It’s a buyer’s market!! You’ve read it, you’ve heard it and you see it everywhere you go. Signs, slogans and ads telling you it’s a buyer’s market and to get out there and buy a home! But before you log on to your local MLS or start going to open houses in your dream neighborhood, there’s one thing you should do to prepare yourself. You need to figure out HOW MUCH of a home you can afford to get out there and buy. There is no worse feeling in my opinion, then taking a tour of a gorgeous house, falling in love with it, mentally moving in and arranging your furniture JUST to find out that you can not afford it after all.
A major factor in owning a home is being able to afford it. Now, I’m not just talking about the expenses that come with home ownership in terms of maintenance, decorating, furnishing and tax. I am talking about the mortgage. Now, unless your rich Uncle Frank is leaving you a hefty inheritance, you are going to need to figure out your total monthly income and something called your DTI. This is your Debt to Income Ratio. This little fraction is going to be a key factor in the bank’s decision regarding how much money to loan you to buy your home. Basically, this is going to be a numerical expression of how much of your monthly income is already spent on bills and other expenses.
Now there are two different types of DTI: front and back. Front DTI is basically the amount of your income that is going towards your current housing costs, rent for renters and principal, interest, tax and insurance for homeowners. The other DTI is back which is basically the amount of your income that goes towards expenses like car payments, phone bills, credit cards and other kinds of recurring debt.
In order to get an FHA Loan, your front DTI needs to be about 31% which means that if your monthly income (gross) is $5,000, your payment cannot be more than $1,550. Conventional loans allow for a DTI as high as 33% which would make your payment a maximum of $1,650. Next you will need to determine your back DTI which is also based on your monthly income. Your back DTI reflects your debt and for an FHA loan is about 43% and a conforming is about 45%.
So, on that $5,000 monthly income of yours, you can have $2,150 in monthly payments for an FHA loan and $2,250 for a conventional loan. So if your car payment, student loans, credit cards, phone bill and child support expenses are less than $600 ($2,150 – $1,550), you will effectively qualify for an FHA loan.
This is something you should consider when deciding on buying a home. Although it is a buyer’s market, and there are several great deals out there; you want to make sure that a home you buy will be a home you can KEEP and that your home won’t turn into someone else’s great deal after you realize you can’t make your mortgage!
Is It A Good Time To Buy A Home? The simple answer is YES! It is still a good time to buy a home. With the help of the right agent, you can make this "good time" into a "great time" for you and your family. The news is full of stories about the housing crisis, homeowners losing their homes, and the overall bad state of the economy. Not all of this news, however, has to translate into dissuading you from buying a home. In fact, right now is a very good time, especially for some, to jump in and achieve the American dream of home ownership. As of late, the housing market is starting to look better. Read on for more information about why it is still a good time to buy a home.
First, the government is looking to help you. If you are a first time buyer (which, to the government, is defined as anyone who has not owned a home in the last three years), you are entitled to a maximum $8,000 tax credit. Additionally, interest rates are at all-time lows and the Federal government is taking steps to insure and make these loans available to more and more people.
Leverage. Leverage is defined basically as borrowing money to supplement existing funds for
investment. Imagine if you invested ten thousand dollars in stocks and those stocks earned ten percent, you would have earned one thousand dollars. But investing ten thousand dollars on a home, and having that home's value increase ten percent; effectively, you would have earned ten thousand dollars. Which sounds like a better investment to you?
Next, you have to live somewhere. And so does everyone else. According to nationwide statistics, approximately 800,000 new households are created each year in the United States alone. Each of these households will need housing, regardless of the state of the economy. This fact alone ENSURES the recovery of the housing market.
Cycles. The economy is a cycle, and like a cycle, what goes down must come back up. Once this happens, it will create INSTANT equity for you. That means you will have earned FREE money just by living in your home, which you are going to do regardless of where you live. Why not buy a home and earn free money in the process?
Mortgages. Many people think a mortgage is just like paying rent, right? WRONG! With the right fixed-rate mortgage, you are basically ensuring the same payment for thirty years. If you try to rent an apartment for thirty years, odds are that every year or so, your rent will be increased. That does not happen with mortgages.
Ownership. Owning a home is a GREAT accomplishment and it allows you to express yourself in the best way possible. You can decorate it any way you want, furnish it, paint it, and improve it and all the while you will be increasing its value and the value of your investment. Ownership also gives you and your family a sense of stability and a place to lay your roots.
These are only a FEW of the reasons why right now is a good time to buy a home. A qualified agent will be able to answer any questions you may have and also give you more reasons to consider investing in your next home!
Is It A Good Time To Buy A Home?
The simple answer is YES! It is still a good time to buy a home. With the help of the right agent, you can make this "good time" into a "great time" for you and your family. The news is full of stories about the housing crisis, homeowners losing their homes, and the overall bad state of the economy. Not all of this news, however, has to translate into dissuading you from buying a home. In fact, right now is a very good time, especially for some, to jump in and achieve the American dream of home ownership. As of late, the housing market is starting to look better. Read on for more information about why it is still a good time to buy a home.
First, the government is looking to help you. If you are a first time buyer (which, to the government, is defined as anyone who has not owned a home in the last three years), you are entitled to a maximum $8,000 tax credit. Additionally, interest rates are at all-time lows and the Federal government is taking steps to insure and make these loans available to more and more people.
Leverage. Leverage is defined basically as borrowing money to supplement existing funds for investment. Imagine if you invested ten thousand dollars in stocks and those stocks earned ten percent, you would have earned one thousand dollars. But investing ten thousand dollars on a home, and having that home’s value increase ten percent; effectively, you would have earned ten thousand dollars. Which sounds like a better investment to you?
Next, you have to live somewhere. And so does everyone else. According to nationwide statistics, approximately 800,000 new households are created each year in the United States alone. Each of these households will need housing, regardless of the state of the economy. This fact alone ENSURES the recovery of the housing market.
Cycles. The economy is a cycle, and like a cycle, what goes down must come back up. Once this happens, it will create INSTANT equity for you. That means you will have earned FREE money just by living in your home, which you are going to do regardless of where you live. Why not buy a home and earn free money in the process?
Mortgages. Many people think a mortgage is just like paying rent, right? WRONG! With the right fixed-rate mortgage, you are basically ensuring the same payment for thirty years. If you try to rent an apartment for thirty years, odds are that every year or so, your rent will be increased. That does not happen with mortgages.
Ownership. Owning a home is a GREAT accomplishment and it allows you to express yourself in the best way possible. You can decorate it any way you want, furnish it, paint it, and improve it and all the while you will be increasing its value and the value of your investment. Ownership also gives you and your family a sense of stability and a place to lay your roots.
These are only a FEW of the reasons why right now is a good time to buy a home. A qualified agent will be able to answer any questions you may have and also give you more reasons to consider investing in your next home!
You’ve been hearing a lot lately about foreclosures, REOs and short sales. There are conflicting reports about whether or not they can be good investments. At Crestico Realty, we pride ourselves on giving you the most up-to-date information on making the best real estate decisions for yourself and your family’s future. Buying a foreclosed home may not be for everybody, but keep reading and find out if it’s right for you.
Sometimes, foreclosed homes can be good investments, because often, they sell for less than market value. For a first-time homebuyer, the process may seem more complex and time-consuming but that’s why we, at Crestico Realty, are here to help! A foreclosure is a property that is being “foreclosed” upon by a bank or some other lending institution. It is a legal process through which the homeowner's rights are terminated, generally as a result of his/her failure to pay the mortgage.
One thing that is important when considering the purchase of a foreclosure, is where and how the home is being sold. Often, real estate auctions are where foreclosures are sold because the lender is generally trying to sell the property as soon as possible. At auctions, buyers are generally expected to pay for the house at the end of the auction, which means the financing must already be in place. At Crestico, we work with a preferred lender to make sure that if you want to purchase your home from an auction, we have your financing ready to go.
However, in today’s market, auctions are not the only way to purchase foreclosures. Many REO (real estate owned) companies purchase these foreclosures and list them for sale, essentially performing the function of a “homeowner” who does not live in the house. When making an offer on such a home, it is still a great idea to have your financing in place, so that your offer (which will most likely NOT be the only one) will be easier to accept.
Buyers often ask, regarding foreclosures, “Will I be able to gain equity in an REO?” The answer to this question is generally dependent on (1) the current value and (2) the sales price of the property. If a buyer purchases a property for less than it is worth, there is automatic equity. With foreclosures, and an experienced Crestico agent, you can have the peace of mind that we will find you the right foreclosure to purchase.
If you are interesting in purchasing a foreclosed property, your Crestico agent will work to find you the best home! Your Crestico agent has access to many services that track foreclosures in and neighborhood you are looking to move to, in California. We stay on top of your search. With foreclosures, you have to move quickly because the lucrative investments get snatched up quickly. Call today and speak with one of our REO Buyer Specialists!
