Finally, you are getting closer to the reality of owning your own home. You’re thinking maybe two years down the road you’ll be signing the papers and taking the keys to your new property. That means, for the next 18 months or so, you don’t have to do anything...right?
Actually, if you are planning on buying a home within the next two years--whether that’s a month from now or 24 months from now--you need to begin taking action on that decision sooner rather than later. That might sound like an exaggeration, but this article will surely prove otherwise.
#1 Reason to Start NOW: Mortgage Rates
By far, the number one reason to get this process started as soon as possible is the current national average mortgage rate. It is lower than it has been in quite some time, but that’s expected to change very soon as the housing market rebounds.
As of June 2018, Bank Rate has confirmed that mortgage rates are on the rise, increasing for two straight weeks so far with more increases expected to come throughout 2018 and beyond. What does that mean for you? It means that waiting it out could end up costing you a lot more money in the long run. Even just a .02% increase, like the one seen in the past couple of weeks, could cost you thousands more in interest over the life of your loan.
#2 Reason to Start NOW: The Slow Process
Buying a house isn’t as easy as many first-time home buyers might think. In fact, even seasoned home buyers always seem to be surprised, and frustrated, by just how long it takes between starting your house search and actually moving in to a new home.
Starting Your Search: Depending on the market of the neighborhoods you’re looking into, just finding homes that you want to look at can take days, weeks, or even months. You’ll then need to find an available realtor and schedule viewings for the properties you are interested in. On average, you’ll have to view 10 houses before finding one you want to make an offer on.
Applying For Financing: Most people apply for financing before they even locate a specific property since the application and pre-approval process can take so long. However, you will need to wait out for a pre-approval letter to give to your realtor before moving on to the next step. Depending on your credit, employment, and financial history, this process could take a few days or a few weeks.
Making An Offer: When you do find a house you want to move forward with, the next step is having your real estate agent draw up an offer. The seller will be given a 1-3 days to look it over, at which point they can come back with a counter offer.
Inspection & Review: Once you have found a home, made an offer, and the seller has accepted that offer, the process is still far from over, although you have made some exciting progress. After the offer is accepted, you’ll be given a window in which you can setup an inspection of the home. The inspection and general review of the home’s condition and value may lead you to backing out and having to start your search over again.
Confirming Your Mortgage: With your property chosen, you’ll need to give this address to your lender and let them do some final review of the property. Even though it has passed your inspection, your bank may reject the property for a variety of appraisal/condition reasons, which means you’ll have to find a new property.
The Closing Process: Assuming that the property passes your own inspection and any inspections/appraisals your bank puts it through, you can then move on with the closing process. The closing date is usually set about 30 to 45 days out from the day you make your offer, but certain things (like a seller in the middle of a move) can delay this process further.
On average, it will take a house hunter 90 days to shop and select a home, about 7 days to make an offer and negotiate with the seller, and up to 60 days to close (as little as 30 days if your offer isn’t contingent on financing) according to Trulia.
#3 Reason to Start NOW: Low Inventory
While it’s good news that mortgage rates are at an all-time low, something else is too: inventory. The number of available houses is at an all-time low, specifically in New York and the capital district of Albany. But, no matter where you are shopping, this low inventory is going to effect you since it is such a widespread problem.
You probably learned it in your high school economics class: when supply is low and demand is high, prices go up! This means houses are priced closer to the top-end of their value currently and the market is hot. Some home buyers think this means they should “wait it out” but there’s no telling when inventory is going to go up again. Additionally, waiting it out can end up cost