Waiting for the mortgage rates to come down before you buy a home may not be a good decision.

If you are correct, and the rates do come down by two percent, the savings you benefit from a lower rate will most likely be devoured by the appreciated price increase.

As of 12/8/22, the 30-year fixed-rate was at 6.33% which is close to the highest level since mid-2008.  If the rate drops to 4.7% in three years but the price increases by 5% a year, a $400,000 home today, will cost $463,050 three years from now.

An increasingly, popular option that more buyers are considering is to purchase the home today with an adjustable-rate mortgage that could give them a 5.00% rate for five years.  Then, refinance to a fixed rate when rates come down.

Not only will the buyer have lower payments with the ARM, but the buyer will also own the home, and benefit from the appreciated prices which will build equity in the home and increase their net worth.

Mortgage rates have increased over 3% in the first three quarters of this year.  Some would-be buyers are wishing they had a do-over so they could get into a home at a lower rate. The current differential between the fixed and adjustable rates could lower the monthly payment. 

The lower adjustable-rate could save a buyer $300 a month during the first period of five years.  At any point during that period, they could refinance at a better interest rate should it become available.  However, if the rates do start trending down, the homeowner might decide not to refinance because the rate on the ARM would have to go down at the next adjustment period to reflect the lower of rates in the market.

Mortgage rates have been low since the housing crisis that caused the Great Recession.  The government kept them low to build the economy.  Then, the Pandemic threatened the economy, and the government spent a tremendous amount of money to bolster it which led to inflation which is what is causing the rates to increase currently.

When inflation is under control and back to acceptable levels, the rates should lower.

Home prices are a different situation.  The recent rise in mortgage rates has caused home prices to moderate because it affects affordability.  Inventories are still low and there is a pent-up demand for housing from purchasers unable to buy during the pandemic.

This coupled with millennials reaching household formation age and insufficient home building to keep up with demand for the last decade, prices are expected to continue to rise.  The rate of appreciation could even increase when rates come down which would also affect affordability and demand.

Buyers who feel they missed a window of opportunity to buy before rates started increasing should investigate financing alternatives.

Credit scores are used to assess risk and determine whether a borrower is approved or declined for a mortgage, credit card or some other type of credit.  The score is a numerical value ranging from a low of zero to a high of 850 or 900 depending on the credit bureau.

The higher the score, the more likely the lender will be repaid in a timely manner.

1. A higher credit score could help you get a lower interest rate
2. You can get a free credit report from all three major bureaus at www.AnnualCreditReport.com.
3. Your credit score doesn't have to be perfect to get a loan ... most lenders want buyers to have a minimum of 620 but FHA will consider as low as 500
4. Credit utilization, the percentage of credit used compared to what is available, should be kept below 30%; amounts higher could negatively affect your credit score.
5. There is a difference between a soft and a hard credit pull.  The former doesn't hurt your score, but the latter can lower it a few points.  Try to avoid multiple hard inquiries.
6. Credit cards, bank loans, car loans and home loans are considered "good credit" and a mixture of different types is helpful compared to only a car loan.
7. Opening new credit accounts after you apply for a mortgage can hurt or even prevent you from being approved on the mortgage.

There are five components to making up a credit score.  35% of the weighted average is determined by payment history like paying on time.  The next highest item is the amount owed and counts for 30% of your score.  This component deals with credit utilization which is expressed as a percentage of what you owe divided by what is available.

The length of time you have had credit established accounts for 15% of the score.  New credit and the types of credit accounts are weighted at 10% each.  Opening several accounts in a relatively close period will negatively affect your score.  While it isn't necessary to have all types of credit like credit cards, installment loans, finance company accounts and mortgage loans, the types of credit in the mix are evaluated.

If you need help increasing your score, a trusted lender that provides your pre-approval can also make suggestions that would improve your credit.  Contact Connie Sadowski, Realtor  614-943-0025 to get a personal recommendation of a trusted mortgage lender.

The keys to your home are in hand.Finally, you can install your dream patio.You can paint the walls without losing your security deposit.Heck, you could knock out a wall. You’re soooo ready to be a homeowner.So ready in fact, you’re about to make some costly mistakes.Wait, whaaat?“You have to rein it in and be smart,” says Daniel Kanter, a homeowner with five years under his belt. Especially in your first year, when your happiness, eagerness (and sometimes ignorance) might convince you to make one of these eight mistakes:

The sounds your HVAC system is making clearly require the knowledge of a professional (or perhaps an exorcist?).But you’ve been smart and gotten three contractor bids, so why not go with the lowest price?You might want to check out this story from a Michigan couple. Rather than going with a remodeler who’d delivered good work in the past, they hired a contractor offering to complete the work for less than half the cost, in less time.A year later, their house was still a construction zone. You don’t want to be in the same spot.What to do: Double-check that all bids include the same project scope — sometimes one is cheaper because it doesn’t include all the actual costs and details of the project. The contractor may lack the experience to know of additional steps and costs. Related: How Remodelers Scam You Without You Ever Knowing

Spend Oh-So-Wisely on a Kitchen Remodel

1. 6 Materials to Never Use in Your Kitchen
2. How to Shop for a Retro Kitchen — and Not Get Stuck with Junk
3. Refacing Your Kitchen Cabinets: The Options and Costs

Insurance is there to cover damage to your property, so why not use it?

Because the maddening reality is that filing a claim or two, especially in a relatively short period, can trigger an increase in your premium. “

As a consumer advocate, I hate telling people not to use something they paid for,” says Amy Bach, executive director of nonprofit United Policyholders, which works to empower consumers. But, it’s better to pay out of pocket than submit claims that are less than your deductible.Save your insurance for the catastrophic stuff. “You want the cleanest record possible,” Bach says. 

“You want to be seen as the lowest risk. It’s like a driving record — the more tickets you have, the more your insurance.”

Some insurance groups, like the Insurance Information Institute and National Association of Insurance Commissioners, say it’s hard to generalize about Money TipEven claims on your house by the previous owner can count against you if the issues haven't been fixed; insurers fear the home is likely to have more claims.premium increases because states’ and providers’ rules differ. But this stat from a report by UP and the Rutgers Center for Risk and Responsibility at Rutgers Law School is pretty sobering: Only two states — Rhode Island and Texas — got top marks for protecting consumers “from improper rate increases and non-renewals” just for making:

• An inquiry about a claim
• A claim that isn’t paid because it was less than the deductible
• A single claim 

Your best protection? Maintaining your home so small claims don’t even materialize.

Brandon Hedges, a REALTOR® in Minneapolis-St. Paul, recalls a couple who, though only planning to stay in their home for a few years, quickly replaced all their windows. When the time came to sell, he had to deliver the crushing news that they wouldn’t get back their full investment — more than $30,000.New windows can be a great investment if you’re sticking around for awhile, especially if windows are beyond repair, and you want to save on energy bills.Just because you might personally value an upgrade doesn’t mean the market will. 

“It’s easy to build yourself out of your neighborhood” and invest more than you can recoup at resale, says Linda Sowell, a REALTOR® in Memphis.

What to do: Before you pick up a sledgehammer, check with an agent or appraiser, who usually are happy to share their knowledge about how much moola an improvement will eventually deliver. Related: The Newbie Homeowner’s Guide to Maxing Out Resale Value

When you enter homeownership with an apartment’s worth of furnishings, entire rooms in your new home are depressingly sparse. You want to feel settled. You want guests at your housewarming party to be able to sit on real furniture.But try to exercise some retailing willpower. Investing in high-quality furniture over time is just smarter than blowing your budget on a whole house worth of particleboard discount items all at once. 

What to do: Live in your home for a while, and you’ll get to know your space. 

Your living room may really need two full couches, not the love seat and a recliner you pictured there.

Shortly after moving in, your sump pump dies. You begrudgingly pay for a new one and try to forget about the cash you just dropped. But don’t! When it comes time to sell, improvements as small as this are like a resume-builder for your home that can boost its price. And, if problems arise down the road, warranty information for something like a new furnace could save you hundreds.

What to do: Stow paperwork like receipts, contracts, and manuals in a three-ring binder with clear plastic sleeves, or photograph your documents and upload them to cloud storage.

Use your inspection report as your very first home to-do list — even before you start perusing paint colors. Minor issues that helped take a chunk of change off the sale price can cause cumulative (and sometimes hazardous) damage. Over time, loose gutters could yield thousands in foundation damage. Uninsulated pipes? You could pay hundreds to a plumber when they crack in freezing temperatures. And a single faulty electric outlet could indicate dangerous ungrounded electricity. 

What to do: Get the opinion and estimate of a contractor (usually at no charge), and then you can make an informed decision. 

But remember  

No one wants to be a Negative Nancy, but there’s a benefit to knowing the worst-case scenario.Homeowner Kanter tells the time he hired roofers to remove box gutters from his 1880s home. Little did he know, more often than not aged box gutters come with more extensive rot damage, which his roofers weren’t qualified to handle.“We had to have four different contractors come in and close stuff up for the winter,” he says. 

Had he researched the problem, he could have saved money and anxiety by hiring a specialist from the start, he says.

What to do: Before beginning a project, thoroughly research it. Ask neighbors. 

Ask detailed questions of contractors so you can get your timing, budget, and expectations in line.

You need some basic tools for your first home — a hammer, screwdriver set, a ladder, maybe a mower.

But if you pick up a “novelty” kit (like those cute pink ones) or inexpensive off-brand items, don’t be surprised if they break right away, or if components like batteries have to be replaced frequently.

What to do: For a budget-friendly start, buy used tools from known quality brands (check online auctions or local estate sales) that the pros themselves use.

When to File an Insurance Claim (and W

8 Things Every New Homeowners Should Have

Improve, Remodel, Remodeling Tips & Advice by  AMY HOWELL  HIRT  SOURCE:  COLUMBUS  REALTORS®