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When to Consider Paying off Your Mortgage Early

Reasons for paying off your mortgage early include eliminating monthly mortgage payments, saving money in interest, reducing financial stress, and more. But, just because you can pay your mortgage off early doesn’t necessarily mean you should.

Should You Consider an Early Mortgage Payoff?

It can be tempting to rush to pay off your home loan when you have the ability to, especially if you’ve struggled with debt management. And why wouldn’t you want to pay off your mortgage? Getting rid of debt could potentially increase cash flow.

When it comes to your mortgage loan, paying it off early depends on your unique financial situation and goals — there is no one right answer.

Reasons Not to Pay Your Mortgage Off Early

While it may seem like there are no reasons not to pay off your mortgage early, that is actually not the case. Here are a few reasons why it may not be a good idea to pay off your mortgage loan early:

You Have a Competitive Interest Rate

Unless you’ve reached all of your financial goals, it may not make the most sense to pay off your mortgage early when you have a competitive interest rate.

For example, if you are saving to send your child to college or you’re trying to rebuild your emergency fund after a home repair, those might take priority.

You also could possibly earn more by investing your money as opposed to paying off your loan. If that’s the case, it doesn’t make sense to pay off your mortgage early unless you’re wanting the peace of mind that comes with no mortgage debt. Investment decisions should be based on specific financial needs, goals, and risk appetite.

You Would Have Nothing Left in Savings

If you only have enough in the bank to cover your mortgage, it is not advisable to pay it off. Having an emergency fund is necessary and may take priority over having no mortgage payment.

You Might Face a Prepayment Penalty

Make sure to review your mortgage terms closely. Some lenders charge an early payoff penalty, usually a percentage of the principal balance at the time of payoff.

You Might Miss Out on the Mortgage Tax Deduction

For many people who itemize, having a mortgage helps push their itemized deductions higher than the standard deduction. It’s worth discussing the mortgage tax deduction with your accountant or other tax professional before you resolve to pay your mortgage off early.

You Have Other High-interest Debt

If you have other high-interest debt, such as credit card debt, personal loans, or student loans, it may make sense to pay those off in full prior to paying your mortgage off early. Home loans typically have the lowest interest rates of other forms of debt and are considered “good debt” by lenders. It only makes sense to pay off your mortgage early if you have no other debts in your name.

When an Early Payoff May Make Sense

On the flip side, there are some situations when paying off a mortgage early might make more sense than waiting. Reasons to pay off your mortgage early may include:

You’ve Met All of Your Financial Goals

If your emergency savings account is right where you feel it needs to be and you’re diligently contributing to your retirement accounts, there may be no reason not to pay off your mortgage early.

Another idea, however, is to purchase an investment property instead of paying off your mortgage early. This can create a monthly cash flow in addition to the value of the property (hopefully) appreciating over the years.

You’re Interested in Being 100% Debt-Free

Sometimes, just the idea of having loan payments can be mentally taxing, even if you’re in a good place financially. Money is not just about numbers for many; it’s also about emotions.

If paying off your mortgage loan early relieves anxiety because it’s helping you become debt-free, then that might be something to consider.

Of course, reflecting on why you want to become debt-free is important when thinking about paying your mortgage off. If, for example, it’s because you’re approaching retirement and will no longer be getting a steady paycheck, it might make sense to pay off your mortgage.

Recommended: How to Pay Off a 30-Year Mortgage in 15 Years

Ways to Pay Off a Mortgage Early or Faster

If you’ve decided it makes sense for your financial situation to pay off your mortgage early, here’s how you can do it:

Lump sum. The easiest way to pay off your mortgage early is by making one lump-sum payment to your mortgage lender. Contact your lender prior to making the payment so you can make sure you’re paying exactly what you owe, including any possible prepayment fees.

Extra payments. You could potentially pay more toward your mortgage principal each month if you got a raise at work or you’ve trimmed some fat in your budget.

If you make extra payments toward your mortgage, it could lead to paying off the loan faster than if you were just to make the set payment each month. Make sure to contact your lender prior to making extra payments, though, so you know the extra amount is being applied toward the principal amount only, not the principal and interest.

Refinancing. Another option for paying off your mortgage early is refinancing. Refinancing your mortgage means replacing your current mortgage with a new one, ideally with a better rate and term.

If you shorten your loan term from 30 years to 15 years, for example, it may increase your monthly payments but in turn allow you to pay your mortgage off faster. Home loans with shorter terms often come with lower interest rates, too, so more of your monthly payments will be applied to the loan’s principal balance.

The Takeaway

Should you pay off your mortgage early? Maybe. If your retirement fund is fully-funded, you have no other high-interest debts, and you’re interested in becoming 100% debt-free, it may make sense to pay off your mortgage early. However, if you do not have a fully funded retirement and emergency savings account or you could make more money by investing rather than paying off your mortgage debt, it could be best to hold off on paying your mortgage off early.

One way to save on interest and possibly pay off your mortgage early is by refinancing. Refinancing can allow you to lower your interest rate and shorten your loan term, if desired.

SoFi offers competitive mortgage refinance rates and flexible loan terms. Checking your rate takes just a few minutes and will not impact your credit score.*

Interested in refinancing your mortgage? Apply with SoFi today.



*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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How to Win a Bidding War

In housing markets teeming with buyer demand, it’s not uncommon to put an offer on a home only to be outdone by a competing offer. If two or more potential buyers want a property badly enough, they may find themselves locked in a bidding war.

Some market watchers think that pent-up demand from homebuyers and increasing seller activity will make for a busy homebuying market in 2025. And let’s face it: Some markets are always competitive, and new “hot” markets are born regularly.

Here’s how to increase your chances of winning a bidding war so you don’t have to bid adieu to a home you really want.

Key Points

•   Bidding wars arise in seller’s markets with high demand and limited supply.

•   Prequalify and get preapproved for a mortgage to demonstrate serious buying intent.

•   Reduce contingencies to make offers more appealing to sellers.

•   Use an escalation clause to automatically increase offers against competing bids.

•   Accommodate seller’s needs, like flexible closing dates, to gain an advantage.

1. Know How a Bidding War Works

Bidding wars usually take place in a seller’s market, when demand outpaces housing inventory. They also typically occur when there are multiple interested parties and when there is some sort of constraint, like timing.

When a seller’s agent receives offers for a property that has attracted a lot of buzz, the agent may set a date by which would-be buyers should make their “highest and best” offer. Sellers can accept the best offer, counter one offer while putting the others to the side while awaiting a decision, or counter one offer and reject the others.

This brings up a salient point: It’s true that you can buy a house without a Realtor® or real estate agent, but an experienced agent can guide you through offers and counteroffers, contingency snags, and more.

2. Line Up Your Financing

One of the best things you can do to be prepared for a potential bidding war — or really any time — is to get your finances, and financing, in order.

Be sure to know how much house you can afford, including a down payment and monthly payments.

Determine if you qualify for a mortgage by going through the prequalification with several lenders. Familiarize yourself with the types of mortgage loans that are available: government-backed loan or conventional loan, fixed rate or adjustable rate.

Taking the next step beyond prequalification and go through the mortgage preapproval process. Getting preapproved for a mortgage will give you a specific amount that a lender is tentatively willing to let you borrow. A preapproval letter shows sellers that you are a serious candidate to buy a home. Many experts recommend getting at least three preapproval letters from three lenders.

And a preapproval letter shows sellers that you are a serious candidate to buy a home. Many experts recommend getting at least three preapproval letters from three lenders.

3. Lessen or Drop Contingencies

Contingencies are certain conditions that must be met before a real estate deal becomes binding. Potential buyers can back out of a deal without penalty if the contingencies aren’t met.

A clean offer, one with as few contingencies as possible, is attractive to sellers in a competitive market.

In a typical real estate market, a common contingency is the mortgage contingency, or financing contingency, which allows homebuyers to exit the deal and have their earnest money returned if they cannot secure financing by the agreed-upon deadline.

Another is the inspection contingency. Based on the findings of a professional inspection, the buyer may be able to negotiate repairs or the price, which are known as seller concessions if the sellers are agreeable, or cancel the contract.

Waiving contingencies shows your eagerness to triumph, but it comes with risk. The biggest is losing your earnest money deposit if you hit a snag.

4. Be Quick About Any Remaining Contingencies

Sellers want to avoid spending a lot of time with a potential buyer only to have the deal fall through. If you’re including appraisal and inspection contingencies, do what you can to expedite them.

The real estate purchase contract includes any contingencies, the sales price, the closing date, and the date of the title transfer and possession. The contract is considered a working document until both parties agree on the terms.

5. Use an Escalation Clause

Unsurprisingly, one of the best ways to win a bidding war is by offering more money.

You may want to include an escalation clause in the contract if you assume there will be multiple offers. The clause asserts that if another buyer makes a competing offer, your bid will automatically increase by a certain amount, up to a limit, to exceed the offer.

Say you put a $400,000 offer on a home, with an escalation amount of $10,000 and a ceiling of $430,000. If someone else bids $410,000, you will automatically bid $420,000, up to your ceiling.

6. Stay Flexible

A willingness to be flexible can give you a leg up in the eyes of a seller.

For example, a seller might be moving across the country for work and need to close by a specific date. So if you can get the appraisal and inspection done swiftly, that could be a huge plus.

Alternatively, sellers may need to stay in the house for a while. Working with them on their specific needs could give you an edge.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


7. Pay With Cash

If you are able to do it, buying a house with cash can be very attractive to sellers. The process is typically much faster than going through a lender, and sellers don’t want to worry about financing issues that might hold up the deal or cause it to fall through.

It’s even possible that a seller would choose a cash offer over a slightly higher offer backed by a mortgage.

8. Increase Your Deposit

There are timeless standards for how to make an offer on a house. One is determining the size of your earnest money deposit.

The deposit, held in escrow by the title company, secures the real estate contract. It tells the seller that you are serious about buying the house.

Earnest money is typically 1% to 3% of the purchase price but can be more in a competitive market. If you close on the home, the deposit will be applied to your closing costs.

9. Write a Personal Letter

When sellers are choosing a buyer during a bidding war, they’re often just looking at numbers on a page. Consider writing a offer letter, aka a love letter, to humanize the transaction.

You might want to make a case for why you’re the ideal candidate to buy the home, and note commonalities: You’re a ceramicist and noticed an artist’s studio in the backyard. You have dogs; they have a dog. That big elm reminds you of the one at your childhood home.

Be complimentary about the things you like about the house and how it has been maintained. And be concise.

The Takeaway

Whether you’re buying in a time of burgeoning bidding wars or not, it’s good to know how they work. The tactics help homebuyers understand the lay of the real estate land — contingencies, earnest money, escalation clauses, love letters — and use them to best effect.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Can a homeowner refuse to sell a house to a particular buyer?

Yes, a seller can refuse to sell a home to a buyer without penalty as long as there is no purchase agreement in place, and as long as the refusal is not a violation of the Fair Housing Act. The act prohibits housing discrimination based on sex, race, color, familial status, or national origin.

When should you walk away from a bidding war?

You’ll know you should walk away from a bidding war when you run the numbers on a home mortgage calculator and determine that the monthly payments just aren’t feasible (or are doable but will keep you awake nights). Other reasons to walk away include: The home was pricey for the market or a stretch for your budget at its initial asking price; there are multiple bidders; or the house wasn’t your dream home to begin with.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This article is not intended to be legal advice. Please consult an attorney for advice.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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What's the Difference Between a Hard and Soft Credit Check?

What’s the Difference Between a Hard and Soft Credit Check?

The main difference between a soft vs. hard credit check is that each hard check can knock a few points off your credit score, whereas soft checks don’t affect your score. Both hard and soft checks pull the same financial data but for different purposes. Hard checks are typically done when you apply for a loan or credit card; soft checks are conducted for most other purposes, such as pre-screening for credit card offers.

It’s important for consumers to understand this difference because too many hard checks — also known as hard pulls and hard inquiries — can significantly lower your credit score. This in turn can hurt your chances of getting the best offers on credit cards and loans. Keep reading to learn more about credit checks and how to prevent unnecessary hard checks of your credit file.

What Is a Soft Credit Inquiry?

A soft inquiry is when a person or company accesses your credit as part of a background check. They will be able to look at:

•   The number and type of all your credit accounts

•   Credit card balances

•   Loan balances

•   Payment history for revolving credit (credit cards and home equity lines of credit)

•   Payment history for installment loans (auto loans, mortgages, student loans, and personal loans)

•   Accounts gone to collections

•   Tax liens and other public records

Soft inquiries are not used during loan or credit card applications, and do not require the consumer’s permission or involvement. Reasons for a soft check can include:

•   Employment pre-screening

•   Rental applications

•   Insurance evaluations

•   Pre-screening for financial offers by mail

•   Loan prequalification

•   Checking your own credit file

•   When you’re shopping personal loan interest rates or credit cards

Soft credit checks do not affect your credit score, no matter how often they take place. Some soft checks appear on your credit report, but not all — you may never find out they took place.

When they are listed, you might see language like “inquiries that do not affect your credit rating,” along with the name of the requester and the date of the inquiry. Only the consumer can see soft inquiries on their report; creditors cannot.

Recommended: Does Applying for Credit Cards Hurt Your Credit Score?

What Is a Hard Credit Inquiry?

A hard credit inquiry typically takes place when you apply for credit, such as loans or credit cards, and give permission for the lender or creditor to pull your credit file. As with a soft credit pull, the lender will look at the financial information listed above.

Each hard pull may lower your credit score — but typically by less than five points, according to FICO® Score. All hard inquiries appear on your credit report. While they stay there for about two years, they stop affecting your credit score after 12 months.

Not all loans require a hard credit inquiry — but consider that a red flag. Some small local lenders may offer short-term, high-interest, unsecured personal loans. Borrowers must show proof of income via a recent paycheck, but no credit check is required. The risks of these “payday loans” are so great that many states have outlawed them.

Avoiding Hard Credit Inquiries

Consumers should carefully consider if they really need new credit before applying for an account that requires a hard credit check.

For example, department stores and some chains like to entice you to apply for their store credit card by offering a generous discount on your purchase as you’re checking out. In that situation, ask yourself if it’s worth a credit score hit (albeit a small one).

Another way to minimize hard inquiries is to ask which type of credit check a company intends to run. If, for example, a cable company usually requires a hard credit inquiry to open an account, you might ask if a hard pull can be avoided. Other situations where there may be some flexibility include:

•   Rental applications

•   Leasing a car

•   New utility accounts

•   Requesting a higher credit limit on an existing account

Disputing Inaccurate Hard Inquiries

A good financial rule of thumb is to review your credit reports every year to check for common credit report errors and signs of identity theft. You can access your credit reports from the three consumer credit bureaus (Equifax, Experian, and TransUnion) for free at AnnualCreditReport.com.

To check for inaccurate hard inquiries, look for a section on your credit report with any of these labels:

•   Credit inquiries

•   Hard inquiries

•   Regular inquiries

•   Requests viewed by others

You can dispute hard inquiries and remove them from your credit reports under certain circumstances: if you didn’t apply for a new credit account, you didn’t give permission for the inquiry, or the inquiry was added by mistake.

That said, under federal law, certain organizations with a “specific, legitimate purpose” can access your credit file without written permission. They include:

•   Government agencies, usually in the context of licensing or benefits applications

•   Collection agencies

•   Insurance companies, when certain restrictions are met

•   Entities that have a court order, as in child support hearings

Even so, if you didn’t give permission for a hard credit pull, it’s worth filing a dispute to request that the credit check be removed from your report.

Consumers may dispute hard inquiries online through AnnualCreditReport.com, or by writing to the individual credit reporting agencies.

Hard Credit Checks and Your Credit Scores

As mentioned, hard inquiries appear on your credit report, and each hard pull may lower your credit score by five points or less. Here we’ll go into a bit more detail.

Why Hard Inquiries Matter

Multiple hard inquiries within a short time frame can do significant damage to your credit score. It could potentially be enough to move you from the Good credit range down to the merely Fair. Someone in a Fair credit range can pay substantially more over a lifetime in interest and fees than someone with a Good score or higher.

How Many Points Will a Hard Inquiry Cost You?

As noted above, each hard pull can lower your credit score by less than five points. One or two hard inquiries per year may not matter, especially if you’re not planning on applying for a loan.

If you’re rate shopping for a particular type of loan, such as a mortgage or auto loan, keep in mind that multiple hard credit checks within a specific period (often several weeks) for the same purpose are usually counted as one inquiry by credit scoring companies. However, this is not the case with hard pulls for credit card applications.

How Long Do Inquiries Stay On Your Credit?

Hard inquiries stay on your credit report for two years. While they’re on your credit report, they are visible to anyone who checks your credit. But their impact on your credit score typically lasts less than 12 months.

Soft inquiries may remain on your credit report for one or two years, but only you can see them.

Awarded Best Online Personal Loan by NerdWallet.
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The Takeaway

Soft credit inquiries do not affect a credit score, while hard credit inquiries may cost you a few points. In both cases, individuals or businesses pull information from your credit reports. Checking your own credit report counts as a soft pull, as do most other situations where the consumer hasn’t given written permission. Hard pulls are typically done only when you’re applying for a loan or new credit account.

Many lenders allow you to “prequalify” for a loan without running a hard credit check. This allows you to shop rates without risking any impact to your credit.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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15 Questions to Ask When Interviewing Realtors

Working with a professional real estate agent can make buying or selling a home easier. After all, they are likely to be well versed in the ins and outs of your area, how to best negotiate in the current market, and how to access any other resources (say, a home inspector) that you may need.

Working with a professional real estate agent can make buying or selling a home easier. After all, they are likely to be well versed in the ins and outs of your area, how to best negotiate in the current market, and how to access any other resources (say, a home inspector) that you may need.

While there may be some agents you hit it off with personally, this isn’t a friendship you’re pursuing but an important business relationship. It’s a collaboration that could impact both your finances and your stress level.

No matter which side of a real estate transaction you’re on (buying or selling), it can be wise to have the right professional in your corner. Eighty-nine percent of homes sold in the U.S. involve an agent or a Realtor®, according to a 2023 report. (Realtors are agents who belong to the National Association of Realtors, or NAR.)

If you’re on the hunt for an agent, it’s important to know what to ask to identify the right match. Read on to learn questions to ask, whether you’re buying or selling a property — or doing both at once. (This is a lengthy list of interview questions for real estate, so pick and choose the questions that resonate the most.)

Key Points

•   Interviewing realtors requires asking targeted questions to assess their suitability for your real estate needs.

•   Experience, local market knowledge, and client load are critical factors to inquire about.

•   Understanding a realtor’s team structure and communication methods is essential for collaboration.

•   Specific questions about buying or selling processes help gauge a realtor’s expertise and alignment with your goals.

•   Discussing contract terms and fees upfront avoids future misunderstandings and ensures financial clarity.

How to Interview a Realtor

First, a bit about terminology: Not all real estate agents are Realtors, but for the purposes of this article, we’ll sometimes use the two terms interchangeably.

There are different options for interviewing Realtors. You could schedule an interview:

•   Over the phone

•   In person

•   Virtually via Zoom or Skype.

You might aim to interview at least three agents for comparison’s sake, though you may choose to interview more or fewer.

Create a list of interview questions beforehand to help you stay on track, and begin researching a home loan so you will have a sense of your budget. By the time the interview process is over, you should understand:

•   What the agent’s personality and character are like: Is this person supportive and positive? Do they sound rushed and distracted?

•   What kind of services they offer and what experience they bring to the table.

•   How much you’ll pay for their help.

You’ll learn about how to do this in more depth as you read on.

Recommended: Tips When Shopping for a Mortgage

What to Ask About a Realtor’s Background

Any real estate agent you choose to work with should have the professional qualifications you’re looking for. But it’s also important to get a sense of who they are as an individual to avoid personality clashes. Here are some questions to ask as you evaluate an agent who might help you buy or sell a home.

1. How Long Have You Been a Realtor?

It helps to understand how long an agent you’re considering working with has been buying or selling homes. The median real estate experience of all Realtors is eight years, according to NAR.

Working with an agent who’s newer to the profession isn’t necessarily a bad thing. But one who’s more experienced may be more adept at handling any challenges that arise when buying or selling a home.

2. How Well Do You Know the Local Market?

A Realtor who knows a particular area and its local housing market trends can offer an advantage when buying or selling. Ideally, you should work with an agent who understands the local market and what trends drive it.

The more informed they are, the better equipped they are to do things like comparative market analysis, which can give you a sense of how home prices in the area are trending. They will also likely know details like, say, which parts of town are more prone to flooding than others.

Recommended: Local Housing Market Trends: Popular neighborhoods, home prices, and demographics

3. How Many Clients Do You Work With at One Time?

The answer can give you an idea of how much time an agent will be able to dedicate to working with you. Especially if you ask the follow-up question, “And how many clients do you currently have?”

4. Do You Work Alone or as Part of a Team?

Keep in mind that you may not be working with your Realtor alone to finalize the purchase or sale of a home. Agents may have a team of individuals they work with, including office managers, personal assistants, or marketing directors, who may reach out to you during the process.

Asking who else you may be connected with can help you avoid surprises if you decide to enter into a working relationship with a particular agent.

5. How Will We Communicate and How Often?

Being able to communicate with an agent is important to keep the process moving. Plenty of Realtors email and text to keep in touch with clients. If you’re the kind of person who prefers phone calls or in-person meetings, it’s good to identify communication styles up front and make sure they are in sync.

6. Do You Specialize in Buying or Selling?

Some real estate agents may choose to work exclusively with buyers, while others work only with sellers. And some can act as dual agents, representing both the buyer and seller in the same transaction. Dual agency is rare, and it’s illegal in several states. A dual agent can’t take sides or give advice.

The answer to this question will help you get a better idea of whether the agent is attuned to your side of a real estate transaction. Ideally, you want someone who is passionate about your deal, whether that’s finding the perfect house with a picket fence or selling the condo you’ve outgrown.

7. How Many Transactions Did You Close Last Year?

Asking this question can give you an idea of an agent’s overall success rate and the volume of transactions they handle.

The median number of residential transactions Realtors took part in per year in 2023 is 10. If you’re interviewing agents with closings well below that number, it could be a sign that they aren’t always successful in closing deals. If their number is much higher, it could mean they are super busy and you might not get as much attention as with another agent.

8. How Long Does It Normally Take You to Close a Deal?

Once the seller and the buyer of a property have signed their purchase agreement, closing on a home can take anywhere from a week (for an all-cash offer) to a couple of months (for those involving a mortgage) to close. As of mid-2024, the average closing time on a house was 43 days after an offer was accepted, reports ICE Mortgage Technology, Inc.

Asking a Realtor what their average closing time is can give you an idea of how efficiently and diligently they work to satisfy their clients.

If their average closing time is closer to four or six months, for example, that could be a red flag, though some deals do wind up being more complicated than others.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


9. What Are the Terms of Your Contract?

Working with a Realtor means entering into a contract, and it’s important to know what that contract says. These documents may be more common when you work with a broker to sell a home, but there are also buyer’s agreements.

These ensure that if they invest the time scanning the market for you, scheduling walk-throughs, and negotiating on your behalf, you won’t then complete the deal with, say, a relative of yours who just got their real-estate license.

When you are selling a house, you’ll sign a document agreeing that the agent will handle the sale. Once you sign a contract you’re typically locked in to working with them unless they agree to release you.

The listing agreement will last for a set period, such as three or six months. From your perspective, shorter may be better so that you’re not trapped if you don’t like the agent’s services.

10. What Fees Do You Charge?

Closely connected to contracts is the topic of money. How does it change hands? What are you liable for? Historically, real estate agents worked on commission, and the fee was paid by the seller. Now, real estate commission fees are changing, and while sellers will still likely pay agents a commission, there is no guarantee that the seller will pay the buyer’s agent. If you’re buying, you’ll need to discuss a fee structure with an agent before you begin working together. It might be an hourly fee, or perhaps a flat rate. Some agents may request a percentage of the home price.

Recommended: Do You Still Need to Put a 20% Down Payment on a House?

Questions to Ask a Realtor When You Are Selling

If you’re selling your home, here are some questions to ask to help ensure that you partner with the right agent.

11. What’s Your Typical Marketing Strategy?

A real estate agent should have a clear plan for listing and marketing your home in a way that produces the greatest odds of success in selling it quickly and at your desired price point. Let the agent you are interviewing tell you about their strategy and the results it yields.

For instance, does the Realtor believe in listing at a low price in the hopes of starting a bidding war? If so, what kinds of prices has this achieved? Where will your listing be posted? Will videos be created? Will there be an open house?

These kinds of questions can help you see if you are impressed by and aligned with how a Realtor likes to market homes.

12. Will You Handle Staging and Prep Work?

If you’re selling a home, staging it could help influence buyers’ perceptions of the property and potentially net you a higher sale price.

Staging is something you can do yourself, but your Realtor may have a staging company they work with to get the job done.

Asking about staging or small cosmetic updates, such as painting, can help you figure out what you’ll be responsible for to get your home ready for the market. There’s a price tag attached to all improvements, so you’ll want to know the numbers to be better prepared.

13. How Do You Handle Viewings?

The use of digital tools such as virtual tours have made properties more accessible to more buyers. One survey by Zillow found that almost 40% of Millenials would be comfortable buying a home online vs. in person.

See if your agent plans to create a virtual tour, but you also want to be prepared for the majority of buyers who want to visit in person. Ask Realtors how many viewings they typically schedule in a day or a week, how often open houses will be scheduled, and how they’ll be marketed.

Questions to Ask a Realtor When You Are Buying

Now you’ve learned the questions to ask a Realtor when selling. How about the other side of the deal? Whether you’re shopping for a starter home or trading up, here are a couple of important questions to ask a potential real estate agent when preparing to buy a house.

14. What Happens When I’m Ready to Make an Offer?

If you’re a buyer, agents should be able to walk you through how this process works, what to do if the seller makes a counteroffer, and what you’ll need to do next if your offer is accepted. You also want to check if they have experience with successfully navigating bidding wars, which can happen in hot markets and with well-priced properties.

Also check that they can advise you on how much earnest money you might need to pay and how to find a good, affordable home inspector, as these are important aspects of the homebuying process.

15. Will You Help Me With Getting a Mortgage?

This question will shed more light on a prospective agent’s network and experience. Agents may be able to offer recommendations for mortgage lenders. They may also be willing to communicate with your lender if there are questions about the property or the offer during underwriting.

You’re not obligated to use your Realtor’s recommended lender. In fact, it’s helpful to compare mortgage loan terms and interest rates from multiple lenders to find the option that best fits your needs.

The Takeaway

Due diligence in the search for the right real estate agent may mean interviewing a few of them and not automatically going with a friend of a friend. It’s important to know how to interview a Realtor and which questions to ask, so you can pair up with the best possible professional as you navigate this major transaction.

If you’re a buyer, once you’ve found an agent, you can turn your attention to next steps: finding a home (and a home loan) that suits your needs.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What are the benefits of using a real estate agent to buy a house?

Having an agent to survey the available properties and recommend the ones that suit your needs could certainly save you time, and agents often have local market expertise and the inside scoop on properties that might be headed to market. An agent should also be well versed in the negotiation process (especially useful in a seller’s market) and able to help coordinate the many moving parts that lead to a closing.

What should a homebuyer do before talking to a real estate agent?

It’s wise to have an idea of your budget before consulting a real estate agent. You can prequalify for a mortgage with a few lenders to get a sense of what you might be able to borrow. Also do research online about your desired town or neighborhood to get a sense of where you would like to live. And know your non-negotiables — minimum number of bedrooms, whether you prefer an old home or new construction, for example.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Housing Market FOMO: Gen Z is Feeling Left Behind

Though putting together enough money to purchase a home has always been tough for younger buyers, rising prices and higher interest rates have made it especially difficult for Gen Z (those born from the mid-to-late 1990s and the early 2010s) to get a foot in the door of the housing market.

As they wait on the sidelines for the chance to buy their first place, many are feeling “real estate FOMO” — the fear that they’re missing out on a major life milestone and opportunity to build wealth that others have managed to achieve. Let’s take a look at some of the obstacles Gen Z is facing and learn the steps that could help as you save for, and search for, a home.

What Does FOMO Mean?

FOMO, or the fear of missing out, is a term used to describe the feeling that others are doing better than you are. Maybe they’re achieving goals that you haven’t yet reached, or experiencing things that you currently don’t have the wherewithal to accomplish (financially or otherwise). FOMO is often used in the context of missing out on a social event — a concert, for example, or a party you weren’t invited to. But it also can pertain to wanting to purchase things others in your social circle have — a better car, clothes, trips, or jewelry, for example.

FOMO spending is when the fear of missing out pushes you to spend money — maybe more than you should — to keep up with your peers. (Older generations often refer to this as “keeping up with the Joneses.”) Real estate FOMO can have that effect. It might lead someone to buy a house before they’re ready, or to get a mortgage loan on a house they can’t comfortably afford. But it also can make homebuyers reluctant to pull the trigger on a purchase, if they think they’ll find a better home at a better price if they just wait a while. And for members of Gen Z, social media can exacerbate those feelings.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


How to Deal with FOMO in Real Estate

There are a few different things you may want to consider doing if you think FOMO is getting in the way of making smart homebuying decisions.

If You Feel You Need a Reality Check…

It never hurts to revisit your budget to see how much house you can truly afford. Using a home affordability calculator can help you set some limits. It also may be useful to talk to a financial advisor about how buying a home — or a home at a particular price — could affect your other goals. If you see a property you’re interested in purchasing, run the numbers in a mortgage calculator to get a sense of what your monthly payments would be.

If You Find Yourself Trying to “Time the Market”…

It can be tough to predict when home prices or interest rates will go down. Instead, you might want to talk to a real estate agent about the best time of year to look for housing bargains in your area. Or you could shift your search from a pricey “hot” area to a place where the cost of living is more affordable. Also, if you find a home you think you’ll stay in long-term, you may want to keep mortgage refinancing in mind as an option for lowering costs down the road.

If You’re Feeling Triggered by What Others Have…

Looking at too many listings (or home improvement shows, or friends’ house-proud social media posts) has a way of leading you away from your personal “must-haves.” When that happens, it helps to take a moment (perhaps with a social-media hiatus?) to reprioritize and get back on track.

What Are the Barriers for Gen Z Home Buyers?

Some of the obstacles Gen Z homebuyers face are the same as those would-be homeowners have encountered off and on for generations. Home prices are high. Mortgage interest rates, though nowhere near the double digits they were throughout much of the 1980s, still feel nerve-rackingly elevated. Housing inventory is low. And though inflation is cooling, gas, groceries, and other costs are still taking a toll on household budgets.

But Gen Z has some issues to contend with that other generations may not, including:

Down Payment Costs

Higher-priced houses can require larger down payments, and that can make getting into the housing market increasingly difficult. First-time homebuyers typically put down less than repeat buyers — about 8% compared to 19%, according to the National Association of Realtors® 2023 Profile of Home Buyers and Sellers. That still could be a hefty chunk of change to come up with, however, considering the median home price in the U.S. is currently around $420,000.

Student Loan Debt

A college education may help Gen Z graduates earn a higher salary, but many report that student debt is slowing their progress toward certain milestones, including buying a home. Those college loans can make it even more difficult for younger buyers to save for a down payment or make higher monthly mortgage payments. You can afford a mortgage if you have student loans, but student debt can factor into your debt-to-income ratio (DTI), which may affect whether or not you qualify for a mortgage or what interest rate you’re offered.

Higher Rent Payments

Rising rental costs are another factor that may be affecting Gen Z’s ability to save for a home. According to Zillow’s monthly Observed Rent Index, the typical U.S. rent in March 2024 was $1,983, a 3.6% year-over-year increase.

Adulting = Insecurity

When you’re in a new (or new-ish) career, out on your own with bills to pay, and you’re not sure where life might take you next (a new job, a new town, a new partner, a new baby?), navigating life after college can be daunting enough without the homebuying headaches. While some in Gen Z have found a way to get into the housing market despite the barriers, others are waiting until their personal life feels more stable.

How Does Gen Z Approach Home Buying?

For some in Gen Z, buying a home may not be as significantly linked to achieving success as it was for older generations. (According to a 2023 GoDaddy survey, only 40% of Gen Z respondents chose “yes” when asked if homeownership indicated a person had achieved the American Dream, compared to 44% of millennials, 49% of Gen Xers, and 50% of boomers.) Still, it remains a goal for many, who are finding ways to make it happen — by taking on roommates, moving to a state with a lower cost of living, working a side gig to earn more money, or living with their parents after college to save money.

Where Is Gen Z Buying Homes?

As you might expect, Gen Z-ers who live in or can easily move to more affordable locations are more likely to buy homes than those in large cities where home prices are higher. According to a Redfin report, the typical home price for Gen Z buyers in 2022 was $255,000 or less — much lower than the overall median price in the U.S. that year.

Realtor.com recently listed Jacksonville, NC; Elkhart, IN; Lima, OH; Waterloo, IA; Cumberland, MD; Watertown, NY; St. Joseph, MO; Hinesville, GA; Dubuque, IA; and St. Cloud, MN, as the 10 metropolitan areas with the largest percentage of Gen Z buyers in 2022.

Recommended: Best Affordable Places to Live in the U.S.

Is It Harder for Gen Z to Buy a House?

Gen Zers aren’t facing the double-digit mortgage rates their parents and grandparents paid in the early 1980s. And they aren’t trying to buy a home during a depression or recession. Still, thanks to inflation and other factors — including an uptick in the number of affordable homes being snapped up by investment companies — this is a challenging time to become a homeowner.

According to Redfin, 30% of 25-year-olds owned their own home in 2022 — so it is doable. That homeownership rate is lower than what the baby boomers had (32%) when they were 25. But it’s actually a bit higher than the rate for millennials (28%) and Gen Xers (27%) when they were that same age.

Steps for Gen Z Home Buyers to Consider

For Gen Z, patience, flexibility, and creativity may be the keys to success in today’s tough housing market. Here are some steps to consider as you pursue homeownership:

Know Before You Go

The more you know about the homebuying process, the more confident you can feel about the decisions you make. Get to know the things you can do on the front end (like improving your credit score, lowering your DTI ratio, and researching first-time homebuyer programs and loans). And as you start your home search, consider listing your wants vs your needs, learning about the different types of mortgage loans, and going through the mortgage preapproval process.

Keep Expectations in Check

Here’s where FOMO can really get in your way: The house you can afford may not be anything close to the designer houses you see on social media and TV. But an affordable starter home can be a stepping stone to the home of your dreams. If you aren’t sure what you can manage, talk to a professional, such as your financial advisor, a real estate agent, or a mortgage professional.

Cast a Wide Net

If you can’t afford the trendiest neighborhood or a house directly on the beach, you may want to try searching in areas that are similar or nearby. If you can relocate, you could take your search even broader, looking at states that have what you want but at a lower price.

Recommended: Home Loan Help Center

The Takeaway

If high housing costs and other factors are getting in the way of your plans to buy a home, and you feel a strong sense of FOMO creeping up on you, try not to get sucked into overspending — or turned off to homeownership altogether. Staying true to your budget and your goals, and getting some assistance in finding the right home and home loan, can help you avoid feeling pressured into bad decision-making.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What does FOMO mean in real estate?

The fear of missing out (FOMO) in real estate is the worry that you aren’t where you should be when it comes to homeownership — perhaps because you haven’t yet purchased a home, or you don’t have the same level of home you see others in your peer group moving into.

What housing markets are dropping the fastest?

According to CoreLogic’s U.S. Home Price Insights report for 2024, several locations on both coasts of Florida are likely to experience price drops this year, as well as the Atlanta-Sandy Springs-Roswell area in Georgia, and the Youngstown-Warren-Boardman area in Ohio and Pennsylvania.

What is the slowest month for the housing market?

Winter is typically the slowest time of year for the housing market, while spring and summer are the busiest seasons.


Photo credit: iStock/gradyreese

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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