Is Winter a Good Time to Buy a Home?

Is Winter a Good Time to Buy a Home?

Winter has arrived! The temperatures have dropped and Christmas is only days away. So one may wonder is this a good time to buy a home?  The answer is a resounding YES! 

Buying a home during the winter may seem like a fool’s errand, but it is actually a clever time to buy.  Here are a few reasons why:

Even though there is less inventory, there are also less buyers.  Everyone knows that Spring and Summer are the best times to buy a home.  It is warmer and those with families or are planning to start one, begin looking at school districts and wanting to get into the best neighborhoods.  This also means that even though you may find your dream home so have a dozen other potential home buyers causing a bidding war that you may not be prepared to fight.  During the colder times of the year, fewer people are looking and fewer people are selling.  This can be great news for you as you may not have quite so many cash buyers and those willing to pay over the asking price. 

Thespruce.com tells us all the low activity in the winter will result in sellers being far more motivated to sell. Real estate agents know that the slow winter months are when sellers are more willing to negotiate, whether it is on selling price, closing costs, closing date or even terms of the sale, including what household appliances and items are included in the sale. And these are all the very reasons that many real estate agents recommend that their clients delay listing their homes till at least the spring. The winter is not a great time for sellers, in general.

Winter is also the perfect time to take a look at how the house looks and feels in harsher climate.  During this time you can check the windows to see if they are drafty, how warm does the house feel with the furnace running, are there ice dams on the roof (if you live in a colder climate than Texas), and is the home still aesthetically pleasing with bare trees and bushes? 

Anyone who has purchased a home before knows that during peak real estate months, you must work around your lender’s schedule for your closing.  At the end beginning of the year home sales drop 25-30% hopefully allowing you to close on your new home quicker.

Speaking of having to wait, did you know that it is easier to hire movers during cooler months as well?  Since the moving busy season tends to be during late Spring to late Summer, hiring movers can be daunting to say the least.  Sometimes you may even get lucky and get a break in price because moving companies need the work.  

Many people may feel that searching and buying a home during the winter months isn’t ideal, but with a little knowledge and open mind, you could be sitting by your new fireplace in less time that you thought possible.  

Please take a moment to make sure you follow me on Facebook, YouTube, Twitter, LinkedIn, and Pinterest for other life tips and all things real estate. 

Types of Mortgages

Types of Mortgages

Buying a home today can be a daunting task.  There are so many choices to consider:  condo, townhome, single family home, HOA, school districts, commute, the list goes on and on.  Add to that the type of mortgage you should get and you may feel like quitting before you even get started.  While I can’t help you decide on the type of home you should consider in a blog (I’m better at that in person), with the help of payoff.com I can help you learn the differences between the different types of mortgages to help you make an informed decision.  

The Basic Types of Loans

1. CONVENTIONAL / FIXED RATE MORTGAGE

Conventional fixed rate loans are a safe bet because of their consistency — the monthly payments won’t change over the life of your loan. This is your standard, plain-vanilla mortgage.

They’re available in 10, 15, 20, 30, and 40-year terms but 15 and 30 are the most common.

2. INTEREST-ONLY MORTGAGE

Interest-only mortgages give you the option, during the first five or 10 years, to pay only the interest portion of your monthly payment instead of the full payment. You aren’t required do this. This slows down your repayment time but can be useful in a pinch. Afterward, the rest of the mortgage is paid off in full like a conventional mortgage.

3. ADJUSTABLE RATE MORTGAGE (ARM)

There are many different ARMs. The basic idea is that their interest rate changes over time throughout the life of the loan. The rate changes reflect changes in the economy and the cost of borrowing money. A common ARM is called the 5/1 loan — the interest rate stays the same for the first five years and then is free to change for the remaining 25 years.

Special Assistance for Certain Groups

4. FHA LOANS

These are mortgages guaranteed by the Federal Housing Administration. They come with built-in mortgage insurance to protect against the possibility of not being able to repay the loan. The required down payments are smaller with these loans.

5. VA LOANS

These loans make it easier for veterans of the U.S. armed forces, and sometimes their spouses, to buy homes. They don’t require a down payment and are guaranteed by the Department of Veteran Affairs.

More Exotic Types of Loans

6. COMBO / PIGGYBACK

The combo occurs when you put a down payment of less than 20% and take two loans of any type in combination to avoid paying Private Mortgage Insurance.

7. BALLOON

On a balloon mortgage, you pay interest only for a certain period of time — five years for example — and then the total principal amount is due after this initial period.

8. JUMBO

Jumbo refers to a mortgage that’s too big for the Federal Government to purchase or guarantee. Currently, the limit is about $700,000. This means that the borrower wouldn’t get the lowest interest rates available on smaller loans.

Now that you have a basic idea of what kind of mortgages are available, you are in a better place to work with your mortgage broker in finding the best type of loan for you.  Once you are pre-approved you can begin shopping for your new home with confidence and excitement.  

Please take a moment to make sure you follow me on Facebook, YouTube, Twitter, LinkedIn, and Pinterest for other life tips and all things real estate. 

HOA:  Yay or Nay?

HOA: Yay or Nay?

When you are searching for a new home, chances are you have been to at least a few that are a part of a homeowners association or more commonly known as an HOA.  HOA’s may offer great amenities; community pool, children’s playground, fitness center, etc., so it is easy to gloss over the realities of living within the guidelines of the HOA.

What is a Homeowners Association?  A homeowners association is an organization founded by a real estate developer in order to manage a community of houses, townhouses or condominiums.  According to the New York State Attorney General’s website, this association “is given the authority to enforce the covenants, conditions, and restrictions as well as manage the common elements of the development.” In order to belong to a homeowners association (and, subsequently, live in the community it oversees), you pay dues.  Depending on the community, the dues can range from $100 a year to over a $1,000 a month or more.  You need to consider if the amenities and benefits are of value to you and whether you are comfortable with the rules associated with that particular development. 

The association fees are included in the mortgage lender’s assessment of your monthly mortgage payment, so it is important to confirm that your credit score and debt-to-income ration will support the home development that you choose.  Credit scores can be checked for free at credit.com.  

Why pay a monthly association fee to abide by rules that potentially do not support your lifestyle or support the cost of the amenities you are unlikely to use?  Listed below are some advantages and disadvantages of homeowners associations.

Pros:

  • The HOA maintains the landscape in the common areas as well as community pools, tennis courts, fitness areas, etc.
  • The HOA can be utilized to help with conflicts between neighbors such as unwanted vehicles parked in front of your house or unkempt landscaping. 
  • The HOA can reduce your responsibilities such as snow removal or maintenance you would normally have to pay for yourself.
  • Often, HOAs promote a strong sense of community. Friends can gather at the clubhouse or common areas, people get to know their neighbors, and there are usually social functions planned year round.

Cons:

  • There may be rules or regulations in the HOA documents that will dictate what color you can paint your house, or what type of holiday decorations are acceptable.
  • The HOA may put restrictions on residents wanting to rent out their home. The association may require potential renters to be screened and approved by the HOA board, how much you charge for rent could also be regulated along with the duration of the rental. Some HOA’s ban rentals altogether.
  • An HOA can foreclose on your home.  

Texas Homeowners Association recommends before purchasing a property within an HOA or condo community it is very important that you find out how the association is run, how much the monthly association fees are, what the fees cover and how much money is in the reserve fund to cover any large expenses such as replacing a clubhouse roof. Always get a copy of the rules and regulations before you purchase so that you are completely aware of what you can and cannot do within the community. For example, if you purchase within a condo/townhouse community where there are zero lot lines, more than likely you won’t be able to touch the landscaping outside your home. If you are an avid gardener then this is definitely something you will want to consider before purchasing.

I am available to answer any questions about homeowners associations or any other aspect of buying and selling a home.  Feel free to call me at 970.393.3424 and please take a moment to make sure you follow me on Facebook, YouTube, Twitter, and Pinterest for continual market information.

Repairing Your Credit to Buy a Home

Repairing Your Credit to Buy a Home

 

Buying your first home is an exciting milestone.  Buying a home is a multi-step process. The most important step is to insure that your credit score is as high as possible.  Your FICO credit score is a three digit number ranging from 300-850. The higher the score, the better interest rate which equates to a lower payment.  For a small fee, your credit score is available through myfico.com   If your credit is less than stellar there are things you can do to improve it before meeting with a mortgage lender.  

  • The first step in managing your credit is to familiarize yourself with the credit reports.  There are three credit bureaus: Equifax, TransUnion, and Experian. Each bureau will allow you to review your credit report for free once a year.  When you are planning on purchasing a home, it is in your best interest to download or print your report from each bureau. If you want to make sure everything is accurate with no intention of buying for a few months or a year, then you should pull your report from a different bureau every few months.  

 

  • Once you have reviewed your credit report(s), dispute any incorrect information.  Most people find a few discrepancies. It may be as simple as a misspelled name or an account number that has been transposed by mistake.  Other discrepancies could be more damaging such as an account or purchase that you never authorized. This could indicate identity theft and should be addressed immediately.  Any error could cause your credit score to be many points lower. Using a service like Credit Karma will allow you to review your credit reports, learn your FICO score, and allow you to dispute any discrepancies electronically.   

 

  • After you have reviewed your credit reports and reported any inaccuracies, you can begin to build your credit up and improve your score.  First and foremost try to pay down or pay off new or high interest credit cards. It can be hard to pay extra on accounts especially when you are short on cash.  My best advice is to follow a strict budget, cancel any memberships that aren’t being used or you can go without for a while, and sell items to bring in extra income. The ratio of the balance on your credit cards compared to the credit limit is called your credit utilization ratio. If you have a $1000 limit on a card with a $600 balance, your credit utilization ratio is 60%, which is considered very high. You want to pay down the balances on all of your cards as low as possible. The lower the balances, the higher your credit score will be.  

 

  • From this point on make sure you pay every bill on time every month.  Even one late/missed payment one month can hinder your credit score.

 

  • Now that you have increased your credit score and cleaned up your credit reports, it is time to meet with a mortgage lender to get pre-approved and start house shopping.  The mortgage lender will pull credit reports, verify your income, bank documents and tax filings. We can recommend local lenders that are knowledgeable and can work with individuals with lower credit scores, as well as offer special programs for teachers, police officers, and veterans.  

 

  • One last and extremely important tip:  Once you have your pre-approval and until you have closed on your new house, do not open any new accounts or make any large purchases.  This can hinder the mortgage process and cause you to lose your dream home.

 

When you are ready to purchase your home, or if you have any questions regarding the home buying process, please give me a call at 970.393.3424 or sign in to my website.

Follow me on Facebook, Twitter, Pinterest, and YouTube.

If you would like more information on how to repair your credit, please click on the following links:

https://www.creditrepair.com/articles/loan-center/buying-a-home-with-poor-credit

https://thelendersnetwork.com/how-to-buy-a-house-with-bad-credit/

https://www.inc.com/jeff-haden/12-simple-steps-to-repair-your-credit-and-increase.html