Buying a Home

5 Questions to Ask During an Open House

Home for sale

Home for saleOne of the longest standing real estate traditions is an open house. If you are new to buying properties, take a moment to understand what an open house is and how it could aid you in making a purchasing decision. A way of generating traffic and luring in interested buyers for a potential sale; open houses are usually organized on weekends. The real estate agent will do a number of things to prepare for an open house, such as create ads in the local newspaper, put signs up in the surrounding area, and even embellish the property with banners and balloons to capture the attention of passers-by.

It’s not just the real estate agent who has a duty during an open house, however. As someone who is considering investing in a property, it is your duty to ask questions at this stage. Below, we expand on the five main questions you should be asking prior to purchasing a commercial or residential property.

  1. Why do the sellers want to move? - By asking this question face-to-face, rather than over the phone, you can get an honest answer from the seller or the seller’s realtor. Should the homeowner be transferring ownership of the premises due to relocation, work-related issues, or finances, you needn’t worry. If the seller is transferring home ownership because of constant repairs or if the area or schools are unsafe, you should think about this decision further.
  2. How long has the property been on the market? – The longer a property has been on the market, the more questions you should be asking. A desirable piece of real estate will not be on the market for long before it is snapped up. If a home has been on the market for a while, be sure to check the market value and condition of the home. Some seasons attract more buyers than others, so take this into account as well.
  3. How many offers have been made? - When you know you are competing with other offers, decide whether or not you want to proceed or walk away. Asking this question is essential because it gives you an idea of what the seller deems a reasonable offer. Additionally, it enlightens you about how much interest the property is getting.
  4. Are there any issues with the home? – Not every property featured on the real estate market will be perfect. In fact, a lot of buyers will be on the hunt for properties that they can acquire for a discounted price and renovate. If you are looking for a home that doesn’t need too many repairs, be sure to ask major repair questions, such as when the roof was last repaired.
  5. When was the house last updated? – You can figure out if the property is worth the asking price based on how often it has been maintained and/or updated over the years. If you are looking to avoid making updates down the road, we suggest finding a property that has been recently updated.

Take your time looking around when you attend an open house and try your hardest to envision yourself living in the home. Think about how your furnishings will look inside each room, and if the price of the home falls within your budget. Don’t forget to factor in the closing costs, to avoid unexpected surprises.

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How to Understand the Impact of your Debt-to-Income Ratio and How It Affects the Loan Process

Businessman's hands with calculator and cost at the office and F

Businessman's hands with calculator and cost at the office and FGearing up for a loan application can stir up a mixture of emotions, from euphoria to anxiety about the entire process. All that is required for a plain sailing experience is knowledge on the subject and in particular, on the topic of debt-to-income (DTI) ratios. Many loan applicants will be unaware of the fact that this is considered by a lender before the applicant is accepted for a loan.

What is considered a good debt-to-income ratio?

Dividing your total gross income with your recurring monthly debt is the easiest way to understand what your DTI income ratio is. Once you are aware of this, you can take a step forward and arrange a meeting with a lender. By doing so, you can discuss your loan options and talk about whether your DTI is good or could do with some improvement.

The Negative Impact on Financing

Put it this way: if a lender looks at a borrower who has a DTI of 50% or above, you are instantly in the red. In many cases, they will not give you a second look since you will be deemed “dangerous” in their strict book of lending. This can make it a struggle to obtain financing. On a brighter note, there are multiple lending options out there now that consider applicants with a poor credit history and DTI.

Tips for Being Approved for a Loan

Fear not if you fall into the red category when it comes to calculating DTI because it does not mean that your chances of loan approval have gone completely out the window. In fact, the following tips could actually teach you how to handle your finances overall:

– Pay off any debts you have accrued.

– Reduce your DTI by paying in affordable amounts.

– If you are able, settle high-interest debts.

– Stop spending so much and start saving more.

– Write a monthly budget and stick to it.

– Cut off direct debits or subscriptions that you no longer require.

Improving the Debt-to-Income Ratio

Sit down and really get stuck into your finances. It will be worth it when you get one step closer to being accepted for a loan, despite having a low DTI at the beginning. Pay attention to the higher debts on your list, if possible. Paying off larger amounts faster will ensure that your credit rating boost at a quicker rate. This will also lift that credit rating arrow from the red spot to the amber or, if you really commit, close to the green.

There are plenty of ways in which you can improve your DTI, prior to applying for a loan. This will boost your chances of acceptance and will have a positive effect on your credit score as a whole. Take it upon yourself to perform a recalculation of your DTI every month, as this will paint a clearer picture of how your financial situation is changing, for the better!

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How much home can you afford?

Businessman's hands with calculator and cost at the office and F

Businessman's hands with calculator and cost at the office and FPerhaps one of the biggest downfalls associated with being an adult is the fact that as an adult, we must be responsible for our finances. No more pocket money or asking the parents for a few funds to get you through the weekend – this is the real deal. It doesn’t have to be a stressful time however, whether you are a millennial or make up the “baby boomer” generation, however.

Pushing through the financial force field can be difficult if you don’t know much about financing for home buying. On that note, let’s discover more about how a mortgage approval could steer you in the right direction for real estate success.

Financial Factors to Consider

Before you can start searching for the perfect home, the financial aspect must be put in the spotlight. Sit down (preferably with a financial advisor or lending expert) to figure out how your financial situation is looking. Take the following financial factors into account to ease the house-hunting process:

Down Payment – This is the initial payment you will put down on your property. It will depend on your credit score and ability to make regular payments. Down payments for any loan are contingent upon personal applicants qualifications.

Monthly Expenses - Do not start looking at properties until you know precisely how much money is outgoing every month. Monthly expenses include car payments, credit card payments, and alimony.

Flexible or Fixed Loans? – This is a tricky one. If you want to start off with minimal expenditure, but risk paying a higher interest rate in future, go flexible. Fixed loans are more secure, in the sense that the monthly interest rate does not change.

Reasons to Consider Financing for Home Buying

While some people are in a position to afford the cost of buying a home outright or even affording a high interest rate, others are unfortunately not. This is particularly true for millennials aged around 30. With poorer credit scores and less financing experience, securing a mortgage can be tough. Financing for home buying is beneficial, because it means you have control over your cash for the mortgage lifetime. It also makes becoming a homebuyer possible.

Finding the Best Rates in 2017

Interest rates are changing all of the time and if you are to find the best rates before someone else beats you to it, or before rate fluctuation occurs, there are a few things you need to do. Aside from shining up that unattractive credit score and thinking about how long you intend on living in/working in the property, you can do more to find the best mortgage rates in 2017. First things first, use the Internet to research mortgage rate comparisons on a daily basis or at the very least, a few times per week. This will keep you in the loop about what’s a good deal and what’s not. Your knowledge on the current rate climate will help you to determine whether or not now is the time to act.

Tips for Securing a Mortgage

Keep in mind that certain lifestyle factors will have an impact on mortgage interest rates, not to mention your chance to secure a financing deal at all. Speaking with a financial advisor will relieve you of any concerns or quandaries that might be boggling your brain ahead of purchasing a home. Consider all of your options and do not overload yourself financially.

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Millennials and Mortgage

Content couple eating pizza on floor

Content couple eating pizza on floorTimes are changing and so are the home buying options for millennials. Home ownership is a big stage to take. It means you are an adult and are responsible for making mortgage payments on your personal palace. A place to make memories with loved ones or witness your company flourishing (if you are acquiring property for business purposes), the investment is an exciting one.

According to Politifact.com, affordable housing is a challenge faced by many. In fact, less than 13% of millennials are proud to be homeowners nationwide. Nonetheless, homeownership options are being made available to millennials. Furthermore, financing is an option that could lead to you making the most important investment of your life.

Why are millennials such an integral component in the mortgage sector?

Everyone craves the American dream and millennials are no different. Home ownership for millennials aged 35 and under is decreasing, but things need to change. Younger people owning homes could mean fantastic things for the economy. Generally, a homeowner will have been born sometime between the 1980’s and mid-2000’s. For a huge chunk of them, now is the time to be starting a family and settling down.

Consider this – millennials account for approximately 80 million people in the U.S. alone. This is the largest population of them all! The more educated they are on the subject of financing, mortgages, and home ownership, the higher the chances of them standing out to a financing option for consideration.

Mortgage Facts Millennials Must Know

If you are on the fence about becoming a homeowner for the very first time, you should be up to scratch on your millennial mortgage knowledge. Property hunters aged in their 30’s are searching for a place to call “home” and this group of real estate-hungry people cannot be ignored. Take the following facts into account to ease your mind about mortgage approval for millennials:

Down Payments need not be huge. Millennials can get a chance at homeownership if they secure the investment by making a down payment on the purchase price.

Buying properties for lower prices could aid you in building equity. This equity can be put towards mortgage adjustments, should you wish to close one deal and start another.

Credit score does affect your eligibility. Nonetheless, there are a few ways in which you can build your credit score to avoid higher interest rates. Start making the smallest of repayments on any bills or outstanding debts you have to improve your chances at securing a home mortgage.

Separating the Myths from the Facts

Instead of becoming perplexed by the whole situation as a millennial in the home-hunting stage, know what is a myth and what is a fact. Below, we debunk some common myths:

Buying is more expensive than renting - No, it isn’t if you think long-term and select a low interest rate mortgage.

Payment for buying is higher - Not necessarily; some flexible loans have small starting interest rates.

The process is complicated – This is what financing experts are there for. They will guide you through the process seamlessly.

Since millennials are the biggest group of potential homebuyers out there right now, understanding what financing options are available is essential. In order for this to be achieved, not only do they need to be on top of their finances but also, they ought to proactively engage with lenders who can convince them to make that all-important transaction.

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Market trends on home equity: The top ROI home improvements that contribute to home equity.

Beautiful Kitchen in Luxury Home with Island and Stainless Steel

Home equity is the market value of your financial interest minus the debt balance against it. Typically, the largest debt against your home is your mortgage. As you make mortgage payments against the loan, the equity of your home increases. You may also gain equity as your property appreciates in fair market value.1 Understanding your home equity as well as larger home equity trends is key for making a sound investment in property and then increasing your equity in that investment.

Once you’ve invested in property, you must decide which home improvements to make to boost the equity of your home. Before you consider large home renovations, start with the basics. When a potential buyer looks at a home, he assumes that the basic systems are running smoothly.2 No one wants to buy a home and then immediately sink thousands of dollars into a new roof, plumbing infrastructure, or HVAC system. Taking care of the basics will minimize monthly maintenance expenses and put your home in prime condition for potential buyers.
After the home is in good working order, think about tackling a larger renovation. Two of the best rooms to invest in are the kitchen and bathroom. In a strong housing market, a top notch kitchen or bathroom remodel frequently returns over 100% of the cost. People spend a lot of time in their kitchens and bathrooms and will be able to tell whether or not money was well invested in these areas of a home.

Do you live in an older home with only one bathroom? If space permits, it makes more sense to add a second bathroom than to renovate the only bathroom. If your home has two, three, or even four bedrooms and just one bathroom, adding a second bathroom may increase the sales price as much as 8.7%, which is more than double the rate for adding another bedroom.4
If you’re not anticipating a move in the foreseeable future, be honest with yourself about whether you’d get more use out of a bathroom or kitchen renovation. Even if you don’t get quite as much money back doing the remodel that you really want, you’ll get a lot more enjoyment out of the home.

As you weigh varying home improvement projects, think about the value of your house, the average home value in your neighborhood, the general state of the housing market in your area, when you plan to sell your home, and the projects that interest you the most.5 For example, an $8,000 stove is fabulous, but it simply doesn’t make sense to install it in a home worth $220,000. You want to choose home improvements that offer the biggest bang for your buck.

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What will Fannie Mae HomeReady do for Borrowers?

Blue Key and Great House

In August 2015, Fannie Mae announced a new option for would-be homeowners who have been turned down for conventional mortgages due to lower or moderate income levels: HomeReady. The goal of the program is to recognize that today’s households encompass several generations, all of whom contribute to the well-being of all residents. If you’re a borrower who has experienced difficulties in applying for a home mortgage, here’s what you need to know about this innovative program. 

Fannie Mae HomeReady Facts for Borrowers: There are a few key features of the HomeReady mortgage program that will appeal to borrowers.

  • Low Down Payment: Borrowers can obtain financing for up to 97% and there are flexible options for qualifying applicants.
  • Flexible Down Payment Source Options: An array of resources can be used for down payment and closing costs, with no minimum contribution requirement from the borrower’s own assets.
  • Educational Programs: Borrowers can learn from educational opportunities to help them understand the implications of home buying and ownership. These programs are required under the HomeReady program.

(more…)

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Tips for First Time Homebuyers

loving couple looking at their home

It’s exciting to go house shopping; learning about the loan application, pre-approval and mortgage process isn’t quite as interesting. Still, educating yourself is an essential part of getting financing for your new home. Owning a home is one of the biggest financial investments you’ll make during your lifetime, so you might be feeling a little overwhelmed by the process. Check out a few tips for first time homebuyers that will make things easier once you do find the perfect property.

Run your credit report. Even if you regularly monitor your credit rating, you should run a report in the months before you decide to start house hunting. You want to have time to correct any errors or repair negative items well before you approach lenders for a mortgage. In addition, you should review your credit report to get an understanding of your credit rating. A score of 620 or more is probably enough to qualify for a mortgage, but you’ll get better interest rates the higher your rating. (more…)

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Mortgage Loans for Investment Properties

Purchasing an investment property can be a smart financial move for homeowners approaching retirement or anyone wanting to supplement their income. But acquiring a home for investment purposes isn’t the same as buying your primary residence: What you know from experience with mortgages is helpful, but there are additional factors when it comes to investment properties. Check out these tips before you start shopping.

Save up for the down payment. You can’t obtain private or lender-paid mortgage insurance for investment property purchases, so you’ll need at least 20% of the purchase price as a down payment. Plus, with an investment property mortgage, it’s also a good idea to save up a respectable sum of money for purposes of interest rates. If you can manage to put down at least 25%, you could qualify for lower rates to reduce your monthly payment. (more…)

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