6-8 Months to Secure Your Dream Home

01. Financial Preparedness – One of the primary reasons to start planning for a home purchase several months in advance is to ensure financial readiness. Buying a home involves various costs, including down payments, closing costs, and moving expenses. By giving yourself enough time, you can assess your current financial situation, set a realistic budget, and work towards improving your credit score if necessary. Saving money, paying off debts, and establishing a strong credit history are all crucial steps that can help you secure a favorable mortgage and increase your chances of getting pre-approved for a loan.

02. Research & Education – Real estate markets can be complex and ever-changing, so conducting thorough research and educating yourself about the process is invaluable. Starting your home buying journey early allows you ample time to explore different neighborhoods, understand property values, and familiarize yourself with the local housing market. By being proactive in your research, you can identify trends, assess market conditions, and make informed decisions when the time comes to make an offer. Moreover, you can take advantage of online resources, attend open houses, and consult with real estate professionals (like us at Sage & Cedar) to gain valuable insights into the home buying process.

03. Connecting with a Real Estate Agent – By starting your planning 6-8 months ahead of time, you can take the opportunity to connect with a real estate agent, mortgage lenders, and other industry experts. Professionals like us can guide you through the process, answer your questions, and provide valuable advice. Developing these relationships early on will allow you to establish a rapport, gain access to off-market listings, and potentially secure better deals when the time comes to make an offer.

The Importance of Early Home Buying Planning

04. Time for Pre-Approval and Mortgage Shopping – Obtaining pre-approval for a mortgage is an essential step before house hunting. Pre-approval provides you with a clear understanding of your purchasing power and strengthens your position when negotiating with sellers. Starting the process early gives you ample time to research different mortgage options, compare interest rates, and choose a lender that best suits your needs. By securing pre-approval, you can streamline the home buying process, eliminate potential financing hurdles, and ensure a smoother transaction.

05. Finding Your Dream Home – The home search process can be time-consuming, especially if you have specific requirements or preferences.During this time you can browse listings, attend open houses, and schedule viewings at your desired pace. Rushing into a decision could lead to regret or settling for a property that doesn’t meet your needs. By giving yourself sufficient time, you can thoroughly explore the market, visit multiple properties, and ultimately find the home that aligns with your budget, location, and lifestyle.

Embarking on the journey to buy a home is an exciting yet complex process that requires careful planning. By starting the planning phase 6-8 months ahead of time, you lay a solid foundation for a successful home purchase. Financial preparedness, thorough research, building relationships with professionals, securing pre-approval, and allowing ample time for the home search are all crucial elements that contribute to a smooth and satisfying home buying experience. Ready to take the leap? Visit us here to schedule a one on one buyer meeting with a Sage & Cedar professional!

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4 Benefits of Using a VA Loan to Buy a Home

01. No Requirement for Private Mortgage Insurance (PMI) – One of the most significant advantages of utilizing a VA loan is the absence of private mortgage insurance (PMI) requirements. Unlike conventional loans, which often require PMI for borrowers with a down payment below 20%, VA loans do not impose this additional monthly expense. PMI can significantly increase the overall cost of a mortgage, making VA loans an attractive option for those seeking to save money in the long term.

02. Zero Down Payment – Another notable benefit of VA loans is the ability to purchase a home without making a down payment. Traditional mortgage programs typically demand a substantial down payment, which can pose a significant financial barrier for many homebuyers. With a VA loan, eligible borrowers can finance up to 100% of the home’s value, eliminating the need to accumulate a sizable upfront payment. This aspect of VA loans not only enables easier entry into homeownership but also preserves valuable savings for other purposes, such as home improvements or emergencies.

What do you think of these 4 benefits of using a VA loan to buy a home?

03. No Prepayment Fees – Flexibility is a key advantage of VA loans, as they do not impose prepayment penalties. Prepayment penalties are charges incurred when borrowers pay off their mortgage ahead of schedule or make larger payments to reduce their principal balance. By eliminating these fees, VA loans empower borrowers to make additional payments or even pay off their mortgages early without incurring any financial penalties. This feature grants greater financial freedom, allowing homeowners to save money on interest and potentially become debt-free sooner.

04. Lower Minimum Credit Score Threshold – Obtaining a mortgage often requires a good credit score, which can be a challenge for some homebuyers. However, VA loans typically have more lenient credit score requirements compared to conventional loans. While individual lenders may have their own credit score standards, VA loans generally offer greater flexibility, accepting lower minimum credit scores. This accessibility enables more aspiring homeowners with less-than-perfect credit histories to secure favorable loan terms and realize their dreams of homeownership.

Utilizing a VA loan to purchase a home comes with an array of compelling advantages. The absence of private mortgage insurance (PMI) requirements reduces monthly expenses, while the ability to secure a loan with zero down payment enables easier access to homeownership. The elimination of prepayment fees promotes financial flexibility, and the lower minimum credit score threshold broadens eligibility for a wider range of homebuyers. These benefits make VA loans an attractive option for veterans and active-duty military personnel looking to embark on their homeownership journey. If you are eligible for a VA loan, it’s worth exploring this opportunity and taking advantage of the numerous benefits it offers. Ready to start your home buying journey? Visit us here!

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You Don’t Need to Put Down 20% to Buy a Home

Gone are the days when a 20% down payment was the norm for buying a home. With the evolving real estate market and the advent of new financing options, potential homeowners now have more choices than ever before. Lenders understand the diverse financial situations of buyers and have developed alternatives that require a smaller upfront payment.

Lower Down Payment Options

01. Federal Housing Administration (FHA) Loans: Backed by the government, FHA loans offer down payments as low as 3.5%. This option is particularly advantageous for first-time homebuyers who may have limited savings or lower credit scores.

02. Conventional Loans: While conventional loans traditionally required 20% down, there are now options available that allow for as little as 3% down. Private Mortgage Insurance (PMI) may be required, but this allows buyers to enter the market sooner.

03. Veterans Affairs (VA) Loans: Exclusive to eligible military service members, VA loans often require no down payment, making homeownership more accessible to those who have served their country.

04. United States Department of Agriculture (USDA) Loans: Designed for buyers in rural areas, USDA loans offer low or zero down payment options to promote homeownership in underserved communities.

Down Payment Assistance Programs

Numerous down payment assistance programs are available across the country, providing financial support to qualified homebuyers. These programs, offered by state, local, and nonprofit organizations, can offer grants, loans, or deferred payment options to bridge the gap between what buyers can afford and the traditional 20% down payment.

All this to say, the notion that a 20% down payment is an absolute requirement for buying a home is no longer accurate. With the availability of various loan programs, down payment assistance options, and alternatives such as PMI, prospective homeowners have more flexibility in achieving their dreams of homeownership. By understanding these alternatives and working closely with lenders and real estate professionals, you can embark on your homeownership journey with a smaller down payment, making it more accessible and achievable than ever before. Remember, it’s always wise to consult with a mortgage professional to determine the best course of action based on your specific financial situation. When you’re ready to take that next step, visit us here to set up a buyer meeting!

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Learn about Mortgages for Teachers and Educators

What is down payment assistance? – Down payment assistance is a type of financial assistance that can help qualified buyers cover the upfront costs associated with purchasing a home. This assistance can come in the form of grants, loans, or other types of financial aid.

Who qualifies for down payment assistance? – Qualifications for down payment assistance programs vary depending on the specific program. However, many programs are targeted toward low- to moderate-income homebuyers, first-time homebuyers, and those who work in certain professions, such as education.

What types of down payment assistance are available for teachers? – There are a few different types of down payment assistance programs that are available specifically for teachers depending on your state. In Georgia, one of the programs is PEN with GA Dream! The Georgia Dream program was created to make homeownership possible for eligible low and moderate income Georgians by providing affordable financing options, down payment assistance, and homebuyer education. Potential homebuyers apply with participating lenders for Georgia Dream loans. The loans are secured or guaranteed by FHA, VA, USDA-RD or conventional uninsured loans. Borrowers must attend and complete either a homebuyer education workshop, individual housing counseling sessions, or an online homebuyer education course through E-Home America. As of February 23, 2023, the standard amount was increased to $10,000, and for PEN (Protectors, Educators, and Nurses) that amount has been increased to $12,500!⁠

More about Mortgages for Teachers and Educators

How do I apply for down payment assistance? – To apply for down payment assistance, you’ll need to research the specific programs that are available in your area and determine which ones you may qualify for. You’ll then need to fill out an application and provide documentation to support your eligibility. It’s important to note that down payment assistance programs often have limited funds available, so it’s best to apply as early as possible. Best place to start is with your local Realtor. They can point you towards the right lenders that offer assistance! 

Ready to start your home buying journey? Click here to connect with a Sage & Cedar agent!

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What the new FICO scoring system means for homebuyers

Recently, FICO, one of the largest credit scoring companies in the world, announced that it will be rolling out a new credit scoring system in 2023. This new system, called FICO 10 T, aims to provide a more accurate picture of a consumer’s creditworthiness by taking a more holistic approach to credit scoring.

So, how will the new FICO scoring system affect home buyers? Let’s take a closer look.

What is FICO 10 T?

FICO 10 T is the latest version of FICO’s credit scoring system. It will use the same 300-850 point scale as previous versions of FICO, but it will take a more nuanced approach to credit scoring.

FICO 10 T will look at trends in a consumer’s credit behavior over time, rather than just their current credit utilization and payment history. This means that if a consumer has a history of responsible credit behavior, but experiences a setback like a missed payment or a high credit utilization rate, their score may not be as negatively impacted as it would have been under previous FICO scoring systems.

Additionally, FICO 10 T will differentiate between consumers who have revolving credit (like credit cards) and those who have installment loans (like mortgages or car loans). This is designed to recognize that consumers who have successfully managed installment loans may be better credit risks than those who only have revolving credit.

How will FICO 10 T affect home buyers?

The new FICO 10 T scoring system could have several impacts on home buyers.

First, consumers who have a history of responsible credit behavior but have experienced a setback (like a missed payment or high credit utilization rate) may see less of a negative impact on their credit score under FICO 10 T than they would have under previous FICO scoring systems. This could make it easier for these consumers to qualify for a mortgage or secure a better interest rate.

Second, consumers who have successfully managed installment loans (like mortgages) may see a boost to their credit score under FICO 10 T. This could make it easier for these consumers to qualify for a mortgage or secure a better interest rate.

Third, lenders may be more willing to work with consumers who have less-than-perfect credit under FICO 10 T. This is because the new scoring system takes a more nuanced approach to credit scoring and recognizes that consumers who have had setbacks can still be good credit risks.

FICO scoring system and homebuyers

The new FICO 10 T scoring system could be good news for home buyers. Consumers who have a history of responsible credit behavior may see less of a negative impact on their credit score if they experience a setback, and those who have successfully managed installment loans may see a boost to their credit score. Additionally, lenders may be more willing to work with consumers who have less-than-perfect credit. However, it’s important to remember that credit scores are just one factor that lenders consider when evaluating a mortgage application, and other factors like income and debt-to-income ratio will also play a role in the lending decision.

Interested in starting the home buying process? Click here to connect with a Sage & Cedar agent!

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5 hidden costs of buying a home

Closing Costs

Closing costs are fees that are paid at the time of closing, which is when the sale of the home is finalized. These costs typically include fees for things like the title search, appraisal, and legal fees. Depending on the cost of the home and the location, closing costs can be significant, and can range from a few thousand dollars to tens of thousands of dollars. It’s important to budget for these costs when you’re planning to buy a home.

Moving Costs

Once you’ve purchased your new home, you’ll need to move all of your belongings into it. This can be a significant expense, especially if you’re moving a long distance or have a lot of belongings. Some of the expenses you might encounter when moving include hiring a moving company, renting a moving truck, buying packing supplies, and paying for storage if you need to store your belongings temporarily.

Home Inspection

Before you purchase a home, it’s important to have it inspected by a professional home inspector. The cost of a home inspection can vary, but it’s generally a few hundred dollars. While this cost may seem like a lot, it’s worth it to ensure that you’re not buying a home with serious issues that could cost you thousands of dollars in repairs down the line.

Title Insurance

Title insurance is an insurance policy that protects you in case there are any issues with the title of the home you’re purchasing. This can include things like liens, easements, or other legal issues that could affect your ownership of the home. The cost of title insurance can vary, but it’s usually a few hundred dollars. While it’s not required by law, it’s highly recommended that you purchase title insurance to protect yourself in case there are any issues with the title.

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Let’s take a look at the 4 items you’ll need to collect before applying for a home loan.

01. Proof of Income – Lenders want to see that you have the ability to pay for the home after closing. Because of this they will ask you to provide proof of income. This will consist of 2 years of tax returns and your latest w-2’s. Lenders do not require you to be at the same job for 2 years, but they will want to see consistent income, ideally in the same field. 

02. Proof of Assets – Supplying the lender with proof of assets help the lender decide the type of mortgages you qualify for and sometimes even the interest rate you receive. Most common assets include cash, physical assets (like cars, boats, homes), and liquid assets (like 401ks, stocks, bonds). Supplying proof of all assets will help the lender qualify you for a higher loan amount than they’d be able to without proof. Still have questions on what to include? Consult your CPA!

While the bank *may* ask you for more documentation, these are the core 4 items you need to get started!⁠

03. Good Credit – Most loans have a minimum credit score requirement to qualify. Having a good credit score suggests that you have no problem making payments on time. Usually, the better your credit – the better your interest rate. The most common loan requirements are as follows: Conventional – 620, FHA – 500, VA – 640, and USDA – 640. 

04. Employment Verification – Your lender will require verification of employment to issue a pre approval letter and again right before closing. These documents can include an employment verification letter, a recent pay stub, or anything else to prove an employment history and confirm income. 

Interested in starting your home buying journey? Click here to connect with a Sage & Cedar agent and set up a one on one buyer education meeting! 

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6 steps to buy your first investment property

01. Decide on a price point⁠ – A good rule of thumb is to use the 1% rule. For example if you purchase a home for $100,000, you’ll need a minimum monthly rent of $1,000.⁠
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02. Pick a location(s)⁠ – Airbnb guests aren’t worried about the school district and long-term renters may not need walkability 24/7. Decide which way you’d like to go and pick a location that way.⁠
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03. Determine rentability⁠ – What are your target renters looking for? Long-term renters may say creature comforts like 2-3 bedrooms, washer/dryer, dishwasher, and storage. Short-term renters usually want to be close to (or far from) the action.⁠

What are your target renters looking for?

04. Purchase the Property⁠ – This process will be similar to purchasing a primary residence. Your lender may require a higher down payment and loan requirements may be a bit different than on a primary residence, but the steps are pretty much the same: offer, escrow, closing, rent!⁠
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05. After Closing⁠ – You may want to consider hiring a property manager to take care of renting and maintaining your income property. These will typically run you 15-25%.⁠
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06. Offset Additional Mortgage⁠ – For an investment property, you will need 20% down but the great thing is that you can include rent as part of your income, so this will offset the additional mortgage!⁠
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Ready to get the ball rolling on your investment property journey? Click here to schedule a one on one buyer meeting with a Sage & Cedar agent! 

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3 pre-closing NO-NO’s to avoid before closing

01. Changing the financial situation⁠ – Changing the financial situation involved— whether that’s opening or closing accounts, making a career switch, or changing banks —is a major real estate no-no when looking to close on a deal soon. Even when pre-qualified, any change like this can result in a failure to keep funding.⁠
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02. Solo visits to the property before the keys are in-hand⁠ – A property doesn’t belong to the buyer until ALL closing paperwork is signed and keys are in hand. Buyers need explicit permission and their agent to come along with them, even the day before closing. Visiting without permission and an agent is legally considered trespassing and can lead to legal ramifications.⁠

Knowing what not to do is almost as important as knowing what to do!

03. Skipping the home inspection⁠ – A home inspection isn’t typically required for the sale of a home but for buyers, the cost of a home inspection is worth it because it can reveal expensive issues that may change one’s perspective on purchasing a specific property.⁠
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Questions about the buying process? Click here to connect with a Sage & Cedar agent and to schedule a buyer meeting to learn the first steps! 

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Credit Scores and Purchasing a Home

Having a good credit score to buy a house makes the entire process easier and more affordable – the higher your credit score, the lower mortgage interest rate you’ll qualify for. Though higher credit scores are considered more favorable for lenders, it’s still possible to get a mortgage with less-than-ideal credit. It all depends on the type of loan you’re applying for!

Conventional – To qualify for a conventional loan, you’ll typically need a credit score of at least 620. But borrowers with credit scores of 740 or higher can make lower down payments and tend to get the most attractive conventional loan rates.

Higher credit scores are considered more favorable for lenders.

FHA – If you have a lower credit score you might want to consider an FHA loan. This loan is insured by the Federal Housing Administration. The minimum credit score for an FHA loan is 580. You can also put down as little as 3.5% with an FHA loan.

VA – A government-backed VA loan might be an option for you if you’re a veteran or qualified servicemember or spouse. 100% loan, different lenders can have different credit score cutoffs. But a 620 score is a pretty good barometer for many VA lenders.

Credit Score requirements all depend on the type of loan you’re applying for.

USDA – Another government backed loan is a USDA loan. This loan would work for you if you are looking to live in a rural area and your income falls below 115% of the area’s median income. Most lenders require a minimum credit score of 640 for a USDA loan.

If you’re unsure what loan is right for you, your lender can help you decide! Interested in starting your home buying process? Click here for a free consultation!

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