Wall Street Journal & Forbes: It’s Time to Buy A Home

by The KCM Crew on October 17, 2011 ·

We believe very strongly that now is the time to buy a home. Some will say we are just saying this to create real estate transactions and commissions. Because of that, today we will quote what those outside the real estate profession are saying to the people who look to them for financial advice.

The Wall Street Journal

Last week, in an article entitled It’s Time to Buy That House, the WSJ told their subscribers:

“It’s an excellent time to buy a house, either to live in for the long term or for investment income…Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.”

In an article two weeks ago, MarketWatch.com (the on-line blog for WSJ) told their readers:

“Now could be the best time in history to buy a home.”

Forbes.com

In a report to their subscribers, Capital Economics reported that:

“The previous declines in house prices and the more recent drop in mortgage rates to record lows have created an unusual situation in which the median monthly mortgage payment is more or less the same as the median rental payment.”

Why is this important? Last week, Forbes explained to their readers:

“If rents simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don’t increase with inflation).”

They went on to explain the advantages of homeownership during retirement:

“Even with a dismal 1% growth rate over 30 years, a $300,000 property would appreciate well over $100,000 giving the homeowner an additional nest egg for retirement…

At a time when retirement is becoming much more challenging, an extra $400,000 (or likely more) can make a major difference not to mention the impact of NOT having to pay a mortgage.  How much less would you have to save for retirement if you didn’t pay the mortgage?”

Bottom Line

When the iconic financial newspaper and the iconic financial magazine say that it now makes financial sense to purchase a house, perhaps it’s time to buy a home.

We hope you found this information useful. Thank you for visiting www.BoiseMultipleListings.com.

Research has shown time and again one of the greatest hurdles to
home buying is coming up with the, sometimes dreaded, down
payment. Here are a few softer practical strategies to help you clear
the hurdle and come up with the cash you need.

6 Steps to Saving for a Down Payment

1. Plan for progress – Your Dream Budget.
Saving isn’t all dollars and cents, it’s a little emotional. That’s why we
recommend finding a few visuals to remind you why you’re in the
saving game. They could be photos or a list of features of your dream
home. Whatever your focal point, we recommend storing it close to
your budget, wallet, or in the place you pay bills to remind you of what
you’re working for.

2. Slow your Spending – The 10-day rule.
The biggest enemy of spending is the impulse buy. So, for purchases
over $25 exercise some self-discipline and give yourself 10-days to
decide, Is this purchase for a real need or a want?

3. Avoid the Convenience.
Your mother was right, good things take time…and so do cheap
things. From coffee on the go to lavish meals out, most consumers are
paying quite a bit for convenience. Try to avoid your local convenience
stores and become friends with your kitchen to help your bottom line.

4. Drink More Water.
According to the National Soft Drink Association, the average
American Household spends about $850 annually on sweetened
drinks. In contrast, water costs just a penny per gallon. Do this and
you’ll start your life as a homeowner not only richer, but a bit healthier
too.

5. Track Expenses – Face Your Truth.
We scoured the net and all the experts agree, the only thing more
powerful than creating a budget is actually reading and tracking it. We
suggest you schedule some time with yourself every week to face the
truth about your spending habits and find new ways you can save.

6. Eliminate the excess spending.
Locate the excess in your budget and slash it. Trade the gym for home
workouts, expensive movie nights for checking out free videos from
the library, and keep an eye out at the end of each month for services
you aren’t using.

Saving money for a home purchase is a BIG DEAL. If you’re a first time home buyer be sure to aks us about the American Dream loan program. You need only $1000 into the whole transaction. Sound good? Call us. 208-697-7673.

We hope you’ve found this article helpful. Thank you for visiting www.BoiseMultipleListings.com. Please tell a friend.

What did Cary Grant, Tom Hanks and Richard Pryor have in common? They all  starred in hilarious movies with plots built around their money pit  homes (“Mr. Blandings Builds His Dream House” [1948], “The Money Pit” [1986] and “Moving” [1988], respectively).

But buying  a home through the Boise MLS or the Chuck Jones Group or another agency that turns out to need much more extensive (and  expensive) repairs than originally thought is only funny in the movies. In real life, buying a money pit can nearly drive a new homeowner to lose  their mind – and their shirt.

Fortunately, there are a number of  real-life strategies that real-world buyers can act on to prevent their  own home-buying plot line from including an unfunny lemon of a home. Here are 5 of my personal favorite steps that will help you avoid  buying a money pit.

1.  Attend Inspections. There are lots of things you can outsource and rely on your  professional representatives to do when you’re buying a home, but I’d  suggest you keep attending your home, pest and roof or other specialty  inspections on your own personal to-do list.  When you’re there in  person, the inspector is able to physically show you the items that may  need repair, and give you their professional opinion of how serious and  large needed repairs may actually be at a level of clarity a written  report may lack.

Sometimes, written inspection reports convey minor items (like reversed hot and  cold faucets) as a red-flagged health and safety issue, and more major  items (like a problematic foundation) as something that needs further  inspection.  If you are at the inspection in the flesh, you can brief  the inspector on what level of cost and effort you consider major (and  vice versa), and ask them to help you understand roughly where the  property overall and any individual repairs needed fall, from that  perspective. We recommend Sherlock Homes Inspections 208-466-0242.

2.  Read the Reports and Disclosures. Attending your inspection is just the first step. Reading the inspectors’ reports is critical to avoiding a money pit – both the reports generated by  your own inspectors, and any reports and disclosures provided to you by  the seller. Things to watch for and investigate further in the sellers’ reports and disclosures include:

• repairs the seller completed themselves,
• repeated repairs to the same home system,
• water and leakage issues, and
• any reports of non-functioning mechanical or other systems in the home.

In your inspectors’ reports, make sure to notice:

• repair estimates they offer,
• items that seem like they will have to be completed soon (versus upgrades you can do over the long run)
• items that seem like they might run into big ticket dollar amounts, and
• especially watch for any recommendations that you get a specialist to look at  something – some of the largest potential repairs are often dealt with  in this way by a general property inspector.

It behooves you to follow up on your reading of reports and disclosures by working with your agent to:

• list your questions and concerns,
• ask the inspector(s) and seller any follow-up questions you have,
• obtain follow-up inspections (including obtaining an extension of your inspection contingency, if needed) and
• obtaining reliable repair estimates.

3.  Get Multiple Repair Bids.  While your pest, roof and other inspection specialists may offer you a repair cost estimate with your report, most general property inspectors do not – many states even forbid it by law.  Money pits often occur when  buyers take a place knowing it needs what they thought was a little  work, that actually turns out to be a much more costly or involved  repair, once the actual repair contractor takes a look or starts the  work.

Avoid surprises by getting multiple repair bids from reputable contractors  while you are still within the inspection contingency time frame of your contract. These repair estimates can also provide the basis for any  renegotiation you and your agent choose to initiate with the seller for  price reduction, repairs or increased closing cost credits.

4.  Stop Overconfidence In Its Tracks.  Having managed two extensive remodeling projects myself, I can vouch – unless  you are a construction professional (and sometimes even then!), all but  the most minor home improvement or repair projects tends to take more  time and money to do yourself than you expect at the outset. (With my  own two hands, I took down wallpaper and painted a room in January of  2002, and am still experiencing symptoms of post-traumatic stress  disorder. One room, people.)

Even if you expect to cut costs by doing some work yourself, I urge you to contact and obtain bids on the repairs and upgrades you plan from  actual professionals, so you can at least be armed with the information  about what it will cost to get them done if you can’t complete them for  any reason.

5.  Prioritize Price Reductions and Credits over Seller Repairs. For the most part, I feel that buyers will select their own materials and  repair contractors with more care and are generally more deeply invested in ensuring that repairs are completed to their satisfaction than an  outgoing seller. If you are negotiating with your home’s seller over  repairs that need to happen, discuss with your agent whether it might  make sense to ask for a price reduction or a closing cost credit to  offset the cost of the repairs so you can have them completed to your  standards, and with the materials and by the contractors of your choice, after closing.

We hope you found this information useful. Thank you for reading and visiting our website www.BoiseMultipleListings.com and for shopping Boise homes of sale.

As published in the Idaho Business Review by Brad
Carlson

Zions Bank plans to anchor a 15-story commercial building
tabbed for the so-called “Boise Hole” site in the center of downtown,
the bank and project developer Gardner Co. announced Sept. 19.

Construction is expected to start next spring and
conclude in 2014 at the northwest corner of Eighth and Main streets, where the
site has languished for nearly a decade as an open foundation. Zions will move
staff from other downtown Boise buildings and elsewhere to the new structure,
to be called Eighth & Main.

Gardner Co., with offices in Idaho and Utah, in late July
announced plans to buy the site from Lake Tahoe-based builder Robert Capps. Gardner
has several commercial real estate projects in the Boise area, including the
sizable Portico development largely completed at Franklin and
Eagle roads in Meridian.

The new proposal is smaller than its predecessors, and
calls only for commercial space. Previous proposals included residential condos.

Gardner’s proposed Eighth & Main building will have
two floors of retail space, three levels of parking and 10 stories of upscale office space, officials
with the developer announced. No tenants other than Zions Bank were announced for the
253,000-square-foot building. The Colliers International real estate firm is marketing
space in the planned building.

CTA Architects of Boise and Babcock Design of Salt Lake
City are involved in the Eighth & Main project. The developer plans to seek Leadership in
Energy & Environmental Design certification from the U.S. Green Building Council. A
project cost estimate was not released.

Zions is in preliminary discussions with Gardner Co.
about providing financing, said Michael, Zions Bank executive vice president for real
estate.  Zions has financed other Gardner projects.

The developer plans geotechnical work and some
remediation on the foundation pit, where Gardner evaluated the extent existing concrete footings
could be used, said Boise attorney Geoff Wardle, who represents Gardner Co.

Gardner Co. plans to submit applications with Boise city
planning officials the week of Sept. 19-23, Chief Operating Officer Tommy Ahlquist said.

Zions Bank spokesman Rob Brough said it’s not known how
many floors Zions will occupy. Zions offices in other downtown Boise buildings, and some
other locations in the Boise area, will move to Eighth & Main, he said. The bank’s
downtown branch also will move. Zions Bank President A. Scott Anderson said the top floor
will be a meeting and boardroom facility available to the public.

Now in downtown Boise, Zions occupies all of the first
and third floors of a three-story building at Ninth and Main streets, and about half the second
floor, said Kelly Robertson, Boise-based senior vice president and director of regional credit.
Zions occupies the entire second floor of a building to the north, at Ninth and Idaho streets.

“We’re committed to growth in this market,” Brough said.
Zions operates 26 branch offices and employs 301 in
Idaho. The bank came to the state in 1997 and has increased its share of deposits here
substantially in recent years, Brough said. The bank has been a consistent leader in Idaho in issuing U.S.
Small Business Administration-backed loans.

When it comes to credit, sometimes the largest challenge is the most  difficult to surmount: we simply don’t know what we don’t know, so our  assumptions and inaccurate beliefs run wild and free through our mental  real estate. Most of the time, there’s no harm; following finance  fundamentals like paying every bill on time, every time, keep us out of  credit danger zones.

But when it’s approaching the time to buy, refi or even rent a home here in the Treasure Valley whether tracked on the Boice MLS or by other sources tracking Boise Real Estate home sales  relatively small credit score differences can stop  you from getting your dream home, and can cost (or save) you thousands  of dollars in interest over the life of your loan.

If you’re at a time in your life where it makes sense to invest some time  and effort into optimizing your credit score, here are five common  credit myths we’d like to help you bust without further ado:

Boise Homes for Sale:

Myth #1:  Having lots of cash, a great income, or tons of equity, makes your FICO score less relevant.

Fact: No matter how much cash you have, if you want a mortgage, you must meet  the lender’s FICO score guidelines.  Of course, if you’re flush with  cash, it should be relatively easy to make your monthly payments on  time.  But if you have come into cash relatively recently or you’re coming  off a rough financial patch, lenders don’t not look at your credit score on the theory that your other assets diminish your credit riskiness. Most lenders want nothing more than to avoid  having to foreclose on a home, even if the homeowner has other assets.

And the best predictor of whether you’ll default on a loan in the  future is how you’ve handled your credit in the past, so your credit  score will drive whether you qualify for a home loan and what interest  rate you’re charged, no matter how much you make.

Two exceptions: if you buy a home with all cash, or take a hard money loan, which usually requires a much larger-than-average down payment and  interest rate, you might be able to bypass credit score scrutiny, but  you’ll pay for it.

Myth #2:  Having no debt or no late payments means you have great credit.

Fact:  Financial responsibility and good credit are two different things.  Your FICO score is meant to be a measure of your responsibility when it  comes to managing debt, as proven by the fact that you have credit  accounts, use them regularly and don’t abuse them.

Having no credit accounts or debts doesn’t give you good credit – it gives you no credit.  And on the other end of the credit usage spectrum, being  maxed out on various credit accounts all the time, submitting lots of  credit applications and other credit moves that indicate you may abuse  your credit can actually depress your score.  Best practice is to have  several credit accounts (student and car loans count!) that you actively and responsibly use on a monthly basis.

Tip: FICO gives a top score to  accounts with balances that are 30 percent of the credit limit, so if  you can keep your credit card or loan account balances at or around that mark, even better.

Myth #3:  Checking your own credit score in advance prevents surprises when you apply for a mortgage.

Fact:  Your mortgage originator (broker or banker) must pull their own  version of your report from their own provider, and it might have a very different score, rating scale or even different line items than the  free or paid report you pulled online.  This is why it’s imperative to  start working with a mortgage professional as early as possible – a year in advance is not overkill – so you can detect any errors or issues and get their recommended fix in the works with plenty of lead time.

Myth #4: If you’ve had a foreclosure or short sale, your credit report will be damaged for 7 years.

Fact: Derogatory credit items, like late mortgage payments, foreclosures and short  sales, appear on your credit report for 7 years, but your credit score  can be rehabilitated enough to buy a home or obtain other credit in less time, depending on your circumstances. Your post-short sale or foreclosure waiting period depends on a number of things, including  what type of loan you’ll be seeking to buy your next home with, how much cash you’ll have to put down and whether there were any extenuating  circumstances involved in losing your home in the first place; some  loans allow for an immediate purchase, others require a waiting period of 2, 4 5 or even 7 years after the loss of a home.

Of course, your FICO score is also a key criteria in a post-home loss “buy,” but interestingly enough, the length of time it takes to get your FICO score back up depends on how high it was beforehand.  Earlier  this year, the New York Times reported that it would take a consumer  with a 680 FICO score three years after a foreclosure to bring their  score back to that level, while it might take someone with a 780 FICO  score (near-perfect) seven years for full score recovery.

And keep in mind that as your foreclosure or short sale ages, its impact on your score will decrease, too.

Myth #5:  Short sales have much less impact on your credit score than foreclosures.

Fact: Hear ye, hear ye – short sales and foreclosures have the same impact on your credit score, according to the FICO folks themselves. (The only  exceptions are for short sales or deeds-in-lieu of foreclosure where the property was not upside down, which are few and far between, if they’re not just a real estate urban legend!)

However, the number of missed payments you had before your home was lost to  foreclosure or short sale might weigh on how gravely injured your FICO  score is in the process. At the going rate at which banks are  foreclosing on homes – clocking roughly 2 years of missed payments  before a home is repossessed – your FICO score could take an even  greater hit than if you were able to divest of it via a short sale in 1  year’s time.

TIP: If you’re a first time home buyer I’d recommend checking out US Bank’s American Dream Program. Call Heidi Bateman of US Bank for all the details at 208-373-8704 or Click Here.

We hope you find this information useful. Thank you visiting www.BoiseMultipleListings.com.

August Existing-Home Sales Rise Despite Headwinds, Up Strongly from a Year Ago