Month: June 2021

If you’re buying your first home this year, you’ll need to be extra savvy. Though competition is fierce on affordable housing, interest rates are still historically low. If you can get a home, now is a great time to do it! When you’re on the hunt for our first home, be sure to avoid these common first-time buyer mistakes:

Thinking you need 20% down payment
Unless you are getting a jumbo loan, you don’t need a 20% down payment. If you chose to put down 20% for a conventional loan you won’t have to pay private mortgage insurance. But the minimum down is 3%. And other loan options may offer as little as 0% down. Of course, the more money you put down the lower your interest rate and payments will be. Talk to your home lender to see what they recommend your down payment be.

Not working with a local home lender
There are a lot of home lenders out there. The reason we recommend a local lender is they have more flexibility with down payments, minimum qualifications, and the type of loan programs they can offer. As an extra bonus, they have connections in your community with realtors, inspectors, builders, and title companies. Local lenders live and work in your community, so they have more of an incentive to give you a positive experience since word-of-mouth (and not national ad campaigns) are how they get new business.

Assuming you won’t qualify
Many renters don’t think they’ll be able to get a loan due to their credit or amount they have saved for a down payment. There are many different home loans, and each has its own qualifications. Some are designed for people with low credit, some offer 0% down payment, and others allow your family to gift you money for your down payment. Rather than assume you won’t qualify, make an appointment with your local home lender to see what programs they have available. They are the experts and will be able to tell you the best way for you to purchase a new home.

Underestimating repair costs
Before you buy a home, hire a good home inspector to get an idea of what repairs it needs. Roofs, floors, appliances, windows… all your home’s features wear out. If you purchase an older home as a starter, you might have to pay more money to keep it in working order. The International Association of Certified Home Inspectors has a great document showing the estimated life expectancy for components in your home. If you’re working with a local lender, they’ll be able to recommend inspectors in your area.

Shopping for a house before you get pre-approved
The best way to start your house hunt is by calling or visiting your loan officer. Together, you’ll set a budget for your home purchase and you’ll get an idea of what your monthly payments will be. They’ll run your credit report and pre-approve you for a home loan. In a competitive market, a pre-approval letter will let the seller know your offer is legit and will almost certainly get funded by your lender.

Not taking advantage of local first-time homebuyer programs
Many states (and some communities) combine closing costs and down payment assistance programs for first time homebuyers. Some states offer tax credits you can use on your federal tax returns too. Your local lender is an expert on the current grants and programs you can take advantage of to save money.

So far in 2021, there are still less homes for sale than before Covid hit us in early 2020.  But there’s an interesting trend in the homes that are being bought. More homes are being sold as secondary homes than in previous years. The National Association of Home Builders reported that 15% of all new home sales in 2020 were for second homes – that’s up from 5.5% from 2018. With housing inventory being so low, this trend is especially significant. Whether they’re buying a vacation home or investing in real estate, why might so many more homes be for secondary purposes?

Take advantage of low interest rates
Even though home prices are high, interest rates are staying low. A buyer will likely overpay for your second home, but since rates are so low, you might still be in a better place financially than if you paid less but interest rates were higher. Some buyers who have had an eye on buying a secondary home may be jumping at the chance to get one with a low interest rate.

Income potential
If your second home is located in an area people like to vacation, you may be in an especially good position to use it for short term rental like an Airbnb. The income from the rental may help offset the cost of HOA dues, mortgage payments, and taxes. Pay attention to how much income potential you have and compare it to the time you’ll spend cleaning the property, advertising, responding to reviews, communicating with guests, filing insurance claims for damage, and booking rentals. The average is 5 hours booking per each rental.

Alternatively, you can do long term rental for your second home. It will take less time to manage but you’ll still have to handle payments, repairs, maintenance, and communicating with your renter. You won’t have the flexibility to use the home as your own vacation spot, but you may make more income overall.

Getaway
How many times have you been somewhere beautiful and dreamed of owning a little piece of that heaven? Owning a true vacation house is something a lot of people aspire to have. You just pack the car and head out for the weekend. If you maintain your home and property, you may be able to sell it for a profit some years in the future. You can even rent it out up to 14 days a year before it’s classified as an income property by the IRS.

Future retirement home
Take advantage of the low interest rates and purchase your retirement home today. You can rent it out and put the income towards the mortgage payments and home upkeep. When you’re ready to retire, you can simply move in a continue to make your mortgage payments until it’s completely yours.

Long term profits
Over time, the value of real estate typically increases. It’s possible to purchase a home now at low interest rates and reap the rewards over time when the home value increases. In order to be successful, you’ll need to know what your total investment in the home will be (factoring in principal, interest, maintenance, taxes, HOA dues, and more) as well as the potential for the home’s value to increase (in that past year, they’ve averaged an increase price of 9.2%).

Whatever your plans for a second home are, be sure to contact your local home lender. They’ll go over your loan options, an estimate of costs, and an estimate of your payments. With their information, you’ll be able to decide whether a second home is right for you.

People toss around terms like split-level and craftsman house styles, but what do they mean? In some regions, some styles are more popular than others. But overall, you’ve probably heard all of most of them. Let’s take a moment to go over how to identify the country’s most popular home styles, starting with the classic ranch.

Ranch

It’s a long low-profile one-story home with a pitched roof, attached garage, big picture windows (often with non-functional shutters), and a sliding door leading to a patio. They were popular in the 1930’s to 1960’s and remain a popular style today. Inside is an open floor plan, vaulted ceilings, and sunken living rooms.

Mid-century modern

It’s a style of home built between the 1930’s and mid 1960’s. They look contemporary and even futuristic from the outside. They showcase large windows, open spaces, sliding glass doors, geometric forms, asymmetry, minimum ornamentation, and a range of colors. Inside, they feature floor-to-ceiling windows, sunken rooms, and lots of doors to access the yard.

Contemporary

This style is easily confused with modern. But, unlike modern, contemporary style is still evolving. It started in the early 2000’s. Outside, the homes are asymmetrical and irregular but with a touch of farmhouse, mid-century modern, and boho styling. The design pushes boundaries and showcase the latest technology including eco-friendly materials, smart home products, and energy efficiency. Inside, it’s all about clean lines, a minimal color pallet, and big windows to let in lots of light. They’re interior design is similar to modern, but much warmer. They have large plants, glass accent pieces, natural stone, natural fibers, and open and flexible floor plans.

Split level

It’s a modern style that has at least three staggered levels connected by short flights of stairs. There is a flight of stairs leading to the front door. Commonly one floor has the kitchen, living room, and dining room. A short flight of stairs goes to the upper level with bedrooms. Another short flight of stairs goes to a basement and recreational room. They often have living spaces above a connected garage. Think of the house from the Brady Bunch – that’s a split level. They became popular in the 1950’s and 1960’s.

Bi-level

When you walk up to a bi-level, the front door is level to the ground. When you open the door, there is a small landing with one short set of stairs going down to the below grade basement level and another going to the above-grade level where the kitchen and living rooms are. Since the basement is partly out of the ground, big windows bring a lot of light to the space. This style of home was popular across America the 1970’s.

Cape Cod

Some of the first homes built in the United States were Cape Cods. They’re efficient, symmetrical, and easy to build. The front door is placed in the center of the first level and opens to the main living spaces. If there is an upper level, it’s considered a half level as it isn’t as large as the one below it – it’s essentially a converted attic space. Some homes feature dormer windows, which are individual windows (dormers) that projects out of the sloping roof to let light into the top level.  They were very popular in the 1950’s and were often built with the second story left unfinished to make them even more affordable.

Colonial

In their most basic format, American colonial homes are rectangular in shape, symmetrical, two story structures. The living room, dining room, and kitchen are located on the first level. Bedrooms are on the upper level. The front door is in the middle of the first story, and the windows all around the house are double hung with individual panes.

Dutch colonial

Once you know what one is, it’s easy to pick them out. For the past 400 years, they’ve looked almost the same. They’ve got Gambrel roofs that are fairly flat on top then slope almost straight down. Sometimes they have dormer windows in the roof, but not always. People often think the roofs look like barn roofs. The design makes the attic space livable without always being considered a two-story house. Originally they were very symmetrical, but over time the style has changed and they became larger with side and rear wings.

Bungalow

The name “bungalow” has its origins in India where it meant a small thatched home. We commonly use the term to define a small 1.5 story house with a low profile. They were incredibly popular around 1900 – 1930’s. Bungalows have a covered porch outside and inside feature a big living room with other rooms located around it. There are many variations on this style including California, Chicago, craftsman, arts and crafts, Milwaukee, and many more.

Victorian

In the late 1850’s, machinery and technology advancements in America allowed builders to incorporate mass produced ornamentation for homes such as beautiful spindles, fancy brackets, and interesting shingles. The style is a tall vertical home with a mix of materials and colors. Inside, they have a grand staircase, high ceilings, many rooms, ornate wood paneling, decorative fireplaces, and hardwood floors covered with rugs.

Tudor

This architecture is based on English styles from the 1600 – 1700’s. They’re easy to recognize with their steeply pitched roofs, front-facing gables (covered windows that come out of the side of the home rather than the roof), brick, and decorative half-timbers filled with stucco or stone between the spaces in the boards. They became popular in wealthy areas of Northern and Eastern parts of the United States from 1900 – 1940’s. Inside, the rooms are asymmetrical and decorated with dark wood from ceiling to floor.

Spanish eclectic

This style has its roots in the architecture of Spain and Latin America with Mediterranean accents. You’ll see them all around the United States, but they’re most popular in Florida, Texas, and California. The roofs are red or reddish-brown tile, the siding is a light-colored stucco, doors are dark wood, and you’ll often see arches over the windows, porch entries, and doors. Inside you’ll find a private courtyard, wrought-iron railings, and beautiful painted tiles along the staircases and floors.

No matter which type of home you like best, when you’re ready to buy one talk to your local Mann Mortgage lender. They’ll help you pick a budget that fits your lifestyle so you can find the perfect house to match.