Tips and Tools for Applying for a Mortgage as a Freelancer or Contract Worker
Many people dream of owning a home. However, not many people can afford to pay the full amount of a house in cash up front. A mortgage is the logical solution. If you're a freelancer or a contract worker, getting a home loan can be more challenging, as lenders may view you as higher risk. However, it isn't impossible. The real estate pros at Team Stiles offer some valuable insight into obtaining a mortgage. Find Ways to Minimize Your Mortgage Needs Take steps to counteract the innate risks inherent to mortgages for freelancers. Set up automated savings to start putting money towards a down payment, so you don't need as large of a loan. Save money for your down payment by reducing business overhead costs. Try tips like eliminating commercial rent and reassessing the need for software upgrades. Fully establish your business, and complete your Indiana LLC registration with the state so you can enjoy tax advantages and save more money. Steer clear of typical "red flags'' that might deter a lender from issuing a freelancer a loan, such as large tax deductions. Get Your Financials in Order Prepare your paperwork in advance to simplify the process. Use an online mortgage calculator to figure out how much you can afford to pay for a new house. Learn about mortgage pre-approval, which can help you look like a more serious buyer to prospective sellers. Request back copies of your tax returns from the You may need these to get mortgage pre-approval as a freelancer or contract worker without a steady paycheck. Gather any other essential paperwork you need to apply for a home loan. Find a Fitting Home Within Your Budget A strategic approach to house hunting will ensure you don't go over budget. Try to buy your home in the winter when the competition isn't as stiff. Find a reliable realtor through Team Stiles to guide your home purchase. Strive to make a down payment of at least 20% so you can forego the added expense of private mortgage insurance. Negotiate your closing costs to further save money. Finding your dream home is only half the battle when you're house-hunting. Securing the mortgage you need to afford it is another challenge—especially if you're a freelancer or contract worker. The above resources can help you get the funds you need. Image via Pexels
The Next Generation of Homebuyers Is Here
Many members of Generation Z (Gen Z) are aging into adulthood and deciding whether to rent or buy a home. If you find yourself in this group, it’s important to understand you’re never too young to start thinking about homeownership. The sooner you start planning, the sooner you can move on from renting. As you set off on your journey and plan your next move, here are a few reasons to think about homebuying this year. The Reasons Gen Z Want To Become Homeowners While the majority of Gen Z haven’t entered the housing market yet, a large portion plan to according to a realtor.com report. The report found that 72% of Gen Z would rather purchase a home than rent long-term. As George Ratiu, Manager of Economic Research for realtor.com, says: “With nearly three-quarters of those surveyed preferring to buy versus renting long-term, the housing industry should be prepared for millions of Gen Z buyers to bring a new wave of demand along a similar stage-of-life timeline as the millennial generation before them.” But why do so many members of Gen Z value homeownership? According to the latest Home Buyers and Sellers Generational Trends Report from the National Association of Realtors (NAR), young homebuyers – more than any other age group – want to become homeowners because they want to have a place of their very own. That may be because one of the biggest benefits of homeownership is having a place that you can truly make your own by customizing it to your style and personality. Whether that’s the décor, painting, or renovations, when you own your home, you don’t have to limit yourself to what your lease and landlord will allow. Not to mention, owning a home provides much greater long-term stability and security than renting. When you own a home, there’s also protection from steadily rising rental costs because your monthly mortgage payment is locked in for the length of your loan (typically 15 to 30 years). Work with a Real Estate Professional To Achieve Your Goals Whether you’re just getting started on your homebuying journey, you want to learn more about the process, or you’re fully committed to buying your first home this year, it’s especially important to connect with a trusted real estate advisor soon, as you won’t be the only first-time buyer in the market. According to a recent survey from realtor.com, a majority of first-time buyers surveyed are looking to purchase a home in 2022. As the survey notes: “First-time home buyers retain their optimism despite a challenging housing market in the past year. Hoping to achieve their goal of homeownership and provide a comfortable space for their families, young buyers are setting out to learn what they can about the market and setting their list of priorities for their home purchase.” That means you’ll likely face strong competition from other first-time buyers. One way to get a leg-up on that competition is to work with a real estate professional to make sure you have the support you need to make an informed and confident decision. Bottom Line If you’re planning your next move, you’re not alone. Just know it’s never too early to consider the benefits of homeownership over renting. To learn more, make a connection with a real estate advisor so you have a trusted professional on your side to help you explore your options.
Buyers Want To Know: Why Is Housing Supply Still So Low?
One key question that’s top of mind for homebuyers this year is: why is it so hard to find a house to buy? The truth is, we’re in the ultimate sellers’ market, so real estate is ultra-competitive for buyers right now. The number of buyers searching for a home greatly outweighs how many homes are available for sale. While low inventory in the housing market isn’t new, it’s a challenge that continues to grow over time. Here’s a look at two reasons why today’s housing supply is low and what that means for you. 1. New Home Construction Fell Behind for Several Years The graph below shows new home construction for single-family homes over the past five decades, including the long-term average for housing units completed. Builders exceeded that average during the housing bubble (shown in red on the graph). The result was an oversupply of homes on the market, so home values declined. That was one of the factors that led to the housing crash back in 2008. Since then, the level of new home construction has fallen off. For the last 13 straight years, builders haven’t been able to construct enough homes to meet the historical average (as illustrated in green on the graph). That underbuilding left us with a multi-year inventory deficit going into the pandemic. 2. The Pandemic’s Impact on the Housing Market Then, when the pandemic hit, it fueled a renewed appreciation and focus on the meaning of home. Having a safe space to live, work, school, and exercise became even more important for Americans throughout the country. So, as mortgage rates dropped to at or below 3%, buyers eagerly entered the market looking to capitalize on those low rates to secure a home that would fulfill their changing needs. At the same time, sellers hesitated to put their houses on the market as concerns about the pandemic mounted. The result? The number of homes available for sale dropped even further. A recent article from realtor.comexplains: “Last month, the number of home listings dropped 26.8% compared with the same time a year earlier. This meant there were about 177,000 fewer homes listed in what’s already typically a slower month due to the holidays andcolder weather. . . .” What Does All of This Mean for You? For a buyer, low inventory can be a challenge. You want to find the home of your dreams, and you don’t want to settle. But what if there just aren’t that many homes to choose from? There is some good news. Experts are projecting more homes will soon become available thanks to sellers re-entering the market. Danielle Hale, Chief Economist at realtor.com, shares this hope, but offers perspective: “We expect that we’ll start to see a turnaround and inventory will stabilize and start to go up a little bit in 2022. . . . But that means we’re looking at inventory levels of roughly half of what we saw before the pandemic. For buyers, the market is likely to continue to move fast. If you see a home you like, you want to jump on it right away.” Basically, inventory is still low, even though more homes are coming. But you shouldn’t put your plans on hold because you’re waiting for those additional houses to hit the market. Instead, stick with your search and persevere through today’s low inventory. You can find your next home if you’re patient and focused. Remember your goals and why finding a home is so important. Those things should be the driving force behind your search. Share them with your agent and be clear about your priorities. Your trusted advisor is your greatest support as you navigate today’s low housing supply to find the home of your dreams. Bottom Line If you’re planning to buy this year know that, even if inventory improves, it’s still lower than the norm. Contact a local real estate professional today to learn more about what’s happening in your area, what homes are available, and why it’s still worthwhile to prioritize your home search today.
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