Whether you are a first time home buyer or have already purchased a home, this year’s housing market is looking tough. Here are three tips to help you navigate through it and be successful in your search for a new place of your own.
1. Use a real estate agent
You don’t need one Real estate agent to buy a house. But there’s really no reason not to ask an agent for help. As a buyer, you are not responsible for paying an agent’s commission – this is something that sellers do. And so you might as well have someone in your area who can help you identify suitable homes and negotiate with sellers and their agents on your behalf.
Also, real estate agents sometimes get wind of new listings before they officially hit the market. Working with one of them could give you the opportunity to make an offer on a home before the competition jumps in. This year, it’s more important than ever.
We are starting 2022 with a dire lack of real estate inventory. Getting the first opinions on a home that is new to the market could be crucial.
2. Increase your credit score as much as possible
The higher your credit score at the time you apply for a mortgage, the more likely you are to get a competitive interest rate on your loan. And that’s important in today’s market.
Home prices are nationally high right now, so you might need a lower price. mortgage rate make the purchase affordable. To qualify for the best rates, your credit score will generally need to be in the mid to upper 700s. To be clear, you don’t need to have a perfect credit score (which would be 850) to get the best rates available. . Perfect credit is really hard to come by, even for strong borrowers. But the higher the number, the better.
You can increase your credit score by paying your bills on time each month and keeping your credit card debt to a minimum. Believe it or not, even if you make your minimum payments on time, having too much balance on your credit cards could end up lowering your score.
It also pays to check your credit report for errors and correct any that could lower your score. Credit reports happen to be free on a weekly basis this year until April, so you have the option to keep an eye out for changes to yours during the mortgage application process.
3. Calculate your own numbers
You can choose to get pre-approved for a mortgage, and doing so is a smart bet. Not only does this send the message to sellers that you are a serious buyer, but it also gives you a price range to work with.
That said, mortgage lenders use specific formulas to determine how much borrowers are approved for, and the number your lender arrives at may not match your financial situation. You may want to borrow more conservatively for a home or have other expenses, like high childcare costs, that your lender doesn’t factor into their number. Your best bet in determining how much a mortgage to take out is to run these 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 easier and increase your chances of ending up with a home that really fits your budget.
A Historic Opportunity to Save Potentially Thousands of Dollars on Your Mortgage
Chances are interest rates won’t stay at multi-decade lows much longer. That’s why it’s crucial to act today, whether you want to refinance and lower your mortgage payments or are ready to pull the trigger on buying a new home.
Our expert recommends this company to find a low rate – and in fact he used them himself for refi (twice!).
We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.