Homebuyer Hacks for Today’s Housing Market

Buying a home can be an exhilarating experience. You’ll be hunting for your dream home, handpicking the perfect school district, and building generational wealth through real estate. That all sounds amazing, but the process to get there can undeniably have a few stressors.

Some real estate markets are more challenging than others, but a trusted mortgage advisor can help to make your homeownership dream a reality regardless of the current market environment. That’s where Preferred Rate has your back. 

We know interest rates are higher than in recent years.

We know you may be feeling defeated after several years of fierce competition for homes.

We know you’ve done everything right—paying off your debt and credit cards, paying down your student loans, improving your credit score, obtaining that pre-approval letter—only to be boxed out of the market once again over interest rates. 

We want to get you back to house-hunting, because in many aspects the current housing market is favorable for buyers. Home prices are stabilizing or falling, there’s far less competition in the market, and many homeowners are eager to sell, so now is the perfect time to make your dream home happen for you.

Here are our top four homebuyer hacks to allow you to compete and win in today’s housing market environment.

Homebuyer Hack #1: Buy Now, Refi Later 

Buy now and secure your dream home, and then refinance later when interest rates drop. This is a strategy worth considering because current market conditions offer less competition in the real estate market than in previous years and, in some areas, reduced prices.

By purchasing your home now, you increase your chances of finding the perfect home without the bidding wars that typically drive prices up. Once interest rates drop, you can refinance your mortgage and secure a lower rate and monthly mortgage payment, reducing the overall interest costs over the life of the loan long term.

This approach allows you to lock in your dream home at today’s prices and take advantage of lower interest rates in the future. Remember, real estate markets are cyclical, and interest rates will likely decrease again in time. By acting now, you not only position yourself advantageously in the current market but also set yourself up for financial savings down the road when you refinance.

Don’t let today’s interest rates hold you back from homeownership. Buy now and refinance later to enjoy the best of both worlds: securing your home in a favorable market and reducing your mortgage costs when rates fall.

Homebuyer Hack #2: 3…2…1…Voilà!

Maybe you would rather slash your interest rate and mortgage payment now without waiting for market conditions to change.

Preferred Rate’s 3-2-1 temporary buydown can do just that. It lowers your interest rate by 3 percentage points the first year of your mortgage loan, 2 percentage points the second year, and 1 percentage point the third year, before reverting back to your original interest rate. This saves you thousands of dollars in your first years of homeownership.

This can drastically lower your mortgage payment in the first three years after buying a home, allowing you to replenish your savings in the wake of all the expenses of homeownership, including moving, paying closing costs, and making needed home repairs.

Here’s an example of how this temporary rate buydown program works in action. Say that you qualify for an interest rate of 7%. Using a 3-2-1 buydown means that the interest rate would drop to 4% in the first year of your mortgage, rise to 5% in year two, and rise to 6% in year three. The remainder of your 30-year mortgage term would be at the agreed-upon 7% note rate.

Of course, you will always have the option to refinance your mortgage after the temporary buydown ends.

Note that these are example rates. To see how this program can help your specific homebuying scenario, talk to your Preferred Rate Mortgage Advisor. They can give you a complete breakdown of your savings using today’s interest rates.

Homebuyer Hack #3: Down Payment Assistance

Many people have come to assume that they need a 20% down payment when buying a house. This number is typically used as the “standard” down payment, but it’s not really a rule. Even if you don’t qualify for a VA home loan, many first-time buyers can still buy a home today with little or no money down. 

You do this by leveraging down payment assistance (DPA) programs. Down payment assistance includes gift funds (money that was “gifted” to you by a friend or family member to be used for a down payment); down payment grants from programs like HUD or nonprofits like the National Homebuyers Fund; and down payment assistance loans from government agencies, organizations, or charitable funds. There are many national down payment assistance programs available, as well as state and regional ones.

Your Preferred Rate Mortgage Advisor will have the most current information on what is available in the local market where you’re planning to purchase your home, so lean on them to get the latest and greatest down payment assistance!

Homebuyer Hack #4: Credit Score Improvement

Not everyone gets the lowest published interest rate. To get the lowest rates available today, you still have to qualify for them. That’s why maximizing your credit score is so important before you start house-hunting. 

You can improve your credit score by making timely payments on all your bills, reviewing your credit report and disputing any inaccuracies you find, paying down your high credit card balances, and abstaining from opening any new credit accounts. You should also avoid closing your credit accounts, as the credit bureaus do not like to see a sudden drop in your credit spending power. Finally, it’s a good idea to avoid making big purchases if you plan to buy a home in the next 90 days.

Understanding how your credit score is calculated is crucial to ensuring that yours is as high as it can be. We’ve got you covered there, as well. You can read all about how your credit score is calculated in our article here. 

Beyond the Homebuyer Hacks

We’ve created these homebuyer hacks to ensure that interest rates don’t prevent you from taking advantage of the current housing market’s otherwise favorable conditions.

These four strategies are just the beginning, however. A Preferred Rate Mortgage Advisor will be happy to talk to you one-on-one about your unique financial situation, the current real estate market, and any other ways we can assist you when buying a home.

Click here to connect with a Preferred Rate Mortgage Advisor in your area.