Are you thinking about buying a new home this fall? Worried that you should wait until next spring? Allow me to put some of your worries and other commons myths to rest!
Four Reasons to Buy Now!
Just because the “summer market” has begun to close doesn’t mean that you should wait until the spring to buy your new home. Here are a few reasons why:
- Prices are going to continue to rise.
CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.7% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.2% over the next year. The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.
- Mortgage Interest Rates Are Projected to Increase
Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have hovered around 4%. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase by this time next year.
An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.
- Either Way, You are Paying a Mortgage
I know what you’re thinking. You’re renting right now so you’re not actually paying a mortgage at all. That isn’t the case.There are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity. Are you ready to put your housing cost to work for you?
- It’s Time to Move on with Your Life
The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But what if they weren’t? Would you wait?Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over renovations, maybe now is the time to buy. If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial saving.
Myths Holding You Back from Buying a Home
In Realtor.com’s spring article, “Home Buyers’ Top Mortgage Fears: Which One Scares You?” they mention that “46% of potential home buyers fear they won’t qualify for a mortgage to the point that they don’t even try.”
Myths are rampant when it comes to buying a home. I’ll tackle two of the most common ones we hear in the real estate industry:
Myth #1: “I Need a 20% Down Payment”
Buyers overestimate the down payment funds needed to qualify for a home loan. According
to the First Quarter 2017 Homeownership Program Index (HPI) from Down Payment Resource,
saving for a down payment was the barrier that kept 70% of renters from buying.
Rob Chrane, CEO of Down Payment Resource, had this to say:
“There are many mortgage-ready renters today, but they don’t know it. Often, homebuyers
remain sidelined for years due to the down payment.”
Many believe that they need at least 20% down to buy their dream home, but programs are
available that allow buyers to put down as little as 3%. Many renters may actually be able
to enter the housing market sooner than they ever imagined with new programs that have
emerged, allowing less cash out of pocket.
Myth #2: “I need a 780 FICO® Score or Higher to Buy”
The survey revealed that 59% of Americans either don’t know (54%) or are misinformed (5%)
about what FICO® score is necessary to qualify. Many Americans believe a ‘good’ credit score is 780 or higher.
To help debunk this myth, let’s take a look at Ellie Mae’s latest Origination Insight Report, which
focuses on recently closed (approved) loans. As you can see on the right, 52.2% of approved mortgages had a credit score of 600-74.
In fact, we have several lenders we work with that have multiple loan programs geared at all levels of credit scores that you should be able to find something that works for you.
Whether buying your first home or moving up to your dream home, knowing your options
will make the mortgage process easier. Your dream home may already be within your reach.
Things to Consider When Buying a Home
The four reasons to buy now and two myths above were a sneak peek from my fall edition of Things to Consider When Buying a Home buyer’s guide. The rest of the guide, which you can download free from my website, goes on to talk about the current market trends, what you need to know going in to buying, and what to expect from the process.
The long and the short of it is this: don’t wait until the spring to buy your next home. If you think you won’t qualify for a loan, don’t let that stop you from speaking to a lender…so you may be closer than you think!
To download the entire fall home buyer’s guide for free, visit my website and let me know that you’d like a copy! As always, please feel free to contact me with any questions you have about buying a new home this fall!