How to Prepare to Buy a Home in 2022
Are you planning to buy a home in 2022? This year’s housing market is shaping up to be another competitive seller’s market. However, with increasing mortgage rates, the 2022 housing market will hopefully have a larger inventory compared to 2021. This is good news for homebuyers, but the landscape will still be competitive, meaning you want to be as prepared as possible when you start the homebuying process.
Here are several ways you can prepare to buy a home in 2022:
Improve Your Credit Score
Your credit score is a large contributing factor in determining if you qualify for a home loan. It is also a factor in determining your mortgage rate. Even if you already have a good credit score, it is always worthwhile to improve your score.
A few simple ways to improve your credit score include lowering your credit usage to 10-30%, addressing any derogatory marks on your credit report and any loans that have gone into collection, and making all your payments on time for at least 12 months. There are many other ways you can improve your credit score, but these simple steps are a good start.
Lower Your Debt-to-Income Ratio
Your DTI or debt-to-income ratio is also an important factor when determining your loan eligibility. If your DTI is too high, you will not be able to qualify for a loan. Different loan types have different requirements in terms of DTI and credit score, but the lower your DTI, the better.
You can lower your DTI by paying down and paying off several credit accounts or opening a credit line that you do not use. Avoid closing accounts as this will ultimately lower your overall credit line and inadvertently increase your DTI.
Find The Loan Type That Works Best for You
Different loan types have different qualifications. VA loans and USDA loans do not require a down payment. If you qualify for an FHA loan, you may be eligible for a down payment assistance grant. This is a game-changer for first-time homebuyers who can afford a mortgage and home expenses but do not have the funds for a down payment and closing costs.
Even if you don’t have the funds for a down payment, you can still buy a home with the right loan. There are options for you. The best way to explore your options and determine what type of loan you may qualify for is to contact a loan specialist.
Save For a Down Payment and Closing Costs
Setting aside funds to cover down payment and closing costs will always help you buy a home and secure a mortgage loan. If you have a good buffer saved, you’ll be extra prepared for any unexpected closing costs or expenses that may arise during the loan application process.
Be Prepared to Offer Listing Price
The housing market for 2022 is still projected to be a seller’s market. While the market will not be as chaotic as in 2021, the inventory is still considerably low. Be prepared to offer the listing price when you place an offer to buy a home. There will hopefully be fewer bidding wars in 2022, but you will still need to anticipate competition.
Consider Alternative Housing Markets
Do you work remotely? Do you have a hybrid or flexible employment situation that only requires you to be in-office some of the time? If you don’t necessarily have to live where your work is located, consider shopping in remote housing markets where you get more value for your dollar. This could be a suburban area or suburb.
Contact a Loan Specialist
The best way to know for sure if you are prepared to buy a home in 2022, is to speak with a loan specialist. Our loan specialists at VeteransLoans.com can determine if you qualify for a home loan and walk you through the process. Call (888) 232-1428 to speak with a loan specialist today!