For many of us, every new year usually begins with a plan for a fresh start. After almost a full year of social distancing and spending much more time within the four walls we call “home,” that fresh start may include a new home.
Surprisingly, the housing market has remained steady and some areas have seen increased real estate traffic due to a drop in interest rates that are at the lowest point in several years. Currently, rates remain extremely low, so what does that mean for homebuyers? It can mean a lower monthly payment and a lower total cost for your home since you’ll pay less money toward interest. So, you’re getting more home for your money.
For the past several years, the real estate industry has experienced low inventory and high demand. Buyers are often “waiting in the wings,” so to speak, and when a home that meets their needs becomes available, they buy it. That scenario continues today.
In the current market that is accompanied by record-low interest rates, I want to share with prospective homebuyers a few things they can take care of on the front end of their home search that will make them more prepared once the right house goes on the market. Taking care of the following items early also positions a buyer with an advantage in the event there are multiple offers on the same home.
First, get pre-qualified for a mortgage loan. This is a quick and easy process and some banks, including Arvest, have tools on their mobile app that let you begin the pre-qualification application and provide the necessary documents even before you meet with a mortgage loan officer. Getting pre-qualified also lets you know the price point of homes you can consider. Buyers who may find themselves in a bidding war due to low inventory in the real estate market, may have an advantage in their offer if they can show that they are pre-qualified for a loan. That’s one step and one concern the seller doesn’t have to wait on.
Next, go ahead and determine the loan that best suits your situation. Your local mortgage officer can provide information on any incentives or discounts for first-time home buyers, or other information regarding loans that might affect your home search. For example, many people are unaware of the option or benefits of a Rural Home Development Loan. These loans from the United States Department of Agriculture (USDA) provide homebuyers who are interested in building or buying a home in a rural area with a mortgage option that requires no down payment, a fixed rate, low interest and low mortgage insurance premium. Many areas that qualify for these rural development loans are just outside the city limits and may surprise homebuyers by their location. The USDA’s website provides a tool to search areas nationwide that qualify for a Rural Home Development Loan.
Researching loans before your home search lets you compare down payment minimums, if a down payment is even required; specialty loans, such as a unique program for physicians or veterans; and more. It also provides you the information you need on whether to pursue a 30-year mortgage with lower payments or opt for a lower-priced home and pay it off in 15 years.
So many of us can be emotional buyers, meaning that we buy with our heart more so than our head, when we find our dream home or another big-ticket item that will take years to pay off. Our home will always be the biggest purchase we make, so doing your research on loan options, getting prequalified, considering location and determining the life of the loan you want to repay – all before you get emotionally attached to a home – can help you make a more educated decision in the long run. And, it’s more beneficial to be equipped with this knowledge on the front end, rather than after the “sold” sticker is placed across the “for sale” sign.
As with anything, every aspect of the financial process in purchasing a new home is easier when you enlist the help of a mortgage lending professional. They remain aware of changes and opportunities regarding lending options. Arvest is pleased to provide residents of the River Valley a new, independent mortgage service center in Conway at 2885 Prince St.