Area Real Estate News & Market Trends

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

Jan. 7, 2022

Avoid the Rental Trap in 2022

Avoid the Rental Trap in 2022

Avoid the Rental Trap in 2022

Are you one of the many renters thinking about where you’ll live the next time your lease is up? Before you decide whether to look for a new house or another apartment, it’s important to understand the true costs of renting in 2022.

As a renter, you should know rents have been rising since 1988 (see graph below):

Median Asking Rent

In 2021, rents grew dramatically. According to ApartmentList.com, since January 2021:

“. . . the national median rent has increased by a staggering 17.8 percent. To put that in context, rent growth from January to November averaged just 2.6 percent in the pre-pandemic years from 2017-2019.”

That increase in 2021 was far greater than the typical rent increases we’ve seen in recent years. In other words – rents are rising fast. And the 2022 National Housing Forecast from realtor.com projects prices for vacant units will continue to increase this year:

“In 2022, we expect this trend will continue and fuel rent growth. At a national level, we forecast rent growth of 7.1% in the next 12 months, somewhat ahead of home price growth . . .”

That means, if you’re planning to move into a different rental this year, you’ll likely pay far more than you have in years past.

Homeownership Provides an Alternative to Rising Rents

If you’re a renter facing rising rental costs, you might wonder what alternatives you have. If so, consider homeownership. One of the many benefits of homeownership is it provides a stable monthly cost you can lock in for the duration of your loan.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“. . . fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.”

If you’re planning to make a move this year, locking in your monthly housing costs for 15-30 years can be a major benefit. You’ll avoid wondering if you’ll need to adjust your budget to account for annual increases.

Homeowners also enjoy the added benefit of home equity, which has grown substantially right now. In fact, the latest Homeowner Equity Insight report from CoreLogic shows the average homeowner gained $56,700 in equity over the last 12 months. As a renter, your rent payment only covers the cost of your dwelling. When you pay your mortgage, you grow your wealth through the forced savings that is your home equity.  

Bottom Line

If you’re thinking of renting this year, it’s important to keep in mind the true costs you’ll face. Let’s connect so you can see how you can begin your journey to homeownership today.

Jan. 7, 2022

Could Waiting To Sell Your House Cost You a Small Fortune?

Could Waiting To Sell Your House Cost You a Small Fortune

Could Waiting To Sell Your House Cost You a Small Fortune?

Many homeowners in Silicon Valley who plan to sell in 2022 may think the wise thing to do is to wait for the spring buying market since historically about 40 percent of home sales occur between April and July. However, this year’s expected to be much different than the norm. Here are five reasons to list your house now rather than waiting until the spring.

1. Buyers in Mid Peninsula Are Looking Right Now, and They’re Ready To Purchase

The ShowingTime Showing Index reports data from more than six million property showings scheduled across the country each month. In other words, it’s a gauge of how many buyers are out looking at homes at the current time.

The latest index, which covers November showings, reveals that buyers in Bay Area are still very active in the market. Comparing this November’s numbers to previous years, this graph shows that the index is higher than last year and much higher than the three years prior to the pandemic. Clearly, there’s an influx of buyers searching for your home.

buyers in Menlo Park, Atherton and Palo Alto are looking to buy their dream homes

Also, at this time of year, only those purchasers who are serious about buying a home in Menlo Park, Atherton, and Palo Alto, Los Altos will be in the market. You and your loved ones won’t be inconvenienced by casual searchers.

And that theory is proving to be true right now based on the number of buyers in the Mid-Peninsula who have put a home under contract to purchase. The National Association of Realtors (NAR) publishes a monthly Pending Home Sales Index which measures housing contract activity. It’s based on signed real estate contracts for existing single-family homes, condos, and co-ops. The latest index shows:

“…housing demand continues to be high. . . . Homes placed on the market for sale go from ‘listed status’ to ‘under contract’ in approximately 18 days.”

Comparing the index to previous Novembers, while it’s slightly below November 2020 (when sales were pushed to later in the year because of the pandemic), it’s well above the previous three years.

Pending Sales in Menlo Park Atherton Palo Alto and Los Altos Beats the pre pandemic

The takeaway for you: There are homes purchasers in the Atherton, Menlo Park, Palo Alto, and Los Altos markets, and they’re ready and willing to buy.

2. Other Sellers in Mid Peninsula Plan To List Earlier This Year

The law of supply and demand tells us that if you want the best price possible and to negotiate your ideal contract terms, put your house on the market when there’s strong demand and less competition.

A recent study by realtor.com reveals that, unlike in previous years, sellers plan to list their homes this winter instead of waiting until spring or summer. The study shows that 65% of sellers who plan to sell in 2022 have either already listed their home (19%) or are planning to put it on the market this winter.

Again, if you’re looking for the best price and the ability to best negotiate the other terms of the sale of your house, listing before this competition hits the market makes sense.

3. Newly Constructed Homes in Bay Area Will Be Your Competition in the Spring

In 2020, nationwide, there were over 979,000 new single-family housing units authorized by building permits. Many of those homes have yet to be built because of labor shortages and supply chain bottlenecks brought on by the pandemic. They will, however, be completed in 2022. That will create additional competition when you sell your house. Beating these newly constructed homes to the market is something you should consider to ensure your house gets as much attention from interested buyers as possible.

4. There Will Never Be a Better Time To Move-Up

If you’re moving into a larger, more expensive home, consider doing it now. Prices are projected to appreciate by approximately 5% over the next 12 months. That means it will cost you more (both in down payment and mortgage payment) if you wait. You can also lock in your 30-year housing expense with a mortgage rate in the low 3’s right now. If you’re thinking of selling in 2022, you may want to do it now instead of waiting, as mortgage rates are forecast to rise throughout the year.

5. It May Be Time for You To Make a Change

Consider why you’re thinking of selling in the first place and determine whether it’s worth waiting. Is waiting more important than being closer to your loved ones now? Is waiting more important than your health? Is waiting more important than having the space you truly need?

Only you know the answers to those questions. Take time to think about your goals and priorities as we move into 2022 and consider what’s most important to act on now.

Bottom Line

If you’ve been debating whether or not to sell your house and are curious about market conditions in your area, let’s connect so you have expert advice on the best time to put your house on the market.

Dec. 29, 2021

Why Do You Need to Make a Good Offer in Redwood City?

Why Do You Need to Make a Good Offer in Redwood City

Why Do You Need to Make a Good Offer in Redwood City?

Redwood City is in one of California’s most competitive housing markets and current inventory challenges are not making things easier. If you are looking for a Redwood City home for sale, you should consider working with a good real estate agent who can help you make the best possible offer. 

Redwood City is located in San Mateo County which has seen fewer active listings this year according to the California Association of Realtors. The latest figures for December show 306 active listings which is down almost 54% from last year. The November listings for Redwood City numbered 18, which is down almost 65% from last year. 

Another issue is how long houses are staying on the market. The median average for Redwood City, CA, homes for sale is only seven days. Given these figures, you must have a good offer and be able to act fast when you see a home you like in Redwood City. 

While these might not seem like ideal conditions to buy, it is predicted that home prices in Redwood City will continue to trend upward moderately. According to a survey of experts conducted by the National Association of Realtors, median prices in the United States are expected to increase by 5.7%. Additionally, it is predicted that interest rates will rise in 2022.

Redwood City is a family friendly community with great schools and many high-tech employers. It’s an easy commute to San Francisco, Stanford, and other Silicon Valley economic centers. If you are thinking of buying in Redwood City, now might be the time to act before prices and interest rates rise. Contact a realtor to discuss your options. 

Is Now a Good Time to Sell in Redwood City?

Redwood City is considered a sellers’ market. Due to low inventory, people who have Redwood City real estate for sale might have multiple offers and offers above list price. According to CAR, the sale-to-list price percentage is 110.6. This means that many homes are selling above the list price. 

Given the low inventory and the high demand for houses for sale in Redwood City, now may be a good time to consider selling if you have plans to upgrade, downsize or move to another area of the state or country. 

 

Dec. 29, 2021

Are There Homes for Sale in Portola Valley, CA?

Are There Homes for Sale in Portola Valley, CA

Are There Homes for Sale in Portola Valley, CA?

Portola Valley is one of those areas in the Bay area that has a low density which is one of its charms for many buyers. 

Portola Valley, population 4,600, offers a semi-rural atmosphere in close commuting distance to tech sectors and excellent schools. Residents typically own their own homes on larger lots and have access to outdoor leisure activities such as tennis, hiking, and horseback riding. As a buyer, you might wonder if there is enough inventory in Portola Valley to find your dream home. 

Given the rural character and the low density, houses for sale in Portola Valley, CA, are highly competitive. Those that do go on the market may receive multiple offers. For this reason, it is a good idea to work with a realtor who can help you understand the market and find the right home. 

Why Is Now a Good Time to Buy a Portola Valley Home?

Currently, interest rates are low, but they are expected to increase as the pandemic winds down. Today buyers can take advantage of 30-year fixed mortgage rates of around 3.1%. 

Proposition 19 may encourage some buyers to look at upgrading to a larger home. This legislation allows buyers to keep the same property tax rate if they move into a home up to three times as expensive as their current home. Typically, Portola Valley real estate tends to be higher end, so this might be the upgrade that many buyers are seeking. The median list price of 36 homes on the market earlier this month was close to $4 million. 

Will Housing Prices Drop in the Bay Area? 

Single-family homes in the Bay Area saw a sharp increase in prices caused by the pandemic. More people wanted to buy homes with multiple bedrooms, studies, and outdoor space to work and spend more leisure time at home. As people return to the office, such spikes are not expected to happen again soon. However, there is still low inventory in the Bay Area, which may result in more moderate price increases. For homeowners, this can mean that your home is a good investment because you will be able to build equity. 

Despite the challenging market conditions, 2022 may be a good time to invest in a Portola Valley home. Contact a realtor to discuss your options. 

 

Dec. 26, 2021

Why Are Los Altos Houses for Sale a Good Investment?

Why Are Los Altos Houses for Sale a Good Investment

Why Are Los Altos Houses for Sale a Good Investment?

While other areas of the economy have suffered because of the pandemic, real estate has remained strong and will likely continue to be a good investment in 2022. 

However, the demand was not even across all forms of housing, according to Jordan Levine, California Association of Realtors (CAR) chief economist. People were looking for larger homes in the suburbs that would give them more space for remote work and at-home leisure activities. Another important reason why single-family suburban real estate continued to do well is because of the types of buyers in the market. These buyers tended to be professionals in the tech sector who could afford larger homes. 

These facts help to show why Los Altos has been a very competitive market for home buyers and a good market for sellers. As a beautiful suburb located close to the tech sectors of San Francisco and the Silicon Valley, this community has everything that motivated buyers are seeking.  

Now that the pandemic is winding down, are homes for sale in Los Altos still a good investment? 

The Market in 2022

Although offices have reopened, remote work is still a strong factor in the high-tech sector and likely will remain so. Workers are demanding more flexibility, and competitive companies will want to offer at least some remote work as a “perk” to attract good candidates. 

Another factor impacting demand for homes is limited supply. Currently California is considered a sellers’ market which means there are more interested buyers than homes for sale. A real estate agent can help you find the right home and make a good offer to ensure a successful purchase. On the other hand, if you have a house for sale in Los Altos, CA, the current situation may benefit you as you will likely attract multiple buyers making offers at or above list price. 

Why is now a good time to buy?

Currently, mortgage rates are at historic lows, around 3.1%, but they are expected to rise around .5% over the next year. Buying now would allow you to take advantage of these rates while they are available. 

Secondly, although we likely won’t see the same jumps in home prices that we saw in 2021, real estate prices are expected to continue to rise more moderately meaning your house will be a good investment for the future. 

If you are interested in Los Altos, CA, homes for sale, contact a real estate agent to explore your options. 

 

Dec. 25, 2021

Should You Wait to Buy a New Home in Palo Alto?

Should You Wait to Buy a New Home in Palo Alto

Should You Wait to Buy a New Home in Palo Alto? 

In 2020-2021, home prices increased by 18.2% in the San Francisco/Bay Area as demand exceeded supply. More people wanted to own their own homes or to move to bigger homes due to the pandemic. In 2021, house prices continued to rise more moderately, and this trend is expected to continue into 2022. 

Given that single-family homes are more expensive, is it a good time to look at Palo Alto houses for sale? 

Do you currently have a house for sale? 

If you have a house for sale, you may have some equity in your home due to the appreciation. You may be able to afford a larger or more desirable home due to the size of the down payment you are able to offer. 

Due to Proposition 19, you can purchase a home that is up to three times as expensive without affecting your property tax rate. Additionally, interest rates are currently low. Considering these factors, now may be a good time to upgrade your home. 

There are many houses for sale in Palo Alto that can offer you larger indoor and outdoor spaces, more desirable neighborhoods and schools and other amenities. Contact a realtor to learn more about houses for sale in Palo Alto, CA. 

Consider Palo Alto Hills Homes for Sale

One example of an exclusive neighborhood is Palo Alto Hills. Palo Alto Hills is a quiet area with access to nature and outdoor leisure activities. Palo Alto Hills is a small community with many large lots and luxury homes adjacent to Pearson-Arastradero Preserve. Despite its seclusion, it is a short commute to the city centers of Silicon Valley. 

Are You a First-Time Buyer? 

Making the leap from renter to homeowner can be a big step, but more and more renters have decided to put down a down payment on their first home in the past year. Buying can allow you more space for working and playing at home, which has been a common motivation for the past year. It also allows you to build equity which creates a sense of financial stability. 

While prices have increased in the past year, experts predict that this trend will continue more moderately than in the past. Waiting to buy will likely not result in lower prices. Plus, you may miss out on record-low interest rates which are currently around 3.1%. 

Whether you wish to upgrade your home or are getting into the housing market for the first time, 2022 is a good time to buy a home in Palo Alto. Contact a realtor to help you navigate this desirable area. 

 

Dec. 25, 2021

Why Is Demand High for Atherton Houses?

Why Is Demand High for Atherton Houses

Why Is Demand High for Atherton Houses? 

You may have heard that prices for single family homes in Atherton are some of the highest in the United States, so why are so many buyers looking for Atherton houses for sale? 

There are many trends causing the continuing increases in housing prices and the demand for single family and luxury homes in Silicon Valley. 

Location:

The Bay Area is unique in that one of its major industries, the tech industry, requires highly qualified personnel who demand high salaries. This allows a significant amount of the population to own their home despite rising prices. 

Additionally, the Bay Area offers residents a great climate and conditions for gardening, hiking, cycling, horseback riding, and other opportunities for outdoor recreation. The economic centers of Silicon Valley offer culture, dining, shopping, and educational opportunities. 

Types of Homes:

During the pandemic, many people decided to leave dense areas in larger cities like San Francisco and Oakland for more suburban areas. People were being asked to work and school their children at home which made owning single-family houses a priority. The California Association of Realtors (CAR), pointed out in their end-of-year report that first-time homebuyers were at a decade-long high at the height of the pandemic in 2020. People became used to spending their leisure time at home and wanted yards and bigger dining and living rooms. Atherton houses for sale became very popular for people seeking a suburban area with larger lot sizes.

Although offices have reopened, many employers are offering increased flexibility for working at home and COVID case numbers are currently on the rise, so this trend may continue for some time. For many owning one’s own home is a buffer against uncertainty.     

Interest Rates: Currently interest rates in the United States are at record lows. The 30-year fixed mortgage rate is just over 3% currently and is expected to increase by about a half percentage point over the next year.  

How Can You Find Homes for Sale in Atherton?

A real estate agent can help you find the perfect home in Atherton, CA. Local real estate agents are experts in the market and can show you the perfect homes to meet your needs. They can help you negotiate and close the deal successfully. Contact a real estate agent to help you buy or sell in the Silicon Valley area.

 

Dec. 24, 2021

Is Woodside a Hot Real Estate Market?

Is Woodside a Hot Real Estate Market

Is Woodside a Hot Real Estate Market? 

Woodside, CA, real estate for sale is extremely popular with buyers who want to live in a quiet residential suburb, but does this mean that it is a “hot” real estate market?

A “hot” market occurs when homes do not stay on the market long and there are multiple bidders for the same properties. The number of people wishing to buy, exceeds the number of properties for sale. The San Mateo County market is competitive with 56 houses on the market in November and a median price of $1.4 million for a three-bedroom home according to the California Association of Realtors. Given its suburban character with predominantly single-family homes on larger lots, Woodside is in the upper price range of the county with some very high-end luxury properties such as the $135 million Green Gables compound, which is currently for sale. However, the average person purchasing properties closer to the median price may experience high competition for the properties available. 

What Are the Real Estate Supply Trends in 2022?

This month, the Motley Fool’s Liz Brumer-Smith predicted that nationally real estate demand will continue to exceed supply. In particular, she cited challenges that are currently impacting homebuilding, such as supply chain issues, labor shortages and high tariffs on Canadian lumber. 

She noted that demand might cool with the continued rising real estate prices and interest rates that are expected to rise around .5% in 2022. However, her analysis still predicts a continuing imbalance. As the Bay Area is one of the most competitive real estate markets in the country, these trends are likely to affect Woodside. 

How Hard is It to Find a Home for Sale in Woodside, CA?

Woodside has some of the most desirable Silicon Valley houses for sale. Many buyers are attracted by Woodside’s suburban streets and picturesque town center. Despite the quiet atmosphere, it’s an easy commute to the centers of San Francisco and the Silicon Valley. Although demand is slowing for single-family homes following the records set last year, it may still be a challenging market for buyers. The median home price has been trending upward and this is expected to continue for the foreseeable future. 

If you’re trying to decide when to sell your house, there may not be a better time than this winter. Selling this season means you can take advantage of today’s strong sellers’ market when you make a move.

Win When You Sell

Right now, conditions are very favorable for current homeowners looking for a change. If you sell now, here’s what you can expect:

Your House Will Stand Out – While recent data shows there are more sellers getting ready to list their homes this winter, there are still more buyers in the market than there are homes for sale. If you sell your house now before more houses are listed, it will get more attention from serious buyers who are eager to find a home.

Your House Will Likely Get Multiple Offers – When supply is low and demand is high, buyers have to compete with each other for a limited number of homes. The latest Realtors Confidence Index from the National Association of Realtors (NAR) shows sellers are getting an average of 3.6 offers in today’s market.

Your House Should Sell Quickly – According to the same report from NAR, homes are selling in an average of just 18 days. As a seller, that’s great news for you if you’re looking for a quick process.

Win When You Move

In addition to these great perks, you’ll also win big on your next move if you sell now. CoreLogic reports homeowners gained an average of $51,500 in equity over the past year. This wealth boost is the result of buyer competition driving home prices up. You can leverage that equity to fuel a move, before mortgage rates and home prices climb higher.

The longer you wait to make your move, the more it will cost you down the road. As mortgage rates rise, even modestly, it will impact your monthly payment when you purchase your next home. Waiting just a few months to make that change could mean a long-term financial impact.

The good news is today’s rates are still hovering in a historically low range. According to Doug Duncan, Senior VP and Chief Economist at Fannie Mae:

“Right now, we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low . . .”

Selling before rates climb higher means you can make your move and lock in a low rate on the mortgage for your next home. This helps you get more home for your money and keeps your payments down too.

Bottom Line

As a homeowner, you have a great opportunity to get the best of both worlds this season. You can truly win when you sell and when you buy. If you are looking for a home for sale in Woodside, CA, you are strongly encouraged to work with a real estate agent. A real estate agent can help you identify the perfect properties for your needs and negotiate a good offer. 

 

Dec. 23, 2021

Tips for Finding Homes for Sale in Menlo Park, California

Tips for Finding Homes for Sale in Menlo Park, California

Tips for Finding Homes for Sale in Menlo Park, California

The Menlo Park, CA, real estate market is competitive. With the social distancing measures of the pandemic and more tech workers working at home, single family homes in the Bay Area have been very popular. People are spending more time at home and want more space for work, home-based learning and leisure. If you are looking to buy a new construction home in Menlo Park, you may find that there are many buyers for the listings available. 

Here are some tips for having a successful transaction: 

Put down the highest down payment you can afford. A higher down payment signals to the seller that you are serious and can afford the home, which could help sway the offer in your favor if there are multiple bids.  

If you already own your own home, you may have a gained equity that you can use to make a larger down payment. Homes for sale in Menlo Park, CA, typically have high equity. According to the CoreLogic Homeowner Equity Insights report, homeowner equity has risen 31.1% over the past year. In California, the increase is estimated at $118,700. 

Another benefit for existing homeowners looking to upgrade is Proposition 19, which allows them to keep their previous property tax levels when they move to new homes.  

Take advantage of low interest rates. According to the National Association of Realtors’ chief economist Lawrence Yun, interest rates are expected to rise to 3.5% on a 30-year fixed mortgage. Now is the time to buy if you wish to take advantage of historically low rates. 

Although the demand is not expected to be as high as it was earlier this year, there is still a lot of demand for single-family houses for sale in Menlo Park, CA. The pandemic has not caused workers or jobs to leave the Bay Area. Companies like Facebook and Google are investing in new office space signaling a return to the office for many. However, many workers have an increased expectation for at least some remote work and people continue to spend their leisure time closer to home than in the pre-pandemic world. Menlo Park, CA, real estate is still considered a good investment as sellers’ market conditions are expected to remain for the foreseeable future.

To succeed as a buyer in today’s market, it’s important to understand which market trends will have the greatest impact on your home search. There are two factors every buyer should keep their eyes on: Going forward, the conditions buyers face are primarily dependent on two things: mortgage rates and housing supply.

Here’s a look at each one.

Mortgage Rates Projected To Rise in 2022

As a buyer, your interest rate directly impacts how much you’ll pay on your monthly mortgage when you purchase a home. Rates are beginning to rise, and experts forecast they’ll continue going up in 2022 (see graph below): 

As the graph shows, mortgage rates are expected to climb next year. But they’re still low when you compare to where they were just a few years ago. That presents today’s buyers with some motivation to lock in a low mortgage rate before they climb higher.

More Homes Are Expected To Be Available This Season

The other market condition buyers need to monitor is the number of homes available for sale today. The latest Existing Home Sales Report from the National Association of Realtors (NAR) shows the current supply of inventory sits at just 2.4-months. To put that into perspective, a 6-month supply is ideal for a balanced market where there are enough homes to meet buyer demand.

However, there may be good news for buyers who are waiting for more options. A recent realtor.com survey shows more sellers are planning to list their homes this winter, meaning more choices will likely be available soon.

What Does That Mean for You?

Even if your options improve some this season, it won’t significantly shift market conditions overnight. According to NAR, many more listings need to be available to move closer to a more neutral market:

“Given the average monthly demand . . . , 3.55 million homes should be on the market to meet a level of inventory equal to six months of demand, implying a shortage of homes for sale of 2.24 million.”

So remember, even with more homes expected to come to market this season, competition among buyers will remain fierce as there still won’t be enough homes for sale to meet the current demand. That means you’ll need to act quickly when you’re ready to make an offer.

Bottom Line Get a real estate agent.

If you’re planning on buying a home this winter, more options are welcome news, but it doesn’t mean you should slow down. Let’s connect today so you have an expert on your side to help act as quickly as possible when the right home for you hits the market. Real estate agents can help you find the right property, arrange showings, negotiate on your behalf and help you make a successful offer. 

 

Dec. 22, 2021

The Perks of Putting 20% Down on a Home

The Perks of Putting 20% Down on a Home

The Perks of Putting 20% Down on a Home

If you’re thinking of buying a home in Silicon Valley, you’re probably wondering what you need to save for your down payment. Is it 20% of the purchase price, or could you put down less? While there are lower down payment programs available that allow qualified buyers to put down as little as 3.5%, it’s important to understand the many perks that come with a 20% down payment.

Here are four reasons why putting 20% down may be a great option if it works within your budget.

Your Interest Rate May Be Lower

A 20% down payment vs. a 3-5% down payment shows your lender you’re more financially stable and not a large credit risk. The more confident your lender is in your credit score and your ability to pay your loan, the lower the mortgage interest rate they’ll likely be willing to give you.>

You’ll End Up Paying Less for Your Home

The larger your down payment, the smaller your loan amount will be for your mortgage. If you’re able to pay 20% of the cost of your new home at the start of the transaction, you’ll only pay interest on the remaining 80%. If you put down 5%, the additional 15% will be added to your loan and will accrue interest over time. This will end up costing you more over the lifetime of your home loan.

Your Offer Will Stand Out in a Competitive Market

In a market where many buyers are competing for the same home, sellers often like to see offers come in with 20% or larger down payments. The seller gains the same confidence as the lender in this scenario. You are seen as a stronger buyer with financing that’s more likely to be approved. Therefore, the deal will be more likely to go through.

You Won’t Have To Pay Private Mortgage Insurance (PMI

What is PMI? According to Freddie Mac:

“For homeowners who put less than 20% down, Private Mortgage Insurance or PMI is an added insurance policy for homeowners that protects the lender if you are unable to pay your mortgage. It is not the same thing as homeowner's insurance. It's a monthly fee, rolled into your mortgage payment, that’s required if you make a down payment less than 20%. . . . Once you've built equity of 20% in your home, you can cancel your PMI and remove that expense from your monthly payment.”

As mentioned earlier, if you put down less than 20% when buying a home, your lender will see your loan as having more risk. PMI helps them recover their investment in you if you’re unable to pay your loan. This insurance isn’t required if you’re able to put down 20% or more.

Many times, home sellers looking to move up to a larger or more expensive home are able to take the equity they earn from the sale of their house to put 20% down on their next home. With the equity homeowners have today, it creates a great opportunity to put those savings toward a larger down payment on a new home.

Bottom Line

If you’re looking to buy a home, consider the benefits of 20% down versus a smaller down payment option. Let’s connect so you have expert advice to help make your homeownership goals a reality.

We believe every family should feel confident when buying and selling a home.