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If you are considering purchasing a new home, then you probably know now is the best time to buy. In fact, we haven’t seen such incredible market conditions for buyers in as many as sixty years! But there are a lot of details that people may not realize. To help you achieve success during this process and end up with the perfect home, at a great price, in the best location and at a great interest rate – there are some things that we feel you should know before starting.
Buying for the Right Reasons Is Key
In recent years, we’ve seen an influx of property “flips” where a home is purchased at a low price, numerous updates and upgrades are made through a series of renovations and then the property is resold at a premium price. If you’re thinking of buying in today’s market for this purpose, think again. One of the current market conditions that generally holds across the board nationally is declining or low housing values.
If you plan to buy a home for you and your family to live in, it couldn’t be a more perfect time. Also, if there is imminent relocation in the near future you may not want to invest in a home right now. Be sure to plan on living in the property for at least several years before reselling again, in order for it to be a sound investment.
Credit Is More Important Than Ever Before
Having a good credit score was always an important factor in buying a home but nowadays with lenders exercising extreme caution and care before doling out loans (see Subprime Lending Crisis to understand the shift in lending practices) a good credit profile is essential. Where homeowners might once have been able to secure sizable funding to buy a home in the past, lenders completely scrutinize each detail of a potential borrower’s credit history and standing. In fact, there are new credit scoring methods being used by many lenders that may lead to even more difficulty for many homeowners with less than desirable financial practices in obtaining mortgages.
Despite the added scrutiny on credit, many first time homebuyers are successfully obtaining FHA loans, as long as they have a minimum FICO score of about 640. An added benefit of FHA loan programs is that buyers can obtain as much as 6% in seller concessions that goes toward closing costs.
Grant Money Is Available To Ease Closing and Down Payment Costs
Before beginning your search or deciding on a price range for your property, be sure to research whether there are any grants you may be eligible for toward your home. An example is the Community Development Administration’s grant designed to assist homebuyers with down payment or closing costs. Depending on where you live there are other grants available as well.
VA Loans Provide Added Benefits for Military Veterans
Considering the recent changes in Iraq with many veterans returning home and needing to settle down, VA guaranteed home loans are a welcome avenue for countless military first-time homebuyers. With concessions such as reduced or waived lending fees and no down payment – VA home loans are a great option for veterans or honorably discharged military personnel.
Preparation Now Will Save Headaches Later
As you begin searching for the perfect home, it is important to know exactly what you can afford. The most important step in determining that is to have a consultation with a loan officer. You should receive a good faith estimate that will outline exactly how much money would be paid by you out-of-pocket, the amount you may need to obtain from sellers as concessions and also the amount of your monthly payment. Armed with this information you will be in a much better position to bid on homes that are in your price range and those that you know you can afford. Also, when it comes to multiple offers on a home, sellers like seeing a copy of a preapproval letter and prefer to deal with buyers that have already secured pre-qualification. It’s something that can make the difference when competing against other buyers and negotiating a sale.
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Congratulations on your decision to buy a home for the first time! We hope that with these tips, the buying process will be fruitful as you get into a home that will provide you and your family long-lasting happiness and security!
