Preparing to Purchase a Home
Tips for Homebuying
The Housing Market Changed in 2020.
Now more than ever, it’s critical to be prepared for the home buying process. Record price increases in homebuilding materials now present crucial changes in the housing market. This is good news to existing homeowners – and a challenge to consumers on the market for a new house.
Home loan amounts doubled in 2020 in the Wichita area, with a 56% increase in the dollar amount of first residential mortgages closed in 2020. Nationwide, according to the National Association of Realtors (NAR), home sales set records last year, due in part to the COVID-19 pandemic. According to Realtor.com, the median price of a home in the Wichita, KS area is now $175,000, an increase of 9.4% from April 2019 to April 2021.
The increase in consumers looking to purchase a home means a decrease in the supply of houses available to sell. At the same time, mortgage rates reached historical lows in 2020. Those two factors combined to cause a rise in the cost of homeownership. This trend reveals a decline in housing affordability and could hinder future homeownership for younger adult buyers if supply remains limited.
Tips to Prepare for Homebuying
Are you ready to purchase a house – or are you not so sure? Here are a few suggestions from The Mortgage Reports.com to help you prepare for this monumental purchase:
- Check your credit – Ideally, consumers should check their credit at least six to 12 months before they consider purchasing a house to allow time to mediate a low credit score if necessary. Your credit determines whether you’re eligible for a mortgage and influences your rate.
- Save money – Common advice is to pay a 20% down payment for a home to avoid paying mortgage insurance. But even if you decide to take the mortgage insurance option, most mortgage programs require of a down payment of 3% to 5%. It’s important to remember that the consumer is also responsible for closing costs – roughly 2% to 5% of the loan amount.
- Determine your budget – It’s important to understand how much house you can reasonably afford before start looking. Before even meeting with a mortgage lender, use an online mortgage calculator to estimate affordability. Once you know how much you can afford, be sure to also calculate how much you’ll need to have on-hand as a down payment.
- Don’t rush – Buying a home is a huge decision – and one that shouldn’t be rushed. In today’s market, in which homes are sold at a faster pace, you might feel pressured to make instant decisions. If you move too fast, you could overlook vital steps that could save you money, including home inspection and comparison shopping. Don’t end up with a fixer-upper when you thought you were buying a turn-key home.
Once you are prepared to start the home buying process, you can apply online or in person at Skyward to get pre-approved before you go home shopping. You can also call at 833-759-1941 for a rate estimate specific to you. We can help you guide through the process effortlessly as you prepare for this major purchase.