One factor on every home buyer’s mind is whether they’re getting a deal. One of the best-kept secrets in real estate: buy at the end of the year if you can swing it.
Every year the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, releases their annual loan limits. The loan limits may change annually based on data compiled by the federal government. Recently, the conforming loan limit has increased to $510,400 and in most areas, the FHA loan limits, which also have been increased for 2020, also support purchasing a house at the end of the year because you’re able to borrow more money for more favorable terms and rates which could improve borrowing power, lowering debt to income ratio and supporting a better family budget. Here are three reasons…
Most consumers are not focused on purchasing a house from the beginning of Dec. to about the middle of Jan. Most folks are recovering from Thanksgiving, focused on Christmas and New Year’s and the broader holiday season. Simply put, not all but most sellers have a motivation perhaps more than normal if they’re willing to list their house at the slowest time of the year by industry standards. Good time to capitalize on this from a buyer’s perspective. If you make the right offer on a house there could be some negotiating wiggle room either in purchase price credits or some sort of seller concession as this time of year is typically slower.
Interest rates at the beginning of Dec. to about the middle of Jan. we have the Santa Bubble. The Santa Bubble typically makes mortgage rates go up a tad as Fortune 500 companies are trying to maximize profits for your end reportings. Retail sales data and spending is up typically this time of year and there is generally more optimism in the markets. Not much typically happens from the beginning of Dec. to about the middle of Jan. other than a small uptick in interest rates, however, any negative economic information at this time could spell keeping a lid on rates such as the present impeachment proceedings that are transpiring.
Warren Buffett, perhaps the world’s greatest investor, says that he buys when there is blood in the streets. Go against the masses. If everyone else is spending for the holiday you should be focused on aligning your budget and rechanneling those monies into purchasing a home. There will be many more holidays and family celebrations to come, but the opportunity to purchase a house could radically change your wealth position and those opportunities may be far and few.
Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.