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East Tennessee Real Estate & Neighborhood Source

Searching Homes for Rent Knoxville TN? Think again!

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homes for rent knoxville tnAre you ready to get out of an apartment and into something larger? Searching homes for rent Knoxville TN? You might want to think twice about that.  Here is why.  A recent study by the National Association of REALTORS® that studied “income growth, housing costs and changes in the share of renter and owner-occupied households over the past 5 years in metropolitan statistical areas throughout the U.S.,” showed that over the last 5 years, average rent rose 15%, yet the income of the renters only rose 11%.  For those currently renting, the difference between rent and income could get you stuck in a place where it becomes impossible for you to save up the funds for a down payment on a home.

THE BENEFITS OF HOME OWNERSHIP

One of the biggest benefits of homeownership is the ability to protect yourself from rising rents and have a fixed dollar amount for your housing costs for the life of your mortgage. Did you know that there is a good chance that your monthly living expenses will go down if you buy a home?  That’s right!  Many buyers find that their mortgage payments are less than what they were paying in rent.

The other huge benefit of home ownership is forced savings and building your net worth.  The Federal Reserve conducts the “Survey of Consumer Finances” every 3 years where they collect data across all social and economic groups.  Here are some of their findings:

  • The average American family has a net worth of $81,200.
  • 61.4% or $49,856 of that net worth is home equity.
  • A homeowner’s net worth is 36X greater than a renters!
  • The average renter has a net worth of $5400 while the average homeowner has a net worth of $194,500.

THE REAL DIFFERENCE BETWEEN RENTING AND OWNING

You might be asking yourself why the numbers above are so different.  Here is a practical example.  A renter, who has rented year after year, is paying their landlord’s mortgage for them. We know that over that last 5 years rent has risen by 15%.  So each year the renter is paying more rent to their landlord, yet that renter’s income might not be rising at the same pace as their rent.  Therefore over time it effects their net worth negatively.  A homeowner on the other hand, has a fixed dollar amount to pay for their housing, because they locked in their interest rate and monthly mortgage payment for up to 30 years when they purchased their home.  When they pay their mortgage payment every month, a portion of that payment goes to interest (to pay the bank) and the other portion goes to principal (which pays down the balance of their loan). Whether or not their income increases or not, we know that home values are projected to increase by an average of 3.5% per year for the next 5 years. As the homeowner pays down their balance and the value of their home increases, this builds their home equity, which in turn builds their net worth.  It’s no wonder that billionaire investor, John Paulson, recently stated, “I still think, from an individual perspective, the best deal investment you can make is to buy a primary residence that you’re the owner-occupier of.” (you can read that article HERE)

If the example above wasn’t convincing enough, here are 5 financial reasons to buy a home.

5 financial reasons to buy a home in Knoxville

I CAN’T QUALIFY FOR A MORTGAGE. ARE YOU SURE?

Another study has found that many renters have actually saved up the amount of money necessary for a down payment on a home, but they don’t think they’ve saved enough or think they can’t qualify for a loan.  Unfortunately, this simply isn’t true, even if you’ve had a short sale, foreclosure, or bankruptcy in the past.

According to Freddie Mac:  “Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5-10%.  And new 3% down financing options for qualified borrowers could mean a down payment as little as $6000 for a $200,000 home.”

HOW CAN I FIND OUT IF I CAN BUY?

If you are searching homes for rent in Knoxville, it’s time get off the rental roller coaster and stop the cycle of rising housing costs. Many have been caught in this trap.  You might be ready and willing to buy a home, but don’t think you are able.  Let’s change that!  Contact me, Troy Stavros with Gables & Gates, REALTORS today and I will walk you through the EASY process of finding out if you are in a position to buy a home.  Take this huge step towards increasing your net worth and more financial freedom.  I hope to talk with you soon!

Thinking of Buying a Home Soon? Don’t Run Out Of Luck!

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Buying a home in Farragut Don't Run Out of luckAre you thinking of buying a home in Farragut or Knoxville soon? Don’t let your luck run out! With the 30 year fixed mortgage rates still below 4%, you might be on the fence about buying now or waiting, because you think you still have plenty of time to lock in a low interest rate. However, you might change your mind when you see what the experts predict will happen to rates over the next year.

Predictions for 2016 (2nd Quarter)

  • Fannie Mae Predicts 4.2%
  • Freddie Mac Predicts 4.7%
  • Mortgage Bankers Association Predicts 4.9%
  • National Association of REALTORS® Predicts 5.3%

Let’s take a look at what even a small, .5% increase in the rate could do to the net worth of your family.

Today, on a $250,000 home, with an interest rate of 3.86%, your monthly payment (principal and interest only) would be $1,173.

The Home Price Expectation Survey projects home prices will rise approximately 4.4% in the next year.  So in a year, the home above would cost $11,000 more and now be $261,000.  If we add on top of that the mortgage rate increase projection of Freddie Mac (about an average of all the projections) at 4.7%, the monthly mortgage payment on the same home rises to $1,354.

That is an increase of $181 per month.  And if you think that’s a big chunk of change, let’s multiply it over the course of a 30 year mortgage.  Ready?  You pay $65,160 more, just because you waited a year to buy.

What does this mean for you?

Well, it’s pretty obvious what it means for you as a buyer.  Waiting is going to cost you quite a bit of money.  It’s going to shrink your buying power and affordability.  That means you will be able to afford more house now, than you will in a year from now (if your income level stays the same).

What does it mean for sellers?  Well, what do sellers become after they sell?  Buyers!  So the same holds true for you.  If you are waiting to sell your home because you think it will be worth more in a year, guess what, so will the house you will be eventually buying.  Then add the higher interest rate on top of that.

So what this means for you is that there is no better time to buy and sell than right now.  If you are interested in talking more about any of the information above or want to discuss buying a home, or selling a home in Farragut or Knoxville, as always, don’t hesitate to contact me, Troy Stavros with Gables & Gates, REALTORS.  We’ll find a time that is convenient for you to sit down and discuss your plans and goals and how to best get them accomplished.  I look forward to talking with you!

How To Get The Best Deal When Buying A Home In Knoxville

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best deal on buying a knoxville homeA recent article on the Wall Street Journal’s MarketWatch website discussed housing affordability and how home buyers can get the best deal when buying a new home.  The article’s summary of the national market conditions showed that home prices will continue trending higher this year, but not as fast as 2013.  Mortgage rates are also expected to rise, but estimates say they will do so gradually.  Because of these two factors, home’s will be somewhat less affordable.

It is with these facts in mind that I echo these 6 pieces of advice for getting a better deal when buying a home in Knoxville.

  1. The sooner you buy the better.  Simple logic tells us that if both Knoxville home prices and mortgage interest rates are rising, then it’s better to buy sooner rather than later to take advantage of lower prices and lower interest rates.
  2. Find yourself an expert and work with them.  The last thing I want to do is bash other real estate agents, but just like in all professions, not everyone is created equal.  Find an agent who is intimately familiar with the area where you want to buy your next home, who is on top of market trends, and who has proven themselves as a good negotiator.
  3. Know the local home market.  Continuing off the advice in #2, a good agent will be able to look at a home’s price and tell you if it’s priced above, below, or at market value.  This is key in knowing not only what to offer, but how fast you need to offer.  Homes in the current Knoxville home market that are priced below market value are selling very fast, so if you delay in making an offer, chances are pretty good you will lose out to another interested party.  If your agent isn’t armed with the information to educate you, then you may lose out on a home you love.
  4. Get your financing in order.  As a Knoxville home buyer or a buyer anywhere for that matter, it is super important to understand how much house you can afford.  This dollar amount may or may not be what the mortgage broker says you can qualify for.  Think seriously about how much you are comfortable paying a month (they key term there is comfortable, don’t stretch yourself too thin).  Having a ceiling price can really help when you start getting emotional during negotiations and are tempted to offer more than you should.
  5. Make yourself attractive to sellers.  First and foremost a seller wants to know that you can afford to buy their home, so getting pre-approved by a lender and including a pre-approval letter with your offer is key.  Also keeping the number of contingencies in your offer to a minimum is important.  Oftentimes the highest price isn’t the most important thing to a seller.  When wearing my listing agent hat, I tell me sellers to take into account which offer has the highest probability of closing, as well as which has an attractive offer price. If an offer can’t close, it doesn’t matter how good the offer price is.
  6. Expand your geographic search area.  Depending on where you are looking for your home, sometimes you can get more for your money if you expand your search area a bit.  I’m not talking about moving to a different county (although that is an option), but a subtle zipcode change can make a big difference in pricing.  If you are trying to stay within a certain school district, there may be different pockets within that search area which may offer more house for the money.  Being flexible on location can not only save you money, but can open up additional options and perhaps get you a better overall home.

I’d love to sit down and talk to you about the Knoxville home market.  Contact me, Troy Stavros to discuss your goals in buying a home in Knoxville.

CLICK HERE to read the complete source article at MarketWatch.com.

The Hot Season To Buy Or Sell A Home In Knoxville Is Upon Us!

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Whether you are in a warm weather market, cold weather market, or a high tourist seasonal market, you will see the hot time of the year to buy and sell a home ebb and flow throughout the year.  There will be times of the year that will slow down and others will take off.  Locally, we are about to step into the busiest time of year to buy and sell a home in Knoxville.  As evidenced by the graphics below, we typically see a drop in sales volume, sales price, and inventory throughout the winter months.  Then once we hit February or March, the trend does an about face and the number of homes sold increases, along with the prices of those homes and the number of homes available.

Knoxville Real Estate Volume and Prices Chart March

Knoxville Homes Inventory Graph March

What does this mean for you?

  • If you are looking to sell a home in Knoxville, there is good news and not so good news.  The good news is, the odds of selling your home will increase along with the odds of selling it for a higher price.  The not so good news is you will have more competition.
  • Seller’s takeaway:  Get your home on the market as soon as possible, before more competition hits the market alongside of you. 
  • If you are looking to buy a home in Knoxville, the good news is you should be seeing more options hit the market as inventory increases.  The bad news is that you will most likely be looking at higher prices and more competition for homes as well.
  • Buyer’s takeaway:  Start looking today and when you find the right home don’t mess around.  Waiting too long or submitting low offers will invite additional offers in to compete against you.

If you are even considering buying or selling a home in Knoxville in the near future, contact me, Troy Stavros with Gables & Gates, REALTORS, to sit down and plan out your strategy for achieving your Knoxville real estate goals. I look forward to talking with you!

What Will A 1% Difference In Your Mortgage Rate Save You?

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If you are in the process of buying a home in Knoxville or at least thinking about it, financing is also on your mind.   Unless you are planning to pay cash, you’re going to want to find the best deal and the lowest mortgage rate.  Knoxville mortgage rates can vary from lender to lender and also vary widely according to the type of mortgage and the length of the term.

“Although the difference in monthly payment between a 4.5 percent interest rate and a 5.5 percent interest is not as dramatic, your savings in interest paid over the life of the loan is significant,” said Erin Lantz, director of Zillow Mortgage Marketplace. “Mortgage rates will likely rise to 5 percent by the end of 2014 due to an improving economy and policy changes by the Federal Reserve. By buying a house while interest rates are still incredibly low, you could end up saving more than $52,000 over the course of 30 years.”

Image by Zillow Mortgage Marketplace

What Are The Steps To Buying A Home in Knoxville?

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What are the steps to buying a home in Knoxville?  While the process may be a bit intimidating, if you follow these steps it can be a fun and super rewarding experience.  Once you start skipping steps, you will find the process gets more difficult.  Here are the 12 steps to buying a home in Knoxville:

  • Step 1: Sit down with a real estate agent to discuss and analyze your wants and needs. This very important step can set the tone for the success of your home search.
  • Step 2: You and your Knoxville real estate agent establish a working relationship with each other.  You are officially a team!
  • Step 3: You speak with a lender and get pre-approved for financing.  This important step will help guide you so you make sure you are looking at homes you can afford.  The other option if you have the ability, is to pay cash.
  • Step 4: This is where the fun begins!  This is when you and your dedicated buyer specialist venture out in search of your next home.
  • Step 5:  You’ve found that special place you want to call your Knoxville home.
  • Step 6: You sit down with your Knoxville real estate agent to write up an offer, you write a check for your escrow deposit, and your agent gets the offer presented to the seller.  Negotiations begin.
  • Step 7: The seller accepts your offer.  Hurray! At this time you begin the home inspection process and work on removing any contingencies in your offer.
  • Step 8: You complete your full mortgage application.  This includes the lender pulling your full credit report, ordering an appraisal on the home you are buying, and verifying your employment and finances.
  • Step 9: Your loan goes into underwriting.  This is where the final decision is made on whether you get loan approval.  Underwriting can approve your loan, reject your loan, or give you additional conditions to meet in order to approve the loan.
  • Step 10:  Your loan has been approved and the file is sent to the Title Company or Closing Attorney to complete a Title Examination on the home your purchasing as well as setup your insurance and in some states complete a survey.
  • Step 11:  All of the documentation is pulled together for closing day.
  • Step 12.  It’s closing day!  You meet to bring your down payment money, sign all of the loan documents, and get the keys to your new home.  Let moving day begin!

To discuss buying a home in Knoxville or to get any answers about any of these steps, contact me, Troy Stavros, with Gables & Gates, REALTORS at 865-999-0925 or by clicking here.

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