Three tips to save thousands
ALLEN, Texas, Nov. 17, 2023 /PRNewswire/ — Investment bank UBS predicts a 275-basis point drop by the end of 2024. Homebuyers looking for the perfect time to enter the market could be making three major mistakes leading to thousands of dollars in added costs.
Waiting for lower rates, not leveraging a lender credit, and lacking awareness of wholesale mortgage loans are consumer misconceptions that would offset the benefits of rate declines that are expected to begin as soon as March.
Timing The Market
“Homebuyers waiting for rates to drop are overlooking two key factors” says Raul Hernandez of Competitive Home Lending. Under normal market conditions, home prices in the Dallas market appreciate about 4.5%.
Homebuyers waiting a year for rates to drop could be paying $26,000 more for the same home. Appreciation could accelerate to 9% if lower rates unleash buyer demand. That would cost homebuyers over $50,000 more for the same home. Buying now and refinancing later gives homebuyers equity sooner.
Homebuyers trying to get a jump on the market might overlook how to structure their purchase loan while planning for a refinance in the near future. The key is to pay the least amount of fees now by taking advantage of sellers’ concessions that are common in today’s buyers’ market. That may not be the case in a sellers’ market when rates drop.
“Even without a seller’s concession, homebuyers can leverage a lender credit to reduce the out-of-pocket closing costs that can accompany home purchases” says Raul Hernandez.
Overpaying With Retail Rates
Although a lender credit can increase the rate a homebuyer pays today, that rate can be replaced when rates drop. Leveraging a wholesale mortgage rate can offset the expected rate increase.
Retail rates are between 25-75bps higher than wholesale rates.
“80% of the nation’s top mortgage lenders offer lower wholesale mortgage rates, yet less than 10% of those homebuyers are aware of the thousands in savings” says Raul Hernandez. Leveraging a lender credit now and refinancing at a lower rate will minimize the finance costs of the real estate transactions.
About Competitive Home Lending
As a local mortgage broker specializing in wholesale mortgage loans, Competitive Home Lending focuses on spreading awareness on below-market rates.