Getting ready for spring housing market
Mary Chao, ROC
Alisha Hands and her fiancé, Devon Ferguson, are entering the home-buying market this year. Tired of the daily commute to and from Rochester, they listed Ferguson’s home in Newark, Wayne County, for sale in late January.
But first, they had to get their ducks in a row. That meant working tirelessly to update the ranch-style home, and getting their financial house in order.
“Our goal is to have 20 percent down so we can avoid PMI (Private Mortgage Insurance),” Hands says.
With interest rates now hovering around 4.5 percent — and expected to climb as the year progresses — Rochester real estate agents anticipate a strong spring market. In real estate terms, the spring market kicks off right after the Super Bowl and lasts until July 4 in the Rochester region.
Andrea Noto-Siderakis of Nothnagle Realtors is helping Hands and Ferguson with their home-selling and home search. She is expecting a busy spring, but says the level of activity depends on the location and the condition of a home.
Hands and Ferguson are looking in Webster and Penfield but willing to explore other Rochester suburbs. They are pre-qualified for a mortgage and are looking for homes in the $120,000 to $190,000 range.
Getting your financial house in order is vitally important in the busy spring market, Noto-Siderakis says. Make an appointment with a lending professional to determine how much of a mortgage you qualify for and have them print you a pre-qualification letter and a good-faith estimate. This exercise will also allow you to repair any credit issues that may prevent you from buying right now.
“You want to put yourself in the best financial position possible when buying a home,” she says.
You may have to pay down a credit card or consolidate some student loan debt, or, at the other extreme, you may have no credit and need advice on how to start building credit. It’s also important to consider your personal finances.
“Just because the lender will give you a loan for $200,000, it doesn’t mean that you should look for a house in that price range,” Noto-Siderakis says. “You don’t want to put yourself in a house-poor situation.”
For Hands and Ferguson, buying a home meant streamlining their spending. They are dining out less and not buying that morning coffee to save more money toward their home.
Noto-Siderakis suggests you have a housing budget and a maximum amount you are able to spend on principal, interest, taxes and insurance per month, and stick to that figure.
For example, if your budget is $1,200 a month for a home, that may mean that your loan limit should only be $150,000, she says.
Budgeting for a home is something that a mortgage broker or a real estate agent can help you with, Noto-Siderakis says. There are also online mortgage calculators that can assist with calculating the payment versus purchase price, factoring in interest and mortgage insurance payment costs.
Once your finances are in order, make a list of geographic areas where you think you’d want to live and research them. Get familiar with the types of housing to help narrow your search. And when you make a list of the features you want in a house, make sure you distinguish between want and need, Noto-Siderakis says.