January Dream Key Newsletter

Posted
Brought to you by W. Cavin Weber.
Real Estate News December 2017
Why Remodeling Can Bring More Joy to a Home
By Meredith Dunn, National Association of REALTORS®
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The expected tenure of homeowners in a home continues to increase, according to the latest Profile of Home Buyers and Sellers. Last year, the expected tenure was 12 years – this year, it jumped to 15. And, with tightened inventory in many markets, people are staying put in their homes for longer. As a result, remodeling one’s current home is an increasingly popular option for those who want their dream home, but are unable or unwilling to move.

The 2017 Remodeling Impact report shows that remodeling can bring more enjoyment to a home and that certain projects have high returns both in terms of the joy they bring to the homeowner, as well as the number of expenses that are recouped when the home is sold.

The projects that yield the most joy and recoup the most expenses might come as a surprise. According to REALTOR® respondents, the number one project is a complete kitchen renovation. The top reason homeowners renovate the kitchen is for better functionality and livability, according to 44 percent of respondents. When the project is completed, 91 percent of respondents have both a greater desire to be in the home and have a greater sense of enjoyment when they are at home. Overall, a kitchen renovation receives a 10 out of 10 Joy Score and REALTORS® estimate that $40,000 of the cost can be recovered at resale—approximately 62 percent of the estimated cost.
Complete Kitchen Renovation
kitchen renovation

The second-most popular project is a kitchen upgrade. Like the complete kitchen renovation, upgrading worn-out surfaces, finishes, and materials is high on the list of reasons to undertake the project – in fact, it’s the number one reason, at 42 percent. When the project is completed, 81 percent report experiencing a greater desire to be in the home and feeling a major sense of accomplishment when they think about the project. Slightly less have an increased sense of enjoyment when they are in the home at 76 percent, but the project overall has a Joy Score of 9.6 out of 10. REALTORS® estimate that $20,000 of the cost can be recovered at resale—57 percent of the estimated cost.
Kitchen Upgrade
kitchen upgrade

The third project on the list of most popular projects is a bathroom renovation. Forty percent undertake the project for better functionality and livability, while 38 percent want to upgrade worn-out surfaces, finishes, and materials. When the project is completed, 78 percent feel a major sense of accomplishment when they think about the project. The project has a Joy Score of 9.6 out of 10, and REALTORS® estimate that $15,000 of the cost can be recovered at resale—50 percent of the estimated cost.

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Why is One Extra Mortgage Payment Important?
By W. Cavin Weber – Dream Key Real Estate

Did you know, one extra mortgage payment each year can save you over $30,000 on a typical $200,000 loan! Where does the strategy come from?Most months have four weeks, which means that in those months, you’ll be paying the exact same amount as if you made your typical monthly payment.Each year, a few months have a fifth week, which is why we have 52 weeks in a year instead of 48.  With 52 weeks in a year, you would make 26 half payments over the course of the year by using this strategy.

That adds up to 13 full payments – and a mortgage that’s just a little bit closer to being paid off!

Here are the numbers: A $200,00030-year home loan with an interest rate of 5% would cost $186,512 in interest with the traditional 12 payments a year. Make the equivalent of 13 monthly payments every year, and the loan will be retired in 26 years and you will pay only $153,813 in interest — a savings of $32,699.

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Millennials Search for Unconventional Down Payment Funds, but at What Cost?
By Liz Dominguez

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Millennials meeting with REALTOR

 

Rising home prices are standing in the way of millennials who want to buy their first home; however, these challenges are being overcome via some unconventional methods. Millennials are getting creative and finding sources for their down payment by any means necessary. But are these methods hurting the millennial generation financially?

Borrowing from family: Sure, gifted money doesn’t sound bad. But what if the families don’t have the cash to give? Instead, buyers are asking that their parents’ home be refinanced, using the home equity as a way to fund their own home purchase.

Of course, this can be beneficial in multiple-offer situations to get a competitive edge with an all-cash offer, but borrowing from a relative can go south fast. Not being able to pay a bank back can have repercussions like lowering a credit score, but missed payments to a relative can damage familial relations. Is it worth the risk?

Crowdfunding: There are new crowdfunding platforms being introduced every year, and more of them are tapping into the real estate industry. This can be a great way to amass gifted money from friends and family, but not everyone may see it that way. Instead of crowdfunding for their honeymoon, newlyweds are asking their wedding guests to donate toward their first home.

This method can get complicated in the lending world. Buyers will need to look into gifting regulations before accepting any gifted money.

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