How to Prepare to Buy a Home in 2022
2021 was not as easy year for people looking to buy homes. As prices rose in Minneapolis and nationwide, bidding wars were commonplace, with mad dashes to make offers as new properties hit the market.
In 2022, you will still need to have some patience and take a strategic approach to becoming a homeowner — although the market will ease a bit. You can simplify the process and reduce stress with preparation.
Here are 5 tips to ready yourself for a home purchase in the new year:
Tip #1: Build your down payment.
Expect to put down a hefty sum in 2022, with home prices remaining high. To land a conventional loan without the hassle of private mortgage insurance (PMI), put together a down payment of 20 percent. In the short term, it may be wise to get a second job and proactively budget so you can throw extra funds into savings.
Tip #2. Boost your credit score.
Focusing on getting your credit score as high as possible will be well worth your while. This will not only help with mortgage approval but will also help you qualify for the lowest possible interest rate.
One way to do that is to lower the rate at which you utilize your credit (which is a substantial impact on your debt-to-income ratio, or DTI). Also be certain that you are on-time with all your bill payments.
To get a sense how you might measure up to other consumers, the Federal Reserve Bank of New York found the median score for those accepted for mortgages in the last three months of 2020 was 786. Get yourself as close to that figure as possible.
Tip #3. Be light on your feet.
Watch for “coming soon” listings and new market arrivals. Get ready to make visits and move toward offers rapidly. Consider that National Association of Realtors data for November 2021 showed the average home was on the market for only 17 days!
Tip #4. Be ready for a bidding war.
A mortgage preapproval letter can be invaluable if there are multiple offers on the property. This simple step shows the owner that your finances have been professionally assessed and lets them know that you are a serious buyer.
Tip #5. Choose your professional team.
Who are the professionals you will trust to help you put together your mortgage preapproval letter and help you find your dream home in a challenging market? Not only can we help you with the former, but we can recommend incredible local realtors to assist you as well.
At BAM, all our 58 Google Reviews are currently 5 stars, as are all our Facebook reviews! Google Local Guide Nick Patrek wrote of us, “[Ted’s] communication throughout the process was consistent, and we always felt well informed.” Apply now!