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Top 10 Tips for Home Buyers

July 22, 2020

Buying a house in one of the largest financial commitments you will make in your lifetime, which is why it's vital to make the right decision to fit your lifestyle and needs. When you are finally ready to sign the papers and move in, you want to be confident that you made the best choice! Below are the top 10 tips I like to tell people when they are looking into buying a home.

1. Get Pre-Approved and Aim for a Fixed Rate

There are two very important steps in the first stages of the home buying process: getting Pre-Qualified and Pre-Approved. Pre-qualification is the first step, and is something anyone can do. (Read more about getting pre-qualified here). Whereas, getting pre-appovedQuick read more or view full article data-offset-key="kcqq273h:4"> means that you have a lender who has signed on with you. Comparison shop to get the best mortgage and aim to get approved for a fixed rate. This means that the market's fluctuations will not affect your interest rates.

2. Budget Your Down Payment

Many lenders will require you to have a down payment as it financially incentivizes the buyer to stick with the purchase. Just think, if you had put $20k down, you would be far less likely to sell and move than if you hadn't yet invested any money. But the down payment can work in the buyer's favor too! The more money you put down, the less interest you will have to pay in the long run. Many lenders ask for at least 10%, but if you can do more, your future-self will thank you.

3. Check out the Neighborhood

When buying a house you are not only moving into a new space, but also a new area. Checking out the neighborhood is a vital part of the home searching and buying process. Make sure you like the feel of where you live—you will be spending a lot of time there. Check out the local amenities, see what your commute feels like, and how close is your house to the supermarket. Additionally, checking out the schools is important, even if you don't have kids because it influences property value. You don't want to sign on a house only to find a few weeks later that the neighborhood is not the right fit.

4. Bigger Isn’t Always Better

Many people dream of owning a large impressive house, and for some that is a great fit to their lifestyle. But don't get caught up in the fantasy of having your own "mansion"— especially those buyers who plan to sell. If your plan is to buy and sell, make sure you are purchasing a house that is competitively priced. If you buy the largest most expensive house around, not only have you limited your selling options to a smaller pool, but you may risk limited appreciation. In other words, if you purchase a house that is $200k more than the surrounding houses, it will take longer for your house to appreciate in value.

5. It's Easy to Fall in Love—But Listen to Your Gut

When in the market to buy a new home, it's so easy to fall in love with a certain house. But be weary of this, buying based on emotions can lead to overlooking red flags and poor financial decisions. We all know the advice, "trust your gut"—and that is something you should always do when deciding on a purchase this large. Go with your instinct—you may love the idea of the house, but if your gut feeling contradicts your emotions, always acknowledge that.

6. Spend the Extra Money and get a Physical

When you are budgeting, set aside some extra money to hire a home inspector. Again, in the long run, it's worth it. When buying a car, most people get it checked by a mechanic—this is the same thing. Make sure that you are not missing any details by bringing in an expert who has your best interests at heart.

7. Your Main Focus: What is Important To You?

It's very easy to get caught up in the features of a house: maybe it's the high-tech kitchen, or the luxurious bathroom. Regardless, a buyer needs to take a step back (don't make emotionally-based decisions) and list out their needs. Make sure that your soon-to-be home fits your basic needs and wants, and once all of those boxes are checked, then start to enjoy the unique features of the house and property.

8. Buy to Improve Your Life, Not To Get-Rich-Quick

There are house-flippers out there who are very successful, but if a buyer is in the market to find a place to live, then buy with your best interests in mind. This is not to say you shouldn't consider the appreciation value and selling potential, but the market is too unpredictable to buy only for potential financial gain. Buyers who are trying to find a place to live need to prioritize their needs first.

9. Think Long Term

As a general rule of thumb, think about living in the house you are about to buy for a minimum of five years. Buying a house is a huge financial commitment and is not something many people take on every few years. In fact, reports show that many Americans live in their house for at least a decade before selling.

10. Be Willing To Say Goodbye

This goes back to emotionally-based buying. Buying a house takes time, from the initial search to the signing of the paperwork can take months. It's easy to get attached to an outcome, but buyers must remain objective. If your "dream" house fails the inspection, then chances are it really wasn't the house of your dreams. If the seller's don't accept your highest offer, then don't put yourself into an unstable financial place for the wrong reasons. Bottom line: Don't be afraid to walk away and say goodbye, the right house will come to you at the right time. 
 
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What Credit Score Do I Need As a Homebuyer?

July 15, 2020



Your credit score is a vital number when it comes to the homebuying process. It will dictate your ability to get approved for a loan, your intertest rate, and, in certain circumstances can qualify you for certain purchases. This prompts the common question: What credit score do I need when buying a home? For some, it may even bring up the question, what steps do I need to take to improve my credit score? Find the answers to these questions and more below!



What Credit Score Do I Need As a Homebuyer?

The majority of lenders have a baseline credit score that they use to determine whether or not to accept a mortgage applicant. For many lenders, this baseline is 680—and that is the lowest you want to have when Quick read more or view full article applying for low interest rate. If you are hoping to get a really great loan and interest rate, a score in the 700's is what you want!

For most lenders, 700 and above is fantastic and will open up many poential doors for you, where as a score of 680 is considered adequate. If the credit score is anything lower that 660, that is when the buyer will run into trouble: high interest rates and possible rejection.

When a lender takes you on and gives you a mortgage, they want to know that you are good to pay it back. The higher your credit score, the more trustworthy you will seem to the lender.

Note: This information relates strictly to conventional loans. There are other ways to attain a mortgages, such as a Federal Housing Administration (FHA) or a VA-backed loan. These methods do not require as high of a credit score and many will work with you even if your score is lower than 500.


What If I Have Bad Credit? Can I Still Buy a House?

For those whose credit score has dropped below the 500 mark, there is still an option avaialble: a subprime loan (aka 'bad credit home loan'). Many subprime loans have significantly higher interest rates than the options listed above (aka Prime Loans), and can have additional fees attached.

The option for homebuying is still open to you, however it will end up costing far more than it would if you had a good credit score and go with a conventional loan.


How to Improve a Bad Credit Score?

A credit score is not set in stone, and therefore, improving your credit score is do-able! One of the simplest remedies is to track your financial habits and make sure you are paying everything off on time (credit cards, student loans, car loans, ect.. ). See if there is anything you can pay down and/or try to settle any discrepincies found on your credit history.

There are many sites that will not only help you find your credit score, but will also give you tips on how to improve it. CreditKarma.com or Credit.com are great options!


Bottom Line

It is recommended to step back and take the time necessary to build up your credit score before applying for a loan. Not only will get better rates, but you will also save a lot of money in the long-run.

Note: For those that cannot wait and have to purchase with a bad credit score, refinancing is always an option in the future.

As you can see, this number will dictate a lot of your opportunities as a homebuyer. Start by checking your credit score and depending on what you discover, talk with a lending agent to find out your next step in the pre-approval process.

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