The spring home buying season is about to begin, and the housing market is especially tough for first-time buyers.
Home values skyrocketed. Bidding wars are common. For an inexperienced home buyer, this can all feel a little intimidating.
“There’s a lot of savvy home buyers out there to compete with,” said Katie Sey, an agent in Brown Harris Stevens, N.J. and author of “The Brilliant Home Buyer’s Guide.” Katie Severance said.
If you’re a first-time buyer, here are six questions to ask yourself.
1. What is your credit rating?
Mortgage rates remain historically low. But to get the cheapest rates, you need a credit score of 740 or higher.
Your credit rating is the most important factor in determining your interest rate. Ralph McLaughlin, chief economist at Haus.com, analyzed millions of mortgages issued over the past few years. He found that higher credit scores lower interest rates more than lower debt-to-income ratios or higher down payments.
So if you’re choosing between paying down your credit card debt or cobbling together a down payment, it might be wiser to settle the debt, which should help your credit score.
2. What are your plans for the future?
In other words, how long are you going to be indoors? Generally speaking, if you expect to stay in the same place for less than three to five years, there’s not much point in buying. This is because real estate commissions and mortgage settlement fees can affect your earnings when you sell your property.
A clown: Real estate prices are rising rapidly. Owning a home can pay off in just a few years if the strong growth in property values continues. However, it is almost impossible to predict the development of house prices.
3. How much deposit do you have?
This question is not a deal killer, but it will make a difference. If you can raise 20% of your money—$60,000 for a $300,000 house—avoid Private Mortgage Insurance (PMI). If your deposit is less than 20%, you must pay PMI.
The FHA and VA loan programs allow you to make a small down payment—3.5% for FHA loans and no down payment for VA mortgages. However, these loan programs have higher fees.
4. Can you pay for insurance, property taxes and maintenance?
Buying a home is just the beginning of a financial commitment. Once you become a homeowner, not only do you pay principal and interest, but you also have to pay homeowners insurance and property taxes.
Homeowners insurance varies by location. In some states, you will barely notice your insurance premiums. Elsewhere, especially in hurricane-prone areas, rates have risen sharply.
Property taxes are similar throughout the map. The bill could exceed $10,000 a year in some parts of Connecticut and New York, and less than $1,000 in others.
Owning a home means you now have endless expenses — lawn care, repainting, air conditioning services, electrical replacements. Bottom line? Be sure to budget for the extra cost of owning a home.
5. Are you ready for some high-risk assignments?
If you answered yes to the first four questions, then you’re ready to buy. But in a competitive market like today, you have to spend a lot of time visiting homes and researching property values, Severance said.
Doing a lot of homework will give you a better feel for the market.
“When you’re bidding on the first house you see, you don’t know the market, and it’s scary,” Severance said. “You end up paying too much that way.”
6. Would you like to wait?
The coronavirus housing market has been marked by record low inventory levels and high demand, so prices have soared.
However, the housing market may return to normal later this year. More apartments are expected to hit the market in the second half of 2021 and price pressures will ease, said Frank Nothaft, chief economist at property data firm CoreLogic.
“Potential sellers with flexible schedules are choosing to delay listing until the pandemic has passed or they have been vaccinated,” he said.
يتعلم أكثر:
-
-
-
-
مراجعة بطاقة Delta Skymiles® Reserve American Express – شاهد المزيد.
-
تركز AmEx على تجربة العملاء من خلال الحساب الجاري الجديد والتطبيق المعاد تصميمه
-
