Avoiding the Rent Trap in 2022

Are you one of the many renters thinking about where you’ll live the next time your lease is up? Before you decide whether to look for a new house or another apartment, it’s important to understand the true costs of renting in 2022. As a renter, you probably already know rents have been rising in the Nashville area.  From 2020 to 2021, the average monthly rent for a two-bedroom/two bath rental in Nashville increased 8.1% to $2,079.  Three bedroom rents increased average an increase of 7.4% for the same time period.  Nationally, rents increased at an even faster rate, and Nashville area rents are expected to continue increasing, possibly at an ever faster pace.  According to ApartmentList.com, since January 2021: “. . . the national median rent has increased by a staggering 17.8 percent. To put that in context, rent growth from January to November averaged just 2.6 percent in the pre-pandemic years from 2017-2019.” That increase in 2021 was far greater than the typical rent increases we’ve seen in recent years. In other words – rents are rising fast. And the 2022 National Housing Forecast from realtor.com projects prices for vacant units will continue to increase this year: “In 2022, we expect this trend will continue and fuel rent growth. At a national level, we forecast rent growth of 7.1% in the next 12 months, somewhat ahead of home price growth . . .” That means, if you’re planning to move into a different rental this year, you’ll likely pay far more than you have in years past. Homeownership Provides an Alternative to Rising Rents If you’re a renter facing rising rental costs, you might wonder what alternatives you have. If so, consider homeownership. One of the many benefits of homeownership is it provides a stable monthly cost you can lock in for the duration of your loan. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: “. . . fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.” If you’re planning to make a move this year, locking in your monthly housing costs for 15-30 years can be a major benefit. You’ll avoid wondering if you’ll need to adjust your budget to account for annual increases. Homeowners also enjoy the added benefit of home equity, which has grown substantially right now. In fact, the latest Homeowner Equity Insight report from CoreLogic shows the average homeowner gained $56,700 in equity over the last 12 months. As a renter, your rent payment only covers the cost of your dwelling. When you pay your mortgage, you grow your wealth through the forced savings that is your home equity.   Bottom Line If you’re thinking of renting this year, it’s important to keep in mind the true costs you’ll face. Let’s connect so you can see how you can begin your journey to homeownership today.  

Homeowners Insurance: What Is and Isn't Covered

Homeowners insurance is a must-have for anyone who owns a home. It can help you pay for damages for everything ranging from fire to theft. However, it is equally vital for you to understand what is in your policy and what is and isn’t covered. Homeowners insurance policies can vary from provider to provider, but there are certain things almost all policies will cover and things they won’t. What’s Covered Your homeowners insurance should cover a wide range of damages that could happen to your home, property, and belongings. Most basic homeowners insurances policies have six types of coverage: Dwelling: Your home and any attached structure, like a garage or deck. Other structures: Buildings on your property like detached garages, sheds, and gazebos. Personal property: Belongings such as electronics, furniture, and clothing. Loss of use: Living expenses for temporary housing if your home becomes uninhabitable. Medical payments: Medical coverage for guests injured on your property. Personal liability: Damages resulting from injury or harm to personal property. Your coverage for your home, other structures, and personal property will either cover open or named perils. Open perils refer to anything not explicitly excluded in your policy. Named perils are specific incidents detailed in your policy, which can include: Fire or lightning Vandalism Explosions Falling objects Theft Freezing Smoke Volcanic eruption Windstorm or hail Vehicle damage Aircraft damage Civil unrest Sudden, accidental tearing, burning, bulging, or cracking Sudden, unintentional water overflow Damage by short-circuiting Weight of ice, snow, or sleet You may see a mix of open and named perils in your coverage, with the dwelling and other structures covering open perils and the personal property covering named perils. Remember that you’ll need to pay your deductible before your benefits kick in, and the amount of the deductible ranges from policy to policy. There is also a limit on your policy, which is the maximum amount your policy will pay to cover your loss. What Isn’t Covered As helpful as your homeowners insurance policy can be, it may not be able to help you with certain natural disasters or home damages. Remember that policies can vary, so always read the fine print before you purchase a policy. Flooding A standard policy won’t cover damage from flooding to your home and personal property, but you can buy separate flood insurance. If you live in a flood zone, your mortgage lender may require you to have flood insurance. Earth movements A standard policy does not typically cover damages from events such as earthquakes, landslides, or sinkholes. Some insurance providers have optional policies for earthquakes and landslides. Areas that are high risk for sinkholes, like Florida, require insurance providers to offer optional coverage for this event. Hurricanes A standard homeowners insurance policy may cover wind damages from a hurricane, but if you live in a high-risk coastal state, like Louisiana or Florida, you may be required to buy additional windstorm coverage. Your policy might not cover water damage from a hurricane; this will be considered flood damage. Pests If animals like termites, bedbugs, birds, or mice cause damage to your home, it may not be covered, as this is considered preventable with proper home maintenance. However, some exceptions might be covered, including: If a covered event, such as a tree falling on your roof, causes the infestation. If the infestation causes a covered problem, such as a rodent chewing through an electrical wire that starts a fire. Mold and rot This will often come down to the cause of the mold or rot. If it occurs due to a lack of home maintenance, it will likely not be covered. However, some companies will cover mold removal with limitations, such as a covered event like a burst pipe causing the mold. Plumbing and sewage While a home insurance policy may cover damages from the event, it typically will not cover the repair or replacement of a burst pipe. Your policy will also not cover backs ups or overflows from sewer lines, drains, or sump pumps, although some insurance providers have optional coverage for these events. Other exclusions Some insurance companies won’t write policies for homeowners who own a particular breed of dog. There are also other extreme situations not covered, including occurrences of war or nuclear hazards. It is essential to understand what and how much is covered in your home insurance policy. If you’re unsure of how much coverage you have, contact your insurance provider, and update your policy. It’s always better to have sufficient coverage than not enough.

First Time Homebuyer Myths

Think you need 10% or 20% down to buy your first home? Nope. Not even close, if you meet certain guidelines. There are several programs in the Nashville area available to a single person with an annual income of up to $58,000. And other programs for a single who makes up to $96,000 and a couple who makes up to $115,000. If there's a kiddo in the family, income limits are even higher. THE DOWN PAYMENT REQUIRED BY THESE PROGRAMS? One requires $500 while others require up to 3% of the purchase price. Seriously. And you can get down payment assistance grants and closing cost benefits that help even more. Gifts from family members or friends can be used, too. Other qualifying criteria include credit score (640 is the minimum for most), the location of the home, and the price. All of the programs mentioned have maximum purchase prices. For most that's $375,000. One programs covers a purchase price up to $563,000. The median net worth of homeowners is 80 times larger than renters, according to new data from the US Census Bureau. That same report reveals that the biggest contributors to wealth are two main assets: home equity and retirement accounts, which represent nearly 63% of households' net worth. WHAT DOES IT COST to find out if you qualify for one or more of these programs? A few minutes of your time. That's it. I can answer your questions and put you in touch with lenders who can quickly tell you what you can afford and what programs are for you. These lenders are committed to helping people achieve their dreams of homeownership. Be sure and check out my other posts for first-time homebuyers, too. Let's talk! P.S. If you're curious about what homes are available now and want super up-to-date information on available properties, text me at 615-952-1188 fr a link to my home search app.  

We're In a Seller's Market - What Does That Mean?

Whether or not you’ve been following the real estate industry lately, there’s a good chance you’ve heard we’re in a serious sellers’ market. But what does that really mean? And why are conditions today so good for people who want to list their house? It starts with the number of houses available for sale. The latest Existing Home Sales Report from the National Association of Realtors (NAR) shows housing supply is still astonishingly low. Today, in November of 2021, we have less than a two-month supply of homes in many areas at the current sales pace. Historically, a 6-month supply is necessary for a ‘normal’ or ‘neutral’ market in which there are enough homes available for active buyers (see graph below):When the supply of houses for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. That creates increased competition among purchasers which leads to more bidding wars. And if buyers know they may be entering a bidding war, they’re going to do their best to submit a very attractive offer. As this happens, home prices rise, and sellers are in the best position to negotiate deals that meet their ideal terms. Right now, there are many buyers who are ready, willing, and able to purchase a home. Low mortgage rates and the ongoing rise in remote work have prompted buyers to think differently about where they live – and they’re taking action. If you put your house on the market while supply is still low, it will likely get a lot of attention from competitive buyers. Bottom Line Today’s ultimate seller's market holds great opportunities for homeowners ready to make a move. Listing your house now will maximize your exposure to serious buyers who will actively compete against each other to purchase it. Let’s connect to discuss how to jumpstart the selling process.