Buying your first home is a thrilling milestone, marking a significant step towards independence and stability. However, it’s also a substantial financial commitment that can lead to buyer’s remorse if not carefully considered. To help you navigate this exciting yet daunting journey, here are some essential tips to ensure you make a confident and informed decision:
Enjoying our content? Subscribe to our free weekly newsletter to get real estate market insights, news, and reports straight to your inbox.
Know Your Budget Inside Out
Before you even start browsing listings, take a thorough look at your finances. Understand what you can comfortably afford, factoring in not just the mortgage payments but also taxes, insurance, utilities, maintenance, and unexpected expenses. Being realistic about your budget sets a solid foundation for your home search and reduces the risk of overspending.
Do Your Research
Arm yourself with knowledge about the local real estate market. Research property values, recent sales, and trends in the areas you’re interested in. Understanding the market dynamics will empower you to make informed decisions and negotiate effectively when the time comes.
Get Professional Guidance
Enlist the help of experienced professionals, such as real estate agents, home inspectors, and mortgage brokers. A reputable agent can guide you through the buying process, offer valuable insights, and advocate for your best interests. Likewise, a thorough home inspection can uncover potential issues that might not be apparent to the untrained eye, saving you from costly surprises down the road.
Take Your Time:
While it’s natural to feel eager to find your dream home, resist the urge to rush the process. Take your time exploring different properties, attending open houses, and asking questions. Don’t feel pressured to make an offer unless you’re genuinely confident it’s the right choice for you.
Visualize Your Future
Imagine yourself living in the homes you’re considering. Picture your daily routines, envision family gatherings, and think about how the space will evolve with your needs over time. Connecting emotionally with a property can help you determine if it’s truly the right fit for you.
Sleep On It
Before making a final decision, give yourself some time to reflect. Sleep on it, discuss your thoughts and concerns with trusted friends or family members, and weigh the pros and cons objectively. A good night’s sleep can provide clarity and prevent impulsive decisions that you might later regret.
Negotiate Wisely
Don’t hesitate to negotiate terms that are favourable to you, whether it’s the price, closing costs, repairs, or contingencies. Be assertive yet respectful in your negotiations, and be prepared to walk away if the deal doesn’t align with your expectations.
Checklist Items
If you work from home, ensure that your workspaces are big enough. A small workspace, especially if you have to use it every day can get crammed and can lead to being unproductive. Also, if you’re planning to keep the existing appliances, take the time to test them out and make sure they are working properly. Don’t settle on anything that will make the home less functional for your needs.
Trust Your Instincts
Ultimately, trust your instincts. If something doesn’t feel right or if you have lingering doubts, it’s okay to step back and reassess. Buying a home is a significant decision, and it’s essential to feel confident and at peace with your choice.
Are you looking to buy your first home with confidence? Give us a call today! Our experienced real estate agents will ensure you buy without regrets!
The US economy is in a tricky spot. To close out 2023, fourth quarter GDP measured at a robust 3.3% annual growth rate, but inflation remains above the Fed’s desired 2% target, so the central bank has yet to cut interest rates. Still, many expect that rate cuts will come this year as the economy and inflation cool down more. For the mortgage market, that could also mean that rates come down.
Already, 30-year mortgage rates have fallen from recent highs. While they reached approximately 8% in October 2023, they now average 6.63% as of the beginning of February 2024, according to Freddie Mac.
But what will happen the rest of the year? Below, we’ll look at three possible mortgage rate scenarios.
If you’re in the market to buy a home then start by exploring your mortgage rate options here now.
Will mortgage rates drop below 6% in 2024?
Here are three possible scenarios for mortgage rates this year, according to the experts we spoke to.
Mortgage rates will drop below 6%
Mortgage rates could continue to trend downward this year, especially once the Fed starts cutting the federal funds rate.
“Mortgage rates will go down in 2024. How much and when depends on the economy and inflation. I believe that we will see rates trending to 6% in the summer, perhaps not until late summer,” says Melissa Cohn, regional VP at William Raveis Mortgage. After that, “I believe that rates will drop below 6% and stay below 6% for the year.”
Some experts predict an even larger drop, though still not at pandemic-era levels.
“I believe they will fall to 4.25%,” says Dan Green, CEO at Homebuyer.com. “Inflation is solved, lenders are competitive, and the bond market is finding its health.”
See how low of a mortgage rate you could get now.
Mortgage rates will drop somewhat but not below 6%
While some people think that mortgage rates will fall further, not everyone is convinced that they’ll drop significantly from their current levels. As mentioned, GDP remains strong, and lower rates tend to coincide with a weakening economy, which might not occur.
Shannon Feick,co-owner and co-founder at ASAP Properties, LLC, says he’s “confident that the relatively strong economy will likely prevent rates from falling below 6% in 2024, but with inflation cooling, mortgage rates will fall slightly from their current levels.”
Still, it’s possible that the economy’s health and inflation rate get thrown off by unexpected events, like how geopolitical conflicts have caused oil price swings, which can ultimately influence interest rate decisions.
“I do believe that curveballs like geopolitical events or significant shifts in the job market could alter this forecast, but only by a small amount,” says Feick.
Mortgage rates will stay the same
Another scenario could be that rates end up staying essentially the same, with mid-6% interest rates persisting.
“I think rates will stay flat on average this year, meaning that they will stay in the mid-6s, which is where we dropped to at the end of the year, going into 2024,” says Sam Sharp, executive VP of mortgage lending at Guaranteed Rate.
It’s also possible that rates go higher, but Sharp thinks that the current levels seem to be working.
“I believe that the markets have tested their threshold. When rates capped over 8% the housing market saw a steep decline. As soon as rates dropped into the mid-6s we saw a quick change, and this looks to be a sweet spot in the current environment,” he says.
“Not only is this a level that buyers seem more comfortable with, but I feel this is a good baseline for some sellers, and their motivation is what we need to create a balanced housing market,” explains Sharp.
Learn more about today’s mortgage rates online here.
The bottom line
It’s hard to predict exactly where mortgage interest rates will go in 2024, as much depends on factors like the state of the economy and how the Fed responds to inflation. But if you can afford to buy a home now at current levels, you might be better off doing so for two main reasons.
One, it’s hard to say how long you’ll have to wait for rates to drop — if they do at all — and you might not want to put your home search on hold indefinitely. Two, a decrease in mortgage rates could increase competition among homebuyers, as those who have been waiting for rates to drop might jump in, thus complicating the process.
However, one advantage of waiting to buy a home could be that more sellers jump in, too. Some sellers have been reluctant to give up their homes and then buy a new one at high mortgage rates. But if rates do drop, or if sellers simply get more accustomed to current rates as the new normal, then that could increase inventory.
So, you’ll have to weigh these factors, along with looking at your finances and the local conditions in your desired area to see what makes the most sense for you. And while you probably don’t want to bank on it, mortgage refinancing could be an option down the road if rates drop further.
Start exploring your current mortgage rate options here.
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations.
Getting back on your feet after bankruptcy can be a gradual process, but it doesn’t mean you have to give up on your dream of buying a home.
In fact, buying a house is possible just a couple of years after you file for bankruptcy. That said, the length of time you have to wait before getting approved for a mortgage largely depends on the type of loan you’re shopping for and how you’ve managed your credit.
Read on to learn more about buying a house after bankruptcy.
How Soon Can You Buy a House After Filing Bankruptcy?
The waiting period following a bankruptcy gives borrowers time to stabilize their finances before taking out another loan. The type of bankruptcy you experience will also play a role in the length of the waiting period before you’re eligible to purchase a home.
The most commonly filed types of bankruptcy are Chapter 7 and Chapter 13. Read on to discover how soon you can purchase a home after each of these types of bankruptcy.
Get matched with a personal
loan that’s right for you today.
Learn
more
Type of Loan
Chapter 7
Chapter 13
Conventional loan
4 years
2 years
FHA loan
2 years
1 year
USDA loan
3 years
1 year
VA loan
2 years
1 year
How Long After Chapter 7 Can I Buy a House?
Also known as a “liquidation bankruptcy,” Chapter 7 involves selling nonexempt assets to discharge debts. With a Chapter 7 bankruptcy, the waiting period begins when the action is discharged—approximately four to six months after initially filing the bankruptcy. From that point, you’ll have to wait four years for a conventional loan, three years for a USDA loan, and two years for FHA and VA financing.
How Long After Chapter 13 Can I Buy a House?
A Chapter 13 bankruptcy allows debtors to create a repayment plan to the creditors they owe over a three- or five-year period. Since Chapter 13 bankruptcies involve fulfilling your financial obligations, they impact your credit less severely than Chapter 7 bankruptcies.
Therefore, the waiting periods for a Chapter 13 bankruptcy differ slightly. You can get approved for a conventional loan after a two-year waiting period. FHA and VA loans have even more flexible criteria—borrowers can be eligible for these government-backed loans just a year after the discharge date of a Chapter 13 bankruptcy. You will typically need to show at least 12 consecutive months of on-time payments and permission from the court to take on new debt.
Types of Mortgages You Can Get After Bankruptcy
After filing for bankruptcy and fulfilling the waiting period, you can get any type of mortgage. However, some mortgage programs have more stringent requirements following a bankruptcy than others. Lenders may also have their own in-house requirements on top of that.
Let’s take a look at the requirements for different types of loans:
Conventional mortgage: Typically, a down payment of at least 3% is required along with private mortgage insurance (PMI) for down payments below 20%. Borrowers must have a 620 credit score or above and a good debt-to-income ratio (DTI) that is below 45%.
FHA loan: Requirements for FHA loans are more lenient, with a minimum credit score requirement of 580 and a maximum DTI of 57%. A minimum down payment of 3.5% is required, and borrowers must also pay an FHA mortgage insurance premium (MIP).
USDA loan: This type of loan is only available for properties located in designated rural areas. There is no down payment requirement or minimum credit score, although lenders typically prefer a 620 credit score or above.
VA loan: The Department of Veterans Affairs (VA) offers loans for veterans, active-duty service members, and eligible spouses. Typically, there are no down payments or credit score requirements.
How to Get a Mortgage After Bankruptcy
If you’ve experienced bankruptcy, here are some steps you can take to improve your chances of getting approved for a mortgage:
Repair your credit: Bankruptcy can take a serious toll on your credit. Tips to rebuild your credit after bankruptcy include paying bills on time, lowering your existing debts, and avoiding taking on new debt.
Write a letter of explanation: A letter of explanation is a document that allows you to explain the circumstances surrounding your bankruptcy. In the letter, explain why you filed for bankruptcy and the steps you’ve taken to improve your financial health.
Get preapproved: Getting preapproved for a mortgage after bankruptcy helps you create your budget, strengthens your homebuying credibility, and helps streamline the overall process.
Buying a House After Bankruptcy FAQ
We’ve answered some commonly asked questions about buying a house after bankruptcy below to give you a better understanding of the process.
What Is the Best Home Loan After Bankruptcy?
FHA loans may be the best home loan after bankruptcy because they provide the opportunity to get a mortgage even if you have a low credit score.
What Is the Waiting Period for Multiple Bankruptcies?
The waiting period if you’ve filed for bankruptcy more than once in the past seven years grows to five years before the date of the most recent discharge.
Are There Exceptions to Waiting Periods?
According to Fannie Mae, waiting periods can be shortened to two years in documented extenuating circumstances. However, there are no exceptions after a Chapter 13 discharge.
How Soon Will My Credit Score Improve After Bankruptcy?
Your credit score after bankruptcy can be negatively impacted for seven to 10 years. However, the impact of the bankruptcy on your credit will decrease over time, so you should gradually see your credit health improve as you manage your credit responsibly going forward.
All in all, bankruptcy makes you a riskier borrower, but it doesn’t have to ruin your chances of being a homeowner. During the mandatory waiting period, take steps to reestablish your financial picture. Work hard to improve your credit and understand your mortgage options well before starting your home search. Check your credit reports and credit scores regularly to track your progress. You can check your credit score and credit report card for free through Credit.com. Try it today.
Purchasing a home can be a daunting task, especially for first-time homebuyers. There is often a great deal of pressure to find a home that meets your preferences and is in good condition, as well as obtaining approval for a mortgage. Even those with experience in real estate may feel overwhelmed by the process.
Plus, even if you find the home of your dreams, you still have to put in an offer and hope that it’s accepted with no competition from other buyers.
Luckily, there’s a way to not only stand out from other home buyers, but also to expedite your mortgage approval process. By getting preapproved for a mortgage before you even put in an offer on a home, you can significantly increase your chances of having your offer selected.
The Basics of Mortgage Preapproval
A mortgage preapproval refers to a letter from your lender indicating that you meet the standards for a mortgage loan within a certain price range.
The lender has thoroughly reviewed your credit history, income, and other financial indicators and put them through the automated underwriting system. Mortgage preapprovals are typically valid between 60 and 90 days.
Why Mortgage Preapproval Matters for Homebuyers
There are a couple of benefits to getting preapproved in advance of viewing houses. One of the most significant factors is that it strengthens your offer when bidding on a home that you love.
Many deals fall through because of financing issues, even after the seller accepts an offer. If you have a preapproval letter to submit as well, the seller knows that the deal is more likely to close by accepting your offer than someone else’s.
Furthermore, real estate agents typically want to see that you’ve been preapproved before they show you houses. They don’t want to waste their time showing clients houses if they cannot buy a home.
Mortgage Preapproval Letter
Getting a mortgage preapproval letter also gives you a chance to see how large of a home loan you’ll be approved for, helping to narrow down your home search to the suitable price range.
You’ll also find out what types of home loans you qualify for, whether it be a conventional, FHA, VA, or other type of mortgage. Some of these loans have certain restrictions on the type of property you can purchase and what condition it must be in. Some also require a certain down payment percentage.
The content of a preapproval letter may vary depending on the lender. Generally, the letter includes details such as the purchase price, loan program, interest rate, origination fees, loan amount, down payment amount, expiration date, and property address. This letter is typically included with an offer to purchase a new home.
Private Mortgage Insurance
If your down payment is less than 20%, you’ll likely have to pay private mortgage insurance (PMI), which is also based on the loan amount. Getting preapproved helps you financially prepare for the full cost of your new home and your monthly mortgage payment.
Check Out Our Top Picks for 2024:
Best Mortgage Lenders
Once you determine your target loan amount, you’ll know what your monthly principal, interest, and mortgage payments will look like. When you know that, you can then look at individual properties to determine how much property tax and even homeowner’s insurance you’ll need to tack on to each month’s payment.
You need to consider all of your fees before finalizing your maximum home price. Otherwise, you could be unpleasantly surprised when you get your first mortgage bill.
Getting Ready for Mortgage Preapproval
Before you talk to a lender about getting preapproved for a mortgage, the best thing to do is to check both your credit report and credit score.
Get Your Free Credit Report
You can access your credit reports from each of the three credit bureaus for free once every twelve months. So get started a few months before you’ll be house hunting to give yourself time to address any issues.
Dispute Negative Inaccuracies
You might have outdated information lingering on your credit report or even incorrect items. The dispute process can take some time. You want to make sure your credit score is as strong as possible. That way, you can get approved and get the best mortgage rates possible when the time comes.
Check Your Credit Score
There are a couple of free websites like Credit Karma that provide you with access to your credit score. It might not be the same credit score your lender will use, but it still lets you know what ballpark you’re in. If your credit score is lower than you’d like to see, you have time to make some quick fixes.
For example, you can get a higher credit card limit to decrease your credit utilization ratio or pay down extra debt to lower your debt-to-income ratio. A little planning can help strengthen your chances for preapproval before you even contact a lender.
How to Get Preapproved for a Mortgage
When you’re ready to start the mortgage preapproval process, the loan officer will ask you for several pieces of information. You will need to provide income tax returns from the past two years, pay stubs to verify your employment and gross monthly income, and bank statements.
You’ll also have to provide your Social Security number and sign a form giving the lender permission to perform a hard inquiry on your credit report.
At that time, the lender will also perform a credit check and review your credit score to use in the evaluation process. Because underwriting systems are now automated, you can get preapproved in a matter of minutes.
Possible Outcomes
When the underwriting process is completed, you’ll either receive one of four responses.
Here’s what they are and what they mean:
Approved: your initial mortgage preapproval has gone through with no conditions.
Approved with conditions: you must complete additional steps before getting approved (for example, providing extra income verification to the lender.)
Suspended: you must answer additional questions before the underwriter determines whether you’re approved.
Declined: your application did not get approved.
Many mortgage lenders state that it’s actually quite rare to be preapproved for a mortgage with no conditions on your first attempt. So, don’t be disheartened if this happens to you—you’re in good company!
Even a suspended application isn’t the end of the road. And if the lender declines your mortgage preapproval, make sure to ask them why so that you can take targeted steps to improve the weak areas in your application.
Mortgage Prequalification vs. Preapproval: Clarifying the Differences
When you first contact a lender about qualifying for a mortgage, you’ll probably discuss your basic financial picture to help you determine how much of a loan you’re likely to get approved for.
Mortgage Prequalification
This is referred to as prequalification for a home loan. The mortgage lender doesn’t access your credit report or request financial documentation. Instead, they give you an idea of loans you’d qualify for based on the information you provide.
If you provide false information, your mortgage application will definitely fall apart in the underwriting process, so it’s important to be honest and as accurate as possible. Otherwise, it’s a waste of your time. Getting prequalified is a smart move to inform yourself of your mortgage options, but it’s not strong enough to submit with an offer on a house.
Mortgage Preapproval
On the other hand, getting preapproved for a mortgage prove to sellers that you’ve already been through the preliminary underwriting process, and your financing is likely to go through all the way.
In this instance, you submit all necessary financial documentation to your lender. Not only does it strengthen your offer when you find a home you like, but it also speeds up the next steps in the mortgage process so that you can close more quickly.
Choosing the Right Mortgage Lender
Getting a prequalification before a preapproval may seem like an unnecessary step, but it’s a great way to interview the lender as much as they’re interviewing you.
At the end of the day, mortgage lenders compete for your business, so don’t just choose the first one who gives you a prequalification or preapproval. There are several factors to consider before you make this critical decision. You should speak to multiple lenders and compare interest rates and loan options to find the best one for your financial situation.
Comparing Interest Rates
Start with an interest rate comparison. You should be able to get quotes based on your basic financial information without the lender performing a hard pull on your credit report.
Furthermore, consider how much money the lender says you can afford. They don’t know how much your other bills are or how much you’re comfortable spending.
If they try to pressure you into a loan amount that seems like it would be too expensive based on the monthly payments, they may not have your best interests at heart. A good lender wants to make sure you can afford your payments every month and is transparent about costs beyond your principal and interest.
Mortgage Rate Lock Float Down
You can also ask lenders what kind of perks they offer. For example, some give their clients one free float down before closing. This means, if interest rates have dropped since you locked in your rate, you can get that lower rate without having to pay any additional fees or points.
Others offer discounts on closing costs to clients in public service professions, such as teachers, police officers, and firefighters. Even if a particular lender doesn’t offer any of these services, you can reference another one that does to negotiate your own special deal.
Mortgage Preapproval Checklist
Check your credit report and credit score.
Find a trustworthy lender.
Get prequalified to find out what types of loans you’re eligible for.
Gather financial documentation, such as pay stubs, bank statements, W-2s, and income tax returns from the last two years.
Apply for a preapproval letter to seriously begin your home search.
Frequently Asked Questions
What factors are considered for mortgage preapproval?
Lenders will take a look at your credit score and verify your employment and income. They will also consider your debt-to-income ratio (DTI), which is the percentage of your monthly income that goes towards paying off debts.
To get a mortgage, it is generally advisable to have a DTI of 50% or lower. The required DTI for a loan may vary depending on the type of loan you are seeking.
Why should I get preapproved by more than one lender?
By applying to multiple lenders, you can compare interest rates and fees to find the deal with the most favorable terms. This can save you a lot of money over the life of the loan.
To find a mortgage that works for your financial situation, you should do your research and weigh all of your options.
Can I get preapproved for a mortgage online?
Yes, it is possible to get preapproved for a mortgage online. Many lenders allow you to provide your financial information and documentation through the lender’s website or over the phone.
You will typically need to provide the lender with information such as your monthly income, monthly debts, and credit history. After reviewing this information, the lender will determine how much they are willing to lend you and provide you with a preapproval letter.
Does mortgage preapproval guarantee a loan?
No, getting preapproved for a mortgage does not guarantee that you will receive a loan. The lender will still need to evaluate the property you are interested in buying and your financial information at the time of the loan application.
How much house can I afford?
There are several factors to consider when determining how much house you can afford, including your income, debts, down payment, and the type of mortgage you can qualify for. A general rule of thumb is to aim for a home that costs no more than three to five times your annual household income.
To calculate how much you can afford, you’ll need to consider your debt-to-income ratio (DTI). This is a measure of how much of your income goes towards paying off debts. Lenders typically look for a DTI of 50% or lower when determining how much you can borrow.
You’ll also need to consider your down payment and the type of mortgage you qualify for. A larger down payment can help you qualify for a better mortgage rate, and a shorter loan term (such as a 15-year mortgage) can also lower your monthly payments.
It’s a good idea to work with a lender to get a more detailed assessment of how much you can afford. They can help you understand your options and guide you towards a mortgage that works for your budget.
Can I get preapproved for a mortgage with bad credit?
It may be more difficult to get mortgage preapproval with bad credit, but it is not impossible. Some lenders may require a higher down payment or charge a higher interest rate for borrowers with lower credit scores.
While spring and summer are typically the most active home-buying seasons, things tend to cool down by September, much like the weather. But that doesn’t mean you should put off your home search. In fact, the fall can be the golden time to find a home.
Let’s explore why autumn can be one of the best times of the year to buy a home.
There Are Fewer Shoppers
The spring and early summer frenzy of buyers wanting to get into a home before school starts has settled down. You’ll have less competition as homes hit the market.
Very Motivated Sellers
Sellers are often motivated due to less competition from buyers. They may also be eager to sell before the holiday season, which can translate into a good deal for you.
Starter Home Inventory Peaks
Leaf colors aren’t the only things that peak in the fall. Typically, so does starter home inventory, which can be good news for first-time homebuyers. These homes tend to be in the lower-third price range of available houses, making them a potential option for those taking their initial step into homeownership.
The Weather Can Uncover Issues in the Home
Sunny summer weather can hide water-related issues such as roof or window frame leaks. Autumn rains make it easier for your home inspector to see potential water problems firsthand. Cooler fall weather also allows you to evaluate the heating system more effectively.
Uncovering issues that need repair may help you bring down the price of a home, or you may want to consider rescinding an offer if the fixes are too extensive or expensive.
You Could Have More Negotiating Power
With fewer homebuyers in the market, you may be in a good position to negotiate a more favorable price. Plus, sellers may be tired of waiting for a sale if the home has been on the market since the summer. They may be more open to making a deal and hoping to close before the holidays and the winter.
Flexibility on Move-In Dates
Need to move in earlier or later? Motivated sellers may be more willing to accommodate your schedule.
Plus, demand for moving companies wanes in the fall. With more crews available, scheduling your move may be easier, allowing for more flexible move-in dates. Moving costs may also be lower, thanks to off-peak pricing.
Prices Are Dropping
Historically, home prices are highest in the spring and summer and drop during the fall. This is especially true for homes that have been on the market throughout the summer; sellers may lower the asking prices to encourage a sale.
Home Winterization Not an Issue Yet
Milder fall temperatures mean a home’s winterization isn’t yet an issue, but you’ll have time to address any concerns. Prepare for winter’s chill by maintaining the furnace and water heater, sealing cracks and adding insulation, all of which cut energy costs.
More Contractors Available for Renovations
Spring and summer are busy seasons for contractors, but things tend to slow down in autumn. Contractors, subcontractors and skilled laborers may be more readily available to take on your new home’s renovation or repair projects.
Tax Write-Off Before End of Year
Taking advantage of homeowner tax deductions on next year’s returns may save you money, too. Write-offs may only be a percentage of a full year’s deductions (when you’ve been residing in the home continually), but getting in before the December 31 tax deadline means you’ll be able to write off some of this year’s mortgage interest, along with deductions for points, property taxes and home offices.
Summer Listings Are Still Available
There are still homes on the market from summer that some sellers may remove during the holidays and relist next year.
Spring and summer may traditionally be the peak home-buying periods, but the autumn months present several overlooked benefits — from reduced competition to lower prices to greater starter home inventory. Whether you’re a first-time homebuyer, relocating, moving up or downsizing, autumn can be the perfect time to begin your search and find a home you’ll “fall” in love with. Contact a Pennymac Loan Expert to explore our wide range of financing options for your home loan needs.
The most popular time to list and buy a home during the year generally tends to be spring. In fact, many homeowners like to list their properties during the warmer weather months because that’s when it’s easiest to show off their homes’ curb appeal.
Similarly, as a buyer, you might prefer to do your house hunting in the spring. That way, you won’t have to deal with frigid weather and snowstorms en route to see different properties.
But actually, winter can be a great time to buy a home — in general and today especially. Here’s why.
1. You might have less competition
The U.S. housing market is sorely lacking inventory right now. As of the end of October, there was only a 3.6-month supply of available homes, as per the National Association of Realtors. And it can easily take a six-month supply to fully satisfy buyer demand.
At a time when inventory is low, it’s a good thing to have less competition when you’re looking to buy a home. Since winter isn’t a very popular time for buyers to be looking, you may find that if you push forward with your home search in January or February, you might have certain listings all to yourself.
This gives you more leeway to negotiate with sellers. And it also means you may not have to worry about landing in a bidding war.
More: Check out our picks for the best mortgage lenders
2. You might see lower prices
Despite higher mortgage rates that may be pushing some buyers out of the market, housing prices are still high. And the reason largely boils down to a lack of inventory.
If you buy a home during the winter, you might see it listed for less, since sellers know that it’s not necessarily a great time to find a buyer. And at a time when mortgage lenders are charging such high rates, shaving a little money off of the purchase price of a home could result in a nice amount of savings.
3. You’ll get a chance to see how well specific homes fare in the cold
You may be willing to commit to the expense of a mortgage if it means getting to enjoy a comfortable living space of your own. But unless you actually go and visit a home during the heart of winter, you can’t necessarily be confident that it will, in fact, be comfortable when temperatures are plunging.
On the other hand, if you go to see a house on a 20-degree day and find that it’s nice and toasty inside, it’s a sign that the heating system works and that the insulation is decent and doing its job. That’s a good thing, because paying for a heating system upgrade is an expense you may not want to bear after emptying your bank account to put a down payment on a home.
Buying a home in winter does have some drawbacks. Weather issues aside, it’s hard to get a sense of a home’s landscaping during the winter. And there are certain outdoor features you may not get to test out, like a pool, if you’re conducting your search in January. But for the above reasons, it pays to consider looking for a home this winter — especially if you’re hoping to buy at a time when inventory is tight and prices remain stubbornly elevated.
In our latest real estate tech entrepreneur interview, we’re speaking with Lara Gabriele from HomeWayz.
Who are you, and what do you do?
My name is Lara Gabriele and I have been involved in some aspect of the Real Estate Market since 1997. I didn’t realize until now that my path in life was going to lead me to this. I graduated high school and my first job was in banking. I learned everything from Loan Servicing to Fraud and Foreclosure to Processing and Underwriting through to selling actual Real Estate.
My background as a child was different in that my father died when I was young and my mother, who was from Lebanon, had to become the breadwinner. I learned early on that as a woman and a minority I was the only one who would be able to take control of my future. As a woman in Real Estate tech… well that was going to be much more difficult. Watching my mother struggle made that more real for me. I soaked up knowledge at every turn. Once I started to sell Real Estate it was evident that there were many manual tasks that could have and should have been automated so that the daily agent could do their job faster and much more efficiently than we were already doing. I was always asking my brokers where this technology was? Aside from lead gen and so-called training what were they really offering for a large percentage of my commission? Crickets…. so I decided to do it myself. I set forth to truly automate the things that agents do manually on a daily basis to free up their most valuable and limited resource: time.
What problem does your product/service solve?
HomeWayz Solves the not so glamorous problem of taking on the mundane tasks that an agent must accomplish in order to help their clients buy and sell the largest asset of their lives. We have created a truly unique fully automated workflow solution that allows for you to use automation for things like route generation, home schedules, feedback data, home search and allowing your client to have their own dashboard so they can enjoy the Journey. We created the first of its kind algorithm that will allow all of this to be done with a push of a button.
HomeWayz will eventually allow you the agent to do everything from uploading lead gen and CRM functionality to remarketing to your SOI while conduction a complete transaction on the platform at the same time. Yes, It’s a lot, but we have taken this on so you no longer have to.
What are you most excited about right now?
Honestly, everything. The industry is on tilt at the moment. The big boys are fighting amongst each other because they believe that the agent only cares about the front end of the funnel: lead gen. When you talk to veteran agents like myself we know that our business is so much more than that and we need help. I can’t wait to put my solution in the hands of the everyday agent on the go and see what they can accomplish with it! It will be an amazing turn of events once the agent has the ability to fully automate the most basic of processes.
What’s next for you?
We are headed to Inman Connect to showcase the core functionality of HomeWayz, the automated showing and route planner with Feedback. Once we get back we will be working on adding more features that are engaging and help showcase what an agent can really do in the eyes of their clients.
What’s a cause you’re passionate about and why?
Being Middle Eastern I am always concerned about what is happening there, The Middle East is made up of so much beauty and diversity that many times I believe that is lost through media and politics. I try to mentor people who have come to this amazing country. I work with the Women’s Junior League and other outlets to help as much as possible. Open dialogue and diversity are what this country is truly about..we are a beacon for so many other countries when it comes to many of the freedoms that they are not allowed to express. It truly makes me proud to be an American.
Thanks to Lara for sharing her story. If you’d like to connect, find her on LinkedIn here.
We’re constantly looking for great real estate tech entrepreneurs to feature. If that’s you, please read this post — then drop me a line (drew @ geekestatelabs dot com).
Mortgage rates tumbled this week in the biggest one-week drop since last November. It’s the second straight week that rates have fallen, after rising for seven consecutive weeks.
The 30-year fixed-rate mortgage fell to an average of 7.50% in the week ending November 9, down from 7.76% the week before, according to data from Freddie Mac released Thursday.
A year ago, the average 30-year fixed-rate reached 7.08%, its highest level in 2022. The following week, rates dropped by 47 basis points. This week saw a drop of 26 basis points from last week.
“As Treasury yields decline, the 30-year fixed-rate mortgage dropped a quarter of a percent, the largest one-week decrease since last November,” said Sam Khater, Freddie Mac’s chief economist.
“Incoming data show that household debt continues to rise, primarily due to mortgage, credit card and student loan balances,” he said. “Many consumers are feeling strained by the high cost of living, so unless mortgage rates decrease significantly, the housing market will remain stagnant.”
The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit. A current buyer’s rate may be different.
Lower rates could bring buyers off the sidelines
Homebuyers have been shellshocked by surging rates, which have sent home loan applications and home sales down sharply. Sales hit a 13-year low in September as buyers paused their home search, waiting for more inventory and lower mortgage rates.
But as mortgage rates dipped last week, there was a 2.5% increase in all applications for loans from a week ago, according to the Mortgage Bankers Association. Applications for a mortgage to purchase a home went up by 3%.
“Applications for both purchase and refinance loans were up over the week but remained at low levels,” said Joel Kan, MBA’s vice president and deputy chief economist. “The purchase index is still more than 20% behind last year’s pace, as many homebuyers remain on the sidelines until more for-sale inventory becomes available.”
The Federal Reserve’s decision at last week’s monetary policy meeting to keep interest rates where they were was good news for homebuyers struggling with sky-high mortgage rates, but the option for an additional Fed rate hike is still on the table.
“More economic indicators are needed to determine whether the current policy is ‘restrictive enough’ to bring inflation back to the [Fed’s] 2% target,” said Jiayi Xu, an economist at Realtor.com.
Rates cool as job growth slows
While the Fed does not set the interest rates that borrowers pay on mortgages directly, its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasuries, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually ends up doing and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow.
Meanwhile, Xu said, the October jobs report, which revealed moderate job growth and reduced wage pressures, might boost confidence among policymakers that the economy will continue to ease without the need for more Fed rate hikes in the coming months. The Fed’s last rate-setting meeting of the year is scheduled for December 12-13.
“As the possibility of a rate hike remains on the table, investors are likely to exercise caution in their positioning, and the expectations for [mortgage] rates to stay steady to slightly higher remains,” said Xu.
The monthly cost to buy a home hits a record high
Homebuyers are getting a little break in rates just as unaffordability reaches new heights.
While the median price of a home in October was about the same as last year, according to Realtor.com, mortgage rates that have been over 7% since mid-August have resulted in a significant increase in the cost of financing a typical home purchase.
The monthly cost to buy a home has risen by over $166. That’s a 7.4% increase compared to the previous year and a new record in the year-over-year increase in the cost of buying a home, Realtor.com has found.
But while mortgage rates remain relatively high, the difference between rates now and what they were a year ago has narrowed, said Lisa Sturtevant, chief economist at Bright Multiple Listing Service.
“In many ways, market conditions are similar to what they were last November,” she said. “The difference is that consumers have adjusted their expectations about mortgage rates.”
“Many buyers are pressing on and will act quickly when they see rates dip,” she said. “Other prospective homebuyers will bide their time until after the first of the year, hoping for lower rates and more inventory.”
While rates are expected to come down in 2024, she said, they are not forecast to return to pandemic levels.
“We are in a new era for mortgage rates, where prospective homebuyers can expect rates to settle above 6%,” said Sturtevant.
Milestones, the all-in-one home management solution specifically designed for consumers to buy, move, own, sell, manage, and access mortgage services for their home seamlessly in one centralized portal, has announced its strategic alliance with FinLocker, a pioneer in digital, consumer-permissioned personal financial fitness tools focused on homeownership. This partnership will provide mortgage lenders with an end-to-end engagement solution to attract, nurture, and retain homebuyers and ensure their consumers have a smooth transition from initial interest, through the preparation for a mortgage, to closing and beyond.
FinLocker provides mortgage lenders and their originators with a hyper-personalized engagement platform to attract early-journey homebuyers to their business and nurtures them with personalized data-driven journeys using the financial tools and education embedded in the platform to achieve mortgage readiness and sustain homeownership.
Milestones complement this approach by guiding these educated leads throughout the decade-long journey of homeownership with online home management portals “hubs” that deliver a wide array of home services, such as home service providers, home value insights, home maintenance tasks, home document storage, and much more.
Together, this comprehensive solution will revolutionize the way consumers navigate the complex journey of homeownership by educating and empowering them from planning to closing, resulting in increased customer retention, and reduced customer acquisition costs for mortgage lenders.
“FinLocker is excited to partner with Milestones as the platform provides an extension of our financial fitness platform to prepare first-time homebuyers to qualify for a mortgage,” said Brian Vieaux, President and COO of FinLocker. “Mortgage lenders who use Milestones will now have an all-encompassing solution to attract, engage, nurture, retain and reactivate clients in their database.”
FinLocker and Milestones combined boast a myriad of features catering to both pre and post-transaction stages, ensuring a holistic and supportive homeownership experience.
Pre-transaction
Credit monitoring and credit score-building tools
Goal setting and budgeting for down payment saving and debt reduction
Financial Education
Homebuyer mortgage readiness assessment and guidance
Home Search
Streamlined mortgage application management
Post-transaction
Home Education Knowledge Base
Home Value and Home Equity Monitoring
Home Maintenance Task Reminders
Suggested Home Improvements to Build Equity
Home Document Storage
Home Services Vendor Marketplace
About FinLocker Headquartered in St. Louis, Missouri, FinLocker provides a secure financial fitness app that aggregates and analyzes a consumer’s financial data to offer personalized journeys to build and monitor their credit, manage their financial accounts, receive their net worth and cash flow analysis, create goals, save and budget to achieve loan eligibility for a mortgage and other financial goals.
Within the FinLocker app, consumers can take a readiness assessment before applying for a mortgage, begin their property search, and securely store personal and financial documents, which can be shared with a lender directly from the app to start their loan application. Mortgage lenders and financial service providers use their white-labeled FinLocker to generate and convert leads, gain market share, cross-sell value-added products, reduce loan processing costs, decrease risk, and create customers for life. For more information, visit FinLocker.com.
About Milestones Milestones is a homeownership solution that delivers personalized client portals (“hubs”) specifically designed to engage consumers at every stage of the decade-long homeownership journey – from buying, selling, moving, and managing a home. Milestones hubs give consumers access to a wide array of home service providers, insights into home value, and much more, positioning real estate professionals to stay connected, educate, and add value to create forever clients. Learn more at Milestones.ai.
Media Contact: Monika Sollee for Milestones [email protected]
Find topics in marketing, technology, and social media for realtors, and housing market resources for homeowners. Be sure to subscribe to Digital Age of Real Estate.
If you’re getting ready to buy your first home, there are probably thousands of questions running through your mind. Questions about location, real estate services, expenses, and more — it’s a huge financial commitment and you probably want to make sure you have the best chance at getting exactly what you want. While it can be a difficult process to navigate, there is help for first-time homebuyers, from resources and advice to first-time homebuyer programs to help you finance a home.
If you’re worried you won’t ever be able to purchase a home, take a deep breath and a good look at your finances. You can start by reviewing your current financial situation and beginning to save for a down payment. (There are investment accounts and savings options that can help you reach your goal of buying a home, too.) Here are 12 helpful tips for first-time homebuyers.
1. Know Your Credit Score
Your credit score is typically very influential in determining what kind of interest rate you can get on a home mortgage loan. You can get one free credit report from each of the three major credit bureaus (Equifax®, Experian®, and TransUnion®) every 12 months, and may also be able to view free reports more frequently online. You can review your credit report to spotlight any errors that may affect what lenders are willing to offer you.
If you find any errors, you can report them and have them removed. This process can sometimes take a while, even if the mistakes are obvious, so consider starting a credit report review early on in your home-buying process.
2. Calculate What You Can Afford
Do you know how to figure out how much house you can afford? While the size of your mortgage is generally determined by an evaluation of your personal finances and debt, there are a few rules of thumb that may be relevant.
One general guideline is that your housing costs, including your mortgage payment, should, ideally, be no more than 28% of your gross monthly income.
If you are paying off student loans, credit card debt, or have a car payment, you may want to adjust your budget accordingly. Some people try to keep their debt to 36% of their gross monthly income, so that they can still prioritize financial goals like saving for retirement. (This is just another rule of thumb and everyone’s financial goals are different.)
And having less debt may make you more appealing to mortgage lenders. Understanding how much money you feel comfortable spending on a house can, in turn, impact the properties you consider. As you build your budget, you can also check out SoFi’s mortgage calculator.
3. Look into First-Time Homebuyers’ Programs
While you are evaluating your options and creating your budget, it could be worth looking into some first-time homebuyers’ programs. Some programs offer down payment and closing cost assistance, or loans with reduced interest rates.
There are a variety of options available for first-time homebuyers looking for assistance. For example, the Federal Housing Administration offers a mortgage insured by the FHA. These loans often come with competitive interest rates and allow for smaller down payments.
The USDA also helps first-time homebuyers with a program focused in rural areas. And the VA loan program provides assistance to active duty military members, veterans, and surviving spouses. There are even more first-time homebuyer programs and loans available from various states as well.
4. Understand the Expenses
There are plenty of other expenses that come with purchasing a home beyond your down payment and closing costs. For example, when you’re renting property, you don’t have to worry about property tax or general maintenance. When you own property, you do.
In addition to property tax, you’ll likely also need insurance to protect your new home. And you’ll be responsible for maintaining the property, of course, which can include painting, replacing windows, updating the roof, replacing appliances, and more regular maintenance and upkeep.
You may also need to factor in additional purchases like a lawn mower or professional landscaping if the property you are looking at has a yard. Will you need to buy a snowblower to clear the driveway during long winters? These are all factors that can come into consideration when figuring out the cost of your new home.
Check out our Home Affordability Calculator to estimate how much house you can afford.
💡 Quick Tip: Jumbo mortgage loans are the answer for borrowers who need to borrow more than the conforming loan limit values set by the Federal Housing Finance Agency ($726,200 in most places, or $1,089,300 in many high-cost areas). If you have your eye on a pricier property, a jumbo loan could be a good solution.
5. Remember that Location Matters
Location is, obviously, important to many buyers. In some cases, you may have to decide if being in the neighborhood you want is more important than having extra square footage or other, similar trade-offs.
If you have kids or are planning to, you will likely be considering the school district each potential property falls in. Even if you aren’t planning to have kids, it could be worth considering the school district since it can have an impact on the value of your property and could make it easier to sell the house down the line.
6. Plan for the Future
Zoning laws and development plans are another factor to consider when house-hunting. If there is undeveloped land nearby, it can’t hurt to do some digging and see if there are any plans for development.
It may also be worth looking into the property value of other homes in the area. Have they been declining in recent years? If so, this could impact the future value of a home you’re considering.
7. Use Your Imagination
When shopping around for houses, you can take the opportunity to look at a property’s potential, as well as its current value. It’s easy to be distracted by the current owner’s décor, paint, carpet, or other factors that are easy to change. You can easily repaint or update the appliances, but you won’t be able to adjust the location, floorplan, or add rooms to the home as easily. 💡 Quick Tip: Backed by the Federal Housing Administration (FHA), FHA loans provide those with a fair credit score the opportunity to buy a home. They’re a great option for first-time homebuyers.
8. Reserve Cash for Home Improvements
When you’re getting ready to put a down payment on a house, it may be tempting to clean out your savings account. And while that’s completely understandable, keeping your emergency fund close at hand may be a good idea when becoming a homeowner.
After closing costs have been sorted out and you’ve moved into your new home, you might find that unexpected repairs pop up. Having a reserve stash of cash can be helpful if the roof in your new home starts leaking, or you need to replace an appliance.
9. Get a Real Estate Agent
With all of the housing apps and free resources available on the internet, it may seem like a real estate agent is unnecessary. But in reality, navigating the housing market can be tricky and hiring an agent up front can save you time and help make your home-buying experience easier.
While you could spend your time going to open houses and scouring real estate listings, an agent can tailor the home search so that you spend less time looking at houses that don’t meet your criteria. They also can have access to new listings that aren’t yet on the market and may be willing to “preview” homes for you. A real estate agent can also help you navigate the intricacies of contract negotiations and paperwork. If you’re wondering how the real estate agent gets paid take heart: They are typically paid from the seller’s proceeds.
10. Know What to Expect from a Home Inspection
Having a home inspection completed is a critical step in buying a home. Inspection procedures vary from state to state, so it can be important to understand what is included in the home inspection in your state, since this is a great chance to truly examine the property and uncover any issues—before they become your issues.
Inspectors should have access to every part of the house including the roof and crawl spaces, and you should be able to attend the inspection yourself.
Don’t be afraid to ask the inspector questions; the more information you have, the better prepared you can be to decide if this is the right house for you.
11. Negotiate the Offer
You’ll have an opportunity to negotiate when you’re making an offer on a house. A lot of factors can influence an offer and negotiating terms in your favor could result in serious savings, especially if you are in a buyer’s market.
If you are working with a real estate agent, they can help give you a good idea of what is considered a reasonable purchase bid by providing comparable sales. A “comparable” is a home similar to the one you are considering (and in the same condition and location) that has sold in the last three months. An agent can help give you an estimated price range and manage your expectations.
12. Find the Right Mortgage
Before committing to a mortgage, it’s smart to shop around and see what various lenders are willing to offer you. A few things to consider include the interest rates, loan terms, application process (Is it lengthy? Online only?), and any hidden fees included in applying for or repaying the mortgage. Familiarize yourself with the different types of mortgage loans available during this shopping process.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
Photo credit: iStock/PeopleImages
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.