Pamela McArdle's Blog
The perfect home is not the only thing you'll need to shop for when you want to become a homeowner. In order to get the best terms, the lowest monthly payment and a reasonable interest rate, start doing some homework now -- before you even attend your first open house.
1. Check Your Credit Score
Checking your credit score should be the first thing you do when you're considering the purchase of a home. Why? Because every lender you speak to will use it as a benchmark for determining the likelihood of you being able to pay off the debt. The better your credit score, the more favorable terms and interest rates a lender might offer you. The earlier you know your credit score, the more time you have to address any issues that might be contained in it. Remember, you're entitled to one free credit report from each of the three reporting agencies each year. Take advantage of this service and keep tabs on your credit score.
2. Have Steady Employment
Being able to demonstrate that you are gainfully employed will go a long way toward qualifying for a mortgage loan and being offered attractive interest rates. Aim for at least two years of unbroken employment. Be ready to back up your claims regarding the duration of your employment and the dollar amounts you bring home.
3. Offer a Sizable Down Payment
Come to the negotiating table with a lender and with a solid down payment, you'll be able to enjoy lower monthly payments. There's no fast rule regarding the amount of a down payment. That being said, most lenders like you to have at least 20 percent of the home's purchase price as the down payment. There are some lenders, however, who accept less than 20 percent. If your lender accepts down payments that are less than the standard 20 percent, expect to have to purchase private mortgage insurance. This can be anywhere from .05 percent to 1 percent.
4. Know Your Debt To Income Ratio
The debt to income ratio demonstrates your ability to pay off the mortgage as agreed upon. Most lenders like to see that your monthly debt payments are equal to or less than 43 percent of your gross monthly income.
In a seller's market, there might be several people vying for the same home. Addressing the items above can make you look more attractive compared to some of the other potential home buyers.
Buying a house is a life-changing decision. As such, you should perform extensive home evaluations before you make your final purchase decision.
There are many questions to consider as you review houses, and these questions include:
1. Does a home match my expectations?
Entering the housing market with homebuying criteria usually is a good idea. If you know what you want to find in your dream house, you can tailor your home search accordingly. As a result, you can speed up the homebuying journey.
When it comes to establishing homebuying criteria, it helps to consider your short- and long-term goals. For example, if you want a house that is close to your current office in the city, you can search for residences in towns and cities near your workplace. Or, if you are willing to upgrade a house on your own, you may want to focus on "fixer-upper" properties.
2. Can I afford a house?
Home prices vary based on many factors. Fortunately, if you create a homebuying budget, you can narrow your house search and review properties that fall within your price range.
Oftentimes, it helps to get pre-approved for a mortgage. Banks and credit unions are happy to provide you with a wide assortment of mortgage options. Once you assess the different types of mortgages, you can choose one that will ensure you can acquire your dream home in no time at all.
3. Will a home require in-depth repairs in the near future?
How a home looks today may not match how this residence looks in the years to come. As you evaluate residences, it may be beneficial to consider potential repairs.
For instance, if a house likely will require a new roof in the next few years, you may need to budget for this expense. Conversely, if a home is brand new or recently has been upgraded, you may be able to avoid costly, time-consuming repairs in the foreseeable future.
If you want to streamline your home search, you can hire a real estate agent too. In fact, if you employ a real estate agent, you can receive comprehensive support throughout the homebuying journey.
A real estate agent has a simple goal: to help you find a great house at a budget-friendly price. To accomplish this goal, a real estate agent will learn about you and your homebuying criteria and craft a personalized homebuying strategy. Plus, a real estate agent will set up home showings, offer expert homebuying recommendations and help you submit an offer to purchase your dream residence. And if you have homebuying concerns or questions, a real estate agent is available to respond to them at your convenience.
Lastly, be careful as you evaluate available homes in your preferred cities and towns. Keep in mind that no house is perfect, and any residence you buy may increase or decrease in value over time. And if you find a home that you want to buy, prepare a competitive offer, and you can boost the likelihood of receiving an instant "Yes" from a property seller.
Purchasing a home should be fun, memorable process. However, many homebuyers struggle with fears as they embark on the process of acquiring their dream homes.
Some of the most common homebuying fears include:
1. I will pay too much for a house.
Overspending on a house is a common fear among homebuyers nationwide.
If you pay too much for a house, you may struggle to afford the monthly payments for the duration of your mortgage. Perhaps even worse, your house may lose value over time. And if you eventually decide to sell your home, you may be forced to accept less than what you initially paid for it.
Ultimately, an informed homebuyer will understand the differences between a buyer's market and a seller's one. He or she will be able to determine whether a home is affordably priced and proceed accordingly.
An informed homebuyer also will know the importance of getting pre-approved for a mortgage. With a mortgage in hand, this homebuyer will understand exactly how much that he or she can spend on a house.
2. I'll wait too long to submit an offer on a residence.
If a homebuyer is uncertain about buying a particular house and waits too long to submit an offer, he or she risks missing out on this residence altogether.
Fortunately, there is a simple way to avoid this problem.
A homebuyer who knows what he or she wants to find in a dream home can narrow a home search. Then, if the homebuyer discovers a home that matches or exceeds his or her expectations, this individual can submit an offer right away.
Don't forget to submit a competitive offer, i.e. one that accounts for the needs of both a homebuyer and home seller, as well. A competitive offer will stand out from other proposals and increase a property buyer's chances of securing his or her dream residence.
3. I'll buy a home that will fail to maintain its long-term value.
What you pay for a home today is unlikely to remain the same over the course of several weeks, months or years. But a homebuyer who employs an expert home inspector can learn about a house's strengths and weaknesses and ensure a property is a viable long-term investment.
A home inspector will conduct an assessment of a house after a property seller accepts a buyer's proposal. At this point, an inspector will examine a house's interior and exterior and identify any potential issues. Lastly, a home inspector will issue a report with his or her findings, and a homebuyer will have a final opportunity to modify or rescind an offer on a house.
For homebuyers, it is important to work with a trusted home inspector – you'll be glad you did. This home inspector will go above and beyond the call of duty to evaluate a house before you finalize a home purchase.
Working with an experienced real estate agent may benefit a homebuyer too. With a top-notch real estate agent at your side, you can get the support you need to acquire a first-rate home that will maintain its value both now and in the future.
Believe it or not, you don't need to be a homebuying expert to score a great deal on your dream residence. In fact, there are many things you can do to find and acquire a house that won't force you to break your budget, and these include:
1. Shop Around
When it comes to conducting a home search, it generally is a good idea to be thorough. If you search for residences in a variety of cities and towns, you can boost the likelihood of finding a home that you can afford.
Also, it is important to remember that scoring a great deal on a residence usually requires hard work and patience. If you perform lots of housing market research, you can gain deep insights into the real estate sector. You then may be able to use housing market insights to find ways to speed up the process of locating and purchasing your ideal home.
2. Get Pre-Approved for a Mortgage
If you have a mortgage in hand when you start your home search, you will be better equipped than other buyers to pounce at the opportunity to acquire a budget-friendly home.
Typically, it won't take long to get pre-approved for a mortgage. If you meet with myriad banks and credit unions, you can explore all of your home financing options. Then, you can select a mortgage and perform a home search with a budget at your disposal.
If you have questions about a mortgage, there is no need to worry, either. Banks and credit unions employ courteous, knowledgeable mortgage specialists who are happy to respond to your home financing queries. Therefore, these specialists can help you make an informed mortgage selection.
3. Collaborate with a Real Estate Agent
A real estate agent is a homebuying professional who will help you find a terrific house at an affordable price – without exception. He or she knows what it takes to perform an in-depth home search, and as such, will take the guesswork out of acquiring your dream residence.
In addition, a real estate agent offers comprehensive homebuying insights you may struggle to obtain elsewhere. If you are unsure about where to search for a home, for example, a real estate agent can help you hone your homebuying criteria. Or, if you are uncertain about how much to offer to acquire your dream residence, a real estate agent will help you submit a competitive homebuying proposal.
A real estate agent is available to assist you in any way possible as you navigate the homebuying journey, too. That way, you can get the help you need to seamlessly go from homebuyer to homeowner.
For those who want to purchase a first-rate house at an economical price, it helps to prepare for the homebuying journey. By using the aforementioned tips, you can move quickly to find a home that falls in line with your finances. As a result, you could accelerate your home search and acquire your ideal residence in no time at all.
Purchasing a home in a seller's market may prove to be difficult. Fortunately, we're here to offer expert guidance to ensure you can find the best house at the lowest price, regardless of the present real estate sector's conditions.
Now, let's take a look at three tips to help you get ready to pursue a home in a seller's market.
1. Assess the Housing Market Closely
A seller's market likely features a shortage of high-quality houses. As such, you'll want to analyze the local real estate sector closely so you can identify your dream home faster than ever before.
Take a look at the prices of recently sold houses in your city or town. This information can help you understand the average price range for homes of all sizes in your area. You also should find out how long these homes were available before they sold to understand the current pace of the real estate market.
Furthermore, you should make a checklist of home must-haves and wants. Once you craft this checklist, you can assess the houses available in your city or town and map out your homebuying journey accordingly.
2. Get Pre-Approved for a Mortgage
In all likelihood, you'll need to act fast to acquire your ideal residence in a seller's market. If you have a mortgage in hand when you submit a home offer, you may boost your chances of receiving a "Yes" from a seller.
A home offer that is contingent on a buyer's approval for a mortgage often is far from ideal. If a seller receives this type of offer, he or she may be reluctant to accept it, as there are no guarantees a buyer will be able to obtain the necessary financing to acquire a home.
Comparatively, a buyer who gets pre-approved for a mortgage can enter a seller's market with a budget in hand. And if he or she finds a great house, this buyer can submit an offer without having to worry about getting financing at a later time.
To get pre-approved for a mortgage, you should meet with a variety of lenders. These financial institutions can teach you about a wide range of mortgage options and help you find the right mortgage based on your finances.
3. Collaborate with a Real Estate Agent
A seller's market can be tough to navigate, regardless of whether you're a first-time or experienced homebuyer. Thankfully, real estate agents are available who can guide you along the homebuying journey.
Typically, a real estate agent will learn about your homebuying goals. He or she then will keep you up to date about houses that meet your criteria, set up home showings and help you submit offers on residences. And if you ever have homebuying concerns or questions, a real estate agent is ready to respond to them at any time.
Prepare to buy a house in a seller's market – use the aforementioned tips, and you can move one step closer to acquiring your dream residence.