Take this Home Loan Tip: Buy in the Fall

By Jonathan Haeber
CMR Columnist

In the home mortgage and real estate industry, there's a thing called seasonality. Basically, the home market rises and falls based on the month of the year. If you look at a graph for home prices in the past, you'll notice a spike in prices come August; but by October through December, the price growth falls precipitously before rising again in the spring.

There's a reason for these changes, and a lot of it has to do with people's motivations at different times of the year. Generally, homebuyers avoid taking out a home loan in the late fall or early winter months because of taxes. If they anticipate an increase in their household income the following year, they might benefit from home mortgage closing costs tax breaks, such as transfer taxes, after the first of January.

Another reason people don't buy before the New Year is the weather. Home tours are not pleasant in the rain and snow; neither is moving. Yet another reason is because the holidays are a big travel time, and you can believe me when I say that buying a home is a major time commitment. Forget traveling while you're applying for a home mortgage, signing titles, visiting agents, and setting up bank accounts.

The Benefits of Buying a Home in the Fall or Winter

Despite all of these factors, there are major benefits to buying in the fall or winter. Your offer is more likely to be accepted, and the purchase price might even be a bit lower during this seasonal slowdown.

A second benefit is attentiveness. Both real estate agents and home loan officers are often swamped in the busy summer months. You might find that real estate agents listen more to your questions and needs during the winter. Home loan officers will be more willing to spend time explaining all the terms of your home mortgage loan. In the end, you're more likely to become informed about both your purchasing and home mortgage decisions.

Of course, everybody's situation is different. You may want to wait for the holidays to be over, stay out of the rain, or stick it to the tax man. If you do find a great home in the winter, though, just remember that same home may be worth much more the following summer.

Sources
Bankrate.com

About the Author
Jonathan Haeber is a marketing writer for Discovery Channel Stores. He recently purchased his first home, and took a self-taught crash course in home mortgages.

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