With a new year just around the corner, you’re probably excited for what’s to come.
Hopefully, 2022 will be a much brighter year as you pursue your dream of homeownership.
There will be new challenges in the coming year, chief among them is the likelihood that interest rates will begin to creep upward. Not to mention, homebuyers will also be faced with stiff competition, rising home prices and tight home inventory.
As you begin to plan for your journey toward homeownership, here are four tips that can help you get over the real estate hump in 2022.
Start researching right now
It’s never too early to research home prices.
As everyone is aware, prices have skyrocketed. And the consensus is that they will continue to rise in 2022. Whether or not home price gains continue on their current pace is unclear. But take it upon yourself to dive deep into pricing trends of various neighborhoods that meet your budget.
Don’t go cold into your home search in 2022. All your hard work of researching now will help you zero in on a property that you can both afford and that you love.
Pump up savings for down payment
Whether you opt for conventional lending or FHA, you’ll need enough money to cover the down payment and other costs associated with buying a home.
By boosting your savings, you can ensure that you won’t fall short when all the numbers are added up.
Stimulus money, year-end bonuses, tax refunds and other sources of cash can go toward your savings for a home.
If you save enough money, you can avoid private mortgage insurance payments, which are added to your monthly mortgage tab. So as you enter 2022, remember to save everywhere you can to build your real estate piggy bank.
Get ready for some competition
It goes without saying that you’ll face some stiff competition once you enter the real estate market.
While there might be a slight increase to home inventory, that’s no promise that things will get any easier. Home prices will likely rise and interest rates might do the same in 2022. Prepare accordingly.
If you want to win a potential bidding war and stand out in tomorrow’s real estate market, a mortgage preapproval goes a long way toward those ends.
When sellers review offers, they’ll be on the lookout for the ideal possible candidate with the capacity to follow through.
A preapproval indicates that a lender is already working with you and has approved you for a loan. In other words, when you’re ready to make an offer on a home, the seller will have peace of mind that your loan is good to go.
So standout from the rest with a lender-approved letter for a mortgage loan.
Get that credit score up
A good credit score will allow you to secure a mortgage loan on favorable terms. The higher the credit score, the better interest you can expect to receive.
Do what you can now and up until you apply. A lower interest rate will make homebuying more affordable, as you’ll pay less on interest over the life of the loan.
A favorable interest rate also reduces the monthly payment while increasing how much home you can afford.
These two factors are reasons enough to get working hard on improving your credit score as much as possible. Simple steps, such as putting a dent to the outstanding balance, paying on time and monitoring activity can get you to where you want to be.