In a recent poll completed by the National Association of Realtors there were 4 main barriers that were stopping homebuyers from successfully becoming a homeowner. Increasing home prices, rising mortgage rates, lack of available homes and difficulty raising enough funds for a down payment were those 4 main reasons for over 75% of the respondents. With the Spring 2024 home buying season almost upon us, I wanted to give you some great ways to counteract each of these barriers and get on the road to homeownership.
Increasing Home Prices - Home prices have been increasing for a while now but they really took off after the pandemic. The unique thing we are seeing is that prices are still going up even though the overall number of home sales are going down. When home sales go down, you usually expect prices to follow but that hasn't happened. If your plan is to just wait for prices to go down, you will likely miss out on the market completely, market indicators say that prices will continue to rise well into 2025. So what is one to do? Knowledge is power: Instead of waiting for prices to drop, become a savvy buyer. Research the market, understand fair pricing, and partner with a knowledgeable real estate agent to guide you through the process. Teamwork makes the dream work: Involve your agent, mortgage lender, and support system in your search. Their collective expertise can uncover overlooked opportunities and ensure informed decisions.
Rising Interest Rates - Interest rates were so low for so long that we thought they could never go up, when they started rising in August of 2022 there was this expectation that there would be a slow rise. However, as inflation kept rising the Federal Reserve increased rates quickly and what was once 3's was suddenly 7's. Rates peaked around 8% in 2023 and have started coming down since but have stalled recently in the 6.75% range.Start early: By starting the mortgage pre-approval process early, you can explore options to secure the best possible rate.Improve your financial standing: Focus on building your credit score and lowering your debt-to-income ratio to qualify for lower interest rates. Shop around: Explore different lenders and loan programs to find the combination of competitive rates and low closing costs. Consider adjustable-rate mortgages (ARMs) with fixed rates for the initial years, if it aligns with your long-term goals.
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Lack of available homes - This has been by far the most frustrating part of the real estate market. The lack of available homes has been the biggest reason for the incredible gains in home prices and has led to many buyers giving up. It is hard not to be frustrated but I will argue that there are more available homes than you think. Experience matters: Choose an experienced real estate agent who has a proven track record of identifying hidden gems and securing early access to listings. Expand your network: Let your friends, family, and colleagues know you're actively searching. They might be aware of potential sellers before their homes even hit the market.
Raising a Down Payment - Challenge the norm: Forget the outdated 20% down payment myth. You can buy a home with a 3% down payment or explore zero-down payment programs offered by local banks or down payment assistance initiatives. Just this week we got a buyer accepted for $10,000 in assistance that will cover her down payment and closing cost.
If you are considering purchasing in 2024 now is the time to surround yourself with a trusted team of professionals who can guide you through every step of the process. A reliable real estate agent, mortgage lender, home inspector, and insurance agent can make the journey smoother and ensure a successful purchase.
Do you have a trusted team? My team has over 24 years experience, we can lead you to your dream home and provide the best home inspectors, mortgage lenders and insurance agents along the way. Click Here to contact us now!
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