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Frequently Asked Questions

Is this real estate economy a bubble?

Real Estate Economy: It’s Not a Bubble Unless it Pops
A bubble, by definition, pops and prices plummet. Look at buyer demand. Look at homeowner equity. Prices could stop going up for a bit – but it’s not a bubble.

NEW YORK – Record home prices, bidding wars and other factors show a real estate market that appears eerily similar to the 2006 bubble market, although mortgage loans are much harder to get today than they were 15 years ago. A mortgage credit availability index reached almost 870 in June 2006; it was only 125 this March.

Today, loans are proportionally smaller to house values and borrowers’ income; borrowers’ average credit scores are higher.

Another implosion seems unlikely, with tight housing supply and strong demand likely to persist. There’s no imminent danger of a sharp appreciation in mortgage rates – though they’re likely to rise a small amount – and the U.S. Federal Reserve has purchased nearly $1 trillion in mortgage-backed securities to keep the rates down since resuming its buys in March 2020.

Although rising home prices may not be as destabilizing as they were in the last bubble, they are placing homeowners in a more favorable position than renters. CoreLogic estimated that homeowners’ equity in mortgaged homes gained 16%, or $1.5 trillion, in 2020 alone.

Is the house price rally decelerating? Indicators are inconsistent. The Mortgage Bankers Association’s index of applications for mortgages to buy a home slipped to 269.6 the week of June 4 from 342.8 in the week of April 16. And the National Association of Realtors®’ index of pending home sales declined 4.4% in April – down 19% from its August 2020 record.

Source: Bloomberg (06/10/21) Coy, Peter

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What factors are considered when setting a selling price?

• Market conditions
• Condition of your home
• Repairs or improvements
• Selling timeframe

How long will it take to sell my house?

That's a question that we get often asked when meeting with sellers to list their home. Of course, there is not a standard answer to this question as the days on market (DOM) depends on the current market conditions, location of the property, and condition of the property. Pricing correctly your home is one of the most important aspects to the listing of your home. Pricing it and marketing it correctly will help to reduce the DOM. 85 & Sunny Real Estate will be able to give you an estimate of DOM at the time of the listing presentation.

In today's (2020) current market condition, in Brevard County, it's taking around 20-40 days to get your home under contract.

Once you are under contract, a contract closes generally within 30-45 days.

What's the first step on the buying process?

Start the buying process by talking to a lender and getting a preapproval letter. By talking to the lender ahead of time, you will be able to know how much you can afford and have an idea of how much money you will need for downpayment and closing costs. Finally, the seller will know you are a serious buyer when presenting an offer with your pre-approval letter. 85 & Sunny Real Estate can help you to get in touch with a variety of lenders depending on your situation. Call us today at 321-254-1330.

Will I need a lot of money in order to buy a home?

Typically, homebuyers will need some money for a down payment and closing costs. However, with today's broad range of loan options, having a lot of money saved for a down payment is not always necessary - if you can prove that you are a good financial risk for a lender. If your credit isn't stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender. High-ratio mortgages can be a good option for those who haven’t managed to save a large chunk of money (who has?), but naturally, these have additional costs associated with them.

How much money do I need to buy a house?

There are two main areas that will need money when buying a house: - the downpayment and - the closing costs.

- Downpayment can vary from buyer to buyer. There are many loan program available depending on your credit score and income situation. Many first time homebuyers are looking to purchase their first home with as little money as possible. There are several loan programs that will help you with this. A FHA loan requires 3.5% down. A VA (for former or current veterans) requires 0% down. Even some conventional loans today have as low as a 5% down if you have the credit score and the ratios that the lender is looking for. Though, traditionally, conventional loans are still looking for 20% or even higher (specially if you are an investor). There are other type of loans like USDA loans that can be made as well with 0% down, but these loans are only available to low-to-middle income buyers and USDA-eligible rural areas that in Brevard County are very almost non-existent.

It is important to remember that any loans in which you don't put the 20% downpayment will see either some type of insurance fee up front (like the VA loan) or a monthly private mortgage insurance with your loan payment (like the FHA or the low downpayment conventional loans).

- Closing costs includes all the fees and expenses you pay when you close on your home, beyond the downpayment. These could easily add 3 to 5% of the loan amount to the cost of the home you purchase. These include, but not limited to: title insurance, title closing fee, appraisal, inspections, survey, escrows for your property taxes and insurance, PMI (private mortgage insurance, if applicable), loan origination fees, mortgage points, homeowners insurance, and other fees that may be required by the lender or the title company.

Can my parents help me with my downpayment?

Sometimes the lender will allow a downpayment contribution from a family member in the form of a gift. In this case, the family member generally has to show where that money came from and needs to sign a letter indicating that this is a gift and it does not need to be repaid.

Should I hire a home inspector?

Yes. A home inspection is an inexpensive way to gain peace of mind, and guard your bank account. For $300-500, a proper inspection will cover all areas of the house including foundation, electrical, heating, plumbing, floors, walls, ceilings, attic, roof, siding and trim, porches, patios, decks, garage and drainage. A professional inspector can give you an objective view of the property, with a written report, indicating the present condition and items that will need repair. Their expertise can mean the difference between uncovering major flaws before or after you own a home. Make the final contract subject to the report’s findings.

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