Educate and Prepare With Spire By Your Side
Many regions nationwide are continuing to experience housing demand that outpaces supply, but the dream of buying a home is very attainable, even in a sellers’ market. Preparation and flexibility are two important behaviors when traveling the path to homeownership under current market conditions.
Understandably, rising home prices and competition can be intimidating, specifically if you’re a first-time buyer or haven’t bought or sold a home in some time. However, it’s important to remember that buyers and sellers exchange keys virtually every day, regardless of interest rate or other market conditions.
The best time to purchase a home is ultimately driven by personal lifestyle and financial goals. While renting makes sense in certain scenarios, it’s also important to consider that you are likely still paying a mortgage, even when it’s not your own.
While interest rates have high, their are some benefits of buying in a high-rate environment.
The biggest benefit is lower competition for quality homes. When rates are low and affordability is high, there are a lot more people who can and want to buy, so getting the home you want is much more competitive.
Many people buy in a high-rate environment so they can get the home they want knowing they can refinance to lower payments when the rates come back down.
With the higher rates seen this year, many are considering holding off. But is this the right decision? A few factors should be considered.
Buying in a high-rate environment means you could be paying a lot more each month which may be pricing you out of the home market. Waiting for a more affordable environment might be your only option.
Just know, when rates come down, competition and prices usually go up substantially. So if you can afford to buy now, it’s worth considering your options with a lender knowing that when rates come back down you can always refinance to the lower payments and rates while also avoiding the competitive environment.
While some house hunters start their road to ownership by viewing homes online or in person, it’s important to identify your overall budget, address any credit inconsistencies and determine what qualities in your next home are non-negotiable before beginning your search. Working with an experienced mortgage professional will help address these items and ease the perceived complexity of the homebuying process.
Buying a home is likely to be the largest purchase most people make in their lifetime. Choosing a qualified mortgage team to assist with the purchase journey will help minimize any surprises and stress through the process.
Many buyers are surprised to find the minimum down payment for most loan products is 3 to 3.5% for first-time home buyers. Plus, this can come from a gift or a down payment assistance program.
It’s a good idea to talk to a professional about the different loan types and programs available to you in your area. A professional loan originator can help you craft a roadmap to homeownership. You might be closer than you think!
Most home loans allow roughly half of your monthly pre-tax income to go towards your house payment and other debts that show up on your credit report (car payment, student loans, credit cards to name the most popular credit lines).
A quick way to estimate what you could afford monthly is to take your yearly gross income and divide it by 12 months. Then cut that in half. If you have no other credit debts, this is your maximum home payment range.
If you do have other monthly credit debts, subtract the minimum payments from them to get your home payment range you can afford.
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