In the past year, real estate news has been all over the map. One day it’s a seller’s market with bidding wars and record low interest rates. The next, we read stories about a cooling market and climbing interest rates.
With constantly changing information, how much weight should you give the latest news when approaching a real estate transaction? Is now the right time to buy, or should you wait? Will there be another bust? Did you miss the market bottom?
Here are three strategies for approaching a real estate transaction in the era of information overload.
Be smart about mortgage rates
Some people spend more time planning a vacation or researching a car than shopping for mortgage rates. Particularly in strong real estate markets, buyers feel pressure to move swiftly through escrow. That pressure can result in less shopping around or simply taking the mortgage loan that’s in front of them. But if you have the luxury of time, float rates for a few days, or work with a mortgage broker so you can re-lock your rate at a different bank if rates fall.
Also, don’t be motivated to act simply because of the recent rise in mortgage rates. Sure, they might climb further, but they’re still near historic lows. By comparison, interest rates were in the mid-teens in the 1980s.
And it’s possible mortgage rates could go down a bit, too. But would you say “no” to the perfect home just because you think rates might go down in one month? Let’s hope not.
Don’t try to time a real estate transaction
Buying a property isn’t like buying stock. There’s no way to time a home purchase, as new opportunities, with different sets of circumstances, present themselves each week.
Instead, do your research, line up financing and be fully in the market. You don’t want to buy the wrong property just because you want to get in on low rates or low prices, or because the home is a real “deal.”
Buying a home isn’t like purchasing a car or TV, especially if you’re a first-time buyer. It takes time to learn the market, see enough properties and do comparisons. Don’t rush through the process, or you may have buyer’s remorse down the road. Find the home that’s right for you, and do it on your own schedule.
Ultimately, the time to buy a home isn’t when interest rates and prices are low, are starting to climb or are beginning to dip. The right time to buy is when you’ve found a place you love, saved up a down payment, have your financing in order, want to commit to the local community, want the freedom to do what you want in your home and want the tax benefits homeownership can give you. That’s the way our parents bought their homes, and that’s how we should, too.