You probably instinctively realize that rising interest rates will affect home buyers. The interest rate you pay can make a big difference in the size of the home loan you will qualify for as well as the price of the home you’ll be able to buy. Mortgage brokers use the monthly mortgage payment to determine how much you can afford to pay. Of course the larger the payment, the harder it is to qualify.
Interest Rate And Its Effect On Affordability
All mortgage payments include principal and interest as part of the total cost. Lenders use this payment to determine how much you can borrow for the home loan. Commonly, you can have 31-35% of your total monthly gross income as a loan payment.
Risks Of Waiting To Buy
We are still seeing all-time low rates but more increases are predicted. A home mortgage is the best hedge against inflation. By purchasing a home now, you lock in your monthly housing cost, which as we’ve already seen is the largest monthly expense for most families. Interest rates are one of the biggest factors that affect your ability to finance a home purchase. Along with your credit score and employment history, the amount of interest you pay on the loan has a big impact on affordability.
There are plenty of real estate terms used in transactions. Both buyers and sellers find terms like “pre-qualification” and “pre-approval” used interchangeably. Is there a difference?
The first step in obtaining a home loan is to meet with a lender. The lender will discuss income, job stability, debt and credit. Once the lender has performed a basic review of the qualifications and run credit, they will issue a pre-qualification letter to the potential buyer. This letter will identify the maximum sales price that the lender is willing to lend. The pre-qualification letter is used to provide evidence that the buyer has been reviewed by a lender and is vouching for their ability to obtain a loan.
A pre-approval is quite different. In this case, the lender collects all the necessary information and proof of eligibility and has it reviewed by an underwriter for approval. A pre-approval letter is almost like shopping with cash, the only remaining piece of the puzzle is the property you are buying.
Selling your home doesn′t just mean hiring a realtor to stick a sign out front. There are a lot of preparations you should make to ensure you get the best offer possible in the shortest time.
Repair. Just because youve gotten used to the cracks in the walls and the rattles in the radiators doesnt mean a buyer will too. If you have hardwood floors that need refinishing, be sure to get it donehardwood is a huge selling point. Buyers like to snoop around, so be sure to fix any sticky doors or drawers as well. Finally, dont forget to address any issues with the exteriorfences, shingles, sidewalks, etc. After all, without curb appeal, some buyers may never get to see the inside.
Neutralize. You want buyers to see themselves in your home. If your living room has lime green shag, wood-paneled walls, and all your collectibles and personal photographs, this will be much harder for them to do. Try replacing any bold color choices in your floors and walls with something more neutralbeiges, tans, and whites. Repainting and reflooring will make everything look fresh and new, and help prospective buyers imagine all the possibilities.
Stage. Once your house is clean and updated, its time to play dress up. Home stagers can add small details and dcor touches that will bring out the possibilities in the various spaces in your home: lamps, mirrors, throw rugs and pillows, flowers, decorative soaps and towels, patio furniture. Home staging can be particularly useful if your home is especially old or if the exterior looks dated. Think of it as a little mascara and rougeif its done right, you notice the beauty, not the makeup.
Home sellers and real estate agents often fear the winter months because it seems like a poor time to list. The truth is that winter can be a great time to list your home for sale.
Most say that taking your home off the market in the winter or waiting to list until spring is the best way to sell your home. The truth is that if you are trying to sell your home, wouldn’t you rather list while the competition is low?
When the summer ends, oftentimes, homes are removed from the market because sellers mistakenly believe they need to wait for the spring. But when listings flood the market in April, prices can go down as a “buyers’ market” takes hold and inventory increases.
Buyers in the winter also tend to be more serious about a home purchase. The holidays are a time to relax and enjoy family and friends. In real estate, studies show that if a buyer is out looking for a new home during these months, they have a reason to move, which tend to create better offers. Home sellers can enhance their ability to capitalize on the slower pace and smaller inventory by listing their homes for sale now. Winter is the perfect time to get the highest possible sales price while the competition is drinking pumpkin spiced latte and waiting for the spring.
Buying a home can be very exciting but it can also be confusing, especially to first-time buyers. The truth is that buying a home can be a simple and stress-free transaction, if home buyers follow a few simple tips.
1. One Step at a Time – Home buying is not a one-time moment but a series of steps. Make decisions as they come, as you move through the process make sure each discovery is one you can live with.
2. Start with a Lender – Understanding your financial decision is your first step towards homeownership. Talk to a lender first so you know your parameters and limitations ahead of time.
3. Do Your Due Diligence – Never assume when buying a home. Have a professional home inspection and take the discoveries and disclosures seriously.
4. Follow Your Gut Instinct – If you think something is off, then follow up and double check.
5. Move Quickly When Necessary – When you find the right home, don’t wait too long. The first step is writing an offer, there are many opportunities along the way to change your mind, so if you find the right home, write the offer.