So you’ve been searching for that perfect house to call a home and you finally found one! The price is right, and in such a competitive market you want to make sure you make a good offer so that you can guarantee your dream of making this house yours comes true!
Have you ever been flipping through the channels, only to find yourself glued to the couch in an HGTV ‘show hole’*? We’ve all been there… watching entire seasons of “Love it or List it,” “Fixer Upper,” “House Hunters,” “Flip or Flop,” “Property Brothers,” and so many more, just in one sitting.
Interest Rates are still below historic numbers – that means buying a home is affordable! You get to lock in a low rate for 30 years! If you need a better analogy, mortgages are on sale – get one now, before the price goes up.
88% of property managers raised their rent in the last 12 months! If you buy a home, your mortgage payment never goes up!
Credit score requirements to be approved for a mortgage continue to fall, which is great news if you have bruised credit but still want to buy a home.
You can wait until next year – but it will probably cost you.
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 4.6% by next year.
CoreLogic predicts home prices to appreciate by 5.3% over the next 12 months.
If you are ready and willing to buy your dream home, find out if you are able to!
Why do we wait?
Our natural tendency, especially on a larger purchase, is to wait.
Electronics, like TVs and cell phones, still keep getting better, and last year’s amazing technology at a high price is now run-of-the-mill and on-sale.
Sometimes, we may wrongly apply that same thinking to other topics, including real estate.
We wait, because tomorrow may hold a better deal, and who knows what will happen a year from now?
Why should I buy now?
The reality of the housing market is that you’re going to miss out if you wait. Prices continue to trend upwards, and interest rates are incredibly low.
Waiting a year will mean a higher price point for the same house, most likely a higher interest rate (and therefore payment), and you will have burned another year of expenses while waiting for that “better deal”.
For example, if you are currently renting at $1000 / month, in one year you will have spent $12,000 on rent alone.
That’s 5% of the purchase price of a $240,000 home.
That’s a sizeable amount of equity to give up while waiting for the “right” time.
To borrow a phrase from J. Massey, the time is “Now 0′ clock”.
“We are a leading source of financing for mortgage lenders, providing access to affordable mortgage financing in all markets at all times. Our financing makes sustainable homeownership and workforce rental housing a reality for millions of Americans.
We also help make possible the popular 30-year, fixed-rate mortgage, which provides homeowners with stable, predictable mortgage payments over the life of the loan. Our tools and resources help homebuyers, homeowners, and renters understand their housing options.”
This post refers only to the Fannie Mae loan programs.
What is the minimum down payment required to purchase a home? 3%
For a $200,000 home, that’s $6,000. Simple math!
But that’s just the down payment – this does NOT cover the other expenses, such as closing costs. Make sure you budget for those too!
What is the minimum FICOscore required to qualify for a mortgage? 620
If you’re not sure of your current FICO score, get a (proper!) free credit report. If you have any issues, fix them now.
Once you start the loan application process, you absolutely should NOT do anything to affect your credit score.
What is the maximum Back-End DTI Ratio (Debt To Income) allowed? 45%
I’ll explain the concept, if not the strict legal definition.
If you make $60,000 a year, that’s $5,000 a month.
Your monthly housing debt (total!) needs to under 45% of that number, or $2,250.
That’s the approximate monthly payment for a $450,000 house.
A 3% down payment would be $13,500.
And that *50% exception? If you’re that close, I’ll connect you with someone to work through it.
If you are considering purchasing a home, make sure you are aware of all your options before moving forward.
Contact me today and I’ll connect you with the right person and company for your situation.