Helen and Danny Cheek's Blog
The biggest area of your life that you need to understand before you buy a house is your own finances. Before you know what kind of house you can buy, you’ll need to understand your own buying power. While things like square footage, how many bedrooms you need, and finding the right neighborhood are important, you can’t go very far without some type of financing. While understanding how much you can spend on a property is one of the more serious parts of buying a home, it’s something that you’ll want to do. Knowing what you can spend on a home is a step to helping you land a home you love. If you understand your own numbers, you’ll know the chances that you have of an offer being accepted on a place you love.
The Elements Of Your Buying Power
Your Credit Score
This little three digit number has a lot of meaning behind it. This is the most basic piece of information that lenders use to determine your loan worthiness. The factors that influence your credit score include:
- Payment history
- How much you owe
- Length of your credit history
- Mix of credit accounts
- How much new credit you have opened
A low credit score is somewhere under 620. Having a score this low doesn't necessarily mean that you’ll be denied for a loan, but the type and amount of the loan you’re offered can be impacted. You’ll also face higher interest rates because of a low credit score. This means your mortgage could be considerably more expensive than if you had a higher credit score.
The 20 percent down as a rule of thumb actually offers many benefits to your buying power. This means that you’ll need 20% down of the purchase price of the home in cash. If you put this amount of money (or even more) down on a home, it eliminates the need for you to have to buy PMI (Private Mortgage Insurance). You’ll even be able to negotiate a lower interest rate. A large down payment may be especially helpful in competitive markets where there is a lot of buyer competition.
How Your Financial Picture Appears
Your assets and your debt-to-income ratio are also important factors in your financial picture that you present to the lender. Basically, all of these numbers let both the lender and the seller see how committed you are to buying a home. It is one of the biggest financial undertakings of your entire life. If you can’t show financial responsibility, then it may be a bit difficult for lenders to see that you’ll actually pay your loan back in a timely manner.
The better all of your financial numbers are, the more buying power that you’ll have. If your numbers are good, you’ll be able to afford more house. While it may not be the most exciting thing to look over all of your financial numbers, it’s a vital step in the process of your journey to home ownership.
You already know that closing costs on a home can come at a hefty price. There are a few ways that you can actually cut down on the amount of closing costs that you may have on a home.
Compare The Costs
You have the right to shop around for a lender who offers the lowest closing costs. You can even ask your lender to match the closing costs of another lender that may have them for a lower fee. Certain fees that are included in the closing are negotiable and flexible. You’re allowed to shop around for inspections, title searches, surveys, and the like. There’s nothing that says you have to go with the company recommended by your lender for each. There should be a list of services that is included in the closing costs on your estimate that you receive form the lender.
Question What Each Fee Covers
When you get the loan estimate, don’t just accept it. Take a look at each item and inquire what the fee includes. See why each item costs as much as it does. Be on the lookout for fees with similar names. The lender could be double charging you without your knowledge. It’s always good to be informed especially where large investments are involved.
You have the right to negotiate with your lender on the closing costs. You can ask for obscure and unnecessary costs to be taken off from the closing. Getting the closing disclosure form as soon as you can will also help you to settle any discrepancies before it’s too late.
Ask The Seller
Some sellers will even be willing to sweeten the deal for you by either lowering the sale price of the home or covering some or all of the closing costs. Depending on the market, you may be able to get the seller to help reduce your burden of the closing costs.
If You’re Refinancing
Every time that you refinance your home, you’ll need to pay closing costs. There are a couple of ways that you can save in this situation. One is to waive the appraisal altogether. If the home has recently been appraised, you may be able to waive the appraisal completely. You can also request an automatic appraisal rather than a full appraisal in order to save some money.
The other option that you have when refinancing to save money is to save on the title insurance. You can ask for what’s called a re-issue date, which is a less expensive rate for the title insurance for refinancers.
Closing costs are a part of the process when you buy a home. If you’re careful, you might be able to save some money on these mandatory fees.
If you plan to list your house in the foreseeable future, you should do everything possible to differentiate your residence from the competition. That way, you can show homebuyers exactly what your house has to offer and increase the likelihood of a fast, profitable home sale.
Now, let's take a look at three tips to help you optimize your home's potential.
1. Boost Your House's Curb Appeal
Your house's curb appeal may dictate how quickly your residence sells. If you allocate time and resources to transform your home's exterior from drab to fab, you may be able to reap the benefits of a speedy home sale.
Mow the lawn, trim the hedges and perform other home exterior upgrades. By doing so, you can take your house's curb appeal to new heights.
Also, if you need assistance with home exterior projects, you can reach out to local home improvement professionals. Contractors are available in cities and towns nationwide, and these professionals can help you enhance your house's curb appeal in no time at all.
2. Remove Clutter
Clutter is an eyesore that home sellers need to eliminate. Because if your home is overloaded with antiques, decorations and other items, it may be tough for homebuyers to envision what life may be like if they purchase your residence.
If you own lots of items but want to keep these belongings, there is no need to worry. You can always rent a storage unit where you can store various items until your house sells. Or, you can contact family members and friends to find out if they can store some of your belongings for the time being.
On the other hand, if you want to get rid of assorted items, you can host a yard sale or sell items online. This will enable you to simultaneously remove clutter from your house and earn extra cash.
3. Conduct a Home Inspection
Identifying home problems sometimes can be difficult. Luckily, home inspectors are available who can analyze your residence and offer valuable property insights.
Typically, a home inspector will review your residence over the course of a few hours. The inspector then will provide you with an inspection report that details his or her findings. If you analyze the inspection report closely, you can gain comprehensive insights into your house's strengths and weaknesses and prioritize home improvements.
If you need help finding a home inspector or completing other home selling tasks, you may want to hire a real estate agent as well. A real estate agent will help you revamp your house both inside and out and ensure your residence stands out to property buyers. Perhaps best of all, a real estate agent is happy to respond to any of your home selling concerns and questions, at any time.
Maximize your house's potential – use the aforementioned tips, and you can update your residence and differentiate your home from the competition.
If you want to buy a terrific house at a budget-friendly price, it generally is a good idea to plan ahead as much as you can. In fact, with a homebuying strategy in place, you can boost the likelihood of a fast, seamless homebuying experience.
Now, let's take a look at three tips to help you craft a successful homebuying strategy.
1. Think About Your Homebuying Goals
Do you want to live in a warm-weather region? Or, would you prefer to buy a house in a city or town where you can experience all four seasons? Regardless of where you want to live, you need to think about your homebuying goals and incorporate them into your homebuying plan.
Make a list of what you want to find in your dream house – you'll be glad you did. With this list, you can narrow your home search.
Also, it often helps to review your future plans as you put together a homebuying strategy. For example, if you intend to return to school, you may want to consider houses located near top colleges and universities. On the other hand, if you plan to settle down and start a family, you may want to pursue houses near parks and other family-friendly attractions.
2. Consider Your Financing Options
Buying a house likely will be impossible without home financing. Fortunately, there is no shortage of home financing options available.
Oftentimes, it is beneficial to meet with a variety of banks and credit unions. These financial institutions can teach you about myriad mortgage options and help you get pre-approved for a mortgage.
Once you have your home financing settled, you can incorporate a budget into your homebuying strategy. Then, you can check out available houses and avoid the risk of overspending to acquire your ideal residence.
3. Consult with a Real Estate Agent
Developing a homebuying strategy sometimes can be tough, particularly for those who are crafting a homebuying plan for the first time. Lucky for you, real estate agents are available nationwide who can help you complete a successful homebuying journey.
A real estate agent is happy to meet with you and discuss your homebuying goals. He or she also can review your homebuying strategy and offer expert homebuying recommendations.
Let's not forget about the support that a real estate agent can deliver during the homebuying journey, either. A real estate agent will set up home showings, keep you up to date about new houses as they become available and negotiate with a seller's agent on your behalf. Perhaps best of all, a real estate agent will help you minimize stress throughout the homebuying journey and ensure you can purchase your dream home in no time at all.
If you want to get the most out of the homebuying journey, creating a homebuying strategy is a must. Take advantage of the aforementioned tips, and you can craft a successful homebuying strategy.