If 2022 is the year you will buy your first home, congratulations! You’re about to embark on an exciting journey and you’ve picked a great time to make your move. Our mortgage experts are here to help, with information to educate and equip you to buy your first home like a pro. Read their tips below and contact a Resource Financial mortgage banker near you to get pre-approved for your first home loan.
Tip #1 Prepare. The inventory of homes on the market is low, so be prepared to compete with other homebuyers for the home you really want. Getting pre-approval for your mortgage is essential to show sellers you are a serious homebuyer. Pre-Approval proves you can secure the mortgage needed to complete your purchase, which shows the seller you are serious about buying a home and makes them more likely to accept your offer over others.
Tip #2 Lower your DTI ratio. DTI is your debt (monthly payments) divided by your monthly income. Lenders look at this number to see if it’s possible to repay what you have borrowed. Having a low number is better, but most lenders will allow a DTI of 43%. If your percentage is higher, it means your debt takes up most of your income, which heightens the risk of defaulting on the loan. If your ratio is too high, try to pay off your high interest debt, lower your monthly payments on a debt by asking for a lower interest rate on a current loan, and definitely control your non-essential spending.
Tip #3 Mortgage rates are expected to rise. Interest rates plummeted to new historic lows in 2020. As the economy climbs out of its pandemic slump and inflation puts pressure on interest rates, experts say mortgage rates will go higher in 2022. Industry sources predict they will rise to the high 3% – 4% range by the end of 2022. Even though these mortgage interest rates are an increase from the all-time lows (which were below 3%) they are still very affordable and experts don’t expect the rate increases to stray too far from the all-time lows. However if you’re looking for the lowest rates in 2022, you’re better off buying early in the new year.
Tip #4 Stay flexible. With a shortage of starter homes, first time homebuyers must be both prepared and flexible when looking to purchase a new home. Mortgage experts suggest looking a bit outside your desired radius for a first-time home, especially if you will be working from home. You could also be flexible in the type of home you are looking for. With the market so competitive, you may not be able to find and buy your ideal home just yet. But stay flexible and open to opportunities and you can take steps to make owning your dream home possible in the future.
Tip #5 Ask about first time homebuyer down payment assistance programs. There are a variety of grant programs available for first time homebuyers. Some offer down payment assistance, help with closing costs, reduced interest rates and more. Your Resource Financial mortgage banker will know which ones are available in your area and will be more than happy to help you apply for these grants and guide you through your homebuying journey.
If you’re in the process of purchasing your first home, and these programs are of interest to you, be sure to reach out to one of our Mortgage Bankers who can help you choose the programs that work best for you as well answer any questions that you may have.