October 6, 2023
Do you plan to buy a home in 2024? If you are currently planning and saving for your loan, you likely have seen headlines predicting a tough market in the coming months.
According to a 2023 article published by CNBC, home prices are expected to keep rising in 2024. Those are observations based on real estate forecasts from the National Association of Realtors and federal agencies.
What should you know about buying a home as we head into 2024? In some cases it may be a simple matter of adding extra time into your home loan process for planning and saving.
For others, it may be a matter of choosing the right type of mortgage loan.
For example, instead of competing for a limited inventory of existing homes, some applicants decide to build from the ground up using an FHA One-Time Close Construction loan.
Others may decide to go a simpler route but with a more complicated loan. An FHA adjustable rate mortgage, for example, can help you get into a mortgage with a (temporarily) lower interest rate.
Is it easier to locate an undeveloped plot of land or build a home on a parcel of land you already own in 2024? It might be if your housing market doesn’t have a lot of housing inventory.
But there are some potential downsides for some borrowers. These are important to know before you commit to a construction loan or even an FHA 203(k) rehab loan.
Loans involving construction or renovation may cost more upfront, and construction loans in general may feature higher credit score requirements.
What’s more? Construction loans may typically be approved without permitting down payment assistance. If you are concerned about the ability to qualify for a home loan in general, this option may not be right for you.
Adjustable rate FHA loans have a lower introductory interest rate period, sometimes known as a so-called teaser rate. These expire in one to ten years depending on the options your lender offers.
When the teaser rate expires, the FHA mortgage loan interest rate adjusts annually.
For best results, you need to specifics about the duration of the lower rate and may need to make a plan to refinance or sell once that intro rate expires.
Ask your lender about the longest intro rate period possible and whether or not getting that longer intro rate might be more expensive upfront.
If you don’t make a plan to deal with the mortgage rates once they start adjusting, you could get caught in a cycle of increasing monthly payments, so it’s smart to discuss the process of the loan with your participating lender.
You’ll want to fully understand what happens to your monthly payment once the rates begin adjusting after that intro rate expires.
