September 2022 WK 1
For many, home ownership was on the radar but with so much uncertainty in the economy there may have been a bit of caution and missed opportunities. There is no way we can see into the future but what you can be assured of is as long as you are paying rent you are contributing to someone else's future rather than your own - your landlord is growing their wealth while you continue to fall behind. The numbers do not lie. As you pay rent each and every month there is a big fat ZERO of equity at the end of your lease. With mortgage payments a portion goes towards your equity so when you are ready to upgrade your home, or have to move to a new city because your career is growing, you will be ahead. With mortgage rates historically low now is the time to take advantage of home ownership and the purchasing power that this gives you. This is why I put together the steps to help make home ownership a reality, to contribute to your future, and to cut off your landlord.
The first step is deciding to buy and I have already covered some reasons to help bring you to that decision. There is a lot to think about when making this type of purchase. For most of us, it will be the biggest and most important purchase we will make in our life time. Know that you do not need to be an expert in the real estate market, chose a local Realtor® to serve as your expert and enjoy the experience.
That brings me to step two, hire your agent. Finding the right agent is very important and the secret is find the agent who puts you, the client, first. Your agent should be able to educate you about the market, analyze your want and needs, guide you to homes that fit your criteria, coordinate the work of other needed professionals, negotiate on your behalf, check and double check paperwork along with deadlines and solve any problems that may arise without complaint.
Step number three is very important unless you have cash to buy and that is securing financing. This will tell you how much home you can afford and there are several mortgage programs available but they have a few things in common. They all look at your credit but not all have the same guidelines, and they want you to prove the ability to repay. Do not assume your credit is not strong enough or you do not have enough money for a down payment. Many buyers have been surprised of the programs available to them that help obtain their dream of owning a home. Remember, your rate and credit will determine how much home you can purchase. You can control your credit but the rate you cannot control. As mentioned before, rates are at a historical low and there is no way to know when they will rise and take away your purchasing power.
Now that you have secured your financing it's time for step number four -find your home. This is the time you will sit with your Realtor® and review your specific needs and wants. There is a lot that goes into this conversation from location, size, single family or condo, along with features and amenities. It's good to note that you may start with one direction but as you continue to view different properties that you may make a few adjustments and that is okay. Remember to have fun on this step you do not usually buy a home very often so enjoy this time and if it takes awhile until you find the right home you will have some good stories to share when you have your house warming party.
Congratulations you have found your home and now you are ready for step number five make your offer. There are three key components of an offer - price, terms and contingencies. Price is obviously the amount you are willing to pay for the property. Terms cover the financial parts and timing factors that will be included in your offer. Contingencies are clauses that let you out of the contract if the house has problems that didn't exist or that you were not aware of at the time of the contract. Once your Realtor® has provided information about the fair market value you will be able to know the right price for the property. Look to your Realtor® for their expertise and the ability to provide the data about the area that you want and need.
Wow! We have come a long way but now it's time for some home work because your offer is accepted and taken us to the final steps. Steps number six - perform due diligence and communicate with your lender. This is the time that logic has to trump emotion and where we always remind our buyers to not fall in love with the home until you get the keys in your hand at the closing table. The home will need to be inspected and this is when the home inspector will discover this issues no matter how large or small and sometimes the inspection report can be very lengthy. This is the time that you will decide if you want to take on the issues or move on. The other side is the underwriter and they can seem to be very needy at times asking for all kinds of documents and questioning every dollar in your account. Be sure not to utilize your credit at this time by completing a department store credit card to save money off of a purchase or that desire to buy a new car. Hold off until after your purchase your home because it could kill your financing and 'bye bye new home'.
Well we have made it to step seven - closing. Be sure to stay in touch with your lender and Realtor® they may need to have documents signed or sent into the underwriter as the closing deadline is around the corner and you do not want a delay. Time to get your homeowners insurance established and your agent will let you know about all your utilities contacts so they will be turned on when you are ready to move in. WooooooHooooo!! You are now a home owner with keys in hand. Way to go! You Did it!!!
But wait... you are almost done step eight protect your investment for years to come. It is better to keep up than catch up; for maintaining your home fix the small things watch for leaks, damage and wear. When a storm passes through take a walk around your home inside and out. It is easier to fix small problems than bigger ones and a lot less money. Now your Realtor's® job is not over either. They can help with information about your tax returns, finding contractors and repair services and a great resource for tracking your homes current market value.
There is a lot that goes into buying your home but with the right Realtor® your home buying process can be seamless and an enjoyable experience with lots of great memories. If you are thinking about buying or know someone who is thinking about buying we can help at Towerside Realty. Call us at 407-454-9800 and ask for Ron or Jennifer to set up an appointment today.
The understanding and knowledge about how your credit score develops is key to financial success and freedom.
Lenders and creditors confidence increases with good credit history when they loan money to you. When your credit history shows you have paid back your loans as agreed, lenders are more likely to extend credit again. The positives of good credit, you can borrow for major expenses, such as a home, car or education and the biggest positive is you can borrow for a lower cost than with weaker credit which means good credit helps you save money.
There are many formulas used today to give a snapshot of your creditworthiness predicting how likely you are to repay your debts. The most commonly known one is from Fair Isaac Corporation (FICO). Their website (www.myfico.com) shares your credit score is determined using the following factors:
Payment History (35%) - Have your payments been made on time? Have you ever filed for bankruptcy or lost your home to foreclosure? How frequently have your bills gone to collections?
Amounts Owed (30%) - How much do you owe to creditors and lenders?
Length of Credit History (15%) - How long have you had credit?
New Credit (10%) - Does your credit report indicate that you have made numerous applications for new credit and are potentially taking on too much debt? Did you recently receive multiple lines of credit in a short period of time?
Types of Credit Used (10%) - Does your credit report show a "healthy" mix of credit types in use?
Create and Manage Your Good Credit
Understanding and educating yourself to use credit wisely can start your path to homeownership and saving money. The credit decisions you make today will impact your financial future. Here are a few tips to start or strengthen your credit:
Open checking and savings account. When you have your checking and savings account be sure to avoid unnecessary minimum balance fees, never bounce checks and make regular deposits. When applying for a mortgage your lender will request bank statements. More to come later about bank fees and what to look for in a bank vs credit union.
Use credit cards carefully. Credit cards give you great flexibility and safety but can also cost use hundreds or thousands of dollars in interest alone. Allowing your credit card balance to go higher than 30% of its limit unpaid each billing cycle or go over the limit will not only cost you but weaken your credit. Focus to pay them on time and do not let the balance roll over more than the 30% of each limit will show lenders our ability to pay on time and that you have the ability to manage your debt without over spending. This will keep your credit growing and help you save money, see the trend.
Establish credit independently. Very important for both partners in a marriage or relationship to establish their own credit to achieve financial goals and protect against unforeseen circumstances. I have seen many times a widow or widower has to close credit accounts because of death and only to find out they have no credit history for themselves. Be sure to communicate with each other to ensure that neither has an excessive amount of charges that cannot be repaid.
Honor your promises to pay. This is extremely crucial. You must honor your promise to repay loans or credit cards on time and in the amounts scheduled. Contact your lender or creditor immediately if you are experiencing difficulty making payments.
Know what's in your credit report. Go to www.annualcreditreport.com each year to check your credit to ensure accuracy. This site was credit to provide you a free credit report by law from the three credit bureaus (Equifax, Experian and Transunion). When you are planning to make a large purchase like a home be sure to check your credit so there are no surprises.
This is the time you must use caution. Avoid disreputable credit repair companies at all cost. Those that promise to repair and take your money which could lead to more debt. Go to the three bureaus to follow their steps on improving your credit it cost you ZERO.
Take action now to strengthen your credit because when you want to use your credit and it's not ready to be used you will feel the pain with higher rates and more money coming out of your pocket. Strong credit will give you the financial freedom you are looking for help you increase your savings and help you meet all your financial goals.
If you would like more information about this topic or interested in what it takes to buy a home or sell your home please contact me at 321-332-8049 or firstname.lastname@example.org
Thank you for reading my blog and please come back and visit www.towersiderealty.com.com for future information to give you what you need to meet your financial goals.
Ron Roberts SRS
Curious about local real estate? So are we! Every month we review trends in our real estate market and consider the number of homes on the market in each price tier, the amount of time particular homes have been listed for sale, specific neighborhood trends, the median price and square footage of each home sold and so much more. We’d love to invite you to do the same!
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