It is no secret that the housing market has been on fire. Mortgage rates are low, and sellers are getting top dollar for their homes.
With the rush of buyers trying to secure these low rates, inventory has been low.
How long will this last? What should you be prepared for when buying a home in 2021? Here is what the experts have to say.
There is still time
The best time to buy a home is when it works best for you, not depending on the market.
So, if you have the means to cover a down payment, you are pre-approved and ready to move – NOW is the time!
Mortgage rates are predicted to start to rise this year and home values will continue to appreciate.
With this information in mind, do not let a seller’s market scare you into holding off.
Pre-approval
Nowadays, a pre-approval holds significant weight over a prequalification.
To be pre-qualified, a lender takes an overall view of the potential homebuyer’s financial standing to see what they may be eligible to borrow.
A pre-approval is a more involved process. The lender takes a deep dive into the borrower’s credit history, employment, debt, and other deciding factors.
They, then, procure a letter stating that the buyer has met the requirements to be granted a home loan. An official mortgage application has been completed and the buyer’s creditworthiness has been assessed.
A pre-qualification may be a good option for potential buyers just exploring their options, but if you are a serious buyer, a pre-approval will hold its weight.
Get ready for a bidding war
In a seller’s market, it is likely the home of your dreams will already have a few offers on the table.
You will need to get with your Real Estate agent ahead of time and discuss options to present your best offer. It is also a good idea to come up with solutions for scenarios that may involve counteroffers and contract stipulations.
Not only do you want to be prepared for a bidding war, but you will need to know when it will be time to back away if it escalates to more than you can handle.
Appraisal gaps
Once your offer gets accepted, it is time for inspections and the appraisal.
An appraisal is an official report of what the property is worth. You will need to be prepared if the appraisal comes in high or low.
If it comes in low, you will need to decide if it is worth paying the extra amount, or if the seller will be willing to meet at the appraised value.
There are so many different ways to approach an appraisal gap so make sure to talk them all over with your Real Estate agent.
Also, read further about how the demand in the housing market is affecting appraisers.
With a strong offer, a game plan, and a great Real Estate agent in your corner – it will make buying a house in 2021 that much easier.
