In many markets across the country, the number of buyers searching for their dream homes greatly out numbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. The first step in the home buying process is to get pre-qualified or pre-approved for a mortgage… before starting your home search.
Even if you are in a market that is not as competitive, understanding your budget will give you the confidence of knowing if your dream home is within your reach.
Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:
One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”
Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:
Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.
Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so.
Tag: home buying
Whether you are a buyer searching for your first home, or a homeowner looking to move up to your next home, you should pay attention to where mortgage interest rates are heading.
Over the course of 2018, according to Freddie Mac’s Primary Mortgage Market Survey, rates have increased from 3.95% in the first week of January to 4.40% in the first week of April.
At first glance, the difference between these numbers in such a short amount of time could be concerning, but if we look at the graph below, we’ll see that rates have already started to level off and return to the mark set in February.
This is great news for anyone looking to buy a home this spring! The spring is always one of the busiest seasons for home buying, and with rates increasing even more, buyers have come off the fence to lock in great rates! This is still great advice as the experts believe that rates will continue to rise throughout the year.
Every month, Freddie Mac, Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors release their projections for where they believe mortgage rates will be in the coming months. If we take the average of what each of the four organizations is predicting for the second quarter, rates are expected to rise to about 4.48% by June.
That average climbs to 4.73% by the end of this year.
So, what does this mean?
Waiting until the end of the year to buy, with rates still projected to increase, will end up costing you more money on your monthly mortgage payment. For every $250,000 you need to borrow to purchase your dream home, you will spend $49.21 more per month, $590.52 per year, and over $17,700 by the end of your 30-year mortgage.
And that’s just the impact of your interest rate going up!
If you are ready and willing to purchase a home, find out if you’re able to by sitting with a local real estate professional who can evaluate your needs and help you with next steps!
According to the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, the U.S. housing market has continued to move deeper into buy territory, supporting the belief that housing markets across the country remain a sound investment.
The BH&J Index is a quarterly report that attempts to answer the question:
In today’s housing market, is it better to rent or buy a home?
The index examines the entire US housing market and then isolates 23 major cities for comparison. The researchers “measure the relationship between purchasing property and building wealth through a buildup in equity versus renting a comparable property and investing in a portfolio of stocks and bonds.”
While 13 of the 23 metropolitan markets examined moved further into buy territory, markets like Dallas, Denver, and Houston are currently deep into rent territory. Due to a lack of inventory, the home prices in these areas have increased by 6.7%, 6.3%, and 5.3%respectively from a year ago.
According to Eli Beracha, Ph.D., Co-Creator of the index, home prices will begin to return to more normal levels.
The majority of the country is strongly in buy territory. Buying a home makes sense socially and financially, as rents are predicted to increase substantially in the next year. Protect yourself from rising rents by locking in your housing cost with a mortgage payment now.
To Find Out More About the Study: The BH&J Index and other FAU real estate activities are sponsored by Investments Limited of Boca Raton. The BH&J Index is published quarterly and is available online at http://business.fau.edu/
Some believe that the combined effects of the new tax code and rising mortgage rates will have an adverse impact on residential real estate prices in 2018. However, the clear majority of recently surveyed housing experts believe that home values will continue to rise this year.
What is the Home Price Expectation Survey?
Each quarter, Pulsenomics surveys a nationwide panel of economists, real estate experts and investment & market strategists. Those surveyed include experts such as:
Where do these experts see home values headed in 2018?
Here is a breakdown of where they see home values twelve months from now:
Almost ninety-nine percent of the top experts studying residential real estate believe that prices will appreciate this year, and over 93% believe home values will appreciate by at least 3%.
There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with someone rent-free, you are paying a mortgage – either yours or your landlord’s.
As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:
Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage as opposed to paying rent:
As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.
Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.22% last week.
Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.
Contact us to learn more about your local market! (708) 529-5839 cell.
So, you’ve been searching for that perfect house to call a ‘home,’ and you finally found it! The price is right, and in such a competitive market, you want to make sure that you make a good offer so that you can guarantee that your dream of making this house yours comes true!
Freddie Mac covered “4 Tips for Making an Offer” in their Executive Perspective. Here are the 4 tips they covered along with some additional information for your consideration:
1. Understand How Much You Can Afford
“While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”
This ‘tip’ or ‘step’ should really take place before you start your home search process.
Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).
2. Act Fast
“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.”
The inventory of homes listed for sale has remained well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream homes.
Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.
3. Make a Solid Offer
Freddie Mac offers this advice to help make your offer the strongest it can be:
“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.”
Talk with your agent to find out if there are any ways that you can make your offer stand out in this competitive market!
4. Be Prepared to Negotiate
“It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford.
Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”
If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home.” If the inspector uncovers undisclosed problems or issues, you can discuss any repairs that may need to be made with the seller, or cancel the contract.
Whether you’re buying your first home or your fifth, having a local professional on your side who is an expert in their market is your best bet in making sure the process goes smoothly. Happy House Hunting!
Knowing your credit score or getting a recent copy of your credit report is one of the first steps that you can take toward knowing how ready you are to start the home buying process.
Make sure all the information listed on your report is accurate and work to correct any mistakes. The higher your credit score, the more likely you will be to receive a better interest rate for your mortgage, which will translate into more ‘home for your money.’
Many potential buyers believe that they need a 750 FICO® Score or higher to be able to purchase a home. The truth is that according to Ellie Mae’s Origination Report, over 53% of loans were approved with a FICO® score under 750 last month!
Here are some tips for improving your credit score:
- Make payments, including rent, credit cards, and car loans, on time.
- Keep your spending to no more than 30% of your limit on credit cards.
- Pay down high-balance credit cards to lower balances, and consider balance transfers to free up credit.
- Check for errors on your credit report and work toward fixing them.
- Shop for mortgage rates within a 30-day period — too many spread-out inquiries can lower your score.
- Work with a credit counselor or a lender to improve your score.
Once you know your score, your next step will be finding a lender and getting pre-approved for a mortgage. Doing this will ensure that you know your budget before you start looking for your dream home.
- The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.
- Freddie Mac predicts interest rates to rise to 4.4% by next year.
- CoreLogic predicts home prices to appreciate by 5.0% over the next 12 months.
- If you are ready and willing to buy your dream home, find out if you are able to!
On Sept. 7, credit bureau Equifax announced it discovered a data breach, which gave hackers access to personal information on about 143 million U.S. consumers, plus that of some Canadian and U.K. citizens.
The data breach lasted from mid-May through July. Hackers could see names, dates of birth, addresses, Social Security numbers and some driver’s license numbers. Further, about 209,000 U.S. consumers’ credit card numbers and about 182,000 U.S. consumers’ dispute documents –
which contain personal identifying information – were accessed.
In short, hackers may have accessed enough information to open unauthorized accounts or lines of credit.
Consumers can protect themselves by taking matters into their own hands. Here’s what you can do to keep your personal and financial information under wraps:
Step 1: Find out if you were affected
Equifax created a website – www.equifaxsecurity2017.com – so consumers could determine if they were one of the 143 million whose personal information was accessed. The site requires your last name and the final six digits of your Social Security number.
Whenever you’re entering sensitive information – partial Social Security numbers, credit card numbers, or answering any security questions – it’s not wise to be on a public Wi-Fi network. Do this at home or on a secure network you trust; the hotspot at your favorite cafe doesn’t count.
Security blogger Brian Krebs wrote that some consumers found that, after entering the same information at different times, received different results. Krebs notes that it might be prudent to just assume that you are one of the many who were affected.
Step 2: Pull your credit report
There’s an easy way consumers can find out if someone has tried to open an account or line of credit in their name. This is through annualcreditreport.com, a website mandated by Congress so that consumers can access one free credit report every year from each of the major three credit bureaus: Equifax, TransUnion and Experian.
Everyone should make a habit of doing this anyway. Now is the perfect time to start if you aren’t doing this already.
Step 3: Sign up for credit monitoring
Equifax is offering free credit monitoring services to consumers through www.equifaxsecurity2017.com. Krebs explains that these types of services alert you if someone steals your identity, but doesn’t prevent the theft from occurring in the first place.
Still, it can help you take the right steps in the aftermath of identity theft.
Step 4: Initiate a credit freeze
A credit freeze prevents anyone who has your personal information (yourself included) from opening an account or line of credit in your name. This is the most secure way to protect yourself from fraud or identity theft.
According to the Federal Trade Commission, to initiate a credit freeze, you need to contact each of the three credit bureaus individually by phone. Here are their numbers:
You’ll need to provide information like your name, Social Security number, address and birth date.
When you freeze your credit, you’ll receive a unique PIN. This is the key you’ll use to unlock your credit if you decide to open a new account. Keep this in a secure location.
If you have any questions about how this breach may affect the mortgage lending process, reach out to The Federal Savings Bank.
I specialize in helping clients purchase and refinance homes in all 50 states.
I can finance your primary residence, vacation home, and investment property.
Please call or email me today if I can help you or anyone you know!
Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market. Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right. Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions. That hasn’t happened this year. Demand for housing has remained strong as mortgage rates have remained near historic lows. The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2016 all fell in April, May or June. Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.
Bottom Line If you are planning on selling your home in 2017, meet with a local real estate professional to evaluate the opportunities in your market. Contact us today!