With a competitive housing market, people may be concerned about buying a house as they go into the new year. As first-time or current homebuyers look to purchase a new home in 2022, it’s best to prepare yourself for any opportunities or challenges the new year will bring.
Consider these tips for buying a home in 2022 from First Fidelis to prepare yourself financially as you look to invest in your next home purchase.
1. Get Your Debt-to-Income Ratio as Low as Possible
Mortgage lenders are more willing to approve a home loan if your debt-to-income (DTI) ratio is as low as possible. In a time where buying large purchases on credit has become the norm, it may be difficult for some to pay down their debt. However, for aspiring homeowners, getting your DTI ratio as low as possible is crucial when entering the market for a new home.
While many may focus on paying their debt down, you may also want to consider ways you can increase your income. A higher monthly income often increases any amount of money a bank will lend, and it gives you more security as you start to save for a down payment. This is something you will want to start early, as lenders usually want to see your job history for several months.
2. Improve Your Credit Score
Although it takes time to improve your credit score, it’s a good practice to pay all bills on time to maintain a solid score, especially as you start to think about purchasing a home. Your chances of being approved for a home loan greatly increase with a lower credit score, and your lender will be more willing to offer you a lower interest rate.
3. Save for More than the Down Payment
When you start to think about buying a home, your mindset may be to only save money for the down payment. However, once you start making monthly payments on your mortgage, you’ll need to adjust your budget where necessary to avoid any financial surprises. Not only will you be paying for your home, but you’ll also be paying for maintaining it.
As you save money for your down payment, you should also save money for any monthly expenses once you own a home. Avoiding unnecessary shopping sprees or eating out excessively now can save you a lot of money in the long run that you can put toward monthly expenses once you’ve purchased the house. Other expenses you should be prepared for include:
- Closing costs
- Application, origination, and underwriting fees
- Home inspection
- Pest inspection
- Moving expenses
4. Choose a Knowledgeable Agent
When shopping around for a home, it’s best to find a knowledgeable real estate agent that knows the area well. A trusted agent will email you different listings and help you find homes that you love. Your agent can also work with any deadlines, hang-ups, or funding constraints you may have during the homebuying process.
Finding your dream home becomes that much easier when you have an expert on your side. A real estate agent will get to know you, your family, and exactly what you’re looking for in a new home.
5. Shop Around for Mortgages
In a highly competitive housing market, it’s best to shop around for mortgages as early as possible. As a homebuyer, you’ll want to be offered the best possible mortgage terms and rates as possible. It’s best to examine your budget ahead of time to know exactly what you can afford monthly and decide how long you want your loan term to be. Most mortgages must be paid over a 15 to 30 year period.
You should also shop around for any assistance programs you may qualify for. First-time homebuyers may be able to lower their down payment or closing costs if they’re eligible for certain programs like down payment assistance.
6. Research the Housing Market in Your Area
Buying a home is an investment, and most houses will increase in value over time if well-maintained and in an ideal living area. As you research the housing market in your area, look for neighborhoods that offer the potential for increasing home values. This can be done by tracking the sell prices of other comparable properties in a certain area to see what potential your new home may have.
As a local Kansas City mortgage lender, First Fidelis is here to help make the homebuyer process as easy as possible. See what home loan options we have to offer for homebuyers, or get started with our pre-approval application today. If you have any questions, contact us at 913-205-9978.