The housing market has been a rollercoaster ride over the past few years, and with all the changes in interest rates and economic conditions, buyers are left with a multitude of questions and concerns. In a recent interview by Gia Silva, mortgage broker Julie Aragon with over 20 years of experience shared her expertise on some of the pressing questions buyers have as we head into 2025.

Is It the Right Time to Buy?

One of the most frequently asked questions from first-time buyers in 2024 was, "Is it the right time to buy?" Interest rates have seen significant changes, rising from 3% to 7% between December 2021 and October 2022. This steep increase understandably caused many buyers to hesitate. However, Julie Aragon notes that despite high rates, many clients recognize that life goes on. Buying a home is a necessity, not just a financial decision. The key is understanding affordability and what can be done to make purchasing a home feasible.

Addressing the Fear of Affordability

Fear plays a significant role in the decision-making process for first-time buyers, especially regarding affordability. Julie emphasizes the importance of breaking down the budget to see what buyers can actually afford. By comparing their current rent and the rate of increase over the years, buyers can get a clearer picture of what their financial situation might look like in the future if they continue renting versus buying.

To further aid in the decision, Julie and her team provide a detailed pre-approval process that includes accounting for tax benefits and potential equity growth. This comprehensive approach helps demystify the costs associated with homeownership and provides buyers with a realistic view of their financial position.

The Cost of Not Buying

Julie also highlights the often-overlooked cost of not buying. Renters face uncertainty with potential rent hikes and the instability of not owning property. Homeownership, on the other hand, offers long-term stability and the opportunity to build wealth through property appreciation and equity. By conducting detailed financial forecasts, Julie shows clients the long-term benefits of owning versus renting, which often outweigh the initial higher costs of purchasing a home.

Overcoming Down Payment Challenges

A common misconception is the need for a 20% down payment. Julie reveals that many of her clients fear mortgage insurance (MI), but in reality, MI costs can be minimal, especially for those with good credit. By showing the math, Julie demonstrates that putting down 5% or 10%, and paying a small MI, allows buyers to purchase sooner and start building equity faster. This practical approach dispels the myth that a substantial down payment is always necessary.

The Role of Concessions and Closing Costs

Understanding closing costs and potential seller concessions can also make a significant difference. Julie advises clients to consider asking sellers for credits towards closing costs or temporary interest rate buydowns, which can make monthly payments more affordable in the short term. While this may not always work in competitive markets, it can be a valuable strategy in more balanced market conditions.

Expert Advice for 2025

Heading into 2025, Julie advises potential buyers to consult with a mortgage broker early in the process rather than relying on potentially misleading online forums. Professional advice can provide a clear path towards homeownership, tailoring the plan to each individual's financial situation and goals. This proactive approach ensures that buyers are well-prepared and confident in their decision to enter the housing market.

As we move into 2025, the expertise from seasoned professionals like Julie Aragon is invaluable in navigating the complexities of the real estate market. By addressing common fears and misconceptions, buyers can make informed and confident decisions on their path to homeownership.