As recently as last year, homes changed hands almost entirely on the seller’s terms. Today, a potential buyer gets to call more of the shots. In the past couple of years, at the peak of the market, buyers were forced to remove a lot of protections, in order to secure a new home, including paying over asking price, no contingencies to protect the buyer and little to no seller concessions, while closing in 14 days or less. Today, in most cases, buyers are able to get below asking price, contingencies to protect the buyer and some sellers are offering concessions. Additionally, during the peak of the market, cash was king and, sometimes, the only way to win a multiple-bid situation. Now, all financing types are welcome.
Buyers who have seen interest rates increase from all-time lows might think they cannot buy the home of their dreams. Even though interest rates have increased, this is a great time to negotiate with the seller to “buy down” the interest rate. (A buydown involves paying a one-time fee at closing to secure a lower interest rate for the loan term.)
The best advice for today’s homebuyers? Start with a mortgage financing preapproval. Preapprovals use today’s mortgage rates to tell you how much home you can afford and set realistic boundaries for your home search. A mortgage adviser also can help address any credit issues and work on steps to help build your credit, if necessary.
As a borrower, it makes little sense to attempt interest rate timing (waiting to buy until interest rates fall) in this market. Regardless of current interest rates, the best recommendation is to purchase a home when you are financially ready and can afford it. You are not bound forever to your mortgage rate. When interest rates drop, homeowners can refinance, to save money. Additionally, as interest rates fall, home prices will increase, building equity.
CoreLogic reported that home prices have declined only 3% from their peak — not exactly a housing bubble (a run-up in housing prices fueled by demand). CoreLogic also predicted that home prices will rise another 3% in 2023. So, don’t let a short-term circumstance get in the way of a long-term wealth-creating opportunity!
– Matt Quagliana, NMLS #1937747, is a mortgage adviser with Homeowners Financial Group in Canton. He can be reached at 470-863-7072 or firstname.lastname@example.org.
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