Brace yourself for another competitive year in the housing market.
Home sales are expected to grow 6.6% in 2022, a 16-year high, according to Realtor.com. The typical winter lull isn’t even necessarily happening. Home prices actually accelerated from November to December, said Danielle Hale, chief economist at Realtor.com.
While Realtor.com is forecasting prices will rise 2.9%, the pace is slower than last year. Inventory will remain limited, but is expected to rebound from 2021 lows.
The bottom line is that buyers need to be prepared before they start shopping around.
“You’re going to have to act quickly when you find a home when you want,” Hale said.
Here’s what you can do now to put yourself in the best position to find your new home this year.
Look at your credit
Your credit score is an important factor in getting a mortgage and the type of loan you’ll get. It also impacts the interest rate you’ll receive and potentially how much money you need for a down payment.
By checking your credit score ahead of time, you’ll know whether you’ll need to make any changes to try to increase that number.
Also, get a copy of your credit report to check for any errors or unpaid bills, which may also affect your credit score. Consumers can get their credit report up to once a week for free from the nation’s three largest credit reporting firms — Equifax, Experian and TransUnion — through April 2022.
Lenders will also look at your debt-to-income ratio, which is the amount of debt relative to your income, when determining your loan. If you have debt, try to pay it down before you start house hunting, suggests Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors.
Consider using any year-end bonus money or cash gifts to pay it off. If you don’t have debt, put that cash into savings to help with your down payment…ReadMore…