Jeremy Mateo, 27, is a real estate broker in Hawaii. one bedroom apartment for $ 560,000 in Honolulu, right before the coronavirus pandemic turned life in the United States
Since Mateo closed his home in March 2020, the real estate market has been experiencing a rift. First, the pandemic closed the entire market. According to him, by the summer, consumer demand rose sharply after Federal Reserve System announced until 2022, it will keep base interest rates near zero, and mortgage rates will fall to historic lows“and then all the real estate here in Hawaii started going crazy.”
First, the basics: Mateo says buyers need to make sure they have a good credit rating in order to be eligible for a home loan at a favorable interest rate. Generally, the higher your credit rating, the lower your mortgage interest rate. A lower interest rate can mean significantly lower monthly payments.
BUT strong credit history can also improve your chances of winning a bid or pre-approving a mortgage.
But it may take time build credit or improve a low score that takes into account your payment history, amount owed, length of credit history, new loan, and loan combination.
With that said, financial experts emphasize that mortgage rates will stay low for the next two to three years if you need time to improve your financial situation.
It can take years to accumulate a down payment on a home, but this is not the only number worth considering.
For example, Mateo laid out 10% on his home or $ 56,000 upfront and pays $ 185 extra for private mortgage insurance every month. (Financial experts recommend setting aside at least 20% of a home’s value for a down payment to avoid recurring PMI.)
Closing costs, which can include home inspection costs, loan application fees, clearance fees, and even property taxes for two months from 2% to 5% of the loan amount and they are payable at the time of purchase. As a real estate agent, Mateo received a commission to cover his closing expenses, but without it, he would have received an additional $ 7,800 on the day of signing.
Most buyers should also consider recurring expenses such as homeowner’s insurance, property taxes, and repairs and maintenance. They can range from 1% to 2% of the purchase price each year. For example, Mateo’s mortgage and PMI are $ 2,833. He pays an additional $ 1,010 a month in Homeowners Association dues, service fees, taxes and insurance, bringing his total housing costs to about $ 3,843 a month.
Then, after Mateo bought his home, he revised his original budget for renovations and furnishings and ended up spending about $ 100,000 to make his home feel like home.
Taking advance payments and travel costs into account, Mateo says re-evaluating your home savings is critical: “If you think you have a number to save on your mind, save more because you just never know what contingencies you will need. should be. “