Marje Tracy's Blog
The biggest area of your life that you need to understand before you buy a house is your own finances. Before you know what kind of house you can buy, you’ll need to understand your own buying power. While things like square footage, how many bedrooms you need, and finding the right neighborhood are important, you can’t go very far without some type of financing. While understanding how much you can spend on a property is one of the more serious parts of buying a home, it’s something that you’ll want to do. Knowing what you can spend on a home is a step to helping you land a home you love. If you understand your own numbers, you’ll know the chances that you have of an offer being accepted on a place you love.
The Elements Of Your Buying Power
Your Credit Score
This little three digit number has a lot of meaning behind it. This is the most basic piece of information that lenders use to determine your loan worthiness. The factors that influence your credit score include:
- Payment history
- How much you owe
- Length of your credit history
- Mix of credit accounts
- How much new credit you have opened
A low credit score is somewhere under 620. Having a score this low doesn't necessarily mean that you’ll be denied for a loan, but the type and amount of the loan you’re offered can be impacted. You’ll also face higher interest rates because of a low credit score. This means your mortgage could be considerably more expensive than if you had a higher credit score.
The 20 percent down as a rule of thumb actually offers many benefits to your buying power. This means that you’ll need 20% down of the purchase price of the home in cash. If you put this amount of money (or even more) down on a home, it eliminates the need for you to have to buy PMI (Private Mortgage Insurance). You’ll even be able to negotiate a lower interest rate. A large down payment may be especially helpful in competitive markets where there is a lot of buyer competition.
How Your Financial Picture Appears
Your assets and your debt-to-income ratio are also important factors in your financial picture that you present to the lender. Basically, all of these numbers let both the lender and the seller see how committed you are to buying a home. It is one of the biggest financial undertakings of your entire life. If you can’t show financial responsibility, then it may be a bit difficult for lenders to see that you’ll actually pay your loan back in a timely manner.
The better all of your financial numbers are, the more buying power that you’ll have. If your numbers are good, you’ll be able to afford more house. While it may not be the most exciting thing to look over all of your financial numbers, it’s a vital step in the process of your journey to home ownership.
f you are on the fence about buying a fixer-upper house, you may be wondering if it’s as affordable as you think it might be. Depending upon what needs to be done in the house and how extensive the projects are, you may be in over your head buying this type of home. Here’s a few things that you should consider before you buy a fixer-upper:
Can You Do Any Of The Work Yourself?
If you watch any television remodeling show, you think that remodeling can be done in an hour. They make it look so easy! Too bad it isn't like that in real life. If you attempt a job, and it takes longer than it normally would, that can set you back on dollars. Even worse, if you can’t complete the job yourself, you may need to hire someone to finish it, which will cause you to incur unexpected costs. Ask yourself the following questions before you decide to undertake your own home improvement projects in a fixer-upper home:
- Do You Have The skills?
- Do you have the time to complete the job?
- Will doing the repairs stress you out?
- will you be happy if the results are less than professional?
- Do you actually want to do the job yourself?
Before You Make An Offer, Price Out Repairs
Before you even make an offer on a fixer-upper home, make sure that you find contractors and price out the repairs that the home will need. If you do decide to do the work yourself, make sure that you price out the supplies that you’ll need. No matter what you decide to do for your repairs, you should add an additional 10-20% on to the estimated costs for other unforeseen problems.
Don’t Forget About Permits
You’ll need to check out the permit costs for any and all repairs. Doing work without a permit may save you money, but it could cause problems once you try to resell your home. Contractors can arrange the permits for you. Getting these permits can be a time consuming matter and frustrating at times, so be prepared to go through some paperwork when you start the repair process.
Understand The Cost Of Major Structural Work
If the home needs major structural work, it’s a good idea to hire a structural engineer for a few hundred dollars in order to inspect the home before you even put in an offer. This way, you can be confident that you have everything budgeted properly and understand the full extent of the problems.
Generally, it’s not a great idea to purchase a home that needs major structural work unless you fall into the following categories:
- You’re getting a great discount
- You understand all of the problems that you’re facing in the home
- You know for sure that the problem can be fixed
- You have an estimate for the repairs
- You know how you’re financing the repairs
- You have the budget to complete all of the repairs.
There’s a lot to consider when you’re buying a home that needs significant repairs. It can be a great bargain if you have the budget and the will to complete the projects at hand. Just know what you’re getting into when you buy a fixer-upper home!
When you think of selling a home, you may picture the conventional home sale where you hire a realtor, and the house is listed along with open houses held. An off-market listing keeps your property off the MLS (Multiple Listing Service) so that it’s not accessible to many home buyers.
What’s The Advantage?
The off-market listing provides a feeling of exclusivity. This attracts only the most serious of buyers and allows a less stressful selling process for the seller. Sellers can expect to get at least the asking price for the property. How does an off-market listing work?
Celebrities tend to sell with off-market listings. Doing so helps their properties to stand apart from the mainstream real estate market. Buyers who are part of an off-market listing can feel as though they are part of an exclusive club that few can access.
Regardless of how high the price of a home is, selling a home off-market can be easier for many reasons. You can sell a home to a relative or friend without having to go through the hassle of listing it. In hot markets, you or your agent can mention that the property is for sale to a few key people in the area. From there word may get out that your home is being sold, but no formal marketing is being done.
Don’t Be In A Hurry
Off-market listings are not for people who need to sell their home quickly. As a seller, you want to see how much interest there is in the property, so this could take some time. You’re trying to attract buyers who are in a particular market, not just a group of buyers an agent has been in contact.
Networking Is Important
Since the listing isn’t advertised anywhere, word of mouth and the right network is important. You need to pick the right agent to help you with an off-market listing. This person should be seasoned in luxury real estate and have an extensive network who they can reach out to.
Privacy Is Bliss
If you don’t feel the need to have a big “for sale” sign out in front of your home, an off-market listing is for you. If you don’t want people to know you’re moving and hope to keep your decision to sell on the down low, it’s a great option.
From the benefits of privacy to the strong possibility that you’ll get a better return for your property sale, off-market listing are a great choice, especially for luxury homes.