Each year brings different changes to the housing market, and along with those changes come new worries for prospective home buyers. Whether it is stricter criteria for mortgages, rising housing prices or worries about your credit, there will always be reasons to fret over the purchase of a home.
After all, it is one of the biggest transactions most people ever participate in. Of course your mind will be going into overdrive, looking for threats to your dream of owning your own home.
Fortunately, for every new potential problem there is a solution when it comes to buying a home, and in finding these solutions you better prepare yourself for the big step that is home ownership.
Working as one of the top RE/MAX Real Estate agents in Massachusetts, I get to see firsthand some of the top concerns of today’s home buyers. The following five concerns are at the top of the list for current home buyers. Read on to discover the most common obstacles people are dealing with, so you can come up with your own answers to the roadblocks that may spring up as you move towards your purchase.
1. Home prices are going up
As the housing market improves, it is inevitable that the price of homes will increase. The bottom of the slump is long past, and the market continues to stabilize. This can be alarming if you are lukewarm about purchasing a home, but if you are serious about buying, you are still in a position that buyers in the early 2000s would envy. Yes, prices are going up, but they are far from peaking.
2. Interest rates are increasing
Interest rates have been at historic lows for a surprisingly long period of time. Low rates can’t last forever. As the economy gets better, interest rates will increase. The rise is inevitable. As with home prices, although interest rates are on a positive trajectory they are far from hitting a level where buyers are discouraged from taking out a mortgage.
Sure, everyone would like to borrow at the lowest interest rate possible. But borrowing at a rate slightly higher than the lowest is also favorable for the borrower. Of course, if you wait long enough rates may rise to a level that is cost prohibitive.
3. Mortgages are harder to get
The economic downturn demanded that lenders take a long hard look at the way they were qualifying applicants for mortgages. Demands from legislators and a need to protect themselves from unnecessary risk have led to stricter mortgage requirements. However, guidelines are not so hard to meet that people can’t buy homes. Plenty of buyers still qualify, and there is a good chance you can as well. The only way to find out is to talk to a lender.
If you find yourself in a situation where you cannot qualify for the mortgage you want, it’s time to look at how you can achieve the credit rating and financial stability to get that mortgage. One strategy is to set sights on a more modest home purchase to start, and build a strong foundation for the future purchase of the home you really want.
Either way, understanding your borrowing status can only be a good thing.
4. Hard to find homes in your price range
Many would-be home buyers discover that the homes they can afford do not meet their aspirations. With the exception of affluent buyers, most people in the market for a home run into this problem. When your must-have list is long, it is virtually impossible to find every required feature in a single home – especially on a budget.
Make a list of the things that are most important to you in a home. Take the list to your real estate agent along with the price range that your lender pre-qualified you for, and work with the agent to pin down the essentials. Your agent can show you what is attainable in your price range. With a clear list of essentials, you can come much closer to getting the home you really want at a price you can afford.
5. Buyer competition is fierce
Another consequence of an improving housing market is that buyer competition rises, especially for homes that offer value and affordability. Depending on your market, you may be competing against multiple other home shoppers who want the same house you do.
To get a leg up on the competition, start by including a pre-approval letter from your lender in any offer you submit. Not all buyers are so well-prepared. Make sure that your letter specifies that you have automated underwriting approval. With this, you can demonstrate to the seller that you are only a few steps from having the check in hand to pay for the house.
You can buy a home that you love
The key to an easier home buying process is to plan ahead. No matter how many obstacles get in your way, with determination and enough preparation on your part, you can purchase a home that will make you happy. There will always be challenges, no matter when you choose to buy. Work with your agent to overcome the challenges.
About the author
Bill Gassett is a nationally recognized Real Estate leader who has been helping people move in and out of the Metrowest Massachusetts area for the past 29 years. Bill works at RE/MAX Executive Realty, one of the largest RE/MAX firms in Massachusetts with six office locations.