If you’re shopping for a new home this summer, you’ve probably got interest rates, inflation, inventory issues, and more on your mind. Here are a few tips to help you through the summer home-buying season.
Don’t Make Rash Decisions Over Interest Rates
Most of today’s homebuyers are acutely aware that interest rates have risen from their historic lows of the recent past. And that can add a sense of urgency, prompting people to want to buy before rates go any higher. But that rate trajectory isn’t guaranteed; some economic experts are predicting that rising inflation could slow down economic growth, a condition that often leads to lower mortgage rates. While the forecast is unclear, fear of sharp rises in interest rates shouldn’t rush your decision.
Do Make a Realistic Budget
Inflation is having its say everywhere these days, and the housing market is no exception. According to the Federal Reserve Bank of St. Louis, the median home sale price for the first quarter of 2021 was $369,800. That rose to $428,700 in the first quarter of 2022 – an increase of almost 19%. So what can you realistically afford? Getting a pre-approved mortgage is one of the best ways to answer that question, and one of the best ways to show sellers you’re serious in this summer’s hyper competitive market.
Don’t Be Rigid With Contingencies
It’s common for homebuyers to insist on some contingencies. These may include an inspection, an appraisal, a title review, and a home-sale contingency that gives the prospective homebuyer time to find a buyer for their current home. While these contingencies offer protection and peace of mind, a bidder who insists on contingencies may be at a disadvantage if there are multiple competitive offers on the same property. You have better-than-average chances of finding yourself in a multiple offer situation; according to Redfin, 61% of home sales involved bidding wars in April 2022. So it is best to be flexible with contingencies where you can.
Do Consider a Fixer-Upper
With rising home prices, and housing inventory deficits tied to the pandemic and global unrest, savvy homebuyers are widening their searches to include homes that need some work. An ugly duckling could be converted into a dream home for less time and money than you might imagine. That is, if the homebuyer has a keen eye to spot red flags such as structural damage, foundation issues, bad plumbing, and old electrical systems. But if the issues are more cosmetic, you might consider a fixer-upper and the right mortgage product to finance the upgrades.
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