What once was your dream home is now getting old. Maybe you have grown out of it or you just need something new. That means it’s time to figure out your next move – should you buy a new house or renovate your current one?
There’s a lot to consider when it comes to making this decision. That’s why we’ve outlined some of the key factors you’ll need to take into account when choosing the path that’s best for you. Plus, our Loan Originators are ready to help you with decisions like these, so you don’t have to figure it out on your own.
Are You Attached to Your Current Home?
The first thing you should consider is the sentimental value of your home. Are you emotionally attached to this house? You should even consider things the location, your neighbors, the proximity to loved ones.
Do You Need More Space?
Are you finding that you need more room in your home? Consider if it’s an increase in square footage that you need or simply a different layout. Sometimes changing up the layout without adding square footage can make the difference you’re looking for.
Is It Something Only a Move Can Fix?
Sometimes you’re looking for a change because of problems a remodel can’t fix. If you need more land, you need to get away from your neighbors, or the location just isn’t right anymore, that could mean remodeling isn’t an option.
So, What Are the Pros and Cons?
Pros of Moving
The advantages of moving include being able to move to a new location entirely. This means you can choose a spot that better suits your need for more physical space, closer proximity to other locations like work or loved ones, or other physical advantages. Another advantage of moving is that you can upgrade or get the changes you’re looking for without having to deal with the stresses of construction or working with contractors.
Cons of Moving
The disadvantages of moving involve the higher cost of moving, the fact that you might not get exactly what you want compared to renovating to your exact specifications, and the fact that you may need to leave the area you might be fond of.
Pros of Remodeling
The biggest advantage of remodeling is that you can ultimately achieve exactly what you’re looking for. You get to remodel your home however you like so you can make the specific changes you’re looking for. Remodeling rather than moving also means that, if you like the neighborhood or physical location you’re in, you don’t have to lose that. Plus, you can avoid the higher costs and the stress of moving.
Cons of Remodeling
The downside to renovating or remodeling is the stress and energy that can come along with planning and implementing a remodel. Not to mention the possibility of having to live in a construction site, depending on the nature of your remodel. The other major downside to remodeling is the fact that the costs can be unpredictable. Unexpected or surprise costs are likely to emerge in any remodeling project, making your budget higher than planned.
How to Decide What to Do
There are some other big factors that come into play when deciding whether to remodel or sell. You’ll need to consider the financial details and implications of the decision. Do you have a great deal on a new house? How much equity do you have on your current house and what can you do with it? A Loan Originator can help you work through your options and decide what’s best for your specific situation. Overall, the biggest things you want to consider are your housing goals for the next ten years and your finances. That means considering your lifestyle, how it will change in the future, and what that will mean for your needs in a home.
To get help understanding your situation and determining what your best option is, contact us today. Our Loan Originators are looking forward to guiding you through the process and helping you achieve your goals.
Anyone getting ready to move who already owns a home comes across the question of whether to buy a house before or after they sell their current home. On one hand, buying before selling means you don’t have to risk being without a place to stay or having to deal with finding a short-term rental as you buy a house. However, you could risk being stuck with two mortgages. On the other hand, you could sell before you buy and only be responsible for one mortgage. But this means you may need to consider short-term rental options or determine a place to stay while you look for a new house. While this decision can be tricky, there are steps you can take to sell and buy as close to at the same time as possible.
If this is something you’re considering, reach out to a Loan Originator. They can help you assess your current financial situation to determine what’s the right move for you. They’ll help you understand what options are available to you and if buying a new home and selling your old makes financial sense for you.
1. Evaluate the Markets
First, assess the state of the market you’re buying and selling in. Once you understand what type of market you are in, your Loan Originator and Real Estate Agent can help you get an idea of how to time buying and selling. Of course, it’s ideal to be selling in a seller’s market and buying in a buyer’s market, but if this isn’t the case, there are tools available to you to help you achieve ideal timing. Remember to ask your Loan Originator about what you can financially handle. This will help you stay away from situations that might not be ideal for you such as ending up with more than one mortgage.
If you’re buying in a buyer’s market, you can make an offer with a sale contingency – meaning, your offer is valid as long as your house sells. This can protect you from ending up with two mortgages if your house doesn’t sell. Just be aware that it could make your offer less competitive.
If you’re selling in a buyer’s market, try to request an extended closing which will allow you more time to stay in your home before buying your new house.
If you’re buying in a seller’s market, you can make an offer with a settlement contingency. This means that your offer to buy a home is contingent on the closing of the home you’re selling. That way, you don’t have to buy the new house unless your home is sold. Again, remember that contingencies can decrease the competitiveness of your offer.
2. Prepare Your Home to Show
After you’ve determined the status of the market, you’ll need to start preparing your home to be shown. This includes hiring a Real Estate Agent, pricing your home right, and fixing it up to look appealing. Consider hiring a Home Inspector so you can take care of anything that needs fixing early on instead of waiting for the buyer’s inspector to find something unexpectedly which could mess up your timeline.
Another thing you can do to prepare your house to be shown to buyers is staging your home. You can do this yourself or hire a professional service to do the staging for you. While you are staging make sure you thoroughly clean the entire house or hire a cleaning service. These kinds of efforts can make a huge difference in attracting buyers and getting more money from the sale of your house.
3. List Your Home
Now that your house is in pristine shape for the market, have your agent list it and start accepting showings. Speak with your agent about what you’re looking for in contract negotiations to best stay on track with your timelines. This may also be the time to start viewing home listings you’re interested in buying.
4. Buy Your New Home
While you’re waiting on the closing of your current home, start the process of buying your new home. Determine your budget, work with your Loan Originator to get pre-approved for a mortgage, go house hunting if you haven’t yet, submit an offer, get an inspection on the home, and close.
We understand that this process can be overwhelming. That’s why we’re here for you. Our Loan Originators are happy to help guide you through your homebuying journey to help make it as simple and straightforward as possible. They’ll guide you through your options and help you make the choices that will satisfy your goals. Contact us today to get started.
The housing market has been one of the most affected areas of the economy by the coronavirus pandemic. As the economy sunk to unprecedented levels in the last couple months, certain signs indicate the housing market may be coming back to life. While we have been here for our borrowers who have continued to refinance and purchase their dream homes, there are signs the housing market is headed toward growth.
Increased Purchase Applications
Purchase applications were one of the most affected areas of the economy since the pandemic, making them a sensitive and strong indicator of a rebounding economy. The Mortgage Bankers Association shows that mortgage purchase applications rose 6.7% higher than a year ago, which says a lot considering we were not in the thralls of a pandemic last year. Plus, purchase applications have been increasing for 6 weeks in a row. This increase in purchase applications tells us that growth may be on the way.
A Flattening Curve
Another indication we can look to in order to determine the status of our economy’s recovery is the status of the curve – is it flat or flattening? As long as the virus is still being spread and isn’t contained, we cannot go back to work and work on reopening our economy. When we see the curve flatten, more and more people will resume their home purchasing and selling activity, and we can begin to rebuild our housing market. We have seen significant improvement in the containment of the virus, and we may be getting close to a flat curve, but we still have work to do and must continue our efforts.
The End of Sheltering in Place
Once businesses reopen and the stay at home order is revoked, that will be a strong indication of movement toward economic growth. We are just entering the early stages of reopening, and as people begin to leave their homes once again, we will likely see many of them participating in the housing market.
Decrease in the Stress Index
One metric commonly used to measure the state of the economy is the St. Louis Financial Stress Index. This metric showed a spike in financial stress on March 20th. However, since then, we are seeing a decrease in financial stress. While we are not there yet, we are on our way to more stable economic conditions that help lead to a healthy housing market.
Decrease in the Rate of Unemployment Growth
With over 38.6 million Americans filing for unemployment suddenly due to the coronavirus pandemic, this was a major measure of the state of the economy and housing markets. The rate at which unemployment was growing has decreased in the last week, hopefully pointing toward a trend of economic improvement as the unemployment growth slows down. As long as unemployment continues to slow down, this may be an indication that we are heading back to stable conditions.
The 10-Year US Treasury Yield Increases
A common method of determining the state of the economy is through the 10-Year Yield. Once we see a 10-Year Yield above 1%, we can take that as a good sign of a growing economy and housing market. With 10-Year Yields below 1%, we’re not there yet. However, despite the negative economic impact of the pandemic, the 10-Year Yield remained relatively high, perhaps in expectation of improved times ahead. As other factors such as decreases in unemployment, lifting of the stay at home order, and the flattening of the curve come into play, we may see this metric increase which would further signify a strengthening economy.
As we pay attention to these indicators and we notice the housing market rebound, you may find yourself stepping into the housing market once again. Whatever your needs are, we are here to help you, no matter how difficult and confusing the times are. Contact us today to find out how we can help you achieve your ownership goals.
As you move through the home buying process, there are many things you should keep in mind. Here are the Top Ten financial pitfalls you should avoid when purchasing a house.
#1) Changing jobs
Change in your job status will cause your file to be re-underwritten and reconsidered. This may cause a delay with your loan process or possible denial of your loan application.
#2) Co-signing a loan
During the loan process, changes to your credit report or status could negatively affect your ability to close your loan on time or at all.
#3) Buying a vehicle
Applying for credit to purchase a vehicle will be recorded as an inquiry into your credit. This may decrease your credit score or decrease the amount of money that you may qualify for when purchasing a home.
#4) Using charge cards excessively or making late payments on ANY of your accounts
Excessive use of credit cards can have negative effects on your credit rating. Inquires are recorded by credit bureaus and balances on credit cards exceeding 35% both affect your debt to income ratio and decrease your credit score. Also, late payments of any type can decrease your credit score, increase your home loan interest rate, delay loan closing, or cause loan denial.
#5) Spending money you have set aside for closing
Most conventional loans require 2 months of reserve money to be verified in your available financial accounts. Once it has been verified for use at closing, spending these reserve funds may result in loan closing delays or loan denial.
#6) Omitting debts or liabilities from your loan application
Please be honest and clear about ALL of your debts or liabilities early in the loan application process. Having the right information will allow your Loan Originator to provide you the best qualifying loan value. Unrecorded debts or liabilities that are found later in the process may affect the amount of money you qualify for in addition to causing delays or denials of your home loan.
#7) Buying furniture, appliances, or household items before closing
Large purchases causing deductions in your banking accounts or additional debt on credit cards can negatively affect your loan process resulting in delays or denials.
#8) Originating any inquiries into your credit
Multiple inquires into your credit may decrease your credit score and any credit checks could negatively affect your ability to qualify for a home loan.
#9) Making large deposits without first checking with your Loan Originator
Abnormal deposits or large deposits into checking, savings, or any financial account beyond normal payroll deposits must have money sources verified by Underwriting. Making these deposits could result in loan processing delays or denials.
#10) Changing bank accounts
Because the loan process requires a 2 month history of reserve funds, opening new financial accounts near a closing date may void this history. New bank accounts will not have the 2 month history available and cannot be used. This may result in loan closing delays or denials.
Once you know what equity is and how you can use it, the next step is figuring out how to build it so you can take advantage of its perks. Since equity is the percentage of your home that you own, building equity means increasing cash resources that are available to you.
1. Make a Large Down Payment
Putting more money down in the beginning is a good way to get a head start on building home equity. Plus, if you put down 20% or more, you can avoid having to take out private mortgage insurance.
2. Pay Extra on Your Mortgage
When you pay more than your regular payment on your mortgage, you can increase your home equity as long as your extra money is going toward the principal. Ask your mortgage servicer how to apply the extra payment so it’s covering the principal. This way, you can be sure you’re increasing your home equity.
3. Make Improvements that Increase the Property Value
You can boost your home equity by renovating, remodeling, or making improvements on the home. When you make improvements that increase property value, you also increase your home equity. Consult with a home professional before you do any renovations so you have a good idea of which type of project should get you the best return.
While building equity is a process that takes time, it can be beneficial in the long run. The faster you can grow your home equity, the quicker you can enjoy the benefits. Whether you consider putting down more money in the beginning, paying a little extra toward your mortgage, or making renovations that increase your property value, these are all great ways to boost your home equity.
To learn more about how you can build home equity or how we can help you achieve your specific financing goals, contact us today. Our Loan Originators are happy to answer all your questions!