By Khristopher J. Brooks | 12.23
Many Americans may be pondering their 2023 goals, and for many, that will include buying a new home.
Competition in the residential real estate market is unlikely to be as intense next year as it was in 2022, experts told CBS MoneyWatch, as the soaring price of homes and mortgages will keep many would-be buyers on the sidelines.
Here are some steps experts say house-hunters can take now if they plan to buy a home in 2023.
Improve your credit score
Getting the best possible interest rate on a home loan often requires boosting your credit score, said Gary J. Reggish, a regional vice president at the National Association of Realtors.
The average credit score for a first-time homebuyer is 746, according to a 2022 Fannie Mae study. The average score for all homebuyers — first or otherwise — is 754, the study found.
A "good" credit scoring range is around 670-739. If you improve your credit score from fair to good — or better yet, "excellent" (800 and up) — you are in a better position to be approved for mortgages with better interest rates, which can potentially save you tens of thousands of dollars over time.
Someone with a low score due to a lack of credit history should consider getting a credit card, Reggish said. By contrast, those with multiple credit cards and a low score should focus on clearing the balance on two or three cards and close those accounts, he said. These are the easiest ways to inch up your score quickly, Reggish added.
Make those changes as soon as possible because "it can take 30-to-60 days for the credit agencies to change your score," he said.
Start using online tools
Gone are the days of driving around town to open houses all weekend, said Zillow senior economist Jeff Tucker.
Anyone looking to buy a home next year can go online instead and take a 3D virtual tour of a property, Tucker said. Virtual tours have been around for years, but their popularity exploded during the coronavirus pandemic, he said.
Experts also suggest using an online mortgage calculator to estimate the price of a home you can afford. After you've worked up an estimate, sign up for email alerts from websites like Redfin or Zillow so you'll know immediately when new homes within your price range hit the market.
Search for the right agent and lender
Start contacting potential real estate agents and mortgage lenders early in the year because it could take a while to find a person and company with whom you're comfortable, experts said. The goal is to have a loan pre-approval letter and an agent in place by spring.
"April and May are where you'll see the most homes hitting the market," said Taylor Marr, deputy economist at Redfin. "That's where you'll want to target your buying plans."
January is a slow time for real estate agents in most markets, so now is a good time to find one to sit down and discuss what type of home you want, Tucker said.
Picking someone should be your first step so you can avoid "scrambling to find an agent once you've found a house you want to buy," he noted.
Pounce on desired properties
While the housing market is cooling, that doesn't mean it's no longer competitive. If your goal is to purchase a home in 2023, it can be wise to place an offer on a property you like immediately, experts advise.
Some home buyers might think they can wait a few weeks for the price of a home to drop or mortgage rates to fall. But hesitating can be a costly mistake, Reggish said.
"All they're doing is increasing the probability that one other buyer is going to find the same house and put in an offer," he said.
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