Whether you are a first-time buyer or looking to move up to the home of your dreams, now is a great time to purchase a home. Here are three major reasons to buy today.

1. Affordability

Many people focus solely on price when talking about home affordability. Since home prices have appreciated throughout the past year, they assume homes are less affordable. However, affordability is determined by three components:

• Price
• Wages
• Mortgage Interest Rate

Prices are up, but so are wages – and interest rates have recently dropped dramatically (see #2 below). As a result, the National Association of Realtors’ (NAR) latest Affordability Index report revealed that homes are MORE affordable throughout the country today than they were a year ago.

“All four regions saw an increase in affordability from a year ago. The South had the biggest gain in affordability of 6.9%, followed by the West with a gain of 6.0%. The Midwest had an increase of 5.8%, followed by the Northeast with the smallest gain of 1.8%.”

2. Mortgage Interest Rates

Mortgage rates have dropped almost a full point after heading toward 5% last fall and early winter. Currently, they are below 4%.
Additionally, Fannie Mae recently predicted the average rate for a 30-year fixed mortgage will be 3.7% in the second half of 2019. That compares to a 4.4% average rate in the first quarter and 4% in the second quarter.

With mortgage rates remaining near historic lows, Fannie Mae and others have increased their forecasts for housing appreciation for the rest of the year. If home price gains are about to re-accelerate, buying now rather than later makes financial sense.

3. Increase Family Wealth

Homeownership has always been recognized as a sensational way to build long-term family wealth. A new report by ATTOM Data Solutions reveals:

“U.S. homeowners who sold in the second quarter of 2019 realized an average home price gain since purchase of $67,500, up from an average gain of $57,706 in Q1 2019 and up from an average gain of $60,100 in Q2 2018. The average home seller gain of $67,500 in Q2 2019 represented an average 33.9 percent return as a percentage of original purchase price.”

The longer you delay purchasing a home, the longer you are waiting to put the power of home equity to work for you.

Bottom Line

With affordability increasing, mortgage rates decreasing, and home values about to re-accelerate, it may be time to make a move. Let’s get together to determine if buying now makes sense for your family.

Shopping for a home is always an exciting experience. And, with todays technology it’s never been easier or more enjoyable. No matter where in the world you are you can shop for a home in a new area. You can find a new home and never leave your old comfy couch. The access to available homes is as easy as it is exciting.

However, the ease of access does not come without some dangers. Shopping for a home is easy- but buying a home can be hard in today’s marketplace. If you’re considering buying a home with a mortgage don’t make the mistake of submitting an offer without being pre approved or pre qualified.

In many markets across the country, the number of buyers searching for their dream homes greatly outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are in a market that is not as competitive, understanding your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional like myself is that I have relationships with lenders who will be able to help you with this process. Depending on your needs and situation I can refer the right lender.

Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

• • Capacity: Your current and future ability to make your payments
  • Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  • Collateral: The home, or type of home, that you would like to purchase
  • Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Pre approval and how it affects your OFFER

The importance of being pre approved can’t be over emphasized. In a competitive marketplace where there are more buyers than homes finding a home and submitting an offer WITHOUT a pre approval letter is likely a huge waste of time. The seller is going to discount the value of your offer in terms of your ability to close. The seller will NOT take your offer seriously in comparison to the other offers in consideration. Why should a seller take your offer seriously if you’ve not done the work to obtain pre approval. Submitting your offer with a pre approval or pre qualified letter enhances the value of the offer and shows the seller your serious. It removes one of the sellers greatest worries- do you have the money to close?

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. Getting a referral to a lender that helps you get qualified is an important early step in the home purchase process. Without pre approval you’ll have a very frustrating experience.
On the other hand, if you are ready and willing to buy, you may be pleasantly surprised at your ability to do so. And, you’ll know your offer is received and given full consideration because you’ve done the proper work ahead of time.