A Closer Look at Mortgage Rates and the Home Buying Process

If buying a home is your goal, now is the time to do it!  Mortgage rates are at a record low.  They are likely to remain low for the next couple of years. This is good news for home buyers.  It means lower monthly mortgage payments and larger buying budgets. Becoming a homeowner just became a more feasible option for more people.  

The Real Estate Market

The ongoing pandemic has had a significant impact on the real estate market.  As the vaccines roll out and seller apprehension decreases, the housing supply is expected to improve.  If you are a buyer, you will likely have to move fast when looking for your dream home.  The low interest rates have generated bidding wars and home prices have gone up.

There has also been a sudden wave of relocations made possible by remote work.  Work from home policies have given people the freedom to reconsider where they live.  Cities and counties that were previously undesirable are being considered as people are seeking warmer, healthier, and less dense areas.

Determining if You Are Ready to Buy

The real estate market is just one part of determining if now is a good time to buy a home.  Do you have a down payment ready?  Is your credit score looking good?  Are your finances in order?  The right time to buy a house is when you know your finances can handle the responsibility of owning a home.

Here are several things to consider as you determine if you are ready to buy a new house:

1. Are you out of debt?  Do you have an emergency fund available?   Getting rid of debt before purchasing a home is recommended.  Then your income will be freed up to help with all of the costs of the home.  You should have a moderate to low debt to income ratio.
2. Your house payments shouldn’t be more than 25% of your take home pay.  This includes the principal, interest, property taxes, and insurance.  Homeowners Association fees (HOA) should be considered as well.
3. You should have saved up enough for a 10 – 20% down payment.
4. Educate yourself on the mortgages available and know how to choose the right mortgage.  The overall lowest cost mortgage is the 15 year fixed rate conventional loan.  More complicated loans such as FHA, VA, or USDA loans are designed to help people that are not financially as ready to purchase a house and will end up paying in extra interest and fees.
5. You need to be prepared to handle the homeownership costs.  The average homeowner completes an average of seven home maintenance projects every year.  There needs to be money set aside in a budget for these costs.
6. Plan to stay in the same place for a considerable amount of time.  If you love your location and plan to stay for a least several years, buying a house is a great investment.
7. Your credit score should be 620 or higher.
8. You must have dependable employment and a stable income.  Lenders want to see that your current income will continue for three years after the purchase of the home.

The first step toward buying a house is getting pre-qualified.  The pre-qualification letter does not guarantee that a lender will work with you, but it does give you a sense of whether you will qualify for financing and how much you will be able to borrow.  A letter also tells agents and sellers that you will be able to follow through with the purchase once an offer has been made.

Purchasing a home when home values are trending upward is favorable.  You will start building equity right away.  There are several factors that indicate a good time to buy, which means a good return on your investment.  First, real estate development is happening in the area.  Second, new restaurants and retail stores are opening.  Third, the area is gaining popularity.

WIth home values trending upward and interest rates staying low, now is a great time to buy a house.  Finding a lender you can trust and rely on for guidance is the first step.

Jarrettsville Federal has a secure online platform for your mortgage lending and refinancing needs. With competitive rates for the taking, now is the time to take advantage.  We offer a variety of reliable programs to assist all types of borrowers, from first-time homebuyers to long-term homeowners who are purchasing again or refinancing. Your loan officer will explain these products in detail and help you determine which loan is best for your individual situation.  Contact us at 410 -692- 5151 or visit our website at https://www.jarrettsvillefederal.com/