4 things every home buyer needs to know in 2024

Greetings from the trenches of the housing market in 2024. I’m buying a house this year and it’s hard not to feel bad luck. Not only have mortgage interest rates risen, but housing supply is also short. What’s an aspiring homeowner to do? Read on to find out.

1. It is still a seller-centric market

I don’t want to break it to you, but if you’ve been wanting, wishing, and saving for the last few years and you’re finally ready to pull the trigger on buying a home, you’re definitely not alone. Unfortunately, housing supply is not enough to satisfy everyone. According to the National Association of Realtors, only 2.9 months’ worth of homes were sold in February 2024. To equalize the market between buyers and sellers, supply must be higher. Ideally it would be at least 4 months, probably closer to 6 months.

2. Review all your mortgage options and figure out how much you’ll pay.

If you’re a prospective homebuyer, you probably already know that you’ll be paying a lot more on your mortgage than you will in 2020 or 2021. As of this writing, the average interest rate for a 30-year fixed mortgage is 6.79%, according to Freddie Mac. The interest rate you receive will vary greatly depending on your financial profile, but even if you have a stellar FICO® score, you’ll end up paying more than you want.

It is very important to look closely at all your home loan options. Depending on your life and financial situation, this may include:

• FHA loans (first-time buyers, buyers with poor credit, buyers with small down payments)
• VA Loans (Active Duty Military or Veteran)
• USDA loan (for purchases in eligible rural areas)

Even if, like me, you are purchasing through a conventional loan, you still have options to explore. You can get a mortgage from a large online lender, a small local credit union, or anything in between. And you can choose the conditions. The 30-year fixed-rate mortgage is the American classic, but you can also get a 15- or 20-year term loan or an adjustable-rate mortgage (ARM).

3. It is important to get pre-approved for a mortgage.

When it comes to mortgage options, it’s not enough to research and decide what type of loan you want to target. Before you begin your home search in earnest, you should contact some lenders and apply for pre-approval. Having your lender observe your actual financial situation can give you peace of mind that you can actually purchase a home.

How disappointing it would be to dream of the day you get your keys, start your home search without pre-approval, find the perfect home, then talk to a lender, only to find out that the mortgage interest rate you qualify for won’t cover your monthly payments. Imagine this. Or worse, your existing debt, income, or credit score may prevent you from actually getting approved at all.

Avoid grief and research your finances in advance. And once you realize that the purchase is not a good idea from a financial standpoint, you will gain insight into how to solve the problem. Perhaps you need to increase your income to cover your mortgage payments, or you may need to pay off your current debt to improve your debt-to-income ratio and get approved for a loan.

Another reason to get pre-approved is a direct result of the highly competitive market. If you want to find the perfect home for you and make an offer, you can do so quickly and confidently if you already know that a lender is likely to give you final approval. Pre-approval doesn’t guarantee that the loan is yours, but it’s certainly more likely if there aren’t any major changes to your finances and you’re not targeting a home you can’t afford.

4. Save as much money in advance as possible

This last one is a big problem. Buying a home is expensive. This will likely be the biggest purchase you’ve ever made. You must pay a down payment. While there is a $0 down mortgage option, it is generally a good idea to put something down when purchasing a home to secure home equity in the first place. There are also closing costs, inspection costs, and more. And the bills don’t stop even after the ink dries on all the documents you’ll sign at closing. Now you have a house to maintain and all the costs that come with it.

How do you deal with it? Save as much money as possible before starting the process. I started saving at the end of 2022 to buy a house. Because we found out that the earliest time to purchase is early 2024. And after I achieved my initial savings goal, I kept saving and am still saving. I’m glad I gave myself this much financial runway and feel better about buying a home again after my disastrous first experience with homeownership.

Buying a home in 2024 is a challenge. Wherever you go, there will be potential pain and pitfalls. Keep these things in mind to have the best chance of success and luck.

NOTE: Our top-tier cashback cards now offer a 0% introductory APR through 2025.

This credit card isn’t just good. This is a very good card that professionals use personally. Features a long 0% intro APR period, cash back rates of up to 5%, and no annual fee! Click here to read the full review for free and apply in just 2 minutes.