Aug. 17, 2018.
It sounds counterintuitive, but as school starts and homebuying slows down, it may not be time to pack in the house-hunt yet. Stay in the game through the end of the summer, and you could take advantage of a slight dip in mortgage rates that equates to a lower monthly payment. You can also get access to more starter home inventory.
6 ways to find your dream house at a low price (and with less competition)
Waiting to buy could cost you. The housing market is always changing, and when you find yourself ready to make a move, it literally pays to get prequalified, find out how much you can afford, and lock in a mortgage before the next interest rate increase.
For example, because of several recent Federal rate hikes, mortgage rates have risen steadily over the summer. But now, at the end of the season, they’re stable with a slight dip. Freddie Mac’s Primary Mortgage Market Survey shows an average 4.59 percent rate for a 30-year fixed-rate mortgage this week, a small decline from the previous 4.6 percent average. Mortgage rates are also historically low, giving another good incentive to buy.
Buying a house now offers more wiggle room with extra starter home inventory available at this 4.59 percent rate. It could also save you several hundred dollars a month compared to buying a year from now at over a 5 percent projected interest rate. Saving hundreds of dollars each month may add up to nearly $100,000 in savings over the life of a 30-year mortgage. Trulia confirms that starter home inventory rises by up to 7 percent in the fall versus the spring. So, house-hunting in late summer may mean more affordable home options at today’s lower rate, saving you money on your monthly mortgage.
If you haven’t snagged your dream home yet, don’t stop looking. Take advantage of the seasonal slowdown.
Here are six smart ways to find a cheaper house you’re going to love:
1. Widen your scope.
Now’s the time to get prequalified, if you haven’t already. Once you’re prequalified, you’ll know how much house you can afford, and you’ll also look more serious — and ready to purchase — to a seller. Getting prequalified at today’s moderate mortgage rate could put you in a brand-new price range and give you access to a slew of homes you haven’t yet considered. Zillow confirmed last year that August had more active for-sale listings for U.S. metro areas compared to June of the previous year, and September’s selection was similar.
If you haven’t tweaked your home search filters yet, now’s the time to do that too. In high-volume areas where housing inventory has previously been tight this summer, you’re likely to be pleasantly surprised.
“Oftentimes, we see the market pick up during the summer months because many people who are looking to buy and sell, especially if moving to a new city or school district, try to do so around their child’s school schedule,” Andrea Valenzuela, Cornerstone partner and realtor at Price & Co. Real Estate, says. “This means there is an excellent opportunity for those looking to buy at the end of summer and into the fall because the competition of other buyers that is typical of May-June-July has subsided.”
2. Don’t rush into anything.
In late summer, housing prices are more likely to match a home’s market value. You can be more selective, and you can stick to your top criteria, in most cases. You may also be able to put an offer on a house that’s just above your price range, with the potential for a seller to accept a lower offer at market value.
“Families are getting their last vacations in and prepping for school. This creates a temporary window of opportunity for those who continue to shop for homes,” Jacob Washburn of Cornerstone Home Lending, explains. “We’ve seen slightly less competition for those continuing their search through the end of the summer.” Washburn says he frequently works with end-of-summer borrowers who are happy to find the home they want with less competition and, therefore, a more favorable price point.
3. Think about a fixer-upper.
With more options available to you, you may come across some stellar homes that need improvement. You may also find houses in great locations that could use a little work. Home renovation loans are available to make this process easier, like the low-cost FHA 203(k) rehab loan that will allow you to finance repairs and upgrades into an FHA mortgage with a 3.5 percent minimum down payment. Loans like this can be used for homes with large-to-small fixer-upper needs, ranging from roof replacement to minor kitchen remodeling to a new coat of paint.
4. Check time on the market.
Coming in late during a summer slowdown can have its advantages. Owners of properties that have been sitting on the market may be itching to strike up a deal as summer comes to an end. “With there being a reduction in buyers, it could lend to a potentially beneficial scenario where the seller is more likely to be negotiable on price and terms,” Valenzuela says.
The longer a house sits, the more likely it is that a seller may have committed the cardinal real estate sin of overpricing. Less than 25 percent of homes that take longer than a month to sell close at or above their initial asking price.
5. Look for your own lender.
It can be helpful to get recommendations for lenders, inspectors, and other professionals from your realtor since they’re likely to have trustworthy industry connections. But you now have the gift of time to do your homework. Not all lenders charge the same fees, offer the same level of customer service, or even have enough loan options to help you find an affordable mortgage program at a low rate.
A local lender that offers specialty programs like 10-day loan closing, for example, could be a big help.** Once you find the house you really love amidst the newly available inventory, you’ll want to close on it quickly so you can start planning your move and get your keys fast.
Your loan officer can support your financial goals and help you find the right mortgage. Get connected now.
6. Use Early Bird Approval.
Buying in cash is one of the most effective ways to land a home you love. Early Bird Approval comes in close second. In any season, Early Bird Approval makes an offer as close to cash as possible and can be used to grab a seller’s attention.***
Getting your credit and finances approved by your lender upfront will save you from slogging through a mess of paperwork once you’re under contract. When you find the right house, your mortgage is likely to be funded faster. A seller will get their money sooner, and you’ll get home happy (and, of course, fast). This kind of expedited loan processing is a win for buyer, seller, and realtor who all want to close a mortgage quickly and without delays.
Pay less for your forever home when you buy at today’s rates
You’re in a really great position to buy when you’re shopping at the end of summer with less competition and at today’s steady rates. If you haven’t gotten prequalified yet, take that step first and save yourself from house-hunting time-waste. Give our free LoanFly app a quick download, and get prequalified to find out how much house you can afford in 15 minutes.* Then, connect with a local loan officer and benefit from Cornerstone’s 30 years of industry experience and the wide variety of loan programs we offer to all of our borrowers. And when the time is right, and you’re ready to make an offer on your new place, you can leverage our Early Bird Approval*** and 10-day closing** programs to get there faster.
*During normal business hours.
**10-day close not typical and not all loans will close in this timeframe.
***Pending appraisal approval.
For educational purposes only. Please contact your qualified professional for specific guidance.
Sources are deemed reliable but not guaranteed.