While dramatically lower mortgage rates have made it possible for many first-time homebuyers to purchase a home this year, rates are starting to rise and experts predict they will increase even more in 2022. Higher rates will increase monthly mortgage payments, tighten budgets for 48 percent of Las Vegas homebuyers who have been saving for a new home for one to three years.
Amidst the still-competitive sellers market in Las Vegas, when does it make sense for the beds to buy?
Understanding your mortgage options is the best place to start. Here are three tips for finding the right mortgage for your family:
1. Prioritize Mortgage Pre-approval
If you are serious home buying, the first step you should take is to get pre-approved for a mortgage. Pre-approvals require a few more steps, but they give buyers more confidence in their purchasing power and can help a buyer’s offering stand out from the competition. This is especially valuable at the moment because it gives buyers the flexibility to move quickly into the properties they love.
2. Decide between adjustable rate mortgages and fixed rate mortgages
The type of mortgage that is best for you may depend on how long you plan to live in the home. If you think you’ll move in a few years, an adjustable rate mortgage (ARM), rather than a fixed rate mortgage, can lead to more savings.
3. Monitor interest rates amid changing demand
Lower interest rates motivate more buyers to enter the market and existing homeowners to refinance. However, even when interest rates are low, accessing financing can be more difficult due to stricter credit guidelines and additional documentation requirements. Many lenders, especially some major banks, require a credit score of at least 680 and a minimum of 20% to apply.
Pro type: Use a mortgage calculator to estimate how much money a 20 percent down payment could save you over time.
Nadia Aziz is the General Manager of Housing Loans at Opendoor.