Everyone wants to time their home purchase “just right.” Ideally, the picture-perfect “buyer’s market”; plenty of well-‐priced listings, low-interest rates, and a slow-moving real estate market where the buyer has plenty of -me to decide on an oﬀer. The reality is that the current market is a fast-paced environment where the best homes move quickly, and serious homebuyers need to be prepared to act when they ﬁnd the right home.
Fortunately, starting your home search the right way is easy by following these simple tips:
Find a Lender and Get Pre-‐Approved – Know what you can aﬀord before you start your search. By getting a pre-‐approval letter, you demonstrate to sellers that you are serious when you write your oﬀer, and it proves you can aﬀord the home.
Research Neighborhoods – Each community will have its own personality and advantages; before you spend time looking at homes, choose the right area for your lifestyle and family needs.
Pick the Right Home Style – Learn about the various home styles available in your community. Do you want a single story? Large yard? Do you like older homes or historic-‐ style properties?
Make a List of Must-Have and Like-‐to-‐Have – There is a diﬀerence! Make a list and be ready to compromise when appropriate by ranking the items.
Take Notes – Often, a home buyer can see 6-7 homes in a single day; take notes and, if possible, take pictures so you can remember the things you like and don’t like about the homes you see once you get home.
In a fast-paced real estate market, spending some time preparing for your home search will
help you move quickly when you ﬁnd the right home for you and your family.
Most areas of the country are experiencing a brisk real estate market. Well priced homes are moving quickly and often sellers have multiple offers from which to choose. How can you make your oﬀer stand out and put you in a better position to get the home? Fortunately there are a few things you can do to make your offer more attractive to sellers.
Oﬀer a Fair Price – When the market is moving quickly, this is not the time to throw out a low ball oﬀer and hope they negotiate. Write an honest price based on market values.
Have a Pre-‐Approval – It may not be enough to simply oﬀer a pre-qualification letter. When issuing a pre-‐approval the lender verifies your qualifications and an underwriter gives preliminary approval based on the actual home and a good appraisal.
Flexible Timing – Not everything comes down to price. A seller who is relocation might be more interested in an oﬀer which gives them extra time to move.
Attractive Terms – Most offers include contingencies for items like appraisal, inspection, title, loan approval among others. Working with your lender and real estate agent, consider removing any contingencies you don’t need. If you plan to remodel extensively for instance, you might remove the home inspection contingency. This provides more confidence in your oﬀer vs the competition.
The most important thing in a competitive real estate market is being prepared. Working with your lender and agent, you will understand your options and be able to write a solid oﬀer quickly, putting you in the best position to have your offer accepted.
When our parents were buying their first home, there was one way to finance the purchase. You would walk down to the corner bank and asked for a 30 year mortgage. Today the average home owner moves every 5-7 years. Depending on your needs there are a number of mortgage options you might consider, each with its own advantages and disadvantages, spending some time to understand the options is the best way to choose the right loan for your needs.
While loan programs and terms vary, the most common are:
Conventional – A conventional loan is normally still designed to be paid off in 30 years with equal monthly payments during the term of the loan. There are currently conventional loans that require as little as 5% down, although 20-25% is still commonplace.
FHA – An FHA loan is guaranteed by the Federal Housing Administration and is attractive for a number of reasons, especially for the first time home buyer. The down payment can be as little as 3.5% and that can be a gift.
VA – VA (Veteran Affairs) is a loan program offered for Veterans and their spouses. While the terms can vary from 0-5% down payment, this loan may allow the borrower to finance as much as 100% of the home’s value in the loan.
Your lender will also have more specialized options for you, such as adjustable rate loans and 10 or 15 year loans. They can also explain the additional costs that could be associated with each type of loan program.
Part of purchasing a home is to find the right financing. Your lender will talk you through your options. If you have not already spoken to a lender, or if you need a referral, your real estate agent is a great resource for you.
Do you feel that you’re ready to buy your first home? Tired of paying your landlord’s mortgage? Do you want to put down roots and start building equity for yourself? There are many reasons why people decide it could be time to buy a home. The costs associated with buying and owning a home can feel overwhelming but fortunately there are simple steps you can take to see if you can afford to buy a home.
Talk With a Lender
The best step you can take to start your home buying planning is to find a good lender and meet to talk about your financial situation. Your lender will look at your income, savings and credit and then talk about your needs. They will help you explore the loan options available to you and the down payment, saving reserves and closing costs requirements.
Can You Afford the Mortgage?
Typically rent payments are less than a mortgage payment; this can feel unsettling until you understand the qualifying formula. Because mortgage interest is deductible (speak with your tax professional for exact details), most lenders look for the buyers to spend approximately 30% of their GROSS income on the loan payment and no more than 36% on all other debt.
Ex. If your monthly gross income is $5000/month, you can spend $1500/month on your mortgage payment.
If you think you’re ready to buy a home, find a good lender and start talking about your unique situation. Learn the costs and benefits to help you determine if you can afford to buy a new home.