Problems in Real Estate – with the Solutions
1. Rent vs. buy
2. Finding a suitable property (low inventory/when is the best time to purchase)
3. Rehabbing vs. Home that is move in ready
4. Problems getting a mortgage
-Finding a down payment
-Loan to debt ratio & student loan debts
Rent vs. Buy
Buying remains cheaper than renting in the US.
There are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.
WHY NOT PAY YOUR OWN MORTGAGE and GET YOUR OWN EQUITY FOR YOU AND YOUR FAMILY!
If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings. The Freddie Mac Outlook Report predicts that home prices will appreciate by around 6% in 2019. Not to mention, the tax benefits that still exist for 2019. You can deduct your interest paid on your mortgage.
Bottom Line: If buying a home is in your plan for this year, doing it sooner rather than later could save you thousands of dollars over the terms of your loan.
Solution: talk to an agent & mortgage professional today to discuss all of your options.
Finding a suitable property
When is the best time to purchase a property?
There really is no BEST time to buy – the best time, is when you’re ready! Tips and things to remember about market time:
1. In the spring / summer markets, you may have more competition and may have to deal w/ multiple offer situations in some cases. Don’t fear this, we can combat this with numerous strategies. For instance, writing letters to sellers, pocket listings (not yet on market listings), and many other options.
2. Pricing may be a bit inflated in spring / summer, as sellers come to market at higher pricing starting in the spring market
3. A better time to purchase a home and get the lowest price is typically in the late fall/winter /early spring market, due to lower pricing and sellers have a NEED to sell in most cases.
Rehabbing vs. NEW /move in ready home
This is truly personal preference!
Things to consider: are you handy, do you have a contractor, do you want to live through a renovation, do you have pets or children, how long will your renovation take, can you live in one portion of the property while the other portion is being worked on (IE: you have two bathrooms and one will be renovated), what is your style (IE: do you love old world/vintage or new construction look), are you concerned with updated electrical, plumbing, etc.
All of these things can be discussed in detail with your REALTOR ahead of time to ensure you are in the perfect house for you and your family.
SOLUTION: to find out your preference between rehabbing vs. move in ready: Break out your list… discuss in full detail, and you and your agent should be able to identify 3 lists.
• ‘Must-Haves’ – if this property does not have these items, then it shouldn’t even be considered. (ex: distance from work or family, number of bedrooms/bathrooms)
• ‘Should-Haves’ – if the property hits all of the ‘must-haves’ and some of the ‘should-haves,’ it stays in contention, but does not need to have all of these features.
• ‘Absolute-Wish List’ – if we find a property in our budget that has all of the ‘must-haves,’ most of the ‘should-haves,’ and ANY of these, it’s the winner!
Down payment – While many believe that they need at least 20% down to buy their dream homes, they do not realize that there are programs available which allow them to put down as little as 3%.
61% Of First-Time Buyers Put Down Less Than 6%
Closing costs – Closing costs are typically between 2 & 5% of your purchase price
Here is a list of just some of the fees/costs that may be included in your closing costs, depending on where the home you wish to purchase is located:
• Government recording costs • Appraisal fees • Credit report fees • Lender origination fees • Title services (insurance, search fees)
• Tax service fees • Survey fees • Attorney fees • Underwriting fees
DO YOU HAVE ENOUGH FOR THESE COSTS? NO? THERE IS A SOLUTION TO THIS!!
SOLUTION: We can write this into the purchase contract. The seller can pay the closing cost for you. OR there may be loan options for you to choose depending on where you are purchasing or what type of loan options there may be at the time that will include the closing costs.
Employment – You will need 2 years of work history. Do you have 2 years of different employers? That’s ok – you just need the documentation. DOCUMENT EVERYTHING for your lender!
Credit – You can purchase a home w/ a credit score of as low as 580. The better your credit score the lower your monthly interest rate.
Debt – your debt to income ratio will be considered when you get a loan.
Can you have student debt? YES!
It will be counted in your debt to income ratios.
SOLUTION: to ensure you qualify with student debt – We have lenders that will get you pre-approved prior to starting your home search to make everything so much easier, so you and I both know exactly how much you are qualified for and then searching in the price range for your new home. This will also provide you an estimated monthly payment plan for your new home.
BOTTOME LINE – SOLUTIONS – follow these suggestions:
Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:
1. Capacity: Your current and future ability to make your payments – do not open new credit cards, do not purchase new /large items, keep your budget the same with no large purchases or extra expense (IE: new car, or major furniture, etc.), do not make large deposits or withdrawals from your accounts.
2. Capital or Cash Reserves: The money, savings, and investments you have that can be sold quickly for cash – make sure your documentation is available for your lender and all your cash you will be using for your home is liquid,(if you are using 401K, double check that you have access to it ahead of time).
3. Collateral: The home, or type of home, that you would like to purchase – make sure you are looking in your price range according to your pre-approval
4. Credit: Your history of paying bills and other debts on time – make sure your bills are paid and on-time.
Michelle Chicago – Michelle Chicago Real Estate Group / @ Properties
Content provided by Women Belong member Michelle Chicago