“Hard, but worth it. »5 Critical Lessons I Learned From Buying A Home In The Competitive Real Estate Market Of 2021
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For years, I lived in a “flexible” one-bedroom apartment that I shared with a roommate on the Upper East Side of Manhattan. I paid $ 1,600 for my share of the rent – and throwing that money away every month was affecting me. I wanted to invest in my own home, especially since I knew that 30-year fixed-rate mortgage rates were near historic lows. (Indeed, some 15-year rates are close to 2% and some 30-year rates are below 3%.)
But I could only afford to put 10% down, and when I started working with agents in 2020 I was told that it was not possible to find an apartment in Manhattan with my finances (most of the co-ops in the areas I was looking for wanted 20% down). But I knew there had to be a way around it. So I contacted many agents until I found one who would help me find the few one bedroom apartments at my price that would accept a 10% deposit.
At the end of February 2021, I found the one bedroom co-op that checked most of the items on my wish list (it was even on the same street that I had been renting for six years). My offer was accepted, and for $ 25,000 below the asking price. But then came the hard part: six months of back and forth with the bankers, lawyers and my agent waiting for mortgage and board approval (spoiler alert: it was hard , but it was worth it). Here’s what I learned about buying a home in 2021.
You may not need as large a down payment as you think
Home prices are rising and this can make it even more difficult to find the down payment. But even if you don’t have a big down payment, there could be a variety of options for you to buy a home. In my case, my agent found co-ops that only accepted a 10% deposit. For you, the options may be different. An FHA loan may only require a 3.5% down payment, USDA and VA loans may not require a down payment at all, and here are more options to consider.
Work with an agent who will invest the time to find a home that meets your desires and budget
Get an agent who understands your finances and what you’re looking for, and who can make the right suggestions and give the right advice. It took me a few tries to find this, but once I did, it was worth it. You may also need to broaden your search area or narrow down the list of items that you consider essential; an agent should be able to help you do this.
Organize your finances and improve your credit score
Before you bid, get your credit score and finances in order. “First-time home buyers should try to improve their credit score as much as possible. One of the ways to do this is to check your credit report for errors and dispute any inaccuracies, ”says Jill Gonzalez, analyst at WalletHub. here is more tips on increasing your credit score.
And also be in control of your finances, especially if you are a single buyer relying on an income stream like me. You will need the last two years of income tax returns, W-2s if applicable, documentation of all of your income, and your credit report. here is a complete list. Make sure you are aware of the monthly payments on all of your accounts and have any issues sorted out before you get pre-approved for a mortgage. This was crucial for me as I have student loan debt and had no other assets other than my solo and 401K income.
Hire a trusted team that is knowledgeable about the area and the type of property you are buying
I’ve learned that it’s also imperative to choose a mortgage banker and attorneys who know the type of home you’re buying – whether it’s a home, condo, or co-op – in the city where you are buying. My mortgage banker and attorneys had no experience closing co-ops and were both based in upstate New York, which slowed the process down.
The week before the scheduled closing date, my bank did not update my expired review, delaying the close for an additional two to three weeks. It was often impossible to get in touch with the same mortgage banker between their summer vacation and the long-delayed response days – another reason I would love to work with someone I knew or who was to me. recommended.
Keep track of interest rates
Interest rates dropped a few points as I waited for final approval from the co-op board of directors and was able to secure a lower rate which reduced my payout by just over $ 100. monthly mortgage. Since rates change quickly if you find a lower rate. you might want to lock it. “Keeping up to date with the latest mortgage rate trends should help you get the lowest mortgage rate before closing. However, usually when you’re stuck on a mortgage rate, you won’t be able to change it if the rates go down. It is important that you clearly understand what your lender’s rate lock-in rules are and that you find out if your locked rate could change under certain circumstances, ”says Gonzalez.