What You Need To Know: Mortgages in 2022
A mortgage is critical to landing the home of your dreams. Your mortgage plays a major role in your home buying journey - from the initial paperwork process to the moment the keys are in your hand.
If you are looking to buy a new home in 2022, it is more important than ever to have a strong preapproval letter in hand to make an offer on the home of your dreams. This year, interest rates are expected to rise, making it more expensive to get a mortgage.
In this article, we will take a look at what you need to know about mortgages in 2022.
The Real Estate Market in 2022
One of the relatively unexpected impacts of the COVID-19 pandemic was the explosion of prices in the residential housing market.
Homes prices have doubled (and tripled!) in many locations, and inventories are limited across nearly all markets. Those who have been able to secure an offer find that they are paying a premium to secure a home in today's market.
If you are hoping to buy a home in 2022, it is more important than ever to have your finances in order and ready for the oncoming interest rate hikes.
Different parts of the country face different price points, but one thing is clear: the cost of housing is at an all-time high. If you are hoping to buy a home in 2022, it is critical that you have your preapproval letter in hand prior to making an offer on the residence of your dreams.
Interest Rates Are Climbing
Along with higher sales prices has been inflation. Consumer purchase prices have skyrocketed across industries, and the Federal Reserve is looking to get ahead of the trend by hiking interest rates this year.
"As early as March, the Fed is expected to raise its benchmark rate by half or a whole point. This could lead to a whole point increase in the coming year. "
By the end of 2022, rates are expected to be more than double what they were during the lowest parts of the pandemic.
This means that it will be more expensive than ever to secure a mortgage for home buyers.
Today, the average 30-year fixed rate is hovering around 4.5%. By year's end, it is believed that this number could rise higher - and fast. The higher interest rates go, the less you will owe on your monthly payment.
The Mortgage Process in 2022
Securing a home loan is just the beginning of your journey. To ensure that you get the best rate you can, here's a primer on what you need to do.
1. Get Your Finances in Order
First, secure your pre-approval letter from a local lender.
This document will prove that you can purchase the home you are interested in at today's interest rates and help avoid issues such as lowballing an offer or losing out on a great opportunity due to financing.
2. Get an Agent on Your Side
A real estate agent and mortgage lender are integral to your success in 2022.
Your agent will be able to help you locate the home that is right for your family while also making sure that you are present at all relevant open houses.
Your lender will ensure that the process goes smoothly, helping to keep buyers informed of what steps need to be taken next and how long each step may take.
3. Get Pre-Approved
You do not want to be surprised by any additional costs associated with your loan. Before you get into the process of purchasing a home, make sure that a mortgage lender pre-approves you.
This will ensure no unexpected bumps in the road ahead of you and help guarantee that you get the best available interest rates on your financing.
4. Make an Offer and Get it in Writing
Do not fall victim to low-balling or false hopes. Once you have preapproved, the next step is as simple as securing a home loan. Before purchasing your dream home, offer written documentation that you are capable of making such a purchase.
5. Closing Day
Last but not least, go into the closing day with a realistic understanding of what to expect.
You will need to bring all necessary documentation and be prepared for any and all questions about your loan, including the loan amount, interest rates, and any additional fees that may apply.
Tips to Beat The Competition in 2022
If you want to land the home of your dreams, you need to come to the table prepared. Make sure you are seen as a highly-valuable buyer with these tips:
1. Get with the Housing Trends
A strong preapproval letter will ensure that you are among the first in line to secure financing for homes when they come on the market with desirable interest rates.
2. Beat Other Buyers to the Punch
To avoid being outbid by other buyers in 2022, be sure to have your offer in writing before an offer is even accepted on a home. Once you are preapproved, other buyers will be able to see this and take your offer seriously.
3. Call Your Lender First
Before making an offer, call your lender to learn how long it will take to secure financing for the home of your dreams. This way, you can plan ahead and make sure that you find a home before interest rates rise.
Get Strategic with Your Mortgage
The increased demand for residential real estate has created a competitive market. In order to get the home of your dreams, it is important that you get pre-approved to lock in the lowest rate you can.
If you are ready, the next step is to get pre-approved before making an offer. This will ensure that you are among the first in line and can take control of your mortgage financing.
To learn more and get started, contact me today.
I will work with you to learn about your dream home goals.
We will make sure to give you the right program to suit your needs. Even in this market, you can get into the home of your dreams if you stay ahead of the curve.