So one of your New Year’s resolutions is to cut out the landlord and pay yourself rent in 2017. That’s a bold move, and an admirable one. By joining the ranks of homeowners, you’re taking a vital step to secure your financial future. For example, did you know that the difference in net worth between renters and homeowners is staggering? According to a recent Forbes article, the National Association of Realtors'(NAR) Chief Economist Lawrence Yun predicts that in 2016, the net worth gap between homeowners and renters will widen to 45x. That’s because while renters simply write a (sizable) check to their landlord each month, homeowners are earning equity each year their house appreciates. If you’re going to take the homeowner plunge, here are some important tips about buying a house in Denver Metro’s sizzling hot seller’s market.
Not sure what your budget can buy? Drive around and look at homes under contract. That’s the reality of what you can buy for your price point.
Don’t wait for a dip in prices. The whole city is waiting for that. And if it comes, it doesn’t decrease competition, it increases it. Instead, focus on your finances and be realistic about what you can afford.
Prequalify. In this seller’s multiple-offers market, most sellers will consider offers that are accompanied by a pre-qualifying letter. Using a strong local lender can also improve your chances, advises local mortgage broker Matt Carrell of Cherry Creek Mortgage Company. “If the sellers are eager for a quick close, their broker knows that large, national chains are less likely to close within 30 days than a strong local lender,” says Carrell. Ask your realtor for a list of lenders with a good track record, and talk to several lenders so you get accurate information.
First time Buyer? Look into FHA financing. Take advantage of Federal mortgages policies, advises Carrell. “If you’re a first time buyer, this is a definite advantage. You can put down as little as 3.5%. This is a great advantage to buyers with lower credit scores, such as students who are paying off student loans, or millennials who are still building up a credit history.”
Consider a fixed-rate mortgage. “Mortgage rates are already rising, and market volatility could lead to larger highs and lows than we’ve seen lately,” says Carrell. “Even if you lock in at an 1/8 of a point higher, at least you’ll be set if rates continue to rise. The last twenty years, the average was 8.3, so at today’s rates you’re still doing very well.”
More questions? Contact Link Real Estate Group–we’re here to help you become a homeowner in 2017!