Loan Options for First Time Home Buyers & Credit Scores!
No/Low Down Payment Options for Home Buyers
What Loan?? What is my credit score??
Buying a home for the first time can be stressful and nervous. So many moving parts. The best advice is to hook up with a Realtor you trust and a Lender you trust. Most often, the Realtor will be able to refer you to a few lenders to choose. Buyers need to understand credit reporting and loan options with no or low down payment requirements. USDA and FHA tend be the most popular options.
Understanding the Credit Score for Home Loans
First time buyers sometimes don’t even know they can even qualify. They assume their credit score is not very good or that they can’t cave up enough money. The factors are necessary, but these Soon-To-Be Buyers needs some education on the process. When applying for a home loan the buyer will complete an application and provide the lender necessary income documentation & asset information. The lender then pulls a tri-merge credit report. This is important as it is pulling the Equifax, Transunion and Experian. This is very important because most banks, car loans, credit cards only pull one bureau for their qualifying purpose. So, this means when your buyer is getting their monthly credit score update from their bank or credit card company, they may only be getting 1 score by 1 bureau. A mortgage lender will have all 3. They then ignore the lowest score reported and the highest score reported. They use the middle score. Keep in mind, the highest and lowest bureau reporting may not always be the same for you or another buyer. Each creditor reports to different bureaus. So the buyers middle score could be from Transunion and their spouses middle score could be Experian. Never rule out you have “bad credit” or “amazing credit,” let the lender be the judge on that.
Buyer Loan Options with No/Low Down Payment
There are some great loan options for first time buyers that require No or Low down payment option. So, all that money the buyer things they have to save may not be the case at all. USDA is a government loan that require No Down Payment for rural areas. They have a cap on price for the different counties and they have a income grade for number of people in the household. This is not a low income loan, as the income caps are fairly comparable to the income in the different counties. Depending on the market, it is possible to get the seller to pay for closing costs. Which then, in return, allows for very little money by the Buyer.
Now there is, also, the FHA government loan program. This one has more flexibility with lower credit scores and income and price caps. It does, however, require 3.5% down payment. This down payment can, also, come as a gift from a family member.
3rd Quarter Market Update for Sonoma County
2nd Quarter Market Update for Sonoma County
VA Home Loans and the Benefits for Veterans, Active Duty and/or Surviving Spouse
Benefits to VA home loans: Low Rates, No Down Payment Required, No Private Mortgage Insurance, Assumable……
Preparing for a Bidding War in Today’s Market
So, how to prepare for a bidding war when making an offer on a new home?? Today’s market can be tough, especially with low inventory. In Sonoma County we have the, unfortunate, change of events impact the real estate market as well as the work force numbers. 2017 we were hit with the Tubbs fire which burned over 3,000 homes to the ground. Building of the replacement homes started immediately. However, we had another big fire come around in 2019- Kincade fire. Sonoma County was not prepared at all for the Tubbs fire, but this go around with the Kincade was a different story. We did not lose nearly as many homes or structures but we had a lot of smoke damage form Kincade. This chain of events of evacuations, Warnings and then smoke damage evaluation and Restoration of homes, really halted the real estate market. And now with the 2020 Pandemic, along with some more lighting fires, we just can’t seem to catch a break. We are competing with each other AND the Baby Boomers moving from the city.
It is very important to go into every deal ready to go to war and bid! This is, also, where it is very important you have an experienced realtor on your side. A realtor that is experienced, but liked in the community and know to “get things done.” Keep in mind that sometimes the best offer is not just in price. You may go up against many offers and “bidding war” may be a serious of items that intrigue the Seller. Your experienced agent will do the homework on the sellers- their motivation to sell, the factors that they need for a smooth close, etc.
Get Preapproved for your home loan
Know what you can afford
To get you prepared for a Bidding War, we first get you pre-approved. Let’s see where you stand in qualification. You may only want to pay a certain price, but I always recommend getting approved for the max so you know what that payment looks like. Be prepared, on the event, you do have to go up in price- It is better to know right away if that option is even a choice for you. No delays, cut to the chase. Having a good lender is helpful here as well. Many programs for buyers and many strategies to put a good offer together. These different programs may allow a higher debt to income ratio, or lender paid MI into rate, etc. Lender has a job to find you the best program/price. When we prepare for a bidding war, we come in with a lot of ammunition. A few different price points and scenarios can help you feel prepared, in the event, the Seller counters your offer. At that time it is important to answer fast, before another offer swoops in.
Make Your Best Offer
Highest offer is not always the best offer.
Now for the offer- we look at timelines for seller and for yourself. We ask questions like “does the seller need a rent back” or “does the seller need a longer escrow.” All these question can help you understand the seller and relate to their situation. Is this the home they raised their children in? Is this the home that was a rental and no emotional connection? A letter to seller tugging at the heart strings could make a difference when offering on a family home. But, it may be worthless for an investment home. So many variables, but this is why choosing the “right” agent is important. I have been known to get an offer accepted just because I was the agent and the listing agent liked working with me. I have had listing agents share that they would rather not work with another agent, as that agent has had poor dealing’s and is always canceling his buyers for lack of preapproval, etc.
All great points when tying to prepare for a bidding war. Keep in mind when there are other offers, you need to come in with your best offer. Last thing that you want to happen is offer a little less “to see” and then they take a different offer that is lower than what you were willing to pay IF a counter offer came. In a bidding war there is NO GUARANTEE that the Seller will even issue you a counter offer. Sometimes there are too many offers and sellers just pick the best. So, ALWAYS, go in with your best offer….Especially, when you know there will be more offers. Seller will not always give you a counter offer.
Pick the “right agent,” experience a must!
It is important to take the time to stage your home before putting it on the market, even if its just the 5 Golden Rules.
Home staging can be pricey depending on how large your home is and if you need to remove all items from the home. Home staging can be done on a budget. Homes that are occupied by Sellers, are on the market all the time. Sellers are living in their homes. Some have kids and pets. But, a good agent will set the expectation for the Buyer they bring through the home. But, a good agent will prepare the home to sell. And, if Professional Staging is not in the budget then there are many things you can do to your home to “stage” it with a few dollars or no money at all. The idea behind this is that you want that buyer to envision living in your home. However, we don’t want them to see how you “really”live….UNLESS, you are the person who lives like a magazine photo and I know many of you like this and I am jealous!!
Home staging on a budget can be things as easy as De-Cluttering. This is my #1 rule. De-clutter closets and book cases. Remove all the nick-knacks you have collected through the years. Remove all those awesome family photos & wedding pictures. Take all items off counters in Kitchen and Bathrooms. This is a great time to just start packing things away. For the bathroom, I recommend a cute little basket with all your necessities. When you leave for showings put that cute basket away. Same for closet. Box it up, especially closets packed with clothes. Pack away what you won’t wear. Big jackets in the Summer and Shorts and sundresses in the Winter can be packed away. To be honest, a garage full of nicely organized boxes or storage tubs is not a turnoff for Buyers. A, it shows you are getting ready to move and B, it can help show the size of the garage space. This article that RIS Media put out goes over the 5 Golden Rules. I agree with everyone of them. You are setting the “tone”for the potential Buyer who may or may not have similar taste, kids, animals, etc. If they do then you have no worries, but chances are they will not. So, make that 1st impression on a budget.
Fixer Upper Money Pit
Cosmetic or Bones? Fixer Upper can mean different things for many:
Want a fixer upper? I meet clients, often, looking to buy and “flip” or want a deal on a Fixer Upper. Looking for the deal of the year. I am not against this but it does take a level of sophistication to make this happen, successfully. First you need to determine a budget. Then what you would like to net from the deal? Be sure to have a buffer in the budget for those items that show up while you are doing the demo. A cosmetic fixer is pretty much going in and making the home look pretty. Update floors, bathrooms, paint inside and out. A “real” fixer upper is a “gut job.” You will need to be aware of what is or could be behind those walls, under the house and under those sinks. A good agent can help assist with this. But, keep in mind a lot of these types of homes have no reports on file and you, usually, need to make an offer BEFORE you get inspections. However, don’t get discouraged. Just use your resources so you know what you are getting into. An agent will run comps based off the home being improved at that time. We get a contractor in the home to give us a bid. Most contractors will leave a “buffer” or “pad the budget.” They, too, know that once they open up walls, etc, more problems or repairs could be exposed. When thinking about getting into the “flip” business, think about end result. Almost any buyer is going to get inspections completed and it will expose anything you try to hide, so don’t. If you purchase a Fixer Upper, then do just that….Fix it Up! And don’t go at it alone. A realtor is one of your good resources. They have the relationship with the listing agent and they can communicate the concerns. Don’t be afraid of purchasing a Fixer Upper, but be aware and informed. Call me to help you!
Sell now??? The infamous question.
I get this question everyday:
Should I sell my house in the Winter wait until Spring?
My answer is always different. Are you selling and buying a replacement home? Are you selling for hardship purposes. Are you selling for convenience of a new marriage or out of necessity like a divorce or death? Are you selling to improve cash flow?
So, too many variables to have just one answer. But, when you plan to sell because you are purchasing a replacement home, then the answer is YES, sell now. Remember, when you sell low, you buy low. And, when you sell high, you buy high.
Now, if you plan to sell because you are ready to dump this asset and you have another home to go to, then that answer may be No, let’s wait to see how the winter comps play out. If you try to get top dollar and have the time and resources to make it happen over a period of time, then your agent, ME, is there to assist in gathering data. Past sales, Active listings, days on market, amount of inventory similar to your place, and so on. So, should I sell in the Winter or wait for the Spring? CALL ME!!
During a distressed sale: divorce, death, financial issues, etc I will help you make the decision. It may be not a good time, but there may be other sources that you could explore in order to not sell during a slower time. Sometimes a refinance, equity line, AirBNB, long term rental, can all be resources to help the situation at hand. Again, call the expert who can connect you with the resources needed to help make this decision.
Mandy Corriea, Broker Associtate
What is happening with the Windsor Real Estate Market?
Windsor….how does it hold up to the other cities it borders?
Our market has been very interesting, especially with the late winter we had. I put a listing on at the beginning of the year and got some real good action, but it all came to a halt when we got our first rain…uh….storm. We had so much rain we flooded in a lot of areas around us. And with rain comes house problems: roof leaks, blown down fences, leaking windows, etc. No one was looking at houses. We had a couple of open houses and we basically had neighbors stopping by. But, then we got some great weather….for about a week! Next storm came rolling in, and another and another. Spring Break got our market moving again, along with the Sun!! Sold that home within a week. People were motivated to get out of their homes and start the search. Also, spring break, gets those motivated to Sell knowing school gets out in less than 2 months! Families like to sell homes and moving during the summer so their is no disruption with school. This trend I have seen in my 19 years in the business and it still holds strong today. SO…how are we doing? Well, we are doing great. Average days on market is less than 30 days, since May 1. And if your home is “turn key” reading to just unpack your belongings, those are on market even shorter. I have, also, seen homes going quick with entertaining backyards: lights, grass, fire pits, out door stoves, established flowers & trees. Welcome to 95492, where the medium price range goes quick. If you are looking to Sell, it’s not too late to put your home on market. If you are looking to buy, be sure you are pre-approved and ready to ponce as soon as that house hits the market!! Not much time to “think about it.” My take is that even with all the inventory out there, we still just don’t have enough Medium Priced homes for the active buyers out there. -Mandy Corriea, W Real Estate
Thank you for the advice but I need to talk to the Professional:
Outdated Advice may be given to you by family and friends. Let me give you advice with today’s market trends.
You are ready to buy or sell your first home and your friends and family, who have been through the process have all this advice for you….But, most of it MAY BE Outdated Advice.
Market’s change so often, especially here in Sonoma County. We have had some chain of events that have kept us very volatile. Low inventory, high rates and then a ton of over priced inventory after fires. Now inventory is picking up but then we had a very long, wet Winter/Spring that slowed that process….and now, School it out!! One of the busiest open house weekends I have seen in awhile. And, still, more homes coming to market. However, I am still seeing deals being made and homes falling out of escrow. Rates play a big part in the process and I have seen those go up and down often this season. I always tell my friends and family: “You won’t know when the housing market has hit bottom until it has passed us.” Don’t settle for Out Dated Advice when making one of the toughest decisions in life.
I am Your Professional Advice Giver When it Comes to Buying & Selling Homes. Mandy’s Happenings in Real Estate