Things Every First-Time Home Buyer Needs to Know

Here's what every first-time home buyer needs to know to dive into house hunting with confidence—and with as few curve balls as possible.

1. How much home you can afford as a first-time home buyer?

Homes cost a bundle, so odds are you'll need a home loan, aka mortgage, to foot the bill, along with a hefty down payment. Still, the question remains: What price home can you really afford? That depends on your income and other variables, so punch your info into realtor.com®'s home affordability calculator to get a ballpark figure of what you can manage. 

In general, experts recommend that your house payments (mortgage, maintenance, taxes) should not exceed 28% of your gross monthly income. So, for example, if your monthly (before-tax) income is $6,000, multiply that by 0.28 and you'll see that you shouldn't pay more than $1,680 a month on your home. 

But online calculators give just a ballpark figure. For a more accurate assessment, head to a lender for mortgage pre-approval. This means the bank will assess your credit history and other factors, then tell you whether you qualify for a loan, and how much. Mortgage pre-approval also puts home sellers at ease, since they know you have the cash to back up your offer.

2. Pick the right real estate agent

You buy most things yourself—at most, sifting through a few online reviews before hitting the Buy button. But a home? It's not quite so easy. Buying a home requires transfer of a deed, title search, and plenty of other paperwork. Plus there's the home itself—it may look great to you, but what if there's a termite problem inside those walls or a nuclear waste plant being built down the block? 

And did we mention there's a whole lot of money involved?

All of which is to say, you will want to have a trusted real estate agent by your side to explain the ins and outs of the process and help you make the best decisions at every step. Make sure to find an agent familiar with the area where you're planning on purchasing; the agent will have a better idea of proper expectations and realistic prices. 'Finding a Realtor is not hard, but finding one that is best-suited for you and your purchase is a challenge,' he adds.

Make sure to interview at least a couple of agents, because once you commit, you will sign a contract barring you from working with other buyer's agents—this ensures the agent's hard work for you pays off.

3. Know there is no such thing as a perfect home

It's your first home—we understand if you've dreamed about the ideal house and don't want to settle for anything less. 

We've been there! But understand that real estate is about compromise. As a general rule, most buyers prioritize three main things: price, size, and location. But realistically, you can expect to achieve only two of those three things. So you may get a great deal on a huge house, but it might not be in the best neighborhood. Or you may find a nice-sized house in a great neighborhood, but the price is a bit higher than you were hoping for. Or else you find a home in the right neighborhood at the right price, but it's a tiny bit, um, cozy.

Such trade-offs are par for the course. Finding a home is a lot like dating: 'perfect' can be the enemy of 'good.' Or even 'great.' So find something you can live with, grow into, and renovate to your taste.

4. Do your homework

Once you find a home you love and make an offer that's accepted, you may be eager to move in. But don't be hasty. Don't purchase a home without doing your due diligence and add some contingencies to your contract—which basically means you have the right to back out of the deal if something goes horribly wrong.

The most common contract contingency is the home inspection, which allows you to request a resolution for issues (e.g., a weak foundation or leaky roof) found by a professional.

Another important first-time home buyer addition: a financing contingency, which gives you the right to back out if the bank doesn't approve your loan. A pre-approval makes this possibility much less likely, but a pre-approval is not a guarantee.

You also might want to consider an appraisal contingency, which lets you bail if your lender values the home at less than what you offered. This will mean you will have to come up with money from your own pocket to make up the difference—a tough gamble if cash is already tight.

5. Know your tax credits 

The first-time home buyer tax credit may be no more, but there are a number of tax breaks new homeowners may not be aware of. The biggie: Mortgage interest deduction is a boon for brand-new mortgages, which are typically interest-heavy. If you purchased discount points for your mortgage, essentially pre-paying your interest, these are also deductible. Some states and municipalities may offer mortgage credit certification, which allows first-time home buyers to claim a tax credit for some of your mortgage interest paid. 

Check with your Realtor and local government to see if this credit applies to you.

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It'll Pay to Sell Your Home Early in 2018

Here are 5 Reasons

It's been nearly a decade since the Great Recession delivered the worst housing crash in modern memory. But these days,

the fallout feels squarely in the rearview mirror. Markets have bounced back with fervor, and confidence is skyrocketing: From Charlotte, NC, to Stockton, CA—and everywhere in between—homes are flying off the market at record prices, and buyers are still clamoring to get in the game.
One thing is clear: It's a great time to be a seller.

'We’ve seen two or three years of what could be considered unsustainable levels of price appreciation, as well as an inventory shortage that resulted in a record low number of homes for sale across the country,' says Javier Vivas, director of economic research for realtor.com®.

Related Articles

• These Real Estate Trends Will Be Game-Changers in 2018
• The New Gold Standard: 10 U.S. Housing Markets That Will Rule 2018
• The 3 Best Reasons to Buy a Home in 2018 (but You'd Better Hurry)

In other words: Today's buyers are exhausted. And in many cases that means they're willing to sacrifice to get a toehold in the market.

Sounds like the stuff of seller's dreams, right? But know this: If you plan to sell in 2018—and you want to unload your home quickly and for maximum money—your window of opportunity may be rapidly narrowing. Here's why you should get moving ASAP.

1. Rates are still historically low, drawing buyers into the market

We may not be enjoying the rock-bottom interest rates of yore, but by historical standards, today's 30-year mortgage rates—hovering just above 4%—are still low. And experts agree mortgage credit will remain relatively cheap for most of the year.

That means the getting's still good for buyers—and, subsequently, for sellers looking to unload their homes. But rates are on the rise, and it's been widely predicted that they'll reach 5% before year's end. Buyers know that the longer they wait to buy, the more expensive it will be.

Roughly translated, that means you'd be wise to list your home earlier in the year, before more rate hikes kick in. Not only will you capture the market of buyers scurrying to close a deal, but if you're buying after you sell, you'll also benefit from those lower rates.

2. Inventory remains tight—and demand high

The New Gold Standard: 10 U.S. Housing Markets That Will Rule 2018

Simply put, there are more buyers than available homes—particularly in red-hot markets where land is scarce and it isn't cheap to build.

And the housing shortage will likely get worse before it gets better: Realtor.com data predict inventory will remain tight in the first part of this year, reaching a 4% year-over-year decline by March.

Sellers, that means this is your opportunity to be wooed. Buyers, their choices limited, are going to great lengths (and making some major concessions) to win the house.

'We're in a very favorable seller's market,' she says. 'We're seeing bidding wars—which push up prices—and buyers are submitting offers with very pro-seller terms, like forgoing the repair request or waiving the appraisal contingency.'

And cash investors are in the mix, too, accounting for 22% of all home sales transactions in November 2017 (up from 20% in October), according to the National Association of Realtors®.

Those cash buyers are snapping up homes in an already tight market and keeping some first-time buyers at bay (sorry, buyers!). But if you're selling, you stand a better shot at an all-cash offer—one you just might be crazy to refuse.

Of course, there's a catch: Inventory levels are predicted to begin rising in the fourth quarter, marking the first inventory gain since 2015 and setting the stage for more dramatic housing gains to come. So if you're thinking of selling, start preparing now in order to walk away with a sweet paycheck.

3. Home prices are still increasing

From coast to coast, home prices continue to rise—which translates to more money in your pocket when you sell.

But the gains are predicted to be more moderate than in years past. Realtor.com data suggest a 3.2% increase year over year, after finishing 2017 with a 5.5% year-over-year increase.

Bottom line: You still stand to make a pretty profit if you sell this year, but the earlier you can list, the better off you'll be.

4. People have more money in their pocket

Record levels of consumer confidence, low unemployment, and stock market surges are setting the stage for high home buyer turnout in 2018. For the first time since the 1960s, the Fed has projected that the unemployment rate will below 4%, and the domestic stock market is enjoying a nearly unprecedented rally.

The housing market is already reflecting this boom: Existing-home sales soared 5.6% in November 2017 (the most recent month for which data are available) and reached their strongest pace in almost 11 years, according to the NAR.

'Incomes are growing and people are finding better and more stable jobs,' Vivas says. Buyers 'are feeling pretty good about (their) finances.'

All of these factors combined mean more buyers could be on the hunt, with more money in their pockets to shell out on a home for sale—possibly yours!

5. Millennials are ready to commit

Millennials, often crippled by student debt, have been especially hampered by rising interest rates and high home prices.

But the aforementioned conditions are ripe in 2018 for these first-time buyers to take the plunge, and experts predict that millennials will make up a vital part of the buyer pool over the coming year: Millennials could account for 43% of home buyers taking out a mortgage in 2018 (a 3% year-over-year increase), according to realtor.com data.

'As people move into their 30s, they're looking to move from renting to homeownership.'  'And we predict that trend will continue even more this year.'

More home buyers flooding the market can only mean good things for sellers—at all price points.

Is Your Home, Your Resolution

If one of your New Year's resolutions for 2018 is to purchase a home, or save for a down payment and related costs, following are some steps to help get you started.

• Determine how much you can afford. If you're just starting to think about buying a home, you can get a very rough estimate of your affordable home price range by multiplying your annual gross income by 2.5. However, you'll also need to consider down payment and closing costs, your monthly expenditures (current and future) and a financial cushion for life's unexpected emergencies. 

• It's estimated that 40% of America's families make New Year's Resolutions. That's more than watch the Super Bowl. Stick to your goals!
  Get Pre-approved. If you're a serious buyer and ready to begin looking for your home now, reach out to your lender to get pre-approved. Your lender will evaluate your 4 C sto determine how much money you can borrow. Having a pre-approval letter in hand allows you to house hunt with greater confidence and alerts sellers that you're a serious buyer. 

• Save and stay focused. If saving for a down payment and associated costs is part of your goal, work with your lender or a housing counselor to develop a responsible, yet reasonable, savings plan. Stick to this plan and keep your end goal in mind. 

• Identify your 'must have' home attributes. Take some time to answer the following questions to narrow down your home search. Where do you want to live and how far are you willing to drive to work and/or schools? How many bedrooms and bathrooms do you need? Do you need a garage or perhaps a backyard? Does the home need to be move-in ready? What qualities would make a house a deal breaker without even looking? More. 

• Get educated. No matter if you're still saving or ready to move forward and look at homes, getting educated on the homebuying process is a must and will provide a much better homebuying experience. Learn more about: 

1. The important role of mortgage rates.
2. Which mortgage product is best for you.
3. The importance of credit and how you can improve it.
4. Your down payment options.
5. How to assemble your homebuying team.
6. The financial obligations of homeownership.

Preparing to buy a home is a very exciting time. Just remember, the better prepared you are, the better your experience will likely be. Visit My Home by Freddie Mac® for information, resources, and tools to help you understand your options, the homebuying process and the importance of finding the right team.

Let's Talk About 3% Down

If you think buying a home is out of reach because you don’t have enough for a 20% down payment, think again.  Most 

homebuyers put down less and low down payment options are available for qualified borrowers.

For example, the Freddie Mac Home Possible Advantage^® mortgage offers down payment options as low as 3% and helps position qualified first–time homebuyers and low–to–moderate–income homebuyers for successful homeownership.

Think this might be right for you?  Here are answers to some frequently asked questions about Home Possible Advantage.

Watch to see how Home Possible Advantage has helped families across the country achieve their goal of homeownership.

• Can I use gift funds as my down payment?
  Yes, the 3% down payment can come from a number of sources, including personal funds, gift funds, grants and affordable second mortgages.
• Will I have to pay private mortgage insurance (PMI)?
  Yes, loans with less than 20% down require PMI that will be added to your monthly mortgage payment. PMI serves as an added insurance policy that protects the lender if you are unable to pay your mortgage. Learn more about the facts (and myths) of down payments and PMI.
• Do I have to live in the house? Yes, with Home Possible Advantage the home you are buying must be your primary residence.

• Do I have to be a first–time homebuyer?  No. As long as the home you purchase is your primary residence, you may be eligible for a Home Possible Advantage loan.
• Am I required to get housing counseling? First–time homebuyers are required to participate in an acceptable borrower education program, such as Freddie Mac’s CreditSmart^®.
• Can I use Home Possible Advantage to refinance my current mortgage?
  Yes, Home Possible Advantage can be used for a 'no cash–out' refinance of an existing mortgage. It's available in 15–, 20–, and 30–year fixed–rate terms.

If this has piqued your interest, contact us to learn more and discuss your options. 

Source: Freddie Mac’s 

How to Rent Out a Condo: Watch Out!

Not the Same as a Home
How to rent out a condo: This may seem like a simple question, but if you own a condominium, 

you probably know it's actually rather complicated.
For those who are foggy on what a condo is, let's start with the definition: It's a home, typically part of a larger building, that comes with shared common areas such as yards and garages that are maintained by hired help, rather than by individual owners. This makes condo ownership a breeze, by comparison with the labor involved in maintaining your own house, and you pay for that convenience in condo fees.

This more communal living arrangement, however, also means that you can't just rent out your place whenever the whim strikes. In the past, condominiums were pretty flexible about allowing unit owners to rent out their homes. In recent years, though, condo associations have become a little more restrictive. Here we break down everything you need to know about how to rent out a condo.

Step 1: Read your condo association's governing documents

Every condominium is different, but they all have one important feature in common: Owners are subject to a set of rules established by the condo association and upheld by the Board of Directors. Some do not allow for renting as an option. Review your condo association's bylaws, and/or rules and regulations, to understand the existing policies regarding renting out units.

Step 2: Know your condo association's restrictions
If renting is allowed, there may be limitations on the length of the lease term—including minimum and maximum times—and on whether pets are allowed. Also look into whether or not renting has been an issue in the past, which could give you a crystal ball into your future. 'Review board meeting minutes to see if any new policies are being discussed that might impact your plans,' says Reiss.

Another potential renting deal-breaker to be aware of is that some condominium associations allow only a certain percentage of total units to be rented out at any one time. Check to see if the current ratio of rented to non-rented condos will accommodate your unit. Keep in mind that some associations only allow renting after an owner has lived there for a minimum period, usually two years.

Step 3: Navigate the condo rental approval process
This process varies from association to association, but some form of approval to rent your condominium is usually necessary. This step usually requires the prospective renter to complete an application and to provide both financial information and references. Sometimes a fee—ranging from a hundred to a few thousand dollars—is also called for.

Some condos may even require a tenant interview, usually by a committee of the condo board.For condos that do not ask for a formal interview, tenants may still need to be approved by the management company. It all comes down to this: 'The associations want to know who's going to be living there. To confirm the exact details of the process, contact a board member directly, in addition to checking the bylaws. Getting it wrong could land you in violation of association rules and result in a fine.

Step 4: Make sure your tenant is clear on condo rules
As the owner, you're the one responsible for making sure the tenants abide by the condo's rules. To guarantee that prospective renters understand their obligation, O'Keefe recommends including a clause in the lease about adhering to those rules.
Last but not least, consider confirming everything you've found out about how to rent out your condo with a local real estate agent who has listed apartments in the association before. An agent who knows your condo's process can also help you find the right tenant, too.


source: Realtor.com

The U.S. Metros With the Best

The U.S. Metros With the Best

And the Most Miserable—Commutes
The realtor.com® data team jumped into the driver's seat to separate the best metros for commuting from the ones that make you fantasize about telecommuting—or moving.  

Best metros for commuters
Some metros have clear roadways and transit options that whisk caffeine-fueled and -deprived commuters to work. Others are all about punishing traffic, buses that never show up, and trains that arrive about as often as presidential apologies.

So what makes a metro a great place for commuters? Consistent travel times, mostly, says Joseph L. Schofer, professor of civil and environmental engineering at Northwestern University. “That comes from well-managed road networks, limited congestion, quick incident-clearance times, and [bus and rail] transit [options],” he says.
The realtor.com data team looked at a variety of criteria in the 150 largest metros, to find the best and worst places for commuters. We analyzed:*                   
                                                         Worst metros for commuters

• Average commute time for drivers, carpoolers, and public transportation riders
• Average number of hours spent in traffic congestion
• Percentage of roads in “good” or “fair” condition
• Percentage of bridges that are “structurally deficient”

So grab your morning joe and hop in! First, let's head over to the places where commuters are at peace. 
Now that you know the best places, let's run you through the worst. There are three staples in these cities: death, taxes, and traffic jams.

The Three Big Mortgage Trends of 2018

 The lowest mortgage loan delinquency rates since 2005, a reduction in the share of refinanced mortgages, and the return of home equity line of credit (HELOCs) are trends to look for in the mortgage industry in the next year according to

TransUnion’s 2018 consumer credit forecast released on Wednesday.

Trend 1: Serious mortgage delinquency rates to fall
According to the forecast, the mortgage delinquency rate is expected to drop to 1.65 percent by the end of 2018, the lowest observed since 2005, down from a rate of 1.91 percent for Q3 2017.

“From a credit performance standpoint, mortgage loan delinquency rates are the biggest story and are expected to decline next year driven primarily by strong employment and rising home prices,” Matt Komos, VP of Research and Consulting at TransUnion said.
The forecast states that increases to the labor participation rate, median household income, and home equity levels are additional factors impacting lower mortgage delinquency rates.

Trend 2: Rising rates and refinancing
With interest rate increases expected in 2018, the forecast has projected continued reduction in the share of refinanced mortgages as a percentage of all mortgages. Industry forecasts have refinancing share dropping from 35 percent in 2017 to 28 percent in 2018.

“Many existing homeowners already having refinanced into a low-interest rate mortgage may be unwilling or unable to move up due to how expensive housing has become. That lack of mobility can put pressure on the supply of entry-level housing,” Joe Mellman, SVP and TransUnion’s mortgage line of business leader said.

Trend 3: Return of HELOCs
Home equity line of credit is set to make a comeback in 2018 with TransUnion forecasting approximately 1.6 million HELOC originations in 2018. That stands in stark contrast to the previous five-year period when less than half that number were originated. According to the forecast, as rising home prices see many more homeowners tapping into their home equity, the three largest uses for HELOCs will be:

• Debt consolidation to a lower interest rate
• Financing a large expense such as home improvement
• Refinancing an existing HELOC or Home Equity Loan

For more about the 2018 TransUnion Forecast, click here.