Be Ready To Buy Your First Home

 First-time homebuyers have it tough. The supply of homes for sale is tight, and lenders are tightfisted. 

SOURCES: Trulia.com; Realtor.org; HSH.com; Svenja Gudell, Zillow.com; David Stevens, president and CEO, Mortgage Bankers Association; Linda Descano, president and CEO, Women & Co.; Walter Molony, National Association of Realtors

Student debt, at an all-time high of nearly $30,000 per grad, is getting in the way of saving for a down payment, says David Stevens, president and CEO of the Mortgage Bankers Association. But it's a great time to get your foot in the door. "Interest rates remain the envy of even your grandparents," says Keith Gumbinger, vice president of mortgage publisher HSH.com. First, make your finances sparkle.

THE TURNING-POINT CHECKLIST:

12 months in advance:

Make sure the time is right. Use Trulia.com's rent or buy calculator to see if you'd really come out ahead, based on loan rates, taxes, and where rents and prices are headed in your area. Nationwide it's 38% cheaper buying vs. renting.

Clean up your act. Devote this year to saving money and paying down debt. You'll need at least 3.5% down for an FHA loan, or 10% to 20% for a conventional mortgage. Lenders also like to see job stability, so settle in for now.

Learn what you like. When a home catches your eye -- a listing, say, or a photo -- pin it to a board on Pinterest. Or try Swipe, a new app from the site Doorsteps, which lets you browse listing photos and mark them pass or save.

Six months out:

Look better to lenders. To boost your credit score, order your free credit reports at annualcreditreport.com and fix any mistakes. Pay bills on time, chip away at credit card balances, avoid new debt, and don't close any accounts or apply for new credit. The average credit score for approved mortgage applicants is 755.

Figure out what you can buy. Use an online calculator like the one at Zillow.com to estimate how much house you can afford based on your income, savings, and debts. That'll help you research homes and drill down on costs.

Forecast future bills. With an idea of how big a house you can buy, you can do a more detailed budget. Scan listings for property taxes on homes you like. Get a homeowners insurance quote at Insweb.com. Call local utility companies for the typical bills. And tack on 1% of the home's value for yearly maintenance.

Three months out:

Pick your loan. Fixed mortgage rates, now 4.4%, may edge up to 5% this year, forecasts HSH.com. If you are confident this is a starter home, you can save with a 7/1 adjustable-rate loan, now 3.5%. The risk: You end up staying longer than seven years and rates rise sharply. Most -- 92% of mortgage borrowers -- opt for fixed-rate loans.

Prove you're a serious shopper. Based on your income and credit, a bank will give you a mortgage pre-approval. "It's the No. 1 thing you want in your back pocket when you go shopping," says Svenja Gudell, an economist with Zillow. Even better in a hot market: Pay a few hundred to go through underwriting upfront.

Find a guide. Look for a realtor who has worked in the neighborhood where you hope to live. And in a tight market like today's, ask candidates what their strategies are for unearthing listings and handling potential bidding wars. 

Student debt joins weather in slowing housing sales

Source: Jeff Clabaugh, Washington Business Journal

Sales of existing homes in February were down 0.4 percent from January, and sales were 7.1 percent lower than a year earlier, according to the National Association of Realtors. 

It blames much of the slowdown in closed sales in February on severe winter weather, but there are other factors dragging on the housing market now, including record student loan debt. 

NAR president Steve Brown says 20 percent of buyers under the age of 33, a prime group for first-time buyers, are putting off buying their first condo or house because of outstanding debt. And a NAR survey found 56 percent of younger buyers who took longer to save for a down payment identified student debt as the biggest obstacle. 

"It's clear there are other people who would like to buy a home that are not in the market because of debt issues, so we can expect a lingering impact of delayed home buying," Brown says. 

A slowdown in sales is not hurting prices, though. The median price of a closed sale of an existing home in February was up 9.1 percent from a year ago, largely because of continued tight inventory, NAR says. 



The number of home sales may be down nationwide, but sale prices are certainly going up! Current inventory in the DC metro area is as tight as anywhere in the country, meaning now is the time to get the most out of selling your home.
If you are interested in selling your home, Call me, Mynor Herrera, today for expert help buying or selling in the DC, MD, & VA areas!  I also specialize in Bethesda and Chevy Chase, as well as the subdivisions of Rosemary Hills, Rock Creek Forest, East Bethesda and Whitehall Condominium.