5 Things To Know About Homeownership In Your 20s

If we all went by movies and TV shows, our 20s are for getting that first job, having that first “real” relationship, and moving into that first apartment. (And of course, PARTYING.)

But your life doesn’t have to conform to by pop culture’s expectations. You’ve got goals and dreams that may not match up with the latest “group of friends trying to have it all” sitcom.

For example, there’s no rule or law that says you can’t or shouldn’t buy a home in your 20s. It could be the right thing for you — but before you go get a mortgage, please read these things you need to know about becoming a homeowner:

1) You’re not too young to buy.
Like I said above, there’s no rule or law that says you can’t or shouldn’t buy a home. In fact, if you’re in good financial standing (see #2, 3 and 4), it could make sense for you to make the investment and start building equity.

2) Your credit report and credit score both matter. A lot. (And they’re different things.)
A credit report tracks your debts — whether they’re paid off or not — as well as each time you apply for credit (ex.: making major purchases like a car or home). Lenders will look at your report to see if you are a good credit risk.

Your credit score, which is somewhere between 300 – 850, is based on a formula that takes into account your existing debts and limits, your payment history, how many types of credit accounts you have, and a few other variables. The higher your score, the better.

The bottom line: Having a “clean” credit report and a higher credit score can mean you’ll qualify for a better interest rate on your mortgage loan.

3) The bigger the down payment, the better off you are.
To be clear, you can buy a home without putting any money down. But if you are able to put down some money up front (maybe you have some savings or just put away a nice haul of birthday checks), that can help lower your monthly payments — just like you do with a car purchase.

4) Shop around for a good mortgage person and rate.
There are thousands of mortgage lenders out there, and it’s best to meet with a few (or at least call/email several of them) to find one that you connect with. Check the Internet for testimonials and take a peek at their LinkedIn profile, because positive reviews are a great sign.

5) Find a REALTOR® you trust that will work hard on your behalf.
You may have a realtor in your family or circle of friends, and that can work wonderfully. If you don’t know one, or you prefer to keep “personal” and “business” apart, you can do an Internet search (same as above for mortgage lenders), and maybe find a company/broker you like (they range from small, independent brokers to the nationwide companies like Coldwell Banker) or just ask around your personal and professional networks.

The bottom line: Consider your options carefully — and don’t rule out homeownership, regardless of your age.

Whether you’re ready to buy a home in your 20s, 30s , 40s or never, I hope you find this advice helpful!

 

Whatever your age, you need a REALTOR® who understands your needs. Contact me at 267.566.3448 or email me at shannon.rubin1@gmail.com today!

© 2014 Shannon Rubin.

Advertisements

How to Buy a Home With Bad Credit

Lots of people are dealing with bad credit. (No judgments here!)

You could have credit issues for a wide variety of reasons:

Maybe you made some bad decisions…

Maybe you were just unlucky…

Or maybe your credit report has errors that you don’t know about— a recent study shows that 1 in 4 Americans have had issues with their credit report.

Image courtesy of digitalart at FreeDigitalPhotos.net

Image courtesy of digitalart at FreeDigitalPhotos.net

But it’s not impossible to buy a home with bad credit — maybe tougher than normal, but it can be done. Here’s how:

1) Know your score.

First, you need to know where you stand in the credit world. Find someone you trust who can “pull” your credit. (I don’t usually recommend those “free credit check” websites — they usually require a subscription.)

Once you see what’s on your credit report, it might just mean paying off some credit cards or a medical bill — which could be the difference in qualifying for a mortgage.

===================================================

“37% of American adults admit they don’t know their credit score.”

(Source: FINRA Investor Education Foundation, Sallie Mae,
TransUnion, Experian, U.S. Department of Housing;
http://www.statisticbrain.com/credit-score-statistics/)

===================================================

2) Find a loan officer.

If you already know someone in the business, great. If not, chances are a friend or colleague knows a mortgage loan professional who can help. (I’m happy to refer you to one of my trusted colleagues.)

You definitely need a hard-working pro who you can trust. Their main responsibility is helping you find which loan programs and amounts that you qualify for and fit your budget.

3) Develop your plan of action.

If your credit issues need serious work and you don’t qualify for a mortgage loan right away, you might have to postpone your house purchase — but not forever.

Now that you know what your credit issues are, you can work towards paying off old debts and getting them removed from your credit report.

Also, there may be sellers who will consider working with you by way of asking for a larger down payment. This could require a multi-month plan to save cash for your down payment.

4) Think before you budget.

We’d all like a big mansion for the price of an efficiency apartment. But in reality, it’s crucial to look for a house that fits your budget.

That doesn’t mean you can’t have a nice house in a good neighborhood with exemplary schools and a beautiful park. It just means you need to ask yourself some very important questions:

  • How much of a down payment can you afford?
  • How much of a total monthly payment can you afford?
  • What kind of term loan would you like (how many years — 15, 30, etc.)?
  • What interest rate can you qualify for?
  • What’s your loan-to-value ratio? (Divide mortgage loan amount by the fair market of the home value.)
    Ex.: A $150,000 loan on a home appraised at $200,000 = an LTV of 75%.
    Note: Most mortgage loans with an LTV that’s more than 80% require private mortgage insurance.
  • What can you afford to pay in yearly property taxes?
  • What can you afford to pay for yearly property insurance?

Try the “How Much Can You Afford?” calculator from “Freddie Mac” here.

(Freddie Mac is the Federal Home Loan Mortgage Corporation.)

Bad credit? Mediocre credit? Good credit? Excellent credit? Whatever your score, I know how to help you find your next home.

Call me at 267.566.3448 or email me at shannon.rubin1@gmail.com today!

© 2013 by Shannon Rubin.

Working With Your Mortgage Lender

(This post is Part 2 of my “Mortgage Lender” blog series. You can read the first blog in the series here.)

Once you’ve found a mortgage lender you trust, it’s time to get to work. But not just for your mortgage pro — you need to be involved, because the more you know, the better.

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

You’ll want to know as much as you can about:

RATES

This is one of the most important parts of the homebuying process. Getting a good mortgage loan rate means less money in your monthly payment — and more money in your pocket.

Talk to your lender about:

  • Delivering on the rate or range they mentioned.

    • (It might not seem like it, but there’s a big difference from 5% to 6%.)

  • How your rates may vary, and the contributing factors.

    • (Ex.: Your income, assets and credit will be highly important.)

  • When the rates will be determined.

    • (They cannot be determined until credit and other guidelines are met.)

POINTS

A “point” is one percent of the amount of your mortgage loan. Make sure your lender explains:

  • What your points will be equal to and how they affect your loan rate

  • How points can be charged (for both fixed-rate and adjustable-rate mortgages) in order to increase the yield on the mortgage AND to cover loan closing costs

    • These points are usually collected at closing and can be paid by the borrower or the seller — or may be split between them.

FEES

Banks charge them, lenders charge them — fees are an unavoidable part of a major transaction like a home purchase/sale. Make sure to ask your lender:

  • What fees are associated with my loan?

  • Can you explain each one and how they might affect the overall loan?


GET ALL THE SPECIFICS

There are lots of other details worthy of your attention. You’ll want the answers to questions like these:

  • What loan programs do you offer?

  • Can I see a good faith estimate right away?

  • Can I see estimated closing costs?

  • Are you certain you can get a deal done by closing?

  • Can you get approval for my loan locally?

THE THREE MOST IMPORTANT TIPS ON WORKING WITH YOUR MORTGAGE LENDER

  • Do your homework. This is a huge amount of your money at stake!

  • Make sure you’re working with someone you trust at a reputable company.

  • Before you sign on the dotted line, make sure you understand all the details.

If you have a question about mortgages or choosing a mortgage lender, let me know! I’m a REALTOR who also worked as a loan officer in the mortgage industry — and I can help point you in the right direction.

Think you’re ready to start the homebuying process? Call 267.566.3448 or email me at shannon.rubin1@gmail.com right now!

© 2013 by Shannon Rubin.

Choosing the Right Mortgage Lender

(This post is Part 1 of my “Mortgage Lender” blog series. Coming up in my next blog: “Working With Your Mortgage Lender.”)

Image courtesy of fotographic1980 at FreeDigitalPhotos.net

Image courtesy of fotographic1980 at FreeDigitalPhotos.net


One of the most important decisions you’ll make as a home buyer is choosing the right mortgage lender. It’s really the first major step in your decision to buy!

If you have the full cash amount to pay for a house, you don’t need a mortgage. But most people need to get financing — and what you really need is a reputable mortgage company and a loan officer you can trust.

This is your home we’re talking about, and the big monthly bill you’re about to start paying for years to come. You deserve to work with someone who’s “got your back!”


MAKE SURE IT’S THE RIGHT PERSON

A good starting place is getting referrals from the people you trust the most — your family, friends and colleagues. Get some names of mortgage lenders they’ve worked with — chances are, if they really enjoyed working with them, they still have their card and contact information handy.

Then, check out the company and loan officer online. Search their names and look for any reviews of their services, because many people like to share their experiences — both good and bad — online for others to learn from.


“WHAT CAN YOU DO FOR ME?”

Whether it’s on the phone or at an in-person meeting, the best way to get to know your loan officer is to ”interview” them. Here are some questions to ask:

  • “Will you walk me through this process?
    Real estate transactions can be very complicated. You need someone who will take the time to explain all the terminology and details.
  • “Do you have a lot of clients?”
    You also don’t want to be treated like a number. Obviously, you’re not their only client — but you do matter and deserve to be treated well.
  • “Are you reachable?”
    A good loan officer is responsive. They’ll take your calls, respond to your emails and answer all your questions in a timely manner.
  • “Can you deliver on your promises?”
    Your loan officer needs to meet deadlines and back up what they promise — especially when it comes to locking in your mortgage rate. And there should never be any hidden fees or “oops, I forgot to mention this fee!”

And finally, get referrals from other satisfied customers. If they’re good at what they do, they should have plenty!


ASK ME

If you have a question about mortgages or choosing a mortgage lender, let me know!

I’m a REALTOR® who also worked as a loan officer in the mortgage industry — and I can help point you in the right direction.


Are you ready to start the homebuying process? Call 267.566.3448 or email me at shannon.rubin1@gmail.com right now!

© 2013 by Shannon Rubin.

Image courtesy of fotographic1980 at FreeDigitalPhotos.net