The year is 2022, and the housing market is especially tough for buyers right now. Supply is low in Oregon and the demand for quality homes is high, so you should be prepared to make an investment if you choose to buy a new home in 2022. Do you still have your heart set on a Portland home? Surprisingly, the mortgage rates in Oregon are rather low right now, which helps to counter the high down payment of Oregon homes. Taking out a Portland mortgage is fairly easy with a reliable mortgage company like The Lindley Team. Before we discuss mortgage rates, however, let’s look at what it really takes to buy a home in Oregon in 2022 and what you should expect throughout the home buying process.
Are You Really Ready to Buy a Home in 2022?
So, you’re hoping to move to Oregon. Before you begin telling all your neighbors and co-workers that you are planning to move, here are a few questions you should ask yourself about how prepared you are to invest in a home and a Portland mortgage:
Do you have a steady job with a reliable income?
Working remotely is becoming more and more common as a result of the COVID-19 pandemic, and there is no sign of this trend slowing down in 2022. Are you planning to keep your current job when you move, or do you have a new job option lined up? Are you completely confident that you did indeed get the new job? How does the job market look right now, and do you feel confident that you will not be quickly laid off? Do you feel that your current financial situation will allow you to make consistent payments on your new property every month?
These are all questions that you should consider when determining your housing budget. Obviously, you should not make a large investment if you and the other members of your household are not prepared for this expense, and especially not in Oregon where housing prices are on the rise.
- See also: How to Buy a House from Out of State
What other money do you have access to?
Consider your savings. Do you have enough money saved up that you will be able to get by for a while even after making your down payment? It is impossible to predict the future with 100% certainty, and there is always a risk that you could end up without a job a few months from now (Think about how quickly your work situation may have changed as the COVID-19 pandemic swept the world). Will you still have some savings for food and utilities after placing a down payment on your home? Would a family member be able to loan you money for food and utilities in an emergency if you did lose your job? It is always a good idea to keep additional savings on hand, and not invest in a house above your means even if you obtain a loan for it.
Do you have a good credit score?
What should your credit score be when you look for your first house? Usually, you will want a credit score of at least 650 in order to obtain a loan. You will have a much higher chance of receiving a loan if your credit score is 700 or above. If your credit score is high enough, you may be able to qualify for lower interest rates on your mortgage. A credit score of at least 740 is considered “excellent.”
Researching Before You Buy
Buying a home is not an investment you should rush into unprepared. Take your time to research everything you can about the locations you are considering looking for a home.
Neighborhoods
Not all neighborhoods are created equal. When you purchase a house, you aren’t just purchasing a building to live in, but also planting your roots into the surrounding area.
- Is your neighborhood safe? Does it have a history of crime? What about earthquakes, floods, or fires? Is your neighborhood located in a place that would become unsafe during storms? Are the roads well maintained?
- Consider both the physical safety of the area and the emotional security you can enjoy by choosing a safe, friendly neighborhood over one that is located in a run-down area. Although lower housing prices may be tempting, keep in mind that you will likely need to pay a mortgage regardless of which location you choose to buy your house. Is the discount worth a potentially dangerous area to live in?
Your Commute
Your commute to work is a path you may be driving twice daily. If there is a bus, subway, or tram system near your work, you may be able to save on gas money. In some places, it may not be possible to avoid this drive. Strive to find a commute that feels like a drive you can make safely and confidently. Consider what traffic is like at different hours and on different days so you can anticipate the best and the worst. A quick google maps search can give you a picture of what routes are available, when peak traffic occurs, alternate “back” roads, etc. In a nutshell:
- How long will your commute be to your work? More and more people are beginning to work remotely as time goes on, but if you’re a person who much prefers driving into the office every day, then consider how far your workplace will be from your new home. You may be able to save on gas money by choosing a neighborhood that is farther along your commute.
- Where is the nearest grocery store? Gas station? Hospital? Vet clinic? Schools? Are any of your favorite restaurants nearby? Knowing the placement of these essential buildings (as well as their quality) can help you narrow down your search for the right neighborhood, especially if you are considering options on opposite sides of the state.
Other Occupants In Your Home
When choosing a neighborhood to look for a new house, consider how the location may affect others in your home.
- If you have children, will they be attending a quality school? Will they have access to quality extracurricular activities? Look for public pools, parks, playgrounds, and hiking trails near your neighborhood and examine how well they are maintained. This can help you get a good idea if the area your looking at will be a good fit.
- Will the area you are considering still suit you and your children as the years pass? For example, if you have elementary school aged children, look ahead and check the quality of nearby middle and high schools.
- Are there nearby farms that could trigger allergies for people living in your home? Are there nearby sources of loud noises (such as freeways, train tracks, or airports), that could be distracting throughout the day or during the night?
Budgeting For Your New Home in 2022
Housing prices are expected to remain high throughout 2022. That means it is more important than ever to manage your money wisely and strive to stick within your housing budget.
How should you determine the down payment on your home?
There are many loan programs available depending on how much liquid funds you have available for a down payment – the lowest being no money down, 3% down, and 3.5% down options.
The larger the down payment you can afford, however, the better interest rate you will receive and the lower your mortgage insurance will be. At 20% down, you can eliminate the need for mortgage insurance altogether.
However, it is very common (especially for first time homebuyers) to pay less than 20% as a down payment for a home, as not everyone can afford the steep upfront cost. If you can only afford to pay 3-5% of the total price of a house you are looking at as your down payment, then speak with your mortgage company. If you have a high credit score and low overall debt, you will be in a much better position and may be able to potentially offset some of the otherwise higher payments.
What budget have you set for your home buying needs?
So, you’ve found a house that you are considering. To determine a reasonable budget before you buy your home, calculate what your expected mortgage payment would be by using our mortgage calculator, downloading our app, or scheduling a call with a loan officer at the Lindley Team. In general, it is wise to have at least three months of your mortgage payment in reserves (along with the money to pay other bills and utilities). This will allow you to continue making payments in the event of an emergency.
Real Estate and Mortgages
Tips for finding a real estate agent
You should always strive to work with a local real estate agency. With so many homes available to buy across the country, it would be impossible for a single agency to hold a monopoly and be intimately familiar with the status and upkeep of every house up for sale. Therefore, you should seek a local real estate agency who is familiar with the neighborhood and the homes you are looking at.
Underwriting
During the underwriting process, your lender will review your financial and credit documents to confirm that you are qualified for the loan you are asking for. Each loan program and lender has specific and varying guidelines that borrowers have to meet, and the underwriter’s job is to ensure that the loan file fits within those guidelines.
Making an offer on a house
When you’ve determined the neighborhood you’re interested in, how much down payment you can afford, and have had your finances reviewed by a mortgage lender for pre-approval, you’re ready to make an offer when the right house comes your way. Your real estate agent can help you draw up an offer letter to present to the seller along with outlining the terms of your agreement. Including the pre-approval from your lender along with your offer will dramatically increase your credibility as a buyer. This lets the seller and their agent know that you have the means to buy the property and the risk of the sale falling through is much lower.
Once you make an offer, the seller may accept your offer or make a counteroffer. Your real estate agent will be able to help you negotiate with the seller to find a reasonable price for both parties. You can also ask for repairs or a seller credit during the early stages of negotiation in order to decrease the overall price of the house, if the seller is willing.
Finalizing
At this point, you should now be working towards finalizing the offer on your new home. Congratulations!
Home inspections
Home inspections happen after your offer has been accepted on a home, but before the house is officially purchased and in your possession. Although some people choose to skip this step, we recommend you go through with the home inspection anyway. Opting for a proper home inspection ensures that you won’t end up inadvertently buying a house that is affected by problems such as:
- Mold
- Foundation issues
- High levels of radon
- Damaged plumbing or electrical
- Unpermitted upgrades or addons
Many people do not realize that if the home they are buying includes rooms or additions that are not up to code, this can dramatically lower the value of the home. By having the home inspected before it is purchased, you can ensure you know exactly what you are paying for.
If you are looking to take out a Portland mortgage, The Lindley Team can walk you through the process and answer any questions you may have about mortgage rates and the different loan programs available in Oregon. Mortgages can be confusing to understand, especially if this is your first time buying a new home, so taking your time to research the mortgage process and seek out an experienced real estate agency is essential to the home buying process.
