Want to Buy a home?  Where to Start?

by | Dec 29, 2017 | Real Estate | 0 comments

Upcoming Free (& non-promotional) Home Buyer Classes:
Saturday January 6 , from 9am-12pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Thursday, January 11, from 5pm-8pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Saturday, January 20, from 12pm-3pm (ish)
Vancouver YMCA, conference room
11324 NE 51st Circle, Vancouver WA (corner of SR500 & Gher Rd/112th Ave)
 If these class dates and/or times don’t work for you, please let us know.  We understand that you have lives, and families, and work.  We will work something out that works better with your schedule.  Just let us know….                                                                                  

….we also have home seller classes available too…link on left on website

Remember…with reservation…we will throw in lunch, or dinner!  😀
Hey there!

Happy New Years!  🙂  2018…  does anyone else feel that 2017 flew by?  When you’re young they tell you that time goes by faster as you get older…. I am here to tell you that it really is true.  I guess we all need to listen to Dr. Who, and to stop blinking!!!  ….sigh…  

   I hope you had a wonderful Christmas with friends, family, and food…. holiday food really is the best.  With the new year starting though, a lot of folks start thinking about new things, and resolutions.  I’m not a fan of resolutions… unless they are to eat more bacon, read more books, crochet more blankets, or help folks buy (or sell) a home…. those are about the only resolutions I can keep!  Do you have resolutions?  Do you keep yours?

The holidays are really about family & home, I think…..having friends & families over for the holidays, or going to someone else’s home for the holiday celebrations.  Add that to the new year, and new beginnings and many people start thinking about the next big step.  Is it time for a new home…a bigger home?  Maybe a smaller home, or are you renting your home, but want to be a homeowner? 

Purchasing a home, whether it’s your first home, or you’ve owned homes before, is one of the four BIG steps we take in life.  What most folks don’t know is where to start, and what questions do you need to ask yourself?  What questions do you ask a lender? A Realtor?  What about classes?  There are SO many right now (it’s because it IS the beginning of the year), but how do you KNOW which one is going to give you the best information?    There are definitely some questions you should ask….

Let’s start with questions to ask yourself…. 

#1…  Do you have a steady income? 
When you decide it is time to try to buy a home, a lender is going to want to see a steady income.  Have you been on your job for at least 6 months?  Were you working before that?  Was it in the same industry?  If you weren’t working before your current job, were you in school?  Were you in school for the occupation you are in, or something similar?  Are you self employed?  Do you have at least 2 years of 1099’s and tax records to prove your income?  These are all questions a lender will ask, and need answers to.  Want more information on this part?  Contact Chris Berg at Pinnacle Mortgage for answers.  He can be reached at cberg@pcmloan.com , or at 503-320-0925.  Don’t let the 503 number fool you….he is local.  🙂

Owning a home is usually a bit more expensive than renting.  With the rising costs of monthly rent, your rent and mortgage payment may be about the same, but owning does have a few more expenses.  When you rent, and something breaks, or has an issue, you call your landlord, or rental management company, and eventually things get repaired.  When you own a home, YOU are the landlord, and so you need to budget for those home repair issues that will come up.  Take $20 from each check and have it automatically deposited in a credit union or financial institution of your choice.  Do not have a check book or card for this account.  This is your home maintenance fund.  You know I love the home warranty, and remember that you can continue it year after year.  Use this fund to pay for that next year of the home warranty.  However, remember that the home warranty does not cover roofing, windows, walls, flooring, or siding.  This account should also be used to maintain and take care of those items as well.  

#2…How much debt to you have?
This is a big one.  We all have debt, and don’t get me wrong….I think Dave Ramsey is a good guy with many excellent ideas, but there is one area that he preaches that actually hurts you in the pursuit of buying a home.  The idea of a cash based living style is wonderful, but when it comes to buying a home this will actually hurt you.  Strange as it is, having NO credit is worse than having BAD credit!  Some debt is actually good….not a lot…but some.  A lender will base the amount of your pre-approval on how much income you have vs how much debt you have.  Your mortgage payment can only be a certain percentage of your disposable income which, in a nutshell, is your income minus your debt.  Some debt is good because it gives you a history of payments.  Are you credit worthy?  Do you pay your debts?  Do you pay those debts on time?  Are you reliable?  Too much debt is bad because the ratio of your debt to your income is too high.  When you are applying for a mortgage, that is (for some of us) the largest debt we will ever carry.  How do lenders know if you will pay back that debt?  They will look at your credit score…which is determined by how well you pay your current debt.  This kinds of leads me to our next question.

#3…  What is your credit score?
Ah yes…the dreaded credit score!  In the upcoming weeks we will spend some time talking about credit scores…the good, the bad, and the ugly.  For right now though, a credit score is based on your credit history.  It tells the lender a story about your reliability of repaying your debt.  Frankly, at some time, we all have credit issues…or at least most of us do.  Many moons ago, when my husband and I were in the early years of our marriage, we had ‘issues’.  We had 2 young children, and a ton of medical debt.  When our son was a baby, we declared chapter 7 bankruptcy.  At the time it was the only thing we could do.  My husbands wages were being garnished, and we couldn’t even afford diapers.  We were, in a word, BROKE…and only going broker.  So, we made the decision to go bankrupt.  It was, looking back at it, really the best decision we could have made.  After the discharge, we took it upon ourselves to learn about how ‘this’ all works.  I think they should teach budgeting, and credit in schools.  This lack of understanding gets a lot of young adults in trouble….of course….just like everything else here this is just my opinion  🙂  So, we learned, and we made better decisions, and choices.  We learned to live within our means.  We learned to stock up, and save.  We went back to school to better ourselves, and our situations so we could provide a better life for (at the time) two children.  Our oldest daughter was married this year, and like most young couples they are broke. I guess it is where most of us start. She *barely* remembers what it was like when she was very young.

A credit score is based on what type of credit you have, if you make your payments on time (late payments ding your credit score), how much credit you are carrying, and if you pay off your credit in a timely fashion.  Do you have a car loan?  Do you make the minimum credit payment, or more?  Have you paid off a debt?  If you have paid off a credit card….don’t close the account because closing the account can hurt your credit score.  Cut up the card if you want, but keep the account open.  Do you have high credit balances?  Lenders don’t like to see this because if you have high credit balances it means you have less credit to draw on in case of emergency, and let’s face it, we all have emergencies sometimes.  

In short, a credit score is based on your past credit history, and lenders use this number to determine how risky it is to loan to you.  With lending…it is all about risk.  They prefer to loan money to individuals with reliability.  They don’t want to loan money to individuals with a high risk…someone who most likely won’t pay back the money.  
So what can you do if your credit score is somewhat, less than stellar?  Call your lender, or call Chris.  They can go over your credit report with you, and point out the areas that you need to address.  They can, and should, actually HELP you to understand your credit report, and should be able to give you some steps to take to better your credit score.  Is it hard work?  Yes…but the end result is absolutely worth it.  It may take some time, but if you do all the steps, we can….and will…help you find a home.  

What is ‘good’ credit?  Most loans will want to say a ‘mid-score’ of at least 620.  There are three credit scoring companies, Equifax, Transunion, and Experian.  The lender will use the middle score of the three.  The better the credit score, the lower your interest rate for some loans as they have determined you have less risk. With a few loans, you can go as low at 580 on your credit score, but there are some ‘hiccups’ with that.  The majority of loan programs, especially the loan programs that help home buyers with downpayment will require a 620 mid score to loan money to buy a home.     
#4… Do you have a down payment?  Do you need help with one?
There is quite a few down payment grants & loans out there that can help with that.  Yes, there really is!  Many lenders, and classes will talk about one…maybe 2, of them…but there are some grants to help with your down payment too.  No lie…  There is also other ways to come up with a down payment….401k, ‘gifts’, tax refunds, etc.  All of these options (and the pros/cons of each) are discussed by Chris Berg at the free & non-promotional home buyer education classes.  Remember that you do need money for a earnest money deposit, the home inspection, and the appraisal though.  Anyone who tells you that you don’t need any money to buy a home is blowing smoke…. *and I’ll let you finish that*

#5….  Have you taken a home buyer education class?
Buying a home, or taking that first step to buying a home, is a tense, exciting, thrilling, fun, and yet scary time for everyone.  These classes are about 3 – 3 1/2 hours long and will go over the entire real estate process & what the papers all really mean to you.  The lender will go over the entire loan process including closing costs, down payment loans/grants, and the loans (including the 100% loans), the pros & cons of each (not just the good stuff, but the things you really do need to know too) , credit (and help to get you there), interest rates, and more.  The real estate portion will help you understand the steps, the questions to ask a Realtor (see next weeks email), inspections, appraisals, earnest money, and what all those papers involved in an offer really mean.  The classes are free, non-promotional, and taught at community centers for your convenience.   Before you talk with a Realtor, or a lender, and definitely BEFORE you sign any papers with either a Realtor or a lender… TAKE A CLASS.  A home buyer education class should be your first step….not the last one.  When you call to rsvp for a class…. ask how long the Realtor and lender have been teaching classes.  Ask how long the Realtor has been licensed.  Ask where the classes are being held at….are you going to a lender office?  A real estate office?  What will they go over?  There’s nothing wrong with taking more than one class too..  Buying (and selling) a home are some of the biggest things that you will ever do.  The only thing that will cost you more money is having a child….and wouldn’t it have been nice to have a handbook for that?  😀
Information is power, and I hope that I am able to help you.  Good luck, and as always…May the odds be ever in your favor out there….  If you are looking for a real estate agent, I would love to be able to help you.                                                                       
As always….this is just a quick overview…. please remember that your agent, and your lender work for YOU.  You drive the bus…we are merely GPS to help you get to your goals.  Like the classes, this weekly blog email is to help you with your home adventure.  The goal is to be informative and non-promotional.  🙂  We are, however, hoping you will call and want us to help with your adventure.  

If you have any questions about this, or something you have heard…or if you would like me to help you with your home adventure, please call, email,  text, or facebook me anytime.  I am, as always, happy to help!
Thank you again for your business and your referrals!!  …and thank you for referring these classes to your friends, family, and co-workers. 
 .   ..disclaimer…if you have already purchased a home, or would no longer like to receive these emails, please let me know and I will be happy to remove you from any further mailings… 
 Next Week:   Interview Questions to hire a Realtor

 Last Week:   Winter time & buying (or not) buying a home                                                                             
Have a great day, and I will talk to you soon,

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA

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