March 6th, 2014
2014 is anticipated to be a steady year for the U.S. housing market, as mortgage rates are expected to rise, sales are predicted to continue growth and prices are forecast to appreciate further.
A recent report by Triangle Real Estate solicited the advice of 26 loan officers to give homebuyers the winning edge in this year’s housing market. Here are some highlights from their tips:
Prepare for the mortgage application process
Completing the paperwork to apply for a home loan is not a five-minute task. In fact, current mortgage applications are about 4 to 5 inches thick, and each page requires detailed information. Be prepared to devote a significant amount of time to completing the documents accurately so you don’t feel overwhelmed.
Look into down payment assistance programs
First-time homebuyers who feel they may not have enough saved up for a property they love should not despair. There are many programs that can help them buy a home even if they cannot put up a 20 percent down payment. For instance, first-time homebuyers can take advantage of a home loan from the U.S. Federal Housing Administration, which offers financing with down payments as low as 3.5 percent.
Members or veterans of the U.S. armed forces can take advantage of mortgages offered by the U.S. Veterans Administration, which do not require a down payment in most cases.
Factor in the new Qualified Mortgage rule
Under the QM rule, lenders are required to assess a homebuyer’s ability to repay a home loan before making an approval. It is likely that lenders will have tougher standards and be less lenient when it comes to the maximum sale price. Buyers have to be realistic about the home they can afford and/or work to improve their credit history and other factors that affect the amount they can borrow.
In addition to government regulation ensuring a homebuyer’s ability to afford a home, consumers should take some time to see how mortgage payments will factor into their monthly expenses before meeting with a mortgage provider. Rather than expecting a loan officer to tell them what they can afford, homebuyers can see where their money goes and where cuts can be made to offset a new mortgage bill.
Get financing before home shopping
There’s no advantage to looking at properties without a gauge for buying potential. If homebuyers find a home they love and subsequently find out that the financing they are qualified for does not cover the asking price, they may be in for disappointment. Buyers should at least get a preapproval before perusing the market.
With secure financing, homebuyers can make an offer on the property they want as soon as possible. There are inventory shortages in many parts of the U.S., and many homes don’t spend a long time on the market. Homebuyers need to have their offer together and understand how much higher they can negotiate.
Check credit history
Buyers can get an idea of their creditworthiness by checking their credit reports from any or all of the three major credit reporting agencies: TransUnion, Experian and Equifax. If they see a lot of red flags that may hurt their chances for approval, they can take some steps to improve their credit, such as paying down old debts while keeping lines of credit open.
Work with an accessible loan officer
Homebuyers need a mortgage provider that is going to be available for questions. They should work with a loan officer that they can meet in person to review their application documents and answer questions about their financing.