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How Today’s Home Buyers Are Making Their Best Offers On A House

By Dan Green

Home builder confidence puts its strongest July reading in thirteen years; today’s mortgage rates and the 5-day trend; and, making your best offer for a home.

Home Builder Confidence Suggests Higher Home Prices Ahead

NAHB Homebuilder Confidence Survey July 2018 - Growella
NAHB Homebuilder Confidence Survey July 2018

U.S. homebuilder confidence is at a 13-year high for July.

According to the National Association of Home Builders (NAHB) and its monthly Housing Market Index , U.S. homebuilders feel good about the future of housing.

Three questions comprise the homebuilder confidence survey:

  1. How is the current sales volume for your new homes?
  2. What do you expect sales volume will be over the next 6 months?
  3. How is foot traffic through your model units for sale?

The trade group compiles builder replies for each question, then scales them as a composite value between 1-100. The highest recorded value is 77 (June 1999).

The lowest recorded value is 8 (January 2009).

For July 2018, home builder confidence reads 68. It’s the highest reading for a July since 2005, and for buyers of new construction, the most recent Housing Market Index signals that builders may be less willing to negotiate on price between now and 2019.

Buyers can expect fewer free upgrades to kitchens and bathrooms as well.

If your housing plans include the purchase of a newly-built home between now and early-2019, either as a first-time buyer or repeat buyer, consider that the best deals in new homes may be the ones you find today.

Because, with mortgage rates up and builder confidence rising, the costs of homeownership can climb.

Don’t overpay for your home. Click here for today’s live mortgage rates.

Today’s Mortgage Rates & Interest Rate Trends

Current Mortgage Rates for July 18, 2018 - Growella
Current Mortgage Rates for July 18, 2018

Mortgage rates are falling today.

Federal Reserve Chairman Jerome Powell begins the second day of his 2-day congressional testimony today, a session that can nudge mortgage rates either higher or lower.

So far, market reaction is muted. Rates for all government-backed loan types — FHA, VA, USDA, Conventional — are slightly improved, and pricing for jumbo loans are better, too.

Fixed-rate loans are edging lower, including the 30-year fixed-rate mortgage and 15-year fixed-rate mortgage. Adjustable-rate mortgage rates are down as well.

Mortgage lenders price loans differently and rate quotes are personalized. Borrowers should not expect to receive the same quotes when compared to what a friend or neighbor received.

More than a dozen factors affect your quoted mortgage rate including your exact credit score, your specific loan size, and your choice in mortgage lenders.

How you pay closing costs matters, too.

Loans with discount points get access to lower mortgage rates overall; lenders assigne slightly higher rates to zero-closing cost mortgages.

Click here for a free mortgage rate quote.

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3 Easy Prep Steps For Today’s Home Buyers

Median Days On Market - Growella
Median Days On Market

Home buyers who prepare outperform those who do not. For home-buying success, do your homework and be ready to make a bid.

Home values are up close to seven percent since last year nationwide and, in some markets, double-digit growth is typical.

Pent-up demand is releasing, turning renters into buyers at a faster pace as compared to earlier this decade; and, there are too few homes to accommodate all who hope to buy.

It’s competitive to be a home buyer today, and when you see a home you love, you want to give yourself the best chance possible to submit a winning bid at a price that’s within your budget.

Preparation is key. You can’t buy a home last-minute.

First, get pre-approved by a mortgage lender — any mortgage lender. It’s a non-negotiable step. Home sellers won’t take your offer without a proper pre-approval so make a point to get one early.

You can start by shopping lenders here.

It doesn’t matter if your pre-approval letter comes from an online lender or anyone else — you just need the letter to start the process. The seller has to know you’re qualified and a pre-approval letter proves it.

Next, ask yourself “How much house can I afford?”

How much house you can afford is a question of monthly payment — not list price on a home. Find the number that you’re comfortable spending each month. Then, work backward to find a realistic purchase price based on today’s actual mortgage rates.

This online mortgage calculator that does the math for you, and when you know your specific budget, you’re unlikely to overpay for a home.

Third, get yourself a real estate agent.

As a home buyer, you don’t pay to use a real estate agent; the seller pays from its commission after the sale. It’s free for home buyers to work with real estate agents.

A good real estate agent performs the following services for buyers, and more:

And, make sure to get your own real estate agent. Do not use the seller’s agent, a scenario known as dual agency . In a dual agency scenario, the real estate agent’s fiduciary duty is to get the seller the maximum price for the home. There is no consideration for the buyer.

Dual agency can be terrible for buyers of homes. Avoid the scenario by working with an agent of your own. If you don’t have one, ask for a referral.

And, that’s about all you need to do to be prepared — get a pre-approval, know your budget, and have a real estate agent working to help.

Homes are selling quickly today. Prepared buyers are more likely to succeed.

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Written by Dan Green

Dan Green is a personal finance expert and the founder of Growella. His expertise has been cited by The Wall Street, NPR, and CNBC; and, his advice has helped millions of people make better choices with their money. Dan hosts the mortgage news show "The Mortgage Minute-and-a-Half" three times weekly on YouTube.

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