Housing | Mortgage Lenders in Raleigh NC

Understanding the Real Costs of Homeownership by Raleigh Mortgage Broker Kevin Martini

June 4, 2023 by Kevin Martini

A home is not just a sanctuary that provides an address but the foundation for your safety and security. Likewise, owning a home isn’t merely a material possession but a significant investment that reflects your hard work and determination. But don’t let the pride of ownership blind you to the realities that come with it.

Homeownership is a journey filled with anticipated and unanticipated expenses. From the maintenance costs that ensure your home stands tall today to the future investments that promise its continued longevity.

Understanding these costs isn’t just a smart move; it’s essential. And it’s about more than having the means to meet them but possessing the foresight to budget for them effectively. A well-planned budget will shield you from surprises and ensure the enduring value of your investment.

In the grand homeownership scheme, these expenses are not burdens but stepping stones on your journey. They ensure that the pride you feel in your home never fades and that the security it offers never wavers. Yes, a home is an investment, but more importantly, it’s an investment in you.

I help the dream of homeownership become a reality. However, homeownership comes with various responsibilities and costs that often remain obscured by the excitement of owning a property. As a Certified Mortgage Advisor, I help the people I serve with careful analysis and shed light on the actual costs involved in owning a home.
Certified Mortgage Advisor and Raleigh Mortgage Broker Kevin Martini

The Initial Investment: Down Payment and Closing Costs

The journey to homeownership starts with an initial investment that goes beyond the regular monthly mortgage payments. A significant part of this initial investment is your down payment; the down payment typically ranges from 3% to 20% of the home’s value.

However, the downpayment is more manageable than it may seem. The Martini Mortgage Group offers unique mortgage solutions for those looking for a different path to homeownership. In some instances, these unique options may eliminate the need for a down payment, making your path to homeownership easier.

Yet, there’s another layer to the financial story of buying a home – the closing costs (a.k.a. settlement costs). These costs may include origination fees, appraisal fees, and other legal and administrative charges. Typically, they range from 2% to 5% of the loan amount. Although these costs may seem like additional hurdles, they are, in reality, steps that bring you closer to realizing your dream.

Mortgage Payments

Your monthly mortgage payment is the most prominent recurring cost associated with owning a home.

Your mortgage payment has two components – the first component, the principal, represents the actual loan amount – the cost of your home. On the other hand, the interest, its partner, is essentially the price you pay for the privilege of borrowing that sum. This pairing, in a nutshell, constitutes your monthly mortgage payment.

Homeowners Insurance and Property Taxes

Two additional essential elements are homeowners insurance (a.k.a. hazard insurance) and property taxes.

The cost of these necessities is not a fixed number but a fluid one, determined by your property’s value, geographical location, and the specifics of your insurance policy. It might seem complex, but a handy rule of thumb simplifies it: In North Carolina, your annual homeowners insurance and property tax can be guestimated to roughly equal 1.25% of your home’s value.

Mortgage Insurance

The keys are within your grasp, yet the requisite 20% down payment remains an obstacle. This is where mortgage insurance steps in, not as a hurdle but as a trusted ally.

If you are considering a down payment of less than 20%, you may encounter a companion known as mortgage insurance(a.k.a. PMI or MIP). Mortgage insurance is far from being a deterrent; it is, in fact, a facilitator. It opens the door to homeownership, even when the traditional 20% down payment seems out of reach.

Mortgage insurance’s role continues beyond there. It stays by your side until you reach a particular equity position in your home. In most cases, once this milestone is achieved, it gracefully steps back, its purpose served.

Thus, mortgage insurance can be seen as a valuable ally on your journey to homeownership, enabling you to stride forward with confidence toward the dream of a home of your own.

Home Maintenance and Repairs

Unlike a renter, as a homeowner, you assume the responsibility for the home’s maintenance and repairs.

These tasks can be as mundane as replacing a flickering light bulb or as consequential as fitting a new roof or furnace. Yet, regardless of their size or complexity, they are integral to the essence of homeownership, preserving the health and longevity of your investment.

How does one prepare for these duties? A trusted guideline is to set aside 1% of your home’s yearly value for maintenance and repairs.

Utilities and Services

As a homeowner, you are responsible for all the utilities and services necessary to run your home. This includes water, electricity, gas, garbage collection, and in some cases, HOA (Homeowners Association) fees.

Navigating this path requires understanding how to meet these costs and the foresight to budget for them effectively.

The Martini Mortgage Group is here to sheds light on these costs, helping the dream of homeownership become a reality while elucidating the actual costs involved in owning a home.

From the initial investment, including down payment and closing costs, to monthly mortgage payments, homeowners insurance and property taxes, mortgage insurance, and maintenance costs – every facet of homeownership is an integral part of your journey. Moreover, as a homeowner, you embrace the responsibility of utilities and services, a necessary element that breathes life into your home.

Thus, homeownership isn’t merely an investment; it’s a testament to your determination and an investment in yourself. As you travel to homeownership, allow Kevin Martini, a mortgage broker and Certified Mortgage Advisor, to guide you, illuminate the hidden costs, and empower you to make informed decisions.

So, keep the excitement of owning a property clear from the responsibilities that come with it. Reach out to Kevin Martini today, understand the actual cost of homeownership, and explore your options. Equip yourself with knowledge, budget effectively, and transform your dream of owning a home into a reality.

certified mortgage advisor kevin martini

Marry the House, Date the Rate – A Smart Raleigh Homebuying Strategy

May 24, 2023 by Kevin Martini

An intriguing cliche in the real estate world has become a powerful strategy known as “marry the house, date the rate.” But what does it mean, and is it an excellent approach to consider when buying a home in Raleigh, North Carolina, or any city in the U.S.?

Understanding the “Marry the House, Date the Rate” Strategy

The adage “marry the house, date the rate” emphasizes that you can change your mortgage rate while remaining in the same house. Many people believe it’s best to postpone purchasing a home when Raleigh mortgage rates are high, assuming that waiting for rates to drop is the more financially sound decision. However, this thinking may cause you to miss out on the perfect home you want to make your own.

Instead of waiting indefinitely for interest rates to decrease, it might be wiser to take action now. Interest rates constantly fluctuate, and although your initial rate might be higher than desired, you can “date” your interest rate and “flirt” with another home loan rate when the market represents a more attractive option. This means that when interest rates eventually come back down, you can refinance to a lower rate and improve your financial situation.

The Importance of “Dating the Rate”

It’s Not a Matter of ‘If,’ but a Matter of ‘When’
Raleigh Mortgage Broker Logan Martini

Logan Martini, Senior Mortgage Strategist with the Martini Mortgage Group, states that when home loan rates decrease again, borrowers can refinance their mortgage and secure a more favorable interest rate for their mortgage while continuing to capture the appreciation of the home. By adopting the “marry the house, date the rate” strategy, you position yourself to take advantage of future rate reductions and potentially save a significant amount of money in the long run while seizing the appreciation.

Is Now the Right Time to “Marry the House, Date the Rate”?

If you already have a mortgage, it’s always advisable to keep an eye on interest rates and consider refinancing if they drop. Hence, the “marry the house, date the rate” strategy should be deployed in any market, not just in markets with elevated home loan rates, such as the current market conditions.

The opportunity to refinance when rates decrease, serves as a built-in safety net, ensuring that you won’t be stuck with a higher interest rate for the entire mortgage term. Moreover, even though interest rates have reached levels not seen for a long time, they may continue to rise. Delaying your home purchase could prove costly, as future rate increases would impact your affordability. By taking out a mortgage now, you eliminate the risk of being priced out of the market due to escalating rates, and you will be able to lock in your housing costs.

This strategy can particularly appeal to renters who have hesitated to enter the housing market during these uncertain times. Renters cannot recoup their money on rent, whereas homeowners steadily build equity with each mortgage payment. By adopting the “marry the house, date the rate” approach, renters can start building equity immediately, leveraging their monthly payments to accumulate wealth as a valuable asset: a house.

Considering House Prices and Market Dynamics

When deciding whether now is the right time to buy a house, it’s not just interest rates that come into play; you have to consider the cost of the house too! Skyrocketing house prices have also deterred many potential buyers. At the end of Q1 2023, the median sales price of homes in the United States was $436,800, according to the St. Louis Fed. In Q1 of 2021, it was $329,000. This represents a staggering increase of $107,800 in just three years!

However, it’s crucial to consider two essential points regarding current housing prices.

First, significant price drops are unlikely to occur soon since home prices have stabilized based on Case-Shiller, the FHFA (Federal Housing Finance Agency) data, and CoreLogic. As a primer, home prices climbed in the first half of 2022 and peaked in June 2022. Then in the second half of 2022, there were negligible declines in value; however, in Q1 of 2023, there was a stabilization, and we are now rebounding.

The recent rebound does not mean a trend; however, it does signal home prices were not retracing but recharging. This sentiment is echoed by the current inventory of available homes for sale is at the lowest point seen in years. The absence of housing inventory for sale and supply and demand dynamics should result in stable prices or potential increases.

Second, high prices and interest rates have dissuaded many potential homeowners, leading to fewer buyers. However, this situation presents opportunities for those in the market to purchase a house.

With fewer homebuyers, sellers need more potential purchasers. As a result, they may be more willing to negotiate on price and terms. By acting now, homebuyers could secure a better deal than in a less turbulent housing market.

Making the Decision: To “Marry the House, Date the Rate” or Not?

Ultimately, the decision to adopt the “marry the house, date the rate” strategy rests on various factors unique to each individual’s circumstances. By carefully considering interest rates, market dynamics, and personal financial goals, you can make an informed choice – the Martini Mortgage Group can help. In addition, they will monitor the markets post-closing so that when it is time to “flirt” with a new rate to lower your cost of homeownership, you will be alerted, and you will miss no opportunity.

If you’re ready to embark on your homeownership journey and want to take advantage of potential rate decreases in the future, it may be the right time to “marry the house, date the rate.” Remember that a well-thought-out mortgage application is crucial to securing your situation’s best terms and rates.

For expert mortgage assistance, Martini Mortgage Group is here to help. Contact us today to begin your mortgage application and take a significant step toward owning your dream home.

Home Affordability: Understanding the Factors that Affect it

April 11, 2023 by Kevin Martini

As we navigate the real estate market, home affordability is a significant concern for many individuals and families. In recent years, the headlines have caused alarm, leading to a misunderstanding of the actual situation. Additionally, the associated articles often fall short in providing clarity, as they tend to leave out critical information that provides a complete picture.

In 2022, several news stories predicted a steep drop of 20% in home prices. However, this did not come to pass, as the analysts failed to grasp the intricacies of home affordability. It is essential to have a thorough understanding of the factors that constitute home affordability to make sound decisions regarding real estate investments.

At its core, home affordability is determined by three primary factors: home prices, wages, and mortgage rates. These factors play a crucial role in determining whether an individual or family can afford to purchase a home. In this article, we will delve deeper into these factors and explore how they affect home affordability.

Home Prices

Home prices refer to the cost of homes, which can vary depending on several factors such as location, size, age, and amenities. In many cases, the demand for housing in a particular area drives up home prices. Increasing the supply of housing through new construction can help reduce the cost of homes and make homeownership more accessible.

It is worth noting that lowering home prices is not the only solution for making homes more affordable. In some cases, lower home prices can result in lower quality homes, which can lead to additional costs down the line. Instead, increasing the supply of housing through new construction can help reduce home prices without sacrificing quality.

Wages

Wages are another critical factor in home affordability. If wages are not increasing at the same rate as home prices, it can be challenging for individuals and families to afford a home. In recent years, wages have not kept up with the rising cost of living, which has made homeownership more difficult for many people.

An increase in wages can have a positive impact on home affordability. It can make it easier for individuals and families to purchase a home and reduce the financial strain that comes with homeownership. Employers can play a significant role in improving wages and, in turn, making homeownership more accessible to their employees.

Mortgage Rates

Mortgage rates are a significant factor in home affordability. The interest rate on a mortgage loan has a significant impact on the overall cost of homeownership. Lower mortgage rates can make it easier for individuals and families to purchase a home, while higher mortgage rates can increase the monthly payment and make homeownership more challenging to achieve.

It is worth noting that higher mortgage rates do not necessarily mean homes are unaffordable. Instead, it is crucial to consider all three factors when assessing home affordability. Lowering home prices alone may not be enough to make homeownership more accessible. An increase in wages and lower mortgage rates can also have a significant impact on home affordability.

National Association of Realtors’ Housing Affordability Index

The National Association of Realtors has an index called the Housing Affordability Index. The index indicates whether families can qualify for a mortgage loan on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.

In January 2023, the index was at 104.9, indicating that more families can qualify for a mortgage loan on a median-priced home. This is a positive sign for those looking to purchase a home, as it suggests that homeownership may be more accessible than in previous years.

The Impact of Increasing Demand

Despite the challenges that come with homeownership, many individuals still see it as a crucial part of achieving financial stability and building wealth. As such, demand for homes remains high, which can impact home affordability.

According to a Nerd Wallet survey called the 2023 Home Buyer Report, 28 million Americans plan to purchase a home in the next 12 months. This is a significant number and highlights the pent-up demand for homeownership. To put it in perspective, only under 6 million homes sold last year. This demand for homes, combined with the current state of home affordability, is likely to drive up home prices, making it even more challenging for some individuals and families to purchase a home.

However, it is worth noting that every time mortgage rates decline by 1%, 5 million more renters are able to afford a home to purchase. This means that even with high demand, lowering mortgage rates can make homeownership more accessible to a broader range of people.

Real Estate Market: The Calm Before the Storm?

Despite the headlines in 2022 predicting a steep drop in home prices, the real estate market has remained relatively stable. According to the Case-Shiller 20-city composite index, year-over-year appreciation in January 2023 was at 3.8%, indicating that home prices did not experience the drastic drop that some analysts had predicted.

While four of the 20 cities did see declines, and 16 of the 20 cities saw an increase, the cities with a decline were all on the west coast of the U.S. and this is because of the slowdown in the tech sector which is so prevalent in those markets. In January 2023, month-over-month data showed a decline of negative 0.2 percent, but this is not significant as it is only two-tenths of a percent.

It is essential to note that the real estate market is not just local; it is hyperlocal. While the national picture is positive, it is important to consider the local market when assessing the state of the real estate market. Factors such as the job market, the economy, and population growth can all impact the local real estate market and, in turn, home affordability.

Understanding the factors that affect home affordability is crucial for individuals and families looking to purchase a home. The three primary factors that constitute home affordability are home prices, wages, and mortgage rates. Lowering home prices is not the only solution for making homes more affordable, and an increase in wages can have a positive impact on home affordability. It is crucial to consider all three factors when assessing home affordability.

Despite the challenges that come with homeownership, many individuals still see it as a crucial part of achieving financial stability and building wealth. With pent-up demand for homeownership, the real estate market is likely to experience a surge in home sales in the coming years. This demand, combined with the current state of home affordability, is likely to drive up home prices, making it even more challenging for some individuals and families to purchase a home.