Palm State Mortgage has noticed in recent research that the home shopping season has started early this year. It is no secret that economic growth is slated to continue recovering this year.
This week Fannie Mae’s economic and strategic research group, stated, “2015 looks promising for the housing market.” Experts are expecting home sales “to grow by around 6% in 2015.”
Likewise, we at Palm State Mortgage Company have noticed that in the Orlando area, house hunting has already taken on springtime momentum.
This is a good sign because “economic growth is currently forecast to increase to 2.9% in 2015, up from 2.5% the year prior, as an improving job market and lower gasoline prices help nudge consumer spending upward throughout the upcoming year.”
These factors led Fannie Mae Chief Economist Doug Duncan to announce, Feb. 26, 2015:
“Our forecast calls for a number of factors, including strong hiring and income growth, stabilized housing affordability, and modestly easing lending standards, to translate into improving housing demand throughout the year.”
All these harbingers of economic stability have led many house hunters, our friends and readers, to begin roaming around neighborhoods, and checking out options for new, or “new to you” homes.
Perhaps you are seeking to upsize for an expanding family or downsize for an emptying nest.
Whether you are seeking to move closer to work or checking out the peace of the suburbs and lake areas, you can benefit from our House Hunter’s Quiz.
Below, we will attempt to answer this major house hunter’s question:
How do you know that spring 2015 is the right time for you to buy a home? Should you even consider being a house hunter in Spring 2015?
Take Palm State Mortgage Company’s short House Hunter’s Quiz, and see where you stand:
1. How is the Market? This issue challenges even the experts, but the comments introducing this blog give you some key hints about today’s climate for home buyers.
Likewise, if you must sell your current home to buy another and move, you should know “The Federal Housing Finance Agency (FHFA) said today [Feb.26, 2015] that home prices in the fourth quarter of 2014 were up 1.4 percent compared to the previous quarter and 4.9 percent from the fourth quarter of 2013.”
Read more House Hunter’s facts and figures in this informative article.
2. What is your life plan for your new house? If you want your real estate investment to pay off in any way, you must intend to keep your new place for at least five or ten years before you sell. This is the way you give your home the opportunity to appreciate in value.
3. Have you calculated your “Cap Rate?”
By definition, capitalization, or cap rate is “the rate of return on a real estate investment.”
Figure your Cap Rate from the net income remaining after your loans and interest are paid on the property. Here’s the simple math to find your percentage:
A House Hunter’s Sample Cap Rate Calculation: “For example, if you paid $100,000 for a house and your net income after expenses comes to $8,000, divide the $8,000 by the purchase price to Arrive at the cap rate.” Read more about Cap Rate at this real estate information online source.
This example shows an 8% return. If you have taken out a home loan at 6% interest, it is a nice investment.
If you are paying 12%interest, it would be a “bad buy.”
For more information, check out this online real estate resource.
4. Have you saved up a reasonable Cash Reserve?
Call it your fall-back money, special savings, or emergency fund, your Cash Reserve can be tricky to uphold. Month to month, it is a sum that should not be spent, but should be held in ready access.
Economic experts tell us that a family should have a Cash Reserve of about half a year of living expenses. This could save your family’s financial situation if you have unexpected expenses or emergencies.
Owning a house is a definite commitment; mortgage payments are due each month. For more information, we refer you to one of our previous articles.
No matter how solidly you plan, new expenses can arrive on the horizon. The Cash Reserve is your personal protection.
5. At the end of your House Hunter’s adventure, are you prepared for an excellent mortgage deal?
Before you decide to become a home owner, you need to investigate your own financial picture:
A. Is your credit score good?
B. Are your financial statements correct and available?
C. Is your job stable?
At Palm State Mortgage, we give you this advice because a high credit score, a good down payment, and reliable income are the essential tools of negotiating a good deal on a home mortgage. We also suggest you look into another Palm State article with more detailed advice.
We have the expertise to put these tools to work for you through a number of lenders. Look to Palm State Mortgage Company for assistance in finding the best possible mortgage situation for your budget.
If you have these tools ready to go to work for you, then we say, “Happy House Hunting,” and “We hope to see you soon!”