With a surplus of homes on the market, it is defiantly a buyer's market. There have never been so many opportunities to buy a home at such a reduced rate. Mortgage rates are low so what's that delay? Given the recent news with the mortgage crisis and bank failures, many banks have tightened their guidelines. But does this mean that banks aren't lending? No! Qualified borrowers are still getting loans.
If you are just starting out in housing market or are just wondering what the guidelines are in this market, here are few tips to get ready:
1.) Build a savings for a down payment: Yes, 100% financing is gone and will not be back in the foreseeable future. Buyers need to be prepared to put down between 5%-20% on a home to secure conventional financing with a bank. Those putting down the lower of the down payments will only end up paying more in mortgage insurance. Some buyer's who qualify will be allowed to put down a lower amount through FHA loans depending on the program.
2.) Emergency funds: With an uncertain economy, the latest advice to all home owners is to save at least 6 months of mortgage payments for emergencies. Banks like to see reserves; it gives them the added assurance that you have some cash flow. There are insurance plans out there that are available for coverage of the mortgage in the case of job loss (Job Loss Insurance), but as with anything, there is fine print and you may not qualify in certain situations. It's a nice idea to purchase something like this for added assurance, but the money reserves in the bank is the best way to protect yourself.
3.) Choose a qualified Mortgage Originator: Get a referral from people in the market - such as local Realtors , friends or trusted colleagues. Look for someone with plenty of experience and follow up with internet research to see if there is any feedback on them positive or negative. It's important to also make sure your mortgage originator will take your needs and situation into account when helping you choose a mortgage program. Make sure they have plenty of experience in working with FHA loans (FHA certified). FHA has guidelines that originators must go through to gain that status.
4.) Get Pre-qualified: Now that you have chosen who you are going to work with for a mortgage, it's time to get pre-qualified. This is the best time to learn how much house you can afford, what programs you will qualify for, what the rates and loan details will be and what you need to do to make the process go smoothly and quickly. You may find that in order to qualify for a better loan program, you need to make a few adjustments to credit or bills or, clear up an error. Plus you will learn what you need to gather for the bank in order to expedite your loan when you are ready to make an offer.
5.) Read the Fine Print: Sometimes mortgage programs can offer great deals with rates lower than everyone else, If it sounds too good to be true, it just may be. Check out the fine print on the mortgage to make sure you are getting the type of program you think you are. Some programs only offer a low rate for a certain period of time before it changes. Be aware of what program you are agreeing to before you make an offer on a house. A reputable mortgage originator should explain each program to you. Be an informed consumer and do your research before agreeing to a program.
6.) Home Shopping - Find a Realtor: If you are ready to shop homes, it's time to choose a Realtor. It's a good idea to find a Realtor who knows the market you are interested in very well. Make sure you communicate your needs to the Realtor ahead of time. Start with identifying the types of neighborhoods you are looking for, size of home, details such as schools or land and any amenities that matter to you. Realtors will be able help you determine if a neighborhood is a good buy based on its ability to hold its value or if it's on the decline due to excessive foreclosures or other issues - this gives you the opportunity to get the most for your investment. If its great deal you are looking for, it's a good idea to also look for a Realtor who is also specialized in short sales and foreclosures - they can search many databases to find you a great deal. When ready to make an offer, your Realtor will walk you through the process of the offer and contract contingencies.
7.) Lock that rate! Once you are ready to make an offer, speak to your loan originator about locking your mortgage rate. In these uncertain times of market fluctuations, a small increase can make a difference in payment.
Shopping for a home can be an exciting time. There have never been so many great buys on the market at once. When qualified, you will find yourself with many opportunities to get the house of your dreams. This is a buyer market so take advantage of what it has to offer!! Following practical advice with experienced, qualified professionals will make the difference between smooth sailing and choppy waters ahead.
If you are looking for advice or want to take advantage of what the real estate market in the Ocala area and The Villages has to offer, don't hesitate to contact me! I will be happy to help.
Keller Williams Cornerstone Realty
Serving Ocala-Marion County, Summerfield and The Villages
Toll Free: (800) 391-8354 Ext:0
Local: (352) 547-1077 The Villages: (352) 267-7846