There are numerous good reasons to buy a home; a few of them are building equity in a place of your own, financial stability, and not following a landlord’s rules.
Buying your first home is a significant landmark, but it can also be a hectic and time-consuming process. You can find many trusted Dubai real estate that can help you out in this process. They can’t only speed up legal checks for you, but they can also help you get your head around the critical considerations of purchasing a home and help you choose whether now is the good time to make a move.
If buying a house is on your list for the following year, it’s time to start preparing.
While it’s unlikely the market be as unexpected as it was in 2021, you may still encounter some headwinds along the way. And understanding what you are up against can lead to a better outcome.
Here, we will explain five things that all first-time buyers should know before buying a home in 2022.
There will be tough competition among homebuyers.
Demand for housing is not going anywhere. There is a massive housing shortage, along with would-be buyers waiting to jump in. Many of them also can move and work from anywhere, taking benefit of the broad approval of remote work brought on by the pandemic.
There are also demographics to regard. Millennials are in their excellent homebuying years and have made up an enormous share of buyers during the past few years. On the other hand, Boomers are at the downsizing stage, which creates lots of competition — particularly for smaller and entry-level homes.
In short, be prepared for a bidding war and come prepared, particularly if you are eyeing a starter home. Waiving contingencies, can increase your offer price, or adding an escalate clause, which automatically increases your offer (to a certain point) if you are outbid, can all help you be more competitive.
Be prepared for the competition.
One step worth taking in this context is getting a mortgage pre-approval letter. That sends the message you have an interest and genuine home buyer whose finances have already vet. And it may prompt a seller to accept your proposal over a comparable one.
Though 2022 may end up being a tough year to buy a home, there are actions you can take to increase your probability of success. Be sure to check off these boxes if you plan to become a homeowner over the next 12 months
Mortgage rates probably will be higher.
The Federal Reserve just announced it would start shortening its purchases of bonds and mortgage-backed securities in the coming months. Inevitably, that will indicate higher mortgage rates (and higher payments) for the average homebuyer.
According to the Mortgage Bankers Association, rates on 30-year loans will likely rise to 3.3% in the first quarter of the following year and reach 3.7% by the third quarter. If that 3.7% becomes a reality, a recent mortgage insurer, First American analysis, presents that homebuying power would drop by about $49,000 per borrower.
While this doesn’t necessarily suggest buying a home will be unimaginable next year, it does suggest you can expect to pay more or will require to lower your price point to account for the higher costs of financing.
Work on increasing your credit score Home prices will rise but not that fast
Possibilities are, you don’t have the money to buy a home outright next year. Instead, you will probably require a mortgage. The more your credit score is, the more likely you will be to get approved for a home loan and a reasonable interest rate.
You can increase your credit score in several ways:
- If possible, pay off a chunk of existing credit card debt, especially if you are carrying a high balance relative to your total credit limit across all of your cards.
- Be certain to pay all of your bills on time.
- Check your credit report for mistakes and correct those that could be dragging your score down.
Home prices will rise but not that fast
One upside to next year is home prices are not projected to increase as quickly. While that will help on the front end, once you own a home (or rental property or whatever else you’re buying), that house will appreciate more slowly as a result.
That suggests it takes a little longer to see the outcome of your investment. That’s not to say you will not make a profit if you sell the home in a year or two, and you will not reap a windfall. By most predictions, home prices are predicted to appreciate anywhere from 2% to 7%. On a $200,000 house, that works out to a return of about $4,000 to $14,000.
Research home prices ahead of time
This year, home prices have skyrocketed due to the high buyer need and fixed housing inventory. Come 2022; those circumstances could remain unchanged. It makes sense to research various neighborhoods in advance and notice which ones have home prices within your financial reach.
Your housing choices may be restricted.
Housing starts and construction have ticked up, and more foreclosures are beginning to smash the market, but there probably won’t be a significant surge in homes available for sale. After all, according to Freddie Mac, the market’s supply is almost 4 million homes lacking demand, and that’s a pretty steep hurdle to overcome.
That means you can probably consider making some compromises if you are buying a home, just as buyers did this year. That might show offering more than the asking price, considering smaller homes or alternate property types (townhomes), or broadening your search geographically.
Use a trusted realtor.
We all understand that realtors get a cut of a home’s sales price, which makes some buyers reluctant to use a realtor: they believe it moves up the overall cost. Remember that the seller, not the buyer, pays the commission. A smart realtor who works for you can save your interests and guide you through the buying procedure – from bargaining a price to navigating home inspections.