How to Make the Most of a Seller's Market

All signs point to plenty of buyers looking to sell homes, but most areas of Cincinnati are seeing low inventory. Homes are going pending quickly, especially the best ones in "move-in ready" condition. If you've been thinking about selling your home, this may be a great time to get a custom market evaluation from me to learn what your home might sell for and how to best prepare your home to sell.

The most successful buyers have thoroughly researched their financing options and are ready to make an offer quickly after seeing a home. Most sellers will not accept an offer that does not have a solid mortgage pre-approval letter, or proof of cash funds. So, if you are thinking about buying and you have not yet started the pre-approval process, it's time to get on that! I have some recommended lenders for you on the Helpful Info tab above. If you are worried about affording a home, be sure to ask about available grant programs which offer money toward your down payment and/or closing costs. And if you want to buy but also have a home to sell, I can help you estimate appropriate timelines for marketing your home and finding the next one!

Is it time to refinance?

Picture this: you'd like to sell your home and move to a new one, but you haven't built up enough equity in your home for that to make financial sense. This is the case for many homeowners who may at one point have been underwater, but have watched home values slowly rise (or not so slowly, depending on what part of the country you're in).

There may be a solution -- not an instant fix, but nonetheless a smart step on that path to owning the new home you have in mind. Mortgage rates are still nice and low and qualifying should be easier than anytime in the past several years. However, rates are expected to rise this year which would once again make refinancing impractical for millions of homeowners. 

Refinancing helps you, when it's done intelligently, by helping you capture more of the equity in your home and locking in a lower monthly payment. For example, I purchased a home in 2009 with an FHA loan and refinanced in 2011 when I saw property values rising dramatically -- meaning that I already had more equity in my home just due to market activity. And since I was pretty sure I was moving within the next 3 years (I was right), I chose a 5/1 ARM at 2% interest, which cut my payment dramatically. I did have to pay closing costs out of pocket, which I was able to do, but I no longer had to pay mortgage insurance. Plus, I was able to pay bi-weekly which meant an extra payment a year...so when I sold my home in 2013 I was able to walk away with a good amount of cash.

For more information on refinancing, check out this article from TheTruthAboutMortgage.com or talk to your favorite lender -- and if you're looking for a lender in the Cincinnati area, check out my Helpful Information page for some referrals!

Want To Buy That $40,000 Home? No. You Don't.

You've all heard the stories -- finding that gem of a foreclosure way below market price that only needs a new furnace and some cosmetic updates, bought by a savvy investor or lucky owner-occupant. Have you been hoping to find the $40,000 property in a $100,000 neighborhood that only needs a new roof, not a new foundation? I'm here to tell you that the likelihood of that happening anymore is very, very small. Infinitesimal. The homes I've been showing in Hamilton, Clermont and Brown counties that are in this price range are not worth fixing up -- you will never ever get your money back. Sounds harsh even to me, but there you have it. That's the bad news.

The good news is this: if you have an income that has been nice and steady for the past two years, average credit, and the will to commit to home ownership, qualifying for a mortgage is probably MUCH easier than you think. Plus, there are plenty of low down payment mortgage options for you to choose from: FHA with 3.5% down and recently lowered mortgage insurance premiums, USDA in many rural areas with 0% down payment, VA loans for veterans of the military with no mortgage insurance premium, the new Freddie Mac Home Possible Advantage with 3% down -- many lenders are even offering 5% down conventional loans.

Will you end up paying more for a house if you make a smaller down payment? Yes, probably. Unless you make extra payments and pay down the principal balance over time. But it still beats renting, and as long as you take good care of your home chances are you will see a return on your investment.

How Much Do You Need For A Down Payment?

According to a survey from RealtyTrac, buyers in 2014 put down an average of 14%, and more in higher-priced markets. Surprisingly, younger buyers appear to have made higher down payments at an average of 17%. It's important to note that while RealtyTrac surveyed over 350 counties, most of these appear to be on the coasts.

3.5% down payment FHA loans, and 5% down conventional loans are increasingly popular -- and publicized -- in the Midwest, including greater Cincinnati, where lower sale prices (as compared to coastal states) mean that first-time home buyers and others who may not have large amounts of cash available for a down payment are competing against people in similar situations rather than those able to fork over 24% which is the average in some luxury markets.

What does this mean for you? Talk to a few lenders to get a good idea of what types of loans you qualify for, and talk to a Realtor about what you need to be competitive in your local market.