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If you’re planning to buy a home this year, you likely know you won’t be dealing with typical circumstances.

The real estate market was completely upended by the pandemic along with its ensuing financial fallout — and then when it looked like things were getting a little bit more "normal," mortgage rates increased.

It's definitely not a "typical" housing market, and that means there are a few things you should know before you visit your first open house this spring.

Flattening home prices
Home prices shot up by 18.2% year-over-year in 2021, and then a generous 9.6% in 2022. The National Association of Realtors (NAR) predicts median existing home prices will inch up just 0.3%, and new homes will rise by 1.3% in 2023. This is fabulous news for buyers who were worried about ever-increasing prices on homes these last two years.

Stabilizing mortgage rates
Mortgage rates more than doubled in 2022, from approximately 3% to more than 6%, further driving up the price of buying and owning a home. The 30-year fixed mortgage is expected to average between 5.2% and 6.8% in 2023, according to recent predictions by Fannie Mae, Freddie Mac, the Mortgage Bankers Association and the NAR. While the Federal Reserve still plans to raise rates, it has slowed its pace with smaller recent increases. Lenders will likely slow down their interest rate increases as well.

More negotiating room for buyers
In recent years, home-buying was characterized by fierce bidding wars, which left little to no room for buyers to negotiate. That’s about to change. With the supply of available houses on the market creeping closer to matching the demand, buyers will have more negotiating power and will be able to stand firm on their personal preferences, like home inspections and a lower price.

Tips for buying a house in 2023
If you plan to buy a new house this year, here’s how to prepare for and ensure a smooth and successful process.

  • Get your finances in order. It’s a good idea to verify you can afford to buy a new home before you start your search. If it’s possible, take a good look at your finances for at least half a year before you plan to start looking for a new home. How much money do you have saved up for a down payment? How much can you afford to spend on a monthly mortgage payment? Ask these questions before getting started to avoid disappointment later on in the game. It's worthwhile to talk to our certified financial counselors at GreenPath for assistance in getting credit and finances in order.
  • Boost your credit score. You’ll need a minimum credit score of 670 to qualify for a home loan from most lenders, so make sure your score is up to par before you hit the market. Work on paying down debt, paying your bills on time or early and lowering your credit utilization in the months leading up to your search. You’ll also want to avoid opening new cards at this time.
  • Understand your mortgage options. Depending on your personal circumstances, you may benefit from a mortgage backed by the Federal Housing Administration (FHA), which only requires a 3.5% down payment, or a VA mortgage, which requires no down payment. Similarly, a 30-year fixed-rate mortgage may be in your best interest, or consider going with a 15-year adjustable-rate mortgage (ARM). Make sure you know your options well so you can make an informed choice. We really recommend that you take advantage of our Member Advantage Mortgage program for financing needs and understanding mortgage options.
  • Get your pre-approval before you start your search. This way, you’ll know exactly how much house you can afford, and sellers will regard you as a serious buyer. Remember: Being pre-approved is better than being pre-qualified, so take that extra step.
  • Move quickly when you’ve found a possible yes. The market may be cooling down, but it’s still competitive. If you want to buy a home this year and have your finances worked out before you start shopping, it’s a good idea to have a trusted Realtor working with you so you can make an offer quickly. Take advantage of our HomeAdvantage program to find a Realtor who can help you secure your dream home this spring.

Best wishes for a successful home search this spring!

Information is valid as of publication date and rates are subject to change without notice. Click here to view current deposit rates and current loan rates

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