Tag: home

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News News Feature

Buying a Home?

Photo: Tierra Mallorca | Unsplash

In a seller’s market, buyers can end up getting the short end of the stick. Housing inventories have yet to revert to normal levels, and the demand is high for mid-price homes, often driving multiple offers on many properties. If a buyer is lucky enough to get an accepted offer, they still need to contend with the reality of higher interest rates taking a bite out of their household income (unless they’re an all-cash buyer).

So, what’s a buyer to do? Before you start looking at homes, you need to know three key numbers: what the bank will lend you, what you can afford, and what you’re willing to pay. It’s essential to understand the difference between these three numbers, or you might end up biting off more than you can chew.

1. What Will the Bank Lend You?

Unless you’re holding enough cash to buy a house outright, your first step is getting preapproved for a mortgage. This is especially important in a hot real estate market. When there are multiple offers on the table, sellers may reject offers outright that aren’t accompanied by a preapproval letter.

But don’t take the first mortgage deal you’re offered. Even if you have an existing relationship with your local credit union or community bank, it’s in your best interest to get at least one comparison quote before you sign on for a mortgage. A rate difference of as little as 0.25 percent can really add up over 30 years. While you can shop different lenders for the best terms and rates, a better option is to use a mortgage broker. They can save you time by shopping different lenders on your behalf.

Because brokers work with multiple lenders, they often have more flexibility in how they structure your loan. They can alter terms like cash down, interest rates, closing credits, and loan duration, which will likely result in a mortgage that better fits your financial needs.

2. What Can You Afford?

Unfortunately, regardless of which lender you work with, you can’t rely on them to tell you what you can afford. While they will tell you what they will lend you, that is by no means a bellwether for what you should spend because the calculation they perform is essentially a measure of risk, not a measure of cash flow.

Credit scores are used as an indicator of how much risk a lender assumes when they sell you a mortgage. Not only can a very low credit score impact your ability to get a mortgage, but it will also factor into the interest rate you’ll pay. The lower your score, the higher your interest rate will be. That translates into a larger mortgage payment overall.

3. What Are You Willing to Pay?

The last number you need to know is what you’re realistically willing to pay.

This number will change from property to property, depending on what features the home has and what projects you may have to take on. Understand that in a seller’s market, you’ll likely have to pay above list price, and you may have to pay above the property’s appraised value.

If you’re willing to pay more than the appraised value of the home, you’ll need more cash in the deal because your lender won’t cover the gap between the offer price and the appraised value with a mortgage.

This can put you in a sticky situation if you have little leftover cash to cover the unexpected expenses that inevitably come with home ownership.

Keep a Healthy Cash Reserve on Hand

Home buying is a stressful process, but owning a home without adequate cash reserves is a recipe for disaster. Regardless of the condition of the real estate market, it’s important to keep a healthy cash reserve on hand to handle emergency expenses without going into credit card debt.

It’s a tough market for buyers right now. But if you go into the home buying process armed with the appropriate information, you’ll be well positioned to make a strong offer on a property that meets your needs and budget. In the end, your perfect house is probably the one that allows you to sleep soundly in the short term and helps you build value over the long term.

Gene Gard, CFA, CFP, CFT-I, is a Partner and Private Wealth Manager with Creative Planning. Creative Planning is one of the nation’s largest Registered Investment Advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

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Hot Properties Real Estate

Medieval Modern

This Tudor Revival house is on a grand block in the Vollentine-Evergreen Historic District. Also known as VECA, this neighborhood and Hein Park were both built to reflect the Collegiate Gothic style of Rhodes College. Both neighborhoods are showcases of the Tudor Revival and are full of these little English-style cottages clustered around what amounts to a medieval enclave.

The Tudor Revival was noted for its high-peaked, multiple gables, with the look of half-timbering in stucco atop a lower level of brick and stone. Often, as seen here, there’s fieldstone stacked around the chimney and cut limestone surrounding the principal entry and repeated inside at the fireplace mantel. Windows are often diamond-paned, as in this house, to resemble medieval leaded casements, and chimneys can end in multiple stacks to suggest multiple fireboxes inside, even though there’s really only one. The flattened Tudor arch often appears in doors, fireplace openings, and interior arches between rooms.

All of these hallmarks and more are on display in this detail-rich house. The front-facing main chimney is a marvel of masonry construction. There is handsome flat stonework around the main entry, which is now almost invisible because it has been painted to match the dark brown wood trim. A pale, limestone paint color would accentuate this entry surround by contrasting it to the dark polychrome brick walls.

There is a surprising side porch, more commonly found in large, landmark Tudor Revival houses. It is pleasantly embellished with a bracketed canopy extended over steps to the drive — a clever, simple detail that provides much the same benefit as a porte cochère.

The interior has generous rooms and nice materials, but it has also been appealingly updated. The original narrow-board oak floors and unpainted doors and trim are in great shape. The original radiators have been augmented with dual air systems for the main floor and attic living areas.

As is the fabulous confection of a chimney on the exterior, the kitchen is the showpiece of the interior. Lots of cabinets you would expect, even some with leaded diamond-paned glass. Double ovens and a gas downdraft cooktop are most attractive and functional. The dark-green, Arts and Crafts ceramic-tile counters fit well with the house. But the drama comes when you look up and realize the original ceiling has been removed to vault the room all the way to the roof’s peak with light filling the space from two glazed, cross gables. To further the enjoyment, an exposed stair leads up through this space to a family room in the attic.

Three bedrooms and two baths complete the interior. The master bedroom on the rear has a private bath and a new triple-casement window that looks out over a nicely landscaped backyard. A two-level deck features a shady, vine-covered arbor near the kitchen and an adjoining sunny area with built-in seating. A double garage with an electric gate and a high wooden fence ensure privacy for outdoor activities, whether they be jousting or slightly more modern pursuits.

924 Kensington Place

Approximately 2,700 square feet

3 bedrooms, 2 baths; $249,000

FSBO: Tim Martin, 252-2206

Categories
Opinion The Last Word

The Rant

CREDIT: (AP Photo/USAF)

The evolution of excuses for blundering into and maintaining the Iraq war is becoming comical. The first excuse was weapons of mass destruction. Do you remember the constant talk about weapons of mass destruction, “the worst weapons in the hands of the worst dictator”? Do you remember how President Bush said the sole reason for the war was to disarm Saddam Hussein? Do you remember how we were warned about a smoking gun that could be a mushroom cloud? Do you remember how Iraq was an “imminent” threat to the world? Do you remember how a 65-year-old dictator, widely acknowledged as not the smartest guy in the world, was compared to Hitler, who had put together a regime and an army that conquered Europe?

Well, oops. Not a single weapon of mass destruction was found in the country. Furthermore, the Iraqis had said there were no weapons of mass destruction. To cover their behinds, U.S. officials started peddling the story that Saddam wanted people to believe he had weapons of mass destruction. That U.S. lie didn’t fly because Saddam and his government repeatedly denied that the weapons existed. Furthermore, Iraq had invited in U.N. inspectors who were verifying the absence of weapons, which was one reason Bush forced the inspectors out by going to war. He had to start his war before the inspectors proved his bogus intelligence amounted to a pack of lies.

Enter the second excuse: Bush wanted to spread democracy in the Middle East, starting with Iraq. That never progressed past elections because, as everyone familiar with the country knew or should have known, a vote would elect a Shia majority with two fractious minorities, Kurds and Sunnis. This is the government that has proven to be totally ineffective. It also greatly increased the influence of Iran. It has sparked the civil war in Iraq.

Bush lately has hinted that his faith in democracy is weakening by implying that a reasonable authority would be acceptable. Trouble is, the U.S. can’t even find a dictator willing to take the job, given the present situation.

Now, when the issue has become getting Americans home from a war that has lasted longer than World War II, the final excuse is to trot out the empire’s favorite ambiguity: stability. If we leave Iraq, instability will result. It’s hard to believe anyone can say that with a straight face. Iraq is unstable already. It’s in the midst of civil war, with a million refugees and displaced people, hundreds of thousands of dead and wounded, its economy a total wreck, and virtually all work on repairing the infrastructure at a standstill.

Ironically, the last time Iraq was stable was when Saddam was in power. Iraq is unstable because we made it unstable. We destroyed Iraq’s infrastructure, its economy, and its government. We did. One of the most shameful lies peddled by the Bush administration has been to blame the poor state of Iraq’s infrastructure on Saddam. We destroyed that infrastructure with wars, bombings, and medieval sanctions. The miracle is that with all we were doing, Saddam managed to produce more electricity and more oil than our occupation has been able to produce.

Finally, how is it the U.S. can claim that after four years, there is no trained Iraqi army and police force able to handle security? We send kids into combat with about 16 weeks of training. And why is the U.S. building the largest embassy in the world in a Third World country that is in chaos?

What “Herbert Hoover” Bush has done is destroy the credibility of the U.S., sully our reputation almost beyond repair, demonstrate the weakness of our leadership and the vulnerability of our military, and convince many people in the world that we are an evil nation of idiots led by fools. Let’s at least hope that he destroys the Republican Party, too. It deserves a zero existence.

Charley Reese has been a journalist for 50 years.

Categories
News

Memphis Homes of the Rich and Famous

CREDIT: Devin Greaney

Most Memphians know that Cybill Shepherd grew up here, and more than a few know that Oscar-winning Kathy Bates is a proud graduate of White Station High School.

But not so many, we suspect, know that actress Shannen Doherty was born in Memphis — in Whitehaven, to be more specific — along with quite a few other celebrities.

Devin Greaney has not only tracked down the childhood homes of famous Memphians (and former Memphians), he has photographed them and compiled them on a website.

Want to see where Tim McCarver, Aretha Franklin, Henry Turley, Elvis, and even Machine Gun Kelly grew up in Memphis? Sure you do. Go to Devin’s website to find out more.

And, even though he’s not rich, semi-famous Flyer writer and former-editor Tim Sampson’s childhood home is also included.

Categories
Living Spaces Real Estate

Opportunities abound for the first-time home buyer

For many people, buying a first home is a rite of passage. It’s a foot firmly planted in independence and on the path to success, a true part of the American dream. But as many first-time buyers are coming to realize, it’s more than just the end-goal of a journey toward financial independence. Buying a home, particularly your first home, just makes good plain sense, now more than ever.

Potential first-time buyers may be intimidated by today’s changing housing market. Isn’t it just better to “play it safe” and keep renting in case home prices fall? If you buy now, will you be paying too much?

First, these are valid considerations. Even those who have bought and sold many homes ask similar questions. But the truth is that today’s economic environment makes it an excellent time to buy. Interest rates are low by historical standards, there are lots of choices, and sellers are offering incentives.

Perhaps, as a first-time buyer, you want to wait until prices drop lower. Actually, if you continue to wait, you may never be able to afford to get into the housing market. The truth is, even a small uptick in interest rates can wipe out any gains from falling prices.

Consider this example: If you decide to wait to purchase a home and the price were to drop $10,000 from where it is today, you could still end up losing money. How? If interest rates were to move up half a point during this period, the savings on the reduced home price would be more than offset by the higher monthly payment you would be making over the life of the loan.

Interest rates currently stand at about 6.5 percent and are extremely favorable for buyers. In fact, they are hovering near 30-year lows. But waiting to time the market is a dangerous — and losing — game. Even those who follow the market for a living can’t figure out when interest rates will bottom out. If they could, they would all be multimillionaires. Because interest rates are near historic lows, it is much more likely that they will head higher in the future as opposed to moving even lower.

Now consider the current rental market. During the past few years, many rental units have been converted to condos, resulting in fewer rentals on the market. Less supply, higher prices. Each year, your rent can easily go up 5 to 10 percent. Where is the economic security in that? When you buy a home, you’re also locking in price stability, knowing that you will pay the same monthly payment for the life of your 30-year fixed-rate mortgage. Plus, renting doesn’t get you the investment or tax benefits of homeownership.

The best way to build household wealth is to own a home. Once you do, you are able to take advantage of generous tax deductions, and your equity begins to build. Your home will appreciate in value over the years, and eventually you can use those gains to sell your starter home and afford to move into a bigger house. Remember, it’s called a starter home for a reason. With so many homes on the market to choose from, your best strategy may be to scale back expectations for your dream home. After a few years, you will be able to leverage this investment and buy a larger house.

The truth is, buying your first home just makes good sense. Housing is always a smart investment, and it is by far the best way to use a small amount of money for a big return. Interest rates are historically low, and the selection of homes on the market is plentiful. Do your research and you’ll come to this conclusion: In today’s market, the real risk isn’t in buying a home, it’s sitting on the fence.

Keith Grant is president of the Memphis Area Home Builders Association.