I recently stumbled across an article by NerdWallet entitled “Buying a House in 2019: What You Need to Know.” The information was really thought provoking, so I thought I’d share some with you today and answer a few questions that it posed:
1. “What’s the first step to buying a house?” The quick and easy answer to this question is that you need to talk to a lender before doing anything else, including even going to look at homes. That lender is able to pre-qualify you for a loan, and if you want to be even more competitive in today’s market, you’ll want to get pre-approved.
2. “How much can I afford?” By getting pre-approved, you’ll be able to tell how much house you can afford based on your credit score, your income, your debt-to-income ratio, and more. This is important because knowing how much you can afford will narrow down the kinds of homes you’ll look for, as well as give you an idea of your monthly payments.
3. “What is up with rising interest rates?” In 2018, we saw two or three rate jumps, and we’re told to expect something similar in 2019. Just to keep that in perspective, right now, we’re hovering around the 5% mark; back at the height of the market, we were closer to 7%. Historically, we’ve seen rates reach double digits, so while these jumps in rates will affect your monthly payments and affordability, they are helping to keep our economy healthy. If this is a concern for buyers in the market, it’s not so bad that it should knock them out of the game, but it will be better for buyers to act sooner than later.
4. “What is a good credit score?” We’re seeing lenders that will lend to those with credit scores as low as 580, perhaps even a little lower. That might sound nice, but you’re not going to get the best rates and programs with a score that low. The average score at the moment is about 620; if you can get your credit score up to 680 or above, you’re going to be sitting very pretty, and you’ll have access to the best rates and programs. If your score isn’t where you’d like it to be, I recommend working to bring that up as soon as possible.
5. “How much do I need to put down on a house?” There are programs out there that are still offering grant money. Some programs even allow for 0%, though for those, you won’t get the best rates. On average, most will need either 3%, 5%, 10%, and 20%. Mind you, most people don’t have the cash sitting around for 20% down, but that program also means you won’t need mortgage insurance. We’ll want to take a look at all your options and figure out which is going to be the best program for you.
6. “How long does it take to buy a house?” The averages quoted in the article regarding how long the home buying process takes from start to finish were 43 to 45 days. However, we have lenders who can get it done in 30 days or less, depending on how quickly you find the house and get your lender all the documentation they need. In general, I would suggest planning for the process to take a couple months. Demand in Arizona is also extremely high, and that’s going to affect the process as well, so consider these questions during the transaction: How specific are your needs? How flexible are you?
If you’re thinking of buying a home in 2019, let’s start a discussion about it right now. We can make sure you know how much you’re comfortable paying for, that your credit score is where it needs to be, and that you’ve got a timeline worked out.
As always, I’m here to be a resource for you. If you have any questions, feel free to reach out to me and I’d be glad to help you in whatever way I can.