Money Management

Winter isn’t the most popular time to buy a home. But here’s why you may want to look for one in the January-February time frame. 

The most popular time to list and buy a home during the year generally tends to be spring. In fact, many homeowners like to list their properties during the warmer weather months because that’s when it’s easiest to show off their homes’ curb appeal.

Similarly, as a buyer, you might prefer to do your house hunting in the spring. That way, you won’t have to deal with frigid weather and snowstorms en route to see different properties.

But actually, winter can be a great time to buy a home — in general and today especially. Here’s why.

1. You might have less competition

The U.S. housing market is sorely lacking inventory right now. As of the end of October, there was only a 3.6-month supply of available homes, as per the National Association of Realtors. And it can easily take a six-month supply to fully satisfy buyer demand.

At a time when inventory is low, it’s a good thing to have less competition when you’re looking to buy a home. Since winter isn’t a very popular time for buyers to be looking, you may find that if you push forward with your home search in January or February, you might have certain listings all to yourself.

This gives you more leeway to negotiate with sellers. And it also means you may not have to worry about landing in a bidding war.

2. You might see lower prices

Despite higher mortgage rates that may be pushing some buyers out of the market, housing prices are still high. And the reason largely boils down to a lack of inventory.

If you buy a home during the winter, you might see it listed for less, since sellers know that it’s not necessarily a great time to find a buyer. And at a time when mortgage lenders are charging such high rates, shaving a little money off of the purchase price of a home could result in a nice amount of savings.

3. You’ll get a chance to see how well specific homes fare in the cold

You may be willing to commit to the expense of a mortgage if it means getting to enjoy a comfortable living space of your own. But unless you actually go and visit a home during the heart of winter, you can’t necessarily be confident that it will, in fact, be comfortable when temperatures are plunging.

On the other hand, if you go to see a house on a 20-degree day and find that it’s nice and toasty inside, it’s a sign that the heating system works and that the insulation is decent and doing its job. That’s a good thing, because paying for a heating system upgrade is an expense you may not want to bear after emptying your bank account to put a down payment on a home.

Buying a home in winter does have some drawbacks. Weather issues aside, it’s hard to get a sense of a home’s landscaping during the winter. And there are certain outdoor features you may not get to test out, like a pool, if you’re conducting your search in January. But for the above reasons, it pays to consider looking for a home this winter — especially if you’re hoping to buy at a time when inventory is tight and prices remain stubbornly elevated.

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If you’re concerned about a recession, the best bet is to take steps to protect yourself. Here’s how it’s done. 

Given all the hoopla surrounding each recession, it’s surprising that we don’t spend more time prepping for them. Recessions are a normal part of the economic cycle, a chance for the economy to slow down and reset. While we’re not currently experiencing a recession, we can count on it happening again, and that means we can begin to prepare. Whether there’s a recession in 2024 or the next serious economic downturn holds off for several years, now is a good time to make plans.

1. Inventory your budget

If you’re someone who’s managed to get by without a monthly budget, you may want to rethink that strategy. Budgets do more than remind you when bills are due. A good budget will also help you quickly determine the following:

How much cash do you have in your checking account?How much are your basic living expenses, including your home, food, health insurance, child care, and transportation?Have you developed additional sources of income? For example, do you have a side hustle or a way to quickly increase your income?What kind of debt do you have? How many of those debts carry a high interest rate?How does your savings account look? How long could you live on the money currently in your account?

If you don’t currently have a monthly budget that helps you stay ahead of your financial situation, it’s easy to build one, either on paper or through a budgeting app. You can’t know precisely where you stand until you’ve taken a full inventory of your finances, and a budget is the easiest way to do that.

2. Build emergency savings

The truth is, you may never need to access your emergency fund, but you’ll definitely be able to sleep more soundly knowing you have money to fall back on.

The general rule of thumb is to put enough money away to cover three to six months’ worth of expenses. Again, this is where a budget comes in handy. If you’re not sure how much to save, this emergency fund calculator can help.

3. Adopt a hands-off policy for your investments

Nothing sets media sources buzzing faster than a recession to report on. Even if you’re not directly impacted by the economic downturn, just hearing about it is enough to increase your anxiety and potentially cause you to do something rash.

If you have investments, now is the best time to adopt a hands-off policy. In fact, investing during a recession (while stock prices are low) is a great strategy. But even if you’re not in a position to make new investments, your existing 401(k), IRA, and other managed investment vehicles are likely to plump up following a recession. That’s because fund managers take the opportunity to snap up bargain-priced investments on your behalf while values are low. Once the recession has passed and values return to normal, your portfolio will be fatter than ever.

You may also want to avoid checking your portfolio too often during a recession. What you see will not be pretty. You’re better off riding it out and waiting for your portfolio to recover.

4. Take a closer look at your job

If you have reason to believe that you could be laid off, focus on paying your monthly bills and continue to sock away any available cash. At the same time, begin looking at other job options. At the very least, find a good side hustle that allows you to earn extra cash. Whether you’re working throughout a recession or not helps determine how impacted you are by the experience.

5. Keep economic downturns in mind as you make financial decisions

Even if the next recession is years away, knowing it will happen at some point is not necessarily a bad thing. Before making a purchase, consider how much debt you would be able to handle if your job was at risk.

To make life easier on yourself, make it a habit to live below your means. And if you’re in a relationship, aim to keep your monthly bills low enough for one partner to cover them on their own. That way, you have a financial lifesaver at the ready.

The good news is this: A Capital Group analysis of 11 recessions since 1950 found that recessions last between two and 18 months, with the average spanning 10 months. Better yet, the average economic expansion following each recession lasts 69 months.

In other words, don’t let the idea of recession shake you. It will not last forever. If nothing else, the threat of recession serves as a reminder to get our financial houses in order while we can.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Mortgage rates have fallen in recent weeks. But should you rush to sign a home loan? Read on to find out. 

For much of 2023, buyers have faced the double whammy of inflated home prices and elevated mortgage rates. But recently, there’s been a touch of relief on the mortgage front.

On Dec. 7, the average 30-year mortgage rate fell to 7.03%. And while that’s not necessarily the most competitive rate buyers have seen this year, it’s an improvement from the typical rates we were seeing over the past three months. In fact, that 7.03% represents the lowest average mortgage rate since August.

If you’ve been tracking mortgage rates, you may be inclined to make an offer on a home ASAP. But is that the right move?

Mortgage rates could come down even more in 2024

It’s encouraging to see mortgage rates creep down toward 7%. And we may even see rates dip below 7% before the end of the year.

You may be inclined to jump on the opportunity to lock in a mortgage at closer to 7% than 8%, which may have been the case a month or so ago. But one thing to keep in mind is that borrowing rates have the potential to drop in 2024 across the board. So you may find mortgage lenders offering more competitive rates in the new year than they are today.

Why so? A big reason borrowing is so costly today is that the Federal Reserve has been raising interest rates to cool inflation. The Fed doesn’t set mortgage rates, or any consumer interest rates, for that matter. But when the Fed raises its benchmark interest rate, the cost to banks tends to get indirectly passed along to borrowers.

However, if inflation levels continue to drop, the Fed may cut rates in 2024. If that happens, home buyers could be in for considerably lower interest rates than what they’re looking at today.

To be clear, we’re well past the days of 3% mortgages. But could mortgage rates drop to 6% or even below in 2024? That’s certainly possible.

The one reason to buy a home ASAP

Mortgage rates still have the potential to fall quite substantially from where they are today. But one reason not to wait to sign a mortgage is if you manage to find a great home that meets your needs and fits nicely into your budget.

There’s been a glaring shortage of real estate inventory that’s likely to continue into 2024. If you come across a home you can see yourself living in, it could pay to get a mortgage immediately — even if that means locking in an interest rate at just above 7% when you might be able to get a lower one next year.

Plus, a lot of people are deep in holiday mode right now and are largely focused on that. If you find a home that works for you, you may not have much competition. And that could allow you to enjoy some savings on the purchase price of your home, since you may not have competing buyers trying to outbid you.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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We’re not quite done with 2023. Take the opportunity to make these important adjustments to benefit your finances. 

At this point, a lot of us are busy making our New Year’s Eve plans (unless you’re like me and you know those plans will consist of sitting on your couch and falling asleep somewhere in the ballpark of 9:30 p.m.).

But 2023 isn’t over just yet, and we still have a few more weeks to go before 2024 begins. While we wait for the ball to drop, you may want to take the opportunity to tackle these important financial moves.

1. Check your credit score

Borrowing has been expensive in 2023 on the heels of the Federal Reserve’s numerous interest rate hikes. But the Fed may cut rates in 2024 if inflation continues to cool, making the new year a better time to borrow.

If you’re planning to get a loan in 2024, whether to buy a car or fix up your home, then you’ll want to go in with solid credit. Now’s a good time to check your credit score and see what that number looks like.

Many credit card companies and banks make that information available to consumers, so check your credit score sooner rather than later. If you’re not happy with the number, you’ll know you should work to improve it. That way you won’t be in for a shock when you go to apply for a loan in the new year and get stuck with an exorbitant interest rate — or, worse yet, a rejection.

2. Consolidate costly debt

Carrying a number of high-interest credit card balances? You’re not alone. U.S. credit card balances reached $995 billion as of the third quarter of this year, according to TransUnion.

But a big reason why credit card debt can be so tricky to pay off is that interest continues to build up day by day, effectively trapping you in a seemingly hopeless cycle. To break free, consider consolidating your credit card debt into a home equity or personal loan.

Though it’s true that borrowing rates are elevated today, the upside of a home equity or personal loan is that you get to lock in a fixed interest rate on your debt. The result? Predictable monthly payments. And chances are, the rate you’re looking at on one of these loans will still be considerably lower than what your credit cards are charging you.

3. Lock in a CD while rates are high

Those Fed interest rates we talked about earlier? They haven’t been all bad for consumers. One upside is that savings account and CD rates have risen this year as a result of the Fed’s actions. So one more move to consider before the end of the year is opening a certificate of deposit (CD) while rates are still attractive. If the Fed cuts rates in 2024, CDs are apt to start paying less.

And if you’re worried about having to tie up your money for years, rest assured that’s not your only option. Shorter-term CDs are paying generously right now, so if you’re only comfortable locking your money up for six to 12 months, that’s just fine. In fact, I recently opened a 10-month CD because that’s a time frame that worked for me.

Many people are ready to say goodbye to 2023. But before the year wraps up officially, consider adding these moves to your must-tackle list.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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