Mortgage rates have dipped again this week, and this is great news for borrowers preparing to start their home search in the coming months. In the Northeast, we are bracing for one of our final winter storms, but before you know it, buyers will be back out there in full force. In the Southeast, the market is always hot but, still seasonal to some degree, as most folks like to wait until school is out to relocate. In both cases, lower interest rates indicate an optimistic outlook for the housing market in the coming months.
According to Freddie Mac, the government-sponsored agency that supports a secondary market for housing mortgages, mortgage rates fell for the third consecutive week in February 2019. Mortgage rates going lower is good news for borrowers seeking to buy or refinance.
“Wages are growing on par with home prices for the first time in years, and with more inventory available, spring home sales should help the market begin to recover from the malaise of the last few months,” Freddie Mac predicted.
So, as a potential borrower what does that mean for you? You should be ready for a competitive housing market, and the best way to be prepared is to follow a few simple rules:
- Save your money. There are many programs for borrowers who have little money to put towards a down payment for a home, but you are always better off saving your money for a down payment. If you put more money down, your loan amount will be smaller, and your interest rate will be lower.
- Clean up credit. Before starting your home search, you should make sure you are paying your bills on time, and you are not overextending yourself with credit card and other personal debt.
- Get pre-approved. A true pre-approval requires submitting income and asset documentation and pulling a credit report. A pre-approval is a commitment to lend subject to further verification. Having a pre-approval will help you get a jump on your competitors. You should be able to get a pre-approval free of charge from a lender within 24 hours.
- Don’t make any other big purchases. If you are beginning the process of looking for a home and getting a mortgage, it is not the time to also buy a new car or furniture. Those purchases can wait until you are in your new home. Never make a large purchase while you are waiting for final loan approval. Debt and income ratios will be reviewed again before your closing date; if you have incurred new expenses, this could affect your ability to qualify for your loan.
- Don’t quit your job. Just don’t!
- Find a great realtor. It is tempting to try to go it alone, but a great realtor is a trusted advocate who knows the local market and the process.
It should shape up to be a robust spring market, so get your financial profile in order and contact a loan officer for your pre-approval as soon as possible.