The Perfect Storm: Why Now is the Time to Buy a Home with Dropping Mortgage Rates

The Current Real Estate Market: A Buyer's OpportunitY

Have you been sitting on the sidelines waiting for rates to come down and home prices to soften so you can finally afford that place you've had your eye on? Now might be the perfect time to act!

Now that inflation is easing up and the Fed started talking rate cuts, the mortgage markets have responded and we've seen rates come down quickly. In many markets around the country, there are also homes sitting on the market long enough to make reasonable offers. We've even seen home prices come down in some markets where only a year or two ago we saw double-digit price increases and folks were forced to pay well above list price just to win a deal.

Dropping Mortgage Rates, Why This Window of Opportunity Won't Last

This perfect storm of better rates and softer home prices won't last. It can't. The pent-up demand and number of folks needing housing, combined with lower rates that will allow more people to afford the home they want, will force market competition back in line. How fast? No one has a crystal ball but my educated hunch after more than two decades watching markets rise and fall is that we have until Spring of 2025 at best before markets return to something that resembles the post-pandemic feeding frenzy. Remember the refi boom and as much as double-digit appreciation in some markets? When you had to offer $50,000 to $100,000 over list price just to win a home and you couldn't get your mortgage lender to return a phone call? Let's not wait for that again!

How to Take Advantage of the Current Market

1. Connect with a Mortgage Lender

Reach out to your favorite mortgage lender, hint hint, you know, ME! to find out what a payment looks like today and what it might look like when rates come down again next year. If you're a first-time buyer, make sure you understand what documentation you will need so you don't run into any surprises or issues. If you own a home now and plan to sell once you buy, work out the specifics ahead of time with your lender to see where you might pull cash for down payment and see if you can qualify without selling first. Perhaps you can't get approved for conventional financing but find out when you speak with your lender that rates for non-conventional loan options have also come down enough that you can finally afford that home you want. If you're prepared ahead of time for your purchase, it makes you a stronger buyer and gives you more power at the negotiating table once you find that right home.

2. Work with a Real Estate Agent

Connect with your favorite real estate agent and look at homes that have been sitting more than 30 days. These are usually the homes that are more open to price reductions and closing cost concessions. See if any of these might fit your criteria. Send one or two listings to your lender to see what the numbers look like.

3. Prepare Your Homebuyer Checklist

Put together a Homebuyer Checklist. Does your credit need some love? Do you need to figure out where your down payment will come from? Maybe you need to take out a home equity line on your current home or have that conversation with family about a gift for down payment. Perhaps summer travel increased balances on some credit cards and you would like to pay them down before pulling credit so your FICO is in good shape and you can get the best rates and terms on the new mortgage. Aren't sure where you want to live? Explore some neighborhoods and when you find one you like, spend some time there at different times of day to see what it feels like to live there.

Planning ahead of these dropping mortgage rates is key, and being willing to jump when the right home comes along will save you a ton of stress and just might save you substantial money. If you have any questions or need some complementary advice on how to navigate all of this, please reach out, my email liana@pomeroylending.com or call me 303-601-5197. I'm always happy to lend my ear and my expertise.