- The latest Freddie Mac Primary Mortgage Market Survey showed that mortgage rates remained low compared to 2018’s rate.
- With the continuation of low mortgage rates, there will likely be an increase in first-time homebuyers.
- First-timers can make the homebuying process easier by following three basic strategies.
The latest Freddie Mac Primary Mortgage Market Survey was released on April 18, and it showed that mortgage rates remained low compared to last year’s rate. The average mortgage rate on a 30-year fixed-rate mortgage is 4.17%.
That rate is slightly higher than it was in early April, but still below 2018’s rate of 4.42%. With mortgage rates so low, the market will likely experience an increase in first-time homebuyers.
Here’s What First-Time Homebuyers Should Know
Buying a home is stressful for most people, but it can be even more challenging for first-time homebuyers. Here are three ways first-time homebuyers can make the process a bit easier.
Check Your Credit Score First
Before you begin the prequalification process, you’ll want to check your credit score. That number will play a big part in determining your interest rate and loan terms. A credit score between 740-799 is considered very good, and a score above 800 is considered excellent.
When you check your score, look for any errors or opportunities to improve your score. You’ll want to avoid opening any new credit cards or taking out additional loans until you close on your home.
Don’t Miss: This Is the Credit Score You Need to Buy a House
Don’t Forget About the Down Payment
Traditionally, homebuyers were required to put a 20% down payment on their house. But now, some lenders will allow first-time homeowners to get by with a down payment as low as 3%.
Making a minimal down payment might sound appealing, but this means you’ll likely end up spending more on mortgage insurance and have higher costs overall.
You can use one of several ways to begin saving money for your down payment. You can set aside tax refunds or set up an automatic savings plan. If you don’t have that kind of time to save up, you can ask to borrow money from family or friends.
It might also be possible for you to withdraw funds from your retirement account. However, you could end up paying a penalty, and most experts would not advise doing this.
Determine What You Can Actually Afford
There’s some debate about how much you should spend on your monthly mortgage payments. But in general, you want to keep your housing costs below 30% of your gross income.
You might want to reconsider spending that much if you have auto loans or additional debt you’ll be paying down. And your mortgage payments are just the tip of the iceberg when it comes to paying for a home.
You’ll also have insurance, taxes, homeowners association fees, maintenance costs and general upkeep to consider. So be realistic about what you can actually afford to pay every month.
Learn more about the implications of steady interest rates for Americans.
More on Buying a Home
- Millennials Want to Buy Homes, but They’re Held Back by One Crucial Thing
- Why These Midwestern Cities Are the Best Places for First-Time Homebuyers
- The West Coast Is Not the Best Coast for First-Time Homebuyers, Study Finds
- Here’s Why Millennials Won’t Be Able to Afford a Home Until Retirement
This article originally appeared on GOBankingRates.com: Attention, First-Time Homebuyers: 3 Things to Know as Mortgage Rates Remain Lower Than 2018’s Rate