Homebuyers on Alert As Housing Prices and Mortgage Rates Decline
Summary
Housing prices and mortgage rates are dropping in many U.S. cities, making it easier for buyers to afford homes. Buyers should start saving for a down payment now and consider how to protect and grow their savings while improving their credit scores to get better loan rates.Key Facts
- Sellers now outnumber buyers by over 600,000 nationwide, a large gap.
- Home prices have dropped in more than half of the top 50 metro areas, with big declines in cities like Austin, San Diego, San Jose, Minneapolis, and Washington D.C.
- Mortgage rates are falling below 6%, which helps buyers get better loan terms.
- A typical down payment goal is 20% to avoid extra costs like private mortgage insurance.
- Special loan programs exist for low- or moderate-income buyers, some requiring as little as 0% to 3.5% down.
- It's best to keep down payment savings in low-risk, liquid accounts like high-yield savings accounts to earn steady interest.
- Improving credit scores before applying for a mortgage can lower the interest rate, saving buyers thousands of dollars over time.
- For example, someone with a credit score of 740 may get a mortgage at 6.4%, while a 620 score could mean 7.17%, which costs more over the life of the loan.
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