Buying a Home in 2022 in this Crazy Market
Buying a home in 2022 is difficult. In part due to the pandemic, the housing market has gotten increasingly competitive and difficult to break into for first-time homebuyers. According to Zillow, in July 2021 over half of homes were sold above their listing price. Buyers snapped up many of them in record time, too. Here are some things to consider as you prepare to enter the crazy housing market this year.
Get preapproved for a mortgage
Before you even start scrolling through property listings, you should have the bank’s seal of approval first. Knowing how much home you can afford and being able to show that to sellers is key to setting yourself up for success. Once you know your price range, you will be better able to compare costs.
Take advantage of low interest rates
While mortgage rates may be beginning to creep back up again, they are still near historic lows. The Federal mortgage entity Freddie Mac has forecasted that interest rates should stay around 3.6 percent throughout 2022 and rise to around 3.9 percent in 2023.
Practically, having a lower interest rate will help you pay less over the life of a loan. Even though interest rates hit their lows in 2021, does not mean you cannot still reap some of the benefits of the lower rates by buying a home in 2022.
Don’t overlook the fixer-uppers
With so much competition for housing right now, you might need to let go of the idea of having just one dream home, especially if that ideal place will put you over your budget. If the home meets your basic qualifications like size and location, don’t rule it out over small things.
You can remodel or change some elements over time. Just make sure that the things that need changing aren’t huge structural issues. That is where a home inspection would come in handy.
Look at other areas
Just like you don’t want to get too attached to any one house, you should also consider looking at other nearby cities. Maybe a smaller city a few miles away from your dream area is more affordable or less competitive.
If you don’t immediately need to move, it might be better to wait it out until the market cools off over the few months or year. Waiting would give you more time to raise your credit score or save up more towards a down payment, which could save you from paying Private mortgage insurance (PMI). Or you could use the extra money toward home renovations when you do close on a place.
Buying a home in 2022 might seem overwhelming and is certainly more competitive than even a few years ago. Going in with a good understanding your finances and what you’re willing to compromise on can help.