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If you're on the sidelines, at least get ready...

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If you're on the sidelines to buy a home, there are things you can do to be ready when you do get back in the game. Improve your credit score to qualify for the best mortgage rate available which are reserved for those with the highest scores.   Get a copy of your current credit reports from all three of the main credit bureaus: Equifax, TransUnion, and Experian.   You can get them at AnnualCreditReport.com without paying for them. While you won't see a credit score on these reports, you will see a history of your available credit accounts.   According to the Federal Trad Commission, one in five people have at least one error on one of their credit reports which can lower your score or increase the cost or likelihood of receiving new credit.   Identify and correct these mistakes.   Explain in writing the error in the report and include copies of documents that support your dispute.   Both the credit bureau and the business that supplied the information must co

Negotiating Your Position

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The seller wants the most for their home and the buyer wants to pay the least possible.   From the very beginning of the homebuying process, there are adversarial positions between the principals.   If you happen to be in a multi-offer situation, it just complicates things further. Then, there are the emotions that tend to cloud the decision making on both sides of the transaction.   Sellers have lived in the home for years, possibly, with cherished family experiences and maybe, having put considerable effort and money into capital improvements. On the buyer side, they may have lost out on several homes due to competing offers and now, this year, interest rates have doubled, and the discretionary funds required to pay for a home could be causing cuts in their budget in other areas. A year ago, buyers were waiving contingencies for financing, appraisals, inspections, and other things just to be competitive.   Today, to make the home more affordable with the higher mortgage

Turn Back Time

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As the expression goes, "if I could turn back time", maybe you'd would do some things differently.  If you're wanting to buy a home, the regret may come from not getting a mortgage when rates were half of what they are today.  There may not be a way to literally "turn back time" but you may still be able to get a mortgage with last years' rates. Let's say a home was sold in the fall of 2021 for $350,000 with a 3% FHA loan.  Today, winter of 2023, the home is on the market for sale at $400,000.  There are buyers who have $40,000 for a down payment, who like the home, and want to purchase it. At today's mortgage rate of 6.42%, the $360,000, 30-year mortgage payment would be $2,2565.54 for the principal and interest.  They have been looking for a year and in the past 12 months, the mortgage rates have doubled which will stretch their finances along with all the other inflationary pressures. Their incredibly savvy agent has learned that

Buy Now, Refinance Later

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The dilemma facing would-be buyers today is to wait until things settle down or move ahead in this unsettling economic environment.   More specifically, the question should be, what are you waiting to settle down: mortgage rates, or prices or both? Mortgage rates haven't been this high since 2002, so it could be considered plausible that the high rates are temporary.   That leads to the question of how long before they do start coming down.   If we look back further, the average 30-year fixed-rate mortgage, dating back to April 1971 is 7.81%, so the current rate is lower than the 50-year average. The other variable is waiting for prices to come down.   That one is probably not as likely to happen.   We have seen some softening of prices for homes on the market which is due to a decline in sales based on affordability and the resulting increase in inventory.   Sales reached a seasonally adjusted annual rate of 4.09 million in November which is down 35.4% from one year

Does high inflation discourage your from buying a home?

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Inflation devalues the purchasing power of money and the interest earned on savings is almost always less than inflation.   Tangible assets like your home consistently become more valuable over time.   In inflationary periods, a home is a good investment and a hedge against inflation. Borrowing money at fixed rates during times of inflation can be very advantageous...like buying a home.   The rate stays the same over the term of the mortgage and so does the payment instead of going up at the rate of inflation. In September 2022, rents rose by 7.2% according to NAR Chief Economist, Lawrence Yun and "rents are accelerating to higher figures with each passing month."   The annualized rate for this year is 10.6%.   Buying a home allows you to avoid rent increases while enjoying property appreciation. The housing shortage that is fueling the price appreciation, as well as increases in rent, is something that has existed for over ten years, yet American home building

Did you know this about your credit?

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Credit scores are used to assess risk and determine whether a borrower is approved or declined for a mortgage, credit card or some other type of credit.   The score is a numerical value ranging from a low of zero to a high of 850 or 900 depending on the credit bureau. The higher the score, the more likely the lender will be repaid in a timely manner. A higher credit score could help you get a lower interest rate You can get a free credit report from all three major bureaus at www.AnnualCreditReport.com . Your credit score doesn't have to be perfect to get a loan ... most lenders want buyers to have a minimum of 620 but FHA will consider as low as 500 Credit utilization, the percentage of credit used compared to what is available, should be kept below 30%; amounts higher could negatively affect your credit score. There is a difference between a soft and a hard credit pull.   The former doesn't hurt your score, but the latter can lower it a few points.   Try to avoi

Waiting for the Mortgage Rates to Come Down

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Waiting for the mortgage rates to come down before you buy a home may not be a good decision. If you are correct, and the rates do come down by two percent, the savings you benefit from a lower rate will most likely be devoured by the appreciated price increase. As of 12/8/22, the 30-year fixed-rate was at 6.33% which is close to the highest level since mid-2008.   If the rate drops to 4.7% in three years but the price increases by 5% a year, a $400,000 home today, will cost $463,050 three years from now. An increasingly, popular option that more buyers are considering is to purchase the home today with an adjustable-rate mortgage that could give them a 5.00% rate for five years.   Then, refinance to a fixed rate when rates come down. Not only will the buyer have lower payments with the ARM, but the buyer will also own the home, and benefit from the appreciated prices which will build equity in the home and increase their net worth. Mortgage rates have increased over 3%