How Can Homebuyers Gain a Competitive Edge?

Let’s face it – even though many great homes are available, securing your dream house at the best price can be extremely difficult due to the sheer volume of homebuyers. Lucky for you, we’re here to help you stand out from the competition so you can purchase your ideal home at a price that matches your budget.

What does it take to differentiate yourself from the homebuying competition? Here are three tips to help homebuyers gain a competitive edge over rivals:

1. Submit a Competitive Offer

There is no time for hesitation in a highly competitive real estate market. Thus, if you see a home that you like, be ready to submit a competitive offer immediately.

With a competitive offer, you can improve your chances of securing your dream home in no time at all. This offer shows that you are serious about purchasing a residence – something that may help your proposal stand out from others. Plus, a competitive offer will be based on housing market data and research, ensuring that your proposal will meet your needs as well as a home seller’s.

Furthermore, if a home seller counters your initial offer, be ready to negotiate. Keep an open mind, and ultimately, you may be able to land your dream house quickly and effortlessly.

2. Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage enables you to establish realistic expectations before you begin your search for your perfect home.

Check out what various credit unions and banks have to offer prior to agreeing to mortgage terms. By doing so, you can find a mortgage that will correspond with your finances.

With a mortgage in hand, you can start your home search. Be sure to explore lots of houses that fall within your price range. And when you’re ready to submit an offer, a home seller may be more likely to accept your proposal thanks in part to the fact that you have already secured financing.

3. Employ an Experienced Real Estate Agent

Real estate agents possess plenty of housing marketing knowledge and expertise. Therefore, they can help you streamline the process of securing the perfect residence.

Finding a real estate agent who understands the ins and outs of the housing market is paramount. This real estate professional will keep you informed about new houses in your area as they become available, set up home showings and even help you submit competitive offers on residences. In addition, if you’re ever uncertain about how to proceed, your real estate agent can offer guidance and tips throughout the homebuying journey.

Perhaps best of all, your real estate agent will respond to your homebuying concerns and queries. He or she is happy to help you in any way possible and will ensure that you can differentiate yourself from the homebuying competition.

Hire an experienced real estate agent, and you can gain a competitive edge that is sure to serve you well in any housing market, at any time.

Simple Ways to Save for a Down Payment

For many of us, it can seem like our paychecks are gone before we even get a chance to see them. With seemingly endless bills and expenses, both recurring and unforeseen, saving up for a house is a daunting task.

Fortunately, there are ways you can prepare yourself for those intimidating down payments and many closing costs.

In this article, we’re going to walk you through how you can start saving for a home right this moment. After all, every day is another day you could be contributing to your savings and taking another step closer to owning your own home.

Use a Budgeting Tool

The first step to saving and determining how much you can save is to start budgeting. Many people hear the term “budget” and get nervous thinking they’ll have to start counting the number of coffees they buy. However, there are less anxiety-inducing ways to budget.

From your phone, tablet, or computer you have access to a large number of free budgeting tools. Mint, You Need a Budget (YNAB), and PocketGuard are three of the top budgeting tools that will get you started.

With apps that integrate with your bank accounts and loan balances,  there is little work required on your part. Just set an amount to save each week or month, and direct the funds into your savings account.

Set up a dedicated savings account

Speaking of savings accounts–now is a great time to set up a new one. It’s almost always free to open a new account with your bank. What’s more, it’s a lot less tempting to pull from a savings account when it’s labeled something like “HOUSE SAVINGS – DO NOT TOUCH.”

Once you have your budgeting app and bank account set up, it’s time to dig into some of the ways you can save money without skipping meals.

Cutting Monthly Expenses

Rather than telling yourself you can’t buy any more fancy Starbucks drinks anymore until you have a house (don’t torture yourself), make a list of all your monthly expenses. That can include anything from Netflix and Spotify to haircuts and car washes.

A great way to make this list is to go through your credit and debit card transactions. If you have autopay set up, you might not even realize how many services are withdrawing directly from your accounts each month.

For each item on your list, determine if you can either eliminate the expense or spend less on it. Maybe you go for the deluxe car war rather than the basic. Or, you might pay for services you don’t use as much as you used to.

If you’re worried about having no entertainment if you drop Hulu, Netflix, and Amazon Prime, you could try out your local library system. Most of the time you can have books, movies, and music shipped for free from all around your state.

When it comes to cable, cell phone plans, car insurance, and other monthly bills give your provider a call and tell them you’re thinking about switching over to a cheaper competitor. They’ll likely offer you a discounted rate. If they don’t, follow through on your promise and call other providers to see if you can get better rates.

Renting Your Way Into Homeownership

Condominiums and houses offer rent-to-own options. Renting your way into home ownership can take the fear out of owning a home. It gives you the chance to transition from relying on a maintenance professional to make all the repairs on your home to you starting to take on more of that responsibility. Work with a realtor to locate competitively priced rent to own properties in neighborhoods you love.

Rent to Own Options
You can also research rent to own properties online. Foreclosure houses can yield auction like savings. Walk through foreclosure and short sell properties. Although these homes can net you significant savings, they could also come with repair headaches.

After you land on the home that you want to rent to own, negotiate a good price. Depending on the laws in the city where you live and on the particular rent to own agreement that you sign, you could have one to five years to rent the property before you enter an agreement as a buyer. Use this time to save a down payment on the home or another property. You could also use the time to strengthen your credit scores.

Unlike traditional home buying agreements, you may have to pay an option price before you move into the house. If you want to rent and leave the option to buy open so that it’s not a requirement that you buy the house at the end of the rental agreement, state this in the lease agreement. Other agreements may have rent with the requirement to buy legal verbiage in them. Read through your contract thoroughly. Working with a realtor to find a rent to own property? Ask your realtor to review the agreement before you sign it.

Accepting Maintenance Responsibilities
If you’re renting so that you can improve your credit and you don’t plan to buy the house that you’re renting, consider adding in a clause that makes you responsible for maintenance but that leaves you open to walk away from buying the property at the end of the lease. You’ll gain firsthand experience as to what it’s like to perform or pay for all repairs needed at a home.

Considering that maintenance is a leading reason why people put off buying a house, this option might be perfect for you. Other reasons to opt to take on maintenance while leaving the requirement to buy out of your lease agreement include if you serve on active duty in the military, work a civilian job that requires you to travel frequently or if you are planning on relocating to another area in a few years.

If you do sign an agreement that requires you to own the house at the end of the lease and you don’t obtain financing or decide not to buy the property, you’ll be out of the option money that you paid. So, give rent to own homes as much thought as you would if you were, in fact, buying the house.

Why You Should Get Preapproved For A Mortgage

When you’re shopping for a home, there’s so much to consider. Between the questions of what neighborhood you should live in and what style house you like, you need to think of the most important thing: finances.

When you think that you’re financially ready to buy a home, you often will get the notion that it’s a good time to just start shopping. There’s several steps that you must take first before you start shopping for a home. One of the first steps you should consider taking before you make the leap into home ownership is to get preapproved.

While buyers still tend to skip the preapproval process, doing this can help you immensely throughout the home buying process. While it may seem an insignificant and kind of boring step, getting preapproved is important for your finances. It may even help you to land in a home that you love faster.

It’s actually detrimental to make an offer without a preapproval, because some lenders won’t accept an offer without one. Many realtors verify and require that offers come along with the stamp of preapproval.

What Does Getting Preapproved Involve?

You may have heard of a prequalification. This is much different from being preapproved. Prequalification involves buyer provided information, just to get a sense of how much they can spend on a home. Preapproval involves credit scores, bank statements, tax returns and more. This process states exactly how much lenders will be willing to give to the borrower. All of the documents needed for preapproval are the same exact documents needed for a mortgage. This helps you as the borrower prepare ahead of time as well.

These are some of the kinds of documents that you’ll need for preapproval:

Pay stubs
W-2s from the previous year
Federal tax returns from the past two years
Two Months of Bank Statements from all of your accounts
A credit report

While a preapproval is only one step in the long process of buying a home, it speeds up the later steps of securing a mortgage. The process also helps buyers face their financial reality. Don’t put off the important process because you fear that you won’t be approved for the amount that you need. It’s also common for buyers to assume that because someone they know has been approved for a certain amount of money that they will be able to get that same loan amount as well. This isn’t always the case and another great reason to get preapproved.

Errors On Credit Reports

Often, there are errors on credit reports. That’s why you need to check them often. If you have some errors on your credit report, getting preapproved is a great way to check if there are any errors and give you time to fix them before you apply for a mortgage.

What is PMI?

When buying a home and shopping for a mortgage there are lots of new and unknown terms and one of those is often PMI. What is PMI? PMI stands for private mortgage insurance and chances are if you are first-time buyer you will have to pay it.

First things first, PMI is for the lender, not for you. Typically, homebuyers who put down less than 20 percent on their homes are required to pay private mortgage insurance. PMI protects the lender in the event that you default on the loan.

Mortgage insurance requirements vary by loan type and are not inevitable. Different loan types will have different mortgage insurance requirements. You will want to shop around because some loans have no PMI requirements at all. If your loan has PMI some lenders may offer something called “lender paid mortgage insurance” in exchange for a slightly higher interest rate.

Here are some typical loans and the PMI requirements:

FHA loans: Require mortgage insurance to be paid up front and monthly if equity in the home is less than 20 percent.

VA loans: Do not require mortgage insurance.

USDA loans: Do not require mortgage insurance.

Conventional loans: Require mortgage insurance if equity is less than 20 percent.

If you have to pay mortgage insurance you are not stuck with it forever. Once you reach an equity position of 20 percent or more you will be able to stop making mortgage insurance payments.  When you reach this position notify your lender, who will send you information on what is required for your specific loan program to get rid of mortgage insurance payments.

Looking For a Condo

When it comes to searching for a home, there are a lot of factors that you have to consider. This is especially the case if you are shopping for condos, as you will be sharing a lot of common space with your neighbors as well. The first thing to look into is the overall interactivity that goes on within the block of condos you are considering to make your home. In most cases, it is always better to find a condo that has an interactive community, because this in turn means that you never have to worry that someone might not be doing their part in keeping the block of properties maintained and in good condition.

One thing to be careful of is that some communities do not allow pets, and so if you are looking for a condo for you and your pets, then you need to make sure that the community has no problem with this. In the end, you have to find a condo that is able to be comfortable to live in, and where there is the least amount of stress. While it can be very beneficial to live in a community, it can at times be stressful if you are not one to go by strenuous rules. For some people, the idea of owning a home means that they have the freedom of choice to do what they want in their property.

One of the most important things to look into when buying a condo is the condo fees. What are they and what will they be down the road? Are they set condo fees, or could they become too costly to pay down the road? Some condos fees go up to the point that makes the great price you got on the condo not look so great because of what you are paying in taxes and condo fees. One of pluses of a condo is no maintenance and a lot of people really like that especially in your later years when you don’t want to mow the lawn or shovel the sidewalks. A condo is a great option for many buyers and you can generally get into a condo for a fair price.

Short Sale Pitfalls to Avoid

You may think buying a short sale is a good deal and many times it can be a good option. Short sales can also be fraught with complications and often can easily fall apart. Here is a list of things to be aware of so your short sale doesn’t become a long shot.

• When a house is placed for sale as a short sale the owner doesn’t always have the authority to sell the house at the advertised price. The owner hopes the bank will accept that price as a short sale.

• The negotiating process is far different than a regular sale. You often will first negotiate with a seller but remember the bank has the final say-so.

• You are making an offer to purchase blind because many lenders will not even discuss a short sale with a seller until a purchase contract is in place. There is no guarantee the lender will even accept a short-sale offer.

• Short sales often are not short at all. They can be long, drawn-out affairs. Be prepared for it to take months.

• Even though the lender may have taken their time on the short sale approval, once approved the lender often require the sale to close within a short period of time.

Due to the way many short sales happen, a buyer may have to put out money for a home inspection, appraisal, credit report and application fees paid to their lender and the sale may not even happen. So while short sales can often be a good deal they can also be a long shot. Take your time, do your research and be sure to work with a real estate professional to help guide you through the potential pitfalls of a short sale.

Get Off the Fence

Whether you are a buyer or a seller it is time to get off the fence. Despite years of bad news surrounding the real estate market, the time has come when it is both a good time to be a buyer and a seller.

Why Buy?

Here are just a few reasons why you should get off the fence and buy:

1. When investors start gobbling up real estate you know it’s a good deal. In 2011, investors upped their buying by 64%.  While it is still not time to start flipping for a profit the clock is ticking down to an uptick in prices.

2. Interest rates are historically low. You have been hearing this for a while but they are hovering right around 4%.

3. First-time buyers are in a unique position. They didn’t lose money in the housing market.

4. It’s a great deal! Prices are at all-time lows. So you may be saving as much as 40% off a home if you buy now.

Why Sell?

Here are just a few reasons why you should get off the fence and sell:

1. Inventory is shrinking. Demand is up and in certain areas and price ranges there is limited inventory so putting your home on the market now will most likely result in a sale.

2. Mortgage availability has stabilized. Mortgage restrictions are loosening and especially first-time buyers are able to get mortgages as they were not affected as much by the financial crisis.

3. Unemployment is not as bad as you think. One is 30 Americans is unemployed as a result of the recent financial crisis. There are lots of able buyers out there.

4. Houses are selling and some are even going to bidding wars. Homes that are priced according to the market are selling and selling quickly.

5. Don’t wait for prices to increase. This could be a long wait.


Is Flipping For You?

The recent drop in homes prices, affordable mortgage rates and the popularity of television shows showing investors turning over homes has many people wondering if they can make money flipping homes. Flipping a house simply means buying and then selling a home quickly for profit. There are different ways to do this, but if you are interested in buying and selling houses, or just want to find a good deal to invest your money in. You will want to follow some tips on how to make sure you make money and not end up busting the budget.

1. KNOW THE AREA

It is not just about the house you want to buy but also the area. Focus on buying homes in an area that holds value and where homes sell quickly. The golden rule of a home, location, location, location, applies here as you will want the home to be able to be sold quickly. Get to know the average costs and days on market for homes in that area. The more information you have about the market you have chosen, the better decisions you can usually make when it comes time to buy.

2. DO NOT GET EMOTIONAL

This is a business venture; your goal is to make money. Emotions and money rarely mix well. Do not get emotional about house flipping. When choosing colors, fixtures and carpets go neutral, you will not be living in the home. Be careful of becoming too attached to the flip. Choose a price to sell the home, do not overprice the home. Overpricing typically leads to you holding the flip longer thus reducing your profit.

3. KNOW YOUR LIMITS

If you are new to flipping homes, it is important to know your financial and work limits. The budget will always be more than you anticipate, plan for unexpected problems. Start with homes that mainly have cosmetic problems. Look for houses that need new, modern paint or updated fixtures. Homes where the outside yard and landscaping are unappealing are usually a great buy and can yield more profit. Curb appeal is usually a problem that can be fixed very easily and relatively inexpensively while greatly increasing the value of the home.

4. HAVE AN EXIT STRATEGY

The point of flipping is to get in and out as quick as possible. Every day that you own the homes costs you money. Have a plan and know exactly what you’re going to do with the home before you buy. Make a schedule of when work will get done and drop dead date of the house going back on the market. If you don’t know if you can sell it quickly, don’t buy it.

How to Prepare Buy Your First Home

You’ve been thinking about buying your first home and it is a very big decision. It is typically not a decision you make overnight instead you need to take the time prepare yourself.  Here are the basic steps that you should follow when it is time to buy a home.

  1. Ask are you ready? Home ownership is quite different than renting. It is a lot more expensive than renting. You will have added expenses and responsibility. There will be expenses like repairs, added utility costs, such as garbage and water, plus taxes and insurance related to your home. You will want to make sure to have an emergency fund, before you purchase your first home.
  2. Shop for a loan. Your first step will be to get preapproved. Knowing how much you can afford will help you to look for homes within your price range.
  3. Figure out how much you can afford. Just because you are preapproved for a certain loan doesn’t mean you can afford that in the real world. A good rule of thumb is to keep your mortgage along with your taxes and insurance between twenty five and thirty percent of your income. You don’t want to be house poor.
  4. Use a real estate professional you can trust.  A good real estate professional will listen to your wants and needs carefully. It is important that you are also educated on the process of buying a home. A good real estate professional will help meet your needs while navigating you through the process and advocating for your best interests.