As the holiday season approaches, most people focus on celebrations, not significant life decisions such as buying a home. However, purchasing a home during this time of year offers advantages you should not overlook.
Prepare for homeownership
Before diving into the housing market, it’s essential to assess your financial situation. Start by reviewing your income and expenses to determine a comfortable monthly mortgage amount. If necessary, create a plan to pay off any debts. It’s also wise to save 3-6 months of living expenses in an easily accessible emergency fund to cover unexpected costs. Additionally, establish a savings goal for homebuying-related expenses, such as closing costs and the down payment.
Your credit score plays a significant role in securing a favorable mortgage rate, so review it early in the process. You can obtain a free annual credit report from Experian, TransUnion and Equifax at AnnualCreditReport.com. This will give you a clear picture of your credit status and time to correct any inaccuracies.
Exploring mortgage options
Once you’re financially ready, it’s time to explore mortgage options. Conventional loans offer competitive fixed rates for 30, 20, 25, 15 or 10 loan terms for qualified buyers. Adjustable-rate options are available for short-term purchases. Government-backed loans, such as FHA, VA or USDA loans, offer low down-payment options.
Renovation loans allow you to purchase a fixer-upper and turn it into your dream home. Renovation loans are available for homeowners who would like to upgrade their home or improve it for resale. These loans can cover a range of improvements, from maintenance upgrades to energy enhancements. Changes to the 203(k)-renovation program, effective this November, make it even more appealing:
- A borrower can finance up to $75,000 in allowable total rehabilitation costs for the Limited 203(k) program. The original limit was $35,000.
- The time to complete rehabilitation and repair work has increased to 12 months for the Standard 203(k) program and nine months for the Limited 203(k) program.
- A borrower can finance the cost of the 203(k) Consultant Fee into the total mortgage amount for the Limited 203(k) program, if the borrower opts to use a consultant.
- The allowable fees a 203(k) consultant can charge has increased.
Advantages of holiday homebuying
The period from September to January, particularly December, is one of the best times to buy a home. According to a November 2023 analysis by ATTOM, homes purchased then often have the lowest premiums above the automated valuation model (AVM), meaning you’re likely paying closer to the home’s estimated value. This can result in significant savings.
Lower competition is another benefit of buying a home during the holidays. The National Association of Realtors (NAR) notes that homes in October and November are typically about 5 percent less expensive compared with June. From December to February, the market slows down due to the holidays and colder weather, leading to less competition and potentially better deals.
Buying before the New Year also has tax benefits. You may be eligible for deductions on mortgage interest and property taxes. Consult a licensed tax professional for personalized advice.
Your next steps
If you’re ready to embrace homeownership this season, it’s important to be well prepared. Understanding your budget and knowing your non-negotiables will streamline the process. In today’s fluctuating rate environment, getting early pre-approval for a mortgage is crucial. Pre-approval determines how much home you qualify for and also shows your purchasing power as rates change during your search.
Buying a home is a significant investment, and having local experts on your side can make a significant difference. From understanding grant programs to accessing niche mortgage products, leveraging local relationships ensures you receive the personalized homebuying experience you deserve.
This holiday season, take the opportunity to turn a house into a home filled with love, laughter and memories.
