Buying a House in 2020: What You Need to Know
In the year 2020 there is a chance or new beginnings and to make a new start. Many people can accomplish their goals including owning a home. Some things are changing in the market for a homeowner and there are some important things a person needs to know about purchasing a home in 2020.
Pre-approval is Important
There is a shortage of homes on the market. It is a seller’s market. Before a real estate agent will work with a buyer they need to have a pre-approval letter from a mortgage company. This will allow the deals to be closed quickly and with as little snags as possible. With this letter, the seller will know that the buyer is serious about purchasing a home and if they like the home they can put an offer in on it that same day. The lender will help the buyer determine what they can afford and work out any issues that may affect their ability to purchase a home.
There are certain credit scores need to purchase a home. In 2020 a person will need to have a credit score of at least 620. An average credit score for homeownership will range between 620 and 680. If a person has a better credit score such as a 740 they can enjoy lower interest rates.
Most people wonder what they can afford and which homes they should be looking at in their price range. Lenders are still going to focus on debt to income ratio but some things can help a person determine the price of a home. if the household income is around $110,000 then they can afford homes in the price range of $330,000. To determine an exact amount a person should speak to the lender before they begin their search. This will help them look for homes within their price range.
For some time interest rates for home, loans have been around 4 percent. There is no too much change predicted for 2020 and interest rates should remain around this rate. They are not expected to drop but the good news is they are not expected to increase either. This is a pretty good deal for a home mortgage interest rate.
Most people think they need to put 20 percent of the purchase price of the home as a down payment. This is not always the case. People have been putting between 3 and 5 percent of the price as a down payment. This is making it more affordable for people to purchase a home.
Review Finances and Spending
Lenders are going to want to see how much money is a person is making and how much money they are spending. It is important to have all of this paperwork in order. A person has to be willing to supply the lender with their income information, baking information, current bills including student loans and credit card bills, and related information about debts. This is very important. They are going to use this information not only to see if a person can afford a home but to track their spending habits and see if they are responsible with money. This is something lenders are going to be focusing on so a person needs to watch their spending habits for 2020.
Home Prices are Rising
Home prices are continuing to rise in 2020 but they are going to increase slowly. Home prices are predicted to increase by 2.8 percent. While homes are getting more expensive this increase is nothing to be overly alarmed about. Buyers should be willing to expand their search and look in towns outside of the area where they want to live. They may have to travel a couple of additional miles to work to get a better deal on a home.
Buyers are mostly Millennials
It is important to know the people that are looking to purchase the home. Millennials like to use technology and they will put research into a home before they may an offer. Real estate companies and sellers should make sure the home is posted online and it is easy to find. They need to invest in high-quality pictures and possibly even posting a digital tour of the home. Since most people will be looking for a home online it is important to have a strong presence and good pictures. A person should highlight some appealing features if their home happens to have them. Laundry rooms, patios, and extra storage are highly desired by homebuyers.
Equity Will Not Decrease
This is good news for the homeowner. The prices of homes are expected to increase and the seller can make a profit on their home. They should continue to monitor their equity in 2020.
Most people are looking to purchase a home near conveniences and homes with easy access to highways. This is slowly changing. Homebuyers are looking for homes in the country and smaller neighborhoods. They do not want the noise when they are not working and they are willing to drive a little further to get the home that they want. There is also the increase of people working from home so location is not as important as it once way. Buyers are looking for homes outside of bust areas so if a person lives outside of the main city they may be able to see their home this year.
These are some things that are going to be carefully examined and things to keep in mind when looking to purchase a home in 2020. Interest rates on home loans are low and a person can continue to see these low rates in 2020. There are more buyers than homes for sale on the market. A person needs to keep their credit good and watch their spending so they will be able to purchase a home in 2020.
What kind of credit score do you need to buy a house?
Typically you will just need a credit score of 580 credit score to buy a house. Credit scores between 580-620 are often bad or not approvable, but in rare instances it may be enough for you to get approved.
How much money do you need to buy a house for the first time?
The average amount is 3% to 6% of the price of the home. Given that range, it’s a good idea to start with 2%-2.5% of the total cost of the house, to account for closing costs.
Can you buy a house with no money down?
Usually, FHA loans, USDA and VA loans require zero down payment. So yes, considering these options, this would make it possible to buy a house with no money down.
How long does it take to build credit?
Fortunately, it does not take too long to build up a credit history. It takes anywhere between 3-6 months of regular credit activity for your credit score to be calculated.