Buying a Home in 2022 – Everything You Need to Know About Buying Your Dream Home
Buying a home in 2022 is more complicated than it sounds. The real estate market is suffering from record-low housing inventory, driving up listing prices around the country. Potential buyers are continually getting priced out of the market or beat by stiff competition.
So how can you stand out to ensure that your offer is accepted over dozens of others? This article will cover why buying a home in 2022 doesn’t have to be so difficult and how you can start the homebuying process today.
Deciding if you’re ready to buy a home
Let’s face it–not everyone is in a position to buy a home. Purchasing a home is one of the most significant financial transactions in your life, and the timing isn’t always right.
If you think that now is the right time to buy a home, you’ll want to look at several factors relating to your credit and income to see whether or not you can afford to buy in today’s market.
Credit is one of the most important factors when qualifying for the ability to own a home. Lenders want to ensure that you’ll be able to make regular monthly payments for up to the next 30 years, so they look at your credit profile as an indicator of your ability to repay (ATR).
Loan programs typically require a credit score of at least 580 and sometimes 620 to qualify for a home. Lenders may deny you if you have a record showing late payments, foreclosures, or bankruptcies.
Income & employment
One of the best ways to determine whether or not you can afford a home is to look at your income and employment status. You should ask yourself the following questions:
- Do I have a stable job that provides regular income I can report on my tax returns?
- How much income am I making each month?
- After paying all my monthly debt obligations, how much extra income do I have?
If you can confidently answer these questions, you may be ready to start the homebuying process.
Deciding on a mortgage program and getting pre-approved
There are four main loan types available to borrowers in the US, they are:
- Federal Housing Administration (FHA)
Most prospective homeowners will only qualify for FHA or Conventional loans, so it’s crucial to understand the requirements for these two loan programs.
Once you’ve chosen your loan program, the next step is getting pre-approved by your lender. They will typically ask for income documents, tax returns, and paystubs in order to qualify you for a mortgage.
Finding an agent
After getting pre-approved, you’ll want to start looking for real estate agents in your area. The best way to find a quality real estate agent is through research online or word-of-mouth.
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Closing on your dream home
After finding an agent, they may start to send you listings via the MLS online portal where you can save listings you like and delete the ones that aren’t a good fit. The real estate agent will then want to meet up in person to show you properties in your area that you’ve shown an interest in.
A good real estate agent guides you through the entire homebuying process. They help with negotiating and submitting counter offers as well as drafting agreements to ensure you enter a valid contract with favorable terms.