Our Real Estate Blog
An informed homebuyer may be better equipped than others to enjoy a successful property buying experience. In fact, an informed homebuyer likely will understand the ins and outs of the local housing market – something that could make it simple for this individual to discover a great residence at a budget-friendly price.
Ultimately, it helps to review the local real estate market closely before you embark on the homebuying journey. Lucky for you, there are many things you can do to analyze the local real estate market and gain the homebuying insights you need to succeed.
Let's take a look at three tips to help you study the local housing sector so you can navigate the homebuying journey with poise and confidence.
1. Assess the Prices of Recently Sold Houses
Oftentimes, it is a good idea to review the prices of recently sold houses in cities or towns where you plan to search for your dream residence. If you understand how much home sellers are receiving for their residences, you can narrow your house search to properties that fall in line with your budget.
It is important to remember that city houses may be more expensive than comparable residences in small towns, too. Thus, you should budget accordingly based on where you choose to search for a home.
2. Find Out If Homes Are Selling Quickly
Take a look at how quickly homes are selling in cities and towns where you want to live. With this housing market data in hand, you can determine whether a buyer's or seller's market is in place.
In a buyer's market, there may be an abundance of available houses. Or, in a seller's market, homes may sell within days of being listed.
If you are operating in a buyer's market, you may be able to take your time to find your ideal house. Comparatively, in a seller's market, you should be prepared to act quickly to acquire your dream residence.
3. Consult with a Real Estate Agent
A real estate agent can teach you everything you need to know about the housing sector. That way, a real estate agent can help you become an informed homebuyer in no time at all.
Typically, a real estate agent will learn about you and your homebuying goals. He or she next will provide insights into the housing market in your preferred cities and towns and help you hone your house search. Then, a real estate agent will help you search for your dream residence. And once you find a house you want to purchase, a real estate agent will help you submit a competitive offer to purchase this home.
As you prepare for the homebuying journey, it may be beneficial to learn about the local real estate sector. By doing so, you can gain comprehensive housing market insights that you can use to streamline your home search. As a result, you could speed up the process of finding and purchasing your ideal house.
Buying your first home is undoubtedly a long and complex process for someone who has little to no experience in the subject. Your average first-time homeowner learns as they go, with the help of their real estate agent and mortgage lender.
But, even so, first-time buyers often make many mistakes along the way that they could have avoided with prior knowledge and preparation.
In today’s article, we’re going to cover 5 of the most common mistakes that first-time homebuyers make when purchasing a home. From the first house you look at up until closing on your first home, we’ll cover common mistakes from each step of the way to give you the knowledge you need to make the best home buying decisions.
1. Shopping for homes preemptively
Once you decide that you’re interested in potentially buying a home in the near future, it’s tempting to hop online and start looking at listings. But, searching for your dream home at this stage is a poor use of your time.
It’s best to use this time to start thinking about the bigger picture. Have you secured financial aspects of owning a home, such as a down payment, a solid credit score, and two years of steady employment history?
You’ll also need to have a clear picture of what you want your life to look like for the next 5-7 years. Will you still want to live in the same area, or will your job lead you elsewhere?
These are all questions to ask yourself before you start house hunting that will inform your process along the way and make your hunt a lot easier.
2. Not knowing your budget
It’s a common mistake for first-time buyers to go into the house hunting process without a clearly mapped budget. You want to make sure that after all of your expenses (mortgage payment, utilities, bills, debt, etc.) that you still have leftover income for savings, retirement, and an emergency fund.
Make a detailed spreadsheet of your expenses and determine how much you can afford each month before you start shopping for mortgages.
3. Borrowing the maximum amount
While it may be tempting to buy the most expensive house you can get approved for, there are a number of reasons this might be a bad idea for you, financially. Stretching your budget each month is putting yourself at risk for not being able to contribute to savings, retirement, and emergency funds.
Furthermore, you may find that the extra square-footage you purchased wasn’t worth having to cut corners in other areas of your life, like hobbies, entertainment, and dining out.
4. Forgetting important expenses
If you’re currently renting an apartment, you might be unaware of some of the lesser-known costs of homeownership. Your chosen lender will provide you with an estimate of the closing costs, which you’ll have to budget for.
However, there are also maintenance, repairs, utilities, and other bills that you’ll have to figure into your monthly budget.
5. Waiving contingencies or giving the benefit of the doubt
While it may seem like an act of goodwill to give the seller the benefit of the doubt when it comes to things like home inspections, it’s usually a bad idea to waive contingencies.
The process of purchasing a home, along with a purchase contract, have been designed to protect both your interests and the seller’s interests. It isn’t selfish to want to know exactly what you’re getting into when making a purchase as significant as a home.
Buying a home may seem like a smart financial move. However, it may not always be the right time or the right move for you. While buying a home is a great investment, you may not be ready to buy a home of your own. The following questions should help you to determine whether or not you are fully ready to buy a house in the near future.
How Much Money Do You Make? How Much Have You Saved?
buying a home is a significant expense. First, you’ll need quite a large sum of money for a downpayment and closing costs on the home. Second, to get approved for a mortgage, the lender will look at every part of your finances from your income to your assets. Once the home is purchased, you’ll also need quite a bit of capital for expenses including insurance, taxes, HOA fees, emergency funds, utilities, and furniture. You don’t want to buy a home only to be overwhelmed with costs. You want enough of a financial cushion to enable you to furnish your home, decorate your home, and not have a completely empty bank account. That’s why you should make sure that you do make enough money to buy a home.
How Much Debt Do You Have?
If you have established that your income is enough to buy a home, the next thing that you need to establish is that your debt isn’t too high. Before you enter into the adventure of homeownership, you’ll need to make sure that your bills are under control. These expenses include things like car loans, student loans, and credit card bills. Your lender will put your debt into consideration as a part of your entire financial picture. Your debt (including your proposed mortgage payment) should be less than around 36% of your gross income. Before you take the leap into buying a home, you’ll need to make sure that your debt is under control. If you need to take a step back and pay your bills down before you start house hunting, you should as it will make buying a home easier for you.
Are You Seasoned At Your Job?
In order to secure a mortgage for a home, you’ll need to show that you have been at the same job for a certain period of time. Your average income will probably be calculated based on how long you have been at the company and your job history. You should be able to explain any income gaps, changes in positions or companies. Otherwise, you’ll appear to be an unstable person to lend to. Lenders want to know that you’ll have a steady, stable income.
How Is Your Credit?
In order to secure a mortgage, you’ll need to have a good credit score. Check on your credit report when you begin thinking about buying a home. If your credit is on the low side, you’ll want to work on bringing that score up.
The US government has been helping Americans achieve their goal of homeownership for decades. Through programs offered by the Federal Housing Authority, the USDA, and the Department of Veterans Affairs, millions of Americans have been able to afford a home who would have otherwise struggled.
The focus of today’s post is one such service: loans offered through the USDA Rural Development program.
If you’re hoping to buy a home in the near future but are worried about being able to save up enough for a down payment or build your credit score in time, USDA loans could be a viable option.
Let’s take a look at some of the common questions people have about USDA loans:
Do I have to live in the middle of nowhere to get a USDA loan?
The short answer is “no.” rural development loan eligibility for your area is laid out on a map provided by the USDA. Most of the suburbs outside of major cities, as well as nearly all rural areas, are covered by the rural development program.
Can I qualify for a USDA loan if I’ve previously owned a home?
Yes. You may be eligible for a loan as long as you’re not the current owner of a home that was purchased through the rural development program. So, for example, if you own a home financed through the USDA and wanted to buy a second home and rent out the first one, you wouldn’t be able to finance your second home through the USDA.
How does the USDA loan guarantee work?
When you buy a home, a lender asks you to make a down payment. If you don’t have a down payment, the government (USDA, VA, or FHA) insures the down payment on your home rather than you paying it up front.
Will I have to pay mortgage insurance?
Unlike other subsidized loans, rural development loans require a “guarantee fee” rather than PMI (private mortgage insurance). The guarantee fee is 1% the total mortgage amount and this can typically be financed into the loan (so you don’t have to pay up front). In addition to the guarantee fee, USDA loans also charge an annual premium for the lifetime of a loan.
What are the qualifications for a USDA loan?
To find full eligibility information, complete the survey on the USDA’s eligibility website to find out if you qualify. However, the general qualifications are:
Buying a home in a qualifying area
24 months of income history
A credit score of 640 or higher for streamlined processing
Income high enough so that your monthly payments do not exceed 29% of your monthly earnings
What is the direct loan program?
The USDA really offers multiple urban development loans. The guarantee program, for which most single families utilize, and the direct loan program. Direct loans are designed for families who have the greatest need. You can also find out if you’re eligible for a direct loan by filling out the questionnaire on their website.
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.