Best paid for the creation and placement of content on this page. It does not necessarily reflect the editorial views of NextAdvisor or any of its affiliated entities.
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 your eyes wide open,” says Farnoosh Torabi, managing editor of CNET Money and host of the award-winning So Money podcast. “This is not buying a sweater on sale at Target,” she says. “This is going to be a great investment.”
Low inventory and low interest rates have pushed up prices and competition, says Torabi. Therefore, you should expect the best service, care, and attention from your lender.
We talked to four buyers who managed to beat the odds and purchase a home that fit their needs and budgets. Here’s how they did it, plus their tips for homebuyers.
1. Get recommendations from your friends and family
First-time buyers Tessa Sliwa and her fiancé Benjamin were ready to quit renting and buy a house big enough for their growing family. But they have busy lives, and traditional lenders still required in-person meetings and lengthy phone calls to get them approved for a mortgage, the couple says.
A personal recommendation led them to Better Mortgage. “We had several friends who had bought houses at the same time, and they had great things to say about Better,” says Sliwa.
Better Mortgage made the entire process easy to understand from the start, Sliwa says, especially thanks to the checklist provided to guide them every step of the way. And while the online application process kept things moving quickly, the couple say they never felt rushed or pressured. Sliwa said she was also impressed with the best price guarantee, which matches any competitor’s loan estimate.
Busy homebuyers should value efficiency, the couple say. We have the technology for automated approval processes that can be done entirely online, so why bother with fax machines or postal mail?
2. Be clear about your goals
After losing their home to a wildfire, Teresa Hanni and her husband had nowhere to go and had to deal with a lot of insurance paperwork. Fortunately, Hanni owned another house, but it was rented to a tenant and the mortgage payments were starting to look too expensive.
Crammed into a small borrowed trailer, Hanni and her husband had to line up on targets. For them, that meant a quick refinance with good customer service. The couple contacted several loan companies to find a better deal on Hanni’s original mortgage, and soon narrowed down the list to three companies they thought might be able to help them.
The couple ultimately chose Better Mortgage because it provided fast and efficient service, and given their dire circumstances, working fast was a top priority.
The bank Hanni was already using for her checking and savings accounts couldn’t provide the couple with the efficient service they needed: “It took five weeks for them to call me back,” says Hanni. “That’s not customer service, and I certainly didn’t have to do that with Better Mortgage.”
When you know, you know, and you rarely have time to wait. Better Mortgage can pre-approve borrowers in minutes and charge no origination fees. The online lender also offers additional incentives for using Better Real Estate and Better Mortgage, as well as a closing guarantee that offers a $2,000 payment if Better Mortgage doesn’t close on time.
3. Plan ahead and budget for a home purchase
Life is known to bring surprises, and Dr. Taisha Johnson experienced this firsthand after navigating the death of her father and the end of her marriage simultaneously in the summer of 2019.
In the midst of loss and grief, Dr. Johnson was able to make a long-term plan. He left his five-bedroom, 3,500-square-foot home and moved into an 1,100-square-foot apartment with his three children.
Dr. Johnson, a school psychologist and adjunct professor, made it her 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 buy a permanent home that she and her children could move into once they came out the other side of her difficult transition.
“The kids and I look at the prize,” says Johnson. After a period of saving, research, and budgeting, Johnson was ready to start working with lenders. Traditional lenders saw problems with his student debt from medical school, which came as a surprise. His student loans hadn’t been a problem in the past. However, Johnson decided to improve his credit score.
4. Choose an online lender
Fred Miller, a 79-year-old Michigan native, had hoped to spend 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 her ideal retirement home would look like, Miller found the perfect place while surfing the web with her daughter. The house was the smallest in a good neighborhood, perfect for a single retiree.
There was only one question: could Miller finance a house at his age? What if he asked a traditional lender for a 30-year mortgage?
But Miller’s family informed her that she could take an alternate route and put all of her necessary personal information on the Better.com website.
Miller was quickly pre-approved for a 30-year, $300,000 fixed-rate mortgage through Better Mortgage at a competitive rate after confirming his asset accounts, employment history and credit report on Better’s online application portal. com.
“It was really an easy process,” Miller said.
In just 30 days, Miller closed on a $400,000 house. Better Mortgage also helped line up your homeowners insurance through Better Cover, the company’s affiliated homeowners insurance business. The process was “quick and efficient,” Miller said.
“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,” says Torabi.
Buyers should never have to feel rushed through the process or that they didn’t get all their questions answered. Don’t rush, fear or take extreme measures like forgoing major inspections or contingencies, advises Torabi.
And when you have questions, need guidance, or just want to explore your options, choose a lender who lets you in on their experience.
“Don’t try to change who you are and your temperament and comfort level because that’s what the market dictates right now,” says Torabi.