Homebuying 2021, Getting It Done - Mortgage Edition

Homebuying 2021: Getting It Done, Mortgage Edition

If you are currently in the market for a home, you may have been surprised at the current real estate market. On one hand, home prices have risen significantly to all time highs this last year. In many markets, multiple offers are the norm, and most homes are selling for more than the listed price. On the other hand, mortgage rates remain at record lows, which means home affordability is still within reach. 

 

Get Your Pre-approval Early | Pre-approval is essential in today’s market because many sellers are looking closely for any chance that you might not be able to close. Being pre-approved helps to put their mind at ease. Pre-approval also lets you know how much house you can afford. With many homes selling for over the asking price, it also helps you to know how much home you can actually afford. Understanding your purchasing power from the start gives you more confidence.

PRO-TIP: Many online mortgage lenders offer pre-approval generated on the fly in minutes, and you are under no obligation to use them when you proceed with a purchase.

Put Away Your Credit Cards & Check Your Credit Scores | Checking now and addressing anything that comes up will alleviate stress before you are scheduled to close. Don’t wait to fix errors or issues on your credit report, changes and updates take time so give yourself plenty of it. And, lots of spending now may impact your credit score (even if you pay it back). Spending can also increase your DTI ratio and limit your purchasing power. Also, decreasing your spending now is a great way to have a nest egg ready for closing costs, down payment, moving expenses, and renovation costs.

Housing Inventory Will Be LOW! | Demand is high, and inventory is at an all-time low. Would-be sellers have no place to go.Current price increases make it hard to move up, and there are fewer move down homes on the market, which has caused many sellers to stay put for the time being. This supports our previous point, being prepared is essential so you can make an offer at a moment’s notice.  

Your Perfect Home May Be A Fixer-upper | Many of us are not typically content with upgrades that previous owners or developers make, so why pay more for those? We want to make a home ours with our own special touches. The key is to know the difference between design challenges, superficial blemishes, and major problems. Some sellers may be thinking that they can finally sell their ‘money pit’ because of today’s hot market. Try to be pragmatic, and not make any emotional decisions. And, as always, ask your REALTOR® for advice. 

Be Prepared To Negotiate, Fight, Or Walk Away | You may encounter bidding wars. It is ok to pay more than the asking price, but remember another opportunity is right around the corner. Don’t let your emotions get the best of you. It is ok to walk away. Trust your gut. If you win an offer, get an inspection, even if only for informational purposes. You can still negotiate items that need to be addressed before closing. 

Do Your Homework | Shop around for a mortgage professional. Get referrals. Ask your friends and family. Rates are important, as is service. Your REALTOR® may have suggestions, get a quote and ask about special incentives offered. Think about how you want to structure your mortgage including down payment, type of loan (FHA/VA/Conventional), and term. A 30-year fixed loan may not be the best option for you. Adjustable Rate Mortgages (ARM) may be an option for you. Do your homework, and make the choice yourself. 

With Covid-19 restrictions easing and people starting to vacation, we may start to see a breather in the intensity of the market and some new opportunities if you are in the market for a home. Now is the perfect time to check your credit, shop for a mortgage lender, and start looking at homes that are for sale now. If you would like to be connected with a REALTOR® that can help you get started, contact us today.

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