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.
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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.
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