Aiming to buy a home in the next year? Do these 4 things

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If you want to buy a house in the next year, be prepared to save up and act fast.

The housing market has been red hot for the past 18 months, with buyers sometimes opting to skip many of the traditional strappings of the process, such as appraisals, inspections or even seeing the house in-person before making a deal.

All-cash purchases became the norm during the pandemic, currently comprising 24% of the market, according to the National Association of Realtors. Many buyers lost out on multiple homes before finally getting a bid accepted.

Things aren’t quite as crazy as they once were, but prices remain sky-high, inventory is low and homes are still going fast. Those trends are expected to continue into 2022.

To get ahead of potential competitors, you will, of course, need to save as much as possible and research your options before placing an offer. But here are four other things to keep in mind if you want to buy a home in the next year.

1. Improve your credit

2. Research down payment options

You already know you need to save up for a down payment: The rule of thumb is to put at least 20% down. But with many homes going for well over asking, often in all-cash transactions, you’ll probably need to save a lot — potentially more than 20%, depending on where you want to buy.

But you don’t necessarily need to do it all on your own. There are plenty of federal, state and local programs to help first-time homebuyers. One example: Freddie Mac’s Home Possible, which helps lower-income borrowers buy a home with as little as 3% down.

You can also search for a down payment assistance program in your state. In California, for example, there is the California Housing Finance Agency MyHome Assistance Program, which provides down payment help to eligible buyers.

There are thousands of these programs across the country, according to the Urban Institute. They are often capped by income, and the thresholds vary by state, county and even city. This list breaks down programs by state, and you can also search “[your state] + down-payment assistance programs” to find more in your area. There are also programs tailored to certain professions, like teachers, firefighters or veterans.

That said, using a down payment assistance program can potentially make your offers less competitive to some sellers. Be mindful of that when looking.

3. Be nimble

With the inventory shortage, chances are homes will continue to go fast, says Glenn Phillips, CEO and lead economic analyst for Lake Homes Realty. Many of the best deals may only last a day or a few hours on the market, he says. The average home lasted 17 days on the market throughout November, according to the National Association of Realtors.

“When buying a home in the next year or longer, it will be important to watch new listings, including ‘coming soon’ listings, and be very prepared to not only visit the home quickly, but prepare to decide and extend an offer almost immediately,” says Phillips.

You should do all of your research and preparation ahead of time, so you’re ready to pounce.

4. Don’t overpay

Acting fast doesn’t mean overpaying, though. “Buy competitively, but still be prudent,” Phillips says. “There are home sellers who are pricing at such a high price that only suckers will buy.”

In the current market, these are usually the homes that have been for sale for two weeks or longer. “These are homes where the home buyers and their agents recognize the home is grossly overpriced and are now avoiding it.”

Compare home prices from the prior year in your local area. If a seller is listing the same type of house for significantly more, you might be better off waiting for the next property to come on the market.

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