Is Now a Good Time To Buy a House?

Is now a good time to buy a house? Here are 5 tips to help you determine if now is right for you.

Quick Takeaways

• Gauge your financial health as you decide if now is still a good time to buy a house
• Balance today’s mortgage rates against home prices
• Explore ways to lower a mortgage rate
• Weigh the pros and cons of buying a house right now
• Maximize strategies for a smooth homebuying process

1. Gauge your financial health as you decide if now is still a good time to buy a house

Two elements of your homebuying decision you control are your financial health and goals. Here are some key questions to ask that can gauge your financial readiness:

• How long do you plan on staying in the house? Generally speaking, the longer you stay in a home, the better the chance its value will go up. Buying a house for the long term can also help you get through market downturns. If housing values go down or you’re worried about a recession, a long-term plan can build in time to recover.
• Are your finances steady? If your income and savings will be stable into the future, you’ll be less affected by market changes if you buy.
• How much can you buy? Mr. Cooper’s mortgage calculators can help you estimate how much you need to set aside for your purchase. Ideally, you’ll want a payment that leaves room in your budget for emergency savings and home maintenance costs.
• What are your homeownership goals and needs? Do you need a larger space for a growing family? Are you relocating for a job? Or, does it make financial sense to downsize? Some situations make buying a “need” more than a “want.”
• How’s your credit? Typically, the better your credit score, the lower your mortgage rate. Because of this, many people work to boost their credit score before starting the homebuying journey.
• Are you selling your current home? Will you have money left over when you sell your home that you can put down on a loan for a new home? This could help lower your final mortgage payment while rates are higher.

2. Balance today’s mortgage rates against home prices

Mortgage rates have hovered near 6 and 7% throughout 2023. While today’s rates are higher than the record lows we saw in 2021, they’re lower than record highs. The 30-year mortgage rate hit 18.63% in 1981, according to Freddie Mac. This rate may also start going down in late 2023 and through 2024, according to sources such as the Mortgage Bankers Association’s August 2023 forecast.

The challenge, if you’re trying to decide if now is a good time to buy a house, is that home prices have also gone up. The median existing home’s sales price in June 2023 was $410,200, according to the National Association of REALTORS (NAR), close to NAR’s record high of $413,800.

This causes higher mortgage payments. A possible solution can be to purchase a home or condo with a lower sales price or to move to a more affordable area. Some areas that topped Kiplinger’s list of most affordable cities as of April 2023 include St. Louis, Missouri; Des Moines, Iowa; Knoxville, Tennessee; and Amarillo, Texas. There are also mortgage options that may help—we’ll discuss a few next.

3. Explore ways to lower a mortgage rate

There are a variety of mortgage financing options that can help homebuyers either lower a mortgage rate or its overall costs. Three the Consumer Financial Protection Bureau (CFPB) has discussed to address the higher rate environment include:

• Temporary mortgage buydowns: A mortgage buydown discounts a mortgage’s rate temporarily, often for 1–3% a year, for an upfront fee. Most homebuyers’ buydowns last for 1–2 years, and one popular option lasts 3. Additionally, many sellers and homebuilders, and some lenders, have been paying the fee to help home sales go through. Mr. Cooper’s 1% Mortgage Markdown is one of these programs. We’ll knock 1% off your rate for a full year.¹ Learn more about Mr. Cooper’s 1% Mortgage Markdown here.
• Discount points: Discount points lower a mortgage’s interest rate permanently for an upfront cost. The cost is usually 1% of your loan amount for a discount of up to .25% on the rate.
• Adjustable-rate mortgages: An adjustable-rate mortgage (ARM) starts with a temporary rate that’s lower than similar fixed-rate loans. After that, the rate may adjust up or down, with most ARMs adjusting once a year after the fixed-rate period ends.

Keep in mind, if rates go down significantly after you buy a house, you can consider refinancing. Refinancing replaces your current mortgage with a new mortgage that usually reflects the going rates. Opinions vary, but sources like Investopedia suggest refinancing to a rate that’s 1 or 2% lower than your current mortgage may be worth it. (To that end, Mr. Cooper’s RateSwap lets you buy now and get up to $1,500 in savings when you refinance.² Learn more about RateSwap.)

On the other hand, if rates continue to go up, you’ll still likely have a home with a better interest rate than the going rates.

4. Weigh the pros and cons of buying a house right now

Pros:

• Owning a house allows you to begin building home equity. Equity is a home’s appraised value minus any debts against it, like a mortgage. (A home that’s worth $400,000 and has just a $200,000 mortgage, would have $200,000 in equity.) Home equity usually goes up with home values, and it can be turned into cash through a home equity loan or cash-out refinance, or when you sell the property.
• Options like temporary mortgage buydowns can potentially save you thousands of dollars.
• The housing market has fewer buyers for sellers and home builders to work with. This can make them more open to options like paying for a temporary mortgage buydown. In Aug. 2023 for example, the National Association of Home Builders reported that home builders had lowered prices an average of 6%.
• Some housing markets have seen lower prices. CoreLogic, which tracks housing data, released findings in Sept. 2023 that showed declines in markets including Denver, Phoenix, and San Diego.
• If rates go down after you buy, you can consider refinancing to the better rate.
• Homeownership includes potential tax benefits, such as the chance to deduct property taxes.

Cons:

• Low housing supply is leading to bidding wars and some homes are selling above their asking price.
• If home values end up going down significantly, your mortgage could end up underwater. That would mean you would owe more on the house than it’s worth.
• You may need to buy a smaller or less appealing house than you want to keep costs down.
• Mortgage rates may go down in the coming months and you may get a lower mortgage payment then.

5. Maximize strategies for a smooth homebuying process

If you feel that now is the right time to purchase a new home, here’s a final roundup of tips to help your buying process run smoothly:

• Look into money-saving mortgage financing options: Research options such as temporary mortgage buydowns, discount points, and ARMs. Also consider money-saving options like lower-priced homes and relocating, if it’s an option.
• Find a trustworthy real estate agent: Work with an experienced agent who can help you find a solid home at a fair price. With Mr. Cooper’s Agent Assurance program, you get connected with trusted, local real estate agents and receive some great perks when you sell or buy.³
• Ensure an easy closing process for your seller: Savvy sellers know a sale can fall through at the closing table and may be more picky about buyers they’ll work with. That said, guaranteeing an on-time closing could make your offer stand out versus competitors’. Some lenders can assist with this, including Mr. Cooper’s Close On Time Guarantee. If we don’t close on time, your first month’s mortgage payment (principal and interest) is on us.⁴  
• Save money on your move: Moving can be costly, but there are plenty of ways to reduce moving costs. These can include scheduling a professional move when demand is low, and selling items you won’t need in your new house.

Deciding if now is a good time to buy a house will come down to a number of factors. Getting a competitive mortgage and lowering costs will probably be chief among them.

Ready to explore your options with Mr. Cooper? Call us at 833-702-2511 or get started online.

Tradenames and trademarks used in this blog post are the property of their respective owners. Nationstar Mortgage LLC d/b/a Mr. Cooper is not affiliated, associated, or sponsored by any of these owners. Use of these names and trademarks is not intended to and does not imply endorsement, but is for identification purposes only. Information provided does not necessarily represent the views of Mr. Cooper. Information is subject to change without notice.

1. Mr. Cooper’s Mortgage Markdown is a temporary buydown program that allows borrowers to reduce their effective interest rate and effective monthly payment for a specified period of time by establishing a custodial escrow account which will be funded partially by the lender and partially by the borrower (in the case of a VA loan the account will be funded entirely by the lender), and funds will be dispersed from the escrow account to the investor to account for the difference in interest during the 1 year buydown period which subsidizes the monthly payment amount. Mortgage Markdown is available for purchase loans that are locked by 12/31/2023. Mortgage Markdown is only available on purchase loans for primary residences. Not available on jumbo loans, second mortgages, or refinance transactions. Offer may not be redeemed for cash or credit and is nontransferable. Offer cannot be retroactively applied to any loans. This offer is subject to changes or cancellation at any time at the sole discretion of Mr. Cooper. Additional restrictions/conditions may apply. Offer is contingent on qualification per full underwriting guidelines.

2. To be eligible for RateSwap, you must lock a new purchase loan with Mr. Cooper by 12/31/2023. Mr. Cooper will waive the origination (application fee in New Jersey) up to $1500 on a refinance within 39 months of the purchase loan’s lock date. All other fees apply. Refinance subject to borrower and property qualifications and credit approval. Not all applicants will qualify. Refinanced loan must meet agency and investor guidelines. Limited to the initial refinance of the qualifying loan. You will be required to have made a certain number of timely monthly payments before you can refinance. Applicable on new purchase applications only. Not available for purchase loans currently in process or refinances. Other conditions and restrictions apply. Offer subject to change at any time.

3. Mr. Cooper^® Agent Assurance (“Program”) is offered by Mr. Cooper affiliate Xome Realty Services LLC. (“XRS”). Referrals to XRS may provide a financial benefit to Mr. Cooper. Program is not available in all states. You are not required to use a real estate agent referred from the Program as a condition of receiving a loan from Mr. Cooper, and you are not required to obtain financing from Mr. Cooper to use the Program. Mr. Cooper^® Agent Assurance is a service mark of Nationstar Mortgage LLC. Program terms and conditions are subject to change at any time without notice. Additional terms, conditions, and restrictions apply.

This is an advertisement and not a solicitation for agent representation if your property is currently listed with an agent. Xome Realty Services LLC, 750 State Hwy 121 Bypass, Suite 100, Lewisville TX 75067. Licensed Texas Broker, license # 9002550.

4. Mr. Cooper^® Close On Time Guarantee Terms and Conditions

The Mr. Cooper^® Close On Time Guarantee offers assurance to customers purchasing a home with a Mr. Cooper home loan that the loan will close on or before the contract closing date, or the customer will receive a check equal to their first month’s principal and interest payment (“Guarantee Payment”). The customer is still responsible for making all scheduled loan payments according to the loan documents. For NY customers, this may be subject to attorney availability and requires Mr. Cooper approval.

Eligibility: To be eligible for the Mr. Cooper^® Close On Time Guarantee,

(1) the customer must:
(a) submit a complete application for a purchase money home loan product directly to Mr. Cooper;
(b) provide a fully-executed purchase contract which must include all pages, addendums, and required signatures;
(c) provide all requested supporting documentation (including income/asset verification documents) needed to make a loan decision and signed initial loan disclosures within 24 hours of submitting the home loan application or within 24 hours of request.  All required documents must be submitted electronically using Mr. Cooper’s online portal, Loan Tracker; and
(d) remain responsive with any further requests from Mr. Cooper and third party providers (such as appraisers and inspectors) in connection with the processing and underwriting of the home loan by providing any required documentation, access to property, or other response within 24 hours of request; and
(2) The loan application must be for a first lien, conventional, VA, or FHA mortgage loan product.  This offer does not apply to non-conventional, or non-QM loan products.
(3) All required appraisals and an acceptable home inspection must be received 10 days before the Guaranteed Closing Date.  Title work must be completed 5 days before the Guaranteed Closing Date. Sufficient funds to close must be verified 5 business days before the Guaranteed Closing Date. All required approvals from third parties (e.g. HOA, Condo certifications, etc.) must be received 5 days prior to the Guaranteed Closing Date. If home purchase is dependent on sale of home, proceeds from home sale must be received same day or before the Guaranteed Closing Date. For home loans to be secured by new construction, Mr. Cooper must receive a completed Final Inspection and/or certificate of occupancy at least 72 hours prior to the Guaranteed Closing Date.

Guaranteed Closing Date: The purchase contract closing date (“Guaranteed Closing Date”) must be at least 21 days for conventional loans and 30 days for VA and FHA loans after the date that the customer submits the complete mortgage application, purchase agreement, and all requested initial supporting documentation (including income/asset verification documents) to Mr. Cooper’s Loan Tracker portal.  If the loan does not close on or before the Guaranteed Closing Date (subject to these terms and conditions), the customer will receive the Guarantee Payment in the form of a check following the home loan closing.  The customer is responsible for any tax liability related to participating in the program and should consult a tax advisor if there are any questions about their personal tax situation.

Important Restrictions: The Mr. Cooper^® Close On Time Guarantee will not apply if: (1) an existing loan application has been submitted by borrower involving same subject property address as of May 19, 2019 (2) changes are made to the original closing date as documented in the purchase agreement; (3) changes are requested to the loan amount, product, or terms requested within 10 days of the Guaranteed Closing Date; (4) there are changes to borrower’s income, employment, or debt from time of application to closing; (5) closing date extensions are due to a delay in completion of new construction, improvements, or property repairs; (6) either borrower or seller fails  to meet purchase contract terms and requirements including seller-related delays, (7) home loan transaction involves a Co-op, CEMAs, or requires two or more appraisals, and/or (8) delay in closing is due to force majeure events including weather, or natural disaster.

Mr. Cooper reserves the right to amend, terminate, or withdraw the Mr. Cooper^® Close On Time Guarantee at any time without prior notice.