Millenials and Home-Buying

For many millenials, the American Dream has lost some of its luster.

The American Dream used to be all about owning your own house, where your family can be safe and sound with a white picket fence out front. But, for many millenials, the American Dream has lost some of its luster.

Millenials today (this group has a mushy definition: anyone born between 1977 and 2000, according to some) face a lot of challenges in the house-buying arena.

Bidding Wars

In some markets, competing with other, established homeowners for desirable homes is a losing battle: previous homeowners with good credit usually have more equity from a previous home and more money saved for a down payment, as well as an established financial history. On top of this, houses are getting very expensive around the nation! (Click here for an article about how this affects millenials.) In some areas of the country, such as urban California, houses are valued so high it’s almost impossible to win the bidding war. Sellers often make tens of thousands more dollars than the listing price!

Financial Burden

A major roadblock for millenials trying to buy a home is difficulty in getting home loans, which is in part due to another difficulty: high student loan debt. (We published an article here about financial assistance with buying a first home.) Many millenials feel they just can’t afford a house payment in addition to their other debts, or can’t afford to save for the down payment.

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Relief in Sight!

In East Tennessee, mortgage prices are often the same, or lower, than rent. Housing prices around here are so comfortable, it makes sense (if you’re planning to stay in the area for more than three years ) to invest in owning a home. And, especially in rural areas, it’s easy to get down payment assistance from government loan programs. Plus, when you make mortgage payments on time for more than three years, it’s just like putting money in an equity bank. When you’re ready to move, you can sell your home and roll over the equity into a down payment on a new house. (Or use the money for whatever you need it for.)

Don’t Forget the Dog!

Of course, buying a home is about more than just financial considerations. A home is an emotional and time commitment, too! What kind of lifestyle are you looking for? Millenials often have a different answer from Boomers, when it comes to lifestyle. For example, this article says that millenials are more influenced by their dog than any other reason when it comes to buying a home. Sure, extra space for the family is nice, as well as the idea of investing in real estate and being more fiscally responsible, but having a more stable place for the family pooch wins out over what we consider the more traditional reasons for buying a home.

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Home ownership might not make sense in other places, but here in East Tennessee, low home cost (and low cost of living,) options for down payment assistance and the chance to invest in your family’s future make buying a home a great option.

Whatever your reason is for house hunting in East Tennessee, check out DarleneReeves-Kline.com to get started.

Fixer Uppers!

We put together a few tips to consider when you’re looking for a fixer upper!

With the explosion of popularity of the HGTV show “Fixer Upper,” thousands more homebuyers are on the hunt for the gem hidden behind a facade of neglect or just bad design choices from years gone by (ahem: baby food-green shag carpet, anyone?)

Not every house is worth fixing up, though! For every one house that hides gleaming wood floors underneath threadbare carpets, you could view three that have severe water damage or a foundation so bad you’ll want to hightail it out of the house for fear the whole thing will crash down on your head!

How can you get a ride on the fixer upper train? We’ve pulled together a few tips to help you get started. Read on to find out more!

Foundations

We decided to start at the bottom because, arguably, it’s the most important part of the house. If your house has a bad foundation, you’ve got the real estate equivalent of a game of Russian Roulette. It could be easily fixed with the addition of metal columns to shore up the concrete blocks. OR, you could discover it will take upwards of $50,000 to completely jack up the house, remove the unstable foundation and replace it with a working one. The problem is, you might not know what you have on your hands until you start (literally) digging in.

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The solution? Train your eyes to check out cracks and settling in the foundation. Is the roof line less than true? It could be a bad roof, or it could be the result of a foundation sinking on one side, bringing the rest of the house with it. Obvious, big cracks in the mortar of the foundation? Red flag. And always, always, get a professional’s opinion on the state of the house.

Tip: It might be a good idea to view the house after a strong storm. If water is coming into the basement, you’ll be able to see it in action.

Roof

We mentioned the top of the house already. A sturdy roof is very important in maintaining your home. It keeps out the weather and unwanted critters, but a good roof also keeps the house insulated: warmer in the winter and cooler in the summer. Get up there and look at it! Are the shingles bald? Crumbly? Are there dips in the roof?

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Even if the shingles need replacing, you can sometimes get away with just putting a fresh layer on top of the old ones. If you need a whole new roof, it will set you back thousands. That might not be a deal breaker, especially if you can put in the labor yourself.

Bones

Does the house “speak to you?” Can you see a vision of your future in it? Maybe if you knock down a wall there, add a window in over here … if the layout of the house is absolutely terrible, you might be able to open it all up. Or, you might realize you’d basically have to rebuild the entire structure to get it how you want it.

Feeling inspired to look for your next diamond in the rough? Visit DarleneReeves-Kline.com and let’s get started!

East TN, A Great Place for Families

Many of the best qualities of our area make it a fantastic place to be for those in any stage of life.

We’ve written a lot about how attractive East Tennessee can be to retirees, but what about young families? Many of the best qualities of our area—the weather, low taxes, relaxed lifestyle—make it a fantastic place to be for those in any stage of life. Read on to find out more!

Low Taxes

Tennessee has some of the best tax rates in the country. We don’t have an income tax, and our property taxes are very reasonable. This means your money stretches a lot farther when you work and own a home, here.

More House for the Money

Compared to other states, the price of homes in East Tennessee is much more reasonable. Basically, you can get more house for your money here than comparable homes elsewhere! Many families discover they can own their own piece of lake real estate for tens of thousands less than it would cost elsewhere.

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Public Beach at Jefferson City

Higher Standard of Living

In addition to lower land taxes and zero income tax, your money goes farther around here because the comparative cost of living is lower for a higher standard of living, compared to other states. What can this mean for your family? It means you can take the extra money you’re not spending on basics like energy bills and groceries, and invest them for a comfy, early retirement (in wallet-friendly East Tennessee, of course!) Or, it means an extra family vacation per year. No matter how you choose to allocate your saved money, it equals an elevated quality of life.

And here’s a nice perk: the state of Tennessee recently began a program for free tuition to all its state community colleges. Which brings us to our next point:

Nice Place to Raise Young ‘Uns

Even if you choose to buy a house in the city, or in a subdivision, you can still reap the rewards of a laid-back rural lifestyle. Any town in the region has easy, public access to lake parks and beaches. The most popular fall activity is visiting the local corn mazes. State and National Parks offer free enjoyment of nature. You get the picture: our neck of the woods is a pretty relaxing, wholesome place to be.

Have a Vacation in Your Back Yard!

Thousands of people flock to the Smokies, and surrounding areas, every year for the mild summers, amazing fall leaves and even the stark beauty of the mountains in winter. Living here, you can take a brief drive and feel like you’re on vacation. Trust us, the beauty never gets old. If you get too familiar with your own county, taking a drive to the next lake or park is enough to remind you how diverse the beauty of our fair state is.

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Our lovely part of the state offers the best of many worlds. Lake living, mountain living, farm living, even city living, are all within short day trips. And, with the low cost of living, you can afford to experience all of it!

 

Of course, if you have any more questions about living in East Tennessee, or if you want to start searching for houses in the area, check out DarleneReeves-Kline.com.

 

 

How to Seal Your Real Estate Deal

You’re investing lots of time and mental energy into house hunting, and you don’t want all that to be for nothing.

Last week, we talked about some ways to know when to walk away from the real estate deal. This week, let’s flip the coin and look at some of the ways you can sweeten the deal to get your dream house. Read on to find out more!

You’ve done it; you’ve searched countless properties online and in person. You’ve weighed out the pros and cons, double checked your budget, gotten preapproved and now … you’ve finally found the perfect property! The problem is, if it’s a great house, in a great location, with a sweet price, then you might be up against some buyer competition.

Do a little research.

Find out why the seller is selling, if at all possible. Often, this is as simple as asking your realtor to relay your questions to the seller’s realtor. If they are highly motivated to sell because of a death in the family, a job transfer or divorce (for example), then you know you have some negotiating room. If they are certain they’ll get asking price and have all the time in the world to get their house sold, then you’ll have to shift your strategy. Also, find out what the seller’s least and most favorite aspects of the house are. Their answers might direct you to see how perfect the property is for your family, or they might give you reason to move on, plus add to your checklist of things to look out for during your house hunt.

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Compare this home (and the asking price) with other homes in the area.

Even if this is an amazing house, if it’s located in the heart of the city vs. in the middle of the country makes all the difference in price. Be very aware of the market values in all the places you’re searching; house prices can change from town to town. Again, this is something your realtor is well-equipped to help you figure out.

Offer asking price.

If the house clearly has some wiggle-room built into the asking price, then maybe offer a few thousand less. But, if it’s a great price and you’re certain you want the property, go ahead and offer asking price–or even a few thousand above. Your offer is possibly being weighed against other offers, so the more money the better, from a seller’s perspective. Your realtor will be able to help you determine how stiff your competition is, so you can come up with a strategy.

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Get pre-approved!

Your realtor has probably already advised you to do this. It protects you. You’re investing lots of time and mental energy into house hunting, and you don’t want all that to be for nothing because you find out you can’t secure a loan. But, the preapproval letter also communicates your level of seriousness to the seller. It says you’ve already taken steps toward buying a home. It also says the deal is less likely to fall through in beginning stages; you’re a buyer backed by money, so the seller is more likely to get paid quickly for their home and not have to wait around for the bank to approve the mortgage.
Good luck! And visit DarleneReeves-Kline.com for your East Tennessee realty needs.

 

When to Walk Away from the House

How do you know when it’s time to walk away from a real estate deal?

We’ve talked about a lot of considerations in buying a house, such as how to approach buying a house in busy months. But how do you know when it’s time to walk away from a real estate deal?

This article on Zillow gives a few great examples of when not to sign on the dotted line. Read on to hear our take on the subject:

The house appraises for below the contract price.

If it’s really your dream home, in your dream neighborhood, then maybe this doesn’t matter to you as much. But, it can cause a problem with your lender: they won’t want to put up more than the house is worth, so you might have to come to the deal with more cash in hand. If you get the sinking feeling that you’d be paying too much for the house, or if you just don’t have the extra money to pay up front, maybe this is a sign you should walk away from the house.

The house doesn’t pass inspection.

Sometimes, a seller will fail to disclose serious problems with things like the foundation, roof or electrical or plumbing systems. If they are willing to renegotiate the price of the house to accommodate fixing these things, or if they are willing to fix the problems before the signing date, then maybe this isn’t as big a deal. Some buyers still get a bad taste in their mouth when sellers fail to disclose big issues, though. It leaves them questioning: “What else aren’t they telling me about the house?”

If the seller isn’t willing to fix the problems or sell at a lower price to help you finance fixing them, this is definitely a good time to walk away. Again, the exception to this rule is if the house is your absolute dream house, and you’re willing and able to foot the bill for major renovations.

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Keep in mind, if you’ve already signed a contract agreeing to buy the house, you might have difficulty backing out of the deal. The above-mentioned reasons to walk away can be exceptions to this rule: most contracts will state that if the house doesn’t pass inspection or appraisal, the contract is no longer valid. Your realtor will help you navigate the legalities of this.

The house is almost good enough.

Before you put in an offer, think hard about what your gut tells you. Is it a nice house, but nowhere near where you actually wanted to live? Is it in a great neighborhood, but way too small for your family’s needs? Would it be an enormous effort to fix up, and you’re just not the DIY type? Many realtors adopt this philosophy: If it’s meant to be, it will be. Don’t settle for a house that makes you compromise too much. It’s normal to have cold feet before plunging into such a big investment, but if your gut is telling you the house isn’t right, then it isn’t right.

Your partner isn’t into it.

Kinda like the above reason, if your partner’s gut is telling them it isn’t right, then it isn’t! Even if the house checks all your boxes, if your partner doesn’t love it, the house might just become a sore topic for as long as you both live there. It’s just not worth signing on the dotted line if you’re not both on board.

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The house is out of your range.

You’ve already checked your finances and been pre-approved for a certain range. You’ve done your homework, and you know what your budget can bear, but … then you see your dream home, and it’s just out of reach. You could always offer below asking price and see what comes of it, but if you can’t get the house within your league, don’t make yourself house poor. It’s not worth the ulcer your future self will curse you for. Instead, hold out for something you can afford now, and save for a down payment for your future dream home. With the equity you build now, it could be within reach sooner than you think.

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As always, for any questions you might have about this article or other real estate needs in East Tennessee, contact Darlene Reeves-Kline!

Spring Buying Frenzy!

What can you do to alleviate some of the springtime house buying stress?

Spring is often perceived as the best time to buy a new home. The weather is getting sweeter, so prospective homebuyers are more willing to get out and about, checking out new neighborhoods. Plus, spring is one of the best times to showcase your home if you’re selling. The grass is growing, and trees and flowers are blooming. It’s when nature puts her best foot forward, which makes for some of the best curb appeal. Spring is also an ideal time to get set to move, because the kids will be out of school in just a handful of weeks (so you don’t have to pull them out mid-year, if you’re changing districts) and you’ll be getting ahead of all your summer vacation plans.

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Red Buds will start blooming soon!

But, trouble is, LOTS of homebuyers think springtime is great for buying a new home! That can make for some really frustrating situations for buyers who put in an offer on their ideal new home, only to see it bought out from under them. So, what can you do to alleviate some of the springtime buying stress?

We found this great article about the Spring Buying Frenzy! Read on for the tips we like the best:

  • You can always wait until the buying frenzy dies down. Still tour homes and watch the trends in real estate where you think you’d like to move. Doing this homework will help you feel like you are buying exactly what you want when your deal finally does go through.
  • You can bid up. Offer above selling price to make sure your dream house isn’t snatched up by someone else. This is especially true if your prospective home is a foreclosure. It’s probably being sold below appraisal, anyway, so knock out the competition with a high offer.
  • Get some local help! Your local realtor knows the market, and knows who to turn to for the fastest results and the best loans for your circumstance. Which leads me to the next point:
  • Get pre-approved by a local lender. Although you can get a legitimate online approval, that local name cues the seller that you’re serious, and your offer is more likely to be considered.
  • Practice stress management! Don’t get so caught up in the moment that you lose perspective of the big picture. Take a walk, get a massage, have a cup of herbal tea … whatever it takes to bring you back down from panic mode. It’s easier to make good decisions when you’re calm.

If it really, truly feels like the right home for you, make the offer! That’s good advice for any prospective homebuyer, any time of the year. Conversely, if you’re on the fence, if there’s something not quite right about the property or the location, then wait a few days. The old adage, “If it’s meant to be, it will be,” is probably truer in real estate than anywhere else. You’re better off waiting for the right house to come along than you are tying yourself up in a house that’s “just ok.”

If you have questions about your house-buying strategy, or about real estate in East Tennessee, please visit DarleneReeves-Kline.com.

Down Payment Assistance

One of these options, plus getting frugal, could get you all the way to paying closing costs and the down payment on your house.

Lots of renters think paying a monthly mortgage is way beyond their reach­–until they do the math, look up one of the online mortgage calculators and realize, “Wait a minute! Mortgage payments on a modest home are actually less than my monthly rent!” Not only that, but the money homeowners pay on their mortgage actually builds wealth. The house appreciates in value over time, so that years from now, when you’re ready to move on, you’ll actually make money from the sale of your home. That’s a pretty great alternative to watching rent checks go down the drain each month.

BUT …

The up-front costs of buying a home sometimes brings a potential homebuyer to a screeching halt. Traditionally, banks require twenty percent of the cost of the home as a down payment. That’s more cash than most first time homebuyers have on hand! To use a simple figure, it would be $20,000 on a house priced at $100,000. Plus, there are closing costs: house inspection and appraisal, title company and bank fees, and more, depending on the particulars of the loan.

There is good news, though.

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There are several financial strategies, as well as grant and loan programs available to homebuyers in East Tennessee. Any good loan officer can check out a few options to help you find your best one. Here are a few ideas:

 

  • You can use up to $10,000 from your IRA for a house down payment, without penalty. If you’re married, you can pull from both IRA accounts for $20,000 in down payment funds.
  • You can borrow against your 401(k). This is less desirable, since you’ll have to pay taxes with this plan.

One of these options, plus getting frugal, selling some of your stuff online or in a yard sale, or even asking for gifts from family members could get you all the way to paying closing costs and the down payment on your house.

But, if you don’t have access to an IRA or a 401(k) and selling your stuff gets you a net gain of about $27, then you’ll be thinking about more substantial assistance. Luckily, there are many assistance programs available. Keep in mind that your financial situation and the house you want to buy create a unique set of circumstances, so your loan officer will have to assess many details of your case before you decide which loan is really the best for you.

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First Time Homebuyers

Backed by the Federal Housing Administration, sometimes first time homebuyers can get their home with a down payment as small as 3.5%.

Veterans Administration

Specifically for veterans, this loan requires no down payment, and even assistance in closing costs.

Rural Development

This loan is backed by the USDA. You’ll have to check the availability of this loan for the area you want to live. You can’t get this one for the loft downtown, but you could get it for a house in a neighborhood just off the main thoroughfare. You don’t have to live far out in the country to get this loan, and it requires zero down payment.

Grants

Check into local and state grants available for the specific area you want to move to. Sometimes a city or county is looking to help a blighted area develop, and is willing to encourage homeowners by paying part of the down payment.