Do I Really Need a 20% Down Payment to Buy a Home?

Do I Really Need a 20% Down Payment to Buy a Home? | MyKCM

Is the idea of saving for a down payment holding you back from buying a home right now? You may be eager to take advantage of today’s low mortgage rates, but the thought of needing a large down payment might make you want to pump the brakes. Today, there’s still a common myth that you have to come up with 20% of the total sale price for your down payment. This means people who could buy a home may be putting their plans on hold because they don’t have that much saved yet. The reality is, whether you’re looking for your first home or you’ve purchased one before, you most likely don’t need to put 20% down. Here’s why.

According to Freddie Mac:

“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”

If saving that much money sounds daunting, potential homebuyers might give up on the dream of homeownership before they even begin – but they don’t have to.

Data in the 2020 Profile of Home Buyers and Sellers from the National Association of Realtors (NAR) indicates that the median down payment actually hasn’t been over 20% since 2005, and even then, that was for repeat buyers, not first-time homebuyers. As the image below shows, today’s median down payment is clearly less than 20%.Do I Really Need a 20% Down Payment to Buy a Home? | MyKCM

What does this mean for potential homebuyers?

As we can see, the median down payment was lowest for first-time buyers with the 2020 percentage coming in at 7%. If you’re a first-time buyer and putting down 7% still seems high, understand that there are programs that allow qualified buyers to purchase a home with a down payment as low as 3.5%. There are even options like VA loans and USDA loans with no down payment requirements for qualified applicants.

It’s important for potential homebuyers (whether they’re repeat or first-time buyers) to know they likely don’t need to put down 20% of the purchase price, but they do need to do their homework to understand the options available. Be sure to work with trusted professionals from the start to learn what you may qualify for in the homebuying process.

Bottom Line

Don’t let down payment myths keep you from hitting your homeownership goals. If you’re hoping to buy a home this year, let’s connect to review your options.

What’s the Difference between an Appraisal and a Home Inspection?

What’s the Difference between an Appraisal and a Home Inspection? | MyKCM

If you’re planning to buy a home, an appraisal is an important step in the process. It’s a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. It’s also a different step in the process from a home inspection, which assesses the condition of the home before you finalize the transaction. Here’s the breakdown of each one and why they’re both important when buying a home.

Home Appraisal

The National Association of Realtors (NAR) explains:

“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”

When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.

This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.

However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.

Home Inspection

Here’s the key difference between an appraisal and an inspection. MSN explains:

In simplest terms, a home appraisal determines the value of a home, while a home inspection determines the condition of a home.”

The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.

Bottom Line

The appraisal and the inspection are critical steps when buying a home, and you don’t need to manage them by yourself. Let’s connect today so you have the expert guidance you need to navigate through the entire homebuying process.

Why Moving May Be Just the Boost You Need

Why Moving May Be Just the Boost You Need | MyKCM

As we look back over the past year, we’ve certainly lived through one of the most stressful periods in recent history. After spending so much more time at home throughout the health crisis, some are wondering if they should move to improve their mental health and well-being. This is no surprise since the U.S. Census Bureau reported an increase in the percentage of adults with symptoms of anxiety and depression in a recent Household Pulse Survey.

There’s logic behind the idea that making a move could improve someone’s quality of life. When people change their scenery, they often feel happier. Catherine Hartley, an Assistant Professor at New York University’s Department of Psychology and co-author of a study on how new experiences impact happiness, mentioned:

“Our results suggest that people feel happier when they have more variety in their daily routines—when they go to novel places and have a wider array of experiences.”

If you’re looking for a new experience, planning a move into a new home may be something you’ve started to consider more carefully. If so, you’re not alone. The 2020 Annual National Movers Study by United Van Lines shows:

For customers who cited COVID-19 as an influence on their move in 2020the top reasons associated with COVID-19 were concerns for personal and family health and wellbeing (60%)desires to be closer to family (59%); 57% moved due to changes in employment status or work arrangement (including the ability to work remotely); and 53% desired a lifestyle change or improvement of quality of life.”

So, if you’re thinking of moving this year to help boost your happiness factor, here are a few questions to ask yourself as you make your decision.

How’s the Weather?

Is the weather something that’s important to you? Does it have a tendency to impact your mood? The World Population Review shares:

“What states have the best weather? When evaluating each state for temperature, rain, and sun, some states stand out. Although climate and weather preferences are personal and subjective, some criteria are considered to make up the best weather, according to Current Results:

  • Comfortable temperatures from 63°F to 86°F for more than half of the year.
  • Dry weather with no more than 60 inches of rain per year.
  • Mostly clear skies with an average of sunshine for at least 60% of the year.”

“Better weather” can mean different things to different people – some prefer the heat, others cooler temperatures, and some want to experience all four seasons. Think about what makes you feel happiest if you’re looking for a new location.

Should I Choose the City, Suburbs, or Country?

With the COVID-19 pandemic, some people are deciding to move to lower-density areas. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), mentions:

“The third quarter Home Building Geography Index (HBGI) reveals that a suburban shift for consumer home buying preferences in the wake of the COVID-19 pandemic is accelerating as telecommuting is providing consumers more flexibility to live further out within large metros or even to relocate to more affordable, smaller metro areas.”

Can you work from home? Are you open to a longer commute in the future? If so, a move to the suburbs or even a quieter rural area may be a win for you. Or, if you’ve always dreamed of life in the city, now may be your chance to move into town.

Bottom Line

As we look beyond the trials of the pandemic, many are hoping for a new beginning, and that may mean moving. Let’s connect today to talk about your new goals and options in today’s market.

Four Expert Views on the 2021 Housing Market

Four Expert Views on the 2021 Housing Market | MyKCM

The housing market was a shining star in 2020, fueling the economic turnaround throughout the country. As we look forward to 2021, can we expect real estate to continue showing such promise? Here’s what four experts have to say about the year ahead.

Lawrence Yun, Chief Economist, National Association of Realtors (NAR)

“In 2021, I think rates will be similar or modestly higher, maybe 3%…So, mortgage rates will continue to be historically favorable.”

Danielle Hale, Chief Economistrealtor.com

“We expect sales to grow 7 percent and prices to rise another 5.7 percent on top of 2020’s already high levels.”

Robert Dietz, Senior Vice President and Chief EconomistNational Association of Home Builders (NAHB)

“With home builder confidence near record highs, we expect continued gains for single-family construction, albeit at a lower growth rate than in 2019. Some slowing of new home sales growth will occur due to the fact that a growing share of sales has come from homes that have not started construction. Nonetheless, buyer traffic will remain strong given favorable demographics, a shifting geography of housing demand to lower-density markets and historically low interest rates.”

Mark Fleming, Chief Economist, First American

“Mortgage rates are expected to remain low for the foreseeable future and millennials will continue forming households, keeping demand robust, even if income growth moderates. Despite the best intentions of home builders to provide more housing supply, the big short in housing supply will continue into 2021 and likely keep house price appreciation flying high.”

Bottom Line

Whether you’re ready to buy or sell a home in 2021, if you’re planning to take advantage of the market this winter, let’s connect to talk about the opportunities available in our local market.

Virtual Home Learning and Work Spaces

Attachment-1-2020-08-02T173634.390 “This time of year is one of my favorites because I feel like back-to-school is a time for new beginnings and goals. Never did I imagine that this start to the school year would begin with remote learning. While virtual learning is not a new concept for the kids as they learned from home in the spring, starting a school year this way feels very strange.

First, the kids will not get to meet their teachers in the classroom. Also, our kids will not be filling up their back packs and picking out an outfit for the first day. It will really be hard for the first day of school to feel like a “real” first day! 

While the kids did just fine with online learning in the spring, I will admit that everyone (including me!) lost our learning “enthusiasm” by the end of the school year. At the beginning of the quarantine, we made sure to get dressed and ready for the day. By the end of the school year, my kids were doing their work in pajamas!

I really want to help the kids stay positive and excited about school. One way I am doing this is by creating cute and fun homeschool set up for the kids!

This past weekend, I spent a few hours rearranging my home office which will not also be a part time classroom. I did not have to spend a lot of money and I was able to gather items I had around the house.

How to Create a Homeschool Set Up in a Small Space

There are a  few things to consider when creating a virtual or homeschool set up in a small space.

1. Pick a space that will have the least amount of distractions. 

You certainly do not need to spend money to create a homeschool work area! And you most certainly do not need a decorated space. The main thing is that it is a space that is free of clutter and distraction!

It is easy for kids to get distracted from learning at home. So, ideally your homeschool area is away from toys, the TV or any other popular distraction in your house!

2. Find a spot that will be dedicated to school. 

This might seem obvious, but you want to find a spot in the house that is solely used for home school.

In the spring when we started virtual learning, my kids mainly used our dining room. Which worked out for a short period of time but it did become a pain to move all of the schoolwork out of the way every  night for dinner. Plus, I did not love having our dining room table covered in school stuff all the time.

3. Decide if all of your kids will share one space. 

A few weeks ago I mentioned that we were looking for  new desks for the kids. We ended up ordering these drawer units from Ikea and then we will add a wood top to the drawers. This shared desk will be for the boys’ room.

However, realistically, I know that my boys will not be able to work together in the same room all day! My second grader will require a lot of attention. Whereas my sixth grader will work mostly independently. Therefore, I decided to use some space in my home office to make a small homeschool set up. 

Then, I can keep a close eye on my second grader while I am working in my office. Also, I hope that my older kids will use this homeschool area too just for a change of scenery!

4. Utilize bins and baskets to organize supplies

Make it easy for the kids to reach for their school supplies by organizing those items into small bins and containers. You can find organization bins at the Dollar Tree, Homegoods and Target. Just a few things to keep supplies organized will make a big difference especially if desk space is limited.

5. Create a warm and inspiring place. 

You do not need to run out and create a simulated classroom for your kids! But at the same time, if you can bring some elements to make the small space feel like a learning environment. Between a few quick trips to the Dollar Store and Michaels, I was able to find a few inexpensive homeschool decor items that made our room feel special.

6. Shop your home for home school decor

I did not really want to invest money into our homeschool set up. Mainly because I do not know how long my kids will be learning at home. Plus, we did just purchase new permanent desk area in the boys room. This homeschool area is more of a temporary set up. Whether we will be using this set up for a few months or an entire school year remains to be known!

So, before I ran out and purchased anything new for the home school room, I shopped my own home!

Here are a few budget friendly homeschool decor ideas:Attachment-1-2020-08-02T182934.143

  • Use books to decorate your home school set up. Books are a FREE way to decorate!
  • Display your kids’ artwork as decor! Art provides a colorful and whimsical look to a school room. Kids love seeing their work displayed. The nice thing is that you can rotate the art work for a whole new look.
  • Mason jars are a cheap way to organize writing supplies. I found this pencil mason jar at a local sale but this set of school themed mason jars are so cute!
  • Chalkboards are another great home school decorating idea!

Decorating Ideas for a Small Homeschool Set Up

I did not need to purchase much for our homeschool set up. But, there are so many cute things at Michaels and Target, that I wanted to buy a few things.

Every year we have a back-to-school dinner so I bought these fun laminated maps  and social system poster for the occasion. (Available at Michael’s in store only) These place mats are also perfect for our home school table. Attachment-1-2020-08-02T195939.298

When I spotted this pencil border (only $.99!) I knew I wanted to find a place for it to go. So, I taped the pencil border to the front of the book shelf. My mom was a 2nd grade teacher and I loved going to set up her classroom with her. I remember she would pick a new bulletin board theme each year. 

I found the storage boxes at a local close out store. The boxes are great for storing extra supplies!

A little plant always brightens up a room. This plant is the only kind that I can actually keep alive:)

We are so happy with how the homeschool room turned out. All of my kids LOVED it. Despite the start of the school year not going as hoped, I feel a lot better about having a fun and cute space to learn at home!”

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