First Time Buyers: What You Need Know to Navigate the 2017 Market
Buying a Home in 2017? Here Are 6 Things You’ll Want to Know
Now that the panic, unrest, and general exhaustion caused by the presidential election is, for the most part, in our rear view mirror, people are starting to look ahead. For many, this means buying their first home in 2017. But, the first year after a presidential change is always tricky when it comes to buying a home, and this year is shaping up to be no different. Here are six important things first-time home buyers need to know if they want to make buying a home one of their New Year’s resolutions.
#1: Rates Are Already Rising
A change of presidents traditionally causes interest rates to rise slightly, but since Trump’s election win, the rates have already climbed by 0.5%, a rather quick hike. Because Trump’s election is having a negative effect on inflation, buyers should expect home prices to also start rising. If the recent upswing in loan applications tells us anything, it is that the threat of higher interest rates and home prices is creating a sense of urgency among buyers.
#2: City Properties Are Still Best for Investment Properties
If you want to buy a home that will provide you with the highest appreciation potential, then you’ll want to focus your search in metro areas. City properties have the best price appreciation rates and income potential from renters, especially when those properties are located in larger cities.
#3: You Need to be Able to Afford More Than Just the Down Payment
At one time, home buyers could get away with just the down payment coming out of pocket. All other associated fees and closing costs were able to be rolled into the mortgage. But these days, lenders want buyers to not only have the down payment amount, but also their closing costs available in cash. And with some closing costs as high as 2.5% of the loan amount, this can really have an impact on how much home you can actually afford.
#4: Get Pre-Qualified Before You Start Looking for Homes
Getting pre-qualified for a home loan doesn’t guarantee you will be approved, but it is a good place to start. This is because getting pre-qualified will give you an idea of how much home you can afford. Plus, because your credit score, debt-to-income ratio, and down payment amount can have an impact on your interest rate, getting pre-qualified will give you the information you need early on in the process so you can improve your chances of getting your loan approved at the best rate possible.
#5: Do Your Due Diligence When Choosing an Agent and/or Lender
Buying a home requires a lot of research. But, your research shouldn’t be restricted to just comparing locations and properties. You also need to do your due diligence when shopping for a real estate agent as well as your lender.
When you’re buying your first home, trust in your agent and lender is paramount. So, ask those you trust for referrals to Realtors and lenders. Visit with each and speak to them before you agree to use their services.
In fact, try to choose your agent and lender very early in your buying process. This will enable your relationship with them to grow and in turn, they’ll become valuable resources of information and professional advice while you’re on your home buying journey.
#6: Be Ready to Move
With interest rates starting to climb, competition is going to start getting very fierce, very quickly in 2017. So, if you find a home you love, put in an offer and get ready to move because odds are things will progress quickly. This is especially important if you’re looking at homes priced $200,000 or less. Buyers will be jumping on these properties because with home prices rising, they’re going to want to get in early, and so should you. Good luck!
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