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Homeownership is more than just a lofty American dream—it’s how many can build generational wealth. For the Black community, 90% of wealth gains come from homeownership, meaning that owning a home continues to be a crucial method for Black households to build and accumulate wealth.
The Seattle housing market remains highly competitive. As of July 2024, home prices in Seattle have increased by 10% year-over-year, with the median sale price reaching $880,000, according to Redfin. Home buyers who have been waiting on the sidelines for prices to become more affordable might see some relief soon. The Federal Reserve (the Fed), which sets interest rates in the U.S., announced on Wednesday that it cut its key rate by a half-percentage point, bringing it down to between 4.75 and 5%. This is the first rate cut we’ve seen in more than four years!
Jen Cheun
This could make things more affordable for new buyers and also benefit current homeowners who are stuck with higher interest rates.
Jen Cheung, Vice President and Home Lending Advisor at Chase answers some of your questions:
What role do interest rates play in buying a home?
Mortgages respond to market conditions, including the Fed’s monetary policy. As interest rates climb, so do the interest on new mortgages and mortgage payments. Conversely, if rates fall, so does the interest on mortgages. So, buying at a lower rate can save you money in mortgage payments.
How do I prepare myself to buy a home in this current environment?
We not only want consumers to attain homeownership but to sustain it. That’s why it’s important to understand what exactly you can afford before getting into the market. There are a variety of resources to help you prepare financially for buying a home to see how much you can afford in the areas you’re looking to buy, compare loan options and obtain a free credit score. You’ll also want to start compiling all of your necessary documents for pre-approval, such as W2s, bank statements, income documentation, etc.
What about the down payment? Do I need to have 20% of the home cost saved up?
Most first-time home buyers are singularly focused on saving for a down payment. However, long gone are the days of putting down 20% of the purchase price. Low down payment loan options are available with some requiring as little as 3% down. Plus, there are a variety of incentives and grants that can lower your costs. For instance, Chase offers a homebuyer grant of up to $7,500, where eligible, to help with the interest rate, closing costs, and the down payment. These grants are offered in low- to moderate-income communities and neighborhoods that are designated by the U.S. Census as majority-Black, Hispanic and/or Latino.
Should I work with only one lender for my mortgage?
Studies show that 45% of borrowers who shopped around for mortgages received lower offers. Make lenders compete for your business—many have varying fees and closing costs that can add up. Also, interest rates can fluctuate daily, so lock in your rate with your lender if they offer that option for extra peace of mind.
I’m an existing homebuyer. How does a rate cut impact my situation?
It can be a good time to refinance when interest rates are going down, especially for those with rates above or at 7%. For current homeowners looking to refinance, we advise them to keep their end goal in mind as they consider whether refinancing makes sense for their personal situation. Work with your local advisor or using a Refinance Savings Calculator to understand when it makes sense for your specific situation to refinance.
Why should I refinance now that rates are lower?
When interest rates are lower, you may be able to refinance your loan for a shorter term without seeing much of a change in your monthly payment. Even if your payments are higher, you may see significant savings over the life of your loan by making fewer interest payments. For example, you may decide to refinance a 30-year loan into a 15-year loan. While it has higher monthly payments, you’ll pay the loan down faster and pay less in interest.
For more information visit Chase.com/afford to start your journey, invest in your future and save in the long run.
For informational/educational purposes only: Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. Information has been obtained from sources believed to be reliable, but JPMorgan Chase & Co. or its affiliates and/or subsidiaries do not warrant its completeness or accuracy.
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