Tuesday, March 29, 2022 / by Flr Team
What To Do When Home Prices Are Rising Faster Than Your Down Payment
If you’re trying to buy a home right now, you may find that what you’ve saved for your down payment isn’t going as far as you thought it would. The record-breaking rise in home prices is to blame.
Why are home prices rising faster than your savings? The combination of low mortgage rates, allowing buyers to be able to afford borrowing more than they otherwise would, and limited housing supply is what’s driving prices up. Those that rent are struggling with the rising prices as well. Rent has also been going up just as home sales, and because of inflation, wages aren’t keeping up for both buyers and tenants.
There are a few things you can do if your down payment savings aren’t keeping up with the rising home prices. First, you could try waiting out the market and boosting your savings for a down payment. You may even see home prices come down a little in your area, which means your funds will go further. But keep in mind, there are no guarantees in real estate because market conditions are always changing. Start with making the decision whether now is the right time for you. If you can’t afford to buy now, it’s probably not a good time to start looking for your dream home.
Another thing you can do is to alter your home wish list. Everyone wants to get the best house in the nicest neighborhood that they can afford, but if you can be a little more flexible about the location, it could help you get into a home faster and more affordably. Looking in a broader geographical area will open up more options and may allow you to look at homes that work better with your savings.
There is also the option of getting homebuyer assistance grants or more traditional routes including FHA loans, VA loans and first-time homebuyer programs. Keep in mind that many lenders will allow you to put less than 20% down. You may have to pay for private mortgage insurance (PMI) until you build up more equity, but if you can afford the extra monthly cost, you’ll have no problem getting into a home if your offer has been accepted.
With all of this in mind, it’s crucial to work with a knowledgeable real estate professional in this competitive market. Most sellers are receiving multiple offers, many of which are above asking price, so it’s important to work with someone who really understands the market in the area where you’re looking and can help you write a strong offer. A good agent will also be able to help you tailor your search as you adapt to different needs or a change in your budget.
It’s a tough market for homebuyers with home prices increasing so rapidly, but that doesn’t mean it’s impossible to buy. It may just take a little strategizing. A trusted real estate professional can help you figure out your options and start the journey of getting you that dream home.
Florida Lifestyle Realty