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How to's and money-saving tips from resident homeowner and mortgage professional, Cathy West

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Where are millennials purchasing homes?

Where are millennials purchasing homes?

Millennials today make up a large and seemingly growing share of the mortgage market, as more young adults gain the financial power to make a home purchase. While there are significant forces at work that could continually impact their abilities to make a home purchase, they are nonetheless not being dissuaded from their goals, but have had to become more adaptable.

Today, millennials seem to be shying away from more expensive, busier housing markets and focusing on secondary large metro areas instead, according to the latest data from LendingTree. In February, the three cities where millennials made up the largest share of people submitting purchase mortgage applications were Des Moines, Iowa; Pittsburgh and Buffalo, respectively. In each of these metro regions, adults under the age of 35 made up at least 40.5 percent of the purchase loan market, versus just 32.5 percent for the country as a whole.

Market issues
In addition, all of those major cities saw average purchase prices on those mortgage applications range from less than $114,100 in Buffalo to less than $141,800 in Des Moines, highlighting another issue many millennial homebuyers face, the report said. In general, young adults aren't targeting expensive homes, especially as mortgage rates and prices continue to rise.

On a national basis, the prices young adults may be willing or able to pay could be declining, according to the latest Ellie Mae Millennial Tracker. In April – the latest month for which data is available – the average loan amount sought on purchase mortgages slipped to less than $188,200, down from more than $192,000 just a month earlier.

This came as the average mortgage rate granted to those borrowers increased sharply to 4.73 percent, up 10 basis points from March and the highest level observed since the tracker was launched in January 2014. This despite the fact that the average credit score carried by these borrowers hovered above 720.

What's the impediment?
Millennials may not have the ability to be as flexible about buying more expensive homes because of the financial pressures they have largely faced as a demographic group, according to financial advice site DaveRamsey.com. Most likely have tens of thousands of dollars in outstanding student loan debt, as well as other financial obligations, and this is often cited as the biggest hurdle for young adults to be able to adequately build a sizable down payment.

At the same time, many of today's young adults may have relatively little take-home pay in comparison with previous generations which, when paired with high debt loads, can further depress a young adult's ability to save the tens of thousands of dollars often required to make a down payment.

When millennials are thinking of buying a home, they need to be realistic about what they will be able to afford and search for properties in markets where they will be comfortable both financially and in their lives generally. Working with experienced lending and real estate professionals could help them elucidate what they need to do to adequately prepare for the homebuying process.

For more information about this article, call 866-614-5959.

How to keep bills down

How to keep bills down

When buying a home – especially for the first time – many people might have the need and desire to save money on their monthly costs. The good news is that there are plenty of ways to do so without making significant life changes, and all it might take is for homeowners to do a bit of research and find some options that will work well for their needs and routines.

One of the simplest changes for many homeowners is to swap out their lightbulbs for the more energy-efficient models now widely available, according to Family Handyman. New compact fluorescent lightbulbs last for 10,000 hours and use about 75 percent less power over their lives than traditional bulbs. In addition, light switches that are on motion sensors will help ensure bulbs come on only when someone is in the room could save homeowners at least $100 a year.

Other ways to save on costs
New homeowners with older central air conditioning units can ask the previous occupant about the last time the AC was serviced, the report said. If it was a while ago, a quick tune-up could make the system work better and far less energy in cooling a home at this time of year. Furthermore, an energy audit of a home in general could help them identify areas where they can potentially save money.

Along similar lines, making sure all lint is cleaned out of a dryer's trap or exhaust will make that appliance operate a lot more efficiently, the site advised. Experts note that a clogged or even dirty lint screen can make a dryer as much as 30 percent less efficient. Likewise, performing routine maintenance checks on various other appliances throughout a home may help homeowners keep everything in good working order and keep their energy costs down.

Attacking bigger expenses
While many people will certainly see their energy bills go up when they move from an apartment into a house, that's probably not the biggest driver of their monthly expenses, according to The Simple Dollar. While every bit certainly helps, it might be wiser for homeowners to do more to cut their monthly contributions to debt by more aggressively paying down their highest-interest accounts first.

In addition, finding ways to refinance existing financing – such as an auto loan – will likely also pay off in terms of reducing monthly and long-term costs, the site said. 

Along similar lines, taking steps such as getting rid of cable or other monthly subscriptions that might not be used often can also help new homeowners save hundreds of dollars or more each year, the report said.

Furthermore, homeowners might now need to think about putting money away in rainy-day funds, according to HGTV. After all, they're likely to incur far more maintenance costs than they're used to paying, and being able to budget for those expenses so any issues faced can be dealt with expediently is crucial to living comfortably.

Homeowners should always be proactive about looking for methods to save money, and talking with a financial professional may help them find ways they can do so quickly and easily.

For more information about this article, call 866-614-5959.

Reduce debt to boost down payment savings

Reduce debt to boost down payment savings

Many people who may want to buy a home in today's market might not have the opportunity to do so because they have significant existing debt burdens that can imperil their credit and hurt their ability to build their savings. As a consequence, those with dreams of homeownership would benefit from having a strategy for reducing debt so they can better boost their ability to make a sizable down payment.

Perhaps the most important step to start saving more money is to pay off the debts that add up fastest, according to USA Today. With this in mind, it's wise for consumers to figure out which credit cards or other accounts have the highest interest rates and start devoting more time toward reducing those balances first. Future homeowners can start by paying the bare minimum on other accounts and devoting additional funds toward paying down the highest-interest accounts because under federal law, every cent contributed above the minimum on a credit card bill goes toward reducing the balance. 

Furthermore, it's also vital for consumers to stop using the accounts they're trying to pay down, the report said. In addition, some lenders whose cards allow consumers to accrue points or cash back will allow borrowers to contribute those accrued benefits toward their balances, rather than cashing out in other ways.

Where to begin
While "the account with the highest interest rate" is always a good jumping-off point, issues may arise when consumers have a few accounts that have interest rates in the same range, according to Financial Finesse in an article for Forbes. Any balances with rates over 7 percent are the ones to target first, but those with lower rates – such as auto loans – probably shouldn't be as significant of priorities.

When those balances are reduced to zero, more money can go into paying down other obligations with lower interest rates, the report said. After all, accounts with large balances and sky-high rates add up quickly and also typically require somewhat sizable minimum monthly payments. When those debts go away, prospective homebuyers could have hundreds of additional dollars that can go toward paying down the next-highest balance and so on until all accounts are paid down to zero (but not closed out, as doing so can negatively affect a borrower's credit score).

Other strategies
Meanwhile, it's probably wise to reduce discretionary spending as much as possible as a means of freeing up even more money that can go toward debt reduction, according to Leisurely Does It. Even an additional $50 per month can help reduce debt that much more quickly, and once future homeowners take care of those balances, they can contribute potentially hundreds of dollars per month toward their down payment savings.

It might be wise for homebuying hopefuls to talk to a financial or real estate professional about options when it comes to finding an affordable mortgage, and what they can do to improve the quality of their applications. When consumers have higher credit scores and larger down payments, they're not only more likely to be approved, but also to get a better deal.

For more information about this article, call 866-614-5959.

Ways to improve a bid on a new home

Ways to improve a bid on a new home

When even the most qualified homebuyer is shopping for a property, they're likely to encounter some resistance among sellers simply because most houses now earn multiple bids. To that end, it's important for would-be buyers to make sure they not only know what their initial bid is going to be, but also how to improve that bid when there's interest from other shoppers as well.

Obviously the simplest way for shoppers to improve their offers in a multiple-bid situation is to offer more money, but that's not going to be feasible for every person just on the basis of current and long-term affordability, according to Realtor.com. However, if a higher bid isn't always feasible, owners might be enticed to accept a new bid with buyers opting to put more money into escrow, which can help show how serious they are about buying the property.

Other changes to make
Another way to improve a bid financially without increasing its dollar value is to come to the table with mortgage pre-approval, Realtor.com advised. This is something buyers should be doing anyway simply as a means of expediting the mortgage and sales processes, but it can also give them an edge on the competition.

"Whether you are planning to take out a mortgage or pay all cash, you can stand out from other offers if you show you are a serious buyer by proving you have the funds to buy the home," real estate agent Andrew Sandholm told the site.

In addition, buyers can say they're willing to buy a home "as is" instead of increasing the size of a bid, the report said. While this isn't necessarily advisable with older homes, choosing to forego repairs that sellers would have otherwise made, or going without a home inspection, could help sweeten the deal and make sellers more motivated.

Tips and tricks
Meanwhile, buyers can build "escalation clauses" into their bids, meaning they're making the initial bid they want to, but sellers are authorized to automatically increase that amount if other bids come in and beat the initial number, according to MoneyTips. This, too, makes mortgage pre-approval valuable because buyers will know exactly how much their lenders will allow them to spend on a bid, so they can set their initial offers anywhere below that level and allow for escalation up to the maximum.

Finally, a relatively new trend in bidding is for would-be buyers to write letters to current owners explaining how much the home would mean to them if they were to have their bids selected, according to Redfin. Interestingly, some bidders have been known to write letters so good that owners accept their offers despite the fact that it wasn't as much money as other shoppers would have paid.

As with many other things in the homebuying process, it's important for shoppers to keep the lines of communication with their agents open, and seek advice on a regular basis. These professionals can typically provide critical insight that helps them find the home they're looking for without going over budget.

For more information about this article, call 866-614-5959.

What costs to anticipate in the first year of homeownership

What costs to anticipate in the first year of homeownership

When people buy homes for the first time, they typically do so with the expectation that their costs will drop. And while this may be true when it comes to issues like the cost of rent versus that of paying down a mortgage, there may also be plenty of unexpected expenses to face if they're not adequately prepared by a real estate professional.

For instance, if people move into an existing home that comes with its own appliances, they may have a need – or desire – to replace or repair those units at some point in the first year of homeownership, according to Money Ning. This can cost hundreds of dollars or more and may be necessary in a lot of cases, but nonetheless it is important for new buyers to think about whether this is something they might have to do, as early as the start of the homebuying process. Most appliances have a lifespan of between 10 and 20 years, so taking stock of that potential need during a sale is critical.

Other expenses to consider
Meanwhile, many owners will also be moving from smaller homes or even apartments into good-sized houses that will necessarily require more furniture, the report said. Often, furniture can be expensive if it's being bought new, but even going online and finding items on Craigslist or similar sites could end up resulting in hundreds of dollars in expenses. And while these may be necessary for a home to feel truly "lived in," it's nonetheless something new owners will have to budget for.

Paying more for common expenses
Meanwhile, many homeowners may not always think about the ways in which a larger home will often result in them paying a lot more for utilities, according to Quicken. Adding potentially hundreds of dollars per month for heating and electrical costs is not out of the norm, and it's definitely something owners will have to budget for/

The same is true of homeowners insurance, which can cost thousands of dollars per year based on a number of factors, the report said. While many people who previously only rented have renters' insurance that costs relatively little each month, homeowners insurance necessarily has to cost a lot more, and for those moving into homes that may be at particular risk for damage, the expense can mount quickly.

Adding everything up together, even beyond mortgage costs, the average homeowner might expect to pay as much as $1,200 per month for all of these expenses, according to Go Banking Rates. Property taxes, homeowners association fees, private mortgage insurance and general home repair and maintenance are some of the other common expenses that people who didn't previously own will suddenly have to pay. While these are by no means hard and fast numbers, they are certainly in the ballpark of what owners will face.

With all this in mind, it's vital for would-be buyers to really think about exactly how much home they can afford as they begin the shopping process, because there's a lot more than just mortgage costs that go into homeownership.

For more information about this article, call 866-614-5959.