January 24, 2024
Are you considering buying a new home with an FHA loan? Current market trends point to growing interest in existing construction purchases. And that is in spite of a bit of mortgage loan interest rate changes pushing rates higher (in the short term.)
That move higher has not discouraged many from their overall impression of a housing market in recovery, however slow the progress may be.
Business Insider reports that, at press time, “30-year mortgage rates have averaged around 6.32%,” according to Zillow.
The report also notes that the rates are “a bit below” the December interest rate averages, “and more than a full percentage point down from when they peaked in October 2023.”
As housing market and home loan interest rate conditions improve, demand for existing construction homes may also increase and there are steps potential borrowers should consider to anticipate more competition in the Spring 2024 real estate selling season.
Get Pre Approved Before You Look At Property
Before house hunting, a standard step house hunters take is to get preapproved for a mortgage loan. This shows the seller you are serious about making an offer on the right house.
Some of your competing house hunters might be tempted to skip this step, to their disadvantage. If you find a house you like without preapproval and you aren’t ready, will you miss out on that property? It may take longer to get approval than you realize, it’s better to start looking at homes after you’ve taken this step.
Make Your Offer Hard To Turn Down
Are you concerned about your ability to make a serious offer? If you are trying to make a more tempting one than other potential buyers, consider the things you can make your offer harder for the seller to reject.
The first place to start? Do not make an offer that’s too low. It is far too tempting for the seller to reject a low-ball offer in favor of something that looks more reasonable (to the seller.)
Seller Concessions? Not So Fast
When buying a home, you have the right to ask seller for concessions, which means the seller would (if they agree) pay a portion of the buyer’s closing costs up to six percent of the price of the home. FHA loan rules permit this, but those rules also state that its up to the buyer and seller to discuss.
It may be a bad idea to ask for seller concessions when competition heats up for the house you want to buy with an FHA mortgage. Not asking for the concessions may cost you more at closing time but it could make the difference between an accepted offer and a rejected one.
Avoid A Bidding War
Avoid being pushed into making an emotional decision about buying a home. If another buyer is competing with you too aggressively, it the transaction could wind up costing the “winner” more than they expected to pay, and making an emotional choice about an investment is never a good idea.
If you and other bidders start competing over a property, don’t get pulled into the “contest.” It may be wise to step back and let others fight over that house instead of being tempted to pay more than you can afford to buy it. A bidding war could cost far more than you intended to spend.
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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