As the home buying season heats up, housing prices and interest rates are on the rise, inventory is at record lows, and prospective buyers who don’t get prepared are likely to face challenging searches filled with tough decisions. Despite higher housing costs, the average property listing is selling about 8% faster than it would have a year ago. Indecision and lack of preparation can jeopardize a successful purchase. Fortunately, there are things buyers can do to get a jump on the competition in today’s tight housing market.
Checking Credit Reports and Getting Rid of Debt
Prior to searching for a new home, home buyers should make sure that their finances are in order, which entails more than simply having an emergency fund available. Reviewing credit reports is a good first step to take, followed by consolidating any existing debt.
Paying off debt could help lower monthly payments and make the debt-to-income ratio more favorable for consumers. Both of these factors are what lenders will take into account when determining the creditworthiness of borrowers.
Choosing the Right Type of Home
Because of the current housing market, buyers should decide on the type of home they want, the location they desire, and the amenities they would like to have well in advance. That way they don’t waste time on these types of decisions while someone else walks away with the home of their dreams.
Determining What’s Actually Affordable
Home buyers often find themselves bidding higher than the maximum price they’re capable of paying. Unaffordable bidding wars can be avoided by creating a housing budget that includes the cost of insurance, taxes and other costs and only considering homes that are truly within the buyer’s price range. It is recommended that buyers target a monthly mortgage payment that’s approximately 80% or less than their current rent.
Looking for the Right Lender
As mortgage rates continue to rise, lenders are competing more to attract the ideal home buyer. Comparing fees and other associated costs and negotiating with lenders is a good way to find the best deal.
