It’s easy to get swept up in the excitement of buying a home. Once you’ve had an offer accepted on your dream house, you’ll probably be anxious to move in. However, before you make a significant financial commitment, it’s best to know exactly what you’re buying.
When you hire a home inspector, you get a professional, in-depth examination of the property’s structures and systems. It’s a worthwhile investment that can save you money in the long run, either by warning you away from a bad purchase or by providing a list of deficiencies you can use to negotiate with the sellers.
The inspector’s report will also list minor repairs that, if made, will help to maintain your home over the long term. Additionally, a good inspector can often predict the standard life expectancy of your roof, HVAC, and other big-ticket items so you can start planning for their eventual replacement.
However, many buyers make mistakes during the inspection process that cost them time and money and lead to unnecessary stress. Avoid these eight common buyer blunders to minimize your risk, protect your investment, and give yourself peace of mind and confidence in your new home purchase.
Don’t wait until you’re ready to move to start preparing financially to buy a home.
If you’re like the vast majority of home buyers, you will choose to finance your purchase with a mortgage loan. By preparing in advance, you can avoid the common delays and roadblocks many buyers face when applying for a mortgage.
The requirements to secure a mortgage may seem overwhelming, especially if you’re a first-time buyer. But we’ve outlined three simple steps to get you started on your path to homeownership.
Even if you’re a current homeowner, it’s a good idea to prepare in advance so you don’t encounter any surprises along the way. Lending requirements have become more rigorous in recent years, and changes to your credit history, debt levels, job type and other factors could impact your chances of approval.
It’s never too early to start preparing to buy a home. Follow these three steps to begin laying the foundation for your future home purchase today!
STEP 1: CHECK YOUR CREDIT SCORE
Your credit score is one of the first things a lender will check to see if you qualify for a loan. It’s a good idea to review your credit report and score yourself before you’re ready to apply for a mortgage. If you have a low score, you will need time to raise it. And sometimes fraudulent activity or erroneous information will appear on your report, which can take months to correct.
The credit score most lenders use is your FICO score, a weighted score developed by the Fair Isaac Corporation that takes into account your payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%).1
Base FICO scores range from 300 to 850. A higher FICO score will help you qualify for a lower mortgage interest rate, which will save you money.2
By federal law, you are entitled to one free copy of your credit report every 12 months from each of the three major credit bureaus (Equifax, Experian and Transunion). Request your free credit report at https://www.annualcreditreport.com.
Minimum Score Requirements
To qualify for the lowest interest rates available, you will usually need a FICO score of 760 or higher. Most lenders require a score of at least 620 to qualify for a conventional mortgage.3
If your FICO score is less than 620, you may be able to qualify for a non-conventional mortgage. However, you should expect to pay higher interest rates and fees. For example, you may be able to secure an FHA loan (one issued by a private lender but insured by the Federal Housing Administration) with a credit score as low as 580 if you can make a 3.5 percent down payment. And FHA loans are available to applicants with credit scores as low as 500 with a 10 percent down payment.4
STEP 2: SAVE UP FOR A DOWN PAYMENT AND CLOSING COSTS
The next step in preparing for your home purchase is to save up for a down payment and closing costs.
When you purchase a home, you typically pay for a portion of it in cash (down payment) and take out a loan to cover the remaining balance (mortgage).
Many first-time buyers wonder: How much do I need to save for a down payment? The answer is … it depends.
Generally speaking, the higher your down payment, the more money you will save on interest and fees. For example, you will qualify for a lower interest rate and avoid paying for mortgage insurance if your down payment is at least 20 percent of the property’s purchase price. But what if you can’t afford to put down 20 percent?
On a conventional loan, you will be required to purchase private mortgage insurance (PMI) if your down payment is less than 20 percent. PMI is insurance that compensates your lender if you default on your loan.7
PMI will cost you between 0.3 to 1.5 percent of the overall mortgage amount each year.8 So, on a $100,000 loan, you can expect to pay between $300 and $1500 per year for PMI until your mortgage balance falls below 80 percent of the appraised value.9 For a conventional mortgage with PMI, most lenders will accept a minimum down payment of five percent of the purchase price.7
If a five-percent down payment is still too high, an FHA-insured loan may be an option for you. Because they are guaranteed by the Federal Housing Administration, FHA loans only require a 3.5 percent down payment if your credit score is 580 or higher.7
The downside of getting an FHA loan? You’ll be required to pay an upfront mortgage insurance premium (MIP) of 1.75 percent of the total loan amount, as well as an annual MIP of between 0.80 and 1.05 percent of your loan balance on a 30-year note. There are also certain limitations on the types of loans and properties that qualify.10
There are a variety of other government-sponsored programs created to assist home buyers, as well. For example, veterans and current members of the Armed Forces may qualify for a VA-backed loan requiring a $0 down payment.7 Consult a mortgage lender about what options are available to you.
If you’re a current homeowner, you may have equity in your home that you can use toward your down payment on a new home. We can help you estimate your expected return after you sell your current home and pay back your existing mortgage. Contact us for a free evaluation!
Closing costs should also be factored into your savings plan. These may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys and other fees associated with the purchase of your home. Closing costs vary but typically range between two to five percent of the purchase price.11
If you don’t have the funds to pay these outright at closing, you can often add them to your mortgage balance and pay them over time. However, this means you’ll have a higher monthly payment and pay more over the long term because you’ll pay interest on the fees.
STEP 3: ESTIMATE YOUR HOME PURCHASING POWER
Once you have the required credit score, savings for a down payment and a list of all your outstanding debt obligations via your credit report, you can assess whether you are ready and able to purchase a home.
It’s important to have a sense of how much you can reasonably afford—and how much you’ll be able to borrow—to see if homeownership is within reach.
Your debt-to-income (DTI) ratio is one of the main factors mortgage companies use to determine how much they are willing to lend you, and it can help you gauge whether or not your home purchasing goals are realistic given your current financial situation.
Your DTI ratio is essentially a comparison of your housing expenses and other debt versus your income. There are two different DTI ratios that lenders consider:
Also called the housing ratio, this is the percentage of your income that would go toward housing expenses each month, including your mortgage payment, private mortgage insurance, property taxes, homeowner’s insurance and association dues.12
To calculate your front-end DTI ratio, a lender will add up your expected housing expenses and divide it by your gross monthly income (income before taxes). The maximum front-end DTI ratio for most mortgages is 28 percent. For an FHA-backed loan, this ratio must not exceed 31 percent.13
The back-end ratio takes into account all of your monthly debt obligations: your expected housing expenses PLUS credit card bills, car payments, child support or alimony, student loans and any other debt that shows up on your credit report.12
To calculate your back-end ratio, a lender will tabulate your expected housing expenses and other monthly debt payments and divide it by your gross monthly income (income before taxes). The maximum back-end DTI ratio for most mortgages is 36 percent. For an FHA-backed loan, this ratio must not exceed 41 percent.13
Home Affordability Calculator
To get a sense of how much home you can afford, visit the National Association of Realtors’ free Home Affordability Calculator at https://www.realtor.com/mortgage/tools/affordability-calculator.
This handy tool will help you determine your home purchasing power depending on your location, annual income, monthly debt and down payment. It also offers a monthly mortgage breakdown that projects what you would pay each month in principal and interest, property taxes, and home insurance.
The Home Affordability Calculator defaults to a back-end DTI ratio of 36 percent. If the monthly cost estimate at that ratio is significantly higher than what you’re currently paying for housing, you need to consider whether or not you can make up the difference each month in your budget.
If not, you may want to lower your target purchase price to a more conservative DTI ratio. The tool enables you to scroll through higher and lower price points to see the impact on your monthly payments so you can identify your ideal price point.
(Note: This tool only provides an estimate of your purchasing power. You will need to secure pre-approval from a mortgage lender to know your true mortgage approval amount and monthly payment projections.)
Can I Afford to Buy My Dream Home?
Once you have a sense of your purchasing power, it’s time to find out which neighborhoods and types of homes you can afford. The best way to determine this is to contact a licensed real estate agent. We help homeowners like you every day and can send you a comprehensive list of homes within your budget that meet your specific needs.
If there are homes within your price range and target neighborhoods that meet your criteria--congratulations! It’s time to begin your home search.
If not, you may need to continue saving up for a larger down payment … or adjust your search parameters to find homes that do fit within your budget. We can help you determine the right course for you.
START LAYING YOUR FOUNDATION TODAY
It’s never too early to start preparing financially for a home purchase. These three steps will set you on the path toward homeownership … and a secure financial future!
And if you are ready to buy now but don’t have a perfect credit score or a big down payment, don’t get discouraged. There are resources and options available that might make it possible for you to buy a home sooner than you think. We can help.
Want to find out if you’re ready to buy a house? Give us a call! We’ll help you review your options, connect you with one of our trusted mortgage lenders, and help you determine the ideal time to begin your new home search.
The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.
As the snow continues to pile up, I sit here daydreaming about fruity beverages on a sunny day, and it made me decide to do a quick post on some of my favorite Happy Hour spots in town (because what else is there to do on a day like this?). So get out your iPhone and schedule some happy hours into your near future. I consider myself a Happy Hour connoisseur, so here are my Top 5 Choices in or around Southington, CT, with links to their websites for more information.
5. Smokin’ With Chris
This was a new Happy Hour jaunt for me recently, and it quickly jumped to the top of my (much longer) list. They had delicious $5 bar bites, like the Pulled Pork Mac n Cheese and the Buffalo Chicken Grilled Cheese, as well as $4 Craft beers, house wines, and well drinks. You can have two drinks, a huge sandwich, and be out of there for under $20. That is my kind of Happy Hour. Tuesday-Friday 3 to 6PM.
4. Anthony Jack’s
I’d consider this restaurant a Southington staple, and the happy hour is another one of the most affordable in town! House wines and select drafts are $4, and they offer a selection of delicious bar bites for $6 or less. I really like their Sweet Peach cocktail for happy hour, which is $6, and the Bacon Roasted Brussel Sprouts. These specials run Monday-Friday, 3-6PM, but they are closed on Tuesday.
3. 75 Center Street
From AJ’s you can hop over to 75 Center Street and continue your happy hour adventures! They have Happy Hour drink specials Monday through Friday from 3-6PM, in addition to daily specials like Taco Tuesdays and Margarita Mondays. And I must say, their nachos are absolutely the best ever. I would pay full price for those all day long. 75 Center also has a game room in back, so you can drink your half priced beer and then burn a few calories playing “beer” pong before you leave!
2. Tavern 42
I love the design of this bar, and their happy hour specials are fantastic. All appetizers are half off – so make sure you order the Chicken Crunch. Happy Hour is Monday, Wednesday, Thursday, and Friday from 3:00pm until 6:00pm (they are closed Tuesday). The drink specials are pretty great, too: $3.50 to $4.00 for beers, $5 hour wines and $6 specialty cocktails (the red sangria is delish!).
1.Viron Rondo Osteria
Although it is technically a Cheshire location, it is so close to Southington that I wanted to include it in this list. It’s also my favorite Happy Hour spot! They offer specials from 3-6PM SEVEN days a week (yes, you read that correctly!) and on Sunday, Happy Hour lasts many hours because it runs from 11-6! The Margherita Pizza is my all-time favorite, but the Mother’s Chips are a close second. And the meatballs are delicious, too! Select house wines are $6 and beers are about $4. They also have Happy Hour cocktails that range from $6-8, which are very tasty. You can’t go wrong! The bartenders are wonderful and they have a gorgeous patio, so if the snow ever melts, you can enjoy happy hour outside!
I hope you go try out some of these great spots. And if you see me there, you already know what drink I want. Cheers!
Okay, so after reading our last post, you decided that you want to sell. You know that your home must be priced right to sell quickly, so how do you determine that value? Unfortunately, Google can't answer that one for you. It’s often not as easy as just picking a number that seems right.
What’s Happening in the Neighborhood?
Although we all take pride in our homes and would like them to be worth a lot of money, the reality is: it is only worth what someone will pay for it. And how do we know what someone is willing to pay? Take a look at the other houses in your neighborhood or town. What are they selling for? Is anything above $200,000 selling quickly? You should have an idea of the current market trends, or at least hire a Realtor who does. This will help to determine a fair value for your home so that it is priced right and attractive to buyers.
Ask For a Comparable Market Analysis
Most Realtors should offer to do a Comparable Market Analysis (CMA) for your home. This is not exactly science, but it can be a tricky numbers game. Basically, they have to see what other properties, which are similar to yours, have sold for in the last 6 months or so. If every Colonial in your town has sold for under $300,000, then you shouldn’t price yours for $350,000. An appraiser will not see that value because they are also going to compare it to other sales. Realtors try to be proactive by finding a number that an appraiser will agree with, making your sale much smoother. Here is a great article on how appraisers value homes: https://www.maxrealestateexposure.com/appraisers-look-real-estate-appraisal/
Present Your Home to Match Its Worth
You may love the bright red you painted in the dining room and all of the knick-knacks on the mantle, but buyers want a fresh start. They want to look at your home and picture themselves in it. So when you are ready to list your home for sale, de-cluttering and removing the “you-ness” of the home is important. Buyers see more value in a home that is clean, move-in ready, and not in need of repairs. Do all of those things first in order to get the price you want. This article explains 20 “Cold, Hard Facts” about selling, which can be difficult to read, but is also very helpful (and true).
In all seriousness, there is a small window of opportunity for your house to be very attractive to buyers. If you price it to sell, then it will sell quickly. Overpricing your home could mean that no buyers are interested, or it will stay stagnant on the market for so long that everyone will forget about it and move on.
Avoid this mistake by hiring a professional Realtor who knows their market and knows how to value your home. I can think of a great suggestion if you need one…
Americans have a hard time letting things go; decorations, people, clothes, grudges against old boyfriends, crumbling macaroni art from the first grade – you get the point. There is a recent real estate trend that shows we might also be afraid to let go of our houses. More people than ever in our area are choosing to rent out their house, rather than leave it on the market to sell.
Why is this rent vs sell debate happening? How do you know if renting is a good option?
Let’s consider the current market trends, and then talk about 3 ways to decide if renting will work for you.
Houses are in Short Supply
Housing markets right now are facing a sluggish inventory, even though there are buyers out there in search of a new home. The prices of homes could be driven down and be more affordable in many areas if there were more options on the market. Home sales in January dropped 3.2%, which is the biggest decline since 2014, according to Inman.
The main reason: there aren’t enough options for the buyers currently looking.
Interest Rates – On the Rise
Interest rates on mortgages have steadily been under 4%, until recently. The average 30-year rate has now passed into the 4.5% range, which has both positive and negative effects. This is still less than half of their historical average, which means now is as good a time as any to lock in your rate, according to The Mortgage Reports’ Tim Lucas. However, it also means that the mortgage you qualify for might be less than you thought.
So, you have a house that you love, but it’s time to move on. (Just like it’s time to get rid of that jacket with the shoulder pads from 1985) But…is it worth selling, or are you better off renting?
Here are 3 key factors to consider in the Rent vs Sell debate:
1. Will the rental cover ALL of your expenses?
2. Do you like the idea of being a landlord?
3. Do you ever plan on living in that house again?
Each situation is different. You have to run the numbers and decide what makes the most sense for you and your family. A good Realtor can run each scenario for you in order to help make this difficult choice of renting vs selling.
Maybe you need to do some reflection and decide if you really want to keep it for financial reasons, or if Elsa was right all along….
Many people, especially millennials currently foraging the housing market, are looking for shiny and new when considering buying: open floor-plans, stainless steel appliances, and granite countertops in turn-key houses that only need furniture and have never been touched. Others want a good ol’ fixer upper: a charming older house that needs some TLC in order to eventually be their dream home. Both options have their benefits, as well as their downfalls. So which type of house are you looking for? Here is a pro/con list to help you decide.
Pros of New Construction Homes:
Floor Plans & Customization- When you work with the builder on a new home, you can plan the layout you want. The details can all be customized to meet your design taste, which means you truly can move in when it is ready and never lift a finger!
Efficiency – Brand new appliances, a new roof, and windows will make your house extremely efficient when it comes to energy and power consumption. In addition, insulation that is more efficient helps to create cozy homes that are less expensive to heat and cool than older models. What does that mean for you? Lower utility bills!
Maintenance – That shiny, new house you just bought will not need much maintenance because everything is, well, new! This means you will save money in the first few years of living there, which is great. You should not have any issues with high-cost items many older homes need.
Timeline – If you are building new, you have plenty of time to work with the builder and watch the construction. This means your timeline is not rushed and you do not need to outbid other buyers or move quickly to close. You can breathe, and enjoy the home-buying process!
Pros of Older Homes:
Character & Charm – Older houses are chock-full of interesting details and architecture that adds character. From built-ins to arched doorways, this type of charm is not usually found in new construction homes. Unless you ask for it – and that’s an upgrade!
Larger Yard – Back in the day, houses were sold on bigger pieces of land. The older homes tend to have roomier yards and more privacy. You might actually have to walk to your neighbor’s house rather than crawl through their window (I have really seen houses this close!).
Established Neighborhoods – Many new construction neighborhoods are exactly that – new! So you have no idea what that neighborhood will look like when it is complete, nor do you have any idea who your neighbors will be. Older homes in older neighborhoods come with memories and stories, and neighbors who might be willing to share them, or a “Welcome to the neighborhood” pie!
Landscaping – If you buy a house that has been around for at least 10 years, chances are that the landscaping is already well established. You may have to do some work, but you will have grass and greenery planted. New construction homes generally start from scratch, so you might be looking at a nice dirt lawn for the first year, or so! And landscaping costs can grow exponentially in the blink of an eye – or the swipe of a credit card!
The Flip Side..
Contact C&C Realty today and we can help you find it!
'Tis pumpkin season, once again! Fall scents and sounds fill the air, and it is a great time of year to sell your house. In fact, Autumn is the second-best season for home sales in this area. It is also a great time of year to incorporate the season into your staging and décor plans. Channel your snuggly side and get those fall candles ready! Grab your PSL and read these Realtor approved helpful hints:
#1- Celebrate the season in your yard!
Curb appeal is always the number one thing that draws buyers in. The weather will be cooler and prospective buyers will be willing to venture around the yard, so landscaping could easily make or break the deal. Focus on creating spaces in your yard for families to spend time in outdoors. Consider getting some mums or other fall flowers to add those warm, vibrant colors to the scenery. Ali's Nursery in Southington always has people willing to help you choose plants that will work for your setting! Lastly, make sure you keep up with the falling leaves! As pretty as they look on the trees, buyers are going to want to see the yard, not just a bunch of leaves on the ground.
#2- Cozy up the inside!
The air is crisp outside, so make your house warm and cozy inside. Create a fall ambiance that makes people want to settle in and never leave (so they have to buy it!). Choose vibrant fall colors for vases and flowers. Don't add clutter, but a few fall accents can really pop. Add a snuggly throw to your couch or armchair to make the living spaces more inviting. Accent the fireplace by decorating your mantle or lighting a fire for showings. Don't be afraid to appeal to their sense of smell with nostalgic fall scents like pumpkin, apple cider, and cinnamon. (Pumpkin Spice Latte is a scent, right?!) Just For You gift shop in Southington has great décor items and candles for all of your fall needs!
#3 - Light it up!
Lighting is everything, especially as it gets darker even earlier. Make sure your house has warm lighting -no fluorescent bulbs- and keep the house bright for showings. Use natural light as much as you can with accent lights turned on. The candles will add to the lighting ambiance, as well. Make your home as inviting as possible so buyers feel welcome and cozy inside.
Use these tips to make your home sell faster during these fall months! For more ideas, contact C&C Realty today!
You are about to enter into a relationship with someone. It could last a week, or maybe six months. You will have to work together and be sure that the other person as your best interest at heart. They may not be buying you a steak dinner, but they are going to help you buy or sell your house (which is sort of a bigger deal). So, how do you know you found the right agent? Here are 5 tips to help you get started:
Summer is here, which means it is time for festivals, cookouts, farmer’s markets, and street fairs.
As a Connecticut resident since birth, and a big Gilmore Girls fan, I have always wondered which towns in CT actually have all of the fairs and festivals that were portrayed on that show. Turns out – a lot of them do! You just have to look for it.
The month of July is stock-full of events, according to this great website I recently stumbled upon. This weekend alone there is a First Friday celebration in Putnam, a balloon festival in Goshen, and a Sailfest in New London. And the list goes on!
Check out all the great celebrations here. Then post in the comments below about which event you liked most!
Fall is the season for festivals and fairs. Take advantage of the cooler weather and explore some new areas of Connecticut to see what they have to offer. There are farmer’s markets, country fairs, family attractions, and so much more! One of our personal favorites is the Southington Apple Harvest Festival that takes place in early October. The Apple Harvest Festival offers a wide variety of live music & entertainment, food, contests, crafts, children's activities, carnival rides, parades, fireworks, and even a beer tent for the adults.
It also features a huge Arts and Crafts fair each year during the second weekend, which is a great opportunity to start some holiday shopping! The famous apple fritters made by the Zion Lutheran Church are definitely worth the wait, and the booth stays open during the week in order to make sure everyone can get their fritter fix. The Southington Apple Harvest Festival is a wonderful event for the entire family! Check their website for dates and additional information: http://www.southington.org/AHF