In the age of information, it can be a little daunting to make any kind of decision. From where to eat dinner to buying a pair of shoes, not only are our options seemingly limitless, the reviews and opinions of the world are available to us at the touch of a keyboard or swipe of a screen. As someone who has had two children go through the college process recently, there is such a thing as too many choices. Buying a home can be just as overwhelming. Beginning with the home search, there are so many options it makes your head spin, never mind the process of finding a lender and of course, determining when it is time to buy a home. The timing of buying a home can be the most confusing aspect of the process. Myths can cloud the facts and even the facts can be confusing.
There is a lot of conflicting information about down payments and what is actually required to purchase a home. The myth is 25% down is required. The truth is, there are a lot of options and your fiscal standing is the key. Those with higher credit scores and lower debt to income ratios can qualify for a Conventional 97 loan with just 3% down. Some first time home buyers can actually qualify for a zero down payment loan. The FHA loan requirement is 3-10%, with the average falling right around 6%. If you have saved enough to put $6,000 on a home, you can purchase a median priced home in Chattanooga. If you have not, do not give up. A reputable, local lender can find the perfect loan for your situation.
Interest rates are climbing. They are still low, but the nearly 1% increase since last year, means someone purchasing a home this year in Chattanooga (average home price is right around $200,000) will pay nearly $120 more each month. Multiply that over the life of a 30 year loan and that is $43,000! What does this mean? You are getting less home for your money the longer you wait. Interest rates are expected to continue to climb in 2019. Where will they land? Who knows, but you can put your $120 in a savings account each month at 2.5% interest for 30 years and you will end up with $64,000. Every one knows a savings account is a low risk, low return on your money. However, it is a much better return on your money than paying mortgage interest. Locking in a low interest rate could be the most important part in the puzzle.
Rent is going up at unprecedented rates. A two bedroom in Chattanooga rents at an average of $958. Renting is awesome… for your landlord. The average rental home in Chattanooga has a mortgage payment of $709. That means you and your hard earned dollars are building equity for someone else. The mortgage payment on a $200,000 loan is $946. You could be renting out a room to a friend and recouping a portion of your investment. Winner!
How do you know if is time to purchase a home? Do you have a job? Is your credit score above 580? Are you tired of paying someone else’s mortgage? It is time to buy a home.
Our Chattanooga Property Shop team can put you in touch with several local lenders who you can meet face to face and who will walk you through the process of getting pre-approved to buy a home. Typically, it takes about 30 minutes if you have all the basic documents (proof of employment, proof of income, tax docs, place of residence, bank account info, credit info and list of monthly payments). Our team of buyer specialists and client concierge will make sure you see all the homes that match your dreams when they hit the market and we will help you buy your first home.
Want more information? Ready to talk to a lender? Reach out to us today! Email Tanya@chattanoogapropertyshop.com, call 423-664-1900 or text 423-403-0320. We want to work for you!