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<p>Whether you already own a home or are thinking of buying one, today's fluctuating interest rates can have certain implications for you. To help you identify those, we tapped top pros for their best advice on navigating the current housing market.</p>
<p>Generally, whenever there's a spike in interest rates, you may pay more in interest charges for your home over time, which can make home buying more expensive overall. At the same time, when rates go up, other market factors like home prices tend to start to shift so that these costs eventually become more affordable than they were. With this in mind, here's helpful advice for both owners and buyers.</p>
<p>&nbsp;</p>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/interest-rates_body-2_1466798680.jpg" alt="A couple reviews their mortgage before moving into a new home"></p>
<h2>If you already own your home&hellip;</h2>
<p>While interest rates are in flux, you may want to think about whether your current mortgage will be affected. This depends on the type of loan you have. If it's a fixed-rate mortgage, the interest rate stays the same over the life of the loan so you won't be impacted by ups and downs. Alternatively, if you have an adjustable-rate mortgage (ARM), your monthly payment amounts could increase since this type of loan is subject to market changes.</p>
<p>You could consider refinancing if you're able to find a lower rate, notes David Brasington, an economics professor at the University of Cincinnati, though "it's unlikely given what's happened over the last few years," he says. "And if you get a lower rate, it's probably going to be an adjustable-rate mortgage, so you're taking a chance that mortgage rates won't go up in the future."</p>
<p>You might also want to think about whether now is a good time to borrow against your home. As a rule of thumb, borrowing against your home tends to be more affordable than using other financial products, like credit cards or personal loans, particularly when interest rates are on the rise.</p>
<p>If you have large expenses like education or medical costs on the horizon, a cash-out refinance can be a good idea because it enables you to borrow more money than you currently owe on your home and to receive the funds in one lump sum. A home equity line of credit (HELOC), on the other hand, typically offers lower interest rates than other products like personal loans or credit cards because you are essentially guaranteeing the loan with your home as collateral; that can make it a smart financing option for expenses like renovations or repairs.</p>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/interest-rates_body-1_1092691402.jpg" alt="A realtor breaks down mortgage costs with a couple"></p>
<h2>If you're thinking of buying a home&hellip;</h2>
<p>While higher interest rates can make home buying more expensive because the monthly payments are greater, the resulting lower demand can potentially work in your favor in other ways. The National Association of Realtors' recent report found that inventory was up 14.4% from one year ago &mdash; and because greater inventory means fewer buyers competing for the same properties, this can often give you more leverage when negotiating with a seller.&nbsp;</p>
<p>What's more, according to a recent Realtor.com housing market trends report, homes spent 47 days on the market, which is one more day than this time last year. That's another potential indicator of more opportunity for negotiation. And while "there are a number of buyers on the sidelines waiting for rates to come down," says Arnaud Dufour, a senior mortgage banker at Citibank, that may not be effective. "There's no guarantee that is going to happen," he says, and "if and when it does, you're going to see a stark increase in demand, and that's going to push prices higher once again." Because "the whole point of waiting to increase affordability will have backfired," he notes, the better option might be to buy now.</p>

Is now the right time to buy or borrow? Find these answers and more in this guide to navigating today’s housing market.  

Interest Rates Are Fluctuating — Here's What It May Mean for You

<p>Building equity in your home is an investment in your financial future.</p>
<p>Equity is the portion of a home that you own outright. It's the difference between your home's current value and the amount owed on your mortgage.</p>
<p>Once you've built up enough equity, you can leverage it to help cover large expenses. For example, a HELOC home equity loan can be a cost-effective way to access funds &mdash; for, say, a home renovation &mdash; compared to using a credit card.</p>
<p>With that in mind, below are four tips to help you build up the equity in your home as soon as possible.</p>
<h2>Save up for a big down payment</h2>
<p>Believe it or not, you can start building equity before you even get the keys to your new home.</p>
<p>The down payment made when you close on a property determines the size of your mortgage. The larger the down payment the smaller your mortgage, and the greater the amount of equity you&rsquo;ll have access to.</p>
<p>&rdquo;Making a big down payment is smart, as long as it doesn&rsquo;t totally drain your savings,&rdquo; says Todd Huettner, president of Huettner Capital in Denver, CO. &ldquo;It&rsquo;s a balancing act between putting down as much as possible and making sure you still have enough funds to cover moving expenses and other unexpected costs.&rdquo;</p>
<p>Huettner recommends saving up money strategically. Create separate savings accounts for your down payment fund and an emergency fund, then contribute to both regularly.&nbsp;</p>
<p>Organizing the money in this way can help you be prepared for both the short term and the future.</p>
<blockquote>
<p>Create separate savings accounts for your down payment fund and an emergency fund, then contribute to both regularly.&nbsp;</p>
</blockquote>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/GettyImages-125142280.jpg" alt="A contractor walks homeowners through plans for an addition."></p>
<h2>Make extra payments on your mortgage</h2>
<p>After you've moved in, one of the most efficient ways to build equity is to make additional payments on your mortgage. Extra payments will help decrease your loan balance faster and increase the amount of available equity.</p>
<p>"It doesn't have to be a lot of money," says Huettner. You can pay $20 or $50 extra every month, plus more whenever you experience a windfall. Even little additions will add up over time to make a difference."</p>
<p>Making additional payments generally works in the same way as the regular, monthly payments. You may need to specify that excess funds be applied to your principal loan balance. This will ensure that the money gets applied to the amount you owe on the home and won't be put toward other expenses.</p>
<h2>Invest in some home improvements</h2>
<p>Increasing a property's market value, particularly with home improvements, is another way to build equity.</p>
<p>It's important to note that home improvements are not the same as regular maintenance and upkeep. "When you want to add value, you have to do more than just replace the carpet," says Huettner. "Often, adding square footage is the best way to do it. After that, it's renovating kitchens and bathrooms."</p>
<p>Keep in mind that every renovation is different, so the amount of value you'll add to your home by renovating will differ. Automated valuation calculators can offer you a broad sense of what your home might be worth post-renovation, but the most accurate valuations will come from an appraiser.</p>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/GettyImages-1299032518.jpg" alt="A couple construct a flowerbed on their property."></p>
<h2>Wait for your home to appreciate</h2>
<p>Although not the quickest option, you can also wait for your home to appreciate. Real estate values tend to rise over time and any increase in value leads to added equity. Of course, the increase in value and the amount of time that takes to appreciate is dependent on the housing market.</p>
<p>Nationally, the 2022 Core Logic S&amp;P Case-Shiller Home Price Index found that, when adjusted for inflation, houses that were worth $178,000 in January 1990 appreciated to become worth $328,000 in January 2024, on average.</p>
<p>"The longer you live in the home, the better chance you have of good appreciation, especially if you keep it well-maintained." says Huettner.</p>
<p>Whether you're saving up for a down payment or making additional payments on the home you own now, you're on your way to building up equity &mdash; and getting closer to reaching your financial goals.</p>

4 Ways to Increase Your Home Equity

<p>Buying a home is an exciting milestone, and yet it can also be an emotional time and, of course, expensive. All the questions, searches, decisions and document-drafting can make it feel overwhelming &mdash; but it doesn't have to be.</p>
<p>Along with having experienced experts in your corner (like a real estate agent and lender), you can turn to the internet for added support. These online tools offer insights and calculations that can streamline your home buying process.</p>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/LAM_6Onlinetools_BodyImage_1000x667_B_0.jpg" alt="A father sits at a table working on a laptop, his wife and baby sit next to him"></p>
<h2>1. Home affordability calculator</h2>
<p>A <a href="https://www.citi.com/mortgage/affordability-calculator" data-link-source="tiny">home affordability calculator</a> gives an estimate of how much you can afford to spend on a home, taking into account some or all of these factors:</p>
<ul>
<li>Debt-to-income ratio (DTI): This is a measure of your income versus your existing debts. It tells the lender how much debt you can afford to take on in a home loan. You'll need to input accurate estimates of your gross monthly income and total monthly debt payments, and then the tool will use this figure to calculate how much you can afford to spend on a home.</li>
<li>Down payment: The amount paid upfront toward the home's purchase price (typically ranging from 3% to 20%).</li>
<li>Anticipated loan term: The expected length of your home loan, which is often either 15 or 30 years.</li>
<li>Current interest rates: Interest rates are determined by market fluctuations and are generally auto-populated by the calculator itself. According to Freddie Mac, one of the largest buyers of residential mortgages, interest rates for 30-year, fixed-rate mortgages currently sit at an average of of 6.87% and have ranged from 6.27% to 7.79% over the past year.</li>
</ul>
<p>Having an accurate home price estimate is important to help set the right expectations for your search, says Zachary Rose, a Citi home lending officer in Laguna Niguel, CA. "You don't want to be looking at houses that are $800,000 or $900,000 when, at the end of the day, all you can qualify for is $700,000 or $750,000," he says, and using a home affordability calculator is an easy way to tailor your search to your budget.</p>
<h2>2. Loan amount calculator&nbsp;</h2>
<p>Once you&rsquo;ve determined the maximum price within your budget, you&rsquo;ll want to think about the right type of loan. Considering how much you&rsquo;re comfortable paying each month is part of that and, often, &ldquo;the payment you can qualify for and the payment you feel comfortable making are two different things,&rdquo; says Rose.&nbsp;</p>
<p>Entering your desired monthly mortgage into a&nbsp;<a href="https://www.citi.com/mortgage/home-loan-amount-calculator" target="_blank" rel="noopener" data-link-source="tiny">loan amount calculator</a>&nbsp;gives you an estimate of how much you could borrow in either a 30-year or 15-year, fixed-rate loan.&nbsp;By playing around with different numbers, says Rose, you&rsquo;ll be able to arrive at the total monthly cost that suits your budget best.</p>
<h2>3. Monthly mortgage payment calculator</h2>
<p>This tool estimates how much you can expect to pay each month based on the total amount you plan to borrow.</p>
<p>By factoring in your loan amount, interest rate and loan term, a&nbsp;<a href="https://www.citi.com/mortgage/monthly-payment-calculator" target="_blank" rel="noopener" data-link-source="tiny">monthly mortgage payment calculator</a>&nbsp;can ensure your new housing payment fits comfortably into your budget, especially when you get specific.</p>
<p>&ldquo;It's very important to include as much information as possible,&rdquo; says Gonzalo Maturana, Goizueta Foundation term associate professor of finance at Emory University in Atlanta. &ldquo;Do your best to include estimates for property taxes and homeowners insurance, as well as homeowners association fees and private mortgage insurance.&rdquo;</p>
<p>These factors are important because they can increase the monthly payment significantly, says Maturana, and the more information you can give the calculator, the less likely you are to be taken by surprise when you talk to a loan officer.</p>
<blockquote>
<p>The payment you can qualify for and the payment you feel comfortable making are two different things</p>
</blockquote>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/LAM_6Onlinetools_BodyImage_1000x667_A.jpg" alt="A couple sit at a table talking "></p>
<h2>4. Real estate agent finder</h2>
<p>Once you've talked to a loan officer and have a <a href="https://www.citi.com/mortgage/surestart-preapproval" data-link-source="tiny">mortgage pre-approval</a> in hand, connecting with an experienced real estate agent is key. You'll want one who has local market knowledge and the ability to put together a strong offer.</p>
<p>Your best approach is to interview multiple agents and ask lots of questions, says Maturana."Inquire about their track record, including how many recent transactions they've closed," he suggests, keeping in mind that, according to a report from the National Association of Realtors(NAR), the typical agent closed 12 transactions in 2022. "Then, try to assess whether they seem knowledgeable about the neighborhoods where you're looking to buy. A good agent will meet both criteria."</p>
<h2>5. Home value estimator</h2>
<p>When you're ready to submit an offer on a home, a <a href="https://www.mortgage.homecaptain.com/homevalue" data-link-source="tiny">home value estimator</a> is useful for getting a sense of how much the home is worth in the current market. The tool uses recent sales data to provide an estimate of a property's fair market value. As a buyer, you can use this information to help you determine what to offer as a purchase price.</p>
<p>It's worth noting these estimates are based on the sales data provided, so they're likely to be more accurate in areas where there are frequent transactions and less so in areas with low turnover rates, says Maturana.&nbsp;</p>

5 Online Tools That Make Home Buying So Much Easier

<p>Interest rates may still be considered high, but you can still find plenty of opportunity in the current real estate market, especially if you&rsquo;ve prepped your finances first. Typically, this includes improving your credit score, paying down debts and bolstering savings. It may seem like a tall order, but it's worthwhile because underwriters consider each of these components when reviewing your loan application. Putting forth the strongest financial package possible will increase your chances of getting approved for a home loan and can also help secure the best possible interest rate, which can save you money over the life of the loan.</p>
<p>To help you get your finances in shape and navigate the current market conditions, we asked industry pros for their best advice on becoming a more competitive buyer.</p>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/LAM_CompetitiveHomebuyer_BodyImage_1000x667_B_1.jpg" alt="A couple signs a document with a real estate agent"></p>
<h2>Work on your credit score</h2>
<p>The surest way to improve a credit score is to make payments on time and <a href="https://www.lifeandmoney.citi.com/lam/articles/money/managing-money/how-to-pay-off-debt" data-link-source="tiny">pay down debt</a> as much as possible. This process takes time, and while there's no immediate way to boost your score, you can try to expedite the process by checking your credit reports for any errors that can be resolved. You may also want to consider asking a friend or family member with good credit if you can become an authorized user on one of their cards. Doing so may raise your available credit and drop your utilization ratio, which is a major factor in determining your overall credit score.</p>
<h2>Build up savings</h2>
<p>You'll need accessible funds for a down payment and closing costs, but having reserves (your cash assets left over after covering those expenses) is important too; typically, lenders expect buyers to have three to six months' worth of mortgage payments in the bank for reserves after closing.</p>
<h2>Consider your debt-to-income ratio (DTI)</h2>
<p>This is a measure of your total recurring debt divided by your gross monthly income. A good goal is for this ratio to be below 45% because that is the number most lenders look for when reviewing loan applications. If your current ratio is over that benchmark, you can improve it by either paying down debt or increasing your monthly take-home pay.</p>
<p>Your best bet is to connect with a home lending officer three to six months before you're ready to buy, says Zachary Rose, a Citi home lending officer in Laguna Niguel, CA. That way, "you can start having a conversation with them about your down payment, FICO score, DTI, and reserves &mdash; all the small details that can throw a wrench in the approval process," he says, instead of having to scramble.</p>
<h2>Get pre-approved for a mortgage</h2>
<p>Getting <a href="https://www.lifeandmoney.citi.com/lam/articles/milestones/home-buying/how-to-get-a-mortgage-pre-approval" data-link-source="tiny">pre-approved for a mortgage</a> is always beneficial because it provides proof that you can afford to buy the seller's property, assuring them your offer is legitimate. It's a must particularly in competitive markets because if you're not pre-approved, other buyers who can provide this reassurance can swoop in and win out. In fact, "a lot of listing agents won't even look at an offer unless it comes with a pre-approval attached," says Rose.</p>
<p>Keep in mind: Most pre-approvals don't come with a lending commitment; they give a rough estimate of what the buyer can afford. Because the final lending decision comes later, after further review, this type of pre-approval can be riskier for both the buyer and seller because the loan application could eventually be denied.</p>
<p>If you're looking for added security, consider an option like the Citi SureStart&reg; Pre-Approval program, which offers a firm loan commitment for approved borrowers. This makes your offer stronger "because you've taken the main hurdle out of the process," says Rose.</p>
<p><img class="right_image" src="https://www.lifeandmoney.citi.com/rcs/lifeandmoney/storage/public/LAM_CompetitiveHomebuyer_BodyImage_1000x667_A_0.jpg" alt="A real estate agent shows an apartment to a couple"></p>
<h2>Work with an experienced local agent</h2>
<p>The pro you choose can directly impact your home buying success, especially in a fluctuating market, so you'll want to find a knowledgeable agent who is responsive and available to answer your questions and is a proven negotiator. Because it's less of a seller's market right now, says Rose, "hiring someone who has the skills to negotiate on price and concessions can be a really big advantage in this environment."</p>
<p>Research options online and ask friends and family for their recommendations, with an emphasis on finding an agent familiar with your area. "Real estate markets are very local, so what's happening nationally may or may not apply," says Stanley D. Longhofer, Ph.D., director of the WSU Center for Real Estate at Wichita State University in Kansas.</p>
<p>"An agent who can help you understand what's going on in your local market is essential," he says. "I can't emphasize the value of that enough. They've seen the types of offers sellers are receiving and they know what types of terms you may need to put to create a competitive offer."</p>
<h2>Structure a strong offer</h2>
<p>The amount of your offer is important, of course, but there are also other components you can include to make your bid even more attractive to the seller. To start, you can increase the amount you put in escrow, or your good faith deposit on the home. The typical escrow amount is 3% of the home's purchase price, according to NAR, but upping that percentage can show the seller you are serious about buying, says Dr. Longhofer. "Just be sure this is an amount you can afford to lose because, ultimately, if you decide to break the contract and walk away from the home, there's a chance you won't get this money back," he says.</p>
<p>If you can afford it, consider covering the closing costs or absorbing repair costs, if any, too. While you won't want to waive an inspection entirely &mdash; it's the only way to get a true picture of the home's condition and the opportunity to walk away if it needs too much work &mdash; agreeing to pay a set dollar amount toward repairs can sweeten the deal, Dr. Longhofer says.</p>
<p>Finally, if you're not set on a particular time frame, consider accommodating the seller's requests on the closing and possession dates. Details like these can be the concessions that give you the winning edge.</p>