Tips to Buying a Home in 2022
Whether you’re a first-time or veteran homebuyer, preparing before purchasing a home is essential. In 2021, we saw record home sales, and that trend seems to be carrying into 2022, meaning it’s still a seller’s market.
As a buyer in a seller’s market, you’ll need to take a few extra steps if you want to secure the home of your dreams. There will be more competition and higher chances of bidding wars. Here at the Erica Deuschle real estate team, we want nothing more for you than a stress-free and successful home purchase.
Keep reading to learn five essential tips on buying a home
Process of Buying a Home
1. Get Your Finances in Order
By finances, we mean all of your finances. Buying a home will likely be the largest financial commitment of your life, so there’s no surprise that it could take a toll on your savings. It’s crucial to save up early, strengthen your credit score, and determine precisely how much you can afford. The price of the home is only one fee in the homebuying process. Other fees include:
- Down payment – Your down payment will vary depending on which type of mortgage you choose. It is recommended to put down 20% of the home’s market price, but some loans offer as little as 3% down for buyers with excellent credit.
- Closing costs – Closing cost fees typically range from 2% to 5% of the loan amount. You can request the seller to pay a portion of the expenses, such as the home inspection.
- Move-in expenses – You’ll need some extra cash for movers, repairs, furnishing, and upgrades once you move in.
2. Explore Your Mortgage Options
As mentioned above, whichever mortgage loan you choose will change the amount of money required to put down, your loan term, and the interest rate. Therefore, make sure to compare multiple quotes to determine the best payoff plan for you. The most common loan types include:
- Conventional mortgages are not backed by the government and benefit those with good credit scores.
- USDA loans are backed by the U.S. Department of Agriculture for rural homebuyers and typically do not require a down payment.
- FHA loans are backed by the Federal Housing Administration and allow down payments as low as 3.5%.
- VA loans are guaranteed by the Department of Veteran Affairs for current and veteran military service members. They typically do not require a down payment.
You will also have some options when it comes to the loan term. Longer terms, such as a 30-year fixed-rate mortgage, will have a consistently higher rate. Shorter-termed loans may have lower interest rates but larger monthly payments.
3. Get Pre-Approved for a Mortgage
In a seller’s market, being pre-approved for a mortgage will show the seller that you mean business and have the funds. In addition, a pre-approval letter will help you stand out against other buyers.
To be pre-approved, your mortgage lender will pull your credit and review your income, assets, and debt. Applying for pre-approval shouldn’t hinder your credit score, as long as you apply for them within a limited time frame, such as 30 days.
4. Pick the Right Agent
Not all agents are made equal, so you need to do your research before settling on just any agent. At Trust The Pineapple, our agents have the market knowledge and expertise to get you into your dream home faster. It can be helpful to conduct multiple interviews with agents to find the best. Good qualities of a real estate agent include:
- Communication – Your agent should communicate often via phone calls, texts, emails, or meetings. If your agent often goes MIA, consider finding a new one.
- Honesty – Your agent should always be honest throughout the process. For example, a bad agent may lie to get you to buy a home you cannot afford down the road.
- Knowledgeable – The best agents thoroughly research the current market and can speak on it with confidence.
- Personable – You want to choose an agent with good people skills. If they seem dismissive or apathetic, move on.
5. Know What You Want and Stick to the Budget
You can easily deter buyer’s agents if you have no idea what you’re looking for. Agents are here to facilitate the process, not decide for you. So, make a list of features and characteristics you desire to have in your new home. This will help your agent narrow down the search for a quicker process.
Also, once you’ve determined a price range, stick to it. It’s much better to buy a starter home you can afford than a “perfect” home that sends you into more debt. Remember that each home you own is an asset and your future depends on your present ability to make payments on time.