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Why Now is Better

Prices are going to continue to rise, Carelogic’s latest Home price Index reported, over the last 12 months home values have appreciated 7.2% and will continue to rise another 4.7% over the next year. Not only are home values going up but so are the interest rates on the mortgages needed to purchase these homes. The current rate average is 4% most experts predict it will increase over the next 12 months. Either you are paying your own mortgage or you are paying someone else mortgage, at least when you are paying your own mortgage you are building your own equity and credit. Bottom line the two factors that equate a home’s price and value are on the rise meaning if you are planning to buy a home it cheaper to do it now then wait. 

Cost of Buying VS Renting

The percent of your income needed to afford median rent is 29.2% while the percent of your income needed to afford a median home is 15.8%. when you do the math it is significantly cheaper to buy than rent. The national average is 37.7% cheaper to own than rent.

Where to Start

The first step in the home buying process is to get pre-approved for your mortgage, so you know your budget. Now it’s time to decide the must haves, should haves, and wish list, this is where you write down all the aspects of the home that are deal breakers or can live withouts. For some buyers, a big back yard is a must have while for others it can be a live-without. Once you have your list, you will save time, money and frustration. Knowing your budget and exactly what you are looking for is half the battle, the third step is to contact a trusted real estate agent like myself to help you locate your home and finish up all the tedious paperwork.

5 Key Factors to Improve Your Home Search

Check On-line: If you are not sure where you plan to move, Google” best places to live,” then call a licensed agent in the area you have chosen. Many agents pride themselves on knowing the ins and outs of neighborhoods and zip codes in their state. Scottsdale was ranked one of the best places to retire, as well as having nationally top rated schools.

Think about Value: A recent study shows that homes built by Target stores have a much higher appreciation, close to 27% price appreciation, which is on average 72% higher than homes near Walmart stores. Homes Close to a Wholefoods or Trader Joe’s have an even higher appreciation value over the years, remember location matters with better stores come better schools and less crime.

Check the Schools Ratings: Even if you don’t want, never will, or are done having kids, living in a good school district maintains the property values.

Explore the Neighborhood:  Stop at the local Starbucks (having a Starbucks in your neighborhood will add stability and maintain the value of your home), people watch, are they nice, or rude? Don’t forget to check out the local parks, malls, and events happening around the neighborhood.

Drive the Commute, and Think Realistically: Prioritize your needs and wants, yes living in that amazing house on the north side might be everything you dreamed but is it in your budget, and is the commute worth it? Before you commit to any home, drive the commute during rush hours in the morning and evening and ask yourself honestly can I do this for the next few years?  

 

How Much to Save for a Down Payment?

It is actually less than you may think, many lenders will take 3% down. Remember the more you put down the lower your mortgage. 64% of home buyers age 18-34 put less than 20% down, while 43.8% put less than 10% down.  While your credit score is a factor in the mortgage rates and the amount of your loan, you’d be surprised to know that you do not need as high of a score as most people think. 54.7% of approved mortgages were to peoples with credit scores between 600-749 which is less than “good” credit (780 is considered good credit by lenders). Knowing your options makes the home buying process so much easier.

The Mortgage Process and What You Need to Know

The average down payment was 10% while many are putting as little as 3% down and some as much as 20% or more.  You will need to have your income verification, credit history, and asset documentation. These are W-2 forms, tax returns, and bank statements to verify your savings.  You must have a stable income as well as decent credit, they will look at your work history, the length of employment and education. Contact a lender to review your income, expenses, and financial goals, as well as to help identify the type of loan you will qualify for. The final step is a pre-approval letter which shows sellers you are a serious buyer, and acts as an estimate for your home buying budget, as long as your income stays the same.

Ray Cutler, RE Investment Specialist

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