Saving is Hard. Here’s How to Make it Easier.
Buying a home is considered by many to be the single greatest financial investment that you can make, and the quickest way to amasse financial wealth. For years, Millennials lagged behind the averages for older generations in home ownership, when they were at the same age. This is due at least in part to bad luck – Millennials entered the job market with thousands in student loan debt, right as the country swung into the Great Recession. This poor timing left many Millennials earning less than Gen Xers and Boomers were at the same age, and carrying significantly more debt from wildly ballooning tuition prices.
But the failure to buy real estate also stems from lifestyle choices. Millennials are getting married later and having fewer children overall, which historically have been the two biggest reasons for buying a house. Today, the number one reason cited by Millennials for buying a house is to have a bigger space and a yard for their dog(s).
Thanks to a stable economy and continued job growth, the number of Millennials purchasing homes is on the rise. For a growing number of first-time homebuyers, regardless of age, the most daunting part of buying a house is the downpayment. In many cases, there is a lack of information about how down payments work, or a flat-out misunderstanding. It’s hard to save up for something you don’t even understand!
So, what is a down payment, and how much does it cost? A down payment is an amount that you pay towards the house, as collateral on the loan. This payment is usually represented as a percentage of the total purchase price of the home. Most people think they need to have 20% of the purchase price saved for the down payment, but in many cases, this is not correct.
In fact, down payments can range from 3.5% up to 20%. The reason that the 20% down payment number is repeated so frequently is that it is the amount you have to put down to avoid paying mortgage insurance (a small fee that is rolled into your monthly payment that protects the lender in the transaction). The type of loan you take out will play a big part in your down payment. For instance, an FHA loan may only ask for 3.5% down (but will require mortgage insurance), while a conventional loan might require 20% but not need mortgage insurance. Both FHA and conventional loans can range from 3.5% – 20% down payment requirements, and anything under 20% will require mortgage insurance, regardless of loan type. We strongly recommend that you consult with a mortgage broker to learn more about what to expect for your down payment.
Try These 8 Simple Steps to Save Up Your Down Payment:
- MAKE A BUDGET: A realistic and thorough budget should be your first step whenever trying to save money. It’s difficult to save when you don’t know where your money is going in the first place! Free apps like Mint will connect to your accounts and give you a detailed look at where your money goes, and make it simple to set budgets.
- SET A REALISTIC SAVINGS GOAL: Once you understand your spending and create a budget to stay within your means and goals, you’ll be able to figure out how much money you can reasonable save on a weekly or monthly basis. Based on your budget, figure out where you can cut back on spending (like eating out three times a week instead of four, brewing your coffee at home, or cancelling that gym membership you haven’t used for the last 6 months – no judgement). Don’t plan on saving $500 a month when you can only consistently save $200. Creating unrealistic goals is a great way to fail. Slow and steady wins the race!
- GET PREQUALIFIED: Prequalification is crucial in the home buying process. Many mortgage brokers allow you to prequalify on their website, before you ever pick up the phone to call them. You fill out a short application to find out a.) if you qualify, and b.) for what amount. This way, you’ll have a better idea of what kind of loan you’ll be using and how much house you can afford. Once you know that, you’ll know how big of a down payment you should be expecting to make.
- LOOK INTO HIGH-YIELD SAVINGS ACCOUNTS: Once you establish a budget, determine a realistic savings goal each month, and find out how much you prequalify for, you’re going to want to get the most bang for your buck when you’re saving. High-yield savings accounts generally pay a higher rate of interest than a traditional savings account. Check your local Credit Unions, which typically offer a variety of options for savings. As an added benefit, when your savings is housed at a different bank than your main checking account, it’s harder to access and spend frivolously.
- LOOK INTO A CERTIFICATE OF DEPOSIT (CD) ACCOUNT: Certificates of Deposits, commonly called CDs, pay out higher interest rates in exchange for leaving the funds untouched for a period of time (typically six months to a year). This is a great option once you’ve saved up a chunk of money, and know you won’t need to access it for at least six months. If you’re hoping to buy a house in the next 3-6 months, stick to the high-yield savings. If you’re playing the long game and are saving for something 6 months to a year (or longer) from now, a CD might be a good choice.
- READ UP ON YOUR 401(K) AND IRA: If you’ve been contributing to a 401(k) savings plan, or if you have an IRA, you might be in luck. Many 401(k) plans allow you to withdraw funds for the purchase of a home without paying a penalty. Check with your 401(k) provider to find out the specifics of your plan and any potential penalties. If you are a first time home buyer, let your provider know – they may have different rules or waive penalties to aid first time home buyers. This is especially common with IRAs.
- RESEARCH DOWN PAYMENT ASSISTANCE PROGRAMS: Don’t overlook the potential benefit of down payment assistance programs. These programs are designed to help buyers overcome the hurdle of saving up a chunk of cash for their down payment. Most programs are geared toward first time home buyers, and typically have a maximum household income cap. These programs usually come in two forms: a grant that gifts the funds the to recipient, with no repayment ever; or as a deferred loan. There are a variety of programs available in Spokane with different requirements and assistance offerings.
- STICK TO THE PLAN: However you choose to save your money, make a plan and stick with it! Slow but consistent saving will beat out erratic and unsustainable savings plans every time. Don’t lose sight of the goal; you’ll be scheduling movers before you know it!
Buying Your First Home in Spokane
Buying your first home is exciting and a bit intimidating! That’s why we specialize in helping first time home buyers find and fund their dream house in Spokane. We understand that buying a home is more than a big transaction – it’s a huge milestone, too. To guide our clients through the process, we focus on education and support; we want you to feel empowered to make a great decision.
Carrie Meyer, leader and head Realtor of the Real Estate Agent Spokane Team, is registered with the Washington Association of Realtors, the Spokane Association of Realtors (SAR), and has been a certified Paralegal for over 30 years. She is an expert at writing, negotiating, and explaining real estate contracts. Contact Carrie today at (509) 868-1077 to start searching for your home in Spokane!
Spokane is chalk full of awesome stuff to do, but never is there more to see and experience than in the spring. As the city shakes off the last dustings of snow and flowers peek their colorful heads out of the soul, the residents of Spokane hit the streets en masse. Here’s the top 4 activities happening this spring, only in Spokane:
43rd Annual Lilac Bloomsday Run
The Lilac Bloomsday Run is an annual race in Spokane. Over 50,000 runners, joggers, and walkers show up to complete the 12K course through the heart of Downtown (near the arena and convention center). While it is too late to register and participate, you can still show up and cheer on the racers on Sunday, May 5th. Check out the Bloomsday official website for handy information on the Boomsday Shuttle, parking options, and road closures for the best Bloomsday experience, or watch this cool video to learn more about the race.
Looking to participate in a more significant way? Volunteers are still needed for a variety of activities on race day. Learn more here.
After the race, reward yourself with a wine tasting in Spokane’s Cork District downtown, and be sure to join Spokane Wine Enthusiasts on Facebook to stay up to date on everything happening in the Spokane wine world.
Manito Park’s Seasonal Gardens
Manito Park is one of Spokane’s crowning jewels, and when the seasonal gardens are open and flourishing, it provides an unparalleled outdoor experience. The japanese gardens, in particular, are not to be missed this spring. The Nishinomiya Tsutakawa Japanese Gardens are located within Manito Park and were built in 1974 to honor the sister city relationship between Spokane and Nishinomiya, Japan.
The space is meant a sanctuary for meditation and quiet reflection, and is open from April 1st to October 31st every year, from 8:00am to half an hour before sunset daily. This is one of the few authentic Japanese Gardens to exist outside of Japan, and a walk through the space will instantly transport you across the Pacific.
Manito Park is also home to a staggeringly diverse and prolific Lilac Garden. Spokane’s Lilac Garden contains “well over 100 named cultivars from 23 distinct species, making it one of the most important lilac gardens in the West,” according to the Spokane Parks Department. Spokane is known as the Lilac City, and the Lilac Gardens are a huge part of Spokane’s local identity. And they’re never more beautiful than in the Spring!
2019 Spokane Lilac Festival
The Spokane Lilac Festival is an annual event celebrating the local military, youth, and the beauty and majesty of Spokane. A multi-day event, the Lilac Festival hosts luncheons, dinners, dances, and more, all operating within this year’s theme of “We Are Spokane.”
The festival culminates in the largest Torchlight Military Parade in the country. This parade is not one you will want to miss – it features bands, floats, military and equestrian groups, drill teams and dancers, cars, and more. The parade has a proud 81-year history in Spokane, with many more to come.
Check out the 2019 Armed Forces Torchlight Parade on Saturday May 18th at 7:45pm. Entrance fees and tickets are $15.
Hoopfest is easily the coolest event you’ll see in any downtown in America. This isn’t just shooting hoops for fun; Hoopfest is the largest 3-on-3 basketball tournament in the world. IN. THE. WORLD. Right here, in Downtown Spokane!
When we say Hoopfest isn’t just friends playing in the street, what we mean is 6,000 teams, 3,000 volunteers, 225,000 cheering fans on 450 courts spanning 45 city blocks. From June 29th-30th, Downtown streets shut down to make way for the event, but nearby restaurants and bars stay open and make a great haven for spectators to enjoy the tournament and a bite to eat.
Registration is open until May 17th, so you and your best b-ball pals still have time to participate in this epic event. If you’re not the athletic type and just want to cheer on the teams, scope out your logistics options in advance, and check out the list of FoodFest options available this year.
If you don’t live in Spokane but are considering a relocation, definitely check out Hoopfest or any of these other amazing happenings around town during your visit!
Want to Live Here?
If you’re looking at buying or selling a home in Spokane, we’d love to learn a little more about your move and help you find the perfect space. Whether you’re looking to upgrade, relocate, or downsize, we can help you find what you’re looking for. Contact me today to set up a custom search and learn more about Spokane’s diverse land and housing offerings.
One of the biggest questions people have about real estate is when’s the right time to sell? There are many deciding factors that go into the timing of selling a home, ranging from financial, practical, and personal needs. If you’re in the position to sell now and just aren’t sure if the market conditions are right, there are a few important indicators you can look for.
Here are the top three things to look for in the local Spokane market to know when it’s the right time to sell:
#1 Low Inventory Market Conditions
In the simplest terms, “low inventory” in real estate refers to the number of homes that are currently for sale; these homes are the available “inventory.” A low inventory market, like what we’re seeing in Spokane and surrounding areas right now, is great for sellers.
When you sell your home in a low inventory market, you have a couple of competitive advantages working in your favor. First and foremost, there is simply less competition from other sellers, as there are fewer homes on the market in general. If the number of buyers remains higher than the number of homes on the market, each buyer is likely to look at a higher percentage of all homes currently listed for sale. This is math-speak for saying that the odds of your home getting a showing with a buyer are better during a low inventory market like what we are seeing now.
And you not only have better odds of getting any one buyer through your door, but you also are likely to have a higher percentage of all total buyers scheduling a viewing. This means that you’re getting a bigger slice of the buyer pie seeing your home online and in person than you would have had in a high inventory market.
The more buyers you can get your home in front of, the better your odds of receiving an offer. But it’s important to remember that just because inventory is low and buyers have fewer options doesn’t mean this a good time to skim on preparing and presenting your home for sale. Holistic and professional home preparation paired with a thoughtful digital listing strategy is always the best plan of attack when selling, in any market.
#2 Highly Motivated Buyers
Interest rates are complicated and can affect the real estate market in diverse ways, but in general, when interest rates are low, buyers become much more serious. Currently, interest rates are low and have recently dropped by almost a whole percentage point, and buyers are eager to take advantage of this money saving opportunity. From a buyer’s perspective, having the ability to save on mortgage interest is a strong motivating factor. And if/when interest rates do go up, this can significantly diminish the buying power for many buyers, which puts additional pressure on serious buyers to buy now.
Highly motivated buyers are good for sellers in general, as they tend to come with fewer demands. In real estate terms, it’s possible that highly motivated buyers will ask for fewer concessions, and will present more competitive offers. With more buyers than homes for sale, you also have the potential to end up in a “multiple offer” situation, allowing you to select the best offer.
When the market produces more serious, motivated buyers, sellers also benefit in purely practical terms, too. When inventory is high, sellers tend to see more “looky-loos” who just want to see the inside of the house with little-to-no actual intent to buy. This can be a nuisance and a waste of time and energy for sellers. Getting your home in front of motivated buyers is one of the biggest challenges in selling your home, which is why the current low-inventory market makes this such a smart and convenient time to sell.
#3 Prices are Going Up
Rising prices are always a great indicator of a good time to sell. Currently, the market is shifting to a full-on seller’s market. In a seller’s market, we tend to see prices going up as there is a shortage of homes for sale and plenty of active buyers. From a seller’s perspective, high buyer demand and low inventory competition creates a favorable environment.
Sellers will want to take advantage of these increasing home prices sooner rather than later. Finding a real estate agent, preparing your home, and listing it are all tasks that should be started now in order to hit the seller’s market in full swing.
In addition to housing prices on the rise in Spokane, the low inventory conditions also means that sellers have more leverage when negotiating against concessions. It’s important to work with a knowledgeable and experienced real estate team that can advise you on what listing prices and concessions make sense in the current local market.
Buying a Home With The Real Estate Agent Spokane Team
The best way to sell a home in Spokane is to work with a real estate team who understands the local market and the listing and negotiations process. The Real Estate Agent Spokane Team is dedicated to informing and guiding sellers so they get the best offer on their home. We’d love to connect and discuss how we can help you list and present your home, from the initial consultation all the way through closing and purchasing a new home.
Carrie Meyer, Team Leader, delivers superior client care to those looking to buy or sell real estate. Our team works to educate and empower our clients through one of the biggest transactions of their lives by bringing a structured, process-driven methodology to bring consistency and clarity to a real estate transaction.
How to Take Advantage of a Hot Rental Market & More
It is age-old adage that owning real estate is the best way to build wealth, and that can certainly be true – especially if you’re investing in real estate outside of your primary residence. And while real estate in general is a good investment, rental properties in Spokane are doing especially well – Spokane is currently enjoying less than a 1% vacancy rate. While this fluctuates from year to year is has remained less than 3% over the last 4 years. But investing in real estate certainly isn’t without its risks, which is why it is so important to do your research and work with a real estate agent who has your best interests at heart.
When you’re thinking about buying your first investment property, you’ll want to define your goal with the purchase. Are you looking for a one time, lump sum payout? Or would you rather use the investment to generate an ongoing stream of income? Both options have pros and cons, depending on your experience, available cash reserves, and long term goals.
Before you buy your first investment property, make sure you understand these four investment basics:
#1 The Pros and Cons of Flipping a Home
With the popularity of DIY and HGTV tv shows and YouTube channels, it’s no surprise there’s so much interest in buying and flipping homes. Flipping a house is a form of appreciation investing, which means that the property appreciates, or increases, in value during the time that you own it. This can be an incredible way to turn a profit, but it can also come with tremendous risks if you don’t enter into the situation well informed and well prepared. When flipping houses in Spokane, we usually see people do it one of three main ways.
The first and simplest way to flip a house is to buy a home that is in structurally and architecturally good shape, but looks outdated. In this case, the work that needs to be done in order to “flip” and resell the home is a simple modernization. For example, a home with shag carpet and green floral wallpaper can be completely remade by simply replacing the carpet (and maybe upgrading to pergo or hardwood floors), repainting the interior using a modern, neutral color, and installing new or stainless steel appliances. The reason that the resale price can be worth the effort is that while the home’s value might not increase exponentially, it’s perceived value does. That’s because many people can’t envision the final product or don’t want to put in the effort. This is a fairly low risk, low reward way to flip a house, and can be a great place to start.
Second, you can buy a house that’s listed very cheaply because it needs a lot of work and do a full-scale remodel. This is a great option when a home (or piece of property) has a lot of unrecognized potential. Common remodels are updated kitchens and bathrooms, knocking out walls to create more open/modern floor plans, or adding a garage. There is a much higher return on investment possible with this type of flip, but also greater risk involved. When you begin construction on a home, it’s possible to discover unknown problems like mold or structural insufficiencies. It’s also possible to create problems that wouldn’t have existed otherwise (moving a pipe or wire that is no longer up to code, or being unable to complete a project as budgeted because of an unforeseen architectural nuance). Although it certainly isn’t a requirement, it is helpful to have experience with remodeling or construction with this type of flip. When done properly, renovating and flipping a house can be rewarding and lucrative.
Finally, there are instances in which it might make sense to purchase a property and sit on it for a year or two before selling, possibly even renting it during this time. This would be the case in neighborhoods that are gentrifying or where there is otherwise reason to believe the land or house will be worth more money in the near future. This is a speculation based form of appreciation investing. For example, There is speculation that real estate will increase in value due to the opening of the new Amazon warehouse in The West Plains. The same speculation is common near universities like Gonzaga and Whitworth. Speculation investments can be risky, because your speculation could be wrong, causing you to break even or even lose money. But if your speculation is correct, your property could appreciate significantly in a few short years, allow you to sell it at a profit with few to no repairs or updates.
All three methods of flipping homes come with risk and reward. Working with a realtor and a lender who are experienced in investment real estate is mission critical for new investors. Let your realtor know that you plan on flipping the house before you begin your home search so they can guide and direct you appropriately.
#2 The Pros and Cons of Buying Rental Properties
If you’re looking for a long term income stream from your real estate purchase, then you might want to look at purchasing a rental property. This is known as a cash flow investment. When you buy a home to rent it out, you have the potential to earn additional income on a monthly basis for years or decades to come. Rental prices are frequently higher than mortgage prices, so the profit from a consistently rented property can be significant over time. Purchasing rental property can also come with risk because you are responsible for the mortgage even if you don’t have a renter, so be certain you can afford to carry both payments for several months, if need be. It is often in your best interest to use a property management company to liaise between yourself and the renters, so budget for them to take a small percentage of the monthly income, as well.
There are two common types of residential rental properties in Spokane: single occupancy homes and multi-family properties. Single occupancy homes are a great starting place for first time investors. Condos, townhouses, and individual homes are commonly purchased as rental properties within the single occupancy home category. The great thing about purchasing a single occupancy home as an investment, is that when compared to multi-family properties, they generally require a much less significant financial investment.
If you’re thinking about buying one of these property types as a rental investment, be mindful of the area you are looking in – some neighborhoods and areas support higher densities of renters than others. Look to your real estate agent to guide you.
The other option for purchasing rental properties is to buy what is known as a multi-family property. Common types of multifamily properties in Spokane are duplexes, quadplexes, and apartment complexes. Purchasing multi-family properties requires a bigger financial investment, but can yield bigger returns. Another benefit to multi-family properties is that they can potentially weather vacancies easier than a single occupancy home, as the rental income from the other units can help mitigate the loss of any single unit. There are a wide assortment of multi-family properties currently for sale in Spokane. First time home buyers can purchase up to a 4-plex and live in one of the units, and rent out the other units and use this income toward qualification.
If you’re thinking about investing in a larger rental property of this type, work with an experienced real estate professional who understands the ins and outs of these types of transactions in Spokane.
#3 Funding Investment Properties
Obtaining a mortgage on an investment property is a little different than it is for a primary residence (the home you live in). If you’re thinking about taking out a traditional mortgage loan, you should know that mortgage insurance won’t cover an investment property, which means you’ll need to put at least 20% of the purchase price as a down payment. You will want to maximize your return on investment by keeping your interest rate as low as possible. Two great ways to do that are to offer a higher down payment percentage, like 25%, and to shop for rates at independent mortgage brokers rather than at big banks.
If you are selling one investment property in order to purchase another, make sure you work with a financial adviser to see if you qualify for a 1031 tax-deferred exchange. This type of exchange for like-kind property sales and purchases can have significant tax benefits when executed properly, so be sure to inform your real estate agent if you are completing an exchange purchase.
#4 Choose the Right Realtor
Choosing a qualified real estate agent is always important, but it is especially important when purchasing homes to flip or rent out. Carrie Meyer, leader of the Real Estate Agent Spokane Team, specializes in investment transactions and has 30 years of experience as a Certified Legal Assistant (paralegal). This background makes her an expert at reading, writing, and negotiating contracts – a critical skill in the investment real estate world. Carrie is a licensed Realtor with the National Association of Realtors and sitting board member of both the Spokane Association of Realtors Grievance and Technology Committees.
If you’re looking at buying investment property in Spokane, we’d love to learn a little more about your investing experience and goals. Whether this is your first foray into investing or you’re a seasoned property owner, we can help you find what you’re looking for. Contact Carrie today to set up a custom search for investment properties for sale in Spokane.