Demand for Home Loans Increasing
Will those higher rates persist? A slight move higher doesn’t offset the encouraging signs of a housing market recovery, however slowly it may be progressing.
Business Insider notes that for 2024, at press time, “30-year mortgage rates have averaged around 6.32%,” according to Zillow data and other sources.
The report adds, “This is a bit below their December average and more than a full percentage point down from when they peaked in October 2023.”
The lower rates seem to drive current demand. As conditions improve, the demand for the houses already for sale in the market will also likely increase. What should a potential borrower do to anticipate more competition for a house?
Before you look at even one property, get pre-approved for the loan to show the seller you are doing more than window shopping.
That may sound like basic advice, but you would be surprised how many of your competing house hunters might be tempted to skip this step. Don't forget that it will take time to apply and get approval. You might miss out on a good opportunity if you find a house before you take this step.
Make Your Offer Attractive
If you worry about your ability to compete with other buyers for a given property, there are things you can do to make your offer harder for the seller to say no to. The first thing is to avoid making an offer that’s too low. “Don’t low-ball the seller,” according to the advice you’ll find in places like USAA.com.
Another aspect of that negotiation? What you ask of the seller.
An inexperienced buyer may ask the seller for concessions, which means the seller is asked to pay a portion of the buyer’s closing costs. These are allowed under FHA loan rules but its up to the buyer and seller to negotiate.
Avoid asking for seller concessions if there is competition for the house you want. It makes your offer more attractive even though it may cost you more at closing time.
Don’t Get Pulled into a Bidding War
Some call it being a disciplined buyer. The goal is to avoid being manipulated by circumstance into making an emotional decision about an investment worth tens of thousands of dollars.
If a bidding war erupts over a property you are considering, the best advice is to step back and get out of that situation. Plenty of other houses are on the market, and more to come. Don’t let a bidding contest cost you more money than you intended to spend.
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