Just because we are going into the fall season doesn’t mean that real estate will slow down all that much… Yet. It is still an excellent time to buy a house even if the market has slowed slightly. There are still great properties on the market and homebuyers should not be fearful of rising interest rates. Remember, these are still the most historically low rates we’ve seen in decades, making it easier for homebuyers to afford a larger home. If you’ve been struggling in the rental market, tired of limitations and dealing with landlords and you’re ready to finally step into the dream of homeownership, now is a great time to say goodbye to renting and hello to homeownership.
One of the first suggestions I can offer is to have a full understanding of your finances. Contact one of the three major credit reporting services; Experian, Transunion, or Equifax, and request a copy of your credit history. Review all the details and correct any mistakes or errors. If you haven’t reviewed your credit history in some time, you might be surprised as to what other creditors are noticing about you. Do you have outstanding debts that you forgot about? Collection notifications? Accounts that you forgot to close? These are credit points that lenders will pay close attention to. If there is information on your credit history that cannot be resolved, it’s important to write a letter of explanation that might exonerate your position. Lenders may request additional information depending on the type of loan.
Check your credit score. A credit score over 600 is considered fair to good, which means you might qualify for an FHA, VA, or USDA loan. Credit scores over 680 typically qualify for conventional loans as long as the borrower can produce at least a 10% down payment. If your credit score is lower than you’d like, it would be beneficial to spend the next 3 to 6 months increasing that score. Pay off as much debt as possible but leave accounts open to show you have available credit. Pay all bills including medical bills and utilities on time, and refrain from opening any additional credit cards or loans.
Start saving for a down payment if you haven’t already. Your down payment can come from a variety of sources. There are several down payment assistance programs or FHA loans, which require just a 3.5% down payment. Grants and state funds may be able to assist in closing costs and additional down payments and even gifts from family and friends can be considered in a down payment. There are a lot of creative financial situations that can help homebuyers with little to no down payment funds. It’s important to talk with a lender about your options.
Avoid identity theft. Unfortunately, the chance of becoming a victim of identity theft can increase when you’re buying and moving into a new home. There is so much documentation that if it falls into the wrong hands, it could wreak havoc on your credit history and your personal financial situation after you’ve moved in. It may be beneficial to purchase identity theft protection from a trusted company that will safeguard your personal data during the home buying process. There are so many scams out there. I recommend that any entity asking for identification verification or documents be verified through your real estate agent and/or lending institution before volunteering information over the phone or through the mail.
Homeownership can be extremely exciting. There are multiple tax benefits to homeownership, it’s a great way to save money and build equity, an excellent solution for building credit when you pay your mortgage on time, and it can give you a sense of stability. If you’re looking to buy a home this fall, the West Bloomfield, Farmington Hills, and Bloomfield Township areas have hundreds of properties for sale. Now that most families are focused on going back to school, the buyer competition will not be as competitive.
Call me today at 248-752-3088 for answers to any of your questions about finding a home loan, buying property, or starting the process to homeownership.