Is 2023 a Bad Time to Buy a Home?

We’re coming out of a difficult year. As we look forward to 2023, an important question to ask is whether 2023 is a good year for you to buy a home. You may have heard that many people are worried about buying and selling homes. Maybe you’ve been planning to buy a home for a long time, or maybe you’re just beginning to consider it. Either way, we want to help you think through your options! You can contact us to ask specific questions, but we also have more general information below.

Before you think about your situation, it’s important to understand what’s happening in the market right now. 2023 is a year with a low housing inventory. That means that that houses are in high demand right now, which naturally drives up the price of homes. That’s not ideal for the buyer. In fact, the housing market right now is what’s called a “seller’s market.” In a seller’s market, the seller has the advantage, because demand is so high that they can sell for more.

This doesn’t necessarily mean that you can’t buy a home in 2023. Rates for mortgages are very low*, and they look like they will stay that way for a while. For home loans, low rates* can save you a lot of money. If you think it’s best not to buy a home in 2023, it may still be a great time to refinance. As you consider your options, you should ask yourself the following questions:

How To Know If 2023 Is A Bad Time to Buy A Home?

As you consider your options, you should ask yourself the following questions:

“I want to acknowledge the exceptional service I received during the purchasing process.” – Eyaba S. 

Do I Have A Good Enough Credit Score?

Anytime you’re considering buying a home or refinancing, you need to ask yourself whether your credit score is good enough. Your credit score is based on your payments to creditors, and a high credit score tells lenders that you are likely to pay them on time. A lower credit score comes from not paying creditors on time, and that scares lenders. You wouldn’t loan your money to someone who doesn’t pay their debts – and lenders won’t, either. In general, a credit score below 640 is too low, although some lenders will still consider approving you.

Do I Have Too Much Debt?

Just like your credit score, your debt tells lenders whether they can trust you with their money. This question probably seems like a no-brainer. Debt isn’t good if you’re trying to get a loan. But if you have debt, the key is to find out how much debt is too much.

Debt is measured using a debt-to-income ratio, or DTI. A DTI compares your monthly income before taxes to the minimum payments for your debt. It tells how much of your monthly income goes to pay off debt every month. The lower your DTI, the better! You can see how you compare to other people in your area with this tool. Some lenders want ratios of 36% or lower, although many will lend to someone with a ratio as high as 45% or higher. If your DTI ratio is higher, it’s often harder to get a loan to buy a home. Contact us to see if you qualify for a mortgage based on your current DTI.

What Is My Local Housing Market Like?

If you have a good enough credit score, and if your DTI ratio is in line, it makes sense to look into buying a home in 2023. But if your local housing market is a seller’s market, you definitely need to get pre-qualified before you look for a home to buy.  If most of the homes listed in your local market are from the last few months, then it’s probably a seller’s market. But if there are many homes listed from many months, it’s probably a buyer’s market. If your housing market looks more like a buyer’s market, that’s a good sign if you want to buy a home because you can aggressively negotiate for the lowest price on your new home!

What Now?

After you think through these questions and you decide that you should buy a home this year, contact us today to see if you qualify at 800-720-0250.

At the end of the day, the only way you can know for sure whether you should buy a home or refinance is by getting personalized advice. If you have a low credit score or a lot of debt, don’t give up! Not all lenders are the same, and you may still be able to buy a home or refinance. To learn more, visit this page.

After you think through these questions and you decide that you should buy a home this year, contact us today to see if you qualify at 800-720-0250. If you decide now is not the time to buy, rates are low, which means you may be in a great position to refinance and save money to buy a home in the future*. Contact us now at 800-720-0250 to get advice for your specific situation! We always provide free quotes, and we want to help you!

*HomePromise provides refinance mortgage loans to clients. In some cases a refinance may lower your monthly payments but increase your total finance charges over the life of your loan.

Understand Property Taxes Where You Plan on Living

Property taxes can be totally different between states, or even between counties in the same state. That’s why it’s so important to know what property taxes are like in the state or county where you will be buying a home. Now that we’re in 2023, it’s worth checking to see whether your taxes have changed under the new administration, too. The U.S. Census Bureau reported that the average property tax for a household is $2,375, but that may not be true for you. For example, states like Colorado and Tennessee have even lower property taxes, but states like New Jersey and Connecticut have much higher property taxes. We recommend you search online for your future home’s county website, which should have information on property taxes.

Get Pre-Qualified with A Lender First

Something that will help you to buy a home is prequalification. If you get prequalified with a lender before you begin looking for a home, this can give you a good sense of your budget, because you will know the approximate size of the loan you qualify for. To be prequalified, you will have to provide information like your income, assets, debt, and credit score. This means they can give you a very specific idea of what you will get approved for. You can also check your credit score so that you know exactly what the lender will be looking at. Something that’s important to know is that getting prequalified does not guarantee that you will be approved for a loan. But it does mean you’re more likely to get approved if you stay within the guidelines of your prequalification.

You may have also heard the term pre approval. Prequalification and preapproval are terms that can have the same meaning! Some lenders use the term prequalification to refer to a kind of assessment that is less precise and doesn’t require the lender to check your credit score, but that’s not what we mean in this article. When we prequalify you, we have reviewed your income, assets, debt and credit score so you can make an offer on a home with confidence. Every lender is different in how they give prequalification, but it is a good idea to take the time to get prequalified with us.

 Slow Down and Don’t Rush the Process

This may seem obvious, but it’s an important reminder! This is one tip that hasn’t changed since 2020. Once you’ve decided that you want to buy a home, it’s easy to get excited about it and forget important details. When you can’t wait to live in your brand-new home, it’s only natural to want things to move faster with the seller and with your mortgage lender. But trust us – it’s easier to make mistakes when you’re rushing, and you want to be able to enjoy your new home without worrying about your mortgage!

Be Aware of Regulatory Changes

If you are a female Veteran or a Native American Veteran, this tip is for you. Recently, the VA department changed the requirements for disability compensation for female Veterans with conditions due to military sexual trauma. And Native American Veterans now have greater access to healthcare services because of recent veteran’s health legislation. To find out how these new regulations will affect you and your options, you need a lender who is familiar with the new information and will be on your side.

So, What Now?

The best thing to do now is take stock of your options, following the tips we’ve laid out above. We can help you with personalized advice for buying a home in 2023!

One thing’s for sure: 2023 will be historic for purchasing or refinancing a home as we look forward to our economy bouncing back from the events of 2020 and all that came with 2022.

Although we can’t predict what will happen in 2023, we know that interest rates are low now, and will stay that way for a while but could rise at any time. Because of that, our last tip is to call us at 800-720-0250 to find out if you qualify instead of using an online loan calculator. Our quotes are always free, and we want to serve you as we look forward to a new year!