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The official blog for Bank of England Mortgage
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Should You Buy a Home or Rent?
Years ago, everyone knew the answer to this question, or thought they did. Owning a home was considered one of the cornerstones of the American Dream. Then we had the housing crash, and a slew of articles advising that buying a home was a scary bet. Over the last several years, that advice has become more mixed, leaving some consumers confused about whether buying a home makes financial sense.
Home ownership is not a one-size-fits-all proposition; the decision to buy is a personal one that hinges on the circumstances of your life, where you live, and how long you plan to stay in one place. Most consumers have by now heard that it doesn’t make sense to buy if you plan on staying in the home for less than three to five years; because most of the early payments on a mortgage goes to paying down interest and closing costs on a mortgage can be substantial, a few years isn’t enough time to accumulate equity to offset the closing costs. For short-term living situations, renting may be the better option.
Beyond this, the situation gets a little murkier. Don't plan on making a big profit by buying a home and selling it one day. Owning a home can still be a good investment, but you shouldn’t expect the value of the home to increase more than the rate of inflation. Over the long term, home values have always tracked pretty closely to the inflation rate; we aren't likely during our lifetimes to see another bubble market with skyrocketing values like we saw in the 2000s, and we probably don't want to see that again, considering the aftermath of the last one. While there are several housing markets in the country where home values continue to outpace inflation, they are in large urban centers such as New York and Los Angeles; the factors in play in those markets do not apply to central Arkansas or most of the rest of the country. Outside of booming urban markets, buyers should expect home values to continue to track pretty closely with inflation.
Purchasing a home can still be a wise investment, especially if you plan to remain in one place for 10 years or longer. In areas where home values are increasing and the cost of renting is close to the cost of a monthly mortgage payment, purchasing a home makes sense. A home purchased with a fixed-rate mortgage represents a known housing cost; rents can and will increase over the course of 10 years. In addition, over that period of time, a homebuyer will build up a substantial amount of equity; if they had rented instead, they would be walking away empty-handed.
The answer, then, is that purchasing a home is still a good bet – if you plan to remain in one place for more than five years, if you buy into an area with increasing values, if the costs of rent are close to the cost of a monthly mortgage payment, and if you’re prepared to shoulder the maintenance responsibilities that come with home ownership. Owning a home provides accomplishment and there is no other feeling than that of laying down roots and providing stability. A home isn’t just a place to keep warm and dry, it’s the place where memories are created that last a lifetime. Bank of England Mortgage is always happy to help educate homebuyers. We’ll help you gain an understanding of the mortgage process so you can make the best choices for your home financing goals. If you’re ready to take the home buying plunge, locate your local branch and give us a call!
Credit Do’s and Don’ts in the Mortgage Approval Process
While pre-qualification allows buyers to know how much they are qualified to borrow for a new home before they start shopping, and it can speed up the mortgage application process once they find a home they like, prospective homebuyers need to keep in mind that pre-qualification is not final approval. Events and decisions affecting a borrower’s financial profile that occur after pre-qualification but prior to closing can determine whether or not the loan is ultimately approved.
Especially now, as the mortgage industry adjusts to new financial regulations, it is more important than ever to ensure that the financing of your new home goes smoothly; thanks to the time constraints of the new regulations, even minor bumps can really slow down the process. Following the tips below will make the process go more quickly and smoothly, help to prevent unpleasant surprises, and reduce the stress of the approval process.
- Make mortgage or rent payments on time.
- Pay all bills on time.
- Stay with the same employer.
- Stay with the same insurer.
- Continue living at your current residence.
- Keep credit card balances at or below 40% of credit limits.
- Call your lender before doing anything regarding your employment, credit cards or assets.
- Ask your agent or seller if the property is in a flood zone as you may be required to obtain flood insurance.
- Notify your lender of any changes to the sales contract (closing date, sales price, etc.)
- Provide a copy of both sides of your earnest money check after it has cleared your bank, along with a bank statement reflecting the withdrawal.
- Promptly provide legible copies of all pages of each document requested by your lender throughout the mortgage process.
- Provide your lender with contact information from your homeowner's insurance agent.
- Communicate openly and honestly.
- Make any major purchases (car, boat, etc.).
- Take out any large cash advances.
- Apply for new credit cards or loans of any kind.
- Pay off any collections or charge-offs before consulting your lender.
- Bounce any checks or overdraft any accounts.
- Change bank accounts or banks unless advised by the lender.
- Consolidate your debt into fewer accounts.
- Start any home improvement projects.
- Deposit cash or non-traceable funds.
- Close credit card accounts.
- Borrow money.
- Transfer checking or savings balances from one account to another.
- Max out or overcharge existing cards.
- Quit or change jobs.
- Do anything that might raise red flags for the underwriter (co-signing on another person's loan, changing your name and address, etc.).
- Plan a vacation during your loan transaction without informing your loan officer.
- Give notice to your landlord before consulting your loan officer.
- Take it personally if you're requested to provide additional information about your income or deposits. All information will remain completely confidential.
- Hesitate to contact your lender with any questions throughout the process. They are there to help!
Bank of England Mortgage is always happy to help educate homebuyers. We’ll help you gain an understanding of the mortgage process so you can make the best choices for your home financing goals.
Make a Good Impression
Today’s market is very competitive, so making a good first impression is crucial. Home staging is the act of making a home look visually appealing to buyers. There are ways to highlight your homes qualities, de-emphasize its shortcomings and engage potential buyers.
Home stagers will make selling your home a lot less stressful. They have an eye for home appeal and can transform it into a welcoming, attractive product that anyone might want and will perceive as a much higher value.
Staging your home yourself or having a professional home stager do the work for you depends on your budget. Either way, the first impression is imperative.
Homeowners, reluctant to spend the money or admit that their decorating choices might not be catnip to buyers, are often loath to pay strangers to impose their tastes on their premises. Home staging has evolved over the past decade. Today, stagers are increasingly tackling all-out transformations in some cases that translate to a much higher selling price and even bidding wars. So if you are thinking of putting your home on the market, consider home staging.
- Be Creative with Color, often when it’s time to sell, some aspects of a home can be dated due to its color. Finding the best color combo to make it look fresh can be really eye catching to a buyer, so don't be afraid to use it creatively.
- De-clutter everything but the bare bone essentials should be removed or thrown out
- Less is More… select your best pieces of furniture and rearrange them.
- Let Light In, good lighting accentuates the best qualities of your home and illuminating essential areas.
- Bring The Outdoors in. There’s nothing like a fresh healthy plant. Decorating with greenery will add charm and beauty to your home.
- Make an Entrance by making the entrance feel welcoming, you honor all who enter. Make it count!
Home Staging Tips
- You will make a profit. The cost of professionally staging your home should be included in the sales price. If staged professionally, more often than not, the home is sold at asking price or very close to.
- Your home will sellmuch quicker. On average, well-staged homes sell faster for more money.
- Selling "as is" in any market doesn't work well. It’s always a buyer's market, so give them what they want. Successful agents know that the key to selling competitively is professional staging.
- Most homebuyers can't see their home unbiasedly. When you create a feeling buyers are looking for and get them emotionally involved with your home, they are more likely to buy your home
- You can unwind. You will have the fulfillment of knowing you have done everything conceivable to affect a quick sale of your most valuable commodity and for as much as possible!
Benefits of Staging (Yourself and Professionally)
Mortgages By The Numbers
For the first-time home buyer, mortgages come with a seemingly incomprehensible flood of numbers. Even seasoned home buyers can find themselves confused; between interest rates, credit scores, and down payment percentages, there are a lot of numbers to juggle. To help sort through the confusion, the following are the numbers you most need to understand in order to make a sound financial decision.
25% - the number of first-time buyers who report being completely in the dark about the mortgage process.
It’s important to understand the process, because not knowing can cost you big. Working with a lender who’s willing to take the time to walk you through the process and answer your questions can help you make the right decision.
77% - the percentage of borrowers who only apply to one lender.
Big mistake - not shopping around can cost you. You shop around for other big purchases, and you should do some shopping around for your mortgage as well, since it’s likely to be one of the biggest purchases you’ll ever make. Get estimates from several lenders and study the terms closely before deciding which lender offers you the best deal. The lender that communicates and explains the answers to your questions, typically, will be more efficient through the process. Also, trust your intuition!
740 – the credit score that will qualify you for the best interest rates on mortgages.
Having a lower score won’t shut you out from buying a home, there are many programs for borrowers with all kinds of situations. Don’t count yourself out, a good lender knows what options you have and will help you get the loan that best fits your needs.
Prospective lenders will pull your credit score as part of the loan application process, but if you’d like to know your score before you start shopping around, you can get a free copy of your credit report from many online credit reporting companies.
20% - cash down payment required for a conventional loan.
Don’t have 20% to pay down, there are loan programs that require much less, some even offer 0% down payment. Find a lender that offers a multitude of programs.
60% - number of homebuyers who used retirement savings to make down payments in 2015.
Just because a lot of people are doing it, it doesn’t mean it’s a good idea. Before you dip into your 401(k) or IRA for a mortgage down payment, consider the tax implications. Consult your certified public accountant for advice.
13 – the average number of year’s home buyers stay in their homes.
The amount of time you plan to remain in your home makes a big difference in what type of mortgage will work best for you. If you’re in a job where you move every few years, you may decide that lower rates offered on ARMs (adjustable-rate mortgages) makes sense. On the other hand, if you plan on staying in the same place indefinitely and need the assurance of a predictable monthly payment, you’ll probably want to take advantage of today’s historically low mortgage interest rates by locking in at a fixed rate for 15 – 30 years.
40% - number of seniors 65 and older who carry a mortgage.
If your goal is to be mortgage-free in retirement, you will want to select a loan with a shorter term, so it will be paid off before you reach retirement.
Bank of England Mortgage is always happy to help educate homebuyers. We’ll help you gain an understanding of the mortgage process so you can make the best choices for your home financing goals.
Holiday Party Do’s for Success
Everyone enjoys being a part of a holiday party, especially one that is well put together. Great music, appetizing food, and enjoying the company of family and friends. It takes patience, planning, and thought to throw a successful party. To make the most of your holiday party, skip the unnecessary plans and focus on the things that are most important. The Do’s.
Although, everyone on your guest list won’t be able to attend the party, you want to aim for a non-conflicting date for most of your prospective guests. It becomes more difficult for friends and family to attend the closer it gets to the holiday. Try setting a pressure free date.
Choose the colors or theme of the party to match the invitations. There are so many options, which may make it harder to choose, but be sure to stick with the same color or theme throughout. If you’re planning a fancier party, paper invitations are almost a must. It helps set the tone for your event. Online invitations are fine if the event is more casual.
Determine how many people you are inviting to decide whether you will need the services of a caterer, a personal chef, or if you can manage preparing the food on your own. Be careful though, if you are choosing to handle the cooking, that you are not spending more time in the kitchen than you are with your guests.
Note on the invitation what type of food you will be serving. Whether it be heavy appetizers, sit-down dinner, dessert and drinks, or a potluck. Tailor the start time of your party to the type of food you will be serving.
Don’t be afraid to ask for help. Friends and family always want to know how they can be helpful. Have them bring an appetizer, drink, dessert or whatever you’re needing to the party.
Lastly, have entertainment that will interest your guest, like party games and a music playlist.
Purchasing a home in winter could save you BIG $$
New information demonstrates that prospective buyers could save money by purchasing a home in the late fall and winter over the late spring. Information for the 50 most crowded metro areas in the United States over two years uncovers that home costs topped during summer and dunked in fall and winter, implying that buyers could save thousands. As fall nears, listing values somewhat fall. There are local changes as well. For instance, the biggest drop amongst summer and fall was in the Hartford-West Hartford-East region of Hartford, Connecticut.
Realtor.com’s chief economist, Jonathan Smoke, said, “If your circumstances give you the freedom to be able to choose the best time to look to sign a contract on a new home, there’s no question that the market dynamics favor you the most to do that in the dead of winter...”
So, When’s the Best Time to Buy a New Home?
Everybody realizes that spring is the best time to purchase or offer a house? The weather is nicer, there are more buyers, and kids are nearing the school year end. It's easily the busiest time in the real estate year.
Land and home building specialists say that an accentuation on the spring home purchasing season has its roots in practical reasons and in some enduring misperceptions about the marketplace.
One things for sure, in spring, individuals who have been cooped up over the winter are prepared to bust free, get out and test the daylight. Also, for some, a potential address change around then fits pleasantly with the school calendar.
Reconsidering the Seasons
Many real estate brokers recommended that the best time to offer their property for sale is in the fall or winter.
“True, in fall and winter, you have less inventory out there, fewer homes to look at. But people who are buying a home in fall or winter, those are serious buyers.” Said recently by a real estate broker in Huntsville, Alabama.
It may feel good to have 35 people come through your open house in May, of which most are less than serious buyers. It deems more favorable and less time consuming on everyone’s part to have a couple people with their agents come through in December that are ready to buy and serious about it.
What's Your Moving Timetable?
One approach to set an individual real estate timetable is to choose when you need to be in (or out of) a house, and work in reverse from that point. The time it takes from contract to closing table can differ regionally, but agents recommend that a month is sensible. For most homebuyers the entire process from finding a home to backing up the moving truck is 2-3 months.
For sellers, it will rely on local market situations and value, both of which have experienced a change in numerous areas since the first of the year.
In the event that you expect to move into a recently constructed home, planning backward from a move-in date is even more critical. Builders Offer Both Built-from-Scratch and Quick Move-In Homes. You have a few timelines to consider. If you’re buying a quick move-in or “spec” home – a home that is built on speculation– the time from contract to move-in might fit that one-month (or slightly longer) span.
If you're outlining and building a home starting with no outside help with a production or large volume manufacturer it could take 4-6 months. It may take longer if building a new home from scratch with a smaller or custom builder.
Real Estate Agent Advice for Buying and Selling in the Winter
You may have doubts about being one of those house seekers conquering the rain, hail or snow to locate your ideal home in the winter months. But, as these tips from two experienced real estate agents will say, winter real estate is full of possibilities.
“Buyers who are house hunting in the winter ought to keep their inquiry going, paying little mind to the season”, states a realtor in the industry for over 26 years, “…a home that meets their optimal criteria and at the right cost can appear available whenever.”
Advice from one realtor, suggests a few things to help close a deal more quickly. “Have an agent who can keep you educated of any present and more up to date listings as a seller. A skilled real estate agent can charm and wow a winter buyer over the competition in any season.” “Concentrate on getting your funding in order so that you can submit aggressive offers.”
Oftentimes, the down payment isn’t the biggest concern for sellers. It’s more about the financing type, short inspection periods, short closing periods, and if you can give the seller time to stay in the home after closing if they need it.”