By Trina Cuccia
Are you are thinking of buying a new home? The current market is challenging to say the least, with low inventory and higher rates than in recent history, so what can you do? Should you wait? Will rates come down? Will housing prices crash?
While we can’t know the future, due to low inventory and higher underwriting standards than pre- 2008, we do not see another housing crash coming. The decision to move is a complex one, and waiting does not guarantee lower rates or prices.
Every situation is different, but I have some advice for anyone considering buying a home to discuss with a professional loan originator.
DETERMINE WHAT YOU CAN AFFORD
Many people, especially first-time homebuyers, over and underestimate how big of a loan they can qualify for.
Do you already own a home that you’ll be selling first? Having a realistic estimate of your home’s value and the amount of money you may have after a sale is important.
CONSIDER MULTIPLE OPTIONS
There are different loan types for individuals living in certain areas or with different incomes. Do you have savings? You also may save by making a larger down payment. Is the seller offering incentives? You may be able to buy down your rate temporarily or permanently.
Many online calculators can give you an idea of what your payments will be but are not tailored to your unique situation. Are you self-employed, a two-income family or have student loans? All these details matter. Discuss different scenarios with your loan officer; they are there to help get you in the best financial position possible. Getting an idea of what monthly payment and down payment options you have will help you build a budget.
MAP OUT A BUDGET
Budgeting is a culmination of the tips above. It is so important, but often overlooked. Monthly payment is only part of the picture. Insurance and taxes can vary widely, as can costs for furniture, repairs and energy bills. A good loan officer will review all of this.
If you can’t make the budget work, that is when you should wait. A good loan officer wants you to be financially stable and to earn your business again, not push you into something you can’t afford.
If you can budget comfortably for home ownership, then do not let the current mortgage rates make your decision for you. These numbers are just part of the story.
WHAT WOULD MY MORTGAGE BE? *sample*
- Loan amount: $300,000
- Type of loan: 30-year fixed
- 6 percent monthly payment: $1,798.65
- 7 percent monthly payment: $1,995.91
Trina Cuccia is a loan officer and branch manager with GMFS Mortgage. Reach her at tcuccia@gmfslending.com.