Cash-Out Refinance

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Are you frustrated by the small selection of homes in your price range on real estate sites? Do most fall short of the “must haves” that you need?

The vast majority of the listings you see come from multiple listing services run by local Realtors. Only members of the MLS can place their properties on it, and that means it’s not a complete listing. There are other sources of affordable homes for sale if you are willing to look.

Many of these properties are in “as is” condition and may require some elbow grease and the services of professional contractors to get them in shape. These are costs you should figure into the purchase price before making an offer.

As a general rule, the hotter and more competitive the local market, the fewer affordable homes you will find, either on or off the MLS. Here are some sources that will help you find more affordable homes to consider:

Fannie Mae’s HomePath Program.

Fannie Mae created this program to offer foreclosed homes directly to home buyers who wish to make the home their primary residence. If you wish to put 3%-20% down, you must have a 660 or greater credit score needed for a mortgage.

The program is limited to first-time buyers who have not owned a home in the past three years, and buyers are required to graduate from Fannie’s home buyer education course, which is online. After graduation, you are eligible for closing cost assistance worth up to 3 percent of the purchase price. If you wish to put more than 20% down, standard guidelines may allow a lower credit score.

Fannie’s “First Look” policy makes newly listed properties available to individual home buyers for a 20-day period before investors can buy them. For more information, go to https://www.homepath.com/

Freddie Mac’s HomeSteps Program.

Freddie’s program is very similar to Fannie’s, with a few exceptions. Freddie Mac also features a first look program to give home buyers an advantage over investors and a mandatory online homeownership education program, without the assistance on closing costs. Freddie’s program, however, is not limited to first-time buyers. For more information, go to https://www.homesteps.com/

For Sale By Owner (FSBO) Sites.

When home prices rise steadily, as they have been lately, more owners choose to sell their homes without the help of a real estate agent who charges a commission. Some will use an agent who simply lists their homes on the MLS for a flat fee. They can also list their properties on a site dedicated to FSBO properties.

Last year, the median FSBO home sold for $35,000 less than the median home represented by a real estate professional.[1] Note that if you buy a FSBO, and you are working with a real estate agent, you will be asked to pay his or her fee. In transactions involving a seller’s agent, the brokerages on each side of the transaction typically divide the commission paid by the seller.

Some of the better know FSBO sites are Owners.com, FSBO.com, ForSalebyOwners.com, Byownermls.com. Zillow also lists FSBOs.

Cash-for-Homes Sites.

Companies like HomeVestors, which has more than 600 franchises, buy homes quickly for cash and rehabilitate them to sell to investors or homeowners. They sell homes on local MLSs through real estate brokers. However, it could be worth a call to local cash-for-homes companies to see if they have any properties or to find out names of brokers they use.

Short Sales and Foreclosure Resource (SFR).

The National Association of Realtors certifies Realtors who specialize in selling foreclosures and short sales. To qualify, they must obtain specialized training. To find an SFR-certified Realtor in your market, search the web for that designation. Have your real estate agent contact SFR Realtors to find out what they are listing and properties they are preparing to list. Ask they to notify you in advance on new listings that you might be interested in.

The Next Steps

When you find a home you’re interested in, be ready to move fast with a pre-approval letter from your lender, the name of a good home inspector you trust who’s readily available, and an offer that is attractive as you are willing to make it.

Investors scour these markets using expensive databases of foreclosures to find properties they can flip or convert to rentals. You may find you have to increase the geography of your search to increase the odds you will find a property that will work for you.

[1] National Association of Realtors Profile of Home Buyers and Sellers, 2015.

Source: totalmortgage.com

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A “For Sale” sign is displayed in front of a home on August 30, 2023 in Los Angeles, California.

Mario Tama | Getty Images

After rising sharply for several weeks, mortgage interest rates pulled back slightly last week, but not enough to revive mortgage demand.

Total mortgage application volume fell 2.9% last week, compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.21% from 7.31%, with points falling to 0.69 from 0.73 (including the origination fee) for loans with a 20% down payment.

“Mortgage applications declined to the lowest level since December 1996, despite a drop in mortgage rates,” said Joel Kan, an MBA economist. “Rates remained more than a full percentage point higher than a year ago, despite mixed data on the health of the economy and signs of a cooling job market.”

Applications to refinance a home loan — which are most sensitive to weekly interest rate changes — fell 5%, compared with the previous week, and were 30% lower than the same week one year ago. The vast majority of borrowers today have loans with rates below 4%. Even with high rates of home equity, borrowers are more likely to take out a second loan to pull cash out, rather than lose their low rate through a cash-out refinance.

Applications for a mortgage to purchase a home fell 2% for the week and were 28% lower than the same week one year ago.

“Prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates,” Kan added.

Mortgage rates turned higher again to start this week, and more economic data out in the coming days could impact rates further. While they have moved in a narrow range the past few weeks, 7% appears to be the new normal. This has thrown cold water on home prices, which had been rising for much of the year but which appear to be easing now yet again.

Source: cnbc.com

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In the US, no one really talks about their money. It’s taboo—impolite, embarrassing, rude. No one wants to sit at the dinner table comparing salaries and tax brackets.

But when the time comes to buy a house, money talk is a necessary evil. Such conversations are critical to getting on the same page financially as your partner. In fact, financial disparities between partners is a leading cause of divorce when not handled properly.

Fortunately, we have some tips about having this delicate conversation on money with your partner, and coming out of it with a better idea of what you two can afford in the housing market.

Planning Before the Conversation.

Before anything, it is important to plan your conversation ahead of time. Write down questions and responses you would like to have ready when you have the talk with your partner. If you don’t already know what their yearly earnings are, it is time to find out.

Additionally, it may be helpful to brainstorm some financial management strategies to cut down on existing costs. Do you really need that magazine subscription or the deluxe package of cable channels? If you are coming into this conversation from a position of power (i.e. you earn more than your partner) take time to carefully word your conversation to avoid gridlock and tension. Some good opening lines include:

  • “We might benefit from meeting a financial coach together.”
  • “We should spend the night going over our budget together. Would you help me get a sense of our spending for each month?”
  • Where do you think we should start our housing search in terms of pricing? What is financial stable for you?

Where to Start.

The first step of the money talk is perhaps the most difficult step. It is important that you and your partner talk about relationship goals. You don’t necessarily have to ask the clichéd question, “Where do you see yourself in 5 years?” but you should have a good forecast of where you will be in a year or two.

Further, where do you see this relationship going? Sometimes, a house is more than a purchase, but the next step in a relationship. If marriage or kids are on the horizon, that will certainly effect the size and location of your real estate search.

Next up, it is important to assess your current financial situation. Where are you both in terms of income and expenses, assets, debts, and credit ratings? Will your financial profile be strong enough to earn a favorable mortgage interest rate? Or will you have to plan to take on a little more debt? Alongside this conversation, it would be a good idea to think about ways to reduce any debts you have faster. This is where you and your partner should be getting into the nitty-gritty of financial transparency. Talk about retirement savings and compare credit scores; factor in family planning costs if that’s where your relationship is heading.

Once you have sussed out where you are presently in terms of money, it is time to look toward the future and discuss potential changes to how, where, and why you spend money. Budgeting together is the best way to start this conversation, identifying where each other can stand to shave off a few dimes.

Communication is key, especially if the money being put toward a home will come more from one partner than the other. That extra financial burden should be recognized and discussed. It is also time to compromise. Commonly, partners will have to find ways to balance the splurging problems of one partner with the intense frugality of the other.

Where to End Up.

Your conversation on financial planning should really culminate in a place of mutual understanding. You and your partner have a future ahead of you that requires, by necessity, time and money. Even if your financial situation changes in the next month or year, getting on the same financial page as your partner will give you a road map to fiscal solvency, and the ability to plan for your future years together.

With that knowledge in mind, you can come into the real estate market from a position of power, brokering deals that will suit you and your partner and provide a strong head start to a future together.

Source: totalmortgage.com

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Though most individuals are familiar home insurance, not all home owners are knowledgeable about title insurance. However, this form of insurance can be very helpful in times of need. To determine how it could be of assistance to you, check out our breakdown of title insurance, its benefits, and some common issues that individuals can face in regards to a title.

What is Title Insurance?

In a nutshell, title insurance covers events that may have happened before the date a title was issued to a new party, and it does not cover events that happen after issuance. In other words, it protects the new owner from any missteps of the previous owner.

Before a new title insurance policy is issued, an insurer will do a title search. This search tends to reveal a number of possible issues:

  • incorrect names on the title
  • improper vesting
  • incorrect notary acknowledgements
  • outstanding mortgages
  • tax liens
  • court judgments
  • easements

Thankfully most of these issues can be cleared up and the insurance process may move forward. With the lender doing this in-depth search ahead of time and making sure that the titles are clean before insuring them, the risk of claims being filed is greatly decreased.

For this reason, many title insurance fees are relatively low. In fact, many require only a one-time fee. This also helps to protect the individual seeking to obtain the title. If there are any issues that arise that cannot be cleared ahead of time, individuals could decide that it is not a proper investment.

 Common Title Problems

Even considering the diligence that goes into researching and clearing titles, there are still title problems that individuals may face. Fraud is a major component to possible issues. Prior owners may have forged documents, power of attorney, mortgages or satisfactions or releases of mortgages.

Even worse, they could impersonate the true owner of the property all together.

There could also be instances where an individual is unintentionally committing fraud, if they think they have the power to sell a property but do not. This scenario is more prevalent in cases of inheritance, divorce, spousal death, dealing with minors, incompetence, or undisclosed heirs.

Outside of fraud there are a few other instances where individuals may have issues with purchased titles. Individuals may purchase a clean title, yet have limited or restricted access to the property. There could also be some unintentional issues with documentation, such as:

  • errors and omissions in transcriptions
  • failure to preserve original instruments
  • incorrect indexing
  • lack of authority of notary
  • inadequate descriptions
  • incorrect interpretations of wills
  • invalid tax titles

These issues may not be easy to address and may prevent the sale of title indefinitely. Unfortunately, for those who may have already begun the process to purchase a title, these issues can lead to financial loss if the problem cannot be rectified.

Along with issues directly with the title, there are some concerns that individuals should address with title insurance itself. There are two types of title insurance:

  1. Owner’s policy: This policy protects the buyer in the case of an issue with the title.
  2. Loan policy: This policy protects the lender should there be any issues with the title.

It is important for buyers to know the difference between the two to ensure that they are fully protected.

Benefits of Title Insurance

There are a few different benefits to obtaining proper title insurance. Quality insurance policies offer protection against additional issues beyond the title, including:

  • zoning or subdivision violations and restrictions
  • damage to the home due to someone’s easement rights
  • interested parties refusing to buy land due to a neighbor’s structures that are on the land

These are just a few of the additional benefits to having a quality title insurance policy in place. Working with a representative of an insurer can help to make sure that you are properly covered for common issues that may be faced. However, it is still important to consider coverage for other, uncommon incidents.

Depending upon the area that live in, such as flood zones or affluent neighborhoods, there may be certain aspects that you should consider. Consulting a knowledgeable professional can help you to both understand what issues you may be facing and also plan for your future.

 As you can see it is very important to make sure that you fully understand what is title insurance. Making sure that you understand the intricacies of this type of insurance and how it can protect you can aid you in making the best decision for you and your family. For more information or to weigh your options, speak with a local representative in your area.

Source: totalmortgage.com

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Nobody wants to pay more for their mortgage than they have to. However, nearly ten percent of couples who file for their mortgages jointly could be saving a thousand dollars or more in interest payments each year because they don’t know how the minimum FICO rule works.

New research from the Federal Reserve found that borrowers filing a joint application for a mortgage would have been better off applying in the name of the individual borrower with the best credit score. That is because, on a joint application, lenders use the lower score of the two to determine the interest rate—a practice known as the minimum FICO rule.

Joint income or lower interest rate?

An important reason many couples file joint mortgage applications is to take advantage of the increased income from two earners. That income level determines the debt-to-income ratio (DTI), one of the most important ways lenders determine if a borrower will be able to meet monthly mortgage payments. Higher income levels improve the DTI ratio and make it possible for a two-income household to qualify for a higher mortgage.

If the borrower with the best score does not have enough income to meet the DTI requirements for the loan, a joint application may be the only option.

The study found that nearly 10 percent of prime borrowers who jointly applied for their loans could have lowered their mortgage interest rate by at least one-eighth of 1 percentage point by applying in the name of the borrower with the best score, and they still would have qualified for their mortgage. Instead, they fell victim to the minimum FICO rule and ended up paying from $220 to $1,400 more each year.

Lower scores suffer more

Those with lower scores suffered more than other borrowers. Among the joint applicants with a lower credit score below 740, for whom mortgage interest rates are most sensitive to credit scores, more than 25 percent could have significantly reduced their borrowing cost by having the individual with a higher credit score apply.

Couples who appeared to have left money on the table tend to have lower credit scores and be much younger and less financially sophisticated. Middle-income borrowers both low-end high-income borrowers seem to have a greater chance of reducing borrowing costs by using individual-applicant mortgages.

Mortgage insurers, lenders and major investors such as Fannie Mae and Freddie Mac follow the FICO Rule. Lenders will check both of FICO scores when evaluating a loan application. Even though one spouse’s good score would qualify for a loan with a more favorable interest rate, under the “FICO Rule” lenders must use the lower score, which results in a higher rate.

The Fed study provides hard evidence that loan officers could do more to help their customers understand how the FICO Rule affects them—and win their trust in the process. Most borrowers, especially younger, first-time buyers, don’t know about the minimum FICO rule and may never realize that they could be paying tens of thousands of dollars less in interest over the life of a loan.

Talk to your lender

If you are considering a joint application, ask your lender whether you would better off with a single appliucaton in the bame of the borrower with the best score. Loan officers can review both credit scores on a joint application and determine how much more interest you would pay with a joint application. If the two FICO scores are close, you may not save much on a monthly basis with a single application and a joint application would help you qualify for a better home.

Whether you decide to go with a single or a joint application, you can make an informed decision once you know how the minimum FICO rule will affect you.

Source: totalmortgage.com

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The amount of equity American homeowners have pulled from their homes over the past three quarters has fallen considerably compared to the same period a year earlier, Freddie Mac reported.

“During the third quarter about $30 billion in home equity was cashed out through refinance of conventional loans made to prime borrowers, down from $40 billion that was cashed out during the second quarter of this year,” said Amy Crews Cutts, Freddie Mac deputy chief economist, in a release.

Through all three quarters, about $99 billion in equity has been pulled out, representing roughly a 50 percent decline from a year earlier, thanks largely to harsher underwriting guidelines and falling home prices.

During the third quarter, 78 percent of Freddie Mac-owned loans refinanced resulted in cash out, down from 86 percent a year earlier, but up from 67 percent in the second quarter.

Because interest rates crept up over the past quarter, those who did seek a refinance were likely motivated by cash-out or a move to a fixed-rate mortgage.

However, the cash-out refinance share through the first three quarters of 2008 was just 63 percent, the lowest since 2004, before the refinance craze got into full swing.

Interestingly, cash-in refinances, where borrowers come in with money to reduce their loan amount, have surged this year.

“Nine percent of homeowners reduced their loan amount while refinancing during the first three quarters of this year,” said Frank Nothaft, Freddie Mac chief economist. “This is the largest cash-in share in three years – since the first three quarters of 2005.

The median age of loans refinanced during the quarter was 4.4 years, the oldest in eight years, likely because many newer loans are currently underwater.

Source: thetruthaboutmortgage.com

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A cash-out refinancing loan is treated differently by the IRS than a traditional mortgage. Although you receive a lump sum of cash, cash-out refinancing is considered a form of debt restructuring, and you do not pay taxes on the cash you receive.

With cash-out refinancing, you cash out a percentage of the equity that you have accrued in your home and replace your existing mortgage with one with a higher principal. You can use the cash for any reason, such as consolidating debt, paying for home renovations, or unexpected medical expenses.

Here’s what you should know about cash-out refinancing and the tax implications.

How Cash-Out Refinancing Works

When you refinance your mortgage, you cash out equity. Equity is the difference between your current mortgage balance and the value of your home today. Let’s say your home is worth $300,000 and the balance on your mortgage is $150,000, you have $150,000 in home equity.

A lender typically requires you to keep at least 20% of the value of your home in equity. In the above case, you would leave $60,000 in equity and have $90,000 to cash out. Your mortgage lender would also charge around 1% in closing costs.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

The Tax Implications of Mortgage Refinancing

A cash-out refinancing loan is treated differently by the IRS than a traditional home loan because it is considered a form of debt restructuring. You do not pay tax on the money you receive in cash, and you might also be able to deduct some of the interest you pay on that cash from your taxes.

Here’s a closer look at the tax implications of a cash-out refinancing loan.

Is a Cash-Out Refinance Taxable?

Because the IRS considers a cash-out refinance to be a form of debt restructuring, the cash you receive is considered a loan, not income, and is not taxed. In addition, you could receive additional tax benefits depending on how you spend the money you receive.

If you use the cash to increase the value of your home, such as putting on a new addition or replacing your heating or cooling system, you can claim the interest that you pay on the loan as a tax deduction.

Before you do this, however, consult a tax professional to make sure that the work qualifies. Simple repairs like painting or general maintenance do not qualify for tax deductions. You will also have to keep meticulous records and save receipts documenting what you spend so that you can prove your case when you file your taxes.

Requirements for Interest Deductions on a Cash-Out Refinance

Capital improvements to a property that increase its value will qualify for an interest deduction. Examples could include a new addition, a security system, or a new swimming pool. General maintenance and repairs will not qualify, nor can you deduct the interest you pay on the loan if you spend the money on a vacation, medical bills, or credit card debt.

How to Make a Cash-Out Refinance Tax-Deductible

Below is a list of home improvements that qualify for the interest deduction.

Qualifying Home Improvements

•   Renovating or adding on an addition, such as a garage or a bedroom

•   Putting in a swimming pool

•   New fencing

•   New roof

•   New heating or cooling system

•   Installing efficient windows

•   Installing a home security system

Improving your property’s value means you can also save money if you sell your home. Capital home improvements count toward the total amount you spent on the property and can potentially lessen your capital gains tax liability when you sell your home.

Deductions for Adding a Home Office

Adding a home office to your home is a capital improvement that qualifies for the interest deduction on a cash-out refinancing loan. There are also additional potential tax benefits to adding a home office for small businesses or the self-employed.

How Home Offices Can Impact Your Taxes

You can deduct the interest on your cash-out refinancing loan if you use the money to add a home office, because it will increase the value of your home and is considered a capital improvement. If you are a business owner or self-employed, you could also qualify for the home office deduction on your federal taxes.

The home office deduction is a benefit that allows you to claim a percentage of what you pay on your loan as a business expense. You must use the designated office space for business purposes only, and it cannot be used as a spare bedroom or family space or it will not qualify. Also, your home office must be the primary place where you conduct business.

Recommended: What to Know Before You Deduct Your Home Office

Tax Implications of a Cash-Out Refinance for Rental Property

Rental income is considered personal income by the IRS. If you use the capital from a cash-out refinance to improve or repair a rental property, the expenses are tax-deductible. Also, interest, closing costs, and insurance paid on a rental property can be deducted from your income as business expenses.

What Are the Limitations for Interest Deduction with a Cash-Out Refinance?

For the 2022 tax year, single filers and married couples filing jointly could deduct mortgage interest up to $750,000. Married taxpayers who file separately could deduct up to $375,000 each. (The limit is higher for debts incurred prior to December 16, 2017: $1 million or $500,000 each for married couples filing separately.)

Can You Deduct Your Mortgage Points?

Mortgage points, also known as discount points, are fees you pay a lender upfront so that you can pay a lower interest rate on your loan. One point is equal to 1% of your mortgage loan. With a cash-out refinance, you cannot deduct the money you paid for points in the year you refinanced until after 2025. But you can spread out the cost throughout the loan. That means if you accumulate $2,500 worth of mortgage points on a 15-year refinance, you can deduct around $166 per year throughout the loan.

Risks of a Cash-Out Refinance

Cash-out refinancing is a risk. You are taking on a larger loan than your original home mortgage, which means that your monthly mortgage payment will increase unless interest rates are lower than when you applied for your current mortgage. If your payments are higher and you can’t keep up with them, you could be at greater risk of foreclosure.

Alternatives to a Cash-Out Refinance

Two financing alternatives that also use equity in your home are a home equity loan or a home equity line of credit (HELOC).

A home equity loan is a second mortgage for a fixed amount that you repay over a set period while keeping your original loan. The payments include interest and principal, just like a traditional mortgage, but the interest rate may be higher than a primary mortgage. This is because the primary lender is paid first in the event of foreclosure, so the secondary lender takes on more risk.

A home equity line of credit (HELOC) is also a second mortgage but with a revolving balance. That means you can borrow a certain amount, pay it back, and then borrow again. As with a credit card, your payments are based on how much you use from the line of credit, not on the available credit amount. If you don’t need to borrow a large sum, this might be a cheaper option than cash-out refinancing because a HELOC tends to have a lower interest rate.

Recommended: Home Equity Loans vs HELOCs vs Home Improvement Loans

The Takeaway

Cash-out refinancing is a way to access the equity in your home and use it to pay for expenses, though it does mean taking on increased debt. The cash from this type of mortgage refinancing can be used any way you like, such as to pay for home renovations, college, or unexpected medical expenses.

When you opt for cash-out refinancing, your original mortgage is replaced by a larger mortgage. If interest rates are lower than when you took out your original mortgage, your monthly payments may go down, but it will take you longer to pay off the loan. Depending on how much cash you need, you can also consider a HELOC or a home equity loan to obtain the money you need.

Turn your home equity into cash with a cash-out refi. Pay down high-interest debt, or increase your home’s value with a remodel. Get your rate in a matter of minutes, without affecting your credit score.*

Our Mortgage Loan Officers are ready to guide you through the cash-out refinance process step by step.

FAQ

Is cash-out refinance tax-deductible?

Some of the interest you pay on a cash-out refinancing loan might be tax deductible if you use the money to make capital improvements on your home and you keep meticulous documentation to prove it. It’s best to consult with a tax professional to make sure the improvements you do on your home qualify for the deduction.

Do you pay taxes on a cash-out refinance?

No. The funds you receive from cash-out refinancing are not subject to tax because the IRS considers refinancing a form of debt restructuring, and the money isn’t categorized as income.

How do I report a cash-out refinance on my tax return?

You don’t need to report the cash you receive from a cash-out refi as income, so the refi would only show up if you record the interest you are paying on the new mortgage on an itemized return.

What are the tax implications of a cash-out refinance on a rental property?

Rental income is taxed as personal income by the IRS. The good news is that if cash from a refinancing is used to improve or repair a rental property, the expenses are tax-deductible. Also, closing costs, interest, and insurance paid on a rental property may also be deductible from your income as business expenses.

How does the timing of a cash-out refinance affect my taxes?

As long as you meet the requirements for capital improvements, you can deduct the interest paid on your refinanced loan every year that you make payments throughout the life of your refinance loan. So, if you refinance your mortgage to a 15-year term, you must spread your deductions over the 15 years. However, you can only deduct the interest you pay each year, and the amount of interest paid will become less as the loan matures and you pay more toward the principal.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

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After increasing in the second half of last year, the homeownership rate looked like it was ending a steady eleven quarter decline that began in 2012. However, despite reports of increased home sales in the first half of this year, the Census Bureau said last week that homeownership has declined for the second quarter in a row, to 62.9 percent. That’s the lowest level in more than 50 years.

Though sales of existing homes through June are up 3 percent over last year and are now up 3.0 percent from June 2015, prices are up 4.8 percent. Prices are significantly higher for affordable entry level properties, and inventories of homes priced lower than market medians in hotter markets are slim.

Where are the first-time homebuyers?

So where are the loses coming from? The Census Bureau reported homeownership rate for Americans ages 18-34 fell to 34.1 percent in the second quarter from 34.8 percent a year earlier, the Census Bureau said. The decline is within the margin of error for that age group of 0.8 percentage points, but that doesn’t mean it isn’t worrisome.

A new study by the National Association of Realtors and SALT, a program provided by the American Student Assistance, found that nearly three-quarters of non-home owners say that repaying their student loan debt is delaying their home purchase.

And that’s not all. More than fifty percent of consumers say they expect to be delayed from buying a home by more than five years. Forty percent of consumers surveyed also said that student debt was delaying them from moving out of a family member’s house after graduating from college.

The student loan debt burden seems to be holding back older millennials, aged 26 to 35, and those with $70,000 to $100,000 in debt the most from home ownership, the survey found.

Minorities have been affected too

Homeownership among minorities is also declining once again. Among African Americans, the homeownership rate has fallen to 41.7 percent from 43 percent a year ago and among Hispanics, the rate is down slightly from the second quarter of 2015, to 45.1 percent from 45.4 percent.

Among non-Hispanic whites, homeownership is statistically equal to a year ago, 71.5 percent in the second quarter of 2016 compared to 71.6 in the second quarter of 2015.

What does this mean for you?

All this seems to indicate that current middle-class homeowners are staying in their starter homes longer, while large groups of potential first-time homebuyers are staying out of the real estate game entirely, leaving a section of the real estate landscape stagnant in spite of improvements. If you’re thinking about selling or buying, the timing is still good, but depending on your local market, either may take longer than expected.

Source: totalmortgage.com

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When you’re thinking about buying a fixer-upper, there are a few factors to take into consideration before taking the next steps in the buying and renovating process.

Make sure you know exactly what you are looking for when on the hunt for your fixer-upper. It will make the search process less stressful. It also helps to have a plan for remodeling in place, so you create the finished product you always wanted.

Here are a few tips to lead you in the right direction.

What to look for when buying a fixer-upper

  1. Keep an eye out for the large yet hidden expenses.

There is such a thing as too much of a fixer-upper. Make sure that the changes aren’t too costly and that the home is actually worth your while. Large hidden expenses would include, but are not limited to, structural problems, the foundation of the home, and roof problems.

  1. Learn to recognize the jobs you can’t complete yourself.

Projects such as redoing the floors or the roof are a lot to take on as a new homeowner. Look to take on simple, high-impact tasks such as refurnishing the bedrooms or a few paint jobs if you want a more manageable and wallet-friendly challenge and budget in advance to hire professionals.

  1. Look for an easily modifiable floor plan in case you want to remodel over time.

Renovating an entire house all at once isn’t always realistic. If the space in a potential home seems cramped and gives you little to work with, you may want to reevaluate your plans. In the event that you buy this home and plan to convert the living space, having an open floor plan would be much easier to work with rather than a jam packed non-conformable one.

  1. Look for hazardous or outdated features.

If you don’t feel that the home inspector did a great job surveying the home, you can hire other professionals to test for dangerous materials like lead or get a second opinion on things like old wiring. This will insure that any potentially hazardous or outdated features are spotted and taken care of immediately.

Things to keep in mind when remodeling

  1. Time manage yourself and the project.

Setting a realistic goal for how long the remodeling project will take is key. Of course you want all of the major jobs finished ASAP so you can enjoy your newly renovated home. However, you need to set a practical timeline giving every job a fair amount of time to be completed.

It is also important to calculate in unforeseen problems that could tack on extra time. There’s nothing worse than having to bump back your child’s birthday party because your house is still a construction zone.

  1. Seek professional help.

The average homeowner can only get so far when remodeling their home. If you are making some major changes, such as restructuring the house, consulting in a certified architect can’t hurt. That is, after you decide what you want to do yourself.

  1. Set a budget, but don’t be cheap.

It is important to come up with a budget early on so that you can set out a clear list of priorities and avoid unintended expenses. However, be wary of going too cheap when renovating, or risk using shoddy materials or getting poor workmanship.  The saying “you get what you pay for” speaks for itself. If you can’t afford something, wait until the timing is right and you can remodel your home to your liking.

Source: totalmortgage.com