HOMEBUYING TIPS FOR SUMMER 2018

DON’T DISCOUNT OLDER LISTINGS: At the times when homes are flying off the market within days due to strong competition, it is easy to think a listing that’s a week or so old is a red flag. But keep in mind that it is not always the case. It is often because buyer got cold feet and pulled out of a deal on a perfectly good house. But thanks to the assumptions home buyers make about older listings in busy markets, the delay can cause the price to come down.
There are just more of these in market. The number of homes in market is shrinking but still there are 8.3 % more fixer-upper among them than there were six years ago. If you are dead-set against a fixer-upper to be prepared to move quickly then there is only ever going to be a couple of options at a time. And when new listings come up it’s going to be pretty ferocious.
GET TO KNOW THE NEIGHBORHOOD: The plus point of competitive market it gives you temptation to make an offer on any available property that fits your criteria but if it’s in the wrong neighborhood, you may never want to purchase the house. It is better to take some time and do community scouting before making an offer. You can even find out what your future neighbors have to say about the area by communicating with them.
MAKE THE STRONGEST OFFER: To stay in the market make the strongest offer, even your offer is not the highest because now is not the time for low ball-offer. No doubt, coming up with cash offer could be tough for many home buyers but there are some ways to make a strong offer that don’t require gobs of money. Substantial eventualities like a shorter closing or inspection period and writing a great offer letter can help make your offer stand out.

Whatever the case, we are here to give you the low-down on what you should know before buying your first home. If you check off all these boxes then your first home purchase will go easy breezy!

GETTING APPROVED IS MORE THAN JUST YOUR INCOME

Before you even begin thinking of purchasing a home you need to make sure you’re even approved. A family “knew” the amount they wanted to spend on a house and what they could afford. But, they didn’t realize the approval process was more than just what they wanted to spend!

There are multiple different factors that go into a pre-approval process. The main ones are:

Income:

Based on your income, they’ll figure out how much you can afford. The higher the income, the higher the loan. That doesn’t mean that if you have a low income you won’t get approved for a loan.

Job Length:

Typically you need to currently be at the same job for 2 years or more. This isn’t the time to be switching jobs or trying to figure out your career path. They want to see consistency. We are not saying you can’t get a loan, because it can be done. You’ll just have to jump through a lot more hoops if you’ve recently switched jobs in the last 2 years.

Credit Score:

Using your credit score they can figure out how “loan-worthy” you are. Just make your payments, people. If you don’t make your payments they’re not going to loan you the money.

THERE’S MORE EXPENSES THAN JUST A MORTGAGE PAYMENT

You’ve got your pre-approval back, and you’re pleasantly surprised that they approved you for more than you thought. This is where home buyers make the SINGLE biggest mistake. Purchasing a house at the max they were approved for.

If you can take away anything from this post then we want it to be this – DO NOT purchase a home for the max amount you are approved for. There’s a reason that it’s your max amount.

If you’re barely making ends meet just making your mortgage payment, what happens when some unexpected expense comes up such as a job loss or medical bills (and yes, it CAN happen to you). There’s always something that comes up and you definitely don’t want to be scrambling to pay your mortgage.

EXTRA COSTS

Not only do you have to consider PMI, but closing costs. You’re going to spend anywhere from 2%-5% of the home price on closing costs. If you feel completely comfortable and confident that you can pay for the closing costs and put a decent amount down (preferably 20%) then you’re pretty safe. No use paying more than you should just because you didn’t want to take the extra year or two to save.

HAVING AN EMERGENCY FUND WILL MAKE OR BREAK YOU

We know you think that nothing is going to happen to you and life will always be fine and dandy. But we hate to tell you that you’re wrong. We just want you to be prepared and smart. Typically, you need to save 1% of your home costs for on-going maintenance every year.

IT’S NOT WORTH IT IF YOU’RE THERE FOR LESS THAN 5 YEARS

It’s been proven that you need to be in a Home for 5 years to start breaking even.

That first 5 years is basically just paying the interest. At that time you haven’t even made a dent in your principal. You would now have to try to resell at the purchase price you bought for or to get any money back, try to sell for higher. Doesn’t that sound like such a hassle?!

There’s so much upfront cost that it’s not even worth it if you’re not planning on sticking around for that long. In this case, renting may be a better option.

YES, THERE IS SUCH A THING AS A SELLERS AND BUYERS MARKET

The market you’re in can extremely affect your buying power. Builders can sell their homes ridiculously overpriced and have them snatched up in days.

In a buyers market you have a lot more leeway. You have the deciding power of finding a home that you truly love (and not just picking one because you can’t find anything else). You also have the opportunity to even come in UNDER asking price. If you know that you’re in a seller’s market and are afraid of paying way too much for a house, it doesn’t hurt to wait it out.

YOUR GUT KNOWS MORE THAN YOU DO

Gut feelings go a long way. Your gut is a lot smarter than it takes credit for, and you should listen to it. Do you feel ready to purchase your first home? Is it something that is truly in your families best interest or do you just want a home because everyone else is doing it.

You may never feel totally confident about purchasing a home (and that’s completely normal) but just make sure you’re prepared. Buying your first home can really be a great experience and an even better long-term investment.