How to Prepare to Buy A Home in 2021

Man sitting at desk smiling at laptop computer screen

So you want to buy a home. But how do you prepare for the crazy competitive seller’s market we’re currently in? And what is a seller’s market, anyway? A seller’s market refers to when the real estate market has more buyers than sellers. So how can you prepare for this market to make sure you have an edge over your competition?

Get to know your finances. 

It’s important to know where you stand with your finances. While there are many aspects of your finances you should be aware of, we’re going to focus on three components: Credit Score, DTI, and savings.

Credit Score

Your credit score is important. Mortgage companies use it to help determine how much it will cost to borrow money for your home. Sometimes a few points on your credit score can impact your monthly mortgage payments, so you want to make sure you’re credit is in tip-top shape before you apply for your mortgage.

For example, most lenders use the FICO credit score. If you’re at 800 or higher, you’re considered to have exceptional credit, while 579 or lower is considered poor credit. There are plenty of ways you can work on improving your credit score prior to applying for your mortgage. Check out this blog for more: https://www.bankrate.com/mortgages/how-your-credit-score-affects-your-mortgage-rate/.

DTI Ratio

You also want to familiarize yourself with what your estimated DTI is. What is DTI? It stands for debt to income ratio. It’s another factor that mortgage lenders use to determine your rates. To calculate a DTI estimate: (Monthly debt/current monthly gross income) X 100. You can also find plenty of DTI calculators if math isn’t your favorite subject.

A DTI of 20% or less is what the Federal Reserve considers a low DTI. A DTI of 40% or more is considered high and could be signs of the borrower being someone who has signs of financial stress.

Savings

How much cash you have saved up for your home is important. Transaction costs can include money for your earnest money deposit, money for your down payment, and money for closing costs. Outside of the transaction, you’ll also need to consider things like moving costs (storage space rentals, boxes, tape, truck rentals, moving companies, etc.). It’s important to be aware of these costs and how much money you have for them before you apply for your mortgage.

Gather paperwork ahead of time.

You’ll want to gather your paperwork before you start your home search. This helps you from scrambling last minute to find something important that could delay closing. Financing issues account for 37% of delays to the closing table (according to NAR). To avoid any delays in getting your dream home, make sure you have all these documents available.

Important documents include: Pay stubs, W2s, 1099s, bank statements, gift letters (if applicable), address/rent history for the past 2 years, employment history, proof of any other income, Child support/alimony, debts like car loans, current home mortgage, credit cards, student loans info, non-liquid asset info like life insurance, debts, and information on stocks & bonds.

Ask questions and get answers.

Man and woman in cafe looking at computer screen together.

When you’re looking for a real estate agent, be sure to ask questions. Your agent is your partner and home buying resource throughout this home buying experience, so you’ll want to make sure they are a good fit.

Ask agents about their communication preferences, familiarity with your area, and how long they’ve been in the industry. Your agent should be able to have a dialogue with you to make sure that you both have the same expectations.

Do a little detective work.

Your agent can be a great resource, but you should always do a bit of research on your own to determine what it is you want in your future home. Ask yourself if you’re looking for your “starter home” or if you’re ready to find your “forever home.”  Look at neighborhoods and what style of home you’re interested in. Decide what’s important to you in a new home, whether it be your morning commute to work or proximity to nearby amenities.

It’s also important to determine what you want vs. what you need in your future home. What features do you absolutely need to have in order to live your day-to-day life, and what features would be nice to have, but not a necessity? Check out our blog on wants vs. needs to determine what your list looks like: Wants Vs. Needs

Make sure you get pre-qualified for your mortgage.

Pre-approval in today’s market is not only a suggestion, it’s often a requirement. Pre-qualification is important for all potential buyers. You can even check out HUNT Mortgage’s Pre-Purchase Commitment program, which is a great way to show a seller you’re serious about your offer. It provides a fully underwritten commitment, subject only to collateral conditions and to reassure sellers, HUNT Mortgage backs its commitment with a $1,000 guarantee*. If a buyer does not close on a transaction due to the buyer’s mortgage application failing, we will pay the seller $1,000. The guarantee distinguishes HUNT customers from other buyers a seller may be considering.

Buying a home can be intimidating, especially when you’re a buyer in a seller’s market. However, with the correct preparation and agent, you can make the entire experience less stressful, and even enjoyable. While it is a red-hot market, there’s still plenty of opportunities for you to find your perfect home.


Disclaimer: *The guaranty is null and void if:  a) The property is not deemed acceptable collateral for the loan due to value and or condition; b) The buyer or seller willfully cancels the transaction; c) The buyer voluntarily terminates employment and or voluntarily divests assets prior to closing; d) The buyer takes out new credit after the Pre-Purchase Commitment is issued; e) The seller is unable to deliver clear acceptable title;  f) Guaranty is only on owner occupied single family transactions; g) The transaction does not close due to a contract contingency not being met other than the mortgage financing; h) Pre-Purchase Commitment was issued with maximum specific sale price and taxes, guaranty is void if either of these are exceeded; i) The contract closing is dated past the expiration of the Pre-Purchase Commitment. Guaranty is only on Pre-Purchase Commitments issued by HUNT Mortgage


Do Pets Impact Home Buying Decisions?

We love our pets. 66% of U.S. households have a pet or plan to get one. So it’s no surprise that when we’re buying a new home, our pets impact our home buying decisions. But just how much influence do they have over our home buying habits? And what property features matter most?

Homebuyers & Pets

Our pets can influence what type of home we buy and where the home is located. 43% of survey respondents said they would move or change their living situation to accommodate their pet.

Many millennials (~37% of buyers) are now in the housing market, so it should come as no surprise that buyers are becoming more concerned with pet-friendly features. Research shows that 76% of millennials are proud pet owners and see their pets as more than just their animal companions. 2 out of 5 said they actually think of their pets as their kids, so it’s no wonder their pet’s comfort is important to them when choosing a home.

REALTORS agree pets are important to their buyers, with 68% stating that community animal policies influenced their clients’ decision to rent/buy in a particular community.

What Pet-Friendly Features Matter Most?

So if you’re a home seller, what pet-friendly features are homebuyers looking for? Almost half (49%) said that a fenced-in yard was the most important feature they’re looking for with pets. 27% said they wanted a home large enough for both their family and their pet (s). Other factors included flooring, a mud room/dog wash station, a dog door, animal pool/outside water feature, a cat litter closet, and a built-in pet food bowl/pet bed.

If you’re ready to buy or sell your home, pets or no pets, make sure you contact a HUNT Sales Professional today!


Before You Buy Your First Home…

man and woman walking into front door of home

Today’s market can seem intimidating if you’re a first-time homebuyer. Mortgage rates are at or near historic lows, but inventory is limited. However, you can prepare yourself for the competitive market and the road to homeownership ahead. Here are 4 ways you can prepare yourself as a first-time homebuyer.


Carefully select your real estate agent.

It’s important that the person who is guiding you through your first real estate transaction is a brilliant partner and resource. That’s why being selective when you choose your real estate agent is so important. Be sure to ask them questions about how they handle business, what their communication style is, and what you can expect from them. Your agent should be a wealth of knowledge and will be the one to help guide you through the process, so make sure your goals and expectations line up.

Know your budget before you look.

You’ve found your dream home. It has everything you need and want. The only problem is: it’s WAY out of your price range. Don’t start viewing homes, even online, until you’re aware of what your budget is. Reach out to a local mortgage consultant and get pre-qualified for your mortgage before you start your home search. You’ll be thankful you did in the long run. 

Know your wants vs. needs.

Make a list of features you would like in your home (wants), and a list of must-haves (needs). Understand what items that are an absolute requirement for your future home. For example, if you have a dog, a “need” might be a fenced-in yard, while a dog wash tub inside the house may be a “want.” Interested in some help to make your wants and needs list? Be sure to check out our blog post: Wants Vs. Needs.

Be prepared for a multiple-offer situation.

With many homebuyers in the market and limited inventory, it is common to be in a multiple-offer situation. But don’t fret! Working with a real estate professional gives you a significant advantage. Your agent will assist you in creating the best offer you can give, and guide you through that process. There are plenty of ways to help you win in a multiple offer situation, so don’t worry if this comes up in your home buying journey


When you’re ready to start your home buying journey, be sure to reach out to one of our knowledgeable sales professionals in your area.


Buy, Build or Fix: What’s Best for First-Time Home Buyers?

With a limited supply of entry-level housing for sale, getting your foot in the door you want could be a challenge if you’re looking to buy your first home soon.

Nearly a third of Americans who’ve never previously bought a home say they plan to in the next five years, according to a survey commissioned by NerdWallet and conducted online by The Harris Poll among 2,007 U.S. adults in January 2020.

Before you join the house hunt, decide which type of property best fits your goals. Here are the pros and cons of buying a turnkey home, building a new house or renovating a fixer-upper.

Buy if you can roll with the punches

What could be the downside to a move-in-ready house? All you need to do is move. But in today’s market, competition is fierce. According to data from the National Association of Realtors, in December 2019 the inventory of homes for sale in the U.S. reached its lowest level in over 20 years.

“You have to be ready to go yesterday,” says Simone Plush, a real estate agent with Washington, D.C.-area Century 21 New Millennium. Especially for first-time home buyers, the process can be “an emotional roller coaster,” Plush says. She encourages buyers to be strategic and swift when making an offer on a turnkey home. For example, looking at homes priced slightly below your budget lets you afford a competitive bid that’s over the asking price.

When you’re feeling frustrated, Plush says, remember your “why” — the reason you’re house hunting in the first place. Reconnecting to your desire to have a backyard for your kids, for example, can help you maintain momentum.

Build if you want to call the shots

New construction might sound intimidating and time-consuming, but unless you’re starting from scratch with an architect and a piece of land, it can be surprisingly straightforward and speedy.

“In many of our communities, home buyers have the option to purchase a quick move-in home,” one that will be ready within 30 to 90 days, commented Jessica Hansen, vice president of communications for Arlington, Texas-based homebuilders D.R. Horton, via email.

Time frames can vary by builder and demand. Jeff Mezger, president and CEO of Los Angeles-based builder KB Home, says his company averages three to four months from breaking ground to move-in day. The average home search takes about 10 weeks, according to a 2019 NAR survey, followed by several more weeks to close and get the keys.

In the same survey, the most-cited reason home buyers gave for purchasing new construction was to avoid renovations or problems with mechanical systems. Both these builders, like many others, offer home warranties, protection that buyers of existing homes may have to purchase for themselves.

“When you close on a used home, you’re on your own if something goes wrong,” Mezger says. “With a new home, you still have that relationship with us.”

But these conveniences come at a cost: In the NAR survey, those who bought new construction paid a median price $85,000 more than those who purchased a previously owned property. Feasibility may also depend on where you live. In an urban area or well-established suburb, building new may be difficult without paying to tear down an existing structure. In rural areas, there’s plenty of land, but starting from the ground up outside a development may mean extra costs for securing access to water, electricity and more.

Fix if location’s a must

Renovating a fixer-upper is tougher than it looks on TV, but if the house has good bones, you could snag an affordable home in your ideal neighborhood. The NAR survey shows 26% of first-time home buyers said they compromised on condition in order to buy a home. Condition issues are unsurprising as the nation’s housing stock ages. According to Harvard University’s Joint Center for Housing Studies, as of 2019 nearly 80% of American homes were at least 20 years old, and 40% were at least 50.

“First-time home buyers should not be shy about houses that have good mechanical and structural components that are just ugly,” says David Pekel, a former contractor who’s now CEO of the National Association of the Remodeling Industry. “You can fix ugly.”Pekel recommends working with an experienced home inspector to determine what needs to be addressed. A contractor can delineate the scope of work and potential cost. Pekel says most will charge a consultation fee that’s refunded if they’re hired.

Finding your financing

Whether you choose to buy, build or fix, there are various financing options. In addition to conventional mortgages and standard government-backed loans, there are construction loans and renovation loans suited for borrowers financing new construction or remodeling. A lender that offers loan products for the kind of property you want can guide you through your choices.

This article was written by NerdWallet and was originally published by The Associated Press.

More From NerdWallet

Kate Wood is a writer at NerdWallet. Email: kwood@nerdwallet.com.

The article Buy, Build or Fix: What’s Best for First-Time Home Buyers? originally appeared on NerdWallet.


Buying a Home in The Winter

Roof with brick fence covered in snowflakes

Ready to get a jump on the spring market? Look for your new home now during the winter months. Buying a home when the snow is falling can be beneficial to you as a buyer. It can even potentially save you some money. Here are 4 reasons to buy a home in the winter.

There are plenty of homes on the market in winter.

We’ve said it before: with technology, there is no off-season for real estate. In fact, “almost a million homes were sold in the US last winter (973,000 from Dec 2018-February 2019).” So there will be plenty of great homes available to buyers during the winter months.

While the quantity may be lower than the spring/summer market, you will still have great options available to you.

You’ll have fewer offers to compete with.

Winter weather keeps some buyers away from the market until the snow and ice has melted. This means there will be lower demand and fewer buyers to make offers.

We aren’t saying you’ll be the only person to place an offer on a home, but you may find yourself in a smaller pool of offers. This can work to your advantage and keep you from engaging in a costly bidding war.

You’ll see how the home holds up in bad weather.

It is easier to inspect the exterior of a home in the spring or summer. But winter will show how well the home performs in snow, sleet, ice, and cold. You’ll be able to see leaks, discover how the insulation performs, and find any heating problems.

Motivated sellers could help save you money.

Many homes listed in the winter because of a major life change. And while this doesn’t mean you’ll get a home for a severe discount, it may save you a few dollars. According to Trulia, buyers saved, “an average [discount] of 6.1% on home prices, the highest discount through the year.”


While it may be a cold outside, the real estate market is still hot! If you’re ready to start looking for your home now, check out homes for sale page to see all of the great homes available now.


5 Questions to Ask At Your Next Open House

Red white and blue Open House Flag

Are you ready to attend an open house? Here are a few questions you should be asking the listing agent while you’re at an open house:

  1. How long has this house been on the market? It’s always good to know if a home is new to the market or has been sitting for a while. It can help inform your agent for negotiations.
  2. Why are the sellers moving? This can offer some insight into the home. Knowing why someone is choosing to sell could be helpful for both you and your agent.
  3. What (if any) updates have been made to the home? This can be important for you as the home buyer to inspect the work. They should be able to provide any permits for those updates (if required).
  4. What is the neighborhood like? The listing agent should be able to give you an overview of the neighborhood and what it’s like.
  5. Are there any offers on the home? If there are offers already in on the home, you’ll have to decide (and quick) if this is a home you’re interested in.

Asking a few questions can give you useful information to determine if a home is right for you.

Interested in checking out some homes in the evening? Don’t miss our Twilight Open House Tours happening Wednesdays this summer. Our next Twilight Open House event is happening Wednesday, June 19 from 5-7PM. Check out all the open houses here: Twilight Open House Tours.