6 Surprising Homebuying Facts That You Probably Didn’t Know

6 surprising homebuying facts that you probably didn’t know

Young couple buying a new house

Buying a home is a learning experience. This is especially true for first-time buyers trying to navigate mortgage rate forecasts, but even seasoned buyers tend to learn at least a few lessons with every purchase.

Be Aware: 5 Types of Homes That Will Plummet in Value in 2024

Discover More: 4 Genius Things All Wealthy People Do With Their Money

Surprises will still crop up during the buying process, but starting as informed as possible gives you an advantage. Whether you’re competing for your dream home in a market with little inventory or working with a lender to get pre-approved, knowledge is power. This isn’t a process you want to rush into, so take your time.

Here’s a look at six surprising facts about buying a home in 2024 that you need to know.

Prices Might Not Slow Anytime Soon

If you’re waiting to buy in hopes of a price drop, you might stay put for quite some time.

“Home prices increased just over 5% this past year according to the CPI, which is down from last year’s peak of 8%, but still very high with no signs of slowing,” said Jared Blumberg, a licensed real estate salesperson and co-founder of the Blumberg Werner Group at Compass, based in New York City. “Should interest rates eventually come down, which is expected, I would think we will see prices rise even more as homes become more affordable.”

Specifically, the median U.S. home sale price was $420,401 in March 2024. This represents a 4.8% year-over-year increase from March 2023, when the median U.S. home sale price was $400,980.

Most Real Estate Markets Are Still Growing

“I think many people feel the housing market is at or near its peak, but all the best indicators we have for future value seem to indicate there’s still room to grow in most markets,” Blumberg said. “There are certainly a select few areas that had major Post-Covid booms currently with a surplus of inventory that would be exceptions to this thought.”

For example, if you’re looking to buy in Florida or Texas, you might be in luck. Out of the 10 metro areas with the largest year-over-year increases in supply, six were in Florida and two were in Texas, according to a March 2024 Redfin report.

Specifically, in Florida, the areas of Cape Coral (51%), North Port-Sarasota (48%), Fort Lauderdale (30%), Tampa (29%), Orlando (23%) and West Palm Beach (20%) had the largest year-over-year increase in homes for sale. In Texas, McAllen (25%) and Dallas (20%) realized the most notable supply increases.

You Don’t Need a 20% Down Payment

“I find that a lot of my first-time home buyers have a misconception that a 20% down payment is required to purchase a home,” said Melissa D. Rubenstein, a realtor-associate at Corcoran Infinity Properties, based in Alpine, New Jersey. “You can generally purchase for as low as 3% down, but it’s important to weigh the potential costs of doing so — fees and insurance on the mortgage,” she said.

Try This: I’m a Real Estate Agent: Buy Property in These 5 Fast-Growing Cities To Be Rich in 5 Years

When you don’t have a 20% down payment, you generally need private mortgage insurance or PMI. This is a monthly fee rolled into your mortgage payment.

The specific amount you’ll be charged varies, but expect to pay around $30-$70 per month for every $100,000 borrowed, according to Freddie Mac. Therefore, if you borrowed $400,000, you might pay $120-$280 monthly in PMI.

Taxes and Insurance May Not Have to Be Part of Escrow

“You don’t always have to escrow for taxes and insurance,” Rubenstein said. “When receiving the disclosures from a lender before closing, there is usually an escrow set up for taxes and insurance.”

When added to the other costs of buying a home, this can be a lot.

“This can be thousands of dollars, in addition to title and other closing costs,” she said. “If you’re putting down over 20%, your lender may allow you to waive the escrow and pay property taxes and homeowner’s insurance on your own, instead of through an escrow.”

Spend Wisely Before Applying for a Mortgage

You want to look as good as possible to potential mortgage lenders, so don’t do anything to jeopardize your chances of both getting a loan in general and a competitive rate. Before deciding whether you’ll be approved mortgage lenders will review absolutely everything about your finances — including recent spending activity.

“Don’t make major credit card purchases in the months before applying for a mortgage,” said Ralph Herrera, a senior real estate advisor at Engel & Völkers, based in Atlanta(3).

The reason for this is two-fold, as both your credit utilization ratio and debt-to-income ratio can take a hit with a major purchase(9).

Your credit utilization ratio refers to the total amount of credit you have, versus the available balance. This directly affects your credit score(9).

Your debt-to-income ratio is the amount of money you owe, in relation to your earnings. This is a key factor when deciding whether to grant you a mortgage(9).

Choose Your Lender Wisely

If you think it doesn’t matter which lender carries your mortgage, you’re mistaken.

“Your mortgage lender matters, [so] shop around and compare costs [versus] benefits,” Herrera said. “A good Realtor will be able to recommend mortgage bankers and brokers.”

Performing careful due diligence is important because failing to do so can cost you a lot of money. You need a lender that is completely transparent about your interest rate, closing costs, property taxes and any additional fees you’ll pay at closing or factored into your monthly payment(10).

Mortgage terms can also vary by lender — i.e., a conventional fixed-rate mortgage, adjustable rate mortgage, FHA loan — so you need a company that works for you. Some lenders also offer options like the ability to purchase mortgage points — i.e., essentially buy a lower interest rate at closing — or score a mortgage rate lock, so choosing wisely can pay off.

More From GOBankingRates

    This article originally appeared on GOBankingRates.com: 6 Surprising Homebuying Facts That You Probably Didn’t Know

    OTHER NEWS

    6 hrs ago

    What time is F1 race today? Monaco Grand Prix start time, live stream and TV channel

    6 hrs ago

    Phillies' Bryce Harper questions umpire's professionalism after his bizarre ejection

    6 hrs ago

    Nationals get 2 runs in 7th inning to top reeling Mariners 3-1

    6 hrs ago

    ‘Down with dictatorship’: Tunisians rally against gov’t crackdown on media

    7 hrs ago

    Haas’ qualifying disqualification and starting spot at F1 Monaco Grand Prix, explained

    7 hrs ago

    Gig workers law to be tabled July

    7 hrs ago

    Bronze Age replica boats ready to launch

    7 hrs ago

    Ancelotti: “Bellingham is not the replacement for Kroos, he needs to be closer to the goal”

    7 hrs ago

    Cannes Film Festival Winners 2024: 'Anora' Wins Palme d'Or

    7 hrs ago

    7 Confucian Money Lessons: Could These Be Key To Achieving Success and Wealth?

    7 hrs ago

    This Amazing Ford F-150 Lightning Lease Deal Can Get You Up To $15,250 Off

    7 hrs ago

    Heavy price to pay for SPM leavers

    7 hrs ago

    What's it like replacing the top amateur in the world? Georgia Tech's Aidan Tran found out Saturday

    7 hrs ago

    Govt ‘testing the market’ with diesel plan, says economist

    7 hrs ago

    Penang banks on durian tourism to drive up local economy

    7 hrs ago

    Rookie Dereck Lively II has been historically good for Dallas Mavericks in playoffs

    8 hrs ago

    No new taxes, only fairer targeted subsidy, says PM

    8 hrs ago

    PKR’s lack of reps a hurdle in state reshuffle, says analyst

    8 hrs ago

    Charles Schwab Challenge: 3 storylines to watch, round 3 tee times

    8 hrs ago

    Their school is about to close. Now, Birmingham-Southern heads to College World Series.

    8 hrs ago

    Patricia Richardson Says She Left 'Home Improvement' as a 'Flip-Off to Disney' Due to Tim Allen Pay Gap

    8 hrs ago

    Housing Market 2024: 6 Affordable Cities in Texas for First Time Homebuyer

    8 hrs ago

    Wallows Celebrate Album ‘Model' by Destroying Their Apartment in ‘You' Video

    8 hrs ago

    Zoe Saldaña Talks ‘Avatar 4' Update & Keeping Up With Karla Sofía Gascón In Acclaimed Movie ‘Emilia Perez' – Cannes Studio

    8 hrs ago

    Soccer-Kroos bids emotional farewell to Real fans

    8 hrs ago

    Berry Gordy Gifts $5 Million to Establish New Music Industry Center at UCLA

    8 hrs ago

    Boaters race to take part in model rally

    9 hrs ago

    Birmingham-Southern baseball advances to D-III College World Series as the college is about to close

    9 hrs ago

    New Formula E record for Vergne

    9 hrs ago

    Lam Thye lauds proposed new law to decriminalise substance abuse

    9 hrs ago

    Box Office: ‘Furiosa' Off to Slow Start With $10.2 Million Opening Day, ‘Garfield' Dines on $8.4 Million

    9 hrs ago

    Far right eyes Europe vote surge and ditches German AfD

    9 hrs ago

    Amy Ryan on “The Office”'s Lasting Success 11 Years After Finale: 'Humor Seems to Be Holding Up' (Exclusive)

    9 hrs ago

    Patriots WR K.J. Osborn avoids humiliation with solid first pitch for Red Sox

    9 hrs ago

    At least 47 killed in Sudan army’s last Darfur stronghold el-Fasher

    9 hrs ago

    Financial Experts: 5 Women in Finance We’re Paying Attention to in 2024

    10 hrs ago

    Montez Sweat is huge key to Bears’ defensive success in 2024

    10 hrs ago

    3 falcon chicks hatch atop the Verrazzano-Narrows Bridge in New York City

    10 hrs ago

    Jenson Button ‘disagrees’ on Mercedes dynamic with fair Lewis Hamilton treatment verdict

    10 hrs ago

    Executive Turntable: Sony Hall Knows Jack; LOCASH Label Staffs Up; Buchalter Bets on Nashville

    Kênh khám phá trải nghiệm của giới trẻ, thế giới du lịch