Recommendations For Buying a New Home

Despite the Coronavirus, experts believe that the upcoming year will be one of the best years to buy a home for the foreseeable future. We’re currently in a buyer’s market, and the future brings more of the same. We expect a higher number of homes for sale than there are buyers in the market. Property is in large supply while demand is lower than average. With that in mind, now is the time to put plans into action.

Mortgage rates are at rock bottom, so time is of the essence. If you’re in the market or have been thinking about buying a new home, the new year presents a unique opportunity that any home buyer should take advantage of. Upcoming benefits include reduced closing prices, waived closing costs, and mortgage modifications. If you’re in a position to buy a home, now is the time to pull the trigger. Let’s look at a few buying tips that will help you along the way.

1. Track and Fix Your Credit Score

When it comes to obtaining an affordable mortgage, credit score plays one of the most critical roles. Whether you’re buying your first home or a 3^rd investment property, your credit score affects the final interest rate. If you have an interest rate between 700 and 750, there is some room for improvement. 750 will generally get the best rates. On the flip side, a credit score of 580 or lower will seldom be accepted. If you’re in this lower range, you should take steps to use credit responsibly, pay off debts, and then jump back into the home market.

2. Keep an Eye Out for Foreclosures

The past year has brought many challenges—economic uncertainty among them. Many mortgages are currently propped up by government assistance, but that won’t last forever. When the unfortunate does occur, more and more homes will enter foreclosure. They’ll show up for auction a few months later. House prices will fall, providing an opportunity for a drastic discount. Foreclosures are lamentable, but they present an opportunity for the prepared buyer.

3. Work Out a Budget

There are general guidelines for house affordability—for example, a rule of thumb says that you shouldn’t own a home more than 3x your annual income ($300,000 on a $100,000 yearly salary, for example). However, this rule depends on your spending habits. How well do you know yourself? Do you need to indulge in the fastest internet and a massive cable package, or can you get by on a couple of streaming services?

You may not be able to afford a higher-priced house if you also live a life of luxury on a moderate income. When you add property taxes, maintenance, and insurance, your budget changes substantially.

4. Consider Your Down Payment

Your down payment, alongside your income and credit score, will determine your loan amounts. Unless you’re investing your money at a substantial return, a larger down payment is usually better. However, the minimum down payment for an FHA approved loan is 3.5% of 10%, depending on credit score. You’ll also need to consider closing costs in your overall loan or down payment.

Larger down payments of 20% or higher can indicate to sellers that you’re serious about buying and you’re ready to make an offer today. Plus, it reduces the overall interest amount paid over the life of the loan. Again, depending on your investment strategies or ability, putting more money down is almost always a good decision.

5. Select the Right Lender and Get Preapproved

Low-interest rates are essential, but they shouldn’t be the only factor you consider when selecting a lender. It would help if you looked through the fees, flexibility, and customer service level provided with your loan. The type of loan offered is also important. There are drawbacks and advantages to adjustable-rate mortgages. If you’re looking to move in less than ten years, they can be beneficial. If you need certainty, they might not be the best option.

Preapproval is crucial, especially for a first-time homebuyer. Knowing how much money you qualify to borrow helps you set a budget and signifies to the seller that you’re prepared and mean business. Plus, the preapproval process is generally fast and simple.

6. Work With a Reputable Real Estate Company

As a homebuyer, an excellent realtor can be a game-changer. The agents at Henderson Properties put you first and represent your interests in price and term negotiations. A friendly, community-oriented real estate company will save you time, money, and headaches. Plus, a commission is paid by the seller, so hiring a buyer agent comes at no cost to you.

Contact us today if you are in the Charlotte, North Carolina area and need help finding a new home in the new year!