Written by Tom Tomasian
Halloween – Don’t get spooked! It’s the time of year again when spooky attractions are everywhere and the ghouls and goblins are out in full force. While visiting a haunted house may be scary, buying a house doesn’t have to be. This month I want to discuss five of the biggest fears would-be homeowners have when entering the market and ways you can overcome these fears to become a successful homebuyer.
I don’t have 20% to put down.
Your parents and grandparents probably put more than 20% down when purchasing their first homes, and that’s the standard that most of us grew up hearing. However, this standard has changed. Today there are loan programs where the buyer can put down much less and still afford their dream home. There are government-sponsored programs like MassHousing that allow down payments as low as 3%, conventional loan programs that start as low as 5% down, and jumbo loan programs that start as low as 10% down. Qualifying veterans can even purchase a home with no down payment. Most of these loans programs have various options, with and without Private Mortgage Insurance (PMI). These low down payment options may allow you to buy a higher priced home and still keep your savings to complete home renovations or for other investment opportunities.
I don’t have great credit.
Credit is a key component of obtaining a mortgage. When the subprime market collapsed, banks tightened lending guidelines until order was restored. It’s safe to say that the market has rebounded, with our local housing market experiencing new highs. With this recovery, we are seeing banks cautiously loosen credit standards. We now have programs available for buyers with scores as low as 620. And if your credit needs major repair, then we can point you in the right direction. With the proper guidance and action, you may be able to improve your score within 3- 6 months.CEO of Key Credit Repair, Nikitas Tsoukalis, is an expert in this field. Improving your credit should be approached in 3 buckets; Clean-Up, Build-Up and Pay-Up. Clean up is a simple concept. The majority of credit reports in the United States have inaccurate items that can be legally removed. Many of those inaccuracies will have a negative association as well like a late payment that can hurt the 35% of your credit score that is associated with payment history. Build-up can be just as easy. The “rule of thumb” in the credit world is 3. 3 is the minimum number of active, healthy accounts you should have on credit. Last but not least we have “Pay-Up”. Debt is 30% of your credit scores and the majority of that 30% is made up of something called credit card utilization rate. Pay down those cards below 10% of the credit limit and your score will start to shoot up quickly!
Inventory is too low; I can’t find a home in my price range.
According to the Massachusetts Association of Realtors (MAR), Massachusetts home sales are facing record lows. This should not deter potential home buyers from entering the market. Take a look around: new construction is booming in Boston, and there will more listings coming to the fall and winter markets. It’s highly unlikely that we will see this market cool off as it traditionally does in the colder months. Developing a relationship with a qualified Realtor who knows the local market can be invaluable. These agents know the market inside and out, and can help you beat other buyers to the home you desire. Fairway Independent Mortgage Corporation also offers prospective clients a free mobile that allows you to view all of the properties currently listed on MLS so you don’t miss anything. Persistence and staying connected will certainly open more doors for you, literally.
I don’t want to overpay.
This may be the biggest fear future homeowners face. Nobody wants to buy at the peak of the market. Ed Mazurkiewicz of Elite Real Estate Services Inc. has been in the residential appraisal business for nearly 20 years. He has seen bubbles come and go. Ed believes we still have plenty of upside to go in Massachusetts, and that home prices will continue to rise for the foreseeable future. This growth is fueled by new construction by big name developers around the city. With more big business like GE and potentially Amazon coming to Boston, the demand will only increase. It is also highly unlikely that prices will collapse when we do peak. We may see a 10 – 15% correction, but certainly not the carnage we saw in the last meltdown. Real estate has been traditionally been a long-term investment vehicle, and the pros of home ownership outweigh the cons. Now is the perfect time to buy.
I don’t know if I’m making the right decision.
Analysis Paralysis is the state of over-analyzing (or over-thinking) a situation so that a decision is never taken, in effect paralyzing the outcome. (Wikipedia) Most of us have suffered from this occurrence at some point in our life. Buying a home is often the biggest financial decision a person will make, and I certainly don’t advocate you rush hastily into this process. Like all other major decisions in your life, you should start with a plan. First, you must commit and make your decision to purchase a new home. Your second step ls to set a date or deadline to hold yourself accountable. Next, you must educate yourself and ask all the relevant questions to arm yourself with best information. And finally, when the time is right, take action! These simple, yet effective steps, will help you focus and put you on the right path.
It is often been said, knowledge is power. While this statement is true, I think in real estate, it’s more apt to say that knowledge plus action is power. Purchasing your first home can often be an intimidating and frustrating process. My goal is to alleviate these fears and to provide you with the resources you need to take decisive action.
Please do call or email me with any questions you have about the home buying process–I am here to help.
Have a fun and safe Halloween everyone!
Head to www.massmortgagepro.com for more information!
*A pre-qualification is not an approval of credit and does not signify that underwriting requirements have been met. Copyright©2017 Fairway Independent Mortgage Corporation. NMLS#2289. 4801 S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Lender. MA Mortgage Broker and Lender License #MC2289. MA Loan Originator License #49810.