Buying a Home: How to Keep the Dream Alive

Purchasing a house is a dream for so many—there’s nothing like unlocking the door to your very own home. However, with the changes in the economy over the last few years, choosing a home that’s right for you, your family and your budget can be difficult to sort out. But that doesn’t mean, if you’re ready to buy, you can’t find something you’ll love.

Because of the uncertainty surrounding the housing market, homebuyers inevitably have a lot of questions. Where is the market going in the short term? What about long-term? Should I wait to buy a house or buy the first one I find? Are we now in a buyers’ market?

Getting the best answers to these questions requires a look into the past, present and future of the real estate market. Read on to do a little time traveling.

A walk through the past

In 2022, we saw home prices soaring, bidding wars, larger-than-usual down payments, a shortage of homes on the market and rising interest rates. It was challenging to get into any home, let alone the home of your dreams.

House hunters were constantly amending their wish lists—accepting fewer features just to find any home to buy. It was business as usual for sellers to receive multiple offers, including cash offers from investors that seemed almost impossible to beat.

The here and now

The real estate market has undergone many changes over the last year. Most areas have seen slightly lower home prices, and interest rates have started to level off. However, many homebuyers who were eager to buy a property are now on the fence, wondering if they should buy now or wait for additional changes in the market. The good news is some sellers are now entertaining lower offers and may be open to negotiations, both of which were not on the table in 2022.

Sellers who had their home on the market last year may be reconsidering, choosing instead to stay in their current home since interest rates have been somewhat unpredictable. This has contributed to fewer homes on the market. However, the total available inventory has improved, so it’s not definitively a sellers’ or a buyers’ market but a good mix of the two—great news for potential buyers. If you can afford a home, it will be easier to find something that works for you.

Looking ahead

Predicting what the housing market will be like in the future involves a lot of speculation and can be exceedingly difficult to pin down. Some experts see rates dropping by the end of 2023 and into 2024, but home prices are estimated to stay about the same. Mortgage experts will tell you real estate is a promising investment as it typically builds equity over time.

Some prospective buyers may be concerned with a “housing bubble”—when housing prices increase exponentially, fueled by demand and exuberant spending, resulting in a market crash or potential recession. Most economic experts, however, believe the real estate market will likely hold for the foreseeable future and housing demand and pricing will level off.

Tips for buying within the next 12 months

Buying a home is usually a worthwhile investment. Remember, equity equals value! If a new home is on your short list, make sure you follow these tips:

• Get preapproved. Preapproval tells you what loan amount you qualify for and helps you determine which homebuying program to use. It also allows you to estimate your monthly mortgage payment to make sure it fits your budget. Then you’ll know your price range as you begin searching so you don’t fall in love with a home you can’t afford.

• Hire a realtor. Is skipping a realtor really worth the money you would save? Many experts say no. Not only is a realtor knowledgeable about the rules and regulations of the industry, they can also negotiate with the seller on your behalf and narrow down your search results to find a house that fits your needs faster than you could alone.

• Decide on your wants and needs. Now comes the fun part—looking at all the beautiful homes! Once you have hired a realtor and are preapproved, visit as many open houses as you can to learn what amenities you can and can’t live without. This will help you set a framework for your budget and find a home you’ll love that fits your needs at the most affordable price.

What if you’re not planning to buy for a year or more?

If you’re not quite ready to take the leap and buy a home right now, preparation is your key to success. Keep these tips in mind as you plan your future purchase:

• Check your credit score. Your credit standing will largely dictate your homebuying journey. If you want to improve your credit score, use the time you have to make impactful changes. Paying down debt will increase your credit score and help you qualify for a better interest rate on your home loan. Also, consider meeting regularly with a financial guide to build a plan to achieve your goals.

• Start saving. Not all mortgage programs require a large down payment, but putting down a little more may qualify you for more favorable terms, lower your monthly payment or shorten the overall length of your loan. If you aren’t buying for another year or so, use that time to start saving.

• Meet with a mortgage specialist. Although you may not be ready to apply for a loan just yet, meeting with a mortgage specialist can help you prep for what’s ahead. They can outline different homebuying programs, give advice about options you may not be aware of and teach you about the mortgage process so you aren’t caught off-guard down the road.

Buying a home is a big moment! Make sure you are prepared ahead of time so you can enjoy the experience.

Ready to start your new home adventure? Mountain America Credit Union will guide you every step of the way toward making happy memories in your new home. Whether you’re buying, refinancing, building or securing a plot of land, we have the right home loan for you. If you can afford a home, now is an exciting time to buy!