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DO NOT Do These 7 Things After Applying For a Mortgage

March 13, 2019 By Troy Stavros

Congratulations! You’ve found a home to buy in Knoxville and have applied for a mortgage! You are undoubtedly excited about the opportunity to decorate your new home! But before you make any big purchases, move any money around, or make any big-time life changes, consult your loan officer. They will be able to tell you how your decision will impact your home loan.

Below is a list of 7 Things NOT TO DO After Applying for a Mortgage! Some may seem obvious, but some may not!

1. Don’t change jobs or the way you are paid at your job! Your loan officer must be able to track the source and amount of your annual income. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed during this time as well.

2. Don’t deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.

3. Don’t make any large purchases like a new car or new furniture for your new home. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher debt to income ratios… higher ratios make for riskier loans… and sometimes qualified borrowers no longer qualify.

4. Don’t co-sign other loans for anyone. When you co-sign, you are obligated. As we mentioned, with that obligation comes higher ratios as well. Even if you swear you will not be the one making the payments, your lender will have to count the payment against you.

5. Don’t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer money between accounts, talk to your loan officer.

6. Don’t apply for new credit. It doesn’t matter whether it’s a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.

7. Don’t close any credit accounts. Many clients have erroneously believed that having less available credit makes them less risky and more likely to be approved. Wrong. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your score.

Bottom Line

Any blip in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. They are there to guide you through the process.

Have questions? Need a recommendation to a loan officer? Want to talk about getting the home buying or selling process started? Contact me, Troy Stavros with CornerStone Realty Associates at 865-999-0925 today!

4 Reasons To Buy A Home This Spring In Knoxville

March 12, 2019 By Troy Stavros

Spring has sprung in Knoxville, and it’s a great time to buy a home! Here are four reasons to consider buying today instead of waiting.

1. Knoxville Home Prices Will Continue to Rise

CoreLogic’s latest U.S. Home Price Insights reports that home prices have appreciated by 4.4% nationally over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.6% over the next year.

Home values in Knoxville will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year fixed rate mortgage came in at 4.41% last week. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are in unison, projecting rates will increase by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You Are Paying a Mortgage

Some renters in Knoxville have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Examine the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, greater safety for your family, or you just want to have control over renovations, now could be the time to buy.

Bottom Line

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Want to talk about your specific situation? Call or text Troy Stavros with CornerStone Realty Associates at 865-999-0925 today!

How To Prepare To Buy Or Sell A Home This Spring in Knoxville

March 11, 2019 By Troy Stavros

Some Highlights:

In the majority of the country, this past weekend marks the start of Daylight Savings Time as we set our clocks forward an hour on Sunday at 2:00 AM EST.
Whether you plan on buying or selling this spring, these tips could help you ‘spring ahead’ of your competition!
Spring brings two things: more buyers & more sellers! Get prepared now to stand out in the crowd!

Have questions or want to get the process started? Contact me, Troy Stavros with CornerStone Realty Associates at 865-999-0925!

Why an Economic Slowdown Will NOT Crush Real Estate this Time

March 7, 2019 By Troy Stavros

Last week, the National Association for Business Economics released their February 2019 Economic Policy Survey. The survey revealed that a majority of the panel believe an economic slowdown is in the near future:

“While only 10% of panelists expect a recession in 2019, 42% say a recession will happen in 2020, and 25% expect one in 2021.”

Their findings coincide with three previous surveys calling for a slowdown sometime in the next two years:

That raises the question: Will the Knoxville real estate market be impacted like it was during the last recession?

A recession does not equal a housing crisis. According to the dictionary definition, a recession is:

“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

During the last recession, prices fell dramatically because the housing collapse caused the recession. However, if we look at the previous four recessions, we can see that home values weren’t negatively impacted:

January 1980 to July 1980: Home values rose 4.5%
July 1981 to November 1982: Home values rose 1.9%
July 1990 to March 1991: Home values fell less than 1%
March 2001 to November 2001: Home values rose 4.8%

Most experts agree with Ralph McLaughlin, CoreLogic’s Deputy Chief Economist, who recently explained:

“There’s no reason to panic right now, even if we may be headed for a recession. We’re seeing a cooling of the housing market, but nothing that indicates a crash.”

The housing market is just “normalizing”. Inventory is starting to increase and home prices are finally stabilizing. This is a good thing for both buyers and sellers as we move forward.

Bottom Line

If there is an economic slowdown in our near future, there is no need for fear to set in. As renowned financial analyst, Morgan Housel, recently tweeted:

“An interesting thing is the widespread assumption that the next recession will be as bad as 2008. Natural to think that way, but, statistically, highly unlikely. Could be over before you realized it began.”

The Knoxville Housing Market Will “Spring Forward” This Year!

March 5, 2019 By Troy Stavros

Just like our clocks this weekend, in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in Knoxville has been holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest. Traditionally, they would have been right.

Buyer demand has seasonality to it. Usually, this falls off in the winter months, especially in areas of the country impacted by arctic conditions.

That hasn’t happened this year.

Demand for housing in Knoxville has remained strong as mortgage rates have remained near historic lows. Even with an increase in rates forecasted for 2019, buyers are still able to lock in an affordable monthly payment. Knoxville home buyers are increasingly jumping off the fence and into the market to secure a lower rate.

The National Association of Realtors (NAR) recently reported that in 2018 the top 10 dates sellers listed their homes all fell in April, May, or June.

Those who act quickly and list now, before a flood of increased competition, will benefit from additional exposure to buyers.

Bottom Line

If you are planning on selling your home in 2019, meet with a local real estate professional to evaluate the opportunities in your market. If you are anywhere between Knoxville and Nashville, contact me, Troy Stavros with CornerStone Realty Associates and let’s sit down and formulate a plan for your specific situation. Call or text 865-999-0925 today!

No Need To Worry.. Home Prices Coming in for a SOFT Landing

March 4, 2019 By Troy Stavros

Home prices have appreciated considerably over the last five years. This has some concerned that we may be in for another dramatic correction. However, recent statistics suggest home values will not crash as they did a decade ago. Instead, this time they will come in for a soft landing.

The previous housing market was fueled by an artificial demand created by mortgage standards that were far too lenient. When this demand was shut off, a flood of inventory came to market. This included heavily discounted distressed properties (foreclosures and short sales).

Today’s market is totally different. Mortgage standards are tighter now than they were prior to the last boom and bust. There is no fear that a rush of foreclosures will hit the market. The Mortgage Bankers’ Association just announced that foreclosures are lower today than at any time since 1996.

Case Shiller looks at the percentage of appreciation as compared to the same month the year prior. Here is a graph of their findings over the last ten months:

As we can see, home price appreciation is softening, as more inventory comes to the market. This shows that real estate prices are not crashing, but merely returning toward historic appreciation numbers, of 3.6% annually.

Bottom Line

Knoxville home prices are leveling off. Long term, that is a good thing for the housing market. Have questions about what your home’s value might be? Want to talk about what buying or selling a home might look like for your specific situation? Call me, Troy Stavros with CornerStone Realty Associates at 865-999-0925 today and let’s set up a time to sit down and talk.

Would You Rather Be Paying Off Your Landlord’s Mortgage Or Your Own?

February 8, 2019 By Troy Stavros

There are some people who haven’t purchased homes because they are uncomfortable taking on the obligation of a mortgage. However, everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

With home prices rising, many renters are concerned about their house-buying power. Mike Fratantoni, Chief Economist at MBA, explained:

“The spring homebuying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.”

As an owner, your mortgage payment is a form of ‘forced savings,’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

As mentioned before, interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest reportshows that rates across the country were at 4.46% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy. Contact Troy Stavros with CornerStone Realty Associates at 865-999-0925 to start formulating a plan and get you into your dream home!

Time To Squash The 20% Down Payment Myth For Good

February 7, 2019 By Troy Stavros

The largest obstacle renters face when planning to buy a home is saving for a down payment. This challenge is amplified by rising rents, which has eaten into the amount of money renters have leftover for savings each month after paying expenses.

In combination with higher rents, survey after survey has shown that non-homeowners (renters and those living rent-free with family or friends) believe they need to save upwards of 20% for their down payment!

According to the “Barriers to Accessing Homeownership” study commissioned in partnership between the Urban Institute, Down Payment Resource, and Freddie Mac, 39% of non-homeowners and 30% of those who already own a home believe they need more than a 20% down payment.

The percentage of those who are aware of low down payment programs (those under 5%) is surprisingly low at 12% for non-homeowners and 13% for homeowners.

In a recent Convergys Analytics report, they found that 49% of renters believe they need at least a 20% down payment.

The median down payment on loans approved in 2018 was only 5%! Those waiting until they have over 20% may already have enough saved to buy now!

There are over 45 million millennials (33%) who are mortgage ready right now, meaning their income, debt, and credit scores would all allow them to qualify for a mortgage today!

Bottom Line

If your five-year plan includes buying a home, let’s get together to determine what it will take to make that plan a reality. You may be closer to your dream than you realize! Contact Troy Stavros with CornerStone Realty Associates at 865-999-0925 to start formulating a plan and get you into your dream home!

4 Time Tested Ways Real Estate Can Build Family Wealth

February 4, 2019 By Troy Stavros

Recently, David Greene, co-host of the BiggerPockets podcast and a nationally renowned author and speaker, wrote an article in Forbes explaining how investing in real estate could help build wealth. Many of the points he made also apply to a family owning their own home. Here are a few:

1. Appreciation

“The rising of home prices over time, is how the majority of wealth is built in real estate. This is the ‘home run’ you hear of when people make a large windfall of money. While prices fluctuate, over the long run real estate values have always gone up, always, and there is no reason to think that is going to change.

One thing to consider when it comes to real estate appreciation affecting your ROI is the fact that appreciation combined with leverage offers huge returns. If you buy a property for $200,000 and it appreciates to $220,000, your property had made you a 10% return. However, you likely didn’t pay cash for the property and instead used the bank’s money. If you consider that you may have put 10% down ($20,000), you actually have doubled your investment, a 100% return.”

2. Leverage

“By nature, real estate is one of the easiest assets to leverage I have ever come across—maybe the easiest. Not only is it easy to leverage the financing of it, but the terms are incredible compared to any other kind of loan. Interest rates are currently below 5%, down payments can be 20% or less, and loans are routinely amortized over 30-year periods.”

3. Paying Off the Debt

“One of the best parts of investing in real estate is the fact that … you’re slowly paying down your loan balance with each payment to the bank… After enough time passes, a good chunk of every payment comes off the loan balance, and wealth is created.”

4. Forced Equity

“Forced equity is a term used to refer to the wealth that is created when an investor does work to a property to make it worth more…

Example of this would be adding a third or fourth bedroom to a property with only two, adding a second bathroom to a property with only one, or adding more square footage to a property with less than the surrounding houses.”

Though Green was talking about investors, the same could be said about a family upgrading their own home.

Bottom Line

Green put it best by saying:

“There are many ways to build wealth in America, but real estate might be the safest, steadiest and simplest way to do so.”

To read the full article, click here.

Contact Troy Stavros with CornerStone Realty Associates at 865-999-0925 to start formulating a plan and get you into your dream home!

Year End Housing Snapshot: Sales Declining Nationally, Knoxville Still Strong

February 1, 2019 By Troy Stavros

Nationally, at the end of 2018, pending home sales fell, possibly due to concerns about the economy and rising home prices, according to a recently released housing index from the National Association of REALTORS®.

Chief economist for NAR, Lawrence Yun said, “The stock market correction hurt consumer confidence, record high home prices cut into affordability, and mortgage rates were higher in October and November for consumers signing contracts in December.”

Compared to a year ago, all four major regions of the U.S. posted declines, with the South posting the largest decrease (the South also had the highest level of sales going in.)

Yun also said, ““The longer-term growth potential is high. The Federal Reserve announced a change in its stance on monetary policy. Rather than four rate hikes, there will likely be only one increase or even no increase at all. This has already spurred a noticeable fall in the 30-year, fixed-rate mortgages. As a result, the forecast for home transactions has greatly improved.”

That being said, one thing we know for certain is that while it’s good to look at what is happening nationally, real estate is local. Knoxville has fared better than what the information above would have you think. While the South showed the biggest decrease, that isn’t true everywhere as witnessed in the images below.

This first image relates to the national numbers:

This next image looks at the same timeline of December, comparing LOCAL Pending Sales and Median Sales Price by County (December 2018 vs. December 2017):

This last image looks at the year to date numbers comparing single family home sales and median sales price, locally by county 2018 vs 2017:

Wondering how your specific subdivision, neighborhood, or your personal home has fared? Just contact me, Troy Stavros with CornerStone Realty Associates and I’d be happy to go over those with you!

Homeownership and the Effects of Student Loan Debt

January 30, 2019 By Troy Stavros

Over the course of the last thirty years, a shift has happened. An entire generation has been raised to believe that a college education is their key to unlocking opportunities that were not available to their parent’s or grandparent’s generations.

Due to this, student loan debt has soared to $1.5 trillion and represents the largest category of debt, surpassing credit card and auto loan debt in 2010 and never looking back. As more and more Americans continue their education amongst rising tuition costs, this number will no doubt increase.

Many housing experts have blamed student loans for a drop in the homeownership rate for young families, and to an extent, they’ve been right. Increased debt at the time of graduation has no doubt limited young people from being able to afford a home at the same rate as their parents or grandparents did at the same age.

In a recent Forbes article, the author explained that “in just the class of 2017, the average student has about $40,000 in debt — almost enough for a 20% down payment on a median-priced home.”

The Federal Reserve set out to determine exactly how much impact student loan debt has had on the homeownership rate of those 18-34 (millennials). Their results found that,

“Every $1,000 in student loan debt delays homeownership by about 2.5 months, but it doesn’t prevent homeownership entirely.

In fact, by the time college grads reach their 30s, those with student loan debt have a homeownership rate nearly identical to those who didn’t take out loans.” (emphasis added)

In the Wall Street Journal’s coverage of the Fed report, they found that recent graduates prioritize paying off their student loans over saving for a down payment, despite their desire to be a homeowner. Many with debt want to “get that monkey off (their) back (before they) make any new investments.”

This has just delayed the wave of young home buyers from hitting the market. But as Danielle Hale, the Chief Economist at realtor.com warns,

“2020 will be peak millennial, the year when the largest number of millennials will turn 30.”

By age 30, those who attained a bachelor’s degree right after high school will be one or two years away from paying off their loans and will have been in their career long enough to earn a higher salary.

In the long run, research shows that attaining a bachelor’s degree or more actually increases the chances that someone will become a homeowner.

Bottom Line

If you are one of the many millennials who has prioritized paying down your student loans over saving for a down payment, you’re not alone. Even if you are a couple years away from paying off your loans, let’s get together to help you determine if waiting really is the best decision for you!

Contact Troy Stavros with CornerStone Realty Associates at 865-999-0925 to start formulating a plan and get you into your dream home!

Why It Doesn’t Make Sense To Wait For Spring To Sell Your Home

January 28, 2019 By Troy Stavros

The price of any item (including residential real estate) is determined by the theory of ‘supply and demand.’ If many people are looking to buy an item and the supply of that item is limited, the price of that item increases.

The supply of homes for sale dramatically increases every spring, according to the National Association of Realtors (NAR). As an example, here is what happened to housing inventory at the beginning of 2018:

Putting your home on the market now, rather than waiting for increased competition in the spring, might make a lot of sense.

Bottom Line

Buyers in the market during the winter are truly motivated purchasers and they want to buy now. With limited inventory currently available in most markets, sellers are in a great position to negotiate.