If you’re thinking about making a down payment on a house that’s been flipped, here are a few precautions you should take. You don’t want to find out months or years after moving into your dream house that the wiring isn’t up to code or that the basement has a serious mold problem.
• Confirm that the developer used a licensed contractor. Sometimes amateur real estate investors will try to fix up run-down houses themselves, often resulting in shoddy workmanship.
• Ask to see all building permits relating to the property and confirm that any upgrades to the house passed inspection. It’s important to confirm that renovations were done according to the building codes specified by your municipality.
• Hire professionals to inspect the house for termite damage as well as mold and water damage. It can be difficult to recognize these kinds of problems underneath the shiny new features installed to sell the house.
Newly renovated houses may be equipped with brand-new floors, fresh coats of paint and the latest appliances, but make sure to investigate potential risks. In some cases, the house’s like-new appearance may mask serious structural problems that the developer failed to address in the interest of turning a quick profit.
Bidding wars: smart tips to stand out without breaking the bank
Buying a home during a bidding war can be complicated. Depending on the situation, you may have to alter your purchase offer several times before it’s accepted. Here are a few tips to help you stand out and avoid overpaying.
Set a maximum price
During a bidding war, the property price can quickly rise. Therefore, you must set the maximum amount you’re prepared to pay for the home. This includes knowing your borrowing capacity.
Determine a move-in date
If you have the flexibility, negotiating the move-in date can help seal the deal. For example, you can delay the move-in date to give the seller more time to arrange their affairs.
Meet the owner
Touring the property while the seller is on-site allows you to ask questions and negotiate. It also helps establish a bond of trust and demonstrates your seriousness in potentially swaying the owner’s decision.
You can also take the opportunity to find out about the owner’s reasons for selling. This will help you determine whether they’re in a hurry to sell or want to take advantage of a hot market.
Do you keep getting caught up in bidding wars and finding it difficult to buy a home? Consider hiring a real estate broker to help.
Ask the Expert: We’re thinking of buying a home, but what do the fed rate increases mean for mortgages?
Mortgage rates have been up and down following the rate increases by the Federal Reserve, beginning with the one in March this year.
Federal Reserve rate increases are aimed at controlling inflation, and while they have affected mortgage rates, the Fed’s actions and mortgage rates haven’t shadowed each other. For example, mortgage rates had a soft response to the Fed’s rate increase in June.
Mortgage rates are still very affordable, and increases have been modest. The 47-year historical average for mortgage rates is 8.1 percent. Today’s rates are well below this.
The key idea to remember is that a fixed-rate mortgage can be a hedge against inflation.
That’s important in today’s economy when inflation is cutting into budgets. A mortgage at today’s rates remains the same for the loan term. That locks in predictable housing costs not affected by inflation. While renters may see rates rise in coming years, homeowners won’t.
Even if rates return to the extra-low rates of 2020 and 2021, homeowners are still not locked in and can refinance.
Meanwhile, the housing market generally is softening somewhat, with well-priced homes selling briskly and over-priced homes reducing their prices somewhat.
Mortgage rates today are still very reasonable. At the same time, there is still high demand in the housing market. Although inventories are below normal, if you find a home you like, it’s still a fantastic time to buy.
Virginia REALTORS® releases 2023 Economic & Housing Market Forecast
Virginia’s largest trade association has released its 2023 Economic & Housing Market Forecast, predicting what is ahead for the commonwealth.
“Sales activity in Virginia’s housing market cooled significantly in 2022, and we’re on track to have our sharpest annual drop in closed sales in more than a decade,” says Virginia REALTORS® Chief Economist Ryan Price. “We expect the slowdown will continue in 2023, as higher interest rates will continue to stifle market activity.”
Virginia REALTORS® 2022 President Denise Ramey says, “Even with the slower sales activity this year, prices continue to trend upward because of the limited supply. However, it’s likely that we will see price growth slow down in the coming year.”
- Total Jobs in Virginia: In 2023, we forecast that 0.3% more jobs will be added than in 2022 (approximately 13,000 jobs). As economic conditions continue to weaken nationally and here in Virginia, job growth will level out in 2023.
- Unemployment: Virginia’s unemployment rate is expected to rise in 2023, climbing to 3.5% by the end of the year, 0.7% higher than 2022.
- Home Sales: Our projections are for a decrease in sales in 2023, 2.5% lower than Virginia home sales in 2022. The market slowdown is being driven by rising mortgage rates, climbing prices, and tight inventory conditions, all of which combined are leaving more buyers on the sidelines.
- Home Prices: We predict the 2023 median home price in Virginia to increase by 2.9% over 2022. While home prices will still see an upward trajectory in many markets around the state, the pace of growth will continue to ease in the coming year.
- New Housing Permits: Our predictions are for a 3.6% reduction in new housing starts in Virginia in 2023. Demand for new homes has softened, and housing starts have dipped, a trend that will continue next year.
- Mortgage Rates: It is expected that the 30-year fixed-rate mortgage rate will gradually recede to approximately 5.2% by December of 2023, down from where they are now.
“As Virginia’s economy continues to shift, the professional expertise of a REALTOR® is critical for buyers and sellers trying to navigate this challenging housing market,” says Virginia REALTORS® 2022 President Denise Ramey.
Click here for more details on the Virginia REALTORS® 2023 Economic & Housing Market Forecast.
How to sell your property with peace of mind
Over the past two years, demand for real estate has been rising. Are you considering moving in with your partner or retiring to a seniors’ residence? Now’s the perfect time to put your house up for sale. Here are a few things to consider to ensure the sale goes as smoothly as possible.
Surround yourself with the right people
First and foremost, do business with an experienced real estate broker who knows the market inside and out. Real estate professionals take a lot off your plate and handle a variety of tasks, including:
• Setting a fair and impartial selling price
• Verifying information about the property
• Taking photos and videos
• Staging the home
• Promoting your ad on different websites and online platforms
• Managing showings
• Preparing contracts and various documents
• Evaluating purchase offers
Real estate brokers are subject to an ethical code that governs their handling of your property. Therefore, you can rest assured they’re trustworthy and have your best interests in mind. Moreover, a real estate broker will help you avoid making costly rookie mistakes.
Furthermore, find your future home before putting your residence up for sale. It’s a good idea to work with a housing consultant or the same real estate broker handling the sale of your home to make your life easier.
Similarly, relying on the expertise of a mortgage broker will save you a lot of work, especially when it comes to transferring your mortgage.
In short, surrounding yourself with the right people is the key to a stress-free experience. Contact a broker near you to get started.
Real estate brokers have access to a vast network of other brokers and an impressive pool of potential buyers. Therefore, they’re best positioned to help you sell your home fast.
Mortgage vocabulary explained
Getting a mortgage is an essential part of buying a property. Here’s a short glossary to familiarize you with the most important terms.
• Mortgage loan. A type of loan typically obtained from a financial institution to purchase a home or other real estate property. The property itself serves as collateral to secure the loan. Moreover, the lender reserves the right to seize the property if the payments aren’t made.
• Down payment. An upfront payment you make to purchase a property. The amount paid is usually a percentage of the purchase price and can range from as little as three percent to as much as 20 percent.
• Mortgage loan insurance. You must buy mortgage loan insurance if your down payment is less than 20 percent of the property’s price. The insurance can be paid upfront or added to your monthly payments.
• Interest rate. A fixed or variable percentage is added to the amount of your mortgage loan. In short, it’s the price you pay to the financial institution for taking on your loan.
• Amortization period. This refers to the length of time it takes to pay off your mortgage.
• Mortgage term. The length of your current mortgage contract is referred to as the term. After the mortgage term expires, the remaining balance must be renewed, refinanced, or paid in full.
• Pre-approval. When you get pre-approved for a mortgage, the lender estimates how much you might be able to borrow based on your income, credit history, assets, debt, and down payment.
Contact a mortgage broker in your region for more information about mortgages or support for buying a home.
Question: In 2020 I lost my job and went into bankruptcy. But now I am back on track and I would like to buy a house. Is it even possible to get a mortgage?
Yes, it is possible to get a mortgage after bankruptcy.
For a conventional mortgage, a lot depends on the type of bankruptcy. For Chapter 7 bankruptcy (you’ve sold your assets to discharge your debts as much as possible), typically, you have to wait four years, but it is possible that your situation could qualify as extenuating circumstances.
For Chapter 13 bankruptcy (you’ve completed your debt repayment plan), you generally need to wait two years from the discharge date. This period is shorter for FHA, VA, and USDA loans.
You’ll also need a 620 minimum credit score for a conventional loan, so keep your balances low on credit accounts and always pay on time. For FHA loans, a credit score of 580 is permissible, and your score could be as low as 500 if you have a 10 percent down payment.
You’ll need a cash down payment. With FHA loans, this could be as little as 3.5 percent.
Another type of loan can benefit people coming out of bankruptcy if they have cash on hand. The non-qualifying mortgage loan (non-QM) is suitable for people in special circumstances, typically self-employed people who don’t have pay stubs but do have a lot of cash and a high credit score. It can also benefit those with cash and a high credit score but a recent bankruptcy.
In 2022, here were the characteristics of the typical non-QM loan:
* Average credit score was 771
* Average down payment 24 percent
* Average Debt-to-Income (DTI) ratio was 37 percent
You generally need a DTI of 43 percent or less to finance a house. A good DTI is about 35 percent or less. You calculate DTI very simply: Monthly debt payments divided by gross income. Add up all the payments you make in a month, including student loans and child support, but don’t include utilities, groceries, and gas.