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It looks like it’s going to be another competitive year for homebuyers in 2022.
While the market isn’t expected to be as frenzied as this past summer, prices are still predicted to rise. Zillow is forecasting 11% home value growth in 2022, down from a projected 19.5% in 2021.
Plus, year-over-year inventory is still lower, and concern about rising mortgage rates is fueling competition in the marketplace, said Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors.
“If you want to get in next year or before interest rates rise, get your ducks in a row now,” she said.
To be sure, mortgage rates are expected to increase in the coming year.
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However, if you are looking to buy in the next six months to nine months, any increases shouldn’t be significant, said Kevin Parker, vice president of field mortgage at Navy Federal Credit Union.
“Rates are still historically extremely low and it is still a great time to buy,” he said. “If someone needs more time, I don’t think they are going to have a big difference in pricing.”
Here’s what you can do now to put yourself in the best position to find your new home in the new year.
Pay down debt
Lenders will look at your debt-to-income ratio, which is the amount of debt relative to your income, when determining your loan. If you have debt, try to pay it down before you start house hunting, Lautz suggested.
Consider using any year-end bonus money or cash gifts to pay it off. If you don’t have debt, put that cash into savings to help with your down payment.
Check your credit
Your credit score is another important factor in getting a mortgage and the type of loan you’ll get. It also impacts the interest rate you’ll receive and potentially how much money you need for a down payment.
By checking your credit score ahead of time, you’ll know whether you’ll need to make any changes to try to increase that number.
Also, get a copy of your credit report to check for any errors or unpaid bills, which may also affect your credit score. Consumers can get their credit report up to once a week for free from …….