Homeownership & Lifestyle, Real Estate

5 Steps to Prepare for Your Next Home Construction Project


Adding a home office? Renovating your outdoor space? Adding an ADU? Upgrading technology? Whichever your next home construction may be, being prepared with these 5 steps will reduce some of the stress a renovation or remodel produces.

1. Plan the Project – Decide the scope of the project. What would you like to accomplish? How much money might it cost? How long might it take?

2. Secure Financing– Depending on the type of project, this could range from a personal loan to a renovation loan or a construction loan. There are also loans available for ADUs and room additions nowadays.

3. Budget for the Project – Now that you know what you would like to build, you can create a budget. This will help you stay on track with expenses and maximize your return on investment. There is always the risk of going over budget but without one at all, there is a greater risk you will run out of financial resources in the middle of the project.

4. Design the Project – You may start with a draft and then show the architect or designer your vision. They will then convert your vision into drawings taking into consideration budget, scope and expected outcomes.

5. Review Contractor Bids – Ultimately, select a contractor who is licensed and bonded, with a good reputation and known to deliver.

It will depend on the type of project if you will need to hire a general contractor, subcontractors, or a handyperson. This will, more likely, be determined in the planning stage. You will also need to be clear on the differences in their responsibilities and commitment. Ultimately, if you do not want to deal with the whole ordeal of a construction project, consider hiring a construction manager who may manage the project and represent your best interest.

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Real Estate, Tips & More

5 Tips to Stay Yourself Cool At Home During a Heat Wave

We are expecting a heat wave this weekend and you might not want to spend it at the beach or at the shopping center. Wondering how you can save energy while keeping yourself cool at home?  Here are 5 tips to keep yourself cool at home during a heat wave:

  • Unplug heat producing electronics such as appliances or computer equipment.
  • Use stand or ceiling fans to circulate the air while you are in the room. Make sure to turn them off when you leave the room.
  • Keep your windows shut and curtains closed. Don’t turn on lights, especially fluorescent lights.
  • Don’t use the stove. Eat cold or microwaveable foods instead.
  • Close doors to rooms to keep the air inside and if you live in a two-story home.

These are just a few ways you can enjoy the comfort of your home during a heat wave while saving energy.  Additionally, stay hydrated by drinking water and staying away from alcohol.  Also, don’t forget to take care of the elderly, children, and pets.  

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Housing Trends and News, Real Estate

What If I Can’t Afford To Make My Mortgage Payment Anymore?

According to a report from Attom, in the first quarter of 2022, the U.S. had 44.9% residential properties which were equity-rich, while only 3.2% were considered seriously underwater. (Attomdata.com). Despite higher interest rates, this would indicate the majority of the mortgaged homes have plenty of equity for the long run.

Nonetheless, a serious illness, a loss of a job, or a major life change can drastically affect a homeowner’s ability to continue making mortgage payments. Many times, it is a temporary season. However, there are those times when despite all the efforts, it is not possible to get back on track.

SEEK OPTIONS

My first recommendation is “don’t give up.” Some homeowners give up and choose to stop making payments. Unfortunately, they wait for the property to foreclose and not only is their morale down but their credit is also damaged.

Before giving up, contact your loan servicer (i.e. the bank where you make your monthly payments). Depending on your particular situation, there can be loss mitigation options such as a forbearance agreement, a payment plan, or a loan modification.

If you are still not able to make the payments, you can ask for Forbearance Assistance.

This pauses your payments temporarily until you are back on your feet. Your servicer will work with you on a repayment plan when you are ready to reinstate your payments.

If you are back on your feet and can continue making your payments, you can arrange a:

Payment Plan:

A repayment plan where you either add the back payments onto your monthly payments or to the backend of the loan.

Loan Modification:

Change the terms of your original loan in order to roll the back payments into the loan. Some of the terms which can be changed are the interest rate or the term of the loan.

CONSIDER SELLING

If you are still not able to make your payments, consider selling your house. If you have equity, it can be a standard sale. If you do not have equity, it can be a short sale. What is equity? Equity is the difference between the value of your home and how much you owe on the loan. In short, if you owe less than what the house is worth you have equity and vice versa.

If you have fallen behind in your mortgage payments and choose to sell your house, it is very important that you work with a real estate agent who is experienced in short sales and properties in default. You want your agent to know how to communicate with the loan servicer so your file does not fall through the cracks; and this requires experience.

In summary, if you are having challenges making your mortgage payment, seek assistance before giving up on making the payments. It might be tempting to remove the expense from your monthly list and not worry about it anymore; but instead of giving into temptation, seek help from professionals who can guide you through the process.

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Homeownership & Lifestyle, Real Estate

Are You Still Working From Home?

Perhaps, when you thought it was temporary, you worked from your kitchen table or your living room couch. However, many employees will now be working from home in either a hybrid or a full time schedule. If you are one of these employees, you will need an area where you can have more privacy and comfort. Setting up an exclusive office area is important for a successful and productive work day.

Set up an ergonomic work area. Some employers are offering to reimburse for equipment and supplies. It is recommended that you, at least, have an ergonomic keyboard, chair, and desk. UCLA offers some great tips on how you can properly set your workstation.

Another recommendation is that you have a work area separate from your living space. This will allow you to create healthy boundaries between work and personal life. If you are not able to convert a room into an office, you should consider a shed or a tiny house. These can be customized so they are as comfortable as your office work area.

Working from home has its advantages. However, there should be a balance between work and home as well as a set up that is mentally and physically healthy. If you will be working from home more permanently, consider making adjustments to your home office in order to fully enjoy your new working environment.

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Real Estate, Tips & More

How to Save to Buy a House

Depending on the type of loan you are applying for, you may need from 3% to 20% of the purchase price for a down payment. In addition to your down payment, you will also need around 2%-5% of the purchase price for closing costs. Once you know how much you can afford, you will be able to determine the amount you will need and how long it will take to achieve your goal. Here are some things you can do to achieve this goal:

1. Open a bank account that is specifically for saving money for your home purchase. This can be a savings or investment account. Set it so the transfer is done automatically every month and, no matter what, do not withdraw any money from that account.

2. You may also deposit any tax refund, extra money, or gifted money into the new account.

3. Reduce any current debt. Start by paying off any high-interest credit cards.

4. Do not get into any new debt whether it is a new credit card, a loan or a new car.

5. Cut down unnecessary expenses such as entertainment, eating out, and non-essentials.

In addition to this, you may also start a new side job and save this income. However, keep in mind it is recommended that before you start saving for your new home, you have an emergency fund already in place with at least three months of your monthly expenses. This will allow you to have a separate account in case of an emergency so you do not need to tap into your home purchase savings.

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Tips & More

Every Homeowner Should Know About These Four Forms

As a homeowner, you should know about these four forms regarding protection of your primary residence and possible reduction of property taxes.

PROTECTION

1. Home Protection for Seniors, Severely Disabled, Families and Victim’s and of Wildfires or Natural Disasters Act – lf you are 55 or older, you have sold your primary residence, and are occupying your replacement primary residence, you may file form BOE-60-AH, Claim of Person(s) at Least 55 Years of Age for Transfer of Base Year Value to Replacement Dwelling, it gets filed with the County Clerk’s Recorder’s Office where the replacement property is located. More information may be found in the California State Board of Equalization information page.

2. Homestead Declaration – This form serves as a protection on your primary residence in the event certain creditors want to force a sale to satisfy a court judgment. There is a designated amount that protects the property equity. You should seek legal advice to ensure the form is completed properly. The notarized Declaration of Homestead form is filed with the County Clerk Recorder’s Office where the property is located.

PROPERTY TAXES

3. Property Tax Exemption – The State of California allows an exemption of up to $7,000 on the value to assess the tax of your primary residence. The claim form, BOE-266, Claim for Homeowners’ Property Tax Exemption can be provided by the County Assessor’s Office and you file it with the County Clerk Recorder’s Office where the property is located. More information may be found in the California State Board of Equalization Property Tax Exemption page

4. Notice of Supplemental Assessment – The County Assessor of the county where the property is located will assess the property value to determine the tax on the property value. You do not need to file anything for this but if you had new construction or if you just bought a property, you should expect this notice. Depending on whether the value went up or down, you will get a bill or a refund. More information may be found in the California State Board of Equalization Q&A page.

These forms are publicly available at your local County Assessor’s Office. They may be able to answer general questions but it is important that you seek legal advice if you have questions about how these forms may or may not benefit you.

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Kostiantyn Li

Tingey Injury Law Firm

Samia Liamani

Marissa Grootes

Blake Wheeler

Probate and Trusts, Real Estate, Sellers

What You Should Know If You Are A Successor Trustee Selling A Home

Losing a loved one is hard as it is. Having to handle their affairs can make it even more difficult to grieve. One of the major assets a personal representative may need to handle is real estate; particularly the primary home. Assuming you have already reviewed the living trust and know you will need to sell the property in order to settle the estate; here are five things you should do:

  • Check the title of the property – You want to make sure the property is still in the trust.  At times, if there was a transaction having to do with title (such as a refinance), the property might not be put back into the trust. It is important to do this as you will need to file paperwork to get the property back into the trust prior to selling.
  • Contact the mortgage company – Inform them the owner has passed away and you are the designated personal representative of the estate. Find out if the account is in good standing, how to go about making the mortgage payments and eventually what is the payoff amount. In addition to the mortgage company, you will also need to contact the utility companies.
  • Sort through the personal property – This might be a difficult task since you are still grieving but you can seek help from friends and family or hire a company who can help with this. You can also have an estate sale or donate to charity.
  • Have the house professionally cleaned – Hire someone to do a deep cleaning of the property as well as someone who will help throw away furniture or any other items you will not keep.
  • Hire a real estate agent who is a probate and trust specialist – It is important that you work with a professional who is experienced in the process and can guide you through it.  A specialized real estate agent can be a great source to find estate lawyers, accountants, contractors, handymen, auctioneers, professional cleaners, etc. who you might need to hire in the process.

Featured Photo by Ridham Parikh

Content Photo by Melinda Gimpel 

Real Estate

Six Tips To Keep Yourself Organized When You Tour Homes

Home buying can be fun and exciting but it could also be overwhelming.  Keeping yourself organized can give you more clarity and reduce some of the stress. Here are six tips to keep yourself organized when you tour homes.

Before you start your home search:

  • Know how much you can afford as well as how much you are willing and able to invest.
  • Write down what you must have in a house. For instance the number of bedrooms, bathrooms, location or sq. ft., etc.
  • Write down what you would like but is not a deal breaker. I would list these in order of preference in case there are multiple homes you like with different features from your list.

Once you begin your home search:

  • Take your “must have” checklist with you.
  • Write notes on each house (after seeing several in one day, you can forget which one had what features).
  • At the end of the home tours, write down the pros and cons of each and determine which have the features you must have vs. what you would be okay not having.

As you view more homes, you will find that your criteria might change along the way. Keeping yourself organized and having a professional real estate agent who is in sync with your needs will make the process a lot easier. You will find it easier to decide on a house and be more comfortable with your offer.


Real Estate

Can Emotions Influence a Buyer’s Decision to Buy Your House?

When we think of marketing a house for sale, we think of staging, professional photography, a for sale sign and other advertising. However, although these are important to attract buyers to tour the house, how buyers feel and the impression they get when they walk in the door has a lot to do with their decision to buy. The moment you list your home for sale it becomes a product that you want to appeal to home buyers. You are not only selling the house but also what it can offer emotionally to the new owner…for instance, a feeling of contentment and tranquility or sense of security and well-being. How you present your house, will evoke either positive or negative emotions. Here are four actions you can take to help evoke positive emotions:

Leave the House

If you prefer not to leave for a long period of time, you can wait outside or go for a walk while the buyers are inside. It is very uncomfortable for buyers to tour the home when the seller is there.  They cannot visualize themselves in the home, nor can they explore freely. This hinders the interest they otherwise would have had if they felt more at liberty to tour the home.

Clean and Declutter

Buyers will wonder how the rest of the house has been maintained if it lacks cleanliness and has cluttered appearance.  Put away the dishes, throw away the trash, make the beds, close the toilet lid, pick up any toys, clothes or shoes.  It is an inconvenience to do this every time someone tours the house; however, the feeling of chaos will affect the impression they get and distract them from appreciating other important features of the house.

Let In As Much Natural Light As Possible

The creepy feeling of walking into a dark house is the last thing you want your buyers to remember your home for. Natural light is preferred, but if you are not able to have much natural light, turn on the lights of the house. Not only will natural light make them feel welcome but it will also make the space appear bigger and give them better visibility.

Remove Bad Odors

They say the sense of smell is powerful in provoking memories.  You want buyers to remember your house for its freshness not for the pet, cigarette, trash, or even food smell. You can light up a candle or plug in an air freshener. Opening windows to let fresh air will also help.

An experienced real estate professional will guide you through the process of selling your home from beginning to end.  Put yourself in the buyer’s shoes and provide the experience you would like to have when touring a house yourself. If evoking positive emotions can help sell your home faster, why not take the steps to do so?

Real Estate

5 Steps To Prepare For Your First Home

You would like to buy your first home but don’t know where to start? Here are five things you can start working on:

  1. Establish good credit – You can open a credit card and use it for small purchases you can afford to pay off at the end of the cycle. Or, get a secured credit card at your bank. With this type of credit card, you deposit your own money and only charge up to that amount. You can also ask someone with good credit to add you as an authorized user on one of their credit cards— but, most importantly, pay on time and do not max your cards (tip: use no more than 30% of your credit limit).
  2. Prepare to afford a house – As a general rule, your total housing expenses should not be more than 28% of your gross monthly income; and ALL monthly debt (including housing expenses) should not exceed 36% of your gross monthly income. Housing expenses include, the monthly principal and interest, property tax, homeowner’s insurance, and homeowner’s association (if applicable).
  3. Save, save, save – Down payments can be as low as 3%. In addition, you will have closing costs of around 2-3%. For example, if the price is $500,000, your down payment could be as low as $15,000 and your closing costs between $10,000-$15,000. You could potentially need around $30,000. You can also receive gifts to help with these costs and, depending on your credit, you may qualify for other down payment assistance programs. However, keep in mind that the higher your down payment, the lower your monthly mortgage payment will be.
  4. Crate an emergency fund – Have a separate account with funds you will not use unless it’s for unplanned expenses or other major emergencies. Ideally, this would be three to six months your monthly expenses.
  5. Plan a budget – Budget when you are saving to buy your house and when you buy your house. A budget will help you track bills and pay on time. Also, keep in mind that when you own a house you also have additional utility and maintenance expenses.

Buying a home for the first time can be scary. You might not know where to start. This is why it is so important that you work with a real estate professional who will guide you through the process. When you are ready to buy, get in touch with a real estate agent. They will refer you to someone who can pre-approve your loan and will get you started on your home search.

Real Estate

Is this a Good Time to Sell or Buy My Home?

Volatile interest rates, inflation, and a reset in housing probably have you wondering if it is a good move to sell or buy your home right now.  Interest rates have been going up; housing prices are still at the highest they have ever been; and the media is announcing a housing crisis.

So, what now? Well, first of all, consider all the data before you listen to discouraging reports…there is a greater chance we will have a housing reset and not a housing crash. Secondly, determining whether or not it is a good time to make a move depends on your individual needs. Are you relocating? Are there health or financial reasons? Is there a life event? Or, are you simply tired of paying someone else’s mortgage?

Buyers — Yes, interest rates are higher than a few months ago. However, they will eventually go down again; and you can refinance to a lower rate. And, if the value were to go down (which is not expected any time soon); it will eventually go up again as well. If you are planning on living there long term and you can afford your mortgage payment; a change in value would not be relevant right now.

Sellers — Yes, if you sell now for a higher profit, your replacement home will also cost more than before the inflation creeped up on us. Nonetheless, consider that this is relative; and you can use the equity you gain from the sale as down payment on your new home. If you are concerned about closing and not having a replacement home, consider negotiating to stay some additional time after close of escrow.

I hope this helps to answer if it is a good time or not to make a move.  It might not be the right time to purchase an investment property. However, it could be the right time to buy your home. Your story is different from your neighbors’ so what is right for you, might not be right for them and vice versa.

COVID and Real Estate, Foreclosure Moratorium, Pandemic Response, Real Estate

THE END OF THE FORECLOSURE MORATORIUM IS NEAR

Back in 2020, homeowners whose income was affected by the pandemic were given the opportunity to apply for a forbearance on their mortgage payments. According to a report from the Joint Center for Housing Studies of Harvard University, Black Knight reported that 14% of all mortgage holders filed for a forbearance during the pandemic. By March 2021, 68% of them had already exited the program either by resolving the delinquency or paying off their loans. Eight percent were still working some sort of loss mitigation agreement and 4% were still in delinquency in the first quarter of 2021. They also reported that about 22% of mortgage holders still in forbearance by the time the 18 months are up, have 10% or less equity and more likely will not have enough equity to sell with equity. (jchs.harvard.edu)

Recently, it was announced that the foreclosure moratorium would end July 2021. So, what if you are one of those mortgage holders who is in forbearance and at risk of foreclosure?  What is next?

The Consumer Financial Protection Bureau (CFBP) has implemented protections for you that will take effect on August 31, 2021.

  • Servicers will need to give you time to process your options and consider your situation. They must meet certain steps before they can initiate a foreclosure.
  • Servicers can offer streamlined loan modifications, which cannot increase your payment.
  • Servicers will be required to increase their outreach to borrowers before they can initiate foreclosure.

What are your options:

  • Resume regular mortgage payment. You can ask to defer your missed payments by moving them to the end of the mortgage.
  • Lower monthly mortgage payment. Ask to modify your loan. This can be changing the interest rate, principal balance or the term of the loan.
  • Sell your home. If you find yourself not being able to make your mortgage payments and have enough equity, you may be able to sell with some profit. If you find you do not have enough equity, you may apply for a short sale. Foreclosure should be the last thing to consider if you do not have enough equity.

A servicer can initiate foreclosure if you:

  • Abandon the property;
  • Were more than 120 days behind in your mortgage before March 1, 2020;
  • Are more than 120 days behind on your mortgage payment and have not responded to specific required outreach for more than 90 days; or
  • Have evaluated all options other than foreclosure and there is no other options available. (consumerfinance.gov)

Feel free to contact me if you are currently in forbearance and need guidance on exiting the program, or believe you will need to sell your home. I am here to help. I’ll be happy to guide you through the process.

Real Estate

Owning a Home is Like Minting Money

One of the more persistent myths when it comes to home ownership is the idea that buying a home is a guaranteed positive investment. While it’s certainly true that home values tend to increase, that is not always the case. Further, some studies show that depending on where you live, you may be better off renting, and putting the money you save into an investment account.

The caveat is that it requires you to have the discipline (and luck) to be able to consistently set aside that gap between rent and mortgage costs. Paying against the mortgage is like having a forced savings account, and that wealth slowly but steadily builds up over time. It’s a great way to set aside savings, but that should never be the primary reason to buy a home. And of course, if you can find a few extra dollars, you can still invest.

The caveat is that it requires you to have the discipline (and luck) to be able to consistently set aside that gap between rent and mortgage costs. Paying against the mortgage is like having a forced savings account, and that wealth slowly but steadily builds up over time. It’s a great way to set aside savings, but that should never be the primary reason to buy a home. And of course, if you can find a few extra dollars, you can still invest.

Real Estate

The Sandwich Generation

You might be wondering what is the sandwich generation. This generation usually is between their 40s and 50s; still have children under 18 or grown children they financially support. This generation also cares for elderly parents. A Pew Research Center study found that almost 50% of this generation takes care of a parent 65 years or older and a child under 18 years old. As much as you would like to be there all the time, it can be difficult and you may even have guilty feelings, but there are ways you can still care for your parent and balance your everyday life.

Tips for Caring for Aging Parents

1) If your parent is at home, hire a caregiver or ask a relative to stay with him or her. You can arrange a schedule when assistance is needed the most.

2) If your parent is in a senior home but you are worried about what is going on with the pandemic, consider building a small studio or an accessory dwelling unit where your parent still has privacy and independence but is close enough to you.

3) Consult with a senior care manager to help with coordination and other resources.

4) If space is a concern, consider moving to a bigger home. But, more importantly, take care of yourself; talk about it; and ask for help when you need it.

Real Estate

The Impact of Covid-19 on Homeowners Who are Working from Home

Despite various employers offering telecommuting opportunities prior to the pandemic, the norm for the majority of the employees has always been to be at the office in person. When we had the shutdown last year, both employers and employees had to innovate and learn to adjust to remote work for employees.

They Adjusted to a New Way of Doing Business

Home offices were set in place, office equipment was used at home, and new ways of communicating face to face were implemented. Perhaps, at the beginning it was an inconvenience, but as time went by and social distancing became the norm, both businesses and employees began to see how telecommuting could benefit them.—Businesses would reduce overhead and employees would reduce commuting time.

The Pew Research Center conducted a survey which showed only 20% of employed adults were working from home prior to the pandemic. After the pandemic, it was 71% working from home. And, when asked who would prefer to work from home after the pandemic, 54% said yes.

(Image from Pew Research Center)

How Does it Impact Homeowners

There is no doubt many will remain working remotely whether it’s a couple of days a week or 100%.

Hanley Wood conducted a survey last year asking if employees would consider moving to a new home if they could work remotely, over 36% said yes. And, when asked if they lived in an expensive area if they would move if they could go all remote, 55% said yes.

Homeowners who own their home near their place of employment may now have an opportunity to relocate to the place they have always wanted to live. It may be saving money or simply a change in lifestyle, but relocating may now be possible regardless of where you work.

So, if you have been on the fence about selling your home and relocating, this is the time to do it. The market is hot for sellers. Not only would you be able to profit the most on the sale but you would also be able to negotiate staying in your home until you find your replacement home. Don’t think about it too much. You might miss a great opportunity to sell at the highest profit possible in history!

Real Estate

10 Tips for Personal Representatives of a Living Trust

Your family or friend has chosen you to handle his or her living trust after passing away.  If your loved one chose you, it was more likely because he or she trusted you and believed you had the ability to handle the living trust responsibly.  Managing a living trust could be as easy selling one or two assets to settle the estate.  Or, it can get complicated if the beneficiaries contest or there are certain assets not included in the trust.  Here are 10 tips that could help you during the process.

  • Read the Living Trust and gather all financial information as well as any debt information
  • Request multiple certified copies of the death certificate (you will need originals to liquidate assets)
  • Be informed on the steps and how long it will take to settle the estate 
  • Keep accurate accounting in case the beneficiaries request it
  • Select service providers who are experienced and knowledgeable in probate 
  • Take inventory of all personal possessions and real property
  • Ensure that any real estate is properly insured and bills are paid
  • Obtain date of death values for real estate, valuable personal items, and business interests
  • Seek expert advise to understand the market when selling real property
  •  File tax return and pay taxes if applicable

It is already difficult enough to grieve for your loved one, and now having to deal with the responsibility of settling his or her estate can be stressful.  For this reason, it is important that you work with estate planning attorneys, real estate agents, estate auctioneers, etc. who are experienced in trusts and probate so they can help ease the burden.  If you or anyone you know is going through this situation, feel free to contact me so I can help guide you through the steps and provide you with contact information on other servicers and professionals who can help you. 

Real Estate

5 Things Seniors Need To Consider Before Selling Their Home

There is a lot of emotional attachment in homes where we have created valuable family memories.  It also makes it difficult when circumstances force us to make decisions.  However, it does not need to be this way.  There might be ways that are more beneficial for you.  Here are five things that will help you decide if it is the right time to sell your home.

  1. Do you have financial need? – If you are facing a savings gap, it might be advisable to sell your home to use the profits on a smaller place.  Selling might lower your cost of living but it is important that you move into a location and home that will require you to spend less.
  • Can you afford to stay in the home? – It is important to evaluate the moving expenses first. Besides property taxes, homeowners insurance, utilities, and routine maintenance, you could get unexpected repair expenses.  Are you able to afford this?
  • Would a reverse mortgage benefit you? – If you are a homeowner age 62 or older, you might be able to receive some of your home equity as a lump sum or a line of credit.   This could allow for you to remain longer in your home.
  • Is your health declining? – Do you find yourself depending on others more than usual to take care of your health?  This might be a hint that you either need to have someone move in with you to help with your health needs, have some modifications done on the house, or sell and move to a place that is safer for you.
  • Is the house right for you? – Have your children moved out and the house is too big f now?  Are you living in a two-story home and have a hard time going up and down the stairs?  Does it require too much maintenance?

Whether you choose to sell your home or age at home, there are various resources available to you to help you choose the best option for you.  Make sure you surround yourself with a caring support system.  And, remember you can always contact me to help you how to reach the best decision for your individual circumstances.

Real Estate

The Difference Between COVID-19 Crisis and the Great Recession

Have you been on the fence about buying your home now or waiting to see if home prices come down?  Perhaps, you have heard from people that the real estate market is going to crash because of the COVID-19 economic shut down.  So, I would like to give you four reasons why it is different and why the impact in housing will not be as drastic as it was in the Great Recession.

  • We need to know the problem originated in the housing sector during the Great Recession.  There were some bad loans out there and financial institutions had to be bailed out. COVID-19 did not originate in the housing sector but in public health.  
  • Yes, the COVID-19 shutdown created a high unemployment rate at a very fast speed.  However, according to the Becker Friedman Institute, University of Chicago, 68% of workers who are eligible to receiving unemployment qualify for more than what they would normally earn and 20% will receive two times more their regular earnings.  This option was not available during the Great Recession.
  • Under the CARES Act homeowners are able to apply for forbearance on their mortgage loan up to a year as well as apply for other options such as loan modifications before their house will be foreclosed on.  During the Great Recession, by the time many homeowners had any of these options, their homes were already foreclosed.   And since many of the servicers were not communicating between departments, when one department was approving a loan modification, the other one was concurrently foreclosing on the property.   Also, most homeowners did not have equity in their home during the Great Recession; however, according to Black Knight Analytics the majority of people in forbearance right now have at least 20% equity.
  • There is a low inventory of homes for sale, which are not enough for the number of buyers looking to take advantage of the low interest rates.  Sales slowed down a bit during the stay-at-home order mandate. However, they are starting to pick up with some hot spots selling homes within days.  Interest rates will more likely be low until the end of the year according to the Federal Reserve.

As always, buying or selling depends on your individual needs and circumstances.  Nonetheless, some additional information can be useful.  If you have any questions on buying or selling your home, feel free to contact me. 

Real Estate

How Can Parents Help Their Adult Children Purchase Their First Home?

Have you wondered how you can help your adult child purchase his or her first home?  Well, here are 4 ways you can help them:

  1. Gift them a portion of their down payment
  2. Co-sign as a non-occupant
  3. Give them a gift of equity
  4. Guide them on establishing good credit

Gift a portion of their down payment – You can gift your children a portion or all of their down payment.  However, please note, gift tax may be applicable after certain amount (consult your CPA for more information).  Also, consult with your loan officer on the guidelines for gift funds to learn up to how much money you are able to gift.  It is also a good idea to have “seasoned” funds.  This means the money has been in the bank account for a couple of months already when the loan officer runs the credit report.

Co-sign as a non-occupant – If you trust your children enough to have your name on the loan, 🙂 this is another option.  The lender will use your credit score and debt to income ratio along with your child’s for the loan qualification. When you co-sign as a non-occupant, you are signing off on the mortgage loan and taking responsibility if your child defaults.

Give them a gift of equity – Equity is the difference between the value of your home and how much you owe on your mortgage loan.  If you were to choose to sell your home to your child for less than what it is worth, the difference would serve as part of or their down payment (depending on the amount).  This would mainly benefit your child, but it could save you some time and money if you were already thinking of putting your home on the market and you will be helping your child.

Guide them on establishing good credit – From a young age, teach them the importance of staying out of debt but at the same time, help them establish their credit.  Guide them into opening a bank account and applying for a secured credit card.  Teach them to stay organized and pay their bills and student loans on time.  You can also let your child become an authorized user on your credit card so your good credit can benefit him or her.  Depending on how responsible your child is, he or she might want to apply for a student credit card; but remind them to always pay on time, pay off the balance, and keep the utilization ratio under 30%.  Their cell phone and utility bills may also help in establishing credit.

These are just a few ways you can help your children purchase their first home.  Their credit, income, and debt will still be taken into account when a lender is considering giving them a loan, but your support could make a difference in getting them approved for a better type of loan or interest rate.

As always, I am here to answer any of your real estate questions. Click below to schedule your online session to chat about how you can help your adult children purchase their first home.

Real Estate

Selling Your Home to Purchase a Replacement Home

Have you considered purchasing a new home but have wondered how to buy and sell your current home at the same time? Did you know you can sell your home contingent upon purchasing a replacement home and the time frame and other terms can be negotiated with the buyer?

Schedule your online session to ask me how you can purchase and sell at the same time.