When Should You Start Looking to get a Mortgage?

Buying a home is a major life decision that comes with a lot of responsibilities and financial implications. One of the most important considerations is financing your home, and for most people, that means taking out a mortgage. But when is the right time to start looking for a mortgage?

In this blog, we’ll discuss the best time of year to look for a mortgage, when to stop renting and start considering buying a house, and the importance of working with a mortgage broker to clear up any confusion you may have.

When Should I Start Looking for a Lender?

The short answer to this question is that you should start looking for a lender as soon as you start considering buying a house. The mortgage process can take some time, so it’s essential to give yourself enough time to shop around for the best rates and terms. Ideally, you should start looking for a lender several months before you plan to buy a home.

A good lender will be able to get you pre-approved before you begin house hunting. Most realtors will not show clients homes until they have a pre-approval to ensure that the client is looking only at homes they can afford.

A pre-approval is a process by which a lender evaluates a borrower’s creditworthiness and financial situation to determine the maximum amount they are willing to lend to the borrower. This evaluation typically involves a review of the borrower’s credit score, income, debt-to-income ratio, employment history, and other financial factors.

It is important to note that a pre-approval is not a guarantee of financing, as the lender will still need to conduct a final evaluation of the borrower’s financial situation and the property being purchased before the loan is approved and funded.

What season is best?

According to historical data from Freddie Mac, a government-sponsored mortgage corporation, mortgage rates tend to be lower during the fall and winter months. For example, in November 2021, the average 30-year fixed-rate mortgage was 2.84%, compared to 3.03% in May 2021. This means that if you start looking for a mortgage in the fall or winter, you may be able to secure a lower rate and save thousands of dollars over the life of your mortgage.

Conversely, mortgage rates are typically higher during the spring and summer months, when demand for homes is at its peak. In June 2021, the average 30-year fixed-rate mortgage was 3.02%, compared to 2.88% in December 2020. This means that if you start looking for a home during the spring or summer, you may have to pay a higher rate and, as a result, pay more interest over the life of your mortgage.

While mortgage rates should be an important consideration, the housing market itself doesn’t necessarily follow those ups and downs. Springtime is the traditional “home-buying season,” and it can be a good time to start looking because there may be more homes on the market to choose from. However, this can also mean that there will be more competition for the best homes, so it’s important to be prepared to act quickly if you find a home you love.

When Should I Stop Renting and Consider Buying a House?

Deciding when to stop renting and start considering buying a house is a big decision, and it’s not one that should be taken lightly. There are a few key factors to consider when making this decision, including your financial situation, your lifestyle, and the current state of the housing market.

One of the most important factors to consider when deciding whether to stop renting and start buying is your financial situation. Owning a home comes with a lot of expenses, including a mortgage payment, property taxes, homeowners insurance, and maintenance costs. For non-VA loans, the minimum down payment is around 3%, so for the average home listing price of $266,100, a down payment down would be around $8,000. It’s important to make sure you’re financially stable enough to handle these expenses before you take the leap into homeownership.

Another factor to consider is your lifestyle. Owning a home comes with a lot of responsibilities, including taking care of the yard, making repairs, and handling any unexpected issues that may arise. If you’re not ready or willing to take on these responsibilities, renting may be a better option for you.

Finally, it’s important to consider the current state of the housing market. If interest rates are higher, it may be a good time to buy because you may be able to get a good deal on a home and you will be able to refinance your loan when rates drop, but be locked in on the lower home price.

Overall, there are many factors to consider when deciding whether to buy or rent a house. While renting can offer more flexibility and lower upfront costs, owning a home can be a smart long-term investment that provides stability, equity, and potential financial benefits. If you are in a stable financial situation and plan to live in the same area for several years, buying a home and building equity will probably be the right choice for you.

Should I Work with a Mortgage Broker?

If you’re considering buying a home and need a mortgage, working with a mortgage broker can be incredibly helpful. A mortgage broker is a professional who can help you find the best mortgage rates and terms for your financial situation. They can also help you navigate the complex mortgage process and answer any questions you may have.

One of the biggest advantages of working with a mortgage broker is that they have access to a wide range of mortgage products from a variety of lenders. This means they can shop around for the best rates and terms for you, with a single credit pull,  saving you time and money in the process.

Another advantage of working with a mortgage broker is that they can help you understand the mortgage process and the different options available to you. This can be especially helpful if you’re a first-time homebuyer and are new to the process. A mortgage broker can help you understand the different types of mortgages available, including fixed-rate, adjustable-rate, and government-backed loans. They can also help you understand the various fees and costs associated with getting a mortgage, including closing costs and private mortgage insurance.

Working with a mortgage broker can also save you a lot of time and effort. Instead of having to research different lenders and mortgage products yourself, a mortgage broker can do the legwork for you. They can help you fill out your mortgage application and make sure all of the necessary documentation is in order. This can save you a lot of time and stress and can help ensure that your mortgage application is processed quickly and smoothly.

If you’re considering buying a home and need a mortgage, it’s better to start looking sooner rather than later. Even if your 6 months out, it’s important to start early to give yourself enough time to get pre-approved and be ready to pounce when the perfect home enters the market.

Finally, working with a mortgage broker can be incredibly helpful in finding the best mortgage rates and terms and navigating the mortgage process. If you’re feeling overwhelmed or confused about the mortgage process, here at JR Mortgage Group we would love to start a conversation with you today and help analyze your specific situation.

Our mortgage consultants are available 24/7 to prepare a pre-approval, discuss financing options, home buying, or refer a trusted realtor in the market.