Welcome to 2013, the 2% and the rest!

Congratulations on surviving 2012.  2013 should be an easy downhill walk after all the turmoil, right?  The housing market has stabilized, the home builders are hiring again, home prices (at least around Chicagoland) have gone up a teensy weensy bit and we’re smack in the middle of investors’ cash only bidding wars.

Is it time for you to jump in?  A client of mine recently went through the motions of a possible move: check market value of their current home on Zillow, check home prices of area she is interested in, drive by the area, check rental prices on investment properties, check rental market times, call a Realtor (me).

Guess what she didn’t do?  She never got around to calling her mortgage lender to find out what she can qualify for in a new home mortgage.  My hands are tied and the doors are locked to us both until and unless she can secure financing.  I hated to be the one to tell her that we were stopped for now.  Some of the properties she was interested in were cash-only deals.  Better to know ahead of time if you can draw $50K cash from your 401K before you actually go to a closing, right?  She wasn’t sure what financing options she even had since so many things had changed since she had last purchased a property.  Don’t let this ruin your plans!  Be sure to put financing as one of the first steps in your checklist-get options to find the money to do what you really want to do.

But even if the traditional bank financing doesn’t come up to where you want it to be, don’t let it stop you.  Perhaps you just need a little more time to come up with more downpayment.  Or maybe that new job or promotion will raise your income level 3-4% to make the ratios work for you at last.  Some people have chosen to find a partner to help them get started investing in rentals.  A lot more of my clients has been quietly working and saving, over the long term, just to make that one big move into their dream home.

My family and I recently went through our finances and realized we were overpaying on our mortgage by 2% and we refinanced it.  It is a good thing we did!  That magic number, 2%, will help cover our shortfall now that the payroll taxes have gone up 2% in 2013.  I call this “invisible money”.  We sort of had the money, but it’s being re-directed without any help from us.

Have a happy and healthy 2013 from my family to yours!

Got a question about the Fox Valley area real estate market?  Looking for a low cost way to  start investing in real estate?  Email me for a list of properties that can fit any investors’ budget.  Jennifer@ElginFoxValley.com

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