2022 is shaping up to be another tough year for home buying. But with the right information and advice, the dream is still within reach.
“You want to go in with eyes wide open,” says Farnoosh Torabi, editor-at-large of CNET Money and host of the award-winning podcast So Money. “This is not buying a sweater on sale at Target,” she says. “This is going to be a really big investment.”
Low inventory and low interest rates have driven up prices and competition, says Torabi. Therefore, you should expect the best service, care, and attention from your lender.
We talked with four buyers who managed to beat the odds and purchase a home that suited their needs and budgets. Here’s how they did it, plus their advice for homebuyers.
1. Get Recommendations From Your Friends and Family
First-time buyers Tessa Sliwa and her fiancé Benjamin were ready to stop renting and buy a house large enough for their growing family. But they have busy lives, and traditional lenders kept requiring in-person meetings and lengthy phone calls to approve them for a mortgage, the couple says.
A personal recommendation led them to Better Mortgage. “We had several friends that had purchased houses around the same time and said really good things about Better,” Sliwa says.
Better Mortgage made the whole process easy to understand from the start, Sliwa says, particularly thanks to the checklist provided to guide them every step of the way. And though the online application process made things move swiftly, the couple says they never felt rushed or pressured. Sliwa said she was also impressed with the Better Price Guarantee, which matches any competitors’ loan estimate.
Busy homebuyers should value efficiency, the couple says. We have the technology for automated approval processes that can be done totally online, so why bother with fax machines or snail mail?
2. Be Clear About Your Goals
After losing her home to a wildfire, Teresa Hanni and her husband had no place to go — and lots of insurance paperwork to deal with. Fortunately, Hanni owned another home, but it was being rented to a tenant, and the mortgage payments were starting to feel too expensive.
Squeezed into a tiny borrowed trailer, Hanni and her husband had to align on goals. For them, that meant a fast refinance with good customer service. The couple contacted various lending companies to find a better deal on Hanni’s original mortgage, and soon narrowed down a list of three companies that they believed could help them.
The couple ultimately went with Better Mortgage because it provided quick and efficient service — and given their extreme circumstances, working fast was of utmost priority.
The bank Hanni was already using for her checking and savings accounts couldn’t give the couple the efficient service they needed: “It took them five weeks to call me back,” Hanni says. “That’s not customer service, and I certainly didn’t have to do that with Better Mortgage.”
When you know, you know — and rarely do you have time to wait around. Better Mortgage can pre-approve borrowers in minutes, and charges no origination fees. The online lender also offers extra incentives for using both Better Real Estate and Better Mortgage, as well as a closing guarantee offering $2,000 payment if Better Mortgage doesn’t close the loan on time.
3. Plan Ahead and Make a Homebuying Budget
Life is known to deal surprises, and Dr. Taisha Johnson experienced this first hand after navigating the death of her father and the end of her marriage simultaneously in the summer of 2019.
Amid the loss and grief, Dr. Johnson was able to make a long-term plan. She left her five-bedroom, 3,500-square-foot home and moved to a 1,100-square-foot apartment with her three children.
Dr. Johnson, a school psychologist and adjunct professor, set a goal to use the time in the apartment as an opportunity to get ahead financially. The plan was to improve her credit score, save money, and shop for a permanent home that she and her kids could move into once they came out on the other side of their tough transition.
“Me and the kids just kept our eye on the prize,” Johnson says. After a period of saving, researching, and budgeting, Johnson was ready to start working with lenders. Traditional lenders saw issues with her student debt from medical school, which came as a surprise. Her student loans hadn’t been a problem in the past. Yet Johnson resolved to improve her credit score nonetheless.
4. Choose an Online Lender
Fred Miller, a 79-year-old Michigan native, had been looking forward to spending more time at his suburban Detroit home with his wife of 35 years. But just as the global COVID-19 pandemic began and stay-at-home orders were issued, Miller’s wife passed away.
“I miss her,” says Miller. “She was quite a lady.”
With new plans for what his ideal retirement home would look like, Miller came across the perfect place while browsing the web with his daughter. The house was the smallest home in a good neighborhood, perfect for a single retiree.
There was just one question: Could Miller finance a home at his age? What would happen if he asked a traditional lender for a 30-year mortgage?
But Miller’s family informed him he could go an alternative route and put all his necessary personal information into the Better.com website.
Miller quickly received pre-approval for a 30-year, $300,000 fixed-rate mortgage through Better Mortgage with a competitive rate after confirming his asset accounts, employment history, and credit report in Better.com’s online application portal.
“It was really an easy process,” Miller said.
In just 30 days, Miller closed on a $400,000 home. Better Mortgage also helped line up his homeowners insurance through Better Cover, the company’s affiliated homeowners insurance business. The process was “quick and efficient,” said Miller.
“We did everything you would normally do when you get a mortgage anywhere, and we did it all online,” Miller said.
Buying a home is a big commitment, and it makes a big difference to feel like you’re working with a lender who understands your circumstances and is on your team.
“If there’s one thing that remains — no matter how many changes we see in the market right now — it’s that buying a home for most people is the biggest financial decision of their lives,” Torabi says.
Buyers should never have to feel rushed into the process or that they didn’t get all their questions answered. Don’t rush, give into fear, or take extreme measures like waiving inspections or important contingencies, advises Torabi.
And when you have questions, need guidance, or simply want to talk through your options, choose a lender that allows you to learn on its expertise.
“Don’t try to change who you are and your temperament and comfort level because that’s what the market is dictating right now,” says Torabi.