Homeownership: 3 Reasons Why it is Even Harder!

Looking to become a homeowner? It has become even harder to purchase a house in the last 90 days. The information that is discussed in this article is outside typical challenges buyers face when buying a house such as credit, down payment, monthly payment hurdles, conventional loan versus FHA loan, and mortgage rates. But the focus of this post is to discuss the external influences of homeownership that we cannot control whatsoever.

Housing Starts (New Homes)

Decreased 6% in January to 1.580 million units. Existing home inventories fell 16.4% or 1.1M homes (1.9 months worth of homes). Record-setting low since 1999.

Soaring Lumber Prices

Prices have tripled in the last 90 days to where the price of 1,000 board feet peaked at $1,004.90. For a 1,000 square foot home, you would need 6,300 board feet to complete. That would be just $60,000 to frame your home.
Compared to just 4 short months ago it would have cost you $30,000 or $491 per 1,000 board feet. 100% increase in 4 short months. And it would add an additional 30% to the sales price of a $100,000 home.
Remember: Homebuilders typically have margins between 20% and 40%. For example: If the builder has a target margin of 30% on each home then the pass-through costs to you the buyer would be 60%. And the math behind that is their margin of 30% plus the increase in lumber costs in relation to the sales price of the home. To make things simple that would total $60,000 additional you would have to pay on a home that used to sell for $100,000

Homeownership is Overpriced

Housing Prices are En Fuego - For a single-family home in the USA, it will cost you $266,222 to purchase a home. That same home in January 2020, would have cost you $244,000, an increase of $22,000 or 10%.
Now, I can hear some of you saying that is only 10%, but let's look at it this way. What does that additional $22,000 cost you over the life of your loan? Have a guess? You will pay an extra $11,358 over the life of your 30-year loan at a 2.99% interest rate. What could you do with the extra $$$$? Better seek help from a financial coach!

To Sum It All Up

The housing market is overpriced, supply is WAY DOWN, and demand is through the roof. So, what do you do if you are in the market for a home? Start looking outside the traditional channels that most buyers search in. A few channels that I could suggest are:
Look for homes in up and coming neighborhoods that are run down (The ugliest house on the block)
REO's- Work with a local Realtor to locate any REO's (Real Estate Owned) properties that are being sold by lenders.
Foreclosures- Even though this channel is not hot right now it would not hurt to take a look at them to see what prices are going for in the neighborhoods you want to live in.
Note Purchase- This is a channel that is not covered very much, but it is a viable one if you know how to buy notes (A.K.A. Mortgages) from lenders directly.
Hope this post helps shed a bit of light on the housing market and the external influences that we all face as a part of homeownership. I know purchasing a house is the largest investment you will make in yourself, but remember one thing: Do not fall in love with buying a home until the math works in your favor, and your monthly mortgage payment fits into your budget. There are other houses out there it will just take some time to find the right one for you. Good luck and happy house hunting!

by truadmin

www.truvest.co

A High Credit Score Does NOT = Financial Success??

#FICOscore #CreditBureaus #CreditScore

 

Why is the FICO score formula not published? Because then all of us would know how to get around the FICO credit system, but there is a better way to increase your FICO score...And that is to be debt-free!

Did you know that 35% of your credit score consists of the length of your credit history? The credit bureaus are looking at your debt load and factoring these dollar amounts into your credit rating.

The next is 30% is based upon your debt level. So the amount of debt that you're carrying. So guess what, the more debt you carry, the better your FICO score gets. Well, that also has a problem on the other side. And I'll just digress really quick. When your debt usage is high and you try to go get a mortgage or another line of credit. They look at a thing called DTI debt to income ratio. Well, you can't keep on strapping on more debt and expect to get more. So look where that takes you. That takes you down a path of staying in debt.

 

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by truadmin

Buying a Home can be Overwhelming.. But You Have a Friend in the Business

YES? it is possible to buy a home for your family, even if you do not know where to start! We are here to guide you.

 

Buying a home can be overwhelming and there are so many things you have to do before you can get your keys to your home.?

 

The very first thing you should do is find out what your credit score is. If you do not know what your score is you can get a copy of your report for free from annualcreditreport.com

 

Once you have your report look at the following items:

  • Locate and know your score
  • Are there any errors? For example Payment history, balance, date opened/closed
  • Do you have any collection, charge off or judgment accounts?

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If there are any errors in your credit report you should dispute them to the credit bureaus. We found a free app that allows you to dispute your errors all in one place. The app is called UpTurn. We are still testing this app, but thus far we are quite pleased with the app. And you cannot go wrong with FREE!

 

If you?d like to talk to us about purchasing your first home, just leave a comment or send us a message!?

by truadmin

Why Credit is Your Secret Weapon in Getting a Mortgage

Do you know how important your credit is in obtaining a mortgage? It is the secret weapon that will put you at the top of the lender?s list to approve your mortgage. But you have to do some work to ensure that your credit is ready to take on a mortgage. Before you start the house-hunting process you need to have your ?Credit House? in order.????

 

There are three critical aspects of obtaining a mortgage; your credit report, the money you have allotted for the down payment as well as closing costs, and your income. Lenders want to paint a picture that encompasses all these aspects to make sure they minimize their risk and ensuring they are setting you up for success.

 

According to the American Bankers Association, less than half of all U.S. consumers know their credit score is or have reviewed their report in the last 30 days. Your credit score is the first thing a lender reviews and it determines if you get to go to the next step of the application process. TIP: Your credit score will determine your interest rate on your mortgage and what type of loan you will be offered.??

 

The next item is your down payment and monies you have saved for closing costs on your mortgage.? The more money you have saved towards both these will make the lenders? decision much easier to approve you. Yes, there are loans, such as FHA loans that only require 3.5% as a down payment. Closing costs typically run between 2% and 4% of the loan amount. For example, on a loan of $100,000, there could be between $2,000 and $4,000 in closing costs. On that $100,000 loan, you would have to have $3,500 saved for your down payment. TIP: There are down payment assistance programs available for first-time homebuyers.

 

The last but not least important item in obtaining a mortgage is your J-O-B. The lender is looking for the following: how long have you worked at your current employer, do you earn enough to pay the mortgage and your bills on a monthly basis, lastly are you able to save money after all your bills are paid. These are basic items lenders look at, but the lender could ask for additional financial documents. TIP: The more you can save the better your application looks to the lender and the better your loan terms could be.?

 

Once you have all these items to your lender they will then produce a pre-approval letter that you can use to find a home. The pre-approval letter will explain all the terms of your loan and the all-important dollar amount you are approved for your home purchase.? At this point, you are ready to go out and start looking for a home. TIP: Your pre-approval has a 90 to 120-day expiration, meaning if you do not purchase a home during that time the lender will have to pull your credit again.??

 

If you are ready to be a homeowner the first thing you need to arm yourself with is your credit score. Get your free annual credit report and know where you stand with your credit. If you need assistance or have questions feel free to reach out to us by email or call us at (812) 777-5850.??

 

by truadmin