4 Tips to Win at Home Buying This Spring

Early 2022 will be a great season for home purchases. Sellers are blessed with the perfect blend of brisk demand and a low interest rate environment. And we can see opportunity here for buyers too.

Granted, the bidding wars are still happening, especially for condos and accessibly priced houses. Analysts generally project high housing demand to last through the rest of the decade. But in 2022, there should be fewer bidders to compete with than last year!

No matter how active your market may be, adopting a confident outlook is key. But is confidence really warranted now? Let’s see.

A House Is Nearly Always a Great Investment. Including Now. 

Some would-be buyers are worried about “buying at the top.” Understandably, they’d rather have a cheaper entry point into the market — what investors call a correction. Then again, what buyer feels more confident buying when prices going down?

No market ever looks absolutely perfect. As Peter Lynch famously said:

Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.

But you’ll still want to know: Will a home purchased now appreciate in the future? It’s typical for property values to bob up and down over the years, and gradually follow an upward trend over the long term. You’ll miss out on that likely appreciation as long as you’re paying rent or otherwise delaying a purchase due to market conditions.

Or perhaps your core question is: Right now, is it better to rent or buy when we have a choice? To answer that question, start by boiling the choice down to its essence: you’re either making monthly payments into your own home equity, or into someone else’s.

 ☛ It’s not your imagination: The cost of renting is soaring. In many markets today, buying a house is more affordable than continuing to pay rent.

It’s true that home buyers pay a lot in closing costs and fees. They typically top 10% of a home’s price. It’s also true that being an owner means shelling out money for property taxes, maintenance and repairs. As a renter you are covering those costs, too — for someone else, i.e., the property owner. And either way, you’ll need enough in the bank to tide you over during any periods of lost income or unexpected emergencies.

Buying offers some financial boosts, too, like the federal tax deductions for the mortgage interest. And because creditors value the stability of home ownership, owners gain access to higher credit limits. Unlike most rent payments, monthly mortgage payments count for improving credit scores. 

You get the idea. Renting still makes sense for many people. But if you are in a position to buy, and if you want to buy, buying makes sense.

With mortgage rate predictions heading to 4% later this year (and that’s still historically low!), financing is on the buyer’s side today.

So, without further ado, here are…

Four Strategies to Help You Buy in Spring 2022

If you’re ready to buy real estate this season, you’ll have a variety of ways to increase your chances of success. Here are four of them:

1.     Shop under your budget.

Chances are, you’re applying for a mortgage loan. It’s a perfectly sensible way to buy when interest rates are attractive. Your mortgage specialist will work with you, advising on how much buying power is within your means.

But you don’t have to make an offer on the most expensive house in your range. Search for a desirable home that won’t max out your loan pre-approval amount. This way you can offer more if other bidders appear.

It’s not essential, of course, to buy the ideal home immediately! There will be opportunities later to sell and buy a better house. Getting into the market today creates that potential.

2.     Ask for solid proof of your buying power.

Spring 2022 will be a competitive real estate market, with some condos and accessibly prices houses listed and sold within just days, or even on the same day. If the area you’re looking in is super-competitive, it will take more than a pre-qualification to seal a deal. Getting a pre-approval as soon as possible will position you to move fast when you find a home you’d like to buy.

You can request a “proof of funds” letter from the mortgage company to vouch for your ability to handle the promised down payment and all closing costs. Get ready to show the seller’s agent your power to successfully close on the house.  

3.     Know what contingencies to leave in and out of the purchase contract.

Have a talk with your agent about contingencies and how to bargain with them. It’s usually best not to waive appraisals and inspections. No one wants expensive repair surprises after a deal is done.

But you might be in a position to waive some contingencies to win a deal. Could your lender do without the financing contingency? Ask your mortgage representative for a letter to present to the seller’s agent, attesting that you’re through the underwriting, and have a valid approval that will cover you through your projected closing date.

4.     Consider location, location… and another location.

If you can swing at least a partial work-from-home schedule, commuting might not be a big burden. This can broaden the scope of your house search.

Do choose a location with strong future prospects. Is the school district desirable? Are the businesses healthy? Imagine what the market could look like a decade or two into the future. Can you reasonably assume that the area will endure weather and climate events? Are popular amenities like access to transit available? Run some internet searches to learn about any forthcoming local projects that could affect these factors. Try to choose the best overall package of potential appreciation, while buying a place you’ll feel good to live in.

Should You Make Your Move in Spring 2022? It’s Your Call, Not the Market’s.

At the end of the day, a house is more than its property value. It’s a home. Investment value isn’t the only benefit to buying it.

Still, while there are no guarantees, real estate does tend to appreciate the longer it’s owned. And in this digital era, as our work environments continue to offer increased flexibility, people will continue to move for real estate opportunities. Property values will benefit.

If you’re ready to settle into a community for, say, seven years or more, buying makes sense. The longer the time an owner holds a property, the more equity is built up in the home, making the closing costs worthwhile. All things considered, the best time to buy is when you can afford it, and when it makes sense for your situation. If those factors align, Spring 2022 is an excellent time to buy or sell a home.

We wish you well on the journey. And no matter what’s next for the economy, at Deeds.com, we look forward to helping you meet your document needs.  

Supporting References

Deeds.com: Ring In the New: Home Buying Trends for 2022 (Dec. 20, 2021).

Photo credits: Curtis Adams and Pixabay, via Pexels.