In July of 2022, the consumer price index rose 9.1% from a year earlier in a broad-based advance, the largest gain since the end of 1981. Inflation has increased the cost of everything – from groceries to utilities to gas prices.
Buying your first house during a period of economic inflation can be challenging, but it’s far from impossible. And if you set yourself up right, you can keep your homebuying expenses in check and walk away with a win.
Below, we’ve shared some tips that can help first-time homebuyers in this situation.
How Is Inflation Affecting the Housing Market?
Increased demand, supply chain issues, policy changes, and increased labor costs have all contributed to the inflation that we’re seeing right now. The higher cost of living has no doubt created challenges for everyone, including families and individuals who are buying their first house.
Right now, we’re seeing inflation affect the housing market in a number of ways such as:
- Higher rent prices
- Higher home prices
- Increased mortgage rates
Unfortunately, experts predict that many of these challenges aren’t going to disappear anytime soon.
What Can First-Time Buyers Do?
In some cases, it may seem like it makes sense to hold off on buying a new home. But, unfortunately, regardless of what’s going on with the economy, life still happens. Some people find that they can’t wait due to a change in employment, a new baby on the way, or other life circumstances.
Buying your first house during a period of inflation can be difficult, but it can be done. Here are some tips you can use to set yourself up for success:
Buy Before Home Prices Go Higher
Home price increases may be cooling off, but experts predict they won’t come to a halt anytime soon. Home prices are likely to continue going up in the future, just not at the same rate as they were before. Therefore, it may make sense to buy sooner rather than later.
Adjust Your Budget Accordingly
Because mortgage rates are higher, you may want to consider adjusting your homebuying budget to make your monthly payments more affordable. This may mean buying a slightly smaller home or one with fewer amenities.
Improve Your Credit
Work on improving your credit and saving for a down payment to better your chances of getting a good rate.
Consider an ARM
Consider taking out an adjustable-rate mortgage (ARM) instead of a fixed rate. With an adjustable-rate mortgage, rates are typically lower for the first few years. This may be a good option for individuals buying a starter home or those planning on staying in the home for a short time.
Work with a Mortgage Expert
An expert may be able to help you find other ways to save and make buying your first house more affordable. Call Mortgage Solutions Financial today to get in touch!