Are you thinking this is the year to buy a new home? Here are some tips to make it a little easier and also some things to know so you are better prepared!
- Prepare for more sticker shock! If you are looking to buy in 2021, know that home prices look to be increasing. Part of the reason for that is inventory. The number of homes for sale has been low for the past few years and 2021 doesn’t look to be any different. With low interest rates, there are many first time homebuyers that are out looking. The number of people that would be selling and down sizing or moving up have not been moving as fast. That doesn’t help inventory.
- Get your mortgage approval early. Realtors want to make sure you can buy before they start showing you homes. You need that approval letter in order to write a purchase agreement. Plus you want to know how much you can afford – there is nothing worse than finding a home you love and later finding out you can’t qualify for it!
- Once you have your approval, put away your credit cards! You may want to check your credit score before you apply and if you need to improve it, pay down any revolving debt to at least 30% of the maximum limit. That will help your credit score. Then you want to avoid charging more than that – so keep an eye on your credit limits, make sure you pay your bills on time and keep your credit card balances as low as possible. Remember that if you pay off your credit card every month, the credit card company may report mid month – so you may have paid it off but then used it before it is reported. That will affect the minimum payment your lender will need to use. Also if you have 3-5 cards with $100 balances on them more than likely the minimum payment is $10-25 per card. If you are only using one card, the minimum payment may be less than using more cards. That could affect what you can qualify for.
- Expect multiple offers again. The past few years have been the same story – homes are selling fast and there isn’t much inventory so new listings are frequently sold in multiple offers. Expect to put your best offer in quickly and hope that you get the home. You also will need to make sure the home can appraise for what you are paying for it. If it doesn’t appraise, you can talk with the seller and negotiate a lower price or walk away. Once you get that home, you can negotiate during the inspection phase. So if there are issues with the home, now is the time to ask the seller to fix things or maybe lower the price or help with closing costs.
- Expect to get a good interest rate. Mortgage rates are very low – and expected to stay that way. We may see rates start to move up a bit as the year goes on, but they are still expected to stay low for most of 2021. The lower interest rate will help offset the higher sales price – possibly.
There are plenty of mortgage programs that allow you to buy with as little as 3% down, maybe less if you can use USDA or VA financing. This allows you to get into homes with a smaller down payment and you can ask the seller to contribute towards your closing costs. Depending on your financial situation, this may allow you to buy sooner than you thought you could. Do you have a tax refund coming this spring? Save that for your down payment.
Buying a home can be exciting and frustrating all at the same time! Making sure you are prepared will make the process that much easier! Working with a good realtor (Sharlene is great!!) will help you make the process easier. Feel free to call or email me with questions so we can help you find your next home!
Leslie Vanderwerf, NMLS ID#335509, Cross Country Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
