Principal and Interest: Defined and Explained

March 27, 2023Home Buyers

When you take out a mortgage, one of the challenges that people often face is understanding the long list of complicated terms and lingo. Two common terms often used in the world of banking, including mortgages, are principal and interest. First-time home buyers, in particular, may not fully understand how their mortgage payments are determined. Simply put, it all comes down to principal and interest.

Below, we explain the difference between the two and apply these concepts to help you manage your personal finances.

What Is Your Principal Payment?

The principal is the amount of money you borrow when you originally take out your home loan. To determine your mortgage principal, just take the sales price of your home and subtract the amount of your down payment.

For example, if you buy a home for $300,000 with a 20% down payment. In this instance, you would have put down $60,000 toward your loan. Your mortgage lender would then cover the cost of the remaining amount on the loan, which is $240,000, which would be your principal balance. Your principal is the most important factor in deciding how much home you can afford. The principal you borrow accumulates interest as soon as you take it out.

Each month, part of your mortgage payment will go toward lowering your principal balance. It’s important to be aware that the principal starts accumulating interest as soon as you close on your loan.

What Is Your Interest Payment?

The second major part of your monthly mortgage payment is interest. Interest is money you pay to your mortgage lender in exchange for giving you a loan. Lenders charge interest as a way to profit from lending money. That means you have to pay back what you originally borrowed plus some extra. However, the amount of interest lenders charge differs from one lender to the next, as well as between different types of loans.

The amount of interest you pay over the life of your loan will depend on your interest rate. When you apply for a mortgage, your lender will evaluate your eligibility and offer you an interest rate based on factors that include your:

• Credit score
• Income
• Down payment
• Debt-to-income ratio
• Housing market

Interest Rate vs. APR

It is also worth mentioning that the interest rate on your loan is not technically the same as its annual percentage rate (APR). Though these terms are sometimes used interchangeably, they are two different things, and both are important to understand.

• Interest rate on your loan is the cost you pay to borrow the funds from the lender.
• APR reflects the interest rate plus other expenses, like mortgage points, fees and any other charges associated with borrowing the money.

The APR is a broader measure of what it will cost you to pay back the loan, so it is typically higher than the pure interest rate. If you are comparing loan offers from different lenders, be sure to examine the APRs and interest rates separately. Do not compare the interest rate from one lender with the APR of another, for example.

How are Principal and Interest Calculated?

Lenders multiply your outstanding balance by your annual interest rate, but divide by 12 because you’re making monthly payments. So if you owe $300,000 on your mortgage and your rate is 4%, you will initially owe $1,000 in interest per month ($300,000 x 0.04 ÷ 12). The rest of your mortgage payment is applied to your principal.

Is It Better to Pay Off Principal or Interest First?

As a general rule, it is better to pay off your principal first. Although your amortization schedule will outline a plan for paying off your loan, you may be able to pay it off faster and avoid some interest by putting extra money toward your principal. The faster you pay off your loan principal, the less you will pay in interest.

Using a loan principal and interest calculator is a good strategy for helping you make a plan for paying down your principal balance faster. By understanding all of the terms and conditions involved with personal loans, you can get a better idea of the money you’ll ultimately owe.

When you make monthly payments to the lender, everything you pay above the interest payment amount goes toward paying off the principal. The more you deposit into the credit account, the faster you reduce your principal balance, and the less you usually have to pay in interest.

Other Components of Your Monthly Mortgage Payment

While your principal and interest make up most of your monthly mortgage payment, you may also pay money into an escrow account as part of your mortgage payment each month. Your lender will then take the money in your escrow account to pay important mortgage-related expenses on your behalf.

These expenses most often are:

• Property Taxes

All homeowners must pay a property tax, which goes to their local government to fund public services such public schools, roads, recreation fire departments and libraries. Taxes are one of the most overlooked parts of owning a home, and they can also be one of the most expensive. Property taxes go to your local government and fund things like.

The amount you pay in taxes depends on the value of your home and the local amenities your community offers. Part of the reason you get an appraisal when you buy a home is so your local government can correctly calculate your taxes. Taxes can vary from year to year, and your county might require you to get a new appraisal every few years.

• Homeowner’s Insurance

You are not legally required to have homeowner’s insurance to own a home. However, most mortgage lenders will not give you a loan without insurance. Homeowner’s insurance protects you against damage from fires, break-ins and lightning storms, just to name a few examples. You may need an additional policy to protect yourself from damage caused by flooding and earthquakes.

Mortgage insurance is calculated as a percentage of your home loan. The lower your credit score and the smaller your down payment, the higher the lender’s risk, and the more expensive your insurance premiums will be. But as your principal balance falls, your mortgage insurance costs will go down, too.

If the amount you owe in homeowners insurance, property taxes or both changes over the life of your loan, your lender will reassess the amount you pay into escrow each month and raise or lower your monthly payment accordingly to ensure these costs remain covered.

Find the Right Agent

Buying your house should be a fun and fulfilling experience. If you have done your research and evaluated what you can afford and what you truly need, finding a new home can be exciting. Learning more about the purchase process eliminates the fear of the unknown and lets you search for a home with peace of mind.

Windermere’s community of real estate professionals is our greatest asset. We have experts in all areas of real estate, from your typical starter home to condos, luxury properties, and new construction. While residential real estate is the mainstay of our business, Windermere also has offices and associates who specialize in property management, commercial real estate, and relocation services. To further facilitate the home buying process, Windermere has affiliated partners in certain regions to provide mortgage, title, and escrow services.

Call us today with any questions or concerns. Our professional Real Estate Agents will help you through this exciting process. (951) 369-8002

by Windermere Tower

Common Hidden Costs of Buying a Home

February 22, 2023Home Buyers

A house is often the most expensive investment a person will make in their lifetime. ‍When you buy your first home, it is easy to get caught up in the excitement. When you buy a home, you might be expecting certain costs, such as the earnest money deposit and the actual monthly mortgage payments — but there could also be hidden costs that first-time homebuyers especially may not anticipate.

Mortgage lender requirements, closing costs and other lesser-known fees add up for homebuyers, especially those with little to no experience navigating the real estate market. These hidden costs of buying a home could leave you feeling overwhelmed. And you would not be alone in that feeling. In fact, studies have shown that nearly 20% of buyers underestimated the total expense of owning a home, including taxes, insurance and other unexpected disbursements.

This guide breaks down common hidden costs of buying a home so you can be prepared when it comes to closing on your dream home.

PROCESS COSTS

It takes an average of 45 days to close on a house. Several costs pile up within that nearly two-month window, including:

Earnest Money

When you buy a home, you will pay “earnest money” up front after a seller approves your offer and before you start checking off all the tasks required to buy a home. The earnest money deposit shows the seller that you are serious about your plans to purchase their property. Once the transaction goes through, your earnest money will be applied toward your down payment on your closing date. If you choose to back out of the deal, you may not get your earnest money back. Your contract will outline the rules about your deposit, but earnest money is usually 1% to 3% of the home’s sale price.

Down Payment

The down payment is the part of the home’s purchase price you pay upfront, rather than financing it through a mortgage. If you are buying a $300,000 home, for example, and put 10 percent down, or $30,000, you would be getting a mortgage for $270,000.

If you choose a conventional or FHA loan, a down payment is required. The amount of the down payment that is required is based on the home’s price and property type, as well as the loan product.

For a conventional loan, exactly how much down payment you need depends on the lender and loan type — you might put down 3 percent, 10 percent, 20 percent or more. With an FHA loan, you could be able to put down as little as 3.5 percent.

It is important to note that there are loans without a down payment requirement: USDA loans, for borrowers buying in designated markets (generally rural), and VA loans, for eligible service members and veterans.

Home Appraisal Fees

Your lender will want to ensure that the home you purchase is actually worth what the seller is asking. This requires a home appraisal that you get to pay for.

A designated appraisal management company (AMC) will appoint an appraiser to perform this duty. The total cost of your appraisal will depend upon several factors, including:

• The size and value of the property
• The type of mortgage you are applying for
• The property’s geographical location

Expect to pay at least $300 for an appraisal, but it could be closer to $1,000 depending on your situation.

Home Inspection

While not required, having a property’s systems and overall soundness professionally inspected before a deal goes through is highly recommended and can be worth every penny. Most homebuyers still get an inspection to avoid purchasing a house with serious structural issues. Home inspections save homeowners money on repairs in the long run, but scheduling one will cost you money upfront.

The factors that affect the cost of a home inspection mirror that of a home appraisal — namely, square footage, cost of living, and the state of the housing market. The costs between the two are similar as well, with prices averaging $300–$400 but often costing more depending on where you live and what you are buying.

CLOSING COSTS

You do not want to show up on closing day only to find that you are unprepared for the litany of costs. These costs must be paid before you can take ownership of your house, so come to the table ready to hand over a check.

Loan Origination Fee

Some mortgage lenders will charge a loan origination fee to set up your home loan. Every lender has their own process for how they charge fees, so you may see some lenders split up the origination fee into a processing fee (for reviewing your application and assembling documentation) and an underwriting fee (to determine if you qualify for the mortgage loan).

Lenders base loan origination fees on a certain percentage (usually between 0.5% and 1%) of your total loan amount. If you apply for a $500,000 mortgage and they charge a 1% origination fee, then you’ll need to pay $5,000.

If you come across a lender that does not charge a loan origination fee, take a look at how much interest they charge. More often than not, lenders that do not charge loan origination fees charge higher interest rates which may cost you more in the long run.

Homeowner’s Insurance

During your closing meeting, you will need to prove that you have protected your investment with a homeowner’s insurance policy. Lenders typically require you to have paid for a year of insurance before signing off on your mortgage.

The cost of homeowners’ insurance will vary depending on your location, the type of coverage you’re buying and any discounts you might qualify for, and your insurer.

Broadly speaking, you can expect to pay about $35 a month for every $100,000 in home value. Coverage for rebuilding or repairs after an earthquake or flood is usually not included in standard homeowners’ policies, so you may want to — or in the case of flood insurance, have to — buy a separate policy.

If you are buying with a mortgage, the lender will typically roll the cost of insurance into the monthly mortgage payment and pay the premiums on your behalf.

Property Tax

As a homeowner, you will need to pay property taxes. Property taxes are determined by the township, city, or county in which the home is located. The effective average rate nationwide is 1.1% of the home's assessed value, but it varies widely by state and locality, from an average under 0.4% in Alabama to about 2.2% in New Jersey. Property tax is guaranteed payment in perpetuity. Although you do not have much say in how much it is, as with any tax, strategies exist for lowering it.

Some states, like California, require payments of property taxes in two installments.

Escrow Fees

Sometimes known as closing fees or settlement fees, escrow fees are paid to the title company for handling money, the title transfer, and other paperwork for real estate transactions. These fees vary depending on your area and the title company you choose to work with, and in some cases it may be a percentage of the sale price rather than a flat rate.

Your lender pulls funds from your escrow account, but a third-party escrow company manages and operates it. They do not set it up for free, though. Average escrow fees range between 1% and 2% of a home’s sale price. This cost is often split between the buyer and the seller, though these terms may be negotiated in favor of either party as part of the initial offer.

You might also want to shop around to find a closing services provider with lower fees; your real estate agent can guide you to title and escrow companies they have had success with in the past to get you both a good deal and a smooth transaction.

SITUATIONAL COSTS

Other situations add to your overall home buying cost depending on where and how you are buying your house. These costs do not apply to every purchase situation, which is why they often take homebuyers by surprise.

Homeowner’s Association Fees

Homeowner associations or HOAs are non-profit entities that can establish and enforce rules, provide basic services such as water and tend to the maintenance and repair of community amenities such as pools, roads and landscaping. If you are buying a condo or another kind of home in a community overseen by a homeowner’s association (HOA), you will likely be required to pay a monthly fee, known as an HOA fee. HOA fees are determined by the association, and highly variable. These funds go toward the services the association provides, which may include security, a pool or gym and landscaping and maintenance.

HOAs can also charge occasional special assessment fees for urgent repairs. These financial obligations may be overlooked when buyers tally up the costs of buying a home, but they add up quickly. Dues vary widely, and can change depending on the community needs.

Mortgage Insurance

Mortgage insurance offsets some of the risks a lender takes when it allows people to buy a house without substantial money down. Mortgage companies know that not everyone can afford a sizeable down payment for their homes, but small down payments equal more considerable risks for lenders. ‍If your down payment is less than 20% of your home’s purchase price, your lender will likely require you to purchase mortgage insurance. Mortgage insurance is also always required on FHA loans. This policy protects the lender if you stop making payments on your mortgage loan.

Mortgage insurance is usually a monthly fee that will be included in your mortgage payment, but in some cases it can be a lump sum that will be paid at closing — and with some loans, you will pay both a monthly premium as well as an upfront fee.

Find the Right Agent

Buying your house should be a fun and fulfilling experience. If you have done your research and evaluated what you can afford and what you truly need, finding a new home can be exciting. Learning more about the purchase process eliminates the fear of the unknown and lets you search for a home with peace of mind.

Windermere’s community of real estate professionals is our greatest asset. We have experts in all areas of real estate, from your typical starter home to condos, luxury properties, and new construction. While residential real estate is the mainstay of our business, Windermere also has offices and associates who specialize in property management, commercial real estate, and relocation services. To further facilitate the home buying process, Windermere has affiliated partners in certain regions to provide mortgage, title, and escrow services.

Call us today with any questions or concerns. Our professional Real Estate Agents will help you through this exciting process. (951) 369-8002

by Windermere Tower

Should You Get A Mortgage Preapproval?

January 13, 2023Home Buyers

When you start the process of buying a home, the single most important thing you can do is to get a mortgage pre-approval. This step is relatively easy and straightforward, and will give you a clearer picture of your exact budget. But more than that, sellers often look at pre-approval as an indication of how serious the buyer actually is.

In order to get pre-approved for a mortgage, you need to provide your lender with extensive documentation proving your income, assets and debt obligations (we will get into those details later). If you qualify, you will receive a pre-approval letter indicating how much you can borrow to purchase your new home.

Below, we will cover how to get pre-approved for a home loan and why it can be incredibly important.

What Is A Mortgage Pre-Approval?

When a lender preapproves you for a mortgage, it tells you exactly how much they are willing to loan you to pay for a home. The lender makes this determination by reviewing your credit report, income, employment history, assets and debts. Your pre-approval will come in the form of a letter. It will also contain an initial interest rate as well as terms of the loan.

Keep in mind that a pre-approval is not a commitment to lend. Your desired house still has to pass an appraisal to qualify for whichever mortgage option you are requesting. While a mortgage pre-approval is not an ironclad guarantee that your loan will end up closing, having a pre-approval does show sellers that you are serious in your intent to purchase a home and have the financial resources to follow through

Mortgage pre-approval significantly boosts your chances in the housing market. For starters, most real estate agents expect you to be pre-approved for a mortgage before you even request their services. They tend to view it as an affirmation that you are someone they can trust and that you are serious about buying a home. Pre-Approval basically hedges against window shoppers since a lot of time and effort goes into finding and showing properties.

The entire process takes about two-to-four weeks.

What Is A Mortgage Pre-Approval Letter?

If a lender offers you a pre-approval, they will issue you a pre-approval letter. A good pre-approval letter will contain several pieces of information:

• The amount of the pre-approval
• The length of time the letter is valid for
• Which loan option is being used (for example, 30-year conventional)

Is Pre-Qualified the Same as Pre-Approved?

No, a mortgage pre-qualification is not the same as a pre-approval. Pre-approval is a process that includes getting an in-depth review of your finances or a hard credit check. Pre-qualified does not. Pre-qualification offers a relatively informal estimate of how much you can borrow. In a pre-qualification, a lender usually asks for verbal or written estimates of your income and assets to calculate your debt-to-income ratio (DTI) and down payment savings.

When it comes to choosing between getting pre-qualified versus pre-approved, a pre-approval is going to be more comprehensive and give you a more accurate look at the types of mortgages you qualify for.

While pre-qualifications are a good way to come up with a budget and an initial estimate of how much you can afford, in the eyes of sellers and the real estate agents, they do not mean very much because none of the numbers are verified. This can be particularly problematic in markets experiencing low inventory.

How Long Does Pre-Approval Last?

If you are pre-approved, you will receive an approval letter offer that lasts for 60 – 90 days, depending on the lender. After that, you will need to apply again with another credit check and updated paperwork. If there are any major changes to your financial situation, your pre-approval amount might also change.

You can look at a house without pre-approval but getting pre-approved early in the home buying process is most beneficial. This way, you can find out if there are any issues that could prevent you from getting financing.

How to Get Pre-Approved For a Mortgage

In addition to considering your credit score, lenders will want to verify your employment and income. They will also be considering your debt-to-income ratio (DTI), which is a calculation of your total monthly debts, divided by your monthly income. This ratio, expressed as a percentage, helps lenders make sure you have enough income to reasonably cover your debts.

The exact DTI needed for mortgage approval varies by loan type. But generally speaking, you’ll want your debt-to-income ratio to be 50% or lower.

Now that you understand the importance of the mortgage pre-approval, let’s run through the process.

Step 1. Get Financially Ready

If you are looking to buy a home in the near future, your first step should be to make sure you are financially prepared. There are a couple of steps you can take to get ready.

Check Your Credit Score

A good credit score is key to getting pre-approved. Each lender and loan type has a minimum credit score requirement that will apply to both you and any co-applicant. For conventional loans, lenders typically like to see a credit score of 620 or higher. Before applying for a pre-approval, take some time to request a free credit report to ensure there are no errors on your report that could be negatively affecting your score.

Since completing a pre-approval application does affect your credit score, getting a free credit check that will not impact your credit score will give you a rough idea of your current score. You can then use the estimate as a baseline for checking if you meet a lender’s mortgage qualifications.

Pay Down Your Debt

During the mortgage pre-approval process, your lender will also look at your debt-to-income ratio (DTI), which compares your monthly debt obligations to your monthly income. DTI requirements can vary by lender and loan type, but generally speaking, the lower your monthly debt compared to your income, the better. For the best chance of qualification, you want to keep your DTI at 43% or less.

Step 2. Gather Your Documents

Your lender will run a thorough search of your financials. To avoid any future headaches and expedite the process, have the following documents at hand. Keep in mind that this is not an exhaustive list:

• Proof of Identity: You will need to show your driver’s license or government-issued ID, passport, Social Security card and other documents that verify who you are and where your permanent residence is.
• Proof of Employment History: Most mortgage lenders require the last 30 days of pay stubs that also indicate your year-to-date income.
• Tax Documentation: Be sure to bring your last three federal and state tax returns along with your last three W-2 forms. If you are self-employed, you can collect your most recent 1099 forms.
• Bank Statements: Likewise, you will need the last three month’s worth of financial statements for all your accounts. This may include checking, savings, money market, and certificate of deposit (CD) accounts.
• Asset Information: You should also collect statements for brokerage accounts or other taxable investment vehicles. Proving you have assets at hand would serve you well in the mortgage pre-approval process.
• Real Estate Income: If you are earning income from any property, you will need to provide specific paperwork. These documents can include a lease and documentation of rental income for the last three years. You will also need to prove the current market value of the rental property.

Step 3. Shop Around

When you are going through the process of applying for a mortgage loan, shopping around could result in a better rate and higher loan amount. It is not just rates you should be worried about, but also how the lender will treat you, so you need to be comfortable. Do they charge fees for mail-in or phone payments? Will they service your loan after it closes, or will the servicing be sold? Will they proactively reach back out to you if there is an opportunity to get you into a lower rate? All of these things need to be considered.

What to Do After You Get Pre-Approved for a Mortgage?

After a lender pre-approves you for a mortgage, your journey through home buying continues. Pre-Approval usually comes in the form of a letter proving that a lender has verified your information and is willing to give you a specific loan. But remember, you earned pre-approval because you demonstrated your trustworthiness as a responsible borrower. If you fail to in your obligations, your lender may reduce the amount you can borrow, raise your interest rate or revoke the pre-approval if you fail to maintain a good financial standing. Lenders continue to monitor your debt-to-income ratio. So you should avoid making any large purchases without first notifying your lender.

In addition, avoid opening any new lines of credit. Each credit inquiry will knock down your credit score and change your credit capacity. Instead, focus on paying off your current debt and keep paying bills on time to boost your credit score. A different lender may take notice of your improved credit score and offer you a better interest rate.

Once you have found a home you are ready and able to commit to, your lender will move your mortgage pre-approval onto the final application phase. The loan finalizes when an appraisal of the home is completed, and your mortgage is tied to a particular property.

 Find the Right Agent

Buying your house should be a fun and fulfilling experience. If you have done your research and evaluated what you can afford and what you truly need, finding a new home can be exciting. Learning more about the purchase process eliminates the fear of the unknown and lets you search for a home with peace of mind.

Windermere’s community of real estate professionals is our greatest asset. We have experts in all areas of real estate, from your typical starter home to condos, luxury properties, and new construction. While residential real estate is the mainstay of our business, Windermere also has offices and associates who specialize in property management, commercial real estate, and relocation services. To further facilitate the home buying process, Windermere has affiliated partners in certain regions to provide mortgage, title, and escrow services.

Call us today with any questions or concerns. Our professional Real Estate Agents will help you through this exciting process. (951) 369-8002

by Windermere Tower

How Important Is School District When Buying A House?

December 27, 2022Home Buyers

There is so much to think about when choosing a home to buy: location, floor plan, property taxes, whether you will have any nosy neighbors poking around. If you have children, choosing a home in a reputable school district might also be at the top of the list.

But you might not realize that whether or not you’re a parent, school districts can play a major role in your home buying decision. Here’s what you should know about how school districts affect your finances when buying a house.

How to Determine How Good a School District Is

When evaluating a school district, there are a few things to take into consideration. Take a look at the quality, age, and facilities of the schools themselves. Look into how students perform on standardized tests. Check out the student-to-teacher ratio to see how much personalized attention the students receive. The amount of spending per pupil at the school will tell you how much of the budget is allocated for each student.

Most importantly, talk to people who have lived in the area for a while and have children enrolled in the schools. You may even want to schedule an interview with a teacher or administrator at the school. A good school district generally produces good kids. Not only are they academically inclined, but well-behaved as well. As such, areas with good school districts tend to be safer and experience less crime.

Great grades are not all that matter, though. Sometimes the schools that are ranked the highest are the ones with the most rigorous curriculums, and those can sometimes be overly stressful or overwhelming for children or adolescents. For more personalized recommendations, turning back to the community is always a good idea.

If you can, you should check out all of the district’s schools. While your child might be going to elementary school now, he or she will eventually be going to middle school and high school. You want to make sure that they are all suitable for your child.

Understanding School Ratings

According to the National Center for Education Statistics, there have been more than 98,000 public schools in the United States. Even divided by 50 states, that number can feel overwhelming. But each state has School Report Cards, which are federally mandated to be available to the public under the Every Student Succeeds Act (ESSA). These report cards are similar state-to-state.

Although the names of the sections may differ across reports, the information they provide typically is divided into one of five categories:

1. Demographics

This section provides information on the students attending the school. This might be enrollment numbers, teacher and staff information, information on racial or ethnic self-identification, economic standing, learning differences, family backgrounds, and more.

2. Academic Achievement

This broad category covers how students perform on state exams. ESSA allows individual states to set their own parameters for standardized tests. However, to make it easier to compare schools in a consistent way, this section also typically includes performance on nationally standardized exams such as the SAT and ACT.

3. College and Career Readiness

This information might be included within academic achievement, but is often in its own section. Performance in upper-level courses and on national standardized exams is strong indicators here, if they are not covered in in academic achievement.

4. Climate

The Climate section deals with school environment. Many campuses now implement student survey data, asking students their opinion on how high classroom expectations are or whether they feel as though their teachers care about them individually. On a broader scale, this section usually also includes safety and disciplinary information.

5. Accountability

Accountability, another ESSA term, is used to indicate if a school has been identified as needing additional support, and if so, what kind. Often, this information is indicated on the first page of the report, in the “Overview” or “Summary” section. Occasionally, however, this information is given a tab of its own within the report. The accountability score given to schools is determined by individual states, as are the plans of support moving forward.

What a Good School District Means When Buying a Home

If you are in the market for a new home you better be researching local school districts – it could mean all the difference for your family, whether you have children or not. Homes in the best school districts, on average, sell for higher prices than similar homes in less-popular school districts. A simple analysis might say that good schools are wholly responsible for this added value.

Here are four of the main reasons why the quality of school districts is something that you need to keep in mind when you buy your next home.

1. Good Neighborhood

A good school district tends to equal a good neighborhood. Great location can mean safer neighborhoods, an abundance of places to eat, ease of access to transportation, proximity to urban, beach or vacation areas and amenities like public parks and services.

2. Good Education

If you have children, the biggest reason to buy a home based on the school district is so you can provide them with a quality education. A good district will offer the best education for your children. This is especially important if you have children with unique learning needs. Some districts are more accommodating to children who need additional enrichment or learning opportunities.

3. Home Value Stability

Even if you do not have kids, living in a good school district can help increase your home’s value over time. That is because neighborhoods with higher school ratings tend to have higher home values. Homes will go up and down in value, but an outstanding school district can make all the difference during a tough market.

4. Higher Resale Potential

Real estate is by nature a venture that carries with it a certain level of risk and never comes with guarantees. While this is true, you do want to do everything in your power to make sure you get the best that you possibly can for your family. Home buyers should think about resale and building home equity when selecting their new home- even if they do not plan to move in the near future.

After all, plans change unexpectedly. You may think a house is your “dream home” and plan to live there forever, but plans change. If you find yourself in a position where you need to move in a few years, you want the resale value to be high.

School Districts Matter Even If You Do Not Have Kids

Even if you do not plan on using the schools, the school district should still be an important part of your home hunt. If you have been browsing online real estate listings or talking with your agent, you have likely seen or heard about local school ratings. School district ratings are one of the neighborhood lifestyle statistics you often find in home-for-sale listings, along with data about walkability, crime, and more.

It might be tempting to skip over this info if you do not have kids, but do not discount this valuable information. If you are not a parent or do not plan to be one, you might still want to consider buying a home in a "kid-friendly" neighborhood with highly-rated schools.

The National Association of Realtors (NAR) found 26% of home buyers said the quality of local schools was important when finding a home and 20% said proximity to schools was a deciding factor. Realtor.com found that homes in good school districts got 26% more online views than comparable homes in average school districts and sold on average eight days faster. When school districts maintain their good rankings, these homes will likely appreciate in resale value.

Find the Right Agent

Choosing a location for a home is dependent on many factors for your individual needs. If you’re looking for better resale value and a safer location for your home, then you should consider buying a home that is located within a high-rated school district. Your realtor can help you choose a home in the perfect location for your needs

Windermere’s community of real estate professionals is our greatest asset. We have experts in all areas of real estate, from your typical starter home to condos, luxury properties, and new construction. While residential real estate is the mainstay of our business, Windermere also has offices and associates who specialize in property management, commercial real estate, and relocation services. To further facilitate the home buying process, Windermere has affiliated partners in certain regions to provide mortgage, title, and escrow services.

Call us today with any questions or concerns. Our professional Real Estate Agents will help you through this exciting process. (951) 369-8002

by Windermere Tower