How To Know When It Makes More Sense To Buy Than Rent

Renting is a great short-term housing solution for millions of Americans each year. And, for those who don’t want the responsibilities of homeownership, it can also serve as a longterm lifestyle for those uninterested in equity. However, if you do hope to someday purchase a home, there are several reasons it is one of the best financial decisions in the long run.

Finding out when is the right time to buy a home is a difficult question to ask yourself. You’ll have to consider your current budget and future financial goals, your employment situation, and personal lifestyle preferences.

In today’s post, I’m going to discuss several of these considerations to help you determine if now is the time to buy a home or if you should continue renting for the time being.

Mortgage rates through history

One of the features of homebuying that is largely out of your control is the historical average mortgage interest rates.

While your specific rate will be based on things like your income and credit score, as well as the type of mortgage you choose, real estate trends will also have an impact on the rate that lenders use.

Rates are, on average, lower in the last five years than they were throughout the 80s, 90s, and 00s. With rates under 4%, these levels are unprecedented in the last 3 decades. However, last year did see a slight increase to 4.1%.

What are your long and short-term plans?

Many people who are considering buying their first homes are more concerned with whether it’s  financially feasible than if it fits into their life and career goals.

Before you start shopping for houses and contacting lenders, it’s a good idea to sit down with your family or significant other and start thinking about a timeline.

First, are you prepared to live in your next home for 5-7 years? This a good baseline for the amount of time you need to stay in a home to make it worth the costs.

Next, would you have better career or education prospects if you were to move elsewhere in a few years?

Of course, these questions are not objective–you may never know for sure which is the best decision. However, having the conversation is vital to moving forward.

Are you prepared for the extra workload?

Homeownership is work. Aside from just having to mow the lawn and take out the garbage, you’ll also be responsible for repairs and maintenance that previously your landlord was required to do.

The good news is you can learn most things on YouTube. However, some repairs can be costly and require calling in a professional. Just like owning a car, homeownership has it’s associated upkeep expenses.

However, with that added responsibility comes independence. You can paint and change your home how you see fit without worrying about losing a security deposit.

Start considering these questions now and in due time you’ll have a better understanding of your current and future goals. This way, you’ll be able to choose the best possible time to buy a home.

Get Ready to Buy a House in a Seller’s Market

Purchasing a home in a seller’s market may prove to be difficult. Fortunately, we’re here to offer expert guidance to ensure you can find the best house at the lowest price, regardless of the present real estate sector’s conditions.

Now, let’s take a look at three tips to help you get ready to pursue a home in a seller’s market.

1. Assess the Housing Market Closely

A seller’s market likely features a shortage of high-quality houses. As such, you’ll want to analyze the local real estate sector closely so you can identify your dream home faster than ever before.

Take a look at the prices of recently sold houses in your city or town. This information can help you understand the average price range for homes of all sizes in your area. You also should find out how long these homes were available before they sold to understand the current pace of the real estate market.

Furthermore, you should make a checklist of home must-haves and wants. Once you craft this checklist, you can assess the houses available in your city or town and map out your homebuying journey accordingly.

2. Get Pre-Approved for a Mortgage

In all likelihood, you’ll need to act fast to acquire your ideal residence in a seller’s market. If you have a mortgage in hand when you submit a home offer, you may boost your chances of receiving a “Yes” from a seller.

A home offer that is contingent on a buyer’s approval for a mortgage often is far from ideal. If a seller receives this type of offer, he or she may be reluctant to accept it, as there are no guarantees a buyer will be able to obtain the necessary financing to acquire a home.

Comparatively, a buyer who gets pre-approved for a mortgage can enter a seller’s market with a budget in hand. And if he or she finds a great house, this buyer can submit an offer without having to worry about getting financing at a later time.

To get pre-approved for a mortgage, you should meet with a variety of lenders. These financial institutions can teach you about a wide range of mortgage options and help you find the right mortgage based on your finances.

3. Collaborate with a Real Estate Agent

A seller’s market can be tough to navigate, regardless of whether you’re a first-time or experienced homebuyer. Thankfully, real estate agents are available who can guide you along the homebuying journey.

Typically, a real estate agent will learn about your homebuying goals. He or she then will keep you up to date about houses that meet your criteria, set up home showings and help you submit offers on residences. And if you ever have homebuying concerns or questions, a real estate agent is ready to respond to them at any time.

Prepare to buy a house in a seller’s market – use the aforementioned tips, and you can move one step closer to acquiring your dream residence.

Reasons to Accelerate the Homebuying Journey

If you plan to pursue a house, you likely want to enjoy a seamless homebuying experience. Although you may take extra steps to err on the side of caution as you explore myriad homes, there may be times when it helps to be an aggressive homebuyer.

Ultimately, there are many reasons why you may want to be aggressive and try to accelerate the homebuying journey, such as:

1. You’re facing a tight deadline.

If you have only a certain amount of time to buy a house, it may be a good idea to be aggressive. That way, you can accelerate the homebuying journey and acquire your ideal residence before time runs out.

For those who are facing a tight deadline, you may want to stay on top of new houses as soon as they become available. Fortunately, if you work with an expert real estate agent, you can do just that.

An expert real estate agent can keep you up to date about houses that fall within your price range and are located in your preferred cities and towns. As a result, this housing market professional can help you secure your dream house faster than ever before.

2. You discover your dream home and don’t want to risk losing it to a rival homebuyer.

If you find a house that fulfills all of your homebuying criteria, there is no need to wait to submit an offer. In fact, if you hesitate, you risk losing your ideal residence to a rival homebuyer.

Of course, when submitting an offer on a house, it pays to be realistic. If you analyze the housing market closely, you can understand a house’s current value and submit a competitive proposal right away. As such, you can boost the likelihood of receiving an instant “Yes” from a seller, as well as improve your chances of enjoying a successful homebuying experience.

3. You possess the homebuying confidence and expertise that you need to succeed.

An informed homebuyer should have no trouble assessing the housing market and finding a residence that matches or exceeds his or her expectations. Thus, this homebuyer may be more likely than others to quickly discover a terrific house at a budget-friendly price.

To build your homebuying confidence and expertise, it may be beneficial to collaborate with a real estate agent. This housing market professional can teach you everything that you need to know about purchasing a house. By doing so, a real estate agent will ensure that you can achieve the best-possible results throughout the homebuying journey.

Let’s not forget about the housing market insights that a real estate agent can provide, either. A real estate agent can help you differentiate between a buyer’s and seller’s market, submit a competitive offer on a home and much more. Therefore, with this housing market professional at your side, you can go from homebuyer to homeowner in no time at all.

Ready to start your search for your dream house? Become an informed homebuyer, and you can speed up the homebuying journey.

3 Tips for Finding an Inexpensive Home

Browsing the real estate market may seem like an exhausting process, particularly for those who are searching for inexpensive properties. Fortunately, there are many quick, easy ways to streamline your search for a cost-effective residence.

Here are three tips that homebuyers can use to find inexpensive properties in any real estate market, at any time.

1. Check Out “Fixer-Uppers”

A fixer-upper, i.e. a property in need of substantial upgrades and maintenance, may prove to be a great value.

In many instances, fixer-uppers are priced to sell. These properties may require a lot of repairs, but homebuyers who are ready to work hard and perform a variety of home improvement projects on their own may be able to save money by purchasing a fixer-upper.

Check out the fixer-uppers in various cities and towns. By doing so, you can assess the current condition of a fixer-upper and find out how much maintenance it requires. And ultimately, you’ll be able to determine whether a fixer-upper matches your price range, along with whether you’re up to the task of completing myriad home improvement tasks.

2. Submit Offers on Many Residences

When it comes to buying an inexpensive home, it is important to remain patient. If at first you don’t succeed with an initial offer on a home, be sure to try again.

It may take some time to find a home that corresponds with your budget. But homebuyers who are committed to exploring the real estate market are sure to find lots of properties that they can enjoy for years to come. And even though the asking prices of some homes may appear to be outside of your price range, it never hurts to ask whether a home seller will consider a proposal that is less than his or her initial asking price.

Be prepared to submit many offers on residences as you browse the real estate market for an inexpensive home. If a home seller rejects your initial proposal, don’t be discouraged. Remember, there are many terrific homes that are available, and a diligent homebuyer should have no trouble discovering the right residence at a budget-friendly price.

3. Collaborate with a Real Estate Agent

Real estate agents are ready to assist you in any way possible. Thus, if you work with an experienced real estate agent, you can explore a vast array of inexpensive houses at your convenience.

Your real estate agent will keep you up to date about any properties that match your price range as they become available. Plus, your real estate agent can offer homebuying recommendations that you may struggle to obtain elsewhere, ensuring that you can secure your dream residence at the right price.

Work with a real estate agent as you begin your search for an inexpensive home – you’ll be glad you did. Your real estate agent will go the extra mile to help you find a wonderful house that won’t require you to overspend. As a result, your real estate agent will make it simple for you to go from homebuyer to homeowner in no time at all.

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.