As we enter the traditional spring homebuying season, much has changed for potential homebuyers compared to the past couple years.
While a lot of focus has been on soaring interest rates and selling prices, a key factor for homebuyers has slipped under the radar.
After record-low mortgage rates spurred the recent homebuying frenzy, home prices skyrocketed, driven by intense competition for homes. Many homebuyers at the time were simply priced out of the market.
Now, however, the market is much different and that may be a good thing for potential homebuyers who were previously shut out.
Feelings of Optimism Among Homebuyers
A new WSFS Mortgage Study found that while more than one-quarter (28%) of Greater Philadelphia and Delaware region residents are currently discouraged from searching for a new home due to the economic climate, one-third still plan to look for a new home this year.
Discouraged regional homebuyers cite home prices (65%), mortgage rates (57%), and recession concerns (41%) as reasons to hold off on their home search this year, but four in 10 (42%) of those who are likely to search for or buy a new home this year believe there are available homes they want and 37% expect mortgage interest rates to decrease.
The expectation within the mortgage and residential real estate industry is in line with potential homebuyer expectations, which is great news for those looking to buy for the first time or upgrade on their current home.
What to Expect
While signs of mortgage rates continuing to stabilize remain, they are not going to fall back to record levels. It is also important to remember that mortgage rates are not directly tied to the Federal Reserve interest rates, but are more influenced by the bond market, mortgage-backed securities and more specifically, the 10-year Treasury yields. Fixed mortgage rates tend to go in the same direction as Treasury yields.
If you continued to save for a home despite previous frustrations, you may be rewarded in your home search due to stabilizing mortgage rates and diminished demand, even allowing for negotiating on your terms instead of the previous “sight unseen” bidding wars for homes that recently dominated the market.
How to Reboot Your Home Search
First, find the right team for your home search, including a mortgage lender and real estate agent that know the area you want to buy in. They can not only help you find the right home, but also help identify ways to save money on your upfront costs and monthly payments.
The WSFS Mortgage study found that when asked to choose what they want from a mortgage lender, nearly half (44%) of regional residents selected lower service fees as their top priority, with transparency on all-in purchase cost (41%), homebuyer assistance programs (39%) and a quick and easy pre-approval process (37%) also ranking high.
There are several local, state and federal programs designed to help homebuyers with upfront costs, such as down payment and closing expenses. Work closely with your lender and realtor to identify programs you may be eligible for, including those offered by your lender.
Knowledge is power in homebuying, so tap into every resource you can to have a clear understanding of how much home you can afford and lean on your hand-picked team to help you find the home of your dreams this year.
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