As we know, the last few years have been a whirlwind, and so many aspects of life have been affected. It’s certainly no surprise that the housing market is among that list of things, due in part to record inflation. Seemingly, everyone wants to buy a home these days, but with high interest rates and home costs, potential homebuyers might feel uncertain about it. To help you make your decision, we want to give you a few useful housing tips.
Let’s start with a couple of important facts.
Costs of Massachusetts homes have risen 9% since 2021[1]
What does this mean for homebuyers? According to veteran realtor, Javier Vidana[2], most people decide to purchase for three reasons: they have the financial ability, they have an urgent need, or they see a potential investment opportunity. With the current impact inflation is having on the housing market, you should be sure that you’re buying for the first two reasons – and hold off if you’re buying for the last reason. Mortgage rates and home costs will gradually stabilize, so purchasing a home now should be a careful decision.
Massachusetts home sales have declined by 11.8% since 2021[3]
65.5% of Americans own a home, but this is a statistic that was solidified pre-pandemic. This year, the number of homebuyers has been increasing at an unusually slow pace.
Interest rates on 30-year fixed mortgage loans have surpassed 7%[4]
Rising rates can create opportunities for people looking to buy homes. Rising rates can shift the real estate market from a seller’s market to a market in equilibrium or a buyer’s market. This is the type of market that we are now entering. Sellers must be realistic in pricing the homes that they desire to sell. So, have no fear. If you’re looking to purchase a home now or in the near future, there are a few methods and tips to ensure you find a home and save on interest rates in the long run.
What methods should you use if you want to own a home now?
- Method 1: “no point, no closing cost” – pay no closing cost fees and initially accept a slightly higher rate, then eventually refinance to a lower rate as the economy slows and rates drop.
- Method 2: “adjustable-rate mortgage” – take advantage of a discounted interest rate for a set period of time, usually from 3-7 years. The goal when choosing this option is to refinance at a later date when the economy slows to a fixed rate option.
Additional tips for homebuyers:
Start planning early
Let’s say you want to buy a home in a year. If you gather all the information you need now, you’ll be armored with sufficient housing market knowledge once it’s time for you to buy.
Use technology to your advantage
Websites such as newfed.com/mta can help you get an idea of interest rates, monthly costs and your local housing market. 84% of new homebuyers say the information they found online was crucial for their research.[5]
Finance before you shop
Getting pre-approved before you shop gives you confidence. In addition to that, sellers will find comfort in knowing that all of your qualifications have already been checked. This helps reassure them that you’re an eligible candidate and you’re not there to waste their time.
Figure out your budget
Having a set number in mind allows for a smoother home shopping experience. One of the worst feelings is getting attached to a home and later realizing that it’s out of your price range.
Find a trusted specialist who knows your market best
Experienced representatives will always have the highest level of familiarity with housing programs, legal requirements, facilitating negotiations and much more. Connect with a licensed New Fed Mortgage specialist to help you achieve your homeownership goals.
These are a few tools you can use to prepare to purchase your next home. Visit www.newfed.com/mta or call 877.861.MTAB to speak to a mortgage specialist and learn how you can save even more, just by being an MTA member.
[1] Zokovitch, Grace. “Massachusetts Home Prices Hit New Record Over $600,000.” Boston Herald, 19 July 2022, www.bostonherald.com/2022/07/19/massachusetts-home-prices-hit-new-record....
[2] https://javiervidana.com/. Javier Vidana, 2022, www.javiervidana.com.
[3] Young, Colin. “https://www.cbsnews.com/boston/news/massachusetts-home-sales-prices-mort....” CBS News, 16 Aug. 2022, www.cbsnews.com/boston/news/massachusetts-home-sales-prices-mortgage-rate.
[4] Olick, Diana. “https://www.cnbc.com/2022/10/11/mortgage-rate-is-over-7percent-harder-to....” CNBC, 11 Oct. 2022, www.cnbc.com/2022/10/11/mortgage-rate-is-over-7percent-harder-to-qualify....
[5] Georgiev, Deyan. “69+ Real Estate Statistics, Trends and Fun Facts in 2022.” Review42, 18 Nov. 2020, review42.com/resources/real-estate-statistics/#:~:text=84%25%20of%20new%20homebuyers%20say,was%20crucial%20for%20their%20research.&text=Typical%20home%20buyers%20search%20for,detailed%20information%20about%20properties%20online.