Mortgage Rates: Is It Better To Buy A House Now Or In 2023?

By Alvaro Moreira
9 min read

Mortgage Rates: Is It Better To Buy A House Now Or In 2023?

It is becoming more and more complicated to time the market when it comes to mortgage rates. They are rising rapidly and it is confusing people. Most buyers understand there aren’t too many houses to choose from on the open market, which is causing the prices to rise rapidly. This is causing buyers to consider the idea of waiting a year before looking at the market again.

This might be the wiser option depending on your financial situation and goals. Of course, this does not mean it is the right way to go and that the market is guaranteed to be better in a year’s time. It might get worse, which is why it’s important to look at bettering your financial situation making it easier to get a house when you want it. 

Here is what you have to do.

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Is It Unwise To Buy A Home Right Now?

For those who have the means to do so, there is nothing wrong with buying a property in this real estate market. It is fine to dive in and get the house you have on your radar. However, you will still need to account for specific factors in a situation such as this.

The market continues to change. Buyers will have to look at the number of houses on the open market and see what the competition is like in the space. If you are thinking about buying a house, you are going to be in a favorable position as a buyer. You will want to create additional flexibility to improve the chances of getting a great house. This is why getting into a bidding war is not the right approach and it is not how you should be getting into this market. 

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It Is Possible To Get The Mortgage Rate Locked For A House If You Want To Do It Right Now

It is possible you could end up having to pay more for a house in 2023. This sometimes has nothing to do with how competitive a real estate market is. The house can still be costly. You will also have to account for the mortgage rates as they are likely going to go up in 2023. You will want to be smart about the rate you’re going with and how it plays out when it is time to get financing on a purchase. 

If you are someone that wants to postpone the purchase, you could end up missing out on a good house in the right location. This is something to think about when you are looking for a new property. You might not want to have to wait around for another opportunity such as the one in front of you. This is what buyers do need to mull over as you do not want to miss out on a great buy. Look into this and compare the pros and cons of what is in front of you and missing out on it. 

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Who Should Be Waiting For 2023?

It is important to look at the real estate market with your financial situation in mind. You will want to think about what is going to work for you.

It is likely better for those who are still unsure about the real estate market. You will want to wait and see how things pan out rather than being uncertain. This is a great way to save more money and get a better hold of what the market is doing. You can then make a decision again when you have more to put down. This also applies to those who are already dealing with debt under their name. You can focus on paying it off.

It is always important to buy a house when you are sure about it financially. This includes the mortgage rate you sign up for.

If the higher rates are too much for your budget, you will want to let things stabilize on the market. This is the only way to go when you are unsure about budgeting. Do not take a step that will make you regret your timing.

Buyers are likely going to have more to choose from in the coming months. This will make it a lot easier to find what you want and the competition won’t be the same as it is now. It is going to give you more to negotiate with.

It is also recommended for cash buyers to be patient in this market. You will have more leverage when it is time to buy later. 

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Six Simple Steps To Buy A House In 2023

If you are committed to the idea of buying a house in 2023, it is recommended to understand what you are getting into. You will want to prepare for 2023 ensuring you can get the house of your dreams when you are ready to buy.

Reach Out To A Loan Officer

The first thing you are going to want to do is to gauge your credit situation and what a loan officer has to suggest based on the information you are giving them. This will ensure you do have financing in hand when you are ready to enter the market in 2023. 

You will want to have as much information as possible when you are ready to buy. The home-buying process is not easy and getting the loan officer’s guarantee is a step in the right direction. You will want to have a read on what the loan process is going to be like when you are ready in 2023. It will also let you know where improvements are required. 

You will want to look at going with a trusted loan officer that will offer insight into what you are doing and how you are going to manage a situation such as this. You will want to have a stronger financial standing and this can happen as long as you are aware of the situation. This is what going to a good loan officer is all about.

You are going to also learn more about your other loans and contributions that can be made.

The loan officer can help with a myriad of things including ways to bring down the debt on your name. You will want to speak to a mortgage broker as they will also help with getting a good rate. You will want as much information as possible about your financial situation and how it correlates with getting a mortgage. You will want to ensure you are also accounting for the cash you have in hand. 

Find A Loan Program

A mortgage broker can help with finding a loan program that works for you. It is not always about one loan program. You are going to have numerous options to choose from based on whether or not you qualify. This is going to include getting an FHA loan, USDA loan, or even a conventional loan.

There are specific requirements for each type of loan that you will need to account for. A good example would be a 3% down payment for a conventional loan, while there is no down payment for a USDA or VA loan. An FHA loan can be acquired with a FICO score of only 580. 

You will need to know which loan program works for you and then apply. It is going to make life easier for you as you head into 2023.

Start Saving

You are going to need to save more. The higher deposit is going to make it easier to get the property you want without the hurdles. 

It is best to prepare for the deposit in advance. You are going to feel more assured about what you are doing in the housing market and the property you end up getting.

You will want to look to save at least 20% of the property’s value. The reason you want to target this percentage is due to the quality of the rates you are going to get. It is common for the best rates to be offered to those in this type of position. You might not have to with some loans such as an FHA loan but you will still want to open yourself up to as many quality mortgage loan options as possible. 

Cut Into The Debt

Having debt in your name is not good when applying for a loan. It will only make things harder. This is why you will want to cut out some of the debt during this year and then prepare for 2023.

Small debt does add up and it will not look good for your credit utilization ratio. You will want to make sure to clear out as much debt as possible and then begin preparing for a mortgage loan. 

You will want to cut into a credit card balance and pay off the debt. This is how you are going to know what type of rating works and what does not for your mortgage rate. 

Credit Score Requirements

When it is time to get a loan, your credit score will matter. It is best to speak to a mortgage broker to find out your credit score and what can be done to make it better. This is only going to ensure you get a better mortgage rate when it is time to look around.

It is common for the requirements to be:

* USDA Loans – 640

* Conventional Loans – 620

* VA Loans – 580-620

* FHA Loans – 580

Improve Your Credit Score

The steps you are going to take when improving your credit score will make life easier when it is time to apply for a mortgage. You are going to get a much better rate on your loan when you are in this process.

Here is what you will want to think about to drive your credit score up.

It is best to look at any other loan that is under your name. You will want to avoid adding more loans to your name as that will reduce your score. The same goes for opening new credit accounts. You will want to ensure the debt is as low as possible.

You will want to drive the credit utilization ratio down. This is going to mean your debt is less than 30% of your credit limit.

You will want to pay your bills on time and make sure to drive the balance down.

It is also important to request at least three credit reports to get an accurate read of your credit history.

What is the housing market going to be like in 2023?

The future is tough to predict but it is still possible to get a good read on how things will unfold.

It is expected for the mortgage rates to start to level off a bit. This is due to the nature of the spikes that occurred this year. They are going to stabilize a bit in the coming year.

The bidding wars are going to slow down too. There will be more properties on the market and that is going to make it easier for buyers to avoid jumping into extravagant bidding wars to get a property.

Additional Supply

There may be an increase in the number of houses next year. This is due to resales and new development projects.

The pandemic is starting to wither away, which means construction projects are back into their natural flow. This is also letting more materials hit the market, which is good for these projects and their timelines. This will allow the market to have more houses to choose from, which will bring the prices down too. This is something to think about when the goal is to go with a cost-efficient property.

Your Strategy

It is important to think about what will work for you and that having control is a must when investing. You should always budget for the future and make sure you are preparing for how the financial future is going to work out for you.

It is okay to wait and it will be advantageous as long as you are going into the process with a plan.