Wednesday, February 13, 2019

5 Things Every First-Time Home Buyer Needs to Know

Here's what every first-time home buyer needs to know to dive into house hunting with confidence—and with as few curveballs as possible. Whether it's getting a mortgage, choosing a real estate agent, shopping for a home, or making a down payment, we lay out the must-knows of buying for the first time below.

1. How much home you can afford as a first-time home buyer

Homes cost a bundle, so odds are you'll need a home loan, aka mortgage, to foot the bill, along with a hefty down payment. Still, the question remains: What price home can you really afford? That depends on your income and other variables, so punch your info into realtor.com®'s home affordability calculator to get a ballpark figure of the type of loan you can manage.
In general, experts recommend that your house payment (which will include your mortgage, maintenance, taxes) should not exceed 28% of your gross monthly income. So, for example, if your monthly (before-tax) income is $6,000, multiply that by 0.28 and you'll see that you shouldn't pay more than $1,680 a month on your home mortgage.
But online mortgage calculators give just a ballpark figure. For a more accurate assessment, head to a lender for mortgage pre-approval. This means the bank will assess your credit history, credit score, and other factors, then tell you whether you qualify for a loan, and how much you qualify for. Mortgage pre-approval also puts home sellers at ease, since they know you have the cash for a loan to back up your offer.
You can also decide if you're going to apply for a loan through the Federal Housing Administration (FHA).
"An FHA loan is a great option for a lot of home buyers, particularly if they're buying their first home," says Todd Sheinin, mortgage lender and chief operating officer at New America Financial in Gaithersburg, MD.
An FHA loan will have looser qualification requirements than a traditional mortgage, but there are still certain prerequisites borrowers must meet like getting private mortgage insurance and having a minimum credit score of 500.

2. Pick the right real estate agent

You buy most things yourself—at most, sifting through a few online reviews before hitting the Buy button and making a payment. But a home? It's not quite so easy. Buying a home requires transfer of a deed, title search, and plenty of other paperwork. Plus there's the home itself—it may look great to you, but what if there's a termite problem inside those walls or a nuclear waste plant being built down the block?
There's also a whole lot of money involved. (You know, a down payment, loan, etc.)
All of which is to say, before you make a massive payment, you will want to have a trusted real estate agent by your side to explain the ins and outs of the process. Make sure to find an agent familiar with the area where you're planning on purchasing; to her credit, the agent will have a better idea of proper expectations and realistic prices, says Mark Moffatt, an agent with McEnearney Associates in McLean, VA.
"Finding a Realtor is not hard, but finding one that is best suited for you and your purchase is a challenge," he adds.
You can search on realtor.com/realestateagents to find agents in your area as well as information such as the number of homes sold, client reviews, and more. Make sure to interview at least a couple of agents, because once you commit, you will sign a contract barring you from working with other buyer's agents—this ensures the agent's hard work for you pays off.

3. Know there is no such thing as a perfect home

It's your first home—we understand if you've dreamed about the ideal house and don't want to settle for anything less. We've been there! But understand that real estate is about compromise. As a general rule, most buyers prioritize three main things: price, size, and location. But realistically, you can expect to achieve only two of those three things. So you may get a great deal on a huge house, but it might not be in the best neighborhood. Or you may find a nice-size house in a great neighborhood, but your down payment is a bit higher than you were hoping for. Or else you may find a home in the right neighborhood at the right price, but it's a tiny bit, um, cozy.
Such trade-offs are par for the course. Finding a home is a lot like dating: "Perfect" can be the enemy of "good," or even "great." So find something you can live with, grow into, and renovate to your taste.

4. Do your homework

Once you find a home you love and make an offer that's accepted, you may be eager to move in. But don't be hasty. Don't purchase a home or make any payments without doing your due diligence, and add some contingencies to your contract—which basically means you have the right to back out of the deal if something goes horribly wrong.
The most common contract contingency is the home inspection, which allows you to request a resolution for issues (e.g., a weak foundation or leaky roof) found by a professional.
Another important first-time home buyer addition: a financing contingency, which gives you the right to back out if the bank doesn't approve your loan. If they believe you'll have trouble making a payment, a mortgage lender will not approve your loan. A pre-approval makes the possibility of having your loan application rejected much less likely, but a pre-approval is also not a guarantee that it'll go through.
You also might want to consider an appraisal contingency, which lets you bail if the entity who is giving you a loan values the home at less than what you offered. This will mean you will have to come up with money from your own pocket to make up the difference—a tough gamble if cash is already tight.

5. Know your tax credit options

The first-time home buyer tax credit may be no more, but there are a number of tax breaks new homeowners may not be aware of. The biggie: Mortgage interest deduction is a boon for brand-new mortgages, which are typically interest-heavy. If you purchased discount points for your mortgage, essentially pre-paying your interest, these are also deductible. Some states and municipalities may offer mortgage credit certification, which allows first-time home buyers to claim a tax credit for some of the mortgage interest paid. Check with your Realtor and local government to see if this credit applies to you.
The McLeod Group Network can help you find your new home! 971.208.5093 or admin@mgnrealtors.com
By: Realtor.com, Jamie Wiebe

Wednesday, February 6, 2019

Sitting on the Sidelines? 4 Reasons to Get Up and Buy a Home This Year

The housing landscape of the past several years hasn't exactly been friendly to buyers: the bidding wars, the eye-popping prices, the houses that sold before a "For Sale" sign even went up. It's enough to make any of us put our search on hold until we have a fighting chance at landing a home—without draining our bank accounts.
If you've been sitting on the sidelines, we've got good news and we've got bad news: Things are finally slowing down. But they might not slow down fast enough for your liking.
Don't despair, though—this year still stands to look better than last for aspiring home buyers.
"If your resolution is to buy a home in 2019, you’ll have some challenges to contend with, but also some opportunities," says Danielle Halerealtor.com's chief economist.
The devil's in the details, though, and there are quite a few factors that could dictate whether this is your year to buy. Here are the four biggest reasons to take the plunge now

1. There will be more available homes—or at least, not fewer

Tight home inventory has sidelined would-be buyers for several years now. Even if you could afford a home, too few of them were hitting the market to keep up with demand. Or, when they did, there was a good chance they were snapped up before you could even call your real estate agent.
House hunting felt especially bleak last winter, when nationwide inventory hit its lowest level in recorded history. By the end of 2018, though, things finally started looking up, and in 2019, experts predict more opportunities—and less frustration—for buyers.
But there's a catch: Not everyone will be able to afford those opportunities. That’s because the markets seeing the most increases in available homes tend to be more expensive, Hale says.
“For buyers, there is going to be more inventory. So that’s a bright spot," she says. "The downside of that bright spot is it might not be in their price range.”
If you don't have big bucks, though, all is not lost. The news is still good—just tempered. The supply of affordable homes for sale (under $300,000, which is about the median home price right now) might not be growing dramatically just yet, but it's certainly not decreasing anymore.

2. Skyrocketing prices will slow their roll

While inventory went down, down, down over the past few years, home prices did the opposite. Will we still see staggering dollar amounts throughout 2019?
It's another mixed bag here: Expect home prices to continue to rise (blah), but at a slower pace than they have been (yay). Hale predicts a 2.2% increase in home prices this year—compared with a nearly 5% increase last year.
That's not nothin'. And if you can get in the market before those moderate increases, all the better.
"We do still anticipate rising home prices, particularly for below-median-priced homes, so buyers in that price range may have some incentive to buy sooner rather than later," Hale says.
And there's a silver lining to those climbing home prices, too—again, for some of you.
"As rising costs raise the bar to homeownership, some would-be buyers will be knocked out of the market, so that remaining buyers may have less competition to contend with than they saw in 2018," Hale says.

3. Mortgage rates are lower than expected

There was a lot of discouraging talk at the end of 2018 about increasing rates—and there was good reason to be nervous. Rates on a 30-year fixed-rate mortgage, the most popular home loan, were approaching 5%—and expected to trend upward throughout 2019.
But that hasn't happened.
In fact, rates have been falling—perplexing the pros but creating a prime opportunity for home shoppers. Rates did tick up slightly last week—for the first time in 2019—to 4.46%. But that's still historically low.
"That’s definitely a huge opportunity for buyers because it drastically improves affordability," Hale says. "And I think that if these low rates persist for a little while, then we’ll actually see stronger sales than we originally forecast."
"Lower mortgage rates will get buyers off the sidelines," adds Ali Wolf, director of economic research at Meyers Research. "Consumers should take advantage of the returned purchasing power, and in fact, we're already seeing early 2019 data that suggest they are."
But don't get complacent, Hale warns: "I do think that the long-term direction of mortgage rates is going to be back up. We’ve still got a strong economy."

4. Rents are rising—and won't be falling anytime soon

Buying a home is a scary-expensive endeavor in the best of circumstances, and when prices are climbing, it can be downright soul-sucking.
But bear this in mind: Rents are rising, too. In fact, they very rarelydecline, Hale says. And while buying a home is generally going to cost you more in the short term than renting, you have to look at the bigger picture. Buying means you're building equity—and not forking over your hard-earned dollars to a landlord.
"The challenge will be finding a home that fits needs, some wants, and still stays within the monthly budget," Hale says.
If you can afford to buy now, you'll thank yourself in the long run—and whenever your friends get their annual rent increases.
The McLeod Group Network can help you find your new home! 971.208.5093 or admin@mgnrealtors.com
By: Realtor.com, Rachel Stults

Monday, February 4, 2019

Whose Mortgage Do You Want to Pay? Yours or Your Landlord’s?

There are some people who haven’t purchased homes because they are uncomfortable taking on the obligation of a mortgage. However, everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

With home prices rising, many renters are concerned about their house-buying power. Mike Fratantoni, Chief Economist at MBAexplained:

“The spring homebuying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.”

As an owner, your mortgage payment is a form of ‘forced savings,’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.

As mentioned before, interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie 
Mac’s latest report shows that rates across the country were at 4.46% last week.

Bottom Line
Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

The McLeod Group Network is here to help! 971.208.5093 or admin@mgnrealtors.com

By: KCM Crew