The Tucson real estate market, like most other markets across the country, has experienced a steady increase in value over the last several years. Tired of renting, you decided that you want to own your own home now. While not the 20% experts recommend, you saved up money for your down payment, closing costs and other expenses. Because you won't be putting 20% down, you're going to get hit with PMI (private mortgage insurance). What exactly is PMI and why do you have to pay it? Let me explain.

What is PMI?

First of all, let me answer the basic question: what is PMI? Private mortgage insurance covers the lender in case you default on your loan. When a Tucson home buyer purchases a property with less than 20% down, they automatically pay PMI. How much you pay depends on how much you put down, the size of the mortgage, the length of your loan, and your credit score. This varies between 0.25% to 2.0% of your balance. Most lenders usually charge 0.5% to 1.0%. For example, let's say your loan balance was $200,000 (slightly above the $187,600 median value right now). Just 1% of the loan balance comes to $2,000 per year or approximately $167 per month. I could think of a few other things I'd rather spend that $167 a month on...like the principal of my loan perhaps?

How Long Do I Have to Pay PMI?

The law requires that lenders cancel PMI once the loan-to-value (LTV) reaches 78%. That means, once the total of your down payment and whatever you've paid on your loan so far reaches 78% of the purchase price, the lender must cancel this added insurance. Under the Homeowners Protection Act, this happens whether your property goes up in value or not. If you don't want to wait for your lender to automatically cancel the insurance, talk to your lender once your loan-to-value reaches 80%. On a $200,000 purchase, that means when your balance reaches $160,000. As long as your mortgage payments are current, you're a borrower in good standing, and you have no liens on the property, your lender should be able to accommodate this.

Like I said before, we've been experiencing a steady increase in home values lately. If you bought your Tucson home a couple of years ago, your current value may place your equity at 20% or higher. Some lenders allow you to cancel PMI early if you have at least 25% equity from appreciation after owning your home two to five years. However, they may require that you obtain an appraisal to prove your property's current value. Another way to cancel PMI is to refinance. However, you should seriously weigh the cost to refinance against the savings you may receive from the private mortgage insurance. It might not be worth it.

If you have any questions about private mortgage insurance, I highly suggest that you speak to your lender or a trusted Tuscon REALTOR®. Don't let PMI deter you from purchasing a property right now. Home prices continue to rise. Maybe 20% down is out of reach at this time. Or, perhaps you want to keep some money set aside in case of emergencies instead of tying it all up in your home purchase. PMI is a small price to pay to become a Tucson homeowner right now. Contact me when you're ready to start looking.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

Have you ever heard the phrase "you need to learn to walk before you can run"? When you first learn to ride a bike, it usually includes training wheels. For past generations of homeowners, their first home rarely became their forever home. Instead, the starter home acted as training wheels for future homes. Nowadays, though, first-time homebuyers skip right past the starter phase and jump head-first into a bigger, more expensive property. But is that the best path to take? Not always.

Should Your First Home be Your Forever Home?

The Affordability Factor

Fancy finishes and lots of rooms easily distract first-time homeowners. You don't want to be "house poor" and stuck with astronomical mortgage payments. That leaves little else for you to afford to do, including taking care of the maintenance on such a property. Take your lifestyle into consideration before committing to a mortgage payment. Do you like to travel? What about the cost of your hobbies (sports, hiking, camping, etc.)? Do you enjoy seeing your favorite musical acts live and in person? If you purchase a Tucson home at the top of your budget, that could mean scaling back or eliminating many of the other things that make your life worth living. 

Life Choices

Have you settled into your career yet? Do you want a family? Do you even like the city you live in? If you answered "no" to any of these, it might not be the best time to settle into a forever home. However, that doesn't mean you need to keep renting either. A starter home provides the chance to dip your toe into the real estate market without burdening yourself with a high debt load. Smaller single-family homes or even condos keep maintenance costs and living expenses low. But they also tend to be a little easier to sell when you decide to move on to another job, city or living situation. And, when you buy a property with the idea that you'll end up selling it down the road, you become less attached to it. That makes it a little easier to part with when the time comes.

Seek a Forever Town Over a Forever Home

Instead of searching out a forever home, look for a forever town. If you're new to the area, a starter home makes even more sense. That way, if the area isn't exactly what you thought it was, you can sell the property or keep it as a rental and move on to somewhere else. Your income and family size may change over the years. When you're younger, it's the perfect time to try on several different locations before settling on where you want to live for the rest of your life. A starter home helps make that search a little easier.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

The debate rages on. Homeownership vs renting. Which one works best for you? Truth be told, only you can decide. However, LendingTree released their findings of a recent survey they conducted. It seems that the answer to this debate varies depending on the age of the homeowner and the length of time they've owned their house.

Homeownership vs Renting

LendingTree surveyed 2095 homeowners about their feelings regarding homeownership. They talked to Millenials (ages 22-37), Gen-Xers (ages 38-53), Baby Boomers (ages 54-72), and the Silent Generation (ages 73+). The survey asked about their satisfaction with their home purchase, their interaction with HOAs, whether they're happy living in their state or would prefer to move, and if they would ever consider returning to renting instead owning a home. 

Homeowner Satisfaction

Both Millenials and their parents (Gen-Xers) reported the most dissatisfaction with their properties. 23% of Gen-Xers weren't happy while 21% of Millenials reported their dissatisfaction. On the flip side, only 14% of Baby Boomers and 3% of the Silent Generation said that same about their homes. The reasons for their unhappiness with homeownership could be something other than the fact that they own instead of rent, of course. For example, maybe their family is expanding and they need a bigger home. Perhaps they didn't check out the school district before they bought. It's also possible that they just want a change of scenery.

HOAs

Homeowners Associations help maintain a sense of order in the neighborhood. Even so, homeowners have a love/hate relationship with them. LendingTree's survey discovered that approximately one-third of all homeowners who live in an HOA community have had a dispute of some kind with their HOA. The majority of disputes center around the maintenance of the house, with its appearance coming in second. 

Who's Likely to Move Out of State?

Of the nearly 2100 people surveyed, Arizona homeowners came in at #4 for their happiness in the state they live in. Only 14% were likely to move out of state. Only owners in Georgia (13%), Tennessee (11%), and Missouri (9%) came in higher. On the other hand, Maryland, Massachusetts, and Illinois homeowners were the most likely to want to move out of their state, with 32%, 27%, and 27% respectively reporting a desire to leave.

Return to Renting?

Even with their displeasure with their current home, 67% of homeowners surveyed reported that owning a home is much easier than renting one. Only 13% said that they would prefer to be a renter again. And, the longer an owner lived in their home, the more satisfied they were with being a homeowner. Those living in their homes for a year or less were four times more likely to want to return to renting than those who lived in their homes for 10 years or more.

In the end, only you can decide whether homeownership is right for you or not. First, you need to be ready to stay in one place for an extended period of time (at least two years to avoid capital gains taxes). Plus, you need to be financially stable enough to afford your monthly payment, insurance, and any costs that may come up in the maintenance and repair of your property. If your credit leaves something to be desired, it could cost you more to borrow the money needed to pay for your house, too. There are several factors to consider when deciding if homeownership is right for you. Weigh the pros and cons carefully before fully committing to this huge financial investment. When you're ready to start looking for a Tucson home, contact me.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

Experts suggest that you put 20% down when buying a home. This eliminates PMI (private mortgage insurance), lowers your monthly payment, and shows the seller that you mean business. If the home you're interested in is $200,000, that means putting $40,000 down. Plus, there are closing costs and other "hidden expenses" to consider. But, if you don't have 20% to put down, that's OK, too. Several programs allow for as little as 3-3.5% down. VA loans require no money down. Saving up for a downpayment doesn't have to be a struggle. And, if you have everything you need to purchase a property, it would be a good idea to have an easily accessible emergency fund set aside. Implement these simple tips and tricks to save money for your next Tucson home purchase.

How to Save Money for Your Next Home Purchase

Create a Budget

It's one thing to create a budget. It's another to stick to it. Take a moment to sit down and take an honest look at your finances. Write down your monthly expenses (groceries, rent/mortgage payment, credit card payments, student loans, car loans/leases, entertainment, etc.). Then, compare that total to your monthly household income. Cut unnecessary expenses wherever possible. But, instead of spending the difference on something else, set that money aside in a dedicated savings account. 

You don't have to live like a pauper to save money if you don't want to. Take leftovers to work four out of five days a week. Same goes for your morning latte. Grab a cup to go from home at least four out of the five days a week. The money you used to spend on your daily meal and coffee runs can go into the savings account. Go out to lunch on Saturday or breakfast on Sunday instead of a heavier and more expensive dinner. Stash those savings in your account as well. As your savings grow, you'll find yourself becoming more motivated to save wherever else you can, too.

Pay Yourself First

Most employers offer an automatic deposit for your paycheck. Request that a certain amount per paycheck is deposited into your savings account. Whether it's a specific dollar amount ($100) or a percentage (10%), anything you save helps your downpayment or emergency fund grow. Studies show that you are less likely to spend that money if you never see it to begin with.

Find A Second Source of Income

If you really want to save money quickly, you might want to consider finding a second job. Love to take pictures? Hire yourself out for birthday parties, weddings, bar mitzvahs, and any other special occasion. Do some babysitting for friends over the weekend. Find a part-time job. All money made from these side gigs can be deposited directly into your savings account.

Take a Breath Before Buying Anything

You'd love to buy a new car. Maybe your refrigerator has seen better days. That air fryer on QVC would be great for your kitchen. Stop! Take a breath. Impose a 24-48 hour waiting period before you actually pull the trigger on these types of purchases. Oftentimes, you'll find that you didn't really need it in the first place. It was an impulse. You can wait. Remember: the more you spend, the less money you'll be able to save for your Tucson home purchase. Always keep the bigger picture in focus when looking at little things to buy.

Make Savings Into a Game

Do you and/or your significant other have trouble saving money? Do you have a friend who would like to save some money, too? Think about starting up a savings challenge. Set a time period for the challenge (one week or one month, for example). The person who saves the least amount of money in that time frame has to do the household chores or must watch the kids while the other goes out window shopping, to the movies or simply enjoys some "me" time. Make it fun. Healthy competition helps drive your savings impulse. Then, everybody wins.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

Selling your Tucson home can be stressful. Getting it ready for the market. Finding a good Tucson real estate agent. Staging. Open houses. So much to do. So little time to do it in. To help you maneuver through the process, I've whittled it down to a few home seller essentials you need to follow when preparing your property for the marketplace.

Home Seller Essentials for a Successful Sale

You Might Have to Spend Money to Make Money

One of the home seller essentials Tucson homeowners know is how to spend their money wisely. Make any necessary repairs you can before you list it, no matter how small or insignificant you deem them. Take a walk around your property with a notepad. Write down every little thing that needs repair. Broken window or screen? Squeaky gate hinges? Missing tile? Stained carpet? Loose doorknob? Add everything to the list (both big and small) that needs your attention. Fix everything your budget allows. Then, get estimates for the things you couldn't take care of yourself. Present this to a potential buyer if they bring up these items in negotiations.

Before you tackle a renovation, consider the best use for that money. Let's say you budget a specific amount on your kitchen. But your ideas would put it out of sync with other Tucson homes in your neighborhood. Spending too much on a renovation could price you out of the market. And that's money you won't recoup. Instead, make moderate updates that stay within the guidelines of what other properties on your street have to offer. Instead of demolishing everything and changing the footprint of the current kitchen, stick with the same footprint and install new energy-efficient, smart home appliances. If the cabinets are in good shape, consider painting them. Add new hardware to the cabinets and drawers. And give the area a really good scrubbing. Smaller changes can make a huge impact. Put your money where it will do the most good for you instead of breaking the bank on something that won't help your bottom line.

Watch Your List Price

You only have one chance to make a great first impression. Another one of the home seller essentials you need to be aware of is pricing. If you price it too high, buyers will be put off. In order to drive as much traffic (and potential buyers) to your Tucson home as possible, you might want to price it slightly under market value. Sometimes, this spurs on multiple offers. In turn, that could bring in more money than you initially expected. Talk it over with your real estate agent first to make sure that this is the best policy for your area. They'll look at comps in your neighborhood to help you determine a fair list price.

Spring Might Not be Your Season to Sell

You may have heard that spring is the best time to sell a home. In Tucson, that isn't necessarily the case. We don't worry about cold weather keeping buyers at bay. So, any time of year tends to be a good time to put your property on the Tucson market. However, buyers do drop off at the beginning of the school year and around the holidays towards the end of the calendar year. Right now, though, it's a great time to sell!

Great Photos Help Sell Homes

The first place most home buyers look when they want a new home is online. So, another one of the home seller essentials you should invest in is a good photographer. They know the right angles to enhance your home's amenities as well as the perfect amount of lighting needed. Camera phones have come a long way. But they don't compare with the skills of a pro.

Curb Appeal is King

What's my final home seller essential? Curb appeal. Don't knock how important curb appeal is to a Tucson home buyer. If your front yard looks a bit worse for wear, you might turn off a potential buyer before they even venture inside. Make sure all toys and tools are put away at all times. Clean off the driveway and sidewalks of any debris and stains. Trim shrubs. Touch up paint wherever needed if painting the entire exterior is outside your budget. Get rid of any weeds. Check the roof for broken or missing tiles.

Your best bet to receive the highest sale price for your Tucson home is to follow these home seller essentials before you list. Talk things over with your real estate agent before you do anything. They may have suggestions that you weren't aware of. They also know what other properties on the market look like. So, their advice could prove invaluable.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

Many people put "money" at the top of their list of reasons why they don't own a home. Even if your credit score is top notch and you know that you can easily afford the monthly payment, there are other costs to consider. First, you need to save up a down payment. Then, you need to pay closing costs. Plus, there might be an inspection or two to pay for. It all adds up. The Tucson and Pima Industrial Development Authorities understand that this can be a struggle. To help ease the financial burden of our vets, they offer a VA loan assistance grant as part of the Pima Tucson Homebuyer's Solution Program (PTHS).

Pima Tucson Homebuyer's Solution Program (PTHS)

The Pima Tucson Homebuyer's Solution Program allows any home buyer in the Tucson and Pima County area to borrow 2.5-5% of the purchase price to use as the down payment on a home. This becomes the "silent second". You pay it back in 36 equal installments over the first three years you own your property. No matter what type of loan you utilize for your purchase (conventional, FHA, VA, etc), qualified buyers can use the PTHS program to assist with their down payment. Of course, your credit score must meet their minimum standards. And household income cannot exceed $99,169. You don't have to be a first-time homebuyer to qualify either. But this is only available for new purchases, not refinancing.

VA Loan Assistance Grant

Any veteran who qualifies for the PTHS program may also apply for a VA Loan Assistance Grant. Unlike the repayable PTHS loan, this grant gives veterans 2.5% of the purchase price to use towards their closing costs and other prepaid expenses that come due at closing for their VA loan. No repayment required. And no restrictions as long as it's a 30-year, fixed-rate loan. Partner this with a no money down VA loan and it just got a little easier for veterans and their families to set down roots in Tucson.

You must find a knowledgeable lender who works with the PTHS program first. Visit eHousingPlus.com to find a list of participating lenders in the Tucson/Pima County area. When you decide which lender to proceed with, make sure you bring your most recent paycheck stubs, the name and address of your employer, and a list of all outstanding debts. On the list of debts, make sure to include names of your creditors (including credit cards, car loans, student loans, etc.), account numbers, outstanding balances, and monthly payments. This will help make the process a little easier. Good luck! When you're ready to look for your next Tucson home, contact me.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

So, you've decided to invest in real estate of your own. Good for you! It's a great time to purchase a property. What should Tucson home buyers focus on? Price is one (very important) aspect of a home purchase. But, there are other factors that are equally important to keep in mind.

What Should Tucson Home Buyers Focus On?

Money

The primary focus for many Tuscon home buyers tends to be money. Why? Because this may be the most significant financial investment you make in your life. New to the city? You might want to rent for six months to a year to give yourself the time to look around at the area you want to live. Thinking about moving out of the area in a couple of years? Buying a home right now may not be the best decision. Having all your money tied up in a house when you need to move could make it a little more difficult to pick up and leave when the time comes. However, if you decide to make Tucson your home base for a while, buying a home makes total sense. And the tax incentives you receive as a homeowner can sometimes make ownership a more feasible option than renting.

Keep Budget and Lifestyle in Mind

That being said, don't invest your entire income into your Tucson home. If you love to travel or have hobbies you enjoy, you don't want to be "house poor". So, your lender approved you for a high dollar home. That doesn't mean that you have to spend that much, especially if it impedes your lifestyle at all. To be happy, Tucson home buyers need to focus on how much they can afford to spend and still continue to do the things they enjoy. After all, it's the experiences in life that make it worth living...not the "stuff". Also, consider keeping a separate emergency fund to cover unexpected expenses that may occur. Even with a home warranty and insurance, you still may incur expenses. It's better to have the peace of mind knowing you're covered no matter what life throws at you.

Location

There's a reason why you hear "location, location, location" when it comes to buying a property. It's pretty much the only thing you absolutely cannot change when it comes to real estate...unless, of course, you decide to pick it up and move it. But that's much more expensive and time-consuming than it's worth if it has no historic value. If this is where you plan on retiring, find out where the property is located in proximity to hospitals, pharmacies, grocery stores, and activities you enjoy. For temporary digs, think resale. What is the school district like? Are there family-friendly amenities nearby? Even if you don't currently have school-age children living with you, a Tucson home in a great school district appeals to future home buyers with families.

What Might the Future Bring?

We tend to focus on the "here" and "now". But, if you plan on staying in your Tucson home for a while, you need to check out your surroundings. While you may have plenty of space to roam around in at the moment, that could change. Find out if the City has plans for developing the area around your house anytime soon. Getting in on the ground floor of a residential boom could be profitable. On the other hand, if you crave the quiet, this may not be the neighborhood for you. Also, if future development ends up being industrial rather than residential, that could prove less than desirable as well. The decision is ultimately yours to make.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

The Tucson real estate market constantly changes. Like the rest of the country, the price a home sells at today may differ from what it would have sold for 60 days ago. And what it sells for 60 days from now could be totally different as well. If you want your property to sell today, you need to know what other properties in your neighborhood recently sold for. These are called "comps". Comps are also known as a Comparative Market Analysis (CMA). So, what exactly are real estate comps and why should you pay attention to them when selling your home?

What are Real Estate Comps?

Basically, real estate comps are the statistics of other recently sold homes located in the same neighborhood as yours. Comparing a three bedroom/two bath house in Dove Mountain to a three bedroom/two bath house in Rita Ranch wouldn't be fair. It's like comparing apples and oranges. But looking at stats in the same neighborhood is more of an apples-to-apples comparison. You want to look at properties sold within the last 30 days (but no more than 60 days max). They need to be similar in age, square footage, and amenities. Neighborhoods can vary so much that a CMA works even better when the statistics come from a house located directly on your street or no further than 1/4 mile in any direction. 

Talk to your Tucson real estate agent about obtaining a CMA. A good agent will most likely have run one before you even think of asking about it. Ignore list prices. The more important info is found with the sale price. Information from at least three recent sales in your area should help you and your agent come up with a good list price.

The Importance of Comps When Selling Your Tucson Home

What is the importance of real estate comps when selling your Tucson home? Why should you even care? Knowing what buyers are paying for properties similar to yours allows you the opportunity to price your property to sell as quickly as possible and for as much money as possible. Overprice it and you run the risk of sitting on the market too long. Underprice it and you may miss out on a better profit margin. Your Tucson real estate agent can access all the information you need to help you sell your property right now.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

Money tends to play the biggest factor in buying a house. Many renters worry about saving up for a down payment. Unless you previously served or currently serve in the military, you're going to have to come up with a down payment. But that's not the only money you'll be paying throughout the home buying process. You'll also need to come up with closing costs. If you've concentrated solely on saving money for your down payment, having to come up with this unexpected chunk of change towards the end of your purchase may be difficult. 

What are Closing Costs?

Closing costs are the fees and expenses due at closing. These include your lender fee (aka "origination fee"), appraisal fee, title fee, escrow fees, insurance premium, HOA fees, and taxes among other costs. By law, your lender should provide you with a loan estimate within three days of receiving a completed loan application. Your estimated closing costs should be included on this loan estimate. Likewise, three days before you close on your Tucson house, you should receive a closing disclosure form that outlines your actual closing costs. The total runs anywhere between 2-5% of your total loan. For example, if you take out a $200,000 loan for a Tucson home, your closing costs should fall between $4000 and $10,000.

Who's Responsible for Paying Closing Costs?

While sellers usually pay agent commissions, buyers tend to pay most of the closing costs. Sometimes, however, a seller may offer to pay a portion of the closing costs in order to make a deal happen. This is something that gets negotiated into the sales agreement. Talk to your Tucson real estate agent/broker if you have any questions.

What Can I Do to Reduce my Closing Costs?

Unfortunately, there's no negotiating down your property taxes when you purchase a Tucson home. However, there are some ways you might be able to reduce your closing costs. One of these ways is to shop around for your homeowners' insurance. Also, if you have a good relationship/history with your lender, you may be able to negotiate down the lender's fee. Consider shopping around for your title company and title insurance as well. Find out who the seller's title insurance is through and ask for a "reissue rate". It might save you money rather than having a whole new company issue a new policy altogether.

If you ever have any questions regarding your closing costs, feel free to contact your Tucson real estate agent. Do this as early as possible so that you still have time to shop around. It can sometimes be difficult to find the time to shop for insurance and title companies. You may feel overwhelmed by everything else involved in the buying process. In that case, your lender will make recommendations for you. How this is handled is totally up to you. Just be prepared to provide enough funds to cover both the down payment and closing costs when you buy a Tucson home.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

As we age, we tend to be less mobile. Trips to the store become a little more cumbersome. Sometimes, elderly adults end up skipping meals because they just can't get to the store to replenish their supplies. Last year, Mobile Meals Tucson delivered over 100,000 meals to homebound adults living in Pima County. Right now, they're looking for volunteers to help deliver meal trays during the summer. 

Mobile Meals Tucson Needs You!

Community service looks great on college applications. It also works wonders on instilling compassion and pride in yourself. If your teenager has a driver's license and has access to an insured vehicle, they can volunteer for Mobile Meals Tucson this summer. Do you have younger children? Why not volunteer yourself and bring them along for the ride. It's never too early to show them the importance of helping others.

Mobile Meals Tucson needs volunteers to deliver eight meal trays just once a week. The total time to deliver takes only 1.5 to two hours per week. Feel free to sign up for more shifts if you'd like. They reimburse for mileage, too. You must provide your own vehicle. Make sure to show proof of insurance. All volunteers must complete a background check as well. Weekday meal deliveries take place between 11 am and 1 pm Monday through Friday. If you're interested in a weekend delivery, there are opportunities available there, too.

Orientation for Volunteers

All Mobile Meals Tucson volunteers must attend orientation. Orientation meetings take place from 2:30 pm to 4 pm in the Nextrio Conference Room at 4803 E 5th St. on the following dates:

• March 28th
• April 9th & 25th
• May 7th & 23rd
• June 4th & 20th
• July 9th & 25th

To attend an orientation meeting, you must RSVP. To do so, either call Stephanie Swift at (520) 620-1600 or email your RSVP request to stephanie@mobilemealsoftucson.org.

Can't Volunteer? Donate.

I get it. We're all busy people. Between work, school, and extra-curricular activities, time can be a very precious commodity. If you can't fit volunteering into your schedule, you can still help Mobile Meals Tucson carry out their mission each week. Donate money. Through their Adopt-a-Route program, you choose to sponsor one of the 33 routes driven by volunteers. Whether it's for one week, one month or one year, your donation ensures homebound adults get the food and much-needed companionship needed to get through the day. Contact Christine at (520) 622-1600 to find out how to sign up for the Adopt-a-Route program. Or make a one-time or regular monthly donation by visiting the Mobile Meals website here.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate