Many Americans have been putting off buying a home over the past few years as mortgage rates and home prices have risen sharply over the past few years. Fixed for an average of 30 years mortgage interest rates After hitting a historical low of 2.65% in January 2021, it reached a 23-year high of 7.79% in October 2023. The average sales price of U.S. homes also increased by about $120,000 during the epidemic.
However, these elevated levels now appear to be the new normal. house price Mortgage rates have remained in the 6% to 7% range since the Federal Reserve began its long-awaited rate cuts in September 2024.
With only two more Fed rate cuts expected in 2025, mortgage rates won't may fall More this year. And if you've been thinking about buying a home, experts say January might be a good time to get pre-approved to start the process.
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4 reasons to get pre-approved for a mortgage this January
by request Mortgage Pre-Approvalyou'll find out how much home you can afford in the current market and how much financing will cost. You will also receive a pre-approval letter required to bid. But experts say it might be a good idea to get pre-approved this month for a number of reasons, including:
Stay ahead of other buyers
"Getting pre-approved before the season will give you an advantage over other buyers," says Fairway Independent Mortgage Corporation branch manager Jeremy Schachter. You can watch homes come on the market and be better prepared to make an offer.
"If you were pre-approved in the past, it's likely that approval has expired. If you're back in the market, it's recommended that you contact your lender to re-examine your credit, income and assets," Schachter said.
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Identify potential problems early
Josh Lewis, a certified mortgage advisor at The Educated HomeBuyer, says January is an especially good time to get pre-approved.
"Everyone has a 'new year, new you' mentality, and homeownership is often one of those goals," Lewis said. Additionally, obtaining the appropriate pre-approval allows you to Get a clear understanding of your budget and detect potential problems early.
"I can't tell you how many times I've seen buyers wait until the spring to get pre-approved, only to find out it will take them three to six months to resolve eligibility issues - and by that time, they've missed their ideal buying window," Lewis explain.
Get more personalized attention
January and February also tend to be slow months for the housing market, Lewis said. As a result, lenders, real estate agents, and other professionals have more time to educate you and answer your questions.
“Once the spring buying season hits, everyone gets busier and can’t provide the same level of attention,” Lewis said.
Paul Miller, CPA, managing partner at Miller and Company LLP, said this year is likely to be busy.
“Competition to buy a home will be fierce in 2025 due to increasing demand,” Miller said.
Gauge the interest rates you can get in the current market
This is also a good time to get pre-approved for rates, at least based on Recent interest rate trends.
"Mortgage rates have been as low as 6 per cent and as high as 8 per cent over the past few years. We are currently in the middle of that range, and while we can't predict exactly where rates will go, being approved now can help you understand your options at current rates," Lewis said.
By being pre-approved, he adds, you'll be ready to move quickly if interest rates increase or you find the right home.
bottom line
If you want to get pre-approved for a mortgage this month, a good place to start is by shopping around and gathering quotes from a few lenders. From there, you can request pre-approval from the lender that offers you the best deal.
"Keep in mind that pre-approval costs nothing and typically lasts 90 to 120 days, so it doesn't hurt to be prepared early," Lewis says.