Key points
- Low inventory and high home prices make 2022 a tough time to buy.
- Here’s how to navigate the housing market and mortgage application process.
three tips to help you navigate it and come out successful in your search for a new place to call your own.
Here’s how to tackle this year’s tricky housing market.
Whether you’re a first-time homebuyer or have purchased a home before, this year’s housing market is shaping up to be a challenging one. Here are
1. Use a real estate agent
You don’t need a real estate agent to purchase a home. But there’s really no reason not to enlist an agent’s help. As a buyer, you’re not responsible for paying an agent’s commission — that’s something sellers do. And so you might as well get someone in your corner who can help pinpoint suitable homes for you and negotiate with sellers and their agents on your behalf.
Furthermore, real estate agents sometimes get wind of new listings before they officially hit the market. Working with one could give you an opportunity to make an offer on a home before the competition pounces. This year, that’s more important than ever.
We’re starting off 2022 with a glaring lack of real estate inventory. Getting first dibs on a home that’s new to the market could be crucial.
2. Boost your credit score as much as possible
The higher your credit score at the time you apply for a mortgage, the more likely you’ll be to snag a competitive interest rate on your loan. And that’s important in today’s market.
Home prices are high on a national level right now, so you may need a lower mortgage rate to make buying affordable. To qualify for the best rates, your credit score will generally need to reach the mid-to-upper-700s. To be clear, you don’t need to have a perfect credit score (which would be an 850) to snag the best available rates. Perfect credit is really hard to come by, even for strong borrowers. But the higher that number is, the better.
You can raise your credit score by paying your bills on time every month and keeping your credit card debt to a minimum. Believe it or not, even if you make your minimum payments on time, too high a balance across your credit cards could end up dragging your score down.
It also pays to check your credit report for errors and correct any that could be lowering your score. Credit reports happen to be free on a weekly basis this year through April, so you have a chance to keep tabs on changes to yours during the mortgage application process.
3. Crunch your own numbers
You may decide to get pre-approved for a mortgage, and doing so is a smart bet. Not only does it send the message to sellers that you’re a serious buyer, but it also gives you a price range to work with.
That said, mortgage lenders use specific formulas when determining how much borrowers are approved for, and the number your lender arrives at may not actually align with your financial circumstances. It may be that you want to borrow more conservatively for a home, or that you have other expenses, like hefty childcare costs, that your lender isn’t factoring into its number. Your best bet in determining how much of a mortgage to take out is to run those numbers yourself.
While 2022 may not be the easiest year to buy a home due to limited inventory and inflated prices, there are steps you can take to be more successful. Follow these three tips to make the process go more smoothly, and to increase your chances of ending up with a home that truly works for your budget.
A historic opportunity to potentially save thousands on your mortgage
Chances are, interest rates won’t stay put at multi-decade lows for much longer. That’s why taking action today is crucial, whether you’re wanting to refinance and cut your mortgage payment or you’re ready to pull the trigger on a new home purchase.
Source: fool.com ~ By: Maurie Backman ~ Image: Canva Pro
