Be smart with home buying in 2019 with rising mortgage rates
Home buyers are starting to feel the pressure of rising mortgage rates. Mortgage rates have been increasing with the Treasury yields Federal Reserve’s rate increases. As of now, 30-year mortgage rates are in the high 4% and it is expected to hit 5% in the beginning of 2019. Luckily, in the Portland real estate market, home prices have been stagnant and it is not expected to go up much in 2019 except for detached single family homes under $400K. Read more on Portland real estate market predictions for 2019. Depending on which neighborhood or area you’re buying, it may still be a seller’s market or buyer’s market. Right now, the market is absorbing the slowdown and the market trend is somewhat unpredictable. So if you’re planning to purchase a home in 2019, what can you do to make sure you can be smart about home buying?
Be ready with your mortgage and lock in rates early with your pre-approval
Rates are on the upward trends. It is very important that you lock in rates with your mortgage pre-approval so that when you have an accepted offer and close on a home, you can keep the same quoted rate. Do this first before home shopping. Many people do this the other way and it can hurt you if you are not prepared once you do find the perfect home.
Work with a good real estate buyer’s agent
Despite Zillow and Redfind and other online home websites, a home buyer is not an expert and may not realize what he or she doesn’t know about a home and the neighborhood from looking at homes online. MLS has a lot more information specific to real estate agents. Also experienced realtors understand the neighborhood well and the true value of a home as well as how to best negotiate on buyer’s behalf. Buyers don’t pay for real estate buyer’s agent commission. It’s already offered by listing agents through the MLS so the seller’s agent does not have to bring in buyers to sell a home. Buyer’s agents will work exclusive for buyers and stay loyal to their clients despite this commission system.
See more homes and really compare
With rising mortgage rates, Portland real estate market is slowing down and may no longer be a seller’s market. Depending on which area you are purchasing, it may be a buyer’s market. Your real estate agent should give you the latest comps and how long each home stayed on the market and compare that to homes currently on the market to determine your leverage as a buyer. Also, you will less likely have competition from other buyers in 2019 and homes will stay on the market longer as a result. This means you can see more homes and consider them before putting an offer on one rather than being rushed into one because of competition.
Checklist for dated components that need repair or replacement
If you are a first time home buyer, you may not realize what all goes in a house that makes it a functional and safe house. There are many components that should be checked to make sure they are in good conditions including roof, furnace, A/C, water heater, electrical panel, obvious structural issues and overall conditions of interior and exterior. A good real estate with construction knowledge should be able to tell you how much things can cost to repair or replace certain things in a house so before you put in an offer, you should make sure what kind of things need repair or replacement and how much it can cost you in a short or long term and factor it into your decision making for an offer price or whether you even want to proceed with the home. You don’t need to wait for a home inspector to find out whether your roof needs replaced or your exterior needs a lot of work.
It is important that buyers understand the true value of a home. In order to do that, have your realtor send you all the recent comps in the neighborhood of your target home. Analyzing the recent sold home prices and its data, one can find out whether a home is overpriced or not. Sometimes, it’s best to just walk away from a home knowing it’s over-priced and the seller’s value expectation is all wrong. A lot of times, sellers in the Portland market still feel exuberant about their home value and their ability to sell it high with some “future value” as if we are still in 2016. A smart buyer would have seen the comps in the neighborhood and know not to pay too much for a home.
More leverage as a buyer to make contingent offers
Except for first-time home buyers, many home buyers are sellers as well. People move up to a bigger house or downsize depending on their changing life needs. It is not easy to buy and sell at the same time and requires a lot of pre-planning as there are many ways to do this. You need to consult with a realtor to figure out what is your best way to go about this transition. Maybe you need to buy first instead of selling first. Maybe you need to take out a HELOC (home equity line of credit) so you can put a non-contingent offer on what you’re looking to purchase. Maybe the market is slow enough so you can wait for an offer on your current home to buy your next home with a contingent offer. With 2019’s market slowing down, you will have a better chance to make offers contingent on the sale of your primary home. Two years ago, such offers didn’t have a chance with a pile of competing non-contingent offers.
Talk to a real estate agent early and plan your home purchase in 2019. It is very important you act fast and get started early so that you can prepare for the best scenario for you possible as a home buyer.