The Cost of NOT Paying PMI

Saving for a down payment is often the biggest hurdle for a first-time homebuyer as median incomes, rents, and home prices all vary depending on where you live.

There is a common misconception among homebuyers that a 20% down payment is required, and it is this limiting belief that often adds months, and sometimes even years, to the home-buying process.

So, if you can purchase a home with less than a 20% down payment… why aren’t more people doing just that?

One Possible Answer: Private Mortgage Insurance (PMI)

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. The monthly cost of your PMI depends on the home’s value, the amount of your down payment, and your credit score.

Below is a table showing the difference in monthly mortgage payment for a $250,000 home with a 3% down payment and PMI vs. a 20% down payment without PMI:

The first thing you see when looking at the table above is no doubt the added $320 a month that you would be spending on your monthly mortgage cost. The second thing that should stand out is that a 20% down payment is $50,000!

If you are buying your first home, $50,000 is a large sum of money that takes discipline and sacrifice to save. Many first-time buyers save for 5-10 years before buying their homes.

To save $50,000 in 10 years, you would need to save about $420 a month. On the other hand, if you save that same $420 a month, you could afford a 3% down payment in less than a year and a half.

In a recent article by My Mortgage Insider, they explain what could happen in the market while you are waiting to save for a higher down payment:

“The time it takes to save a (larger) down payment could mean higher home prices and tougher qualifying down the road. For many buyers, it could prove much cheaper and quicker to opt for the 3% down mortgage immediately.”

The article went on to say,

“Since renters typically devote a higher percentage of their income to housing than homeowners, providing flexible down payment options can help renters with solid earnings purchase a home – and gain a fixed-rate mortgage with principal and interest payments that will not increase over the life of the loan.”

If the prospect of having to pay PMI is holding you back from buying a home today, Freddie Mac has this advice,

“It’s no doubt an added cost, but it’s enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

Based on results of the most recent Home Price Expectation Survey, a homeowner who purchased a $250,000 home in January would gain $50,000 in equity over the next five years based on home price appreciation alone (shown below).

Bottom Line

If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, let’s get together to discuss our market’s conditions and help you make the best decision for you and your family. 971.208.5093 or admin@mgnrealtors.com.

By: KCM Crew

What Is a Tankless Water Heater? The Key to Endless Hot Showers, but With a Catch

What is a tankless water heater? Also called “demand-type” or “instantaneous water heaters,” these devices deliver warm water only when you want it. Conventional water heaters, on the other hand, perpetually heat water whether you need it or not.

Traditional hot water tanks use electricity or gas to heat and store hot water until that magic moment you decide to take a shower or wash your dishes. As faucets dispense hot water, cold water refills the tank, and the heating process begins again.

If you use hot water faster than your tank can warm the water, you'll find yourself feeling the side effects, in the form of a cold shower.

Tankless devices, on the other hand, heat water on the way to your faucet; as the name implies, there is no the storage tank. When you turn on the hot water tap, cold water flows into your tankless unit, which uses a much more intense electric current (or blast of gas) to quickly heat water on the way out your tap. Theoretically, the supply of hot water is unlimited.

Tankless water heaters, which can be as small as a suitcase, can produce hot water at the rate of 2 to 5 gallons per minute. If only one person is taking a shower, which requires a flow rate of about 1 to 2 GPM, then you’ll have a lovely, long-lasting hot spray.

But suppose you are taking a shower while someone is washing dishes (3 to 7 GPM), or your washer is cleaning a load of clothes (1.5 to 3 GPM). Add up all those GPM figures, and a regular heater falls short of the hot water demand.

The solution is to either stagger hot water usage, install more than one hot water tank, or install a tankless water heater.

How much do tankless water heaters cost—and how much will they save you?

The U.S. Department of Energy says that if you use 41 gallons or less of hot water each day, tankless water heaters can be 24% to 34% more energy-efficient than conventional hot water storage tanks. If you use 86 gallons a day, the efficiency drops to 8% to 14%. The energy ratings institution Energy Star estimates a typical family can save $100 or more a year with a tankless water heater.

But here’s the rub: Tankless water heaters cost up to three times more than conventional heaters to buy and install. A whole-house tankless water heater costs $800 to $3,000, and installation—including upgrading electrical and gas pipe systems— can add $1,000 to $3,000 to those costs. As a result, it might take decades to recoup the cost of your energy-saving appliance.

On top of that, tankless water heaters can be expensive to maintain.

“I’m not a big fan,” says Tom Bigley, a Pittsburgh plumber for 36 years and director of plumbing services for the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry. “They are maintenance-intense and expensive to repair. With parts and a basic service call, you’re at $300 to $400. Is the money you're saving on energy bills worth that?”

Bottom line: As is the case with most energy-saving appliances, you should carefully weigh the costs of a tankless water heater against the long-term savings to determine whether one's right for you. If your current setup gives you enough hot water, you're probably fine as is; but if you're cringing every morning at the prospect of a cold shower, a tankless water heater could be worth its weight in gold.

Contact McLeod Group Network at 971.208.5093 or admin@mgnrealtors.com for all your Real Estate needs.

By: Lisa Kaplan Gordon, Realtor.com

U.S. Housing Starts Rose in August

U.S. housing starts grew modestly last month, driven by an outsize jump in apartment building that masked weakness in the pipeline for single- and multifamily construction.

Housing starts increased 9.2% in August from the prior month to a seasonally adjusted annual rate of 1.282 million, the Commerce Department said Wednesday. This rise in building was driven by a robust 29.3% climb in the volatile multifamily sector that likely won’t be sustained.

Building permits, a more stable measure that can signal how much construction is in the pipeline, were down for multifamily building, a sign that demand continues to cool for apartments and condominiums.

Permits were also sluggish for the single-family sector, even as steady job and wage growth are helping drive home-buyer demand. Rising material costs and labor shortages are posing challenges for builders seeking to ramp up construction.

“Builders know that there is demand at a lower price point,” said Aaron Terrazas, senior economist at Zillow. “They can’t meet that price point given all the costs.”

Housing-starts data are volatile from month to month and can be subject to large revisions. August’s rise for starts carried a margin of error of 11.4 percentage points.

The broader trend shows the housing market notching some pickup, as starts climbed by 6.9% in the first eight months of 2018 compared with the same period a year earlier.

Still, would-be buyers are also dealing with rising prices and borrowing costs, deterrents to home buying.

“There is fundamental softness in housing,” wrote Stephen Stanley, chief economist at Amherst Pierpont Securities, in a note to clients. “Even if the weather had been more favorable in recent months, housing activity would probably not have been much better than flat after advancing at a substantial pace in prior years.”

The National Association of Home Builders on Tuesday said its gauge of builder confidence remained unchanged in September.

Jerry Howard, chief executive of the home-builder association, said the fact that the index is flat is a positive sign that his members aren’t becoming overly exuberant the way they did in the mid-2000s.

Still, he said labor costs and affordability are going to become an increasing challenge to the industry. He expects housing to become an issue in the coming midterm elections and the presidential election in 2020.

“We’re seeing younger people priced out in more and more markets,” he said.

Contact McLeod Group Network at 971.208.5093 or admin@mgnrealtors.com for all your Real Estate needs.

By: Sarah Chaney, Realtor.com
Laura Kusisto contributed to this article.

If You Are Thinking of Selling? You Must Act NOW!

If you thought about selling your house this year, now more than ever may be the time to do it! The inventory of homes for sale is well below historic norms and buyer demand is skyrocketing. We were still in high school when we learned about the concept of supply and demand, so we understand that the best time to sell something is when the supply of that item is low and demand for that item is high. That defines today’s real estate market.

Lawrence Yun, Chief Economist at the National Association of Realtors, recently commented:

“Contract signings inched backward once again last month, as declines in the South and West weighed down on overall activity.”

Yun goes on to say:

“The reason sales are falling off last year’s pace is that multiple years of inadequate supply in markets with strong job growth have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it.”

In this type of market, a seller may hold a major negotiating advantage when it comes to price and other aspects of the real estate transaction, including the inspection, appraisal and financing contingencies.

Bottom Line
As a potential seller, you are in the driver's seat right now. It might be time to hit the gas. Contact McLeod Group Network at 971.208.5093 or admin@mgnrealtors.com to find out how much your home is worth! 

By: KCM Crew

4043 Cheshire Lane SE: To-Be-Built Beauty in Desirable Fairview Addition!

Salem-Keizer OR Real Estate For Sale
4043 Cheshire Lane SE, Salem, OR  97302


SWEET says it all about this to-be-built charmer at Fairview Addition, by Olsen Design & Development! This 3 bedroom, 2.5 bath new construction home encompasses over 1800 square feet of flowing, open living spaces. Be welcomed at your front porch into the warmth of the living room accented by a mantled gas fireplace and custom bookshelves. Stay part of the conversation from the open kitchen outfitted with Bosch appliances. Take in some sun from your reading nook off the dining area. A main floor master with en suite and walk-in closet is privately tucked away allowing you to kick back and relax! Upstairs you will find two nicely sized bedrooms with a private bath providing plenty of space for all your needs. Classic styling with access to Community Garden & more! Be the first to enjoy all that 4043 Cheshire Lane has to offer!

The McLeod Group Network has distinguished themselves as a leader in the Salem Oregon real estate market. As a full service, real estate team - focused on working with our Seller and Buyer clients to help achieve their real estate goals!

We bring a keen eye for the details of buying or selling a Salem Oregon home and seemingly boundless determination and energy, which is why our clients benefit from our unique brand of real estate service. Rooted in Tradition, focused on the Future –The McLeod Group Network will help make the most of your Salem Oregon real estate experience. With over 40 years of combined experience, you can rest assured that your real estate transaction will be handled and cared for with the utmost respect and attention to detail. Give us a call today 503-798-4001 and discover the difference we can make during your family's move.

7 Promising Signs the Home You're Buying Will Have Good Resale Value

While it might seem premature to think about selling a home before you even buy it, it's important to remember that a house is an investment. And in an ideal world, investments make money—not lose it.

That's why resale value should be an important consideration when house hunting. No, it shouldn't supersede your must-have requirements (if you demand 20 acres and lakefront access, prioritize that). But if you do your best to predict how the house you're buying—and the neighborhood it's in—will appeal to future buyers, then future-you will be a whole lot happier. And possibly richer.

Considering resale value "also saves the buyers a lot of money, as they will not need to spend big on renovations or updates," says real estate agent Lukasz Kukwa.

But one caveat: Good resale value is never a promise.

"It is almost impossible to guarantee that a home will retain its full resale value, as the local market and economic factors have a large effect on the housing market," Kukwa says.

In short: Resale value is anybody's guess if the economy tanks. But there are some indicators to watch for that could be the difference between barely squeaking by or coming out ahead. As you hit the house-hunting trail, look for these promising signs that suggest your investment will be a smart one.

1. The neighborhood's hopping...

Pay attention to your surroundings when house hunting. Is the neighborhood walkable? Or is a trip to the grocery store so onerous it requires snacks for the road? Meanwhile, are there restaurants nearby for those nights you simply just can't?

"If you buy in an area that is not well-developed and doesn't have good infrastructure—like shopping close by—you will not have a high rate of return on the home," says Realtor® Patricia Vosburgh.

"The more amenities, the higher chances the home will sell faster and for more money," she explains.

Even if there are development plans in the works, don't bank on that to prop up property values; construction can stall or be scrapped entirely. When calculating your home's future worth, focus on what exists now.

2. ... but the street itself is quiet

Buying a home is a study in contrasts: You want a gorgeous kitchen—and good delivery options, too. You need five bedrooms—and a decent hotel around the corner, because no way is your mother-in-law staying with you. You want things to be hopping—but not in your backyard.

"We advise against buying on a busy street or purchasing a home surrounded by commercial properties nearby," Vosburgh says.

Not that there aren't buyers—possibly even you—who love living in the middle of the action. But before you buy the bungalow next to your favorite watering hole, consider that future buyers might not be so keen.

3. The home's systems are in good shape

Many people consider return on investment to be the sum of a simple calculation: Will the home sell for more than you paid?

But it's a little more complex than that. You have to factor in how much you'll spend on the home while living there—even if the market becomes red-hot. And if the home's vital components are falling apart, you'll be spending a lot.

Your inspector can give you a rundown of your future home's health, but keep a close eye on the roof, water heater, HVAC system, windows, and foundation. Pay attention to the plumbing and electrical, too. A problem with any one of these major systems can require a costly repair—and take a bite out of your payday.

"When these items are new or in good standing, that's a great sign," Kukwa says.

4. The schools are great

If you're child-free, this one might seem entirely irrelevant. But a word to the wise: If you think you might someday sell your home, you'll want to factor in the school district before you buy.

"Even if buyers personally don't have children, for resale it is imperative that they buy in a great school zone," Vosburgh says. (You can check school ratings at GreatSchools.org.)

Just make sure to do your research and determine where the home sits in relation to the school district boundaries.

“Often agents will advertise a property as being near such-and-such school area, but not necessarily specify the district, which can be very confusing,” explains Tina Maraj, a Realtor with Re/Max North Orange County in Fullerton, CA. “It can be a real eye-opener if a buyer closes and they’re on one side of a main street that is the dividing line between the top-rated and the lowest-rated high schools.”

5. The light is inspiring

"Any apartment in any neighborhood that has good light will sell—and will always sell," says New York City broker Noemi Bitterman.

With good light, "there is always a good feeling—a feeling of embracing and belonging," she continues. "When [a home] is dark, no matter how nice and new it is, it doesn't feel inviting, it takes a much longer time to sell, and the price reflects the lack of light."

Whether you're shopping for a condo, apartment, or house, visit the property at different times of the day to see how the light affects the space.

6. The floor plan is family-friendly

Again? asks the child-free reader. Must all my housing decisions be dictated by families? No. But if you're hoping to sell that home for a profit down the road, you should keep kid-friendliness in mind.

"Look for a home with a floor plan that will appeal to families," says broker Kris Lindahl. That means at least three—if not four—bedrooms on the same level, an open concept kitchen, and at least one bathtub.

And always pay attention to the number of bathrooms. You want "enough to avoid fights in the morning," Lindahl says.

On a related note: No matter how much you love that gloriously unique Frank Lloyd Wright spiral house, it's often best to stick to a more traditional floor plan if you're worried about selling later.

"Buying a home that is too quirky or has very untraditional features can result in a decreased ROI and smaller pool of potential buyers in the future," Kukwa says.

7. The community is restrictive

Homeowners associations can be a pain in the butt—the irritating restrictions, the monotonous meetings, the monthly dues that you're not always sure you can account for.

But an HOA can actually be helpful, at least when it comes to resale value. That's because HOAs usually keep everyone in line, preventing your neighbors from letting weeds take over their lawn, painting their houses bright pink, or permanently parking an RV in the middle of your street—all things that could ding the value of your home.

Of course, purchasing an HOA-regulated home isn't for everyone. But if you're seriously concerned about the resale value of your new home, covenants and restrictions could keep you flush.

Contact the professionals on the McLeod Group Network to start the search for your new home! 971.208.5093 or admin@mgnrealtors.com.

By: Realtor.com, Jamie Wiebe, Wendy Helfenbaum.

Be Careful! You May Be Ruining These 4 Major Appliances

Appliances are designed to make your life easier, but having to repair or replace one prematurely can put a major strain on your wallet. Sure, they undergo daily wear and tear, but appliances are expected to weather years of use.

But did you know that you could be shortening the life span of your appliances without even trying? That's right. Whether it's negligence or improper use, how you treat your appliances could lead to an expensive repair—or needing to replace them sooner than you should.

Let's look at the ways you may be inadvertently damaging four common appliances—so you can stop doing so immediately!

1. Refrigerator

The refrigerator is one of the hardest-working appliances in your home, since it’s operating 24 hours a day, seven days a week. However, without proper maintenance, it has to work a lot harder, which means it’s not operating efficiently. That will ultimately hurt its chances of lasting as long as it's supposed to.

“One of the easiest ways to extend a refrigerator’s life span is to clean the condenser coils, which help the refrigerator stay cool by releasing heat from the sealed system,” says Wayne Archer, an appliance expert at Sears Home Services. He recommends cleaning the coils with a vacuum or coil brush at least twice a year to remove dirt, pet hair, and food.

“If you have an older fridge, the coils might be painted black and mounted on the back,” Archer says. “Newer refrigerators often have the condenser coils on the bottom.”

Also, don’t forget to clean the gasket (that’s the rubber seal on the inside of your refrigerator and freezer doors) periodically. The gasket ensures that your doors remain tightly sealed. If the seal is worn out, you’ll need to replace it.

2. Washing machine

Most homeowners are shortening the life span of their washing machine in two ways: by washing too much laundry at one time and using too much detergent. Admittedly, it's tempting to pack the washing machine to capacity to reduce the number of loads you have to wash. But this is a bad idea.

“Overloaded washers won’t clean clothes properly because there’s no room for the clothes to move or for the detergent and water to circulate; the extra weight of wet clothes can damage the machine,” says Archer.

This damage includes prematurely wearing out the washer’s drum and bearings.

“Never fill the washer more than two-thirds full, and refer to the owner’s manual to make sure you’re doing what’s right for your model,” he says.

Adding more than the recommended amount of detergent won't make your clothes cleaner—it'll just create a buildup of odor-causing residue.

“Over time, this residue can cause the machine components to fail,” Archer says.

3. Dryer

Did you know that dryers can catch fire as a result of improper use? It's true! When dust, dander, and pet hair build up in your dryer vent, it can create a fire hazard.

However, proper maintenance can greatly reduce the chances that your dryer will go up in flames. Be sure to keep the dryer vent and the lint filter clean. The dryer vent is located in the back of the dryer and is connected by a hose to the outside.

“Use a vent brush to clean the complete venting system, including where it vents to the outside wall—but be sure to unplug the dryer first,” says Archer. You should do this at least once a year.

The lint filter is the easily removable filter screen that catches lint before it gets to your vents.

“A clogged dryer lint filter makes your clothes dry slowly and forces the appliance to work harder,” says Doug Rogers, president of Mr. Appliance repair service.

“If the thermal fuse blows, you’ll need to schedule appliance repair, but you can prevent this by cleaning the filter before every load,” he says.

4. Dishwasher

Having a dishwasher means you don't have to wash your dishes before loading them, right? Wrong!

“Some dishwashers advertise the ability to clean even the grimiest dishes, but food particles can gum up moving parts and become stuck in crevices,” says Rogers. He says that rinsing away food particles before loading these items into the dishwasher can help to prolong the appliance’s life.

You should also clean the dishwasher itself.

“Every three to six months, run an empty cycle with a dishwasher cleaner (or a cup of vinegar) to remove calcium deposits,” Rogers advises. “This prevents the sprayer arm from becoming clogged, so you don’t have to worry about repairing it prematurely.”

Some dishwashers have a self-cleaning filter; however, if your appliance has a manual filtering screen under the bottom spray arm, it needs to be cleaned on a regular basis. All you have to do is rinse the filter under running water.

“If not, trapped food particles will degrade into a sludge that blocks water flow and eventually requires a repair,” Rogers says.

Don't do dishes very often? Your dishwasher still needs to run occasionally.

“This helps keep the seals, gaskets, and hoses from dry-rotting, and keeps mold and mildew from forming,” says Archer. “Also, make sure the drain in the bottom of the dishwasher is free of debris to prevent drainage issues.”

Contact The McLeod Group Network for all your Real Estate needs! 971.208.5093 or admin@mgnrealtors.com. 

By: Terri Williams, Realtor.com

5 Reasons You Should Sell This Fall!

Here are five reasons why listing your home for sale this fall makes sense.

1. Demand Is Strong

The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase…and are in the market right now! In fact, more often than not, multiple buyers end up competing with each other to buy the same homes.
Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now 

Housing inventory is still under the 6-month supply needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon!
Historically, a homeowner stayed in his or her home for an average of six years, but that number has hovered between nine and ten years since 2011. Many homeowners have a pent-up desire to move as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.
The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell.

3. The Process Will Be Quicker

Today’s competitive environment has forced buyers to do all that they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and much simpler as buyers know exactly what they can afford before home shopping. According to Ellie Mae’s latest Origination Insights Report, the average time it took to close a loan was 44 days.

4. There Will Never Be a Better Time to Move Up

If your next move will be into a premium or luxury home, now is the time to move up! The abundance of inventory available in these higher price ranges has created a buyer’s market for anybody looking to purchase these homes. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly AND you’ll be able to find a premium home to call your own!
According to CoreLogic, prices are projected to appreciate by 5.1% over the next year. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.

5. It’s Time to Move on With Your Life 

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you feel you should?
Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

Contact the professionals on the McLeod Group Network to find out how much your home is worth! 971.208.5093 or admin@mgnrealtors.com.

By: KCM Crew