Buying your first home? Now may be the time as U.S. long-term mortgage rates fell this week, reaching record lows for the 13th time this year amid fresh signs of weakness in the pandemic-ravaged economy.
Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year benchmark loan declined to 2.72% from 2.84% last week. By contrast, the rate averaged 3.66% a year ago.
The average rate on the 15-year fixed-rate mortgage eased to 2.28% from 2.34%.
Home loan rates have trended downward through most of this year, bolstering demand from would-be homebuyers.
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So as first-time homebuyers prepare to enter the market, here's a couple of things to keep in mind:
Get Cozy With Your Credit Score
If you don't know what your credit score is, you're not ready to buy a home. Period. Full stop.
“Know your credit score and make sure that there are no surprises/errors,” Wendy N. Arriz, an agent with Warburg Realty told Today.com. “Many people now subscribe to Experian [or another consumer credit reporting agency] and are given monthly updates on the status of their credit score. That is a great way to keep an eye on things.”
Talk With a Mortgage Broker or Loan Officer About Pre-Approval
Take the mystery out of it. Speak with a mortgage broker or loan officer to discover if you pre-qualify for a mortgage before you go house hunting.
A loan officer works for the lending institution in question while a mortgage broker works as an independent agent for both you and the bank. The latter facilitates the loan process to choose the right lender and guide you through the whole process — and gets a commission if the loan closes. A loan officer typically works on commission or salary provided by their institution.
Set a Down Payment Goal
Figure out how much money you can afford to put down and work from there. Online calculators can help with the process. The general rule of thumb is you should plan on putting 20 percent down.
Hire the Right Agent
Interview multiple real estate agents before settling on one — and check their online reviews on sites like Angie’s List, Trulia or Zillow, which lets you enter the specifications you’d like.
Buy for Now... and the Future
They're called starter homes for a reason. If you're a first-time buyer you don't want to necessarily buy more home than you need. But you also want to buy a home that you can grow into.
"You want to think not just about today, but about long term because when you buy a home typically you're taking out a 30-year mortgage, so you're making a long term commitment," says Danielle Hale, chief economist with Realtor.com. "t may not be a 30 year commitment if you end up moving before that 30 year time frame, but you definitely want to think about what you need now and in the years ahead."
The Associated Press contributed to this report.