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Can You Buy a Home in 2025 Without Waiting for Lower Rates?
Like many homebuyers, you may be waiting for rates to drop before you finally buy a home this year. The latest expert reports predict that rates will continue to fall, but not as low as many hope. While this may be discouraging, the good news is that there are still ways you can buy a home in 2025 without waiting for lower rates.
Will Rates Keep Dropping?
Near the end of 2024, experts were predicting that mortgage rates could dip below 6% by the end of 2025. More recent projections are suggesting that rates will continue to fall but hover somewhere above 6%.
Recent projections from Fannie Mae, the Mortgage Bankers Association (MBA), and Wells Fargo now predict that mortgage rates will stabilize around 6.5% by the end of the year.
If you’re holding out for mortgage rates to drop below 6% before buying, you may need to keep waiting into next year at least. But what if you’re a buyer who can’t wait to move because of a major life event, like a new job, a new baby, or a marriage? Don’t panic—you’ll still be able to move this year, but you may need to take advantage of some alternative financing options.
How to Finance a Home in Today’s Market
With rates predicted to hold more stubbornly than expected this year, it’s worth researching different financing options, especially if your move is a non-negotiable one. Here are three unique financing strategies that may be helpful to you depending on your situation. If you’ve already chosen a lender, discuss each of these options with them to decide if any are a good fit. It may make all the difference you need to buy a house in 2025.
1. Mortgage Buydowns
A mortgage buydown allows you to pay an upfront fee—sometimes called “discount points”— to lower your mortgage rate temporarily or sometimes permanently. This can be an especially helpful option if you want or need a lower monthly mortgage payment early on. Of course, the obvious downside is a higher upfront cost.
A recent survey by HomeLight found that 27% of real estate agents day first-time homebuyers are increasingly requesting mortgage buydowns from sellers. This is a new program called RateReduce Sell that allows sellers to pay an upfront cost to lock in a lower mortgage rate for buyers. However, a real estate agent can help negotiate this with a seller, so be sure to mention it if you’re actively looking to buy a house.
2. Adjustable-Rate Mortgages
Adjustable-rate mortgages (ARMs) are loans that combine a fixed-rate period with an adjustable-rate period. ARMs typically start with a lower rate than a traditional 30-year fixed mortgage then fluctuate with the market once the fixed-rate period ends. This can make them an attractive option if you expect rates to drop in the future, or plan to refinance your home later.
If you remember the 2008 housing crash, it may be reassuring to know that today’s ARMs aren’t like the volatile loans from back then. Lance Lambert, Co-Founder of ResiClub, describes modern ARMs this way:
“. . . ARM products today are different from many of the products issued in the mid-2000s. Before 2008, lenders often approved ARMs based on borrowers ability to pay the initial lower interest rates. And sometimes they didn’t even check that (remember Ninja loans). Today, adjustable-rate borrowers qualify based on their ability to cover a higher monthly payment, not just the initial lower payment.”
Before 2008, banks used to give loans without checking to see if buyers could realistically afford them. These days, lenders verify income, assets, and employment, reducing the risks previously associated with loans like ARMs.
3. Assumable Mortgages
An assumable mortgage allows you to take over a seller’s existing loan, usually including its lower mortgage rate, repayment period, and remaining balance. This can be a great option if the seller was locked into a low mortgage rate, but few are willing to offer it by default. According to U.S. News, more than 11 million homes qualify for an assumable mortgage, so it’s always worth bringing up with your agent or seller.
Conclusion
With mortgage rates looking unlikely to fall below 6% in this year, waiting for a drop may not work out if you’re eager to buy a house in 2025. Consider options like mortgage buydowns, ARMs, or assumable mortgages depending on what makes the most sense for you. Connect with a local lender or expert agent today to explore your options and get the help you need.
Top 10 Best Real Estate Markets for First-Time Buyers in 2025
If you’re like many aspiring homebuyers, the rising cost of living might feel like a major roadblock. From groceries to gas, and yes, especially home prices, everything seems to be getting more expensive.
But even in today’s market, there are still ways to make your homeownership dreams a reality. The key is knowing the current best real estate markets and how to approach your first home purchase strategically.
Think of Your First Home as a Stepping Stone
One of the biggest misconceptions among buyers is that their first home has to be their dream home. The truth is, your very first home doesn’t need to check every box on your wish list. Instead, think of your first home as a stepping stone to your final destination.
Owning a home allows you to start building equity, which grows over time as home prices increase. That equity can be a powerful tool when you’re ready to upgrade to a bigger home or move to a more desirable location in the future.
Rather than waiting until you can afford your dream home in your ideal neighborhood, consider starting with something that fits your current needs and budget. This approach gets you into the market sooner and may cost you in the short-term, but it sets you up for long-term financial growth. Best of all, it’s a real start to eventually buying your dream home at some point in the future.
Explore the Best Real Estate Markets in 2025
If the price of homes in your preferred area are holding you back, it might be worth broadening your search. With some flexibility in location, you can find more affordable options without sacrificing the amenities most important to you. Many first-time buyers find homebuying success by exploring surrounding areas or even considering a move to a different state.
According to a report from Realtor.com, these are the 10 best real estate markets for first-time homebuyers in 2025:
- Rochester, NY with a Median List Price of $129,900.
- Lansing, MI with a Median List Price of $135,000.
- Harrisburg, PA with a Median List Price of $140,000.
- Lauderdale Lakes, FL with a Median List Price of $154,850.
- North Little Rock, AR with a Median List Price of $160,000.
- Baltimore, MD with a Median List Price of $210,000.
- Wilmington, DE with a Median List Price of $222,000.
- Altamonte Springs, FL with a Median List Price of $229,400.
- Tonawanda, NY with a Median List Price of $229,000.
- Villas, FL with a Median List Price of $236.950.
Realtor weighted their market rankings by several factors including median price, location score, number of home listings, average commute time, and others specified in the full report. If one of these cities is in or near your target home location, it’s worth looking to see what properties are available. Even if you don’t find your dream home, you might find the perfect starter home on the path to it.
Stay Local and Look Just Outside Your Preferred Area
If moving to a different state isn’t an option, you can still find affordable homes by expanding your search locally. Sometimes, looking even just 10 to 20 minutes outside your ideal neighborhood can make a significant difference in price. Nearby areas can often offer similar amenities, like access to restaurants, shops, and activities, but at a lower cost.
And the best way to see what’s available is to work with a real estate agent who understands the local market and can help you identify hidden gems nearby. An agent can point you to communities you may not have considered that have lower price tags now and are steadily gaining value and appeal. That way you can buy your first home and be set up to gain equity through the years.
Conclusion
Today’s cost of living is a challenge for many homebuyers, but by exploring 2025’s best real estate markets and working with a knowledgeable agent, you can take that first step toward owning a home this year, and building equity for your future.
How far outside your area would you be willing to look to make your homeownership dreams a reality? Connect with us to discuss your options and find the perfect market for your first home.
Home Price Growth Is Slowing in 2025 – What Does That Mean for You?
Over the past few years, home prices have skyrocketed as demand has increased and supply has stiffened. It’s been a frustrating market for buyers, leaving many to doubt their chances of ever owning their own home. But the early weeks of 2025 have brought welcome news: the pace of home price growth is finally slowing down, and that’s a positive shift for anyone looking to buy a home.
Home Price Growth Drops to a Healthy Pace
At the national level, home prices are still rising, but at a much more normal, manageable rate compared to the double-digit spikes we saw in 2021 and 2022. Recent data from Case-Shiller show that in November 2024, the year-over-year increase in home prices was just 3.8% nationally, a clear drop from Pandemic rates:
What does this mean for you? For one thing, you’re less likely to experience the sticker shock that was common just a few years ago. The days of rapid price jumps that made it difficult to plan or pursue your purchase are behind us, and projected drops in mortgage rates this year paint an even more positive picture. More stable price growth also means that the home you buy today is still likely to appreciate in value over time, helping you build equity and secure your financial future.
Real Estate Is Local: Prices Vary by Market
While the national trend is pointing to more moderate price growth, keep in mind that all real estate is local. Some markets are still experiencing strong demand and upward price pressures, while others are cooling off or even seeing declines. For example, smaller, more affordable metro areas are still seeing significant demand and price increases. As CoreLogic Chief Economist Selma Hepp explains:
“Regionally, variations persist, as some affordable areas – including smaller metros in the Midwest — remain in high demand and continue to see upward home price pressures.”
Meanwhile, other regions, particularly those in southern markets, experienced slight month-over-month declines in November, according to Federal Housing Finance Agency (FHFA) data:
Differences like these highlight the importance of understanding what’s happening in your specific market. National averages can provide a general idea, but they rarely give you the whole picture. That’s where the knowledge and expertise of a local real estate agent can really help. They can help you understand local trends, identify opportunities, and create a buying strategy tailored to your needs and budget. Whether you’re buying in a high-demand market or one that’s cooling off, having a local expert on your side ensures you’re making more informed and confident decisions.
Conclusion
Home prices in early 2025 are growing at a more manageable pace, giving you the opportunity to plan your purchase without fearing the rapid price hikes of recent years. Connecting with a local real estate agent can help you navigate your area’s local home market, and make the best decision possible.
If you’re thinking about buying a home, 2025 is shaping up to be a great time to explore your options. Reach out to us today to connect with a local expert who can help you buy with confidence and find the perfect home for you.
FHA Home Loans in Wisconsin
If you’re in the market for a home in Wisconsin, you may have heard of FHA loans, or Federal Housing Administration loans, as a financing option. These government-backed loans are a popular choice for first-time homebuyers and those with less-than-perfect credit. In this guide, we’ll break down everything you need to know about FHA loans in Wisconsin, along with benefits and requirements of state-specific programs that can help you achieve your dream of homeownership.
What are FHA Home Loans?
FHA loans are mortgages insured by the Federal Housing Administration (FHA) and are designed to make homeownership more accessible, especially for Americans who may not qualify for a traditional mortgage or other loans. This reduces the risk for lenders and allows them to offer lower down payments and more lenient credit requirements. This also makes FHA loans particularly appealing to first-time buyers or those with limited savings.
Here are a few ways that FHA loans stand out from other options:
- Low Down Payment: You can qualify with as little as 3.5% down if your credit score is 580 or higher, meaning that up to 96.5% of a home’s value can be borrowed through an FHA loan.
- Flexible Credit Requirements: FHA loans are more forgiving of lower credit scores compared to conventional loans. Borrowers with scores as low as 500 may still qualify with a 10% down payment.
- Competitive Interest Rates: Being backed by the federal government, FHA loans often have lower interest rates than conventional loans, making monthly payments more affordable.
- Mandatory Mortgage Insurance: FHA loans require both an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP), which is paid monthly.
These are just a few ways FHA loans can help homebuyers overcome financial barriers and make homeownership a reality for more Americans. With lower credit score requirements and lower down payments, it’s an easier pathway to securing a loan and finally owning a house.
Current FHA Loan Interest Rates in Wisconsin
As of February 2025, the average interest rate for a 30-year fixed FHA loan in Wisconsin is 6.24%, with an APR of 6.92%. These rates are slightly lower than conventional loan rates, making FHA loans a more cost-effective option. However, rates vary depending on your credit score, the lender, and the loan type and length, so always explore your options and compare offers when possible.
FHA Loan Requirements in Wisconsin
To qualify for a FHA home loans in Wisconsin, several key criteria must be met to ensure that potential borrowers are financially stable and capable of repaying their loan. Most notably, applicants need to demonstrate a reliable employment history and income.
Here’s a summary of the main eligibility criteria:
- Credit Score: As of 2023, a minimum score of 580 is required for a 3.5% down payment. Scores between 500 and 579 require a 10% down payment.
- Debt-to-Income Ratio (DTI): Your total monthly debt, including the mortgage, should not exceed 43% of your income, though some lenders may allow up to 57% in certain cases.
- Employment and Income: You’ll need a steady employment history of at least two years and verifiable income.
- Primary Residence: The home must be your primary residence.
- Property Standards: The property must meet FHA’s minimum standards for safety and livability, as determined by an FHA-approved appraiser.
- Loan Limits: For 2025, the FHA loan limit for a single-family home in most Wisconsin counties is $524,225. In higher-cost areas like Pierce and St. Croix counties, the limit is $529,000.
By meeting these requirements, you better position yourself for loan approval. It can also simplify the loan process, making it smoother and preventing potential setbacks or delays.
Applying for an FHA Loan in Wisconsin
Applying for FHA home loans in Wisconsin is straightforward but involves several basic steps. Borrowers should start by researching and comparing various FHA-approved lenders to find the best loan terms and secure the best deal.
After selecting a lender, borrowers complete the FHA loan application process. This process may vary between lenders, but should follow the same general steps. Here’s an overview of the major stages involved:
- Find an FHA-Approved Lender: Choose a lender approved by the FHA. Most banks, credit unions, and mortgage companies offer FHA loans.
- Pre-Approval: Get pre-approved to determine your budget and show sellers you’re a serious buyer.
- Submit Your Application: Provide details about your income, employment, and the property you want to buy .
- Provide Documentation: Submit tax returns, pay stubs, bank statements, and other financial documents.
- Property Appraisal: The lender will order an appraisal to ensure the home meets FHA standards and is worth the loan amount.
- Underwriting: The lender reviews your application to ensure you meet all FHA requirements.
- Closing: Sign the final paperwork, pay closing costs, and officially become a homeowner.
Wisconsin-Specific Programs to Pair with FHA Loans
Certain areas in Wisconsin may offer programs that can make FHA loans even more affordable. These programs are most common in larger metropolitan areas like Madison and Milwaukee, but some are available statewide through the Wisconsin Housing and Economic Development Authority (WHEDA). Here are a few options to explore if you’re planning to buy a home in Wisconsin:
- WHEDA Down Payment Assistance: The Wisconsin Housing and Economic Development Authority (WHEDA) offers programs like the Easy Close DPA, which provides up to 6% of the home’s purchase price as a second mortgage. Another option is the Capital Access DPA, offering $7,500 with no interest or monthly payments
- City of Madison’s Home-Buy the American Dream Program: Provides up to $35,000 in down payment and closing cost assistance, deferred until the home is sold or refinanced.
- Milwaukee Down Payment Assistance: Offers forgivable grants of up to $7,000 for homes in designated areas, provided the buyer contributes at least $1,000 and lives in the home for five years.
- Local Assistance Programs: Many cities and counties in Wisconsin offer grants or zero-interest loans for first-time buyers. Check with your local housing authority for details.
Conclusion
FHA loans are an excellent choice for hopeful homebuyers, especially first-time buyers or those with limited savings. By combining the benefits of FHA loans with Wisconsin-specific programs like WHEDA’s down payment assistance, you can make your dream of homeownership a reality. Whether you’re buying in Milwaukee, Madison, or a smaller town, understanding the FHA loan process and available resources will help you make informed decisions and secure the best deal for your new home.
If you’re ready to take the next step, start by finding an FHA-approved lender and exploring the down payment assistance programs available in your area. With the right preparation, you’ll be well on your way to owning a home in the beautiful state of Wisconsin!
Ready to buy but not sure how to secure a loan? Reach out to us today for help finding a qualified lender that works for you.
2025 Housing Market Predictions: What Do the Experts Say?
Wondering how the housing market is expected to change in 2025? And more specifically, what it all means for you if you plan to buy or sell a home? As always, the best way to get that information is to consult the pros.
Experts are constantly refining their predictions in response to changes in the market and overall economy. Here’s the latest information on two key factors sure to influence the housing market in 2025: mortgage rates and home prices.
Will Mortgage Rates Come Down?
Mortgage rates remain one of the strongest factors influencing the market, and everyone is waiting for them to come down. The real question is: will they drop, and how quickly?
The good news is that mortgage rates are indeed projected to ease a bit in 2025, falling into the mid-6% range on average. But experts say not to expect a return to 3-4% mortgage rates, at least not this year. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“Are we going to go back to 4%? Per my forecast, unfortunately, we will not. It’s more likely that we’ll go back to 6%.”
Other experts agree with Yun’s 6% prediction. They’re forecasting rates could settle in the mid-to-low 6% range by the end of 2025 (see chart below):
But remember that the market can change quickly, and experts will revise their predictions as the new year continues. Market forecasts are based on what experts know right now. And since everything from inflation to economic drivers have an impact on where rates go from here, some ups and downs are still very likely. So, don’t get caught up in the most exact numbers and try to time the market. Instead, focus on the overall industry trend and on what you can actually control.
A trusted lender and a local agent partner will make sure you’ve always got the latest data and the context on what it really means for you and your financial goals. With their help, you’ll see that even a small decline in mortgage rates can help bring down your future mortgage payment when you decide to buy.
Will Home Prices Fall?
The short answer? Not likely. While mortgage rates are expected to ease, home prices are projected to keep climbing in most areas – but at a slower, more normal pace. If you average the expert forecasts together, you’ll see prices are expected to go up roughly 3% next year, with most of them hitting somewhere in the 3 to 4% range. But this is a much more typical and sustainable rise in prices compared to (see graph below):
If you’re thinking of buying in 2025, don’t expect a sudden drop to score you a big deal. That may sound disappointing if you’re hoping for home prices to come down, but this means you won’t have to deal with the steep increases we saw in recent years. You’ll also likely see any home you do buy go up in value after you get the keys in hand, and this can turn into a great investment over time.
Like many buyers, you might be wondering how it’s even possible that home prices are still rising. The answer all comes down to supply and demand. Even though there are more homes for sale now than there were in 2024, it’s still not enough to keep up with all the active home buyers on the market. As Redfin explains:
“Prices will rise at a pace similar to that of the second half of 2024 because we don’t expect there to be enough new inventory to meet demand.”
Keep in mind that the housing market is hyper-local, so this will vary by area. Some markets will see even higher prices, and some may see prices level off or even dip if inventory is up in that area. In most places though, prices will continue to rise as they usually do.
If you want to find out what’s happening in your local housing market, it always helps to lean on an agent who can explain the latest trends and what they mean for your homeownership plans.
Conclusion
The housing market is always changing, and 2025 will be no different. With mortgage rates likely to ease down to the 6% range and prices rising at a slower, more sustainable pace, it could be a great time to finally buy or sell. As always, it’s all about staying informed and making a plan that works for you.
If you’re in the market to buy or sell a home in 2025, let’s connect you with a local agent who can give expert advice on what’s happening in your area and make sure your next move is a smart one.
Closing on a House: A Step-By-Step Buyer’s Guide
The process of closing on a house is the final stretch before home ownership is transferred and the property becomes legally yours. If you’re a new homebuyer, the closing process and its various steps can be confusing and intimidating. This short guide will outline the home closing process and help simplify your final steps to home ownership.
10 Steps to Closing on a House
The closing process can vary from transaction to transaction but generally tends to follow the same basic milestones. Here are 10 major steps of the closing process you’ll need to follow to complete your home purchase.
1. Offer and Acceptance
The closing process typically begins when the seller accepts your offer to purchase the home. This agreement sets the terms, including the purchase price and any contingencies.
2. Open an Escrow Account
Escrow plays a pivotal role in the real estate closing process. An escrow account is established to hold funds and documents until the transaction is finalized. This account is managed by a neutral third party, such as an escrow agent or title company, which also manages the transfer of the property title.
3. Conduct a Title Search and Obtain Title Insurance
A title search ensures the property is free of liens or ownership disputes so you can be sure you’re buying a home with a clear title. Meanwhile, title insurance protects you from future claims against the property and covers legal costs if past owners have unresolved claims. Together, a title search and insurance provide a buyer with legal safeguards and extra peace of mind during the closing process.
4. Schedule a Home Inspection
Hire a professional inspector to evaluate the property’s condition. Address any issues identified during the inspection by negotiating repairs or price adjustments with the seller. While costly, this will save you from any unexpected repairs and expenses after closing.
5. Negotiate Closing Costs
Work with the seller to determine who will cover specific closing costs, which may include loan fees, appraisal fees, and title insurance. Always review your settlement statement thoroughly to understand what costs you’re responsible for and if any are negotiable.
6. Secure Financing
Finalize your mortgage by submitting required documents, locking in your interest rate, and obtaining loan approval. Ensure you receive a Loan Estimate and Closing Disclosure from your lender. Timelines for a mortgage approval can vary, so stay in constant communication with your lender to monitor progress and respond promptly to any additional requests they make.
7. Review All Documents
Carefully review the Closing Disclosure (or settlement statement), which outlines the final loan terms and closing costs. Pay special attention to any discrepancies in loan terms or fees to avoid unexpected expenses in the future. Verify all details are accurate and address any remaining issues immediately.
8. Conduct a Final Walk-Through
Perform a final inspection of the property within 24-48 hours before closing. Confirm the property is in the agreed-upon condition and that all negotiated repairs have been completed. Following a walk-through checklist can be a convenient way to personally check each area of the home ands its condition.
9. Attend the Closing Meeting
At the closing meeting, sign all necessary documents, including the deed, mortgage, and promissory note. Pay the remaining closing costs and down payment. Address any potential closing delays, such as remaining problems from the title search or home inspection.
10. Transfer of Ownership
Once all documents are signed and funds are transferred, the title is recorded, and ownership officially transfers to you. You’ll receive the keys to your new home and will finally be ready to begin moving in. Congratulations!
Conclusion: From Buyer to Homeowner
With the closing transaction complete, it’s time to enjoy your new home! Before putting your closing behind you, take care of any post-closing responsibilities you may still have to a third party other than your lender. Next, you’re ready to begin your transition into the next step of your journey as an official new homeowner.
Interested in closing on a house or making that first leap into home ownership but unsure where to start? Contact us today to connect with an expert real estate agent for help on your homebuying journey, or start a property search in your local area now.
What Credit Score Do You Need To Buy a House?
Buying a house is a major milestone for many people, but it can also be a daunting process. One of the biggest concerns for potential homebuyers is their credit score. So what credit score do you need to buy a house in Wisconsin? Let’s explore this question and how it relates to the housing market.
Understanding Credit Scores
Before we dive into the specific credit score needed to buy a house, it’s important to understand what a credit score is and how it is calculated. A credit score is a three-digit number that represents your creditworthiness and is used by lenders to determine your risk as a borrower. The most commonly used credit score is the FICO (Fair Isaac Corporation) model, which ranges from 300 to 850 and prioritizes payment history. The other credit score type is the VantageScore model, which prioritizes total credit usage and is typically referred to less often.
Your FICO score is calculated based on several factors, including your payment history, amounts owed, length of credit history, new credit, and types of credit used. Credit payment history and amounts owed are typically the most significant factors in determining your FICO score. Keeping your credit balances low and making regular on-time payments are the best ways to maintain a good FICO score. The higher your credit score, the better your chances of getting approved for a loan and receiving favorable mortgage rates.
The Housing Market and Credit Scores
The housing market is constantly changing, and this can have an impact on the credit score needed to buy a house. In a strong housing market, lenders may be more lenient with credit score requirements as they are more confident in the market’s stability. On the other hand, in a weaker housing market, lenders may tighten their requirements and look for higher credit scores to mitigate their risk.
Credit Score Requirements for Different Types of Loans
Different types of loans have different credit score requirements. For example, a conventional loan typically requires a credit score of at least 620, while an FHA loan may accept a credit score as low as 500 with a 10% down payment. While a higher credit score will usually result in better mortgage rates and loan terms, it’s always advisable to compare the repayment terms of different loan offers before accepting one. While a loan with a lower down payment may be enticing in the short term, a lower interest rate will results in a lower monthly payment, saving you more in the long term.
Good Credit Score for Buying a House
While the minimum credit score required for a mortgage loan may vary, a good credit score for buying a house is generally considered to be 700 or above. In particular, Wisconsin has one of the highest average credit scores in the country at 732, which falls in the upper end of the “Good” score range. Having an average credit score or better shows lenders that you are a responsible borrower and can handle the financial responsibility of a mortgage. With a good credit score, you are more likely to be approved for a loan and receive favorable mortgage rates.
Improving Your Credit Score
If your credit score isn’t where you want it to be, don’t worry. There are steps you can take to improve your credit score before applying for a mortgage. These include paying off outstanding debts, making all payments on time, and keeping credit card balances low. It’s also a great practice to regularly check your credit report for any errors and dispute them if necessary. Generally, the best way to build your credit score over time is to make regular monthly payments that slowly lower your total credit usage.
Final Thoughts
The credit score needed to buy a house can vary depending on the local housing market and the type of loan you are applying for. With that said, a good credit score for buying a house is generally considered to be 700 or above. If your credit score is not where you want it to be, take steps to improve it before applying for a mortgage. Keep in mind that the average credit score in Wisconsin is relatively high at 732, and that meeting or exceeding this score will grant you a valuable advantage. With a good credit score, you can increase your chances of loan approval and receive better mortgage rates that will save you a considerable amount of money in the long run.
Modular Homes vs. Regular Homes: How Do They Compare?
Between the woes of rising home prices and a lack of new inventory, many eager home buyers are exploring newer, more accessible options for achieving home ownership. One increasingly popular choice among new homeowners is the modular home, a type of prefabricated housing designed to offer increased affordability, customizability, and even construction quality over conventional site-built homes. But what exactly is a modular home, and how does it compare to a traditional single-family home? Keep reading for all the information you need to answer these questions and decide if a modular home is right for you.
What is a Modular Home?
Modular homes are a type of prefabricated housing built in individual sections or modules in a factory and then transported to the site for assembly. Unlike other prefab units, modular homes are placed onto a permanent foundation during assembly, and are built to the same building codes and regulations as traditional homes. Because modular homes are composed of different modules or “pieces”, the buyer has much more freedom and control over the design, layout, and style of the final product.
The main difference between modular homes and other prefabricated housing is the construction process. Modular homes begin as individual modules built in a controlled factory environment, which allows for increased efficiency and quality control. Once the modules are completed in the factory, they are transported to the site and assembled to create the finished home. This assembly process typically takes a shorter amount of time compared to traditional home construction, as the modules are already built and only need to be connected together. The result is a quickly-built and affordable new home, custom-tailored to fit the buyer’s preferences and needs.
Despite these differences from traditional site-built homes, modular homes are subject to the same building codes and meet the same standards of quality and safety. However, like any manufactured product, quality of service and construction can vary between sellers, so it’s advisable to buy from a trusted builder.
Quality Construction
One major advantage of modular homes is the quality construction that scaled factory production provides. In addition to following the same building codes as regular homes, the controlled factory environment ensures that modular homes are consistently produced at a set quality standard. Reputable manufacturers also produce home modules using the same materials that regular home builders do, making sure that a completed modular home meets or exceeds the quality of a traditional one. Of course, this may vary between manufacturers, so it’s always a good idea to research and confirm a builder’s practices before choosing one.
Customizable Options
As their nature implies, modular homes offer customization and creative freedom far beyond a traditional home. The ability to choose and combine different modules provides a considerable number of potential floorplans, allowing homeowners to personalize their new living space. Modular homes also offer the flexibility of adding additional modules in the future, providing the option to expand and adapt your home over time. Meanwhile, regular homes often have limited options for expansion, especially in planned communities or developments. This is even truer of starter homes, which can be costly to expand with added square footage thanks to construction costs. Naturally, this leads us to the last and perhaps most attractive strength of modular construction: cost-effectiveness.
Affordability
Modular homes and their owners enjoy considerable advantages in cost and affordability over regular homes. According to SoFi, modular homes tend to be 10% to 20% cheaper than traditional homes. The simplicity and efficiency of large-scale factory production means modular homes can be constructed and assembled at much lower costs than traditional homes. In addition, housing modules made with high quality materials are often more energy-efficient thanks to more effective insulation, which results in savings on utility bills during summer or winter. The combination of these lower costs provides a home that’s not only more affordable to buy, but more affordable to live in as well. In contrast, regular homes can have higher construction costs due to the increased labor required. The potential for weather delays can also extend a new house’s required construction time, driving up the final cost even further.
Is a Modular Home Right for Me?
Modular homes can be a great option for new home buyers who want the option to expand in the future, but there are downsides to consider as well. You’ll need to work with a contractor to purchase a parcel of land for your modular home, and finding suitable land can be difficult. Purchasing a modular home might require a construction loan rather than a mortgage, and some lenders may not finance a modular home due to unfamiliarity and inexperience. Reselling a modular home can also be challenging due to their customization as well as public misconceptions about their quality and desirability.
If you’re considering a modular home but have reservations, it’s always a great idea to consult a real estate professional or financial advisor. Modular homes certainly aren’t for everyone, but they can be the perfect alternative to the costs and long-term commitments of a regular home.
Why Pre-Approval Is Your Homebuying Game Changer
If you’re thinking about buying a home, pre-approval is a crucial part of the process you definitely don’t want to skip. So, before you start picturing yourself in your new living room or dining on your future all-season patio, be sure you’re working with a trusted lender to prioritize this essential step. Here’s why.
While home price growth is moderating and mortgage rates have been coming down in recent weeks, affordability is still tight. At the same time, there’s a limited number of homes for sale right now, and that means ongoing competition among hopeful buyers. But, if you’re strategic, there are ways to navigate these waters – and pre-approval is the game changer.
What Pre-Approval Does for You
To understand why it’s such an important step, you need to know more about pre-approval. As part of the homebuying process, a lender looks at your finances to determine what they’re willing to loan you. From there, your lender will give you a pre-approval letter to help you understand how much money you can borrow. Freddie Mac explains it like this:
“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”
Getting pre-approved starts to put you in the mindset of seeing the bigger financial picture, one step at a time. And the key is actually more than just getting a pre-approval letter from your lender. The combination of pre-approval and strategic budgeting is your golden ticket to understanding what you can actually afford. It saves you from painful heartaches down the road so you don’t fall in love with a house that might be out of reach.
Pre-Approval Helps Show Sellers You’re a Serious Buyer
But that’s just the beginning. Let’s face it, there are more people looking to buy than there are homes available for sale , and that creates competition among homebuyers. That means you could see yourself in a multiple-offer scenario when you get ready to make your move. But getting pre-approved for a mortgage can help you stand out from other buyers.
In today’s fast-moving housing market, having that pre-approval in your back pocket can be your secret weapon. When sellers see you’re pre-approved, it tells them you’re a strategic and serious buyer. In a world of multiple offers, that’s a big deal. As an article from the Wall Street Journal (WSJ) says :
“If you plan to use a mortgage for your home purchase, preapproval should be among the first steps in your search process. Not only can getting preapproved help you zero in on the right price range, but it can give you a leg up on other buyers, too.”
Pre-approval shows sellers you’re more than just a window shopper. You’re a buyer who’s already undergone a credit and financial check, making it more likely that the sale will move forward without unexpected delays or issues. Sellers love that because they see your offer as a reliable one. A win-win, right?
Bottom Line
So, before you start mentally arranging furniture in your dream home, work with a trusted lender to get your pre-approval set. It’ll save you time, stress, and a lot of headaches that could come up along the way without it. The reality is, the more prepared you are, the more likely you are to land the home you’re longing for.
