millennials. That list tells a similar story, however. Of traditional large coastal cities, only Boston cracked the top 10.

SmartAsset.com made its own list, too. New York, Los Angeles, and San Francisco don’t crack the top 25. Fort Wayne, Indiana, and Cary, North Carolina, on the other hand, made the top 10.

ATTOM Data Solutions, using a different set of criteria, shared another list of places popular with young home buyers—cities where the highest percentage of FHA loans (and their low down payments) have closed. It’s also full of smaller towns in Texas, North Dakota, and Pennsylvania.

“Millennials are a massive generation, the largest now in fact, and they certainly don’t act in a monolithic manner,” said Daren Blomquist, vice president of ATTOM. “So when we see increases in home sales to millennials in places like Lima, Ohio, or Pottsville, Pennsylvania, what it doesn’t necessarily mean is that there is a broad migration of millennials to small towns. But what it does mean is that there are millennials who are willing to move to small towns, likely because they are finding jobs there and they are finding a much more affordable cost of living, particularly when it comes to housing.”

So wherever millennials are headed, one thing is certain: affordability is more important than ever.  Fortunately, tools like Credit.com’s Mortgage Calculator and Mortgage Marketplace can help make housing more affordable no matter the location. Check out our Mortgage Resource Center to learn more.

Image: istock

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42 States with the Highest Home Seller Profits

Home For Sale Real Estate Sign and Beautiful New House.

If you’ve been thinking about selling your home, we’ve got some good news for you. According to RealtyTrac.com, home sellers saw an average price gain of $51,000 in Q2 of 2017. That’s a 26% average return on the previous purchase price. Most homeowners who sold during Q2 this year had owned their home an average of eight years, and while it’s a great time to sell your home right now, that also means homebuyers are looking at steep competition in today’s seller’s market. Find out the average home seller profits for your state in Q2 this year.

1. California, San Jose-Sunnyvale-Santa Clara

Average Price Gain Since Purchase: $410,000

Average Return Since Purchase: 74.5%

2. Hawaii, Urban Honolulu

Average Price Gain Since Purchase: $171,300

Average Return Since Purchase: 48.4%

3. Colorado, Boulder

Average Price Gain Since Purchase: $165,320

Average Return Since Purchase: 49.4%

4. Washington, Seattle-Tacoma-Bellevue

Average Price Gain Since Purchase: $165,000

Average Return Since Purchase: 63.5%

5. Massachusetts, Boston-Cambridge-Newton

Average Price Gain Since Purchase: $150,000

Average Return Since Purchase: 57.3%

6. Oregon, Portland-Vancouver-Hillsboro

Average Price Gain Since Purchase: $129,800

Average Return Since Purchase: 58.7%

7. Nevada, Reno

Average Price Gain Since Purchase: $100,000

Average Return Since Purchase: 46.5%

8. Arizona, Prescott

Average Price Gain Since Purchase: $86,000

Average Return Since Purchase: 46.7%

9. New Jersey, Newark-Jersey City

Average Price Gain Since Purchase: $82,000

Average Return Since Purchase: 29.5%

10. New York, New York City

Average Price Gain Since Purchase: $82,000

Average Return Since Purchase: 29.5%

11. Florida, Miami-Fort Lauderdale-West Palm Beach

Average Price Gain Since Purchase: $77,900

Average Return Since Purchase: 45.3%

12. Utah, Provo-Orem

Average Price Gain Since Purchase: $76,879

Average Return Since Purchase: 44.1%

13. Texas, Dallas-Fort Worth-Arlington

Average Price Gain Since Purchase: $75,511

Average Return Since Purchase: 51.2%

14.Tennessee, Nashville-Davidson-Murfreesboro-Franklin

Average Price Gain Since Purchase: $66,750

Average Return Since Purchase: 43.8%

15. South Carolina, Charleston-North Charleston

Average Price Gain Since Purchase: $58,000

Average Return Since Purchase: 29.4%

16. New Hampshire, Manchester-Nashua

Average Price Gain Since Purchase: $56,000

Average Return Since Purchase: 28.1%

17. North Carolina, Asheville

Average Price Gain Since Purchase: $53,000

Average Return Since Purchase: 28.6%

18. Rhode Island, Providence-Warwick

Average Price Gain Since Purchase: $53,000

Average Return Since Purchase: 26.9%

19. Wisconsin, Madison

Average Price Gain Since Purchase: $50,750

Average Return Since Purchase: 26.0%

20. Idaho, Boise

Average Price Gain Since Purchase: $50,354

Average Return Since Purchase: 31.9%

21. Minnesota, Minneapolis-St. Paul-Bloomington

Average Price Gain Since Purchase: $47,000

Average Return Since Purchase: 24.4%

22. Georgia, Atlanta-Sandy Springs-Roswell

Average Price Gain Since Purchase: $39,100

Average Return Since Purchase: 24.5%

23. Michigan, Detroit-Warren-Dearborn

Average Price Gain Since Purchase: $39,000

Average Return Since Purchase: 37.1%

24. Alaska, Anchorage

Average Price Gain Since Purchase: $36,319

Average Return Since Purchase: 15.4%

25. New Mexico, Albuquerque

Average Price Gain Since Purchase: $34,458

Average Return Since Purchase: 22.9%

26. Virginia, Richmond

Average Price Gain Since Purchase: $34,050

Average Return Since Purchase: 17.5%

27. Connecticut, Bridgeport-Stamford-Norwalk

Average Price Gain Since Purchase: $34,000

Average Return Since Purchase: 9.1%

28. Missouri, St. Louis

Average Price Gain Since Purchase: $33,351

Average Return Since Purchase: 26.3%

29. Ohio, Columbus

Average Price Gain Since Purchase: $32,750

Average Return Since Purchase: 22.6%

30. Pennsylvania, Pittsburgh

Average Price Gain Since Purchase: $32,500

Average Return Since Purchase: 28.3%

31. Nebraska, Lincoln

Average Price Gain Since Purchase: $29,000

Average Return Since Purchase: 22.7%

32. Louisiana, New Orleans-Metairie

Average Price Gain Since Purchase: $27,000

Average Return Since Purchase: 18.2%

33. Indiana, Indianapolis-Carmel-Anderson

Average Price Gain Since Purchase: $26,037

Average Return Since Purchase: 22.0%

34. Maryland, Baltimore-Columbia-Towson

Average Price Gain Since Purchase $25,100

Average Return Since Purchase 12.6%

35. Mississippi, Memphis

Average Price Gain Since Purchase: $20,500

Average Return Since Purchase: 16.1%

36. Arkansas, Fayetteville-Springdale-Rogers

Average Price Gain Since Purchase: $20,240

Average Return Since Purchase: 14.0%

37. Kentucky, Clarksville

Average Price Gain Since Purchase: $20,150

Average Return Since Purchase: 16.9%

38. Alabama, Huntsville

Average Price Gain Since Purchase: $18,140

Average Return Since Purchase: 13.5%

39. Illinois, Chicago-Naperville-Elgin

Average Price Gain Since Purchase: $18,059

Average Return Since Purchase: 8.7%

40. Iowa, Cedar Rapids

Average Price Gain Since Purchase: $17,500

Average Return Since Purchase: 14.3%

41. Oklahoma, Oklahoma City

Average Price Gain Since Purchase: $17,000

Average Return Since Purchase: 13.2%

42. Kansas, Kansas City

Average Price Gain Since Purchase: $10,119

Average Return Since Purchase: 6.4

Image: Feverpitched

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5 Things You Shouldn’t Do Before Buying a Home

Source: iStock

There’s a lot more to qualifying for a mortgage than simply saving up money for a down payment. You need to find a good real estate agent, have money on hand for closing costs, and understand your budget and taxes.

But for as much as there is to do while you’re preparing to buy a home, there are also things you shouldn’t do. Taking any one of these actions can jeopardize your purchase, leaving you disappointed at best, and potentially in a financial bind.

Don’t take on new debt

Mortgage underwriters consider your debt-to-income ratio when evaluating your ability to make monthly payments. If you have too much debt, it can affect how much you can borrow or whether or not you can even get a mortgage. Neil Cannon, a mortgage loan officer at PenFed Credit Union, encourages potential homeowners to start thinking about their debt usage as soon as they start planning to save for a down payment.

“If you want to own a home in two years, but you need to buy a car now, the decision on the car can affect your home purchase in two years,” Cannon explains.

He gives the following example: If you purchase a used car for $6,000 and pay it off within two years, you’ll look much better financially than someone who bought a $50,000 car with 0% financing and still has four years left on their auto loan.

While you should carefully evaluate any decision to take on debt years before purchasing a home, it’s especially vital to do so before closing. Cannon notes that if you prequalify for a mortgage, and then take out a loan for a car or other purchase prior to closing, it can threaten the entire deal.

Don’t switch jobs

Cannon says that before closing, your lender will perform a Verification of Employment — also known as a VOE. The VOE typically occurs up to two weeks before closing, though it can happen as late as hours before you sign on the dotted line.

If you’ve resigned between prequalification and closing, you will not be able to close. If you’ve switched jobs, you must have already reported to work at the time the VOE is completed if you want your new salary to be included.

Generally, though, it’s wise to stay with the same employer for at least two years before closing on your home. This is because compensation like bonuses, overtime, and commissions are variable, and your underwriter will need two years’ worth of documentation if you want this money to be considered as income on your mortgage application.

Cannon also notes that underwriters consider bonuses discretionary, no matter how your employer may pitch them.

“I have had dozens of clients tell me they have a ‘guaranteed bonus,’” says Cannon. “If that is the case, then it is not a bonus, and your employer is torturing the English language.”

This means that your bonus may not be counted as guaranteed income on your mortgage application, even if you feel confident your bonus will come in as it has in years past. If your bonus is particularly large, this could impact how much money you qualify to borrow — or if you qualify to borrow at all.

Don’t move money around

“If we cannot track the source of large deposits, we can’t use the assets for qualifying,” says Cannon.

“I had a recently married couple have a deposit of $14,000 into their savings account. It was all wedding presents, and it was basically all cash. It could not be traced. We could not use it.”

The couple was lucky: Their parents were able to give them a documented gift of $14,000 to make up the difference. Without their parents’ generosity, the couple wouldn’t have qualified, even though they had the money on hand.

If you cannot properly document where your money came from, the best-case scenario would be that your underwriter would not allow the funds to factor into the equation — meaning you can’t count them as an asset toward purchasing or closing on the home.

The worst-case scenario is that the underwriter could assume the money is recently acquired debt. Without documentation, the lender has no way of knowing. This could negatively affect your debt-to-income ratio.

Cannon notes that while it is possible to move money around, it’s wise to do so with guidance from your loan officer — especially during the 60 days prior to filling out your mortgage application all the way through closing.

Don’t sign a contract before getting prequalified

“You always want to be prequalified before you start shopping for a home so you do not make knee-jerk emotional decisions,” says Cannon. Signing a contract puts you under legal obligation. Doing so without being prequalified is a risky move, as you’ll lose any earnest money you put down in good faith at the time you signed the contract should you not qualify. You could also end up with a lawsuit against you, depending on how far the seller is willing to go.

Even if your contract has a financing contingency clause — meaning you have a set amount of days to secure a loan or terminate the contract — it’s still in your best interest to get prequalified. You may have as little as 15 days to secure a loan with the contingency.

If you are unable to, and you do not terminate the contract in writing within the specified time frame, some contracts will still legally obligate you to purchase the home. Because you lack capital, you won’t be able to. If the seller chooses to sue, you could end up in court.

Don’t assume you know as much as your real estate agent

With so much knowledge at their fingertips, it’s easy for today’s homebuyers to feel empowered. There are calculators that tell you how much you should theoretically be able to borrow. You can easily obtain an estimate on a house’s market value versus asking price. You can even research all the first-time homebuyer assistance programs in your area from the comfort of your couch.

But don’t mistake the ease of obtaining information for professional expertise. As a buyer, using a real estate agent costs you nothing. Your agent has likely gone through the home-buying process more than you will in your entire lifetime, and their depth of knowledge — especially of your local market — is something to take advantage of.

“If you are a buyer, you likely need guidance to figure out why this home seems overpriced to you and why that home looks like a great bargain,” says Cannon. “Realtors are compensated fairly, and good Realtors create value for their clients.”

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The Best Mortgages That Require No or Low Down Payment

 

If you’re considering buying a home, you’re probably wondering how much you’ll need for a down payment. It’s not unusual to be concerned about coming up with a down payment. According to Trulia’s report Housing in 2017, saving for a down payment is most often cited as the biggest obstacle to homeownership.

Maybe you’ve heard that you should put 20% down when you purchase a home. It’s true that 20% is the gold standard. If you can afford a big down payment, it’s easier to get a mortgage, you may be eligible for a lower interest rate, and more money down means borrowing less, which means you’ll have a smaller monthly payment.

But the biggest incentive to put 20% down is that it allows you to avoid paying for private mortgage insurance. Mortgage insurance is extra insurance that some private lenders require from homebuyers who obtain loans in which the down payment is less than 20% of the sales price or appraised value. Unlike homeowners insurance, mortgage protects the lender – not you – if you stop making payments on your loan. Mortgage insurance typically costs between 0.5% and 1% of the entire loan amount on an annual basis. Depending on how expensive the home you buy is, that can be a pretty hefty sum.

While these are excellent reasons to put 20% down on a home, the fact is that many people just can’t scrape together a down payment that large, especially when the median price of a home in the U.S. is a whopping $345,800.

Fortunately, there are many options for homebuyers with little money for a down payment. You may even be able to buy a house with no down payment at all.

Here’s an overview of the best mortgages you can be approved for without 20% down.

FHA Loans

An FHA loan is a home loan that is insured by the Federal Housing Administration. These loans are designed to promote homeownership and make it easier for people to qualify for a mortgage. The FHA does this by making a guarantee to your bank that they will repay your loan if you quit making payments. FHA loans don’t come directly from the FHA, but rather an FHA-approved lender. Not all FHA-approved lenders offer the same interest rates and costs, even for the same type of loan, so it’s important to shop around.

Down payment requirements

FHA loans allow you to buy a home with a down payment as low as 3.5%, although people with FICO credit scores between 500 and 579 are required to pay at least 10% down.

Approval requirements

Because these loans are geared toward lower income borrowers, you don’t need excellent credit or a large income, but you will have to provide a lot of documentation. Your lender will ask you to provide documents that prove income, savings, and credit information. If you already own any property, you’ll have to have documentation for that as well.

Some of the information you’ll need includes:

  • Two years of complete tax returns (three years for self-employed individuals)
  • Two years of W-2s, 1099s, or other income statements
  • Most recent month of pay stubs
  • A year-to-date profit-and-loss statement for self-employed individuals
  • Most recent three months of bank, retirement, and investment account statements

Mortgage insurance requirements

The FHA requires both upfront and annual mortgage insurance for all borrowers, regardless of their down payment. On a typical 30-year mortgage with a base loan amount of less than $625,500, your annual mortgage insurance premium will be 0.85% as of this writing. The current upfront mortgage insurance premium is 1.75% of the base loan amount.

Casey Fleming, a mortgage adviser with C2 Financial Corporation and author of The Loan Guide: How to Get the Best Possible Mortgage, also reminds buyers that mortgage insurance on an FHA loan is permanent. With other loans, you can request the lenders to cancel private mortgage insurance (MIP) once you have paid down the mortgage balance to 80% of the home’s original appraised value, or wait until the balance drops to 78% when the mortgage servicer is required to eliminate the MIP. But mortgage insurance on an FHA loan cannot be canceled or terminated. For that reason, Fleming says “it’s best if the homebuyer has a plan to get out in a couple of years.”

Where to find an FHA-approved lender

As we mentioned earlier, FHA loans don’t come directly from the FHA, but rather an FHA-approved lender. Not all FHA-approved lenders offer the same interest rates and costs, even for the same type of loan, so it’s important to shop around.

The U.S. Department of Housing and Urban Development (HUD) has a searchable database where you can find lenders in your area approved for FHA loans.

First, fill in your location and the radius in which you’d like to search.

Next, you’ll be taken to a list of FHA-approved lenders in your area.

Who FHA loans are best for

FHA loans are flexible about how you come up with the down payment. You can use your savings, a cash gift from a family member, or a grant from a state or local government down-payment assistance program.

However, FHA loans are not the best option for everyone. The upfront and ongoing mortgage insurance premiums can cost more than private mortgage insurance. If you have good credit, you may be better off with a non-FHA loan with a low down payment and lower loan costs.

And if you’re buying an expensive home in a high-cost area, an FHA loan may not be able to provide you with a large enough mortgage. The FHA has a national loan limit, which is recalculated on an annual basis. For 2017, in high-cost areas, the FHA national loan limit ceiling is $636,150. You can check HUD.gov for a complete list of FHA lending limits by state.

SoFi

For borrowers who can afford a large monthly payment but haven’t saved up a big down payment, SoFi offers mortgages of up to $3 million. Interest rates will vary based on whether you’re looking for a 30-year fixed loan, a 15-year fixed loan, or an adjustable rate loan, which has a fixed rate for the first seven years, after which the interest rate may increase or decrease. Mortgage rates started as low as 3.09% for a 15-year mortgage as of this writing. You can find your rate using SoFi’s online rate quote tool without affecting your credit.

Down payment requirements

SoFi requires a minimum down payment of at least 10% of the purchase price for a new loan.

Approval requirements

Like most lenders, SoFi analyzes FICO scores as a part of its application process. However, it also considers factors such as professional history and career prospects, income, and history of on-time bill payments to determine an applicant’s overall financial health.

Mortgage insurance requirements

SoFi does not charge private mortgage insurance, even on loans for which less than 20% is put down.

What we like/don’t like

In addition to not requiring private mortgage insurance on any of their loans, SoFi doesn’t charge any loan origination, application, or broker commission fees. The average closing fee is 2% to 5% for most mortgages (it varies by location), so on a $300,000 home loan, that is $3,000. Avoiding those fees can save buyers a significant amount and make it a bit easier to come up with closing costs. Keep in mind, though, that you’ll still need to pay standard third-party closing costs that vary depending on loan type and location of the property.

There’s not much to dislike about SoFi unless you’re buying a very inexpensive home in a lower-cost market. They do have a minimum loan amount of $100,000.

Who SoFi mortgages are best for

SoFi mortgages are really only available for people with excellent credit and a solid income. They don’t work with people with poor credit.

SoFi does not publish minimum income or credit score requirements.

VA Loans

Rates can vary by lender, but currently, rates for a $225,000 30-year fixed-rate loan run at around 3.25%, according to LendingTree. (Disclosure: LendingTree is the parent company of MagnifyMoney.)

Down payment requirements

Eligible borrowers can get a VA loan with no down payment. Although the costs associated with getting a VA loan are generally lower than other types of low-down-payment mortgages, Fleming says there is a one-time funding fee, unless the veteran or military member has a service-related disability or you are the surviving spouse of a veteran who died in service or from a service-related disability.

That funding fee varies by the type of veteran and down-payment percentage, but for a new-purchase loan, the funding fee can run from 1.25% to 2.4% of the loan amount.

Approval requirements

VA loans are typically easier to qualify for than conventional mortgages. To be eligible, you must have suitable credit, sufficient income to make the monthly payment, and a valid Certificate of Eligibility (COE). The COE verifies to the lender that you are eligible for a VA-backed loan. You can apply for a COE online, through your lender, or by mail using VA Form 26-1880.

The VA does not require a minimum credit score, but lenders generally have their own requirements. Most ask for a credit score of 620 or higher.

If you’d like help seeing if you are qualified for a VA loan, check to see if there’s a HUD-approved housing counseling agency in your area.

Mortgage insurance requirements

Because VA loans are guaranteed by the Department of Veterans Affairs, they do not require mortgage insurance. However, as we mentioned previously, be prepared to pay an additional funding fee of 1.25% to 2.4%.

What we like/don’t like

There’s no cap on the amount you can borrow. However, there are limits on the amount the VA can insure, which usually affects the loan amount a lender is willing to offer. Loan limits vary by county and are the same as the Federal Housing Finance Agency’s limits, which you can find here.

HomeReady

 

The HomeReady program is offered by Fannie Mae. HomeReady mortgage is aimed at consumers who have decent credit but low- to middle-income earnings. Borrowers do not have to be first-time home buyers but do have to complete a housing education program.

Approval requirements

HomeReady loans are available for purchasing and refinancing any single-family home, as long as the borrower meets income limits, which vary by property location. For properties in low-income areas (as determined by the U.S. Census), there is no income limit. For other properties, the income eligibility limit is 100% of the area median income.

The minimum credit score for a Fannie Mae loan, including HomeReady, is 620.

To qualify, borrowers must complete an online education program, which costs $75 and helps buyers understand the home-buying process and prepare for homeownership.

Down payment requirements

HomeReady is available through all Fannie Mae-approved lenders and offers down payments as low as 3%.

Reiss says buyers can combine a HomeReady mortgage with a Community Seconds loan, which can provide all or part of the down payment and closing costs. “Combined with a Community Seconds mortgage, a Fannie borrower can have a combined loan-to-value ratio of up to 105%,” Reiss says. The loan-to-value (LTV) ratio is the ratio of outstanding loan balance to the value of the property. When you pay down your mortgage balance or your property value increases, your LTV ratio goes down.

Mortgage insurance requirements

While HomeReady mortgages do require mortgage insurance when the buyer puts less than 20% down, unlike an FHA loan, the mortgage insurance is removed once the loan-to-value ratio reaches 78% or less.

What we like/don’t like

HomeReady loans do require private mortgage insurance, but the cost is generally lower than those charged by other lenders. Fannie Mae also makes it easier for borrowers to get creative with their down payment, allowing them to borrow it through a Community Seconds loan or have the down payment gifted from a friend or family member. Also, if you’re planning on having a roommate, income from that roommate will help you qualify for the loan.

However, be sure to talk to your lender to compare other options. The HomeReady program may have higher interest rates than other mortgage programs that advertise no or low down payments.

USDA Loan

USDA loans are guaranteed by the U.S. Department of Agriculture. Although the USDA doesn’t cap the amount a homeowner can borrow, most USDA-approved lenders extend financing for up to $417,000.

Rates vary by lender, but the agency gives a baseline interest rate. As of August 2016, that rate was just 2.875%

Approval requirements

USDA loans are available for purchasing and refinancing homes that meet the USDA’s definition of “rural.” The USDA provides a property eligibility map to give potential buyers a general idea of qualified locations. In general, the property must be located in “open country” or an area that has a population less than 10,000, or 20,000 in areas that are deemed as having a serious lack of mortgage credit.

USDA loans are not available directly from the USDA, but are issued by approved lenders. Most lenders require a minimum credit score of 620 to 640 with no foreclosures, bankruptcies, or major delinquencies in the past several years. Borrowers must have an income of no more than 115% of the median income for the area.

Down payment requirements

Eligible borrowers can get a home loan with no down payment. Other closing costs vary by lender, but the USDA loan program does allow borrowers to use money gifted from friends and family to pay for closing costs.

Mortgage insurance requirements

While USDA-backed mortgages do not require mortgage insurance, borrowers instead pay an upfront premium of 2% of the purchase price. The USDA also allows borrowers to finance that 2% with the home loan.

What we like/don’t like

Some buyers may dismiss USDA loans because they aren’t buying a home in a rural area, but many suburbs of metropolitan areas and small towns fall within the eligible zones. It could be worth a glance at the eligibility map to see if you qualify.

At a Glance: Low-Down-Payment Mortgage Options

To see how different low-down-payment mortgage options might look in the real world, let’s assume a buyer with an excellent credit score applies for a 30-year fixed-rate mortgage on a home that costs $250,000.

As you can see in the table below, their monthly mortgage payment would vary a lot depending on which lender they use.

 

Down Payment


Total Borrowed


Interest Rate


Principal & Interest


Mortgage Insurance


Total Monthly Payment

FHA


FHA

3.5%
($8,750)

$241,250

4.625%

$1,083

$4,222 up front
$171 per month

$1,254

SoFi


SoFi

10%
($25,000)

$225,000

3.37%

$995

$0

$995

VA


VA Loan

0%
($0)

$250,000

3.25%

$1,088

$0

$1,088

HomeReady


homeready

3%
($7,500)

$242,500

4.25%

$1,193

$222 per month

$1,349

USDA


homeready

0%

$250,000

2.875%

$1,037

$5,000 up front,
can be included in
total financed

$1,037

Note that this comparison doesn’t include any closing costs other than the upfront mortgage insurance required by the FHA and USDA loans. The total monthly payments do not include homeowners insurance or property taxes that are typically included in the monthly payment.

ANALYSIS: Should I put down less than 20% on a new home just because I can?

So, if you can take advantage of a low- or no-down-payment loan, should you? For some people, it might make financial sense to keep more cash on hand for emergencies and get into the market sooner in a period of rising home prices. But before you apply, know what it will cost you. Let’s run the numbers to compare the cost of using a conventional loan with 20% down versus a 3% down payment.

Besides private mortgage insurance, there are other downsides to a smaller down payment. Lenders may charge higher interest rates, which translates into higher monthly payments and more money spent over the loan term. Also, because many closing costs are a percentage of the total loan amount, putting less money down means higher closing costs.

For this example, we’ll assume a $250,000 purchase price and a loan term of 30 years. According to Freddie Mac, during the week of June 22, 2017, the average rate for a 30-year fixed-rate mortgage was 3.90%.

Using the Loan Amortization Calculator from MortgageCalculator.org:

Assuming you don’t make any extra principal payments, you will have to pay private mortgage insurance for 112 months before the principal balance of the loan drops below 78% of the home’s original appraised value. That means in addition to paying $169,265.17 in interest, you’ll pay $11,316.48 for private mortgage insurance.

The bottom line

Under some circumstances, a low- or no-down-payment mortgage, even with private mortgage insurance, could be considered a worthwhile investment. If saving for a 20% down payment means you’ll be paying rent longer while you watch home prices and mortgage rates rise, it could make sense. In the past year alone, average home prices increased 16.8%, and Kiplinger is predicting that the average 30-year fixed mortgage rate will rise to 4.1% by the end of 2017.

If you do choose a loan that requires private mortgage insurance, consider making extra principal payments to reach 20% equity faster and request that your lender cancels private mortgage insurance. Even if you have to spend a few hundred dollars to have your home appraised, the monthly savings from private mortgage insurance premiums could quickly offset that cost.

Keep in mind, though, that the down payment is only one part of the home-buying equation. Sonja Bullard, a sales manager with Bay Equity Home Loans in Alpharetta, Ga., says whether you’re interested in an FHA loan or a conventional (i.e., non-government-backed) loan, there are other out-of-pocket costs when buying a home.

“Through my experience, when people hear zero down payment, they think that means there are no costs for obtaining the loan,” Bullard says. “People don’t realize there are still fees required to be paid.”

According to Bullard, those fees include:

  • Inspection: $300 to $1,000, based on the size of the home
  • Appraisal: $375 to $1,000, based on the size of the home
  • Homeowners insurance premiums, prepaid for one year, due at closing: $300 to $2,500, depending on coverage
  • Closing costs: $4,000 to $10,000, depending on sales price and loan amount
  • HOA initiation fees

So don’t let a seemingly insurmountable 20% down payment get in the way of homeownership. When you’re ready to take the plunge, talk to a lender or submit a loan application online. You might be surprised at what you qualify for.

The post The Best Mortgages That Require No or Low Down Payment appeared first on MagnifyMoney.

5 Reasons to Call a Real Estate Agent Before Your Vacation

Top real estate agents, as local experts, can show you a place the way only long-time residents can see it.

You might be surprised to hear this, but if you want to maximize the benefits of a vacation and minimize your costs, you ought to give a top real estate agent in the area a quick call.

Top real estate agents, as local experts, can show you a place the way only longtime residents can see it. They make insightful tour guides because they spend every waking moment trying to convince people to move into the neighborhood.

Not only that, but if you end up loving your trip so much you want to live there forever, it doesn’t hurt to have a contact on the inside. Good agents can help you crunch the numbers and figure out whether it’s financially viable to own a vacation house in your lovable getaway place. (Here’s how to calculate how much house you can really afford.)

Ask any agent who knows what they’re doing and they’ll talk your ear off about how they can help you on your travels, but we thought to boil it down to the five ways they can save you money in the long run.

1. They Can Be Your 15-Minute Tour Guide (Just Ask Politely)

If you’re vacationing, chances are the hip urban vibe or tranquil oceanscape will spark a sense of wanderlust. The problem is that there are too many special boards out there advertising “$15 Cruise on The Bay!” at Fisherman’s Wharf or “Scenic Waterfall Hike!” on the big island of Hawaii. Who goes to a place just to see the same stuff they get at home?

No one knows the local landscape better than a good real estate agent. They have to — without extensive knowledge of local schools, eats and local things to see and do, they would have nothing to show potential buyers.

For example, real estate agent Dan Ihara, who happens to be in the top 1% of sellers in Hawaii, knows the waves in Honolulu unlike anyone else.

He knows most of the people buying homes in Honolulu are headed there for the surf culture. And he’s got the inside scoop on great surf spots you’ll never find in a guidebook.

Any real estate agent will be happy to spend 15 minutes chatting with you, especially if there’s potential for you to become a client later on.

Here’s how to use that short introductory call to your advantage:

1. Get “what it’s like to live there” recommendations for local sights, eats and things to do to get a feel for what the city is all about. These places are guaranteed to be cheaper — and better quality — than tourist sites that attempt to squeeze as much money out of you as possible.

2. Get recommendations for areas in your price range.

3. Make plans to see the highest performing rental areas.

The best part about using an agent as a tour guide is that you’ll build a positive relationship if you decide to buy a property in that location down the road.

2. They’ll Be Straight With You

Owning a vacation home cuts the cost of lodging and food when you travel, as you’ll have a full kitchen to store and prep meals. Plus, in some markets, you can make enough renting out the home when you don’t use it to cover the cost of the second mortgage.

On the other hand, you should be careful when you consider buying a vacation home.

As Wall Street Journal reporter Jeff Brown writes, “Among the common rookie mistakes are focusing on purchase price, rental rates and recent market trends and counting on more renters than are likely.””

A local agent can give you insights about buying in the area.

The next time you visit your favorite destination — perhaps in the Cayman Islands, the South of France or the Gold Coast of Australia — a top real estate agent can sit down and help you understand what you can reasonably afford.

We put together several questions to ask in a meeting with a real estate agent to better your understanding of owning a vacation rental. Your ultimate goal is to learn if you can make money or break even on your vacation home, or if you’ll need to pay for a second mortgage.

1. How is the vacation rental market in this area? Do vacation homeowners usually get strong occupancy rates? What is the average vacation rental occupancy rate in this area?

2. How much do you think I can afford in a vacation home? How much do homes usually rent for per week in this area?

3. Do you have a relationship with any vacation rental companies that could care for or rent out the property for me? How much would that cost?

4. Do you think I will make money, break even or lose money on this vacation home?

5. What is peak season for vacation rentals in this area?

3. They Can Provide the Latest & Greatest on Trendy Neighborhoods

Real estate agents also know what’s going on in the local market, what homes move the fastest and what vacation areas are ripe for investment. For example, in Las Vegas, top 1% agent Jeff Galindo can anticipate the trends of his area better than any travel agency.

“When things started changing about a year ago, or 18 months ago, give or take, those homes are the ones that started getting swallowed up,” he said. “Those are the ones that people took out of the market and started buying and flipping and rehabbing. So it’s really difficult for anyone to find anything under $100,000 today in our market, which is unusual.”

These neighborhoods are not only good places to invest in, but they’re the areas you should see on vacation. The faster homes start to move, the more interest there is in a particular area, which means locals can’t get enough of it.

Take San Francisco. Visit the city and you might get stuck at Fisherman’s Wharf, on a cable car in Union Square or licking ice cream off your fingers in Ghirardelli Square. The true expression of San Francisco culture, though, is in the Mission District, or the Hayes Valley neighborhood, or in the Castro. These places also have rising home prices.

4. They Can Help You Get More for Your Money

If you are in the market for a vacation home, one strategy to maximize the house you’ll get for your money is to buy a home you can fix up.

Real estate agents will know about properties like these in your vacation destination that are most likely in your price range. If you’ve dreamt about owning a treehouse in Kauai, talking to an agent before you fly over to the island could give you the confidence you need to start looking.

(Don’t forget to check your credit before you start shopping around. You can view two of your credit scores for free on Credit.com.)

5. They Can Help You Pick Your New Perfect Neighborhood

A real estate agent is the person best equipped to match you to neighborhoods she thinks will become your favorite. In addition to roaming the streets to find your favorite new bistro, you’ll get acquainted with areas you could see yourself — and your family — living in.

As Mynor Herrera, top 1% real estate agent in the Washington, Virginia and Maryland areas told us, “There’s so much that a local agent can bring to the table just by institutional knowledge of that marketplace.”

The real estate agent will know the best neighborhoods and get a feel for how people actually live life in your destination.

Ultimately, meeting with a real estate agent on your vacation can give you a new perspective on the area and what it’s like to live there. You may even get inspired to finally buy the beachfront hideaway you’ve always wanted.

Image: Petar Chernaev

The post 5 Reasons to Call a Real Estate Agent Before Your Vacation appeared first on Credit.com.

10 Cities Where Millennials Are Buying Homes (& 10 Where They Aren’t)

Millennials are increasingly becoming homeowners, but in some cities more than others.

With staggering student loans, fewer affordable starter homes and lower earnings than the previous generation, young adults own fewer homes than ever. Considering the reputation millennials have in the media for poor financial skills — avocado toast, anyone? — it’s no surprise the millennial generation is very slowly entering the home buying market. Although millennials are the largest generation of adults, they only account for 7.5% of the value of all U.S. homes.

ABODO, an apartment listing company, analyzed the 100 largest metropolitan statistical areas by population from the U.S. Census Bureau 2015 American Community Survey to find the highest and lowest percentage of all millennial householders who are owners.

Home buying among adults ages 18 to 35 has slowed. In 2005, 39.5% of this age group owned homes. That share fell to 32.1% in 2015. (Remember, when buying a home, your credit plays a major part. Before stepping into the home buying market, it’s a good idea to check your credit. You can see a free snapshot of your credit reports on Credit.com.)

This trend might reverse. Recently, more millennials have been entering the home-buying market. Only time will tell if this trend will stick, but for now, here are the 10 cities millennials are buying homes — and the 10 where they aren’t.

Cities Where Millennials Are Buying Homes

10. St. Louis, Missouri-Illinois
Millennial Home Ownership: 40.2%

9. Detroit-Warren-Dearborn, Michigan
Millennial Home Ownership: 40.2%

8. Boise City, Idaho
Millennial Home Ownership: 40.6%

7. Baton Rouge, Louisiana
Millennial Home Ownership: 41.0%

6. Scranton-Wilkes-Barre-Hazleton, Pennsylvania
Millennial Home Ownership: 41.9%

5. Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
Millennial Home Ownership: 42.4%

4. McAllen-Edinburg-Mission, Texas
Millennial Home Ownership: 43.3%

3. Des Moines-West Des Moines, Iowa
Millennial Home Ownership: 43.6%

2. Grand Rapids-Wyoming, Michigan
Millennial Home Ownership: 45.3%

1. Ogden-Clearfield, Utah
Millennial Home Ownership: 51.0%

Cities Where Millennials Aren’t Buying Homes

10. Durham-Chapel Hill, North Carolina
Millennial Home Ownership: 25.2%

9. Madison, Wisconsin
Millennial Home Ownership: 24.7%

8. New Haven-Milford, Connecticut
Millennial Home Ownership: 24.4%

7. Fresno, California
Millennial Home Ownership: 23.6%

6. San Francisco-Oakland-Hayward, California
Millennial Home Ownership: 20.5%

5. San Jose-Sunnyvale-Santa Clara, California
Millennial Home Ownership: 20.2%

4. New York-Newark-Jersey City, New York-New Jersey-Pennsylvania
Millennial Home Ownership: 19.8%

3. San Diego-Carlsbad, California
Millennial Home Ownership: 19.8%

2. Urban Honolulu, Hawaii
Millennial Home Ownership: 18.3%

1. Los Angeles-Long Beach-Anaheim, California
Millennial Home Ownership: 17.8%

Image: Bauhaus1000

The post 10 Cities Where Millennials Are Buying Homes (& 10 Where They Aren’t) appeared first on Credit.com.

What to Do Before You Start Your Home Search

The process of buying a home can be nerve-wracking for some who have not been through it before, but with a little bit of preparation, you can help minimize some surprises along the way.

One important thing you can do as soon as you start thinking about buying a home is checking your credit report. Ideally, this should be done at least six months before purchasing a home in order to give yourself time to dispute information, if needed. It is important to know how your payment history is being reported by your creditors. And if you see any unfamiliar information, it’s important to know how to take action.

Consumers are entitled to a free copy of their credit report, from each of the nationwide consumer reporting agencies, once a year by visiting annualcreditreport.com.

What should you look for? Any information that might be inaccurate or incomplete. In the personal information section of your credit report, is your name (and any former names, such as a maiden name) listed accurately? Is your address up to date? Are there any addresses you don’t recognize? In the account information portion of your credit report, are all of the accounts listed complete and accurate? Are there any accounts that you don’t recognize? Do the balances appear accurate?

If you find information that appears inaccurate or incomplete, contact the lender or creditor associated with the account. You can also contact the nationwide consumer reporting agency that issued the credit report. If necessary, take steps to change some of your credit-based behaviors.

Here are some other items to include on your checklist as you prepare to buy a home:

— Gather any required documents you may need to apply for a mortgage. Tax returns, pay stubs and bank statements are among the ones you’ll need.

— Figure out how much home you can afford. There are a number of online mortgage calculators that can help. Remember a home’s purchase price is only part of the picture; you may also be responsible for a down payment, closing costs, taxes, insurance and other expenses. Learn your debt-to-income ratio and familiarize yourself with the requirements for loan qualification.

Buying a home is one of the most important – and largest – financial decisions you may make, and you owe it to yourself to prepare for it thoroughly and thoughtfully and hopefully smooth out any bumps in the road to home ownership.

How a Coat of Paint Can Determine Your Home’s Sale Price

An inexpensive can of paint holds a lot more power than you think.

From the time of year to the neighborhood, a lot of factors come into play when you’re selling a home. But here’s one variable you might not have considered — color.

During open houses and online searches, the colors of your home are constantly working for or against you. That’s according to Zillow, a real estate and rental marketplace, which examined over 32,000 photos from sold homes around the country to see how certain paint colors impacted their average sale price compared to homes of similar value with white walls. Here’s what they found.

A Change of Trends

The colors that added value to your home just a year ago can now be hurting its sale price. In 2016, painting your kitchen a shade of yellow could help your home sell for $1,100 to $1,300 more. However, this year, a yellow kitchen could lower your home’s value by an estimated $820, according to Zillow.

Some color preferences remained consistent, with terracotta walls still devaluing a home. Just last year, homes with terracotta walls sold for $793 less than Zillow’s predicted selling price. This year, that number more than doubled, with homes with terracotta walls selling for $2,031 less.

The takeaway: If you’re looking to sell your home, you may want to avoid a terracotta shade. Also be cautious in general when choosing dark and bold colors.

Keep it Light

“Painting walls in fresh, natural-looking colors, particularly in shades of blue and pale gray, not only make a home feel larger but also are neutral enough to help future buyers envision themselves living in the space,” said Svenja Gudell, Zillow’s chief economist, in a statement.

In fact, homes with blue bathrooms, including lighter shades of blue or periwinkle, sold for $5,440 more than expected, Zillow found. Kitchens with light blue-gray walls sold for $1,809 more than expected, and walls with cool, natural tones like soft oatmeal and pale gray also had top-performing listings.

Light, simple walls performed best among sellers, however, walls with no color had the most negative impact on sales price. Homes with white bathrooms or no paint color, for instance, sold for an average of $4,035 less than similar homes, Zillow noted.

Head Outside

As if it isn’t stressful enough worrying about your rooms’ colors, your home’s exterior color can also impact its sale price.

To that end, buyers typically enjoyed a pop of color, with homes featuring dark navy blue or slate gray front doors selling for $1,514 more. Buyers also responded positively to trendy mixes of light gray and beige, or “greige,” exteriors versus basic tan stucco and medium-brown shades.

If you’re trying to sell your home, a can of paint can be a wise investment — so long as you choose the right color. Keep these findings in mind before you head to the paint store. Likewise, just as color impacts sale price, know that selling your home can impact your credit. Don’t forget to check your credit report card before you start picking out paint chips.

Image: andresr

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