Articles Tagged "Financing a home"

Buying a home for the first time can feel like an overwhelming experience. The walkthroughs, loan applications, and negotiations are only made more difficult when your offer is denied by a seller who chooses another buyer. Our real estate agents are also discouraged when a great offer goes unaccepted. Although a normal part of this process is to feel like the odds are stacked against you, remember that it's only a matter of time until you're handed the keys to your dream home.

Why First Time Homeowners are Faced with Unfavorable Odds

As each generation gets older, many men and women hope to purchase their first home early in adulthood. Unfortunately, there are a variety of factors that could prevent potential homebuyers from the home of their dreams. Some of the common hurdles first-time buyers struggle to overcome include:

• Saving for a Down Payment
  A 20 percent down payment is a significant amount to save, especially for younger homebuyers. A single individual may find it difficult to reach this amount alone within a few years. Studies report that an individual may need up to 11 years to save for a down payment. Others may be struggling with student loan debt or are earning a salary that does not enable them to afford the homes in their area.
  
  
• Increases in Housing Prices
  Even if an individual or couple are not struggling with debt and are earning salaries that meet the national average, these hopeful homebuyers can still encounter obstacles in the form of rising property values. Home prices are rising significantly in larger cities throughout the country where younger adults are relocating to, particularly new homes.
  
  
• Limited Homes Available in an Area
  Even when young adults choose to relocate to larger real estate markets, they're still discovering that there are limited homes available — especially entry-level homes. Older adults are choosing to age in their current city, downsizing to smaller and more affordable homes.
  
  
• Difficulties Qualifying for a Loan
  Although they may have an adequate down payment, some younger adults do not have the credit score or history necessary to secure a loan.
  
  
• Increased Competition
  Young adults are facing two challenges simply because of their age. Not only are they competing for homes with other Millennial homebuyers, but they are also competing against another sizeable population — Baby Boomers who are downsizing. With the two largest generations competing for limited homes, it's increasingly difficult to secure a home.

How to Improve Your Odds as a First-Time Homebuyer

These obstacles may seem difficult to overcome, but don't lose hope! There are ways in which you can improve your odds of securing the home of your dreams even in a competitive market. We suggest that first-time homebuyers consider these tips:

• Monitor and resolve any issues with your credit score. If you have a limited credit history, take responsible steps to improve it.
  
  
• Save for more than the minimum down payment amount. Putting a few thousand extra aside will help cover closing costs or any bidding wars you might get into.
  
  
• Limit your demands and try to find amicable ways to compromise during negotiations.
  
  
• Submit an offer that's slightly above the asking price. A well-priced home could encourage more offers and your elevated offer will immediately stand out.
  
  
• Get pre-approved for your mortgage loan before you begin your search. You should always calculate how much home you can afford before you begin searching. Securing pre-approval for a loan will show the seller that you are serious and able to afford the home.

Contact us today for the support and guidance first-time homebuyers need when buying Dallas homes for sale.

Buying or selling a home can be a stressful situation, but buying and selling a home simultaneously can get downright terrifying if you're not ready for the transition. Fortunately, there are some ways to help ease the burden of buying and selling at the same time, and the primary method is by way of a bridge loan.  

Just like it sounds, a bridge loan helps bridge the gap between selling your current home and buying another. Our real estate agents are familiar with the challenges you face when trying to sell your existing home and purchase a new home, so we've put together this guide on how to bridge the gap.

• How Does a Bridge Loan Work?
  Bridge loans are meant to be short-term solutions to help you purchase your new home. Generally speaking, you can borrow up to 80% of the combined value of the two homes. The 20% gap will need to be made up with equity in your current home or cash. Unless you've got a substantial amount in liquidity, you're probably banking on having a good deal of equity in your current home.
   
• Reasons to Use a Bridge Loan
  Bridge loans, while available, are still fairly rare in the grand scheme of home loans. But just because they're rare doesn't mean they aren't worth considering.
  
  One of the main reasons you may choose to use a bridge loan is to secure your position as a buyer when making an offer. Many times, offers and contracts on homes are contingent on the buyer securing the necessary financing. While this is common, it leaves a lot to be desired on the seller's side and practically gives a buyer a free out if their financing falls through.
  
  With a bridge loan, you're guaranteed the cash to purchase the home you're looking to buy, which can significantly improve your position while making an offer on a home.
  
  
• Reasons to Avoid Bridge Loans
  Bridge loans, as we've already said, are considerably more unorthodox compared to conventional loans or other mortgage products. Knowing that, it's essential to realize that getting a bridge loan is wholly dependent on your credit, debt-to-income ratio, and a lender's willingness to give you the money. 
  
  Even if you are in a relatively favorable financial position, getting a bridge loan is basically like taking out two loans at the same time. This means that you'll likely have double the payment as long as you technically own both homes, which can be a big financial burden. Understandably, this burden is only for a short time, but the real estate market is far from certain.
  
  No matter how confident you are of selling your existing home, there is still an inherent risk that you'll be stuck with a bridge loan for longer than you ever intended.

Talk to a Real Estate Agent

If you're looking to sell your current home and upgrade to a new home, no matter if you're looking to a bridge loan or not, selling your home quickly is critical. Contact us today to get in touch with an agent and let one of our agents help you search Dallas homes for sale!

Our real estate agents are always glad to support your search for the best Dallas homes for sale. First-time buyers, in particular, find the process easier when they connect with the right real estate agent—someone with plenty of experience in their situation. Many of the big questions first-time buyers have usually deal with obtaining a mortgage loan.

They often worry about the effect of credit score on their hopes for a favorable mortgage. Most people don't have perfect credit, so they wonder if their credit will stop them from getting the home they want. Luckily, the answer to this is almost always "no." A few credit blemishes here or there will not usually disqualify you from getting a home loan. Even if you've had credit problems in the past, many lenders are willing to look at your current income and credit behavior to determine how much you can borrow.

That said, your credit score is still relevant. A good credit score can improve your loan terms. Raising your score just a few points can make a worthwhile difference, so don't feel you need perfection. Even if you have only a few months before you begin your home search, there are steps you can take to raise your credit score. This may translate to better loan rates and substantial savings over time. Let's look at some ways you can raise your credit score faster.

1. Pay Off Any Credit Debts You Can
   As a general rule, paying credit card debts with a higher APR (annual percentage rate) will help you reduce your total debt load while paying less in interest. Look at the APR of each of your credit debts and pay off any that combine a low balance with a high APR.
   
   
2. Don't Close Any Unused Credit Accounts
   Closing an unused credit account may seem like a good idea, but it's actually self-sabotaging. This is because the total amount of credit you have influences your score. Simply pay off each credit card and leave it. You can use cards occasionally for small purchases to keep them active.
   
   
3. Don't Take on New Loan Obligations
   When planning to buy a home, it's best to make it your sole financial focus if you can. Lenders will tend to be suspicious of buyers who take on a new car loan or other major debt before a home search. In the early stages of getting a loan, this may endanger your plans.
   
   
4. Choose a First-Time Buyer Loan Program
   This won't affect your credit score directly, but it may help you boost it in the long run. First-time homebuyers can benefit from many state and federal programs that make it easier to access a mortgage loan. Most of them put less emphasis on credit score or may not consider it at all.
   
   
5. Examine Your Credit Report for Errors
   Credit data is collected from a number of sources and compiled by several different companies. When mistakes are made, they can negatively impact your credit score. Use the official site to get your free annual credit report and follow up with creditors on any errors you catch.
   
   
6. Consider a Side Gig
   If you can raise your income even a hundred dollars a month, you'll be able to pay off your debts that much faster. There are many legitimate opportunities to make more money out there on the web, but be careful you don't end up working around the clock!

Contact us to find out more about your options as a first-time home buyer here in the Dallas area. The team at RE/MAX DFW Associates looks forward to helping you.

Latinos are finding their economic legs under the Trump administration, leading the surge in home ownership and income growth and record low poverty rates, according to two comprehensive new surveys.  While they remain far behind whites in income, they have seen their third consecutive year of income growth and have a higher workplace participation rate, according to the National Association of Hispanic Real Estate Professionals and the Hispanic Wealth Project. 

In two studies just released, the groups also provided revealing details about Latinos and their growth in America. For example, by 2060, nearly one of every three in the U.S. will identify as Latino.  The reports detailed Hispanic housing and economic trends and found most signs rapidly improving.  What's more, the group's goal of nudging overall Hispanic income up is showing signs of success. The group said that within the next five years, Hispanic median income will triple.

The group listed the positive trends in its income report:

• For the fourth consecutive year, Hispanics increased their rate of home ownership, reaching a rate of 47.1%. In 2018, Latinos added 362,000 homeowners which is the highest number of owner households added for Latinos since 2005.
• In 2017, Hispanics saw the third consecutive year of income growth and the highest of any demographic.
• Between 2016 and 2017, Hispanics increased their real median income by 3.7%. Latino families making an annual income over $200,000 increased from 2.1% in 2011 to 3.8% in 2017, and the percentage of Latino millionaires more than doubled between 2013 and 2016.
• Poverty rates reached a historic low for Latinos. Simultaneous to median income growth, Hispanics have lowered their poverty rate for three consecutive years. With a poverty rate of 18.3% in 2017, Hispanics reached their lowest level since poverty estimates for Hispanics were first published by the U.S. Census Bureau in 1972.

• Latinos have significantly higher labor force participation rates. Hispanics are employed at a rate of 66.1%, compared to 62.9% of the general population. The Hispanic unemployment rate was reduced by over 7 percentage points between 2009 and 2018, from 12.1% to 4.7%, respectively.
• Latinos continue to drive small business growth. Between 2014 and 2016, the number of Latino-owned employer firms increased by 13.1%, accounting for 23.8% of the net growth of all employer firms during that period.
• Participation in retirement accounts for Latinos is increasing. Between 2013 and 2016, Hispanics increased their rate of retirement account ownership from 25.1% to 29.7%, and the value of their retirement accounts increased by roughly 40.4%.

• Washington Examiner, April 23, 2019

Spring is prime home buying season just about everywhere. Our real estate agents always see an increase in buyers this time of year. People are less busy than they are other times of the year, the weather is pleasant, and sellers know they'll have plenty of interest in their homes. Even with more competition, it's still the best time to get the home you've been dreaming of. Here's how you can set yourself up for home buying success.

• Secure financing ahead of time
  This includes several steps like viewing your credit report and credit score, planning your budget, and meeting with a lender to get pre-approved. A little prep work here can go a long way to make your offer on a home more attractive. Pre-approval shows sellers you're serious, and there's less chance your financing will fall through. This also means you'll be able to move quickly and make an offer right away when you find the right home for you.
  
  
• Pick the right agent
  Finding an agent that's a good fit for you and knows the area you're hoping to relocate to is important. Their insight can help you make the kind of offer that will get the seller's attention.
  
  
• Make your first offer great
  If there's a lot of competition, you don't want to assume the buyer plans on negotiating. In that situation, they probably won't. Your agent may be able to get a feel for what the seller is looking for. If you can use that information to make a better offer than your competition, then do it. Offer shorter closing time, fewer contingencies, or anything that can make your offer look better than others.
    
• Keep the big picture in mind
  Your goal is to get into a home that fits your needs. That's important to remember during the negotiating process. Keeping your expectations realistic is essential. In the long run, a few thousand dollars one way or the other won't make much difference, but losing out on a home because you wouldn't negotiate or got too hung up on the details, will.
  
  
• Be prepared for a bidding war
  It's not the optimal situation for buyers, but it is more common during prime buying season. Have a plan for what you are prepared to do in this situation and understand you may end up having to make an offer on a different home. If there are multiple offers, the thought of a bidding war may scare off some buyers, which may work to your advantage. Knowing what you're willing or not willing to do ahead of time prevents emotional and impulsive decision making, and helps you formulate a strategy to improve your chances of winning the home you love. You can offer the seller something different than other buyers with shorter or longer closing times, a bigger down payment, or a cash offer. Your real estate agent can offer plenty of advice.  

Spring really is the best time to start looking for a home for sale in Dallas. Despite increased competition, your chances of finding the right home are excellent with the help of one of our agents. Contact us today to get started.