Should buyers take the plunge this spring?

March Buying Advice: Pending sales are up, and experts say the economy is stronger. With mortgage rates still pretty attractive, it might be time for some fence-sitters to become homebuyers.  They are saying the prices have gone about as low as they are going to go. So now is the time to jump into the pool of buyers for the homes that are still at great prices.  Pending sales are up and inventory is down.  In our area in Tuscaloosa, Alabama we actually are having difficulty finding homes for buyers that are looking in the $135000-$165000 range.   So , how should this shape your strategy?  As a buyer you need to be prepared for the downpayment that will be required.  This amount  will depend on what type of loan you choose.  It is best to speak with your lender to get a good picture of how you need to proceed.  Also you will need to make a list of your desired amenities in a home.  You need to be realistic and realize you may not be able to get all on your list.  So prioritize your list to must haves and needs and then wants. This will help your buying process tremendously!  Then you need to interview agents so that you can decide on the right person for you .  This may take a few days or a week or so , but it is worth it to make sure you get an agent that is truly going to work for you!  If you are a 1st time home buyer you especially need to choose someone who specializes in 1st time home buyers!  This person has been trained to focus on your needs and help educate you about the process at the same time.  Take your time but be proactive and your buying process will be enjoyable!

Five Common Mistakes for Buyers!

1. Closing old accounts:  15 percent of a consumer's credit score is based on the length of their credit history, closing old accounts that are no longer used can actually hurt your credit score.
2. Paying off old debt:  If the consumer discovers some small balance on an old account , don't make the mistake of simply paying off the balance, assuming this will clean up a credit blemish.  This could cause a decrease in the score.
3. Opening new credit lines:  Buyers should always avoid any new actions that alter their credit picture after they have applied for a mortgage but before the transaction is closed.   They should wait until after closing day.
4. Assuming you know your credit score:  A consumer's so -called soft inquiry can generate a different number than the actual FICO score a mortgage lender sees.
5. Credit line increases/decreases: If a credit card company raises their credit line with a consumer, that consumer's CU ratio just improved.  But keep in mind a creditor also has the power to lower a credit line if they see too much activity over long periods of time or missed payments on another creditor's file.  This can drastically  change your score by as much as 100 points!

This information can be found from the National Association of REALTORS.  Always speak with your lender about these issues to make sure you have what you need to purchase a home.

Home Owners Reality!!

Just as an FYI!  I was discussing with an agent in my office today about home owners who have in the recent past took out a loan or equity loan on their home.  This loan shows up as the amount owed on the home in the court house records.  But this additional amount does not qualify to be used in the sell of your home unless you actually used it to add to the home itself such as floors, additions, remodeling, etc.  This should not be loans used on furniture, credit card debt, etc.  We as REALTORS will do comps according to the market value in your area and what homes are selling for .  When this additional amount is added on by a homeowner then it usually puts the home over the market value for the area in which it is located.  The homeowner needs to realize that other buyers do not want to pay for your personal loans nor do they want to pay too much for your home when they can go down the street and buy a home that is correctly priced.  So think long and hard if you are thinking about putting your home on the market and you are trying to add additional loan money to the price of your home , it will not work.  In this market you need good equity in your home to make money or to break even, otherwise you will bring money to the table ( which should be your personal loans) in order to close.  This may be brutle ,but it is the truth!