FHA vs Conventional Loans

next homefor sale

There are many different kinds of mortgage loans available in today’s market. How do you know which one is right for you? Your financial institution will have the most up-to-date rates and information regarding specifics for you, but if your dip into the home-buying pool has just started, here is some helpful information about the 2 most common types of mortgage loans: FHA and Conventional.

Conventional loans are issued by a bank or mortgage lender (usually a bank) and your interest rate (variable) is dependent upon your credit score and history. Your income and banking history are also taken into account for your pre-approval amount and ultimately what you will be allowed to borrow. Your interest rate can range anywhere from 3.49% to 3.62 for a 30 year fixed (not variable) mortgage. The less time it takes you to pay it off, the higher interest rate is usually going to be. a conventional 15 year mortgage can range anywhere from 3.87% to 4.12%. Down payment for Conventional loans usually doesn’t falter far from 10%. You will need to verify income with pay stubs as well as bank statements. Pay stubs usually go back about 6 months, bank statements around 2 years. They want to be sure you’ve got a good history with your bank account(s), and rightfully so as only .36% of mortgages went into foreclosure last year. Most banks offer some sort of payment deferment if you do run into financial trouble, they don’t want to foreclose on you! They want to help! If your credit is above 640 and you’ve got a good employment and bank history, you should try for a Conventional mortgage, as even a 1% difference in a mortgage rate means about $30,000 over the course of a 30 year loan.

 

FHA loans are backed by the Federal Housing Administration and are actually still issued as mortgages from a financial institution, but they’re guaranteed through the FHA. That means if you default on the loan, the FHA will step in and pay the bank on your behalf. You may still be foreclosed on, but the bank will be protected. And the foreclosure procedures are much more lenient than with a Conventional mortgage, which basically means they will do anything and everything they can to get you back on track to avoid a foreclosure. FHA loans also require a lower credit score and potentially a lower down payment. If your credit score is between 500-579, you will still be required to have 10% down, but a credit score of 580 and above qualifies you for only 3.5% down! Although you may get a break on a down payment, FHA loans are always fixed and the rate is almost always higher than that of a Conventional loan. Rates as of today on a 30 year mortgage are 4.969%, but for a 15 year mortgage, they are 3.997%. If you’re in a position to afford a 15 year over a 30 year mortgage, it will ultimately save you tens of thousands of dollars. FHA loans also require much more strict inspection requirements, although you will have the chance to fix them (or have the seller fix them!) but EVERYTHING must be up to code by closing date, no exceptions. If you’re interested in the requirements, this article can explain further.

 

Bottom Line: If your credit score allows, try for a Conventional loan. If not, FHA is there for borrowers who need it! Either way, buying a home is the quintessential adult thing to do and it’s closer than you think.

Keep moving forward with your dreams

What You Can Do to Keep Your Dream of Homeownership Moving Forward [INFOGRAPHIC]

What You Can Do to Keep Your Dream of Homeownership Moving Forward [INFOGRAPHIC] | MyKCM

Some Highlights:

  • Don’t put your homeownership plans on hold just because you’re stuck inside.
  • There are several things you can do right now to keep your home search moving forward.
  • Connect with an agent, learn about resource programs for things like down payments, and get pre-approved today.

Cures for Cabin Fever!

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It’s been a long couple of days, and it seems to be getting more and more scary to leave the house. Being stuck inside is hard, throwing kids into the mix makes it a much different challenge! Kids these days need constant entertainment and getting creative is half the battle. Here are a few suggestions to keep everyone from going crazy…

 

  • Hide and Seek: I know it may sound silly, but if you play your cards right, you can take 20 minutes to find them if you want!
  • Glow Sticks: The sun is staying out longer so a glow stick dance party could be just the ticket to earlier bed times! Throw them in the tub and turn off the lights for bath time. Plus, you can get like, a thousand glow sticks for $5.
  • Scavenger Hunt: again, the creativity really is key here. Try to make them solve riddles or problems to get the next clues. Make sure the surprise at the end is sweet! Cookies, brownies, etc.
  • Build a Fort: take all the pillows, chairs, and blankets you can find. Make a maze out of an entire room! Guaranteed to invoke feelings of childhood nostalgia.
  • Coloring Contest: Depending on age and competitive nature of your children, this can also be an hours-long distraction. And you can find a billion pictures to color on the internet.
  • Tik Tok: Ask your kids…..and suddenly it’s dinner time!
  •  Board Games: I know you’ve got a stack in your closet 🙃🙃
  • Card Games: Teach your kids cribbage like your grandma taught you. Also guaranteed nostalgia.
  • Bored Jar: Write down 100 things to do, from doing 50 jumping jacks to vacuuming the stairs to picking snacks and a movie. Every time a child says they’re bored, voila!
  • Indoor camp out: Most everyone owns a tent. Bust out the s’mores for this! Pitch the tent by the TV for an ultimate “Drive-In” experience! Snacks. Snacks. Snacks.
  • Teach them how to make chocolate chip cookies from scratch: It’s a much needed skill, and it ends in chocolate chip cookies 🥰
  • Play chess: It’s scientifically proven to increase brain activity and your kids probably won’t ever beat you!

THE BIG MOVE

moving box

 

Moving sucks. There, I said it. Nobody wants to pay a moving company, especially your husband. He can move that washer and dryer HIMSELF! (No he can’t) If you’re going to give in and pay someone to move everything, I would suggest a local moving company. But if you’re like most of us, that’s just not in the financial cards, especially after buying a new home. I’m outlining some tips to make the tremendous task of moving a little less strenuous, and maybe even a little fun.

 

  1. Use the rule of three. Try to count how many boxes you think you’ll need, then multiply that number by 3! That’s how many boxes you’ll need.
  2. Use smaller boxes. They are SO MUCH EASIER TO CARRY! Your husband will thank me.
  3. Pack up the fine china first. Using newspaper or bubble wrap, carefully pack up all the dishes, pots, pans, cups, basically everything in the kitchen that you hardly ever use. Then, even if you don’t get around to putting those boxes away immediately, you won’t really miss them.
  4. PURGE!!! Anything you don’t need, donate or throw it away. If you’re that attached to it, take a picture of it to remember it by.
  5. Don’t ask your friends. I know this seems like the EXACT scenario where your friends would come in handy, but everyone with a truck knows how annoying that age-old “Will you help me move?” request is.
  6. You’re going to make a mess. Don’t get overwhelmed by the mess, this is bound to happen when you’re moving literally everything you own.

#thinkingofbuyingahome #thinkingofsellingahome

10 Steps to Buying a Home [INFOGRAPHIC]

10 Steps to Buying a Home [INFOGRAPHIC] | MyKCM

Some Highlights:

  • If you’re thinking of buying a home and you’re not sure where to start, you’re not alone.
  • Here’s a guide with 10 simple steps to follow in the homebuying process.
  • Be sure to work with a trusted real estate professional to find out the specifics of what to do in your local area.

Set to Sell

next homefor sale

 

Selling a home can be STRESS-ful, but once it’s done, what a relief! If you’re thinking of selling, contact one of our agents today! And in the process of selling, here are a few tips to help your property sell quickly and smoothly.

  1. Stage your photos.  When you list a property, photos are a buyer’s first impression. The first impression is the only impression. No dirty dishes or visible mess. Make sure you take photos during the day to showcase the natural light in your house, more and more people are turning their thumbs green! Try to de-personalize, everyone has different taste and yours might deter someone else. It’s harder for buyers to imagine themselves in a house with a lot of deco that’s not to their liking.  Try to take photos in spring or summer, sometimes winter photos can be unappealing. Clean all your rooms, vacuum if necessary. Everyone loves vacuum lines! Plus a clean room usually makes it look bigger. Hide the pet stuff. I KNOW, I can’t believe not everyone loves cats as much as me!!
  2. Make it smell good.  Smell is the closest sense to memory so when a place smells good, you literally remember it better. Everyone’s house has a smell and if you don’t know what yours is, ask a friend to come over and help. Some rooms may be a little smellier than others. Wax melts are super cheap and they really do the trick. Use the same scent on every floor, mixing can be dangerous! (Do lemon and sandalwood smell good together? I don’t know!) You can also use essential oils on your air filter or car fresheners on vents to circulate any scent you like throughout the whole house. Take some orange and lemon peels, freeze them in ice trays with water, and put them down your garbage disposal. You can also boil those peels for a fresh scent! If you have pet odor or mildew smell, you’re going to need to get rid of that and not just mask it with scentsy wax, that sometimes makes the odors more pronounced. Find where it’s coming from (pet stains, litter box, mold under the sink, etc.) and fix it.
  3. Include a Home Warranty. This will really put your buyer at ease, and it’s relatively cheap. You’re really offering peace of mind and buying a house is definitely scary! Your agent will have all the information on available plans.
  4. Have your own inspection done. This really shows honesty and transparency. Buyers are able to have their own inspection done, which they should. But offering this information upfront is an easy way to gain trust.
  5. The price is right. Depending on the market, if you’re expecting multiple offers, asking less than market value can usually bring multiple bids, sometimes above market value! If that doesn’t bring the buyers to the yard like you expected, remember you don’t have to accept any offer you don’t like! And you can always raise the price.
  6.  Be honest with your agent. They have the same goal as you: Sell!! Trying to hide a termite infestation or some structural issues is only going to backfire. If you’re not comfortable with something, tell them! They are here for YOU!!

 

Is aging in place right for you?

Does “Aging in Place” Make the Most Sense?

Does “Aging in Place” Make the Most Sense? | MyKCM

A desire among many seniors is to “age in place.” According to the Senior Resource Guide, the term means,

“…that you will be remaining in your own home for the later years of your life; not moving into a smaller home, assisted living, or a retirement community etcetera.”

There is no doubt about it – there’s a comfort in staying in a home you’ve lived in for many years instead of moving to a totally new or unfamiliar environment. There is, however, new information that suggests this might not be the best option for everyone. The familiarity of your current home is the pro of aging in place, but the potential financial drawbacks to remodeling or renovating might actually be more costly than the long-term benefits.

A recent report from the Joint Center for Housing Studies of Harvard University (JCHS) titled Housing America’s Older Adults explained,

“Given their high homeownership rates, most older adults live in single-family homes. Of the 24 million homeowners age 65 and over, fully 80 percent lived in detached single-family units…The majority of these homes are now at least 40 years old and therefore may present maintenance challenges for their owners.”

If you’re in this spot, 40 years ago you may have had a growing family. For that reason, you probably purchased a 4-bedroom Colonial on a large piece of property in a child-friendly neighborhood. It was a great choice for your family, and you still love that home.

Today, your kids are likely grown and moved out, so you don’t need all of those bedrooms. Yard upkeep is probably very time consuming, too. You might be thinking about taking some equity out of your house and converting one of your bedrooms into a massive master bathroom, and maybe another room into an open-space reading nook. You might also be thinking about cutting back on lawn maintenance by installing a pool surrounded by beautiful paving stones.

It all sounds wonderful, doesn’t it? For the short term, you may really enjoy the new upgrades, but you’ll still have to climb those stairs, pay to heat and cool a home that’s larger than what you need, and continue fixing all the things that start to go wrong with a 40-year-old home.

Last month, in their Retirement ReportKiplinger addressed the point,

“Renovations are just a part of what you need to make aging in place work for you. While it’s typically less expensive to remain in your home than to pay for assisted living, that doesn’t mean it’s a slam dunk to stay put. You’ll still have a long to-do list. Just one example: You need to plan ahead for how you will manage maintenance and care—for your home, and for yourself.”

So, at some point, the time may come when you decide to sell this house anyway. That can pose a big challenge if you’ve already taken cash value out of your home and used it to do the type of remodeling we mentioned above. Realistically, you may have inadvertently lowered the value of your home by doing things like reducing the number of bedrooms. The family moving into your neighborhood is probably similar to what your family was 40 years ago. They probably have young children, need the extra bedrooms, and may be nervous about the pool.

Bottom Line

Before you spend the money to remodel or renovate your current house so you can age in place, let’s get together to determine if it is truly your best option. Making a move to a smaller home in the neighborhood might make the most sense.

Why do I need to get pre-approved before I start looking for a home?

Three Reasons Why Pre-Approval Is the First Step in the 2020 Homebuying Journey

Three Reasons Why Pre-Approval Is the First Step in the 2020 Homebuying Journey | MyKCM

When the number of buyers in the housing market outnumbers the number of homes for sale, it’s called a “seller’s market.” The advantage tips toward the seller as low inventory heats up the competition among those searching for a place to call their own. This can create multiple offer scenarios and bidding wars, making it tough for buyers to land their dream homes – unless they stand out from the crowd. Here are three reasons why pre-approval should be your first step in the homebuying process.

1. Gain a Competitive Advantage

Low inventory, like we have today, means homebuyers need every advantage they can get to make a strong impression and close the deal. One of the best ways to get one step ahead of other buyers is to get pre-approved for a mortgage before you make an offer. For one, it shows the sellers you’re serious about buying a home, which is always a plus in your corner.

2. Accelerate the Homebuying Process

Pre-approval can also speed up the homebuying process, so you can move faster when you’re ready to make an offer. In a competitive arena like we have today, being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.

3. Know What You Can Borrow and Afford

Here’s the other thing: if you’re pre-approved, you also have a better sense of your budget, what you can afford, and ultimately how much you’re eligible to borrow for your mortgage. This way, you’re less apt to fall in love with a home that may be out of your reach.

Freddie Mac sets out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

Local real estate professionals also have relationships with lenders who can help you through this process, so partnering with a trusted advisor will be key for that introduction. Once you select a lender, you’ll need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac also describes the ‘4 Cs’ that help determine the amount you’ll be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or Cash Reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

While there are still many additional steps you’ll need to take in the homebuying process, it’s clear why pre-approval is always the best place to begin. It’s your chance to gain the competitive edge you may need if you’re serious about owning a home.

Bottom Line

Getting started with pre-approval is a great way to begin the homebuying journey. Let’s get together today to make sure you’re on the fastest path to homeownership.

Homebuying Checklist

2020 Homebuying Checklist

2020 Homebuying Checklist | MyKCM

Some Highlights:

  • If you’re thinking of buying a home, plan ahead and stay on the right track, starting with pre-approval.
  • Being proactive about the homebuying process will help set you up for success in each step.
  • Make sure to work with a trusted real estate professional along the way, to help guide you through the homebuying steps specific to your area.

What color should you paint your ______room?

paintingWhen selling a house, it’s important to stage it so people feel comfortable when they’re in it. Personally, I love bold colors. My living room is Navy Blue and my dining room is very Green. Obviously not everyone shares my love of colors, especially on walls that everyone who visits will see (and judge). Non-neutrals are harder to color coordinate with decor and furniture, too. Let’s look at the best color for each room in your house.

  • Kitchen-  Warmer colors are said to increase appetite (red, blue, yellow, green) but white and grey are safer. Behr paint actually has a Paint your Place feature on their website to help you visualize any color in any space. Here are a few suggestions for the kitchen: Silver Bullet         Halatian        Natural Almond        Half Sea Fog        Morning Zen
  • Bathroom- This room should look clean at all times, that’s why an off-white or a lighter taupe or beige is a safe bet.         White Veil        Burnished Clay        Statuesque
  • Bedroom- Lavender, Pale Blue and Soft Grey are the top 3 colors for a soothing and peaceful bedroom. I’m not a fan of pastels, but these 3 are pretty muted:         So Blue-Berry        Permafrost        Hush
  • Living Room- If you have an open concept living/dining/kitchen area, one color is best to tie them all together, and what are top 3 colors for living areas? If you said Muted blue, grey and beige, you’re right!! Neutrals really are the best way to capture all the possibilities for potential buyers. It’s also easier to imagine other colors over a light grey wall than a bright green wall.  Here are some more neutral options:        Silver Mine        Sandstone Cliff        Rain Dance

Here is a great article about DIY Painting like a Pro to motivate you this Monday!!