There’s one essential step in the homebuying process you may not know a whole lot about and that’s pre-approval. Here’s a rundown of what it is and why it’s so important right now.
Pre-approval is like getting a green light from a lender. It lets you know how much they’re willing to let you borrow for a home. To determine that number, a lender looks at your financial history. According to Realtor.com, these are some of the documents a lender may ask you for during this process:
The result? You’ll get a pre-approval letter showing what you can borrow. Keep in mind, that any changes in your finances can affect your pre-approval status. So, after you receive your letter, avoid switching jobs, applying for new credit cards or other loans, or taking out large sums of money from your savings.
This year, home prices are expected to rise in most places and mortgage rates are still showing some volatility. So, since affordability is still tight, it’s a good idea to talk to a lender about your home loan options and how today’s changing mortgage rates will impact your future monthly payment.
The pre-approval process is the perfect time for that. Because it determines the maximum amount you can borrow, pre-approval also helps you figure out your budget. You should use this information to tailor your home search to what you’re actually comfortable with as far as a monthly mortgage payment. That way, you don’t fall in love with a house that’s out of your comfort zone.
Once you find a home you want to put an offer on, pre-approval has another big perk. It not only makes your offer stronger, it shows sellers you’ve already undergone a credit and financial check.
When a seller sees you as a serious buyer, they may be more attracted to your offer because it seems more likely to go through. As Greg McBride, Chief Financial Analyst at Bankrate, says:
“Preapproval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements. A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”
If you’re planning on buying a home, getting pre-approved for a mortgage should be one of the first things on your to-do list. Not only will it give you a better understanding of your borrowing power, it can put you in the best position possible to make a strong offer when you find a home you love. Connect with a trusted lender to learn more.
Are you hesitant to sell your house because you’re worried no one’s buying with rates and prices where they are right now? Here’s some perspective that can help.
The market actually isn’t at a standstill. While there weren’t as many sales last year as there’d be in a normal market, roughly 4.15 million homes still sold (not including new construction), according to the National Association of Realtors (NAR). And the expectation is that number will rise in 2025. That means more people will likely move this year, and they need homes to buy. Homes like yours.
But even if we only match last year’s sales pace, here’s what that looks like.
Think about that. Just in the time it took you to read this, 8 homes sold.
If you’ve been holding off on selling your house because you think buyers aren’t out there, let this reassure you – there are still buyers looking to buy.
Every day, thousands of people need to buy homes. So, while higher home prices and mortgage rates have slowed the market down and forced some buyers onto the sidelines, that doesn’t mean the market isn’t active. Many buyers are still eager to make a move because life doesn’t wait for perfect market conditions.
With the right agent by your side, you can get your house in front of those buyers while other hesitant homeowners are still putting their plans on pause because they’re worried buyer demand has disappeared. Let’s get your house sold.
On average, 11,000 homes sell every day, and yours could be one of them. In the time it took you to read this, another 8 homes sold.
When you’re ready to take the next step, connect with a trusted local real estate agent so you have an agent to create that perfect strategy.
Your credit score plays a big role in the homebuying process. It’s one of the key factors lenders look at to determine which loan options you qualify for and what your terms might be. But there’s a myth about credit scores that may be holding some buyers back.
According to Fannie Mae, only 32% of potential homebuyers have a good idea of what credit score lenders actually require.
That means two-thirds of buyers don’t actually know what lenders are looking for – and most overestimate the minimum credit score needed.
But the truth is, you don’t need perfect credit to become a homeowner. To see the average score, by loan type, for recent homebuyers check out the graph below:
There is no set cut-off score across the board. As FICO explains:
“While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders, and there are many additional factors that lenders may use . . .”
So, even if your credit score isn’t as high as you’d like, you may still be able to get a home loan. Just know that, even though you don’t need perfect credit to buy a home, your score can have an impact on your loan options and the terms you’re able to get.
Work with a trusted lender who can walk you through what you’d qualify for.
If you want to open up your options a bit more after talking to a lender, here are a few tips from Experian and Freddie Mac that can help give your score a boost:
1. Pay Your Bills on Time
This includes everything from credit cards to utilities and other monthly payments. A track record of on-time payments shows lenders you’re responsible and reliable.
2. Pay Down Outstanding Debt
Reducing your overall debt not only improves your credit utilization ratio (how much credit you’re using compared to your total limit) but also makes you a lower-risk borrower in the eyes of lenders. That makes them more likely to approve a loan with better terms.
3. Hold Off on Applying for New Credit
While opening new credit accounts might seem like a quick way to boost your score, too many applications in a short period can have the opposite effect. Focus on improving your existing accounts instead.
Your credit score doesn’t have to be perfect to qualify for a home loan. The best way to know where you stand? Work with a trusted lender to explore your options.
Have you ever stopped to think about how much wealth you’ve built up just from being a homeowner? As home values rise, so does your net worth. And, if you’ve been in your house for a few years (or longer), there’s a good chance you’re sitting on a pile of equity — maybe even more than you realize.
Home equity is the difference between what your house is worth and what you owe on your mortgage. For example, if your house is worth $500,000 and you still owe $200,000 on your home loan, you have $300,000 in equity. It’s essentially the wealth you’ve built through homeownership. Right now, homeowners across the country are seeing record amounts of equity.
According to Intercontinental Exchange (ICE), the average homeowner with a mortgage has $319,000 in home equity.
The rise in home equity over the years can be credited to two key factors:
1. Significant Home Price Growth
Home prices have climbed dramatically in recent years. In fact, according to the Federal Housing Finance Agency (FHFA), over the past five years, home prices nationwide have risen by 57.4% (see map below):
This appreciation means your house is likely worth much more now than when you first bought it.
2. Longer Tenure in Homes
Data from the National Association of Realtors (NAR) shows people are staying in their homes for a decade (see graph below):
This increased tenure means homeowners benefit even more from home values growing over time. That’s because the longer someone has lived in their house, the more that home’s value has grown, which directly increases equity.
And if you’re one of those people who’s been in their home for 10 years or more, know this – according to NAR:
“Over the past decade, the typical homeowner has accumulated $201,600 in wealth solely from price appreciation.”
What does that mean for you? It means your house might be your biggest financial asset — and it could open up some exciting opportunities for your future. Let’s break it down.
Your equity could help you cover the down payment for your next home. In some cases, it might even mean you can buy your next house all cash.
Thinking about upgrading your kitchen, adding a home office, or tackling other projects? Your equity can provide the funds to make those improvements happen, increasing your home’s value and making it more enjoyable to live in too.
If you’ve been dreaming about starting your own business, your equity could be the kickstart you need. Whether it’s for startup costs, equipment, or marketing, leveraging your home’s value can help bring your entrepreneurial goals to life.
Whether you’re thinking about selling, upgrading, or simply want to understand your options, your home equity is a powerful resource. If you’re wondering how much equity you’ve built or how you can use it to meet your goals, connect with a local real estate agent to explore the possibilities.
Knowing what to budget for when buying a home may feel intimidating — but it doesn’t have to be. By understanding the costs you may encounter upfront, you can take control of the process.
Here are just a few things experts say you should be thinking about as you plan ahead.
Saving for your down payment is likely top of mind. But how much do you really need? A common misconception is that you have to put down 20% of the purchase price. But that’s not necessarily the case. Unless it’s specified by your loan type or lender, you don’t have to. There are some home loan options that require as little as 3.5% or even 0% down. An article from The Mortgage Reports explains:
"The amount you need to put down will depend on a variety of factors, including the loan type and your financial goals. If you don’t have a large down payment saved up, don’t worry—there are plenty of options available . . ."
A trusted lender will go over the various loan types with you, any down payment requirements on those, and down payment assistance programs you may qualify for. The more you know ahead of time, the easier the process will be. And the key to getting the information you need is working with a pro to see what’ll work best for your situation.
Make sure you also budget for closing costs, which are a collection of fees and payments made to the various parties involved in your transaction. Bankrate explains:
“Mortgage closing costs are the fees associated with buying a home that you must pay on closing day. Closing costs typically range from 2 to 5 percent of the total loan amount, and they include fees for the appraisal, title insurance and origination and underwriting of the loan.”
When it comes to closing costs, a trusted lender can guide you through specifics and answer any questions you may have. They can also give you a better idea of how much you should be prepared to pay so you can cruise through your closing with confidence.
And as you plan ahead for closing day, be sure to budget for your real estate agent's professional service fee too, in case the seller doesn't cover it. But don’t worry, you’ll work with your agent ahead of time to agree on what this is, so you won't be surprised at the finish line.
And if you want to cover all your bases, you can also consider saving for an earnest money deposit (EMD). According to Realtor.com, an EMD is typically between 1% and 2% of the total home price and is money you pay as a show of good faith when you make an offer on a house.
But, it’s not an added expense. Instead, it works like a credit and goes toward some of your upfront costs. You’re simply using some of the money you’ve already saved for your purchase to show the seller you’re committed and serious about buying their house. Realtor.com describes how it works as part of your sale:
“It tells the real estate seller you’re in earnest as a buyer . . . Assuming that all goes well and the buyer’s good-faith offer is accepted by the seller, the earnest money funds go toward the down payment and closing costs. In effect, earnest money is just paying more of the down payment and closing costs upfront.”
Keep in mind, this isn’t required, and it doesn’t guarantee your offer will be accepted. It’s important to work with a real estate advisor to understand what’s best for your situation and any specific requirements in your local area. They’ll advise you on what moves you should make so you can make the best possible decisions throughout the buying process.
The key to a successful homebuying savings strategy? Being informed about what you need to save for. Because, when you understand what to expect, you can plan ahead. With an expert agent and a trusted lender, you’ll have the information you need to move forward with confidence.
Let’s face it – life can throw some curveballs. Whether it’s a job loss, unexpected bills, or a natural disaster, financial struggles can happen to anyone. But here’s the good news. If you’re a homeowner feeling the squeeze, there’s a lifeline that many people don’t realize is still available: mortgage forbearance.
As Bankrate explains:
“Mortgage forbearance is an option that allows borrowers to pause or lower their mortgage payments while dealing with a short-term crisis, such as a job loss, illness or other financial setback . . . When you can’t afford to pay your mortgage, forbearance gives you a chance to sort out your finances and get back on track.”
A common misconception is that forbearance was only accessible during the COVID-19 pandemic. While it did play a significant role in helping homeowners through that crisis, what many people don’t know is that forbearance is still a tool to support borrowers in times of need. Today, it remains a vital option to help homeowners in certain circumstances avoid delinquency and, ultimately, foreclosure.
Forbearance continues to serve as a valuable safety net for homeowners facing temporary financial challenges. While the overall rate of forbearance has seen a slight increase recently, it’s important to understand what’s driving this change and how it fits into the broader picture.
According to Marina Walsh, VP of Industry Analysis at the Mortgage Bankers Association (MBA):
“The overall mortgage forbearance rate increased three basis points in November and has now risen for six consecutive months.”
This may seem concerning at first glance, but let’s break it down. The graph below, going all the way back to 2020, puts things into perspective:
While the share of mortgages in forbearance has significantly declined since its peak in mid-2020, there has been a slight but notable increase in recent months. This uptick is largely tied to the effects of two recent hurricanes — Helene and Milton.
Natural disasters like these often create temporary financial hardships for homeowners, making forbearance a crucial safety net during recovery. In fact, 46% of borrowers in forbearance today cite natural disasters as the reason for their financial struggles.
Even with the most recent uptick, the share of mortgages in forbearance is nowhere near pandemic levels, and, thankfully, reflects a very small portion of homeowners overall.
Forbearance can help borrowers avoid the spiral of missed payments and foreclosure. It provides breathing room to address challenges and plan next steps. And while most homeowners today are not in a position to need forbearance, thanks to strong equity and foundations of the current housing market, it is an option for the few who do need it.
If you or a homeowner you know is facing financial difficulties, the first step is to contact your mortgage lender. They can walk you through the forbearance process and help you understand your options. Keep in mind that forbearance is not automatic — you need to apply and discuss the terms with your lender.
In tough times, knowing your options can bring peace of mind. Forbearance isn’t just a financial tool — it’s a lifeline. And while the recent increase in forbearance rates might make headlines that give you pause, the truth is this option is working exactly as it should: helping those who need it most get through difficult moments without losing their homes.
Wondering what’s in store for the housing market this year? And more specifically, what it all means for you if you plan to buy or sell a home? The best way to get that information is to lean on the pros.
Experts are constantly updating and revising their forecasts, so here’s the latest on two of the biggest factors expected to shape the year ahead: mortgage rates and home prices.
Everyone’s keeping an eye on mortgage rates and waiting for them to come down. So, the question is really: how far and how fast? The good news is they’re projected to ease a bit in 2025. But that doesn’t mean you should expect to see a return of 3-4% mortgage rates. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“Are we going to go back to 4%? Per my forecast, unfortunately, we will not. It’s more likely that we’ll go back to 6%.”
And the other experts agree. They’re forecasting rates could settle in the mid-to-low 6% range by the end of the year (see chart below):
But you should remember, this will continue to change as new information becomes available. Expert forecasts are based on what they know right now. And since everything from inflation to economic drivers have an impact on where rates go from here, some ups and downs are still very likely. So, don’t get caught up in the exact numbers here and try to time the market. Instead, focus on the overall trend and on what you can actually control.
A trusted lender and an agent partner will make sure you’ve always got the latest data and the context on what it really means for you and your bottom line. With their help, you’ll see even a small decline can help bring down your future mortgage payment.
The short answer? Not likely. While mortgage rates are expected to ease, home prices are projected to keep climbing in most areas – just at a slower, more normal pace. If you average the expert forecasts together, you’ll see prices are expected to go up roughly 3% next year, with most of them hitting somewhere in the 3 to 4% range. And that’s a much more typical and sustainable rise in prices (see graph below):
So don’t expect a sudden drop that’ll score you a big deal if you’re thinking of buying this year. While that may sound disappointing if you’re hoping prices will come down, refocus on this. It means you won’t have to deal with the steep increases we saw in recent years, and you’ll also likely see any home you do buy go up in value after you get the keys in hand. And that’s actually a good thing.
And if you’re wondering how it’s even possible prices are still rising, here’s your answer. It all comes down to supply and demand. Even though there are more homes for sale now than there were a year ago, it’s still not enough to keep up with all the buyers out there. As Redfin explains:
“Prices will rise at a pace similar to that of the second half of 2024 because we don’t expect there to be enough new inventory to meet demand.”
Keep in mind, though, the housing market is hyper-local. So, this will vary by area. Some markets will see even higher prices. And some may see prices level off or even dip a little if inventory is up in that area. In most places though, prices will continue to rise (as they usually do).
If you want to find out what’s happening where you live, you need to lean on an agent who can explain the latest trends and what they mean for your plans.
The housing market is always shifting, and 2025 will be no different. With rates likely to ease a bit and prices rising at a more normal and sustainable pace, it’s all about staying informed and making a plan that works for you.
Reach out to a local real estate pro to get the scoop on what’s happening in your area and advice on how to make your next move a smart one.
Trying to decide whether it makes more sense to buy a home now or wait? There’s a lot to consider, from what’s happening in the market to your changing needs. But generally speaking, aiming to time the market isn’t a good strategy – there are too many factors at play for that to even be possible.
That’s why experts usually say time in the market is better than timing the market.
In other words, if you want to buy a home and you’re able to make the numbers work, doing it sooner rather than later is usually worth it. Bankrate explains why:
“No matter which way the real estate market is leaning, though, buying now means you can start building equity immediately.”
Here’s some data to break this down so you can really see the benefit of buying now versus later – if you’re able to. Each quarter, Fannie Mae releases the Home Price Expectations Survey. It asks over one hundred economists, real estate experts, and investment and market strategists what they forecast for home prices over the next five years. In the latest release, experts are projecting home prices will continue to rise through at least 2029 – just at a slower, more normal pace than they did over the past few years (see the graph below):
But what does that really mean for you? To give these numbers context, the graph below uses a typical home value to show how it could appreciate over the next few years using those HPES projections (see graph below). This is what you could start to earn in equity if you buy a home in early 2025.
In this example, let’s say you go ahead and buy a $400,000 home this January. Based on the expert forecasts from the HPES, you could gain more than $83,000 in household wealth over the next five years. That’s not a small number. If you keep on renting, you’re losing out on this equity gain.
And while today’s market has its fair share of challenges, this is why buying is going to be worth it in the long run. If you want to buy a home, don’t give up. There are creative ways we can make your purchase possible. From looking at more affordable areas, to considering condos or townhomes, or even checking out down payment assistance programs, there are options to help you make it happen.
So sure, you could wait. But if you’re just waiting it out to perfectly time the market, this is what you’re missing out on. And that decision is up to you.
If you’re torn between buying now or waiting, don’t forget that it’s time in the market, not timing the market that truly matters. Connect with an agent if you want to talk about what you need to do to get the process started today.
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