Pierre C. Rumpf's Blog
Let's face it – buying a home in a hot housing market is no easy task. For example, if you wait too long to submit an offer on a house, you risk losing this residence to a rival buyer. On the other hand, if you rush to submit a home offer at or above a seller's initial asking price, you risk spending too much to acquire your dream residence.
Clearly, there's a lot to think about as you search for a home in a hot housing market. Lucky for you, we're here to help you overcome myriad homebuying hurdles and acquire your dream residence, even in a hot housing market.
Let's take a look at three tips to help you succeed as a homebuyer in a hot housing market.
1. Narrow Your Home Search
You know that you want to live in a specific city or town, but you still are uncertain about what type of house that you want to purchase. However, if you create a list of home must-haves and wants, you can narrow your house search and speed up the homebuying process.
Once you have a homebuying checklist in hand, you should have no trouble evaluating residences in a hot housing market. Then, you can check out these houses in person and move one step closer to submitting an offer to purchase your dream house.
2. Get Pre-Approved for a Mortgage
To acquire a home in a hot housing market, you'll likely need a mortgage. Thankfully, lenders are available that can teach you everything you need to know about a wide range of mortgage options.
Lenders can explain the differences between adjustable- and fixed-rate mortgages, describe exactly how a mortgage works and much more. That way, you can assess many mortgage options and select one that matches your finances.
After you obtain a mortgage, you can enter a hot housing market with a homebuying budget. This will enable you to further accelerate your home search and ensure you can quickly submit an offer as soon as you discover your ideal residence.
3. Collaborate with a Real Estate Agent
Navigating a hot housing market sometimes can be tricky, particularly for a homebuyer who is competing against dozens of rivals. But if you hire a real estate agent, you can receive comprehensive support as you pursue a home in a hot housing market.
A real estate agent is ready to assist you in any way possible. This housing market professional will offer insights into the real estate conditions in a particular city or town and help you map out your homebuying journey accordingly.
In addition, a real estate agent understands exactly what it takes to buy a residence in a hot housing market. He or she will help you put together a competitive offer on any home, at any time. And if your offer is rejected, a real estate agent will help you regroup and reenter a hot housing market so you can find your dream home.
Ready to buy a home in a hot housing market? Use the aforementioned tips, and you can accomplish your homebuying goals faster than ever before.
Buying your first home is exciting and you will spend a lot of time working with your real estate agent. However, before you begin searching for the right agent, here are some helpful hints to help you get started off on the right foot and make sure you are ready to purchase a home.
Check Your Credit Report
One of the most important things you can do before you start the home mortgage process is to verify the information on your credit report. Errors in your credit can result in higher interest rates or denial of credit. You can access your credit report free from all three major credit agencies. Review all items for accuracy and if you find any errors, take the time to have them corrected.
Familiarize Yourself with Loan Programs
There are many loan programs to help first time buyers. Depending on your specific situation, you may be eligible for a loan guarantee from the Veteran’s Administration, the Federal Housing Administration or other loan programs. Before you meet with a loan officer for the first time, take the time to understand what loan options you may qualify for. Keep in mind, many states have first-time buyer programs, which can be of benefit to you as well.
What You Should Know About Down Payments
If you suddenly hit a windfall lottery winning or are considering borrowing money on your credit cards to fund your down payment, slow down. There are specific requirements for down payments including the “seasoning” of the funds. Before you apply for a mortgage, make sure you know about down payment gifts, how to document the funds you are using for your down payment and other rules, which may pertain to your specific situation.
Understanding Mortgage Application & Loan Terms
Your home will be the most substantial investment you make in your lifetime. Make sure you are being an informed consumer and familiarize yourself with the most common mortgage application and loan terms. The application form for a home mortgage is a Fannie Mae Form 1003 or Freddie Mac Form 65. Once you have filled out this application, you will also receive a good faith estimate (GFE) from the mortgage lender. You will also be learning other words like points, annual percentage rate, closing costs and escrow. Do not be afraid to ask your lender to explain what these all mean to you.
Loans are often quoted in years and term. For example, a 30-year fixed rate mortgage is exactly what it sounds like. You are accepting or applying for a mortgage, which will be paid over 30 years at the same interest rate as you see at closing. Other terms may be more confusing, for example an adjustable-rate mortgage may be quoted as 5/5, which means the rate is fixed for the first five years and adjusts every five years thereafter. Make sure you understand these terms before you sign any loan documents.
Preapprovals Increase Bargaining Power
Once you have determined what you can afford to pay for a home mortgage, which can be determined using any number of mortgage calculators found online, you should apply for a preapproval. Do not confuse a preapproval with a prequalification, they are not the same although oftentimes you will hear them used interchangeably. Here is the difference:
- Prequalification — this process involves you providing the lender with information pertaining to your income and current expenses. You give the lender an idea of the strength of your credit and based on information provided, they can give you an estimate of how much you can borrow at what interest rate.
- Preapproval — this process is significantly different because you will provide the same documents you would provide for a full mortgage application. The lender will request up to three years of your tax returns, bank statements, they will pull your credit, and they will verify your bank activity. Once this process is complete, the lender will give you a letter that tells you exactly how much of a mortgage you qualify for to use when shopping for your home.
The preapproval process gives you bargaining power because you are able to meet with your real estate agent knowing that provided there are no changes in your financial situation or your credit, you are guaranteed a mortgage in the amount of the preapproval at the terms listed.
When you start the home buying process, there is a lot to learn. Most first-time buyers will be required to take a first-time home buying course before their lender will move forward. Your real estate agent can also provide you with a lot of information you will need to get started on solid footing on the path to home ownership.
A deck adds valuable outdoor living space to your home's square footage, but to be an asset, it needs to be well-maintained. If your deck has missed a few annual cleanings or is showing popped nails, splintered boards or water damage, consider resurfacing it instead of replacing it. The money you save will be significant. Here's how:
Inspect Your Existing Deck
Look for rot, termite damage, warped or weakened boards and missing screws. Fix any problems you find by replacing individual boards and railings with similar materials. Make sure everything is structurally sound and sanded smooth before moving forward with the next step.
Choose the Right Deck Wash
Step two involves giving your deck a good scrubbing to remove all traces of algae, dirt, mildew or mold that may have formed. You'll need a good wire broom or brush, eye protection and waterproof gloves, because some deck wash can be damaging to skin. You'll want to protect any nearby plants as well. Cover them in plastic while washing down your deck.
Deck wash can be painted on, sprayed on with a garden hose, or applied with a pressure washer. A simple mixture of laundry detergent, bleach and warm water may be all it takes to begin bringing your deck back to life. Once applied, work the cleaning solution into the wood using your brush or broom. Rinse clean and allow the wood to dry before proceeding to the next step in resurfacing your existing deck.
Apply Deck Stain
Lastly, you'll need to re-stain to apply a protective coating to your freshly cleaned decking. For older wood that still shows imperfections, try using a semi-transparent stain, instead of something that's clear. This will help to hide flaws and resistant stains.
You can spray, roll or brush the stain onto the deck, or you can use a combination of techniques such as spraying the stain down, then using a brush or roller to even out puddles and to trim out around railings. Apply the stain evenly, and then add the second and third coats while the stain is still damp. This helps keep old, thirsty wood from absorbing all the stain. Once applied, you'll need to re-stain your deck every other year to keep it looking its best.
The total cost to replace your old deck can run upwards of $10,000, says ProRemodeler. Compare that with the $4,000 you might spend to replace worn boards and connectors, and you're looking at a significant savings. If your existing deck is worth repairing, that's usually the better option. But it must be structurally sound by the time the work is done. If you're unsure, call in a pro for an inspection.
Many home buyers have lots of questions as they go through the buying process, especially first-time buyers. Whether you’re looking for a $50,000 house or a multi-million dollar luxury home, the questions are often the same.
How Much House Can I Afford?
Lenders use several factors in determining whether to loan you money, including your credit score, loan-to-value and debt-to-income. If you are self-employed, you could make $400,000 per year and still not afford a $150,000 home. Lenders look at your income, and if you are self-employed like many luxury home buyers, you use tax deductions and expenses to your benefit. However, doing that lowers your adjusted net income. If your adjusted net income plus depreciation doesn’t meet the debt-to-income bar for the lender, you won’t qualify for the loan. People in this situation need to find a lender who will lend based on bank statements instead of tax returns.
How Convenient Is This Location?
Luxury home buyers often have location concerns. You travel more and have more people — friends and relatives — visit. That means you need a home location that is convenient for travel. If travel convenience is a concern, ask your real estate agent about the distance to the airport, the ability to rent limos, and other travel concerns.
How Much Down Payment Do I Need?
Most loans require 20 percent down if you do not want to pay private mortgage insurance (PMI). However, if you are buying a multi-million dollar luxury home, that might be difficult if you don’t have liquid assets. Before you start looking, get a pre-approval from a jumbo lender, including the amount the lender requires with and without PMI. You can adjust the amount you are willing to spend or take the time to liquidate assets to get the down payment if you have your heart set on a home that requires a high down payment.
What Does My Credit Score Need to Be?
Conventional loans have a cap, which changes depending on your location and whether the Federal Housing Finance Agency (FHFA) increases that cap. If your mortgage is going to be higher than that cap, you will need to take out a jumbo loan unless you put enough down so that you are financing an amount below the cap. When you take out a jumbo loan, you are at a higher risk to the lender, so you have to jump through more hoops, including having a higher credit score.
If you are applying for a conventional loan, especially a loan backed by the VA, Fannie Mae or Freddy Mac, your credit score could be as low as 500. However, with a jumbo loan, your score must be at least 680. Some jumbo lenders require scores as high as 720.
If you recently added your house to the real estate market, it may be only a matter of time before you sell your house. In fact, if you know what to expect after a home listing is published, you can plan accordingly for all stages of the home selling journey.
Now, let's take a look at three tips to help you prepare for the home selling process.
1. Craft an Engaging and Informative Home Listing
Oftentimes, a home listing may dictate a seller's success. If a seller creates a listing that fails to effectively highlight a house's benefits, buyers may shy away from the residence altogether. On the other hand, a seller who crafts an engaging and informative listing can increase the probability of a fast, profitable home selling experience.
Your home listing should include relevant information about your residence, including details about your house's age and condition. Also, it may be beneficial to include high-resolution photographs of your house to help buyers envision what life may be like if they purchase your residence.
There is no need to stretch the truth in your home listing, either. Because if you fail to provide homebuyers with accurate information about your home – and these buyers discover "hidden" home problems during an inspection – you ultimately may put a potential home sale in jeopardy.
2. Make Your Home Available to Potential Buyers
As a home seller, you should strive to make your residence available to as many potential buyers as possible. Thus, if a buyer requests a home showing on short notice, you should be willing to temporarily vacate your residence to accommodate this buyer's request.
In addition, you should try to keep your house neat and tidy. That way, if a buyer requests a showing on short notice, you won't have to worry about scrambling to clean your home.
3. Know What Your Home Is Worth
After you list your house, buyers will read your home listing and set up showings. And if a buyer is truly interested in purchasing your home, he or she likely will submit an offer.
A seller generally has only a limited amount of time to assess an offer and decide whether to accept, reject or counter it. Fortunately, if you conduct a home appraisal, you can find out what your house is currently worth.
With a home appraisal, a property expert will examine your residence, as well as evaluate pertinent housing market data. Next, this property expert will offer a home valuation that helps you understand the true value of your house.
Lastly, if you need assistance as you sell your house, it may be helpful to hire a real estate agent. This housing market professional can teach you about the real estate sector and help you make informed decisions at each stage of the home selling journey.
Take the guesswork out of selling your house – use the aforementioned tips, and you can boost your chances of enjoying a fast and successful home selling experience.