House hunting has always involved a bit of work but with the ongoing Covid-19 pandemic, the search for the perfect home just got a little more challenging. Last year, homebuyers saw prices skyrocket with
double-digit price increases seen in 78% of the markets. But according to
Zillow,
2022 home value growth won’t hit the numbers seen in 2021 which should bring some slight relief to anyone thinking of buying a home this year. If you’ve done your research and are ready to buy, here’s what you should know.
Fewer options to explore
The pandemic has brought on many market-related disruptions like labor shortage and supply chain issues which have resulted in higher material costs, leading to a decrease in home production.
According to Redfin, homes actively listed for sale at the end of November 2021 hit a record low. While builders do their best to continue
to increase inventory to help meet the soaring demand, buyers could still see their options for homes dwindle.
Home prices and mortgage rates will increase
The increase in demand with little inventory set off a tilt in 2021 that favors sellers and economists are predicting that prices will continue to climb. While prices may not hit 2021 highs, the National Association of Realtors estimates home prices will
see an increase of 2.8% this year, which is a big drop from the 14.7% hike in 2021. Mortgage rates saw historic lows in 2020 and part of 2021 but mortgage rates are expected to climb back up with the projection that the Federal Reserve will see
several interest rate hikes in 2022.
Your credit score matters
With an expected increase in mortgage rates, your best bet to help you save and land a good loan deal is to work on getting your credit score as good as it can get before applying. Focusing on improving your credit as well as maximizing your down payment and working to pay down debt will help you secure a better loan and help you prepare for the next step in the home buying process.
Homebuying season tends to kick off in the spring so if you’re planning to buy then, you’ll want to start working on your credit score now. Request a copy of your credit report by visiting AnnualCreditReport.com, look for any errors, and get
them fixed immediately. Incorrect information in credit history reports is the most common complaint against the three major credit reporting bureaus: Equifax, Experian, and TransUnion.
If your score isn’t where it should be, look for additional ways to improve your credit. Payment history makes up about 35% of your score with debt owed making up 30% of your score, so aim to make payments on time and avoid accruing new debt.
Hughes members can take advantage of CreditSmart, an online banking tool that provides a breakdown of your score with tips on what to do and how to get the best score possible.
Start with pre-qualification
Homes are selling fast. According to the National Association of Realtors, homes that were actively listed sold in an average of seventeen days. One way to help you get ahead of the competition is to be prepared and ready to make an offer. If your credit
score is ready for review, shop around and get preapproved. This step will allow you to start seeing properties you’re interested in and when coupled with a sizeable down payment, your seller will feel more confident that your loan close, helping
you get closer to an accepted offer.
The home buying process can feel like an overwhelming job but you don’t have to go at it alone. The mortgage professionals at Hughes Federal Credit Union are ready to provide expert guidance helping you along at each step of the process. From working
with you to help gather the right financial documents to assisting in calculating a price range that works for you, we’re here to help you realize your dream of being a homeowner.
Get started today!
