Buying a house in 2023 is going to be drastically different than trying to buy it in any other year, and not just because of the home prices or interest rates. The main issue with the real estate market right now is the fact that there are limited houses available. People are stuck fighting over properties they are not really in love with and they tend to skip out and go with renting or other options as they wait for the market to get better.
Others are not as lucky with time to spare and need to act faster. They need to buy a house this year, regardless of interest rates, prices and even availability. Paying a mortgage on a house would be the same as a rent check for an apartment and once the market settles, all signs point to prices going up once again. That’s why many people look at 2023 as their best shot to get a property, otherwise they may have to wait longer.
How To Buy A House In 2023
If you are looking to buy in 2023 but you want to make yourself a better candidate, there are a lot of things you need to do. Buying a home in many ways is like interviewing for a job as there is now so much competition that property owners have to choose based on more than just price. If you want to impress sellers, here are somethings you can work on:
- Build your credit: While it does take a bit of time to build up your credit score, there are both organic and paid options that can give you a quick boost. However, it’s important that you adopt a strategy for improving your score as much as you can, not just because it can impact what you pay on a home loan, but also because it will have an impact on other financial needs you may have after.
- Lower your debt: The fact is that the most important number lenders look at is your debt-to-income ratio. This ratio tells lenders what the maximum is that you can borrow and that is based on the debt you currently have against your income. The debt will include car payments, credit card debt and anything you are financing and the higher your debt is, the less you can borrow.
- Save up: Your downpayment can help you to save big. Paying more than 20% allows you to skip paying the mortgage insurance which can save you thousands of dollars a year. Additionally, the more you can put down on the property, the less you have to borrow. Because you’re paying back a lender, the more you borrow, the more expensive it will be to pay off all the debt.
- Make more money: It seems like an obvious tip but realistically, if you can get an additional job or find new ways to earn, that will help improve your numbers when getting a loan, especially your debt-to-income ratio. Banks want to know that you can afford to cover these bills and your income will be a big indicator of that.
- Select a target area: Once you get your finances together you want to start looking at different areas you would like to buy. Because housing prices can vary by hundreds of thousands of dollars within the same street, it’s important to have a general idea of areas you want to focus on first. This is where map searches may be best so that you can pinpoint the area specifically.
- Set a budget: Once you know how much you can put down and borrow towards a house, it’s time to set a budget. It’s important to factor in moving costs, closing costs, estimates, upgrades to the house and other costs you will have if you are working with a tight budget. Knowing what you can spend is important because it helps the realtor get a better idea of not only what you want, but what will work best for you.
- Select a realtor: Selecting the right realtor may be the most important part of the process simply because of the hours of headache and tens of thousands of dollars they can save you. Realtors get results and the best ones know how to help their clients find the best options in a targeted area. While the results may take some time because of the limited selection, a great realtor can also help keep you from buying the wrong house because they put in the work to learn everything they can about a property and what you specifically need to know.
- Get a loan: Once you’ve got a realtor, the next step is to find a lender. The reason you want to select a realtor first is because often times, they have lenders that they will recommend that they have worked with in the past. That working relationship can be beneficial to you, especially if it means getting reliable and fast information throughout the process. If you are new to buying a home, the guidance through this process is very important to ensure no mistakes are made.
As you begin your homework on what it will take to buy a home in 2023 you have to understand that things are completely different than they’ve been in the past. That means that you cannot expect to know if rates will go up or down and the same goes with home prices. However, finding the right realtor and home right now will be far more valuable, especially if it saves you another year of paying rent. Building equity in a property is one of the smartest investments you can make and long-term, it should serve you well.
Realtors understand the challenges of today’s market. Their experience will help guide you through this process as well as to help you better appreciate how unique the current market is and how that influences your options for both homes and borrowing. While you want to get the best possible deal, the most important thing is to get the best possible home. Consider that as you are researching your options and make sure that you get your finances together and looking their best before you begin.