Why You Shouldn’t Wait to Apply for a Mortgage – There are plenty of factors that might be leading you to wait on applying for a mortgage. Maybe you are worried about how to qualify as a newly self-employed person or entrepreneur, or maybe you’ve watched interest rates rise over the past year and think your opportunity has passed.
In actuality, there are quite a few reasons not to wait on applying for a mortgage. First of all, getting pre-approved is free and relatively easy. You may be surprised to find that you can qualify for a loan that will et you a house that works for you, for a monthly payment that works for you, in spite of your unique employment scenario or your current assets. You won’t know if you don’t ask, so start by talking with a loan officer. What do you have to lose?
Why You Shouldn’t Wait to Apply for a Mortgage
Shouldn’t I wait for rates to come back down to 3%?
It’s true that homebuyers two years ago were able to take advantage of record-low interest rates and historically favorable mortgage conditions. However, experts don’t predict rates coming back down into that 3% range any time soon.
On the other hand, interest rates are still historically low when we zoom out and consider the past few decades. The bottom line is that real estate property appreciates over time, and homeownership is one of the best ways to create financial stability and build generational wealth. Instead of waiting for the interest rate you are hoping for, look at what you can afford and don’t spend any more time than you have to waiting to invest in your home.
If not 3% interest rates, what should I look for to see that I’m ready to apply?
Rather than waiting on interest rates (which are totally out of your control) to determine when you should apply for a mortgage, consider the factors that are within your control. These include your:
- Credit score
- Debt-to-income (DTI) ratio
- Savings for down payment and closing costs
Your strength as a mortgage applicant is significantly based on these three factors. The good news is, it is within your control to strengthen all three of them, which will help you qualify for the optimal mortgage rates available and buy your home from a position of financial strength.
Is there any risk of waiting too long?
The bottom line is: yes. Waiting too long to become a homeowner is a risk. Once you know you are ready to afford your monthly mortgage payment, from a strong financial position with a good credit score and emergency fund, waiting to buy is simply leaving money on the table.
The best way to succeed in real estate is to invest as early as possible. Even as the market takes dips along the way, the trajectory is always headed upwards. Waiting for those perfect market conditions is a gamble you may not want to make. Instead, buy when you can afford to buy and consider refinancing to take advantage of mortgage rates if they come down. This strategy puts you in control, rather than being at the mercy of a national real estate market that you can do nothing about.
If homeownership is one of your goals, we want to help you reach it. Contact us any time to learn more about what it takes to apply for a mortgage and what you might qualify to buy.