Wow - we’re halfway through 2024! As we look at the rest of the year, I’ve got a few tips on how to help your buyers navigate the current market conditions as they prepare to purchase.?? 

1. Paying Discount Points Can Help the Right Buyers 

With average interest rates hovering around 7%, combined with higher home prices, more buyers are choosing to pay a partial or full point to buy down their interest rate in exchange for a lower monthly payment.? 

It used to be that the general rule of thumb was for every discount point your buyer paid, their rate would decrease by .25%.? However, in the current market environment, we’re seeing that paying a full point can save from .25% - .50% in rate, or even paying a partial point can save .25% on the rate.?

2. Closing Costs Have Risen 

We discuss this often, but it bears repeating: the old 3% for closing cost in many markets no longer holds true. 

As mentioned above, buyers may pay discount points. Additionally, inflation and the cost of compliance play a role as well.?Appraisal fees have increased, attorneys have raised their closing fees, and lender fees for verifying employment, Social Security numbers, running fraud checks, and so on have increased too.?Of course, if the property is in a flood zone, requires a well or septic inspection, a foundation certification or a condo questionnaire, this will add to the overall cost.?In addition, if your client elects to obtain a survey or is paying a realtor admin fee, this will also impact the total settlement expenses. 

Because many of these fees are fixed costs, for sales prices under $350,000, the percentage of sales price increases.?We are seeing closing costs run closer to 4%, but they can be higher or lower depending on many factors.

3. “Pre-approved" Means More Than “Pre-qualified” 

Pre-approvals are always better than pre-qualifications, and there is a big difference. 

“Pre-qualified” simply means your buyer and I have a general conversation about what they can afford based on what they tell me about assets, income, etc. No credit is pulled, and no documents are required or reviewed. 

Call me with any questions you have.