featured, Local Real Estate, Millennials, Renters

What Credit Score Do You Need To Buy A House?

What Credit Score Do You Need To Buy A House? | MyKCM

There are many misconceptions about the credit score needed to buy a house. Recently, it was reported that 24% of renters believe they need a 780-800 credit score to be considered for a mortgage. The reality is they are misinformed!

Only 25% of the Americans have a FICO® Score between 740 and 800. Here is the breakdown according to Experian:

  • 16% Very Poor (300-579)
  • 18% Fair (580-669)
  • 21% Good (670-739)
  • 25% Very Good (740-799)
  • 20% Exceptional (800-850)

Randy Hopper, Senior Vice President of Mortgage Lending for Navy Federal Credit Union said,

Just because you have a low credit score doesn’t mean you can’t purchase a home. There are a lot of options out there for consumers with low FICO® scores,”

There are many programs available with low or no credit score requirement. The Federal Housing Administration (FHA) now requires a minimum FICO® score of 580 if you want to qualify for the low down payment advantage. The US Department of Agriculture (USDA) does not set a minimum credit score requirement, but most lenders require a score of at least 640Veterans Affairs (VA) loans have no credit score requirement.

As you can see, none of them are above 700!

What Credit Score Do You Need To Buy A House? | MyKCM

It is true that the average FICO® score for all closed loans in January was 726, but there are plenty of people taking advantage of the low credit score requirements. Here is the average FICO® Score of closed FHA Loans since April 2012 according to Ellie Mae:As you can see, that number has been dropping for the last seven years. As a matter of fact, the average FHA Purchase FICO® Score reported in January 2019 was 675!

One of the challenges is that Americans are unsure about their credit score. They just assume that it is too low to qualify and do not double check. Credit.com confirmed that only 57% of individuals sought out their credit score at least once last year.

FICO® reported,

Since October 2009, the average year-over-year FICO® Score has steadily and consistently increased, from a low of 686 in 2009 to the latest high of 704 as of 2018.”

Here is the increase in the average US FICO® Score over the same period of time as the graph earlier.

What Credit Score Do You Need To Buy A House? | MyKCM

Bottom Line

At least 84% of Americans have a score that will allow them to buy a house. If you are unsure what your score is or would like to improve your score in order to become a homeowner, let’s get together to help you set a path to reach your dream!

Buyers, featured, home buyers, Home Owners, Local Real Estate, Millennials, Real Estate, Renters, Sellers

Why Homeownership Matters Now More Than Ever

Why Homeownership Matters Now More Than Ever | MyKCM

Study after study shows that no matter what generation Americans belong to, the vast majority believe that homeownership is an important part of their American Dream. The benefits of homeownership can be broken into two main categories: financial and non-financial (often referred to as emotional or social reasons.)

For Americans approaching retirement age, one of the greatest benefits to homeownership is the added net worth they have been able to achieve simply by paying their mortgage!

The Joint Center for Housing Studies at Harvard University focused on homeowners and renters over the age of 65. Their study revealed that the difference in net worth between homeowners and renters at this age group was actually 47.5 times greater, with nearly half their net worth coming from home equity!

Why Homeownership Matters Now More Than Ever | MyKCM

Homeowners over the age of 65 are much more financially prepared for retirement and often own their homes outright if they were fortunate enough to purchase their homes before the age of 36.

Their 30 years of mortgage payments have paid off as they gained equity through their monthly payments and as home values appreciated.

It is no surprise that lifelong renters have had a hard time accruing net worth as the latest Censusreport shows that the Median Asking Rent has been climbing consistently over the last 30 years.

Why Homeownership Matters Now More Than Ever | MyKCM

Bottom Line

Your monthly mortgage payment is a form of ‘forced savings’ building your net worth with every payment!

Buyers, featured, home buyers, Home Owners, Joplin, MO Real Estate, Local Real Estate, Millennials, Real Estate, Renters

4 Proven Ways Real Estate Can Build Sizable Family Wealth

4 Proven Ways Real Estate Can Build Sizable Family Wealth | MyKCM

Recently, David Greene, co-host of the BiggerPockets podcast and a nationally renowned author and speaker, wrote an article in Forbes explaining how investing in real estate could help build wealth. Many of the points he made also apply to a family owning their own home. Here are a few:

1. Appreciation

“The rising of home prices over time, is how the majority of wealth is built in real estate. This is the ‘home run’ you hear of when people make a large windfall of money. While prices fluctuate, over the long run real estate values have always gone up, always, and there is no reason to think that is going to change.

One thing to consider when it comes to real estate appreciation affecting your ROI is the fact that appreciation combined with leverage offers huge returns. If you buy a property for $200,000 and it appreciates to $220,000, your property had made you a 10% return. However, you likely didn’t pay cash for the property and instead used the bank’s money. If you consider that you may have put 10% down ($20,000), you actually have doubled your investment, a 100% return.”

2. Leverage

“By nature, real estate is one of the easiest assets to leverage I have ever come across—maybe the easiest. Not only is it easy to leverage the financing of it, but the terms are incredible compared to any other kind of loan. Interest rates are currently below 5%, down payments can be 20% or less, and loans are routinely amortized over 30-year periods.”

3. Paying Off the Debt

“One of the best parts of investing in real estate is the fact that … you’re slowly paying down your loan balance with each payment to the bank… After enough time passes, a good chunk of every payment comes off the loan balance, and wealth is created.”

4. Forced Equity

“Forced equity is a term used to refer to the wealth that is created when an investor does work to a property to make it worth more…

Example of this would be adding a third or fourth bedroom to a property with only two, adding a second bathroom to a property with only one, or adding more square footage to a property with less than the surrounding houses.”

Though Green was talking about investors, the same could be said about a family upgrading their own home.

Bottom Line

Green put it best by saying:

There are many ways to build wealth in America, but real estate might be the safest, steadiest and simplest way to do so.”

Buyers, featured, home buyers, Home Owners, Local Real Estate, Millennials, Renters, Sellers

The Importance of Homeownership to the American Dream

The Importance of Homeownership to the American Dream | MyKCM

For centuries, people in this country have seen homeownership as part of the American Dream. Whether they were born here or immigrated from another country, they wanted to own a piece of America. With so many prominent societal changes over the last few decades, it is fair to ask if people in America still feel the same way about owning a home. The answer was made abundantly clear in two separate reports released earlier this month.

In their market trends report, As Housing Trends Shift, So Does Renter, Buyer and Seller SentimentTrulia revealed that:

“After two years of no change, the share of Americans who say that homeownership is part of their personal “American Dream” ticked up from 72 percent to 73 percent of Americans.”

At the same time, the National Association of Realtors released their Aspiring Home Buyers Profile. As the report explained:

“For both homeowners and non-homeowners alike, homeownership is strongly considered a part of the American Dream. For non-owners, roughly 75 percent reported that homeownership is part of their American Dream. For owners, nine in 10 believe it is part of their American Dream.”

Bottom Line

The belief among the vast majority of Americans, whether they rent or own, is that purchasing a home still remains a major step toward accomplishing the American Dream.

Buyers, featured, home buyers, Joplin, MO Real Estate, Local Real Estate, Real Estate

Belief in Home Ownership as an Investment is Growing

Belief in Homeownership as an Investment is Far from Dead | MyKCM

Following last year’s real estate market was like riding a rollercoaster. The market started off strong in 2018 and then softened before finishing with a mild flurry. However, one thing that did not waiver was America’s belief that owning a home makes sense from a financial standpoint.

An end-of-the-year survey by the Federal Reserve Bank’s Center for Microeconomic Data revealed that:

“The majority of households continue to view housing as a good financial investment.”

And that percentage has increased over the last three years.

Belief in Homeownership as an Investment is Far from Dead | MyKCM

Bottom Line

Though there is some uncertainty as to how the real estate market will perform over the next twelve months, one thing remains very certain: America’s belief in homeownership.

featured, Home Owners, Local Real Estate, Real Estate, Sellers

Why Houses DO NOT Sell in a Strong Market

Why Houses DO NOT Sell in a Strong Market | MyKCM

As we approach the end of the year, many homeowners find themselves asking the question, “If we’re currently in a strong real estate market, why won’t my house sell?

Below are the 5 most common reasons why a listing contract will expire:

1. The Price

Sometimes when the market is hot, homeowners attempt to set their listing price higher. Their hope is that a motivated buyer will be willing to pay any price for a house in their desired neighborhood! Sellers must remember, though, that in today’s market a house must be sold twice; first to the buyer and then to their bank.

A buyer can agree to pay the homeowner’s asking price, but after the bank conducts their appraisal, the price might need to be adjusted. The bank will only give the buyer a mortgage for the value of determined in the appraisal.

Sellers must also keep in mind that today’s homebuyers are well-educated. Before they look to buy a house, they have already seen many houses online. They’ve done their research on the neighborhoods they are interested in, including information on the school districts in the area.

They will know if your house seems overpriced and will not waste their time considering it. This is why it’s so important to make sure that your home is priced right from day one on the market!

2. The Condition of the House

In many areas, builders are taking advantage of the lack of inventory of homes for sale by building new houses. These newly constructed homes create competition for existing homes in the market. For this reason, many homeowners are making renovations and updates to their homes to compete with the new construction in their marketplace.

Most agents recommend that homeowners declutter their houses before putting them on the market. Buyers want to be able to imagine themselves living in the home instead of focusing on the current homeowner’s decor.

It’s important to take care of the small problems like dripping faucets and torn screens, while also remembering to remove any posters hanging in your teenager’s bedroom. Making sure your home is in perfect condition will make buyers fall in love with it and will ultimately help you get the right price for your house!

3. Seller’s Motivation

Why did the seller put their house on the market in the first place? Is the seller’s motivation still the same as it was when they first listed?

If homeowners are really motivated to sell, they will make sure their houses are both priced right and in good condition. The seller’s motivation will push them to consider all offers and help them make the right decision for their family’s future.

4. Marketing Plan

Having a marketing plan is important! According to NAR’s 2018 Profile of Home Buyers and Sellers, 95% of buyers searched online for a home last year. The days of looking for a newspaper ad or yard sign in your preferred neighborhood are over.

If you want to sell your home, you need a real estate professional who understands your local market and knows how to promote your home online. Something as simple as using pictures taken by a professional photographer can make a huge impact in advertising your home!

5. Lack of Communication with Your Agent

Keeping an open line of communication with your agent is crucial in getting your home sold with the least amount of hassles, in the right amount of time, and for the right price! From the beginning, establish a continuous line of communication with your agent, and make sure you review your agreement often to see if any changes need to be made. For example, adjusting the selling price!

Bottom Line

There are houses selling every single day because they are listed at the right price, they have the right marketing plan, and they are staged for the sale. If for some reason your home didn’t sell and you’re still motivated to get it sold, let’s get together to figure out the reason your house isn’t selling!

Buyers, featured, home buyers, Home Owners, Local Real Estate, Real Estate

Homeowners Aged 65+ Have 48x More Net Worth Than Renters

Homeowners Aged 65+ Have 48x More Net Worth Than Renters | MyKCM

Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. Their latest survey data covers responses from 2013-2016.

The study revealed that the median net worth of a homeowner was $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013).

These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter.

There are many who see that statistic and point toward how broad the range of respondents are for the Federal Reserve survey. Their study includes all economic and social groups and also includes all age groups. The argument is that older respondents have a higher likelihood of being homeowners, while the homeownership rate among younger survey takers is much lower.

Recently, the Joint Center for Housing Studies at Harvard University focused on homeowners and renters over the age of 65. Their study revealed that the difference in net worth between homeowners and renters at this age group was actually 47.5 times greater!

Homeowners Aged 65+ Have 48x More Net Worth Than Renters | MyKCM

Homeowners over the age of 65 are much more financially prepared for retirement and often own their homes outright if they were fortunate enough to purchase their homes before the age of 36. Their 30 years of mortgage payments have paid off as they gained equity through their monthly payments and as home values appreciated.

It is no surprise that lifelong-renters have had a hard time accruing net worth as the latest Censusreport shows that the Median Asking Rent has been climbing consistently over the last 30 years.

Homeowners Aged 65+ Have 48x More Net Worth Than Renters | MyKCM

Bottom Line

As a homeowner you put your monthly mortgage payment to work for you, building your net worth with every payment.