All You Need to Know About Taking Out a Home Loan in 2022

Family searching for a home

posted March 25, 2022 in Blogs

The real estate market has shifted tremendously since the start of the coronavirus pandemic. Now, as we approach the two-year mark since COVID-19 reached the U.S., the market continues to adjust to the changing economic environment, rising inflation and fluctuating demand. If you’re looking to take out a home loan in the near future, it’s important to learn about the current market trends and what you can expect in the coming months. Here’s what you need to know about taking out a home loan in 2022.

Market trends

Experts are predicting a somewhat cooler real estate market in 2022. Here’s what to expect among some of the different factors in the market. 

  • Supply and demand. 2021 was the year of frenzied bidding wars, as the supply of homes on the market fell well below the heightened demand. Despite these conditions, home sales were up by 44% in 2021 compared to 2020, according to Realtor.com. Looking forward, experts expect the demand to remain high in 2022, but they also anticipate the supply of available homes to inch closer to the demand as more new-construction homes hit the market. In addition, the trickle-down effect of the end of the government’s moratorium on foreclosures will likely increase the supply of available homes on the market. 
  • Home prices. In 2021, the average price of homes rose to an estimated 14.75%. According to the National Association of Realtors, home prices will continue to increase in 2022, but at a far more modest rate of just 2.8%. Fannie Mae projects a 7.4% increase, while mortgage bankers expect home prices to rise 5.1%. 
  • Mortgage rates. Mortgage rates remained at historic lows in 2021, with the average 30-year fixed-rate hovering around 3% at the end of the year. Economists expect mortgage rates to increase in 2022, but to continue to remain relatively low. The National Association of Realtors claims that mortgage rates will increase to 3.7% in the first quarter of 2022, while Fannie Mae anticipates the 30-year fixed mortgage to average 3.3% throughout the year.

Tips for buying a house in 2022

If you plan on buying a house in 2022, here’s how to make the most out of your search:

  • Get pre-approved. It’s always a good idea to get preapproved for a mortgage before you start your search. It’s even more important in a sizzling real estate market like the one buyers are facing today. A preapproval gives you a leg up on bidding wars, shows potential sellers that you’re serious about buying and helps you keep your search within parameters you can afford. 
  • Shop around for a mortgage. While mortgage rates are still relatively low, each lender sets their own rates and closing costs. Shopping around before choosing a mortgage lender can save you money in the short term and long term. 
  • Use a local real estate agent. In a tight housing market, it’s important to use an agent who knows the area well and can give you a realistic picture of what you can expect to pay for the home you want. 
  • Prioritize carefully. Every homebuyer has a wish list of features they’d love to have in their new home and neighborhood. But, when supply is limited, absolute must-haves need to be chosen carefully. Narrow your list as much as possible before beginning your search, as it will help you to avoid disappointment later on. 

Keep these tips and considerations in mind as you begin your quest for the perfect new home. A little “pre-home” work can help make a big difference in the enjoyment of your home and your overall financial health for years to come!

If you’re entering the market for a new home, we can help! Greater Iowa offers home loans for qualifying members that feature competitive interest rates, an efficient and smooth application process, and the personalized service you’ve come to expect. Call, click, or stop by today to get started.