The Marriage between Real Estate and Technology

It’s hard to imagine a world without the convenience of technology. Where would we be without our ipads, cell phones, and laptops? Google announced their Glass concept which will change the way we capture and organize data. Apple’s “watch” not only adds convenience but applications limited only to our imagination.

Do you remember the newspaper? How about some local magazine or that special edition publication you waited every other month for? Let’s not knock the publishers of print-media after all they are the first physical version of the internet. Nowadays, the major player in delivering information is done through the technological advances in digital communication. Specifically, the technology applications field will continue by leaps and bounds to integrate everyday practical things we do in a seamless way.

As I was growing up, I remember the computer being somewhat of a big deal. We were the generation transitioning into the evolution of computing. Today, children often have an ipad in their hands as quickly as they are able to pick them up. I did not embrace this new evolution nor did I turn my back. In the last two weeks, I have attended a few technology events. These events led me to believe we haven’t even tapped into what our future will look like. The world’s information will be delivered quickly and efficiently to anyone on any platform. I’m not a creative person but this was my takeaway as I left these events.

Being in the real estate industry, I envision our business to drastically change even further from what it is today. Although buying a home still appeals to our senses, the traditional methods of searching will no longer apply. For instance, looking for an “Open House” through the Sunday newspaper may not get you very far especially since most home Buyers use online searching as their primary choice. Online buyers are quick enough to take a look that day to schedule something that afternoon with the possibility of making an offer if they like the property. The applications to bring up-to-date information accurately and efficiently will be intertwined with our industry as our consumers demand the data to fit their criteria. There will be innovative products out there to deliver the information that will be part of our daily lives. Who thought we would be so “naked” without our cell phones? Just as Amazon has conveniently brought to us the world’s store, it would not surprise me if the ease of purchasing real estate was conveniently done with the click of a checkout button.

Purchasing A Home Will Be One Of This Decades Best Investments

Buying a home today can be one of the most significant investment decisions you will ever make. It will not be the same experience if you had purchased a home 10 years ago. The primary reason is home prices and mortgage rates are the lowest they will ever be. It has been over 50 years since interest rates have been this low (source: Federal Reserve on the 30-year Bond). To put this into perspective; the world’s population in 1960 was a little over 3 billion (7 billion now). Neil Armstrong would set foot on the moon about a decade later. There have been numerous wars including Vietnam, Korea and conflicts in the Middle East. You get the point.

Since 2008, the price of homes fueled by numerous foreclosures and short-sales has spiraled downward. I believe we are in the recovery process but we have just turned this corner. In essence, we are still at the bottom of the market with some ways to go. Inflation, without a doubt, is coming. Prices are still low in certain markets however you will see a quicker increase in value in others. I would not consider this to be normal so you would need to perform some due-diligence.

With rates at an-all-time-low and home prices still at very affordable levels, you have a recipe for a very positive and favorable investment. Mortgage payments would rival and in some cases surpass those of higher rental payments. These are all positive benefits for the future homeowner. When you include inflation, you not only build equity but you also increase your net worth.

With all that is happening in the world, the crisis in Europe, the price of Gold dropping and the overall bearish position of our stock market, I would say purchasing a home has never been more appealing.

FHA Loan vs. Conventional Loan

When it comes time to choose a loan, many people can be overwhelmed from the different types of loans that are available. It doesn’t help that there are plenty of lenders, banks, brokers and other financial institutions to choose from. It always seems that whomever you speak to may give differing views on lending information and practices. The experience of finding the right loan can be somewhat confusing, overwhelming and stressful. Let’s look at the types of loans that are available:

A Conventional Loan is a salable loan that is not affiliated with a government agency. These loans are guaranteed by Fannie Mae or Freddie Mac and are underwritten by their guidelines to ensure sound practices of issuing credit based on income, assets and collateral. These guidelines are widely accepted by lenders, financial institutions and banks which allows these entities to sell mortgage loans to Fannie Mae or Freddie Mac directly. Guidelines may differ based on credit score, loan amount, down payment, etc.

A FHA Loan is a government-issued loan. This loan is backed and fully insured by the US Department of Housing and Urban Development. One primary difference between a Conventional Loan and a FHA loan is with an FHA loan, you can bring a minimum of 3.5% down payment when making a home purchase. Another difference is the source of the down payment can be gifted by family, friends or employer. There are also some guideline differences but that would depend on your particular credit and income profile.

This is a broad and general overview of the two major types of loans that are available. Factors such as location of the property, type, credit score and loan amount will determine eligibility of the loan qualification. This should serve as a basic understanding on the key differences of available loan products.