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Top 10 Myths That Trip Up First-Time Home Buyers

by Lorna Calder


If you’re thinking about buying a home, you’ve probably received your share of advice from family and friends. Add to that the constant stream of TV shows, news segments, and social media posts that over-simplify the home buying process for easy entertainment.

With so much information to sift through, it can be tough to distinguish fact from fiction. That’s why we’re revealing the truth behind some of the most common home buyer myths and misconceptions.

Buying a home is a big decision, but it doesn’t have to be a scary one. If you arm yourself with knowledge and a qualified team of support professionals, you’ll be well equipped to make the right choices for your family and financial future.

 

DON’T FALL FOR THESE COMMON HOME BUYER MYTHS

 

Myth #1: You need a 20% down payment.

Plenty of buyers are purchasing homes with down payments that are much less than 20% of the total cost of the property. Today, you can buy a home with as little as 3-5% down.

There are multiple programs out there that allow you to have a lower down payment, and a lender or mortgage broker can talk you through which option is the best for you. Since you’re putting less money down, you’re a riskier borrower to your lender than people who put down a full 20%. Because of this, you will most likely need to pay mortgage insurance as part of your monthly payment.

Myth #2: Real estate agents are expensive.

Your agent is with you every step of the way throughout your home buying journey, and he or she spends countless hours working on your behalf. It sounds like having an agent is expensive, right? Well, not for you. Buyers usually don’t pay a real estate agent’s commission. Your agent’s fee is paid for at closing by the seller of the home you’re buying.1 The seller knows to factor this cost into the property’s total purchase price.

Myth #3: Don’t call a real estate agent until you're ready to buy.

The earlier you bring in an agent to help with the purchasing process, the better. Even if you’re in the very early stages of casually browsing Zillow, a real estate professional can be a huge help.

They can create a search for you in the Multiple Listing Service (MLS), so you get notifications for every house that meets your criteria as soon as it hits the market. The MLS is typically more up-to-date than popular home search sites like Zillow and Trulia. Setting up a search a few months before you’re considering buying gives you a good idea of what’s out there in your town that’s in your budget. Reviewing the MLS and speaking with an agent as soon as possible can help you set realistic expectations for when you actually start the house hunting process.


Myth #4: Fixer-uppers are more budget friendly.

We’ve all watched the shows on HGTV that encourage people to go after fixer-uppers because they’re more affordable and allow buyers to eventually renovate the home to include everything on their wishlist. But, this isn’t always the case.


Sometimes, homes that need a lot of work also require a lot of money. Big renovations, like add-ons, a total kitchen remodel, or installing a pool, take a lot longer than it looks on TV. If you’re really interested in a fixer-upper, ask your agent to show you a mix of newer homes and older homes. If you fall in love with an older home that needs a lot of work, get some quotes from contractors before you buy so you know the real cost of the renovations and see if you can work them into your budget.

Myth #5: Your only upfront cost is your down payment.

Your down payment is big, but it isn’t the only money you’ll spend during the home buying process. At closing, you’ll pay your down payment, but you’ll also bring closing costs to the table. Closing costs are typically anywhere from 2-4% of the total purchase price of the home.2 This amount includes the cost for items like homeowners insurance, title fees, and more.

You’ll also need to pay for an inspection before closing, which usually costs a few hundred dollars. This price will be higher or lower based on the size of your new property. Your lender will also require an appraisal. An appraiser will come in and inspect the home to determine how much it’s worth. Depending on your lender, you may have to pay this when the appraisal is conducted or it might be rolled into your closing costs.

Myth #6: You need a high credit score to buy a house.

You don’t need perfect credit to buy the perfect home. There are loans out there that buyers with lower credit scores can qualify for. These are good options for people who have had credit issues in the past, but some of them come with additional fees you will need to pay. Speak to a few local lenders or mortgage brokers to talk through which options might be best for you.


Myth #7: You can't qualify for a mortgage if you're still paying off student loans.

While some buyers may feel more comfortable paying off their existing debts before taking the leap into homeownership, it’s not a requirement. When you’re applying for a mortgage, the lender takes a close look at your debt-to-income ratio.3 If you want to calculate this on your own, add up all of your monthly debt payments and divide those by your monthly income. When you’re lender does this, they’re trying to make sure that you will be able to afford your monthly mortgage payments along with your other existing payments. If your income is high enough to allow you to make all of these payments each month, having a student loan will most likely not stop you from getting a mortgage.

Myth #8: You should base your budget on what your lender approves.

How much house you qualify for and how much you can afford are two totally different numbers. When you prequalify for a mortgage, your lender will look at your income, debt, assets, credit score, and financial history to determine how much money you might qualify for.4 For some people, this number might be much higher than you thought because lenders tend to approve for the highest amount they think you can afford. But that doesn’t mean that’s how much you should borrow.

Instead, figure out how much house you can actually afford. An online mortgage calculator can be a good first step in determining this number. We recommend thinking about what you want your monthly payment to be as a starting point. And remember to include your principal, interest, taxes, and, insurance. You should also think about ownership expenses that aren’t part of your monthly payment, like HOA dues and maintenance.


Myth #9: It's all about location.

You’ve heard the phrase. Location, location, location is basically the real estate industry’s motto, but we’ll let you in on a little known secret: It’s not always true. Yes, location is great to consider when it comes to school districts and commute times, but you also need to think about how the home will function for you and/or your family’s lifestyle. If a family of five is choosing between a one bedroom condo in the bustling city center and a 4-bedroom home out in the suburbs, the latter is probably the best, most functional choice for them. Also, by buying in a less sought after neighborhood, your property taxes will most likely be much lower!

Obviously, you might still want to choose an area with great resale potential, and this is something that your agent can speak to you about. They’re an expert in your city and are constantly monitoring buying and selling trends.

Myth #10: If you look hard enough, you'll find a home that checks every box on your wishlist.

You’ve seen that famous house hunting show. And while we have our suspicions about how real it is, the one thing they get right is that almost every buyer needs to compromise on something. Yes, the perfect house that meets every item on your wishlist is probably out there, but it’s also probably double or triple your budget.

A long wishlist can be a great starting point for figuring out what you want and don’t want, but we recommend narrowing that wishlist down to the top five things that are important to you in order of priority. We also recommend noting on your wishlist what your absolute deal breakers are, like “must have a yard for our dog,” and noting what you can live without, like “heated bathroom floors.”

This is a great list to discuss when you first start talking to an agent. A good real estate agent will be able to look at your list and find properties that might work for you. By coming to that first meeting with realistic expectations and knowledge about home buying rather than a bunch of myths heard here and there, you’ll be able to start the process off on the right foot and be in your new house in no time.

WE’RE HERE TO HELP

Whether you’re a first-time buyer or a seasoned homeowner, there’s no reason to go through the home buying process without an advocate on your side. We’re here to answer your questions and do the hard work for you, so you can spend your time dreaming about your new home. Call us today to schedule a free, no-obligation consultation.

Get a FREE copy of our Home Buyer’s Guide to Getting Mortgage Ready

Now that we’ve cleared up these common homebuyer myths, find out if you know the steps you should take to prepare financially before you apply for a mortgage. Contact us to request a complimentary copy of our “Home Buyer’s Guide to Getting Mortgage Ready.”


Sources:

  1. Realtor.com - https://www.realtor.com/advice/finance/realtor-fees-closing-costs/
  2. The Balance - https://www.thebalance.com/buyer-s-closing-costs-1798422
  3. StudentLoanHero - https://studentloanhero.com/featured/student-loans-buying-house/
  4. Zillow - https://www.zillow.com/mortgage-learning/pre-qualification-vs-pre-approval

You Don't Need Luck to Find Your Dream Home

by Lorna Calder

You don't need luck to find your Dream Home! Let The Lorna Calder Team guide you through the process step by step!

Step One:

Give us a call today! 281-361-2280

Step Two:

Our team of professionals can help you with the first steps of getting pre-approved with a reputable mortgage lender.

Step Three:

We can then start the search for your dream home in Kingwood, Humble, Atascocita and and Houston area.

Step Four:

We will handle all the paperwork and use our proven negotiation techniques to help get you the best deal for the perfect home.

Step Five:

You get to move in! Its that easy. We simplify the process so you don't have to sweat the small stuff.

Read our past clients' reviews and see what they had to say about us here.
 

2018 Market Insight

by Lorna Calder

 

What’s in store for the market in 2018? While it’s impossible to know  for sure, experts analyze current trends to predict what may happen.

 

Home prices and values are expected  to rise modestly 

Home prices have been increasing around the country, with cities such as Dallas, Portland and Seattle experiencing the  largest year-over-year price gains.1 In fact, Washington has  experienced the fastest rise in housing prices in the United States over the past few years.2 While the National Association of Realtors anticipates 2018 home prices will rise by 3.5  percent, Freddie Mac predicts they’ll increase 4.9 percent.3  This percentage may seem modest, but for cities such as Detroit, Las Vegas, Phoenix and San Diego, rising home prices may continue the 2017 trend of creating more pressure in the market.1 The good news is home values in 28 states have risen to above pre-crisis peaks and are at an all-time high.2 


Rental prices are no longer increasing at the rate of home prices in most areas.4 Although the leveling off of rental  prices may take some financial pressure off renters, for  those thinking of buying, it’s a good time to turn their  dream of homeownership into reality.

 

 

Existing home sales have leveled off for now

Experts predict 2018 will spell more of the same for home sales. Many believe this is due to the increase in interest rates in 2017, which may have reduced the purchasing power of many homebuyers. Home purchases are expected to rise a modest 2.8 percent (5.8 million) in 2018.3  


However, patience may pay off for potential buyers. While  the combination of economic recovery, comparatively low mortgage interest rates and job growth may have brought more interested buyers to the market, inventory has been tight over the last few years. In response, homebuilding has been up and new homes are expected to hit the market this year, increasing inventory for potential buyers.5,6 Many experts are predicting 2019 will be a buyers’ market in many areas. 

 

Will 2018 be a banner year for new homes?

Many experts predict that new home sales will drive the  market in 2018.3 A total of 1.33 million housing starts are  expected for 2018, an increase from 1.22 million in 2017.3  While total home sales are expected to increase over two  percent, new home sales are expected to increase eight  percent, reaching 670,000 sales.
 

 

 

 

Sources:  1. Kiplinger 2. Home Buying Institute 3. NAR, Realtor.com 4. CNBC  5. First Tuesday Journal  6. Business Insider  7. Freddie Mac 8. Fannie Mae

© 2018 Buffini & Company. All Rights Reserved. Used by Permission. RMMK JANUARY MF S

 

Some GREAT tips for Today's Home Seller!!

by Lorna Calder

Especially for first time sellers and/or those who have been in their home for a very long time, selling your home is an emotional process! Whatever your reason for Selling is, here is how to handle it!


FOR ALL SELLERS:

When you are a first time seller, it could be an anxious process because you don't know what to expect! Even experienced sellers could encounter uncertainty with the ever changing market. Follow these tips t help make the process worry-free and be sure to ask us ANY questions that arise, nothing is too silly!

  • Prepare your home. Get your home move-in ready and make an needed repairs. You may also hire a home inspector so you know for sure what to fix!
  • Prepare your mind. See your home as it is, a place to live. Try and remove all sentimental and emotional value from the home. 
  • Make your home available to show during the day. To help agents sell your home faster increase the accessibility of your home. Try to make sure at any time of the day, if someone wants to view it, they can.

 

Before buying another home:

  • Plan ahead to save time and money. If you sell your home before you are able you buy a new one, DONT WORRY! Count on me to find you a new home quick or a short-term lease!
  • Get PRE-APPROVED for a mortgage on your next home BEFORE you even go looking with us!

 

IF YOU'RE TRADING UP:

When families look to trade up, they usually only focus on the size of the home but there are many more factors and unique circumstances to consider while going through the selling process that you should know about. 

  • Buy or Sell first? You are probably thinking, "Should I sell my home first or buy a new home and THEN sell?" Please allow me to discuss the options with you and the outcome of all different choices to ensure you and your family make the MOST informed decision. 
  • Price it right. Many people would like multiple bids on the home so you can pick and choose to get the best and highest. To target the right buyers for your home, the price needs to be just right! To speed up the selling process, setting an accurate asking price will help you move on to the next chapter while still getting the most money!

 

Before buying a larger home:

  • Continue to shop for a home while your home is still currently on the market, never stop looking!
  • Create a list of must have and deal breakers for your next home and that will make your home search a bit more efficient and save time and money.
  • Consider the suburbs. If you want space at a budget price, consider rural or suburban areas where you may be able to get more home for you money!

 

IF YOU'RE DOWNSIZING:

The majority of folks who downsize are those who have retires, but there are many reasons why a home buyer would seek out a smaller home. Some would prefer to save more money on their mortgage and some don't want to deal with the hassle of maintenance. Whatever the reason for scaling down, you may also be focused on selling for profit to pay cash for your next home and stash some of that extra cash into savings!

  • Clear the clutter. Seeing that you are moving into a smaller home it may be a good idea to go through all of your belongings and declutter, tossing or donating items you no longer need or use! Remember, you may not have the storage in your next home that you currently have!
  • Update the interiors. Look, you dont need to go all crazy "fixer upper" on your home. Just the basics like a fresh coat of pain, removing brass fixtures and other small things can make a BIG difference. Also, trust in us! We know the market and what is trending so we can help you to make informed decisions about renovations that will save you money and get you buyers!
  • Hire a professional stager. Let be honest with ourselves, not all of us know how to decorate a home properly to speak to TODAYS buyers! You may not need it and well will let you know but we have references to some amazing and affordable stagers. 

 

Before buying a smaller home:

  • Don't write off a fixer upper. Depending on how much you sell your home for, you may have the money left over to hire a good contractor to improve the look and functionality of a bargain home!
  • Reconsider paying all cash. Instead of using home profits to pay for your new house outright, allocate a large amount for the down payment and take out a small mortgage for the remainder. Doing this gives you the liquid flexibility of cash in your financial plan as you get settled in your new home. 
  • Try before you buy, especially if you are moving out of town or downsizing a considerable amount. Renting a much smaller place in your desired location will help you determine the ideal size and exact place to buy your new home, before making a large investment. 

 

If you would like print outs of the PDFs to use or share click on these pages! PAGE1 or PAGE2

 

© 2016 Buffini & Company. All Rights Reserved. Used by Permission. RMMK OCTOBER MF S 

You may miss out on Low Interest Rates if you wait...

by Lorna Calder

 

Waiting to Buy a Home? 

You May Miss Out on Low Interest Rates!

 

In December, the Federal Reserve raised the key interest rate by a quarter-point to a range of 0.25% to 0.5%, the first rate increase in nearly a decade.1 While some experts expect the Fed to raise rates gradually this year, some economists expect rates to increase three or four more times this year.2 Increases are anticipated to amount to a quarter -point each time, and when they do occur are sure to impact mortgage rates.What's a homebuyer to do?

 

NOW IS THE TIME TO BUY!

Quarter-point interest rate increases may not seem like a whole lot but it could mean the difference of hundreds of dollars!

 

WHAT SHOULD YOU DO NOW?

  • Get pre-approved for a mortgage
  • Narrow down your search criteria
  • Get hunting

 

Check out the image below or upload our PDF for more details on these bullet points and to gather more important information on why NOW is the time to buy!

1. CNN Money, December 16, 2015

2. The Guardian, January 6, 2015

First Time Home Buying 101

View graphicWorking with a lot of first time home buyers, I get asked a lot of questions. Good questions. Whether you are a first time home buyer or a second time around buyer, make sure that you are well informed of the process and real estate practices in the area that you are purchasing in. Policies, procedures and contract forms vary from state to state. So make sure you keep in the know.

Other things you may want to consider should be, what is the average home price in the area that you are looking in? Why should you know this? Because you should know whether you are purchasing above or below the average price range - this can help you when you are thinking about resale... which by the way - you should be thinking about before you buy... Confused yet?

Is it better to buy a three bedroom or a four bedroom?

What features are you looking for in your home? Are you aware of what some of those features can cost in the area you are looking in ?

What is the typical cost of home improvement projects? Can you afford to update a home after you buy it? Which home improvements gibe the best return on investment?

How much does an inspection cost in the area? Why should I have one?

How much is an appraisal? Survey?

What are closing costs and how much will they be? Who pays the closing costs?

How much is homeowners insurance?

What is title insurance and why do I need it? Who pays for it?

What is an escrow account? Why do I have to have one?

Where is the best place to look for houses?

What are the Steps to Buying your First Home?

How much should I have for a down payment?

How much house can I afford?

How do I get pre-approved? What is the difference between prequalified and pre-approved? Why does it matter?

Many of these questions can be answered by having a first time home buyer consultation with a real estate agent. Looking before you leap into a contract on a home can save headache, heartache, stress and money. Asking your questions early in the process will make you feel very comfortable about what you are doing and the decisions you are making.

Make sure that you are prepared - even if it means waiting a little bit to start looking while you get your affairs sorted out and ready. You have to be in the position where as seller can look at your contract and your pre-approval letter and say yes, this buyer is Ready, Willing and Able to buy my house. You must be all three. Most prospective home buyers are ready, and they are willing, they are just not able... yet.

Ask your real estate professional a lot of questions - they should know the answers, or be able to get the answer quickly or put you in touch with someone that can. If they cannot, you should ask yourself if this is the best person to be working with. If you would like to see the full size infographic - click here.

Seems like a lot to think about and it is, but the whole process can go fairly smoothly when you are working with a Realtor. If you are thinking about purchasing a home, contact the Lorna Calder Team. Lorna and her Team have helped many first time home buyers navigate through the process to become successful home owners.

Lorna Calder is an award winning Real Estate Broker in Kingwood Texas. Lorna's past clients rate her as #1. Lorna Calder has also appeared on HGTV's House Hunters.
 

 

Steps to Rebuilding your Credit

by Lorna Calder

Credit Reporting 101

I often get calls from prospective home buyers looking for information on how to get the home buying process started. In the course of my needs assessment, we will eventually get around to discussing their credit. Some clients are ready to go, while others may need to do a little work before we can get the process started. Understanding and knowing about credit utilization and reporting and how they can impact your ability to purchase a home are critical for any buyer. The following infographic by Your Wealth Puzzle shows consumers how to rebuild their credit score.

Building your credit may require a roadmap:

  • Check your Credit report - you are entitled to a free credit report if you Live in Texas once per year from each of the three credit reporting bureaus, Equifax, Experian and Trans Union
  • Verify that the information is correct and be on the lookout for any information contained in the report that does not pertain to you. If you find errors contact the credit bureaus.
  • Start establishing credit stability by maintaining and using checking and savings accounts regularly.
  • Learn the basics of credit scoring, research and be invested in your good credit habits.
  • 'Borrow' off another persons record by being an authorized user, or by having a co-signer.
  • Apply for a secured card, by depositing a secure amount with the lender and borrowing and repaying. This can help get you started on establishing your own score.
  • Avoid opening credit cards and accounts at several institutions or retail stores - this can dramatically lower your score and harm you in the process. Remember when you are starting out establishing your credit has a purpose - to build your score. Only open one new account to start. A responsible person really only needs a couple of credit cards, and perhaps a couple of retail credit cards if you shop their often. Having too much available credit can harm your score also.
  • Once you have an established secured credit card, open a retail card. Stop here and build your score by using and paying the cards off.
  • Do not max your cards and keep them at the max. Try to keep balances at no more than 33% of the limits and pay in full monthly if you can.
  • As you move down the road, open an installment loan such as a car loan or small loan. Pay it religiously and never late.
  • Use your revolving credit accounts lightly but regularly so that you are continuously reporting to the credit bureau.

Lorna Calder is an award winning Real Estate | Broker Associate at | RE/MAX Associates Northeast in Kingwood TX

Mortgage Changes to Be Aware of for 2014

by Lorna Calder

Mortgage Changes to Be Aware of for 2014

There are new regulatory changes that came into effect in January that impact mortgages in 2014.

One of the biggest changes is The Consumer Financial Protections Bureaus Ability to Repay Mandate – which is designed to ensure that every borrower is a qualified borrower. Under this new mandate, Lenders must now follow a set of guidelines to establish income, assets before deeming an applicant eligible for financing.

We are also seeing more changes to FHA loans. FHA loan limits are now reduced from $662,500 to $592,950. This reduction is more likely to impact buyers of higher priced properties.

Another change is that points and fees can no longer exceed 3% - due to caps on loan origination fees.

Under the new mandate these tighter qualifying rules may make it more difficult for self-employed borrowers, even if they have good credit.

Real Estate Predictions for 2014

by Lorna Calder

Real Estate Predictions for 2014

Chief economist for Stewart Title Ted C. Jones shares his predictions for the real estate market in 2014.

With interest rates being at historic lows for some time now, with the economy improving Ted predicts that interest rates will start to rise and that we could see 5.6 - 6% by the end of next year. Ted goes on to predict that if rates were to go up say from 4.5% to just 5.5% that could mean an increase in the monthly payment of over 10%. This can make a difference between one house or the next.

These predictions will certainly make the home buying process a challenge for buyers this spring and into the coming year. The Houston and surrounding market has experienced low housing inventory numbers since last year and this trend is expected to continue through the year. An experienced REALTOR® can prove to be an invaluable resource when it comes to finding homes that are just on the market, coming on the market or maybe being overlooked in the market due to poor online marketing.

Lorna Calder is a top rated Broker Associate at RE/MAX Associates Northeast in Kingwood Texas. Currently ranked #7 at RE/MAX in Kingwood, Lorna continues to exceed her clients expectations.

 

 

July 2013 Houston and National Housing Market Trends

by Lorna Calder

This month’s feature video will discusses the difference between an FHA and a Conventional loan. The federal housing administration or the FHA provides a loan guarantee program in lieu of private mortgage insurance so qualified borrows can secure a mortgage loan with a low down payment. The FHA doesn't lend you the money, it guarantees the loan so that the lender doesn't take on a financial risk by extending you credit.

The USA Department of Housing and Urban Development's website can help you locate HUDS approved counselors in your area who can answer questions about FHA loans. The most popular FHA loan has a minimum down payment of 3% but allows 100% of the money needed at closing to be a gift from a relative, a nonprofit organization or government agency.

FHA loans are assumable, that means you can transfer your loans to the new owner if you sell your home. To assume the loan the buyer has to meet to credit standard for the loan, this feature can make it easier to sell your home. This provision isn't found in the conventional mortgage form. Under a conventional loan the sale of the subject property triggers a due on sale clause. The biggest disadvantage to FHA loans is the mortgage insurance premium, although conventional loans with less than a 20% down payment also require mortgage insurance coverage.

Consumers need to shop rates when looking for FHA mortgages just as they would a conventional loan because the rates are established by the lender not the government. FHA loan interest rates are typically higher than conventional or non-government guaranteed loan rates but shouldn't be significantly higher unless you have credit problems. The current state of our economy and the housing market in general have made FHA loans much more viable and popular.

There is a lot to know about owning a home. A realtor is always your best source of information for all your real estate needs.

If you have not reviewed my monthly Housing Trends Newsletter - you could be missing out. Everywhere I go, people are asking me about the housing market conditions - it's on everyone's mind. Staying abreast of local and national market conditions and factors that can affect the future sale or purchase of your home can make the decision process less daunting. I always tell my clients that in order to make the best decision they need to have all the information they can upfront. My Housing Trends Newsletter is just one of the tools in my arsenal to make sure you keep informed.

The June 2013 Local and National Housing Trends has just been released. This month's newsletter is packed full of local and national housing market statistics and news you need to know to stay current with today's changing housing market.

This month's housing trends issue features:

How to Negotiate the Best Real Estate Deal

Should You Buy a Used Home Instead of a New Home?

Home Owner Misperceptions About Flood Insurance

Tips for Staging Kitchens and Bathrooms When Selling 

Moving Day Guide and Checklist

You can view the newsletter here.

If you wish to receive FREE Housing Trends eNewsletter e-mailed to you monthly, click here to Subscribe.

If you are considering selling your house or buying a home and need more information, I am never too busy to help, please contact me for more information.

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