Zillow’s Tips for Buying Your First Home In Today’s Evolving Market

Buying a home is one of the largest investments most people will ever make to help build wealth for themselves and their families. Investing in the American Dream can simultaneously be an exciting and daunting experience.

Navigating today’s unpredictable real estate conditions, the mortgage financing process, and housing affordability issues can, at times, be exasperating.

So, perhaps the big question potential buyers are asking is: “Should I buy now or wait?” For prospective homebuyers, coming up with a definitive answer to that question can be difficult. Yet, there are some points to consider:

Buying offers a wealth-building event impossible to achieve as a renter.
In some markets, home prices are dropping now or rising less rapidly than during the pandemic, which could make it a little easier to plan your home purchase and manage your money. This trend is expected to continue through late this year.

Orphe Divounguy, a senior economist at Zillow, says the decision about when to buy a home is deeply personal, and a unique, individual need drives each prospective homebuyer.

“A good reason to buy is to want a home to call your own because you’re in the right place personally and financially,” said Divounguy.

Zillow’s experts point out what first-time buyers should consider amid today’s volatile mortgage rates and housing affordability concerns. These moves can potentially help many buyers get a home regardless of market conditions.

Understand what you can afford.

Although mortgage rates—a key driver for housing affordability—are beginning to stabilize, Divounguy maintains affordability is still the toughest challenge in today’s market, with mortgage payments on a new loan having doubled since May 2019.

You should start with an online mortgage calculator and affordability tools to understand what you can realistically afford and how home prices and mortgage rates translate into monthly payments.

Get Financing first.

Get pre-approved—not just pre-qualified—for a mortgage first. You should shop around for a lender to make sure you’re getting the best rate and find a knowledgeable loan officer to partner in the buying process and help explain options so you can make an educated decision.

A recent survey from Zillow Home Loans shows many homebuyers don’t shop around for their mortgage, potentially costing them hundreds of dollars each month.

Mortgage giant Fannie Mae projects that rates on 30-year home loans will average 6.4% this year and decline to 5.9% in 2024. That difference could mean huge monthly savings.

Homebuyers can start that process without impacting their credit score through Zillow Home Loans. And it makes an eventual offer much stronger in the eyes of a seller.

Buying points on a mortgage is also an option to essentially pre-pay interest upfront in exchange for a lower rate and monthly payment. A break-even calculator can help buyers determine if paying more now to buy points could save them money in the long run.

Discovering ways to get help with your down payment.

Among the biggest challenges for first-time homebuyers is coming up with the down payment. For many homebuyers, that can appear to be an impossible effort. But it doesn’t have to be. You can explore down payment assistance programs available on every Zillow listing, including federal or local programs that offer cash grants to buy homes and interest-rate subsidies. On average, eligible buyers receiving down payment assistance get approximately $17,000 to help with their purchase.

Hire the right real estate agent.

With the market’s shift, you want to hire an expert who’s been there before and has a pulse on all the changes happening in your desired neighborhood.

Zillow estimates nearly 90% of buyers work with a professional real estate agent at some point during the process. The major task for the buyer’s agent is to look out for your best interest in negotiations, helping you gain a price that works best for you.

Real estate agents’ expert knowledge of local neighborhoods, property values, and market trends enables them to help buyers make informed decisions, navigate the process confidently and win the home that best meets their preferences and investment goals. Connect with a local agent here.

There is a range of factors to consider when searching for a home, from setting a budget to understanding home-buying incidentals like property taxes, homeowner’s insurance, and closing costs. To help make that review easier, start your quest with Zillow’s Home Buyers Guide.

The information in the guide can prove vital in helping homebuyers save money to purchase a house, find first-time homebuyer programs, and learn how much a house is worth. It also includes other tips to make you a savvier buyer, like discovering the ups and downs of buying a new home versus an existing one, determining which party pays for home inspections, and more.

This article is sponsored by Zillow.