The Lawhead Team would like to share the latest One Cool Thing from the CAR about housing prices for would-be buyers.

With interest rates and home prices rising in the first half of 2015, housing affordability remains an issue for many would-be buyers.

• 30 % – The percentage of buyers who could afford to purchase a median-priced, existing single family home declined in the second quarter.
• $485,100 – Statewide median-priced, existing single family home in the second quarter of 2015.
• $96,160 – The minimum annual income needed to qualify for the purchase of a median-priced, existing single-family home.
• $2,404 – The monthly payment, including taxes and insurance, on a 30-year, fixed-rate loan.*

*assumes a 20% down payment and an effective composite interest rate of 3.9%.

Source: CALIFORNIA ASSOCIATION OF REALTORS

Planning to buy a home in the near future? Check out these ten steps from TransUnion to prepare your credit and finances to apply for a mortgage:

1. Start with your credit report. The first thing lenders will probably do when you apply for a mortgage loan is to check your credit; you should, too. There’s no better time for regular credit monitoring than when you’re trying to prove your creditworthiness to a lender so you can get the best possible rates. You want to make sure that your credit report is as accurate as possible, your scores are where you want them to be, and no one else is getting access to your credit, possibly harming your scores.
2. Then, get things in order. Once you’ve been keeping regular tabs on your credit report, you’ll be able to see how you’re doing. Dispute any inaccuracies with the 3 credit bureaus and get everything cleared up. If your debt-to-credit ratio is too high, monitoring your score over time will show you how your score might change. If you see accounts that you didn’t open or addresses that aren’t yours, take immediate steps to investigate what could be identity fraud.
3. Do your homework. Yes, the word “homework” makes us shudder too, but this time the reward is much bigger than memorizing geometry theorems or the periodic table. You’re finding a home but you’re also making a financial commitment you’ll have to live with for years: get the best deal you can. Research loans, rates and brokers exhaustively before you sign or commit to anything. Doing the hard work now will pay off down the road with a better rate and terms.
4. Be realistic about what you can afford. Home ownership may be the American dream, but keep one foot on the ground, too. If you’re looking for a rate that will require you to come up with a 20% down payment and you only have about 5%, figure your calculations based on the rate you’ll be able to get.
5. Understand how lenders operate. Your credit score, on which lenders base much of their decision about your loan amounts and rates, is a reflection of their confidence in your ability to repay them. In a nutshell, the higher your credit score is, the easier it will be to get the amount and rate you want.
6. Decide how you’ll finance it. Once you research the types of financing available, determine which is best for your financial situation when buying a home: 15-year mortgage or 30, adjustable or fixed. If you are looking for security and a guarantee that payments won’t increase, a fixed rate mortgage might be the way to go. If you believe mortgage rates could still fluctuate and you want more flexibility, consider an adjustable rate mortgage.
7. The larger your down payment, the wider your options. See number 4, it’s important to be realistic. So within a realistic framework of what you can afford, the more you put down, the better your terms. The days of zero down payments, especially on a mortgage, seem to be winding down. Putting more money down up front will help ensure you pay less each month.
8. Check on pre-payment penalties. Something else to keep in mind when finding your perfect mortgage is whether or not you’ll be penalized for paying the mortgage off early. Some homeowners double up on payments to reach the end of their term sooner—regularly or when they experience a cash windfall. Check and make sure you won’t be dinged for actually getting to your goal sooner!
9. Take a targeted, rather than shotgun approach to mortgage applications. Remember that whenever you apply for a loan, including a mortgage, the “hard inquiry” the lenders make shows up on your credit report and temporarily lowers your score. Applying for several mortgages in a two week period only counts as one inquiry, but if you drag it out and canvas as many lenders over a longer period, you’ll end up doing damage to your score, which could result in a lower rate than you were hoping for.
10.  “Not now” doesn’t mean “never”. Home ownership is just not a realistic option for everyone right now, despite what may look like once-in-lifetime mortgage rates. If you fall into this category, don’t despair. Your financial circumstances could change, the economy is still very much in flux, and remember that the current mortgage crisis involved a lot of home buyers getting in over their heads. When it comes to a major purchase like a home, timing is critical.

Read entire article from TransUnion – Ten Tips When Preparing For A Mortgage.

Buying a home takes preparation and it is important to make sure you are ready to make the commitment to buy a home.

The Lawhead Team would like to share some helpful ways to know if you are ready to buy a home:

• You’ve created a budget – When you own your own home, money management is a must. There will be unforeseen expenses and emergencies you will have to fork up money for. If you haven’t started a budget yet, start it now and make sure to use it!
• Save up for a down payment – For a conventional loan, you will need to save up 20% of the cost of the home. If you plan to buy a $400,000 home, you will need to have $80,000 saved up. If you haven’t started saving yet, start now!
• You can show a solid proof of steady income – It is important to make sure you will be able to not only afford the monthly mortgage payment, but also the extra little expenses that come with home ownership.
• You’ve created an emergency savings fund – This is on top of your down payment savings you’ve built up. Say a serious illness happens or an unexpected layoff. You will still be able to survive for a few months while you are unable to work because of your emergency fund.
• Your credit report looks good – Good credit history will help you get a lower interest rate on your mortgage while lowering your monthly payment. Check out your credit report to make sure there aren’t any incorrect marks before you go to buy your home.
• You can stay in the home for at least three to five years – That is usually how long you’ll have to keep the home in order to recoup any buying and selling costs. If you aren’t sure how long you can stay in the home you may want to wait to buy  a home and rent for a bit until you know where you’ll be for three to five years.

The Lawhead Team would like to share an Infograph on the latest reasons those in California are buying homes.

Most Californians bought in 2013 mainly because of low home prices. Just in 2013 alone, 38% of those in California bought primarily because of price reductions. While we have started to see a gradual increase in home prices, overall home prices since the last crash a few years ago are still very low.

Next up for California home buyers was the favorable financing that has been available. FHA loans allow a home buyer to purchase a home with only 3% down. Low entry cost combined with low housing prices tempted many Californians to make their home purchase this year.

We all want a better life and living situation. Well, 10% of those in California bought their homes in 2013 because they desired a better or new location. And why not? With housing prices still low and unusually low mortgage rates, 2013 made it the best time to upgrade your home for a lower cost than normal.

If you were in the housing market this year in California, you most likely experienced the bidding wars associated with putting offers in on various homes. In 2013, 9% of California dwellers bought a home for an investment and/or tax advantage.

Lastly, 7% of those in California bought a home because they were tired of renting. And rightly so, it probably cost less to own a home on a monthly basis than to rent based on 2013’s low housing cost and low mortgage rates.

As you are probably aware, mortgage rates are now starting to make their way back up from their record low numbers.

The Lawhead Team would like to share an article from US Finance Post about the expected increase in mortgage rates seen here is the US:

An Increase in Mortgage Rates Should be expected

Reporter: Rebecca Freeman

As mortgage rates have risen recently, many people appear to have started to panic. Mortgage rates really haven’t spiked, but they have increased, experts say. The increase appears to be a shock to some, but analysts point out the rates had been dropped to all-time lows.

All good things must end, and that is the case with the mortgage rates. Experts point out that two months ago, a 30-year fixed rate mortgage had an interest rate of only 3.35 percent. Instead of working about them increasing to slightly over four-percent, people need to realize why they were so low.

The rates were reduced because the Federal Reserve had no confidence in the economy. Rising mortgage rates has a positive overall meaning, the economy is improving. An improving economy has a major overall impact on a variety of industries and markets.

What should be expected? Experts say as the economy improves, mortgage rates will slowly increase and make it back to their normal levels.

While some reports have indicated that rising interest rates could negatively impact the housing market, others indicate that is not the case. According to the Mortgage Bankers Association, the volume of applications to refinance mortgages since May has dropped by 53 percent. The volume of applications for purchase-money mortgages, which are mortgages for those wanting to buy homes, has decreased by only eight percent.

To sum it up, fewer people need to refinance and the number of those wanting to buy since May has been barely affected. The number buying new and existing homes has not been drastically affected by the rising rates. The most recent national average has the thirty-year fixed rate mortgage at 4.51 percent. The Wall Street Journal has pointed out that even when that rate reaches five percent the cost of housing is still affordable by historical standards.

So as the economy improves, the mortgage rates will continue to rise. Overall, that could be a positive thing because it means that many industries are seeing growth. When industries see growth, there is an increase in cash flow. If people have the cash flow, they can and will buy houses. Increasing mortgage rates are not to believe to result in a major negative impact on the housing market, according to analysts.

However, if someone wants to take advantage of the historically low mortgage rates, now is the time to act, experts indicate. As the economy improves, the rates will continue to climb.

Read entire article here: http://usfinancepost.com/an-increase-in-mortgage-rates-should-be-expected-2892.html

Before you buy a home, it is important to get all your ducks in a row. The Lawhead Team would like to share what not to do when buying a home.

•  Keep your bank account steady when buying a home. Don’t make large deposits into your bank account. Lenders usually like the money you’ll be using as your down payment to be sitting in your account for at least two months prior to approval of a loan.
• Don’t change your bank. Just like your employment, it looks better if you have been with one employer for a longer period of time when buying a home.
• Keep your job, don’t change it. Just like above, you want to show your lender you have stability. This is not the right time to become self-employed or go on unemployment.
• Don’t purchase anything you have to finance. Buying a truck or car will increase your debt to income ratio and loan officers do not like to see that. Wait until after your loan closes to purchase a new vehicle when buying a home.
• Wait until after you close escrow on your house to buy furniture on credit. Just as above, you want to avoid a larger debt to income ratio.
• Don’t be late on your payments you currently have. For example, being late on a credit card payment shows you have a hard time managing your money.
• Make sure to be honest on your loan application. Don’t leave any debts or liabilities out on your application when buying a home.
• Always avoid co-signing for someone on any type of loan. This not only increases your debt to income ratio but if the other person fails to make a payment, you are responsible for that payment.
• Don’t have hard inquiries made on your credit. Opening credit accounts within a short period of time represent risk and your credit usually takes a hit. When buying a home, you want to do everything to make your credit the best it can be.

If you have any questions about applying for a home loan, please call The Lawhead Team, Because Two Lawheads Are Better Than One!

Buying a home can be a stressful and exciting event and knowing what you will be faced with before you take the leap of buying a home is helpful.

The Lawhead Team would like to share some helpful tips to buying a home.

• First you should ask yourself why you want to buy. Do you want to stop renting? Will a home make your family happy 10 years from now? Home ownership is definitely part of the American dream but it may not be right for everyone.
• Figure out your financial aspects of purchasing your home. A home is usually the largest purchase most people make and a home loan is usually needed in order to finance the purchase. Make sure to review your credit score before you start your home buying process.
• Depending on the size of your loan, you will have to come up with anywhere from 3.5% to 25% down payment when buying a home.
• Next you need to get pre-approved for a home loan. If you have been long-time customers of your personal bank or credit union, it is a good idea to approach them first for your home loan. These lenders are usually more inclined to show favor to a longtime customer in order to keep their business.
• Once you get pre-approved, you can start house hunting. Seek out a good real estate agent who knows the area you are buying a home in. Real estate agents can help buyers stay on track with personal and financial objectives while you are buying a home.
• When you find a home you’d like to put an offer in on, don’t be surprised if you enter a bidding war. During these times of low inventory, homes have multiple offers on them. Once the bid is accepted, contact your loan officer immediately. Your loan officer and real estate agent will coordinate the purchase and sales agreements, appraisal and review the title records.
• Once everything goes through, you will sign the loan papers and you will now be a happy home owner. Now it is time to move in and call your house a home.

Do you have questions about buying a home? Please contact The Lawhead Team.

If you already own a home, you know about all the responsibilities and obligations that come with home ownership. If your home owning experience has been a positive one, the thought of a second home may have sparked your interest.

The following are reasons you may want to buy a second home, for either an investment or just vacation.

1. Having a rental property, buying a second home strictly to use to rent out to tenants, can boost your monthly cash flow if rent will cover your expenses. With the real estate market still low, it is possible to buy a second home and be able to rent it out with a positive cash flow.
2. A vacation home can serve as a nice getaway spot for you and your family and friends. Keep in mind however, you need to make sure you can afford the extra monthly expenses since you will not be renting the home out to make a profit.
3. An investment property can be bought for family members, say your son or daughter in college, and can be sold later for a higher price. Or you can use this piece of property to use for future retirement.
4. Upgrade to a newer and bigger second home and rent out your first home you bought. You can possibly receive a positive cash flow on your first home and enjoy the luxuries of your newer second home.

With interest rates and housing prices still at an all-time low, this makes for a great time to buy a second home. If you do decide to purchase a second home, it is important to know that location is everything. We all want to buy a home with the thought that the value of the home will go up. In order to increase your chances of awesome resale value, choose properties in areas like beaches, lakes or mountains.

When looking to purchase a second home, remember the overall costs just to own and maintain your first home. Don’t make the mistake of underestimating the real cost of home ownership for a vacation property or rental property.

When it comes to your second home and taxes, there are different rules than you’ve gone by with your first home. With your primary residence you are allowed to exclude up to $250,000 in capital gains ($500,000 if you are married) when you sell your home. The same exemption does not apply to your vacation home when you sell it. In order to get the tax break, you would have to make your vacation home your primary residence for at least two years.

Even more rules apply to your second home if used as a rental property. We suggest getting help from your accountant when it comes to taxes and your second home. Do you have questions about owning a second home? Please comment on our blog or contact us.

Taking some time to do research on potential homes you put offers in to buy will help you save money.

Save money, effort and time when buying a home with careful preparation and planning. Once you have decided on the home you would like to buy, follow the tips below:

Find out if the seller has put any money into the home. You can find out how much the seller bought it for originally and when. Find out if the taxes are paid up and how much the home appraised for. It is important to also check if the home was used for collateral or they’ve taken any additional loans out on the home. This will help you find out what the home is really worth and find out how motivated the seller is, and can help you save money with the next step.

Offering even just a thousand or two less will help save money and keep it in your pocket. If you can afford to not get the house or the market is a bit slow, cut down your initial bid. You can always come back with a higher bid if they decline your offer. But in the chance they accept your lower offer, you will end up being able to save money to use on furnishing the house.

Ask for furnishings already in the home to save money when it comes to buying a couch, refrigerator, etc. Even if the furniture isn’t your taste, it can be sold to help fund a new TV or barbeque. You can also ask for items like cars, boats and golf carts to be included in the selling price. Anything that you can either keep and use or sell to make money will help in the long run.

Hire an inspector to check out your house. We can’t stress how much this will save money for you in the long run. Make sure this is a person working for you who does the inspection. An unstable foundation, electrical wiring costs, fixing pipes and other major items are all things that will end up costing you much more money than you had planned. Either have the seller get these fixed or make your offer lower to compensate for the cost of repairs.

Double check figures before signing loan papers. If you can move in sooner/or later to help you save money, make sure this is an option. By putting 20% down, you will avoid the cost of mortgage insurance allowing you to save money monthly. Also find out if you can decrease your interest rate. Even a small percentage makes a big difference in your payment.

A great way to save money when buying a home is to get the seller to pay the closing costs. This amount can be thousands and having any extra in your pocket will help.

Do you have questions about how you can save money when buying your next home? Call us!

Are you moving and not sure if you should buy or rent? The Lawhead Team came across this article from fazhomes.com discussing the reasons why buying a home is better than renting:

7 reasons home buying a home trumps renting.

Historically, buying a home has been something people look forward to and use as a measure of success, but after the housing bubble burst, the thought of home ownership has made people wary. Fortunately, the market is recovering and we are happy to tell you that buying is coming back! No more doom and gloom; in fact, many analysts are saying that buying is now better than renting. Here is why:

1. Buying a home is cheaper than renting

Experts are saying that homes are at “historic levels of affordability,” where as rent is up an average of 5%. In nearly 60% of 257 metro areas surveyed, homeowners would reach a “breakeven point” in three years or less. This means if you stay in one place for more than three years, it is financially a better choice to buy versus rent.

2. Mortgage rates are at an all time low

In the past few months mortgage rates have reached record-breaking lows. If inflation increases, chances are we will never see rates this low again.

3. Unlike rent, fixed mortgages can’t go up

Rent rises and falls with the economy, but no matter what happens with the economy, you will always pay the same fixed mortgage rates. With all-time low rates, now is the time to lock yourself into a great mortgage deal.

4. Tax breaks for home owners

Homeowners are eligible for several different tax cuts, the biggest of which is the ability to deduct mortgage interest payments.  Homeowners can also deduct qualified expenses such as energy-efficient improvements.

5. Forced savings

Mortgage payments are a means of forced saving. Each month you are essentially putting money into a piggy bank (your house), and if you choose to, you can cash in on that investment by selling the house. In contrast, if you rent, you have nothing to show after years of paying rent each month.

6. A home is a security investment

Owning a home means you are in control. You can plan for the future and know that you will have a place to live. Renting means your living situation is in the hands of a landlord. Unfortunately, the landlord decides whether you stay or you go.

7. And of course, freedom

You can paint the walls, choose your service providers, and turn on the heat or AC whenever you want. Best of all, no more worrying about getting your security deposit back. You can live it up and maybe even drink red wine on your white carpet!

For some people, it simply comes down to whether or not you want, or need, the flexibility of renting. If you have been renting simply because you are nervous about investing in buying a home, the time is right to take the plunge and buy a home.

Read full article on the benefits of buying a home vs. renting: http://www.fazhomes.com/buying-a-home/to-buy-or-not-to-buy-7-reasons-home-buying-trumps-renting/