Tag Archives: buy

Should You Buy a Home Now or Later?

You may know you want to buy a home, but timing is everything. For such an important decision, you have to consider when exactly the right time is.

It is impossible to pin point the exact perfect time for anyone to buy a home, but there are a few valuable questions to consider when determining: when is the best time to buy a house: right now, or wait?

Consider these three questions while deciding when to buy a home:

Your Financial Situation

When you are buying a home the first and most important thing you need to consider is if you can afford it! You must consider the following:

  • Being able to put down a down payment – down payments on homes are typically 20% of the home value. This is money you must provide upfront and must be able to front before moving in. If you can’t commit to this large sum of money you may consider taking some more time to save up.
  • Affording a mortgage payment every month – on top of the down payment you must consider the monthly mortgage payments. Can you afford to pass off a few thousand dollars every month?
  • Your credit score – one last financial item to consider is your credit score. Have you paid off debt in the past? Can lenders trust and rely on you? Having a good credit score is very important when buying a home in order to ensure you can be approved for the mortgage.

Conditions of the Real Estate Market

Like a lot of things in life, the real estate market is constantly changing. Sometimes are better to sell and sometimes are better to buy. Talk to your real estate agent about the local real estate market conditions to determine when would be the best time to commit to buying a home.

When the buying season is slow you oftentimes have more negotiating power, this is something to look out for! Here are some items to consider when looking into the real estate market:

  • Quantity of available listings – if houses have been sitting on the market for a while then chances are prices should be down and you should have the negotiating power. If houses are selling quickly then now may not be the best time for you to buy if you are worried about financing.
  • Mortgage Interest rates – The rates on home loans are constantly fluctuating and impacting the conditions of the market. Again, if you are worried about finances then you want to make sure to buy at a time when interest rates are lower.
  • Buying vs. Renting – another factor to consider is whether you want to buy or rent. There is nothing like owning your own home, but sometimes it helps to rent first and take some time to save up more and be fully ready to make a financial commitment when you do decide to buy a home.

The Time of Year

A lot of people move during the spring and summer months that ore often less busy then fall when school is starting or winter when the holiday craze takes over. Although this has credit to it, you should be aware that buying during these times can give you more of a competitive edge. Consider what you are looking for and how the seasons can affect your purchase.

Your History

Do you have a track record of moving from place to place and never settling down? Buying a home brings on a lot of additional costs that may not be suitable for your needs if you aren’t looking to stick around for the long haul. When buying a home, consider how long you want to stay in the area and whether it would be a good idea to purchase a home in that area.

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How To Prep Your Bank Account To Buy A Home In 2017

Getting your finances in order can help you buy a home in the new year.

This is it: 2017 is the year you will finally buy a home! But even once you’ve made the ultimate decision to make the leap into homeownership, your hard work is far from complete. Buying a home is a big commitment and costs a lot of money — and getting the mortgage you want at the best interest rate possible is enough to stress anyone out. Organizing your financial house, so to speak, can help reduce that stress and set you up for home-buying success.

Whether you’re eyeballing a home for sale in Jacksonville, FL, or a humble abode in Phoenix, AZ, you can take action to prep your bank account and savings to be ready to buy a home in 2017. So, if your goal is to nab the keys to a brand-new place, these six steps will help you get organized, stay on track, and fund your dreams.

1. Set a specific goal

It’s hard to make a plan of action if you don’t know where you want to go. Look at how much it will cost you to buy a home in 2017. What amount of money do you need to save for that down payment? Your best option is to save at least 20% of a home’s purchase price. This allows you to get better options when it comes to mortgages and interest rates, and it means you avoid the extra cost of PMI (private mortgage insurance).

Once you have the specific target number in mind, you can break it down by month. If you want to save a total of $20,000 before you buy, for example, you need to put away about $1,667 per month to meet your goal at year’s end.

2. Designate a savings account just for your down payment fund

You can stay organized by putting the money you save for this specific purpose into its own savings account. Online banks like Ally or CapitalOne360 offer great options, because they allow you to have multiple accounts that you can designate for specific goals. (CapitalOne360 allows up to 30 accounts without a fee!)

Online banks also tend to offer higher interest rates in the current low-rate environment than traditional, brick-and-mortar banks. But that’s not a hard-and-fast rule. Shop around and look for a bank (or credit union) that offers the best savings account option, with the best interest rate — and don’t settle for an account that charges you fees. There are too many no-fee options available.

3. Create an automatic transfer

You have your specific goal and now you know where you’ll put that money while you save. The next step: Set up an automatic transfer from your checking to that designated savings account. Setting up an automatic transfer is a great way of “paying yourself first.” You prioritize your savings by moving it into the designated account first. This means you won’t be tempted to spend that money like you might if it sat in your checking account for a while before you made the conscious decision, month after month, to transfer it to savings.

It also means you’ll make progress toward your savings goal even if you forget about it one month (or two). An automatic transfer means you won’t fall short of your goal at the end of the year simply because you forgot to move the money to the right savings account.

4. Revise your budget to cut costs

Depending on how much you want to save for a down payment, you may need to move a lot of money from checking to savings each month. This can severely limit your cash flow and leave you short in other areas of your budget. To prevent this, review your budget with your monthly savings goal in mind. Where can you cut costs so you can afford to save this much per month? Start by looking at your discretionary income. You don’t need to eliminate everything, but could you cut back on how much you spend to eat meals out, for example?

Don’t forget to evaluate your bills and living expenses too. While you may not be able to cut these costs entirely, you can take action to reduce them. Call providers and ask about discounts or lower-priced options. Every little bit of expense you can eliminate makes it that much easier to add to your savings so you can stay on target.

5. Allocate extra funds to your home-buying goal

In addition to freeing up money from current costs in your budget, you can allocate any extra money you make to your down payment fund. This can accelerate your progress toward your ultimate savings goal — and even help you exceed it. Put any kind of windfall toward your designated savings account. This could include overtime pay, quarterly or annual bonuses from work, or extra money you make on the side (but be sure to set aside funds to cover taxes on your added income). Allocate at least half of cash gifts to savings too.

6. Resist making massive transfers before you apply for a mortgage

You’ve worked hard to save up the money you need to buy a home in 2017. You know your home-buying budget, you’ve identified a lender, and you’re ready to apply for a mortgage. Now is not the time to do anything drastic with any of your bank accounts. Remember, when you apply for a home loan, the lender will carefully scrutinize all of your financial activity. You’ll need to explain the source of any large transfers and provide documentation for proof.

Talk to your lender about what kind of funds they’ll approve and what cash they won’t allow you to use toward a down payment. Ask what documentation or proof you need for different kinds of transfers. Doing so now will help you prepare to buy a home in 2017 and secure the mortgage you need to help you reach your goal.

 

Post courtesy of trulia.com

What Is Stability of Income? The Key to Getting a Great Mortgage

When you apply for a mortgage to buy a home, lenders will scrutinize many aspects of your finances to gauge whether you can handle those hefty monthly payments. They’ll check how much income you’re earning, of course, but they’ll also probe deeper by assessing your stability of income. So what is stability of income? This is an evaluation of how dependably you can continue to bring in the amount of money that you are currently earning.

Along with your credit score (your track record of paying off debts), “stability of income is the main criteria that lenders use to assess a potential buyer’s qualification for a mortgage,” says Bill Golden, an Atlanta-based Realtor.

Of course, lenders don’t have a crystal ball pinpointing when you’ll get that raise or if layoffs are on the horizon. Instead, like with your credit score, they will presume that your past and present situations are a decent predictor of your future. If they spot anything suspicious, they may ask for an explanation, so it’s best to have a good response ready. So here’s what mortgage officers scrutinize and the best way to respond.

Gaps in employment

Mostly, lenders want to see a consistent work history—namely, that you’ve been working for at least two years. If you have more than a one-month gap in your work life, underwriters will want to hear a good reason why. Perhaps your work is seasonal or you took maternity leave, or suffered an illness or death in the family. Whatever the reason, a lender may ask you to explain the gap in a letter.

Also be prepared to back up your explanation with paperwork. If you left a job to pursue an MBA, you may be asked to produce a university transcript. Or if you took medical leave due to a health issue, you may be asked for documentation from your doctor. (Be aware that it is illegal to deny a pregnant woman a mortgage.)

Frequent job changes

Changing jobs frequently isn’t necessarily a bad thing in the eyes of a mortgage lender. Silicon Valley workers, for instance, are often hopping from one tech company to another.

What lenders want to see is that you’re moving up, not just moving. You’ll have to prove that the new jobs were advancements, came with more money, or offered better benefits like matching 401(k)s.

The key point is that lenders want to know that your income will at least stay the same, not necessarily that the same employer is paying that income.

Probability of continued employment

Lenders will also try to divine how likely you’ll stay in your current job or, if you leave, what the chances are that you’ll find employment elsewhere. Are you in a hot industry, offering a service everyone needs, or are you holding out to be the last switchboard operator in town? Your longevity in the field, education, and experience matter as well.

Consistency is key: If you’ve been with the same company for 15 years, lenders typically accept that tenure as an assurance that you’ll probably work there a while longer. But if you’ve been working for a company for just one year, that doesn’t mean you’re damaged goods. In that case, a lender may ask for a letter from your boss saying what a great employee you are and how great it would be if you stay there forever (or at least well into the foreseeable future).

Courtesy of realtor.com

Fall Might Be the Best Time to Buy a Home: Here’s Why

Photo credit: Andy Dean Photography / shutterstock.com

Buying a house is one of the biggest investment a person can enter into. A home offers shelter and security to the family and a majority of people consider it a very important purchase. Buying a home comes with spending some good money towards it. For buyers, you are looking at getting the best house at the best possible price. A person who wants to buy a house should always ask himself the best time he or she will be able to get the best deal.

There is always a discussion about the time of the year best to buy a house. A good number of real estate expert believe that fall is the best time to buy a house. Below are the reasons why fall is the best time to buy a home:

1. Less competition.

Competition for houses during fall always drop off but the houses are still available for sale. Due to less competition, the buyers are in a great position to negotiate for the home prices.

2. Sellers are tired.

Most sellers who had placed their houses out for sale during the prime season of property sale are very exhausted in fall. After not having made a deal in the summer and winter, most sellers are always ready to get a deal at a possible price reduction. This favors the buyers.

3. More time with your real estate agent.

There are always fewer buyers during fall meaning a buyer at that time has the full attention of the real estate agents compared to summer or winter period. A person is able to ask questions with the real estate agent and get clarifications easily.

4. There are home improvement bargains.

There will be some improvement needed when you buy a house. It is always good to coordinate the house purchase with home improvement. It is said that fall is the best time to buy most household goods. It is important to take advantage of the low prices during this time.

5. Holidays around the corner.

Most sellers are not only worn out from the summer sale but they are looking forward to holidays. This preholiday time always affects the willingness of the sellers to dispose of their property.

6. Year-end tax credit.

It is always necessary to understand the advantages of having a home in regards to a person’s income tax. By buying a house, a person will be able to qualify for tax deductions.

In conclusion, it is not just about buying a house, it is more about getting a house at a good deal. Knowing the right time to purchase a house is very important for a potential home buyer.