Check The Equity In Your Home - You May Be Surprised!

Many homeowners looking to sell feel like they’re stuck between a rock and a hard place right now. Today’s mortgage rates are higher than the one they currently have on their home, and that’s making it harder to want to sell and make a move. Maybe you’re in the same boat?

But what if there was a way to offset these higher borrowing costs? There is. And the money you need probably already exists in your current home in the form of equity.

What Is Equity? I actually presume you all know what equity is, but here ya go....

Think of equity as a simple math equation. Freddie Mac explains:

“. . . your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.”

Your equity grows as you pay down your loan over time and as home prices climb. And thanks to the rapid home price appreciation we saw in recent years, you probably have a whole lot more of it than you realize. We can tell you how much!

The latest from the Census and ATTOM shows more than two out of three homeowners have either completely paid off their mortgages (shown in green in the chart below) or have at least 50% equity (shown in blue in the chart below):

That means the majority of homeowners have a game-changing amount of equity right now. Game-A-Changing indeed!

How Your Equity Can Help Fuel Your Move

After you sell your house, that equity can help you move without worrying as much about today’s mortgage rates. As Danielle Hale, Chief Economist for Realtor.com says:

“A consideration today’s homeowners should review is what their home equity picture looks like. With the typical home listing price up 40% from just five years ago, many home sellers are sitting on a healthy equity cushion. This means they are likely to walk away from a home sale with proceeds that they can use to offset the amount of borrowing needed for their next home purchase.”

To give you some examples, here are a few ways you can use equity to buy your next home that you may not have thought about:

Be an all-cash buyer: If you’ve been living in your current home for a long time, you might have enough equity to buy your next home without having to take out a loan. If that’s the case, you won’t need to borrow any money or worry about mortgage rates. 

Make a larger down payment: That equity can be used toward your next down payment. It might even be enough to let you put a larger amount down, so you won’t have to borrow as much at today’s rates. Win-Win!

The First Step: Determine How Much Equity You Have in Your Home

Want to find out how much equity you have? To do that, you’ll need two things:

The current mortgage balance on your home. The current value of your home.

You can probably find the mortgage balance on your monthly mortgage statement. To understand the current market value of your house, you can pay hundreds of dollars for an appraisal, or you can contact a local real estate agent who will be able to present to you, at no charge, a professional equity assessment report (PEAR). Yes, of course, we can do that!

Once you’ve connected with a trusted local agent and run the numbers, you’re one step closer to making a move you may not have thought was realistic – all thanks to your equity.

Just give us a holler, we'll let you know the amount of equity in your home!

What Buyers Want Right Now ~ July 2024

Because Leslie, Jennifer, and I have our 'head in the game', we know what's selling quickly .... for the most part. And, it's houses that are either extremely desirable ... one of a kind .... or one that is gorgeous and move-in ready. Buyers are paying big bucks, with high interest rates right now. They want the best for paying top dollar.

So, here's a blog post that I copied and pasted from a company I get email campaigns daily. Not gonna kid you though, you'll spot my opinions mingled in their paragraphs! 😄

"If you’re thinking about selling your house, you should know there are buyers who are ready and able to pay today’s high prices. But they want a home that’s move-in ready. A recent press release from Redfin explains:

“Buyers are still out there and they’re willing to pay today’s high prices, but only if the house is in really good shape. They don’t want to spend extra money on paint or new appliances.” Boy oh boy, if I could tell you all the crap we had to do to our first Valencia home!

It makes sense when you think about it. They’re having to pay a lot of money for a house in today’s market. That means they may not be able to easily afford upgrades after they move in. So, if your home is outdated or needs some work, buyers might pass it by or offer a lower price than you were hoping for.

And there are a lot of homes that need upgrades right now. Millions are entering their prime remodel years, meaning they’re between 20 and 39 years old. Maybe yours is one of them. 

If your house falls into this category, it’s important to consider making selective updates to help it appeal to buyers, so it sells faster. But how do you know where to spend your time and money?

Why You Need a Real Estate Agent (raising hand here!)

By working with a local real estate agent to be strategic about the improvements you make, you can be sure you’re making a smart investment. Put simply, not all upgrades are worth the cost. As Bankrate says:

“Before you spend money on costly upgrades, be sure the changes you make will have a high return on investment. It doesn’t make sense to install new granite countertops, for example, if you only stand to break even on them, or even lose money.”

And, as that same Bankrate article goes on to say, that’s where a local real estate agent comes in:

“. . . a good real estate agent will know what local buyers expect and can help you decide what needs doing and what doesn’t.” You know a GREAT local 'family' of agents, right? 😉😉😉

Just in case you forgot who your 'family' is!

Your agent will know what buyers in your area are looking for and what they’re willing to pay for it. By working together, you can avoid spending money on upgrades that won’t pay off. Instead, they’ll fill you in on which changes will make your house more appealing and valuable.

Bottom Line

Selling a house right now requires more than just putting up a For Sale sign. You need to make sure it’s in good condition to attract buyers who are willing to pay today’s high prices.

The way to do that is by making smart improvements that will give you the best return on your investment. Work with a local real estate agent so you know what buyers are looking for and what your house needs before selling."

Smart article. Can you tell where I interjected? 

Thoughts Post Debate

Yeah, we all saw that debate. Yeah, a lot of you probably aren't satisfied with your partys' candidate. So, if you're wondering how the election may affect housing?

Some Highlights:

Are you wondering if the upcoming election will have an impact on the housing market? Here’s what history tells us you need to know if you’re considering a move.​

Data shows home sales slow in November but quickly bounce back and rise the following year. Prices usually keep climbing. And mortgage rates typically come down slightly.

Presidential elections have only a small and temporary impact on the housing market. If you have questions, connect with a real estate agent.

Connect with us now so we can help you navigate when you're ready!

Santa Clarita Home Sales Activity ~ July 5th, 2024

Hope you all had a wonderful Independence Day yesterday! Ours was peaceful, no fireworks at all. Dogs slept like babies!

Market is changing, a wee bit. Home sales have slowed, a wee bit. Prices aren't as inflated, a wee bit. Inventory has grown, yep, you got it, a wee bit.

Including Acton to the East, Stevenson Ranch to the West. Castaic to the North, and Newhall to the South, plus all the little hoods in between....

(Do You Know Where The Community Is From This Picture?)

ACTIVE Homes for Sale ~ 484

COMING Soon ~ 14

UNDER Contract ~ 309

SOLD in the last 30 days ~ 281

So, obviously, if you've been reading my posts for a few years now, inventory is up, but not normal. Closed sales are down, but, near normal. Nuff Said, right?!?

Funny stuff about Real Estate ... some clients will tell you everything that is going on in their world, so we'll understand their actions & reactions. Others, few though, just don't. And, that makes it harder to understand why their actions & reactions are what they are. Realtors are like counselors. If you don't tell us the absolute truth, we can't help you in the best way possible.

Food for Thought.

No matter which one of us you work with, 

definitely let us know what's going on in your world. 

We are your 'Real Estate Home Counselor', 

during one of the biggest events of your life.

Newbies - What's an Inspection And/Or an Appraisal?

When you decide to buy your first home, you will definitely come across a number of terms & language you’re not familiar with. While you may have a general idea of what an inspection is, maybe you’re not sure why you need one or how it’s different from an appraisal. To keep it simple, here’s an explanation of each one and what they mean for you as a Newbie homebuyer.

Home Inspection ~

Once you’re under contract, aka in escrow, on a home you’d like to buy, getting an inspection is a super important part of the process. An inspection gives you a pretty good idea of the safety and overall condition of the home – which is important for such a big transaction. As a recent Realtor.com article explains:

“A home inspection is something that protects your financial interest in what will likely be the largest purchase you make in your life—one in which you need as much information as possible.” The LARGEST! 

If anything is questionable in the inspection process – like the age of the roof, the state of mechanical systems, or just about anything else – you have the opportunity to discuss and still negotiate any potential issues or repairs with the seller before the transaction is final. And don’t worry – you don’t have to go through that process alone. We will 100% will be your advocate & negotiate with the seller for you! If you're not happy with the Seller response, you have some options.

FYI, all 3 of us ... Myself, Leslie, and Jennifer .... have great home inspectors that we trust!

Home Appraisal ~

While the inspection tells you about the current state of the house, an appraisal gives you its value. Bankrate explains:

“When buying or selling a home, an appraisal verifies that the sale price of the home is in line with fair market value. This ensures the homebuyer doesn’t pay more than the home is worth, and the mortgage lender doesn’t lend more than it is worth.”

Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to buy it, the appraisal protects you from overpaying and the bank from lending you more than the home is worth. Well, you could still overpay, that's an option as well.

And if there’s ever any confusion or discrepancy between the appraisal and the agreed-upon price in your contract, we will be the ones that help you navigate any additional negotiations to try to close the gap. That's what we do.

Bottom Line ~

The inspection and the appraisal are different but are equally important steps when buying a home – and you don’t need to manage them by yourself. Connect with us today so you have expert guidance from start to finish. We definitely ARE the experts!

Worried About Mortgage Rates? Control the Controllables!

Very likely are you’re hearing a lot about mortgage rates right now. You may have spotted the headlines talking about last week’s Federal Reserve (the Fed) meeting and what it means for rates. But the Fed doesn’t determine mortgage rates, even if the headlines make it sound like they do. 

In reality, mortgage rates are impacted by a lot of factors: geo-political uncertainty, inflation and the economy, and more. And trying to pin down when all those factors will line up enough for rates to come down is tricky.

That’s why it’s generally not worth it to try to time the market. There’s too much at play that you can’t control. The best thing you can do is control the controllables.

And when it comes to rates, here’s what you can influence to make your moving plans a reality.

Your Credit Score

Credit scores can play a big role in your mortgage rate. As an article from CNET explains:

“You can’t control the economic factors influencing interest rates. But you can get the best rate for your situation, and improving your credit score is the right place to start. Lenders look at your credit score to decide whether to approve you for a loan and at what interest rate. A higher credit score can help you secure a lower interest rate, maybe even better than the average.”

That’s why it’s even more important to maintain a good credit score right now. With rates where they are, you want to do what you can to get the best rate possible. Better credit scores helps get a better interest rate. If you want to focus on improving your score, your trusted loan officer can give you expert advice to help.

Your Loan Type

There are many types of loans, each offering different terms for qualified buyers. The Consumer Financial Protection Bureau (CFPB) says:

“There are several broad categories of mortgage loans, such as conventional, FHA, USDA, and VA loans. Lenders decide which products to offer, and loan types have different eligibility requirements. Rates can be significantly different depending on what loan type you choose.”

When working with your team of real estate professionals, make sure you find out what’s available for your situation and which types of loans you may qualify for. 

Your Loan Term

Another factor to consider is the term of your loan. Just like with loan types, you have options. Freddie Mac says:

“When choosing the right home loan for you, it’s important to consider the loan term, which is the length of time it will take you to repay your loan before you fully own your home. Your loan term will affect your interest rate, monthly payment, and the total amount of interest you will pay over the life of the loan.”

Depending on your situation, the length of your loan can also change your mortgage rate.

Bottom Line

Remember, you can’t control what happens in the broader economy. But you can control the controllables. And, we can help figure out how to start that control. 

Our Family of Agents. Jennifer, Me, Leslie!

C.A.R. Market Minute - June 2024

June 10, 2024 – The ongoing strength of the U.S. economy continues to drive severe volatility in the bond market that impacts 30-year mortgage rates and, thus, the housing market here in California. 10-year Treasury rates have surged in the wake of last Friday’s jobs report, which showed more than 270,000 net job gains and daily mortgage rates have jumped back near 7.2%. The services sector, which has seen the strongest demand over the past 2 years, continues to grow and remains plagued by a lack of available workers, which is keeping wage growth and inflation elevated. Fortunately, more listings have been coming onto the market in the past few months despite many homeowners facing rate-lock after buying/refinancing when rates were below 3%. This has already helped home sales rebound from 2008 financial-crisis levels through April, and sales should continue to rise through the end of the year notwithstanding the caveat that the market will remain volatile.

Big jobs number spooks bond traders, but hides some underlying cracks: Last month, the U.S. economy expanded by a net of 272,000 new jobs, which blew past the expectation of fewer than 200,000 jobs created. Financial markets have met these results with angst as the hoped-for slowing in the economy that might enable the Federal Reserve to begin cutting rates has continually failed to materialize. However, the strong jobs numbers from the “employer survey” that we see each month mask some underlying weakness in the labor market being reported in the “household survey,” which has been flat or negative for much of the past year. The household survey, which is weighted toward small business more heavily than the employer survey, showed an acceleration in job losses that suggests the labor markets may not be as strong as the headline numbers would have us believe.   

Rates surge as economy refuses to cool: Although the strong jobs reports masks some of the underlying weakness that is beginning to show in the labor markets, the bond market reacted strongly to the latest jobs report and demand for 10-year Treasuries fell pushing bond prices down, thereby increasing bond rates. As the timeline for the first Fed rate cuts get pushed out after each strong data release, bond investors pull back as they attempt to time the market and get in when rates are at their peak so then can sell them on the secondary market when they begin to fall. As a result, the latest pull back drove the 30-year fixed-rate mortgage close to 7.2% at the time of this writing. And, although C.A.R. has not ruled out a rate cut for 2024 yet, the pace of decline in mortgage rates will be modest regardless given a long-term projection of a 2.5%-3% Fed Funds Rate. 

Home sales holding up remarkably well despite noisy rate environment: Home sales in California, although sensitive to modest rate changes, have held up remarkably well in this volatile environment. After hitting a low-point of roughly 225,000 units last winter, sales bounced back to a 275,000-unit pace in April and preliminary indications are that May should maintain a similar level of sales. The top end of the market (homes priced $1 million and above) are significantly outperforming the entry level, both due to more available inventory at the top end of the market and the overperformance (economically) of high-income earners in California. Regionally, there is very little variation between north and south; urban/metro and rural; coastal and inland—highlighting how much of today’s housing market is influenced by macro, rather than local-specific factors. The current forecast expects sales to continue to trend up, breaching the 300,000 benchmark again by the end of the year, but the highs reached in 2021 are still years in the future. 

Housing supply keeps rising, but normal still a long way off: Although more than 2/3 of California homeowners secured a rate below 4% during the pandemic, which provides a significant disincentive for existing homeowners to move, inventory has been rising throughout 2024. Facing higher rates now is certainly one factor in deciding whether to move, but many life events have been accumulating in California since many of these homeowners achieved such low rates. For example, California has seen nearly 1.7 million babies born since 2020. More than 1.2 million Californians have died since the pandemic as well, and a net of over 1.1 million people have moved out of the state during this time. In simple terms, many people are in homes that don’t work for them as well as they used to, and they are deciding to change gears despite the higher rates. This is the main factor that drives our forecast for higher sales this year, but it is also important to temper our optimism because inventory has only rebounded to 2020 levels and a tight market will remain the norm.

The service sector results suggest consumers aren’t done spending yet: The primary indicator of service-sector bounced back sharply in May after a decline in April. Both ‘business activity,’ a measure of current demand, and ‘new orders,’ which measure future demand, rose last month as the index posted its largest gain in nearly a year and a half. In addition, prices paid for services continued to rise, which is important for the Fed as service-sector inflation has been lagging the decline in inflation on goods. Interestingly, service sector hiring was negative in May, as it has been for most of 2024, despite strong service-sector employment growth in the national employment survey. This may lend credence to the labor market weakness evident in the monthly ‘household survey,’ which has consistently fallen short of headline numbers.

We're always here to help!