For those looking to buy a home, timing is crucial. Peak housing-hunting season is typically in the spring and summer, before the school year begins.
Personal finance expert Dave Ramsey highlights why the colder months don't have to mean a frozen property market and urges buyers to get their finances in order before considering buying a home.
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The real estate market typically slows down in the winter, but less competition can benefit buyers. Sellers are motivated to take their homes off the market and may be more willing to make offers.
Reduced competition can give buyers more room to negotiate and allows lenders and real estate agents to close sales faster than in the high-traffic summer months.
However, Ramsey notes that consumers should not look at properties until they are financially stable and debt-free.
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Dave Ramsey says a good financial situation is the key to a housing agreement
Although buying a home is often a gateway to building wealth, it is a multi-decade financial commitment that must be carefully planned.
Ramsey suggests that potential homebuyers should first pay off any credit card debt, student loans or auto loans and build up their emergency savings reserve.
Having all of your debt paid off can also make it easier to save for a substantial down payment, which is another essential part of the home price equation.
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“You need to make a large down payment when buying a home because a larger down payment means smaller monthly payments and less debt overall,” Ramsey wrote. He suggests that all home buyers aim for a 20% down payment as a general rule, but that a 5 to 10% down payment is acceptable for first-time buyers.
The evidence agrees: Studies show that improving your credit score, paying off debt, and increasing your down payment can reduce your mortgage rate by up to 2%.
Ramsey stresses that the price has to be right: Making sure monthly home payments don't exceed 25% of your take-home pay will set buyers up for financial success.
Ramsey: Buying a home in winter can have a significant financial reward
Although mortgage rates have not yet fallen following the Federal Reserve's recent interest rate cuts, they have They are going down year after yearwhich shows that the market is going in the right direction.
Related: Dave Ramsey explains how your mortgage is key to retiring early
Experts anticipate that mortgage rates will gradually fall early next year, which may make this winter the perfect time to buy a home.
Ramsey points out that buying a home during a less competitive winter housing market can mean big savings.
The National Association of Realtors estimates that median home prices in January 2024 were $70,000 less than in June 2024. Winter home sales can equate to substantially cheaper monthly mortgage payments, which can be a big point sales for budget-conscious buyers.
Home sales are estimated to increase 9% year-over-year in 2025, indicating the market is about to heat up. Buyers waiting on the sidelines for mortgage rates to decline may want to act soon before consumer demand skyrockets.
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