Is 2023 a Good Time to Build your Forever Home?

Rising inflation rates caused increased prices in building materials and, therefore, homes. If
you’re like millions of others, you’ve held off on building your dream home, hoping that prices
would fall again.

The unfortunate truth is that real estate prices won’t fall within the next few years, so the
question is, should you build your forever home in 2023?

The answer for most people is yes, as long as you can afford it.

Here’s why.

You Can’t go Back in Time

Building your dream home in 2019 would have cost a lot less, but we can’t go back there. Prices
won’t reverse, and no one has a time machine to go back in time.

So instead, it’s time to take control of the future. What you can do is lock in today’s prices. The
good news is lumber prices aren’t as crazy high as they were this time last year, so you’ll save
some money on materials.

That’s not to say they are as low as before the pandemic. However, that’s par for the course,
even without a world crisis.

You can Cut Corners

Even though you’re building your dream house, you can cut corners. I don’t mean you must
sacrifice what you have in your house. Instead, you can find cheaper ways to make them
happen, including DIY.

For example, if you’re handy and can install cabinets or take on another task in building the
home, you’ll save money on the labor and still get what you want in the home.

You’re Investing in your Future

When you build your forever home, you’re investing in your future. Real estate goes through
cycles, but overall, it appreciates. Even with higher prices for lumber and labor today, you’ll see
a return on your investment if you keep the home long-term.

You can Build What you Want

When you build your own home, you get what you want rather than buying an existing home
and taking what’s available. If this is your forever home, you can put the features in it that will
last for your intended duration.

You can Refinance your Mortgage

Even if you have to take higher interest rates than you intended to build a home, you can
refinance the mortgage in the future. This is because interest rates won’t stay high forever;
eventually, they will come down, even if it takes a few years.

Final Thoughts

2023 could be the perfect time to build your forever home. Even if it’s not the home you’ll live
in for your lifetime, as long as you stay there for three to five years, you may see a return on
your investment.

While higher material and labor prices can be prohibitive right now, your investment will pay off
in the future. If you want to learn more about the pros and cons of building your forever home
in 2023, contact me today, and let’s discuss your options.

Closing on a House – How Long Does it Take?

Buying a house is exciting, but it can feel like it takes forever to get from the offer to the closing
table.

On average, it takes 30 – 45 days to get to the closing table, and that’s in a perfect situation.
Sometimes you may close faster or slower, but keep 30 – 45 days in mind when signing a sales
contract.

The Process to Close on a House

The house closing process is complex. Not only must you find the house you want to buy, but
you must sort out your financing. Here’s a quick rundown of the typical timeline.

Get Pre-Approved

Start the process by getting pre-approved with a lender. This tells you how much you can afford,
on what terms and the conditions you must satisfy.

A pre-approval letter also gets your foot in more doors with sellers. Most sellers only want to
work with pre-approved buyers.

Find a Home

Once pre-approved, you can look at homes. Pre-approvals usually last 30 – 60 days, so it works
best if you can find a home within that time.

You’ll sign a sales contract when you find a home and negotiate the price and terms. The sales
contract starts the clock, which is why getting pre-approved is essential. After that, you’ll have a
majority of your personal underwriting completed.

Submit your Contract and Order the Title and Appraisal

After signing a contract, you’ll submit your sales contract to the underwriter, and they’ll order a
title search and appraisal on the property.

In the meantime, you’ll provide any missing documentation or updates the lender needs to
finish underwriting your qualifying factors.

Get the Clear to Close

Your goal in underwriting is to get the clear to close. This happens after the appraisal, title
search, and your qualifying factors pass the underwriter’s requirements. Then, with the clear to
close, you’re ready to head to the closing table.

Receive your Closing Disclosure

Lenders must send you the Closing Disclosure before the closing. By law, they must send it at
least three business days before you close. This allows you time to review your loan terms,
costs, and interest rate to ensure everything looks how the lender initially promised.

If everything looks good, you get your cashier’s check or bank wire to close the loan and get
ready to become a homeowner.

Closing the Loan

The last step is to close the loan. You’ll attend the closing with your attorney, loan officer,
possibly the sellers, and a closing agent. You’ll sign documents and disclosures, exchange funds,
and receive the keys to your new home.

Final Thoughts

Typically it takes 30 to 45 days to close on a house, but there can be delays. The key to avoiding
them is to get pre-approved for your loan and satisfy any conditions the underwriter needs.
Once you find a house, the only conditions you’ll have to focus on are those about the house,
many of which are outside your control.

What Should you Ask Lenders When Buying a Home?

Buying a home requires more than finding the perfect home. First, you need financing, or you won’t be able to buy the home.

Lenders have specific requirements when considering buying a home, so knowing what questions you should ask them is important.

How Much do I Need for a Down Payment?

Your down payment depends on the loan program you choose. For example, VA loans don’t require a down payment, but FHA loans require 3.5% down. Conventional loans require 5% down in most cases, and if you put down less than 20%, you’ll pay Private Mortgage Insurance.

Discuss your down payment options and how much you should put down to get the best rate and terms on your loan.

What’s the Best Interest Rate I can Get?

Interest rates are much higher this year than last, so you should talk to your lender about how you can lower your rates.

They’ll look at your qualifying factors and tell you what you can improve to ensure you get a lower rate. You can also ask about the possibility of buying the rate down (paying points) to lower the interest rate to keep it even lower.

When Should I Lock my Interest Rate?

You must lock your interest rate before closing on the loan, but your loan officer can tell you the best time to do it. Most rate locks are free for 30 days, but if you must lock it for longer, it might cost you.

It’s best to lock your rate after you sign a purchase contract, so you have a better chance of closing on the loan before it expires, but always ask your lender when it’s the best time to lock.

How Much are Closing Costs?

You’ll need more than the down payment to close on your loan. You’ll also pay closing costs. Most lenders charge 3% – 5% of the loan amount in closing costs. Ask your lender what the total cost of the loan is so you can budget accordingly.

Some loans allow you to wrap some closing costs into it if you don’t have the funds upfront. If you’re worried about affording the closing costs, talk to your lender about your options.

Final Thoughts

Knowing what to ask lenders before you buy a home is important. Mortgage financing is one of the most important aspects of buying a home. Without a mortgage, you’d need cash to buy a home, and most people don’t have enough cash for a purchase of that size.

It’s a good idea to get quotes from at least three lenders and to get to know their process. No two lenders offer the same rates and terms or have the same process. You might find one lender has an easier process and better rates than another, which can mean the difference of thousands of dollars!