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Looking To Buy A Home Soon? Here Is What You Need To Do Now!

Looking To Buy A Home Soon? Here Is What You Need To Do Now!

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If you're in the market to buy here's some advice to help would-be home buyers plot their next move. 


The good news: There are a lot more homes to choose from. In addition to the additional properties already on the market, Zillow's Humphries is forecasting an increase in houses and condos for sale this year as builders pick up the pace and more homeowners cash in on their rising equity. As prices have risen from the depths of the recession—the median sales price hit bottom in 2012, at an average home price of $152,000—the flippers have started to flee, which has helped the overall market stabilize. "Home prices have risen to the point where, in many markets, houses don't make sense for investors," says Daren Blomquist, vice president of Realty-Trac, noting that cash buyers dipped to 30%, the lowest in four years. "That helps level the playing field for regular buyers.”


Then there's that other important factor: interest rates. Despite prognostications that they could tick up by summer, the 30-year fixed rate—recently at 3.7%—"is still within shouting distance of 60-year lows," says Keith Gumbinger, vice president of HSH, a mortgage information provider.






1. Start hunting. 




Sure, you've been hearing for years that interest rates would shoot up soon. This time you can

believe it—Federal Reserve 


chairman Janet Yellen signaled as much in her most recent Federal Open Market Committee

statement. The NAR is forecasting that the 30-year fixed-rate mortgage will average 4.3% in the third

quarter of this year, 4.7% in the fourth, and 5.3% over all of 2016. On a $300,000 loan, the difference 

between 3.7% and 5.3% would be $285 a month (a payment of $1,381 vs. $1,666) and $102,600

over the life of the loan. 


Those rates could go even higher if Europe's economy starts to recover, warns Sam Khater, deputy

chief economist for CoreLogic. One reason that American mortgage rates have stayed so low is that

in recent years global investors have poured money into the relative safety of U.S. Treasuries, a main

factor influencing the price of mortgages. If money starts flowing back out to the rest of the world,

domestic rates will inch up. 


Home prices have been heading up as well. Not as fast as in the bubble years, of course, but some

areas have already seen double-digit growth. "Until recently the fastest-growing markets were those

hit hardest," says Khater. "Today the fastest growing are those with healthy economies." With the 

economy on the upswing, there are a lot more of those now too.



2. Go fixed-rate, not flex. 




Adjustable-rate loans may look irresistibly low now—around a 3% average for a five-year and as low

as 2.5% for borrowers with credit scores of 760 and higher. But you're likely to end up paying

significantly more at the reset date with rates heading upward. "It's hard to argue against a fixed-rate

loan," Gumbinger says. The exception: Buyers who plan to stay in the home for less 

than 10 years may benefit from the low ARM rates in the fixed period.


3. Size your down payment.




If you're looking in a highly competitive market, offer to put down more than the standard 20% if you

can afford it. That gives the seller the extra reassurance that if the house appraises for less than the

asking price, you'll still be able to secure a mortgage. Signs that market conditions warrant

sweetening the down payment: if houses where you're looking are going to contract within a matter of 

days or if they are routinely selling for more than the asking price.


4. Find a savvy broker. 




Buyers have so much more information at their fingertips: comparable sales, school district reports,

walkability, and more. But don't underestimate the kind of advice you'd get from a broker. A buyer's

agent will have on-the-ground knowledge of market trends and be able to identify unseen

circumstances that affect a property's price, anything from a cracked foundation or a dead boiler to

whether there's been a recent school redistricting or a zoning change in the area. She might also

have access to "pocket" listings that don't make it online because the privacy-minded sellers don't

want their home flooded with prospective buyers. 


5.Take a little time.  





Sure, you want to keep an eye on the prospect of rising interest rates. But in a balanced market with

steadily rising inventory, don't feel pressure to jump at the first house you like, says Craig Reger, a

broker in Portland, Ore. Visit a good number of open houses (at least five) to get a sense of what's 

out there, and go shopping with your agent. You'll start to learn if a property is over- or under-priced

and why. The rules are a little different if you're looking at new construction, because builders don't

negotiate on price very often. "They tend to sell at 100% of their list price because that's their

comparable for the next house," says Jacquie Sebulsky, a broker with Cascade Sotheby's

International in Bend, Ore. That said, if you buy in the early stages of construction (when the

developer knows you'll have to live through months of noise, dust, and other hassles), you may 

be able to ask for help later with closing costs, upgrades, and additional amenities, such as

appliances, in lieu of a price cut.


6. Remember that money isn't (always) everything. 




Even in a market where inventory is tight and sellers aren't negotiating much, you still have some

leverage. That starts with minimizing the seller's potential headaches. If you have attractive financing

—a pre-approved loan from a reliable lender or a large down payment—say so. If you can close on 

the seller's schedule—whether that means quickly or letting him stay an extra month—do it.


 And don't be shy about plucking a few heartstrings. It never hurts to write a letter explaining what the house means to you. "A lot of sellers don't want to sell to investors," says Tim Lenihan, a broker in Seattle. "Hokey as it sounds, it can help you get your foot in the door."


By Cribsuite Team


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