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In this high-interest-rate environment, many potential home buyers are put off by high mortgage costs. Homes that may have been in your budget in the past may no longer be affordable when you account for monthly interest payments.
But that doesn’t mean the situation is completely out of your control. Although mortgage times can be tough, you can make decisions Wait to see As interest rates fall, many Experts predict Will happen in the next year or so.
There are also several steps you can take to improve your finances and get a handle on the real estate market as you decide when to buy a home.
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What Prospective Home Buyers Should Do Until Interest Rates Fall
In particular, there are some action items to consider as you wait to see what happens Mortgage interest rates Include the following expert-recommended tips:
Find out what you want
If you’re waiting to see what happens with interest rates, use this time to do more research. This includes narrowing down what you want in a home and what you can realistically afford.
“Use this time to refine what your budget can buy you and exactly what you’re looking for in your next home, including things like your ‘needs’ and ‘wants,'” says Merav Bloch, VP and GM of OpenDoor Exclusives. If you’re willing to trade a long commute for a dream yard, but your partner wants to live within a 10-minute drive of their office, now’s a good time to debate that trade-off.”
Even if you’re not ready to buy right away, you can still tour the home.
“I encourage buyers to tour as many homes as possible to see what’s out there and understand what your budget will get you, your non-negotiables and what neighborhoods you’re open to.” “People don’t usually get married on the first date, and it’s usually best not to buy the first house you visit.”
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Talk to the experts
As you determine what you want in a home, it can help to talk to experts like mortgage consultants and real estate agents to narrow down what’s realistic for you.
Tanya Ball, regional director of home loans at BOK Financial, recommends asking experts about down payment assistance options as well as “specialized loan programs if you’re a Westerner, Native American, first-time buyer or buying in a rural area.”
Also, talking to an expert like a mortgage professional “can let you know what items to focus on for better offers — for example, a higher down payment or paying off the loan,” says Michael Merritt, mortgage servicing operations manager at BOK Financial. “The biggest benefits will vary based on your situation, so it’s important to focus on the things that will help you the most.”
Improve your credit score
For some potential home buyers, improving your credit score can make a significant difference in mortgage rates You deserve it.
“Lenders typically offer better interest rates and loan terms to borrowers with higher credit scores, so taking steps to improve your credit can help you get the best possible deal on your mortgage,” says Addie Kriegstein, a licensed real estate salesperson at Compass Real Estate. “This can include paying off existing debt, making all your payments on time and avoiding new credit inquiries or applications.”
Make your down payment
Another way to take advantage of this time to wait for interest rates to stabilize or decrease is to build your down payment. The more you can keep, the less you have to borrow and therefore pay in interest. Also, a higher down payment will likely get you a lower interest rate.
“One strategy I recommend, especially for first-time home buyers, is to put the difference between your current housing payment and your projected payment into a high-yield account each month. This can increase your down payment or the amount you can use. “Helps. Pay off the debt and test it for your projected budget to see if it works,” says Merritt.
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Shop around
Don’t assume that what one lender offers you is the same as what all other banks and mortgage providers offer. Your loan limits, interest rates and terms can vary from lender to lender, so it pays to shop around.
You can find it Paying for mortgage points With some lenders (where you pay upfront to lower your interest rate), or choosing an adjustable-rate mortgage instead of a fixed-rate loan, it works for you.
“It’s an interesting quirk of human nature that many of us drive across town to save 30% on a sofa but don’t necessarily compare rates and financing options on a home-sized purchase,” says Bloch.
“If you’ve been waiting to buy, now is a great time to shop lenders and look for financing options, including lesser-known options like rate buydowns. In this market, buyers are acutely aware of interest rates, but they’re less aware of options for their monthly payments. to reduce,” says Bloch.
Improvements to your current home
Finally, if you already own a home, you can use this time to improve your current home so you can try to get more money when you eventually sell. This can help offset the cost of higher interest rates.
One idea is to inspect a home now, says Jonathan Rundlett, a real estate agent and regional owner of EXIT Mid-Atlantic.
“This will allow you to take the time to wait for interest rates to drop to make any repairs or updates your home inspector finds,” says Rundlett. “Making any necessary repairs and updating your home so it looks move-in ready will allow you to get top dollar for your home when you’re ready to sell.”
Bottom line
These action items can help many potential home buyers better position themselves as they wait to see what happens with interest rates. But it’s important to remember that the specific way to improve depends on your situation Personal reasons
Such as your credit history, savings and income.
And while you can try to time a mortgage, knowing when to buy a home can be difficult, as it can be both a financial and an emotional decision. Some people may feel comfortable paying more for their dream home, while others may want to wait to get a better deal on mortgage interest rates. Weigh the pros and cons and consider talking to experts for personal advice.
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