Concern over the current fiscal showdown in Washington has made lots of investment options uncertain. But with most policy concerning homeownership not likely to change in the near term and mortgage rates at historic lows, 2013 should be an opportune year to purchase a home.
The recovery of the housing market that began in 2010 is likely to continue into 2013. Home buying resource site Zillow recently published their Home Price Expectations survey of more than 100 economists and forecasters. The experts estimate home prices to increase 3.1% in 2013 – good news for homeowners. Those expecting to buy their first home next year are also in luck as the Federal Reserve has promised to keep interest rates low (currently at 3.2% for a 30-year fixed rate mortgage).
If your New Year’s resolution is to stop paying rent and become a homeowner, here are 5 tips to help you buy wisely in 2013.
Secure the Lowest Rate
Just because interest rates are down, on average, doesn’t mean that you’ll get one for your mortgage. You’ll have to qualify. That decision will be based primarily on your credit with borrowers scoring 740, 760 or better earning the lowest interest rates. If your score needs repair, the fastest and most helpful way to boost it is to pay your bills on time and to reduce your credit card debt to no more than 10% of your available credit limits. Another tip: pay 20% or more towards a down payment. Banks offer more favorable rates to borrowers willing to put more skin in the game. With your those two factors in place, you’ll be a strong candidate for a low rate.
Find A Great Agent
An experienced real estate agent who understands your needs and wishes – and has a strong track record in your desired neighborhood – can be an immense help in the search and buying process. Start by asking friends and family for recommendations. Sites like Zillow and Realtor can also help you find qualified professionals.
Widen Your Search…Carefully
Your dream home may not end up being quite like you imagined it. The only way to know is if you seek many, many properties. Be open to different styles and options – but try to stay focused on what you can afford. Otherwise, after seeing higher priced homes with fancier amenities you may begin justifying spending more money (money, that you don’t have).
Save Up For Closing Costs
Finally, there’s nothing that can throw a monkey wrench into your plans like unexpected closing costs. Few first-time homebuyers prepare for them and, based on where you’re buying, they can vary widely. Be sure to include closing costs in your homebuying budget. They average $3,754 but can be reduced if you negotiate and take a fine toothcomb through them before the sale is final.
Speaking of negotiation, January and February are probably the best months of the year to ask for discounts and free perks. That’s because these two months are the slowest sale periods of the year. If you’re focused on buying in the next 8-10 weeks, you’ll probably have a lot more bargaining power to sweeten the deal with fewer buyers in the market.
Photo courtesy RWCOX123′s photostream on Flickr