If one of your New Year’s resolutions was to buy a new home and are a bit clueless on how to achieve that, then take note of the following tips and basic information here on what you should know and consider before buying a house in 2019.
Time changes things, and this year we’re facing a reinvigorated market that would bring an increase in expenses, but with it newly-constructed homes and a new chance to review and improve your credit score, which is the foundation for a better shot to get the home of your dreams.
Get to know the essential factors to carefully choose the right home, but always keep in mind that buying a house can be a sea full of doubts, but hopefully, we can help you clear them.
So you won’t have to stress and get disappointed during the process,
Here are some things to consider when buying a house in 2019
1. Can you afford it?
Buying a house is still expensive and prices might go higher with time, which means you need to find out how much house is reachable for your finances. The mortgage calculator is a good start because you have a better vision of how much can you pay monthly and make sure your budget can handle it. Your budget is your budget, commit to it and don’t try to rush any purchase decision. The key is that you can put down at least 10% on a 15-year fixed rate conventional loan. If you can’t do this with the house of your liking, then it’s a no.
You should also consider that if in your search you don’t find exactly what you want and new high-quality home is almost impossible to get, could you be happy living in a community that’s crowded with homes that may or may not need repairs? The advantage of this is that there might not be any competition from other buyers, but in the end, you’re the one that might need to decide and ponder between these and other paths.
2. Prices and offers
During 2017 and even early 2018, home prices went up 10%, but this year, the scenario might change, because even if home prices rise in 2019, it will happen at a slower pace, while there will be more houses for sale, which are expected to increase by 10% to 15%. This isn’t terrible news for homebuyers, although it is a bit for homeowners looking to sell.
According to Lawrence Yun, the chief economist at the National Association of Realtors, “For home sellers, they need to recognize those days of a frenzied market are over. They must price competitively to sell their home,” and “for buyers, there will be challenges when it comes to rising interest rates, but they don’t have to make hurried decisions anymore.”
In short: This coming year might be a good one for buying before either interest rates or the economy get more difficult by 2020.
3. Improve your credit score
The minimum credit score you need so mortgage lenders can take you into account is 620, although some lenders can ask for as low as 580.
Another thing that could be helpful is that you get preapproval for a home loan, which in these times is an essential factor when looking to buy a house. Hal M. Bundrick, a staff writer at NerdWallet website, says, “in the world of homebuying, think of a mortgage pre-qualification as a learner’s permit, while a preapproval letter is an official license to drive. Like a learner’s permit, a pre-qualification letter will get you on the road to homeownership, but there are going to be some limitations on how you can get from Point A to Point B. With a pre-approval letter, you’re in the fast lane.”
Among the things you need to do to get a pre-approval letter are calculating your debt-to-income ratio, having proof of income readily available, having your bank, savings and investment account information ready, and knowing your credit score and pulling your own credit history before the lender does. Zillow has a nifty article about the difference between pre-qualification and pre-approval if you’re still a bit confused.
4. Get the house hunting season right!
We know that people are most likely to start a new life in a new home during the spring, the most beautiful season of the year, because it fits well with the idea of experiencing changes; but in reality, the only thing that has to fit well is your budget, and the house you’ve been thinking so much about, right?
So taking that in mind, the actual perfect season to get a new home is – you guessed it – winter, as prices during summer are incredibly high. During winter, competition and prices are lower, plus, you can see the purchase as the perfect Christmas present.
5. Try less-populated areas
We all know that most people’s dream is to live in metropolitan areas due to all conveniences, but we also know this is expensive; nevertheless, many people still try to get a place within the lights of an urban area, which is the reason you should consider getting a new home in a less-populated city or neighborhood. Save money and look for a house that might not be super close to urban amenities, but maybe only a 10-minute drive away. Of course, this doesn’t mean you should go live in a country town away from civilization; just try looking for a house in the suburbs.
6. Explore all house types
Always have in mind that you don’t necessarily need to get the traditional house style. If you stay open-minded, you can consider a mobile home or a townhouse that can fit your needs. The number of mobile homes is expected to grow, from 93,000 in 2017 to 100,000 this year.
These type of homes are way cheaper than the typical single-family home, while a townhouse is located in a community of homes, and their construction is going through significant annual growth lately as well.
7. Prepare a down payment
If you have a sizable down payment, it will mean that you can receive a lower interest rate that could save you thousands of dollars over time. In the end, it all comes back to simple saving. Wondering how much should you save to start your journey in getting a new home? Most mortgage lenders ask for the 20%, so they can be absolved of paying a Private Mortgage Insurance (PMI), which helps them protect themselves when loan payments fail.
8. No matter the year, always know what a fixed rate and an adjustable rate mortgage are
A fixed rate loan has an interest rate that you will keep paying for the whole loan term, with no changes, is going to be the same amount monthly, no changes; a locked in a contract.
On the other hand, an adjustable-rate mortgage (ARM) will start with a lower interest rate (lower than a fixed rate loan), but as every year passes, it can be adjusted, and rate can be higher. Or you can get a hybrid of these two, which is a 5-1 ARM. This offers you a lower rate for the first five mortgages, and after that, the rate can be adjusted annually. For more information on this subject click here.
Get a Top-Notch Real Estate Agent
Partnering with an expert in real estate will always be ideal, so you can exteriorize all your doubts and have a trustworthy agency by your side. At Integrated Realty Group you can find what you’re looking for. We are a specialized Laguna Hills real estate realtor that goes beyond the search of a house, as we handle residential, commercial, industrial, and any other specialty types of real estate. Find your new home in all of our featured areas.
Let 2019 be the year where you’ll find the home of your dreams, so follow these basic tips and adventure yourself to a house hunting with less stress.