So You Think You Know How To Buy A House – Step 1

Sounds simple enough.  Then you start browsing. Maybe on a national home listing site, or you click on a social media ad.  You save a house or two as a ‘favorite’ and you keep going back to look at it.  You drive through the neighborhood, look at the house from your vehicle and think, “yeah”.

But buying a house is a process.  And over the years it has gotten much more complicated. It’s a little less complicated if you can buy cash, e.g., no financing, but there are still a lot of ‘gotchas’ out there.  And with a big ticket item, the ‘gotchas’ are more expensive.

Step 1 should always be to see what you can afford.  You don’t have to buy for the max, but know where your comfort level is at.  Prices vary greatly even within the same zip code.  TALK TO A LENDER.  I recommend you get at least two opinions, from two different kinds of lenders.  There are regional banks, local or community banks, credit unions, and mortgage brokers from which you can choose.

They offer different kinds of financing programs. Some have a limited number of loans and you will have to ‘fit’ into one of them. Other lenders have a wider variety of loan programs and you will have more comfort and choice in deciding which suits you best.  It’s as important to know that you qualify for an FHA loan (but not a conventional mortgage) as it is that your maximum price is x thousands of dollars. Or that the Rural Development Home Loan you want is good in certain areas but not possible in others.

Realize that different loan types may require additional inspections which will be more out-of-pocket expenses. If you do get pre-approved (which I highly recommend), be sure that the loan officer has run a credit check, not just taken your verbal answers. There are people who get to the point of making a formal loan application and then they discover an old or erroneous blemish on their credit which will take time to resolve – and they lose that perfect house.

Come back next week for the next step.

Image courtesy of Stuart Miles/freedigitalphotos.net

Robert Smith is a licensed real estate agent in Michigan and has worked at Preview Properties, PC for 20 years.  Real estate law and lending regulations can vary from State to State. This blog and its posts are not intended as legal or financial advice.

Flood Insurance Premiums to Change

In case you missed the article by Lalita Clozel in this morning’s (Mar 19, 2019) Wall Street Journal, flood insurance rates are being revised.   FEMA, the department that administers the National Flood Insurance Program, will start a new assessment of properties with several variables – hurricane rainfall, distance from a body of water, coastal surges, and replacement cost of the home – instead of using a single formula for an entire flood zone.

This will apply to inland river and coastal flood plains and zones, but the biggest impact is expected in coastal states.  It’s thought that homeowners with more expensive homes will face higher premiums while lower-cost homes may see a premium decrease.

The new rates will be announced April 1, 2020 and go into effect October 1, 2020.  Due to congressional restrictions on rate increase amounts, the premium changes may have to be phased in over a longer time period.  More details should be released soon.  Feel free to call me with your real estate questions at 810-220-1478.

photo courtesy of think4photop / FreeDigitalPhotos.net

What NOT To Put In Your Garbage Disposal

I saw this in my news feed today and had to blog about it.  A few years ago, a friend that worked for a property management company complained about renters that were clogging up their disposals with - potato peels.  For the record this should definitely never go into a garbage disposal.

My recent personal experience was a "duh!" moment.  We had a couple lemons that had been 'zested' for a baking project. I've always cut up old citrus into small pieces and used them to freshen up the smell of the disposal, so I wasn't thinking I'd have an issue.  But the disposal didn't sound right, so I stopped it and looked in there.  Saw the lemon pieces and thought, "hmm", that should work just fine.  Tried again and this time the disposal froze.

I hit the reset button on the bottom of the motor, took another look, then tried to grind them up again.  Same result. I grabbed my trusty kitchen tongs and started fishing out the lemon chunks.  But I came up with something else, too.  A dark blue kitchen wash cloth had fallen into the disposal and that's what was catching. I'm blaming one of the kids for that one.   It was pretty badly mutilated so it's history now. And the disposal worked happily ever after.

This link will take you to an article of really good things to pitch into the garbage can instead of the disposal.  I hope it saves you some grief.  If you want to talk about real estate or swap garbage disposal stories, feel free to call me at 810-220-1478.  

Michigan is 182 Today!

Michigan was admitted into the Union on January 26, 1837, as the 26^th State.  Of course, our history goes back much further. The name ‘Michigan’ is derived from the Native American ‘Michi-Gama’ meaning “large lake”.

Native Americans are thought to have mined copper in northern Michigan as early as 5000 BCE to 1200 BCE.  It was about 1841 when ‘modern’ mining took over.

Sault Ste Marie was settled by the French in 1668, making it the 3^rd earliest settlement in what is now the United States of America.  After the war of Independence, Michigan was included in what was then called the Northwest Territory.

Our oldest County is Wayne, founded in 1815. In 1846 Michigan became not only the first State to abolish the death penalty (except in cases of treason), but the first English-speaking government in the world to do so!

The State Capitol was built in 1879, our State Flower was declared in 1897, the State Bird in 1931, the State Tree in 1955, and the State Stone in 1965. Think you know them? (answers found at the end)

Did you know that Michigan has 3,126 miles of freshwater shoreline?  And as you would expect from the ‘Great Lakes State’, Detroit, Michigan is the home to the only floating post office in the United States.

The Westcott Company was founded in 1874 as a vessel reporting service, then the only way loved ones could know where their sailor family members were on the Great Lakes. Later, it took on duties as a mail delivery service, zip code 48222.  The J. W. Westcott II makes 15-18 deliveries every 24 hours, including mail, packages from FedEx and UPS, and even occasional pizza deliveries.

Sadly, the ‘Wolverine State’ no longer has wolverines in the wild. Some of us call ourselves Michiganians, others, Michiganders.  It’s said that the term ‘Michigander’ was coined by none other than Abraham Lincoln.  In 1848, Michigan Governor Lewis Cass was running for President and (possibly over-) emphasizing his military accomplishments. Mr. Lincoln then gave a speech against Gov. Cass, calling him a ‘Michigander’, possibly to relate him to being as silly as a goose. New research indicates there may have been earlier use of the term, but no doubt that its use in a Presidential campaign would help it get traction.

And with that, Happy Birthday Michigan! 

Answers: State Flower – apple blossom; State Bird – robin; State Tree – white pine; State Stone – Petoskey Stone. Real Michiganians, er, Michiganders knew that already.

Photo: Tahquomenen Falls

2019 Real Estate Forecast

Courtesy of Stuart Miles/freedigitalphotos.net

Depending on what you read (or news you watch), you would get slightly different opinions on how real estate will perform in 2019.  Here's a summary of housing industry sources for you: 

• National Association of Realtors (NAR) - Home sales will be flat; 3% appreciation rate; inventory will stay tight.
• Realtor.com - Likely will stay a seller's market for a couple of years as inventory slowly builds; interest rates likely to climb to 5.5% by year's end; about a 2% decline in overall number of homes sold compared to 2018
• Redfin - Home prices will be flat to 3% appreciation; Interest rates to 5.5% by year's end; more renters will find a way to buy.
• Zillow - Home values up 3%-4%; Interest rates to 5.8% by year's end; rising home costs and mortgage interest rates will encourage people to stay put.
• National Association of Home Builders (NAHB) - Builder confidence at 3 year low due to increased costs from labor, lots, laws, lending and lumber.  Prediction is flat to 2% growth in number of new home sales.
• Mortgage Bankers Association (MBA) - Housing demand will remain strong; mortage rates will hang in the mid-5% range; home prices likely to 'moderate'.
• Forbes - Mortgage interest rates continue to rise into the mid 5% area; millenials will continue to enter into home ownership; overall home sales to drop 2%; inventory will increase.

These are predictions nationwide.  Local markets vary.  It is still a good seller's market in Livingston County until you get to the homes priced at $400,000 or higher. Other nearby areas may vary somewhat.  Call me at 810-220-1478 if you want info on West Oakland or North Washtenaw.

Edit:  Coincidentally, an article ran in today's (Jan 24, 2019) Detroit Free Press under Steve Pepple's byline on page 5A.  The Metro Detroit summary is that the number of 2018 home sales were down, but prices were up.  For Livingston County, the median sales price was up 6.3% to $270,000 and the number of sales (2,721) were down 8%. I'll be analyzing the full 2018 data in the next couple of weeks.

Student Loan Debt Hurts Young Home Buyers

courtesy of Stuart Miles/freedigitalphotos.net

A recent Federal Reserve study has found that high student loan debt especially hurts the 24 - 32 year old population that want to buy a home.

Credit scores and the cost of credit and loans also plays a part in the downturn of home ownership across the spectrum of potential purchasers.

Jeff Cox of CNBC has a great, short article, which you can read here.

Michigan "High Outbound" State According to Movers' Study

United Van Lines' National Movers Study has Michigan at number 10 in its outbound moves for 2018.  United Van Lines also does a survey to find out why people move.  A top reason is career change (roughly 50%) but the migration to southern and western states often show reasons like job growth, lower costs of living and more temperate climates.

Top Five Outbound States?  New Jersey, Illinois, Connecticut, New York and Kansas.

Top Five Inbound States?  Vermont, Oregon, Idaho, Nevada, and Arizona.

For this study, 55% or more (of either inbound or outbound) got you a "High" rating, and "Balanced" if the difference between in- and out-bound was negligible.

You can see the full report at: https://www.unitedvanlines.com/contact-united/news/movers-study-2018