Many want to realize their dream of owning a home. It takes some effort too. You must save and have a good credit score. While hoping for the best, issues of life may hinder your dreams. Sometimes you lose your job or fall sick, plunging yourself into more debt.

California residents have a little glimpse of light regarding home loan issues. But lenders can take action against mortgage defaulters. In that case, what options do you have as a homeowner?

If you default on a mortgage payment, you can opt for foreclosure or short sale. Though you may lose your home during the process, the consequences differ. So, read our analysis on foreclosure vs. short sale in California.

Understanding Short Sales

If you sell your house for a value that is less than your loan debt, the transaction is a short sale. Before you engage in a short sale, you must get your mortgage lender’s approval. 

A short sale can cause your lender, typically a bank, to lose money. So, they must see the reasons why it makes sense.

What Qualifies You for a Short Sale?

You must show evidence of financial hardship to qualify for a short sale, and your documents should spell cases like job loss, ill health, or natural disaster, to name a few. Make sure that your lender accepts these reasons. Otherwise, you can’t proceed with a short sale. 

In addition, you must provide your lender with the most recent selling prices of homes in your neighborhood. These are typically called comps, or comparable sales.

Your creditor will check your documents and real estate price data. If accepted, then you can sell your home under short sale. In this case, your lender might not recoup the full mortgage debt value.   

How Does a Short Sale Affect Your Credit Score?

Your credit score will drop by 50 points if you repay your loan on time after completing your short sale transaction. If paying late, your credit score can drop by 200 points. 

Borrowers with a low credit score of 700 and less pay higher rates. Likewise, those with higher credit scores enjoy lower rates and better chances of getting loans.

How Long Does It Take To Get a Mortgage Loan After a Short Sale?

After a short sale, it takes about two to four years to get another home loan. Your home worth also determines how soon you can secure a new loan. 

For instance, if your creditors lost 20 percent of their loan amount, the next mortgage becomes available in two years. Meanwhile, it takes four years before a new loan for a 10 percent drop in debt value.

Understanding Foreclosures

Foreclosures empower the lender to take over your home if you stop making payments. Since you used your home as collateral, whether it’s worth the debt, the bank can seize it. 

Your creditor will notify you about the default 30 days after failing to repay. If you don’t attempt to pay, expect a foreclosure notice from your lender. Of course, that means you will lose your home.

How Does Foreclosure Affect Your Credit Score?

California has its procedures, consequences, and length of time for foreclosures. According to FICO, your credit score can drop up to 100 to 200 points, which means foreclosure has a more severe effect on your credit score than a short sale.  

How Long Does It Take To Get a Mortgage Loan After a Foreclosure?

Besides taking an enormous toll on your credit score, you may wait for seven years before securing another home loan. Depending on why your income dropped, some financial institutions can give you a loan within a shorter period. 

When applying for a new mortgage, inform your prospective lender that you already had a foreclosure.

With Foreclosure vs. Short Sale, Which Option Should You Take?

Homeowners in California enjoy certain rights that prevent lenders from coming against them in a full sweep. No matter how favorable the law is, it doesn’t take away the creditor’s power. So, let’s examine both foreclosure and short sale options to help you choose which is better.

When to Exit Your Property

Check your deed of trust for the power that allows lenders to come to your home. You can stay in your home for a while since it takes months before the court actions on your lender’s request.

You will get a notification from your bank on the date of the sale, and it takes 20 days from the date you received the notice. Your lender will also notify you after selling your house. At that time, get ready to leave your property within 3 to 45 days after getting the notice.

If your creditor files for a deficiency judgment, you can get your house again within one year. But the court order also mandates you to pay the difference between the outstanding debt and the sale price.

Redeeming Your House

If you have no way of getting your house back, go for a non-judicial foreclosure. Remember, only a deficiency judgment can make your home redeemable, and otherwise, you cannot reclaim it once the transaction window closes.

Know Your Type of Mortgage to Avoid Tax Implications

If you have a non-recourse loan, you shouldn’t pay a fine for the difference between the total debt and the sale amount. But you will pay tax for the same reasons in a recourse loan.

A Short Sale Is Faster

A short sale offers you the opportunity to sell your property for less than your mortgage. Remember to secure your lender’s approval to initiate a quick sale. As a positive, California laws mandate financial institutions to respond on time. So, typically you can complete the deal within six months.

No Deficiency Judgment Against Short Sales

In California, the law prevents financial institutions from getting deficiency orders against mortgage defaulters for the difference between the short sale amount and the debt owed. But expect your credit score to reduce after completing your transaction.

Find out which markets are hot and what sellers are looking for in their new hometowns.

According to the 2020 Atlas Van Lines Migrations Patterns Study of 65,000 interstate and cross-border moves, traditional population centers in the US are giving way to areas that put a priority on affordability, home options, and, perhaps most importantly, wide-open spaces with room to roam. Here are the states where everyone will be living next.

Idaho (66.4 percent)

We hear so much about people heading south for warmer weather and increased job opportunities. Therefore, it might come as a surprise that Idaho tops the list of inbound moves according to the Atlas study. This is due to a number of factors, including Idaho’s proximity to California, which made up 57.1% of outbound moves according to the same study.

What Idaho lacks in sunny days and coastline it makes up for in many of the factors that draw in new residents — safety, price, and job opportunities. Here you’ll find a low cost of living and low insurance rates, especially compared to some of its more expensive neighbors. With low unemployment levels, Idaho is a great place to find a job, especially if you’re in the medical or tech field. According to the Bureau of Labor Statistics, these groups make up the highest-paid employees in the state.

North Carolina (64.6 percent)

It seems that everyone is moving to North Carolina, and with so many great options it’s no wonder. From the big-city living you’ll find in Charlotte to the hipster meccas of Greensboro and Asheville to the Raleigh-Durham Research Triangle, North Carolina offers sophisticated living at a fraction of the price you’ll pay in other states with major metropolitan areas.

Besides educational and job opportunities, North Carolina offers greater affordability than other areas along with plenty of perks. While you’ll experience milder weather throughout much of the year, you’ll still experience four distinct seasons, something that’s missing in many other southern states. In addition, there’s greater diversity and a more international flavor here so newcomers will feel right at home.

Maine (62.4 percent)

Folks are moving to Maine in record numbers, making it tough to find homes to buy or rent in some areas. Why? In large part because of the lower cost of living you’ll find, where even homes with lots of land are going for less than a starter home in other states. In addition, Maine’s emphasis on the natural world and outdoor adventure makes it attractive for young, active residents — especially those who are environmentally conscious and able to work remotely.

New Hampshire (61.6 percent)

Similarly, New Hampshire’s reputation for year-round outdoor beauty and active living options in the area’s ski resorts, lakes, and forests make it an exciting setting for young residents looking to get away from life in the big city. However, there’s still close proximity to major employment hubs throughout the Northeast plus no income or sales tax, contributing to increased affordability.

Alabama (60.8 percent)

Alabama is a popular destination for young professionals and retirees, with residential options ranging from big cities to suburban luxury enclaves to coastal retirement communities. In addition, there’s year-round warm weather without the crowds you’ll find in Florida and Texas. Even without pro sports teams and some of the advantages of nearby Tennessee and Georgia, Alabama’s college football culture and historical sites offer plenty of opportunities for fun and adventure.

District of Columbia (60.2 percent)

The mid-Atlantic region offers exceptional living with mild year-round weather and proximity to major employment hubs. However, its popularity has resulted in long commutes plus skyrocketing home prices and tax rates in Virginia and Maryland. That may be why so many people are flocking to the relatively more affordable DC neighborhoods. Here you’ll find everything from historic homes in Georgetown to new construction condos in newly hip in-town neighborhoods. In addition, Amazon’s investment in the area is bringing in a host of residents who are finding a new hometown in the District.

New Mexico (60.0 percent)

Like Idaho, New Mexico is the new home for many of the California residents fleeing the state. Here you’ll find a combination of residential affordability and plenty of elbow room. Newcomers are also finding lower costs of living and lower housing prices along with a growing job market. On top of all of that, there’s a reason New Mexico is called “The Land of Enchantment” as the state’s many natural beauties continue to enchant newcomers.

Nevada (59.8 percent)

After struggling in the aftermath of the 2008 mortgage crisis, Nevada has rebounded in a big way to become one of the country’s most popular destinations for new residents. Here there are many job opportunities, low taxes, and a lower cost of living than you’ll find in other western states. In addition, you’ll find plenty of room for outdoor activities and plenty of space for new neighborhoods to accommodate all of those incoming residents.

Alaska (58.6 percent)

Speaking of wide-open spaces, Alaska offers some of the world’s most extraordinary outdoor vistas and sporting opportunities. With incentives to offset the cost of moving, lower housing prices, and no state income or sales tax, Alaska offers more affordability than many other places in the Lower 48. In addition, for young people who are looking to live a life of adventure while maintaining their professional options through remote work, Alaska offers an ideal setting.

Kentucky (57.7 percent)

One of the biggest outcomes of the pandemic has been the ability to work from anywhere — a trend that has been accelerated by work-from-home policies from some of the country’s biggest employers. This has been great news for states like Kentucky, which offer lower costs, plenty of space to build or expand, and beautiful outdoor scenery. In addition, the state is home to hip enclaves like Louisville where you’ll find arts, culture, museums, and history alongside craft bourbon distilleries and Churchill Downs, the home of the Derby.

Wherever you’re moving next, a fast and convenient home sale process will make the transition easier. Reach out to us at Offercity for a free, no-obligation evaluation of your property. Let us help you move to your new favorite state on your terms and your timeline. 

Selling a home for the first time can feel just as daunting as going through the initial home-buying process. You may not be sure how to price it, what needs fixing beforehand, and what other tasks are necessary to get your home sold for a worthwhile profit. If you’ve found yourself wondering, “should I sell my house”? It’s time to check out some of the best advice from Offercity. 

Determine Your Home’s Worth

You can’t just set an arbitrary selling price. You need to look at the housing market in your area, consider the costs of similar homes, and get an accurate determination of your home’s potential worth. 

Having an accurate selling price can help you sell your home more quickly than if you had a cost set far beyond what anyone would be willing to pay. You may even consider paying for an appraisal to help you determine the best price to set.

You can check out real estate sites to get some of this information. Find homes recently sold in your neighborhood or within the same city. Make sure the number of bedrooms and bathrooms match and find similarities with amenities and unique offerings, such as a pool if you have one. The more similar the listings, the more likely you are to find a suitable number. 

Learn About Equity

If your home has no equity, you aren’t going to make a profit. You need to learn about your home’s equity to determine if it’s a good time to sell. Home equity is the remaining value after taking away what is owed to your mortgage lender. If your entire sale price needs to go toward your remaining mortgage payments, you’ll have no money left to settle closing costs or put a down payment on your next home. 

The best advice is to be sure you have enough equity to cover the remaining mortgage and any closing costs and a 20% down payment for your next home purchase. Without this, it may be difficult to purchase your next place. Most people do not have enough equity in their home until they’ve lived there and paid into their mortgage for five years or more. 

To determine your potential equity, take your remaining mortgage amount and subtract it from your home’s worth (or potential selling price). If you hope to buy a larger house, the number will need to be substantial. You won’t need as high of a number if you’re looking to downsize. 

Discover the Cost of Selling

Selling your home isn’t free. There are always costs involved with everything you do, and selling your home is no different. The repairs you need to make, to make the home livable and worthwhile to a potential buyer can add up quickly. You also need to consider what final closing costs you’ll have to cover or if you can get the buyer to handle them. 

Set Your Sale Timeline

On average, sellers see their homes sold within just two months since they put them on the market. However, this number can vary widely. It all depends on how quickly you can get things in order and how quickly you are willing to be out of there. You can set your sale timeline if you need more time to make repairs, get your belongings out of the home, and find your next place to live. 

The timeline also starts a little sooner for most than the day of listing. Many people take a good couple of months to make the changes necessary and have their staging photos taken. This prep time should also be accounted for when you’re considering selling. The more time and money you can spend on getting the home updated and in proper order, the more you may be able to list it for when it comes time.

Decide on Your Method of Selling

If you’re also struggling with the question of “how should I sell my house,” it’s wise to consider the choices. Working with a real estate agent is the most common method of selling a home. The real estate agent has the experience and knowledge to get you through the process easily. However, there are three other options for selling a house without the need for a real estate agent at all. These methods are:

1. Putting the home as “For Sale By Owner”
2. Marketing to property investors
3. Choosing an iBuyer

Selling your home with the help of a real estate agent to interested parties in the area can help you earn a worthwhile profit. However, you’ll also need to pay extra fees that aren’t involved with the other options. Selling by owner allows you to take the lead, but it puts all the work on your shoulders. 

Selling to property investors or an iBuyer are valid solutions if you’re looking to make a fast sale and avoid the staging photos and strangers traipsing in and out of your place while still living there. Overall, though, the solution you choose needs to be what is the most beneficial to you. Everyone will choose differently. 

Offercity Can Help Answer ‘Should I Sell My House’

Offercity is a great option for homeowners looking to sell their homes quickly and for the best price. Sellers don’t have to worry about decluttering, making costly repairs, home inspections, or paying fees or commissions. We work on behalf of sellers by marketing homes directly to local investors. Investors bid on these homes, therefore, guaranteeing the best possible as-is cash offer for the seller. Contact us to get started.

If you’re gearing up for retirement, these are the best cities for your next home.

Southern California is one of the most iconic regions in the United States. From movies to music and television, this area has been heralded for its sunshine, surfing, and easy-going vibe, making it a perfect choice for retirement. Whether you’re planning a retirement that’s focused on golf and tennis, long walks on the beach, or a second-act career reboot, you’ll find a world of options when you retire in Southern California.

SoCal has almost too many amazing towns and cities to count and it’s important to remember that many areas offer access to multiple cities. In addition, with easy travel options between the different communities, you’ll enjoy the opportunity to visit your favorite areas frequently. Alternatively, consider splitting your time between different communities with a variety of desirable features.

Palm Springs

There may be no Southern California community so effortlessly cool as Palm Springs. Made up of a number of smaller communities, including Palm Desert, Indio, Palm Springs, Desert Hot Springs, La Quinta, and Indian Wells, this is an area that combines quintessential California architectural and design features with a world-class culinary scene and an emphasis on the arts to create a true playground for grown-ups — and a picture-perfect setting for your retirement.

Fans of mid-century modern styles will find swoon-worthy homes and interior designs. As an ultra-cool playground for the rich and famous, there’s no shortage of luxurious amenities and recreational options. Those who are looking for an active, outdoor lifestyle will find golf, hiking, and swimming while spas, gardens and museums appeal to those seeking relaxation.

Santa Barbara

Nestled between the Pacific Ocean and the Santa Ynez Mountains, Santa Barbara is a true paradise, offering spectacular scenic vistas and year-round great weather. Named for a Presidio dating back to the era of Spanish Conquest, Santa Barbara still pays tribute to its historic past. Here you’ll find residential architecture ranging from authentic Victorian homes to Mediterranean Revival, Spanish Colonial Revival and Mission Revival styles.

If you’ve been thinking about going back to school after you retire, you’ll find plenty of options in Santa Barbara. The city is host to four major institutions of higher education, including the University of California Santa Barbara, Santa Barbara City College, Westmont College, and Antioch University. Spend time in the area’s parks, stroll the picture-perfect beaches and hiking trails, or hit the links at some of the country’s best-known local golf courses.

Pasadena

Popularly referred to as the City of Roses, Pasadena is probably best known as the home of the Rose Bowl and its iconic parade and college football tournament game airing each New Year’s Day. However, the other 364 days of the year, Pasadena offers spectacular natural and manmade beauty, making it one of the most beguiling and unforgettable cities in Southern California. 

If you want to be close to the big city while retaining a sense of small-town living, you’ll love Pasadena. While visitors come from all over the world to the area’s colleges and universities, its population is just over 140,000 making it relatively small by SoCal standards. As the home of CalTech, Pasadena is a great choice for those who are retiring after a career in high tech or engineering, especially if you’re planning to keep a hand in with consulting opportunities post-retirement.

Los Angeles

Of course, no list of Southern California cities would be complete without Los Angeles. As the center of the entertainment industry and a hub for business of all kinds on the west coast, LA is one of the most vibrant and exciting cities on earth. In addition, however, there are a wide variety of enclaves and neighborhoods in the surrounding metropolitan area for those who want to be near the city without actually living in the city.

Whatever you’re thinking about doing in retirement, you can find opportunities along with like-minded individuals. Start a business here and have access to some of the most important professional connections in the country. Go back to school and attend classes at exceptional colleges and universities. Pursue your long-delayed artistic dreams when you sign up for an improv or acting class and go out on auditions. Immerse yourself in the city’s artistic, cultural, and international life. The possibilities are truly limited only by your imagination.

San Diego

Located in Southern California along the border with Mexico, San Diego offers you everything you’re looking for and a combination of both a big-city lifestyle and exclusive resort-style gated enclaves. The metro area is made up of more than 100 distinct neighborhoods, allowing you to find the perfect location for your active retirement wherever you want to be. In addition, San Diego has one of the country’s best climates, with year-round mild weather enhancing the area’s natural scenery.

If you love outdoor living, San Diego is truly the place for you. Here you’ll experience everything from year-round golf to one of the most bird-friendly areas in the United States. There are nature preserves with rare plant species and one of the country’s most robustly diverse animal populations. You’ll also enjoy big-town arts, culture, sports, and entertainment, along with incredible views from the mountains to the area’s world-famous beaches.

If you’re ready to make a move, Offercity offers an unbeatable option for your home sale. If you’ve got equity in your home and want to avoid the hassles and expenses associated with a traditional home sale, we’ll bring you competing offers from multiple local real estate investors in your area. Not sure where you’re moving next? We’ve got you covered with variable terms for closing from 10-60 days, plus a cash advance of up to $10,000 to help you cover your expenses.

Top 6 Home Organization Upgrades that “Spark Joy” for Buyers

Thanks to Marie Kondo and her hit Netflix series “Tidying Up,” home organization is a hot topic right now. Marie encourages her viewers to minimize their possessions and keep only those items that “spark joy.”

With spring in full bloom, now is the perfect time to do some spring cleaning and add organizational systems to your own home. Not only will you clear out clutter, your efforts can also actually increase the value of your home.

Ready to give it a try? Here are six home organization ideas that will “spark joy” for you and your property value.
 

Boost Bathroom Storage Capacity

When was the last time you cleaned out your bathroom cupboards? If it’s been awhile, remove everything and take a look at each item. Toss any old or expired products—keep only what you actually use.

If your vanity has drawers, add drawer organizers, so you have a dedicated space for smaller items, like makeup and jewelry. For deep cabinets, install roll-out shelves or baskets to maximize the use of space.

And don’t forget about the walls! Mount open shelves to store towels. If you’re short on storage space, a cabinet over the toilet can offer additional room for supplies. These inexpensive additions can make your morning routine a little easier while giving your bathroom a more custom feel. And on average, minor bathroom remodeling projects like these see a 102% return at resale.¹

Upgrade Your Laundry Room

Sort through the items in your laundry room and throw away or donate anything you no longer need or use. If you’ve been holding onto a collection of old washcloths and single socks, it’s time to say goodbye. Then give your laundry room an upgrade with some customized organizational features.

A mix of open cubbies and cabinets with doors will give you plenty of options for storing detergents and supplies. If you have space, a divided hamper or set of laundry baskets can provide a place to sort your clothes before washing. Install a hanging rod or drying rack for delicates and a flat work surface for ironing and folding clothes. With a few simple tweaks, you can turn this chore into a score!

Fully Utilize Your Basement or Attic

Basements and attics can easily become a dumping ground for clutter. If that’s the case in your home, you know what to do!

Once you’ve conducted a thorough clean out, think about how you can better utilize the space to meet your family’s needs. Install cabinets and a table so you can use the area as a craft room. Or you could turn it into a game room with a media center and ping-pong table. Investing in your basement will not only add function for your family, but also the average basement remodel can see up to a 70% return on investment when it’s time to sell.²

If you have an attic, consider adding a cedar closet to store your off-season clothing. The cedar lining will keep your clothes free from moths and smelling fresh year round.³ Turning your attic into a more usable space will pay off down the road, too. A finished attic sees an estimated 60% return on investment.²
 

Customize Your Closets

Cleaning out the closet is a chore most of us dread, but by now, you’re a pro! Get rid the clothes and shoes that don’t fit you, are uncomfortable to wear, or that no longer “spark joy.”

Then it’s organizing time. So where do you start? You’ll want to create a designated space for each type of clothing: high hanging rods for dresses and long jackets, lower rods for skirts and shirts, and shelves for folded items like jeans. And accessories need a place to go, too. Add racks for your shoes, drawers for jewelry, hooks for hats, and shelves or racks for handbags.

A well-equipped closet can be a major draw for buyers—the average return on a closet remodel is 57%.⁴ But more importantly, it’ll improve your day-to-day life. Surveyed homeowners gave their closet remodel a “Joy Score” of 10 out of 10, higher than kitchen or bath upgrades.⁵

Install Built-in Bookcases and Cabinets

Built-in furniture adds functionality and storage to a room while giving your home a high-end look. Built-in bookcases can turn an empty room into an office. Custom cabinets can be used in a living room to display media equipment while providing hidden storage for DVDs, board games, and family albums.

When designing any built-in feature, remember not to go too custom. A design that only fits your tastes or belongings could turn off future buyers. Instead, select standard sizes and classic finishes to appeal to a broad range of buyers when it comes time to sell.

Equip Your Garage

If you can no longer fit your car in your garage, it may be time for a clean out. Similar to an attic or basement, the garage can quickly become overrun with clutter. A thorough cleaning will help you assess which items are worth keeping.

When adding organizational systems your garage, start with a small rack to store yard tools and larger racks for bikes and sports equipment. Overhead racks are a great place to put seasonal items and bulky luggage. A workbench against a wall lined with pegboard and hooks creates a dedicated space to use and store tools. If you have children or pets, add a cabinet with a lock. This will give you a place to securely store harsh chemicals and sharp tools. With a little effort, you’ll be pulling in your car (and buyers) in no time!

SPRING INTO ACTION

If you’re searching for service providers to help with your spring cleaning or home organization efforts, let us know! We can connect you with our trusted network of local home improvement professionals. We can also help you determine which organizational upgrades will add the most value to your home. Call us today, and let us know how we can help!

Sources:

1. HGTV -
   https://www.hgtv.com/design/real-estate/top-home-updates-that-pay-off-pictures
2. Nationwide -
   https://blog.nationwide.com/valuable-home-improvements/
3. HGTV -
   https://www.hgtv.com/remodel/interior-remodel/maximum-home-value-storage-projects--attic
4. The Closet Doctor - https://www.closet-doctor.com/news/what-is-the-return-on-investment-on-closet-organizers
5. NAR Remodeling Impact Survey -
   https://www.nar.realtor/sites/default/files/documents/2017-remodeling-impact-09-28-2017.pdf

If you’re thinking about buying a home, you’ve probably received your share of advice from family and friends. Add to that the constant stream of TV shows, news segments, and social media posts that over-simplify the home buying process for easy entertainment.

With so much information to sift through, it can be tough to distinguish fact from fiction. That’s why we’re revealing the truth behind some of the most common home buyer myths and misconceptions.

Buying a home is a big decision, but it doesn’t have to be a scary one. If you arm yourself with knowledge and a qualified team of support professionals, you’ll be well equipped to make the right choices for your family and financial future.

DON’T FALL FOR THESE COMMON HOME BUYER MYTHS 

Myth #1: You need a 20% down payment.

Plenty of buyers are purchasing homes with down payments that are much less than 20% of the total cost of the property. Today, you can buy a home with as little as 3-5% down.

There are multiple programs out there that allow you to have a lower down payment, and a lender or mortgage broker can talk you through which option is the best for you. Since you’re putting less money down, you’re a riskier borrower to your lender than people who put down a full 20%. Because of this, you will most likely need to pay mortgage insurance as part of your monthly payment.

Myth #2: Real estate agents are expensive.

Your agent is with you every step of the way throughout your home buying journey, and he or she spends countless hours working on your behalf. It sounds like having an agent is expensive, right? Well, not for you. Buyers usually don’t pay a real estate agent’s commission. Your agent’s fee is paid for at closing by the seller of the home you’re buying.¹ The seller knows to factor this cost into the property’s total purchase price.

Myth #3: Don’t call a real estate agent until you're ready to buy.

The earlier you bring in an agent to help with the purchasing process, the better. Even if you’re in the very early stages of casually browsing Zillow, a real estate professional can be a huge help.

They can create a search for you in the Multiple Listing Service (MLS), so you get notifications for every house that meets your criteria as soon as it hits the market. The MLS is typically more up-to-date than popular home search sites like Zillow and Trulia. Setting up a search a few months before you’re considering buying gives you a good idea of what’s out there in your town that’s in your budget. Reviewing the MLS and speaking with an agent as soon as possible can help you set realistic expectations for when you actually start the house hunting process.

Myth #4: Fixer-uppers are more budget friendly.

We’ve all watched the shows on HGTV that encourage people to go after fixer-uppers because they’re more affordable and allow buyers to eventually renovate the home to include everything on their wishlist. But, this isn’t always the case.

Sometimes, homes that need a lot of work also require a lot of money. Big renovations, like add-ons, a total kitchen remodel, or installing a pool, take a lot longer than it looks on TV. If you’re really interested in a fixer-upper, ask your agent to show you a mix of newer homes and older homes. If you fall in love with an older home that needs a lot of work, get some quotes from contractors before you buy so you know the real cost of the renovations and see if you can work them into your budget.

Myth #5: Your only upfront cost is your down payment.

Your down payment is big, but it isn’t the only money you’ll spend during the home buying process. At closing, you’ll pay your down payment, but you’ll also bring closing costs to the table. Closing costs are typically anywhere from 2-4% of the total purchase price of the home.² This amount includes the cost for items like homeowners insurance, title fees, and more.

You’ll also need to pay for an inspection before closing, which usually costs a few hundred dollars. This price will be higher or lower based on the size of your new property. Your lender will also require an appraisal. An appraiser will come in and inspect the home to determine how much it’s worth. Depending on your lender, you may have to pay this when the appraisal is conducted or it might be rolled into your closing costs.

Myth #6: You need a high credit score to buy a house.

You don’t need perfect credit to buy the perfect home. There are loans out there that buyers with lower credit scores can qualify for. These are good options for people who have had credit issues in the past, but some of them come with additional fees you will need to pay. Speak to a few local lenders or mortgage brokers to talk through which options might be best for you.

Myth #7: You can't qualify for a mortgage if you're still paying off student loans.

While some buyers may feel more comfortable paying off their existing debts before taking the leap into homeownership, it’s not a requirement. When you’re applying for a mortgage, the lender takes a close look at your debt-to-income ratio.³ If you want to calculate this on your own, add up all of your monthly debt payments and divide those by your monthly income. When you’re lender does this, they’re trying to make sure that you will be able to afford your monthly mortgage payments along with your other existing payments. If your income is high enough to allow you to make all of these payments each month, having a student loan will most likely not stop you from getting a mortgage.

Myth #8: You should base your budget on what your lender approves.

How much house you qualify for and how much you can afford are two totally different numbers. When you prequalify for a mortgage, your lender will look at your income, debt, assets, credit score, and financial history to determine how much money you might qualify for.⁴ For some people, this number might be much higher than you thought because lenders tend to approve for the highest amount they think you can afford. But that doesn’t mean that’s how much you should borrow.

Instead, figure out how much house you can actually afford. An online mortgage calculator can be a good first step in determining this number. We recommend thinking about what you want your monthly payment to be as a starting point. And remember to include your principal, interest, taxes, and, insurance. You should also think about ownership expenses that aren’t part of your monthly payment, like HOA dues and maintenance.

Myth #9: It's all about location.

You’ve heard the phrase. Location, location, location is basically the real estate industry’s motto, but we’ll let you in on a little known secret: It’s not always true. Yes, location is great to consider when it comes to school districts and commute times, but you also need to think about how the home will function for you and/or your family’s lifestyle. If a family of five is choosing between a one bedroom condo in the bustling city center and a 4-bedroom home out in the suburbs, the latter is probably the best, most functional choice for them. Also, by buying in a less sought after neighborhood, your property taxes will most likely be much lower!

Obviously, you might still want to choose an area with great resale potential, and this is something that your agent can speak to you about. They’re an expert in your city and are constantly monitoring buying and selling trends.

Myth #10: If you look hard enough, you'll find a home that checks every box on your wishlist.

You’ve seen that famous house hunting show. And while we have our suspicions about how real it is, the one thing they get right is that almost every buyer needs to compromise on something. Yes, the perfect house that meets every item on your wishlist is probably out there, but it’s also probably double or triple your budget.

A long wishlist can be a great starting point for figuring out what you want and don’t want, but we recommend narrowing that wishlist down to the top five things that are important to you in order of priority. We also recommend noting on your wishlist what your absolute deal breakers are, like “must have a yard for our dog,” and noting what you can live without, like “heated bathroom floors.”

This is a great list to discuss when you first start talking to an agent. A good real estate agent will be able to look at your list and find properties that might work for you. By coming to that first meeting with realistic expectations and knowledge about home buying rather than a bunch of myths heard here and there, you’ll be able to start the process off on the right foot and be in your new house in no time.

WE’RE HERE TO HELP

Whether you’re a first-time buyer or a seasoned homeowner, there’s no reason to go through the home buying process without an advocate on your side. We’re here to answer your questions and do the hard work for you, so you can spend your time dreaming about your new home. Call us today to schedule a free, no-obligation consultation.

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We can definitely fill you in on details that are not listed on the report and help you determine the best home for you. If you are wondering if now is the time to sell, please try out our INSTANT home value tool. You’ll get an estimate on the value of your property in today’s market. Either way, we hope to hear from you soon as you get to know our neighborhoods and local real estate market better.