There’s a Window of Opportunity Open for Homeownership in Houston

“The cost of renting is really high right now. Rents have been rising and rising. Renters are getting squeezed, and some want to convert to ownership,” says Lawrence Yun, chief economist at the National Association of Realtors.

Are you paying the high cost of renting right now? Are you ready to sign on the dotted line to take the plunge into homeownership in Houston? If you answered yes, then it’s time to take advantage of historically-low 30-year, fixed-rate mortgages before they start inching upward this summer. “There’s a window of opportunity for buying and refinancing at crazy-low rates, but it’s closing,” says Gina Pogol, loan expert at Charlotte, North Carolina-based Lending Tree.

“The Federal Reserve is likely to raise short-term interest rates in the summer, which will be a signal for the rest of the market for rates to go higher,” Yun says. And getting a loan to buy a home will prove to be a bit more difficult to do as the housing market continues to recover and markets favor home sellers. Getting pre-approved for a mortgage will increase buyers’ chances of homeownership in Houston. Pre-approval makes buyers more attractive to lenders and speeds up the home buying process.

But what can you, the buyer, afford? What can you qualify for? Visit your lender. Get pre-approved. Getting pre-approved will set boundaries on exactly how much home you can afford before you fall in love with a home outside your price range.

What does “pre-approved for a loan” mean? “Pre-approval means actually applying for a loan, having your credit checked and your income documented. Pre-approved means that as long as the property meets the lender’s requirements, you can close,” Pogol says.
Here are 4 steps to take to get pre-approval started for homeownership in Houston:

1. Get your credit score up

Those with high credit scores will bet the best mortgage rates. The higher the three-digit number generated using information on your credit report, the better. “To get the best rate, strive for above 740. That is the benchmark for A-plus lending,” says Jeannie Meronk, assistant vice president and mortgage loan officer at First State Bank of Illinois.

To get your credit score up:

• Avoid delinquent payments. All payments should be on time 6 to 12 months prior to getting pre-approved for a loan.
• Provide as much down payment as possible. A high down payment can make a credit score more forgiving.
• Don’t take on new or additional debt. Taking on new car loans, new credit cards, new furniture financing can put your debt ratio over the edge. Not a good idea.
• Keep an eye on your credit and watch for inconsistencies. If and when you find any, fix them right away.

2. Look at an assortment of lenders

This helps you, as a prospective buyer, find the right mortgage with a lender you trust.

And just because you qualify for a certain loan amount doesn’t mean that is what you should spend. Consider your monthly budget. Determine what level of monthly payment you’re comfortable with. Don’t forget that there will be other costs relating to homeownership – property taxes, maintenance, unexpected repairs. Read all about the surprises of homeownership in Houston in this blog post.

If you’re self-employed, you’ll need to provide two years’ worth of tax returns. If your income fluctuated from one year to the next, income from the past two years will be averaged. Then your income will be looked at after all business deductions have been taken out. Your taxable income is what is used, not your gross income. For example, writing off every meal and vacation as a business expense, comes off the top.

3. Keep pay stubs and bank statements on file

File every new document as it is received for six to 12 months. You’ll need a recent pay stub and a complete bank statement.

4. Give your insurance agent a call

In order to find out the exact amount of your monthly payment, your first year’s home insurance policy must be secured before closing.

Remember, The Pikoff Team knows real estate. We know the costs of homeownership in Houston. Our knowledge and expertise can guide you from renting to owning in Houston. Contact The Pikoff Team at (281) 670-1910 today. We’ll help you find a home you can afford and share excellent resources for all your other homeownership needs. You could be enjoying homeownership in Houston before you know it!