Buying a Home in 2022? 15 Things You Need to Do

Buying a home is a big undertaking. And in today's real estate market, it can be challenging. Here are some essential steps to take if you think 2022 is the year you'll become a homeowner.

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Figuring out where you want to buy will help you embark on a more focused home search. Research different neighborhoods to find out which offer the things you're looking for. You may want to hone in on factors like traffic, local amenities (like parks and restaurants), and school-system ratings.

Home values are up on a national level. Before you start looking for a home, do some research to determine how the home prices are trending in your target neighborhood to make sure they're within your price range.

ALSO READ: Home Prices Rose 19.5% in September, Reports Key Index

Teaming up with the right real estate agent could spell the difference between a fruitless house hunt and a successful one. Ask friends, neighbors, and colleagues for recommendations so that you can find an agent who will truly offer great service and have your best interests in mind.

Knowing what home features you want the most will help you narrow down your choices. Figure out what you're looking for in a home and what features you absolutely cannot live without.

ALSO READ: 3 Home Features That Could Help You Save Money

Because housing inventory is limited right now, you may not get all the things you're looking for in a home. Organize your wish list by priority so that you'll know which items you're okay to compromise on. You may not be willing to give up a large yard or basement, but you may decide to deal with an outdated kitchen that you can renovate later on.

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Since there aren't many available homes on the market, you may need to duke it out with other buyers in a bidding war. Work with your real estate agent to put together a strategy for that scenario. That could include setting a maximum bid so that you don't wind up getting in over your head.

If you're aiming to buy a home, you'll probably need a mortgage to finance it. So, the last thing you want is a string of red flags on your credit report, potentially turning lenders away. Get a copy of your report and check it for errors. If you see anything that could work against you, get it corrected before applying for a home loan.

The higher your credit score, the more likely you'll be to not only get approved for a mortgage but also get a competitive interest rate. And given how high home prices are right now, you'll need a low mortgage rate to help offset them. You can boost your credit score by paying incoming bills on time, eliminating existing credit card debt, and correcting credit report errors.

ALSO READ: 5 Ways to Boost Your Credit Score in 2022

In addition to your credit score, lenders take your debt-to-income ratio under consideration when deciding whether to approve you for a mortgage. That ratio measures the amount of debt you're on the hook for relative to your income. You can lower that ratio by paying off an existing credit card balance, a personal loan, or even your auto loan if that's possible.

The higher your income, the more it'll help your debt-to-income ratio improve and the more flexibility you'll get to take out a higher mortgage. You can boost your income by fighting for a raise at work, going after a promotion, or getting a side hustle on top of your main job.

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Since homes are costing more these days, you may need to come up with a higher down payment than usual -- both to satisfy a lender's requirement and to avoid having to take out a mortgage you can't cover. Aim to boost your cash reserves so that you have the borrowing flexibility you need.

ALSO READ: How to Save for a Home Down Payment in 2022

In today's tight housing market, there's a lot of competition for homes. A good way to get your offer accepted over another buyer's is to go in with a preapproval letter from a lender. That sends a message that you're a serious buyer whose finances are strong enough to render you eligible for a mortgage.

Home prices are very high, so you'll need as low a mortgage rate as possible to offset them. That's why it's important to shop around for offers rather than go with the first one you receive. Ultimately, each lender sets its own rate based on different factors, so it's worth taking a little time to compare offers.

When you sign a mortgage, you'll be charged closing costs to finalize it. And while you can generally roll those fees into your mortgage, that'll result in a higher payment. As such, you may want to bring a check to your closing instead.

ALSO READ: How Much Should You Budget for Closing Costs?

Whether you're moving down the block or across the country, hiring professionals can be expensive. Figure out how much money you might have to shell out to move so that you're not caught off guard, especially when you may be writing another large check to finalize your mortgage.

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There's no question about it: Today's housing market isn't the easiest to navigate. If your goal is to buy a home this year, make sure to check these key items off of your list before diving in.

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