With Halloween quickly approaching, prospective homebuyers don’t need to visit a haunted house to be frightened; they have today’s housing prices.
At least, this is what happened to Sarah, also known as the TikTok user @sarahjilllutz. She posted a TikTok describing the agony of trying to locate an affordable home for herself, her husband, and their infant daughter in the tri-state area.
The Long Island mother states, “We’d have to work, work, work to pay off our mortgage.” “We want a better life than that.”
Sarah reports that she presently lacks space for a nursery or storage for her daughter’s books and toys. Even though her income as a nurse and her husband’s income as an occupational therapist affords them a comfortable lifestyle, they cannot afford the properties in and around New York City.
Sarah observes homes selling for $50,000 to $100,000 above the asking price. However, if you’re determined to purchase a new home, does that imply it’s a bad time to do so?
Consider market factors
Sarah is not alone in her belief that it is a poor time to buy. The same sentiment is shared by 84% of consumers, according to the Fannie Mae Home Purchase Sentiment Index for October 2023.
The National Association of Realtors (NAR) reports a 15% decline in home sales in September compared to the same month last year. Chief economist of the NAR, Lawrence Yun, attributed the decline to “limited inventory and low housing affordability” A expanding housing supply suggests that buyers can be more selective than even a few months ago.
In addition, increased interest rates — which have led to increased mortgage rates — have served to shift the market in favor of buyers by slightly stifling demand, thereby allowing buyers to negotiate with sellers.
Whether you’re a first-time homebuyer or not, you should get pre-approved for a mortgage before you start attending open houses. You don’t want to discover that you can’t afford your dream property after discovering it. Obtaining pre-approval for a mortgage will allow you to construct a more thorough budget for your home purchase.
Need money? Utilize your home’s equity
As a result of rising home prices, the average homeowner holds a record quantity of home equity. Astute homeowners are utilizing their home equity to consolidate debt, fund home improvements, and cover unforeseen expenses. The nation’s largest mortgage lender, Rocket Mortgage, offers competitive rates and expert advice.
Do you have sufficient savings?
Sarah and her spouse currently reside in a one-bedroom apartment on Long Island, New York, for which they pay $3,850 per month.
She states, “We’re wasting our savings in this apartment.”
Sarah realizes that, despite the fact that down payments can differ, she must save aggressively in order to purchase her dream home. Ramit Sethi, a personal finance expert, has the following advice for determining if you’re prepared to begin house hunting: “If you haven’t saved 20% for a down payment, you’re not ready to buy a house.”
This number will save you a great deal of money in the long run by making you more appealing to lenders and thereby making the mortgage application procedure much less stressful and time-consuming. Additionally, when you finance less up front, you will save a substantial amount on interest payments.
Sarah and her spouse have a difficult time saving for a mortgage despite their well-paying jobs, as do many young people today. While there is little you can do about rising prices, a savings calculator can assist you in devising a plan to save enough money to buy your ideal home.
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