It’s the most wonderful time of the year to buy a home! Well, at least we think so. If you’ve been on the fence about getting out of the rental circuit or upsizing/downsizing, here are some factors to consider and some tips to make your spring homebuying experience a positive one.
Mortgage rates are still near historic lows.
Despite the Fed increasing the federal funds rate, mortgage rates have stayed near record lows in the first three months of 2016, making many renters jump on the homebuying bandwagon.
Simply put, lower mortgage rates mean high home affordability and rates won’t stay this low forever.
Rent is still on the rise.
Nearly half of all renter households were considered “cost-burdened” in 2015, meaning they were spending more than 30 percent of their income on rent, according to the Harvard Joint Center for Housing Studies.
Zillow predicts rental prices will soar to their highest medians on record in the new year, which is even more incentive for a renter who is on the fence about purchasing.
Low down payment and flexible credit score loan options have never been better.
A major hurdle for first-time homebuyers is saving up the funds for a down payment and/or closing costs. Luckily there are several new and continuing loan programs that allow eligible borrowers to purchase a home with little to no money down and less-than-perfect credit.
To check out our list of low down payment programs, click here.
Home price growth has slowed going into 2016.
Both new and existing home sales price medians dropped in January. This supports many economists’ predictions that while home values will still appreciate in 2016, we’ll see some slowdown. Quickly rising home prices have minimized homebuyers’ affordabilityand have shut out some potential buyers from the market completely.
Slowing price growth coupled with low mortgage rates is positive for anyone looking to increase their mortgage affordability.
Despite low inventory, existing home sales are increasing.
According to the National Association of Realtors, the amount of existing homes on the market in January was only a 4-month supply. A 6-month supply is considered a balance market, meaning buying a home this spring could be very competitive.
“The spring buying season is right around the corner and current supply levels aren’t even close to what’s needed to accommodate the subsequent growth in housing demand,” said Lawrence Yun, National Association of Realtors chief economist.
Having your home financing in line prior to your home search is essential to homebuying this spring.
With inventory and mortgage rates low, the busiest homebuying season of the year is bound to get even more competitive, which is why meeting with a mortgage banker should be the first task to check off your to-do list.
For more information about buying and financing your first home, download our free Mortgage 101 Handbook. Happy homebuying!