Emily Merkley, association executive, Cache Valley Association of REALTORS
WITH LOW MORTGAGE rates and high competition in the affordable housing market, it’s important that potential buyers have access to REALTORS® who can guide them to make smart financial moves with such a big investment. Some of these guidelines often include helping distinguish which types of homes are worth viewing and best meet your needs.
A budget is the biggest factor that dictates what homes, neighborhoods, and features potential buyers view. A budget is crucial because homeowners must make sure they can comfortably afford their mortgage payments month after month, and while searching for a home, it helps distinguish which homes will fit in that category. But in a market that is flooded with competition from other buyers, there is a place and time where it is appropriate to search for and see homes that are out of budget for buyers, and here’s why:
1. Other factors play a role in monthly expenses, and a preferred location can make a big difference. If a home is a bit over the budget, a REALTOR® can help buyers determine if the higher home cost in a better location can help lower other expenses related to school accessibility, lower gas usage, better utility providers, lower taxes, and more.
2. Viewing homes above budget can also help potential buyers distinguish between wants and needs for a home. Deciding what aspects are most important to buyers, and allowing them to see what those cost within the context of a home purchase, will allow a REALTOR® to work directly with buyers and create a plan of action based on realistic priorities.
3. The asking price for a home is not etched in stone. Homes just outside your budget might be sitting in a slow market, could need some renovations, or have other reasons that the sellers would be willing to negotiate on price.
A REALTOR® knows how to read the comps for each home and market and is trained to help guide buyers through the home selection, viewing, and purchasing process. The dream of homeownership is within grasp in an active market, and a small bump in price can make a huge difference in home, with minimal increase to the mortgage.
looking to buy? Here’s what NOT to do:
DO NOT TAKE OUT MORE LOANS! Taking out new loans before applying for a mortgage (think new car, boat, etc.) increases your debt load and a lender may question your financial responsibility.
DO NOT APPLY FOR NEW CREDIT CARDS OR RACK-UP CREDIT CARD DEBT! Credit card balances are also considered as a monthly recurring expense, and a new credit account will increase your DTI (debt-to-income) ratio.
DO NOT SPEND YOUR SAVINGS! Lenders will want to verify that you have the funds to cover the costs of closing on a home, as well as the ability to repay back the loan. Your savings is something that lenders will verify, and not only do they want to see liquid assets, they want to see history of maintaining it.
DO NOT MAKE LATE PAYMENTS! Lenders use your credit score as a risk assessment tool. A higher score indicates a lower risk for the borrower.
DO NOT MAKE MAJOR LIFE CHANGES! Lenders want to see a history of steady employment and income. In most cases, they’ll require steady employment for at least two years.