May 20, 2024
In the days before January 1, 2024, finance pundits and mortgage blogs (at least in some circles) were expecting a housing recovery to be underway by now. But as of May 2024, those commentators are revising their opinions about when and how a market recovery could happen.
Consider what Yahoo!Finance published on May 19, 2024. “At the beginning of the year, housing experts and homebuyers looked forward to better buying conditions — interest rates were poised to drop, a shift expected to free up inventory and cool surging home prices.”
That, according to Yahoo!Finance, has “mostly changed.”
The housing market is headed into summer 2024 without the hoped-for mortgage rate cuts. There are also problems with housing inventory in some markets.
Even the National Association of Realtors has complained in print that some improvement should have arrived by now, but to date, that hasn’t occurred.
Before Buying A Home With An FHA Loan
Before going into any kind of strategy borrowers can use to give themselves an advantage going into a new home loan, it’s good to remember the causes of the current lack of improvement in the housing market.
The Federal Reserve has resisted cutting mortgage rates until there are more indicators of a financial recovery. This could continue as long as there are indicators that prices aren’t coming down to the Fed’s liking.
What that means for the average house hunter is that rates could persist at or near the 7% range into the summer and perhaps even the fall of 2024.
According to the article, today’s housing market may have more renters “stuck” in rentals “because they can’t afford to save for a down payment, and they can’t afford to save for a down payment because rent is high,” and the key to solving this problem may be starting to plan and save earlier than previous advice would suggest.
What’s The Right Strategy?
For some, the key is to start saving for a down payment long before the time to house hunt comes. The more you save when you begin, the better off you are, which is why our advice includes setting some money aside even before you actively plan the home purchase.
Build a strategy to build your downpayment over time, even if it’s only a small amount of money per month. Those who know they will eventually commit to a home at some point in today’s market can give themselves a serious advantage by doing so.
Down Payment Assistance
This is a smart plan even for those who plan to get down payment assistance from a state or local program.
Why? Any early cash you save can go toward other closing costs if you have assistance with down payment funds. The extra money gives you more options, and saving cash at home also helps with your appraisal, pest inspection, home inspection, and any required compliance inspections later.
The expenses you pay during the process of buying a home can add up. The borrower who starts working on their downpayment in advance helps lessen the financial blow, but in times when a housing market looks like a recovery could still be a ways off it pays to give yourself every advantage before making an offer to a seller and applying for the FHA mortgage.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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