We are all searching for opportunities to improve our situation. When an opportunity presents itself, some will take it while others will hesitate or dismiss it outright. How many times have you heard someone bemoan that they should have bought (fill in the blank, e.g. Apple, Amazon, Google, Facebook, etc) company stock back when it had just gone public. Real Estate is no different. Plenty of clients wish they had bought a home at the time of their first job; or when they completed boot camp and became eligible for their VA benefits. The one thing that all of these situations have in common is that seldom is it too late to benefit from such an opportunity.
Many people getting started in life will put off buying for an number of reasons from a lack of down payment, to wanting flexibility, to fearing the unknown future. There are loans specifically designed to help people get into home-ownership with little to no savings. Decent credit (550 and higher) is required, as is employment. For those who want to remain flexible, consider renting out the home if you need to move elsewhere. Keeping the home means your future property taxes will be based on today’s price. If you sell it and then return years later, you will be paying taxes based on the future price which will be higher. The other often quoted reason is what if interest rates fall.
This desire to time the purchase for the lowest possible interest rate derails many a financial wizard. The fact is that purchasing a home is not as simple as saying “I’ll take that one”. You need to line up financing before you go shopping. How else are you going to know what you can afford and what you can’t? Once you have financing, you start looking. It may take quite some time before you find a home you like. Then you have to be the buyer who’s offer the seller accepts over all other offers. This step alone may take several tries as you learn from past bids. Even once you are in escrow, you are going to take at least a month to get the loan funded. This translates to a few weeks to several months from when you first talk to a lender to when you have an accepted offer to take back to the lender. Only when you have an accepted offer is it wise to lock your interest rate. If you lock too soon, the lock period may expire before you have a home under contract.
It All Comes Together
Speak to a home owner who has had their home for a few years. Almost all will tell you that even though they missed out on the lowest possible interest rate, the home has appreciated nicely. The rate has become a secondary issue if they even think about it at all.
Right now we are at an opportunity point. Interest rates are starting to come down and it is expected that they will continue to come down for the next 30 to 60 days. The drop will likely be in the 100ths of 1% each week. However, even a few hundred dollars of savings upfront is still a savings. If you get really lucky, this may translate to saving $20 to $30 on your monthly payment for a first (read small) home.
Get yourself ready to take advantage of this opportunity by talking to a lender now and then a realtor in quick succession. I do both and can be reached at 760 622 5087 or firstname.lastname@example.org.