Our local real estate market is always changing. Compared with not so long ago, that's a good thing. If you are ready to buy a home in today's market, you need to take note of recent changes that may affect your buying power.
Buying a home in our local market today is not just about finding one in the best condition in a great location for an affordable price. Smart home buyers today require a deeper knowledge of the economy, the local market and regulations. We can help you pinpoint all you need to know to make an educated move when buying a home.
Home prices, interest rates and fees are all top-of-mind when you're figuring back-of-the-envelope costs. But do you know what guidelines are in place that can affect how much mortgage you can qualify for, what the local inventory of available homes is currently or if you can find funds to remodel a home down the road? When you're ready to buy a home—or if you're thinking of selling and want to understand what buyers are thinking in today's market—keep reading to get a true picture of how to make a smart move today.
1. HOME PRICES & INVENTORY
Because a smaller number of homes are available for sale, home prices are rising and many homes are being sold at—or even above—list price. According to Lawrence Yun, chief economist at the National Association of REALTORS (NAR), existing-home sales are on target to exceed 2015's pace. With more homebuyers seeking fewer homes, competition is heating up. If you find a home you love, act fast to put in a bid and we can help you craft the offer to look most attractive to the home seller.
2. INTEREST RATES & BUYING POWER
Although interest rates have been running near historic lows for many months, if they rise it will affect how much home you can afford. Granted, rates won't shoot up immediately, but even incremental changes will increase your costs...and reduce your buying power. Combine rising interest rates with increases in home prices, and your dream-home picture may have to be modified the longer you wait.
3. BARGAINS & INVESTMENTS
If you're looking for a steal that needs just a bit of sweat equity to fix up, you might be disappointed. The number of foreclosures, short sales and other distressed properties has been decreasing, and when foreclosures do appear, they are often bought up quickly and quietly by all-cash investors. If you're looking for bargain or investment property, we can help you locate suitable properties, but the inventory may be tight.
4. NEW CONSTRUCTION
With the improving economy, home builders are back in business offering brand-new homes. Don't go it alone with the builder; get a real estate professional—like us—to represent your interests in the purchase.
5. UNDERSTANDING "MORTGAGESE"
Today, lenders require more documentation of your finances, but offer "qualified mortgages" with terms and rates that fit your budget and will not surprise you. Additionally, the Loan Estimate and Closing Disclosure forms outline each cost related to obtaining your home loan along with your monthly mortgage amount.
6. COMFORTABLE AFFORDABILITY
Lenders who provide "qualified mortgages" ensure that your total debt does not exceed 43% of your total income. Therefore, if you earn $75,000 per year, your total combined debt (mortgage, insurance, car loans, student loans, etc.) could not exceed a yearly total of $32,250. When divided by 12, this means your total monthly debt payments cannot exceed $2,687.50. This formula gives you a good indicator of whether your debt level is manageable, and you can afford to repay all your obligations.
7. IMPROVING YOUR HOME
When the value of your home is greater than your mortgage, the difference is "home equity." Lenders today will allow you to tap into this equity, once again allowing homeowners to remodel and refurbish their homes with a low-interest loan backed by the equity of their residence.
8. THE PROS KNOW
Despite the challenges, today's homebuyers are out and about, as in many markets it is more affordable to own than it is to rent. That makes now a great time to buy a home and perhaps a better time than you're likely to see for many years to come. To take advantage of today's market, and overcome any hurdles along the way, you'll need someone like us on your side to work with you. Contact us when you—or someone you know—are ready to buy a home!