Last Updated on September 6, 2022
If you’re searching for a new home then you already know, buying a home in this current housing marketing can be challenging– but certainly not impossible.
Just last week, Danielle Hale, chief economist for realtor.com,® noted that housing inventory is down significantly from this time last year, stating that there are roughly 40% fewer homes for sale compared to the same time period in 2019.
And of course, as anyone who has taken a simple economics course can attest, low inventory results in more demand, which unfortunately drives up price.
So where’s the good news in all this?
The good news is actually great news for buyers because despite the difficulties one might experience while trying to purchase a home right now, your money goes much, much farther today than it did last year.
Let’s do some simple calculations to show you what we mean:
Say you wanted to purchase a home last year for $400,000– given the average interest rate of 3.73%,* your monthly payment would be $1,848.
Now let’s look at what you could expect to pay this year for that same $400,000 home given the lower interest rates today that are averaging around 2.87%*.
Calculating everything up, your monthly mortgage payment would be $1,659!
Given today’s ultra low interest rates, you could even bump your budget to include homes priced up to $450,00 and still have a monthly mortgage payment at almost exactly what you would have paid in 2019 for a $400,000 home. Not too bad, right?
Now that you’ve seen the positive aspects about purchasing a home despite the tight inventory, here’s 3 tips to help you be a successful buyer in today’s market.
Tip #1: Get pre-approved first
Be ready to make a competitive offer that sellers will take seriously when you get pre-approved before you even shop for homes.
Unlike a pre-qualification, which is traditionally an automated review of your credit report, credit score and stated application information, a pre-approval scrutinizes every aspect of your creditworthiness.
A pre-approval determines exactly how much you may borrow under a specific mortgage program. It’s also a great way to distinguish your offer in a highly competitive, low inventory market. In other words, once you’ve obtained your pre-approval you can shop for homes with confidence! Get pre-approved now and shop for homes with confidence.
Tip #2: Go local
Would it surprise you to find out that shopping locally for a mortgage is actually one of the best things you can do when it comes to having your bid accepted?
“A lot of people think that the highest bid is the one the seller automatically chooses— and ultimately there’s a lot more to it than that,” says Allen Tate Mortgage’s Vice President of Loan Origination, Lisa Green.
“Good Realtors will advise their clients to look beyond the dollar signs of the offer— not that offer price isn’t something that’s important, because it is, it’s just not the only thing sellers should consider,” says Lisa. “Just like conditions are important to weigh in the decision process, sellers should also think about whether or not the prospective buyer has been vetted and truly pre-approved by a local lender.”
Find a local, experienced mortgage professional with Allen Tate Mortgage today.
Tip #3: Make a clean offer
Now is not the time to attach all types of contingencies to your offer. Normal contingencies that depend on financing or passing inspection are completely fine, but having too many unreasonable stipulations is likely to cause your offer to be rejected.
If you’re having trouble sorting out what’s acceptable and what’s not, it’s best to talk with your Realtor. In the meantime, you’re welcome to browse a helpful article we wrote on the topic.
Ready to move? Whether you’re interested in the house down the street, halfway around the US or the world, we can help. As a founding member of the Leading Real Estate Companies of the World®, our agents can help you buy or sell a home anywhere!
