For National Homeownership Month held in June, the Huntsville Business Journal asked the Huntsville Area Association of Realtors (HAAR) about what would-be homeowners can do to navigate the current market conditions, and make the best financial decisions for their households.

But before getting into those tips, HAAR President Chris Hulser offered some insights as to why looking into homeownership may be a wise choice, even in the face of the higher interest rates that we’ve seen this past year.

“When you own your own home, you build equity over time as you pay down your mortgage,” he told the HBJ. “This equity can be used as an asset and investment that can be used for future financial ventures.”

Hulser also stressed the stability and predictability of financing a home versus the rental market.

“Unlike renting, where landlords can increase rent prices, homeownership offers stability in monthly mortgage payments. With a fixed-rate mortgage, you have predictable payments, making it easier to budget and plan your finances.”

Moreover, homeownership can be a potent financial tool in and of itself. Leveraging the value of the property is useful for gaining access to loans or lines of credit, granting homeowners the ability to access loans or lines of credit that renters may not.

While the appreciation of a property’s value is not a given, when that value does appreciate, it further financially-empowers the homeowners, potentially kicking off a self-reinforcing feedback loop of appreciation and opportunity.

This cycle, combined with post-World War II legislation like the GI Bill, is what built the modern American middle class. Homeownership is a critical component of the establishment of not only financial security in one’s own lifetime, but of an intergenerational wealth, that can be bequeathed to our children and grandchildren, to keep them secure long after we are gone.

Now that we’ve established why homeownership remains a worthy goal to work towards, let us turn our attention to how we might best navigate the task of financing that goal. Mortgage loan officer Lacy Dyar offered her tips for those looking to become homeowners:

Always contact a lender before you begin your search. You don’t want to fall in love with a home only to find out it’s not in your price range.
Know your “ideal” budget. Just because you can afford a home on paper, make sure you’re comfortable with the payment amount INCLUDING property tax and insurance.
Ask your lender for options! You should always have different options for rate, costs, and down payment so you can choose what is right for your individual scenario. There are seemingly endless ways to get the rate and payment that best fits your budget. 4. Ask for return on investment scenarios. Sometimes it’s a great value to spend money at closing for a lower rate, and sometimes it isn’t. Your lender should act as an advisor to show you what makes the most sense.
Prepare to provide documents up front. If you can provide income and asset documentation at application you could be preapproved instead of prequalified, which gives you more buying power.
Read up on the local housing market. The media may say home prices are dropping, but that’s only in certain areas (definitely not including our area). If you make a low offer on a home, be prepared for a counter offer or even a rejection.
Keep an open mind, and tap into your creativity. If you love everything about a home but it needs a little work or a few tweaks, consider a renovation loan program that allows you to include repairs or upgrades in the initial loan.

As always, the Huntsville Business Journal strongly recommends consulting with expert realtors and financial officers before making any real estate purchases. Real Estate Update will be back with our normal coverage of the local real estate market in our next column.