So you checked your credit, assessed the market, and have begun your search for your new home!  You visit all of the listings sites and save your favorite houses, but you realize they are all in different neighborhoods.  And, you’re not actually sure WHERE you want to buy your new home.

How do you know which town or city is right for you?  What factors should you keep in mind when searching for a neighborhood that will meet your needs?  And are there any tools to help you with your search?

Here are 5 factors that you should consider when searching for a new neighborhood.  Most of my Illinois clients are moving to avoid high taxes in their area, and I find myself showing many Northwest Indiana properties as a result.  So, I will use both states as examples throughout this discussion.

Commute

While the average commute for Americans is around 27 minutes each way, many people end up traveling 30-60 minutes or more during traffic and construction season—which, as we know, is 365 days a year in Chicago.  If you spend 5 hours of your week in the car, finding a home in a neighborhood with convenient commuting options is crucial for work/life balance.  Consider your average travel time to work, proximity to highways, and public transportation when searching for a home.

Residents of Northwest Indiana who commute to Illinois have heard it before: “You come all the way from INDIANA every day?!”  But the truth is, Northwest Indiana provides great options for commuters to travel to work in a timely manner.

For example, the average driving commute for Dyer residents who work in Chicago is 39 minutes.  Compare that to the 51-minute average drive from Naperville, and you’re saving yourself 2 HOURS of driving time per week!

Do you prefer to take the train to work?  The South Shore Line train has stops in Portage, Hammond, and other Indiana towns, and it provides quiet cars, discounted tickets in bulk, and Wi-Fi.  You’re just a 45-minute ride from downtown at any given time.

Safety

Safety can be a big factor in searching for a home.   Whether you have a family or just want to walk the streets worry-free, consider doing some research into each town’s safety rating.

Northwest Indiana provides some of the safest towns to choose from in the entire state.  While Federal Fair Housing laws do not permit agents to discuss neighborhood safety, there are plenty of tools you can use to do the research yourself, including Safewise, Niche, and the National Council for Home Safety and Security.  These lists account for violent and property crime as well as resident reviews.

Often, a good way to research a neighborhood is to drive around at different times (morning, midday, weekdays, weekends, etc.). Doing so gives you an idea of the town’s atmosphere and an opportunity to imagine yourself in that environment. It can also be comforting to see police and fire stations, hospitals, and other emergency resources are close by.

Taxes

Benjamin Franklin once said that there are two certainties in life: death and taxes.  Taxes are a huge factor in your new monthly home payment, and knowing what to expect when it comes to federal, state, and county taxation is key to budgeting accordingly.

There are several tools you can use to research the taxes you might pay in different areas.  Financial website Kiplinger provides a detailed map showing the difference in taxation among US states:

Likewise, you can compare state-to-state taxes with their list tool, as I have done here with Illinois and Indiana:

The area in which you choose to buy a home can affect your buying power.  For Illinoisans looking to move to Indiana, the difference in buying power can be significant thanks to lower taxes.  For example, a budget of $180,000 in parts of Illinois can equate to a $230,000 budget if searching in Indiana!  Understanding how tax percentages play into your house payment can change which homes you can afford in different neighborhoods.

Education

If you have children, education is a category you should research.  Take a look at schools in each neighborhood, paying attention to academics, student programs, and athletics (if applicable).

Northwest Indiana provides some great schools, and there are plenty of tools to help you pick a district.  Niche compiles school lists based on data involving graduation rates, college readiness, teacher quality, and more, and U.S. News provides “Best High School” rankings that include some Indiana schools.  

If you’re looking to provide a stellar elementary, middle, or high school education for your child—or all of the above—Northwest Indiana has wonderful options for schooling in each neighborhood.

Social Needs

When searching for a home, consider neighborhoods that can provide you the excitement you need.  Whether you’re extroverted or introverted, search for areas with the right amount of social interaction for your comfort level.

Do you prefer a tight-knit community where everything is within walking distance?  You can use sites like Walk Score to gauge an area’s walkability and see how close your potential home is to local restaurants, shops, parks, etc.

When it comes to towns that offer social events in Northwest Indiana, you really can’t go wrong with any neighborhood.  From weekly activities to holidays, each one hosts events throughout the year. Just take a look at this list of “20+ Places to See Santa Claus in Northwest Indiana” posted by local blog Ramble the Region.

If you require retail therapy regularly, the areas surrounding Southlake Mall in Hobart and Shops on Main in Schererville are filled with shopping opportunities at major retailers.  Many towns—such as Valparaiso and Crown Point—even have downtown areas made up of small businesses you can support.

In Summary

Commute, safety, taxes, education, and social needs are important factors to consider when searching for a new home.  Although the importance of each factor can vary from person to person—someone with children may prioritize education and safety over taxes or commute—these categories encompass many of the circumstances individuals should consider when searching for a town or city that can meet their needs.

My Home Search App is a great tool to use when searching for the right neighborhood in which to buy a home.  The best part: if you open the Home Scan feature, point your phone at any house for sale, and tap the screen, the app can provide you more info with no search required.

Contact me today if you have any questions regarding the right neighborhood for you and your family!

So you’ve checked your credit score, you feel confident in your finances, and you’re ready to start your home search!  You’ve scoured Zillow, Trulia, and other listing sites for homes, and you have a list of potential houses to see.  

But wait: is this a good time to buy?  How do I know I’m getting a good deal? And why do houses seem to be disappearing overnight?

Before you go crazy making appointments to see houses, consider speaking with a professional about your home search.  Realtors are great resources for information, and you should always consult with one before diving into a contract.  Two big things they can help you understand are the difference between a buyer’s market and a seller’s market and how both cycles affect the homes available to you.

What do you mean there are different markets?

The real estate market is full of ups and downs, similar to a roller coaster.  Changes are controlled by the law of supply and demand, and contributing factors include area, seasons, and the financial market.  That’s right, it’s ECON 101 all over again!

With real estate markets, you want to focus on “housing supply” and “housing demand”.

An agent can walk you through the specific factors that affect the market of any neighborhood you’re investigating.  But, here is a guide to understand the features of each market and what to expect when buying.

What is a buyer’s market?

In a buyer’s market, housing supply exceeds housing demand.  In other words, the supply of homes for sale is higher than the supply of buyers searching for a home.  

Sellers may see their property sitting on the market longer (about 6 to 9 months), and prices/negotiations are favorable for buyers.  Sellers may often get crafty to sell their home ahead of the competition with home staging, incentives, etc.

What is a seller’s market?

A seller’s market is the opposite of a buyer’s market: so many buyers are searching for homes that their demand exceeds the supply of houses for sale.  

As there are often multiple bids on each property (also known as “bidding wars”), buyers may have to spend more than they want to beat the competition.  Homes sell quickly—sometimes in hours or days—and showing appointments must be made ASAP to avoid a house selling before you can even see it.

Is there anything in between these two markets?

Yes!  A market that has equal amounts of buyers and sellers is a balanced market.  In this situation, home prices can remain stable and bidding wars are reserved for special situations.

So what does the current housing market look like?

This is a great question with a vague answer: it depends on where you’re looking.  The housing market can vary by city or state, taking into account factors such as cost of living, schools, neighborhoods, etc.  

Northwest Indiana is a sought after region!  Many Illinois residents are moving to Lake, Porter, LaPorte, and Jasper Counties as public transportation and other infrastructure improvements make it possible to commute to Chicago from out of state.  

Additionally, the South Shore CVA lists lower taxes, great schools, and increasing home values as factors that have piqued the interest of buyers.  With all of this in mind and median home prices on the rise, it’s fair to say Northwest Indiana is currently experiencing a seller’s market.

However, as previously stated, the market oscillates frequently.  While the current market will ideally last through the end of the year, 2020 could bring Northwest Indiana much different circumstances that affect home sales.

In Summary

Supply and demand are the main factors that influence the housing market.  When buyer demand is high and selling supply is low, we have a seller’s market.  When demand is low but supply is high, we experience a buyer’s market.  And, when supply and demand match, we have a balanced market.

Northwest Indiana is currently experiencing a seller’s market, with many regional features creating a high demand from buyers and driving up median selling prices.

Each market comes with its own benefits and challenges, and seeking a home at the right time can be crucial to getting a good deal in your dream neighborhood.  Speaking with a professional about your home search should be at the top of your list of priorities before you start!

Download my app today to start your search, and contact me for more information on neighborhoods, market trends, and any other questions you may have regarding finding your dream home.

Buying your first home is one of the most exciting milestones you can achieve: you’ve finally reached a level of personal and financial independence where you can comfortably purchase property and build equity.  Congratulations!

However, it can also be incredibly stressful, and your head may be swirling with questions: Is this a good time to buy?  How do I know if I’m getting a good deal? What is a mortgage and how do I get financing? Where should I even start?

 Luckily, this blog will help break down some of the more complex topics of home buying or selling.  Our goal is to help you feel more confident in your decisions and make the process a smooth one!

So let’s get started: you’re thinking of budgeting for a home purchase, but you don’t know your credit score.  How can you find out what your score is and does it play a role in buying a house? Is there a recommended score for home buying?

Where can I find my credit score?

There are many free resources that will provide access to your credit report.  My favorite tools for viewing my credit scores are Credit Karma and NerdWallet, as they provide valuable insights into what factors impact your scores and how you can improve them.  They’ll also send you updates every time a score changes to keep you informed and protect against any unapproved activity on your accounts.

If you’d rather not make a free account, most credit card companies allow you to view your credit score on their website, and you can also order your annual free credit report here.

Once you know your credit score, you can better understand how that number impacts your buying power.

How high should my credit score be if I want to buy a house?

This is a tough question: there is no specific score required to buy a home.  Whether it’s a VantageScore or FICO credit rating, your score helps you understand what financing options you’ll have rather than providing a definitive cutoff for home buying.

Ultimately, a score over 500 can potentially receive funding, and scores over 740 have the most options.  Overall, your credit score will play into the loan financing, down payment, and mortgage rates you will need.  The healthier your credit score, the more options you will have.

Why is a healthy credit score important for buying a home?

Mortgage lenders use credit scores as a predictor for whether or not you will repay your home loan.  Your credit score is made up of many factors that demonstrate whether you are a responsible creditor who will pay his or her mortgage payments on time.  

For instance, a higher score signals reliability, as you have paid your credit card bills on time, have not spent to your card limits, etc.  If you do have a lower score, you may still find a lender willing to accept your loan, but you will experience higher interest rates to make up for the “risk” of investing in your purchase.

Maintaining healthy credit is an important step in ensuring you get the best loan options for home financing.

What types of loans can buyers expect for their mortgage?

The three loan types you will typically see are Conventional, FHA, and VA.  Here are some basic descriptions of each:

Conventional Loans

Conventional loans are not backed by the government (FHA or VA), so they are reserved for individuals with higher credit scores.  Due to the risk of taking an uninsured loan, lenders often require higher down payments. But, buyers who put at least 20% down do not have to buy mortgage insurance and can expect a lower monthly payment.  

Conventional loans can be conforming or non-conforming/jumbo, depending on their amount and whether they “conform” to the guidelines set by Fannie Mae and Freddie Mac, with conforming loans having lower mortgage rates and non-conforming loans having higher amounts and stricter requirements.

FHA Loans

The Federal Housing Administration insures your loan in case you are unable to pay a private lender.  Buyers can use FHA loans when they have lower credit scores or to purchase homes that require renovation (also known as a 203(k) loan), and the loans can sometimes lower mortgage insurance payments.  You can typically expect a 3.5-10% downpayment with an FHA loan: the lower the credit score, the more money required. 

VA Loans

VA loans are available for any active duty military, veterans, or eligible spouses of military personnel.  The U.S. Department of Veterans Affairs insures these loans, and they often require no down payment or mortgage insurance.

What type of loan can I expect with my credit score?

The infographic below summarizes the types of loans and interest rates you may secure with each credit score.  

Note: There will always be outliers in this information, but feel free to use this as a general guide to give you an idea of what to expect in your situation.

In Summary

Your credit score is a great indicator of what type of financing you could receive in the home buying process, but there are options for buyers in most categories.  If you’re thinking of purchasing a home, you may want to start with a good look at your credit score: is it in a healthy range? If not, can you take the time to work on repairing your credit?  

When looking to get the best loan options, you should try to maintain a credit score above 740.  In reality, experts regard scores of 620-640 as the threshold to obtaining a conventional loan. If your score is less than ideal, you can always work on repairing your credit or look at FHA, VA, and other loans rather than conventional ones.  It may take a little more time to prepare to buy, but doing so can save you some cash and heartache when you finally find your dream home.

Do you still have some questions?  Are you ready to start your home buying adventure?  Please contact me so I can help you find your dream home!