Homebuyer checklist for 2014
Get positioned to buy a home. Those who are considering buying a home in the new year are likely in a good position. Affordability remains historically high, and inventory will be abundant. However, while conditions are ripe for a purchase, there are still a number of things homebuyers will need to do to prepare for what will likely be the largest purchase in their lifetime.
Whether you are experienced or new to the housing market, buying a home probably seems like a daunting task. With so much to consider, it's important to follow a checklist. Here are some tips to get any potential buyer started with the process:
- Request a credit report. One of the first things a potential homebuyer will want to do is get a copy of his or her credit report. Lenders will assess a borrower's credit score for a home loan, so it's important for buyers to know where they stand. A free credit report can be obtained from the three credit reporting companies: Experian, TransUnion and Equifax.
Not only will this show you your credit rating, but it can also allow you to assess your report for mistakes. Finding any errors could mean a credit score is better than it appears, so it's important for it to be thoroughly reviewed.
- Get preapproved for a mortgage. From there, a potential homebuyer will want to get preapproved for a mortgage. This has a number of benefits for borrowers and is something they should do once they decide they'll move ahead with a home purchase. A preapproval can significantly speed up the mortgage process. Whereas a lender could run into hurdles getting a buyer approved once they have found a home, a preapproval will ensure a mortgage application is processed quickly. It also allows the borrower to know where they stand financially, giving them an idea of their price range while they're out searching for a home.
- Be scrupulous in searching for a property. After a preapproval, a borrower is now ready to shop around. As 2014 is expected to be a strong year for home sales, there will likely be a wide variety of inventory to choose from. For any homebuyer, it's important to be thorough when reviewing a home. For example, if they notice water or foundation damage at an open house, it might not be worth the asking price. As always, it's critical to have an unbiased home inspector look at the property. Finding the right help can make all the difference when buying a home.
Academy Mortgage is one of the top independent purchase lenders in the country as ranked in the 2013 CoreLogic Marketrac Report. Visit www.academymortgage.com to find a loan, get a rate, or calculate your payment today.
Buying Better Than Renting After Three Years in 64 Percent of Metros
May 30, 2013
According to a recent report by Zillow, in 64 percent of metropolitan areas across the nation it's a smarter financial move to buy a home when compared to renting, if the person plans on staying for three years. This information is particularly important for a first time home buyer weighing their options.
The report showed that certain housing markets fared better than others when it came to their breakeven point where buying was cheaper than renting. Zillow factored in all costs associated with buying and renting when compiling the information, including upfront payments, closing costs, anticipated monthly rent and mortgage payments, insurance, taxes, utilities and maintenance costs.
"Locally high home value appreciation in many areas, combined with historically low mortgage rates and low home prices relative to recent peaks, has made buying a home a more advantageous financial decision than renting for many would-be buyers," said Zillow Chief Economist Stan Humphries. "The decision to buy or rent should always take into account a number of factors, one of which is how long a buyer or renter plans to stay in a property. Even in areas with relatively low breakeven horizons, buyers should resist the temptation to buy and sell properties based only on short-term goals."
No bubble in sight
With today's housing market seeing low rates, prices rise and sales increase, Americans can't help but think is it all too good to be true? A recent report from Trulia indicated that it is not and no housing bubble forming.
The report noted that for a bubble to form, home prices have to rise beyond their fundamental value. Trulia says that the actual value of a home is based on supply, demand and expectations of where the housing market will be in the near future.
According to the report, home values are actually undervalued by 7 percent across the nation. When comparing this to pre-bubble levels, it is glaring that today's housing market is not in a bubble. Trulia indicated that homes were overvalued by 39 percent in 2006, just two years before the market collapsed.
"Home prices fell so much after the last bubble burst that they still remain below normal levels even as prices rise sharply today," said Jed Kolko, Trulia's chief economist. "Several forces are waiting in the wings that should slow down today's rapid price gains before they rise into bubble territory again. More inventory, higher mortgage rates, and fading investor activity would each take home-price gains down a notch."
How to Improve Your Credit
If you’ve had credit problems, be prepared to discuss them honestly with your mortgage professional. Responsible mortgage professionals know there can be legitimate reasons for credit problems, such as unemployment, illness, or other financial difficulties. If you had a problem that’s been corrected and your payments have been on time for a year or more, your credit may be considered satisfactory.
If you currently have excess debt, there are four ways to control it:
If your credit is not in terrible shape, you can reduce your other expenses, even if it means making hard choices or changing your lifestyle to fit your income. Consider selling a second car, taking equity out of your home, applying for a non-secured signature loan, obtaining a loan from a relative, selling family heirlooms or jewelry, cashing out your 401(k) or other retirement benefits, or selling your home and paying off your debts with the proceeds and then renting. (Note: Taking money from your retirement accounts or tapping the cash value of your life insurance policy to pay bills or living expenses may have serious implications you haven’t considered, so get advice from an expert before you take any major financial actions.)
If your credit is already damaged or one of the above isn’t an option, go through your local Consumer Credit Counseling Services (CCCS). CCCS may be able to help you pay off your debts as if you were in a Chapter 13 bankruptcy, but you don’t actually file for bankruptcy.
If CCCS won’t take you, you may want to consider bankruptcy. Claiming Chapter 13 bankruptcy takes longer than a Chapter 7, but your credit will end up in a little better standing. Chapter 13 bankruptcy gives you up to five years to pay off your debts. The disadvantage is that you’re in bankruptcy for up to five years, plus your credit report shows your bankruptcy for seven more years after you have finished paying off your debts.
If you are so far in debt that you can never repay it, then the best solution may be a Chapter 7 bankruptcy. A Chapter 7 bankruptcy is the least desirable from a credit standpoint, but you are typically out of bankruptcy in six months and you don’t have to repay most debt. The disadvantage is that this shows on your credit report for ten years from the date of filing your bankruptcy. Creditors are tightening their credit requirements, and you may have a tough time getting future financing.
If your debts are under control now but you want to improve your bad credit history, the most important factor is to make your monthly payments on time. Late payments may mean late fees, higher interest, and/or a negative mark on your credit report. Send your payment as early as possible if you carry a balance. Most companies calculate interest on a daily basis, so the sooner they receive your payment, the less interest you’ll pay.
If you are worried about making payments, make a list of your debts and when the payments are due. If you think you will have trouble meeting the monthly payments, contact your lenders immediately to arrange a payment schedule.
Please do not hesitate to contact your Academy Mortgage Loan Officer if you have any questions or are experiencing any difficulties with your mortgage.
Academy Mortgage and its employees do not provide credit repair or credit counseling services. Each state has its own bankruptcy laws, so you need to check with your state for details. The information provided is for general information purposes only and is not intended to be a legal opinion or legal advice, nor is it intended to be a complete discussion of all the issues related to credit or bankruptcy. Every individual’s factual situation is different, and you should seek independent legal advice regarding your specific situation before undertaking any course of action.