How to Build or Purchase Your Home in a Tight Market

couple doing construction

If you are in the market for a home, you don’t need us to tell you that the real estate market is as tight as it’s ever been. Demand is sky-high and inventory is low. But that doesn’t mean buying your dream home right now is entirely out of the question.

Even in the tightest markets, you can always make a competitive offer if you have strong financials. If, on the other hand, you want to avoid a bidding war altogether, there is the option of building your own home. Regardless of which path you want to take, we can help put you in a position for success. Below, we’ll cover some key factors to help show how you can achieve your home buying goals in this challenging market.

What Location are You Pursuing?

After you receive your pre-qualification from your lender, the first step is to determine the preferred location for your next home. What area do you see yourself in long-term? In addition to hunting for homes and properties online, take the time to drive around your preferred area or areas to scout for potential listings. This is an important step, even if you have a real estate agent, because you’ll get a better sense of what you like in the area, or what you want to avoid.

Make sure your agent has a clear idea of what on your wish list for a future home is a “must-have,” versus a “nice-to-have.” They will be the first to see items appear on the MLS listings, and a good agent will contact you when a new home appears that meets your criteria. In the meantime, with the housing market moving so quickly, it is important you have all your necessary materials and funds in place and are prepared to submit an offer as soon as possible after viewing the perfect home for you.

The Importance of Funding for Your Offer

Speaking of funds, in this tight market you’ll want a large down payment so you can make as competitive of an offer as you can. When putting down 20% or more on a home, you are letting sellers know you are serious. Keep in mind that, if you make an offer over the asking price, and the appraisal comes in low, you will need to be prepared to make up the difference in cash (outside of the loan amount and down payment). If you choose to build your next home, construction loans typically require a 20%-30% down payment. But don’t let that discourage you from building – at Guardian, our Dream Builder One Program requires a minimum down payment of only 10%.

What are Construction Loans?

Construction loans are short-term, higher interest-rate mortgages that cover the cost of the construction of a home. This means your mortgage lender pays a construction loan to the contractor in installments as building milestones are achieved. Once building is complete, a home construction loan is either made into a permanent mortgage or paid in full by the borrower.

Builder Incentives

Embarking on new construction can be daunting. This is why our team at Guardian Mortgage works to help home builders and homebuyers alike. We partner with preferred builders in our markets, and offer Guardian Exclusive loan products such as our Builder One option. These loans offer a variety of lock and float-down options while helping builders reduce their inventory.

Traditionally, new construction requires multiple loans for the various components of the project: the loan for the land, the construction loan, and then the permanent mortgage loan. Guardian’s Dream Builder One loan takes care of all three – consolidating the land purchase, construction costs, and long-term financing of your finished home into just one loan – eliminating unnecessary financial hassle throughout the process.

If your builder has partnered with another lender, but you find our rates are better for you, no worries! A little-known tip of the trade is that you can seek outside mortgage companies for your financing.

Renovation Loans

In a competitive market, it can be much easier to find a home that you would typically consider on the lower end of your price range, and in slight disrepair, versus one that is on the higher end. A renovation loan, then, is structured to allow a portion of the loan to be used for repairs and upgrades when you buy a less expensive, less up-to-date home. Learn more about how Guardian’s Homestyle® Loan can help turn any fixer-upper into your dream home.

We won’t lie, it’s currently as competitive a market as we’ve seen in a long time. And in these conditions, it may feel like you’ll never make your dream home a reality. But we ensure you, there’s always a way. The key is to prepare, think strategically, and always have trusted partners by your side to guide you. Working with experienced professionals, including a real estate agent and our team of lenders at Guardian Mortgage, will help set you up for success in any market conditions.

Consult your Guardian Mortgage loan originator for details. Certain terms and restrictions apply, depending on the loan product. Program(s) available only to qualified borrowers. Program(s) subject to change without notice. Underwriting terms and conditions apply. All Loans subject to credit review and approval.