How to Beat the Competition This Buying Season
Mortgage rates are very low and home prices are stable or rising in most communities across the United States, and a recent poll by NeighborWorks America found that nearly nine-of-ten consumers say that homeownership is at least somewhat important. In order to get a leg up on the home buying competition, NeighborWorks recommends consumers follow three simple rules to help make home buying go smoothly.
1. Consult a housing counselor for a homebuyer check-up.
Knowing the numbers that matter when buying a home is extremely important. More than two-thirds of consumers in a NeighborWorks America survey said that the home buying process is complicated. The best way to get a thorough understanding of the process is to consult with a nonprofit housing counselor. Look for a housing counselor who is a certified professional who could walk a home buyer through the different types of mortgages and interest rates; the effect credit scores have on being approved for a loan; and how much down payment is needed for purchase.
Note: I agree with NeighborWorks that a counselor could be of value, however every state or region of the country has different procedures. You just need to be aware that a general counselor may not be familiar with the transaction process in your area. For instance: Did you know that a purchase contract in Arizona MUST be accompanied by the proper Pre-Qualification form from your lender?
“The housing market is tough right now, with fewer homes on the market than usual, and new mortgage rules and many mortgage products from which to choose,” says Marietta Rodriguez, vice president for homeownership and lending at NeighborWorks America. “To be in the strongest position to make an offer that is accepted, consumers have to be prepared. That’s where initial consultation with a housing counselor is a great first-step.”
2. Build a budget.
Even if you’ve never kept a budget before, there’s no better way to accurately know how much money is coming and going (and where) than with a budget. Pursing homeownership without a clear budget could be a recipe for disaster. National surveys have shown that less than one-third of consumers have a budget. Going into this home buying season with a budget that includes potential changes in commuting costs after relocation, home maintenance expenses, and even estimates for changes in life circumstances, such as becoming a parent or paying for college, will give a consumer a leg-up on the competition and provide peace of mind.
“Once all the numbers are on the table, it’s easier to see what type of home suits a family’s budget and needs, what might be necessary financial trade-offs, and what could be a direct line to trouble,” says Rodriguez.
3. Be determined and informed.
NOTE: This is where your agent earns his keep. Intimate knowledge, not just of the area in general but of the neighborhood in which you are buying, is necessary for you to make an informed offer on a home. Too high and you’ve burned all your potential equity. Too low and you may be kicked to the curb.
While the supply of homes on the market is anticipated to be tight this season, making a bid and winning one on a home that isn’t right could lead to trouble. Getting into a bidding war could weaken a consumer’s determination to get the right home at the right time and for the right price, and push a consumer to the edge of their budget or beyond.
The mortgage process is very involved and it can, especially now, be frustratingly slow. Pressing ahead without understanding all of the facts and costs could be disastrous, especially when it comes to home inspection decisions. NOTE: Did you know that some repairs noted by the home inspector can be required by your lender? You should know what those are and how to handle them.
“Forgoing a home inspection to move up a place in the bidding process could be costly down the road if problems and defects with the home arise. NeighborWorks recommends that homebuyers have a home inspection and know as much as possible about the inside of a home as the outside,” adds Rodriguez. NOTE: I never EVER suggest that a buyer forgo a home inspection. Never.
Following these three tips will help ensure homeownership success this season and for the long run.
Source: NeighborWorks.org Reprinted with permission from RISMedia. ©2016. All rights reserved.
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Ever wonder what Closing Costs you’ll be responsible for when you buy or sell a home? Check out our infographic and article:
Who Pays for What?
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