Planning for 2022
If you haven’t already purchased a new home, now is the time to start planning for the upcoming year. Interest rates are expected to rise slightly but home prices are also expected to stabilize. Here are some things you can do to get ready:
- Check your credit report – The scores that you obtain through Credit Karma and other providers are based on consumer purposes and not what lenders receive. Sometimes, the difference between the scores can be as much as 20 points. It is recommended to review your credit report for errors or accounts that you may not be aware of that will affect your credit score.
- Pay down credit card debt – About 2-3 months before you begin your home search, it is recommended that you pay down your credit card balances to at most 30% of the limit. This will help optimize your scores. However, closing credit card accounts will have a negative impact on your scores so go ahead and leave those accounts open.
- Down Payment and Closing Costs – Saving can be hard. A great source for down payment and closing costs can be your income tax refund. You could also negotiate with the seller to have them assist with your closing costs. Some programs like the Veterans Administration Loan and the Rural Housing Loan do not require a down payment, so, if you are eligible for those programs, that could be a great alternative to having to save thousands of dollars.
- Employment history – If you are planning on purchasing a home, check with a mortgage loan officer before making any changes to your employment. For instance, If you are a W2 wage earner and decide to leave that job and become self-employed, there is a 1-2 year waiting period before your income can be considered for qualifying for a mortgage.
There are hundreds of mortgage programs available so feel free to reach out to me if you have any questions or just want some information regarding your own scenario.