Best advice I would give to first-time homebuyers

It’s a common question:  What’s the best advice you would give to first-time home buyers?

 

Without question, your first step in the home buying process is to begin getting your financing in order.  The fact is that most people who buy homes today do so with a mortgage. This part is often the most challenging, and confusing for new buyers.

 

It’s an excellent idea to know the shape of your credit, and be aware of where you stand at the outset.  If there are errors on your report, old past-due accounts you have forgotten about, or public records (judgments, etc.), now is the time to be aware of them and deal with them.

 

Some great places to get your hands on FREE credit reports are websites like annualcreditreport.com or sites with apps such as  Creditkarma.com   Most of those sites will try to sign you up for various premium services, but what you’re interested in at this stage is identifying items needing taken care of to get approved for a mortgage. If there are any past due accounts,  bring them current as quickly as possible. Likewise, if there are judgments or collection accounts, try to settle them. In particular, lenders require that any public record items (judgments and liens) be resolved before closing.

 

It’s not too early in the process to find a loan officer to help you with this part of the process. Even if you’re not ready YET, a good loan officer is usually willing to help you navigate the repair process, and provide guidance.  You should specifically look for someone with whom you feel comfortable and confident. It is not worth focusing on the rate someone may offer if they aren’t available to be your trusted adviser. You want someone who responds promptly to emails, phone calls, and texts, and who gives you straightforward answers in plain language.

 

When you’ve found a loan officer you like, you should begin the preapproval process. You’ll typically provide current pay stubs, W2s, and bank statements.

 

I hope this is useful. Good luck!

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Economy Settles Into Mortgage Nirvana As Fed Remains On Pause

Market Update February 25, 2018

Reading Time: 3 minutes

Right now we are in what I like to call nirvana for the mortgage market. We are seeing low mortgage rates, no volatility, moderate growth and no inflation. In addition, this week Freddie Mac reported that the 30-year fixed-rate mortgage fell again to a one-year low of 4.35 percent (see chart below). Equities continue the slow climb northward, the number of people filing for unemployment is fairly steady and inflation is still right around the sweet spot of 2 percent.

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Because of all that, patience is still the strategy of choice for the Federal Reserve. The minutes from January’s Federal Open Market Committee meeting were released this week and they confirm an emphasis on patience, citing slower growth domestically and internationally as well as softer inflation.

With rate hikes on hold for now (only one hike is expected in 2019), the next big issue for the Fed is its $4 trillion balance sheet. The Fed started growing its balance sheet after the financial crisis, and stocks and bonds responded. From 2009 to 2012, the Fed was slowly growing its balance sheet and stocks were moving higher as the interest rate moved lower. In late 2012, the balance sheet expansion grew dramatically. The balance sheet is mostly comprised of Treasuries and mortgage-backed bonds.

You can see in this chart below from CNBC how much the Fed’s balance sheet has grown since 2008, and you can see how it has started to dip ever so slightly in the last few months.

Feds Balance

At the January meeting, committee members discussed selling off the assets a little more aggressively. So far, the Fed has reduced its balance sheet by about $400 billion. After the release of the minutes, analysts believe there will be an announcement at the March meeting that the runoff will stop at the end of the third quarter. After that, it’s expected the reserves will slowly be reduced.

This week’s report on US jobless claims does hold a slight indication that the labor market is also cooling off. The number of Americans filing for unemployment benefits dropped, but the four-week average is up to a one-year high. That suggests a more moderate pace in job growth, mirroring what we are seeing in overall economic growth.

US and China pushing for March 1st deal

News is slowly trickling out about the potential for a trade deal between the United States and China on or before the March 1 deadline. CNBC reported that the two countries “have started to outline commitments in principle on the stickiest issues in their trade dispute, marking the most significant progress yet toward ending a seven-month trade war.”

According to CNBC’s article, there are reportedly six major issues being negotiated: Forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers.

The deadline is exactly a week from today and President Trump has threatened to increase tariffs on Chinese goods should no agreement be reached.

Slow January enriches home inventory

The exciting news for potential homebuyers right now is that inventory is at a 10-year high over 54 metro areas, according to the latest national housing report from RE/MAX. The report also shows that January was the fourth-consecutive month for inventory growth. Obviously, the other side of the situation is rough for those selling homes.

Existing home sales data released on Thursday backs up the inventory data. The National Association of Realtors report shows US home sales fell to a 3-year low. Home prices are still going up, but definitely continuing to slow down their pace. At January’s sales pace, the existing inventory would be exhausted in just under four months. That’s better than where we were in December, but a six to seven month supply is viewed as a healthy balance.

As we inch closer to the spring buying season we are already seeing mortgage applications pick up. Data from the Mortgage Bankers Association shows that, after four straight weeks of decline, applications are up by 2 percent week-over-week and up 2.5 percent from a year ago.

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ABOUT THE AUTHOR:

GREG RICHARDSON

Greg Richardson is Movement’s Senior Advisor of Capital Markets & Strategy and a contributing author to the Movement Blog. His weekly market update is a must-read commentary on financial markets, the mortgage industry and interest rates. Greg is an industry veteran who knows how to read the financial tea leaves and make complex industry data easy for loan officers, real estate agents and homebuyers to understand.

Is there ever a question you CAN’T ask a Realtor? Never. When it’s your future and your money at stake…

Do I really need to replace my carpeting before the first open house?

If it’s worn, smelly, discolored or worn out and YOU were a potential buyer walking through your house for the first time, how would you react? Buyers think about two things when they tour a property that has not been updated or repaired: time and money.

We are smokers. Do we really have to worry about what our home smells like?

Looking at online photos of your home show one thing. Walking through the front door and smelling the smoke that has permeated your flooring, drapery, cabinets and even furniture are an entirely different experience. Many a buyer will turn on their heels right there in your entryway and head for the next listing. So yes. Be concerned. Be very concerned.

Is it okay to decorate my home for the holidays while it’s on the market?

Absolutely. ’Tis the season. But if you are prone to filling every nook and cranny with happy Santas, hanging stars and extra Christmas trees, this is the time to scale back. You’ll obscure spaces that might otherwise be considered spacious.

Does having a dog make my house harder to sell?

Not if you’ve already dealt with and remediated (1) doggie odors (2) doggie damage and (3) your furry friend’s tendency to bark or scare homebuyers.

Can I keep my displays of vintage guns, religious paintings, and my grandmother’s doll collection while my house is on the market?

If you hope to get the highest prices and sell your home in the shortest length of time, remove as many of these things as possible so the widest range of buyers walking through there will not be distracted. It’s a great idea to pack them up early and have them waiting to grace the interior of your next home.

Source: Imagineyourhouse.com, , TBWS

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How will the Government Shutdown Affect you

How will a government shutdown affect the home buying process?

     Most people don’t think a government shutdown will affect them at all. And for a lot of people, they are right, it won’t have any impact on their daily lives. But for people who are trying to buy or sell a home the shutdown can drastically change the way you approach the process. 

Most loans are backed by government funded agencies such as USDA, FHA, Fannie Mae, and Freddie Mac. With these agencies shutdown down, the process can be severely slowed down. Most of these agencies will be running on a skeleton crew. With files piling up they will be only be able to process a fraction of the loans that they usually process.

As the seller this could change which offers you accept. Sellers will be more hesitant to accept FHA offers, because they know the process will most likely take a lot longer to complete. Getting approved for a conventional loan could be one way to avoid some of the issues that we are sure to see.