Home Buying in 2022

Home Buying in 2022

It’s getting tough out there for first-time homebuyers.

• Interest rates are ticking up. According to Freddie Mac, the 30-year average mortgage was just over 5% as of 4/28/22, up from the low of 2.65% in January 2021.

• The annual inflation rate was 8.5% for the 12 months ended March 2022 — the highest since 1981 when it topped 14.8% (US Dept of Labor).

• There is a nationwide shortage of building materials causing construction delays and increased costs. According to the NAHB, building materials in the aggregate are up 20.4% over the last years and 31.3% since January 2020.

• Homeowner’s insurance premium rates are up over 12% on average nationwide 2017 to 2021, according to S&P Global Market Intelligence data.

Navigating the home buying process can be stressful. It’s important to give yourself the best possible tools to succeed in securing your dream home. Here are 5 things to consider as you start your homebuying process:

1. With higher prices and increasing interest rates, you should have more savings available for your down payment and more room in your budget for a possibly higher mortgage payment. While the average down payment is less than 20%, you should ideally be prepared to put down at least 20% of the home purchase price. This will help you qualify for a lower interest rate, will lower your monthly payment, and could give you an edge over other potential buyers. There are plenty of loan options out there for lower down payments so be sure to speak with your lender about your financial situation.

2. Understanding how your expenses will change, both in monthly cash flow and in preparing for larger costs should be a top priority. When considering buying a home you need to be ready for the immediate expenses of the home purchase itself, i.e., down payment, closing costs, etc. as well as ongoing items such as home insurance, repairs and maintenance, property taxes, HOA fees, furniture, and appliances.

3. If you are thinking of saving money by buying a fixer-upper or home that requires a remodel, you should set expectations that it will probably cost more and take longer than planned. Home prices are up, and so is the cost of remodeling your home. The supply chain issues make it harder to get items, and all the best contractors are busy. Just be cautious before you take on a house with a larger project than you can handle or that your budget can bear. The prices you see on HGTV to redo a home are likely far less than you will find in the real world.

4. If you are an entrepreneur or business owner with variable income, the loan process is more complicated. Be sure to speak with your lender about what they will need from you throughout the loan process.

5. Today’s competitive housing market requires a super responsive and active realtor and mortgage team. Interview different agents and mortgage brokers and get referrals from friends and family.

You can still buy the home you’ve been searching for. Just go into it with a plan in place to set you up for success. At MainStreet, we love to see you achieve your goals, buying a home being one of the big ones! Contact us if you need a partner to help you navigate making these important decisions.

If you are a first-time homebuyer, check out our First-Time Home Buyer’s Guide.


Join us for Chalk Talk: Home Buying in 2022

with Carl Oguamanam

Free to ongoing clients; $10 for guests

Email Info@mainstreetplanning to get a copy!

Some of the topics we’ll discuss:

⁃ How much home can you can afford
⁃ Typical down payment amounts, closing costs, etc.
⁃ Support for first time home buyers
⁃ What to expect if you are a business owner or entrepreneur
⁃ The current mortgage process
⁃ What if I need to sell my home first?

Jennifer Bush
Jennifer Bush

Jennifer’s focus is on guiding clients through the pivotal transition into retirement, ensuring they navigate this significant phase with confidence and clarity.

Get Started with Jennifer

Stay updated on future articles, shows, and podcasts