How to Qualify for a Home Loan

How to Qualify for a Home Loan

Buying a home is a big goal many families have. However, a purchase that can easily reach six figures limits the ability of most people to pay cash. That’s why it’s important to figure out how to qualify for a home loan.

Track Income

Gone are the days in which anyone could walk off the street and leave with a “liar loan.” Instead, it’s necessary to provide proof of income before qualifying for a home mortgage. Banks want to know that a borrower is likely to have the means to pay off a loan. Therefore, saving few pay stubs and having access to previous tax returns is a necessity. These documents will help lenders assess the relative ability of prospective borrowers.

Build A Good Credit Record

Banks will pull a borrower’s credit report before giving her a budget for buying a new home. This will have a list of outstanding debts, and it might also show some debts that are paid in full. Banks want to see that prospective borrowers have a relatively low debt-to-income ratio. Those who have high levels of debt before a mortgage will likely be riskier borrowers for the bank. Paying debts by the due date is the most important component of building a good credit record. It’s important to remember that those with higher credit scores will secure loans with lower interest rates.

Save Money

There are some government-backed lending programs that allow borrowers to get into a home for no money down. However, these are not always the best option. They can come with mortgage insurance that’s intended to protect the lender while doing nothing other than raise the cost of borrowing for the borrower. Those who are able to put at least 20% toward the purchase of a new home will avoid mortgage insurance, and this will cut down on their monthly payment. Additionally, those who have a good down payment will have equity from the beginning. A borrower who puts no money down will have no equity to protect them from owing more than the value of their residence if the market drops.

A mortgage is a requirement for many families to purchase a home. Shopping around can be a good idea that can sometimes provide lower interest rates. However, the most important steps to take toward getting a mortgage are building a nice income and down payment while also working to achieve a high credit score. Those who pay attention to these goals will likely qualify for a mortgage with a relatively good rate.

                                                    

 

                                

What to Ask Your Real Estate Agent When Buying Your First Home

What to Ask Your Real Estate Agent When Buying Your First Home

With an ever increasing number of online tools available for home buyers, it can be easier than ever to buy a home without the guidance of a seasoned real estate agent. That still doesn’t mean it’s a good idea, however. This is particularly true for first-time buyers. There are just so many variables to buying a new home and so much that a seasoned real estate agent brings to the table. Here are three questions first-time home buyers should ask their agent.

  1. Where should I look?

When buyers begin to look at homes, they generally think about where they want to live in terms of commute times, walkability or maybe school districts. What they don’t always think about are things like tax rates, traffic, parking or zoning. Sometimes living on the north or the south side of a certain street can make a huge difference or living just a few blocks east or west may save you thousands of dollars or millions of headaches.

  1. What additional expenses can I expect?

It is a common misconception that owning a home is much cheaper than renting. The truth is, when you rent, your landlord is responsible for any number of expenses that suddenly become yours once you own your own home. These can include things like HOA fees, sewer, water and trash collection, property taxes, mortgage insurance and an entire plethora of upkeep and maintenance expenses. The big difference between owning and renting, however, is that all that money you spend on a home is building equity, while rent never will. By asking your real estate agent what additional expenses you can expect, you will have a much better idea of what you can realistically afford to spend on a mortgage.

  1. Would you buy this home?

Real estate agents have to walk a thin line between keeping their clients happy in the short term and making sure they will be happy with their purchase in the long run. Sometimes clients fall in love with a home that an agent can see a million problems with, but if that’s the home the clients decide they want, that’s the home the agent will help them get. Before you get too fixated on a home, ask your agent if they would buy it and why or why not.

 

How to Find a Luxury Property in your Area

How to Find a Luxury Property in your Area

If you want to start investing in real estate, you’ll probably start with homes in the low to moderate price ranges. This will help you build up some capital, but you won’t make a good profit until you start dealing in luxury housing. When you’re ready, it’s important to know where to find high-end homes that will earn you a better profit. While you can search listings, there are a few more efficient strategies for finding your next investment property.

Socialize With the Wealthy

In any career path, your advancement will depend as much on who you know as it does on your specific expertise. This is equally true when it comes to investing in luxury real estate. You can meet wealthy individuals by joining health spas, country clubs, and other places where the social elite are more likely to congregate. Developing friendships and acquaintances with the wealthy will give you the inside track on luxury real estate. You’ll be among the first to find out who will be selling their properties in the near future.

Provide a Service

The wealthy have unique problems that affect their finances, and they’re always looking for that special professional who can help them alleviate their concerns. Whether you prepare taxes, sell insurance, or have experience in the lending industry, you have skills that the wealthy need. By using those skills specifically to help the wealthy, you can create a niche career for yourself. Additionally, you’ll position yourself to learn about luxury home sales before they hit the market.

Host Seminars to the Wealthy

You can solve a problem for several wealthy individuals at once by hosting a seminar. The event should provide comfortable seating, good quality snacks, and a secluded environment where they can focus on your lecture. Instead of giving specifics for solving the problem, your seminar should focus more on why you’re qualified to solve the problem for them. You can give some generalized information, but you want to ensure they will still need to hire you by the end of the lecture.

You can also work with a real estate agent who deals primarily with luxury real estate. They can help you find high-end homes that are new to the market. An agent can also keep you informed about open houses to help you explore more properties in the market. This type of professional assistance can make your search easier and shorter.

 

How to Know You’re Getting a Good Price on your New Home

How to Know You’re Getting a Good Price on your New Home

While you should work with a real estate agent to help you find your new home, it’s important to remember that the agent earns a percentage-based commission on the house you do buy. While most agents are reputable, you should still be prepared to do some of your own research. Knowing the fair market value of a home will help you get more house for your dollar.

Research Recently Sold Homes

You can do a little research by looking at recently sold homes that resemble the home you want to buy. If you’re looking at a 2,400 square foot home with two bedrooms and two baths, look for the same size homes that were recently sold. While the condition of the home and additional amenities may also affect the sale price, the home you want to buy should be priced within the same ballpark.

Look at Other Homes on the Market

You should attend open houses and tours of other homes that are for sale within the same area. This will give you a better understanding of the price ranges for comparable homes. By touring them, you’ll also see what amenities or features are affecting the prices of homes in the area. As you learn more about the market, you’ll gain the expertise to accurately judge home prices in your community.

Be Skeptical of Private Sellers

Many buyers don’t realize they’re overpaying when they buy a home from a private seller. When a seller hires an agent, the price of the home is marked up by about 3% to cover the agent’s commission. A seller who chooses to sell without an agent should mark their asking price down by that 3% to reflect that they’re not paying the commission, but many don’t take that into consideration.

In the end, you’ll have to trust your own instincts. If you think a seller is charging too much for their home, you can and should move on with your search. In many cases, the seller may lower their asking price rather than risk losing the sale. If they hold fast to their original price, keep in mind that there are more homes on the market. It may take a little longer, but you will find your ideal home at a more reasonable sale price.

 

Ins and Outs of Commercial Real Estate

Introduction

There are two main types of real estate investments; residential real estate investments and commercial real estate investments. Residential real estate is the type of real estate that people traditionally think of when discussing the topic, such as single-family homes and duplexes. Commercial real estate, however, covers a broad range of real estate, such as office spaces and retail locations. Commercial real estate provides a great way for investors to maximize their leverage while controlling more property.

Valuation

Commercial properties are valued differently than residential properties. When a lender assesses the value of a residential property, they use comparables, also referred to as comps, to arrive at their valuation. Comparables provide estimates for the value of a residential property by providing close references to that property.

Lenders use several methods when assessing the value of a commercial property. One of the main tools that a lender will use when they are determining the value of a commercial property is the property’s local capitalization rate. The capitalization rate, more commonly referred to as the cap rate, is a ratio that compares the property’s net operating income to the price that the property was purchased for. The cap rate allows the property to be valued based on the income that it is able to produce.

Lenders also take a property’s net operating income (NOI) into account when they are determining the value of a commercial property. A formula is used to determine the net operating income of a property. Ultimately, the net operating income provides an amount after expenses have been subtracted from the gross income of a commercial property.

Commercial Loan Types

There are a variety of commercial loans that are available for commercial real estate investors. Conventional commercial loans, construction loans, balloon loans, bridge loans, and seller financing are all types of loans that commercial real estate investors routinely use when making their investments.

Conclusion

Learning the ins and outs of commercial real estate takes time and experience. However, with patience and routine education, anyone can develop an in-depth understanding of commercial real estate. The best way for someone to learn commercial real estate is to immerse themselves in the field and surround themselves with people who are experienced and can provide invaluable lessons.

 

How Virtual Showings Are Changing Real Estate

How Virtual Showings Are Changing Real Estate

The traditional model of real estate includes a long series of house showings both on the buying and selling end of the process. As a seller, you open your home to multiple people over the course of the selling process which means you inconvenience yourself to be out of the house at the drop of a hat. As a buyer, you rearrange your schedule to see as many homes, in person, as you can until you find your dream home and have an offer accepted.

While showings and viewing are tedious and time consuming, they have always been an important part of the real estate business. They were important until the start of the Covid-19 pandemic, and when that happened, showings became almost nonexistent. While showings were not happening as much, real estate was still selling, and that is how virtual showings became a vital part of the home buying/selling process. Here are a few of the benefits that people are still seeing because of virtual showings.

Saves Time

Buyers no longer have to travel to multiple homes all over the city, they can see as many homes as they want with no travel necessary. Sellers also do not have to leave their home for a showing, meaning their lives are not disrupted as they show their home.

Provides Increased Safety

Showing up at someone’s house in the middle of a pandemic can be scary. There is no way to know if you are entering a home where the virus is active or not and there was always an aspect of potential exposure when you are with people you do not know. Virtual showings take away this safety issue.

A Wider Reach For Sellers

Sellers can show their home to people anywhere in the world with little to no prior notice. It no longer matters if a person lives in the city or if they are wanting to make a long distance purchase. The market for sellers increased incalculably with the increase of virtual showings.

More Potential Views For Buyers

While sellers are reaching more people, buyers are seeing more homes. In the past, if there was one negative to a home or the home was a little outside of their focus area, it may not be worth a viewing. Now, a buyer can see houses that they are virtually sure that they will not purchase, but they can look just in case, and you never know when you are going to find your dream home.

 

5 Tips for Being a Successful Real Estate Developer

5 Tips for Being a Successful Real Estate Developer

Real estate development is an enticing endeavor for people who want to see significant gains on their investments. The market is one of the most dynamic, though, so you should take each step with careful consideration and due diligence. As you begin in real estate development, here are five things to always keep in mind.

Be Conservative While Taking Risks

If you start out in real estate development investing a huge amount of capital and overnight success, plan to be disappointed. This is a highly competitive and complex environment, so it is best to take risks while remaining conservative with your expectations. Two distinctions to make in the beginning is that between discipline and differentiation. Discipline refers to projections about how much you plan to make each time you sell or lease a space. Differentiation is what sets you apart from the competition. Balance the two just right, and you have a winning combination.

Know the Value of Reliable Data

As technology has evolved in recent decades, we now have access to almost any type of information. Before you decide to take on a real estate development project, research, and then research again. Use reliable sources, and compare the findings across multiple platforms. Always look for data that contradicts what the masses are saying. There may be some insight that saves you time and effort.

Have the Right Team

When you are putting together a team to make your dreams of real estate development come true, choose the right people. This means always choosing the best people in the business, even if you have to pay more. Your team is what will carry your projects through from start to finish and help you build lasting relationships that add value now and in the future.

Learn the Laws

You are certain to have times when you will need to work with local communities, organizations, and governments to secure access to water, land, and even air. Understanding the laws ahead of time makes you prepared for any barriers and challenges that may arise. You will need to know about environmental impact protections and zoning. In large metropolitan areas, air rights are a current consideration, but the advent of drones will make this issue much more common in real estate development.

 

Is 2021 Good for the Housing Market?

Is 2021 Good for the Housing Market?

The impact of disruptions from 2020 are far-reaching, and the housing market is no exception. This leaves many people wondering if 2021 and beyond will be enough time to stabilize the economy and real estate investing. Here are four trends that are emerging in the housing market so far this year.

Housing Prices in Metro Regions

The median price of residential homes in metro areas saw a decline in the first part of 2021, making this a great time for those who are looking to buy. The trend is especially noticeable in metro areas of the country. There in also an increase in the numbers for people who are selling homes for the first time, so inventory may increase, which will also decrease median prices as sellers need to remain competitive. Although median housing prices are higher than the same time last year, the increase is much slower. Overall, housing prices have increased by nearly 13%, but less than 4% in metropolitan areas.

Housing Sales Compared to 2020

Even with the economic challenges of 2020, more people are buying homes in 2021. Sales for existing homes increased by just over 1%, most likely due to the higher levels of inventory and competitive median housing prices. Homes that are on the market are also within an affordable price range for most buyers this year. First-time buyers only represent about 30% of home buyers, and this may be an indication of people downsizing or relocating. The southern part of the country is seeing the highest percent of home sales, followed by the Midwest, west, and northeast.

New Construction

As of June 2021, new home construction continues to decline, and it is at an all-time low as of June 2021. Many predictions indicated that new construction would increase around the middle of 2021, but those predictions have not materialized. Instead, pricing for new homes have made them unrealistic for many buyers. When combined with the inventory and competitive pricing of existing homes, buyers are choosing to get the most house they can for their budgets.

Quick Sales

Homebuyers are making purchases much quicker compared to last year. The increase in people looking to buy may influence the decision to jump on a good deal rather than wait. On average, listings are for sale just over one month before they are under contract and off the market. Analysis of buyer behavior and the real estate market indicate that the time on market will continue to decrease.

 

5 Terms to Understand in Housing Market Value

5 Terms to Understand in Housing Market Value

Each year, millions of homes are bought and sold in the United States, and investors review data released for the housing market value. If you are curious about the housing market or considering investment, here are phrases that you should understand about housing market value.

Median Sale Price

When you look at the median sale price for homes in the country, the data will show a dollar amount and a percentage of increase or decrease. The median price can be viewed as the average. In June 2021, the median sale price was just under $390,000, demonstrating an almost 24% increase compared to last year. Use the median sale price of homes to determine if the housing market is affordable for buyers and profitable for sellers.

Average 30-Year Fixed Mortgage Rates

Fixed mortgage rates reflect the cost of buying a home, typically shown as an interest rate. Higher fixed mortgage rates coincide with a downturn in purchases because people cannot afford the higher monthly payments. When the mortgage rates decline, you will see more people buying homes. In June of this year, the average rate for a 30-year fixed mortgage was 3%, compared to almost 5% in 2018 and 2019.

Median Days on Market

Median days on the market show you how fast properties sell once they are listed. This means that buyers have to act quickly to get the home they want and can afford, and sellers can expect to get out of their properties sooner or later. The average time that it took to sell a home in June 2021 was 14 days, indicating that it is a highly competitive market.

Months of Supply

Months of supply is based on the number of homes that are listed for sale compared to how many people are looking to purchase a home. As of June, there is a little more than one month of supply of homes on the market. This is significantly lower than past years. In 2019, there was a supply of homes for sale that would satisfy buyers for four to five months.

Sale-to-List Price

Sale-to-list price indicates how much the actual sales price was above or below the original listing price. In highly competitive markets, buyers may offer a price that is more than the list price to ensure that they get the home they want. The sale-to-list price is lower when there is little competition or the home’s actual value is below the asking price. In June of 2021, the average sales price was slightly more than the asking price.                                       

Three Reasons to Hire a Real Estate Agent

Three Reasons to Hire a Real Estate Agent

Although some websites promise an easy way to buy or sell a home, there is no substitute for a real estate agent. The experience that agents have can help clients navigate the tricky real estate realm while finding their dream home. These are three of the top reasons that make real estate agents irreplaceable.

Community Connections

For people moving to a new neighborhood, real estate agents can provide home buyers with knowledge of the area. This includes information on the location of schools, utility bills, taxes, local attractions, hiking trails, and lots more physical information. Although real estate agents cannot discuss people or answer other questions that might violate the Fair Housing Law, they are still a wealth of information about whether the physical attributes of a neighborhood fit a client’s needs.

Negotiation Assistance

A major part of buying or selling a home is negotiation. Real estate agents can provide expertise for the negotiation process. Real estate agents understand their listings and can point out issues with the property that can drastically impact negotiations. While some real estate agents have formal training in the negotiation process, all real estate agents have experience in performing these specific negotiations. Agents also know the legal particulars of home buying and selling that people must adhere to that impact the negotiation process. Using special techniques and a vast understanding of the housing market, real estate agents can negotiate for the best deal possible.

Exclusive Access

Not all sellers list their homes online for individual sale by the owner. Real estate agents have exclusive access to many listings. Going without a real estate agent could severely limit the available properties. Real estate agents also do the hard work of arranging a viewing for their clients. Agents call other agents or brokers to set up a viewing. They can also discuss the home more with the other agent to find out if it meets a prospective buyer’s needs, which saves a wasted trip.

The guidance and experience of a real estate agent are integral to a smooth and successful home buying or selling process. There are too many risks for going through the process alone. Real estate agents know their properties and the process well, ensuring a good deal for their clients.