The real estate market has been red hot this year, with many people looking to purchase a home because of record-low interest rates. This includes younger individuals, as younger generations are interested in owning a house for the first time. The past couple of years have been anything except normal, and the housing market has taken off, with demand far exceeding supply. Why is this taking place?
Record Low-Interest Rates Are Driving People Into the Market
Even though there are many reasons why people are interested in purchasing a home, incredibly low-interest rates are one of the biggest reasons. Many people are interested in taking out a home loan with a 30-year term. Potential homebuyers think that they may never see interest rates this low again. As a result, many are looking to capitalize on this opportunity before it disappears. This is increasing competition for homes on the market, driving up their values.
Interest Is Skyrocketing Among Younger Individuals
Record-low interest rates are appealing to just about everyone, but it is a particularly attractive option for young homebuyers. Many are just beginning their careers and are looking for ways to build wealth. One of the best ways to do so is through homeownership. Many research bureaus have noted that there is a sharp increase in younger individuals looking at houses.
Many Are Facing An Uphill Battle
Even though there are many young individuals and families looking for houses, there are a number of challenges they will need to overcome. One of the biggest challenges is that there is a historic shortage of inventory. Even though potential homeowners might be able to lock in a low interest rate on a loan, they might not find a house they can purchase. It is difficult for young home buyers to compete against older individuals and families who can make a cash offer. If a bidding war takes place, younger homeowners rarely have the cash to come out on top.
Asking For Help Is Key
Even though today’s mortgage rates are attractive, it is critical not to overpay for a house. Asking for help from a professional can help potential homeowners make the right decision.
If you are looking for a home, you might need to finance it using a lender, such as a bank or a credit union. There are a number of factors that will influence whether your mortgage application is approved. Then, these same factors will play a role in the terms the lender might offer you. One of the most important factors is called the debt to income ratio, or DTI. It is important to understand how this will impact your mortgage application.