Princeton Capital Blog

Buying A House When Inventory Is Tight

May 23rd, 2013

Real estate offer. BusinessmanBuying A House When Inventory Is Tight

And Other Mortgage News

This week, we’ll start with five home renovations with the best return on your investment. Then we’ll list four questions that a lender may ask you that may seem incredibly personal. And finally, we’ll wrap up with how to buy a home when the inventory is tight.

Home Renovations with Best ROI

A recent study byRemodeling magazine and the National Association of Realtors found that not all renovations are created equal when it comes to resele value.

Spring is the favorite time to start a home improvement project, so if you’re starting to plan, here’s some projects to consider:

  1. Putting in a steel front door
  2. Installing fiber-cement siding
  3. Adding a wooden deck
  4. Garage-door replacement
  5. Minor kitchen remodel

You can download the study here.

And don’t forget to read our other blog post on remodeling.

Surprising Questions from Your Lender

Don’t be surprised if you get asked these questions:

  1. Are you party to a lawsuit?
  2. Are you married, single, or separated?
  3. What is your ethnicity and race?
  4. How many years have you been in your profession?

Seems a bit odd, doesn’t it?  But there are some really good reasons why they ask.

So, working back upwards. They want to see that you’ve been in your profession for a few years to show stability. Even if you haven’t been able to find a job in it due to the economy, you will appear more credit worthy than someone who zips around from career to career.

Number three seems a little backwards, but government agencies want to ensure that you’re not discriminated against for ethnicity and race. So that’s why they ask.

Number two is essential in states which have community property laws. If you’re only separated, you could still be held liable for your spouse’s debts, thus making it difficult to pay your mortgage if you’re having to pay their credit card debts.

And the number one question was on the list for similar reasons: if you are held liable, it could impact the amount of money you have available to pay back a mortgage.

Buying a House When Inventory is Tight

Existing home sales in April were at the highest pace since the homebuyer tax credits caused the market to spike in November 2009. In fact, there probably would have been even more home sales due to the low interest rate if there wasn’t such a lack of inventory.

Zillow is reporting that inventory is down 14% compared to last year. However, they maintain that this inventory will be easing over the next few months.

Of course it depends upon where you live, and where you want to buy.

Yahoo Finance recommends:

  • If you are eager to buy and have found a home you really want, you make your offer as strong as possible. Your real estate agent should have some solid suggestions since they will know the area, and how much homes are selling for.
  • If you have time to shop around, you can be a bit more aggressive with a lower offer.
  • Another way to set yourself apart from other buyers’ is to increase the amount of earnest money you put up with your offer.  The money goes toward your down payment if your offer is accepted, and is returned to you if the seller declines your offer. You lose the money if you back out of the offer, so only do this on a home you really want.
  • Consider the type of mortgage you will use. A conventional mortgage may be more attractive to the seller. The requirements for the condition of the property are often stricter for FHA. loans, so some sellers may be wary of being asked to make repairs before the sale can proceed.
  • Limiting the number of contingencies in your offer regardless of whether they are related to financing, inspections or other conditions,will strengthen your offer.

Do yourself a favor and get pre-approved with a reputable loan officer. That way, you’ll know exactly how much you can afford when you place your offers, and you will be a stronger candidate since you already have financing.

 

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