HOW TO QUALIFY FOR A BETTER MORTGAGE RATE

Don’t just wait for a lower rate. You can make changes to your personal finances that could help you get a lower interest rate. Mortgage interest rates have been headlining financial news segments for several years running. Much of that news has been met with less than open arms, as rates have risen dramatically in recent years, an increase that is related to the ripple effect of the COVID-19 pandemic.

Mortgage interest rates did not immediately spike. In fact, data from the lender Freddie Mac indicates mortgage rates were still well below 4% on January 1, 2022. However, those rates hovered around 7% by the end of that year. and we’re still around that level at the start of 2024. With such high interest rates, it's understandable if prospective home buyers feel helpless. However, there's much buyers can do to help themselves as they seek to secure the lowest mortgage interest rate possible.

Read your credit report and improve your score, if necessary. Many prospective home buyers save up for years in anticipation of the day when they will purchase their own home. During this period, buyers can read their credit reports and address any discrepancies while taking steps to improve their credit scores. Lenders consider a host of variables to determine an applicant's credit worthiness, and credit history and credit scores bear significant influence.

The higher an applicant's credit score, the more favorable mortgage rate he or she is likely to get. Take control of your debt-to-income ratio. Debt-to-income (DTI) ratio refers to what you owe in relation to how much you earn. The lower your DTI, the better you look to lenders.

According to Bankrate, lenders typically want to avoid issuing mortgages to individuals if the monthly payment will exceed 28 percent of their gross monthly income, and people who may be near that threshold for a given home may be denied a mortgage if their DTI is high.

Prospective home buyers currently carrying significant debt, including consumer debt like credit cards and/ or student loan debts, should make a concerted effort to pay down that debt prior to applying for a mortgage. Prioritize paying off consumer debt before applying for a mortgage.

Maintain a strong employment record. Steady employment and consistent earnings make mortgage applicants more attractive in the eyes of lenders. If you are currently shopping for a home or about to make an offer, now might not be the best time to switch jobs.

Self-employed individuals and freelancers working multiple jobs can still qualify for a good mortgage rate, but they may need to provide more extensive documentation that indicates their earnings going back several years. Individuals who have been working full-time for the same company for years may only need to provide W-2 forms from the two most recent tax years.

Shop around for rates. Rates may not fluctuate much between lenders, but it's still worth shopping around for mortgage rates.

A study from Freddie Mac found that the benefits of shopping around for a mortgage rate were especially notable in 2022 compared to the decade prior, saving borrowers who took the time to shop for rates substantial sums of money.

Mortgage rates are higher compared to a half decade ago, but prospective home buyers can take steps to increase their chances of qualifying for a more favorable rate.

 

April 11, 2024

BEST TIME TO SELL YOUR HOME IN 2024

BEST TIME TO SELL YOUR HOME IN 2024
Last year, the housing market faced significant challenges, keeping many buyers—and sellers—waiting in the real estate market wings. As the snow melts, the flowers bloom, and the open houses are being scheduled in earnest, buyers might be eager to emerge.
That’s because home list prices have come down from the peak of $449,000 in June 2022 and $445,000 in June 2023. The median home list price was a median of $415,500 in February, according to the most recent Realtordotcom. While prices are usually highest in the summer, prices are expected to come down a little overall this year by about 1.7%, according to the the 2024 forecast. Mortgage rates have also fallen to the high 6% range from almost 8% last fall. This has freed up some sorely needed housing inventory.
"Many homeowners also felt ‘locked in’ by their current mortgage [rate], hesitant to list their home for sale and trade a sub-4% mortgage for a 7%-plus mortgage" last year, says Jones. That would be what would happen if they bought another home with a new mortgage. This "kept new listing activity low for much of the year."
While rates remain volatile, the Realtordotcom economic team predicts that mortgage rates will fall to the mid-6% range by the end of this year. "While affordability will continue to be a challenge for buyers and sellers who are looking to buy, we expect lower mortgage rates and more new-construction inventory to offer some relief and inject some life back into the market," says Jones.
There’s also a feeling that brings buyers into the spring market that data can’t measure.
Spring is a busy season for many reasons. For clients with children, moving will align with summer break when schools are out and the weather is nice," says real estate agents. Additionally, the end of tax season makes the loan approval process smoother." Homeowners who worry that listing during the busy spring market will put them on the wrong side of supply and demand need to know one crucial data point: The housing market needs inventory—and lots of it.
There were about 7.9% more homes for sale at the start of 2024 than over the same period in 2023. As a result, there were the most homes for sale this January since 2020. However, the number of homes for sale was still 39.7% lower than before the pandemic.
"This gap means there continue to be opportunities for sellers who enter the market this spring," says Jones.
Sellers might also face less competition. Potential sellers should note there are usually 13.7% fewer home sellers during the best time to list compared with an average week.
"If inventory levels remain relatively low, time on market may pick up faster as buyers vie for fewer homes," adds Jones.
Savvy sellers might also want to take advantage of the best time to list, knowing that while spring is the beginning of the prime real estate season, it’s not the peak. This means that this week sees more buyer demand per property than later into the spring and summer.
Sellers should start prepping now to list their homes
All of this means that sellers who want to get their homes onto the market during the best week to list should start prepping ASAP.
This could mean making repairs, painting the walls and cleaning the carpets, planting some flowers out front, and whatever else it takes for sellers to get their homes in tiptop shape. More than half of home sellers took a month or less to get their homes to list, according to a Realtordotcom survey.
Buyers often start looking at listings early in their homebuying journey, meaning a seller who lists early will reap some early-bird rewards. There’s an awakening in spring, a motivation for people to go out after months of hibernation. They’ve monitored the market all winter and are now primed and ready to take action.
Posted in Blog
July 31, 2017

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