The Pittsburgh real estate market has been a whirlwind over the last two years. When we realized COVID was here to stay, we immediately wrote about buying during COVID, selling during COVID, and remaining a homeowner during COVID. We weren’t exactly sure what was coming, but we offered our best advice for managing an unpredictable market. Two years later, we’ve seen the market shift to favor buyers, and that’s made life a little more challenging for buyers in search of a great deal. To help, we’ve assembled a list of recommendations to help you prepare to buy a house in 2022.
7 Steps For Preparing to Buy A House
If you’re thinking about buying a home in Pittsburgh in 2022, be sure to consider these steps carefully:
1. Set Expectations, But Be Reasonable
Whether you’re wondering how many houses you should look at before you buy or what the homebuyer’s timeline actually looks like, the most important thing is to remain flexible.
It’s great for your realtor to know that you’d love to score a house with a cozy bay window, a third bedroom, and quick access to a bus line, but it’s also essential to keep an open mind. Demanding that all of your conditions be met severely limits your opportunities, and we have countless stories of people who fell in love with a home that had only a few (or even zero!) of their initial requests.
Remaining flexible and open to new ideas can help you land the dream home you don’t even know you want!
2. Strengthen Your Credit Before Meeting With Your Mortgage Lender
Your credit score directly impacts your strength as a borrower. A high credit score may increase your lending limit and it could grant access to a lower interest rate.
Some strategies you can use to strengthen your credit:
Always pay your bills on time.
Keep your credit card balances as low as possible.
Resolve any sort of outstanding debts.
3. Understand Your Budget
The worst thing that can happen while buying a house isn’t that you accidentally buy a house with a surprise mold issue or find yourself squeezed into accepting an above-average interest rate. The worst thing that could happen is becoming house poor—when you owe so much on your home each month that you can’t afford to take a vacation, maintain your car, or even splurge at the grocery store!
To prevent this, most experts recommend not spending more than 30% of your monthly income on housing expenses, which includes your mortgage, insurance, and utilities. So, if your lender says you’re approved to borrow up to $400,000, that doesn’t necessarily mean you can afford a house that costs $400,000. It simply means they’re willing to give you $400,000 based on your credit score, income, and other factors.
Pay close attention to your savings and your borrowing limit, then carefully consider what you’ll actually owe each month to remain in your home!
4. Start Saving
The general goal of hitting 20% for your down payment is a nice idea, but it’s not a necessity—especially if you can get a home for only 3% or 3.5% down. But remember, buying a house means you need to cover:
Your down payment - According to the National Association of Realtors, the average down payment on a house in 2021 was 12%. On a $200,000 house, that comes to $24,000.
Your closing costs (most people in Pennsylvania pay 5%-6% of the home’s value)
Your moving expenses (which can often run more than $500)
On average, you may pay 18% on the down payment and closing costs combined, plus the moving expenses. On that same $200,000 house, you could be on the hook for close to $40,000 before you move in.
Plus, every month you live there, you’ll cover homeowner’s insurance, mortgage insurance, utilities, and the mortgage itself.
5. Explore Your Mortgage Options
Understanding your mortgage options can significantly simplify your home buying journey. Mortgages to consider:
Conventional Mortgages - Ideal for well-qualified, competitive buyers. Most conventional mortgages require at least 5% down, but some first-time buyers could qualify for as little as 3% down with specific lender programs.
FHA Mortgages - Ideal for DIYers. These loans from the Federal Housing Administration are great for people with little cash or with lower credit scores. In general, though, these houses can require a bit of sweat equity to transform them into vibrant living spaces.
VA Mortgages - Ideal for military families. In some cases, veterans can get into new homes with down payments as low as $0!
Renovation Financing Loans - Ideal for folks who want to build their dream home on a budget. These loans empower people to move into low-cost fixer-uppers, then renovate them to fit their vision.
6. Work With A Trusted Local Broker or Lender
A local mortgage broker or lender offers a significant advantage over big-box providers from out of town: They understand your market. The nuances between taxes and other variables from one neighborhood to another mean you’re more likely to receive an accurate approval and a smoother overall transaction with few (if any) hiccups along the way! If you need a recommendation in the Pittsburgh region, reach out for an introduction to some of our local partners.
7. Work With A Trusted Local Realtor
As with your broker, a local realtor is more aware of the best deals in your area. They’ll know where the best school districts are, which are the best Pittsburgh neighborhoods for your lifestyle, and where to find the best deals and opportunities based on your dream criteria.
When we’re not in the office, we love referring people to our partner, Lillian Denhart.
Start Your Home Buying Journey
If you’re ready to get started on buying a home, contact us at theblocks@blocksintheburgh.com! We believe when great people love the place they live, great things will happen!
Cheers,
Julie & Ted