Should you rent or buy a home?

Money guide for Millennials

Homeownership was once the cornerstone of the American Dream, but times are changing. More U.S. households are renting today than at any point in the last 50 years, according to a Pew Research Center analysis.

For many people, the comforts of home include a well-funded bank account — and in some circumstances, renting can be more financially savvy than buying.

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Ask yourself these questions as you make long-term housing decisions. You might find that renting is the better option.

1. How long do you plan to stay?

Whether renting or buying a home is the best financial choice usually comes down to one thing: timing. Finding an affordable home (and later making a profit on it) depends heavily on how long you plan to keep the property.

According to Zillow, for instance, the current home listing price in Bothell, Washington, is $698,448, and the average rental price is $2,500. Assuming a 20% down payment on a home purchase or a 5% annual increase in rental price, you’d need to own the home for at least two years before it becomes the better option.

Keep in mind that not every market is booming. In fact, two-thirds of U.S. homes still haven’t returned to their pre-recession values, according to a Trulia report, and owners looking to cash out may have to wait until 2025 before securing a profit. Carrying debt is something of a risk, and a 12-month lease gives you the freedom to move and adjust your housing expenses based on your current needs and income level — two things a fixed mortgage can’t deliver. Do your homework and use a comparison calculator to help you understand the costs of buying and renting.

2. Do you know all the costs?

Comparing rental prices to mortgage payments is a good start, but it’s also important to consider the hidden costs associated with each. For renters, the “cost” is the lack of home equity and the inability to claim housing-related tax breaks.

For example, suppose you’re a homeowner who lives in New York and falls within the 28% income tax bracket. If your mortgage is $200,000 with a 4.5% interest rate, you qualify for $3,585 a year in tax deductions. That said, you’ll also deal with expenses that don’t impact a renter’s monthly budget, including:

Homeowner’s insurance: Protecting your home from damage comes at a price, and while insurance rates vary, the rule of thumb is to divide your home’s value by 1,000 and multiply the result by $3.50. If you home’s value is $200,000, for instance, you’d pay around $700 per year, or $58 per month, for coverage. Renter’s insurance, meanwhile, is usually less than $20 per month.

Private mortgage insurance (PMI): If you have less than 20% equity in your home, expect to pay PMI, which is usually between 0.50% and 1.2% of your loan value. For example, 1% assessed on your $200,000 mortgage would add $200 to your monthly housing expenses until you built up at least 20% equity in your home.

Property taxes: A typical household spends $2,127 each year on property taxes, but you could pay much more depending on location and community benefits.

Maintenance: Homeowners shell out nearly $170 per month on average for regular maintenance and repairs, and that’s not including big-ticket items like a roof repair, a new HVAC system, and other needs that can cost four or five figures.

In this scenario, owning that $200,000 home costs $7,267 a year in extra expenses — more than double what you’d save in taxes. As a renter, you won’t need to worry about adding these fluctuating expenses to your budget, and your landlord may even pick up the tab for your utilities, saving you even more compared to the average homeowner. Consider the hidden costs to learn whether those big tax breaks are worth it.

3. Are you “throwing money away?”

It’s often said that renting is “throwing money away,” but building home equity isn’t the only way to watch your money grow. There’s no denying that property can be a valuable asset, but on a month-to-month basis, owning a home is still more expensive in all 50 states, according to a 2017 NerdWallet analysis, and an inflated budget can seriously impact your ability to save for retirement.

According to the Economic Policy Institute (EPI), the average American has less than $5,000 in savings, and couples between age 50 and 55 only have about $125,000 earmarked for their golden years. That’s not nearly enough to fund a long and financially secure retirement, and lower monthly costs can help you divert funds into catch-up 401(k) and IRA contributions, liquid savings, and other investments. For instance, if you’re 50 and can save $500 a month in housing-related costs, investing it at a 7% return will yield almost $169,000 by the time you reach age 66.

Related links:

• Motley Fool Issues Rare Triple-Buy Alert

• This Stock Could Be Like Buying Amazon in 1997

• 7 of 8 People Are Clueless About This Trillion-Dollar Market

Over the course of several years, you’ll likely come out ahead by owning rather than renting. However, if you have reason to doubt your ability to keep up with the costs of homeownership, or if purchasing a home would leave you unable to save for the future, then renting could be the more responsible choice for now.

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Brexit bust? London home prices fall for 1st time in 8 years

Virtual reality is the new open house

It’s finally happened. London property prices have fallen after years of runaway increases.

London home prices slipped 0.6% in the quarter ended September, according to Nationwide. It’s the first decline since the financial crisis.

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The mortgage provider said the average sale price for a London home is £472,000 ($630,000), an increase of 56% from a decade ago and more than double the current national average.

Nationwide said that mounting pressure on household incomes was weighing on confidence and contributing to the slump.

Experts have warned for over a year that Britain’s planned departure from the European Union would hurt London’s supercharged real estate market. The worry is that major shifts in law-making, immigration, investment and trade could scare away buyers — especially wealthy foreigners.

Related: Toronto faces highest risk of a housing bubble

The doomsday scenario envisioned by some observers has failed to materialize, with initial price declines being limited to central neighborhoods that had been especially frothy.

Prices in other areas of the city proved more robust, with sales being supported by ultra-low interest rates, a robust job market and government programs designed to encourage purchases.

But continued uncertainty over Brexit and the U.K.’s future trading relationship appears to have taken its toll.

“Low affordability, the economic slowdown and uncertainty about the U.K.’s relationship to the EU are keeping demand in check,” UBS analysts said this week. “We continue to advise caution given high market valuations and enormous political uncertainty.”

Related: EU says a Brexit breakthrough could be months away

More pain could be coming: The Bank of England has strongly hinted in recent weeks that it will raise interest rates, making mortgages more expensive.

02 london homes property real estate
Home prices in London slipped 0.6% in the third quarter compared to last year, according to Nationwide.

Many analysts, however, are optimistic that price hikes will resume after Britain’s divorce from the EU is complete.

Savills predicted this week that the most desirable London neighborhoods could see prices rise 20% by 2022.

“When uncertainty clears and central London’s prime residential real estate again represents identifiably good value, prices will bounce, though not to the same extent as in previous cycles,” it said.

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Chinese billionaire dumps huge London real estate deal


Wang Jianlin

One of China’s richest men has abandoned plans to buy $600 million worth of prime London real estate as his aggressive overseas deal-making comes under scrutiny by Beijing.

Billionaire property tycoon Wang Jianlin’s Dalian Wanda Group said Tuesday it would not complete the purchase of Nine Elms Square, a 10-acre site in south London near the River Thames.

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Wanda declined to say why it walked away, but it’s not the company’s first foreign deal to fall through this year.

Its plan to buy Dick Clark Productions, the producer of the Golden Globes and other big awards shows, collapsed in March as the Chinese government cracked down on overseas investments.

Last week, Beijing announced it would restrict Chinese companies from doing deals in other countries, including real estate (the industry in which Wang built his fortune) and entertainment and sports (businesses he has singled out for his company’s future growth).

Related: China clamps down on buying spree in sports, movies and hotels

Wanda’s purchases in recent years have included Hollywood studio Legendary Entertainment and a stake in Spanish soccer team Atletico Madrid. Its huge real estate business encompasses projects in Chicago, Los Angeles and Sydney.

In January, Wang said that Wanda carried out “the greatest number of overseas acquisitions in its history” last year, and that it planned to do more. Last month, as Bejing’s clampdown intensified, he told Chinese business magazine Caixin that the company has “decided to put its main investments within China.”

China is worried that a huge outpouring of cash could destabilize its economy. It’s also concerned about the amount of debt big companies are accumulating to finance overseas acquisitions.

Related: Chinese billionaire battles talk of trouble at real estate empire

Dalian Wanda had agreed to buy the Nine Elms Square property, the site of an old flower market, for £470 million ($600 million) from a joint venture between Britain’s St. Modwen Properties and French construction firm Vinci (VCISY).

St. Modwen’s announced Monday that the sale had been completed. A spokeswoman said the property was bought by a newly formed U.K.-based company, which Wanda could have sold to other investors.

The St. Modwen’s spokeswoman wasn’t immediately able to provide the name of the new U.K. company or identify its backers. Wanda declined to comment further.

The Chinese company still owns another part of the Nine Elms redevelopment in South London — a £700 million ($900 million) hotel project.

Related: Chinese tycoon gives up on plans to beat Disney

Nine Elms Square is expected to be turned into residential and commercial property, including 1,900 apartments.

By pulling out, Wang may also be dodging concerns about a softening in London’s high-end real estate market.

Although London’s residential and commercial property markets have performed better than experts predicted following Britain’s vote to leave the European Union, they’re still not firing on all cylinders.

British hospitality industry in limbo as Brexit looms

The head of Savills World Research, Yolande Barnes, said sales of London properties worth £10 million ($13 million) or more slumped in the months following the Brexit referendum last year.

Activity has since recovered a bit but the market for ultra high end homes remains subdued.

“I think what we’re looking at is called a high plateau rather than a traditional market cycle,” said Barnes.

— Alanna Petroff contributed to this report.

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How to save enough money for a down payment on a home

Money guide for Millennials

Saving up a down payment to buy your first house can seem a pretty daunting task. If you’ve never had more than a few thousand dollars in the bank at any given time, then setting aside five figures or more may seem impossible.

However, getting a down payment together is not as difficult as you may think — if you go about it the right way.

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Figure out how much house you can afford

The first step in saving up your down payment is to pin down the amount you can responsibly spend on a house. Lenders will typically limit your mortgage amount so that your monthly housing payments (including property taxes and insurance) will not exceed 28% of your pre-tax monthly income.

But if your income is a bit iffy — for example, if your pay fluctuates seasonally or you work in an industry with high turnover — shoot for a lower percentage, perhaps 20% or so. After all, home ownership usually comes with additional expenses beyond that monthly housing payment: repairs, additional utility bills, homeowner’s association fees, and so on.

A homebuying calculator can help you figure out just how much home you can afford — but remember that no calculator can account for every aspect of your financial situation.

Set a savings plan

Once you know how much you need to save, the next step is to figure out how much you can set aside each month. That will also help you determine how long it will be before you’ll have the full down payment and can start house-shopping.

For example, if you plan to save $45,000 for a down payment, setting a time frame of five years to save $45,000 means you’ll need to save about $9,000 per year, or $750 per month, to make it happen.

Squeezing an extra $750 per month from your monthly budget will likely mean some serious cutting of expenses and/or finding new sources of income, such as a side hustle.

You can play around with a savings calculator to see how different time frames will affect your monthly savings requirements.

Speed up the process

One way to make the saving process go faster is to get better returns on the money you’re saving by investing part of it in stocks. It’s a riskier course of action than sticking the money in a savings account, but if you have several years before you buy a home, then it could greatly accelerate your savings plan. It would also mean you don’t have to save quite as much to reach your goal, because your money would be earning more money for you.

Your best bet is likely to choose a stock index ETF or two, which will instantly diversify your holdings, thereby reducing your risk of losses. Then hang on to the investment and let it grow for as long as possible, bearing in mind that you may have to ride out some ups and downs in the market.

Also, don’t put all of your down payment money into stocks; limit yourself to about 25% of the whole. That way, if the market heads in the wrong direction just as you’re looking to buy a home, most of your savings will be protected. The rest of the money can go into a savings account — but don’t limit yourself to your local bank’s offerings, because many internet banks pay much higher interest rates on their money market accounts than you could get from a standard savings account at your neighborhood branch.

Borrowing from your 401(k)

If you have a well-funded 401(k) account, you can borrow up to half the money (to a maximum of $50,000) and use that money as part or all of your down payment. You will have to pay the money back within five years, including interest, but at least the interest payments will go to you and not to some other creditor (the interest is paid into your 401(k)).

However, there are some potential drawbacks to tapping your retirement accounts for non-retirement purposes. If you don’t get the money paid back, not only will your retirement savings suffer a crippling hit, but you will have to pay both income taxes and penalties on the entire amount outstanding.

Plus, if you change jobs during the repayment period, you’ll be required to pay back the remaining balance within 60 days. Finally, taking money out means there’s less money in the account earning returns for you, which could derail your retirement savings plans.

Bottom line: A 401(k) loan may be an option for getting your down payment, but it’s risky — and don’t even consider it if there’s a chance you may change jobs in the next five years or if you’re within 10 years of retirement.

If 20% down just isn’t possible

The traditional 20% down payment is still the best option. For one thing, it lets you skip private mortgage insurance, an annoying expense that can put yet more strain on your budget.

But if 20% down is not in the realm of possibility, there are programs that can get you into a house with a much smaller sum. For example, FHA programs let you pick up a mortgage with as little as 3-1/2% down if your credit score is at least 580.

Assuming that you decide to shoot for a mortgage of $180,000, saving a 20% down payment allows you to set a maximum affordable home value of $225,000 — and calls for a down payment of $45,000. On the other hand, if you decide to save only 3.5%, then the most house you could afford would be about $190,000 — that will give you a mortgage of $183,350 and a down payment requirement of $6,650.

Related links:

• Motley Fool Issues Rare Triple-Buy Alert

• This Stock Could Be Like Buying Amazon in 1997

• 7 of 8 People Are Clueless About This Trillion-Dollar Market

You can see how a bigger down payment goal gives you a much wider range of potential homes based on affordability.

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Life is good for U.S. home sellers

Virtual reality is the new open house

It’s good to be a home seller right now … really good.

That’s because it’s the most profitable time to sell a home in almost 10 years.

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Homeowners who sold in the first three months of this year saw an average price gain of $44,000 from purchase, according to a report from Attom Data Solutions released Thursday. That’s the highest gain since 2007.

“I am guessing we will see it get even better before it gets worse,” said Daren Blomquist, senior vice president at Attom. “If you are considering moving this spring, it could be a really good time to sell.”

Cities with robust local economies have seen strong price growth during the housing market’s recovery. Low housing supply has helped push up prices to create competitive markets where bidding wars and above-asking price sales are common.

Nationwide, the median home price was $225,000 during the first quarter of 2017, the report stated, up 13% from a year ago.

Homes in more expensive markets have seen the highest average price gains so far this year, the report found. Sellers in San Jose, California, saw an average price gain of $356,500, followed by those in San Francisco with a gain of $276,750.

Related: The struggle is real for Millennial homebuyers

Even in a seller’s market, homeowners aren’t necessarily in a hurry to list their homes. Sellers in the first quarter of this year had lived in their home for an average of almost eight years. From 2000-2007, the average homeownership tenure was around 4.26 years.

After the housing crisis, many homeowners were underwater and had to stay put until they could rebuild their equity. Now, tight inventory levels have made some owners hesitant to sell because they fear they won’t be able to find a home to move into.

Other homeowners are simply relishing the home price appreciation and expect it to keep going.

“I’ve talked to agents and brokers in the Bay Area, and one of the mantras there is actually ‘never sell,'” said Blomquist. The idea is to leverage the wealth to purchase additional properties or pass the home along to future generations. In fact, San Francisco has a nearly 10-year homeownership tenure, which is among the longest in the country.

Related: First-time homebuyer? Avoid these states

While strong price gains are good news for homeowners, it means buyers really have to step up their game in order to compete.

Not only are home prices rising, they’re moving fast. On a national level, homes sat on the market for an average of 45 days in the first quarter, down from 84 during the same time period in 2011, according to data from Clear Capital.

In the five fastest-moving markets, homes are on the market for less than 21 days.

But not all homeowners are swimming in equity and have buyers lining up around the block. While home prices have exceeded pre-recession levels in more than half of U.S. housing markets, 46% still haven’t returned to their peaks, noted Blomquist.

In Las Vegas, home prices are 26% below their pre-recession high and in Miami and Baltimore, they are 22% below.

“There are many individual homeowners who have been left behind by this housing recovery,” Blomquist said.

Here are the markets with the highest average percent return on the previous purchase price, according to Attom:

San Jose: 71%

San Francisco: 65%

Seattle: 56%

Portland, Oregon: 52%

Modesto, California: 51%

Stockton, California: 51%

Los Angeles, California: 50%

Denver: 50%

Vallejo, California: 47%

Salem, Oregon: 46%

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Good luck buying a home in this hot housing market

Virtual reality is the new open house

It’s going to be a tough house hunting season for buyers, but it’s particularly brutal for those in Seattle.

While competition and prices have been rapidly rising in real estate markets across the country, Seattle buyers are facing major obstacles to landing their dream home.

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Open houses are jammed packed, bidding wars are the new normal and homes are selling for well above asking prices.

Home prices in the city have seen double-digit growth for more than a year, according to the SP CoreLogic Case-Shiller Home Price Index.

“This is the craziest market I’ve seen,” said Kyle Moss, a real estate agent with Redfin who was born and raised in Washington. “We have a sea of very, very well qualified buyers coupled with the lowest amount of homes for sale. It’s a serious problem.”

One reason is that the city has been flooded with new residents, thanks to its strong economy. The Seattle area is home to tech giants like Amazon (AMZN, Tech30) and Microsoft (MSFT, Tech30), as well as other big employers like Starbucks (SBUX) that tend to pay well.

“If someone is making enough to qualify for a $700,000, $800,000 or million dollar mortgage, that is always going to drive housing prices up,” said Moss.

Many of the buyers in the market are first-timers, according to local agents, but there’s also been an increase in foreign buyers paying all cash.

The city has had an inventory problem for about four years, according to Sam DeBord, managing broker for Seattle Homes Group. Regulations and geographical barriers make it hard for builders to put up new homes.

“We are falling behind tens of thousands of units a year and have been for several years,” he said. “The basic law of supply and demand can’t be ignored. That is what is at the heart of this housing crisis.”

Related: The struggle is real for Millennial homebuyers

seattle homebuyers harris
Brian Harris (left) and his partner Damion Wilson recently faced the struggle of house hunting in Seattle.

It’s certainly not impossible to become a homeowner in Seattle. It just takes a lot of time, a thick skin to deal with rejected offers, and a little creativity.

Brian Harris and his partner recently became the winning bidders on a three-bedroom home in Seattle.

But it wasn’t easy reaching that point.

Harris said they were originally searching for a home within 10 miles of the downtown area, but competition was so intense they pushed it even farther to 20 miles out.

Open houses took over their weekends and eventually spilled into their weeknights as well.

“It is all encompassing,” Harris said. “We found we couldn’t wait for the weekend. If a house came on the market on Monday or Tuesday, it was pending by Thursday or Friday.”

Homes are selling fast in Seattle, spending about 25 days on the market, down from 65 in March 2012. It can be hard to find parking at open houses and some are so crowded that it’s hard to move around to see the home.

Sellers are seeing some of the biggest price gains in almost a decade, and they know they’re in the driver’s seat.

“You put a house on the market you will have 100 people through the open house on the weekend and maybe 15-20 offers,” said Patti Hill, a real estate agent who has worked in the Seattle market for more than 17 years.

And despite the high demand, the housing stock isn’t always impressive.

Harris said that while some owners still take the time to clean and present their homes in the best way, others aren’t even bothering. “It was surprising how little effort some sellers are making.”

Related: Buying a home in 10 steps

To win a home, buyers are putting in aggressive offers.

“Some of them are kind of scary because they’re waiving contingencies that puts earnest money in jeopardy if something happens,” said Hill. It’s common for Seattle buyers to waive inspections and appraisals and go above list price.

When Harris and his partner found their soon-to-be new home, they did everything they could to come up with the winning bid. They waived all contingencies, went above the asking price and had an escalation clause.

“Buyers are totally at the mercy of whatever the sellers wants,” he said. “If you want the house, you do whatever it takes.”

The pair also talked to the listing agent to find out about any special circumstances about the owner and incorporated that into a personalized letter and also offered a 30-day rent-back-to-owner for free.

Their winning bid was $425,000 — $60,000 over the asking price and above their original budget.

They are set to close this month, with a move in date in June.

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4 things first-time homebuyers need to know

Money guide for Millennials

My wife and I are hoping to be first-time homebuyers this year. We’ll likely blow our savings on the down payment and closing costs. What’s the best way to handle the costs for home renovations? Private loan? Just wait a year or two for our savings to replenish some? –Brian Emily, Jersey City

Congratulations on your adventure into becoming homeowners.

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Buying a home is likely the biggest purchase you’ll ever make, and it’s not always an easy one.

Low inventory has pushed home prices up in cities throughout the country, giving sellers an advantage. Homes sell fast, bidding wars break out and offers above the asking price are common.

All of this means that buyers need to be on their game and have their finances in order before entering the market.

Here’s what experts said first-time buyers need to know:

1. What you can actually afford

Before buyers start their house hunt, it’s important they know how much they can afford to spend.

“Start with a plan,” said Chantel Bonneau, a financial adviser at Northwestern Mutual. “Don’t let your imagination take over and don’t let what you see from friends’ houses drive your budget.”

Buyers should list out all of their monthly expenses. Don’t forget to include items like groceries, transportation, and discretionary spending, like gym memberships and nights out.

Related: Should real estate be part of my retirement plan?

A general rule of thumb is that housing costs shouldn’t take up more than 30% of your before-tax income.

But experts said that the percentage can vary, especially if you have other debts, like student loans or car payments.

Spending too much on monthly housing payments can leave homeowners house poor, and unable to afford other expenses — like saving for retirement.

“A home is not a good excuse to be reckless with the rest of your financial situation,” said Bonneau.

In competitive markets, it’s common for buyers to get pre-approved for financing to get a leg up. But experts said that just because a bank approves you for a certain amount, it doesn’t mean that’s what you should spend. Stick to a price limit you’re comfortable with.

broke no more
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2. You need a buffer

While it may be tempting to throw everything you’ve got at your offer to stay competitive, experts recommended having at least some money left over after you close on a home.

“If buying a house takes your checking account down to $1,000, it’s probably too expensive,” said Bonneau.

Experts advised having at least three to six months in savings the day you become homeowners. One reason is that you’ll need emergency savings now more than ever.

Related: Should I use my savings to pay off my credit card debt?

“You don’t want a flat tire or a deductible on a medical plan to throw you into financial turmoil,” said Bonneau. “When you are a homeowner, you have a lot more things that can go wrong.”

If a home purchase leaves you with no liquidity, it might be worth considering waiting to increase your savings or lowering your price point, advised Neil Krishnaswamy, a certified financial planner with Exencial Wealth Advisors.

homebuyers brian emily
Brian and Emily are looking to buy their first home.

3. The true cost of owning a home

The down payment tends to be the biggest financial hurdle to owning a home, but there are many other costs that pop up along the way: appraisal, origination, credit report and notary fees can all add up.

And the costs don’t stop just when the keys are handed over. There’s the move, new furniture and costs like lawn care and utility payments that former renters might not be used to paying.

“I don’t know if anyone truly understands the total cost of owning a home,” said Krishnaswamy. “Things just continually come up that you want to do, either buy something to fill a room or fix or improve something. Most people underestimate the cost.”

4. Renovations are not as seen on TV

Buying a fixer-up might allow you to snag a bigger home or afford one in a more desirable area, but experts warned there are huge risks.

“Know that it is always more expensive than what you are imagining … or what you see on TV,” said Bonneau.

If a home needs renovations, factor that into the total cost of buying, recommended Krishnaswamy.

A private loan is an option to finance the project, but can be difficult to secure, especially after just taking out a mortgage.

If your home appraises for more than you purchased it for, you could have the option of tapping your equity to help pay for renovations.

There are some mortgage options that include renovation expenses. For instance, 203k FHA loan allows homebuyers to finance the sale and rehabilitation on a single mortgage.

Another option is asking a friend or family member for a loan.

“If you are trying to secure the best low-rate loan, look at those closest to you, but be mindful of your relationship status if you can’t pay back the loan,” said Krishnaswamy.

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First time home buyer? Here’s what you need to know

Money guide for Millennials

It’s going to be a rough summer for many wanna-be homeowners, especially the first-timers.

Buyers are facing stiff competition and bidding wars in the real estate markets that clearly favor sellers.

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But that doesn’t mean you should abandon your dreams of home ownership.

Here’s what real estate agents from across the country want first-time buyers to know:

Be realistic

You know those HGTV shows that make home buying look fun and super fast? The buyers only look at three houses, find their dream home and get an accepted offer within their budget, all on the same day. Yeah, that’s not how it works IRL.

“After seeing three homes, most buyers say, ‘wow, that is nothing that we want. We need to see more.'” said Alex Haried, a Redfin real estate agent in Chicago.

House hunting can be long, frustrating and exhausting. Open houses and home showings can take over your weekends and creep into your week nights, and checking for new listings online can become an obsession.

Don’t bite off more than you can chew

Experts recommended getting pre-approved by a lender before you officially start your search.

That can be a good starting point in figuring out what you can afford. But just because you were approved for a set amount doesn’t mean you have to spend that much. Creating a budget can help to determine how much money you’re comfortable spending each month.

Once you’ve figured out your ceiling, take the time to research the market to find out how far your budget will go.

“Get realistic about what your money can buy,” said Dana Bull, a real estate agent in Boston.

Related: How much house can you afford?

It can also be tempting for buyers to go above their budget when they fall in love with a house. But realtors say that can be a big mistake.

“I talk to them on a personal level,” said Stephanie Collins, a real estate agent in Denver. “I tell them, ‘If you want to be downtown where you can walk to restaurants, are you going to be in over your head with the mortgage? Will you be able to dine out?'”

Play it cool at the open house

You’ve finally found your dream house. It’s perfect and you start coming up with your offer.

Be cool.

It helps to establish contact with the seller’s agent to start a rapport, but oversharing can create problems.

“Some of my clients are bubbly, and I have to reel them in,” said Bull. “Don’t give the listing agent too much information, you never know what they will use to negotiate against you.”

Related: 4 things first-time homebuyers need to know

For instance, saying you’re relocating to the area for a new job or telling them your parents are helping with the some of the costs could make the agent nervous about your ability to secure financing.

“It’s almost like a job interview — buyers want to come off as easy to work with and that the process will be smooth and that they are going to get to the closing table.”

Be prepared for rejection

In many housing markets, sellers have the upper hand, which means competition is stiff — especially for first-time buyers.

“A lot of people don’t get their first offer accepted,” said Haried. Most of his first-time clients don’t make an offer until they’ve seen at least 15 homes.

While it hurts to get rejected, the process will get easier as time goes on.

Lay low once your offer is accepted

Once you have an accepted offer, your lender will start the underwriting process on your mortgage. Banks will scrutinize your finances and any big purchases might affect your qualification status. So lay off the credit cards, and don’t suddenly decide to quit your job.

Bruce Elliott, president of Orlando Regional Realtor Association, once had a client’s closing delayed over a $300 purchase.

“That purchase could push your debt-to-income level too high and you wont be able to close,” he said.

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These are the fastest-growing cities in the U.S.

Population increase: 7.8%

It seems like everyone is headed South these days — especially to Texas.

Eight out of the 10 fastest-growing cities in the U.S. are in the South, according to a recent report from the Census Bureau, with the population in large southern cities increasing by an average of 9.4%.

Conroe, Texas, a Houston suburb, was the fastest-growing city in the nation last year with a population increased of 7.8%. That’s a growth rate 11 times higher than the national average.

Article source: http://rss.cnn.com/~r/rss/money_realestate/~3/azOrpTiXV3c/index.html