Henry T. Matos' Blog
If you discover a house that you want to buy, it generally is a good idea to submit a competitive offer. That way, you can move one step closer to acquiring your ideal residence.
However, the hours after you submit a home offer can be stressful, particularly for a buyer who fails to plan accordingly. Lucky for you, we're here to help you stay calm, cool and collected as you wait to receive a seller's response to your offer.
Let's take a look at three tips to help you get ready to handle a seller's response to your homebuying proposal.
1. Plan for the Worst-Case Scenario
Even the worst-case scenario is not the end of the world for a buyer who is awaiting a seller's response to a home offer. In fact, if a seller rejects your proposal, you can always reenter the housing market and continue your pursuit of your dream home.
As you await a seller's response to your home offer, you should not stop searching for available houses. Because if you continue your home search, you'll have no trouble moving forward in the homebuying journey if a seller rejects your home offer.
2. Consider All of Your Options
If you submit a home offer and a seller says "Yes," what should you do next? Consider how you'll proceed if a seller accepts your proposal, and you'll be better equipped than ever before to enjoy a seamless homebuying experience.
On the other hand, it helps to prepare for a potential counter-offer from a home seller as well. If you are open to negotiating with a seller, you may be able to find common ground with him or her and finalize a home purchase.
3. Consult with a Real Estate Agent
A real estate agent knows all about the stress that is commonly associated with submitting a homebuying proposal. He or she can help you minimize this stress and ensure you can achieve the best-possible results throughout the homebuying journey.
Typically, a real estate agent will work with you to submit a homebuying proposal. This housing market professional then will keep you up to date as you await a seller's response to your offer. And if you have any concerns or questions during this time, a real estate agent is happy to respond to them.
A real estate agent will make it simple to streamline the homebuying journey too. For instance, if a home seller accepts your offer, a real estate agent will be ready to help you move forward with a property inspection and appraisal. Conversely, if a home seller rejects your proposal, a real estate agent will be prepared to work with you to help you discover another house that matches or exceeds your expectations.
The waiting period after you submit an offer on a house may prove to be a challenging time. Fortunately, if you plan ahead for this period, you can maintain your confidence and continue to move forward in the homebuying journey.
Buying your first home is probably one of the biggest purchases you’ll make in your life. But, it does come with its advantages. Among them are tax breaks and deductions that you can take advantage of to save money if you play your cards right.
In today’s post, I’m going to cover some of the tax breaks and deductions that first-time homeowners should seek out this tax season to help them lower their tax bill.
While earning points is a good thing on the basketball court, it can be a financial drain on a mortgage. Mortgage points are what buyers pay to the lender to secure their loan. They’re usually given as percentage points of the total loan amount.
If you pay these points with your closing costs, then they are deductible. Taxpayers who itemize deductions on their IRS Form 1040 can typically deduct all of the points they paid in a year, with the exception of some high-income taxpayers whose itemized deductions are limited.
If you’re one of the many people who made a down payment of less than 20% on your home, odds are that you’re going to be stuck with PMI, or private mortgage insurance, until you pay off at least 20% of the loan balance.
The good news is that homebuyers who purchased their home in the year 2007 and after can deduct their PMI premiums. However, the state on premium insurance deductibles is something that frequently comes up in Congress, so homeowners should ensure that these deductions are still valid when filing their taxes.
Mortgage interest accounts for the biggest deduction for the average homeowner. When you receive your Form 1098 from your lender, you can deduct the total amount of interest you’ve paid during the year.
Another deductible that shouldn’t be overlooked by first-time buyers is local property taxes. Save the records for any property taxes you pay so that you can deduct them during tax season.
Home energy tax credits
Some states are offering generous tax credits for homeowners who make home improvements that save energy. There are a number of improvements you might qualify for, including things like insulation and roofs, as well as photovoltaic (PV) solar panels.
Many first-time buyers withdraw from an IRA account to be able to make a larger down payment on their home or to pay for closing costs. In most other cases, withdrawing from an IRA will count as taxable income. However, if your IRA withdrawal is used toward a down payment or closing costs, the tax penalty is waived.
Keep these tax breaks and deductions in mind this tax season to help you save money and get a larger refund.
Buying your first home is undoubtedly a long and complex process for someone who has little to no experience in the subject. Your average first-time homeowner learns as they go, with the help of their real estate agent and mortgage lender.
But, even so, first-time buyers often make many mistakes along the way that they could have avoided with prior knowledge and preparation.
In today’s article, we’re going to cover 5 of the most common mistakes that first-time homebuyers make when purchasing a home. From the first house you look at up until closing on your first home, we’ll cover common mistakes from each step of the way to give you the knowledge you need to make the best home buying decisions.
1. Shopping for homes preemptively
Once you decide that you’re interested in potentially buying a home in the near future, it’s tempting to hop online and start looking at listings. But, searching for your dream home at this stage is a poor use of your time.
It’s best to use this time to start thinking about the bigger picture. Have you secured financial aspects of owning a home, such as a down payment, a solid credit score, and two years of steady employment history?
You’ll also need to have a clear picture of what you want your life to look like for the next 5-7 years. Will you still want to live in the same area, or will your job lead you elsewhere?
These are all questions to ask yourself before you start house hunting that will inform your process along the way and make your hunt a lot easier.
2. Not knowing your budget
It’s a common mistake for first-time buyers to go into the house hunting process without a clearly mapped budget. You want to make sure that after all of your expenses (mortgage payment, utilities, bills, debt, etc.) that you still have leftover income for savings, retirement, and an emergency fund.
Make a detailed spreadsheet of your expenses and determine how much you can afford each month before you start shopping for mortgages.
3. Borrowing the maximum amount
While it may be tempting to buy the most expensive house you can get approved for, there are a number of reasons this might be a bad idea for you, financially. Stretching your budget each month is putting yourself at risk for not being able to contribute to savings, retirement, and emergency funds.
Furthermore, you may find that the extra square-footage you purchased wasn’t worth having to cut corners in other areas of your life, like hobbies, entertainment, and dining out.
4. Forgetting important expenses
If you’re currently renting an apartment, you might be unaware of some of the lesser-known costs of homeownership. Your chosen lender will provide you with an estimate of the closing costs, which you’ll have to budget for.
However, there are also maintenance, repairs, utilities, and other bills that you’ll have to figure into your monthly budget.
5. Waiving contingencies or giving the benefit of the doubt
While it may seem like an act of goodwill to give the seller the benefit of the doubt when it comes to things like home inspections, it’s usually a bad idea to waive contingencies.
The process of purchasing a home, along with a purchase contract, have been designed to protect both your interests and the seller’s interests. It isn’t selfish to want to know exactly what you’re getting into when making a purchase as significant as a home.
When you’re shopping for a home, one of the most important things is that you feel comfortable in the home. Sure, you can look at the listing and visit the property, but you’ll never know what it’s like to sleep in a home until you move in. While there aren’t many homeowners that offer overnights in order for you to feel out their property listing, there are ways that you can test a home out subtly.
Check Out The Neighborhood
You can learn a lot about a neighborhood just by observing the area. See how many people are out walking around. What is the age group of the people you see? This can give you a great idea of the neighborhood that your potential home is in. You could do this investigating several times at different hours of the day to get a full picture of the area.
Getting out and taking a stroll around the neighborhood is also a great idea to see what potentially living in your new home will be like. Check out public transportation options and local establishments like restaurants and coffee shops. Another great place to check out is local parks and recreation centers. This will allow you to see both the quality and the quantity of the options available to you.
Test The Plumbing
If you have a chance as you’re walking through a home, touring it, be sure to check out the plumbing. Turn on the faucets. See how the water pressure from the shower is. It seems like kind of a strange thing to think of testing, but it’s important. You don’t want to move into a house only to find out the water pressure is unlivable and the hot water isn’t so hot!
Check Out How The Windows Work
A home with a breeze is always nice. See if any windows get stuck or are leaking out cold air when shut. This is a subtle way to do your own home inspection of an important aspect of your potential future home. Paying attention to the windows can also help you to hear the noise factor that you might face in the home. Can you hear a lot of traffic? Is the neighborhood quiet? Discovering these things will be very important in your decision to purchase a home.
How Is The Storage Space?
Look around the homes that you’re considering and see how much storage space you’ll have. Is there a basement or an attic or both? How easy are these spaces to access? If a home lacks adequate closet space for storing things like towels, cleaners, clothing, etc, you may find yourself scrambling for ways to keep all of your things in the home once you move in. Make sure the storage space you see is enough for you and your family’s lifestyle.
Buying a home is a big financial endeavor that takes planning and saving. Aside from a down payment, hopeful homeowners will also need to save for closing costs and moving expenses.
When it comes to the down payment amount you’ll need to save, many of us have often heard 20%, the magic number. However, there are a number of different types of mortgages that have different down payment requirements.
To complicate matters, mortgages vary somewhat between lenders and can change over time, with the ebb and flow of the housing market.
So, the best way to approach the process of saving for a down payment is to think about your needs in a home, and reach out to lenders to start comparing rates.
However, there are a few constants when it comes to down payments that are worth considering when shopping for a mortgage.
In today’s post, we’re going to talk about some characteristics of down payments, discuss where the 20% number comes from, and give you some tips on finding the best mortgage for you.
Do I need 20% saved for a down payment?
With the median home prices in America sitting around $200,000 and many areas averaging much higher, it may seem like 20% is an unattainable savings goal.
The good news is that many Americans hoping to buy their first home have several options that don’t involve savings $40,000 or more.
So, where does that number come from?
Most mortgage lenders will want to be sure that lending to would be a smart investment. In other words, they want to know that they’ll earn back the amount they lend you plus interest. They determine how risky it is to lend to you by considering a number of factors.
First and foremost is your credit score. Lenders want to see that you’re paying your bills on time and aren’t overwhelmed by debt. Second, they will ask you for verification of your income to determine how much you can realistically hope to pay each month. And, finally, they’ll consider the amount you’re putting down.
If you have less than 20% of the mortgage amount saved for your down payment, you’ll have to pay for private mortgage insurance (PMI). This is an extra fee must be paid in addition to your interest each month.
First-time buyers rarely put 20% or more down
Thanks to FHA loans guaranteed by the federal government, as well as other loan assistance programs like USDA loans and mortgages insured by the Department of Veterans Affairs, buying a home is usually within reach even if you don’t have several thousands saved.
On average, first-time buyers put closer to 6% down on their mortgage. However, they will have to pay PMI until they’ve paid off 20% of their home.
So, if you’re hoping to buy a home in the near future, saving should be a priority. But, don’t worry too much if you don’t think you can save the full 20% in advance.