When you buy a home, you may have dreams of settling into a beautiful new space that meets your needs and that your family can feel comfortable in. While many will enjoy this vision of domestic tranquility after taking ownership of their dream home, others have had their dream turn into a veritable nightmare due to some simple mistakes or oversights on their part. By understanding these mistakes, you can avoid making them yourself.
Paying Too Much For The Property
One the surface, the main cost of buying a home relates to the sales price, and it is true that your monthly housing payment may be the primary related expense. However, other expenses such as homeowners insurance, property taxes, repair and maintenance costs, utilities and more will all need to be factored into the cost of home ownership. Some buyers believe that because an online calculator or a lending professional tells them that they can afford a high priced home that it is the case. You can review your budget and estimate all related home expenses to determine how affordable a specific property is for you.
Finding Out That The Location Is Undesirable
There are many things that can make a location undesirable, and you should take time to become comfortable with the location before making an offer. Consider, for example, if the neighbors like to throw loud parties on the weekend or if there is a teen driver that likes to speed down the street. If you are buying a property with open land or vacant buildings around it, consider researching zoning, and think about future uses for these properties that could influence value and desire.
Discovering That Your Property Is In Bad Condition
Some home buyers discover after purchasing a property that it is not in the best condition, and some even learn that their home needs tens of thousands of dollars of repair work or more. Even properties that appear to be in great condition on the surface may have hidden issues with the foundation, structure, roof, pipes or electrical work, to name a few. You can order a property inspection to learn more about the true condition of a property.
These are among the most common issues that can turn a dream home into a nightmare. When you work with a local real estate agent when buying a home, your agent can help you to avoid unpleasant and costly mistakes such as these.
Most of the focus on stimulus checks has been on "when" they will arrive, but if you are in the market for a new home (and mortgage) you should know how that payment will impact your financing. Part of the latest Covid 19 relief package includes payments and protections for existing borrowers and renters, but what about those who are looking to buy? According to the IRS, here are a few things to know about how your stimulus impacts your upcoming mortgage.
Stimulus Money Is Not Taxable
Any funds you are qualified to receive are not taxable; this is important to know as you move forward with your purchase because it allows you to properly anticipate your tax burden for the coming year.
Stimulus Money Is Not Income
While funds from the stimulus can be used however you'd like, including as part of your downpayment, they are not considered income. If you currently qualify for an income-based mortgage incentive or program, having a one-time boost in income could work against your housing plans. If those extra funds counted as income, some families could find themselves no longer qualifying for programs and loans that have income guidelines.
Stimulus Money Can Be Used For Your Mortgage
Whether you use it for your down payment, pay points to reduce interest, or even pay off remaining debts to improve your ratios, this money can benefit your home buying plans.
Every debt you pay regularly impacts the amount of money you can afford to borrow for your mortgage -- using a stimulus payment to eliminate one or more credit cards or even car payments can increase the amount of monthly payment you can afford. Making these payments can also improve your credit score, which could qualify you for a better rate.
Since the current stimulus program can benefit home buyers in several key ways, there is no better time to buy than now. Use your stimulus to maximize your buying power and get the best possible mortgage terms and you'll be able to access a wider variety of homes.
Aside from owning a business, owning rental property has been one of the top investment choices for people, most commonly done through buying a second home. Handled right, income properties can generate significant gains for investors, both in terms of real estate appreciation as well as monthly income from tenants. However, it’s not sure a surefire approach to financial success. There are a lot of ways that a budding real estate investor can go sideways with an investment property home purchase as well.
Watch Out for the Seller-Renter
Many times people will sell a home but then offer to rent it from the buyer, essentially trading their home title for ready cash but not really moving out. These situations come up a lot where someone wants to stay where they are but doesn’t want to deal with a mortgage anymore and would rather rent. They are also frequently listed as buyer-direct home sales versus using a traditional route through a real estate agent and broker. The big risk here is that the seller is able to unload the home on the buyer, and then stop paying the rent a few months in. The deal allows them to avoid foreclosure but then it becomes the landlord’s problem to actually evict. By the time the legalities are done and eviction is finally achieved, many landlords have taken a loss on the property and end up selling again. It’s better to have a clean sale with no further obligation between the parties and start with brand-new renters altogether.
Have a Good Strategy Ahead of Time
There are different ways to make a net profit from a rental property. Depending on the cost of financing, down payment and expectations of holding a residential property the driver for profit can be different. Some expect to make a gain both from rental income as well as equity growth. Some realize with the cost of financing, the better plan is to use rental income to pay for the mortgage as much as possible and make the net gain on the property equity appreciation over time. How long a property will be held can come into play as well. Knowing going in what one’s strategy is can help avoid mistakes once a commitment has been made or being surprised if the market has a downturn etc.
Tax Benefits are Different
An income property doesn’t get the tax same deduction benefits of a first home. The mortgage interest deduction, one of the biggest tax benefits possible for an individual is not possible with a rental income property. However, if you are operating your rental property purchased as a business, many of the expenses of running that business can be deducted through the Schedule C form process with an income tax return. Check with a tax advisor or attorney to be sure for your specific situation and interests.
Owner Responsibilities
Just because you rent the property doesn’t mean you’re off the hook. As a new buyer and owner, you’re still responsible for the property taxes due, HOA assessments, utilities and other costs tied to the property. Unless you contractually make the renter responsible, the tax, HOA and utilities will address the property in your name as the owner. Some forget this fact and get a nasty surprise in the mail with a tax or assessment lien on their property.
In short, buying a second home as an income property has the potential for significant investment gain, but it doesn’t operate on auto-drive. You need to still be involved quite a bit and watch whom you rent to when protecting your property interest.
Last week’s scheduled economic news included readings on sales of new and previously-owned homes and weekly reports on jobless claims and mortgage rates.
March Sales of Previously-owned Homes Dip; New Home Sales Rise
Sales of single-family homes fell in March as demand for homes exceeded availability. 6.01 million previously-owned homes were sold in March on a seasonally-adjusted annual basis; analysts expected a pace of 6.11 million sales based on February’s reading of 6.24 million sales of existing homes. The March reading for sales of pre-owned homes was 3.70 percent lower year-over-year and was the lowest sales pace reported since August 2020.
High demand for homes coupled with low inventories of available homes constricted sales. Lawrence Yun, chief economist of the National Association of Realtors® said, “Sales for March would have been measurably higher had there been more inventory.” Mr. Yun also addressed affordability concerns arising from lean inventories of homes and high demand. “Without an increase in supply, the society’s wealth division will widen with homeowners enjoying sizable equity gains while renters will struggle to become homeowners.”
The average price of a single-family home in the U.S. rose to $329,100 in March, which indicates year-over-year growth of 17.20 percent in home prices. While a six-month supply of homes for sale indicates an average inventory, the March inventory of homes for sale rose to a 2.10-month supply from February’s 2.0- month inventory of homes for sale.
Shortages of existing homes for sale boosted March sales of new homes, which sold at a seasonally-adjusted annual pace of 1.02 million sales. Analysts expected 888,000 new homes to be sold year-over-year in March based on February’s sales pace of 846,000 new homes sold. Rapidly rising materials costs created obstacles for builders and limited their ability to meet the need for affordable homes, but they raced to meet the ongoing demand for homes.
Mortgage Rates Mixed; Jobless Claims Fall
Average mortgage rates fell below three percent last week; the rate for 30-year fixed-rate mortgages dropped by seven basis points to 2.97 percent. Rates for 15-year fixed-rate mortgages averaged 2.29 percent and were six basis points lower. Rates for 5/1 adjustable rate mortgages rose by three basis points to an average rate of 2.83 percent.
Jobless claims were lower last week with 547,000 new claims filed; analysts expected 603,000 initial claims filed. 586,000 first-time claims were filed in the prior week. Claims were also lower for ongoing claims filed. 3.67 million continuing jobless claims were filed as compared to 3.67 million continuing claims filed in the prior week.
What’s Ahead
This week’s scheduled economic reports include readings from Case-Shiller Home Price Indices, data on pending home sales, and the University of Michigan’s consumer sentiment index. Weekly readings on mortgage rates and jobless claims will also be published.
When buying a new home, you may have a close eye focused on your budget and expenses, and your goal may be to keep related expenses to a minimum. However, you may also be well aware that a real estate purchase is a legal transaction, and you may be wondering if you need to pay for legal services from a real estate attorney. With a closer look, you can make a better decision that is right for your home buying plans.
The Legal Forms Used With A Typical Transaction
The majority of real estate contracts will be written using standard legal forms. These are legally binding forms with clauses that protect buyers and sellers alike. While they are standard forms, you do want to read the forms in their entirety and understand your obligations before signing the contract. Keep in mind that you are not required to use these forms, and you can request an attorney to prepare a separate contract for you. However, these are commonly used forms that real estate agents typically will use.
The Services Of A Real Estate Agent
A real estate agent is not a legal professional, and your agent likely will not be licensed to practice law in the state. However, the agent can explain your obligations with a standard contract so that you have a better understanding about what you are committed to. Your real estate agent may refer you to a real estate attorney if you require a special contract to be drawn up or if you are not comfortable with different clauses in the standard forms.
When Special Situations Arise
The standard real estate contracts will typically be feasible for use with most transactions, but there are special situations that may arise from time to time. For example, you may only want to purchase a portion of a large estate. While the seller would need to subdivided, your attorney would need to review special documents to ensure the transaction is legal. Perhaps you want to purchase real estate in a corporation or under another entity, or you want to protect your rights when purchasing property with a partner who you are not legally married to.
While real estate agents are not legal professionals, they are able to prepare standard contract forms for you and explain them to you. Because of this, many people will not need to pay for additional legal services, but each situation is unique. When you speak with your trusted mortgage professional about your upcoming purchase, he or she can help you to learn more about services an attorney may provide that your real estate agent may not be able to.
The idea of buying a home is challenging enough as the process requires a lengthy approval validation, paperwork, financing, and the actual move with logistics. However, when one really looks at what typically occurs with relocation, buying versus renting can start to make more sense over time.
Finances Have to be In Order
Buying a home more than once every ten years requires a good amount of discipline on one’s personal finances. Most of the initial decisions and approvals will depend heavily on keeping one’s debt versus income ratios in line and viable. That also means saving up a lot to have sufficient cash flow for fees and your down payment. It also means not letting credit cards get out of hand or taking on other significant debt unless necessary as both weigh against one’s ability to obtain new financing for the next home purchase.
Renting Versus Owning
Renting or leasing tends to be the go-to option during a relocation because it tends to be easier upfront, has fewer requirements to achieve, and involves less of a significant commitment financially. After all, what happens if there is another relocation just a year later? However, most relocations are fairly defined in time. Anything under a year would make sense for renting, but when one starts getting beyond a year, buying starts to become far more appealing.
First, all the dollars one pays in rent are a sunk cost. If one buys, some of that money goes into home equity. Second, many companies and organizations who relocate their people often have connections for quick purchasing and residential needs, leveraging corporate interests for their employees. This allows for the rotation of homes from one employee to the next and makes buying easier for longer-term stays.
Third, a purchase for a shorter-term stay doesn’t have to be a full-scale home. Smaller units that cost much less are easier to close and can work just as well for temporary living. Relocating buyers should really consider a wide range of housing options in a buy versus just a strict replacement of what they had before.
Finally, market costs in the target location have to be considered. Some markets are very affordable and might be cheaper than renting month to month but others are astronomical, and it simply doesn’t make sense to buy in these regions for a short-term stay.
The Bottom Line
Understand with renting everything paid is gone and won’t be recovered in any form at all. It’s a lost expense. That can be thousands of dollars after one year alone. Buying will have fees, but the money spent on the mortgage each month buys equity which can be recovered in a sale, plus a possible gain as well down the road. Buying doesn’t work in every situation where one is relocated, but it can be a viable option in affordable markets and when one is staying longer than a year.
As always, check with your local real estate professional for the best advice on your relocation and your personal financial situation.
At the flowers begin to bloom and the weather starts to warm up, everyone is thinking about spring cleaning. It is critical to make sure the house is ready for the warmer weather. What are the top spring maintenance tasks that have to be completed? Do not procrastinate on these tasks, as the price could be high.
Prune The Trees Before They Start To Bloom
Take a closer look at the trees, particularly those that hang over the house. As they begin to bloom, the weight on these branches could start to increase. If that happens, branches could snap over the house, leading to serious roof damage. Prune these trees before they start to bloom. If they are too high, it may be better to reach out to a trained professional who can prune them safely.
Always Look For Signs of Leaks And Water Damage
Check around the house for signs of leaks and water damage. If the floor is buckling, the walls are starting to change color, or the water bill is going up without an explanation, these could be signs there is a leak somewhere. Address any signs of water leakage now. Waiting to address a water leak could lead to serious repair bills down the road. Be sure to get the plumbing system maintained regularly. That way, these leaks can be avoided.
Inspect The Water Heater
Take a closer look at the water heater. It is important to get it inspected by a trained professional once per year. Over time, mineral scaling and gunk can accumulate in the water heater. It needs to be flushed regularly. Even though online tutorials can be helpful, it may be better to reach out to trained professionals who have the equipment to do this properly. In addition, professionals may take a look at other areas of the water heater that might have to be addressed.
Get Ready For Spring
These are a few of the most important spring cleaning maintenance tasks that have to be completed now. Make sure these systems are ready to go before they are called upon. If homeowners do not procrastinate on these important tasks, they could save a lot of money down the road.
Upgrading your rental doesn’t need to cut deeply into your profits. You can add curb appeal and help prospective tenants see your rental as their next home by making some simple changes. The following upgrades are all things that a handy landlord can do without needing to hire professional contractors.
1. Decorative Switch Plates
Replace ugly cream switch plates with either stainless steel models or decorative designs. Fancy switch plates for light switches and electrical sockets cost very little, yet make any room look nicer. The best part is, you can do the replacements yourself, using only a screwdriver.
2. Flower Beds
Beautiful flower beds make any rental look more inviting. You can enhance curb appeal by planting inexpensive perennials around the front of the rental and along the pathway leading up to the door. Top off your newly planted flower beds with a fresh layer of colored mulch.
3. Kitchen Cabinet Refacing
Kitchen cabinets are pricey, but it’s cheap to just reface existing cabinets. You can either replace the entire doors or take them off and give them a fresh sanding and a couple of coats of varnish or paint.
4. Fresh Paint
Even quality paint is inexpensive. Give your rental a beautiful new look with fresh paint throughout. You’ll want to use neutral tones, but consider making an accent wall, painted with an attractive color.
5. New Light Fixtures
Old light fixtures make a place look dated. You can pick up inexpensive light fixtures at big box home improvement stores. This simple upgrade will make your rental more attractive and modern.
6. Broom Storage Area
Most rentals don’t come with a broom closet, but you can create a makeshift broom storage area very cheaply. Just pick up some plastic broom holders and a shelf from the hardware store. Attach the broom holders to the wall and hang the shelf over that. Your tenants will appreciate the upgrade!
7. Fresh Window Treatments
Window treatments make a house look like a home. Replace window blinds or shades for an instant upgrade. Curtains are even cheaper and can be laundered and reused between rentals.
No matter where your rental is located, you can make it more attractive with these easy and inexpensive upgrades that you can do yourself.
Last week’s economic news included readings from the National Association of Home Builders on housing markets along with Commerce Department readings on housing starts and building permits issued. Fed Chair Jerome Powell appeared on 60 Minutes. Weekly readings on mortgage rates and jobless claims were also released.
NAHB: Homebuilder Confidence Ticks Up
The National Association of Home Builders reported that home builders’ confidence in housing market conditions rose one point to an index reading of 83. Builder confidence readings over 50 indicate that most builders consider housing market conditions as positive.
Component readings used for the NAHB Housing Market Index were varied. Builder confidence in current market conditions rose one point to 88 and home builders’ confidence in housing markets over the next six months fell two points to 83. The index reading for home buyer traffic in new housing developments rose three points to 75. Homebuilders faced ongoing challenges including supply chain problems, rising materials prices, and meeting the need for affordable homes.
In related news, the Commerce Department reported a seasonally adjusted annual pace of 1.74 million housing starts in March. 1.77 million building permits were issued at a seasonally adjusted annual pace in March.
Mortgage Rates, New Jobless Claims Fall
Freddie Mac reported lower average mortgage rates last week as the rate for 30-year fixed-rate mortgages dropped by nine basis points to 3.04 percent; rates for 15-year fixed-rate mortgages dropped by seven basis points to 2.35 percent. Rates for 5/1 adjustable rate mortgages averaged 2.80 percent and were 12 basis points lower. Discount points for fixed-rate mortgages averaged 0.70 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.
New jobless claims fell to 576,000 claims filed last week as compared to 769,000 initial claims filed the previous week. Ongoing jobless claims were unchanged from the prior week at 3.73 million claims filed.
The Commerce Department released inflation data for March. The Consumer Price Index rose by 0.60 percent as compared to February’s growth rate of 0.40 percent; analysts expected a March reading of 0.50 percent. Core inflation, which excludes volatile food and fuel sectors rose 0.30 percent in March and exceeded expectations of 0.20 percent growth. Core inflation rose by 0.10 percent in February.
Fed Chair Jerome Powell appeared on 60 Minutes on Sunday; he said that that the global economy would not return to normal until the COVID pandemic is controlled, but he presented a brighter picture for the U.S. economy. He said that the national economy is expected to grow between six to seven percent and that the national unemployment rate could fall to four or five percent from its current rate of six percent.
What’s Ahead
This week’s scheduled economic news includes readings on readings on sales of new and previously-owned homes and weekly readings on mortgage rates and jobless claims.
The national reading for home builder confidence rose one point to an index reading of 83 in April; the National Association of Home Builders predicted a reading of 84. Component readings for April’s national index readings were mixed. Builder confidence in current market conditions for single-family homes rose one point to 88. Builder confidence in market conditions for single-family homes in the next six months fell two points to 81 but homebuilder confidence in buyer traffic in new home developments rose two points to an index reading of 75.
Readings over 50 indicate a majority of builders are positive about housing market conditions. Buyer traffic readings published before the pandemic rarely exceeded index readings of 50.
Regional Home Builder Confidence Varied
Regional readings for home builder confidence varied in April. The Northeast region reported an index reading of 84 in April, which was two points lower than in March. The Midwestern region’s April reading was three points lower at 75 than in March. Homebuilder confidence in the South rose two points to 84 and builder confidence in the West was unchanged with an index reading of 92.
NAHB’s Three-month moving average of regional homebuilder confidence in housing market conditions reported for the Northeast rose six points to 86; builder confidence in the Midwest fell two points to 78 and builder confidence in housing market conditions rose one point to 83. Builder confidence in housing market conditions in the West was unchanged at an index reading of 90.
High Demand for Homes Persists as Materials Costs Limit Affordability
Shortages of available pre-owned homes continued to boost new home sales, but rising materials costs and supply chain issues presented ongoing challenges to builders. NAHB Chair Fowkes said, “The supply chain for residential construction is tight, particularly regarding the cost and availability of lumber, appliances, and other building materials.”
Affordability is a substantial obstacle for first-time and moderate-income home buyers Prices of pre-owned homes are rising at their fastest pace in 15 years as mortgage rates move higher. NAHB Chair Fowkes also said, “Though builders are seeking to keep prices affordable…policymakers must find ways to increase the supply of building materials as the economy runs hot in 2021.”
Homebuilders and potential home buyers can expect ongoing challenges in 2021. As home prices rise, fewer families can enter the housing markets; other potential buyers may decide to postpone buying homes until home price growth eases.
Spring is around the corner, and it's time to get your home in order!
Spring cleaning can be fun and easy if you follow some general guidelines, which are sure to get your home ready for the nice weather and looking as beautiful as the weather is about to. Kick the winter clutter to the curb with these spring cleaning tips.
Start With The Closets
Spring is here, and winter wear is no longer needed! It's time to box up all of the winter boots, jackets, gloves, and scarfs until next season.
Starting your spring clean with your closets is a good tip, and will get you prepared for the rest of the process while creating more space and organization in the bedrooms of the house. This is also the perfect opportunity to create a "giveaway" box full of clothes that are no longer being worn.
Reorganize: Bookshelves, Countertops, And Desks
Reorganizing is the perfect way to prepare your home for the spring and summer. Good clutter is common in many homes, like useful books that are interesting for guests to read or decorations that offer a sense of warmth and character to the home.
So pick up the fallen and leaning books on the bookshelf, reorganize your kitchen countertops, and de-clutter your home office. For busy home offices, purchase organizational tools like additional shelving units, compile and file away old bills and receipts, and toss anything else that is no longer needed or of any use.
Get Scrubbing: Removing Stains And Odors
Getting ready for spring means removing the stains, dirt, and odors that accumulated in your home over the colder months. First, you should start with wiping your painted walls with a wet cloth to remove scuffmarks and dust.
If the water doesn't do the trick, you can try mixing a little dishwashing soap in with the bucket of warm water. You may even want to repaint certain high-traffic areas, like entrance halls and the baseboards around the front door.
Next, you can go for the floors. Having a fresh carpet cleaning is sure to kick-start your spring cleaning; this may be something that you wish to have done by a professional. To make the most out of your carpet cleaning, have it scheduled for when the kids are out of the house for a while, and wait until the worst of the weather is over.
Make sure the kids take their shoes off inside, but get them to leave their socks on to avoid natural oils from getting into your freshly cleaned carpet. Vacuum area rugs in the same fashion, and mop the kitchen and bathroom floors at the same time you clean your hardwood floors.
Give the showers, bathtubs, and toilets in the house a good scrub. In the kitchen, empty the fridge and freezer of their contents, and give the inside a good scrub down as well.
Once the tidying, de-cluttering, and scrubbing are done, you will get to enjoy the fun part of spring cleaning: spring decorating! And while you're at it, why not buy yourself and your home some spring flowers for a job well done.
If you're doing a big spring clean this year because you're looking to sell your home, these tips will get your home ready for any buyer's eyes. Contact your real estate professional today to get more tips on buying or selling a home.
If your personal budget is similar to many other people's budgets, your home mortgage payment is by far the largest expense that you pay for each month. In fact, this payment may easily account for 20 or 25 percent or more of your take-home income.
Understandably, you may be focused on trying to pay this expense off early. By focusing on this payment, you can build equity and may be able to achieve financial security more quickly. You simply have to find a way to put aside a bit of extra cash regularly so that you can make extra payments, and there are few easy ways that you can consider.
Use Your Tax Refund
First, if you are one of the many taxpayers who receives a refund each year, consider setting aside some or all of this refund to reduce your outstanding mortgage balance.
Some taxpayers may have such a sizable refund that it can account for two or more mortgage payments each year. However, even a few hundred dollars extra put toward your principal balance will save you a considerable amount of money in interest charges over time and will have a wonderful effect on your balance.
Earmark Your Annual Bonus
If you are lucky enough to receive an annual bonus each year, you may consider using this to pay down your principal balance. While you may usually spend this money on extra holiday gifts or just add it to your spending cash, you can benefit more substantially when you contribute it to your effort to pay down your mortgage.
Use An Automated Draft To Create a Fund
Another great idea that will work well for all individuals is to create an automated draft from your checking account each month. You may set aside the funds in a special account, and you can make an extra mortgage payment from this account periodically. Another idea is to set up auto payments for your mortgage that are higher than the amount due. For example, you may establish auto payments that are $50 or $100 more than your scheduled payments.
Paying off your mortgage earlier can be a life changing event for you. Simply imagine how different your life would be if you were not responsible for this payment each month. The fact is that this could be your reality sooner than you think if you follow these tips. For the best results, apply two or even all three tips to your efforts.
The better your credit score, the better the mortgage interest rate for which you should qualify. That can mean thousands of dollars saved over the life of the mortgage. If your credit score needs improving, get started prior to your search for a new home.
Pay Bills On Time
The simplest way to boost your credit score is by ensuring your bills are always paid on time. Nothing harms a credit score more than late payments.
Check for Credit Report Errors
Check your credit reports for any errors. These issues are not uncommon, and can really impact your score. Each of the three major credit card reporting bureaus –Equifax, Experian, and TransUnion –will provide you with a free annual report.
Credit Utilization Rate
Look into your credit utilization, or CU, rate. The CU rate is another big credit score consideration. Your CU rate is the amount of credit authorized versus the amount you use. It’s one reason maxing out your credit cards is not a wise move.
Never allow your CU rate to exceed more than 30 percent of your available credit. In simple terms if you have $1,000 in available credit, never use more than $300. High CU rates are a red flag, as they indicate someone with potential financial problems. For best results, keep your CU rate as low as you can.
Calculate your CU rate by adding up the credit limits on all cards, as well as the balances. Divide the total balances by the total credit limit, then multiply by 100. That amount is your CU rate percentage.
Reduce Your Debt
If you carry credit card debt, pay it down as much as possible. That also helps lower your CU rate.
Avoid Opening New Credit Card Accounts
Do not open new credit card accounts while trying to boost your credit score. A new account lowers the age of your accounts, affecting your credit history and lowering the CU rate.
Do Not Close Unused Credit Card Accounts
Do you have credit cards you never use? You might think closing them would boost your credit score, but that is not how it works. When you close the account, the amount of credit you have drops. That triggers a CU rate increase.
Refinancing Credit Card Debt
If you have substantial credit card debt, consider refinancing all of it with a personal loan. You should receive a lower interest rate with your balances now merged into a single monthly payment. This also causes your CU rate to go down.
How Long Will It Take?
How long it will take to improve your credit score depends on the severity of your credit problems. Those with serious credit issues may find it takes years to raise their scores significantly, but most people should see improvement within a few months. Then it is time to think about mortgage shopping!
Last week’s economic reporting included readings from the Federal Reserve’s Federal Open Market Committee and a speech given by Fed Chair Jerome Powell. Weekly reports on mortgage rates and jobless claims were also released.
FOMC Minutes: Fed’s Monetary Policy Stance to Remain “Accommodative”
The Federal Open Market Committee of the Federal Reserve released minutes of its meeting held March 16 and 17. The meeting minutes indicated split opinions on the U.S. economy’s outlook. Several members expected inflation to rise due to constricted supply chains and high demand for goods and services. This scenario resembles trends in residential real estate where supplies of available homes are far lower than buyer demand. Other FOMC members expected continued downward pressure on inflation. Members expected inflation to rise to 2.40 percent in 2022 but expected the inflation rate to ease to 2.10 percent by 2023.
The Federal Reserve has a dual legal mandate to achieve an inflation rate of 2.00 percent and maximum employment. While inflation is expected to exceed 2.00 percent in 2022 and beyond, unemployment remains above pre-pandemic levels. FOMC members did not raise the Fed’s key interest rate range from 0.00 to 0.25 percent.
In related news, Fed Chair Jerome Powell spoke at a webinar hosted by the International Monetary Fund. He emphasized the potential threat of COVID to the U.S. and global economy and encouraged everyone to get vaccinate and said, “Until the world is vaccinated, we’re all going to be at risk of new mutations and we won’t be able to resume activity all around the world.”
Mortgage Rates, Jobless Claims Show Mixed Readings
Fixed mortgage rates were lower last week according to Freddie Mac. The average rate for 30-year fixed-rate mortgages fell by five basis points to 3.13 percent; the average rate for 15-year fixed-rate mortgages fell by three basis points to 2.42 percent. Rates for 5/1 adjustable rate mortgages averaged 2.92 percent and rose by eight basis points. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-year fixed-rate mortgages. Discount points averaged 0.10 percent for 5/1 adjustable rate mortgages.
Initial jobless claims rose to 744,000 claims filed as compared to the prior week’s reading of 728,000 first-time jobless claims filed. Analysts expected 694,000 new claims for last week. Continuing jobless claims were lower last week with 3.73 million ongoing claims filed. There were 3.75 million continuing jobless claims in the prior week.
What’s Ahead
This week’s economic reporting includes readings from the National Association of Home Builders, Commerce Department readings on housing starts and building permits issued, and inflation. Weekly readings on mortgage rates and jobless claims will also be released.
Whether you are preparing to purchase your first home or it has been many years since you last walked through the home buying process, you may be starting to feel overwhelmed at the thought of all of the work that lies in front of you. From concerns about finding the right home to the physical act of relocating all of your belongings after the closing, there is certainly a lot to think about. While each home buying transaction is unique, the most successful home buyers have typically adopted a few behaviors. You may keep these in mind to help you navigate through the process with success.
Keep An Eye On Your Budget
Financial stress when buying a home is common. You may have saved for years to afford your down payment, but there are various expenses that some may have not calculated or planned for. It is important to leave extra funds available for unexpected expenses, such as paying for the appraisal up-front on the home you have fallen in love with. Likewise, keep a close eye on your budget so that you are aware of your financial situation at all times.
Be Available And Flexible
It is imperative that you remain available and flexible as much as possible. Your real estate agent may call you at the last minute with a great new listing that has come on the market, and you may need to be flexible with your schedule to see this property before other buyers do. In addition, you may need to be flexible and accommodating with regards to contract negotiations, working with title company requests and more.
Seek Advice And Knowledge
Buying a home does not have to be stressful, but it also is not something that you do every day. There is a lot for even an experienced home buyer to learn, and you should be prepared to seek advice and to educate yourself along the way. Ask questions as necessary, and use the Internet for additional research.
Home buying is a process, and you may consider taking one day at a time as you proceed through the journey to reach your ultimate goal. A skilled real estate agent can guide you through the process and can help you to more successfully reach your goal. Reach out to a real estate agent today to begin looking for your new home.
