Not Everything is What it Seems

In life, not everything is as it seems. Rising interest rates and growing inflation may be a silver lining for first-time home buyers. What do I mean by that? Due to financial inconsistency in the market, we are seeing investors and second, third, fourth time home buyers pushing the brakes on their purchases. The market that was once flooded with cash is now being forced to take into consideration financed offers; which is how the majority of first time home buyers/end-users sustain their purchase.

With that in mind, I sat down with a dear friend of mine, Ricardo Magistrelli, who is a mortgage broker and together we came up with some HOT tips for first-time home buyers. Check them out below:

1 - Find out how much you can afford!

The first step is KNOW! Do not make assumptions, or think or assume; know how much you can invest. Talk to a professional mortgage broker and get it in writing how much you can afford. In order to do that, you must first determine what kind of property you want, the location, and all costs: taxes, insurance, HOA, etc. 

2 - Manage and improve your credit score.

“There is always room for improvement,” but we can't improve what we don't know. Lenders usually want at least one of the below: 

• Three lines of credit for at least 12 months.  
• Two lines of credit for at least 24 months.

If you don't have them, you CAN'T qualify for a mortgage. A  line of credit can be a credit card (not a debit card), a prepaid credit card, a car lease, or any other loan.

3 - Explore the possibilities and take advantage of knowing.

• Did you know that if the down payment is 20% of the purchase price, you don't need to pay for PMI (Premium Mortgage Insurance)?
• Did you know that all loans from the Federal Housing Administration (FHA) come with 1.75% of Premium Mortgage Insurance, and that PMI can never come out of your mortgage?

4 - Make a financial plan to buy your house. 

It's essential to know exactly how much you will spend in the process. 

•  Closing Costs: between 3-5% of the property's value.
•  Down payments: 
• Houses & Townhomes: FHA 3.5% down payment; Conventional 3% down payment.
• Condos: In general, you will need 20% of the down payment to buy a condo. The HOA demands vary and each case needs to be evaluated.

Owning a house in the US has always been the American Dream, and knowing how wonderful this country is, the government has programs that offer down payment assistance. Qualifications depend on income, residency status, county, etc. 

It is important to note that, historically, interest for home purchases averaged between 9% and 12%. Therefore, today’s interest rate of around 6%, is nothing to be alarmed.

 Don't forget that the right time to buy or sell a property is when it is the right time in your life! Message me today at +1 (407) 697-8189 or email me at marina.elliot@compass.com, and let’s schedule an appointment to see if this is the right time for you.