If you’ve decided it’s time to buy your first home, you’ll probably want to make sure the process goes as smoothly as possible. Here are some tips that can help.
Do plenty of research
First, determine what type of property you want, specifying your criteria for the location, type of dwelling, and year of construction. You should also get a sense of what’s out there by searching real estate websites and walking around the area where you want to buy.
Learn how credit works
It’s important to be aware of the things that can have a positive or negative impact on your credit rating. By being careful about your financial decisions, you can maximize your score and make the most of it when the time comes to secure a mortgage.
Look into homeownership programs
From financial assistance to tax credits and rebates, there are a number of programs designed to make buying your first home easier. Find out which ones are available in your area and whether you’re eligible.
Familiarize yourself with the process
If you understand what’s required to purchase a home, you’ll likely be more at ease and better prepared for each step of the transaction.
Consider all the costs
In addition to the price of the home, there are several other expenses that come with buying a property. These may include mortgage insurance, sales tax, closing costs, and moving fees.
Set aside money for contingencies
Even if you have a home inspected before you buy it (which is strongly encouraged), unpleasant surprises can still occur. Working these expenses into your budget beforehand can save you a lot of worries.
Get pre-approved for a mortgage
This will give you an idea of how much you can afford to borrow for a home and help you narrow your search. Keep in mind that getting pre-approved doesn’t guarantee you the loan, and you’ll need to take further steps to obtain it.
Shop around for a mortgage
Different lenders may offer varying interest rates for the same mortgage. Ask them directly or, to save time and gain access to exclusive products, enlist the help of a mortgage broker.
Finally, keep in mind that any time you’re looking to buy a property, a real estate agent is your best ally.
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.
House selling: should you ever disclose the details of a competing offer?
If you’re selling your home and have several interested buyers, find out if disclosing the amount of a competing offer could help you get the best price.
Who can disclose this information?
Depending on your state, your real estate broker may not be allowed to tell other buyers the amount of a competing offer. However, they can disclose how many other offers are on the table.
If you’re selling your home privately, the decision is yours. You can either tell potential buyers what others have offered or keep this information to yourself.
Why should you share this information?
If you choose to share these figures, you may want to do so after shortlisting the best bids to see if any buyers wish to increase their offer. You could also remain open throughout the entire process and provide this information upfront to anyone interested in putting in an offer.
The first option may allow you to sell your home well above the asking price. The second option may reduce the number of potential buyers but increase the competitiveness of their offers.
Whatever you decide, consulting a professional will help make your sale successful.
Good news for buyers as home prices cool
The red-hot real estate market is slowly cooling as sellers in big markets lower their prices, according to brokerage firms.
Notable in the market are urban areas in California and Utah, where prices were often set unrealistically high, Redfin reports. The highest number of price drops on homes occurred in July in Boise, Idaho, where sellers lowered prices on 70 percent of homes for sale. In Salt Lake City, 56 percent of sellers lowered their prices in July. In fact, more than 15 percent of home sellers dropped their prices in July throughout all metro areas.
This trend may well affect areas throughout the country.
Rising interest rates have cooled expectations across the board. Rates that remained under 4 percent since 2019 are rising to about 5 to 6 percent. As buyers become a little less available, this should mean that the supply of houses on the market will rise.
Sellers should expect to see their homes on the market for 30 days or more, and they should price their homes in line with the market from the start. Some sellers showed unrealistic expectations about what prices their homes would fetch, Redfin says. Part of that problem was the seller grapevine, with people listening to the prices neighbors were getting on their homes and trying to win big themselves.
For now, even with higher interest rates, buyers should begin to have more choices and better prices.
Should you buy an existing home or build new?
Do you want to become a homeowner but can’t decide if buying an existing home or building a new one is the best option? Here are a few things to consider.
The cost of building a home can quickly escalate when choosing the finishings. Keep in mind that you must also pay taxes on the value of the purchase. However, you can be sure you’ll move into a home that suits your tastes.
Additionally, building a new home requires you to be involved in the entire process, mainly because you must make various decisions and supervise the construction. Delays can also sometimes push back your move-in date.
Finally, although you may have more land options in a developing area, remember to ask about future road and service developments to avoid unpleasant surprises in a few years.
When you buy an existing home, you generally get what you see. However, you may have to factor in renovation costs for things like new windows and updated plumbing. You may also have to set aside your style preferences and visualize the property’s potential during viewings.
The amount of time you invest in buying an existing home depends on how many properties you visit and the extent of the renovations you want to make.
In addition, buying an existing property gives you the advantage of starting out in an already well-developed neighborhood. However, this may limit your options.
Once you’ve decided, contact a real estate broker or developer to make your project a reality.