With Mortgage Interest Rates Low, Now Is Still a Good Time to Buy a Home
Perhaps your real estate agent or a friend who’s recently bought a house as told you that we’re in a seller’s housing market. You might be wondering what that means, exactly, and how we’ve ended up in this situation.
A seller’s housing market simply means there are fewer homes on the market than there are people looking to buy at any given time. With a lower inventory, there is more competition for the homes that are listed for sale. This competition benefits the seller; they can expect multiple offers on a home, or a purchase price that far exceeds their expectations.
Lots of factors go into creating a seller’s market: the economy, the stock market, global pandemics and people’s willingness to move out of their homes in the middle of one, time of year, and much more. Regardless of what created the seller’s market, if you want to buy a house now, you’ll need to move forward confidently and courageously. Here are five tips to find a house you love in a seller’s market and get your offer selected.
Tip 1: Secure the Services of a Really Great Mortgage Lender
Sellers can be finicky. Buyers with strong offers will always come out on top, but what if two buyers have made essentially the same offer, but have very different mortgage lenders backing their purchase? A buyer is more likely to choose the offer with a lender with a great reputation for closing on time over a lender that has a history of delayed closings, lost deals, or other issues.
Come in strong with a mortgage backed by Homestead Financial. We’ve been around for decades and specialize in helping people become homeowners in Arkansas, Colorado, Florida, Illinois, Indiana, Kansas, Missouri, Ohio, Tennessee, and Texas. Don’t believe us? Check out our client testimonials on Zillow!
Tip 2: Submit Your Best Offer
In a competitive housing market, sellers want to know that you mean business and really want their house. To make your offer stand out among the others the seller is likely to receive, you should work with your real estate agent to submit your best offer. Don’t count on the seller coming back and asking you for more money; they probably already have an offer like that on the table.
Your real estate agent will help you include all relevant details in your offer, such as the purchase price, any closing costs you’d like the seller to pay, plus any other contingencies, such as a home inspection (highly recommended!). Rely on your agent’s knowledge of the real estate market in your area, and on your pre-approval from Homestead Financial to get you the best deal possible on your dream home.
Tip 3: Make a Home Checklist
Using the amount of mortgage you’re pre-approved for, take a look at homes online with prices that would fit your budget. What features do they have that you want? What features are missing? Is there a disparity in the quality of the homes you’re seeing in your price range versus what you really want or need in a home? If so, that means it’s time for considering what is most important to you.
Remember that just because you’re pre-approved for a certain amount does not mean that you can afford to pay the monthly payment associated with such a large mortgage. Use an online mortgage calculator to do the math and determine how much you can afford to pay each month.
From there, begin listing things your home absolutely must have. Consider the number of bedrooms and bathrooms. Do you need a garage? Are you willing to do some work to improve the home, or are you seeking a move-in ready one? How important is location to you? Using the list you’ve just made, you’ll have greater clarity as you look through home listings and decide which ones you’d like to see in person.
If you are more sure about a home after seeing it in person, then you can confidently make an offer, whereas if you hadn’t prepared ahead of time, you might have hoped the grass would be greener at another house for sale.
Tip 4: Be Patient
One of the worst parts of the homebuying process is having an offer turned down. It’s disheartening to miss out on a house you truly loved, but rest assured another will come along. Houses are listed for sale every day, and your dream home might be coming available for sale soon.
If you’re having trouble finding many homes for sale that meet your criteria, or your offers are refused, know that you are not the only homebuyer this is happening to! Remember that there are fewer homes for sale than there are buyers right now, so competition is fierce.
Tip 5: Stick to Your Budget
If you’re losing out on homes because your budget is less than houses you love are selling for, you may be tempted to increase your budget significantly to broaden your search.
Increasing your budget is absolutely OK if you’re confident that you can comfortably afford a higher monthly payment and that you know you have the extra cash for your larger down payment. However, most financial experts recommend against spending too much of your monthly income on housing. In fact, some mortgage lenders will only approve you for a loan for which your debt-to-income ratio is less than 45 percent, depending on your credit and the loan product you’re interested in.
Know all your numbers before increasing your budget, and make sure your mortgage lender will increase your pre-approval with confidence before falling in love with a house you can’t afford.
Qualify for a Conventional, FHA, VA, or USDA Home Loan
You’ve saved a down payment and are looking to upgrade your home or buy your very first one. Homestead Mortgage can help you with a variety of home loan products and low mortgage interest rates.
Contact us to get pre-approved for a home loan for your dream house in St. Louis or Kansas City today.