President's Message: Tips to ease path to home ownership
Did you know June is home ownership month?
This month, we celebrate the value of owning a home to families and communities across the country.
In addition, we recognize the organizations that help people achieve that dream – U.S. Department of Housing and Urban Development; Federal Housing Administration; Realtors; financial and housing counselors; and housing assistance programs.
Together they help so many find the place they call home.
Last year was great for sellers, as prices skyrocketed nearly 20% from competing bids. It was the most significant annual home price increase in the history of the Housing Index.
Homes sold fast, regardless of the condition of the property. It was another story for would-be home buyers, who faced low inventory and fierce competition. Those shopping this year have seen those issues, plus rising interest rates.
Inflation also is making it harder for would-be first-time buyers to save for a down payment. However, all is not lost, and there are ways to get a competitive edge when purchasing your first or third home.
When you decide to buy a home, check out your financing options. To determine how much you could potentially borrow, get prequalified with a lender. This requires you to give information such as your income, debt, assets, and credit score.
Getting a prequalification is not a loan guarantee because nothing is verified. But it will help give you an idea of the price range in which you can look. Get underwritten preapproval to be better prepared to make an offer on a home. This takes you further into the mortgage approval process, where your identity, income, debts, assets, and credit score/history are verified.
All pertinent financial documentation is collected and run through a process called underwriting. This process assesses your creditworthiness and your ability to pay back the loan. This process also looks for inaccuracies and discrepancies in the information you provided. If the underwriting process approves you, you are given an underwritten preapproval. When you find a home, closing on that home will go much faster since you already did the hard stuff. Having an unwritten preapproval will also make your offers more attractive to sellers since the deal is less likely to fall through.
Another way to gain an edge is to only include essential contingencies in your offer. Such contingencies would be loan contingency and appraisal contingency. One contingency that could be bypassed is the inspection contingency if the buyer is willing to buy the home “as is.”
It’s still important for the buyer to get a home inspection to know the home's condition. But it would be used as a guide and not a negotiation tool. Another strategy is leading with your highest/best bid when making an offer. Only bid what you can afford and have approved financing for. Then, when your offer is accepted, be flexible in negotiations. Chances are, the seller will have other buyers lined up behind you, so only focus on non-negotiable things. And, of course, use a Realtor in your home buying search; their expertise in the business will help you get closer to achieving your dream of home ownership.
The struggle for first-time home buyers to save enough for a down payment has become more difficult. Between the cost of rent going up and inflation raising prices on everything from gas to food, that extra money is being used for essential living. However, there are lots of different programs that can help. For first-time home buyers, various programs help provide low-interest financing for low to moderate-income earners. In addition, there are programs that offer down payment and closing costs assistance. There are also opportunities for others buying a home. Check out NewHomeSource to learn about the many programs available to those in Ohio.
Find it at newhomesource.com.
So, just because the current market is a bit tougher doesn’t mean you have to abandon your dream of home ownership. Do your due diligence and research and be as prepared as you can. Where there is a will, there is a way!
Marlin Palich is president of Stark Trumbull Area Realtors, which serves Stark, Carroll and Trumbull counties. Visit www.star.realtor for a complete listing of Realtors and affiliate members. If you have any questions or comments on this article, contact Cosgrove at president@star.realtor.
This article originally appeared on The Repository: President's Message: Tips to ease path to home ownership
