The Seattle-Tacoma housing market continues to be attractive for home buyers. However, you need to consider if now is the right time for you to jump into home ownership. Just because your friends and family all own homes, doesn’t necessarily mean it’s a financially smart decision for you to. Here are 4 signs you’re ready to buy a home.

4 Signs You’re Ready to Buy a Home

No more debt

One of the top signs you’re ready to buy a home is that you no longer have debt. You have eliminated credit card debt as well as your car payment and you’re now banking more each month. The extra cash flow that is no longer going toward your monthly debt can cover home owner expenses such as property tax, homeowner’s insurance, repairs, and furnishings. Considering the down payment is the top hurdle for most home buyers, the extra cash can cover that expense as well.

Credit score

If you’ve been watching your credit report and taking actions to improve your score, now could be the time to buy a home. Since your credit score is one of the most important factors in qualifying for a home loan, a higher score could land you a higher loan amount. With a higher credit score comes a lower interest rate, which ultimately means a lower monthly mortgage payment and less money over time.

Thought about all the monthly expenses

With owning a home comes many monthly expenses outside of your mortgage. Utilities, property taxes, HOA fees, and insurance bills are all costs you have to budget for. If you have done the research to include a ballpark estimate of all of these expenses and you’re comfortable with the outflow, it’s one of the best signs you are ready to buy a home.

Ready to settle down

Unless you’re in the house flipping business, your home is a long term investment. It’s best to plan to stay in a home for at least five years. If you’re just starting a family and need a certain number of bedrooms and outdoor space, it may be a wise decision to look into buying a home since renting an apartment of that size could cost as much or more. Additionally, if you have dreams of making your house a home, with personalized renovations and décor, owning a home may be right for you.

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Credit score is a large part in buying a home and improving your score could mean qualifying for lower interest rates and better terms. Unfortunately, most people only think about credit repair when it matters and are not proactive in repairing it ahead of time. Here are 4 simple steps to repair your credit score so you can qualify for the best home with the lowest rate.

4 Simple Steps to Repair Your Credit Score

Review your credit reports

The first step in repairing your score is examining it. The credit bureaus are required to give you a free copy of your credit report once a year, you just need to request it. Another way to check is to use a free online tool that gives you a breakdown of your scores. Using these tools you can see the areas of your credit in which you are excelling and the areas which could use some improvement.

Increase credit limits

Credit card utilization holds a lot of weight in determining your score and therefore increasing your limits is one of the best steps to repair your credit score. Generally speaking, carrying a balance of 50% of your available credit to will negatively impact your score. And maxing out your cards will definitely hurt your overall score. If you owe $2,500 on a card with a $5,000 limit, and you increase your credit limit to $7,500, your score will improve immediately. This drops your utilization percentage down which helps your overall score.

Pay down outstanding balances

Decreasing your percentage of available credit can make a significant impact on your score. Similar to increasing your credit limit, paying down outstanding balances helps your credit card utilization percentage. Paying off balances may be tough as a short-term improvement to increase your score, but it should be a long-term financial goal. Over time your credit score will increase and you won’t pay as much interest.

Pay off high interest “new” cards first

Since age of credit matters to your credit score and interest rates matter to your bank account, it’s a smart financial move to pay off high interest new cards first. Paying off high interest cards will help you save money over time since you will be saving the interest on those payments. And paying off new cards first will help increase the average length of credit, which will help your score. Using the saved money from these cards toward paying off other account will help you continue to lift your score (snowball effect), without really changing your spending mindset.

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In the last two decades, real estate has outperformed the stock market at a ratio of 2:1. Real estate has continuously been ranked as the best way to invest money not needed for more than 10 years. So why aren’t more people taking advantage? Here are the 5 top reasons to invest in real estate.

5 Reasons to Invest in Real Estate

Immediate cash flow

Once you buy a property and rent it out, you are receiving cash flow within that first month, and every money after that. If you buy in a hot market, you’re able to use the cash flow to pay back that mortgage as well as use the additional funds for repairs, paying a property management company, or any other house related expense.

Appreciation

While appreciation is largely dependent on property, location and economy, the bottom line is that the US population is growing and the need for housing continues to increase. By way of supply and demand, your home’s value will increase over time. For example, since the inventory of homes in Western Washington is in a shortage, buyers will be willing to pay more for your home since there isn’t much competition.

Equity

If you make paying off your mortgage a priority, the amount of equity – or the amount of house you actually own – grows quickly. If you pay more toward your principal, choose shorter loan terms, and focus on home improvements, you can speed up the pay off process. By paying more toward your principal, the faster your build equity, even if your home is appreciating slowly. By choosing shorter loan terms, you are eliminating the interest rate for the years you aren’t paying a mortgage. For example, a 15 year mortgage is more per month, but over time you actually save a significant amount since you aren’t paying interest on the last 15 years. Finally, by focusing on home improvements, you increase the value of your home and narrow the gap between how much it’s worth, and how much you owe.

Tax breaks

Investing in real estate can come with tax breaks, which makes this one of the top reasons to invest in real estate. Mortgage interest, operating costs, property taxes, and insurance are among the areas you’re able to deduct from your taxes. You’re sending less money to the IRS, and increasing your cash flow.

You don’t have to be the landlord

If you buy an investment property with the idea of just wanting the monthly income without doing the maintenance, a property management company can help you. When you hire a property management company, they can take calls about leaky faucets and drafty windows. Yes you’ll be receiving less monthly income since you’ll have to pay the property management company, but you’ll have much less to worry about. This is an especially good idea for those who buy a rental out of state.

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It wasn’t so long ago that everyone thought millennials would never buy homes. With overwhelming student debt, an inadequate savings account, and average credit scores, millennials were often looked over as a prominent home buying generation. But, in 2020, millennials have passed up baby boomers and Gen Xers for the fifth year in a row! If you aspire to be one of the many millennial homebuyers in 2020, here are four things to make that dream come true.

Tips For Millennial Homebuyers

Pay off Major Debts

One of the largest hurdles for millennial homebuyers is student loans. Over 44 million Americans are paying off student loan debt. Since buying a home is likely the most expensive investment you’ll ever make, it’s best to be as close to debt free as you can. If paying off your loans is not possible in the next decade, then it’s best to get on a budget and manage your monthly payments, seeing how much room you’ll have for an incoming mortgage payment as well as a down payment. A mortgage lender can tell you how to get on track with your payments before buying a home.

Down Payments

Most of us don’t pay cash for our first home, so buying a home requires a down payment. Having a strong down payment can help lower your interest rate as well as pay off your entire mortgage faster. While 10-20% down is ideal, some loan types – such as FHA – require as little as 3.5% down. The catch with a lower down payment is the additional requirement of mortgage insurance added to your monthly mortgage payment. If you feel overwhelmed saving for a down payment, you’re not alone. Some millennials need more than seven years to save for a down payment, so don’t feel bad if it takes time.

Affordable House in a Seller’s Market

A big challenge millennial homebuyers face is the rising value of homes. It’s best to be patient and to not give in to the temptation to stretch your dollars and buy a home that’s out of your price range. No home is worth sacrificing your retirement or your kid’s college fund! That’s why it’s best to find an affordable house in a seller’s market. It may require some renovation, but at least you won’t be struggling to make your mortgage payment each month.

Know the Buying Process

One of the best things you can do as a millennial homebuyer is to get familiar with the buying process. Working with experts who know what they’re doing (agent, lender) will likely result in a seamless process that’s enjoyable and exciting for you and for them! Remember, a good agent and lender is more concerned about your bank account, not theirs. Being confident and knowledgeable about the home buying process will help you move faster on the road to closing on a home.

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When you’re looking to finance something (a car, home, furniture, etc.) the odds are pretty high that the lender will do a credit check. But what does that mean and does that affect your score? Here’s what you need to know about your credit report and the differences between hard and soft credit checks.

What Are Soft Credit Checks?

Your credit report is one of the most important aspects of buying a home. It will tell the lender how much debt you carry and whether you’ve ever foreclosed on a home. It also includes some information such as name, address, and social security number. Your credit score is determined by taking into account all the information provided by your credit report. The higher your credit score, the lower the interest rates available to you.

Do Credit Checks Affect Your Credit Score?

Yes, hard credit checks could potentially lower you credit score a few points. Losing those few points may not seem like a big deal, but when you’re aiming to buy a home with the highest score, every point counts. No one wants to see that their score could have been improved by something as small as a credit inquiry.

Soft Credit Checks

Fortunately there’s a way for lenders to see your score without it hitting your credit score. This process involves a lender to get a general assessment of how credit worthy you will be going forward. If everything looks good, you can move to get pre-qualified with a lender and indicates that your score is favorable and you have a pretty good chance of getting approved for a loan.

By using a soft credit check, lenders can likely tell if a borrower is approved for credit before they do a hard pull. This helps eliminate an unnecessary hard inquiry. Another perk of soft credit checks is that you can pull a general score at anytime using free online credit monitoring apps. Many of these services also alert you if something suspicious happens on your credit report so you can take action immediately. Additionally, these apps break down areas of strength and areas of opportunity with your score. It will let you know if credit utilization could use some improvement, and if you have already hit your max hard inquiry count for this year. Frequently checking your score with one of the apps can help you improve your score to help prepare you to buy a home.

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The down payment is often the largest hurdle first time home buyers face. Whether you’re going the FHA route and can put as low as 3.5% down, or you’re going the conventional loan route with 20% down, saving for a down payment can take some time. Here are 4 simple everyday ways to save for a down payment.

4 Simple Ways to Save for a Down Payment

Make a budget and stick with it

The number one way to save for a down payment is to create a budget. It’s hard to monitor your finances if you don’t know where you and your family stands. Take some time to review all your expenses every month and see the areas where you are over spending. For a lot of people, dining out can cost hundreds of dollars a week, whereas meal prepping at the grocery store could be a couple hundred dollars a month. Once you are aware of how much you spend in each area, make a budget and hold yourself accountable to sticking to it. Weekly checkpoints are a great way to keep yourself on track.

But first, coffee

Coffee is a huge part of how people function, so it’s hard to think about how coffee can actually cost you hundreds a month. If you pick up a coffee from your local coffee shop every morning, you could be spending $5 a day, for 30 days a month. This means you are allocating $150 a month just to coffee. And this doesn’t even include the days you go back for your afternoon pick me up. Think about buying coffee ground from the grocery store and making your own morning coffee. Also, a lot of workplaces offer coffee in the cafeteria for a subsidized cost or even free, so relying on that for afternoons can also help keep the cost low. Remember, saving doesn’t mean you have to get rid of things all together, it just challenges you to find different approaches.

Manage subscriptions

When you get to the point where you don’t even know what you’re subscribed to anymore, you’re likely spending too much on monthly subscriptions. Go through all your monthly and yearly subscriptions and get rid of services you don’t benefit from. For example, if you find yourself subscribed to multiple music streaming services, pick your favorite one and get rid of the other. These services can give you back $10-20 a month!

Sell items

Selling unwanted items can make you hundreds of dollars a month, while cleaning out your home! One man’s trash is another man’s treasure, truly. So go through your basement and see what you can sell. A helpful tip is if you plan to sell seasonal items, do so about a month before the season/holiday. This catches folks who are looking for that exact item, instead of catching people after the holiday hits and it’s not the front of their mind.

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With a booming job market paired with a temperate climate, it’s easy to see why Washington State is a popular state to live in. According to USA Today, Washington State was ranked the 4th fastest growing state in 2019. So let’s take a look at some specific reasons to move to Washington State.

Jobs

With Amazon, Microsoft, Starbucks and Boeing all headquartered in Seattle, it’s understandable why the Seattle, Tacoma, Olympia area is the employment engine for the state. Washington State is also unique in that the Eastern side of the state, opposite Seattle, is one of the nation’s largest agricultural producers, especially for seafood and fruits such as apples and cherries. That’s a lot of employment opportunities, which makes jobs one of the biggest reasons to move to Washington State.

Water

If you move to Western Washington, you’re sure to run across the Puget Sound while you’re there. Cities such as Seattle, Tacoma, and Bellevue are located right on the water so you’re bound to see a view while you’re there. While the water is pretty cold during the fall, winter, and spring months, during the summer you’ll see families gather round the many lakes and bays the state has to offer and remains one to the top reasons to move to Washington State.

Outdoor Activities

With three national parks within state boundaries – Olympic, North Cascades, and Mount Rainier, Washington is a mecca for those who enjoy the outdoors. Hikers flock to popular hikes such as Mt. Si., Rattlesnake Ridge, and Mailbox Peak, whereas those who prefer water sports are seen sailing, kayaking and fishing throughout the state.

Green

Washington State prioritizes sustainability and frequently ranks in the top five in various categories of the most environmentally friendly states. Especially in Western Washington, you’ll see an emphasis on recycling and composting as well as mass transit options such as the Light Rail and Sounder. In 2015, Washington State was ranked as the nation’s most bike friendly state and also hosts the Seattle to Portland (STP) bike race every year.

Diversity

With Seattle being a melting pot of different cultures, you’re surrounded by diversity. You’ll find yourself learning about new cultures on the regular and trying different foods. The row of restaurants adjacent to the University of Washington, informally known as the Ave, hosts over 50 restaurants of 30 different cultures. The diversity in this state inspires creativity and drives innovation statewide.

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In this series, I highlight the businesses I like to refer to my friends, family, home buyers and sellers in the Pierce County area. This month I’m talking about Maidify Cleaning Services.

Community Recommendation: Maidify Cleaning Services

When helping clients buy and sell homes, a common referral question I get is finding a trustworthy and thorough cleaning service. I have had wonderful success with Maidify Cleaning Services and like to refer them to my clients who are looking for a house cleaner. They offer a weekly, monthly and deep clean for clients to choose from. Maidify Cleaning Services is located in Steilacoom and focuses on helping homes in the South Sound region.

Before starting Maidify Cleaning Services, the owner was serving in the Army as a Helicopter Mechanic. After being honorably discharged, he decided to finish his Bachelor’s Degree in Sociology. He tried to get part time jobs to relieve stress off of his family and attend school at the same time, but these “part time jobs” didn’t honor his school schedule and were demolishing his GPA at school. He was very upset and disappointed with most business establishments that claim they “help” College students, only to work them as like full time employees without any benefits.

He started Maidify Cleaning Services for 3 reasons:

  1. To provide part time jobs to local college students and prior military at JBLM
  2. To donate to charity
  3. To help relieve stress on local residents by providing them with a clean home

He wants to thank all the Veterans at JBLM and McChord Air Force Base for making the world a better place.

Maidify offers a 10% discount to Active Duty, Reserve and Retired Military.

For more information about Maidify Cleaning Services, visit their website or their Facebook page.

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The VA home loan offers some unbeatable benefits for active military members and veterans. From $0 down, to no mortgage insurance, to relaxed credit requirements, the VA home loan is definitely worth exploring while searching for a home. Here are the top 4 benefits of the VA home loan.

Top Benefits of the VA Home Loan

$0 Down Payment

The down payment is typically the most challenging hurdle for prospective home buyers, especially first-time home buyers. Qualified veterans can obtain a VA home loan without making any down payment at all. Compared to Conventional and FHA home loans, this translates to significant savings upfront. Conventional home loans typically require at least 10 if not 20 percent down, while FHA home loans require at least 3.5 percent down. The amazing benefit of being able to purchase a home with $0 down is that veterans get to fulfill the American Dream without having to spend years saving up for a down payment.

No Mortgage Insurance

A lot of first-time home buyers are going with an FHA loan since the down payment required is 3.5% (as opposed to the conventional 10 or 20 percent). The down side to paying 3.5% down is that it comes with mortgage insurance of a few hundred dollars a month (depending on the loan amount). The VA home loan doesn’t require monthly mortgage insurance. Skipping the monthly mortgage insurance will help veteran home buyers save hundreds of dollars per month.

Low Interest Rates

Typically, the VA home loan offer the lowest interest rate of all loan types. Since the VA guarantees a portion of every VA loan, financial institutions can offer lower interest rates than other loan types (0.5 to 1 percent lower than conventional rates). On a 30 year $250,000 loans, the difference between paying 4 percent and 4.75 percent equates to $40,000 in savings over the life of the loan. This is one of the top benefits of the VA Home Loan.

Flexible Credit Requirements

Veterans don’t need a perfect score to secure home financing. In fact, the flexibility of credit score allows more veterans to secure a home loan than if they went with a conventional loan. Some lenders allow scores as low as 580 which is significantly lower than the 620 minimum score for other loan types. The flexibility of credit requirements allows veterans to buy a home faster as they don’t need to spend years on credit repair.

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Buying a home is 38% cheaper than renting a home. This is especially true if you plan on living in one space for at least seven years. As mortgage loans are more affordable now with down payment assistance and different loan options, let’s take a look at the financial benefits of owning a home.

Financial Benefits of Owning a Home

Building equity

One of the largest financial benefits of owning a home is building home equity. When you pay rent to your landlord, you’re setting aside a chunk of money that you’ll never see again. Additionally, landlords have the right to raise your monthly rent yearly, so what you pay today could differ than what you pay monthly next year. When you sign a mortgage loan, you are agreeing to the monthly payment for the life of the loan (likely 15/30 years). So, you can accurately budget your spending every month on your mortgage. When you pay your mortgage, you are building equity as you are paying off your loan. This means that unlike renting, you will see these funds applied directly toward what you own.

Tax benefits

Another one of the biggest financial benefits of owning a home is the mortgage interest deduction. Most of your monthly mortgage payments will go towards interest in your first few years of homeownership. You are able to deduct that interest from your taxes, if your loan is $1 million or less. Additionally, any taxes you pay to the government on your property are deductible from federal income tax.

No longer moving every year

Homeownership increases sustainability and stability. While moving every year from rental to rental may be necessary for your lifestyle, it is a major inconvenience and a financial and emotional burden. Renting can mean you may never know where you are going to live in a year, or how much you’ll be paying. Owning a home allows a financial and emotional investment in both your physical home and your community.

Use your home investment toward another investment

The equity that comes from paying a mortgage is what allows many individuals make future investments in the same home (refinancing, renovations), a higher-valued home (using the equity toward a down payment), a second home (using equity toward a second down payment), or additional financial goals (paying off debt, buying an RV). A home equity line of credit helps homeowners use that part of their home that’s already paid off to obtain financing for additional investments.

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