Today’s real estate market is tough. Inventory is also at record lows, which gives sellers a huge advantage over buyers. This means that when you find a home you want to buy, you will most likely be in a bidding war. In this scenario, it is vital to act decisively and act quickly, which might even mean increasing your offer. Can you increase your offer and still qualify for a home loan? Is there anything you can do other than increasing your offer that will make it more likely you will successfully close on the home? These are all complicated and important questions in a market as competitive as today’s. However, no matter how tough it is for home buyers, by focusing on the 3 Ps (patience, planning, and professionals) you can buy the house of your dreams. 

Home Buyers and Mortgage Applicants Need Patience

This is a very competitive home market for home buyers. The chances are that when you find a home you like, there will be others trying to buy that home, as well. As a result, it is widespread that the first bid you put in on the house will not be the last. You will probably have to increase your offer to outbid other buyers. Make sure that your budget accounts for offering more than you anticipated. An excellent way to help work around this issue is to look at homes slightly below your budget. This allows a cushion for you to increase your offer and remain within your budget. 

However, the housing market can be unpredictable. Even if you do everything right, such as you get qualified for a mortgage, you make a great offer, etc. there is still a chance you don’t get the house. In fact, there is a good chance you won’t get the house because there are just that many buyers and that few houses. It is important to understand this reality as you make an offer on a house because it helps you remain patient with the process. You do not want to get your hopes too high on any one home because there are too many variables that can impede the sale. The best thing you can do is find a lot of houses, make a lot of offers, and embrace that it might take a lot of time. For home buyers in today’s market, patience really is a virtue. 

Home Buyers Need a Plan

There are a lot of aspects to buying a home, such as setting a home buying budget. An important thing to consider regarding home buying budgets is that it’s not necessarily a single budget. While some people can buy a house using cash entirely, most need a mortgage. And, if you need to get a mortgage, then you need a plan of how your mortgage payments will fit into your budget. Aside from monthly payments, you need to plan for other costs necessary to get a mortgage. 

Developing a budget to account for your mortgage payments is the most straightforward part of your home buyer financing plan. Mortgage payments should account for no more than 30% of your monthly budget. To budget for these payments accurately, all you need to do is add up your monthly income and your monthly expenses. Then, add mortgage payments and make sure they are not more than one-third of your overall costs. The tricky part of making a home buying budget is all the other stuff to consider regarding the home purchase. 

It’s essential to know about other costs aside from a down payment that goes into budgeting. One of these costs is the closing cost. Closing a home is the last appointment where you officially buy the property. On this day, you will sign all of the paperwork, pay your down payment, and pay your closing cost. Closings costs are separate fees ranging from 2-5% of the total cost. They can include title insurance, origination fees, underwriting fees, document preparation fees, and other expenses. 

To effectively budget for these costs, you must read the entirety of the closing agreement. Go through all of the paperwork before you go through with the deal to know how much money you need. Luckily, the team at People’s Choice Mortgage is here to walk you through the process. We can help you understand the closing costs and find a home that fits your budget. 

Home Buyers Need Professional Mortgage Brokers

One of the most significant considerations you need to make when buying a home is budgeting for a down payment. Conventional wisdom is that you need to set aside 20% of a house’s value for a down payment. However, this is a myth. The truth is that there are many lenders and home loan programs that require a much smaller down payment. Working with a professional mortgage broker will give you access to a wide network of lenders. This will increase the chances that you find a home loan that fits your needs.

Furthermore, true professional mortgage brokers have a thorough understanding of government-backed home loan products. Several loan programs allow you to put less than 20% down for a home loan. One of the methods is getting an FHA loan. FHA loans have backing from the federal government and allow people who have less than perfect for getting their home. In turn, this will enable you to be flexible with your budget and put a smaller down payment. If you qualify for an FHA loan, reduced costs range from 3.5% to 10%. The 10% applies to people with a credit score ranging from 500 and 579. The 3.5% is for credit scores that are at least 580.

Applicants who have military service may qualify for a VA loan. Also federally backed, these loans do not require a down payment. They also do not have any credit score requirements. If you qualify, these loans are outstanding for budgeting your new home. 

Although all of these loans are government-backed, other options don’t break the bank. Working with a professional mortgage broker like Peoples Choice Mortgage is key to accessing many loan options. We work with several lenders and their requirements to get the best home for you. Working with hundreds of lenders will give you a better chance of finding the best home for your budget. 

Final Thoughts

While today’s market is great for sellers, we never know what tomorrow brings. Markets go in cycles, and today’s seller’s market could turn into tomorrow’s buyers’ market. The team at Peoples Choice Mortgage knows the mortgage industry inside-and-out. We encourage you to contact us if you have any desire to buy and want some help on where to begin. Our professional mortgage brokers can walk you through our complimentary mortgage qualifier. From there, we can see what kind of lenders and home loans will be best for you and your needs. Today’s market can be tricky for homebuyers, especially first-time home buyers, but with patience, a plan, and professionals, you can make your dreams reality.