It’s a New Year. Is It Time for a New Home?

It’s that time of year when we all reflect on our lives and changes we want to make. For some, that might mean a change in your living situation. If you have resolved to move into a new home this year–whether that’s buying your first home, trading up, or making a move to accommodate your changing needs–Rich Allensworth, Loan Officer with Rock Mortgage, joins Good Day NWA to talk homeownership.

To start off, what would tell someone who is interested in buying a home in 2022?
Anyone who has been following the housing market knows it has been red hot the past two years. Experts expect it to cool off a bit in 2022 as rates and home prices rise, and that could be a really good thing for prospective homebuyers who have had trouble purchasing in a highly competitive housing market. Northwest Arkansas is unique in that it was recently identified by the National Association of Realtors as a “hidden gem”–one of 10 metro areas in the U.S. where the housing market remains undervalued. NWA and the other areas identified by NAR have relatively affordable homes given the market fundamentals and are expected to see stronger price appreciation in 2022 than the rest of the country. So, it could be a smart move in NWA to buy early in the year and really get an amazing bang for your buck.

Does that mean we are no longer in a seller’s market? I know that has been the trend the past two years.
It looks like there will be more opportunity for homebuyers, especially those on the lower end of income, but that doesn’t mean it won’t be another good year for sellers, too. We expect demand to remain high. Inventory is still squeezed, because it was low going into the pandemic, so my advice to prospective homebuyers is to be prepared. Even if you might not want to pull the trigger on closing on a house until later in the year, getting a jump on the housing market could help you buy sooner, smarter and cheaper. It allows you to spend time getting all your ducks in a row.

What are some things we can do to be prepared if we are planning to buy this year?
Step one: Write down your must-haves: what you need and want in a new home. Then, rank these needs and wants in order of importance. Your “needs” might include things like school zoning, proximity to work and other key locations, and number of bedrooms and bathrooms. Your “wants” might include specifics like an open floor plan, spacious backyard, gas appliances, quartz or granite kitchen countertops, walk-in closets and a three-car garage. Buyers who know what they want and how important each feature is to them tend to feel more satisfied when they move into their new home. You can also set aside savings for moving costs, maintenance and other homeowner expenses. If you’re a first-time buyer, for example, you’ll be newly responsible for expenses that you might not have been responsible for in the past, including utilities, landscape maintenance and home repairs. Finally, you can start to assemble your team. Partner with a real estate agent who is an expert in what you are looking for. Find the right mortgage lender and get pre-approved. That will tell you your budget and what your maximum offer can be. Just because you’re speaking to your lender doesn’t mean you have to buy that day. You want to have trusted, expert partners for your home buying journey. A trusted lender can help you look at your entire situation and advise on how you can meet your needs and make the most out of the homebuying process, by helping you understand everything from costs associated with homebuying to the pros and cons of different available loan programs.

As a lender, what can you tell us about loan programs and what’s new in 2022?
There are a lot of different loan programs out there. It’s a matter of finding one that best meets your needs and there is some give and take. For example, a larger down payment might lower your monthly costs, or might mean higher loan limits. There’s been some recent changes, though, to low-down-payment Federal Housing Agency loans. The FHA recently increased the amount of money that can be borrowed through its mortgage programs. The increase is 18 percent or more than $64,000 in most areas. In high-cost locations, the increase is even greater. These changes will expand access to FHA loans and the benefits that come with them, from lower down-payment options, to more streamlined and lenient refinancing. With FHA loans, you can also have lower total cash-to-close requirements with gift or seller contributions. You also have the ability to combine purchase and rehab financing. In most areas, the FHA loan limit will be $420,680, compared to 2021’s limit of $356,362. In high-cost areas, the limit moves to $970,800. It’s possible in these high-cost areas to have higher loan limits than with conventional mortgages. In some lower-cost areas or those with higher costs of construction, limits will vary.

Thanks for the advice, Rich. Can you tell us now where people can reach your team if they have questions about homeownership and would like to earn more?
I encourage people to visit our website, RockMortgageLending.com or to contact one of our qualified lenders to help you get your bearings to enter this market.

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