Tips for Home Buying in a Competitive Market
As spring approaches, it’s again a seller’s market for home buyers, making for some tight competition on local properties. Here’s what it means for you if you’re looking to buy a home this year.
A Look at Today’s Local Market
During the last week of January, mortgage rates dipped to a 3-year low. Since lower mortgage rates equate directly to lower monthly payments, home buying or stepping up into a larger home, becomes affordable for more people. The result is a competitive, local housing market
Of course, higher demand often spurs rising home prices, and today’s market is no exception. In Nebraska, for example, average prices are predicted to climb 2.6 percent in the next year. Kansas can expect a similar trend, with housing prices rising 2.8 percent, according to Zillow.
Unfortunately, in today’s local market, rising costs are also fueled by weak supply. Home inventory has been falling steadily for several years, particularly for starter homes at lower price points. As a result, buyers continue to purchase near asking price or even slightly above.
What You Need to Know
When home markets are tight, listed properties may not stay on the market for long. In some of the hot spots, such as Council Bluffs, Iowa for example, median days on market for new home listings is only 54.5 days. Peak properties will sell much faster.
If you’re looking to buy right now, you’ll need to have your ducks in a row to take on a competitive market. Here are some strategies to help you more easily land in the home of your dreams:
- Find a good loan officer. Finding a qualified loan officer should be your first step when entering the home market. Having someone to guide you through process is essential in a tight buying market where one misstep may cause you to lose out to a more prepared buyer.
- Get preapproved with your mortgage lender. Once you have identified a loan officer, you should pursue preapproval. Doing so will provide you with a firm number as to the mortgage amount for which you are qualified, so you don’t waste time looking at properties that are out of your price range.
Also, most sellers want to know before accepting an offer that the buyer is indeed qualified for financing. Having a preapproval letter at the time you submit an offer can increase the chances of being accepted, particularly when going up against other bidders. Also, many sellers will not accept an offer without evidence of qualified financing.
- Be aware of special financing options. As home prices rise, you may be inclined to think you can’t afford a mortgage. However, with today’s low interest rates and the number of special financing programs available, you might qualify more easily than you think.
A wide variety of government and investor programs are available to help specific groups of buyers make the most of their purchasing dollars. For example, first-time homebuyers can take advantage of state bond programs that feature below market interest rates and flexible down payment options. There are similar programs through the USDA that allow buyers to purchase homes in rural areas.
Of course, veterans have options through the very popular VA program, and the familiar FHA loan has features that make it a good choice for many buyers.
With so many programs available, it is important that you choose the right lender. You’ll need someone who not only has full access to the wide range of lending options, but also has in-depth knowledge to guide you through the process and help you choose what’s best for your situation.
If you’re in the market for a new home, record-low interest rates make it a great time to buy. However, when searching for a home in some of the country’s hottest markets, you’ll want to be prepared. Be sure to seek a lender who is willing to support you through the process and help you find the best mortgage option to help you land in the home of your dreams.Read More Insights