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Waiting to Buy Can
COST You Money!
If you're a potential first-time buyer wishing you'd taken the home buying plunge while rates were low, it's not too late to dive into the market. In fact, even with interest rates on the rise, waiting to purchase a home could end up costing you money.
Here's why. Let's say you're interested in buying a house that costs $100,000, but you believe interest rates might fall if you waited one year to purchase. Would you really save by waiting?
Probably not. If you were to purchase today, principal and interest payments on a $90,000 loan (after a 10% down payment) would be $660.39 at 8.0%
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interest.
But if rates did fall over the next year, say by one-half percent to 7.5% interest, you would have lost money by waiting. Appreciation at even a meager 3% annual increase has now elevated the cost of the
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What is a Buyers' Market?
N
o matter what town you are living in or where you want to move, the home buying and selling market will be swinging toward one of two directions. Either it will be in a buyers' market or a sellers' market, or sometimes, a little of both.
Most real estate practitioners consider a typical market to be one in which homes take an average of six months to sell. REALTORS® keep track of this number by keeping up with the days on the market (DOM) of every home listed and sold. That means that in the MLS, there are likely to be at least six months worth of inventory (homes) on hand to sell for the number of buyers in the market. If the number rises above six months inventory on hand, then the market is swinging into a buyer's market. If it falls below, it is becoming a seller's market.
A buyer's market is one in which there are too many homes on the market for the number of buyers. Homes take longer to sell and prices fall.
Sometimes buyers believe that winter time is a buyers' market. Although it is true that there are fewer buyers, there are usually a compensating fewer homes on the market as well. Homes offered for sale during slower times of the year are generally aggressively marketed, and may not sell for a significantly lower price than they would if they were marketed in
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Can You Master The Three
C's Of Home Ownership?
T
here are three major benchmarks of a successful home buying candidate: commitment, credit and cost. As a preliminary step to the homebuying plunge, see how you fare in these three categories:
COMMITMENT: In order to clear this hurdle, you must be willing to sacrifice some of those "gypsy feelings" of freedom moving can afford, commit to spend time doing house maintenance and repairs, and be controlled to some degree by the needs of the home (i.e. lawn watering, snow removal, etc.) It's very much like nurturing a child (albeit it one that doesn't talk back nor require college tuition!)
And there may be unhappy times. Like when an obnoxious neighbor makes you wish you could mail the keys to the landlord and move on---but you can't, you're committed.
Why should you be concerned about home ownership commitment? Because if you live in the home you select for the average time period of seven years, you will have spent more than 2,500 days in it! That's a considerable investment in time, effort, and money.
CREDIT: It's never too early to face the fact that most home buyers have to use credit to swing a purchase this large. That means that you'll take on the obligation to check your existing credit picture, or establish one (if you haven't done so already), and be willing to manage your credit once the purchase is complete.
The mortgage lender will not be as
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Two Magic Qualifying
Words for Buyers
Are you a first-time or move-up homebuyer with a champagne appetite on a chablis income? Do rising interest rates threaten to hold you back financially from the home you want to purchase? If so, you need the two magic words that can make a difference with lenders and cinch the financing you need -- compensating factors.
What is a compensating factor? Simply stated, it's a positive used to offset a negative in mortgage qualifying. For example, let's say that as a first-time buyer you're a bit short on qualifying for the $1,250 monthly payment you need. But since you've made timely rent payments of $1,250 for the past two years, it signals to the lender that you're capable of handling that size payment and you get the loan.
Or perhaps your household monthly income is shy for the loan you need; but your spouse is returning to work soon in a job she's been trained for and can show a previous track record in that line of work. Again, a compensating factor.
Don't overlook income increases in your current employment that are guaranteed to begin within sixty days after loan closing. If verified by letter from your employer with no other qualifying
Daily News and Advice
Read about the events shaping the Real Estate market today, find current interest rates, or browse the extensive library of advice and how-to articles written by some of the top experts in Real Estate. Updated each weekday.
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