4 important questions homebuyers should be asking now
Homebuying can be a complex and complicated process to navigate in ideal circumstances, but in the economy and rate climate of 2024, it's arguably more difficult than it's been in years. With inflation still stubborn and interest rates still high, there are many factors to account for before house hunting.
It helps, then, for prospective buyers to focus on the factors in their control — and have the answers prepared for a series of important decisions they'll likely have to make soon.
While these questions will vary based on the buyer and the purchase they intend to make, they can be useful even for those who have yet to get pre-approved for a mortgage. Below, we'll break down three important questions homebuyers should be asking now.
Start by exploring your mortgage options here to see what rate you qualify for.
4 important questions homebuyers should be asking now
Here are four timely questions homebuyers should be thinking about right now.
When will interest rates drop?
The forecast for a drop in interest rates is unknown, with some experts predicting a cut as early as the spring and others expecting it to come in the summer. But even if the benchmark interest rate range does fall this year, it's unlikely to be by much. Many predict a 75 basis point drop from the current 5.25% to 5.50% range.
How that ultimately translates to mortgage rates is yet to be determined and will depend on a series of factors, including the lender you choose. That said, mortgage rates have already started to fall in anticipation of a cut, and you may be able to get a lower-than-expected rate today by simply shopping around.
See what mortgage rate you qualify for here today.
Is it worth waiting for rates to drop?
With many expecting interest rates to drop, the question then revolves around waiting for that point. Specifically, is it worth waiting for rates to drop? As noted, any eventual cut is likely to be gradual and unlikely to result in major savings for buyers.
That said, every dollar counts, particularly when the average mortgage loan lasts 30 years. On the other hand, there are advantages to buying a home now and refinancing when rates stabilize to a new (lower) norm. Only buyers will know the answer to this question, but it's worth thinking about and calculating before rates do fall.
How does my credit look now?
Whether rates drop or not, the lowest rates and best terms will be reserved for borrowers with the highest credit scores and cleanest credit histories. So it makes sense, then, to take a closer look at your credit now.
Is your credit score as high as it can be? If not, consider taking steps to improve it from fair to good. This includes paying off debt, refraining from applying for any new credit and paying your bills on time (or early). By boosting your credit profile now, you'll be better equipped to act promptly.
What will happen to home inventory?
Housing inventory was low in 2023, at least in part due to existing homeowners staying put versus moving and losing their low interest rate. It's worth pondering, then, what could happen to home inventory if rates fall and this becomes less of a concern for owners.
Will inventory rise? If so, by how much? And what will that mean for buyers? Will prices fall as a result or will more inventory entice more buyers to the market, thus beefing up the competition you may not be encountering if you act now? Homebuying could get a lot more complicated later this year, so it's worth thinking about before that point.
The bottom line
The homebuying market is unlikely to look the same as 2024 evolves. Understanding this, buyers should start thinking in a broader sense. By having the answers to the above questions, or simply by thinking about the possible answers in advance, buyers will better position themselves to act when the time is right.
Start researching your mortgage options here now to learn more.
