Watch and Take Advantage of Low Interest Rates
Interest rate have been very low for a long time, so we don’t talk about them very often now. But, taking advantage of even a small fluctuation in interest rates will benefit you.
House Price – $200,000 Interest rate Conv – 3.75 Payment – $1,363 piti est
House Price – $200,000 Interest rate Conv – 4.25 Payment – $1,415 piti est
House Price – $210,000 Interest rate Conv – 3.75 Payment – $1,431 piti est
With this example the added rate increase will cost you $52 a month. Doesn’t sound like much but that is money going to the bank not toward your house principle. Over time that $52 will amount to approximately $6,240 the first ten years alone.
But, by taking advantage of the lower interest rate you can afford more house for almost the same money. That is house for you to enjoy, not money in the pocket of the bank.
A Good Lender is Like Gold
Let me stop here and say that you need to find a lender first thing. It is that important. There may be a few tweaks that need to be made to your credit report. Good lenders will ask for more than just an application so they can look a little closer initially. That way they can give you a confident purchase number.
I’ve seen devastated buyers not be able to buy they home they wanted because it turned out, on closer look, that they did not qualify for the amount of the home, when the information on the application would indicate that they could. You need a solid number before you go shopping and a pre-approval letter in hand.
Please don’t approach getting a lender casually and just ‘pick one’. It isn’t about whether they will loan you the money. It is about their ability to work the loan smoothly and on time.
In my experience the number one reason for a home not closing on time is because the lender wasn’t able to get the loan done and to the closer on time. More common than it needs to be.
In our current business climate, bankers hours no longer cut it. Lenders often need to be reached after hours. If they can’t be reached, find someone who you can reach.
Get referrals. Then look at their reviews. The first time you talk to a lender, you have no way of knowing if they are just giving you a sales pitch on their entity, or if they will be there after the sales pitch.
What does your Realtor say? We are by law not allowed to promote one lender over another. But I am often asked who to use. My buyers trust me and they often ask. I will give them a list of suggestions to talk to.
You Can (more often than not) Afford To Buy a Home
This is a common misconception. There are various programs that assist lower income buyers.
I once received a call from a lady who was inquiring about a house I had listed, but she was wanting to rent. The house she called about was not for rent, but I suggested that she buy a home instead.
She adamantly refused the notion that she could. She had never bought a home and was coming out of a difficult relationship. She was emotionally distraught, financially challenged, and terrified.
But, with the help of a great lender, and a lot of home shopping, we were able to find her a home that she could purchase for what her rent would be. It was an adorable home and she felt such comfort knowing it was her home and that she could afford it.
Let me encourage buyers out there. Just ask. I think you will be surprised at what you can do. With current interest rates incredibly low, now is an excellent time to try.
It’s Not a Bargain to Buy a Fix-R-Upper or As Is Home
Often buyers will lean towards buying a foreclosure or an as-is home thinking that they will save tons of money, and will only have to do a few DIY projects.
I do have investors that I help buy these on a regular basis. They have large cash reserves to do renovations and it is their business to watch profit margins. Usually investors will turn town 9 out of 10 distressed properties before they find one that they know they will not go upside down on.
What do they know that most buyers do not? That it will always take more money to do repairs than you ever dream it will. And, that there are always problems hiding in the walls. If it is in disrepair visually, then you can bet the mechanicals and internals of the home are neglected as well.
To buy a foreclosure or as-is property, you will have to pay you own closing costs. The seller will not. Where, if buying a typical home, you can ask them to pay for your closing costs. That can amount to $7,000 or more. Even if the seller only pays half, that is a savings of $3,500.
No repairs will be done. As-is means as-is. Except in rare cases, you won’t be able to get an FHA loan which has strict structural specifications. Even now, Conventional loans are getting stricter too. If you have paid for inspections and the appraisal, and the appraiser comes back with requirements to repair, you are stuck. You have spent tons of money already on a house that the lender won’t approve.
There are a couple of loan programs out there where you can get a renovation loan at the time of purchase. They have strict guidelines so make sure if you agree to one of those, you know exactly what is required before hand. They also will require considerable cash on hand.
Not All Online Advertising is Created Equal
We live in an age of internet. Everything starts there these days. People are online searching for homes long before their feet ever step into an open house or a showing.
But, as a buyer, please know that the multiple home sites available may not have accurate information.
In fact, the only source that is always 100% accurate, because it is closely governed by the state Real Estate Commission, is your local Mult-list cooperative.
What is this? The MLS, is where 99.9% of all Realtors list their properties first. Their data must be accurate or they can get fined. As I said, it is highly and strictly governed. It is the first and usually only place they ‘list’ their listings for sale.
You can search the MLS yourself and avoid having to weed through inaccurate data from sites whose only goal, contrary to what it seems, is to make tons of money off of Realtors and Lenders.
If you do not know what your local MLS is, ask a Realtor. Or, better yet, ask them to set you up a search. Our new OKMAR MLS gives you that capacity to change your search or conduct many different searches from your personal home page that is set up for you when the search is set up.
You can set your notice to be asap so that the instant a home is listed in your criteria, you get notified. In a hot market that is incredibly valuable. The other sites have to wait for a feed to feed into them.
Some sites list every home out there and will lead you to believe that it is for sale, when after searching the page extensively you will see in the small print, ‘off-market’. They are also very slow to take properties off their site once they have indeed sold.
They are lead capture sites. They charge Realtors and Lenders large fees to advertise on their site in the hope that potential buyers will click on them and they will get a buyer as a lead.
When a buyer is looking at a home and clicks a Realtor popping up on that page, they assume they are the listing Realtor, but it rarely is. You are being connected to a Realtor who knows nothing about that particular home and just wants to get new clients.
I did this for years and met many wonderful buyers and helped them find the perfect home for them. So don’t fault the Realtors and the Lenders. But know what you are getting. Often when one of my buyers finds a property on one of these sites that did not pop up in their MLS search I set up for them, it is because it was not truly on the market. Very common.
Bottom Line of Buying a Home
The bottom line is that there is a lot of bad information out there and even if you think you might know what to do, contact a Realtor. A good Realtor will never push you or try to ‘sell’ you. We are here to help you facilitate the transaction of buying or selling a home.
We may do a lot of leg work up until the offer in made and signe, but our real job starts at that point. It takes experience, dedication, and organization to make sure that contract gets to closing on time!
Need to talk to a Realtor? Call or text me today – 405-921-8449 Or email me at NAJackson@cox.net