As we gear up for a new year, you might set your sights on achieving a major goal — buying a house.
This decision can be both exciting and overwhelming. But between higher mortgage rates and home prices, you might find yourself at a crossroad and questioning whether now’s the right time to make a move.
Fortunately, there are ways to ensure that homeownership remains within your reach. Here are four key things to consider as you start your home buying journey in 2024.
Unlock Savings with Temporary Buydowns and Refinancing
The recent increase in interest rates means that owning a home is pricier than it was a few years ago. When interest rates go up, the cost of getting a mortgage rises. With that being said, is buying a house still doable without breaking the bank?
The short answer is “yes.”
Between temporary buydowns and refinancing options, it’s possible to keep your mortgage costs within a comfortable range.
For example, if you choose a temporary buydown, FirstBank Mortgage will reduce the mortgage rate on your loan for an initial period of time (one, two or three years). With the original rate temporarily deferred, you’ll receive a more manageable payment.
Options include:
1/0 Buydown: Rate reduced 1% in the first year and returns to the original rate in the second year.
2/1 Buydown: Rate reduced 2% in the first year, 1% in the second year, and returns to the original rate in the third year.
3/2/1 Buydown: Rate reduced 3% in the first year, 2% in the second year, and 1% percent in the third year. The original rate starts in year four.
However, you’re not locked into your rate forever. If market conditions become more favorable, you can refinance in the middle of your buydown period to secure a better rate, possibly reducing your monthly mortgage payment.
Leverage Cost-Saving Programs
Down payment costs combined with closing costs can add up quickly. Down payments range from 0% to 5% on average, and closing costs can be another 2% to 5% of the loan amount.
If you’re struggling to save a down payment, ask your loan officer about down payment assistance programs as well as zero down payment options.
Additionally, you might be able to use gift funds for all or a portion of your down payment and closing costs. These are funds you receive from an eligible donor. Any money received, however, must be a “true gift.” In other words, there’s no expectation of repayment.
Gain the Upper Hand with a Pre-Approval
To give yourself a competitive edge, make sure you get pre-approved for a mortgage before house hunting. A pre-approval isn’t required, but highly recommended because it indicates that you’re a “serious buyer.”
With a pre-approval letter in hand, you can quickly submit an offer. In the event of multiple bids, this can be the difference between securing your dream home and watching it slip through your fingers.
Ready to take the leap and start 2024 on the right foot? Contact the loan experts at FirstBank Mortgage to learn about different lending solutions and jumpstart the mortgage pre-approval process.
