Buying a House in 2022
This year has been a tough and unpredictable market for homebuyers, with rising mortgage interest rates and a depleted housing inventory post pandemic.
And while it’s possible to successfully navigate a seller’s market, you have to be strategic.
Buying a house is a major commitment, and most likely the biggest purchase you’ll ever make. The best way to ensure you get the house of your dreams and avoid any costly mistakes is to understand the homebuying process and make sure you’re financially prepared for homeownership before you start.
Here’s everything you need to know about how to buy a house — along with tips to help you overcome the challenges of the current market.
Have a Consistent Stream of Income
Your lender is going to want to see a history of your income to make sure your income source is stable and reliable. It’s important to hand over the right documentation to show steady employment.
If you’re employed by a company, recent pay stubs and W-2s will do. If you’re a freelancer or self-employed, on the other hand, you’ll need to submit your tax returns as well as any other documents the lender asks of you.
Figure Out How Much House You Can Afford
It is officially time to create a home-buying budget.
Start by calculating your debt-to-income ratio — a comparison of your current debts to what you bring home after taxes. This can give you a snapshot of how much money you can afford to spend each month on a mortgage.
In addition to your monthly principal and interest payment, you’ll also need to account for property taxes and homeowners insurance. You may also have to pay homeowners association fees, depending on the property.
It’s important to factor all these expenses into your monthly budget. NextAdvisor’s mortgage calculator is a helpful tool to determine how much debt you’ll be able to take on responsibly. You can adjust various inputs, like the term of your loan or a lower interest rate, to see how each influences your monthly payment.
Crossland Title Inc. is a Knoxville title agency providing full-service real estate title solutions. Crossland Title Inc. makes your closing seem effortless.
With more than 38 years of experience in the real estate and title business, owners Pam Rice and Beth Crox have built their reputations upon the virtues of personal service and integrity. They believe that reputation as an honest and reliable business is the recipe for success.