5 Tips for Getting a Mortgage in 2022
Do you want to buy a house in the New Year? This increases your chances of success in the mortgage business.
Is 2022 a better time to buy a home than 2021? It’s difficult to say. This year the housing stock was extremely limited and real estate prices high. These trends could continue into the new year, making it another difficult time for buyers.
However, when you face the challenge of buying a home, you can put yourself in the strongest position to qualify for a mortgage. Here are five tips you need to know.
1. Check your credit report
Your credit report is a summary of your credit history and habits. This is taken into account by mortgage lenders when deciding whether or not you are a viable borrower. Review this report carefully and make sure there are no warning signs such as: B. Overdue debt on your behalf. If so, it is worth working on resolving these issues before applying for a mortgage.
Likewise, you should make sure that your credit report does not contain any errors (such as arrears debt that you have now paid) that could work against you. If you find them, be sure to correct them before applying for a home loan.
2. Find out your actual creditworthiness
Many consumers are surprised to learn that their credit reports do not list their actual creditworthiness. To get this number, you may need to log into your bank or credit card account. Or you may have to pay for it.
Either way, it is important to know what your credit score is and make sure that you are happy with that number. The higher it is, the more likely it is that you will not only be approved for a mortgage but also set a competitive mortgage rate on that loan. In fact, if you are able to get your credit score in the mid to high 700s (or higher, of course) you are likely to get the best rate any given lender is offering.
3. Lower your debt burden
The more debt you have, the more reluctant a lender may be to give you a mortgage – especially if that debt is consuming a large part of your income. You may want to pay off some debts before applying for a mortgage. And if this is what you want to do, focus on credit card debt first. Lowering your credit card debt could not only improve your debt-to-income ratio, but also improve your credit score.
4. Increase your income with a part-time job
Your income is one factor that lenders use to see if you qualify to buy a home. With home prices rising, you may need a higher than usual mortgage loan to buy a home in 2022. So, whether you’re working shifts at a local store on weekends or taking a drive-in-the-halling company a few evenings a week, it might be worth doing some sidelong income to boost your income.
5. Shop around
When it comes to mortgage lending, each lender sets their own interest rates and closing costs, which are the fees you have to pay to take out a home loan. It pays to seek quotes from different lenders as this can help you get a better deal.
This means you should do your price purchase quickly – ideally within 14 days. Any time a lender checks your credit report to see if you are a qualified borrower, it is considered a tough query. Too many tough inquiries can affect your creditworthiness and make borrowing difficult. However, if you have incoming inquiries from multiple lenders for the same purpose (a mortgage loan) over the same short period of time, all of those inquiries will be counted as one, which will minimize the damage to your creditworthiness.
It’s too early to say what the housing market has in store for 2022. However, if you are looking to buy a home in the New Year, it is worth doing everything possible to increase your chances of getting a mortgage at an interest rate low enough to offset the higher home prices we start with.