Interest rates are at or near all-time lows and the housing market is very strong in most markets. Here are two ways to benefit:
1: Homeowners: Invest in Your Home and Finance the Improvements
From an investment standpoint, if you plan to be in the house less than 5 years, think in terms of whether you’ll recover the investment on a resale. For example, kitchen upgrades and modest outdoor living areas tend to be great investments. On the other hand, “lifestyle enhancements” (like swimming pools) only make sense if you plan to be in the house for 10+ years. That’s because you may not recover the investment. In either case, home improvements have an extra perk: they could enhance your general enjoyment of life and family! The reason it currently makes sense to finance your home improvements is that the cost of financing is so low. The main question to ask yourself when it comes to paying cash vs. financing is: can you earn more than the cost of financing if you invest your cash instead?
2: Homebuyers: Be Prepared for Bidding Wars
Housing inventory is low, and you’ll likely experience a bidding war on a home you like if/when you find it. That’s one reason why it’s so important to get a solid loan approval (fully underwritten) before you go house-shopping. This may enable you to waive the “financing contingency” on your purchase offer. If you go that route, you may want to get approved for a low-down-payment loan in case you need to bid above the asking price and the appraised value doesn’t match up. For example, if a home sells for $500,000 and it only appraises for $475,000, you’ll need to make up the $25,000 difference yourself or get approved for a “higher Loan-to-Value” (low down payment). That’s because the lender will only use the lesser of the purchase price and the appraised value.
Contact me for more information or to evaluate your financing options!
Source: CMPS Institute
About the Author
Ryan Christensen
Responsive, Responsible and Resourceful - How Real Estate Should Be. This is the foundation of our continued success: responsive service, providing accurate and timely information, and demystifying the process. 100% of my business is referral based because I listen to my clients' needs and exceed their expectations. As a full-time real estate broker, I am the best advocate for both my buyers and sellers. I am always available, regardless of the time of day.
Being a native Southern Californian is a tremendous advantage. I know the area. Time is more valuable than money, but neither can be wasted. And, I'm a fan of hard work. My clients can enjoy their home buying and/or selling experience because I provide a trusting, focused, straightforward approach. I look forward to helping you achieve your goals and find joy in homeownership.
I am both a licensed Real Estate and Mortgage Broker. Others choose to concentrate on one or the other. I provide a higher level of service and expertise than those who do not obtain this dual skill set, which differentiates me from other service providers. My decisions and advice are based solely on what is in the best interest of my clients. I use Real Estate Sales as a tool to make sure my clients get the home that meets or exceeds their needs. As a Mortgage Broker, I search for the best loans so I can offer lower rates and pricing than my financing competition. This certainly IS in the client's best interest.