The Columbia SC economic outlook will likely become a little bit clearer – or not – now that the presidential election has been decided. And for an election that was largely based on campaign rhetoric regarding the U.S. economy, the nation’s housing concerns have been largely ignored by both candidates. Let’s take a brief look at each party’s view on the housing market and what its economic policies will do to, or for, housing.
Keep in mind that not only is the presidential election finally over, but so, too, are the races for both houses of Congress. And while the new President will get the lion’s share of the newfound limelight, much of the economic discussion and legislation will come from the House and Senate. Much of what conversation there was about the housing market revolved around Donald Trump’s contention the financial markets are in dire need of deregulation versus Hillary Clinton’s view that affordable housing was the key component to a continued improvement in the single-family real estate market.
For all the hoopla and economic speculation surrounding the elections, the housing market’s issues are clear and challenging. The questions will be, “In what manner will this new administration deal with bringing much needed reform to mortgage industry giants Fannie Mae and Freddie Mac? While these two behemoths financially back the majority of the nation's mortgage market and earn a hefty profit in the process, they are still under the control of the federal government. As such, they are required to pay the U.S. Treasury Department all of their earnings. This, in turn, spawns additional questions for the new administration and the new Congress. How does the country welcome private capital investment back into the mortgage arena? In addition, how does the U.S. monitor, manage and control the rampant growth of non-bank lending institutions, which currently comprise over half of all new mortgage loans originated in today’s market? Furthermore, what about the borrowers who use these lenders, how do we insure their financial safety? Lastly, what efforts must be undertaken to create and expand more affordable housing opportunities in communities that are underserved and largely forgotten?
During the campaign, both presidential candidates boasted of their efforts to grow the nation's economy. However, each had a different road map showing how growth would occur. Most analysts say the Columbia SC economic outlook as it relates to housing is to provide better opportunities for increased home ownership. With the nation’s homeowner participation rate at or near the lowest level in decades, there’s really only one direction it can go. Increasing home ownership means making mortgage lending more easily accessible to more families – and more affordable – in the face of what many believe will be slightly higher interest rates next year.
Trump’s Republican “platform” – or, at least, one of the planks in it – was his feeling that the Dodd-Frank financial reform bill should be reformed or repealed. For all its supposed safeguards, analysts say the regulatory burden saddled on the mortgage industry by Dodd-Frank and the Consumer Financial Protection Bureau (CFPB) was too restrictive. Opponents of Dodd-Frank contend those regulations have made it more difficult for mortgage lenders to extend credit. The result is the creation of a more restrictive environment for even qualified borrowers to obtain necessary financing.
While addressing regulatory concerns in the financial industry will likely be an ongoing debate in 2017, neither Trump nor Clinton set forth opinions nor plans to reform the effects Fannie Mae and Freddie Mac have on the mortgage market. It was largely assumed Clinton would have the advantage of adding to – or at a minimum, continuing – the policies of the current Obama administration.
In addition, Clinton mentioned various proposals during her campaign to spur homeownership. Among them were efforts to provide assistance to those in underserved communities with down payments. For example, her plan would provide a federal government matching fund grant of up to $10,000 in savings designed for those households earning less than the median income. That money would be set aside specifically for the purpose of a down payment to purchase a home. Such a policy could encourage some of the nation’s prospective homeowners to save more money, yet it remains to be seen what sort of stimulus that program will have for housing. Some economists contend that what’s missing in the discussion about down payments is the obvious “elephant in the room” – borrowers still need to have an average to above-average credit score to qualify for financing. Many of the households for which the policies are intended will fall short of the required credit scores.
As far as Trump’s policies, his immigration reform stance may still have legs as it reaches Congress for additional discussion during 2017. If efforts are successful to either stem the numbers of immigrants coming to this country or to better enforce the immigration laws currently in place, housing could be affected.
In summary, the housing market is inherently driven by the successes or failures of the nation's economy. Factors such as employment gains, income growth, consumer confidence and the gross domestic product (GDP) not only contribute to – but also have a direct bearing on – the housing market. With the current state of the market being one of high demand, the Columbia SC economic outlook is for that trend to continue. However, the nation’s homebuilders are constructing new homes at a pace that falls short of the demand. In addition, the mortgage lending industry is in dire need of reform. While the housing crisis of less than a decade ago is clearly in the nation’s rear view mirror, a complete recovery is still yet to be realized.
With the new administration and new Congress, we can only hope for needed improvements in the housing sector for both the Columbia SC economic outlook as well as that of the entire U.S.
You can find more articles pertaining to the Columbia SC economic outlook in the "Economy" section of articles just below Columbia SC Real Estate Categories in the column to your right.
Remember to also check us out by finding us on Facebook and following us on Twitter.
Many potential purchasers seek Columbia SC home buying advice as they prepare to search for a home. These prospective homeowners usually have several things in common – they are all concerned about issues that may arise during the home buying process. Let’s take a look at the five biggest fears first-time homeowners have as they enter the market.
“What if there’s a problem with the home I want to buy?”
Whether it’s a starter home, an older home, or a fixer-upper, one of the most frequently asked questions from purchasers seeking Columbia SC home buying advice is what happens if a home has an issue discovered by a routine home inspection. While most older homes require routine maintenance home inspectors will note in their report, some homes can have more pressing problems. Home issues like a cracked foundation, a leaky roof or dry rot need to be addressed as soon as possible. As the prospective purchaser, if you still want to buy the home, we suggest you discuss the issue with the seller – including the estimate given by the home inspector or repair contractor – and attempt to negotiate a reduction in the sales price or a credit to be applied toward the necessary repair work. If you can’t reach a satisfactory agreement, move on. There are other homes out there – that don’t have major problems with which to contend.
“I don’t want to lose my deposit.”
When you find a home you’re interested in and and are presented a contract to sign, prospective buyers typically are required to include an earnest money deposit ranging from 3%-5% of the sales price. Earnest money is held in escrow to be applied to the sales prices once the deal is consummated. And while there are few scenarios in which buyers actually lose their deposits, it remains one of the most popular concerns from those looking for Columbia SC home buying advice. Remember, there are certain contingencies in every sales contract, and your real estate agent can assist in reassuring you that if those contingencies aren’t met your earnest money will be refunded. As an example, your contract may include a contingency that the home appraise for an amount equal to or greater than the sales price. If the appraisal is less than the sales price, not only will it potentially affect your mortgage financing, but it may signal you’re in danger of overpaying for the home. Our advice is to negotiate with the seller if you still want to buy the house.
“I like this house and I don’t want to lose it.”
Another concern expressed by homeowners asking for Columbia SC home buying advice is the possibility they will lose the chance to buy the house they want. True, if you find the home that best fits your needs and budget, you should be prepared to move quickly. In hot markets – especially with limited inventory available – it’s not unusual for certain homes to receive multiple offers. While we don’t recommend overpaying for a home, consult your real estate agent as to what you can do to ensure your chances of getting the house you want. Be prepared to negotiate, if necessary. In addition, the faster you can offer the sellers a closing date the more attractive your contract may be, so have your proverbial ducks in a row. We suggest being pre-approved for financing and having your down payment in place so you can demonstrate to the sellers you’re prepared to close as soon as possible. Keep in mind, however, your biggest competition will come from those prospective buyers that may make higher offers – especially if one or more of those offers are from cash purchasers who don’t have to rely on mortgage financing.
“I’m concerned about my real estate agent.”
All real estate professionals are not created equally. Sometimes, prospective buyers feel their agents don’t have their best interest in mind or perhaps they just aren’t on the same page when it comes to the home search process. Our advice? If you feel uneasy about working with your agent, discuss your concerns and see if you can reiterate your expectations. If that doesn’t work – or if you choose not to have a heart to heart talk – find another agent. The best suggestion we can provide is to meet with your prospective agent as you consider beginning your home search and interview them. If you don’t feel a connection or don't feel you'll be able to work closely with them, move on and talk to other agents until you find one you're more comfortable with. Never settle on working with an agent you have concerns about. Chance are, your first instincts will end up being true.
“I have a timetable on buying a home… and time’s running out.”
The best piece of Columbia SC home buying advice we can give is not to rush into buying a home. Remember, it's a decision that represents the single largest purchase you’ll probably ever make – so, treat it that way. If you have a timetable, plan ahead and allow for a contingency as you approach your deadline. As an example, if your lease if coming up for renewal and you’re concerned about finding a house before it expires, don’t rush into buying just any home that's available. Consider an alternate approach – you don't have to buy – perhaps you can get a short-term extension on your lease or find another rental property offering a month-to-month lease to give you sufficient time to shop for your home without the pressure of meeting a certain timetable.
Lastly, prospective purchasers interested in Columbia SC home buying advice should remember this: If you’re concerned about any aspect of your home search or mortgage lending process, take it slow and follow your gut. As mentioned before, a home purchase it an important step and a huge financial investment – treat it as such and you’ll be sure to enjoy the process more by having greater peace of mind.
Read more about home buying advice in the section of articles on Columbia SC Home Buying Tips just below our Columbia SC Real Estate Categories in the column to your right. Remember, we also post tips daily on Facebook and Twitter.. Check us out there, too.
If you’ve paid attention to the Columbia SC mortgage industry, no doubt you’ve seen and heard all sorts of ads for a Columbia SC reverse mortgage. Just exactly what is a reverse mortgage, you ask? A Columbia SC reverse mortgage enables a homeowner to extract the equity in his home to use as monthly income. These mortgage instruments can sometimes be attractive options for senior citizens and retirees. The reason? There are no monthly mortgage payments. As long as the homeowner continues to pay real estate taxes and home insurance – and maintains the property in good condition – the repayment of the mortgage doesn't commence until the owner dies, transfers ownership, or no longer lives in the home.
A Columbia SC reverse mortgage, however, may not be for everybody. There are other alternatives to consider – especially if you’re thinking about tapping into your home's equity to help pay living expenses during your retirement years. Let’s take a look at a few options.
Refinancing your existing mortgage.
Refinancing can be a viable alternative to a reverse mortgage. With interest rates at or near all-time lows, from a pure rate standpoint you’ll likely have a much lower rate than you currently have. In addition, being able to extract cash from the equity you’ve built up in your home – especially as home values have risen in the last few years – is an excellent way to borrow cheaply. Another big advantage to refinancing versus taking out a Columbia SC reverse mortgage is you're maintaining the control of your biggest asset – and that’s important if you want to leave the property to family members or other heirs.
Just a few additional points to consider if you’re leaning toward refinancing your mortgage: You can search online for mortgage payment calculators that will show you what your new payment will be. Plus, you can adjust the payment based on a variety of rates and terms to give you a better idea of what to expect. If you’re like most older homeowners and have owned your house for a long time, your monthly mortgage payments are comprised of a larger portion of principle and less interest. By refinancing – even at a lower interest rate – of course, you’re adding greater debt by increasing the existing loan amount by whatever equity you want to borrow. The bottom line is this, compare your payments and make sure you understand your total repayment amount. Refinancing may or may not be the best alternative and depends on a number of factors. Consult your mortgage lender, your financial advisor, or your accountant before you make the final decision.
Lastly, don’t forget the closing costs. As is the case with most refinances, you’ll have to pay closing costs that will be deducted from the equity proceeds of the new mortgage. Be sure you allow for them so you can receive the full amount you want to borrow. Your mortgage lender will give you an estimate of the closing costs you can expect to incur as part of the mortgage lending application process.
Home equity line of credit (HELOC) or a home equity loan.
Other viable alternatives to a reverse mortgage are either a HELOC or a home equity loan. In either case, compared to a reverse mortgage the fees are usually lower. Again, as with a straight refinance, choosing one of these alternatives also keeps your home under your complete control.
Let’s look at the difference between a home equity loan and a HELOC. As for the interest, the borrower pays regularly scheduled interest payments during the loan’s term. The biggest difference between the HELOC and a home equity loan comes at the end of the HELOC term. The borrower must then pay the remaining principal and interest owed – in full – either by refinancing, extending the terms of the loan or paying the loan off entirely.
A home equity loan provides you a lump sum secured by the remaining equity (or value) in your home. It requires normal regular interest payments each month. Columbia SC reverse mortgage lending experts say if you’re considering a reverse mortgage but want to leave your home to your children or other heirs, a home equity loan would be a better option.
A HELOC has been described as an “equity credit card.” It allows the homeowner to borrow up to an established credit limit during the term of the loan. The borrower repays certain portions of the principal at various times throughout the loan’s term. As the principal is reduced, your borrowing power increases (to the pre-determined limit) just like a credit card.
Flexibility is one of a HELOC’s biggest advantages, as it can provide a source of money to be used in emergencies – only if and when you need it.
Consider downsizing.
Of course, selling your home and moving into something smaller is always an alternative to a Columbia SC reverse mortgage – especially for retirees or those approaching retirement. The biggest advantage to downsizing is you can get all the equity in your home in one lump sum as the proceeds from the closing of the sale.
Should you elect to keep your home in the family, selling it to a child or other family member is a possibility. In addition, if you can afford it and if it makes sense financially, you can even consider owner financing by having your child pay you the monthly mortgage principal and interest payments. This is especially a good option if your child or family member doesn't have any credit established or needs down payment assistance. But remember this, family or not, if you choose to take the place of a Columbia SC mortgage lender, do everything by the book. Have the required legal documentation in place with you as the mortgage holder and your family member or child as the borrower signing the note for the amount they owe. A real estate attorney can assist you in handling the preparation of the necessary documents and the closing of the sales transaction.
You can find more articles pertaining to a Columbia SC reverse mortgage in the Columbia SC Mortgage Info section of our site below Columbia SC Real Estate Categories in the column to your right.
We also post daily tips on Facebook and Twitter and would love for you to follow us there, too.
The Columbia SC housing market deserves an analysis of what's happened so far this year – and what we can expect in 2017. With the end of the year quickly approaching, let’s take a look at some of the important facts impacting the real estate market this year.
Refinancing is on the decline.
It took the better part of the entire year, but it appears most people that can refinance already have done so. With rates at or near historic lows, borrowers flocked to their mortgage lenders to pay off loans with interest rates as high as 5%-7% in favor of those averaging in the 3.00%-3.5% range. Refinancing, according to mortgage experts, were the the largest growth stimulators for most banks and lending institutions. Since rates just can’t get much lower, it’s doubtful that refinancing will continue to be as popular as it was in 2016.
Buyers are attracted to new homes.
Despite the homeowner participation rate at a record low during much of 2016, many homebuyers chose to purchase newly built single family homes instead of existing ones. With home inventory levels down in the Columbia SC housing market, homeowners were slower to perform the necessary upgrades to their homes and put them up for sale. This created what economists describe as a “self-fulfilling prophecy” of continued lower inventory and a supply unable to keep pace with demand. The effect was especially detrimental to the starter home market, where first-time homebuyers usually begin their search.
Homebuyer confidence continues to remain robust.
As we’ve seen in recent years, millennials are very careful with their money. As such, many of them have put off home buying until they are able to save for a down payment, or until they are confident with their career choices and the city in which they live and work. However, these fiscally conservative young adults increasingly do want to own their own homes. The proverbial “catch” is they want to do so on their own terms. Remember, this segment of the population is accustomed to renting and they have grown used to the short-term flexibility and expectations that go hand-in-hand with renting an apartment or home. Surveys show more than 85% of millennials plan to stay in the homes they purchase for less than seven years. So, mortgage terms and the ability to sell their homes in a few short years are important factors to them.
Low interest rates prevailed.
Probably the biggest advantage the Columbia SC housing market experienced in 2016 was the consistently low interest rates. Steadily improving consumer confidence combined with reportedly lower jobless rates have given the Federal Reserve little reason to raise interest rates, at least for the time being. Experts say the downside of lower interest rates is that new home sales – which have come to expect and almost take for granted low mortgage rates – will suffer slightly. As is normally the case with a rate increase, even a slight one, potential home purchasers typically are slower to make a move. On a more positive note, however, rising rates usually mean home sales prices will either level off or decrease somewhat.
Remember, all real estate is local… and that’s a good thing.
During 2016, it was reinforced over and over again that it’s difficult – and even dangerous – to lump the real estate market into one large basket. Each individual market is different because each region of the United States is different in terms of the economic influencers in a certain community or state. While some markets may be experiencing very good sales and higher sales prices, others may be lagging behind – negatively influenced by the closing of a large manufacturing facility or the damages cause by a flood, a hurricane or other natural disaster. In addition, the housing market in a state or region that employs a large number of millennials, for example, can be impacted negatively because the average length of time they stay on a job is 2.8 years.
With what we’ve experienced and learned in the Columbia SC housing market in 2016, what can we expect in 2017?
While many factors could come into play between now and the first of the year, it appears to many economists that home prices have probably peaked and will likely go down slightly – for these main reasons:
What goes up must come down. That's usually a “given” in the real estate market. In the long run, home values usually rise. However, if we look at the manner in which prices have risen during the past year or so, a number of the hotter markets will likely experience a correction, causing prices to stabilize or dip.
Interest rates will go up. After all, interest rates can’t stay this low forever, right? So, expect an increase – even a slight one – sometime in 2017. And when rates rise, home prices will decrease.
Home inventory will increase. Analysts expect new construction to shift from multifamily units to single-family homes, making the Columbia SC housing market less competitive in the process.
Affordability will be a hot topic. It always is, but affordability will become even more important if inventory increases and interest rates go up.
How will the elections affect the Columbia SC housing market? The answer is yet to be determined and few discernible changes – if any – will likely not occur until late in the first quarter of 2017, if then. While both candidates have referenced the housing collapse of less than a decade ago, neither has provided a clear policy outlook for how to avoid a similar occurrence in the future. Look for continued government regulation and housing safeguards to protect the industry. However, as always, there will have to be a balance in order to keep home ownership affordable and popular without repeating the mortgage sins of 2008.
See more articles pertaining to the latest Columbia SC real estate news in the section of articles on Columbia SC Real Estate News just below Columbia SC Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there as well.
If you’re like most homeowners, you have questions about your Columbia SC homeowners insurance. Unless you’re an insurance expert, very few of us understand all the ins and outs of our homeowner’s insurance policy. More importantly, few homeowners truly understand how losses caused by natural disasters affect their insurance premiums. Believe it or not, homeowners across the country have decided to drop their insurance policies altogether. Let’s examine the reasons why and consider if you could ever find yourself in their shoes.
Property insurance premiums have risen steadily over much of the last decade, according to Trulia, who cites government sources that say a record number of homeowners are relinquishing their insurance coverage.
Hurricane Matthew, which recently wreaked havoc all along the Southeastern United States coastline, was responsible for losses estimated as high as $6 billion – primarily caused by high winds and storm surges. Now federal officials are discovering the damages will likely be much higher, since many of those affected by the storm were uninsured.
In 2014, the U.S. Census Bureau reported insurance coverage among homeowners living in the Southeast’s largest metropolitan areas dropped anywhere from 7% to 12%. As an example, in Miami, the number of homeowners with property insurance declined from 90% in 2006 to just 78% in 2014. And while the Census Bureau report only reported on primary mortgage insurance, other disaster insurances such as flood insurance or hurricane coverage contained a requirement that the homeowner should first have a standard policy in order to add a hurricane policy. Trulia says there were two contributing factors responsible for the number of homeowners who dropped property insurance:
- Most mortgage lenders require – as a condition of the loan – that a homeowner’s policy be in effect. As a result, the the mortgage is paid off, homeowners elect to go without insurance.
- Homeowner’s insurance coverage is expensive and has increased steadily over the past eight years. During that time, premiums have risen an average of more than 28% nationwide. Trulia says that of the 25 most expensive homeowner’s insurance markets, 10 are in the Southeast.
Despite the fact that many homeowners did not have insurance in the areas affected by Hurricane Matthew, there are other means of compensation and relief. In times of natural disaster the Federal Emergency Management Agency (FEMA) often steps in to provide assistance capped at various levels depending on the regional maximums and extent of the damage.
The big question homeowners should wonder about their Columbia SC homeowners insurance coverage is, “Could it happen here?” Let’s take a look at what could happen and why.
While the threat of hurricanes is more likely in some parts of the country than others, there are other perils or natural disasters that could affect insurance companies on a national level. Tornados, wildfires, earthquakes and raging floodwaters can create staggering losses – losses that a large insurance provider will ultimately have to pay. Should the losses be higher than forecasted by these large insurers, homeowners will bear the brunt of paying higher insurance premiums – sooner than later. Again, as mentioned earlier, premiums have risen over 28% in the U.S. in the past eight years alone. As has been the case in some Southeastern states who’ve experienced record flooding and hurricane damage in each of the past three years, imagine premiums which continually increase until you as a homeowner reach your financial breaking point.
If your home is covered by an existing mortgage, chances are you’re required to maintain at least basic Columbia SC homeowners insurance coverage on the property in an amount sufficient to cover the outstanding loan amount. However, if your home doesn’t have a mortgage, there’s no such requirement, and you’re free to reduce or even drop insurance coverage. Though not advisable, it can be an option to avoid higher premiums. And while it is one option, there are several others. Consider refinancing to have enough money available to properly cover your property in the event of a peril that could destroy it completely. Still the question remains as to whether insurance coverage is a good idea or too much of an added expense. We argue a case for keeping insurance coverage in force – always – despite the cost.
Should you reduce or eliminate insurance coverage on your home? In a perfect world, the answer would always be a resounding “No!” Insurance covering your family’s largest asset – protecting the most expensive investment you’ve likely ever made – is a vital part of home ownership. Should your home be damaged or destroyed by fire or a natural disaster like a flood or a hurricane, without insurance you’d be left to repair or replace your home out of pocket. Few families in today’s economic climate are able to do that, and if you’re unable to do so, you should think twice before gambling by not having insurance coverage. With the rising cost of labor and materials, repairing or replacing your home may be a more expensive undertaking than you think. That's why your insurance coverage should always allow for the replacement value of your home and its contents.
While there may be some areas of the United States that are more prone to certain natural disasters than others, anyone can fall victim to a fire or other loss that may require a substantial out of pocket expense to even attempt to recover. That’s why Columbia SC homeowners insurance experts, financial advisors and real estate professionals all agree that insuring your home is not only vital to protecting your biggest asset, but it protects your family’s future, as well.
Nobody knows what the future holds when it comes to higher prices – regardless of whether it’s higher insurance premiums or not. Through careful planning and frank discussions with your insurance agent – and possibly other companies in the marketplace – there are other viable alternatives to consider rather than eliminating homeowner’s insurance coverage. In our book, that should be the last resort. In fact, we’d more likely recommend selling your home and renting, or buying a less expensive home that you can more readily afford to insure. Eliminating or minimizing the risk is what insurance is all about. Protect your family’s future and their well being.
You can find more articles pertaining to Columbia SC homeowners insurance in the Columbia SC Insurance section of our site below Columbia SC Real Estate Categories in the column to your right.
Remember, you can also check us out by following us on Twitter and finding us on Facebook.