Between low inventory and higher interest rates, the housing market has been challenging for first-time and experienced homebuyers alike. There are signs of improvement, however: The National Association of Realtors is predicting
Make sure you’re ready to strike when your dream home hits the market with these tips from a Thrivent financial advisor and a Thrivent Bank mortgage loan officer on how to successfully navigate the homebuying process.
If you’re a first-time homebuyer…
Create a budget that takes all costs into account
When you’re trying to determine the price of a home you can afford, it’s not advisable to simply go with what your financial institution says you’ll qualify for.
“It’s more important to make sure the monthly mortgage payment fits within your cash flow budget when you consider all your other financial goals,” says Jeremy Seldon, Residential Real Estate lending manager for Thrivent Bank. “You don’t want to be house poor.”
Remember to account for other expenses, too—both one-time and ongoing—including your down payment, closing costs, home insurance, taxes, utility bills, an emergency reserve for home repairs and, potentially, private mortgage insurance (PMI).
Get used to making a larger monthly payment
Once you have a rough idea of what your monthly mortgage payment may be, start putting that money aside in a separate account.
“If you’re used to paying $1,800 a month for rent but your mortgage payment will be $3,200, take that extra $1,400 and put it in savings,” says Lori Nackers, Thrivent Bank’s senior mortgage loan officer. “Get used to making that extra payment to avoid payment shock.”
Plus, tucking that money into savings each month can help bolster your down payment fund or emergency savings until you buy.
Build your team
For first-time homebuyers who aren’t familiar with the process, it’s crucial to have a trusted real estate agent and mortgage lender on your side.
“You want to have a professional who does this every day to help you make the best deal possible,” says Thrivent Financial Associate Derick Ritenour, who also suggests involving your financial advisor. “We’re more than willing to work with your [agent] and your mortgage team to make sure we’re all in lockstep with your overall financial plan.”
Get a preapproval letter
A preapproval letter is a document from a mortgage lender that demonstrates you’ve been conditionally approved for a home loan based on the lender’s review of your finances. This is different from a prequalification letter, which is an estimate of what you might be able to borrow based on financial information you provide to a lender. While a preapproval letter isn’t legally required, it may give you an advantage over other buyers when making an offer on a house.
Make a strong offer
A strong offer is necessary to compete with other buyers in this housing market. “That sometimes means offering more than asking price, or waiving contingencies like inspections,” Seldon says.
Tread with caution here and keep a cool head, so you don’t end up with a house that you can’t afford or that might need costly repairs.
Take advantage of home loan programs
It’s a misconception that you need a 20%
Starting homeownership on the right foot
Like many new college graduates, Sydney Pfotenhauer moved home after graduation in 2020 to save money. After taking two years to pay off student loans and put a down payment on a new car, she took another two years to work and save up enough for a 20% down payment, ensuring she wouldn’t have to carry private mortgage insurance.
Pfotenhauer spent a year casually looking at homes in Appleton, Wisconsin, her hometown, before finding her perfect fit: a new build in a new development, which she moved into last December.
“I ended up getting to pick which lot and which floorplan I wanted for my house, and a few other things along the way,” Pfotenhauer says. “And I knew I’d have less stress going that route versus having to put in offer after offer after offer [on an existing home].”
Her mortgage loan officer, Lori Nackers, made everything go smoothly—from keeping the timeline on track to ensuring Pfotenhauer completed a mandatory first-time homebuyer course that better prepared her for homeownership.
Pfotenhauer’s family was also a source of emotional support. “When I would work with Sydney,” Nackers says, “[her] mom was usually there to guide her. At the closing, [her] mom and dad were there. Not everybody has the luxury of that family support. I thought that was amazing.”
If you’re an experienced homebuyer…
Ask yourself: Does this move make sense?
Think about it not just from a financial standpoint but from a lifestyle standpoint.
If you’re downsizing, Ritenour suggests asking yourself questions like: Are we selling a bunch of stuff or getting a storage unit? Will we be able to age in the new home? Will we have space for visiting children and grandchildren?
The same thought process applies if you’re upsizing or purchasing a second property. “Is it more important to save that extra income for traveling? Do you really need two homes? What is the priority?” adds Nackers.
Get the timing right
Simultaneously selling your current home and purchasing a new home is the biggest challenge for existing homeowners. If it’s not possible to close on both on the same day, “you may need to buy before you sell,” Seldon says. “This can be tougher to qualify [for], but it is a stronger offer to buy not contingent on any sale. It will also afford you more time to move into the new home and may give you some time to make minor improvements to the new home before you are working around all your belongings.”
He notes that homeowners can use products like a
Consult with your team of home professionals
Whether you’re thinking about upsizing, downsizing or purchasing a second property, check in with your mortgage lender and financial advisor to discuss what you can afford, what your new monthly payments may be and to make sure the move fits with your overall financial goals.
Pick the right loan product
The 30-year fixed-rate mortgage is the most common mortgage loan option but depending on your financial situation and stage in life, there could be other products to consider.
For example, if you’re only planning to be in your new home for a couple years, an adjustable-rate mortgage may be more advantageous than a fixed-rate mortgage, depending on the interest rate environment. Or “instead of pursuing a 30-year fixed-rate mortgage, you could pursue a 15-year fixed-rate mortgage,” Seldon says. “It’s going to carry a higher monthly payment, but the interest rate is going to be lower because the duration of the loan is shorter.”
Adjust your mindset
If you bought or refinanced your current home around the pandemic, you may have a hard time letting go of your 3% interest rate.
“Those rates we saw three, four, five years ago don’t exist right now, so if you really want to move, you’re going to have to accept that your interest rate may be higher,” Seldon says. “But if you look at interest rates now compared with where interest rates have been historically, it’s still a great rate.”
Whether you’re a first-time or experienced homebuyer, your Thrivent financial advisor can help you prepare to buy your dream home while still keeping sight of your overall financial plan. It just takes a clear head, a solid budget and good advice from your financial team.
Taylor Hugo is a writer in Colorado.
It’s never too late to follow your dreams
For longtime southern California resident Ken Wilken, relocating to a different state was a lifelong dream. But it wasn’t until retirement—and a trip to visit his dad in Oregon—that the 67-year-old and his wife, Nancy, realized where they were meant to be.
After falling in love with a 1,400-square-foot home on a quarter acre in Roseburg, Oregon, they made the move in July 2024.
“I walk the dog or walk up and down the street for exercise, and I’m constantly waving to everybody that goes by,” says Wilken of his new neighborhood. “You go to the store to get some groceries, and you end up visiting for 20 minutes with somebody you’ve never met. It’s just an easier way of life; it’s a little slower.”
The home selling and homebuying process, however, moved fast. A friend in California hosted an open house and secured a buyer for them—all before the couple even made it back from their home-shopping trip to Oregon. Both homes closed within days of each other, and the Wilkens had five days to pack up 28 years of their lives and start their new adventure.
Their senior mortgage loan officer, Julie Contreras, walked them through every step of the process. “She was such a lifesaver,” Wilken says. “She helped us out so much.”
According to Wilken, Contreras told him to just give her the names and the numbers of the people he was dealing with. She would deal with them directly, do what needed to be done, and keep him informed along the way if she should need anything additional from him.
“She took a load off our shoulders, because we already had enough stuff going on,” Wilken says. “It worked out really great.”
