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Stop Making Excuses! Busting the Most Common Reasons for Not Buying a Home

by Amy McLeod Group


Owning a home means you can build equity, take advantage of tax deductions, and partake in a little something called the American dream. For the past couple of years, the U.S. homeownership rate has hovered around 64%. But there's also a considerably large pool of renters in the country who have plenty of reasons for not buying. And some of those explanations are totally legit: Financial, economic, or personal limitations can prove that now is not the right time to buy. But we know an excuse when we hear one.

We get it—investing in real estate is a huge commitment. It's scary and exciting all at the same time. But what if buying actually is in the realm of possibility?

Think of all of the reasons you've ever given for not getting into the real estate game. Now allow us to poke holes in those theories.

We asked real estate agents to weigh in on the most common reasons people give for not buying a home—along with their counterarguments to these statements. If you do your research and everything checks out, purchasing property could be totally feasible.

'I don’t have enough for a down payment'

According to Jonathan Self, a Realtor® at Center Coast Realty in Chicago, most people who say they don’t have enough for a down payment have no idea how much money they would even need.

“Most people who tell me this have not spoken with a lender—it's rare for people to go to a lender before their agent,” he says.

So, the first step is to find a reputable lender. This can help you set your goals and put you on the path to homeownership.

Yes, there's certainly a chance you won't have enough for a down payment. Yet, on the other hand, you might not need as much money as you think you do. Or, your financial snapshot will qualify for loans that don't require a large down payment. But you’ll never know unless you reach out to a lender.

'I need to save more money'

For some, it makes sense to wait and save for a down payment, future mortgage payments, or home repairs. But as home prices edge higher, so do rent costs. That's why buying might be a better decision than renting.

“The rent you’re paying could be converted to investment in equity,” says John Manning, managing broker at Re/Max on Market in Seattle.

Talk to a lender to see if you qualify for a mortgage. Most agents are willing to match potential buyers with mortgage professionals.

“There are mortgage products for almost every financial scenario,” Manning says.

'I’m locked into my lease'

This is a common excuse, especially among first-time home buyers, according to Heather Sims at Ebby Halliday Realtors in Dallas. “My response is always, 'Let's find out what the penalty is for breaking that lease.'”

She says there’s often no penalty at all if your property management company is able to find a tenant to rent out the unit.

“Other times, it'll be one month's rent. In the grand scheme of things, that's not very much given how much money you're saving (and investing) by buying a home with a reasonable mortgage rate,” Sims says.

In some situations, the sellers will need to lease back the home as they search for a new home. In these instances, Sims says, it’s easy for buyers to recoup the cost of breaking their lease.

'I might move away'

Many of us haven't found our forever town or city yet. That's fine. The possibility of relocation is a valid reason for holding out on purchasing a home—unless you’ve been saying that for years. The truth is, not investing in property could mean you're leaving money on the table.

In some areas, mortgage payments are comparable with paying monthly rent. If that's the case in your neighborhood, it might be wise to buy.

“Even if you have to get out of town before your four to five years of equity has built up to help you break even, you could rent [out] the home and continue to get equity from the tenants," says Self.

'I’m waiting the market out'

It’s a seller’s market. Or is it a buyer’s market?  Buyers often use this confusion as an excuse to wait out buying a house because they believe they'll be able to get a better deal in the near future. Markets are cyclical, and it is usually prudent to purchase when there are more sellers than buyers.

"However, there is a good chance your money isn't doing much for you in your savings account,” Self says. “No one has a crystal ball, but I know people who have been waiting for years so they can jump in at the right time.”

Manning agrees: “Many people will never manage to outsave market appreciation and can lose purchasing power if interest rates trend upward.”

'I’m looking for the perfect house'

Everyone is looking for the perfect home, but if you’ve been searching for years, and you’ve viewed hundreds of homes to no avail, you may need to tweak your expectations. It’s one thing to prefer a move-in ready home over a fixer-upper, or three bathrooms over two, but sheer perfection is hard to find.

“From my experience, buyers who are looking for a perfect house will never find it, because a perfect house doesn't exist, regardless of the price,” says Russell Volk, a Realtor at Re/Max Elite in Huntingdon Valley, PA.

If a house has eight of the 10 features on your wish list, it's seriously worth considering.

Thinking about buying a new home? Contact The McLeod Group Network at 971.208.5093 or [email protected] to start your search today!

By: Realtor.com, Terri Williams

Is Renting Right for Me?

by Amy McLeod Group


If you’re currently renting and have dreams of owning your own home, it may be a good time to think about your next move. With rent costs rising annually and many helpful down payment assistance programs available, homeownership may be closer than you realize.

According to the 2018 Bank of America Homebuyer Insights Report, 74% of renters plan on buying within the next 5 years, and 38% are planning to buy within the next 2 years.

When those same renters were asked why they disliked renting, 52% said rising rental costs were their top reason, and 42% of renters believe their rent will rise every year. The full results of the survey can be seen below:

It’s no wonder rising rental costs came in as the top answer. The median asking rent price has risen steadily over the last 30 years, as you can see below.

There is a long-standing rule that a household should not spend more than 28% of its income on housing expenses. With nearly half of renters (48%) surveyed already spending more than that, and with their rents likely to rise again, it’s never a bad idea to reconsider your family’s plan and ask yourself if renting is your best angle going forward. When asked why they haven’t purchased a home yet, not having enough saved for a down payment (44%) came in as the top response. The report went on to reveal that nearly half of all respondents believe that “a 20% down payment is required to buy a home.”

The reality is, the need to produce a 20% down payment is one of the biggest misconceptions of homeownership, especially for first-time buyers. That means a large number of renters may be able to buy now, and they don’t even know it.

Bottom Line

If you’re one of the many renters who are tired of rising rents but may be confused about what is required to buy in today’s market, let The McLeod Group Network help to determine your path to homeownership. 971.208.5093 or [email protected].

By: KCM Crew

Do You Get Your Earnest Money Back at Closing?

by Amy McLeod Group


Do you get your earnest money back at closing? If you're buying a house and planning to finance the purchase with the help of a mortgage, the question is bound to come up. The short answer is: You don't usually get your earnest money back at closing.

But hold on! Sometimes earnest money is returned at closing. What? Read on to find out what happens to your earnest money at closing.

What is earnest money, anyway?

So you've heard the term "earnest money" thrown around during the purchase process, and you're not quite sure what it means? Sometimes called "good-faith money" or a deposit, earnest money is a sum that home buyers put down when they make their offer on a house, to show they're committed to the purchase.

Earnest money (typically about 1% to 2% of the amount you plan to pay for the house) is put down by a buyer within five days of an offer being accepted by a seller. The money is then deposited into an account by an escrow agent.

Maybe you've heard it called "going into escrow"? That's because the escrow officer will set the earnest money aside while you continue the steps of buying a house, such as getting an appraisal so your bank will approve the purchase or sending a home inspector to the house to ensure there are no reasons you should back out of the deal. They can't touch that money during that time, and neither can the seller!

Do I get my earnest money back at closing?

If the appraisal comes through at a price that makes your lender happy, and the home inspection doesn't turn up anything alarming, eventually you'll get to closing—the end of the home-buying process—when you pay the seller and walk away with keys to your new castle.

This is when your escrow agent is going to pull your earnest money out of escrow. What happens with it next is typically dependent on the sort of earnest money that was put down, says Keith Lucas, broker and owner of the Charleston Real Estate Company, in Charleston, SC.

If you put down cash (which is nearly always the case), the earnest money is traditionally applied to closing costs or toward your down payment—the portion of the sale price that buyers pay on their own in conjunction with a mortgage.

But there are times when you might get the earnest money back. Maybe you have secured a loan with no down payment required, such as a Veterans Affairs loan or a mortgage backed by the U.S. Department of Agriculture. If that happens, the earnest money will be applied to closing costs instead of down payment. If there's money left over after the closing costs are paid, you will get the surplus back.

But sometimes the earnest money isn't actually money at all.

Wait a second. How can there be money that isn't, well, "money"? It turns out, sometimes that good-faith deposit can just be something of "good and considerable value."

"There are cases where a watch, car, boat, real estate, or precious metals have been used as an earnest deposit," Lucas says. "In that case it might be returned to the buyer or liquidated by the seller and put toward the purchase price at closing."

Bottom line: Even if you don't get your earnest money back at closing, don't worry! That big chunk of change you put down at the beginning of the home-buying process hasn't disappeared. It's been used to help pay for your brand-new house.

Starting the search for your new homeContact The McLeod Group Network for all your real estate needs! 971.208.5093 or [email protected].

By: Realtor.com, Jeanne Sager

Buying a House This Year? This Should Be Your 1st Step!

by Amy McLeod Group


In many markets across the country, the number of buyers searching for their dream homes outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show that you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are not in an incredibly competitive market, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you through this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential homebuyers overestimate the down payment and credit scores necessary to qualify for a mortgage.

If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so today. Let The McLeod Group Network help - 971.208.5093 or [email protected]

By: KCM Crew

2 Myths Holding Back Home Buyers

by Amy McLeod Group

Urban Institute recently released a report entitled, “Barriers to Accessing Homeownership: Down Payment, Credit, and Affordability,” which revealed that,

“Consumers often think they need to put more money down to purchase a home than is actually required. In a 2017 survey, 68% of renters cited saving for a down payment as an obstacle to homeownership. Thirty-nine percent of renters believe that more than 20% is needed for a down payment and many renters are unaware of low–down payment programs.”

Myth #1: “I Need a 20% Down Payment”

Buyers often overestimate the down payment funds needed to qualify for a home loan. According to the same report:

“Most potential homebuyers are largely unaware that there are low-down payment and no-down payment assistance programs available at the local, state, and federal levels to help eligible borrowers secure an affordable down payment.”  

These numbers do not differ much between non-owners and homeowners. For example, “30% of homeowners and 39% of renters believe that you need more than 20 percent for a down payment.”

While many believe that they need at least 20% down to buy their dream homes, they do not realize that there are programs available which allow them to put down as little as 3%. Many renters may actually be able to enter the housing market sooner than they ever imagined with programs that have emerged allowing less cash out of pocket.

Myth #2: “I Need a 780 FICO® Score or Higher to Buy”

Similar to the down payment, many either don’t know or are misinformed about what FICO® score is necessary to qualify.

Many Americans believe a ‘good’ credit score is 780 or higher.

To help debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which focuses on recently closed (approved) loans.

As you can see in the chart above, 51.7% of approved mortgages had a credit score of 600-749.

Bottom Line

Whether buying your first home or moving up to your dream home, knowing your options will make the mortgage process easier.

Let's get together and see if your dream home may already be within your reach. 971.208.5093 or [email protected].

By: KCM Crew

You DO NOT Need 20% Down to Buy Your Home NOW!

by Amy McLeod Group

The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that the main reason why non-homeowners do not own their own homes is because they believe that they cannot afford them.

This brings us to two major misconceptions that we want to address today.

1. Down Payment

A recent survey by Laurel Road, the National Online Lender and FDIC-Insured Bank, revealed that consumers overestimate the down payment funds needed to qualify for a home loan.

According to the survey, 53% of Americans who plan to buy or have already bought a home admit to their concerns about their ability to afford a home in the current market. In addition, 46% are currently unfamiliar with alternative down payment options, and 46% of millennials do not feel confident that they could currently afford a 20% down payment.

What these people don’t realize, however, is that there are many loans written with down payments of 3% or less.

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO®Scores

An Ipsos survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores for approved conventional and FHA mortgages are much lower.

The average conventional loan closed in May had a credit score of 753, while FHA mortgages closed with an average score of 676. The average across all loans closed in May was 724. The chart below shows the distribution of FICO® Scores for all loans approved in May.

Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but you are not sure if you are ‘able’ to, let’s sit down to help you understand your true options today. 971.208.5093 or [email protected].

By: KCM Crew

What Is Private Mortgage Insurance (PMI)?

by Amy McLeod Group

When it comes to buying a home, whether it is your first time or your fifth, it is always important to know all the facts. With the large number of mortgage programs available that allow buyers to purchase homes with down payments below 20%, you can never have too much information about Private Mortgage Insurance (PMI).

What is PMI?

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. Freddie Mac goes on to explain that:

“The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $30 and $70 per month for every $100,000 borrowed.” 

According to the National Association of Realtors, the average down payment for all buyers last year was 10%. For first-time buyers, that number dropped to 5%, while repeat buyers put down 14% (no doubt aided by the sale of their homes). This just goes to show that for a large number of buyers last year, PMI did not stop them from buying their dream homes.

Here’s an example of the cost of a mortgage on a $200,000 home with a 5% down payment & PMI, compared to a 20% down payment without PMI:

The larger the down payment you can make, the lower your monthly housing cost will be, but Freddie Mac urges you to remember:

“It’s no doubt an added cost, but it’s enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

Bottom Line

If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, let’s get together to discuss our market’s conditions and help you make the best decision for you and your family. 971.208.5093 or [email protected].

By: KCM Crew

According to data released by the Internal Revenue Service (IRS), Americans can expect an estimated average refund of $2,840 this year when filing their taxes. This is down slightly from the average refund of $2,895, last year.

Tax refunds are often thought of as ‘extra money’ that can be used toward larger goals; for anyone looking to buy a home in 2018, this can be a great jump start toward a down payment!

The map below shows the average tax refund Americans received last year by state. (The refunds received for the 2017 tax year should continue to reflect these numbers as the new tax code will go into effect for 2018 tax filings.)

Many first-time buyers believe that a 20% down payment is required to qualify for a mortgage. Programs from the Federal Housing Authority, Freddie Mac, and Fannie Mae all allow for down payments as low as 3%, with Veterans Affairs Loans allowing many veterans to purchase a home with 0% down.

If you started your down payment savings with your tax refund check this year, how close would you be to a 3% down payment?

The map below shows what percentage of a 3% down payment is covered by the average tax refund by taking into account the median price of homes sold by state.

The darker the blue, the closer your tax refund gets you to homeownership! For those in Alabama looking to purchase their first homes, their tax refund could potentially get them 69% closer to that dream!

Bottom Line

Saving for a down payment can seem like a daunting task. But the more you know about what’s required, the more prepared you can be to make the best decision for you and your family! This tax season, your refund could be your key to homeownership!

Contact The McLeod Group Network to start your home search! 971.208.5093 or [email protected].

By: KCM Crew

6 Mortgage Questions a First-Time Home Buyer May Be Embarrassed to Ask

by Amy McLeod Group

Mortgage questions abound when you're a first-time home buyer. Compounding the challenge is the embarrassment over interrupting the conversation with a would-be lender or seller to ask, "'Scuse me, what is a credit score? How much money do I need as a down payment?" Everyone knows this stuff, right?

No, they don't all know—so you should ask these questions. Or, at the very least, study up a bit so you know the basics. To help get you up to speed, here's a crash course on the most common mortgage questions and answers you need to know. Take five to read on, and wonder no more.

1. What do you need to get a mortgage?

Before loaning you money, lenders want to see proof that you've proven reliable paying off past debts, so you'll need to start establishing credit.

"There are ways to verify your past payments on utility bills, cellphone, and rent," notes Michael E. Matthews, senior vice president of PrimeLending. "Get a credit card, pay it back carefully. Your car and college loans—those things help you establish credit and help you get a mortgage."

2. If you have bad credit, how do you improve it?

Matthews talks to a lot of borrowers who come to him with this mortgage question. They think they have bad credit but are doing better than they think.

His first tip: Check your credit report. It's free to download one copy each year, and you may be pleasantly surprised by what you find. And if the news is bad, there's still hope.

"If you’ve got bad credit, a lot of times there’s aged activity on there—an old collection, a medical bill, something you didn’t know about," Matthews says. And these "errors" can often be fixed, boosting your credit score fairly quickly.

If you do have a bunch of bad marks and late payments, however, start paying on time and your score will gradually improve. Here are some ways to raise your credit score.

3. What’s the difference between a mortgage pre-approval and a pre-qualification?

"Pre-qualification is not going to hold the same weight as a pre-approval," says Matthews. "You can go online and get somebody to print you out a pre-qual letter. And you’ll find that if you’re negotiating with an agent and they’re looking at a pre-qual letter, it’s probably not worth much to them."

A pre-approval letter—involving lenders fully checking your finances in a verifiable way—takes more time and effort, which is exactly why it carries much more weight. If you're serious about buying a home, get pre-approved to show you mean business. Here's more on the difference between mortgage pre-approval vs. pre-qualification.

4. How much down payment do you need for a mortgage?

The gold standard down payment for a mortgage is 20%—so if the home's price is $200,000, you'd ideally have to pony up $40,000 of your own money to get the loan.

If you don't have that much, all is not lost. You can put down less, but that means you'll have to pay PMI, or private mortgage insurance. It's an extra fee of about $50 to $100 a month that lenders will require to mitigate the risk that you might default on your loan due to your lack of funds.

"There’s risk there that literally has to be accounted for, and that ends up being insurance that adds to your mortgage payment," says economist Jonathan Smoke. "When you put less down, the trade-off is you actually have to spend more on a monthly basis."

That said, there are some exceptions that allow a buyer to avoid PMI even with a small down payment. Buyers who are in the military, veterans, and family members of veterans may be able to avoid PMI with a Veterans Affairs loan. And once your equity in your home rises above 20%, you can stop paying PMI.

5. What kind of down payment assistance is available?

If you're looking for help with a down payment, Smoke says, the "bank of Mom and Dad" may be a smart start—if your parents have the means to pitch in. Gifted money can help many people qualify for a loan, he says, although you absolutely must tell your lender that the money was a gift—fibbing on this front will raise red flags.

If private assistance isn't an option, or isn't enough, never fear—there are over 2,000 down payment assistance programs across the country that can help, as long as you meet eligibility requirements in terms of income and credit.

Check with your real estate agent or lender, as they may be able to tell you about programs in your area that will help you become a homeowner.

6. What types of home loans are available?

Loan types vary widely, but Barbara A. Carrollo-Loeffler, director of consumer and residential lending at Provident Bank in Jersey City, NJ, says loans typically fall into two camps. The first includes loans with an adjustable rate, meaning the interest rate could change after a period of time. The second includes loans that are "fixed" or "term," meaning the rate will stay the same for the length of the borrowing period. Generally term or fixed-rate loans are more common and considered the safer option, but it all depends on your circumstances, including how long you plan to stay in the home.

Here's more info on the pros and cons of various types of home loans, and which one is right for you.

Contact your local experts at The McLeod Group Network for all your Real Estate needs! 971.208.5093 or [email protected].

By and photo credit: Realtor.com, Jeanne Sager

Why Getting Pre-Approved Should Be Your First Step

by Amy McLeod Group

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.” 

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well. Let’s get together - 971.208.5093 or [email protected]

By: KCM Crew

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The McLeod Group Network
Keller Williams Capital City
1900 Hines St SE #220
Salem OR 97302
971-208-5093
Fax: 971-599-5229

**Disclaimer: Amy McLeod, and her team, do not initiate, process, or service mortgages.  And provide this information only as a service.  You should confirm information here with your Licensed Mortgage Lender.