How To Buy A Home In Today's Market | ||
|---|---|---|
Also, lenders are offering attractive rates and innovative financing, such as buy-downs and various adjustable loans. Here are six ways buyers can take advantage of today's real estate market.
Be Realistic
Set your site realistically; don't expect to move directly into your dream home in the most expensive part of town. Get a toe in the homeownership door by buying a modest place, modestly priced - in a good location. Improve your home as you can afford to, and/or let your equity build to help you buy the dream house in the dream location later.
Closing Cost Help
If you have not been able to save for a downpayment and closing costs, consider:
- Negotiating a gift, loan or shared equity arrangement with parents or other people looking for a good investment.
- Sell something of value with the realization that you will be able to replace it later
- Financing the Closing costs, if your lender agrees
- Using a tax refund
- Borrowing on your life insurance or securities
Pre-Qualify
"Pre-Qualify" yourself as a borrower by calculating what price home you can afford. Generally (depending on lender and type of financing) lenders consider your total basic monthly affordable housing cost, including mortgage principle and interest payments, real estate taxes and insurance payment. Your affordability is based on 28% of your gross monthly income. Or, with additional long term debts included the ratio is 36%. Remember: Some lenders extend these limits, based on their assesment of you financial situation and the loan plan you select. As a pre-qualified buyer, you will have an advantage over other buyers who aren't, when sellers consider your purchase offer.
Innovative Financing
Get acquainted with the various kinds of loans available: fixed rate, adjustable rate, government backed loans (FHA and VA), assumptions, buydowns, blended loans, seller takebacks, and more. (Terms and interest rates vary considerably - among loans and among lenders; these factors, along with your income and length-of-ownership expectations, must be weighed - and we are here to help you do that.) FHA loans, for example, allow first-time buyers to put as little as 3.5% down. Housing costs cannot be more than 29% of pre-tax monthly income. Housing plus other debt cannot be more than 41%. These are generous standards compared to conventional financing, which means your buying power is increased. Ask us about loan ceilings.
Shop For A Lender
Of course, you want the best terms you can find. If you run into inflexible qualification requirements, don't be discouraged. Some lenders are simply tougher than others. In general, look for these characteristics in a lender:
- Ability to explain loan programs plainly and simply
- Capability of getting your loan processed quickly
- Dependability
Consult A Professional
There are more details involved in buying a home than we have room to outline here. If these basics seem appealing, let us help you understand the home buying process. Feel free to give us a call or send us an email.
Next Home Buying Article: Homebuyer Checklist
