The facts that clear up some misconceptions about the home buying process may help you achieve your goal of homeownership. (iStock)
Recent surveys show that Americans still believe in homeownership, but soaring home prices, skyrocketing borrowing rates and misconceptions about the homebuying process are preventing many from achieving that goal.
According to KB Home, the majority of Americans (83%) consider homeownership to be an important milestone in their lives, and 40% think about homeownership at least once a week. investigationAdditionally, 58% are willing to cut back on non-essential spending to save for a down payment, and 45% would even consider taking on a side hustle to boost their income to help reach their goal.
About 50% of Americans want to own a home for privacy reasons, while 44% say they see buying a home as a good long-term investment and 33% say they want to own a home as a place to make memories.
Despite the overall importance of homeownership, 56% of respondents believe they are in a worse position to buy a home than previous generations. High mortgage interest rates and high home prices have reduced homeowners’ ability to buy a home today. Additionally, a lack of affordable housing makes home buying even more difficult for many.
Homebuyers can find the best mortgage rate by weighing up different options. They can visit online marketplaces like Credible to compare rates and choose loan terms from multiple lenders at once.
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Myths about housing that may be preventing you from buying a home
Although mortgage rates are high, 54% of survey respondents incorrectly believed mortgage rates were at an all-time high: In 1981, 30-year mortgage rates peaked at 18.6%.
Additionally, only 33% of respondents knew important facts about home financing, such as that there is no minimum down payment of 20% or that you can get a mortgage with a credit score in the 500s. Additionally, only about half correctly understood the meaning of terms like “APR” (56%) and “PMI” (54%). Of this group, Gen Z and Millennials were least likely to be familiar with it.
“The majority of Americans lack understanding about many aspects of home buying,” KB Home said.
If you’re ready to search for the best rate on your new mortgage, consider visiting an online marketplace like Credible to compare rates from multiple lenders in one place.
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How to save money to buy a house
According to BMO Financial, 71% of Americans said they are waiting for interest rates to fall before entering the market. investigationAmericans will likely have to endure another summer before they get a bailout.
The Fed has kept its policy range for the federal funds rate at 5.25% to 5.5% since July. Fed officials expect to cut rates in 2024 but have said they need more confidence that inflation is moving toward their 2% target rate.
While waiting for borrowing costs to fall can improve home affordability, shopping around for the best interest rate can also save buyers money. Other tips home buyers should consider to increase home affordability include:
Increased purchasing power due to improved creditworthiness
Buyers can save even more on their mortgage loans by understanding and improving their credit profile. Zillow Analytics Based on a typical home price of $354,165, the study found that borrowers with a “good” credit score of 760 to 850 could save up to $103,626 in mortgage interest payments over the life of a 30-year fixed-rate loan.
Research down payment assistance programs
You can help ease the burden of closing costs by looking into down payment assistance programs. Freddie Mac offers Streamline your documentation By expanding access to the Down Payment Assistance (DPA) program, we can make this assistance available to more lenders and homebuyers.
If you are considering buying a home, it is a good idea to compare different lenders to find the best mortgage interest rate. Visit Credible to compare different lender options and choose the one with the best interest rate.
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