Anyone who lived through the 2008 recession and subsequent housing market crash is likely feeling a little worried. After all, home prices have risen quite a bit in the past few years, and inflation is at a 40-year high.

But does that mean we’ll find ourselves in a situation similar to the late 2000s?

Likely not — because today’s market conditions are starkly different from what was happening in that period.

And in fact, the 2022 housing market is quite strong. Here’s why:

Demand far outweighs supply. Housing inventory is extremely low, and demand continues to surge. Demand will likely remain strong for the foreseeable future as the practices of remote work and buying and selling online continue. These two factors keep home values up and provide a steady stream of buyers as properties hit the market.

Lending standards are stricter. It was much easier to get a mortgage 15 years ago. After the crash, lenders created more rigorous standards for borrowers and the financial situation they need to be in to take on a mortgage. Due to these tighter requirements, most homeowners aren’t at risk of foreclosure if the economy heads toward a recession.

Homeowners have a lot of equity. The average homeowner gained over $55,000 in equity in 2021 alone. In the event of a recession, most homeowners could sell their homes and still make a healthy profit.

There’s no crystal ball to predict the future, but the housing market is on strong footing, even through the ups and downs.

Renovation projects can update your home and make it more comfortable while also boosting its value. But home renovations can be costly. Should you use a home equity line of credit (HELOC) for home improvement projects? While this can be a great option, it’s not the best choice for every homeowner. 

Here are the pros and cons of using a HELOC for home renovations.

How a HELOC Works for Home Renovations

Home equity lines of credit work much like a consumer credit card. To start, a lender will grant you a credit limit based on the equity in your home. During the initial “draw period,” you’ll only pay interest on the money you actually use.  When the draw period ends you make regular amortized monthly payments until the debt is repaid.

Caution should be taken when considering a HELOC.  Many HELOC programs have balloon payments due and payable in full at maturity. This means that the remaining balance must be paid or a new loan taken out to refinance the remaining balance.

Homeowners can use a HELOC as a flexible way to cover a series of smaller home renovation expenses, which can be particularly helpful if you’re not sure about the final cost of your project.  A HELOC can also work well if you are expecting a large lump sum payment, bonus, commission, or gift that you can use to repay the HELOC as you go.

Advantages of a HELOC for Home Improvements

Line of Credit, Not a Lump Sum

Even if you set a budget for your home renovations, it’s not often that your final costs match your initial estimates. A line of credit may make more sense for these types of projects, giving you the flexibility you need to meet the costs of each phase of the project.

A HELOC can be advantageous when you need to cover the costs of different project phases or variable costs such as materials or contract labor.

Line of Credit Stays Open Until Term Ends

A line of credit can be used repeatedly during the initial draw period. You will need to pay down or pay off your balance to reuse the line of credit, much like a credit card.

Typically, the draw period lasts for five to ten years, during which time your HELOC generally provides flexible interest-only payments or very low payment options. Some lenders offer draw periods that go considerably longer, but most home renovation projects are completed quickly enough for a standard HELOC.

Interest-Only Payment Terms

Depending on your lender and your financial history, you may qualify for a HELOC that offers interest-only payments during the initial draw period. This means that you’ll only repay the interest on the money you borrow, not the actual principal.

While you can repay the principal without being penalized, in order to reuse this line of credit, you won’t be required to repay the principal until the interest-only draw period ends. After this, you’ll make both principal and interest payments during the repayment period.

A HELOC option can be an advantage if you’re making improvements to sell your property since you’ll use the profits of the sale to repay the loan.

Tax-Deductible Interest

If you use a HELOC to substantially increase the value of your home, the interest you pay may be tax-deductible. Single or Married Filing Separately IRS Tax Filers can deduct interest on the first $375,000 of indebtedness, while joint filers can deduct interest on the first $750,000 of indebtedness. Higher limits apply if the mortgage debt was incurred before December 16, 2017, refer to the IRS code for your tax professional or particulars.

Just be aware that to claim this benefit, you must itemize your tax deductions, though this can still be a helpful way to improve your home while reducing your tax burden. Check with your tax professional to ensure that you meet all guidelines.

Disadvantages of a HELOC for Home Improvement

Despite the advantages, you might need to be cautious about using a HELOC for home renovations. While none of these drawbacks are insurmountable, they may require additional planning and preparation to navigate.

Variable Interest Rate, Not Fixed

A HELOC offers an adjustable-rate mortgage (ARM), which means that the exact amount of interest you’ll pay each month will fluctuate over the life of the loan. Unlike the predictability of a fixed interest rate, a variable interest rate means that borrowers must leave some breathing room in their monthly budgets to accommodate changing repayment costs.

Payments Increase Once Interest-Only Period Is Over

After the interest-only draw period is over, you’ll be required to make regular monthly principal and interest payments. This means that the shorter repayment period will result in higher payments since you’ll be paying the principal as well as any remaining interest over a shorter remaining term of the loan. 

If you failed to keep track of how much you were using during the draw period, you could be in for an unwelcome surprise when it comes time to repay the money you’ve been using.

Line of Credit Is Secured by Your Home

When you use a HELOC, your home itself becomes the lender’s collateral. If you miss payments, they could result in a default on your loan.  Not only can you damage your credit history and credit score but also risk losing your home in foreclosure.

Other Home Improvement Financing Options

Other available options that you may want to consider are a cash-out refinance or, for a much larger project, a renovation/construction loan.

A cash-out refinance is a refinance of your existing home loan and converting the available equity into cash in hand. If you are choosing this option, you will be making principal and interest payments for the life of the loan and you will need to manage the disbursement of the funds from your personal account where you deposit the loan proceeds.

A renovation loan is a convenient and economical means for borrowers considering home improvements for repairs and full renovations.  This is a single close first mortgage that enables the purchase or refinance of a home in need of repairs AND includes the necessary funds for the renovation. Renovations must be completed within 12 months of the note date.  The minimum renovation loan amount is generally $100,000.

Reach out to us today to find the best option for you. 

Source: https://crosscountrymortgage.com/resource-center/should-i-use-a-heloc-for-home-improvement/?nmls=204068 

It’s summertime, and the weather’s heating up. While having ceiling fans and air conditioning can certainly help cool things down, they can also raise your electricity bill.

Fortunately, there are some ways to stay comfortable around the house — without spending an arm and a leg to do it.

Are you searching for affordable ways to keep cool this summer? Try these four strategies.

Be choosy about your cooking. Turning on the oven or cooking on the stovetop will heat up your house. In the warmer months, you could try to eat more cold foods (like salads and sandwiches) or cook outside on the grill. If you do need to use your stove or oven, try to do so in the evening once the sun has gone down.

Create more shade. Add shade around your home by planting trees or adding a pergola or awning where the sun gets the most intense. Adding reflective film to your windows can help, too.

Maintain your HVAC system. If you’re going to be using central air this summer, make sure it’s in top condition by getting a professional tuneup. You should also change your filters regularly. These steps can ensure your system is working as efficiently and effectively as possible.

Upgrade your windows and insulation. If you have it in your budget, consider upgrading to double-pane or high-efficiency windows and updating your insulation if it’s been a while. Poor insulation and old windows let your cool air out and warmer air in — which will run up your electric bill.

Looking to buy a home that’s already got the updates you need this summer? Get in touch to start your search. Feel free to reach out to us at michelle@mvandassociates.com or at 661 427 8454.

July 24, 2023 –June home sales came in below the 300,000-benchmark for the ninth consecutive month, as rates remained elevated in the past couple of months. The year-over-year decline, however, moderated further with the annual dip dropping below 20% for the first time in 12 months. Meanwhile, the statewide median price remained above $800,000 for the third straight month, as tight supply continued to provide upward support. Monthly price dips in the coming months are anticipated, however, as the market goes through its typical seasonal pattern and rates remain elevated for most if not the entire third quarter. As for the economy, consumers appear to be more resilient than predicted six months ago, and economists are lowering the odds of a recession for the U.S. That’s good news, except a solid economy could mean a delay in the Fed loosening its monetary policy, which could be translated as mortgage rates staying high for a little longer.

Elevated rates and limited supply continue to suppress California home sales: Sales of existing homes in California continued to decline on a year-over-year basis for the 24th straight month in June but registered the smallest yearly drop since May 2022. Short supply and high mortgage rates continued to suppress home sales, while heated market competition remained the driving force that put upward pressure on home prices. As the market moves closer and closer to the end of the home buying season, the statewide median price is near its peak and will level off in July or August. If interest rates start coming down in the next couple of months, the market will see some improvement in affordability, which could help push sales up in the second half of the year.
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Supply remains stuck and may not improve any time soon: Housing inventory in California inched up in June from the prior month but dipped again from the same month of last year, as tight supply continued to be the norm. The statewide unsold inventory index in June 2023 dropped 8.3% from a year ago and increased 4.8% on a month-over-month basis. Active listings at the state level fell sharply by 34% from last year and registered the largest year-over-year decline since May 2021. With mortgage rates expected to be high in the next couple of months, California may not see any meaningful improvement in its supply condition for the rest of the third quarter.
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Retail sales continue to climb but at a slower pace: Consumers continued to spend in June and pushed up retail sales activity for the third straight month. The pace of growth in the latest month was softer than that observed in May and April, which suggests a stalling in momentum on consumer spending despite easing inflation. After accounted for price growth adjustment, real retail sales were up 0.1% from May and were up 2.4% from June 2022. While the overall growth was slowing, ecommerce remained a bright spot, topping all categories with a gain of 9.4% on a year-over-year basis. With Amazon claiming the first 24 hour of its Prime Day promotion in July as the “single largest sales day in the company history”, next month’s report could be even more impressive for ecommerce, and could help maintain a positive month-to-month growth rate for retail sales overall.
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Single-Family rent growth back to pre-pandemic levels: U.S. single-family rent continued to grow year-over-year in May with a gain of 3.4% from last year. The annual increase, however, continued to slow and was back to the rate recorded in the decade before the pandemic. The decelerating trend in rent growth is consistent with the pattern shown in the June’s consumer price index report, where shelter inflation also began to show signs of easing. The mid-single digit increase on rent was a relief for many renters who had to pay a double-digit growth rate on rent in May 2022. At the national level, rent growth for the lowest price tier was more than double that of the highest price tier, which suggest a bigger imbalance between supply and demand in the more affordable segment. Rent growth has been slowing throughout the year and could see further softening before the end of the year, as more multifamily supply continues to come on board.
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Builders remain confident as residential construction falls back: Residential construction took a step back last month, with total housing starts falling 8% during June, partially offsetting the robust gain in May. The sizable drop was broad-based with single-family dipping 7.0% from May to June, while multi-family sliding 9.9% over the same period. Despite a pullback in starts, the outlook for single-family constructions remained positive, as single-family permits continued to rise modestly by 2.2% on a month-over-month basis. With solid demand and a lack of supply in the resale market, developers continue to shift their focus to single-family housing units. Builder confidence remained on the rise for the seventh straight month, with the NAHB/Wells Fargo Housing Market Index gaining 25 points since the December 2022 low

October 2022

Moving can be expensive, whether you’re headed a few miles away or across the country.

There are the costs to rent a truck, purchase packing supplies and possibly hire professional movers — all of which may be more expensive now because of inflation.

Fortunately, there are ways to reduce your costs if you plan ahead. Do you want to save money on your next move? Just follow these tips:

Declutter and donate before packing up. There’s no sense in paying to move items you no longer want or use. Before you start packing or getting moving quotes, declutter your home. You can donate or sell anything you don’t actively use if it’s still in good shape. You might be surprised how much time and money it can save you later.

Get creative with packing materials. Buying boxes, tape and other packing supplies can quickly increase your costs. Instead of purchasing these items, try to source them from neighbors, work or your local stores. You can also use towels, sheets and other linens (which need to be packed anyway) as DIY padding for fragile items.

Shop around for professionals. Don’t go with the first truck rental or moving company you find. Get quotes from several providers and read reviews to ensure you’re getting good service with a trustworthy company — and at a reasonable cost.

Pick your moving dates carefully. The cost of movers rises when they’re in high demand, so plan your move for a less popular time of the year, month and week. Typically, movers cost less in the fall and winter, in the middle of the month, and on weekdays (not including Fridays).

Are you hoping to find a new place to move to soon? Reach out today.

October 2021

Your home is a huge investment — an investment you’ll want to protect for the long haul.

That means proper maintenance is key. Completing a few seasonal chores can help you extend the life span of your home while also cutting down on repair and renovation costs.

Want to make sure you’re keeping your home in tiptop condition? Then don’t skip these five must-do fall maintenance tasks: 

Check for (and seal) air leaks around windows and doors. Leaks in these areas can make it hard to control your home’s climate and, as winter approaches, that could mean sky-high heating and gas bills. It could also make your home pretty uncomfortable year-round.

Clean out the gutters. When gutters get clogged with leaves and debris, water can’t drain properly. This might lead to standing water on your roof or eaves, which can cause significant and costly damage over time.

Inspect your roof. At the very least, your roof needs an annual inspection. Even small leaks or missing shingles can cause big problems like water damage, mold, mildew and more.

Check your smoke and carbon monoxide detectors. These vital safety devices should always be in good working condition. Put them in test mode and make sure they’re all functioning properly. Batteries will usually need to be replaced every six months to a year.

Have your furnace inspected. If you heat your home with a gas-powered furnace, you’ll want the unit inspected at least once per year. Furnaces can pose serious fire and safety hazards if they’re not functioning properly.

It won’t take long to check these tasks off your list, and the payoff is well worth the effort.

Considering buying a new home? Have questions about your home’s value? Get in touch today.

July 2021

The housing market in California has been red hot since last July with home sales for the first half of 2021 surging above last year by 34 percent. Home prices, meanwhile, continue to climb with the statewide median price setting record highs for four straight months since March 2021. On the other hand, supply remained tight as for-sale properties consistently dipped below year-ago levels by 40 - 50 percent in the first half of the year.

The imbalance between supply and demand has created headaches for homebuyers, as market competition remains intense while housing affordability continues to decline. Half of all new listings in the second quarter of 2021 were off the shelf within seven or eight days after being listed, and 70 percent of the homes were sold above their asking price.

Despite the impressive performance in the first six months of the year, the market momentum appears to be slowing as we move into the third quarter. According to the latest housing report released by the California Association of REALTORS® (C.A.R.), statewide home sales declined on a month-to-month basis for the second straight month in June, while pending sales dipped for the first time since May 2020. The housing market is showing signs of cooling down as we enter the summer season.

The market cool-off could be a sigh of relief for potential buyers, however. As the market resumes its seasonal normality, housing supply will likely increase in the next couple months before it starts declining in the fourth quarter as the market enters the holiday season. Assuming that the market follows a typical seasonal pattern this year, supply should improve further before the end of the summer with active listings rising 4.3 percent in July and another 1.3 percent in August.

With inventory inching up and demand slowing as the market reaches the end of a traditional buying season, market competition should cool off in the coming months. For sale properties, for example, should have a longer shelf life in the off season. The median days on market should increase an average of five days in September when compared to June, based on pre-pandemic market trends observed between 2015 and 2019. The sales-price-to-list-price ratio – another measure of market competitiveness, is also expected to come down for the rest of the year. Between 2015 and 2019, the ratio declined an average of 0.98 percent from June to September and dropped an average of 0.55 percent from September to December.

With the pace of the economic recovery likely to slow in the second half of the year, interest rates will inch up but should not rise rapidly in the short term. Higher inflation observed in the recent months will put upward pressure on rates, but the average 30-year fixed rate mortgage should remain below 3.25 percent at the end of the year. As the market takes a breather in the coming months and rates remain near record lows, homebuyers who missed the opportunity earlier will have another chance to test the market (and their luck) again.

• Watch your credit card balances- use 30% or less of your available credit
• Pay your bills on time, every time
• Keep good debt on your report such as a car loan that has been paid on time and as agreed.
• Don't close unused cards

• Watch your credit card balances- use 30% or less of your available credit
• Pay your bills on time, every time
• Keep good debt on your report such as a car loan that has been paid on time and as agreed.
• Don't close unused cards

You have a lot of choices when it comes to selecting a mortgage lender and real estate agent. With a number of brokers, banks, specialty lenders, and agents vying for your business, why should you choose to work with us? 

Simply, we care about providing you with :

• Guidance based on knowledge and experience

• Education about the home buying process

• Commitment to help you achieve your goal

Pro Tip: Pull your team together before you start shopping: Know who your agent, lender, inspector, and attorney are so you can move fast and have a better chance against the competition. 

We're not here to just get you into a home and move on. We're here to build a long-term relationship with you - and your friends and family, too. 

Contact us today to see how MV & Associates can provide the best homebuying experience for you today - and in the future. 

Forget the red tape. We've got a blue ribbon in customer service! 

Experts say that buying a new home can be one of the most stressful times in a person's life. We say if it's that stressful, you're doing it wrong. 

Choosing an expert to help you obtain your home financing just makes sense. In fact, partnering with knowledgeable team members throughout the process - from your real estate agent to your home warranty company - will help make the whole transaction a lot smoother for you. 

When you're ready to start the homebuying process, MV & Associates will be here to provide any information you need and answer any questions you may have. 

Buying a new home doesn't have to stress you out. Contact us, and together we'll find the best options to get you into your new home. 

Budgeting and dealing with debt can be a struggle. MV & Associates is here to share with you some tips for creating a budget and paying down your debt. 

First, identify and track how you're currently spending your money. Then set your financial goals and create a budget around meeting those goals. Continue to track your spending to make sure you're staying within your budget. You can make budgeting simpler by using an app or purchase personal finance software. 

Once you've created your budget and know where your money is going, it's time to start paying down your debt. A good tactic for dealing with debt is Dave Ramsey's Debt Snowball Plan. 

The plan works by focusing on one small, manageable debt at a time. Here are some tips to implement this plan:

• Make a list of each of your debts, including the balance 

• List them from smallest to largest

• Make minimum payments on all your other debts and funnel all of your extra funds into the first (smallest) debt. 

• Each time you pay a debt in full, work on the next smallest debt on your list. Funnel your extra funds, including the payment from the first debt into the next debt. 

• Continue this program until you reach the last debt on your list. 

• Know how it feels to live debt-free!

By starting with your smaller debts, you see results quickly, which helps motivate you to keep going. You'll be surprised by how much progress you can make in a short amount of time. 

If you have any questions or would like me to refer you to a financial advisor, please contact me at 661-215-2552 or michelle@mvandassociates.com 

When the market is competitive, many homeowners opt to renovate their properties rather than sell or buy.

This can be a smart move for many reasons, but as you know, home projects can often end up being expensive and time-consuming.

Don’t want to make a costly mistake or even regret a renovation altogether? Take a look at these four common missteps — and find out how to avoid them. 

Mistake #1: Choosing the Wrong Project 

Ultimately, you want your upgrades to increase your home value and deliver a return on your investment when you eventually sell. You also want to use your precious time wisely. When selecting a project, make sure you choose one that isn’t more trouble than it’s worth.

Mistake #2: Going Too Big

You don’t have to completely redo your kitchen or bathroom to make a big impact. Could you simply repaint the cabinets or replace the fixtures instead? Try to consider low-cost, low-effort alternatives that could deliver a similar result to what you’re aiming for. 

Mistake #3: Trying to DIY Something You Shouldn’t

You can tackle some projects yourself, but if it requires specialized skills like plumbing, electrical work or structural updates, you’re better off leaving it to the pros. DIY work is typically best reserved for small-scale renovations like painting or landscaping. 

Mistake #4: Failing to Budget Properly

Make sure you have a plan to avoid the most common budgeting problems. These include underestimating your costs, not saving enough before starting your work, and failing to have a good buffer set aside in case of surprises. 

Considering buying new instead of renovating? Get in touch today.

Mortgage Insurance (MI) protects the lender in the event that you fall behind on your mortgage payments. If you put down less than 20% when you buy a home, you'll have to pay MI (also referred to as private mortgage insurance PMI or a mortgage insurance premium MIP, depending on the type of loan product you choose. 

While MI places an added expense on your monthly mortgage payment, it can be worth it by helping you purchase a home sooner. For example, let's say you only have 5% saved up for a down payment. Rather than waiting to save up for a full 20% down payment, which could take years, you could purchase a home now with your 5% down payment and pay MI as a tradeoff. 

Once you have enough equity built up, you may be able to cancel your MI. That's because as you build equity, your LTV decreases. Talk to your loan officer to learn more about how MI works. 

If you have any questions or would like me to refer you to a loan officer, please contact me at 661-215-2552 or michelle@mvandassociates.com

Remodeling your bathroom can be a great investment. It immediately makes your home more usable and enjoyable, and in the long term, an upgrade could increase your home’s value by thousands of dollars.

And a remodel doesn’t have to be a time-consuming or costly event. There are quite a few small, low-cost projects that can offer a big impact. 

Thinking about updating a bathroom? Here are a few projects you might want to consider.

Improve the Lighting

Sometimes changing out a fixture or installing a different type of lighting can make all the difference. You can even upgrade to smart bulbs for extra value and convenience. 

Add Some Storage

Who doesn’t need more storage? Whether it’s adding an extra medicine cabinet above the toilet or shelves to the closet, every bathroom can be enhanced with a little extra storage space.

Update Countertops and Fixtures

Changing out the hardware can make a big difference. That might mean swapping countertop materials, changing out drawer pulls or installing new doorknobs and faucets.

Add a Pop of Color

You don’t need to paint the whole room, but a pop of color in an alcove or built-in shelving unit can quickly improve the space. You could even do a patterned wallpaper if it fits with your aesthetic.

Upgrade the Shower or Tub

Could you add seating or built-in storage to your shower? Jacuzzi jets to your tub? A floor-level door for accessibility? It’s the details that matter.

One more thing: If you do opt to update your bathroom, don’t skimp on the planning. Have a budget in place, carefully vet your contractors, and avoid DIYing anything you’re not entirely confident about.