December 20th, 2016 5:07 AM by Jackie Graves, President
If your new
year’s resolution is to buy your first home in 2017, then you’ve got your
financial work cut out for you. It goes without saying that a brand-new real
estate investment will be one of the biggest commitments in your investment
portfolio. And of all your investments, it will certainly require the most
effort to maintain. Nonetheless, the return on investment from quality real
estate can make all the trouble of aggressive saving, negotiating, and endless
explain things you need to consider when buying a home in the current financial
climate, Whitney Fite, president and founding member of Atlanta-based Angel Oak
Home Loans, was able to share some of his insights. For anyone who will be
spending the first few months of 2017 shopping for a new home, here are six
things you need to know before you start.
1. Mortgage rates have risen since the election.
Fite, “Rates have risen approximately .50% since the election, which is a rapid
rise. The overall housing market remains strong, however, a Trump presidency
could be inflationary which would cause real estate prices to increase. New
applications on purchases have risen, which seems to indicate the prospects of
higher interest rates and prices is creating a sense of urgency among buyers.”
2. There is a rising trend of single people purchasing
property is a fairly common step in a financial plan, but the more
”traditional” route is that it comes after joining your finances with a
partner. Turns out, that so-called norm is becoming more and more dated.
According to Fite, the average age of a first-time homebuyer is 33. However, he
also says, “There is an uptick in singles purchasing homes, whereas in the
past, most homebuyers were married.”
3. If you’re looking into investment properties, the
cities are still (most likely) the place to buy.
On choosing a
location, Fite says it all depends on what you’re looking for in a home.
However, for those looking specifically for investment properties, price
appreciation is perhaps the biggest consideration. Fite ultimately says that
price appreciation is likely to be larger in metro areas, and continues, “For
investors, it’s all about anticipated cash flows they can get in a particular area.
Rent increases have been much stronger in metro areas versus rural.”
4. You need to be able to afford more than just a down
“For first-time buyers, it is imperative that they research the total costs
associated with obtaining a particular loan amount, as this will be additional
cash due at closing on top of the down payment. A mortgage provider can provide
a verbal estimate in the form of a total percentage of the loan — for example,
in a particular area closing costs could be 2.5% on a $300,000 loan amount,
which is $7,500.”
5. Make sure you look at how your entire financial
picture will impact your potential mortgage.
pre-qualifying for a mortgage before you even start the house-shopping process.
Fite lays out the factors that come into consideration when pursuing a
manageable mortgage: “Down Payment, credit score and debt-to-income ratios can
all have an effect on the interest rate one receives. The best advice I can
provide is to find a trusted mortgage provider and get pre-qualified prior to
starting the process. I would also advise you take a look at your credit to
ensure there isn’t anything that could negatively affect your terms. If it’s
done early in the process, there is time to fix any potential issues.”
6. Get more than just a second opinion.
sources for referrals to realtors and mortgage lenders,” says Fite. ”Speak with
two or three of each before choosing whom to do business with. Do this as early
in the process as possible so that you have access to these industry
professionals for questions and guidance throughout the process.”
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