Apple FCU’s Top Tips for Homebuyers Helps Buyers Navigate Local Market

By Jeffery Long, Vice President Lending, Apple Federal Credit Union

With the spring market around the corner, Apple Federal Credit Union released its 2017 list of Top Tips for Homebuyers to help new homebuyers prepare for the experience. Typically, the spring market between March and Memorial Day is the busiest of the year.
 
We expect a robust spring market in the Northern Virginia region. Despite the headlines touting rising interest rates above 4 percent, they are still well below 2013 levels, and we fully expect home sales to be brisk.  Being prepared will help homebuyers get a home they want at a price they can afford. 
 
Nationally, the Mortgage Bankers Association predicts mortgage purchases to rise to $1.1 trillion in 2017, up 10 percent from 2016.  Early indicators from Apple FCU support this trend and reveal a strong local housing market.  In addition, Zillow data shows the median home value in Washington, DC is $535,000, and is predicted to rise 4.5 percent this year. In Fairfax, VA, the median home value is $521,200 and expected to rise 3 percent within the next year.  In all, home values in Northern Virginia are expected to grow between 2.5 and 4 percent.
 
To capitalize on these strong market conditions, Apple FCU, which has 22 branches throughout Northern Virginia, has compiled this list of consumer tips to help make the process easier and better for homebuyers in the DC metro region—especially first-timers.

1. Be Pre-Approved Rather Than Pre-Qualified.  A pre-approved loan means that a lender has reviewed your mortgage application, credit, and other paperwork and has approved you for a loan of a specific amount.  This helps guide your home search, since you know what loan amount you qualify for and allows your lender to pre-approve you in up to three days. In contrast, if you are pre-qualified, your lender has not done a complete application process so you may or may not qualify for the loan in question.
2. Know What You Can Afford.  What is your comfort level?  Your lender will tell you what they think you can afford according to your pay stubs and debt-to-loan ratio, but that often is not your total financial picture.  Do you pay for daycare, for instance?  That can be substantial, so be sure to take things like that into consideration when you decide how much of a loan burden you want to carry.
3. Save for a New Home. The money you save for your loan down payment should have two purposes.  First, of course, is to secure your mortgage loan and lower your monthly payments.  But in addition, it’s a good idea to put some of that money aside for unexpected problems.
4. Understand Your Credit Score.  Check your credit score and balances on your credit cards to ensure your debt is 50 percent below the amount of your credit line.  For example, if you have a line of $10,000 on your credit card, ensure that your debt is no more than $5,000 or your credit score goes down.  The lower your credit score, the more difficult it will be to get a mortgage loan.  Ensure your credit card has been open a minimum of 12 months and you have a reliable payment record.
5. Identify Your Lending Options.  In addition to banks, check out credit unions and other non-profit lenders, as they often have rates that are lower because they do not have shareholders to pay.  Other things to consider: is your loan going to be sold to another institution in another part of the country where you will never see a live representative over the 30 years of your loan?  Will the lender take your character, personal history and other non-financial things into consideration when determining if they will qualify you for a loan?
6. Realize that Lenders are Not Created Equally.  Find out if loan decisions at your lender are made locally where the decision makers understand the local landscape, economy, and other issues that influence the market. Ask if your lender will help you if you are turned down for a loan. At Apple, for instance, loan experts sit down with potential homebuyers and explain why they didn’t qualify and counsel them on what to do over the next 6-12 months to improve their chances for a loan.
7. Shop with a Professional Real Estate Agent.  Working with an agent will save you time and frustration. These professionals are wired into expansive databases of inventory and can hone in on the location you choose. Some institutions can help connect you with trusted agents.  For instance, Apple offers Home Advantage, a program which partners with real estate agents who are experienced, vetted, and rated by a national company.  Buyers also receive a cash reward equal to 20 percent of the agent’s commission.

 
Following these important tips will help make your home buying experience a positive one.
 
To learn more, visit www.AppleFCU.org.