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Saving For a Home vs. Paying Off Debit

October 4, 2022

With all the talk about the housing market and constantly changing mortgage interest rates, a common question potential homebuyers have is: Does it make sense to buy right now? Should I be saving for a house or paying off my credit card debt, student loans or any other consumer debt? We are here to answer these questions!


When it comes to buying a house, paying down what we call consumer debt should always be a priority for several reasons. First, your credit scores are weighted heavily on credit utilization. If you are using more than 30% of your credit limits, your credit scores will be negatively impacted; more than 50% utilization has an even greater negative effect. Also, credit card debt tends to have higher interest rates, so you do not want to put it off for long. Paying off your minimum payment is a must monthly BUT paying off as much debt as you can will go a long way in helping you increase your credit score.


As for student loan debt, it is certainly something you want to pay off, but it is not as important as credit card debt for the following reasons: typically, it has a lower interest rate, lower payments, and also has fixed payments that have a definitive end date or term. 


The most important thing to understand is that the better your credit score, the more favorable your final mortgage loan may be. Lenders operate on risk and evaluate your reliability as a borrower based on your entire credit picture. 


Saving for a home is also very important, but it is important to note that you may not need as much money saved for a down payment as you think- first-time homebuyers can finance up to 97% in many cases and sometimes, even more than that!


While your preconceived notions of how much you’ll be paying for a downpayment can be lessened, it is still no small amount of money. Closing costs can range anywhere between 3-6% of the final loan amount. Add that with your downpayment and you can expect to pay thousands of dollars up front to buy your home. 


The bottom line is- you do not have to pay off all of your debt to qualify for a home and you can save money for a down payment and reduce your debt while increasing your credit scores at the same time! 


So what’s the best option? The honest truth is there is no correct answer. Buying a home is an extremely personal (and large) decision to make. If you’re considering paying off your loans or buying a home, one of the most important questions you can ask yourself is “what are my goals for the future and which path makes the most sense to get me there?” 


Paying off debt can be a daunting undertaking depending on your specific situation. Should you decide to buy a home, you must understand that you are adding a huge chunk of financial responsibility to your plate. On the other hand, buying a home adds a list of many other responsibilities you may have never thought of before. 


It’s also important to understand the benefits of both options. Paying off debt can lift a pressure off your shoulders you may not have even known was there, and give you a real sense of financial freedom. On the other hand, buying a home is one of the largest financial decisions you will make and is an accomplishment to feel proud about. In addition to that, becoming a homeowner helps you build equity that can be used for various things down the line.


The answer again, isn’t so black and white. 


If you are ready to start the home buying process or want to learn more, let’s talk!


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Q1 Recap

By Mikaylah Collins • April 12, 2023
We've begun to see signs that the Spring Market is here and could be robust! Here is what we know: According to NAR, home sales were up 14% in February over the previous month which marked the biggest monthly increase since July 2020. While March results are not yet published, the mortgage industry saw an increase in purchase applications for the 3rd straight month; a great sign for the housing market. Driving much of this activity is the stabilization of rates in January & February and lower interest rates this past month. We’re starting to see signs of a slowing economy and the markets are now pricing this in. This week we saw the 10-yr Treasury drop under 3.4%, a level it has not reached for quite some time and the lowest it’s been since September 9, 2022. This is great news for consumers as decreasing rates mean more home affordability. Over the past year, most markets have seen home prices stabilize if not even decline, albeit by a very small amount. This stabilization was still a relief for homebuyers as it helped to offset higher interest rates. As rates continue to decrease, we would expect home prices to again increase due to demand increases. In addition to increased demand, there is still a shortage of homes for sale nationwide and that will continue to worsen as more and more homebuyers enter the market.  So what does it all mean? Now is a GREAT time to buy a home! Rates and home prices are stable, there is not as much competition as there will be when rates do decrease, and buying a home is still extremely affordable for most. Once rates fall, we will likely see home prices rise and the competition for the shortage of homes will increase alongside it making the window of a buyer-dominated market very small.

Q1 2023 Market Outlook

By Sarah Rubin • February 10, 2023
We are well into Q1 and feel confident saying that the market appears to be stabilizing. Before we start looking forward, let’s quickly look back at the end of 2022.

Finding The Right Listing Agent For You

By Sarah Rubin • December 15, 2022
Buying a home is a huge investment and one we talk about often - BUT the flipside is that you have an opportunity to cash in on that investment when you’re ready to sell your home! While you do have the chance to cash-in, a lot more work goes into selling a home than you might think! If you are considering selling your home, working with a listing agent will help you market your home, negotiate with potential buyers, work through paperwork, and ultimately close on your home! So what is a listing agent? In its most basic terms, a listing agent is a real estate professional who represents the seller in a real estate transaction. The listing agent lists the home for sale and works on behalf of the seller to sell the home at the best price and terms for their client. Listing your home is a BIG deal and it is not a place to try and DIY. But why can’t you just grab a sign at Home Depot and try and sell yourself? Well, there are lots of reasons some of which include: Professional consultation: A listing agent will walk you through each step and tell you what to expect along the way! They should understand the specific community you’re in and the current market environment and will help you determine a competitive but realistic asking price for your home. Marketing and selling your home: Your listing agent will list your home on the multiple listing service (MLS) in order to better market your home to potential buyers. They also can make staging recommendations and hire a photographer to best show off your home and its features. They’ll schedule house showings, and can be present to answer any questions. Communication and negotiation: Communication is key to both buying and selling a home in order to minimize stress and misunderstandings. Listing agents take care of this important task, by staying in touch with interested buyers and their agents, fielding questions, handling paperwork, and negotiating the final sale price and terms. Recommendations: Seasoned listing agents might come with a list of professionals who they have worked with in the past that they enjoy working with in order to make the selling process smoother for you! Some of these professionals include: real estate attorneys or title companies, inspectors, stagers, those who specialize in home improvement AND of course trusted Loan Officers. How do I find the right listing agent for my situation? In order to find the right listing agent for you, make sure your agent is licensed and has experience, references, and a professional website where you can learn more about them and their qualifications. Most real estate agents work with both buyers and sellers, but some might specialize in one or the other. Once you find a few agents through referrals or online research, meet with them in person to ensure they meet your needs and work well with your personality. It is also important to ask questions during your meeting with them and it’s imperative that you determine what you’re looking for in an agent so you make sure you are happy with the product being delivered. Selling a home can be stressful, especially for first-time sellers. A listing agent can help by taking on some of the burden and providing the information and resources needed to help sellers make informed decisions. We work with agents on both sides of the transaction – if you have any questions or would like a recommendation for an agent in your area, please reach out to us!
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