A Home for the Holidays? Tips to Reignite Your Home Search this Winter

The housing market remains tight, presenting challenges for many aspiring homebuyers who have been sidelined in recent years.

While the Federal Reserve has started decreasing interest rates, mortgage rates tend to be tied more closely to U.S. Treasury bonds. However, there are steps you can take now to prepare yourself for when you find your desired home.

Here are tips to help evaluate your options and make an informed homebuying decision.

Know Your Dos and Don’ts

The mortgage process can seem overwhelming at first, but it doesn’t need to be. Keep the key dos and don’ts of the mortgage process in mind so your homebuying journey stays on track, including:

• Build Your Homebuying Team: Look for a lender with local knowledge and decision-making capabilities, and a real estate agent who knows the area well.
• Don’t Liquidate Your Savings: Make sure you have enough saved to cover your downpayment, closing costs, fees as well as potential reserve funds, all of which are required to be verified before closing.
• Watch Your Credit Usage: Even if you’ve received pre-approval, it is important to hold off on major purchases, and monitor your spending and credit usage carefully. Avoid taking out new loans or opening lines of credit and resist the temptation to buy the new furniture or appliances before you close the deal.
• Limit Employment and Income Changes: Your employment and income will be reviewed during the process, so try to limit job or income changes when possible.
• Have Your Documents Ready: You’ll need to provide documentation related to income, employment, debt and other obligations. Your lender may have additional requests as well, so keep your documents and financial statements in order.
• Maintain Consistent Contact with Your Team: Don’t be afraid to ask questions! That is what your homebuying team is there for.

Work Closely with Your Lender on Your Options

Mortgage options can vary, from rates to length of terms and more, so it is important to work closely with your lender to ensure you have a solid grasp on what is available and identify the loan that will work best for your financial situation and goals.

Your lender can also help with suggesting homebuying programs that can make the dream of homeownership more affordable. Many lenders have programs available that can be coupled with local, state and federal homebuyer programs.

Another area your lender may be able to help with: rate float downs. Many lenders offer the ability to “float” down your interest rate, often up to a certain number of times, if mortgage rates decrease while you’re in the process, eliminating the urge to try to “time the rate drop.”

Consider Refinancing Instead

If you already own a home, another option that can save you the move is exploring refinancing your existing mortgage. If the rates decrease below what you’re currently paying on your mortgage, refinancing could potentially save you money in the long-run.

Make sure you work closely with your lender to understand any closing costs and fees associated so you can calculate if it is worth it. If you don’t plan to stay in the house more than a few more years, it may not be worth the fees and closing costs so make sure you perform a break-even analysis.

You can also leverage refinancing your mortgage to consolidate your other debts. If you have additional loans with higher interest rates, you could consider consolidating which could reduce the amount you’re paying toward your various debts overall.

Whether you’re looking for your first or next home, or even looking to refinance your current mortgage and other debts, consider scheduling an appointment with your local lender to put a plan in place and make informed decisions.