If you're planning to buy a house this year, here's what you need to know about housing market predictions in 2024, and how you can prepare!

How to prepare to buy a house in 2024: 5 tips

Here's what you should be doing to prepare for homeownership if you're planning to buy this year. 

1. Get your finances ready

Because home prices are likely to remain high and mortgage rates may take a while to fully come down, you'll want to make sure you get the lowest rate you can. 

One of the faster methods to get your credit score up is to lower your credit utilization. This will also decrease your debt-to-income ratio, which is another factor mortgage lenders look at when considering what rate to give you.

J.R. Russell, head of direct to consumer mortgage lending at Citi Mortgages, says homebuyers should consider paying off credit card balances to improve their scores.

"If you're trying to pay off or pay down some credit cards, start with the cards or credit lines with the highest interest rates first," Russell says. "Then, pay off the balances that are smallest. The good news is that if you do this, you'll improve your debt load and your credit score."

2. Look for affordable mortgages and other first-time homebuyer assistance

The key to affording homeownership for many buyers in 2024 will be utilizing mortgages geared toward first-time homebuyers and combining them with grants or other forms of down payment assistance.

"If you're not sure that your down payment will be sufficient, take time to understand all of the available products that you may be eligible for through the FHA or VA, your bank, or other local institutions," Russell says. "These programs may grant you access to down payment assistance and low-to-moderate income programs, among other game-changing resources."

Conventional loans allow down payments as low as 3%, while FHA loans allow 3.5% down payments. USDA and VA loans allow no down payment. 

Look into lenders that offer special mortgage programs that come with additional assistance. Rocket Mortgage, for example, offers a ONE+ mortgage that allows borrowers to put down just 1%, with the lender providing a 2% grant.

Bank of America, another popular lender for first-time buyers, offers a couple of different forms of down payment assistance.

3. Time your purchase right

There probably won't be a single "best time" to buy in 2024, because that depends on each buyer's priorities — so it's important that you figure out yours.

If getting the lowest rate possible is most important to you, you'll want to wait until later this year to buy, or possibly even wait until 2025. Waiting until next spring or summer should also give you more inventory to choose from, but you'll likely be up against greater competition since it's the peak buying season.

4. But don't rush

"If rates do start to moderate and the market does seem to become more favorable to buying in 2024, it will likely stay this way for a while," Russell says. "If that's the case, I encourage you to take your time! Don't put pressure on yourself to make any potentially hasty decisions on what may be your biggest asset and the largest financial decision of your life."

Though it's still a while away, forecasts generally expect mortgage rates to fall throughout 2025. If you don't feel ready to buy this year, there's nothing wrong with waiting a bit to continue saving and working on your credit.

5. Build your savings

Whether you're padding your mortgage down payment savings or contributing to your emergency fund, tucking away some extra cash now is vital if you plan on buying a home soon.

When you buy a house, you'll need enough cash to cover both your down payment and closing costs, which can amount to between 3% and 6% of the loan amount. While many mortgage programs allow low down payments, the more you can put down, the better your interest rate will likely be. Plus, offers with larger down payments are often more attractive to home sellers, giving you a competitive edge in what will likely be a tough market.

Homeownership is also often more expensive than many first-time buyers realize, especially in the first year. Having some extra money set aside for unexpected costs will help ensure you don't go into debt when your first big housing expense comes along.

Please feel free to reach out with any questions that you may have about the housing market forecast or to discuss your Real Estate opportunities!