When Is The Best Time Of Year To Purchase A Home?

 

Historically, spring and summer have been the busiest times in the real estate market. But the traditional seasonality of homebuying and selling was upended by the pandemic: Home sales slowed significantly amid stay-at-home orders, then dramatically spiked, and the market remained volatile for quite some time.

The good news is, things have since returned to something closer to normal. One positive sign: After years of a distinct lack of available homes for sale, which kept homebuyers at a disadvantage, Realtor.com is forecasting an 11.7 percent increase in existing housing inventory for 2025. This increase would bring more balance to the supply-and-demand metric — and also more leverage for buyers. In other words, seasonality may once again become the most important factor in determining the best time of year to buy a house. 

Spring and early summer are the busiest and most competitive time of year for the real estate market. There’s usually more inventory listed for sale than other times of year, and home prices tend to be steeper to reflect the increased demand. Since 2011, the months of February through June have been the most lucrative time to sell, according to a 2024 study by ATTOM Data Solutions, with May in particular earning sellers an average premium of 13.1 percent above market value. The other months in the range all yielded premiums ranging from 12.2 percent to 12.8 percent.

“Typically, sellers choose spring and summer as the time to list as the majority of buyers are out in the market,” says Ryan Jancula, principal and lead broker with Jancula Group at Compass in Los Angeles. “This is a double-edged sword for a buyer, as you will be met with more opportunities but [also] much more competition, which may lead to further increase in prices or less desirable sale terms.”

If you’re hoping to save some money and your timeline is flexible, consider waiting until the rush is over and not starting your home search until mid- or late-summer. The most expensive month of the year to purchase a home is May, when seller premiums are as high as 13.1 percent above market value, according to ATTOM data.

Buying off-season has its benefits, though. The ATTOM study, which analyzed 59 million single-family home and condo sales between 2011 and 2023, showed that October is the month with the lowest seller premium by far at 8.8 percent, compared to May’s 13.1 percent. The next lowest were September and November, both at 9.5 percent. That means October is when homebuyers are likely to get the best deal. In fact, a recent Zillow report declared early fall to be “the next housing sweet spot.” The least expensive month of the year to purchase a home is October, when seller premiums are at their lowest, according to ATTOM.

Just because spring is the industry’s prime time doesn’t automatically mean it’s the right time for you. You have to consider your personal circumstances as well as seasonality — for example, if you are getting married or having a baby in August, you may not be able to wait nearly a year for a larger home.

“While spring is typically referred to as the home buying season, that doesn’t necessarily guarantee that it is an optimal time to buy,” says Mark Hamrick, Bankrate’s senior economic analyst.

In addition, if price is of concern to you, you may in fact be better off waiting out the rush. This chart illustrates median home prices since the start of the COVID-19 pandemic, using data from the National Association of Realtors. Once the chaos of the early pandemic died down, the highest price spikes were uniformly in June or July, and the lowest prices occurred in the dead of winter. Source

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4 Important Accounts To Have When Buying A Home

 

Buying a home is one of the biggest financial moves you’ll ever make. And if you’re planning to buy in 2025, setting up the right financial accounts now can make all the difference between a smooth homebuying experience and unnecessary stress. 

So, let’s break down the four essential accounts you should have before you buy a home;

1. Checking Account – The Hub for Your Finances

Your checking account is where your financial transactions happen—paying bills, covering daily expenses, and managing cash flow. But here’s the mistake many homebuyers make: keeping too much money in their checking account.

Your checking account should only hold enough money to cover three months of expenses at any given time. Why? Because idle money sitting in a checking account isn’t working for you. Interest rates on checking accounts are typically very low, meaning your money isn’t growing. Instead, use this account strictly for expenses and keep your excess funds in high-yield savings accounts where they can earn interest.

2. High-Yield Savings Account (HYSA) – Your House Fund

If you’re planning to buy a home, you’ll need funds for your down payment, closing costs, and initial home expenses—and this money needs to be in a safe place where it can grow. That’s where a high-yield savings account (HYSA) comes in.

Unlike regular savings accounts, HYSAs offer higher interest rates, typically around 3.75% or more. This means your money grows while you’re saving, helping you reach your homeownership goal faster. Look for an HYSA with no fees and easy access, so you can withdraw your funds when it’s time to close on your home.

3. Emergency Fund – Your Safety Net

Life happens. Unexpected car repairs, medical bills, or job changes can throw a curveball at your finances. The last thing you want is to be financially stretched right before (or after) buying a home.

A good rule of thumb? Keep 3-6 months’ worth of expenses in a separate HYSA dedicated to emergencies. Some banks allow you to create sub-accounts within your HYSA, making it easy to separate your emergency fund from your house fund while still earning interest. An emergency fund provides peace of mind, ensuring that you can handle surprises without dipping into your home savings or disrupting your mortgage payments.

4. Retirement Accounts – Thinking Long-Term

While buying a home is a major financial milestone, it’s not your only financial goal. Retirement planning should still be a priority, even when saving for a house.

If your employer offers a 401(k) with a match, contribute enough to get the full match—it’s free money! After that, consider opening an Individual Retirement Account (IRA) to further grow your retirement savings.

Not sure if you’re on track? Tools like Vanguard’s retirement calculator can help you estimate your future savings and adjust your contributions as needed. While your home is an investment, you don’t want to neglect the bigger picture of long-term financial security.

Final Thoughts: Build Your Financial Foundation Now

Buying a home is exciting, but it requires smart financial planning. Setting up these four accounts will put you in the best position to purchase a home without unnecessary stress or setbacks. As a mortgage broker, my goal is to help you navigate the homebuying process with confidence. 

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Getting a Mortgage: 5 Ways to Improve Your Chances

Buying a home is a major financial investment, and, for many people, the largest purchase they will make. To buy a home, you’ll likely need a mortgage for funding that you can pay off over the long-term. However, not everyone will qualify for a mortgage.  Here are a few ways you can improve your chances on being approved right away;

1. Check Your Credit Report

Lenders review your credit report, which is a detailed report of your credit history, to determine whether you qualify for a loan and at what rate.

By law, you are entitled to one free credit report from each of the “big three” credit rating agencies (Equifax, Experian, and TransUnion) every year.

 You can use AnnualCreditReport.com to request your free copy, which you can get immediately in electronic format. Review your credit report for errors and to get an understanding of your credit history, such as if you have a history of late payments or high credit utilization.

2. Fix Any Mistakes

Read your credit report closely to see if there are any mistakes that could negatively affect your credit. Look for potential errors such as:

• Debts that have already been paid (or discharged)
• Information that is not yours due to a mistake (e.g., the creditor confused you with someone else because of similar names and/or addresses, or because of an incorrect Social Security number)
• Information that is not yours due to identity theft
• Information from a former spouse that shouldn’t be there any more
• Out-of-date information
• Incorrect notations for closed accounts (e.g., it shows the creditor closed the account when, in fact, you did)

Consider checking your credit report at least six months before you plan to shop for a mortgage so you have time to find and fix any mistakes.

3. Improve Your Credit Score

A credit score is a three-digit number that lenders use to evaluate your credit risk and determine how likely you are to make timely payments to repay a loan. The most common credit score is the FICO score, which is comprised of different credit data:

• Payment history – 35%
• Amounts owed – 30%
• Length of credit history – 15%
• Credit mix – 10%
• New credit – 10%

In general, the higher the credit score you have, the better the mortgage rate you can get. To improve your score, check your credit report and fix any mistakes, and then work on paying down debt.

Setting up payment reminders so you pay your bills on time, keeping your credit-card and revolving credit balances low, and reducing your debt. Avoid making a major purchase while you are applying for a mortgage.

4. Lower Your Debt-to-Income Ratio

A debt-to-income ratio compares the amount of debt you have to your overall income. It’s calculated by dividing your total recurring monthly debt by your gross monthly income, expressed as a percentage. Lenders look at your debt-to-income ratio to measure your ability to manage the payments you make each month, and to determine how much house you can afford.

Lenders like to see debt-to-income ratios that are 36% or lower, with no more than 28% of that debt going toward mortgage payments (this is called the “front-end ratio”). In most cases, 43% is the highest debt-to-income ratio you can have and still get a qualified mortgage. Above that, most lenders will deny the loan because your monthly expenses are too high compared with your income. 

To lower your debt-to-income ratio, and both are easier said than done:

• Reduce your monthly recurring debt.
• Increase your gross monthly income.

To reduce your monthly recurring debt, first cut back on purchases you make with credit. Look at where your money goes each month, figure out where you can save and make it happen. To increase your income, you can try to find a second job, work extra hours at your primary job, or request a pay increase.

5. Go Large with Your Down Payment

A large down payment can also help increase your chances of getting approved for a mortgage. The more money you put down, the more you reduce the loan-to-value ratio, which also increases your chances of getting the best mortgage interest rates.

The loan-to-value ratio is calculated by dividing the mortgage amount by the purchase price of the home (unless the home appraises for less than you plan to pay, in which case the appraised value is used).

Here’s an example. Say you plan to buy a house for $100,000. You put down $20,000 (20%) and seek a mortgage for $80,000. The loan-to-value ratio would be 80% ($80,000 mortgage divided by $100,000, which equals 0.8, or 80%). If you can put down $40,000 for the same house, the mortgage would now be just $60,000. The loan-to-value ratio would fall to 60% and it will be easier to qualify for the lower loan amount. 

When you're setting your down payment, remember that a 20% or larger down payment will also mean that you won't be subject to a mortgage insurance requirement, all of which can save you money. Source

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What Is Adjustable-Rate Mortgage (ARM)

 

Adjustable-rate mortgages (ARMs) have an interest rate that may change periodically depending on changes in a corresponding financial index that's associated with the loan. Generally speaking, your monthly payment will increase or decrease if the index rate goes up or down.

ARM loans are usually named by the length of time the interest rate remains fixed and how often the interest rate is subject to adjustment thereafter. For example, in a 5y/6m ARM, the 5y stands for an initial 5-year period during which the interest rate remains fixed while the 6m shows that the interest rate is subject to adjustment once every six months thereafter.

When might an adjustable-rate mortgage make sense?

• If you plan to move before the end of the introductory fixed-rate period, so you aren't concerned about possible rate increases
• If you want an initial monthly payment lower than a fixed-rate mortgage usually offers
• If you think interest rates may go down in the future

Source

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All About Appraisals

An Appraisal is an estimate of a property's fair market value. It's a document generally required (depending on the loan program) by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. The Appraisal is performed by an "Appraiser" typically a state-licensed professional who is trained to render expert opinions concerning property values, its location, amenities, and physical conditions.

Why Get An Appraisal? Obtaining a loan is the most common reason for ordering an Appraisal, however there are other reasons to get one:

• Contesting high property taxes
• Establishing the replacement cost for insurance purposes
• Divorce settlement
• Estate settlement
• Negotiating tool in real estate transactions
• Determining a reasonable price when selling real estate
• Protecting your rights in an eminent domain case
• A government agency requirement
• A lawsuit

There are 3 common approaches, or Appraisal Methods, used by Appraisers to establish property value. After thorough exercise of all 3, a final value estimate is correlated. When evaluating single-family, owner-occupied properties, the Sales Comparison Approach is heavily weighted by an Appraiser.

• Cost Approach – A formula is used to obtain the property value: Land value (vacant) added to the cost to reconstruct the appraised building as new on the date of value, less accrued depreciation the building suffers in comparison with a new building.

• Sales Comparison Approach – The Appraiser identifies 3 to 4 comparable comps, recently sold properties in the neighborhood, ideally, sold in the previous 6 months and within ½ mile of the subject property. A comparison is done between the recently sold properties and the subject property including square footage, number of bedrooms and bathrooms, property age, lot size, view, and property condition.

• Income Approach – The potential net income of the property is capitalized to arrive at a property value. Capitalization is the process of converting a future income stream into a present value. This approach is suited to income-providing properties and is used in conjunction with other valuation methods.

Who Owns The Appraisal? The mortgage company owns the appraisal even though the borrower paid for it. This is because the mortgage company orders the appraisal on the borrower's behalf, and the Appraiser lists that mortgage company on the report. The borrower does have the right to receive a copy; however it's the mortgage company's discretion to give the borrower the original appraisal report.

Who Determines The Market Value Of Your Property ?

The property seller sets the price, especially for residential property, not the Appraiser. Sellers usually don't order an appraisal because they want to obtain the highest price for their home and therefore don't want to be bound by the Appraiser's assessment.

The real estate agent receives a percentage of the price as compensation and often represents the seller in the transaction and assists them in setting the sale price. They perform a Comparative Market Analysis (CMA), which real estate agents in most states are allowed to perform without an Appraiser's License or Certification. The CMA is vital to the agent’s preparation for a listing examining recent property sales in the neighborhood to arrive at a listing price. Typically the agent will suggest a price to the seller based on the CMA however the seller may choose to list their property for a higher price. Source

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What Are Some Mortgage Requirements?

Lenders set minimum mortgage requirements you’ll need to meet to get pre-approved for a home loan;

The higher your credit score, the lower your interest rate will be

A lower interest rate means a lower monthly payment, which makes homeownership more affordable.

The higher your down payment, the lower your monthly payment

A down payment of 20% will help you avoid mortgage insurance if you’re taking out a conventional loan. Mortgage insurance covers the lender’s foreclosure costs if you default on your loan.

The longer the term, the lower your monthly payment

First-time homebuyers typically choose 30-year terms to get the lowest monthly payment.

The less monthly debt you have, the more you can borrow

Clear out those car loans, student loans and credit card balances if you want the most mortgage borrowing power. Source

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How Does Inflation Affect Mortgage Rates?

High inflation often leads to higher mortgage rates by pushing up interest rates, reducing purchasing power and influencing housing demand, ultimately making home loans more expensive overall.

Inflation can affect mortgage rates in a few different ways, both directly and indirectly. When inflation is high, borrowing money becomes more expensive, and that can influence not only the cost of buying a home but also whether it's the right time to do it.

Understanding the relationship between inflation and mortgage rates can help you make informed decisions about homeownership.

What Is Inflation?

Inflation refers to the general increase in prices of goods and services over time, which leads to a decrease in purchasing power. In other words, when inflation rises, each dollar you have buys a little bit less.

The most commonly used measure of inflation is the consumer price index (CPI), which tracks the average change in prices paid by consumers for a basket of goods and services.

How Does Inflation Affect Mortgage Rates?

When inflation rises, mortgage rates tend to follow suit. Here are a few key ways inflation can influence mortgage rates.

Higher Interest Rates

The Federal Reserve often raises the federal funds rate to combat inflation, the idea being that higher rates can help curb consumer and business spending and help bring high inflation down.

While the Fed doesn't set mortgage rates directly, its actions influence them indirectly. More specifically, the Fed's monetary policy decisions play a major role in shaping investor expectations. In turn, those expectations directly influence the yield on the 10-year Treasury note.

Because the 10-year Treasury yield serves as a key benchmark for mortgage rates, changes in Fed policy often ripple into the housing market, pushing mortgage rates up or down accordingly.

Reduced Purchasing Power

When inflation is high, it erodes the value of money. For lenders, this means that the money they get back in the future will be worth less than it is today. To compensate, they may increase mortgage rates to protect their profit margins.

Market Sentiment

When inflation is high, rising prices for everyday goods and services can erode consumer confidence and make potential buyers more hesitant to take on a large, long-term financial commitment like a mortgage loan.

If enough buyers pull back, housing demand drops, which can put downward pressure on home prices and, in some cases, mortgage rates. Additionally, individual lenders may lower rates to attract new borrowers and keep loan volume steady.

Does Inflation Affect Fixed-Rate Mortgages?

Once you lock in a fixed-rate mortgage, your interest rate won't change for the life of the loan, even if inflation continues to rise. However, inflation can affect fixed-rate loans in several indirect ways:

• Higher rates: When inflation is high, fixed mortgage rates are likely to be higher than they would be in a low-inflation environment.
• Reduced affordability: With inflation driving up prices, including interest rates, your monthly payments may be higher than if you had locked in your mortgage during a period of low inflation.
• Opportunity costs: On the flip side, if you already have a fixed-rate mortgage at a lower rate, you're protected from rising rates and your loan becomes more valuable compared to new mortgages.

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