Is the new year the time for a new home?


The calendar change is often an opportunity for people to take a look at their lives and assess what changes they would like to make. New Year’s resolutions about exercising, saving money, managing weight, and more can come in handy if done. For many, a resolution may be to buy a new home in 2022. If so, what now?

The process of buying and financing a home can be overwhelming. On the one hand, you don’t just go to the store and buy a house like you would a gallon of milk. Fortunately, lenders are making it easier to finance a home. Some lenders even provide potential buyers with additional information like a first-time buyers book, a roadmap for application documentation, and a checklist for homeownership and financing steps.

Other lenders provide a useful mortgage calculator to see what your monthly payment might look like based on various loan amounts and estimated rates. Borrowers should be aware that loan amounts can change during the home buying process, just as rates can change throughout the home financing journey.

A good mortgage calculator will give you a basic understanding of how monthly payments are calculated. Likewise, a good mortgage originator or loan officer should be ready and willing to assess your level of knowledge and help you clearly understand the process and the choices.

Easier than you think

A good real estate agent will take the time to teach you how this process works. An experienced and reputable mortgage banker will help you with your application and find the options that are best for you and your situation. Every borrower and every property is different, and a good loan officer will be on hand to answer your questions, deal with any changes or surprises, and get you to the closing table as “clean” as possible.

A good loan officer will also take care of you as an individual. Are you married or is there a co-borrower? A good explanation why a 15 year fixed rate mortgage is better for you than a variable rate or a 30 year fixed rate. How a down payment assistance program could help you. Why a prequalification letter is different from a pre-approval letter. The list goes on and on and a loan officer will walk you through the process.

Anyone planning to buy a home in 2022 should realize that most lenders can offer a variety of technological advancements to help process your loan. But you should also know that the process has not changed much: a request is taken, the borrower’s credit is analyzed, the property appraised, a rate and a program chosen, and the loan “funds”. These steps have been streamlined through the use of software that improves the speed and accuracy of data collection, which in turn helps the lender analyze whether you and the property are at good risk.

Stable, consistent for now

As we wrap up 2021 and move into 2022, like many things, home buying and property financing are subject to global events. The pandemic, which has been in the world news for almost two years, continues to influence the strength or weakness of economies, and therefore interest rates and especially mortgage rates.

A good mortgage originator will discuss how the strength of the U.S. economy can affect your mortgage rate, make housing more affordable, or help determine whether it makes sense to refinance. And while the Fed doesn’t specifically set mortgage rates, its actions stem from the economic strength of the United States.

Rates, including those used to finance a home purchase in 2022, have indeed increased from what they were this summer. But the impact of this increase in mortgage rates must be put into perspective. You might not have the same interest rate as your neighbor, but a loan officer will say that the impact of a small rate change might be negligible.

For example, on a fixed rate loan of $ 250,000 over 30 years, the monthly payment at 2.75% is $ 1,021. At 3%, it’s $ 1,054; a difference of only $ 33 per month. A couple who buys coffee every day will spend, over a month, $ 240 per month. A lot of money can be saved over the months and years, for example by making coffee at home and using that money to help pay off their mortgage.

Expertise, relationships, communication

Through it all, it’s important to remember how important a personal connection is with a real estate agent and with a qualified loan officer. Of course, many answers can be found on the internet, but it is always helpful for a new buyer to have someone by their side, ready to answer questions as 2022 approaches – and, possibly, the home ownership or renovation.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


Comments are closed.