Here’s how to prepare if you want to buy a home in this competitive market

The housing market is competitive.

Home sales are expected to grow in a 16-year high. The typical winter lull isn't actually happening. Danielle Hale said that home prices increased from November to December.

The pace of the price rise is slower than last year. The inventory is expected to rebound from the lows.

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Buyers need to be prepared before they start shopping.

When you want to live in a home, you have to act quickly.

Here are some things you can do to find your new home this year.

Your credit score is one of the factors that affect the type of loan you get. It also affects the interest rate you receive and how much money you need for a down payment.

By checking your credit score before you go, you will know if you need to make any changes to increase your score.

You should get a copy of your credit report to make sure you don't have any errors that affect your credit score. Consumers can get their credit report up to once a week for free from the nation's three largest credit reporting firms.

The debt-to-income ratio is the amount of debt relative to the amount of money you make. Jessica Lautz, vice president of demographic and behavioral insights at the National Association of Realtors, suggests that if you have debt, try to pay it down before you start house hunting.

Use any year-end bonus money or cash gifts to pay it off. If you don't have debt, put your cash into savings to pay your down payment.

Kevin Parker, vice president of field mortgage at Navy Federal Credit Union, said to reach out to a lender as soon as possible, at least to ask questions and find out what they need from you in order to preapprove a mortgage.

He said that they like members to understand the process.

You can use an online calculator to figure out how much you can afford. You will want to know how much money is needed to close, since there are fees that are due in addition to your down payment.

You can get preapproved for a mortgage before you start house hunting, since you will need it before you submit a contract for a house.

It doesn't mean that you have a budget because you are preapproved by a mortgage lender.

Determine what you can afford to pay each month by looking at your monthly expenses. Interest rates are expected to rise this year and will increase your mortgage payments.

At the end of the year, the National Association of Realtors predicts rates will reach 3.7%, still low by historical standards.

Hale advised to write down your must-haves and nice-to-haves. You already know what trade-offs you want to make when you have to make a quick decision.

It can help you in a bidding war, which is easy to get carried away with in a highly competitive market.

Hale said to focus on the goal you set out for yourself, like your list of must-haves and nice-to-haves. Stick to it. Be persistent.