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After renting for nearly a decade, New Yorker Malcolm J. Merriweather decided to look for a home to buy.
Merriweather, a director of the New York Philharmonic Chorus, and an associate professor at Brooklyn College, had been on the market to buy a home since 2018.
But since he had many income streams from performing with groups all over the world, the first lender he approached made it difficult to complete the paperwork, he said.
“It was so infuriating,” Merriweather said, “because I have multiple streams of income from my various positions and a lot of people don’t really understand how a working gig-based musician brings in income from year-to-year, it was just really complicated.”
The properties he was looking at weren’t working out. A couple of co-ops in the city were concerned about having a musician in the building. “I do have a piano, and I actively, and obviously use my piano every day,” Merriweather explained, which led to his application not being approved. “And I was just just so discouraged,” he said.
He’s not the only one. It’s still a competitive market out there: Home buyers are on the hunt, and they are pulling out all the stops to close a deal, but one that is suitable for their lifestyle and pocketbook.
“Home prices are falling in some markets, but holding up strong in others. Meanwhile, interest rates have fallen from 2022 highs.”
Mortgage rates have dipped amid economic uncertainty. The 30-year is averaging at 6.16%, according to Mortgage News Daily, down from over 7% at the end of 2022.
But buyers across the country aren’t facing the same environment. Home prices are falling in some markets, but holding up strong in others, CoreLogic said this week.
Zillow Z, +2.93% on Thursday noted that home prices were back on the rise, climbing 0.9% between February and March — the strongest figure since June 2022.
So what strategies can home buyers consider to bring down the cost of purchasing a home? Real-estate experts shared their top advice with MarketWatch:
Tip 1: Buy points on your mortgage
Buyers should consider buying points on their mortgage, Orphe Divounguy, senior macroeconomist at Zillow Home Loans, told MarketWatch.
“Buying points on a mortgage is one way buyers can lower their monthly payment – essentially pre-paying to compensate for today’s higher interest rates,” Divounguy explained.
In other words, you pay a fee to a mortgage lender to bring down the interest rate on the loan.
“Rate buy-downs financed by sellers as a concession can be enticing to both parties – helping a mortgage fit buyers’ budgets and letting sellers keep their intended price,” Divounguy said.
But make sure you shop around with lenders and get a few quotes.
Malcolm J. Merriweather, music director and conductor, at The Grace Rainey Rogers Auditorium in December 2021.
Stephanie Berger, Malcolm J. Merriweather
Tip 2: Don’t obsess over headlines and focus on the home, not the rate
The real-estate market went through a rollercoaster ride after the U.S. Federal Reserve increased interest rates, which prompted mortgage rates to jump.
But constantly monitoring the latest news about rates and home prices is not a good strategy when you’re on the hunt, Nick Bailey, president and CEO of RE/MAX, told MarketWatch.
“Real estate is all about timing, but it is not timing the market for the rates, it is not timing the market for the inventory,” Bailey said. “It is about timing the market [based on what is] right for you.”
If buyers are feeling like they missed out on the ultra-low mortgage-rate boat, they should get out of that mentality, Bailey stressed. “The reality is there are buyers that two years ago maybe hadn’t saved enough for the downpayment — didn’t matter what the rates were.”
“ Constantly monitoring the latest news about rates and home prices is not a good strategy when you’re on the hunt.”
Bailey, who first ventured into real estate when he was 17 with the purchase of two commercial buildings, bought his first home when he went to college the following year. It was a four-bedroom house with two bathrooms. He rented out the bedrooms to help pay for the mortgage. “When I went in as a first-time home buyer, it was a 3% down FHA mortgage that’s government backed, and my interest rate was 6.5%,” Bailey said.
A Federal Housing Administration loan is insured by the government. A buyer can get an FHA loan if they live in the home they plan to buy as their primary residence for at last a year. The requirements for credit scores are lower, as well as the amount that needs to be put down for the house.
“But as a first time homebuyer I didn’t know if the rates were high or low. I didn’t know if 3% was normal or 10% was the average,” he added. “What I knew is I wanted to purchase a home for my needs, and I was most concerned with whether I had enough for the downpayment and can afford the monthly payment.”
Tip 3: Stay committed to the hunt, while switching up your lenders and what you’re looking for
Merriweather, the freelance musician, did eventually find his home, although it was a struggle. He got lucky. He purchased a home in Harlem in New York City in August 2021 when interest rates were low. He secured a 30-year mortgage rate at 2.5%.
During the pandemic, he stuck to his rental but never gave up on his search. He switched lenders to an online company, Better.com, which was able to work with him and his various tax and income documents, to extend him a loan. He found a condo in Harlem and made an offer, which closed in November 2021.
“When I resumed my search, I really wanted to be successful the second time around, so I was pretty aggressive with looking at properties and with what I wanted,” Merriweather said.
He had his list of must-haves, which included an outdoor space. And he’s more than happy with his purchase. “Every time I walk through this threshold, I’m like, Oh my gosh, I’m so blessed to have this property,” Merriweather said.
Fast forward to 2023, the market’s become so short of inventory that Merriweather has started to feel the heat. He said people come up to him in the lobby of his building asking him if he’s ready to sell. “It’s a little awkward,” he added. “And that’s happened four times. I’m not exaggerating.”