Four tips on negotiating a home purchase price

Four Tips On Negotiating A Home Purchase Price

For many inexperienced homebuyers, negotiating a final sale price can seem rather intimidating. Every homebuyer wants to make an offer most in their favor, which is why proper negotiation plays such an important role in the process. Here are four quick tips to help you get started on negotiations.

1. Understand the seller.

Perhaps the most important component of any negotiation, understanding your counterpart helps you estimate how much leverage you have and how low you can make an offer. If a seller is eager to sell the house as quickly as possible, you should stand firm in your negotiations and stress your willingness to buy the home immediately.

2. Research home prices in the area.

Before entering into any negotiation, you want to be sure that you have access to all useful information. In real estate, the average price of surrounding homes provides a reliable starting point for negotiations and helps you pick out houses that are listed well above market value.

3. Keep your options open.

All too often, first time homebuyers fall in love with a property and end up giving away far too much in the negotiation process. Instead of putting all your eggs in one basket, keep several options in mind. Not only will you avoid becoming locked in to one property, but letting the seller know about other properties of interest can give you leverage in a negotiation.

4. Don’t let ego get in the way.

By their very nature, negotiations require a certain level of competition between the two sides. As such, it is important to stay focused on buying a home at a favorable price and not let ego get in the way of common sense. Instead of insisting on a maximum price and risking losing the home, stay focused on the property itself and consider whether or not the price fits into your budget.

Get Your Credit Mortgage Ready

Get Your Credit Mortgage Ready!

If you’re considering buying a new home, then you’re probably aware of the criteria that factors into obtaining a mortgage loan. However, one of the many standards that concern most individuals is the shape of their credit.

Your credit does affect your loan eligibility and rate, that’s why it’s important to take steps in order to improve your report/score before submitting an application.

Check out these 5 steps so that you can have confidence when applying for your next home loan!

  1. Check your credit report

Okay, first things first, check your credit report. You’ve probably heard this advice many time, but there is a reason it is the first step you should take; credit reports may have mistakes. In fact, according to a report by the Federal Trade Commission, 1 in 5 Americans have an error on their credit report. Those aren’t the best odds. Spending time once a year reviewing your report to confirm there are no errors can increase your score and ultimately save you money; better scores typically equal better rates.

  1. Pay down your debt

You’ve probably heard of this little thing called debt-to-income ratio, and if you haven’t, get acquainted with this term. Basically, your debt-to-income ratio is the total of your monthly debt payments divided by your monthly gross income. The higher your ratio, the bigger risk you are to a mortgage lender because you’re less likely to be able to pay your monthly mortgage bill. Paying down debt and paying off collections will also be good for you in the long run because it’s less monthly payments you have to make on top of your mortgage.

  1. Don’t over utilize your credit

No matter how high the limit is on your credit cards, utilizing a high percentage can have a negative impact on your credit. A good rule of thumb is to keep your utilization under 30%, so if you had a credit card with $1500 limit, you wouldn’t want to spend more than $450 at any given time. Also, if you can afford to pay off your credit cards in whole every month, that can help boost your score.

  1. Diversify your credit lines

This may seem counterintuitive, but with responsible managing, having several forms of credit lines can improve your credit. A good mix of credit cards and loans that you make regular, on-time payments with low utilization shows lenders that you are responsible with your debt.

  1. Get some credit

For many, the world of credit cards and personal loans seems daunting and scary, so they opt out of dealing with any form of credit at all. However, building a credit history is important if you plan on purchasing a home with a mortgage. The older your credit history the better, so start building soon. Secured cards and small loans are good starting places. If you’re still unsure, ask a financial professional for help.

 

If you already follow these steps, then you’re on the right track and may be ready to venture into home ownership. Check out our rate calculators and get your no obligation quote today!

homes are selling fast this spring

Homes Are Selling Fast This Spring Season

With demand so high and supply low, it’s no wonder houses are selling faster than agents can set up showings with their clients. This spring we are definitely in a sellers’ market; home prices have gradually increased and show no signs of stopping and yet buyers are still swooping in and purchasing homes.

According to new data collected by Redfin, sales have jumped by 9% compared to this time last year. This competitive market is creating a lightning fast environment for home sales with houses selling at an average pace of 8 days faster than the previous year.

Fast home sales and low supply means that agents and buyers have to be prepared and on their A-game in order to compete in the fast paced market. First time homebuyers will face some of the toughest challenges when searching for affordable homes since builders are having trouble keeping up with demand for starter homes.

A seller’s market is great for business for many real estate agents as buyers attempt to stay competitive and find insider help, and leverage market connections. Buyers know, or will soon realize, that this is not the market to go at it alone, and using an agent will give them a competitive edge when attempting to sway sellers in their favor.

Reduce Your Debt to Income Ratio

Reduce Your Debt-To-Income Ratio

In the wake of the home finance crisis that began in about 2008, obtaining a mortgage is now more difficult than it was before, but knowing the obstacles will help prepare you for buying a home.  Today’s lenders want to avoid the mistakes that bankrupted yesterday’s lenders.  Additionally, Government Sponsored Entities (GSEs) Fannie Mae and Freddie Mac have set much tighter guidelines that lenders must follow.  There are numerous factors considered when determining eligibility for a mortgage, but the three big ones are credit history, income and debt.

The debt-to-income ratio (DTI) is a valuable number that underwriters look at heavily when determining your borrowing ability.  To put it simply, DTI is the amount of debt you have compared to your overall income.  A low DTI shows lenders that you have a favorable balance between debt and income.

There are two main kinds of DTI and they’re expressed as a pair (front-end/back-end).  The front-end ratio indicates the percentage of income that goes towards housing costs (principal and interest, mortgage insurance, property taxes and homeowners’ association dues).  The back-end ratio is the percentage of income that goes towards paying recurring debts, including the housing costs covered in the front-end, plus credit card payments, car payments, student loans, child support, alimony, etc.  AmeriSave, one of the nation’s largest online lenders generally requires a DTI of 45% or lower for conventional conforming loans.

If you haven’t guessed it yet, one of the keys to unlocking the door of homeownership is reducing your debt-to-income ratio.  There are many things you can do to actively reduce your DTI so you can apply for a mortgage.

Increase your income – This might mean working some overtime, asking for a salary increase or taking on a part-time job.  Be advised though, as we mentioned earlier, income verification standards have increased greatly in the new age of lending so be mindful that cash or otherwise non-reported earnings will likely not count toward your “income”; although it could be used to reduce debt to the same effect.

Reduce spending – Review your bank and credit card statements to see where you are spending most of your money.  Cut back on unnecessary expenses and research other providers of insurance, phone, cable and other utilities to see if there are lower-cost alternatives.  Plow those savings into reducing your debt.

5 Ways to Cut Costs and Save

Reduce debt – A high DTI is not necessarily bad if you’re actively reducing debt.  For example, if your income is $2000 per month and you’re putting $1000 towards debts, your DTI is temporarily 50%, but will be reduced to 0% when you’re finished.  If you have any cash saved, you might want to consider paying off some debt.  While credit cards have high interest rates, the minimum payments are typically lower than, say an auto loan. Consider this scenario:

You have credit card debt of $5000 with a minimum payment of $120 and an auto loan with $5000 remaining and a payment of $600.  The $600 per month towards the auto loan reduces your borrowing power by $100,000, so you may want to consider using the savings to eliminate the auto loan and continue paying monthly towards the credit card.

If you plan on paying off any debts in full, ask the creditor the date they report to the credit bureaus, then apply for the mortgage after your account has been updated, revealing less debt.  You can also track changes to your credit report with free services like Credit Karma.

Spring has sprung

What To Expect When Purchasing A Home During The Busiest Time In Real Estate

With the blossoming of new flowers, for sale signs are also blooming across the country; spring homebuying season is up and running. Despite rate increases, it’s still a sellers’ market for Americans in most of the U.S. Yes, 2016 was a great year for mortgage rates, seeing rates hit record lows; however, with rates lingering in the 4% range, historically speaking, we’re a far cry from saying rates are bad. In fact, comparing rates over the course of the past 50 years, a rate below 5% is really great, even by today’s standards.

Spring time real estate sales are projected to boom this year, but low inventory will definitely present a major increase in demand. So, what does this mean for buyers? Well, the simple answer is homes are selling faster than ever. In fact, homes are selling at an average of 8 days faster than the previous year. With that being said, while conditions are great for purchasing a home, finding one to buy may present problems. You will have competition, even more so with the projected increase of millennials entering first time homeownership this year.

Don’t let the lack of supply discourage you though. Our economy is on the rise and has been for some time; that fact, coupled with job growth and still low rates creates a landscape for optimal selling and buying potential. However, it does make it more important than ever to do your research and ready yourself with a great mortgage lender. You can visit amerisave.com and apply for a pre-approval so that you have a gauge of how much home you can afford. The market is competitive

Tax Tips For Last Minute Filers

Tax Tips For Last Minute Filers

When it comes to filing taxes, procrastination plagues a large number of Americans every year. In fact, based on data collected by the Internal Revenue Service, up to 25% of tax filers wait until the last two weeks before they even begin preparing their tax documents.

Of course, procrastination isn’t the only reason individuals delay the tax filing process. For those that owe money, waiting to file can help them earn interest on their money before they pay back the government. Whatever your reasons may be for postponing your taxes, we are down to the wire and the deadline is upon us, so we put together a list of tips that may help you get your returns filed and all squared away! Check out our list below!

1. Write a list

Yes, this may seem arbitrary, but trust us; when a deadline is approaching many find themselves feeling stressed and anxious which usually leads to worrying about what they need to do instead of actually doing it.

A list of documents needed and tasks you need to complete will keep you organized and on track to get everything done on time!

2. Don’t make hasty sacrifices due to time

Itemized deductions could help you save more than the standard deduction. Take time and compare your total deduction amount and make a decision based on what fits your situation.

3. File online

There are awesome tax filing services that streamline the process and make filing easier than ever, and for many Americans, depending on their income levels, it’s free! For those with more complicated financial situations, this may not be the best path, but many individuals have had great success with e-filing services.

4. File an Extension

When it comes down to it and you realize you aren’t able to file by the deadline date (April 17th), the next step is to file an extension. Head over to irs.gov to find the IRS free file application and apply for the 6 month extension. Filing after the deadline without an extension could put you at risk of receiving a late filing penalty.

5. Start tracking your docs

If you haven’t before, a proven way to eliminate tax stress is by keeping track of your records throughout the year. Start now so that you can have a happy, stress free filing year for your 2018 returns!