Becoming a homeowner is a life-changing matter. When you own a home, not only do you change your material situation, you also alter your personal situation as well. Owning a home signals the fact that you’ve planted down roots in a particular community. Homeowners typically invest a great deal into both their own homes and their surrounding environment. Given this fact, it’s a small wonder that homeownership is often regarded as a key marker of adulthood.
If you’re a first time home buyer in 2023, you likely have plenty of things floating through your mind. In this post, we’d like to help out first time home buyers by pointing out a few things which should be considered “must know” information in 2023. When you’re preparing to buy a home, the more information you can absorb about the buying process, the better off you’ll be. Let’s go over a few pieces of essential knowledge for first time home buyers in 2023.
Experts Believe Interest Rates Will Remain Relatively High
First time home buyers in 2023 should know that industry experts believe that nationwide interest rates will remain relatively high. When you buy a home with financing, your mortgage interest rate will have a huge impact on your monthly payment and, by extension, the total amount you will pay for your loan. Even a small change in your interest rate can translate into a big difference in monthly payment and total loan amount. During the second half of 2019, nationwide interest rates hovered around 4% APR. This is relatively low.
If you’re thinking about buying in 2023, be sure to keep up your credit score and maximize your other financial indicators. If you do this, the chances are very high that you’ll obtain a decent rate.
The Impact of Your Credit Score Can Be Massive
Another thing first time home buyers should be aware of is the fact that your credit score can have a massive impact on your interest rate and, by extension, your financial obligation. Suppose you purchase a $300,000 with a mortgage loan. The difference between a FICO score in the top tier (i.e. 760-850) and the lowest tier (i.e. 620-639) can be as much as $300 on a monthly basis, and $100,000 over the course of 30 years. When you stop and ponder this, it’s really an astounding situation. Simply improving your credit profile can translate into huge amounts of savings. Most people have some sense that credit scores are important when you go to obtain a loan. But few people have a sense of what this means in terms of numbers. As the numbers referenced above show, buyers can save thousands and thousands of dollars over the course of their loan by improving their credit score.
Bidding Wars Can Be Common in Certain PNW Markets
Industry experts foresee an inventory shortage in the housing market throughout 2023. This means that buyers may be likely to encounter a “bidding war” for a property when they enter the market. A bidding war refers to a situation in which multiple buyers show interest in the same property at the same time. When this happens, these buyers make competing offers to the seller in an effort to outperform and outbid their rivals. One thing that first time home buyers should know is that many areas in the Pacific Northwest have seller’s markets, and seller’s markets are a recipe for bidding wars. For instance, the city of Tacoma is currently classified as a very hot market. Would-be buyers in Seattle are flocking to Tacoma in droves to take advantage of Tacoma’s relatively more affordable prices. This means that demand has risen greatly in Tacoma, with the side effect that bidding wars are much more commonplace.
The same can be said for the city of Marysville, WA. Located north of Seattle, many buyers have flocked to this small city in search of more reasonable prices. Now, there is so much demand in Marysville that buyers regularly encounter competing offers for properties. This is something which home buyers really need to absorb. When you go to buy a home, there’s a tendency to forget that there are many other buyers entering the market at the same time. You need to prepare yourself to deal with potential competitors, especially in certain markets. This is why you need to conduct research on the markets you enter.
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