Avoiding rising rates pitfalls, eluding bidding tussles and being flexible
For would-be homeowners, navigating a competitive housing market can be a scary and unpredictable journey. Yet with the right roadmap, there’s nothing to fear.
Self-proclaimed “mortgage mentor” Rebecca Richardson (pictured), of Kind Lending, demystified the landscape with something of a primer. The first question often asked before embarking on this journey: Should I make a move in a competitive market?
“Consider your timing,” Richardson said. “You might be trying to time a lease on an apartment or waiting to build your savings. However, it’s important to keep the market in mind.”
Realizing it’s all cyclical
She alerts clients to the cyclical nature of the market in coaxing them to take the plunge: “Everything fluctuates, like interest rates, housing inventory, and competition with other buyers,” she said. “You don’t want to rush, but you also don’t want to wait too long.”
Two words: Get preapproved. “It shows buyers that you’re serious, plus you can narrow your search to homes within your budget, and you can make offers more quickly on homes you love,” the loan originator from Kind Lending said. “This will make the process even easier than it already is.”
She also advised those looking to buy a home to talk to local real estate professionals. “They can provide you with data on recent sales, price trends, and market dynamics to help you make informed decisions,” she said. “They can also help you craft competitive offers and negotiate with sellers to help you ensnare your dream home. Don’t be afraid to ask questions!”
Arguably, the decision of when to lock in a mortgage rate is the toughest call to make for those seeking to buy a home. Richardson places a premium on stability in helping clients decide when to lock in rates.
“Interest rates are volatile because they’re influenced by the overall health of the economy — things like inflation and investor demand,” she explained. “Rates fluctuate daily, sometimes even hourly! It’s not something we can control, but it is something we can take advantage of. Sometimes buyers need to balance between waiting for a better rate and locking in the one they already have.”
Locking in now could translate to greater rate stability: “This means you could solidify a monthly mortgage payment instead of being at the whim of rate swings, resulting in a lower monthly payment,” she said. “This means more money in your pocket and less money paying for your home over time.”
She recommends borrowers talk to their lenders to investigate their unique financial situations, rate fluctuations and the rate lock period that would work best for them.
Escaping from amid a bidding war
Finding themselves in the middle of a bidding war for a home only adds more anxiety to an already stressful process. But there are steps borrowers can take to counter this, Richardson said.
“It might be time to spice up your tactics and show those sellers you’re not just about the numbers,” she said. “Personalize your offer strategy to fit the seller’s needs.”
A borrower’s realtor will likely have some great ideas, she said. She listed the most important ones to remember:
- Having flexible closing dates.
- Offering a rent-back agreement.
- Possessing a larger earnest money deposit.
- Minimal contingencies.
“Something that realtors either swear by or condemn is a love letter to the seller,” Richardson said. “This is a heartfelt note expressing your interest in their home. In this, you’d share what you love about the property and why it’s the perfect fit for you and your family.”
With an experienced real estate agent, Richardson noted, all those metrics work in concert. “They can negotiate on your behalf and build a rapport with the seller’s agent, increasing the chances of your offer being accepted,” she said.
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