Becoming a homeowner for the first time is an exciting and stressful process. That’s why it’s essential to surround yourself with a team of experts – including both a mortgage and real estate professional – to walk you through the steps to home ownership, answer all of your questions and concerns, help you decide what kind of home you can afford and get you pre-approved for a mortgage.
If you’re about to become a first-time homeowner, you might assume the experience of home ownership will be just like renting, except that your monthly payments will build equity. But the reality isn’t quite so simple.
From learning how to fix a leaky toilet to making financial adjustments for long-term annualized spending, home ownership is a totally new ball game. The best way to make a smooth transition to your new home starts before you buy.
Budget Before You Buy
A monthly mortgage payment isn’t the only thing you lock yourself into when you purchase a home. You’re also committing to years of property taxes, homeowners insurance, maintenance and repairs, and increasing utility bills.
Because you don’t want to wind up “house poor,” make sure to take all expenses into account when budgeting. You should build home maintenance and upkeep into your monthly budget.
While spring and early summer reign as peek home-shopping seasons, there’s no good reason why you can’t find that perfect house in the middle of winter, too. In fact, you might even get a good deal from homeowners who are anxious to sell as soon as possible and don’t want to wait for the spring thaw.
Buyers looking for a new home in winter have less competition, since fewer people are looking. That means fewer multiple-offer situations. Plus, sellers who keep their homes on the market during the winter are often more motivated and willing to make a deal. The downside is that there are fewer homes for sale.
Looking at homes in winter, however, requires a different strategy, so consider the following before you start your search:
- Ask for Exterior Photos From Warmer Months: Winter weather may prevent you from getting a good sense of a home’s yard, particularly, if it’s covered in snow. Make sure you’re informed as to the exact size of the plot, patios and decks, and ask your agent to show you pictures of the yard and home’s exterior in the spring and summer, if there aren’t any posted online.
- Document the condition of things you can’t see: Ask when the roof was last replaced, whether the septic tank has been serviced and when the deck was cleaned. Ask the sellers for receipts or copies of ...
Self employed borrowers normally have a tougher time qualifying for a residential mortgage loan than W-2 wage earners. Some lenders may be concerned that you won't earn a steady enough income to make your monthly payments, and others may simply not want to deal with the additional paperwork that can be involved in providing a mortgage to a self-employed person. Don't let anyone tell you that you'll never get a mortgage if you're self-employed, or that you shouldn't quit your day job to pursue your dream of running your own business until you've already purchased a home.
In general, mortgage lending guidelines require that self-employed borrowers provide two years tax returns in order for them to be eligible to qualify for a residential mortgage loan. Fannie Mae’s Automated Underwriting System will not issue an approve/eligible per DU FINDINGS unless self-employed borrowers have two years tax returns. However, Freddie Mac’s Automated Underwriting System will allow self-employed borrowers one year’s tax returns per LP FINDINGS if the mortgage loan applicant is a strong mortgage loan applicant. The key is partnering with a licensed and experience loan originator who is familiar with assisting self-employed borrowers.
For example, if the mortgage loan applicant has high credit scores, good income, large down payment, and substantial in reserves, it is very likely that Freddie Mac ...
The year-end numbers for the housing market are looking quite strong. Despite the recent jump in mortgage rates since the election, the annual average for the 30-year fixed-rate mortgage was 3.65 percent in 2016, the lowest annual average ever recorded in the Freddie Mac PMMS going back to 1971. According to the Freddie Mac Primary Mortgage Market Survey® (PMMS®), rates for a 30-year-fixed mortgage and a 15 year fixed mortgage are only slightly up from this time last year- which means they are still dramatically lower than the rates in 2008 and 2009.
In November, sales of new homes hit their second highest peak since 2008, according to data released by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). While these numbers have been fickle month-to-month, this is a hopeful sign of a surge in demand for the new year to come.
November's new single-family house numbers came in at a seasonally adjusted annual rate of 592,000. This number is 5.2 percent above the October rate, and 16.5 percent above November 2015's numbers, which landed at an estimated 508,000.
"Healthy local job markets amidst tight supply means many areas will remain competitive with prices on the rise," says Lawrence Yun, NAR chief economist. "Those rushing to lock in a rate before they advance even higher will probably have few listings to choose from. Some buyers will have to ...
The sky is falling! The sky is falling! The Fed met last week and raised rates. What does that mean for the mortgage market and mortgage rates?
Not much. The Fed funds rate is the rate that banks lend money to each other on an overnight basis. The Fed raising rates a quarter percent does not instantly translate into a quarter percent increase in mortgage rates. Mortgage rates do not run parallel to the Fed rate. The perception is that all rates rise or fall based on a Fed decision, but, the reality is that the Fed rates have less of an instant impact and are more an indication of long-term borrowing trends for all types of credit.
Mortgage Rates Are Up Already
Mortgage rates have increased substantially in the last few weeks following the election. There are many reasons for this (that we could discuss for hours), but because they have already risen around 0.5 percent or more, running to your lender even now means you are already too late.
Quick Reaction, and Then…
Mortgage rates typically see a quick jump with news of a Fed raise, but rates have already increased substantially. Why? Not only do mortgage rates not run directly parallel to the Fed rate, but often, the mortgage market has already reacted to the anticipation of an increase due to improving economic factors. Not only have we seen unemployment drop to new lows, but income growth is picking up and the stock market appears to be ...