by Sharp Loan | Mar 15, 2022 | Educational, Purchase
As a homebuyer, it’s important to plan and budget for the expenses you’ll encounter when you purchase a home. While most people understand the need to save for a down payment, a recent survey found 41% of homebuyers were surprised by their closing costs. Here’s some information to help you get started so you’re not caught off guard when it’s time to close on your home.
What Are Closing Costs?
One possible reason some people are surprised by closing costs may be because they don’t know what they are or what they cover. According to U.S. News and World Report:
“Closing costs encompass a variety of expenses above your property’s purchase price. They include things like lender fees, title insurance, government processing fees, upfront tax payments and homeowners insurance.”
In other words, your closing costs are a collection of fees and payments made to a variety of individuals and organizations who are involved with your transaction. According to Freddie Mac, while they can vary by location and situation, closing costs typically include:
- Government recording costs
- Appraisal fees
- Credit report fees
- Lender origination fees
- Title services
- Tax service fees
- Survey fees
- Attorney fees
- Underwriting Fees
How Much Will You Need To Budget for Closing Costs?
Understanding what closing costs include is important, but knowing what you’ll need to budget to cover them is critical to achieving your homebuying goals. According to the Freddie Mac article mentioned above, the costs to close are typically between 2% and 5% of the total purchase price of your home. With that in mind, here’s how you can get an idea of what you’ll need to cover your closing costs.
Let’s say you find a home you want to purchase for the median price of $350,300. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,000 and $17,500.
Keep in mind, if you’re in the market for a home above or below this price range, your closing costs will be higher or lower.
What’s the Best Way To Make Sure You’re Prepared At Closing Time?
Freddie Mac provides great advice for homebuyers, saying:
“As you start your homebuying journey, take the time to get a sense of all costs involved – from your down payment to closing costs.”
The best way to understand what you’ll need at the closing table is to work with a team of trusted real estate professionals. An agent can help connect you with a lender, and together they can provide you with answers to the questions you might have.
Bottom Line
In today’s real estate market, it’s more important than ever to make sure your budget includes any fees and payments due at closing. Let’s connect so you have the knowledge you need to be confident going into the homebuying process.
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by Sharp Loan | Jan 10, 2022 | Educational
Anyone who bought or sold a home in 2021 can tell you how crazy the real estate market was. Homes sold in a manner of minutes and for way more than the sellers were asking. While 2022 shouldn’t see the massive price increases and brutal bidding wars that were the norm last year, buying a home won’t exactly be a walk in the park, either. Here’s what you can expect if you’re buying a house in 2022:
Prices Will Go Up
Home values in some areas are up close to 28% compared to the start of 2021. While we don’t expect the prices to continue to increase at such a rapid pace, we can expect them to be about 7-10% higher by the end of the year.
One reason for the continued rise in home prices is the low supply of homes available brought on possibly by delayed construction or the out-of-control short-term rental market. The bottom line is that there are more buyers than there are homes for sale, which increases prices, making it challenging for many couples and families to find a home to purchase.
Interest Rates Will Go Up Too
We’ve been seeing interest rates slowly creeping upward in recent months, which definitely puts pressure on many home buyers. Typically, when interest rates go up, home values come down ever so slightly to compensate for the increased payment the higher rates will cause. However, this isn’t the case in many states since, again, our demand for housing is so high. It would certainly be advisable to get into a home sooner than later to avoid paying more each month.
The same thing is true if you’ve been thinking of refinancing your mortgage. In looking at the way the market has been moving recently, it is expected that rates are only going to continue to go up. However, if you purchased your home or refinanced a couple of years ago, or perhaps your credit has improved, you might still be able to nab a lower interest rate that can save you money in the long run.
If you want to know what rate you’d qualify for right now and all your options, we’d be happy to do a quick check for you – no pressure, hassle-free. Call us at (888) 311-8339
Increased Loam Limits Will Make It Easier To Get Into High-End Homes
Some good news for buyers is that conforming loan limits have increased. The new loan limits are as follows:
- $647,200 for regular one-unit loans (increased from $548,250 in 2021)
- $970,800 for one-unit high-balance loans (increased from $822,375 in 2021)
- $1,243,050 for two-unit high-balance loans (increased from $1,053,000 in 2021)
This is good news for buyers who were coming up a little short on higher-priced homes. Before this increase, those buyers would need to attempt getting a jumbo loan to finance their homes. The jumbo loan requirements are much more challenging to qualify for and can also come with higher interest rates. However, these higher loan limits may also help bump up home values since there will be more competition at this price point.
Not All Doom And Gloom
Even though it may cost homebuyers more this year, the overall buying process should not be as rough as it was in 2021. We are hopeful that buyers will be able to get into a home without waiving most contingencies or getting into tiresome bidding wars with dozens of other buyers. Buying a home in 2022 is still a good idea. The real estate market is strong, and we don’t expect that to change anytime soon.
Unsure about your current rate or interested in getting a better one? Submit the form below and we’d be happy to answer your questions.
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by Sharp Loan | Nov 24, 2021 | Educational
If you had a dollar for every fix and flip reality show on TV, you wouldn’t need to save money for a down payment on a mortgage- you could buy a house outright! This trendy industry has been popularized by shows that feature gorgeous redesigns, high profit margins, and quick turnarounds. Flipping houses can make you a lot of money, but you need to understand what you’re getting into — and that means you can’t rely on HGTV reruns. Here’s a quick behind-the-scenes look at the reality of house flipping that you won’t see on TV.
Harder Than It Looks
Unfortunately, it takes a bit longer than a 30-minute TV episode to complete a successful fix and flip project. Reality TV often breezes by the less glamorous parts of the process, like finding the right property, planning renovations, and working with a lender to purchase the property. Then you have to coordinate with contractors to get the renovations done – and this is easier said than done if you don’t already have connections in the industry that you trust. Plus, you might face delays and unexpected costs that need to be accounted for.
Unexpected Problems
You also have to be ready for unexpected issues that may arise at the worst possible time. When these issues crop up on reality TV, it always looks like the hosts were blindsided – but these are faked reactions to create drama. Going into a fix and flip project with no backup plan can be a recipe for disaster, and experienced real estate professionals will always be prepared for the unknown. Always have a carefully planned budget with a ‘disaster fund’ to cover these kinds of expenses, and carefully research your property before you begin renovating!
Unpredictable Markets
It always seems like the fix and flip homes on TV have buyers lining up to submit above-market offers. Depending on the location and timing of your fix and flip project, this kind of response is possible – but if the home doesn’t sell right away, you need to be prepared for the increased costs of property taxes, interest on your loan, and upkeep costs. The faster you sell the property, the better off you will be, since properties that linger on the market begin to drop in value. To avoid delays, you will need a good real estate agent.
Conclusion
Despite the fact that reality TV often brushes over the more challenging aspects of the industry, house flipping is still a great option to achieve financial independence. For more guidance, contact us! We will help you achieve your homeownership dreams.
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by Sharp Loan | Nov 15, 2021 | Educational, Refinance
For many homeowners, refinancing could provide several potential benefits. One of the primary reasons why people refinance their mortgage is to lower the interest rate. If rates have dropped since you last financed your home, you may want to consider refinancing. Other common reasons to refinance include paying off a balloon payment, converting an adjustable rate loan to a fixed rate loan, or being able to extract cash equity from your home (cash out). Sometimes homeowners cash out to make home improvements, to create an education fund, or consolidate debt. The exact reasons why someone should refinance may vary and should be considered carefully. However, choosing the right time to refinance can be equally important. Here are five reasons why now is a good time to refinance.
Rates could be on the rise
The average 30-year fixed mortgage rate rose above 3.0% once again in the past week, and may continue to rise slowly. If you are thinking of refinancing your home, now may be a good time to start the process so that you can lock in rates before they have a chance to rise.
Interest rates are still low
Rates are still low! Looking at where rates have been historically, refinancing now is still an unusually great deal, despite the recent rate rise.
Don’t be left out
Over 70% of homeowners have not taken advantage of the low rates during the pandemic, and still have yet to refinance. The opportunity will eventually pass and you don’t want to find yourself wishing that you had seized the chance to save money.
Lower your monthly payments
Borrowers can cut down their monthly payments and free up more of their income going into the next year. This could leave more funds for home projects, savings, or offsetting the potential increase in monthly expenses due to the rising prices of consumer goods.
Higher home values
The real estate market has seen historic increases in home values in recent months. Many homeowners have more equity in their homes than ever before. This will give you a lower LTV (loan-to-value) ratio, which could potentially make it easier for you to get approved and qualify for an even better rate. It could also help if you are looking to cash-out.
If you are thinking about refinancing your mortgage, then give us a call to get a quick and easy interest rate quote and get pre-approved in less than 5 minutes! Or submit the form below to get started.
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by Sharp Loan | Nov 12, 2021 | Educational
Is your credit score high enough? Whether your goal is to get a mortgage, buy a car, or go to school, odds are that at some point you will need to borrow money. Having a good credit score will make all the difference in achieving your goals, and it can drastically affect your access to good loan programs and competitive interest rates. Over the life of a loan, your credit score could mean a savings (or a loss) of tens of thousands of dollars!
Credit Cards
One of the best ways to improve your credit score is to pay down the balances on your credit cards. What is your credit utilization percentage? You can find out by dividing your credit limit by your current card balance. For example, if your limit is $3000 and your balance is $1500, that means you are using 50% of your credit. The lower your credit utilization, the better (try to keep it under 30% to see a change on your credit report). This will show your creditors that you’re not overextending yourself, and your FICO score will reflect that.
Credit Limits
You can also call your creditors and ask for a credit limit increase. This will help you improve the ratio between your limit and your balance. Showing that you have a low balance on a good limit helps you improve your FICO score. Just make sure that when you call your creditors, you’ve demonstrated a history of making all your payments on time. You should also ask them not to run your credit, since a hard credit inquiry can cause your score to drop by up to 5 points.
Authorized Users
If you have limited credit, you can add yourself as an authorized user to someone else’s account. This can a be a friend, family member, or anyone- just make sure you choose someone who makes their payments on time and has a low credit utilization! This can directly improve your credit score, since it will add to your credit file and allow you to piggyback on the other account holder’s credit history. Just remember that the door swings both ways: if the account holder starts making late payments while you’re on the account as an authorized user, that will reflect negatively on your FICO score.
Summary
If bad credit is keeping you from realizing your homeownership dreams, we can help you get back on track. Call us at (888) 311-8339 or contact us below!
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by Sharp Loan | Oct 22, 2021 | Educational
“I’m just trying to be successful enough to give my dog the backyard he deserves.”
Older generations might find the idea outlandish, but pets have become one of the most common motivators for homeownership among millennials. A recent survey found that for 33% of millennial home buyers, the decision to buy was motivated by their dogs. That’s a higher percentage than for marriage (25%) or children (19%).
“My Pet is My Child”
There are many factors that may explain millennials’ unusually deep love for their pets. The rise of the internet has certainly played a role; cute dog/cat videos have been a cornerstone of the online experience from the beginning, reminding us every day of the laughter and joy these animals provide. Thanks to modern science, we are also more aware than ever before of the intelligence and complexity of our furry friends. We know that they feel emotions like love, happiness, fear, and grief just as strongly as we do, and today’s pet owners may treat them more like equals as a result. In fact, most millennials would be horrified by the way older generations routinely treated their pets (e.g., shock collars, muzzles, physical discipline). Today, they are considered part of the family (including at Sharp Loan!).
There may also be a more practical reason for society’s fascination with dogs and cats; the cost of living is simply too high for many millennials to consider becoming parents. Many are waiting longer to have kids than previous generations did, and some are choosing not to have them at all. Pets are a significantly cheaper and easier alternative, and they still provide companionship and love.
Guide to Home Buying… For Your Pet
Yard and Fencing
Most pet owners envision a big backyard for their dogs to roam free, but it’s important to make sure they’re protected. If there isn’t a fence, you’ll likely need to add one (as per any HOA guidelines or restrictions in the neighborhood) to keep your pets safely inside and wild animals like possums and coyotes out.
The Neighborhood
With dogs, you have to consider how well-suited the area is for walks. Are there any trails or dog parks nearby? Are there coyotes and foxes roaming around at night that could pose a danger to your outdoor cat? How’s the car traffic on the streets surrounding your house? Are there any veterinary clinics or groomers close by? These are all important factors to consider during the home buying process.
The House Layout
Is there enough space inside for you and your pets to coexist comfortably and peacefully? If you have a large dog breed or multiple pets, this will be a crucial consideration. If you have cats, make sure that there is enough space to keep the food bowl, water, and litter box in their own areas. Another important factor is if the home has two or more floors; as your pets age, it may become difficult for them to use the stairs.
Flooring
This is one of the most important issues when buying a home with your pet in mind. Your best bet for dogs or cats is to go with a hardwood surface and area rugs. Hardwood can be refinished when it gets scratched, and area rugs can be cleaned or replaced more easily than wall-to-wall carpet. Fully carpeted floors can be a disaster for pet owners, easily trapping odors, stains, and pet hair. It’s also not helpful for the resale value of your home.
Summary
Many of us love our pets like our own children, and we know a house wouldn’t be a home without them. If you’re looking for the perfect home for you and your fur baby, call us at (888) 311-8339 or contact us below! We can help you achieve your homeownership dreams.
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