Michelle Anne Murphy's Blog
As a homebuyer, it is easy to envision finding the perfect house, submitting an offer on it and acquiring it right away. However, it is important for buyers to consider the worst-case scenarios as well.
A buyer who understands the worst-case scenarios that he or she may encounter during the homebuying journey can plan accordingly. That way, this buyer will be better equipped than others to avoid various homebuying worst-case scenarios altogether.
Now, let's take a look at three common homebuying worst-case scenarios, as well as how buyers can avoid these situations.
1. You find your dream home, but it falls outside your price range.
If you enter the housing market without a mortgage in hand, you may need to act quickly to acquire the necessary financing to purchase your dream house. But once you kick off a search for a mortgage, you may find that the cost to acquire your dream home falls outside your budget.
When it comes to getting home financing, it often helps to be proactive. Fortunately, if you meet with banks and credit unions before you launch a home search, you can determine exactly how much money you can spend on a residence.
Banks and credit unions employ friendly, knowledgeable mortgage professionals. With these mortgage experts at your side, you should have no trouble getting pre-approved for a mortgage at your convenience.
2. You discover a wide range of problems during a home inspection.
A home inspection likely will be completed in the days after a seller accepts your offer on a residence. And in some instances, an inspection may force you to reconsider whether you want to purchase a house.
If you encounter problems during a home inspection, you still have lots of options. You can ask a seller to perform assorted home repairs or reduce your offer. Or, you can walk away from a home sale and restart your home search.
For homebuyers who are worried about any problems that they encounter during a home inspection, it is paramount to look closely at all of the aforementioned options. By doing so, you can make an informed decision about whether to proceed with a home purchase or reenter the housing market.
3. You employ a real estate agent who fails to help you achieve your homebuying goals.
Many real estate agents are available in cities and towns nationwide. But if you fail to conduct an extensive search for the right real estate agent, you may struggle to accomplish your homebuying goals.
When choosing a real estate agent, you should learn about this housing market professional's industry experience. It also helps to meet face-to-face with a real estate agent and discuss your homebuying goals with him or her. This will enable you to determine whether you're comfortable working with a particular real estate agent.
Enjoy a quick, stress-free homebuying experience – consider the aforementioned worst-case homebuying scenarios, and you can minimize the risk of potential pitfalls throughout the homebuying journey.
Your credit score is a fundamental component of a mortgage lender’s decision to approve you for a loan. It can also affect the interest rate and loan amount you can secure.
Along with your income history and down payment, a solid credit score is one of the three most important things you’ll need when it comes to buying a home.
Credit scores themselves, however, can be a complicated business. And finding out what score you need to buy a home and how to achieve that score can also be a complex topic.
So, in this post we’re going to break down some credit score basics as they relate to buying a home.
Types of credit scores
You may have heard of the three main credit bureaus, TransUnion, Experian, and Equifax. Each of these bureaus keeps a detailed credit history for everyone in America (except for those who have yet to open a line of credit or take out a loan).
Since each credit bureau may have slightly different information available data to draw from, your credit scores from each company may vary.
However, when it comes to buying a home, most lenders use a standard scoring model called a FICO score to ensure that all mortgage applicants are treated fairly when they seek a loan.
Things are further complicated by the fact that there are several different FICO scoring models designed for different types of credit. So, if you’ve seen your FICO score when applying for an auto loan, it may be a different score than you will see when applying for a mortgage.
Build credit; raise your credit score
All of the types of credit scores and scoring models can be confusing. But what you mostly need to worry about is how to boost your score.
Your credit score will be based on five main factors:
Making on-time payments
The percentage of available credit (not maxing out your cards)
Having diverse types of credit (auto loans, student loans, credit cards, etc.)
Not opening new lines of credit frequently (a red flag that you’re struggling financially)
The length of your credit history, or how long you’ve been consistently paying your bills
What score do you need to buy a home?
There are several different mortgage types available for buyers. First-time homeowners, veterans, people seeking to buy a home in a rural area, and any other number of circumstances can help you qualify for mortgages even if you have a low credit score.
A general rule, however, is that it’s always better to apply for a mortgage with a high credit score to help you secure the best possible interest rate.
Some programs do have minimum credit scores that they will accept for a mortgage. FHA loans are one common example. The Federal Housing Authority guarantees loans for people across the country who are hoping to buy their first home (or who haven’t owned a home in the last three years). Their guarantee is what enables lenders to safely approve mortgages for borrowers with low credit scores. The current requirement for an FHA loan is a credit score of 580 or higher for a mortgage with a 3.5% down payment. You can secure an FHA loan with a lower credit score, but you’ll have to make a larger down payment.
There are several other options available for hopeful homeowners when it comes to mortgages. But, if you aren’t planning on moving in the next few months and your credit score could use some work, now is the time to start focusing on building credit.
Finding the ideal home for your family's needs is no easy task, but if you stay organized and focused, the right property is sure to come along!
One of your most valuable resources in your search for a new home is an experienced real estate agent -- someone you trust and feel comfortable working with.
They'll not only set up appointments for you to visit homes in your desired price range and school district, but they'll also help keep you motivated, informed, and on track. Once you know and have shared your requirements (and "wish list") with them, your agent will be able to guide you on a path to finding the home that will best serve your needs -- both short- and longer term.
In addition to proximity to jobs, good schools, and childcare, you'll probably want to pick a location that's close to supermarkets, recreation areas, and major highways. If you have friends or family in the area, then that would also be a key consideration.
While your immediate needs are a good starting point for creating a checklist of requirements, it's also a good idea to give some thought to what you may need in the future. Plans to expand your family, possibly take care of aging parents, or adopt pets are all factors to consider when looking at prospective homes to buy.
If you have college-age children or recent graduates in the family, you might have to save room for them in your new house. Many grads need a couple more years of financial and moral support from their parents (not to mention home-cooked meals) before they're ready to venture out on their own. Houses with a finished basement, a separate in-law apartment, or even a guest cottage on the property are often well-suited for multigenerational households.
In many cases, people tend to buy a home based on their emotional reaction to it, and then justify the purchase with facts. For example, if the price was right and a particular house reminded you of your childhood home, then that combination of elements could prompt you to make an offer on the house -- assuming those childhood memories were happy!
Sometimes prospective buyers might simply love the look and feel of a neighborhood or the fact that there's a spacious, fenced-in back yard in which they can envision their children or dogs happily (and safely) playing.
According to recent surveys, today's buyers are attracted to homes that have energy efficient features, separate laundry rooms, and low-maintenance floors, counter tops, and backyard decks. Gourmet kitchens, stainless steel appliances, a farmhouse sink, a home office area, and outdoor living spaces are also popular features. Although your tastes may differ, many house hunters also like design elements such as subway tiles, hardwood floors, shaker cabinets, pendant lights, and exposed brick.
When it comes to choosing the home that you and your family will live in for the next few years, your top priorities will probably include a sufficient amount of space, plenty of convenience, and a comfortable environment in which you and your loved ones can feel safe, secure, and happy for the foreseeable future!
Winter season is gone; homebuyers are warming up to get the best house available. It is not out of place for several questions or thought to run through their mind. Questions like - is 2019 a good year to buy a home?
The good news is that 2019 is a critical year for housing. Below are some reasons to consider this year a good year to buy a home:
Mortgage rate decreased at the end of 2018
One of the reasons why we think the year 2018 as a good year for housing the reduction of mortgage rate towards the end of 2018. You will notice that the rate increased during the first half of the previous year then it decreased towards the end of the year. Now, the mean rate for a thirty-year fixed mortgage in the first week of January was 4.51 percent.
Some home buyers took advantage of this reduction in mortgage rates by purchasing during the early months of 2019. It is a wise decision to invest at this time because the price could increase as we move further into the year.
Prevalence of price reduction among sellers
Another convincing reason why 2019 is a good year for housing is that prevalence of price reduction among home sellers. Years back, home sellers took advantage of the competition among buyers. The case is different now; more homes on the market means the overabundance of buyers does not exist any longer. Therefore, 2019 is expected to be a year of significant price reduction in the real estate market.
There are more negotiating leverages for home buyers in 2019
A lot of home buyers have more negotiating leverage in 2019. There is a change taking place in many real estate markets all over the country. Sellers are looking for ways to attract buyers because of lack of patronage. It is evident that the real estate market is on the decline, and there are data available to bolster that.
Home buyers in 2019 can make use of this opportunity; this period is the best for housing as they could have more negotiating leverage when compared with buyers who purchased several years back.
The unemployment rate is low
The reduction in employment is one of the factors that boost the financial means of buyers and make them confident enough to buy a house. A stable source of income will enable buyers to stay faithful to their monthly mortgage payment. The unemployment rate of the United States of America was down to about 3.7% as of November 2018 with the addition of more than 155,000 jobs in that month.
For more information about the buyers market in your local area, talk to your real estate agent for the most recent numbers.
Attending open houses is common for property buyers in cities and towns nationwide. However, there is no set number of open houses that a homebuyer will need to attend to discover his or her dream residence. In some instances, a buyer may find the ideal home after attending his or her first open house. Or, a buyer may attend dozens of open houses and fail to find a residence that matches his or her expectations.
As a homebuyer, it is important to do everything possible to make the most of an open house. Lucky for you, we're here to help you get ready for an open house and ensure that you can maximize the value of this event.
Now, let's take a look at three tips to help you get ready for an open house.
1. Create a List of Home Questions
You may have learned about a home from a listing. Yet a listing only offers a limited amount of information about a residence. And if you have additional questions about a residence, an open house provides you with a great opportunity to receive responses to your queries.
Craft a list of questions before you attend an open house – you'll be glad you did. With this list in hand, you can ask questions about a home and gain the insights you need to help you decide whether a residence is right for you.
2. Perform Research
Try to collect as much information as you can about a home prior to an open house. That way, you can have a good idea about what to expect when you attend this event.
Also, you may want to put together a game plan before an open house. This plan allows you to prioritize different areas of a residence that you want to check out. Plus, it may help you conduct an in-depth review of a residence.
3. Consult with a Real Estate Agent
A real estate agent is happy to help you plan ahead for any open house. If you employ a real estate agent today, you can receive comprehensive assistance as you conduct your house search.
Typically, a real estate agent will keep you up to date about open house events in your preferred cities and towns. This housing market professional can attend an open house with you and offer immediate feedback as well. In addition, if you want to submit an offer to purchase a residence after an open house, a real estate agent can help you do just that.
Let's not forget about the expert housing market insights that a real estate agent can provide, either. A real estate agent can offer insights into housing market patterns and trends. By doing so, a real estate agent can help you narrow your home search and ensure that you can find a great house at a budget-friendly price.
Ready to attend an open house? Use the aforementioned tips, and you can attend an open house and learn about all aspects of a residence.