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Posted by Paul W. Cutler on 10/2/2017

Sweeping economic shifts, like a rising Dow Jones or lower unemployment rates, can affect the housing market. As the number of Americans buying houses increases, the sell price that you could get for your house might go up as well. If the housing market hits booming levels, you could get nearly twice as much for your house within five to seven years of the date that you bought the property.

Rising house prices aren't always good

As a seller, there may be little better news than hearing that house prices are going up. Yet, should you be in the market to buy a new house, this upward swing could spell disaster.

What could happen if you buy a house during a housing market boom is that you could enter a mortgage agreement that has you paying more for a house than the house is actually worth. You might not realize this until after the housing market starts turning sharply in the opposite direction.

By then, it could be too late. It's this very type of housing market swing that played a key role in the development of the Great Recession. You could regret housing prices shifting too far upward even if you're a seller.

How is this possible? When housing prices rise to the point that the house prices become bloated, although you can yield a significant profit should you sell your house, you may quickly watch those profits evaporate when you buy another house, especially if every house available for you to purchase cost nearly as much as the house you just sold. This is because bloated housing costs can eventually set everyone back.

Indicators that your house is over valued

Yet, failure to yield a profit during the house sell and buy process isn't the only indicator that your house might be over priced. Following are more signs that you might have paid too much for your house:

  • Comparable housing prices show that you could get nearly double or more for your house than you paid for it less than four years ago, and yet, you have done absolutely nothing to improve your property.
  • Area houses are selling for 20% or less than what you paid for your house
  • Your house has been on the market for four months or longer
  • Lenders are not approving buyers for home loans that would cover at least 75% of the cost of homes similar to yours
  • An experienced and reputable realtor who you're working with keeps telling you that you may want to lower the price on  your house
  • The sell price on your house is above the amount of property taxes that you're liable for
  • What you're asking for your house doesn't factor in damages that your house has experienced since you bought the property

When your house becomes a money sink hole

You're not the only one who doesn't want to pay too much for a house. People shopping for homes like the one you may have just put on the market also don't want to invest more in a house than the house is actually worth.

One reason for this is that the price of the house isn't the only costs that you'll take on if you buy a home. Insurance, association fees, general maintenance, property taxes and repair costs are other expenses that you could get saddled with. Several of these additional costs are directly linked to the price that you paid for your house.

Over priced homes can also place a drag on the entire housing market. This is truly an area where greed causes extensive damage. You may have to do your homework to avoid being pulled into an inflated housing market. But, you can avoid buying a house that's over priced if you practice patience.

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Posted by Paul W. Cutler on 4/9/2017

Thereís so much to consider when to comes to buying a new home. The first issue is that of your finances. You need to make sure that youíre preparing financially for the home search, and not just making your list of ďwantsĒ for a new home. Itís an exciting time when youíre purchasing your first home, but donít let the excitement overtake your responsibility. Hereís some tips to keep you on the financial straight and narrow path when preparing to buy a home: Be Mindful Of Your Credit Score Thereís many factors that can affect your credit score. Applying for new credit cards is one of those factors. Your credit score will drop a few points every time you have a new credit inquiry or open a new account. If you do get approved for new credit, lenders may have concerns that youíll spend up maxing out your new approved credit limit on that account and possibly default on your loan. Closing credit accounts is another factor that greatly affects your credit score. You may think that closing unused accounts is a good idea to help get yourself financially ready for becoming a homeowner. This isnít true. Closing accounts lowers your amount of overall available credit. This means that your debt-to-credit ratio is larger. This lowers your overall credit score. You can certainly make these smart financial changes after you close on your new home. Keep Records When you move your money around, make sure you have records of it. Your lender will want to know about any unusual deposits and withdrawals. Youíll need to prove where your money comes from. All of the cash that youíll be using for your home purchase should be in one account before you apply for a mortgage. Keep Up With Your Bills Donít increase your debt. This will have an affect on the very important debt-to-income ratio which is one of the most vital aspects of loan approval. Also, be sure that you donít skip your payments on bills. Your history of payments is incredibly important as well. Be sure that you continue to make full, on-time payments on all of your bills. Keep Your Job Even though a new job could mean a raise, or a better situation for you and your family, it could delay you in getting a mortgage. Youíll need to have your employment verified along with pay stubs to prove your source of income. Lenders like to see a longer employment history. Keep Saving The biggest up front costs in buying a home is that of closing costs and the down payment. Those must be paid at the time of closing. Lenders may even verify that your savings is on hand. Keep saving steadily and be sure to keep your savings in place.

Posted by Paul W. Cutler on 11/13/2016

Buying your first home can be confusing. Securing a mortgage is one of the most important parts of the home buying process. Making sure that you have the right loan and have chosen the right loan officer are among†the things a first time buyer has to do to start the process. Here are some more tips on how to ensure a successful purchase: 1. Make sure your deposit is in order. Talk to your loan officer about what amount of a deposit is required for the purchase and type of loan. You will also want to make sure the funds are accounted for and readily available. You can expect deposits to run anywhere between 3 and 20 percent of the purchase price. 2. Plan to have a cash reserve in addition to your deposit. You may want to have a reserve of at least two months mortgage payments. 3. Ask your lender to go over all the fees that apply to the purchase. It is better to be prepared and know how much the actual purchase will cost. These costs are typically added into your loan but there may be some out of pocket expenses too. 4. Consider how much you can comfortably afford not how much you have been approved for. These numbers may vary considerably. Your mortgage costs should not be more than†30% of your household income. 5. The lowest rate is not always the best deal. You will want to look at not only the rate but also the terms and fees associated with the loan.