What to know when buying a home

Things Mom Never Told You About Buying a Home

Most of us learned a lot of what we know from our moms. But there may be some things mom never told you, like what you need to know about buying a house. A lot more goes into buying a home than just finding one you like and signing on the dotted line. Here are some things you need to know before you start house hunting.

  1. Get your credit together. Your credit report shows your diligence, or lack thereof, in paying your debts on time. That’s a big deal with lenders. Institutions, like people, who loan you money like to know you will be able to pay it back. Contact the three major credit reporting agencies for a copy of your credit report, which will provide your credit score. If you spot errors, contact the agencies directly to correct them.
  2. Set a budget, and stick to it. The first step in this process is to contact a lender to see how much house you can afford. The lender will pre-approve you for an amount based on your income, debt, and credit. Don’t set yourself up for disappointment by looking at houses that are outside your price range. A general rule of thumb for calculating how much house you can afford is to remember your monthly home payments should not exceed 36% of your gross monthly income.
  3. Save for a large down payment if possible. Although there are several down payment assistance programs available, especially for new home buyers, the truth is the more you put down, the smaller your monthly payment will be. Assistance programs may help get you into a house on the front end, but your monthly payments will be larger than if you put down at least 20%. If your down payment is less than 20%, you will likely need to purchase private mortgage insurance, which protects the bank if you fail to make payments.
  4. Be prepared for fees. Even if you have down payment assistance, you still need to have cash for closing costs and other fees, such as home inspection, appraisal, loan fees and title search fees. If your savings can’t cover these costs, you can withdraw up to $10,000 (though you shouldn’t need this much) from an IRA or 401 (k), or accept a cash gift from your parents up to $14,000.
  5. Get a home inspection. This is one of those costs that you definitely want to plan for, as skipping a home inspection is never a good idea. Inspections normally don’t take more than an hour or two, and can save you from purchasing a problem. Make sure you know the deadline date, and have the inspection done prior to that date. If the inspection uncovers significant defects or potential problems with the house, this is your chance to negotiate the price, or walk away from the deal if you decide that’s the best course of action. Without an inspection, you may be in for some nasty surprises after you move in.

For more information on purchasing your first home, give us a call at (719) 539-6682 or contact us at realestate@firstcolorado.com. We promise we won’t tell your mom.

The Housing Market After A Presidential Election

Housing Market Trends After a Presidential Election

Regardless of which political party occupies the White House, every president has the power to shape America’s housing market and overall economy. History suggests that housing market trends after a presidential election are far more predictable when the outcome of the election is also more predictable. When there is marked uncertainty about who will hold the top office, that uncertainty trickles down into other areas. According to Mary Ann Bartels, Head of Merrill Lynch Wealth Management Portfolio Strategy, if there’s one thing markets hate, it’s uncertainty.

Studies show that the uncertainty produced by a presidential race can ultimately have even more impact on housing than the actual outcome of the election. Departing two-term presidents cause a void that financial markets typically find unnerving. According to the Stock Trader’s Almanac, the Dow Jones Industrial Average has gained an average of 10.4 percent in the year before a presidential election since 1833, but only 6 percent during election years, with the first year of a new president’s term seeing an average gain of 2.5 percent, and 4.2 percent during the second year.

Windermere Real Estate’s Chief Economist Matthew Gardner says historically speaking, home prices continue to rise during an election year and the year after, although the rate of growth does typically tend to slow down. However, Gardner states he does not expect that to happen in 2016; he expects to continue to see “very robust” growth in housing prices this year.

When it comes to the mortgage industry, there tends not to be a rapid rise in interest rates during an election year or the year after. Gardner echoes Ms. Bartels in the opinion that markets do not like change. He states that as time progresses and we become familiar with the new president and their policies, the impact on the housing market will probably not be devastatingly negative. The current U.S. housing market is stronger in 2016 than it was four years ago, as is the economy in general.