Advice on the real estate market 2021


Jaxx Fox has lived in East Tennessee her entire life, although she never felt at home in the apartments she rented. That’s why, three years ago, Fox decided to focus on saving for his own home.

According to the National Association of Realtors (NAR), first-time buyers like Fox are entering a real estate market where housing affordability declines dramatically.

The organization’s Housing Affordability Index indicates that the housing shortage is driving up costs across the country, and is particularly impacting first-time homebuyers.

Median family income in April was down 1.0% from March. Meanwhile, the monthly mortgage payment rose 16.1%.

Fox spent three years paying off her student loans and saving so she could buy the house she always wanted. When she started looking, it looked nothing like she expected.

Fox found a place in a month, but that doesn’t mean it was easy.

From financing to finding a home, this is what first-time buyers need to know in a competitive and expensive real estate market.

How to prepare to pay for a house

Claudia Rios, senior loan officer at First Community Mortgage, told Knox News that the two things that make or break a first-time buyer's loan experience are credit and income.

The first step for new buyers is knowing how to pay for a seat. Usually, people who are buying their first home turn to mortgage lenders for a home loan.

Claudia Rios, Senior Loan Officer at First Community Mortgage and a founding member of the National Association of Hispanic Real Estate Professionals, has helped many first-time homebuyers since her career in financial services began in 2006. She said the current real estate market is radically different. than anything she has seen before.

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Here’s how Rios suggests new buyers get ready to buy their first seat.

  • Plan months in advance: Rios told Knox News that new buyers should speak with a lender about six months before they hope to buy. “It’s never too early to start preparing for a mortgage,” she said. Once newbies find a lender, Rios advises following up often until they’re ready to start looking for a home.
  • Check that your credit score is correct: The COVID-19 pandemic has created challenges for credit bureaus. Rios said she finds that many scores are incorrect. If a buyer’s score is wrong, they can work with a lender to dispute the issue.
  • Contact a credit counselor if needed: Not everyone’s credit score is the best place to buy a home. Rios tells his clients to aim for a credit score of 700 or higher to get a good interest rate and pay off their debts. If you are having difficulty raising your score, credit counselors are available to help you.
  • Make a budget: Buying a home is a big investment, but you don’t want to find yourself stuck paying more than you can afford. Rios asks his clients how much they’re willing to pay monthly and works backwards. The goal is to make enough room in your income for a mortgage payment. Rios said setting aside 45% of his income for a mortgage and 55% for other expenses works well for most of his clients.

The most important thing to do before you buy is to set realistic expectations. It starts with funding. Home prices are rising faster than ever, which means the money isn’t going that far.

According to an analysis by Hancen Sale, director of government affairs and policy for the Knoxville Area Association of Realtors (KAAR), the median selling price of a home was $ 275,000 in June, up 21.4% from report to June 2020.

The 30-year fixed mortgage rate was 3.11% in April compared to 3.37% a year ago.

“Today’s market is tight because a $ 250,000 loan doesn’t get you the beautiful four-bedroom home you might expect. Buyers have to go higher and be strategic.” , said Rios. “It’s a drawback for a lot of people, including new and previous buyers, but it’s the reality.”

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How to buy your first home

Jaxx Fox's is showing his home at 5411 Wil Loyd Drive in Knoxville, Tennessee on Thursday, July 15, 2021. The Fox's are first-time buyers and are working hard to update and repair their home before they move in.

For Fox, finding and buying his first home was the hardest part. This is often the reason why many new buyers give up, especially in this competitive market. But Hudson Legacy Group real estate agent Nikita Hudson said there are ways for buyers to resist the pressure.

“My first conversation with a new buyer only gives them a clear picture of what the market looks like right now and what the process will look like,” said Hudson. “It’s been hard because it’s not what they think it is.”

Here are Hudson’s tips to help first-time buyers succeed.

  • Real estate market research: Just as it takes time to get financing, new buyers should watch the market months before buying. This gives beginners a good idea of ​​costs, timing and supply.
  • Look at your budget below: Hudson recommends that buyers avoid homes at the top of their budget. Look at the ads that give you $ 20,000 wiggle room, she said. KAAR calculations show that over 68% of homes sold in Knoxville in May were sold at list price or higher; almost 10% sold for $ 25,000 or more above asking price.
  • Be prepared to pay: Fox said a large down payment, paying closing costs and offering a down payment helped her secure her home. Hudson supports these strategies and advises buyers to include contingencies in their contracts. An example of a clause would be to agree to ask for improvements only at a certain cost.
  • To show creativity: Money speaks, but Hudson said she sees more and more buyers coming up with creative solutions. “I’ve even asked agents to write offers in which they offer to have champagne brunch at the close,” said Hudson. “You never know what will influence a salesperson.”
  • Always request an inspection: Jim Clabo, owner of A-Pro Home Inspection Services, said that even in the midst of the market craze, it’s never a good idea to skip the inspection. “Inspection can save you hundreds of thousands of dollars. At the very least, it gives buyers peace of mind. Clabo advised new buyers to expect inspections to take a week due to delays.
  • What must happen will happen: Hudson said she encourages her clients to be patient on their home buying trips. “Lord knows we all need it right now,” Hudson said.

From one beginner to another

Updates are being made to the kitchen at Jaxx Fox's home at 5411 Wil Loyd Drive in Knoxville, Tennessee on Thursday, July 15, 2021. The Foxes are first-time home buyers and strive to update and to repair their house before moving in.

Fox’s home buying experience ended quickly and she is one of the lucky ones. She worked for years to achieve her financial goals, which helped her prepare to buy a home. What really made the difference was the timing.

The North Knoxville home purchased by Fox returned to the market after the initial buyer’s financing failed. Fox bid above the asking price, but the valuation was below the cost they offered. The owners desperately wanted to close quickly and accepted the appraisal price.

Since then, Fox and her husband have arranged the place to make it their own. Fox said she wouldn’t trade the stress of buying a home, however.

“(Owning a home) means certainty and stability with my home. I control what happens and doesn’t happen with my living space, and I feel so much more secure than renting,” Fox said.


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