Many people believe that there is a magic formula for timing the market when selling or buying a home. Of course, both buyers and sellers want the best possible price for their side of the transaction. And buyers definitely want the most competitive interest rate they can get.
Some homebuyers can get sucked into obsessively watching the market and interest rates. They may feel that with enough information, timing the market perfectly should be possible.
In actuality, attempting to time your leap into home buying is a lot like trying to catch a falling knife. That is, we don’t advise it. It’s nearly impossible to do and can cause more problems than it’s worth.
TwinCity Lending is your expert partner in home financing. See us when you’re ready to buy a home or want to review your mortgage. We have years of experience in the home loan market and can walk you through the purchasing or refinancing process. Your confidence is our priority throughout your home-buying experience.
Stop Chasing Unicorns
Stressing out about the timing of your home sale or purchase is common. But don’t do it. Trying to time the rise or fall of interest rates to lock in the “perfect” percentage is unrealistic. You will create a lot of work and anxiety for yourself with minimal results to show for it.
It is much better to spend your time finding a highly-qualified broker to help you navigate the process. When planning your home purchase or sale, keep in mind that several factors influence property prices:
- Season – Spring and summer are busier times of the year than fall and winter in the real estate world. Most buyers and sellers want to make their moves in good weather and in between school years.
- Home supply – When there are more properties for sale than there are buyers, home prices can drop significantly. This situation creates a buyer’s market. When the reverse is true, there are too many buyers for the inventory. Home prices go up as demand increases, creating a seller’s market.
- The Fed – The cost of borrowing money can influence buyers’ ability to obtain home loan financing. The Federal Reserve sets the prime interest rate, and lenders reflect this in their rates. Many people get caught up in watching what the Fed is planning to do.
- Exceptional circumstances – Situations like short sales or foreclosures can have drastic impacts on the asking price for a property.
- Location – The adage of location, location, location has not changed. Hot markets demand higher prices. They always have, and they always will.
Strategy Without Stress
It’s possible to create and execute a home buying or selling strategy for an excellent experience. It’s wise to have a tentative plan but also recognize that flexibility makes everything work more smoothly.
Do your homework and make sure to work with a broker you trust to get the job done right. You’ll be better prepared to pull the trigger on locking in your mortgage interest rate when a great property crosses your path.
As you launch into your property search, consider the following tips:
Research the Area
Begin now to narrow down your target neighborhoods for home shopping. Check out the schools, parks, and retail areas nearby. Research criteria that are important to you, such as walkability and job availability. Read through the comps that your real estate agent pulls for you.
Consider the home prices in comparison to your budget to help you determine the size of home you can afford.
Speaking of Budgets, Be Sure to Create One
Visit the TwinCity Lending tools page to find several calculators that will help you determine the monthly payment you can afford. These tools use your current income, down payment, and debt ratio to give you a rough idea of the mortgage you might be able to secure.
You also can enter a range of interest rates into our calculators to see how much house you can afford as the rate changes. Or you can look at how different repayment terms will impact a loan.
Once you have your budget set, you can start focusing on finding a great home.
Consider Buying “Off-Season”
Just like your favorite clothes, homes sometimes go “on sale” seasonally. In cold climates like Minnesota’s, it’s typically harder to sell a home in the dead of winter. Fewer people want to make a move when the snow is blowing, and the roads are slick with ice.
You might be able to take advantage of a seasonal downturn in the market when most homebuyers would rather be sitting by the fire, drinking hot chocolate. Sellers could be motivated to negotiate a lower asking price, saving you money.
Don’t spend too much time trying to pick the perfect moment to lock in an interest rate. You could miss out on some good seasonal deals on the market.
Keep an Eye on Loan Rates, But Don’t Panic
Being watchful of loan rates is a good idea. However, don’t let a slight rise in interest rate push you into a purchase that you aren’t ready to make. Even if you end up purchasing at a higher interest rate, you’ll likely be able to refinance later on if rates drop.
Assemble Your Finance Team for Quick Action
It pays to have all your financial ducks in a row. When you know that buying a home is in your future, it’s time to do the following:
- Don’t obsess over timing the market.
- Start or continue saving for your down payment.
- Meet with a mortgage specialist like the experts at TwinCity Lending to go over all of the available loan options.
- Make sure the mortgage team you choose is trustworthy with a strong track record of client satisfaction.
- Ask any questions you have as you begin to filter possible properties and consider making offers.
Our team is here to assist you from loan pre-approval through closing. At TwinCity Lending, our priority is your home-buying confidence. We’ll make sure you have full knowledge of all the lending options available to you.
We can make your home purchase a stress-free, dream-building accomplishment. Call us today and let’s get you into the home you love.