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How to Overcome Challenges as a Second-Time Homebuyer

By U.S. News & World Report

There’s a lot of advice out there for first-time homebuyers, mostly young people who are new to the process of buying a home.

But what about second-time homebuyers? What obstacles do they face, and what do they need to know?

“The whole landscape of real estate has changed,” says Andi DeFelice, associate broker at Exclusive Buyers Realty in Savannah, Georgia, and the president-elect of the National Association of Exclusive Buyer Agents. “You just have to be ready to roll with the flow. It’s not all about you. The days of the deal are gone right now.”

Second-time homebuyers, whether they’ve moving up to larger homes or downsizing to smaller ones, will find their greatest challenge the same one facing first-time buyers: a lack of homes for sale in lower and medium price ranges, creating a fast market that requires quick decisions and offers little room for negotiation on price.

[See: 10 Secrets to Selling Your Home Faster.]

“They’re not used to this type of market with the multiple offers,” says Larry Kendall, chairman of The Group Inc. Real Estate in Fort Collins, Colorado, and author of “Ninja Selling.” He terms the current real estate atmosphere a “mosh pit market.” “You jump in and there’s a lot of pushing and shoving, and you hope you come out with a contract.”

While some challenges — such as the lack of homes for sale — affect first-time and second-time buyers equally, others are unique to the second-timers. Many, for example, need to sell their current home in order to buy a new one.

“It’s always scary to put your home on the market before you know where you’re going to go,” DeFelice says.

In a slow market, you might be able to make an offer on a new house contingent on selling your old home. In this market, such contingencies won’t fly — though you may be able to write a contract making the sale of your old home contingent on you finding a new one.

Kendall advises move-up buyers to work with their lenders to see if they can get a home equity line of credit on their current home for the new down payment, then qualify for a mortgage on a new home while keeping their old home as a rental for a few years.

Other alternatives are to sell the old home but rent back from the buyers for a few months or move into a temporary rental between homes.

Those who have not bought a home since before the recession may be surprised how much the process has changed, from the role of online services in the home search to the amount of paperwork you must provide to get a mortgage.

“It doesn’t matter how much money you’re spending,” DeFelice says. “The lenders have specific criteria you have to meet.”

Some second-time buyers are also surprised at how much they have to spend to get the property they want, especially if they insist on a home in move-in condition. “They’re stepping up in home price [but] the money that they bring to the table is not going to go as far as they thought it would,” says Richard Harty, broker-owner at the Harty Realty Group in the Chicago suburb of Highland Park, Illinois. “Everybody’s looking for turnkey. People are so busy now. You’ve got to pay more to get that condition.”

[See: 10 Terms First-Time Homebuyers Must Know.]

Here are seven tips for second-time buyers to survive this competitive real estate market:

Have a plan if your old home sells before you find a new one. That could include finding a buyer who will let you rent back, moving into a temporary rental or doing some house sitting while friends and relatives are on vacation.

Expect lots of mortgage paperwork. Mortgage lending guidelines created after the recession require lenders to document that you can actually afford your mortgage. That will require you to document all your income and debts. Before you start looking at homes, consult a mortgage lender or two to find out what you can afford. Your chance of actually getting the home you want increases significantly if you are preapproved for a mortgage.

Be open to homes that need work. There may be less competition for homes that have not been updated. While scraping popcorn ceiling is a messy job, it isn’t that expensive when you look at the price of the home. The same goes for other projects, like changing dated window treatments or removing ugly wallpaper. Even updating kitchens, replacing roofs and changing flooring may be worth doing if it means you can get a good home at a decent price.

Embrace technology. In a fast-moving market, homes often go to the first prospective buyers that get in to tour them. “They have email alerts, and they know about them as soon as they hit the market,” DeFelice says. You can also use the internet to research ahead of time what homes are selling for, what kind of homes are available and what neighborhoods you will consider.

Search at a slower time. In many parts of the country, spring is the top homebuying season, and more buyers are competing for the available properties. Around the holidays and during the winter, fewer buyers are in the market. “If they can wait until late August or September, there start to be more listings available,” Kendall says.

Make your offer strong. Kendall recently received 15 offers on a client’s home, 10 cash offers and five with financing. But none of the financing offers included preapproval letters, and only one of the cash offers included proof of funds. The sellers took that offer, even though it was not the highest. “That buyer had done their homework,” Kendall says. “It wasn’t the best price, but it was the best offer.”

[See: 10 Must-Ask Questions When Choosing a Real Estate Agent.]

Be flexible on closing terms. Price is only one element of the equation. Sellers also care about whether you can close quickly (or are willing to wait), whether you’re likely to pull out after an inspection and whether you’re approved for a mortgage. Not only does closing approach help to make your offer as strong as possible, you might beat competing offers if you’re willing to work within the seller’s timetable.

More from U.S. News

7 Things First-Time Homebuyers Wish They’d Known

7 Things You Can Do to Win a Bidding War

Should You Live Near a Cemetery, Casino or These Other Landmarks?

How to Overcome Challenges as a Second-Time Homebuyer originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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