For every person that’s ever bought a home, there are another ten people that tell you how or when you should do it. There is no perfect answer on when, but American Bank & Trust mortgage bankers study the housing market. So we can help you with a few insights on good times to buy and provide tips on other things you should consider.
First, Let’s Talk Interest Rates
Rates have dropped 1% since late 2018. What does that mean in terms of payments? Let’s say you need to borrow $225,000. When 30 year interest rates were at 5% in December your principal and interest payment would have been $1,208. With interest rates at 4.00%, that payment is now $1,074. That $134 savings is a great incentive to buy or refinance now. Ryan Konz, Mortgage Loan Officer, says “You’ve just increased your buying power and now you can maybe get that countertop upgrade or that third stall garage.”
You Don’t Need 20% for a Down Payment
You may be thinking that because you don’t have 20% saved for a down payment, you should wait to buy a home. That’s one of the biggest misconceptions about purchasing a home.
“Having a 20% down payment has its advantages, but there are many programs that require little or even no, down payment. There are also several down payment assistance programs that can ease that burden.”
The South Dakota Housing Development Authority has programs for first-time and repeat homebuyers. Most of their programs offer lower than market interest rates. There are some income limit requirements so talk to an American Bank & Trust Mortgage Loan Officer for the specific details. As of April 30th they have increased their purchase price limits from $250,200 to $275,000. That alone can increase the number of properties that can qualify for the program. They also have options to assist with down payment and closing costs.
Regardless of Season, Buy When You’re Prepared
There are lots of different research statistics out there:
- Average days on market
- Comp home evaluations
- Median price
These are useful tools in analyzing a housing sales market. But more important than any of these – are you ready to buy a home? Have you saved up adequately for any closing costs? Have you considered your additional new expenses beyond the mortgage payments? For example, snow blowers, lawnmowers and the maintenance and repairs that come with any home ownership all require money.
There are hidden expenses to home ownership, but when you plan for them, they are less daunting. When you look at your budget, don’t stretch it. Build your anticipated expenses into it. This will help give you a more realistic picture.
When you feel confident about your financial plan, talk to an American Bank & Trust Mortgage Loan Officer. Also, check out our mortgage guide with helpful tools and tips on the things you’ll need during the home buying process.
The Housing Market and Seasonality
Sioux Falls and the surrounding area has been a ‘sellers market’ for some time. In addition, as we stated earlier mortgage rates have recently dropped. In short, that means there are more buyers than sellers. So, it’s simple supply and demand. Sellers will likely get their home sold for asking price – often more – with little pushback from buyers.
This makes buying a home highly competitive. That’s one more reason to make sure you have your pre- qualification letter. This letter sends a message to the seller that you are a serious buyer.
Ryan says there are advantages to buying a home in the spring and summer months. “As people are planning for spring and school starts getting out, there are usually more homes on the market,” he says.
Understanding the Process
Regardless of what time of year you buy, Konz stresses finding a mortgage banker who understands the process. American Bank & Trust works hard to consolidate the approvals and paperwork required of buyers and make the process easier.
“I really love working with a range of people, from the first time home buyer to people in all walks of life,” says Konz. “Buying a home is an exciting time and it’s my responsibility to ensure the mortgage process is a smooth and easy experience.”
To learn more about all the considerations of home buying, contact Ryan Konz or your local American Bank & Trust today.