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Should You Buy A Home Warranty?

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Should You Buy A Home Warranty?When you buy a new house, the first thing you want to do is protect your investment. You already have property insurance. Should you also buy a home warranty?

What Is A Home Warranty?

A home warranty is not the same thing as insurance. Home warranties are service contracts. If a covered item breaks down and it is covered in the terms of the warranty, the home warranty company will pay to fix or replace that item.

What is Covered Under A Home Warranty?

Every home warranty contract is different but generally, a home warranty may cover items like major kitchen appliances, HVAC components, sump pump, in-home sauna or spa tub, and/or ceiling and exhaust fans.

Often, a homeowner can get an extended warranty contract that covers items like the washer and dryer, garage door opener, septic system and swimming pool components.

Understand The Costs

A basic home warranty costs between $350 and $500 annually, depending on what coverage you get. However, if something does break, you will also be on the hook for incidentals like service call fees or a deductible.

Know The Benefits

There are considerable benefits to having a home warranty contract in place, especially when something expensive breaks down, like a furnace. There is a lot of peace of mind knowing that you will be able to quickly get something fixed in your home.

You Might Already Be Covered

Your homeowner’s insurance policy might cover some of the same things that are covered with a home warranty. So you could be paying for duplicate coverage on some items. However, your homeowner’s insurance likely will not cover a dishwasher that needs to be replaced or a fridge that suddenly goes out.

There Are Alternatives

Finally, before you pay for a home warranty, remember that there are alternatives. For example, most HVAC companies offer financing options to buy a new furnace. Most appliance stores also offer financing on major purchases like refrigerators and dishwashers. You could save your $500 or so a year and put it in a savings account for a rainy day instead of gambling that you might have a major repair or purchase that year.

There are pros and cons to home warranty plans. Just be sure you fully understand both sides of the issue before you sign on the dotted line.

 

The Most And Least Expensive Cities In America

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The Most And Least Expensive Cities In AmericaThe cost of living in America varies widely in different parts of the country. In general, it is less expensive to live in the country than in the cities.

However, there are many cities where the cost of living is modest compared to others where the money needed to live there is outrageous in comparison.

These rankings came from comparing the monthly cost of renting a one-bedroom apartment, utilities, the price for gasoline, and the cost of groceries.

The Ten Lowest-Cost Cities For Renters

From Texas and Ohio to New Mexico and Arizona, there are some nice cities in this low-cost group.

The top ten lowest-cost cities are:

  1. El Paso, Texas
  2. Lincoln, Nebraska
  3. Toledo, Ohio
  4. Wichita, Kansas
  5. Louisville, Kentucky
  6. Tulsa, Oklahoma
  7. Memphis, Tennessee
  8. Lexington, Kentucky
  9. Albuquerque, New Mexico
  10. Mesa, Arizona

For the top ten lowest-cost cities, the total monthly expenses for two adults ranges from just under $1,200 per month in El Paso to just over $1,500 per month in Mesa. These cities are a great deal when compared to other cities.

In America, the median rent of $1,566 per month is more than the total amount needed to live in these low-cost cities.

The Ten Highest-Cost Cities For Renters

It is not surprising that the biggest metropolitan areas are on the high-cost list.

The top ten highest-cost cities are:

  1. San Francisco, California
  2. New York, New York
  3. San Jose, California
  4. Oakland, California
  5. Boston, Massachusetts
  6. Jersey City, New Jersey
  7. Washington, D. C.
  8. Los Angeles, California
  9. Seattle, Washington
  10. Irvine, California

For the top ten highest-cost cities the total monthly expense for two adults ranges from just over $2,000 per month in Irvine to over $4,200 per month in San Francisco. For those wanting to live in the “City by the Bay” of San Francisco, both of the people in a couple better have an incredibly well-paying executive position to be able to afford to live there.

What About Home Buying?

The national median home price in America is $229,000. The city with the highest median home price is San Francisco at $1,352,000. New York is only $672,000 in comparison. The median home price in El Paso is $129,800; however, El Paso does not have the lowest-priced homes in the country.

The Top Ten Cities With The Lowest-Priced Homes

There are many cities where the homes sell at bargain prices for under $100,000, these include:

  1. Detroit, Michigan — Median home value: $42,800
  2. Dayton, Ohio — Median home value: $66,500
  3. Cleveland, Ohio — Median home value: $67,600
  4. Lansing, Michigan — Median home value: $77,100
  5. Buffalo, New York — Median home value: $77,800
  6. Toledo, Ohio — Median home value: $78,600
  7. Rochester, New York — Median home value: $79,400
  8. Akron, Ohio — Median home value: $80,100
  9. South Bend, Indiana — Median home value: $81,100
  10. Brownsville, Texas — Median home value: $85,900

Conclusion

There are bargains to be found in many parts of America for those that do not have to live in the big cities.

Many younger people are now part of the “gig” economy. They do all of their work online and can work from anywhere that has a decent Internet connection. For these young people, finding a lost-cost city in America to live in and finding a modestly-priced home to buy is not limited to any particular area.

What’s Ahead For Mortgage Rates This Week – June 8, 2020

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What's Ahead For Mortgage Rates This Week - June 8, 2020Last week’s economic news included readings on construction spending and labor reports on public and private sector jobs and the national unemployment rate. Weekly readings on mortgage rates and first-time jobless claims were also released.

Construction Spending Falls in April

The Commerce Department reported lower than expected deficits in consumer spending in April. Construction spending fell by -2.90 percent from the March reading of 0.00 percent growth in spending; analysts expected 6.80 percent less construction spending for April due to the Coronavirus pandemic.

Additional declines in construction spending are expected for May and June as impacts of the Coronavirus and uncertain economic conditions lessen demand for homes. Residential construction spending fell by 4.50 percent in May.

Mortgage Rates Mixed as  Initial Jobless Claims Fall

Freddie Mac reported higher rates for 3-year fixed-rate mortgages, which increased an average of three basis points to 3.18 percent. Rates for 15-year fixed-rate mortgages were unchanged at an average of 2.62 percent. Rates for 5/1 adjustable rate mortgages fell by three basis points to an average rate of 3.10 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable-rate mortgages.

First-time jobless claims fell last week but were much higher than readings reported before the coronavirus outbreak. States reported 1.88 million new jobless claims, which exceeded expectations of 1.81 million new claims and fell short of the prior week’s reading of 2.13 million initial jobless claims.

2.23 million initial jobless claims were filed last week including claims made under federal programs. 3.21 million total jobless claims were filed the prior week.

Jobs Reports Show Mixed Results In May

ADP reported -2.76 million private-sector jobs lost on a seasonally-adjusted annual basis as compared to April’s reading of -19.60 million jobs lost. The government’s Nonfarm Payrolls report showed 2.50 million more public and private-sector jobs than were reported in April.

Analysts expected -7.25 million fewer public and private sector jobs in May as compared to April’s reading of -20.70 million jobs lost.

The national unemployment rate dipped from April’s rate of 14.70 percent to 13.30 percent in May. Analysts expected the national unemployment rate to reach 19.00 percent in May.

Lower unemployment readings suggest that the economy is recovering at a faster pace than originally estimated, but recent civil unrest may cause another wave of coronavirus cases as protesters failed to observe social distancing protocols.

What’s Ahead

This week’s scheduled economic reports include readings on inflation and consumer sentiment. The Federal Reserve’s Federal Open Market Committee is set to meet next week, but this meeting may be canceled due to the Coronavirus pandemic.

What’s Ahead For Mortgage Rates This Week – June 8, 2020

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What's Ahead For Mortgage Rates This Week - June 8, 2020Last week’s economic news included readings on construction spending and labor reports on public and private sector jobs and the national unemployment rate. Weekly readings on mortgage rates and first-time jobless claims were also released.

Construction Spending Falls in April

The Commerce Department reported lower than expected deficits in consumer spending in April. Construction spending fell by -2.90 percent from the March reading of 0.00 percent growth in spending; analysts expected 6.80 percent less construction spending for April due to the Coronavirus pandemic.

Additional declines in construction spending are expected for May and June as impacts of the Coronavirus and uncertain economic conditions lessen demand for homes. Residential construction spending fell by 4.50 percent in May.

Mortgage Rates Mixed as  Initial Jobless Claims Fall

Freddie Mac reported higher rates for 3-year fixed-rate mortgages, which increased an average of three basis points to 3.18 percent. Rates for 15-year fixed-rate mortgages were unchanged at an average of 2.62 percent. Rates for 5/1 adjustable rate mortgages fell by three basis points to an average rate of 3.10 percent. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable-rate mortgages.

First-time jobless claims fell last week but were much higher than readings reported before the coronavirus outbreak. States reported 1.88 million new jobless claims, which exceeded expectations of 1.81 million new claims and fell short of the prior week’s reading of 2.13 million initial jobless claims.

2.23 million initial jobless claims were filed last week including claims made under federal programs. 3.21 million total jobless claims were filed the prior week.

Jobs Reports Show Mixed Results In May

ADP reported -2.76 million private-sector jobs lost on a seasonally-adjusted annual basis as compared to April’s reading of -19.60 million jobs lost. The government’s Nonfarm Payrolls report showed 2.50 million more public and private-sector jobs than were reported in April.

Analysts expected -7.25 million fewer public and private sector jobs in May as compared to April’s reading of -20.70 million jobs lost.

The national unemployment rate dipped from April’s rate of 14.70 percent to 13.30 percent in May. Analysts expected the national unemployment rate to reach 19.00 percent in May.

Lower unemployment readings suggest that the economy is recovering at a faster pace than originally estimated, but recent civil unrest may cause another wave of coronavirus cases as protesters failed to observe social distancing protocols.

What’s Ahead

This week’s scheduled economic reports include readings on inflation and consumer sentiment. The Federal Reserve’s Federal Open Market Committee is set to meet next week, but this meeting may be canceled due to the Coronavirus pandemic.

How To Tell If A Home Has Been Well-Maintained

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How To Tell If A Home Has Been Well-MaintainedAs a homebuyer, your real estate agent will do their best bring you to see homes that meet the criteria you asked for. However, there’s no guarantee that a home will have a history of being properly cared for.

Your real estate agent can choose the homes you see, but they have no control over the property owner’s homeownership habits.

Why Home Maintenance Matters

Home maintenance should matter to you as a homebuyer and later on as a homeowner. A home needs consistent and proper maintenance in order to run efficiently, and that doesn’t only apply to moving parts like the HVAC system. If a home isn’t looked after, it begins to run down and then break down.

Just as a poorly maintained vehicle will eventually strand its owner on the side of the road, a poorly maintained home will eventually fail to properly house its occupants.

How To Tell If A Home Has Been Well-Maintained

A home that hasn’t been cared for will easily give up its secrets to a discerning homebuyer. Conversely, you can tell if a home has been cherished and well-maintained over the years.

  • Home maintenance warranties in place would be a selling feature and indicates the owner understands the power of proactive maintenance.
  • Solid, quality flooring indicates that the owner has shored up the subfloor beneath tile, removed carpet spills expeditiously and replaced cracked, peeling or missing planks or tiles.
  • No signs of basement water damage may signify that owner has installed sufficient sump pump or other drainage solutions, applied basement waterproofing or taken other steps to ensure a dry basement.
  • Finished basement shows that owner has taken care to improve the home where possible and that the owner trusts their basement possessions will be safe from water damage.
  • Straight roof lines mean that there is likely no sagging roof problem that hasn’t already been addressed.
  • Mature, healthy plantings are a sign that the owner has given thought and care to the surrounding landscape over a long period of time.
  • Sound gutters in good condition show that the owner has taken steps to ensure proper roof drainage to water damage.

These are all positive signs for a prospective homebuyer. Of course, you must still pay attention to the home inspection report. But odds are if you see all these signs, you’re probably looking at a new home that will serve your needs for many years to come.

 

7 Reasons To Buy A Home In The Summer Months

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7 Reasons To Buy A Home In The Summer MonthsIf you’ve been putting off your house hunting, it’s time to head out. Summer is the best season to go shopping for a new home, for a variety of reasons. 

1. More Inventory

Homeowners list their homes for sale in the summer more often than any other season. When you shop for a new home during this time, you’ll have a much wider selection of homes to choose from. 

2. Better Prices

More inventory in summer often turns the local real estate scene into a buyer’s market. Home sellers may have to compete with other sellers on the same block or even down the street. This gives buyers a nice position of leverage to possible get a better price on a new home. 

3. More Neighborhood Activity

There’s no better time to get a true sense of the neighborhood than summer. In summer, kids are out playing, homeowners are out tending lawns and friends are gathering for backyard BBQs. These are all activities that can give you an accurate portrayal of the neighborhood culture. Take advantage of summer weekends, too; you’ll find even more neighborhood activity then. 

4. More Visibility

By summer, all the snow, ice and autumn debris has either melted or been cleaned up by homeowners. You’ll have more visibility to view the condition of the roof, siding, deck, lawn, driveway and walkways. Under the cover of snow and ice, you might miss important issues.

5. Evidence Of Any Flooding Problems

Spring rains produce evidence of any flooding issues with water lines along foundation walls. Summer is the best time to go home shopping because this kind of evidence will be fresh and easily identifiable. Flooding isn’t always a reason not to buy a home, but it helps to know what potential issues you could be facing.  

6. More Free Time

Most people have more free time in summer than any other time of year. 

It is more relaxing to go home shopping when you know you aren’t taking valuable time away from work. On your summer vacation, you also don’t have to take unpaid days off to view homes with your real estate agent. 

7. Easier School Transition

When you do go ahead and buy in summer, your kids will have an easier time of transitioning to a new school. Instead of breaking up the school year, your kids can end one grade in one school and start the new year at the new school.

Buying a home in summer just makes good sense. Contact your local real estate agent today so you can hurry and take advantage of the summer real estate market in your area. 

3 Questions Not To Ask Your Real Estate Agent

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3 Questions Not To Ask Your Real Estate AgentIt’s an exciting time when you’re buying or selling your home and your real estate agent is your partner in this real estate endeavor. But there are some questions that your agent can’t or won’t be able to answer for you. These are the top three questions not to ask your real estate agent.

 1. How High Will The Buyers/Sellers Go?

Knowing that your agent is in touch with their agent, you might think your agent knows the highest amount the prospective buyers or sellers will go. This question is problematic for several reasons.

First, would you want your agent to divulge how low of an offer you would be willing to accept? No. Second, the buyers agent would never share that kind of information with your agent anyway. That would violate the ethics code that all quality real estate agents go by. 

2. Can You Please Not Divulge the Mold/Radon/Flooding Issue?

Homeowners and real estate agents are required by law to divulge any known issues such as mold. If you as a homeowner are aware of radon and/or flooding issues and you share it with your real estate agent, they may be required to disclose those issues to prospective buyers.

If you ask your agent to withhold that information or to fib about it, you’re really asking them to risk their license and source of family income. Obviously you wouldn’t want to do that. Instead, abide by the laws and let your real estate agent do the same.

Besides, when your buyer is fully aware there’s a better chance for a successful sale. 

3. Can You Promise Me A Sale Within A Certain Timeframe?

Real estate agents can’t promise that your home will sell in a certain amount of time. They can offer you statistics in your area and give you an average amount of time when your home might sell. Other than that, there are no guarantees. If you want your home to sell fast take as much of your agent’s advice as possible.

Your agent will do everything they can to answer all your reasonable questions. Just don’t ask your agent to violate their ethics or make promises they can’t keep. 

The Pros And Cons Of Remodeling During The COVID-19 Pandemic

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The Pros And Cons Of Remodeling During COVID-19 PandemicNearly everyone has been impacted by the COVID-19 pandemic in some way. While many people are getting tired of being cooped up in their homes, the home improvement industry has actually been able to stay afloat. Furthermore, it is actually thriving. Because many people are trapped in their homes during the COVID-19 pandemic, many people are thinking about carrying out a home remodeling project. For those who are wondering about the prospects of such an undertaking, it is important to weigh the pros and cons. 

The Pros Of Home Remodeling During The COVID-19 Pandemic

There are a few benefits that people should note about remodeling during this time. They include:

  • There is more time to plan out the project. With extra time, people can compare costs, take virtual tours of showrooms, and even check out some of the latest designs. 
  • There are even some brick and mortar showrooms that are still open. While many people are nervous about venturing out during the COVID-19 pandemic, these showrooms are still maintaining proper social distancing measures to keep their staff and customers safe.
  • Finally, there are also a handful of discounts available to those who are remodeling during this time. Because they are eager for business, they are often wiling to slash the prices to help someone get their project done.

These are some of the biggest benefits for people to note; however, there are also a few drawbacks as well.

The Cons Of Home Remodeling During The COVID-19 Pandemic

Some of the disadvantages of trying to start a home remodeling project during this time include:

  • There might be a shortage of materials available to carry out the project. It might take time for companies to restock their inventory, delaying the start of the project.
  • While some items are cheaper, others are more expensive because the supply has dried up.
  • For those who might being a challenging financial situation during the pandemic, there is a risk of spending too much money as the project gets going.

For these reasons, it is important for everyone to carefully weigh the pros and cons of starting a home remodeling project during this time. While there are some attractive offers, everyone’s individual situation is different. People need to think about what is right for them.

What’s Ahead For Mortgage Rates This Week – June 1, 2020

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What's Ahead For Mortgage Rates This Week - June 1, 2020Last week’s economic reports included monthly readings from Case-Shiller Home Price Indices, FHFA home prices, and readings on new and pending home sales. Weekly reports on mortgage rates and first-time jobless claims were also released.

Case-Shiller Home Price Indices: Home Price Growth Pace Increased In March

National home prices rose at a year-over-year pace of 4.50 percent in March from February’s reading of 4.20 percent. According to the Case-Shiller 20-City Home Price Index, home prices rose by 0.40 percent to a year-over-year growth rate of 3.90 percent.

The three cities reporting the highest rates of home price growth year-over-year were Phoenix, Arizona with 8.20 percent year-over-year growth; Seattle, Washington reported year-over-year home prices growth of 6.90 percent. Charlotte, North Carolina reported 5.80 percent home price growth.

Analysts said that Seattle home prices rose despite the Seattle metro area having a large outbreak of Covid-19 in the first weeks of the pandemic. April readings on home price growth are expected to dip into negative readings reflecting the spread of the coronavirus and its increasing impact.

17 of 19 cities reported in the 20-City Home Price Index for March had higher growth rates than in February; the Detroit metro area did not report data for the March 20-City Home Price Index.

The FHFA Home Price Index reported 5.90 percent year-over-year home price growth for March as compared to its February reading of 6.10 percent home price growth. FHFA reports on home sales connected with properties that have mortgages owned by Fannie Mae and Freddie Mac.

New Home Sales Increase in April as Pending Home Sales Fall

Sales of new homes rose in April although many areas were under stay-at-home orders related to the coronavirus pandemic. 623,000 new home sales were reported on a seasonally-adjusted annual basis as compared to the March reading of 619,000 sales of new homes. Pending home sales were -21.80 percent lower as compared to the March reading of -20.80 percent. Fewer pending home sales reflected impacts of the pandemic as government agencies issued stay-at-home orders and citizens faced financial uncertainty and health concerns.

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported lower mortgage rates last week; rates for 30-year fixed-rate mortgages were nine basis points lower at an average rate of 3.13 percent. Rates for 15-year fixed-rate mortgages averaged eight basis points lower at 2.62 percent and rates for 5/1 adjustable rate mortgages averaged 3.13 percent and were four basis points lower. Discount points averaged 0.80 percent for 30-year fixed-rate mortgages and 0.70 percent for 15-year fixed-rate mortgages. Discount points averaged 0.40 percent for 5/1 adjustable rate mortgages.

New jobless claims were lower at 2.12 million claims filed as compared to the prior week’s reading of 2.45 million initial jobless claims filed. While fewer claims filed is good news, readings for initial jobless claims far exceeded typical numbers of new jobless claims filed before the pandemic.

What’s Ahead

This week’s scheduled economic reports include readings on construction spending and labor sector reports on public and private sector jobs and the national unemployment rate. Weekly reports on mortgage rates and new jobless claims will also be released.

Loan Programs For Lower Income Buyers

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Loan Programs For Lower Income BuyersOwning a home may be the American dream, but for many who are in a lower income bracket, finding a loan can become challenging. Thankfully, there are several loan programs that can work well for lower-income people considering homeownership. Here’s a closer look at some of these home loans designed to help people who have a low-to-moderate income find a way to buy a home.

FHA Home Loans

FHA home loans are loans backed by the Federal Housing Administration. Lenders are more likely to lend to “higher risk” borrowers through the FHA loan program because the loans have the FHA’s backing.

With the FHA loan, a borrower can have a credit rating as low as 500, as long as there is a reasonable explanation for it and a fairly high debt-to-income ratio. According to the U.S. Department of Housing and Urban Development, these loans require only a 3.5% down payment, which can come from gifts, and have less stringent requirements for credit rating or income.

USDA Rural Development Loans

If you are shopping for a home in a small town or suburban area, you may qualify for the USDA rural development loan program. Only those borrowers who make no more than 115% of the average median income in their area qualify for this loan program, according to the United States Department of Agriculture.

USDA loans require no down payment and the loan has no debt-to-income ratio maximum. It has a low PMI fee even for a zero-down loan, and fair interest rates. For those who live in areas that qualify, the USDA rural housing loan simply makes sense.

97% Loan-To-Value Purchase Loans

One of the biggest challenges for lower-income borrowers to overcome is the down payment, but the 97% loan-to-value loan makes that less of a concern. This program, which Fannie Mae and Freddie Mac have offered to help encourage more people to get loans, allows people to buy a home with just 3% as a down payment.

The 97% loan-to-value purchase loan is specifically for first-time buyers. Borrowers must not have owned a home within the last three years to apply.

This loan program offers fair interest rates and does not have stringent credit score requirements. Borrowers can use gift funds to pay for the 3% down payment if necessary.

As you can see, there are many home loans designed for lower-income borrowers. If you are looking to buy a home but worry you can’t afford it, consider one of these options.

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Questions?

If you have a question about how any of this works, just give me a call at 214-212-6910.

You can also email me at: Rob@RobWheelock.com.

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