Spring has officially sprung, which means spring homebuying season is upon us. While it's not unexpected to see an uptick in mortgage applications and home sales, this year's spring homebuying season is predicted to be even more competitive than years past.
According to the National Association of REALTORS®, total housing inventory rose 4.6% to 1.59 million existing homes available for sale in February, but that's still 8.1% lower than a year ago. Combined with a decline in the construction of new homes, there's a lack of supply across the U.S., which pushes house prices up. And while mortgage rates are still historically low, they have been generally climbing since the start of the year.
What does this mean for homebuyers? It's more important than ever to be prepared. Here are three ways you can get a head start on the competition this spring homebuying season:
- Understand Your Finances
One of the first steps in the homebuying process is fully understanding your finances. It's not as fun as shopping for homes, but it's important to help you determine how much you can afford.
- Understand the Importance of Credit
If you're thinking about buying a home, you need to be aware of your credit score – one of the most important factors when qualifying for a loan. Generally speaking, a higher score can mean a better chance of getting approved for a loan and securing a lower interest rate.
- Get Pre–approved
Pre–approval is an important and exciting time when you work with your lender to determine how much home you can afford. Getting a pre–approval letter allows you to house hunt with greater confidence, knowing how much the bank is willing to lend you. It also shows sellers that you're serious about buying. Be sure you're honest with yourself about how much you can comfortably afford v. how much you are pre–approved to borrow.
For more information on the homebuying process, visit My Home by Freddie Mac® and be sure to follow our Spring Homebuying blog Series, which will launch next week.
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