Buying a Home? Here’s Four Strategies To Know
By: James Flippin · October 27, 2022 · Reading Time: 3 minutes
The State of Housing
Uncharacteristically, the housing market has behaved sporadically lately.
After averaging approximately 3% coming into 2022, the average 30-year fixed-rate mortgage is now sitting above 7%. It’s incredibly rare for mortgage rates to double in the span of a few months. This rapid change is the result of the Federal Reserve raising interest rates in an effort to combat record-high inflation.
At the same time, Realtor.com lists the median price for a home in the U.S. at $427,000, up 14% year-over-year. This is another significant jump.
At face value, this doesn’t sound like good news for prospective buyers. However, if these trends continue, it could lead to lower demand for houses — which could actually play in buyers’ favor.
Tips for Buying
If you’re looking to buy a home in the next few months, there are a few strategies that you should be aware of.
For starters, you may want to consider as large a down payment as possible. In general, the more money you put down, the less you will need to borrow. Borrowing less will almost always save you more in interest payments over the years.
Additionally, be aware of closing costs. Remember, buying a home comes with plenty of expenses like broker commissions, transfer taxes, title searches, and more. These one-time costs can quickly add up to thousands of dollars.
Also, aim to keep your monthly housing expenses under 30% of your income. This includes your mortgage payment, taxes, and insurance.
Finally, your credit score can greatly impact your buying power. A higher score can get you a better borrowing rate and save you thousands in interest over the course of your mortgage.
Time To Buy?
On a national level, interest rates are rising, which makes it more expensive to get a mortgage. However, this is creating less demand, which could lead to lower home prices in the coming months — a good sign for prospective buyers.
Buying a house is a personal decision that depends on many factors, which means there is never a universal “right” or “wrong” time to buy. But, if the time is right for you, it might soon be right in the market, too.
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