Eight steps to buying a house in Delaware

Now that the post-pandemic housing market has finally stabilised, homebuyers face a new challenge: rising mortgage interest rates. The average 30-year fixed-rate mortgage rate rose to 5.49% from an all-time low in 2021. That means the average monthly mortgage payment is $1,641 (assuming a down payment of 20% of the average home price). However, those who buy a house for the first time can purchase it profitably using the services of real estate agents in Newark.

Price cuts and concessions are common in most markets, giving eager buyers an advantage in negotiating the best price. This guide gives some advice on how to buy a home in Delaware confidently, no matter what the market offers. Whether active house hunters or just starting the search, it’s never too early to find a Delaware real estate agent to help with an inquiry. Experienced agents will help navigate the complex housing market, study financial capabilities and negotiate the best offer. Even better, there are no additional costs for hiring a real estate agent. This is because the seller usually pays both their agent’s and the buyer’s agent’s realtor fees. When house hunters are ready to find local real estate agents but need help figuring out where to start, the best (and easiest!) option is probably to try a free agent referral service. It’s only necessary to answer a few simple questions about home-buying goals, and a real estate agent will provide carefully selected real estate options in the area that fit specific needs and budget.

Down payment

Key points: It’s important to try to have at least 20% of the home value as a down payment. A down payment can be below 20% of the purchase price, but then it will be necessary to get mortgage insurance and pay higher interest rates over the life of the loan. The down payment is a percentage of the home’s purchase price and is paid at closing.  The mortgage lender will pay the balance due on the house. Delaware mortgage lenders typically require putting down 20% of the purchase price as a down payment. However, there is the option to reduce the amount of the down payment. With government loans like VA and FHA, one can put down anywhere from 0% to 3.5% of the home’s value. Even with a traditional loan, the down payment can be only 3-5% (although the minimum amount varies depending on the lender), but a down payment of less than 20% carries certain risks.

First, because more is being borrowed, monthly payments will be higher, and there will be more interest to pay over the life of the loan. Next, on the list of requirements is mortgage insurance. Conventional loans require personal mortgage insurance (PMI) until the loan balance reaches 80% of the purchase price. On the other hand, FHA loans charge a mortgage insurance premium (MIP) over the life of the loan. Mortgage insurance costs about 1% of the annual mortgage balance. The price depends on the deposit and the buyer’s creditworthiness. Mortgage insurance payments are often added to monthly mortgage payments. VA loans do not charge a premium for mortgage insurance. Instead, buyers pay a VA loan financing fee that ranges from 1.4% to 3.6% of the purchase price at closing.

Delaware deposit assistance programme

Delaware offers a variety of first-time homebuyer assistance programmes that also work for low-income residents. Each programme has its eligibility criteria, but there are some great resources to check out. The DSHA Preferred Plus programme is for borrowers who qualify for DSHA loans; it helps members pay a second loan’s down payment and closing costs. This loan is interest-free and can be from 2% to 5% of the total loan amount. This programme is not limited to first-time homebuyers – participants must simply have a minimum credit score of 620 or higher. Family income limits apply, which vary by region.

Dreammaker deposit programme

Primary Residential Mortgage, Inc (PRMI) offers down payment assistance through the Dream Maker Down Payment Program. Financial support is provided through a second mortgage of up to 3.5% of the total purchase price. If the borrower’s income is less than 115% of the median income in the region, this mortgage is cancelled. If the borrower’s average income exceeds the average of 115%, they can choose between a ten-year second mortgage with 0% interest or a 30-year second mortgage with 5% interest. This programme is only available to homebuyers with an FHA loan – those with Virginia, USDA or traditional loans are not eligible. Eligible borrowers must also have a credit score of 620+.

DPA Advantage grant programme

PRMI also offers the DPA Advantage grant programme for FHA borrowers. The mortgage can be subsidised up to 6.5% of the purchase price, 3% of the funds go to the down payment, and the remaining 3.5% to the closing. To be eligible for the program, buyers must have a credit score of 620 or higher and complete a HUD-approved homebuyer counselling course.

Finding a good Delaware real estate agent

It’s a good idea to talk to several agents to find someone who knows the target area, has experience in the same price range, and is a great communicator. The real estate agent will be a number-one ally in buying the desired home. In addition to finding and listing real estate, agents can help create offers, negotiate contracts and manage the closing process for a purchase. Taking the time to choose a representative is worth doing. It’s also best to research and interview a few experienced real estate agents in the area of interest. When looking for a real estate agent, the following points should be considered:

• Years of experience
• The number of transactions over the past year (the more, the better!)
• Work experience in the price category
• Individual reviews

Getting pre-approved for a mortgage

After getting pre-approved for a mortgage, keeping finances intact is essential. A loan denial can disrupt the process and prevent buying a home. Here are a few easy ways to ensure one’s balance stays the same after receiving a mortgage pre-approval letter: avoid opening new credit accounts, and do not close accounts that have been open for a long time. All credit card payments should be made on time.

A mortgage pre-approval letter offers credit for purchasing real estate up to a certain amount. This shows the seller that buyer is serious and has the financial right to make an offer. Most sellers in Delaware require pre-approval before making an offer on their homes. It would help to compare interest rates and pre-approved amounts from multiple lenders to ensure getting the best deal when buying a home in Delaware.

Selecting the appropriate location

It’s time to search for home prices within the appropriate price range. The typical home price in Delaware is currently $361,656, but buyers shouldn’t worry if that doesn’t quite fit their budget. Home prices vary significantly from city to city and even from neighbourhood to neighbourhood, and more information can be gleaned by looking at historical property price trends, which will make it possible to estimate how much the home will increase in value over the next few years.

Starting a Delaware home search

The number of homes in Delaware has grown significantly over the past year, providing various choices. The realtor should know precisely what the buyer is looking for. and listings can be filtered to create a set of homes that fit the right needs. However, due to rapidly rising prices, it may be necessary to maintain a flexible budget or adjust requirements. Searching for a home in Delaware is a fun part of home-buying, with opportunities to look at different houses and find the right combination of musts. Making a list of everything one wants in the home and prioritising can be very helpful. An agent can help determine if what the buyer wants is realistic given their budget and desired neighbourhood or if they need to revise their search criteria.

The timing of a Delaware home search can significantly impact the number of options available. For example, Delaware has always had the highest home sales in October. Searching for housing during this season offers more opportunities and increases the chances of finding a dream home. On the other hand, the fewest options are available in December, historically with 52.4% fewer homes sold than during the peak season. Trends in Delaware vary greatly depending on the local market, and it’s worth consulting the agent before making an offer and following their advice during negotiations. They know the local trends and can advise on an approach. After finding a good housing option, it’s time to make an offer. Real estate agents can help create compelling offers that will give the owner the best opportunity to sell their home at a reasonable price. Homes in Delaware are currently selling in an average of 88 days, however, all markets are subject to seasonal fluctuations. In the busy months, houses are sold faster than others. Historically, homes in Delaware sell the fastest in May, with properties staying on the market for just 77 days on average. If an apartment search is not going well during this period, it’s best to act quickly and be prepared to consider other options. On the other hand, when buying in February, there will be more time to search. Homes typically stay on the market 22 days longer than Delaware’s annual average.

Review and evaluation

After an offer is accepted, there is an opportunity to better assess the condition and value of the house before the official purchase through a home inspection. During a home inspection, a qualified professional will inspect the home for unseen, incidental or potential problems, and determine its value. By having the home inspected by a licensed inspector, buyers can be confident in the property’s condition before spending thousands of dollars on it. The state of Delaware requires sellers to disclose key issues to buyers. Most home problems can be detected during a general inspection, but an additional examination is sometimes recommended for safety reasons. After this step, the terms of the contract can be reviewed with the seller in the event of an unexpected event.

Another step in the contract stage is the assessment, which determines the property’s value. When one uses a mortgage to buy a new home, the lender will issue an appraisal order to make sure the home is worth the borrowed money. Before moving into the new home, the buyer and their agent will inspect the property to ensure it is in the condition they expected. To buy a house in Delaware, it’s essential to complete the necessary paperwork and pay closing costs. Contacting a law firm to facilitate this process and transfer ownership is good practice, and buyers can expect to review and sign important documents before and during the closing. It is recommended to get familiar with these documents to avoid surprises. All financial costs for the closing of the agreements must be paid at their final signing.

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