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How to get approved for a Pennsylvania mortgage in 2022

It’s been challenging to buy a home during the last two years. Although historically low mortgage rates made it more compelling than ever to buy, some homeowners were hesitant to offload their properties because of the uncertainty of the pandemic.

However, that didn’t prevent the rush of buyers from creating a red hot market, where houses sold within hours of being listed and at prices that were frequently the result of bidding wars.

According to a 2021 Homebuyers and Sellers report from the National Association of Realtors, the top reasons buyers moved were:

  1. To be near loved ones
  2. Convenience to friends and family
  3. Increase in living space

While people have historically moved because of a life-changing event (the birth of a child, a divorce, a new job), the NAR noted that the pandemic “became an impetus to sell and make a housing trade.” Even as some homeowners hunkered down, others were eager to sell and become homebuyers again.

In 2022,swellers will continue to be king, according to experts, unless rising inflation rates outpace wages and weaken buyer demand. Home prices are expected to remain at peak rates for the first few months of 2022 before returning to more normal levels, said an economist at the listing site, Zillow.

Another economist at a home-buying app told CNBC, “None of us can promise that [finding] housing will be easy. But it feels reasonable to promise that it will be easier than this past year.”

Whether you buy your dream Pennsylvania home now or later in the year, position yourself in the best way as far as mortgage rates are concerned. Here is a guide on getting approved for a Pennsylvania mortgage in 2022.

  • Check your credit report and score
  • Mortgage approval starts with your credit report and score. Almost all of your mortgage loan options are hinged on the health of your credit score. Getting a full report early on in the process can give you a clear picture of where you stand in terms of your outstanding debt. To find out how well you manage your debt, you will need to know your credit score. Work with your bank or credit card company to obtain your score, which will determine whether you can qualify for a home loan and if you do, by how much.

  • Reduce your debt
  • Aside from your credit score, your mortgage approval and interest rate depend on your debt-to-income ratio or how much of your income goes into paying off your debt. If you spend no more than 35% of your income on debt, lenders consider you a good risk because you are likely to have money left over to pay for a mortgage. Otherwise, you need to reduce your debt in order to qualify for a loan without presenting additional eligibility requirements. Therefore, the less obligations you have, the better your chances of getting approved for a loan.

  • Stabilize your income
  • Home prices are up because of the scarcity of supply. With prices surging well into 2022, make sure your income supports your home buying aspirations. Lenders take into account how much income you bring in regularly. If they see that your earnings are stable from month to month, you are more likely to get approved for a loan with low interest rates.

  • Learn about the minimum requirements
  • There are several types of mortgage loans your family can choose from. Each type has different minimum requirements. When shopping for a home, it is best to consider your capacity against the mortgage types available to you:

    • Conventional loans are best suited for families with a stable income and are capable of paying at least 3% of the total cost in down payment.
    • Fixed-rate loans have a fixed-rate interest for the duration of the mortgage. It is the choice for families who intend to buy their forever home.
    • Adjustable-rate loans are the opposite of fixed-rate mortgages. It is ideal for first-time homebuyers looking to purchase a starter home before they eventually move to a larger property when the family grows.
    • Government-backed loans are less strict with credit scores and down payment requirements. That said, specific criteria must be met to qualify for this type of loan.
  • Weigh your options
    • Each lender sets their own interest rates and purchase costs. When buying a home, it pays to shop around and know the lay of the land.

      Below is a snapshot of fixed-rate loan interest rates as of December 2021 in Pennsylvania:

    Loan Type
    Interest Rate
    Fixed 30 Year Loan
    3.479%
    Fixed 20 Year Loan
    3.469%
    Fixed 20 Year Loan
    3.469%
    Fixed 15 Year Loan
    2.695%
    Fixed 30 Year Loan: FHA
    3.515%
    Fixed 30 Year Loan: VA
    3.350%
    Fixed 30 Year Loan: Jumbo
    3.273%

    *Data as of December 24, 2021

    Find your Pennsylvania dream home with RE/MAX DIRECT

    Buying a home is a life-changing decision.

    Most people need to take out a mortgage in order to buy property. Depending on the type of loan you apply for, your decision can tie you down to a mortgage for at least 10-and-a-half years. Without a doubt, taking your time, preparing for the requirements, and learning the ropes are key to getting your mortgage approved in 2022 in Pennsylvania.

    If you are ready to become a homeowner, our team can help! Browse premium Pennsylvania properties in West Chester, Downingtown, Main Line, Unionville / Chadds Ford, Phoenixville, and the Great Valley area with RE/MAX Direct today!

    Our team of experienced real estate professionals is eager to help you find your dream home in Southeastern Pennsylvania. Get in touch with the RE/MAX DIRECT team by calling 610.430.8100, or by sending us an email at remaxdirectwc(at)gmail(dotted)com. You can also drop your message here. We’re forward to hearing from you!