The Top 10 Tips to Help Homebuyers Thrive in Today’s Current Home Market

Tips for Buying a Home Right NowThe economy has been slowly recovering for a while now, and home prices are starting to show it. An improving national economy means more people are getting new jobs, which means that the need for homes is also increasing. Some people want to buy a home because they don’t want to throw money away by renting anymore, some are changing jobs and need to move to a different part of the country, while others have found a better job and feel the need to upgrade their home.

No matter which category you are from, the increasing home prices and the raising interest rates are probably making you want to act quickly, before prices and interest rates go even higher. Prices and interest rates are much lower than they were before the housing market crash, but analysts say that they will keep increasing, so buying a home right now might not be such a bad idea (Read: 4 Things Home Buyers Should Look Out For With Mortgages Rates on the Rise).

However, needing a home and actually being able to buy one, or buy it at a good price, are very different. Getting approved for a mortgage loan is not that easy, especially if you are also recovering financially. Your credit score, income and debt will have a large influence on whether you will be approved for a mortgage or not. Even if you get approved, but you don’t have an ideal credit score or debt-to-income ratio, you will probably have to pay a much bigger price for the home. Also, getting a mortgage involves a large financial investment, which means that you will probably have to use some or all of your savings.

Tips for Buying a Home in Today’s Home Market

Getting a good deal and making sure that you don’t end up with a mortgage that you can’t afford can be done by doing a little research, consulting a mortgage professional, and having common sense. Here are the top 10 tips for those who are planning to buy a home in today’s home market. For even more reasons and tips see this.

  1. Figure out what you can afford. Put together a financial plan, which will help you determine how much you can afford. Home prices are still fairly low, but that doesn’t mean that you can go ahead and buy any home just because it’s cheaper than it was in the past. Having a mortgage that you can barely afford will cause problems in many aspects of your family’s life, and can result in losing the house. If you think you can’t manage setting up a financial plan, you can find a consultant who will work with you to determine how much you can afford to spend on a home (Read: Most Affordable Housing Markets in the US 2013).
  2. Start saving for the down payment. On a traditional mortgage, the required down payment is 10 to 20 percent. Even 10 percent can mean a large amount of money if the property that you plan on buying is expensive. Also, in order to avoid paying for Private Mortgage Insurance, you should aim to make a 20 percent down payment. By putting more money down, you also have the chance of receiving a better interest rate, which will help you save even more. If you can’t afford to make a 20 percent down payment, saving for it before you start looking for a home is a great idea (Read: Making a Larger Down Payment: Is it Worth it?).
  3. Try to improve your credit score. You need a good credit score to qualify for a mortgage, so anything less than what is considered a good credit score will result in rejection. But even if your credit score is in a “good” range, having a higher credit score will allow you to qualify for more advantageous rates, so you should do everything you can to increase it. Start by taking out a copy of your credit report, which you can get for free once per year, and look for any mistakes. These mistakes should be reported to the credit agency and corrected.
  4. Avoid making new debt. New debt can decrease your credit score, making it harder for you to qualify for a good interest rate. Also, lenders don’t like giving out large loans to someone who seems that is living on credit. You might think that opening a new credit card account will help your credit score, but it is actually the opposite. However, you should keep and use your old credit card accounts.
  5. Pay off some of your debt. Lenders will take your debt-to-income ratio into consideration when deciding on whether to give you the mortgage loan or not. Paying off some of your debt will help your ration, increasing your chances of being approved. Of course, to pay off some of the debt, you will probably have to use some of your savings, making it difficult for you to raise the 20 percent needed as a down payment.
  6. Get professional help. Hiring someone to work out a budget for you will help you figure out how much you can afford and save you a world of trouble in the future. After figuring out a price range for your new home, you should consult a real estate agent to help you find a home. Not only will a real estate do things quicker, but he or she also has access to more home listings, which will increase your options.
  7. Get pre-qualified and pre-approved for a mortgage loan. Getting pre-qualified for a mortgage loan is relatively easy. All you need to do is provide the lender with some info about your financial situation. Unfortunately, being pre-qualified for a mortgage means very little when the time to buy a home comes. Being pre-approved, on the other hand, is very important because things will move much quicker once you find a home that you want to purchase.
  8. Hire a home inspector. You might think that you have found your dream home, but unless you hire a professional to carefully inspect the property, you might have to pay for a new roof or plumbing system in only a few years. This is especially important if you are buying a distressed property. Hiring a home inspector will add to the cost of buying a home, but it’s probably the best few hundred dollars that you will ever spend. To read more about the reliability of a home inspector click here.
  9. Hire a real estate attorney. Ensuring that you understand all the terms and conditions in the contract, and what is included in the purchase price means a lot when making a home purchase. This is one of the largest purchases you will ever make, so even if your lender has an attorney present at closing, hiring your own will make sure that your interests are represented during the whole process.
  10. Start planning early and don’t be in a hurry to make a purchase. Because buying a home involves such a large initial investment, you shouldn’t rush into buying a home, even if prices are rising. Only make a home purchase after you have set a budget, the home has been thoroughly inspected, and you are sure that you can qualify for a good interest rate. Making a quick home purchase might work for seasoned investors, but a simple home buyer should take more time before making the decision to buy a home (Read: Renting vs. Owning: Which is Best for You?).

Buying a home in today’s home market requires you to act more quickly, but older home buying rules still apply, especially because you can still find many distressed properties in certain areas of the country at better prices. Making a home purchase can be a great experience if you take the time to set your budget up, do the research and make sure that you qualify.

Buying Your First Home: The Process from Start to Finish

Buying Your First Home-The Process from Start to Finish-150x150There may come a time in your life when you decide it’s the right time to stop renting or living with your parents, and look for a place of your own. Whether you are looking for a house or an apartment, buying a home for the first time can be an intimidating process, and you are probably afraid not to make a mistake that will cost you more money or jeopardize your chances of becoming a home owner.

Finding the right home, obtaining a good mortgage loan, and moving into a new neighborhood are all steps necessary to becoming a home owner, but there’s nothing to be afraid about. By simply doing a little research, and getting to know all the steps, you will realize that this whole process is actually pretty straightforward. Here’s what the home buying process involves, from start to finish.

Find Out How Much You Can Afford to Pay

The first thing you need to do after you decide to buy a home is find out how much you can afford to spend on your first house or apartment. Having a budget is very beneficial, as it will help you in your search for a home, and it will keep you from spending more than you can afford, without even realizing it. Mortgage calculators can be very helpful in finding out how large of a monthly payment you can make and how big of a mortgage loan you can take out. Keep in mind that you will have to pay interest which, depending on several factors, can make your overall loan value much higher. Also, remember that you will probably have to make a hefty down payment and pay closing costs, which are also expensive.

One of the main factors that will affect how much you’ll be paying in interest is your credit score. You are entitled to one free credit report check per year, so you should make sure everything is in order before applying for a mortgage loan. The higher your credit score will be, the better mortgage loan and interest rate you will qualify for.

Find a Good Lender

The only way to find the right lender is by shopping around, asking your friends and family, or simply talking to various lenders. There’s a tough competition between lenders, so you would be surprised at how much some of them are willing to negotiate in order to get your business. Ask them plenty of questions in regards to the mortgage loans that they are offering, and only decide once you have found a lender that you feel comfortable with.

Once you have found a good lender, try to get pre-approved for a mortgage loan. This will make buying a home much faster once you find the right one, minimizing the chances that the seller will sell to someone else. Being pre-approved for a mortgage loan will also make you look more trustworthy in the eyes of the seller.

Find the Right Home

Knowing what you are looking for before you start to shop around for a home will surely help you narrow down your options, and find the right home faster. Depending on your budget, you might have to make sacrifices in certain areas, but you shouldn’t stop searching for a home until you find the one that is the closest to what you are looking for.

Besides looking at what the property has to offer, also pay close attention to the neighborhood that the home is located in, the proximity to schools or stores, and the length of your commute to and from work. All of these factors can help you better decide if that is the right home for you and give you more reason to negotiate.

Make an Offer

Most home sellers will set their asking price higher than the home is worth, which means that they are probably expecting you to make a lower offer. The best way of finding out how much you should offer is by looking at what comparable houses in the same or similar areas have sold for recently.

Once you have decided how much you want to offer, contact your real estate agent and proceed with making the offer. Most likely, the seller will make a counter-offer, but that doesn’t mean you cannot make a new offer. Going back and forth too much can cause problems, so it is better to meet the seller half way.

Obtain the Right Mortgage Loan

Depending on your budget, you will have to decide between a fixed-rate and an adjustable-rate mortgage loan as well as the loan term. If you can’t afford a large monthly payment, your best choice is to get a 30-year mortgage loan. However, you should keep in mind that the shorter the loan term is, the less you will be paying in interest overall.

You might also qualify for different types of loans that are designed to help those with lower incomes, such as an FHA or a VA loan. These types of loans are geared towards certain people, so you should do a little research before applying for one of these loans to be sure that you fit the criteria.

Close on Your New Home and Move In

Before closing on your mortgage loan, you should get a home inspection to make sure that there are no major issues with your new home. This is one place where you wouldn’t want to try to save money, because finding a problem like roof damage before it’s too late can save you a lot of money in the future. Closing costs will be fairly high, but you will only have to pay them once.

After everything is paid and signed, you can start to move in. You can use a moving company, or just do everything yourself with the help of your friends and family.

Buying a home is not a scary process once you get to know the basics. Of course, you can always encounter some unpleasant surprises along the way, but a little research goes a long way when buying your first home.

Most Affordable Housing Markets in the US 2013

Most Affordable Housing Markets in the US 2013  - 150x150The housing market crash resulted in millions of foreclosures and millions of families ending up owing more on their mortgage than what their home was worth. This has made it nearly impossible for anyone to sell their home at a good price, but it has also created opportunity for home buyers and investors. Affordable housing markets are a double edged sword because, while home ownership is more accessible to people who couldn’t otherwise afford a home, areas with low real estate prices indicate that the local economy is having trouble, meaning that the chances of finding a job locally are minimal. Here is a list of the top 5 most affordable housing markets in the United States in 2013:

  1. Detroit, Michigan. In the most affordable city in the US, the median home price is just $60,200, due to many abandoned properties and homes that sell for under $20,000. Detroit’s median household income of $48,988 is below average, but it’s still 45 percent more than the amount needed to qualify for the loan on an average-priced house.
  2. Atlanta, Georgia. Atlanta is a city that has everything going for it, unlike Detroit. In the state capital of Georgia, the median home price of $103,200 is below average, while the $52,639 median household income is above average. Homeowners in Atlanta also pay below average insurance premiums and property taxes.
  3. Minneapolis, Minnesota. Minneapolis’ higher than average household income of $63,352 allows people to qualify for a mortgage on a median-priced home with a little more than 67 percent of their income. The $174,500 median home price is below average, but Minneapolis has higher insurance premiums and property taxes.
  4. Phoenix, Arizona. Due to the housing bubble burst, Phoenix has become a very affordable city. With a median household income of $50,058, families can easily qualify for a mortgage. The average price of a house in Phoenix is just $148,400, and homeowners pay $1,437 in property taxes and $642 for homeowners insurance.
  5. St. Louis, Missouri. Because the city still has land to expand, the home prices in St. Louis are great for people looking to purchase a house. The median household income of $51,164 is above average, while the median home prices ($131,700), property taxes ($2,132) and homeowners insurance ($881) are all below average.

Affordable housing markets can be a real blessing for home buyers who are looking for a bargain, but also for investors looking to make a profit. Unfortunately, many of the areas in which housing markets are affordable come with a few downsides, such as a stagnant local economy, so make sure you thoroughly research the area before purchasing a home in it.