We are currently in an unprecedentedly hot seller’s market. For buyers, this means that you need to have all your ducks in a row before you start your search so that you are ready to make an offer immediately. If you like a home, you can guarantee that someone else does too and any delay will risk you losing out.
The first step in your purchase preparation is to work out how much you can afford and secure pre-approval of a loan which will typically last for 60 to 90 days. Last week Treasury Secretary, Janet Yellen said “Higher interest rates would be good for the country”, the inference being that rates may be rising, so you need to consider how this will affect you. Pre-approval will not only put you in a position to make a quick offer, but it will also allow you to take advantage of the currently low mortgage rates. House prices may be currently high however, the low rates allow you to spend more. For instance, if you secure a fixed loan for around 2% now, your loan could cost you around half of what it might if you wait for house prices to decrease a little, by which time the rate could be 3-4%. On a fixed rate mortgage of $500,000 for 30 years, that could save you up to $200,000 over the period of the loan.
This sounds like a daunting process, but your real estate agent will have connections with mortgage brokers who will guide you through the process. A good broker will go through your finances with you, work out what you can afford and if needed help you clean up your credit report to get the best possible rate on your loan. They have the connections to shop around for the loan with a down-payment that is right for you.
Once you have your loan pre-approval and your down-payment ready to go, it’s time to go home shopping.